NATHANS FAMOUS, INC. 10-Q

Item 1. Financial Statements. Nathan ’ s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS September 28, 2025 and March 30, 2025 (in thousands, except share and per share amounts) September 28, 2025 March 30, 2025 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents (Note E) $ 32,175 $ 27,802 Accounts and other receivables, net (Note G) 21,613 14,064 Inventories 945 1,221 Prepaid expenses and other current assets (Note H) 683 2,048 Total current assets 55,416 45,135 Property and equipment, net of accumulated depreciation of $ 12,672 and $ 12,295 , respectively 2,013 2,114 Operating lease right-of-use assets, net (Note Q) 4,242 4,987 Goodwill 95 95 Intangible asset, net (Note I) 435 522 Deferred income taxes 570 510 Other assets 96 113 Total assets $ 62,867 $ 53,476 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Current portion of long-term debt (Note P) $ 2,400 $ 2,400 Accounts payable 8,142 6,163 Accrued expenses and other current liabilities (Note K) 5,010 5,969 Current portion of operating lease liabilities (Note Q) 1,933 1,923 Deferred franchise fees 250 309 Total current liabilities 17,735 16,764 Long-term debt, net of unamortized debt issuance costs of $ 291 and $ 327 , respectively (Note P) 46,909 48,073 Long-term portion of operating lease liabilities (Note Q) 2,631 3,528 Other liabilities 864 927 Deferred franchise fees 631 697 Total liabilities 68,770 69,989 COMMITMENTS AND CONTINGENCIES (Note R) STOCKHOLDERS’ DEFICIT Common stock, $ .01 par value; 30,000,000 shares authorized; 9,379,025 shares issued; and 4,089,510 shares outstanding at September 28, 2025 and March 30, 2025 94 94 Additional paid-in capital 64,064 63,492 Retained earnings 16,601 6,563 Stockholders’ equity before treasury stock 80,759 70,149 Treasury stock, at cost, 5,289,515 shares at September 28, 2025 and March 30, 2025 ( 86,662 ) ( 86,662 ) Total stockholders’ deficit ( 5,903 ) ( 16,513 ) Total liabilities and stockholders’ deficit $ 62,867 $ 53,476 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -3- Nathan ’ s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS Thirteen and Twenty-six weeks ended September 28, 2025 and September 29, 2024 (in thousands, except per share amounts) (Unaudited) Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 REVENUES Branded Products $ 29,047 $ 24,536 $ 58,122 $ 50,682 Company-owned restaurants 5,624 5,348 9,610 9,547 License royalties 9,227 9,491 21,608 22,412 Franchise fees and royalties 1,223 1,174 2,352 2,247 Advertising fund revenue 566 560 993 988 Total revenues 45,687 41,109 92,685 85,876 COSTS AND EXPENSES Cost of sales 32,378 26,029 60,801 51,270 Restaurant operating expenses 1,432 1,389 2,611 2,518 Depreciation and amortization 236 247 464 496 General and administrative expenses 3,452 3,252 7,402 7,227 Advertising fund expense 687 560 1,114 988 Total costs and expenses 38,185 31,477 72,392 62,499 Income from operations 7,502 9,632 20,293 23,377 Interest expense ( 739 ) ( 1,441 ) ( 1,497 ) ( 2,501 ) Loss on debt extinguishment (Note P) - ( 334 ) - ( 334 ) Interest and dividend income 236 219 439 297 Other income, net 22 23 43 44 Income before provision for income taxes 7,021 8,099 19,278 20,883 Provision for income taxes 1,822 2,069 5,151 5,576 Net income $ 5,199 $ 6,030 $ 14,127 $ 15,307 PER SHARE INFORMATION Weighted average shares used in computing net income per share: Basic 4,089 4,085 4,089 4,085 Diluted 4,130 4,095 4,127 4,092 Net income per share: Basic $ 1.27 $ 1.48 $ 3.45 $ 3.75 Diluted $ 1.26 $ 1.47 $ 3.42 $ 3.74 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -4- Nathan ’ s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT Thirteen weeks ended September 28, 2025 and September 29, 2024 (in thousands, except share and per share amounts) (Unaudited) Additional Total Common Common Paid-in Retained Treasury Stock, at Cost Stockholders’ Shares Stock Capital earnings Shares Amount Deficit Balance, June 29, 2025 9,379,025 $ 94 $ 63,780 $ 13,446 5,289,515 $ ( 86,662 ) $ ( 9,342 ) Dividends on common stock ($ 0.50 per share) - - - ( 2,044 ) - - ( 2,044 ) Share-based compensation - - 284 - - - 284 Net income - - - 5,199 - - 5,199 Balance, September 28, 2025 9,379,025 $ 94 $ 64,064 $ 16,601 5,289,515 $ ( 86,662 ) $ ( 5,903 ) Retained Additional earnings Total Common Common Paid-in (Accumulated Treasury Stock, at Cost Stockholders’ Shares Stock Capital Deficit) Shares Amount Deficit Balance, June 30, 2024 9,374,130 $ 94 $ 63,124 $ ( 2,057 ) 5,289,515 $ ( 86,662 ) $ ( 25,501 ) Dividends on common stock ($ 0.50 per share) - - - ( 2,042 ) - - ( 2,042 ) Share-based compensation - - 229 - - - 229 Net income - - - 6,030 - - 6,030 Balance, September 29, 2024 9,374,130 $ 94 $ 63,353 $ 1,931 5,289,515 $ ( 86,662 ) $ ( 21,284 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -5- Nathan ’ s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT Twenty-six weeks ended September 28, 2025 and September 29, 2024 (in thousands, except share and per share amounts) (Unaudited) Additional Total Common Common Paid-in Retained Treasury Stock, at Cost Stockholders’ Shares Stock Capital earnings Shares Amount Deficit Balance, March 30, 2025 9,379,025 $ 94 $ 63,492 $ 6,563 5,289,515 $ ( 86,662 ) $ ( 16,513 ) Dividends on common stock ($ 1.00 per share) - - - ( 4,089 ) - - ( 4,089 ) Share-based compensation - - 572 - - - 572 Net income - - - 14,127 - - 14,127 Balance, September 28, 2025 9,379,025 $ 94 $ 64,064 $ 16,601 5,289,515 $ ( 86,662 ) $ ( 5,903 ) 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 ) Dividends on common stock ($ 1.00 per share) - - - ( 4,085 ) - - ( 4,085 ) Share-based compensation - - 417 - - - 417 Net income - - - 15,307 - - 15,307 Balance, September 29, 2024 9,374,130 $ 94 $ 63,353 $ 1,931 5,289,515 $ ( 86,662 ) $ ( 21,284 ) The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -6- Nathan ’ s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Twenty-six weeks ended September 28, 2025 and September 29, 2024 (in thousands) (Unaudited) September 28, 2025 September 29, 2024 Cash flows from operating activities: Net income $ 14,127 $ 15,307 Adjustments to reconcile net income to net cash provided by operating activities: Loss on debt extinguishment - 334 Depreciation and amortization 464 496 Amortization of debt issuance costs 36 122 Share-based compensation expense 572 417 Provision for expected credit losses 63 53 Deferred income taxes ( 60 ) ( 20 ) Changes in operating assets and liabilities: Accounts and other receivables, net ( 7,612 ) ( 994 ) Inventories 276 ( 163 ) Prepaid expenses and other current assets 1,365 1,370 Other assets 17 14 Operating lease assets and liabilities ( 142 ) ( 124 ) Accounts payable, accrued expenses and other current liabilities 1,020 ( 1,912 ) Deferred franchise fees ( 125 ) ( 125 ) Other liabilities ( 63 ) 51 Net cash provided by operating activities 9,938 14,826 Cash flows from investing activities: Purchase of property and equipment ( 276 ) ( 130 ) Net cash used in investing activities ( 276 ) ( 130 ) Cash flows from financing activities: Proceeds from Credit Facility - 60,000 Repayment of Credit Facility ( 1,200 ) - Repayment of Senior Secured Notes - ( 60,000 ) Debt issuance costs - ( 431 ) Dividends paid to stockholders ( 4,089 ) ( 4,085 ) Net cash used in financing activities ( 5,289 ) ( 4,516 ) Net increase in cash and cash equivalents 4,373 10,180 Cash and cash equivalents, beginning of period 27,802 21,027 Cash and cash equivalents, end of period $ 32,175 $ 31,207 Cash paid during the period for: Interest $ 1,531 $ 3,125 Income taxes $ 4,141 $ 4,444 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. -7- NATHAN'S FAMOUS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS September 28, 2025 (in thousands, except share and per share amounts) (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying condensed consolidated financial statements of Nathan's Famous, Inc. and subsidiaries (collectively “Nathan’s,” the “Company,” “we,” “us” or “our”) as of and for the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of financial condition, results of operations and cash flows for the periods presented. However, our results of operations are seasonal in nature, and the results of any interim period are not necessarily indicative of results for any other interim period or the full fiscal year. The Company uses a 52-53 week fiscal year ending on the Sunday closest to March 31. The 2026 fiscal year will end on March 29, 2026 and will contain 52 weeks. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to the requirements of the U.S. Securities and Exchange Commission (“SEC”). Certain prior year amounts have been reclassified in operating activities within the Condensed Consolidated Statements of Cash Flows to conform with the current year presentation. The reclassification does not affect previously reported cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Management believes that the disclosures included in the accompanying condensed consolidated interim financial statements and footnotes are adequate to make the information not misleading but should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Nathan’s Annual Report on Form 10-K for the fiscal year ended March 30, 2025 as filed with the SEC on June 10, 2025. Our significant interim accounting policies include the recognition of advertising fund expense in proportion to advertising fund revenue, and the recognition of income taxes using an estimated annual effective tax rate. A summary of the Company’s significant accounting policies is identified in Note B of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 30, 2025. NOTE B – 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. The adoption of ASU 2023-09 is expected to impact disclosures only and not have an impact 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. 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. -8- In July 2025, the FASB issued ASU 2025-05, “ Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets ” which provides all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets when estimating credit losses for current accounts receivable and current contract assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, which for us is our fiscal year 2027 beginning on March 30, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. Based on our preliminary evaluation, we do not anticipate a material effect 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 the accompanying condensed consolidated financial statements. NOTE C – REVENUES The Company’s disaggregated revenues for the thirteen and twenty-six weeks ended September 28, 2025 and September 29, 2024 are as follows (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Branded Products $ 29,047 $ 24,536 $ 58,122 $ 50,682 Company-owned restaurants 5,624 5,348 9,610 9,547 License royalties 9,227 9,491 21,608 22,412 Franchise royalties 1,138 1,066 2,139 2,047 Franchise fees 85 108 213 200 Advertising fund revenue 566 560 993 988 Total revenues $ 45,687 $ 41,109 $ 92,685 $ 85,876 The following table disaggregates revenues by primary geographical market (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 United States $ 44,756 $ 40,464 $ 90,795 $ 83,760 International 931 645 1,890 2,116 Total revenues $ 45,687 $ 41,109 $ 92,685 $ 85,876 Contract balances The following table provides information about contract liabilities from contracts with customers (in thousands): September 28, 2025 March 30, 2025 Deferred franchise fees (a) $ 881 $ 1,006 Deferred revenues, which are included in “Accrued expenses and other current liabilities” (b) $ 715 $ 1,392 (a) Deferred franchise fees of $ 250 and $ 631 as of September 28, 2025 and $ 309 and $ 697 as of March 30, 2025 are included in Deferred franchise fees – current and long term, respectively. (b) Includes $ 215 of deferred license royalties and $ 500 of deferred advertising fund revenue as of September 28, 2025 and $ 892 of deferred license royalties and $ 500 of deferred advertising fund revenue as of March 30, 2025. -9- Significant changes in deferred franchise fees are as follows (in thousands): Twenty-six weeks ended September 28, 2025 September 29, 2024 Deferred franchise fees at beginning of period $ 1,006 $ 1,226 New deferrals due to cash received and other 88 75 Revenue recognized during the period ( 213 ) ( 200 ) Deferred franchise fees at end of period $ 881 $ 1,101 Significant changes in deferred revenues are as follows (in thousands): Twenty-six weeks ended September 28, 2025 September 29, 2024 Deferred revenues at beginning of period $ 1,392 $ 1,375 New deferrals due to cash received and other 500 500 Revenue recognized during the period ( 1,177 ) ( 1,275 ) Deferred revenues at end of period $ 715 $ 600 Anticipated future recognition of deferred franchise fees The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period (in thousands): Estimate for fiscal year 2026 (a) $ 152 2027 196 2028 104 2029 77 2030 56 Thereafter 296 Total $ 881 (a) Represents franchise fees expected to be recognized for the remainder of the 2026 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less. Amount does not include $ 213 of franchise fee revenue recognized for the twenty-six weeks ended September 28, 2025. We have applied the optional exemption, as provided for under ASC Topic 606 “ Revenues from Contracts with Customers ,” which allows us to not disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty. NOTE D – INCOME PER SHARE Basic 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 net income per common share result from the assumed exercise of stock options as determined using the treasury stock method and restricted stock unit awards. -10- The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024, respectively (in thousands, except share and per share amounts): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Net income $ 5,199 $ 6,030 $ 14,127 $ 15,307 Common Stock: Weighted average basic shares outstanding 4,089,000 4,085,000 4,089,000 4,085,000 Effect of dilutive share-based awards 41,000 10,000 38,000 7,000 Weighted average diluted shares outstanding 4,130,000 4,095,000 4,127,000 4,092,000 Net income per share: Basic $ 1.27 $ 1.48 $ 3.45 $ 3.75 Diluted $ 1.26 $ 1.47 $ 3.42 $ 3.74 Anti-dilutive share-based awards - 120 - 120 NOTE E – 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 $ 24,551 and $ 19,400 at September 28, 2025 and March 30, 2025, respectively. At September 28, 2025 and March 30, 2025, 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. NOTE F – FAIR VALUE MEASUREMENTS Nathan’s follows a three-level fair value hierarchy that prioritizes the inputs to measure fair value. This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows: ● Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market ● Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability ● Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability and reflect the Company’s own assumptions The carrying amounts reported in the Company’s Condensed Consolidated Balance Sheets for 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 P – LONG TERM DEBT) also approximates fair value since such borrowings bear interest at variable market rates and is categorized as Level 2. Certain non-financial assets and liabilities are measured at fair value on a non-recurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as when evidence of impairment exists. At September 28, 2025, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities. -11- NOTE G – ACCOUNTS AND OTHER RECEIVABLES, NET Accounts and other receivables, net, consist of the following (in thousands): September 28, March 30, 2025 2025 Branded product sales $ 17,239 $ 10,534 Franchise and license royalties 3,815 3,902 Other 1,266 270 22,320 14,706 Less: allowance for credit losses ( 707 ) ( 642 ) Accounts and other receivables, net $ 21,613 $ 14,064 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 financial assets 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. Changes in the Company’s allowance for credit losses for the twenty-six week period ended September 28, 2025 and the fiscal year ended March 30, 2025 are as follows (in thousands): September 28, 2025 March 30, 2025 Beginning balance $ 642 $ 403 Provision for expected credit losses 63 275 Write offs and other 2 ( 36 ) Ending balance $ 707 $ 642 NOTE H – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following (in thousands): September 28, March 30, 2025 2025 Income taxes $ - $ 493 Real estate taxes 84 80 Insurance 91 379 Marketing 145 798 Other 363 298 Total prepaid expenses and other current assets $ 683 $ 2,048 -12- NOTE I - INTANGIBLE ASSET The Company’s definite-lived intangible asset consists of trademarks, and the trade name and other intellectual property in connection with its Arthur Treacher’s co-branding agreements. Based upon review of the current Arthur Treacher’s co-branding agreements, the Company determined that the remaining useful lives of these agreements is three years concluding in fiscal year 2028, and the intangible asset is subject to annual amortization. The Company performs an annual impairment test, or more frequently if events or changes in circumstances indicate that the intangible asset may be impaired. The Company tests for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements. Cash flow projections require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record an impairment charge in future periods and such impairment could be material. There have been no significant events or changes in circumstances during the thirteen and twenty-six week periods ended September 28, 2025 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of September 28, 2025. NOTE J - LONG LIVED ASSETS Long-lived assets on a restaurant-by-restaurant basis are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Long-lived assets include property, equipment and right-of-use assets for operating leases with finite useful lives. Assets are grouped at the individual restaurant level, which represents the lowest level for which cash flows can be identified largely independent of the cash flows of other assets and liabilities. The Company generally considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations. The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record on a restaurant-by-restaurant basis, an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering discounted estimated future cash flows from such assets. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material. There have been no significant events or changes in circumstances during the thirteen and twenty-six week periods ended September 28, 2025 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of September 28, 2025. NOTE K – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands): September 28, 2025 March 30, 2025 Payroll and other benefits $ 1,943 $ 3,269 Accrued rebates 1,061 742 Rent and occupancy costs 50 60 Deferred revenue 715 1,392 Interest 78 148 Professional fees 142 60 Sales, use and other taxes 115 33 Corporate income taxes 639 - Other 267 265 Total accrued expenses and other current liabilities $ 5,010 $ 5,969 -13- NOTE L – INCOME TAXES The effective income tax rates for the thirteen week periods ended September 28, 2025 and September 29, 2024 were 26.0 % and 25.5 %, respectively. The effective income tax rate for the thirteen weeks ended September 28, 2025 reflected $ 1,822 of income tax expense recorded on $ 7,021 of pre-tax income. The effective income tax rate for the thirteen weeks ended September 29, 2024 reflected $ 2,069 of income tax expense recorded on $ 8,099 of pre-tax income. The effective income tax rate for each of the twenty-six week periods ended September 28, 2025 and September 29, 2024 was 26.7 %. The effective income tax rate for the twenty-six weeks ended September 28, 2025 reflected $ 5,151 of income tax expense recorded on $ 19,278 of pre-tax income. The effective income tax rate for the twenty-six weeks ended September 29, 2024 reflected $ 5,576 of income tax expense recorded on $ 20,883 of pre-tax income. The effective tax rates are higher than the United States Federal statutory rates primarily due to state and local taxes, as well as non-deductible compensation under the Internal Revenue Code Section 162(m). The amount of unrecognized tax benefits included in Other liabilities at September 28, 2025 and March 30, 2025 was $ 462 and $ 532 , respectively, all of which would impact the Company’s effective rate, if recognized. As of September 28, 2025 and March 30, 2025, the Company had approximately $ 418 and $ 395 , respectively, of accrued interest and penalties in connection with unrecognized tax benefits. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OBBBA”). The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act, including 100% bonus depreciation, and the business interest expense limitation. The OBBBA did not have a material impact to our provision for income taxes for the thirteen and twenty-six weeks ended September 28, 2025. The Company is continuing to evaluate the full year impact of the OBBBA and, based on our preliminary analysis, we do not anticipate a material effect on our consolidated financial statements for the fiscal year ending March 29, 2026. NOTE M – SEGMENT INFORMATION Nathan’s considers itself to be a brand marketer of the Nathan’s Famous signature products to the foodservice industry pursuant to its various business structures. Nathan’s sells its products directly to consumers through its Restaurant Operations segment consisting of Company-owned and franchised restaurants, including virtual kitchens; to distributors that resell our products to the foodservice industry through the Branded Product Program; and by third party manufacturers pursuant to license agreements that sell our products to supermarkets, club stores and grocery 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 Condensed 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. 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. -14- Interest expense, loss on debt extinguishment and interest and dividend income 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 Condensed Consolidated Statement of Earnings (in thousands): Thirteen weeks ended September 28, 2025 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 29,047 9,227 6,847 566 45,687 Less: Cost of sales 29,590 - 2,788 - 32,378 Segment gross profit (loss) ( 543 ) 9,227 4,059 566 13,309 Less (1): Restaurant operating expenses (2) - - 1,432 - 1,432 Department expenses (3) 236 46 109 103 494 Other general and administration expenses (4) - - - 1,478 1,478 Payroll expense 270 - 360 850 1,480 Depreciation and amortization 33 - 165 38 236 Advertising fund expense - - - 687 687 Income (loss) from operations ( 1,082 ) 9,181 1,993 ( 2,590 ) 7,502 Interest expense - - - ( 739 ) ( 739 ) Interest and dividend income - - - 236 236 Other income, net - - 22 - 22 Income (loss) before provision for income taxes ( 1,082 ) 9,181 2,015 ( 3,093 ) 7,021 Thirteen weeks ended September 29, 2024 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 24,536 9,491 6,522 560 41,109 Less: Cost of sales 23,318 - 2,711 - 26,029 Segment gross profit 1,218 9,491 3,811 560 15,080 Less (1): Restaurant operating expenses (2) - - 1,389 - 1,389 Department expenses (3) 216 45 133 102 496 Other general and administration expenses (4) - - - 1,311 1,311 Payroll expense 267 - 345 833 1,445 Depreciation and amortization 38 - 163 46 247 Advertising fund expense - - - 560 560 Income (loss) from operations 697 9,446 1,781 ( 2,292 ) 9,632 Interest expense - - - ( 1,441 ) ( 1,441 ) Loss on debt extinguishment - - - ( 334 ) ( 334 ) Interest and dividend income - - - 219 219 Other income, net - - 23 - 23 Income (loss) before provision for income taxes 697 9,446 1,804 ( 3,848 ) 8,099 -15- Twenty-six weeks ended September 28, 2025 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 58,122 21,608 11,962 993 92,685 Less: Cost of sales 55,823 - 4,978 - 60,801 Segment gross profit 2,299 21,608 6,984 993 31,884 Less (1): Restaurant operating expenses (2) - - 2,611 - 2,611 Department expenses (3) 464 92 263 198 1,017 Other general and administration expenses (4) - - - 3,319 3,319 Payroll expense 574 - 727 1,765 3,066 Depreciation and amortization 67 - 322 75 464 Advertising fund expense - - - 1,114 1,114 Income (loss) from operations 1,194 21,516 3,061 ( 5,478 ) 20,293 Interest expense - - - ( 1,497 ) ( 1,497 ) Interest and dividend income - - - 439 439 Other income, net - - 43 - 43 Income (loss) before provision for income taxes 1,194 21,516 3,104 ( 6,536 ) 19,278 Twenty-six weeks ended September 29, 2024 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 50,682 22,412 11,794 988 85,876 Less: Cost of sales 46,290 - 4,980 - 51,270 Segment gross profit 4,392 22,412 6,814 988 34,606 Less (1): Restaurant operating expenses (2) - - 2,518 - 2,518 Department expenses (3) 548 91 401 202 1,242 Other general and administration expenses (4) - - - 2,928 2,928 Payroll expense 571 - 739 1,747 3,057 Depreciation and amortization 76 - 329 91 496 Advertising fund expense - - - 988 988 Income (loss) from operations 3,197 22,321 2,827 ( 4,968 ) 23,377 Interest expense - - - ( 2,501 ) ( 2,501 ) Loss on debt extinguishment - - - ( 334 ) ( 334 ) Interest and dividend income - - - 297 297 Other income, net - - 44 - 44 Income (loss) before provision for income taxes 3,197 22,321 2,871 ( 7,506 ) 20,883 (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. -16- NOTE N – SHARE-BASED COMPENSATION Total share-based compensation expense during the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024 was $ 284 and $ 229 , and $ 572 and $ 417 , respectively. Total share-based compensation expense is included in general and administrative expenses in our accompanying Condensed Consolidated Statements of Earnings. As of September 28, 2025, there was $ 2,709 of unamortized compensation expense related to share-based awards. We expect to recognize this expense over approximately thirty-two months, which represents the weighted average remaining requisite service periods for such awards. The Company recognizes compensation expense for unvested share-based awards on a straight-line basis over the requisite service period. Compensation expense recognized under all share-based awards is as follows (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Stock options $ 115 $ 60 $ 234 $ 79 Restricted stock units 169 169 338 338 Total share-based compensation expense $ 284 $ 229 $ 572 $ 417 Stock options There were no new share-based awards granted during the twenty-six week period ended September 28, 2025. Transactions with respect to stock options for the twenty-six weeks ended September 28, 2025 are as follows : Weighted Weighted Aggregate Average Average Intrinsic Exercise Remaining Value Shares Price Contractual Life (in thousands) Options outstanding at March 30, 2025 130,000 $ 74.28 4.08 $ 2,667 Granted - - - - Exercised - - - - Options outstanding at September 28, 2025 130,000 $ 74.28 3.58 $ 4,515 Options exercisable at September 28, 2025 42,500 $ 73.48 3.06 $ 1,510 Restricted stock units Transactions with respect to restricted stock units for the twenty-six weeks ended September 28, 2025 are as follows: Weighted Average Grant-date Fair value Shares Per share Unvested restricted stock units at March 30, 2025 30,000 $ 67.59 Granted - - Vested - - Unvested restricted stock units at September 28, 2025 30,000 $ 67.59 -17- NOTE O – STOCKHOLDERS’ EQUITY 1. Dividends Effective June 10, 2025, the Company’s Board of Directors (the “Board”) declared its first quarterly cash dividend of $ 0.50 per share for fiscal 2026, which was paid on July 1, 2025 to stockholders of record as of the close of business on June 23, 2025. Effective August 8, 2025, the Board declared its second quarterly cash dividend of $ 0.50 per share for fiscal 2026, which was paid on September 5, 2025 to stockholders of record as of the close of business on August 25, 2025. Effective November 6, 2025, the Board declared its third quarterly cash dividend of $ 0.50 per share for fiscal 2026 payable on December 5, 2025 to stockholders of record as of the close of business on November 24, 2025. Additionally, effective November 6, 2025, the Board also declared a special cash dividend of $ 2.50 per share to stockholders of record as of close of business on November 24, 2025 of approximately $ 10,224 payable on December 5, 2025. Our ability to pay future dividends is limited by the terms of our Credit Agreement (as defined in Note P – LONG TERM DEBT). 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 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 September 28, 2025, Nathan’s had repurchased 1,101,884 shares at a cost of $ 39,000 under the sixth stock repurchase plan. At September 28, 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. NOTE P – LONG-TERM DEBT Long-term debt consists of the following (in thousands): September 28, 2025 March 30, 2025 SOFR Term Loan Borrowings with an effective interest rate of 5.636 % and 5.825 % at September 28, 2025 and March 30, 2025, respectively. $ 49,600 $ 50,800 Less: unamortized debt issuance costs ( 291 ) ( 327 ) Total debt, net of debt issuance costs 49,309 50,473 Less: current portion of long-term debt ( 2,400 ) ( 2,400 ) Long-term debt, net $ 46,909 $ 48,073 The Company’s mandatory debt principal repayments as of September 28, 2025 were as follows (in thousands): Fiscal Year Amount Remainder of 2026 $ 1,200 2027 2,400 2028 2,400 2029 2,400 2030 41,200 Total $ 49,600 Total debt repayments through 2030 exceed the total carrying amount of the Company’s debt as of September 28, 2025 because the carrying amount reflects the unamortized portion of debt issuance costs. -18- 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 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 6.625 % Senior Secured Notes due 2025. The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes. As of September 28, 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 during the quarter ending September 29, 2024 that reflected the write-off of the remainder of the debt issuance costs on the Company’s 6.625% Secured Notes due 2025. 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 is 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 September 28, 2025 was 5.636 %. 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 September 28, 2025. The outstanding Term Loan borrowings under the Credit Agreement are payable in equal quarterly installments of 1.0 % of the original principal amount of the Term Loan, or $ 600 , which began on 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 2026. Subsequent to the quarter ending September 28, 2025, on September 30, 2025, the Company paid its next quarterly mandatory debt principal repayment of $ 600 . 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. 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 constitutes 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. -19- NOTE Q – LEASES The Company is party as lessee to various leases for land, buildings and certain office equipment for its Company-owned restaurants and corporate office, as well as a lessee/sublessor to one other property. Company as lessee The components of the net lease cost for the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024 were as follows (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Operating lease cost $ 417 $ 420 $ 855 $ 861 Variable lease cost 645 638 1,109 1,098 Less: Sublease income, net ( 21 ) ( 21 ) ( 42 ) ( 42 ) Total net lease cost $ 1,041 $ 1,037 $ 1,922 $ 1,917 The components of the net lease cost are included in the Condensed Consolidated Statements of Earnings for the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024 as follows (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Restaurant operating expenses $ 858 $ 861 $ 1,540 $ 1,548 General and administrative expenses 204 197 424 411 Less: Other income, net ( 21 ) ( 21 ) ( 42 ) ( 42 ) Total net lease cost $ 1,041 $ 1,037 $ 1,922 $ 1,917 Cash paid for amounts included in the measurement of lease liabilities for the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024 were as follows (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Operating cash flows from operating leases $ 561 $ 551 $ 1,122 $ 1,104 The weighted average remaining lease term and weighted average discount rate for operating leases as of September 28, 2025 were as follows: Weighted average remaining lease term (years): 3.1 Weighted average discount rate: 8.472 % -20- Future lease commitments to be paid and received by the Company as of September 28, 2025 were as follows (in thousands): Payments Receipts Operating Leases Subleases Net Leases Fiscal year: 2026 (a) $ 803 $ 84 $ 719 2027 1,940 281 1,659 2028 1,790 129 1,661 2029 440 - 440 2030 171 - 171 Thereafter - - - Total lease commitments $ 5,144 $ 494 $ 4,650 Less: Amount representing interest ( 580 ) Present value of lease liabilities (b) $ 4,564 (a) Represents future lease commitments to be paid and received by the Company for the remainder of the 2026 fiscal year. Amount does not include $ 920 of lease commitments paid and received by the Company for the twenty-six week period ended September 28, 2025. (b) The present value of minimum operating lease payments of $ 1,933 and $ 2,631 are included in “Current portion of operating lease liabilities” and “Long-term portion of operating lease liabilities,” respectively on the Condensed Consolidated Balance Sheet. Company as lessor The components of net lease income for the thirteen and twenty-six week periods ended September 28, 2025 and September 29, 2024 were as follows (in thousands): Thirteen weeks ended Twenty-six weeks ended September 28, 2025 September 29, 2024 September 28, 2025 September 29, 2024 Operating lease income, net $ 21 $ 21 $ 42 $ 42 NOTE R – COMMITMENTS AND CONTINGENCIES Legal Proceedings The Company and its subsidiaries are from time to time involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. Nevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include money damages and, in such event, could result in a material adverse impact on the Company’s results of operations for the period in which the ruling occurs. NOTE S – SUBSEQUENT EVENTS The Company evaluated subsequent events through the date the condensed consolidated financial statements were issued and filed with the SEC. There were no subsequent events that required recognition or disclosure. -21-