NATHANS FAMOUS, INC. 10-Q

Item 1. Financial Statements. Nathan ’ s Famous, Inc. and Subsidiaries CONDENSED CONSOLIDATED BALANCE SHEETS December 28, 2025 and March 30, 2025 (in thousands, except share and per share amounts) December 28, 2025 March 30, 2025 (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents (Note E) $ 24,545 $ 27,802 Accounts and other receivables, net (Note G) 17,726 14,064 Inventories 680 1,221 Prepaid expenses and other current assets (Note H) 995 2,048 Total current assets 43,946 45,135 Property and equipment, net of accumulated depreciation of $ 12,859 and $ 12,295 , respectively 1,886 2,114 Operating lease right-of-use assets, net (Note Q) 3,937 4,987 Goodwill 95 95 Intangible asset, net (Note I) 391 522 Deferred income taxes 599 510 Other assets 85 113 Total assets $ 50,939 $ 53,476 LIABILITIES AND STOCKHOLDERS’ DEFICIT CURRENT LIABILITIES Current portion of long-term debt (Note P) $ 2,400 $ 2,400 Accounts payable 6,067 6,163 Accrued expenses and other current liabilities (Note K) 5,477 5,969 Current portion of operating lease liabilities (Note Q) 1,937 1,923 Deferred franchise fees 216 309 Total current liabilities 16,097 16,764 Long-term debt, net of unamortized debt issuance costs of $ 274 and $ 327 , respectively (Note P) 46,326 48,073 Long-term portion of operating lease liabilities (Note Q) 2,320 3,528 Other liabilities 906 927 Deferred franchise fees 557 697 Total liabilities 66,206 69,989 COMMITMENTS AND CONTINGENCIES (Note R) STOCKHOLDERS’ DEFICIT Common stock, $ .01 par value; 30,000,000 shares authorized; 9,383,920 and 9,379,025 shares issued; and 4,094,405 and 4,089,510 shares outstanding at December 28, 2025 and March 30, 2025, respectively 94 94 Additional paid-in capital 63,885 63,492 Retained earnings 7,416 6,563 Stockholders’ equity before treasury stock 71,395 70,149 Treasury stock, at cost, 5,289,515 shares at December 28, 2025 and March 30, 2025, respectively ( 86,662 ) ( 86,662 ) Total stockholders’ deficit ( 15,267 ) ( 16,513 ) Total liabilities and stockholders’ deficit $ 50,939 $ 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 Thirty-nine weeks ended December 28, 2025 and December 29, 2024 (in thousands, except per share amounts) (Unaudited) Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 REVENUES Branded Products $ 23,749 $ 21,099 $ 81,871 $ 71,781 Company-owned restaurants 1,646 1,804 11,256 11,351 License royalties 7,385 7,105 28,993 29,517 Franchise fees and royalties 1,020 991 3,372 3,238 Advertising fund revenue 512 520 1,505 1,508 Total revenues 34,312 31,519 126,997 117,395 COSTS AND EXPENSES Cost of sales 23,138 19,571 83,939 70,841 Restaurant operating expenses 907 991 3,518 3,509 Depreciation and amortization 232 235 696 731 General and administrative expenses 4,396 3,450 11,798 10,677 Advertising fund expense 512 520 1,626 1,508 Total costs and expenses 29,185 24,767 101,577 87,266 Income from operations 5,127 6,752 25,420 30,129 Interest expense ( 707 ) ( 842 ) ( 2,204 ) ( 3,343 ) Loss on debt extinguishment (Note P) - ( 55 ) - ( 389 ) Interest and dividend income 206 183 645 480 Other income, net 122 21 165 65 Income before provision for income taxes 4,748 6,059 24,026 26,942 Provision for income taxes 1,664 1,575 6,815 7,151 Net income $ 3,084 $ 4,484 $ 17,211 $ 19,791 PER SHARE INFORMATION Weighted average shares used in computing net income per share: Basic 4,090 4,086 4,090 4,085 Diluted 4,119 4,093 4,124 4,092 Net income per share: Basic $ 0.75 $ 1.10 $ 4.21 $ 4.84 Diluted $ 0.75 $ 1.10 $ 4.17 $ 4.84 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 December 28, 2025 and December 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, September 28, 2025 9,379,025 $ 94 $ 64,064 $ 16,601 5,289,515 $ ( 86,662 ) $ ( 5,903 ) Shares issued in connection with share-based compensation plans 4,895 - - - - - - Withholding tax on net share settlement of share-based compensation plans - - ( 459 ) - - - ( 459 ) Dividends on common stock ($ 3.00 per share) - - - ( 12,269 ) - - ( 12,269 ) Share-based compensation - - 280 - - - 280 Net income - - - 3,084 - - 3,084 Balance, December 28, 2025 9,383,920 $ 94 $ 63,885 $ 7,416 5,289,515 $ ( 86,662 ) $ ( 15,267 ) Additional Total Common Common Paid-in Retained Treasury Stock, at Cost Stockholders’ Shares Stock Capital Earnings Shares Amount Deficit Balance, September 29, 2024 9,374,130 $ 94 $ 63,353 $ 1,931 5,289,515 $ ( 86,662 ) $ ( 21,284 ) 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 ($ 0.50 per share) - - - ( 2,042 ) - - ( 2,042 ) Share-based compensation - - 288 - - - 288 Net income - - - 4,484 - - 4,484 Balance, December 29, 2024 9,379,025 $ 94 $ 63,204 $ 4,373 5,289,515 $ ( 86,662 ) $ ( 18,991 ) 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 Thirty-nine weeks ended December 28, 2025 and December 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 ) Shares issued in connection with share-based compensation plans 4,895 - - - - - - Withholding tax on net share settlement of share-based compensation plans - - ( 459 ) - - - ( 459 ) Dividends on common stock ($ 4.00 per share) - - - ( 16,358 ) - - ( 16,358 ) Share-based compensation - - 852 - - - 852 Net income - - - 17,211 - - 17,211 Balance, December 28, 2025 9,383,920 $ 94 $ 63,885 $ 7,416 5,289,515 $ ( 86,662 ) $ ( 15,267 ) Additional Retained 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 ($ 1.50 per share) - - - ( 6,127 ) - - ( 6,127 ) Share-based compensation - - 705 - - - 705 Net income - - - 19,791 - - 19,791 Balance, December 29, 2024 9,379,025 $ 94 $ 63,204 $ 4,373 5,289,515 $ ( 86,662 ) $ ( 18,991 ) 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 Thirty-nine weeks ended December 28, 2025 and December 29, 2024 (in thousands) (Unaudited) December 28, 2025 December 29, 2024 Cash flows from operating activities: Net income $ 17,211 $ 19,791 Adjustments to reconcile net income to net cash provided by operating activities: Loss on debt extinguishment - 389 Depreciation and amortization 696 731 Amortization of debt issuance costs 53 139 Share-based compensation expense 852 705 Provision for expected credit losses 63 53 Deferred income taxes ( 89 ) ( 50 ) Changes in operating assets and liabilities: Accounts and other receivables, net ( 3,725 ) ( 66 ) Inventories 541 254 Prepaid expenses and other current assets 1,053 1,064 Other assets 28 21 Operating lease assets and liabilities ( 144 ) ( 117 ) Accounts payable, accrued expenses and other current liabilities ( 593 ) ( 4,335 ) Deferred franchise fees ( 233 ) ( 200 ) Other liabilities ( 21 ) 71 Net cash provided by operating activities 15,692 18,450 Cash flows from investing activities: Purchase of property and equipment ( 332 ) ( 171 ) Net cash used in investing activities ( 332 ) ( 171 ) Cash flows from financing activities: Proceeds from Credit Facility - 60,000 Repayment of Senior Secured Notes - ( 60,000 ) Repayment of Credit Facility ( 1,800 ) ( 8,600 ) Debt issuance costs - ( 431 ) Dividends paid to stockholders ( 16,358 ) ( 6,127 ) Payments of withholding tax on net share settlement of share-based compensation plans ( 459 ) ( 437 ) Net cash used in financing activities ( 18,617 ) ( 15,595 ) Net (decrease) increase in cash and cash equivalents ( 3,257 ) 2,684 Cash and cash equivalents, beginning of period 27,802 21,027 Cash and cash equivalents, end of period $ 24,545 $ 23,711 Cash paid during the period for: Interest $ 2,249 $ 4,727 Income taxes $ 5,893 $ 6,263 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 December 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 thirty-nine week periods ended December 28, 2025 and December 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”). 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. 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. 8 In December 2025, the FASB issued ASU 2025-11, “ Interim Reporting (Topic 270): Narrow-Scope Improvements, ” which clarifies the applicability of the interim reporting guidance and provides a comprehensive list of required interim disclosures. The Update also incorporates a disclosure principle that requires entities to disclose events that occur since the end of the last annual reporting period that have a material impact on the entity. The Update will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Update should be applied either (1) prospectively to financial statements for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. For the Company, interim reporting requirements will be effective 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 the accompanying condensed consolidated financial statements. NOTE C – REVENUES The Company’s disaggregated revenues for the thirteen and thirty-nine weeks ended December 28, 2025 and December 29, 2024 are as follows (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Branded Products $ 23,749 $ 21,099 $ 81,871 $ 71,781 Company-owned restaurants 1,646 1,804 11,256 11,351 License royalties 7,385 7,105 28,993 29,517 Franchise royalties 906 897 3,045 2,944 Franchise fees 114 94 327 294 Advertising fund revenue 512 520 1,505 1,508 Total revenues $ 34,312 $ 31,519 $ 126,997 $ 117,395 The following table disaggregates revenues by primary geographical market (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 United States $ 33,480 $ 30,659 $ 124,275 $ 114,419 International 832 860 2,722 2,976 Total revenues $ 34,312 $ 31,519 $ 126,997 $ 117,395 Contract balances The following table provides information about contract liabilities from contracts with customers (in thousands): December 28, 2025 March 30, 2025 Deferred franchise fees (a) $ 773 $ 1,006 Deferred revenues, which are included in “Accrued expenses and other current liabilities” (b) $ 250 $ 1,392 (a) Deferred franchise fees of $ 216 and $ 557 as of December 28, 2025 and $ 309 and $ 697 as of March 30, 2025 are included in Deferred franchise fees – current and long term, respectively. (b) Includes $ 250 of deferred advertising fund revenue as of December 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): Thirty-nine weeks ended December 28, 2025 December 29, 2024 Deferred franchise fees at beginning of period $ 1,006 $ 1,226 New deferrals due to cash received and other 94 94 Revenue recognized during the period ( 327 ) ( 294 ) Deferred franchise fees at end of period $ 773 $ 1,026 Significant changes in deferred revenues are as follows (in thousands): Thirty-nine weeks ended December 28, 2025 December 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 ( 1,642 ) ( 1,625 ) Deferred revenues at end of period $ 250 $ 250 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) $ 74 2027 191 2028 100 2029 72 2030 52 Thereafter 284 Total $ 773 (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 $ 327 of franchise fee revenue recognized for the thirty-nine weeks ended December 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 thirty-nine week periods ended December 28, 2025 and December 29, 2024, respectively. Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Net income $ 3,084 $ 4,484 $ 17,211 $ 19,791 Common Stock: Weighted average basic shares outstanding 4,090,000 4,086,000 4,090,000 4,085,000 Effect of dilutive share-based awards 29,000 7,000 34,000 7,000 Weighted average diluted shares outstanding 4,119,000 4,093,000 4,124,000 4,092,000 Net income per share: Basic $ 0.75 $ 1.10 $ 4.21 $ 4.84 Diluted $ 0.75 $ 1.10 $ 4.17 $ 4.84 Anti-dilutive share-based awards - 120,000 - 120,000 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 $ 16,280 and $ 19,400 at December 28, 2025 and March 30, 2025, respectively. At December 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 December 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): December 28, March 30, 2025 2025 Branded product sales $ 14,110 $ 10,534 Franchise and license royalties 3,617 3,902 Other 711 270 18,438 14,706 Less: allowance for credit losses ( 712 ) ( 642 ) Accounts and other receivables, net $ 17,726 $ 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 thirty-nine week period ended December 28, 2025 and the fiscal year ended March 30, 2025 are as follows (in thousands): December 28, 2025 March 30, 2025 Beginning balance $ 642 $ 403 Provision for expected credit losses 63 275 Write offs and other 7 ( 36 ) Ending balance $ 712 $ 642 NOTE H – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following (in thousands): December 28, March 30, 2025 2025 Income taxes $ - $ 493 Real estate taxes 160 80 Insurance 284 379 Marketing 291 798 Other 260 298 Total prepaid expenses and other current assets $ 995 $ 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 thirty-nine week periods ended December 28, 2025 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of December 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 thirty-nine week periods ended December 28, 2025 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of December 28, 2025. NOTE K – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following (in thousands): December 28, March 30, 2025 2025 Payroll and other benefits $ 2,530 $ 3,269 Accrued rebates 989 742 Rent and occupancy costs 28 60 Deferred revenue 250 1,392 Interest 50 148 Professional fees 828 60 Sales, use and other taxes 26 33 Corporate income taxes 539 - Other 237 265 Total accrued expenses and other current liabilities $ 5,477 $ 5,969 NOTE L – INCOME TAXES The effective income tax rates for the thirteen weeks ended December 28, 2025 and December 29, 2024 were 35.0 % and 26.0 %, respectively. The effective income tax rate for the thirteen weeks ended December 28, 2025 reflected $ 1,664 of income tax expense recorded on $ 4,748 of pre-tax income. The effective income tax rate for the thirteen weeks ended December 29, 2024 reflected $ 1,575 of income tax expense recorded on $ 6,059 of pre-tax income. 13 The effective income tax rates for the thirty-nine weeks ended December 28, 2025 and December 29, 2024 were 28.4 % and 26.5 %, respectively. The effective income tax rate for the thirty-nine weeks ended December 28, 2025 reflected $ 6,815 of income tax expense recorded on $ 24,026 of pre-tax income. The effective income tax rate for the thirty-nine weeks ended December 29, 2024 reflected $ 7,151 of income tax expense recorded on $ 26,942 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 effective income tax rates for the thirteen and thirty-nine weeks ended December 28, 2025 included unfavorable discrete tax adjustments of 5.3 % and 1.0 %, respectively, for non-deductible transaction costs. The amount of unrecognized tax benefits included in Other liabilities at December 28, 2025 and March 30, 2025 was $ 491 and $ 532 , respectively, all of which would impact the Company’s effective tax rate, if recognized. As of December 28, 2025 and March 30, 2025, the Company had approximately $ 438 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 thirty-nine weeks ended December 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 December 28, 2025 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 23,749 7,385 2,666 512 34,312 Less: Cost of sales 21,943 - 1,195 - 23,138 Segment gross profit 1,806 7,385 1,471 512 11,174 Less (1): Restaurant operating expenses (2) - - 907 - 907 Department expenses (3) 254 46 147 89 536 Other general and administration expenses (4) - - - 2,385 2,385 Payroll expense 262 - 341 872 1,475 Depreciation and amortization 33 - 160 39 232 Advertising fund expense - - - 512 512 Income (loss) from operations 1,257 7,339 ( 84 ) ( 3,385 ) 5,127 Interest expense - - - ( 707 ) ( 707 ) Interest and dividend income - - - 206 206 Other income, net - - 122 - 122 Income (loss) before provision for income taxes 1,257 7,339 38 ( 3,886 ) 4,748 Thirteen weeks ended December 29, 2024 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 21,099 7,105 2,795 520 31,519 Less: Cost of sales 18,336 - 1,235 - 19,571 Segment gross profit 2,763 7,105 1,560 520 11,948 Less (1): Restaurant operating expenses (2) - - 991 - 991 Department expenses (3) 245 46 153 112 556 Other general and administration expenses (4) - - - 1,403 1,403 Payroll expense 274 - 346 871 1,491 Depreciation and amortization 35 - 156 44 235 Advertising fund expense - - - 520 520 Income (loss) from operations 2,209 7,059 ( 86 ) ( 2,430 ) 6,752 Interest expense - - - ( 842 ) ( 842 ) Loss on debt extinguishment - - - ( 55 ) ( 55 ) Interest and dividend income - - - 183 183 Other income, net - - 21 - 21 Income (loss) before provision for income taxes 2,209 7,059 ( 65 ) ( 3,144 ) 6,059 15 Thirty-nine weeks ended December 28, 2025 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 81,871 28,993 14,628 1,505 126,997 Less: Cost of sales 77,766 - 6,173 - 83,939 Segment gross profit 4,105 28,993 8,455 1,505 43,058 Less (1): Restaurant operating expenses (2) - - 3,518 - 3,518 Department expenses (3) 718 138 410 287 1,553 Other general and administration expenses (4) - - - 5,704 5,704 Payroll expense 836 - 1,068 2,637 4,541 Depreciation and amortization 100 - 482 114 696 Advertising fund expense - - - 1,626 1,626 Income (loss) from operations 2,451 28,855 2,977 ( 8,863 ) 25,420 Interest expense - - - ( 2,204 ) ( 2,204 ) Interest and dividend income - - - 645 645 Other income, net - - 165 - 165 Income (loss) before provision for income taxes 2,451 28,855 3,142 ( 10,422 ) 24,026 Thirty-nine weeks ended December 29, 2024 Branded Product Program Product Licensing Restaurant Operations Corporate Total Revenues 71,781 29,517 14,589 1,508 117,395 Less: Cost of sales 64,626 - 6,215 - 70,841 Segment gross profit 7,155 29,517 8,374 1,508 46,554 Less (1): Restaurant operating expenses (2) - - 3,509 - 3,509 Department expenses (3) 793 137 554 314 1,798 Other general and administration expenses (4) - - - 4,331 4,331 Payroll expense 845 - 1,085 2,618 4,548 Depreciation and amortization 111 - 485 135 731 Advertising fund expense - - - 1,508 1,508 Income (loss) from operations 5,406 29,380 2,741 ( 7,398 ) 30,129 Interest expense - - - ( 3,343 ) ( 3,343 ) Loss on debt extinguishment - - - ( 389 ) ( 389 ) Interest and dividend income - - - 480 480 Other income, net - - 65 - 65 Income (loss) before provision for income taxes 5,406 29,380 2,806 ( 10,650 ) 26,942 (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 during the thirteen and thirty-nine week periods ended December 28, 2025 and December 29, 2024 was $ 280 and $ 288 , and $ 852 and $ 705 , respectively. Total share-based compensation is included in general and administrative expenses in our accompanying Condensed Consolidated Statements of Earnings. As of December 28, 2025, there was $ 2,429 of unamortized compensation expense related to share-based awards. We expect to recognize this expense over approximately thirty months, which represents the weighted average remaining requisite service periods for such awards. 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 is as follows (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Stock options $ 111 $ 119 $ 345 $ 198 Restricted stock units 169 169 507 507 Total share-based compensation expense $ 280 $ 288 $ 852 $ 705 There were no new share-based awards granted during the thirty-nine week period ended December 28, 2025. Stock options: Transactions with respect to stock options for the thirty-nine weeks ended December 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 December 28, 2025 130,000 $ 74.28 3.33 $ 2,600 Options exercisable at December 28, 2025 42,500 $ 73.48 2.81 $ 884 Restricted stock units: Transactions with respect to restricted stock units for the thirty-nine weeks ended December 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 ( 10,000 ) $ 67.59 Unvested restricted stock units at December 28, 2025 20,000 $ 67.59 17 NOTE O– STOCKHOLDERS’ EQUITY 1. Dividends On July 1, 2025, September 5, 2025 and December 5, 2025, the Company paid quarterly dividends of $ 0.50 per share. Additionally, on December 5, 2025, the Company also paid a special cash dividend of $ 2.50 per share. Through December 28, 2025, the Company paid dividends aggregating $ 16,358 . Our ability to pay future dividends is limited by the terms of our Merger Agreement (as defined in NOTE S – SUBSEQUENT EVENTS). Pursuant to the Merger Agreement, the Company is permitted to declare and pay two regular quarterly cash dividends each in the amount of $ 0.50 per share of the Company’s common stock during the period pending the closing of the proposed transaction with Smithfield Foods, Inc. Effective February 5, 2026, as permitted under the Merger Agreement, the Board of Directors (the “Board”) declared its fourth quarterly cash dividend of $ 0.50 per share for fiscal 2026 payable on February 27, 2026 to stockholders of record as of the close of business on February 17, 2026. 2. Stock Repurchase Program In 2016, the Board authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company. As of December 28, 2025, Nathan’s had repurchased 1,101,884 shares at a cost of $ 39,000 under the sixth stock repurchase plan. At December 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): December 28, 2025 March 30, 2025 SOFR Term Loan Borrowings with an effective interest rate of 5.234 % and 5.825 % at December 28, 2025 and March 30, 2025, respectively $ 49,000 $ 50,800 Less: unamortized debt issuance costs ( 274 ) ( 327 ) Total debt, net of debt issuance costs 48,726 50,473 Less: current portion of long-term debt ( 2,400 ) ( 2,400 ) Long-term debt, net $ 46,326 $ 48,073 The Company’s mandatory debt principal repayments as of December 28, 2025 were as follows (in thousands): Fiscal Year Amount Remainder of 2026 $ 600 2027 2,400 2028 2,400 2029 2,400 2030 41,200 Total $ 49,000 Total debt repayments through 2030 exceed the total carrying amount of the Company’s debt as of December 28, 2025 because the carrying amount reflects the unamortized portion of debt issuance costs. 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). 18 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 December 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 in fiscal 2025 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. During the third quarter of fiscal 2025, the Company made a voluntary 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 cost on the Term Loan borrowings. 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 December 28, 2025 was 5.234 %. 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 December 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 $ 1,800 during fiscal 2026 and $ 1,200 during fiscal 2025. Subsequent to the quarter ending December 28, 2025, on December 31, 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. As previously announced, on January 20, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Smithfield Foods, Inc., a Virginia corporation (“Buyer”) and Boardwalk Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Buyer (“Merger Sub”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof and in accordance with the General Corporation Law of the State of Delaware (“DGCL”), Merger Sub shall merge with and into the Company (the “Merger,” and the effective time of the Merger, the “Effective Time”). Pursuant to the Merger Agreement, the Buyer at the Effective Time shall pay all outstanding obligations under the Credit Facility. 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. The Company previously leased and subleased one property; this arrangement was terminated on November 4, 2025. In connection with the termination, the Company received $ 84,000 in settlement income which is included in Other income, net on the Condensed Consolidated Statements of Earnings. Company as lessee The components of the net lease cost for the thirteen and thirty-nine week periods ended December 28, 2025 and December 29, 2024 were as follows (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Operating lease cost $ 389 $ 392 $ 1,244 $ 1,253 Variable lease cost 464 470 1,573 1,568 Less: Sublease income, net ( 7 ) ( 21 ) ( 49 ) ( 63 ) Total net lease cost $ 846 $ 841 $ 2,768 $ 2,758 The components of the net lease cost are included in the Condensed Consolidated Statements of Earnings for the thirteen and thirty-nine week periods ended December 28, 2025 and December 29, 2024 as follows (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Restaurant operating expenses $ 646 $ 659 $ 2,186 $ 2,207 General and administrative expenses 207 203 631 614 Less: Other income, net ( 7 ) ( 21 ) ( 49 ) ( 63 ) Total net lease cost $ 846 $ 841 $ 2,768 $ 2,758 Cash paid for amounts included in the measurement of lease liabilities for the thirteen and thirty-nine week periods ended December 28, 2025 and December 29, 2024 were as follows (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Operating cash flows from operating leases $ 402 $ 391 $ 1,524 $ 1,495 The weighted average remaining lease term and weighted average discount rate for operating leases as of December 28, 2025 were as follows: Weighted average remaining lease term (years): 2.8 Weighted average discount rate: 8.459 % 20 Future lease commitments to be paid and received by the Company as of December 28, 2025 were as follows (in thousands): Payments Receipts Operating Leases Subleases Net Leases Fiscal year: 2026 (a) $ 402 $ - $ 402 2027 1,940 112 1,828 2028 1,790 115 1,675 2029 440 - 440 2030 171 - 171 Total lease commitments $ 4,743 $ 227 $ 4,516 Less: Amount representing interest ( 486 ) Present value of lease liabilities (b) $ 4,257 (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 $ 1,302 of lease commitments paid and received by the Company for the thirty-nine week period ended December 28, 2025. (b) The present value of minimum operating lease payments of $ 1,937 and $ 2,320 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 thirty-nine week periods ended December 28, 2025 and December 29, 2024 were as follows (in thousands): Thirteen weeks ended Thirty-nine weeks ended December 28, 2025 December 29, 2024 December 28, 2025 December 29, 2024 Operating lease income, net $ 7 $ 21 $ 49 $ 63 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. Service Provider Agreement The Company engaged a financial advisor in connection with the Merger Agreement as defined and disclosed in NOTE S – SUBSEQUENT EVENTS to assist the Company and to provide certain advisory services. In connection with this arrangement, the Company may be required to pay such financial advisor certain contingent fees related to their services to the extent that certain conditions are met. The contingent fees related to the arrangement are based on (i) a fixed fee that is due upon the delivery of a fairness opinion and (ii) a percentage fee based upon the aggregate transaction value net of the fixed fee in (i) above payable upon the closing of the transaction contemplated by the Merger Agreement. For the thirteen and thirty-nine weeks ended December 28, 2025, the Company did not record any advisory fee. NOTE S – SUBSEQUENT EVENTS As previously announced, on January 20, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Smithfield Foods, Inc., a Virginia corporation (“Buyer”) and Boardwalk Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Buyer (“Merger Sub”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof and in accordance with the General Corporation Law of the State of Delaware (“DGCL”), Merger Sub shall merge with and into the Company (the “Merger,” and the effective time of the Merger, the “Effective Time”). As a result of the Merger, at the Effective Time, the separate corporate existence of Merger Sub shall cease, the Company shall continue as the surviving corporation in the Merger (the “Surviving Corporation”) and the Surviving Corporation shall become a wholly owned subsidiary of Buyer. After the Merger, the Company will cease to be publicly traded. 21 At the Effective Time, as a result of the Merger and without any action on the part of Buyer, Merger Sub, the Company or the holders of any of the following securities: (i) each share of common stock of the Company, par value $ 0.01 per share (“Company Shares”), issued and outstanding immediately prior to the Effective Time, other than shares to be cancelled in accordance with the terms of the Merger Agreement and shares owned by holders that have exercised their appraisal rights under the DGCL, shall be converted into the right to receive cash in an amount equal to $ 102.00 without interest (the “Per Share Merger Consideration”), less any applicable withholding tax, payable to the holder in accordance with the terms of the Merger Agreement, (ii) each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully paid, non-assessable share of common stock, par value $ 0.01 per share, of the Surviving Corporation, and (iii) any Company Shares owned or held in treasury by the Company and any Company Shares owned by Buyer, Merger Sub or any of their respective affiliates immediately prior to the Effective Time shall automatically be cancelled and shall cease to exist and no consideration shall be delivered in exchange for such cancellation or retirement. From and after the Effective Time, all Company Shares converted into the right to receive the Per Share Merger Consideration shall no longer be issued and outstanding and shall automatically be cancelled and cease to exist. Immediately prior to the Effective Time, (i) each option to purchase Company Shares outstanding under a Company Stock Plan (each a “Company Stock Option”), whether or not vested and exercisable, that is outstanding and unexercised immediately prior to the Effective Time, shall be automatically converted into the right to receive from Buyer or the Surviving Corporation an amount in cash (subject to applicable withholding taxes) equal to the product obtained by multiplying (A) the excess, if any, of the Per Share Merger Consideration over the per share exercise price of such Company Stock Option, by (B) the aggregate number of Company Shares that were issuable upon exercise of such Company Stock Option immediately prior to the Effective Time and (ii) each restricted stock unit of the Company granted and outstanding pursuant to a Company Stock Plan (each a “Company RSU”) shall be deemed to have been earned and become fully vested (in the case of any performance based award, with the applicable performance metrics at the target level), shall be canceled and extinguished as of the Effective Time and, in exchange, each former holder of any such Company RSU shall have the right to receive from Buyer or the Surviving Corporation an amount in cash equal to the product obtained by multiplying (A) the number of Company Shares subject to such Company RSU by (B) the Per Share Merger Consideration (such amount, the “RSU Award Payment”). Any dividend equivalents earned prior to the Effective Time will be paid in cash as soon as administratively practicable following settlement of the Company RSUs. From and after the Effective Time, each Company RSU shall no longer represent the right to receive Company Shares by the former holder thereof, but shall only entitle such holder to the payment of the RSU Award Payment. The Compensation Committee of the Company Board will adopt resolutions to provide that all Company Stock Options and Company RSUs shall terminate conditioned upon, and effective immediately prior to, the Effective Time and the holders thereof will be entitled only to the amount, if any, specified herein in respect thereof. The Company has also agreed not to, among other things, (i) solicit, initiate, knowingly encourage or knowingly facilitate any alternative competing transaction, (ii) participate in any discussions or negotiations with any third party with respect to any alternative competing transaction, (iii) approve or recommend any alternative competing transaction, (iv) enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, share purchase agreement, asset purchase agreement, share exchange agreement, option agreement or other similar definitive agreement relating to an alternative competing transaction or (v) propose or agree to do any of the foregoing. Notwithstanding the foregoing customary “no-shop” restrictions, if prior to obtaining the Company Stockholder Approval (as defined in the Merger Agreement) the Company receives an unsolicited written Acquisition Proposal (as defined in the Merger Agreement) from a third party and the Company Board determines in good faith that (x) such Acquisition Proposal constitutes or could be reasonably expected to result in a Superior Proposal (as defined in the Merger Agreement) and (y) the failure to take the actions set forth in clauses (i) and (ii) of this paragraph would be inconsistent with its fiduciary duties under law, the Company may, in response to such Acquisition Proposal, (i) furnish Company information and access to the third party making such Acquisition Proposal and (ii) participate in discussions or negotiations with such third party with respect to such Acquisition Proposal, or otherwise cooperate with or assist or participate in, or facilitate, any such discussions or negotiations. The consummation of the Merger is subject to certain closing conditions, including but not limited to (a) receipt of the Company Stockholder Approval, (b) that no law or governmental order prohibits, restrains, enjoins or makes illegal the consummation of the Merger, (c) that any waiting period (and any extension thereof) applicable to the Merger and the other transactions under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 have terminated or expired and (d) that the parties have obtained CFIUS Clearance (as defined in the Merger Agreement) for the Merger. Each of Buyer’s, Merger Sub’s, and the Company’s obligation to consummate the Merger is also subject to certain additional conditions, including (i) subject to certain materiality standards, the accuracy of the representations and warranties of the other party or parties, (ii) performance in all material respects by the other party or parties of its or their obligations under the Merger Agreement and (iii) with respect to Buyer’s and Merger Sub’s obligations to consummate the Merger, the absence of a Company Material Adverse Effect (as defined in the Merger Agreement) with respect to the Company. 22 The Merger Agreement also contains certain termination provisions for the Company and Buyer, including the right of the Company, in certain circumstances, to terminate the Merger Agreement and accept a Superior Proposal. The Company will be required to pay Buyer a termination fee in cash equal to $ 10,581,814 if the Merger Agreement is terminated (a) by Buyer because the Company Board changed its recommendation of the Merger, (b) by Buyer or the Company if the approval of the Company’s stockholders is not obtained at the Stockholders’ Meeting and the Company Board previously changed its recommendation of the Merger or (c) (i) by Buyer or the Company following June 22, 2026, subject to extension to October 20, 2026 in accordance with the Merger Agreement (the “End Date”), (ii) by Buyer or the Company because of failure to obtain the approval of the stockholders at the Stockholders’ Meeting or (iii) by Buyer because of certain breaches of the Merger Agreement by the Company, only if, in the case of clauses (i) to (iii), an Acquisition Proposal has been made publicly and within nine (9) months of the termination date the Company consummates or enters into a definitive agreement for an Acquisition Proposal. Upon the election of the Company, the Company and Smithfield Packaged Meats Corp., an affiliate of Buyer (“SPMC”), will enter into an amendment to the licensing and supply letter agreement, dated as of December 5, 2012 (the “Licensing Agreement”), by and between Nathan’s Famous Systems, Inc., a subsidiary of the Company, and SPMC, which will extend the term of the Licensing Agreement for an additional four years to March 2, 2036 from the current expiration date of March 2, 2032, and Buyer will be required to pay the Company a termination fee in cash equal to $ 7,407,270 if the Merger Agreement is terminated (a) because of a CFIUS Turndown (as defined in the Merger Agreement) and the Company is not in material breach of the Merger Agreement at the time of termination or (b) following the End Date if, at such time, (i) a government order or other government action would have prevented the consummation of the Merger (solely as it relates to CFIUS) or the parties have not received CFIUS Clearance, (ii) certain other closing conditions have been satisfied, (iii) the Company's breach of the provisions of the Merger Agreement to obtain certain consents and approvals is not the primary cause of a government order or other government action that would prevent the consummation of the Merger and (iv) the Company is not in material breach of the Merger Agreement at the time of termination. On January 20, 2026, the Company entered into letter agreements (each a “Retention Agreement”) with each of Eric Gatoff, Chief Executive Officer of the Company, and Robert Steinberg, the Chief Financial Officer of the Company. Under the Retention Agreements, each such individual is entitled to a cash retention bonus payment if (1) such individual is actively employed by the Company or a subsidiary as of closing under the Merger Agreement and has not given notice of his intent to resign or (2) the individual is terminated by the Company for any reason and closing under the Merger Agreement later occurs. The retention bonus payment amount is $ 3,250,000 for Mr. Gatoff and $ 1,050,000 for Mr. Steinberg. As consideration for the retention bonus payment, Mr. Gatoff agreed to non-competition provisions that apply for one (1) year following the termination of his employment by the Company for any reason. 23