{"url_path":"/sec/nath/10-k/2026/item-16","section_key":"item-16","section_title":"Item 16 **         **Form 10-K Summary.**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-09","source_url":"https://www.sec.gov/Archives/edgar/data/69733/0001437749-26-019923-index.html","accession_number":"0001437749-26-019923","cik":"0000069733","ticker":"NATH","issuer_name":"NATHANS FAMOUS, INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/69733/0001437749-26-019923-index.html","primary_entity_key":"0000069733","primary_entity_name":"NATHANS FAMOUS, INC."},"word_count":17217,"has_tables":true,"body_markdown":"**Item 16.**         **Form 10-K Summary.**\n\n \n\nNone.\n\n \n\n58\n\n \n\n \n\n**SIGNATURES**\n\n \n\nPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on the 9th day of June, 2026.\n\n \n\nNathan’s Famous, Inc.\n\n \n\n/s/ ERIC GATOFF\n\nEric Gatoff\n\nChief Executive Officer\n\n(Principal Executive Officer)\n\n \n\nPursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on the 9th day of June, 2026.\n\n \n\n/s/ ERIC GATOFF\n\nEric Gatoff\n\nChief Executive Officer\n\n(Principal Executive Officer)\n\n \n\n/s/ HOWARD LORBER\n\nHoward Lorber\n\nExecutive Chairman\n\n \n\n/s/ ROBERT STEINBERG\n\nRobert Steinberg\n\nVice President - Finance and Chief Financial Officer\n\n(Principal Financial and Accounting Officer)\n\n \n\n/s/ WAYNE NORBITZ\n\nWayne Norbitz, Director\n\n \n\n/s/ ROBERT J. EIDE\n\nRobert J. Eide, Director\n\n \n\n/s/ BARRY LEISTNER\n\nBarry Leistner, Director\n\n \n\n/s/ BRIAN GENSON\n\nBrian Genson, Director\n\n \n\n/s/ ATTILIO F. PETROCELLI\n\nAttilio F. Petrocelli, Director\n\n \n\n/s/ CHARLES RAICH\n\nCharles Raich, Director\n\n \n\n/s/ ANDREW LEVINE\n\nAndrew Levine, Director\n\n \n\n/s/ JOANNE PODELL\n\nJoanne Podell, Director\n\n \n\n \n\n59\n\n \n\n \n\n \n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\n**TABLE OF CONTENTS**\n\n \n\n \n\n \n\n \n\n \n\nPage\n\n \n \n\nReport of Independent Registered Public Accounting Firm (PCAOB ID: 199)\n\nF-2\n\n \n \n\nConsolidated Balance Sheets\n\nF-3\n\n \n \n\nConsolidated Statements of Earnings\n\nF-4\n\n \n \n\nConsolidated Statements of Changes in Stockholders’ Deficit\n\nF-5– F-6\n\n \n \n\nConsolidated Statements of Cash Flows\n\nF-7\n\n \n \n\nNotes to Consolidated Financial Statements\n\nF-8\n\n \n \n\n \n\n \n\nF-1\n\n \n\n \n\n**Report of Independent Registered Public Accounting Firm**\n\n \n\n \n\nTo the Stockholders and Board of Directors of\n\nNathan’s Famous, Inc.\n\n \n\n \n\n**Opinion on the Financial Statements**\n\n \n\nWe have audited the accompanying consolidated balance sheets of Nathan’s Famous, Inc. and Subsidiaries (the “Company”) as of March 29, 2026 and March 30, 2025, the related consolidated statements of earnings, changes in stockholders’ deficit and cash flows for the fifty-two week periods ended March 29, 2026 and March 30, 2025, and the related notes ****(collectively referred to as the “financial statements”).\n\n \n\nIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 29, 2026 and March 30, 2025, and the results of its operations and its cash flows for the fifty-two week periods ended March 29, 2026 and March 30, 2025, in conformity with accounting principles generally accepted in the United States of America**.**\n\n \n\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (\"PCAOB\"), the Company's internal control over financial reporting as of March 29, 2026, based on****criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated June 9, 2026*,*expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.\n\n \n\n**Basis for Opinion**\n\n \n\nThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n \n\n**Critical Audit Matters**\n\n \n\nCritical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.\n\n \n\n \n\n \n\n \n\n/s/ CBIZ CPAS P.C.\n\n \n\n**CBIZ CPAs P.C.**\n\n \n\nWe have served as the Company’s auditor since 2018 (such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024.)\n\n \n\n \n\nNew York, New York\n\nJune 9, 2026\n\n \n\nF-2\n\n \n\n \n\n \n\n**Nathan’s Famous, Inc. and Subsidiaries**\n\n \n\n**CONSOLIDATED BALANCE SHEETS**\n\n(in thousands, except share and per share amounts)\n\n \n\n \n \n\n**March 29, 2026**\n\n \n \n\nMarch 30, 2025\n\n \n\nASSETS\n \n \n \n \n \n \n \n \n\nCURRENT ASSETS\n\n \n \n \n \n \n \n \n \n\nCash and cash equivalents\n\n \n**$**\n**24,404**\n \n \n$\n27,802\n \n\nAccounts and other receivables, net (Note D)\n\n \n** **\n**19,841**\n \n \n \n14,064\n \n\nInventories\n\n \n** **\n**891**\n \n \n \n1,221\n \n\nPrepaid expenses and other current assets (Note E)\n\n \n** **\n**1,984**\n \n \n \n2,048\n \n\nTotal current assets\n\n \n** **\n**47,120**\n \n \n \n45,135\n \n\n \n \n \n \n \n \n \n \n \n\nProperty and equipment, net of accumulated depreciation of $12,225 and $12,295, respectively (Note F)\n\n \n** **\n**1,733**\n \n \n \n2,114\n \n\nOperating lease right-of-use assets, net (Note K)\n\n \n** **\n**3,672**\n \n \n \n4,987\n \n\nGoodwill\n\n \n** **\n**95**\n \n \n \n95\n \n\nIntangible asset, net\n\n \n** **\n**348**\n \n \n \n522\n \n\nDeferred income taxes (Note H)\n\n \n** **\n**598**\n \n \n \n510\n \n\nOther assets\n\n \n** **\n**85**\n \n \n \n113\n \n\n \n \n \n \n \n \n \n \n \n\nTotal assets\n\n \n**$**\n**53,651**\n \n \n$\n53,476\n \n\n \n \n \n \n \n \n \n \n \n\nLIABILITIES AND STOCKHOLDERS’ DEFICIT\n\n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n\nCURRENT LIABILITIES\n\n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n\nCurrent portion of long-term debt (Note J)\n\n \n**$**\n**2,400**\n \n \n$\n2,400\n \n\nAccounts payable\n\n \n** **\n**7,904**\n \n \n \n6,163\n \n\nAccrued expenses and other current liabilities (Note G)\n\n \n** **\n**6,466**\n \n \n \n5,969\n \n\nCurrent portion of operating lease liabilities (Note K)\n\n \n** **\n**1,940**\n \n \n \n1,923\n \n\nDeferred franchise fees\n\n \n** **\n**192**\n \n \n \n309\n \n\nTotal current liabilities\n\n \n** **\n**18,902**\n \n \n \n16,764\n \n\n \n \n \n \n \n \n \n \n \n\nLong-term debt, net of unamortized debt issuance costs of $257 and $327, respectively (Note J)\n\n \n** **\n**45,743**\n \n \n \n48,073\n \n\nLong-term portion of operating lease liabilities (Note K)\n\n \n** **\n**2,003**\n \n \n \n3,528\n \n\nOther liabilities\n\n \n** **\n**717**\n \n \n \n927\n \n\nDeferred franchise fees\n\n \n** **\n**509**\n \n \n \n697\n \n\n \n \n \n \n \n \n \n \n \n\nTotal liabilities\n\n \n** **\n**67,874**\n \n \n \n69,989\n \n\n \n \n \n \n \n \n \n \n \n\nCOMMITMENTS AND CONTINGENCIES (Note M)\n\n \n \n\n \n \n \n\n \n\n \n \n \n \n \n \n \n \n \n\nSTOCKHOLDERS’ DEFICIT\n\n \n \n \n \n \n \n \n \n\nCommon stock, $.01 par value; 30,000,000 shares authorized; 9,383,920 and 9,379,025 shares issued; and 4,094,405 and 4,089,510 shares outstanding at March 29, 2026 and March 30, 2025, respectively\n\n \n** **\n**94**\n \n \n \n94\n \n\nAdditional paid-in capital\n\n \n** **\n**64,165**\n \n \n \n63,492\n \n\nRetained earnings\n\n \n** **\n**8,180**\n \n \n \n6,563\n \n\nStockholders’ equity before treasury stock\n\n \n** **\n**72,439**\n \n \n \n70,149\n \n\n \n \n \n \n \n \n \n \n \n\nTreasury stock, at cost, 5,289,515****shares at March 29, 2026 and March 30, 2025\n\n \n** **\n**(86,662**\n**)**\n \n \n(86,662\n)\n\nTotal stockholders’ deficit\n\n \n** **\n**(14,223**\n**)**\n \n \n(16,513\n)\n\n \n \n \n \n \n \n \n \n \n\nTotal liabilities and stockholders’ deficit\n\n \n**$**\n**53,651**\n \n \n$\n53,476\n \n\n \n\n*The accompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-3\n\n \n\n \n\n \n\n**Nathan’s Famous, Inc. and Subsidiaries**\n\n \n\n**CONSOLIDATED STATEMENTS OF EARNINGS**\n\n(in thousands, except share and per share amounts)\n\n \n\n \n \n\n**Fifty-Two**\n\n \n \n\nFifty-Two\n\n \n\n \n \n\n**weeks ended**\n\n \n \n\nweeks ended\n\n \n\n \n \n\n**March 29, 2026**\n\n \n \n\nMarch 30, 2025\n\n \n\nREVENUES\n\n \n \n \n \n \n \n \n \n\nBranded Products\n\n \n**$**\n**105,768**\n \n \n$\n91,828\n \n\nCompany-owned restaurants\n\n \n** **\n**12,508**\n \n \n \n12,714\n \n\nLicense royalties\n\n \n** **\n**37,417**\n \n \n \n37,418\n \n\nFranchise fees and royalties\n\n \n** **\n**4,317**\n \n \n \n4,148\n \n\nAdvertising fund revenue\n\n \n** **\n**2,053**\n \n \n \n2,074\n \n\nTotal revenues\n\n \n** **\n**162,063**\n \n \n \n148,182\n \n\n \n \n \n \n \n \n \n \n \n\nCOSTS AND EXPENSES\n\n \n \n \n \n \n \n \n \n\nCost of sales\n\n \n** **\n**106,519**\n \n \n \n89,707\n \n\nRestaurant operating expenses\n\n \n** **\n**4,417**\n \n \n \n4,379\n \n\nDepreciation and amortization\n\n \n** **\n**925**\n \n \n \n957\n \n\nGeneral and administrative expenses\n\n \n** **\n**17,903**\n \n \n \n14,530\n \n\nAdvertising fund expense\n\n \n** **\n**2,197**\n \n \n \n2,112\n \n\nTotal costs and expenses\n\n \n** **\n**131,961**\n \n \n \n111,685\n \n\n \n \n \n \n \n \n \n \n \n\nIncome from operations\n\n \n** **\n**30,102**\n \n \n \n36,497\n \n\n \n \n \n \n \n \n \n \n \n\nInterest expense\n\n \n** **\n**(2,857**\n**)**\n \n \n(4,106\n)\n\nLoss on debt extinguishment (NOTE J)\n\n \n** **\n**-**\n \n \n \n(389\n)\n\nInterest and dividend income\n\n \n** **\n**780**\n \n \n \n672\n \n\nOther income, net\n\n \n** **\n**165**\n \n \n \n87\n \n\n \n \n \n \n \n \n \n \n \n\nIncome before provision for income taxes\n\n \n** **\n**28,190**\n \n \n \n32,761\n \n\nProvision for income taxes\n\n \n** **\n**8,170**\n \n \n \n8,735\n \n\nNet income\n\n \n**$**\n**20,020**\n \n \n$\n24,026\n \n\n \n \n \n \n \n \n \n \n \n\nPER SHARE INFORMATION\n\n \n \n \n \n \n \n \n \n\nWeighted average shares used in computing net income per share:\n\n \n \n \n \n \n \n \n \n\nBasic\n\n \n** **\n**4,091,000**\n \n \n \n4,086,000\n \n\nDiluted\n\n \n** **\n**4,124,000**\n \n \n \n4,095,000\n \n\n \n \n \n \n \n \n \n \n \n\nNet income per share:\n\n \n \n \n \n \n \n \n \n\nBasic\n\n \n**$**\n**4.89**\n \n \n$\n5.88\n \n\nDiluted\n\n \n**$**\n**4.85**\n \n \n$\n5.87\n \n\n \n\n*The accompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-4\n\n \n\n \n\n \n\n**Nathan’s Famous, Inc. and Subsidiaries**\n\n \n\n**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS**’**DEFICIT**\n\nFifty-two weeks ended March 29, 2026 and the Fifty-two weeks ended March 30, 2025\n\n \n\n(in thousands, except share and per share amounts)\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRetained\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n \n \n \n \n \n \n \n \n\nAdditional\n\n \n \n\nEarnings\n\n \n \n \n \n \n \n \n \n \n \n\nTotal\n\n \n\n \n \n\nCommon\n\n \n \n\nCommon\n\n \n \n\nPaid-in\n\n \n \n\n(Accumulated\n\n \n \n\nTreasury Stock, at Cost\n\n \n \n\nStockholders’\n\n \n\n \n \n\nShares\n\n \n \n\nStock\n\n \n \n\nCapital\n\n \n \n\nDeficit)\n\n \n \n\nShares\n\n \n \n\nAmount\n\n \n \n\nDeficit\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBalance, March 31, 2024\n\n \n \n9,374,130\n \n \n$\n94\n \n \n$\n62,936\n \n \n$\n(9,291\n)\n \n \n5,289,515\n \n \n$\n(86,662\n)\n \n$\n(32,923\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nShares issued in connection with share-based compensation plans\n\n \n \n4,895\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nWithholding tax on net share settlement of share-based compensation plans\n\n \n \n-\n \n \n \n-\n \n \n \n(437\n)\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(437\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nDividends on common stock ($2.00 per share)\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(8,172\n)\n \n \n-\n \n \n \n-\n \n \n \n(8,172\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nShare-based compensation\n\n \n \n-\n \n \n \n-\n \n \n \n993\n \n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n993\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet income\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n24,026\n \n \n \n-\n \n \n \n-\n \n \n \n24,026\n \n\nBalance, March 30, 2025\n\n \n \n9,379,025\n \n \n$\n94\n \n \n$\n63,492\n \n \n$\n6,563\n \n \n \n5,289,515\n \n \n$\n(86,662\n)\n \n$\n(16,513\n)\n\n \n\n*The accompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-5\n\n \n\n \n\n**Nathan’s Famous, Inc. and Subsidiaries**\n\n \n\n**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS**’**DEFICIT**\n\nFifty-two weeks ended March 29, 2026 and the Fifty-two weeks ended March 30, 2025\n\n \n\n(in thousands, except share and per share amounts)\n\n \n\n \n \n \n \n \n \n \n \n \n \n\nAdditional\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nTotal\n\n \n\n \n \n\nCommon\n\n \n \n\nCommon\n\n \n \n\nPaid-in\n\n \n \n\nRetained\n\n \n \n\nTreasury Stock, at Cost\n\n \n \n\nStockholders’\n\n \n\n \n \n\nShares\n\n \n \n\nStock\n\n \n \n\nCapital\n\n \n \n\nEarnings\n\n \n \n\nShares\n\n \n \n\nAmount\n\n \n \n\nDeficit\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Balance, March 30, 2025**\n\n \n** **\n**9,379,025**\n \n \n**$**\n**94**\n \n \n**$**\n**63,492**\n \n \n**$**\n**6,563**\n \n \n** **\n**5,289,515**\n \n \n**$**\n**(86,662**\n**)**\n \n**$**\n**(16,513**\n**)**\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Shares issued in connection with share-based compensation plans**\n\n \n** **\n**4,895**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Withholding tax on net share settlement of share-based compensation plans**\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**(459**\n**)**\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**(459**\n**)**\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Dividends on common stock ($4.50 per share)**\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**(18,403**\n**)**\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**(18,403**\n**)**\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Share-based compensation**\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**1,132**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**1,132**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Net income**\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**20,020**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**20,020**\n \n\n**Balance, March 29, 2026**\n\n \n** **\n**9,383,920**\n \n \n**$**\n**94**\n \n \n**$**\n**64,165**\n \n \n**$**\n**8,180**\n \n \n** **\n**5,289,515**\n \n \n**$**\n**(86,662**\n**)**\n \n**$**\n**(14,223**\n**)**\n\n \n\n*The accompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-6\n\n \n\n \n\n \n\n**Nathan’s Famous, Inc. and Subsidiaries**\n\n \n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n(in thousands)\n\n \n\n \n \n\n**Fifty-Two**\n\n \n \n\nFifty-Two\n\n \n\n \n \n\n**weeks ended**\n\n \n \n\nweeks ended\n\n \n\n \n \n\n**March 29, 2026**\n\n \n \n\nMarch 30, 2025\n\n \n\nCash flows from operating activities:\n\n \n \n \n \n \n \n \n \n\nNet income\n\n \n**$**\n**20,020**\n \n \n$\n24,026\n \n\nAdjustments to reconcile net income to net cash provided by operating activities\n\n \n \n \n \n \n \n \n \n\nLoss on debt extinguishment\n\n \n** **\n**-**\n \n \n \n389\n \n\nDepreciation and amortization\n\n \n** **\n**925**\n \n \n \n957\n \n\nAmortization of debt issuance costs\n\n \n** **\n**70**\n \n \n \n153\n \n\nShare-based compensation expense\n\n \n** **\n**1,132**\n \n \n \n993\n \n\nProvision for expected credit losses\n\n \n** **\n**129**\n \n \n \n275\n \n\nDeferred income taxes\n\n \n** **\n**(88**\n**)**\n \n \n(235\n)\n\nChanges in operating assets and liabilities:\n\n \n \n \n \n \n \n \n \n\nAccounts and other receivables, net\n\n \n** **\n**(5,906**\n**)**\n \n \n392\n \n\nInventories\n\n \n** **\n**330**\n \n \n \n(379\n)\n\nPrepaid expenses and other current assets\n\n \n** **\n**64**\n \n \n \n128\n \n\nOther assets\n\n \n** **\n**28**\n \n \n \n28\n \n\nOperating lease assets and liabilities\n\n \n** **\n**(193**\n**)**\n \n \n(157\n)\n\nAccounts payable, accrued expenses and other current liabilities\n\n \n** **\n**2,238**\n \n \n \n(1,227\n)\n\nDeferred franchise fees\n\n \n** **\n**(305**\n**)**\n \n \n(220\n)\n\nOther liabilities\n\n \n** **\n**(210**\n**)**\n \n \n117\n \n\n \n \n \n \n \n \n \n \n \n\nNet cash provided by operating activities\n\n \n** **\n**18,234**\n \n \n \n25,240\n \n\n \n \n \n \n \n \n \n \n \n\nCash flows from investing activities:\n\n \n \n \n \n \n \n \n \n\nPurchases of property and equipment, net\n\n \n** **\n**(370**\n**)**\n \n \n(225\n)\n\n \n \n \n \n \n \n \n \n \n\nNet cash used in investing activities\n\n \n** **\n**(370**\n**)**\n \n \n(225\n)\n\n \n \n \n \n \n \n \n \n \n\nCash flows from financing activities:\n\n \n \n \n \n \n \n \n \n\nProceeds from Credit Facility\n\n \n** **\n**-**\n \n \n \n60,000\n \n\nRepayment of Senior Secured Notes\n\n \n** **\n**-**\n \n \n \n(60,000\n)\n\nRepayment of Credit Facility\n\n \n** **\n**(2,400**\n**)**\n \n \n(9,200\n)\n\nDebt issuance costs\n\n \n** **\n**-**\n \n \n \n(431\n)\n\nDividends paid to stockholders\n\n \n** **\n**(18,403**\n**)**\n \n \n(8,172\n)\n\nPayments of withholding tax on net share settlement of share-based compensation plans\n\n \n** **\n**(459**\n**)**\n \n \n(437\n)\n\n \n \n \n \n \n \n \n \n \n\nNet cash used in financing activities\n\n \n** **\n**(21,262**\n**)**\n \n \n(18,240\n)\n\n \n \n \n \n \n \n \n \n \n\nNet (decrease) increase in cash and cash equivalents\n\n \n** **\n**(3,398**\n**)**\n \n \n6,775\n \n\n \n \n \n \n \n \n \n \n \n\nCash and cash equivalents, beginning of year\n\n \n** **\n**27,802**\n \n \n \n21,027\n \n\n \n \n \n \n \n \n \n \n \n\nCash and cash equivalents, end of year\n\n \n**$**\n**24,404**\n \n \n$\n27,802\n \n\n \n \n \n \n \n \n \n \n \n\nCash paid during the year for:\n\n \n \n \n \n \n \n \n \n\nInterest\n\n \n**$**\n**2,885**\n \n \n$\n5,481\n \n\nIncome taxes\n\n \n**$**\n**8,186**\n \n \n$\n8,489\n \n\n \n\n*The accompanying notes are an integral part of these consolidated financial statements.*\n\n \n\nF-7\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE A - DESCRIPTION AND ORGANIZATION OF BUSINESS**\n\n \n\nNathan’s Famous, Inc. and subsidiaries (collectively the “Company” or “Nathan’s”) has historically operated or franchised a chain of retail fast food restaurants featuring the “Nathan’s World Famous Beef Hot Dog”, crinkle-cut French-fried potatoes and a variety of other menu offerings. Nathan’s has also established a Branded Product Program, which enables foodservice retailers to sell select Nathan’s proprietary products outside of the realm of a traditional franchise relationship. Nathan’s also licenses the manufacture and sale of “Nathan’s Famous” packaged hot dogs, crinkle-cut French fries and a number of other products to a variety of third parties for sale to supermarkets, club stores and grocery stores. The Company is also the owner of the Arthur Treacher’s Fish & Chips brand. Arthur Treacher’s main product is its \"Original Fish & Chips\" product consisting of fish fillets coated with a special batter prepared under a proprietary formula, deep-fried golden brown, and served with English-style chips and corn meal \"hush puppies.\" The Company considers itself to be a brand marketer of its products to the foodservice and retail industries, pursuant to its various business structures. Nathan’s has also pursued co-branding and co-hosting initiatives.\n\n \n\nAt March 29, 2026, the Company’s restaurant system included four Company-owned restaurants (including one seasonal unit) in the New York City metropolitan area and 221 franchised units, located in 19****states and 11****foreign countries.\n\n \n\n*Pending Merger with Smithfield Foods, Inc.*\n\n \n\nOn January 20, 2026, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Smithfield Foods, Inc., a Virginia corporation (“Buyer”), and Boardwalk Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Buyer (“Merger Sub”). Pursuant to the Merger Agreement, and subject to the satisfaction of the conditions thereof, 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 the 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 the Buyer. See NOTE N – MERGER for additional information.\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\nThe following significant accounting policies have been applied in the preparation of the consolidated financial statements:\n\n \n\n*1.*\n\n*Principles of Consolidation*\n\n \n\nThe accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission and include the accounts of the Company and all of its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.\n\n \n\nF-8\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*2.*\n\n*Fiscal Year*\n\n \n\nThe Company’s fiscal year ends on the last Sunday in March, which results in a 52 or 53 week reporting period. The fiscal years ended March 29, 2026 and March 30, 2025 were on the basis of a 52-week reporting period. All references to years and quarters relate to fiscal periods rather than calendar periods.\n\n \n\n*3.*\n\n*Use of Estimates*\n\n \n\nThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates made by management in preparing the consolidated financial statements include the valuation of long lived assets, the valuation of an intangible asset, the allowance for credit losses, customer rebates and the accounting for income taxes. On an ongoing basis, the Company evaluates its estimates based on historical experience, current conditions and other assumptions under the circumstances. Actual results could differ from those estimates.\n\n \n\n*4.*\n\n*Cash and Cash Equivalents*\n\n \n\nCash 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 $17,703 and $20,401 at March 29, 2026 and March 30, 2025, respectively.\n\n \n\nAt March 29, 2026 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.\n\n \n\n*5.*\n\n*Inventories*\n\n \n\nInventories, which are stated at the lower of cost or net realizable value, consist primarily of food, beverages, and paper supplies. Cost is determined using the first-in, first-out method.\n\n \n\nF-9\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*6.*\n\n*Property and Equipment*\n\n \n\nProperty and equipment are stated at cost less accumulated depreciation and amortization. Major improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. Depreciation and amortization are calculated on the straight-line basis over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the estimated useful life or the remaining lease term of the related asset. The estimated useful lives are as follows:\n\n \n\nBuilding and improvements (years)\n\n \n5\n-\n25\n \n\nMachinery, equipment, furniture and fixtures (years)\n\n \n3\n-\n15\n \n\nLeasehold improvements (years)\n\n \n5\n-\n20\n \n\n \n\n*7.*\n\n*Goodwill and Intangible Asset*\n\n \n\nGoodwill and intangible assets consist of (i) goodwill of $95 resulting from the acquisition of Nathan’s in 1987; and (ii) trademarks, and the trade name and other intellectual property of $348 in connection with the Arthur Treacher’s brand.\n\n \n\nGoodwill is not amortized, but is tested for impairment annually as of the last day of our fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired. As of March 29, 2026 and March 30, 2025 the Company performed its annual quantitative impairment test of goodwill and has determined no impairment is deemed to exist.\n\n \n\nBased upon the review of the current Arthur Treacher’s co-branding agreements, the Company determined that the remaining useful lives of these agreements is two years concluding in fiscal year 2028, and the intangible asset is subject to annual amortization. The Company has recorded amortization expense of $174 for the fiscal year ended March 29, 2026 and estimates that our annual amortization expense will approximate $174 for each of the next two fiscal years.\n\n \n\nThe Company’s definite-lived intangible asset is tested for impairment at least annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company tested for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements. Based on the quantitative test performed, the Company determined that the definite-lived intangible asset was recoverable and no impairment charge was recorded for the fiscal years ended March 29, 2026 and March 30, 2025. 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.\n\n \n\nF-10\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*8.*\n\n*Long-lived Assets*\n\n \n\nLong-lived assets on Company-owned restaurants are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.\n\n \n\nLong-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.\n\n \n\nThe Company tests for recoverability based on the projected undiscounted cash flows to be derived from such asset groups. If the projected undiscounted future cash flows are less than the carrying value of the asset groups, 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 groups . The Company generally measures fair value by considering discounted estimated future cash flows from such asset groups. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material. No long-lived assets were deemed impaired during the fiscal years ended March 29, 2026 and March 30, 2025.\n\n \n\n*9.*\n\n*Leases*\n\n \n\n*Determination of Whether a Contract Contains a Lease*\n\n \n\nWe determine if an arrangement is a lease at inception or modification of a contract and classify each lease as either an operating or finance lease at commencement. The Company only reassesses lease classifications subsequent to commencement upon a change to the expected lease term or the contract being modified. Operating leases represent the Company’s right to use an underlying asset as lessee for the lease term, and lease obligations represent the Company’s obligation to make lease payments arising from the lease.\n\n \n\nF-11\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*ROU Model and Determination of Lease Term*\n\n \n\nThe Company uses the right-of-use (“ROU”) model to account for leases where the Company is the lessee, which requires an entity to recognize a lease liability and ROU asset on the lease commencement date. A lease liability is measured equal to the present value of the remaining lease payments over the lease term and is discounted using the incremental borrowing rate, as the rate implicit in the Company’s leases is not readily determinable. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease payments include payments made before the commencement date and any residual value guarantees, if applicable. The initial ROU asset consists of the initial measurement of the lease liability, adjusted for any payments made before the commencement date, initial direct costs and lease incentives earned. When determining the lease term, as both lessee and lessor, the Company includes option periods when it is reasonably certain that those options will be exercised.\n\n \n\n*Significant Assumptions and Judgement*\n\n \n\nManagement makes certain estimates and assumptions regarding each new lease and sublease agreement, renewal and amendment, including, but not limited to, property values, market rents, property lives, discount rates and probable term, all of which can impact (1) the classification and accounting for a lease or sublease as operating or finance, (2) the Rent Holiday and escalations in payment that are taken into consideration when calculating Straight-Line Rent, (3) the term over which leasehold improvements for each restaurant are amortized and (4) the values and lives of adjustments to the initial ROU asset where the Company is the lessee, or favorable and unfavorable leases where the Company is the lessor. The amount of depreciation and amortization, interest and rent expense and income would vary if different estimates and assumptions were used.\n\n \n\nF-12\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*Operating Leases*\n\n \n\nFor operating leases, minimum lease payments or receipts, including minimum scheduled rent increases, are recognized as rent expense where the Company is a lessee, or income where the Company is a lessor, as applicable, on a straight-line basis (“Straight-Line Rent”) over the applicable lease terms. There is a period under certain lease agreements referred to as a rent holiday (“Rent Holiday”) that generally begins on the possession date and ends on the rent commencement date. During a Rent Holiday, no cash rent payments are typically due under the terms of the lease; however, rent expense is recorded for that period on a straight-line basis. The excess of the Straight-Line Rent over the minimum rents paid is included in the ROU asset where the Company is a lessee. The excess of the Straight-Line Rent over the minimum rents received is recorded as a deferred lease asset and is included in “Other Assets” where the Company is a lessor. There was no deferred lease asset recorded at March 29, 2026. The Company recorded $15 in Other Assets at March 30, 2025. Certain leases contain provisions, referred to as contingent rent (“Contingent Rent”), that require additional rental payments based upon restaurant sales volume. Certain leases may include rent escalations based on inflation indexes. Subsequent escalations subject to such an index and contingent rental payments are recognized as variable lease expense in the period incurred.\n\n \n\nLease cost for operating leases is recognized on a straight-line basis and includes the amortization of the ROU asset and interest expense relating to the operating lease liability. Variable lease cost for operating leases include Contingent Rent and payments for executory costs such as real estate taxes, insurance and common area maintenance, which are excluded from the measurement of the lease liability. Short-term lease cost for operating leases includes rental expense for leases with a term of less than 12 months. Leases with an initial expected term of 12 months or less are not recorded in the Consolidated Balance Sheets and the related lease expense is recognized on a straight-line basis over the lease term. Lease costs are recorded in the Consolidated Statements of Earnings based on the nature of the underlying leases as follows: (1) rental expense related to leases for Company-owned restaurants is recorded to “Restaurant operating expenses,” (2) rental expense for leased properties that are subsequently subleased to franchisees is recorded to “Other income, net” and (3) rental expense related to leases for corporate offices and equipment is recorded to “General and administrative expenses.”\n\n \n\nRental income for operating leases on properties subleased to franchisees is recorded net of associated lease costs to “Other income, net.” The Company previously leased and sub-leased one property; this arrangement was terminated in November 2025. In connection with the termination, the Company received $84 in settlement income which is included in Other income, net on the Consolidated Statement of Earnings.\n\n \n\nF-13\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*10.*\n\n*Fair Value of Financial Instruments*\n\n \n\nFair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price).\n\n \n\nThe fair value hierarchy, as outlined in the applicable accounting guidance, is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable.  Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. \n\n \n\nThe fair value hierarchy consists of the following three levels:\n\n \n\n \n\n●\n\nLevel 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market\n\n \n\n \n\n●\n\nLevel 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\n\n \n\n \n\n●\n\nLevel 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\n\n \n\nThe use of observable market inputs (quoted market prices) when measuring fair value and, specifically, the use of Level 1 quoted prices to measure fair value are required whenever possible. The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures quarterly and based on various factors, it is possible that an asset or liability may be classified differently from year to year.\n\n \n\nAt March 29, 2026 and March 30, 2025, we did not have any assets or liabilities that were recorded at fair value.\n\n \n\nThe carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term nature of those items.\n\n \n\nThe carrying amount of our long-term debt (see NOTE J – LONG TERM DEBT) also approximates fair value since such borrowings bear interest at variable market rates and is categorized as Level 2.\n\n \n\nF-14\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nThe majority of the Company’s non-financial assets and liabilities are not required to be carried at fair value on a recurring basis. However, the Company is required on a non-recurring basis to use fair value measurements when analyzing asset impairment as it relates to goodwill and its other definite-lived asset and long-lived assets. The Company utilized the income approach (Level 3 inputs) which utilized projected undiscounted cash flows in performing its annual impairment testing of the Company’s intangible asset and long-lived assets.\n\n \n\n*11.*\n\n*Start-up Costs*\n\n \n\nPre-opening and similar restaurant costs are expensed as incurred and are included in “Restaurant operating expenses” in the accompanying Consolidated Statement of Earnings.\n\n \n\n*12.*\n\n*Revenue Recognition - Branded Product Program*****\n\n \n\nThe Company recognizes sales from the Branded Product Program and certain products sold from the Branded Menu Program upon delivery to Nathan’s customers via third party common carrier. Rebates provided to customers are classified as a reduction to sales.\n\n \n\n*13.*\n\n*Revenue Recognition - Company-owned Restaurants*\n\n \n\nSales by Company-owned restaurants, which are typically paid in cash or with credit card by the customer, are recognized at the point of sale when food and beverage items are sold. Sales are presented net of sales tax collected from customers and remitted to governmental taxing authorities.\n\n \n\n*14.*\n\n*Revenue Recognition - License Royalties*\n\n \n\nThe Company earns revenue from royalties on the licensing of the use of its intellectual property in connection with certain products produced and sold by outside vendors. The use of the Company’s intellectual property must be approved by the Company prior to each specific application to ensure proper quality and a consistent image. Revenue from license royalties is generally based on a percentage of sales, subject to certain annual minimum royalties, and is recognized on a monthly basis when it is earned and deemed collectible.\n\n \n\n*15.*\n\n*Revenue Recognition - Franchising Operations*\n\n \n\nIn connection with its franchising operations, the Company receives initial franchise fees, international development fees, royalties, and in certain cases, revenue from sub-leasing restaurant properties to franchisees.\n\n \n\nF-15\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nThe following services are typically provided by the Company prior to the opening of a franchised restaurant:\n\n \n\n \n\n●\n\nApproval of all site selections to be developed.\n\n \n\n●\n\nProvision of architectural plans suitable for restaurants to be developed.\n\n \n\n●\n\nAssistance in establishing building design specifications, reviewing construction compliance and equipping the restaurant.\n\n \n\n●\n\nProvision of appropriate menus to coordinate with the restaurant design and locations to be developed.\n\n \n\n●\n\nProvision of management training for the new franchisee and selected staff.\n\n \n\n●\n\nAssistance with the initial operations of restaurants being developed.\n\n \n\nThe services provided in exchange for these upfront restaurant franchise fees do not contain separate and distinct performance obligations from the franchising right and these initial franchise fees, renewal fees and transfer fees are deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement.\n\n \n\nThe services provided in exchange for these international development fees do not contain separate and distinct performance obligations from the franchising right and these international development fees are deferred and recognized over the term of each respective agreement, or upon termination of the franchise agreement. Certain other costs, such as legal expenses, are expensed as incurred.\n\n \n\nThe Company recognizes franchise royalties on a monthly basis, which are generally based upon a percentage of sales made by the Company’s franchisees, including virtual kitchens, when they are earned and deemed collectible.\n\n \n\nThe Company recognizes royalty revenue from its Branded Menu Program directly from the sale of Nathan’s products by its distributors or directly from the manufacturers.\n\n \n\nFranchise fees and royalties that are subsequently deemed to be not collectible are recorded as bad debts until paid by the franchisee or until collectability is deemed to be reasonably assured.\n\n \n\nF-16\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nThe following is a summary of franchise openings and closings (excluding virtual kitchens) for the Nathan’s franchise restaurant system for the fiscal years ended March 29, 2026 and March 30, 2025:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nFranchised restaurants operating at the beginning of the period\n\n \n** **\n**230**\n \n \n \n230\n \n\n \n \n \n \n \n \n \n \n \n\nFranchised restaurants opened during the period\n\n \n** **\n**23**\n \n \n \n25\n \n\n \n \n \n \n \n \n \n \n \n\nFranchised restaurants closed during the period\n\n \n** **\n**(32**\n**)**\n \n \n(25\n)\n\n \n \n \n \n \n \n \n \n \n\nFranchised restaurants operating at the end of the period\n\n \n** **\n**221**\n \n \n \n230\n \n\n \n\n*Contract balances*\n\n \n\nThe following table provides information about contract liabilities from contracts with customers:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nDeferred franchise fees (a)\n\n \n**$**\n**701**\n \n \n$\n1,006\n \n\nDeferred revenues, which are included in\n\n \n \n \n \n \n \n \n \n\n“Accrued expenses and other current liabilities” (b)\n\n \n**$**\n**1,315**\n \n \n$\n1,392\n \n\n \n\n \n\n(a)\n\nDeferred franchise fees of $192** **and $509 as of March 29, 2026 and $309 and $697 as of March 30, 2025 are included in Deferred franchise fees – current and long term, respectively.\n\n \n\n(b)\n\nIncludes $815 of deferred license royalties and $500 of deferred advertising fund revenue as of March 29, 2026 and $892 of deferred license royalties and $500 of deferred advertising fund revenue as of March 30, 2025.\n\n \n\nSignificant changes in deferred franchise fees for the fiscal years ended March 29, 2026 and March 30, 2025 are as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nDeferred franchise fees at beginning of period\n\n \n**$**\n**1,006**\n \n \n$\n1,226\n \n\nNew deferrals due to cash received and other\n\n \n** **\n**115**\n \n \n \n161\n \n\nRevenue recognized during the period\n\n \n** **\n**(420**\n**)**\n \n \n(381\n)\n\nDeferred franchise fees at end of period\n\n \n**$**\n**701**\n \n \n$\n1,006\n \n\n \n\nF-17\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nSignificant changes in deferred revenues for the fiscal years ended March 29, 2026 and March 30, 2025 are as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nDeferred revenues at beginning of period\n\n \n**$**\n**1,392**\n \n \n$\n1,375\n \n\nNew deferrals due to cash received and other\n\n \n** **\n**2,484**\n \n \n \n2,577\n \n\nRevenue recognized during the period\n\n \n** **\n**(2,561**\n**)**\n \n \n(2,560\n)\n\nDeferred revenues at end of period\n\n \n**$**\n**1,315**\n \n \n$\n1,392\n \n\n \n\n*Anticipated future recognition of deferred franchise fees*\n\n \n\nThe following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period:\n\n \n\n \n \n\n**Estimate for fiscal year**\n\n \n\n2027\n\n \n**$**\n**192**\n \n\n2028\n\n \n** **\n**105**\n \n\n2029\n\n \n** **\n**76**\n \n\n2030\n\n \n** **\n**57**\n \n\n2031\n\n \n** **\n**39**\n \n\nThereafter\n\n \n** **\n**232**\n \n\nTotal\n\n \n**$**\n**701**\n \n\n \n\nWe have applied the optional exemption, as provided for under ASC Topic 606, “*Revenues from Contracts with Customers,*”**which allows us not to disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.\n\n \n\n*16.*\n\n*Revenue Recognition*–*National Advertising Fund*\n\n \n\nThe Company maintains a national advertising fund (the “Advertising Fund”) established to collect and administer funds contributed for use in advertising and promotional programs for Company-owned and franchised restaurants.\n\n \n\nThe revenue, expenses and cash flows of the Advertising Fund are fully consolidated into the Company’s Consolidated Statements of Earnings and Statements of Cash Flows.\n\n \n\nF-18\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nWhile this treatment impacts the gross amount of reported advertising fund revenue and related expenses, the impact is expected to approximately offset the increase to both revenue and expense, with minimal impact to income from operations or net income because the Company attempts to manage the Advertising Fund to breakeven over the course of the fiscal year. However, any surplus or deficit in the Advertising Fund will impact income from operations and net income.\n\n \n\n*17.*\n\n*Business Concentrations and Geographical Information*\n\n \n\nThe Company’s accounts receivable consists principally of receivables from franchisees, including virtual kitchens, for royalties and advertising contributions, from sales under the Branded Product Program, and from royalties from retail licensees. At March 29, 2026, three****Branded Product customers represented 25%, 17% and 11%, of accounts receivable. At March 30, 2025, three Branded Product customers represented 18%, 14% and 12%, of accounts receivable. One Branded Product customer accounted for 23% and 20% of total revenue for each of the fiscal years ended March 29, 2026 and March 30, 2025, respectively. One retail licensee accounted for 21% and 24% of the total revenue for the fiscal years ended March 29, 2026 and March 30, 2025, respectively.\n\n \n\nThe Company’s primary supplier of hot dogs represented 97% and 96% of product purchases for each of the fiscal years ended March 29, 2026 and March 30, 2025, respectively. The Company’s primary distributor of products to its Company-owned restaurants represented 2% and 3% of product purchases for each of the fiscal years ended March 29, 2026 and March 30, 2025, respectively. If a disruption of service from a primary supplier or distributor was to occur, we could experience short-term increases in our costs while supply or distribution channels were adjusted.\n\n \n\nThe Company’s revenues for the fiscal years ended March 29, 2026 and March 30, 2025 were derived from the following geographic areas:\n\n \n\n \n \n\n**March 29,**\n\n**2026**\n\n \n \n\nMarch 30,\n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nUnited States\n\n \n**$**\n**158,620**\n \n \n$\n144,318\n \n\nInternational\n\n \n** **\n**3,443**\n \n \n \n3,864\n \n\nTotal revenues\n\n \n**$**\n**162,063**\n \n \n$\n148,182\n \n\n \n\nF-19\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nThe Company’s revenues for the fiscal years ended March 29, 2026 and March 30, 2025 were derived from the following:\n\n \n\n \n \n\n**March 29,**\n\n**2026**\n\n \n \n\nMarch 30,\n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nBranded Products\n\n \n**$**\n**105,768**\n \n \n$\n91,828\n \n\nCompany-owned restaurants\n\n \n** **\n**12,508**\n \n \n \n12,714\n \n\nLicense royalties\n\n \n** **\n**37,417**\n \n \n \n37,418\n \n\nFranchise royalties\n\n \n** **\n**3,897**\n \n \n \n3,767\n \n\nFranchise fees\n\n \n** **\n**420**\n \n \n \n381\n \n\nAdvertising fund revenue\n\n \n** **\n**2,053**\n \n \n \n2,074\n \n\nTotal revenues\n\n \n**$**\n**162,063**\n \n \n$\n148,182\n \n\n \n\n*18.*\n\n*Advertising*\n\n \n\nThe Company administers an Advertising Fund on behalf of its restaurant system to coordinate the marketing efforts of the Company. Under this arrangement, the Company collects and disburses fees paid by manufacturers, franchisees and Company-owned restaurants for national and regional advertising, promotional and public relations programs. Contributions to the Advertising Fund are based on specified percentages of net sales, generally ranging up to 2.5%. Company-owned restaurant advertising expense, which is expensed as incurred, was $96****and $94, for the fiscal years ended March 29, 2026 and March 30, 2025, respectively, and has been included in “Restaurant operating expenses” in the accompanying Consolidated Statements of Earnings.\n\n \n\n*19.*\n\n*Share-Based Compensation*\n\n \n\nAt March 29, 2026, the Company had one share-based compensation plan in effect which is more fully described in Note L.2.\n\n \n\nThe cost of all share-based payments, including grants of restricted stock units and stock options, is recognized in the consolidated financial statements based on their fair values measured at the grant date, or the date of any later modification, over the requisite service period. The Company recognizes compensation cost for unvested stock awards on a straight-line basis over the requisite vesting period.\n\n \n\nF-20\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*20.*\n\n*Classification of Operating Expenses*\n\n \n\nCost of sales consists of the following:\n\n \n\n \n\n●\n\nThe cost of food and other products sold by Company-owned restaurants, through the Branded Product Program and through other distribution channels.\n\n \n\n●\n\nThe cost of labor and associated costs of Company-owned restaurants.\n\n \n\n●\n\nThe cost of paper products used in Company-owned restaurants.\n\n \n\n●\n\nOther direct costs such as fulfillment, commissions, freight and samples.\n\n \n\nRestaurant operating expenses consist of the following:\n\n \n\n \n\n●\n\nOccupancy costs of Company-owned restaurants.\n\n \n\n●\n\nUtility costs of Company-owned restaurants.\n\n \n\n●\n\nRepair and maintenance and other incidental expenses of Company-owned restaurants.\n\n \n\n●\n\nMarketing and advertising expenses done locally and contributions to advertising funds for Company-owned restaurants.\n\n \n\n●\n\nInsurance costs directly related to Company-owned restaurants.\n\n \n\nGeneral and administrative expenses consist of the following:\n\n \n\n \n\n●\n\nPayroll and related benefits, incentive compensation expense and share-based compensation.\n\n \n\n●\n\nTravel expense, marketing, trade show expense and certain other overhead expenses of the various departments that support our operations.\n\n \n\n●\n\nCorporate administrative functions such as executive management, finance, information technology, legal and professional fees, insurance, corporate rent and certain other overhead expenses of our Corporate office.\n\n \n\nF-21\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*21.*\n\n*Income Taxes*\n\n \n\nThe Company’s current provision for income taxes is based upon its estimated taxable income in each of the jurisdictions in which it operates, after considering the impact on taxable income of temporary differences resulting from different treatment of items for tax and financial reporting purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and any operating loss or tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in those periods in which temporary differences become deductible. Should management determine that it is more likely than not that some portion of the deferred tax assets will not be realized, a valuation allowance against the deferred tax assets would be established in the period such determination was made.\n\n \n\n*Uncertain Tax Positions*\n\n \n\nThe Company has recorded liabilities for underpayment of income taxes and related interest and penalties for uncertain tax positions based on the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. Nathan’s recognizes accrued interest and penalties associated with unrecognized tax benefits as part of the income tax provision.\n\n \n\nSee Note H for a further discussion of our income taxes.\n\n \n\nF-22\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\n*22.*\n\n*Adoption of New Accounting Standard*\n\n \n\nIn 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.\n\n \n\nThe Company adopted ASU 2023-09 on a retrospective basis during the fourth quarter of fiscal year 2026. The adoption did not have a material impact on our consolidated financial statements. Refer to NOTE H – INCOME TAXES for further details.\n\n \n\n*23.*\n\n*New Accounting Standards Not Yet Adopted*\n\n \n\nIn 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.\n\n \n\nFor 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.\n\n \n\nF-23\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**\n\n \n\nIn 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.\n\n \n\nIn 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.\n\n \n\nThe Company does not believe that any recently issued, but not yet effective accounting standards, when adopted, will have a material effect on our consolidated financial statements.\n\n \n\n \n\n**NOTE C**–**NET INCOME PER SHARE**\n\n \n\nBasic 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.\n\n \n\nF-24\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE C**–**NET INCOME PER SHARE (continued)**\n\n \n\nThe following chart provides a reconciliation of information used in calculating the per-share amounts for the fiscal years ended March 29, 2026 and March 30, 2025, respectively:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nNet income\n\n \n**$**\n**20,020**\n \n \n$\n24,026\n \n\n \n \n \n \n \n \n \n \n \n\nCommon Stock:\n\n \n \n \n \n \n \n \n \n\nWeighted average basic shares outstanding\n\n \n** **\n**4,091,000**\n \n \n \n4,086,000\n \n\nEffect of dilutive share-based awards\n\n \n** **\n**33,000**\n \n \n \n9,000\n \n\nWeighted average diluted shares outstanding\n\n \n** **\n**4,124,000**\n \n \n \n4,095,000\n \n\n \n \n \n \n \n \n \n \n \n\nNet income per share:\n\n \n \n \n \n \n \n \n \n\nBasic\n\n \n**$**\n**4.89**\n \n \n$\n5.88\n \n\nDiluted\n\n \n**$**\n**4.85**\n \n \n$\n5.87\n \n\n \n\nThere were no anti-dilutive share-based awards for the fiscal years ended March 29, 2026 and March 30, 2025.\n\n \n\n \n\n**NOTE D - ACCOUNTS AND OTHER RECEIVABLES, NET**\n\n \n\nAccounts and other receivables, net, consist of the following:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nBranded product sales\n\n \n**$**\n**16,274**\n \n \n$\n10,534\n \n\nFranchise and license royalties\n\n \n** **\n**4,153**\n \n \n \n3,902\n \n\nOther\n\n \n** **\n**191**\n \n \n \n270\n \n\n \n \n** **\n**20,618**\n \n \n \n14,706\n \n\n \n \n \n \n \n \n \n \n \n\nLess: allowance for credit losses\n\n \n** **\n**(777**\n**)**\n \n \n(642\n)\n\n \n \n \n \n \n \n \n \n \n\nAccounts and other receivables, net\n\n \n**$**\n**19,841**\n \n \n$\n14,064\n \n\n \n\nOur provision for credit losses is based on the current expected credit losses model. The Company is exposed to credit losses through its trade accounts receivable. Trade accounts receivable are generally due within 30 days and are stated at amounts due from franchisees, including virtual kitchens, retail licensees and Branded Product Program customers, net of an allowance for credit losses. Accounts that are outstanding longer than the contractual payment terms are generally considered past due.\n\n \n\nF-25\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE D - ACCOUNTS AND OTHER RECEIVABLES, NET (continued)**\n\n \n\nAn allowance for credit losses is determined by pooling the Company’s trade accounts receivable based on similar risk characteristics and delinquency status under an aging method at the measurement date. The Company considers both qualitative and quantitative information when developing the estimate including assessments of collectability based on historical trends, the financial condition of the Company’s franchisees, licensees and Branded Product Program customers, including any known or anticipated bankruptcies, and an evaluation of current economic conditions, as well as the Company’s expectations of conditions in the future.\n\n \n\nThe Company provides for expected credit losses through a charge to earnings. After the Company has used reasonable collection efforts, it writes off accounts receivable through a charge to the allowance for credit losses.\n\n \n\nChanges in the Company’s allowance for credit losses for the fiscal years ended March 29, 2026 and March 30, 2025 are as follows:\n\n \n\n \n \n\n**March 29,**\n\n**2026**\n\n \n \n\nMarch 30,\n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nBeginning balance\n\n \n**$**\n**642**\n \n \n$\n403\n \n\nProvision for expected credit losses\n\n \n** **\n**129**\n \n \n \n275\n \n\nWrite offs and recoveries\n\n \n** **\n**6**\n \n \n \n(36\n)\n\n \n \n \n \n \n \n \n \n \n\nEnding balance\n\n \n**$**\n**777**\n \n \n$\n642\n \n\n \n\n \n\n**NOTE E - PREPAID EXPENSES AND OTHER CURRENT ASSETS**\n\n \n\nPrepaid expenses and other current assets consist of the following:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nIncome taxes\n\n \n**$**\n**210**\n \n \n$\n493\n \n\nReal estate taxes\n\n \n** **\n**81**\n \n \n \n80\n \n\nInsurance\n\n \n** **\n**376**\n \n \n \n379\n \n\nMarketing\n\n \n** **\n**925**\n \n \n \n798\n \n\nOther\n\n \n** **\n**392**\n \n \n \n298\n \n\n \n \n \n \n \n \n \n \n \n\nTotal prepaid expenses and other current assets\n\n \n**$**\n**1,984**\n \n \n$\n2,048\n \n\n \n\nF-26\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE F - PROPERTY AND EQUIPMENT, NET**\n\n \n\nProperty and equipment consist of the following:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nLand\n\n \n**$**\n**123**\n \n \n$\n123\n \n\nBuilding and improvements\n\n \n** **\n**1,476**\n \n \n \n1,441\n \n\nMachinery, equipment, furniture and fixtures\n\n \n** **\n**4,791**\n \n \n \n5,421\n \n\nLeasehold improvements\n\n \n** **\n**7,505**\n \n \n \n7,418\n \n\nConstruction-in-progress\n\n \n** **\n**63**\n \n \n \n6\n \n\nTotal property and equipment\n\n \n** **\n**13,958**\n \n \n \n14,409\n \n\nLess: accumulated depreciation and amortization\n\n \n** **\n**(12,225**\n**)**\n \n \n(12,295\n)\n\n \n \n \n \n \n \n \n \n \n\nProperty and equipment, net\n\n \n**$**\n**1,733**\n \n \n$\n2,114\n \n\n \n\nDepreciation and amortization expense related to property and equipment was $751 and $784 for each of the fiscal years ended March 29, 2026 and March 30, 2025, respectively.\n\n \n\n \n\n**NOTE G**–**ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES**\n\n \n\nAccrued expenses and other current liabilities consist of the following:         \n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nPayroll and other benefits\n\n \n**$**\n**3,285**\n \n \n$\n3,269\n \n\nAccrued rebates\n\n \n** **\n**1,130**\n \n \n \n742\n \n\nRent and occupancy costs\n\n \n** **\n**26**\n \n \n \n60\n \n\nDeferred revenue\n\n \n** **\n**1,315**\n \n \n \n1,392\n \n\nInterest\n\n \n** **\n**49**\n \n \n \n148\n \n\nProfessional fees\n\n \n** **\n**183**\n \n \n \n60\n \n\nMerger costs\n\n \n** **\n**163**\n \n \n \n-\n \n\nSales, use and other taxes\n\n \n** **\n**11**\n \n \n \n33\n \n\nOther\n\n \n** **\n**304**\n \n \n \n265\n \n\nTotal accrued expenses and other current liabilities\n\n \n**$**\n**6,466**\n \n \n$\n5,969\n \n\n \n\nF-27\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE H**–**INCOME TAXES**\n\n \n\nIn December 2023, the FASB issued ASU 2023-09, “*Income Taxes (Topic 740): Improvements to Income Tax Disclosures,*” which requires public business entities to disclose consistent categories and greater disaggregation of information in the rate reconciliation and for income taxes paid. The Company adopted ASU 2023-09 on a retrospective basis for the years ended March 29, 2026 and March 30, 2025 for comparability and consistency purposes.\n\n \n\nThe income tax provision consists of the following for the fiscal years ended March 29, 2026 and March 30, 2025:                  \n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\nFederal\n\n \n \n \n \n \n \n \n \n\nCurrent\n\n \n**$**\n**6,493**\n \n \n$\n6,909\n \n\nDeferred\n\n \n** **\n**(115**\n**)**\n \n \n(190\n)\n\nTotal Federal income tax\n\n \n** **\n**6,378**\n \n \n \n6,719\n \n\nState and local\n\n \n \n \n \n \n \n \n \n\nCurrent\n\n \n** **\n**1,765**\n \n \n \n2,060\n \n\nDeferred\n\n \n** **\n**27**\n \n \n \n(44\n)\n\nTotal State and local income tax\n\n \n** **\n**1,792**\n \n \n \n2,016\n \n\nTotal provision for income taxes\n\n \n**$**\n**8,170**\n \n \n$\n8,735\n \n\n \n\nThe income tax provisions for the fiscal years ended March 29, 2026 and March 30, 2025 reflect effective tax rates of 28.9% and 26.7%, respectively.\n\n \n\nThe total income tax provision for the fiscal years ended March 29, 2026 and March 30,****2025 differs from the amounts computed by applying the United States Federal income tax rate of 21% to income before income taxes as a result of the following:\n\n                                                      \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nIncome tax provision at the U.S. Federal statutory rate\n\n \n**$**\n**5,920**\n \n \n** **\n**21.0**\n**%**\n \n$\n6,880\n \n \n \n21.0\n%\n\nState and local income taxes, net of U.S. Federal income tax benefit\n\n \n** **\n**1,425**\n \n \n** **\n**5.0**\n**%**\n \n \n1,527\n \n \n \n4.7\n%\n\nEffect of cross-border tax laws\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nForeign derived intangible income\n\n \n** **\n**(67**\n**)**\n \n** **\n**(0.2%**\n**)**\n \n \n(42\n)\n \n \n(0.1%\n)\n\nNontaxable and nondeductible items\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nExecutive compensation\n\n \n** **\n**283**\n \n \n** **\n**1.0**\n**%**\n \n \n283\n \n \n \n0.9\n%\n\nMerger costs\n\n \n** **\n**619**\n \n \n** **\n**2.2**\n**%**\n \n \n-\n \n \n \n-\n \n\nChange in uncertain tax positions, net\n\n \n** **\n**(44**\n**)**\n \n** **\n**(0.2%**\n**)**\n \n \n116\n \n \n \n0.3\n%\n\nOther adjustments\n\n \n** **\n**34**\n \n \n** **\n**0.1**\n**%**\n \n \n(29\n)\n \n \n(0.1%\n)\n\nTotal provision for income taxes\n\n \n**$**\n**8,170**\n \n \n** **\n**28.9**\n**%**\n \n$\n8,735\n \n \n \n26.7\n%\n\n \n\nFor the fiscal years ended March 29, 2026 and March 30, 2025, state and local income taxes in New York, New Jersey and California comprised the majority (greater than 50%) of the tax effect in the state and local income taxes, net of federal income tax effect category. \n\n \n\nF-28\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE H**–**INCOME TAXES (continued)**\n\n \n\nThe income taxes paid (net of refunds) by jurisdictions are set forth below:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\nJurisdiction\n\n \n \n \n \n \n \n \n \n\nFederal\n\n \n**$**\n**6,300**\n \n \n$\n6,500\n \n\nState and local\n\n \n** **\n**1,886**\n \n \n \n1,989\n \n\nForeign\n\n \n** **\n**-**\n \n \n \n-\n \n\nTotal income taxes paid, net\n\n \n**$**\n**8,186**\n \n \n$\n8,489\n \n\n \n \n \n \n \n \n \n \n \n\nState\n\n \n \n \n \n \n \n \n \n\nNew York State (including MTA & NYC)\n\n \n**$**\n**-**\n \n \n$\n710\n \n\n \n\nNo individual state jurisdiction equaled or exceeded 5% of total income taxes paid (net of refunds) for the fiscal year ended March 29, 2026. New York State, which includes MTA & NYC, exceeded the 5% threshold for the fiscal year ended March 30, 2025.\n\n \n\nThe tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\nDeferred tax assets\n\n \n \n \n \n \n \n \n \n\nAccrued expenses\n\n \n**$**\n**325**\n \n \n$\n312\n \n\nAllowance for credit losses\n\n \n** **\n**193**\n \n \n \n159\n \n\nDeferred revenue\n\n \n** **\n**172**\n \n \n \n246\n \n\nDeferred stock compensation\n\n \n** **\n**219**\n \n \n \n106\n \n\nOperating lease liability\n\n \n** **\n**878**\n \n \n \n1,189\n \n\nOther\n\n \n** **\n**136**\n \n \n \n177\n \n\nTotal deferred tax assets\n\n \n**$**\n**1,923**\n \n \n$\n2,189\n \n\n \n \n \n \n \n \n \n \n \n\nDeferred tax liabilities\n\n \n \n \n \n \n \n \n \n\nDeductible prepaid expense\n\n \n**$**\n**153**\n \n \n$\n125\n \n\nOperating lease right-of-use asset\n\n \n** **\n**818**\n \n \n \n1,091\n \n\nDepreciation expense\n\n \n** **\n**288**\n \n \n \n360\n \n\nAmortization\n\n \n** **\n**66**\n \n \n \n103\n \n\nTotal deferred tax liabilities\n\n \n** **\n**1,325**\n \n \n \n1,679\n \n\nNet deferred tax asset\n\n \n**$**\n**598**\n \n \n$\n510\n \n\n \n\nF-29\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE H**–**INCOME TAXES (continued)**\n\n \n\nA valuation allowance is provided when it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. We consider the level of historical taxable income, scheduled reversal of temporary differences, tax planning strategies and projected future taxable income in determining whether a valuation allowance is warranted. Based upon these considerations, management believes that it is more likely than not that the Company will realize the benefit of its deferred tax asset.\n\n \n\nThe following is a tabular reconciliation of the total amounts of unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 29, 2026 and March 30,****2025:\n\n \n\n \n \n\n**March 29,**\n\n**2026**\n\n \n \n\nMarch 30,\n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nUnrecognized tax benefits, beginning of year\n\n \n**$**\n**532**\n \n \n$\n465\n \n\nDecreases of tax positions taken in prior years\n\n \n** **\n**(205**\n**)**\n \n \n(60\n)\n\nIncreases based on tax positions taken in current year\n\n \n** **\n**35**\n \n \n \n127\n \n\nUnrecognized tax benefits, end of year\n\n \n**$**\n**362**\n \n \n$\n532\n \n\n \n\nThe amount of unrecognized tax benefits included in Other liabilities at March 29, 2026 and March 30,****2025 were $362 and $532, respectively, all of which would impact Nathan’s effective tax rate, if recognized. As of March 29, 2026 and March 30,****2025, the Company had $355 and $395, respectively, accrued for the payment of interest and penalties. For the fiscal years ended March 29, 2026 and March 30,****2025, Nathan’s recognized interest and penalties in the amounts of $9 and $49, respectively.\n\n \n\nDuring the fiscal year ending March 28, 2027, we believe it is reasonably possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $50,****due primarily to the lapse of statutes of limitations which would favorably impact Nathan’s effective tax rate, although no assurances can be given in this regard.\n\n \n\nThe American Rescue Plan Act (“ARPA”), among other things, includes provisions to expand the IRC Section 162(m) disallowance for deduction of certain compensation paid by publicly held corporations. Effective tax years starting after December 31, 2026 (March 29, 2027 for the Company), ARPA expands the limitation to cover the next five most highly compensated employees. We continue to evaluate the potential impact ARPA may have on our operations and consolidated financial statements in future periods.\n\n \n\nF-30\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE H**–**INCOME TAXES (continued)**\n\n \n\nOn July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. 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 on our consolidated financial statements for the fiscal year ending March 29, 2026.\n\n \n\nThe earliest tax years that are subject to examination by taxing authorities by major jurisdictions are as follows:\n\n \n\n**Jurisdiction**\n\n**Fiscal Year**\n\nFederal\n\n2023\n\nNew York State\n\n2023\n\nNew York City\n\n2023\n\nNew Jersey\n\n2022\n\nCalifornia\n\n2022\n\n \n\n \n\n**NOTE I**–**SEGMENT INFORMATION**\n\n \n\nNathan’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.\n\n \n\nThe Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”) who regularly reviews operating results, evaluates performance and allocates resources for the Branded Product Program, Product Licensing and Restaurant Operations segments based upon a number of factors, the primary profit measure being income from operations as reported on the Consolidated Statement of Earnings. The CODM regularly reviews revenues, gross profit and income from operations by segment when evaluating the financial performance of each segment. Significant segment expenses are monitored by the CODM and included in the tables below. Segment asset information is not used by the CODM to assess performance and allocate resources and therefore is not presented. Certain administrative expenses are not allocated to the segments and are reported within the Corporate segment.\n\n \n\n*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.\n\n \n\nF-31\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE I**–**SEGMENT INFORMATION (continued)**\n\n \n\n*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.\n\n \n\n*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.\n\n \n\nRevenues from operating segments are from transactions with unaffiliated third parties and do not include any intersegment revenues.\n\n \n\nInterest expense, loss on debt extinguishment, interest and dividend income and other income, net, are managed centrally at the corporate level, and, accordingly, such items are not presented by segment since they are excluded from the measure of profitability reviewed by the CODM.\n\n \n\nThe following tables summarize segment information and reconcile our segment results to our consolidated results as reported on our Consolidated Statement of Earnings:\n\n \n\n**March 29, 2026**\n\n \n\nBranded\n\nProduct\n\nProgram\n\n \n \n\nProduct\n\nLicensing\n\n \n \n\nRestaurant\n\nOperations\n\n \n \n\nCorporate\n\n \n \n\nTotal\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRevenues\n\n \n** **\n**105,768**\n \n \n** **\n**37,417**\n \n \n** **\n**16,825**\n \n \n** **\n**2,053**\n \n \n** **\n**162,063**\n \n\nLess:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nCost of sales\n\n \n** **\n**99,352**\n \n \n** **\n**-**\n \n \n** **\n**7,167**\n \n \n** **\n**-**\n \n \n** **\n**106,519**\n \n\nSegment gross profit\n\n \n** **\n**6,416**\n \n \n** **\n**37,417**\n \n \n** **\n**9,658**\n \n \n** **\n**2,053**\n \n \n** **\n**55,544**\n \n\nLess (1):\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRestaurant operating expenses (2)\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**4,417**\n \n \n** **\n**-**\n \n \n** **\n**4,417**\n \n\nDepartment expenses (3)\n\n \n** **\n**890**\n \n \n** **\n**183**\n \n \n** **\n**554**\n \n \n** **\n**387**\n \n \n** **\n**2,014**\n \n\nOther general and administration expenses (4)\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**9,846**\n \n \n** **\n**9,846**\n \n\nPayroll expense\n\n \n** **\n**1,109**\n \n \n** **\n**-**\n \n \n** **\n**1,430**\n \n \n** **\n**3,504**\n \n \n** **\n**6,043**\n \n\nDepreciation and amortization\n\n \n** **\n**132**\n \n \n** **\n**-**\n \n \n** **\n**640**\n \n \n** **\n**153**\n \n \n** **\n**925**\n \n\nAdvertising fund expense\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**2,197**\n \n \n** **\n**2,197**\n \n\nIncome from operations\n\n \n** **\n**4,285**\n \n \n** **\n**37,234**\n \n \n** **\n**2,617**\n \n \n** **\n**(14,034**\n**)**\n \n** **\n**30,102**\n \n\nInterest expense\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**(2,857**\n**)**\n \n** **\n**(2,857**\n**)**\n\nInterest and dividend income\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**780**\n \n \n** **\n**780**\n \n\nOther income, net\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**165**\n \n \n** **\n**-**\n \n \n** **\n**165**\n \n\nIncome before provision for income taxes\n\n \n** **\n**4,285**\n \n \n** **\n**37,234**\n \n \n** **\n**2,782**\n \n \n** **\n**(16,111**\n**)**\n \n** **\n**28,190**\n \n\n \n\nF-32\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE I**–**SEGMENT INFORMATION (continued)**\n\n \n\n \n\nMarch 30, 2025\n\n \n\nBranded\n\nProduct\n\nProgram\n\n \n \n\nProduct\n\nLicensing\n\n \n \n\nRestaurant\n\nOperations\n\n \n \n\nCorporate\n\n \n \n\nTotal\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRevenues\n\n \n \n91,828\n \n \n \n37,418\n \n \n \n16,862\n \n \n \n2,074\n \n \n \n148,182\n \n\nLess:\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nCost of sales\n\n \n \n82,461\n \n \n \n-\n \n \n \n7,246\n \n \n \n-\n \n \n \n89,707\n \n\nSegment gross profit\n\n \n \n9,367\n \n \n \n37,418\n \n \n \n9,616\n \n \n \n2,074\n \n \n \n58,475\n \n\nLess (1):\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nRestaurant operating expenses (2)\n\n \n \n-\n \n \n \n-\n \n \n \n4,379\n \n \n \n-\n \n \n \n4,379\n \n\nDepartment expenses (3)\n\n \n \n956\n \n \n \n182\n \n \n \n713\n \n \n \n410\n \n \n \n2,261\n \n\nOther general and administration expenses (4)\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n6,204\n \n \n \n6,204\n \n\nPayroll expense\n\n \n \n1,127\n \n \n \n-\n \n \n \n1,457\n \n \n \n3,481\n \n \n \n6,065\n \n\nDepreciation and amortization\n\n \n \n148\n \n \n \n-\n \n \n \n636\n \n \n \n173\n \n \n \n957\n \n\nAdvertising fund expense\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n2,112\n \n \n \n2,112\n \n\nIncome from operations\n\n \n \n7,136\n \n \n \n37,236\n \n \n \n2,431\n \n \n \n(10,306\n)\n \n \n36,497\n \n\nInterest expense\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(4,106\n)\n \n \n(4,106\n)\n\nLoss on debt extinguishment\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n(389\n)\n \n \n(389\n)\n\nInterest and dividend income\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n672\n \n \n \n672\n \n\nOther income, net\n\n \n \n-\n \n \n \n-\n \n \n \n87\n \n \n \n-\n \n \n \n87\n \n\nIncome before provision for income taxes\n\n \n \n7,136\n \n \n \n37,236\n \n \n \n2,518\n \n \n \n(14,129\n)\n \n \n32,761\n \n\n \n\n \n\n(1)\n\nThe significant expense categories and amounts align with segment-level information that is regularly provided to the CODM.\n\n \n\n(2)\n\nIncludes occupancy expenses, insurance expenses, utility costs, repair and maintenance expense and other Company-owned restaurant expenses.\n\n \n\n(3)\n\nIncludes travel expense, marketing and trade show expense and certain other overhead expenses.\n\n \n\n(4)\n\nIncludes incentive compensation expense, share-based compensation expense, professional fees, occupancy expenses, provision for credit losses and certain other overhead expenses.\n\n \n\nF-33\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE J**–**LONG-TERM DEBT**\n\n \n\nLong-term debt consists of the following:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nSOFR Term Loan Borrowings with an effective interest rate of 5.175% and 5.825% at March 29, 2026 and March 30, 2025, respectively\n\n \n**$**\n**48,400**\n \n \n$\n50,800\n \n\n \n \n \n \n \n \n \n \n \n\nLess: unamortized debt issuance costs\n\n \n** **\n**(257**\n**)**\n \n \n(327\n)\n\nTotal debt, net of debt issuance costs\n\n \n** **\n**48,143**\n \n \n \n50,473\n \n\nLess: Current portion of long-term debt\n\n \n** **\n**(2,400**\n**)**\n \n \n(2,400\n)\n\nLong-term debt, net\n\n \n**$**\n**45,743**\n \n \n$\n48,073\n \n\n \n\nCredit Agreement\n\n \n\nOn July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender (capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Credit Agreement).\n\n \n\nThe Company’s mandatory debt principal repayments as of March 29, 2026 were as follows:\n\n \n\nFiscal Year\n\n \n\nAmount\n\n \n\n2027\n\n \n \n2,400\n \n\n2028\n\n \n \n2,400\n \n\n2029\n\n \n \n2,400\n \n\n2030\n\n \n \n41,200\n \n\nTotal\n\n \n$\n48,400\n \n\n \n\nTotal debt repayments through 2030 exceed the total carrying amount of the Company’s debt as of March 29, 2026 because the carrying amount reflects the unamortized portion of debt issuance costs.\n\n \n\nF-34\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE J**–**LONG-TERM DEBT (continued)**\n\n \n\nThe 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.\n\n \n\nThe Company borrowed $60,000 in Term Loan borrowings on the Effective Date to refinance and redeem its outstanding 2025 Notes. The Company completed the redemption of the 2025 Notes on August 13, 2024. The Company will use any Revolving Loan borrowings under the Credit Agreement for working capital and general corporate purposes. As of March 29, 2026, there were no outstanding borrowings under the Revolving Loan.\n\n \n\nIn 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 2025 Notes. Additionally, in connection with the refinancing, the Company incurred $431 of debt issuance costs on the Term Loan borrowings that were capitalized and will be amortized over the term of the Credit Agreement. During 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 costs on the Term Loan borrowings.\n\n \n\nTerm 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 March 29, 2026 was 5.175%.\n\n \n\nThe Credit Agreement contains customary affirmative covenants and negative covenants and requires the Company to maintain a Consolidated Fixed Charge Ratio not to exceed 1.20 to 1.00 and a Consolidated Net Leverage Ratio not to exceed 3.00 to 1.00, in each case, as of the end of each fiscal quarter. The Company was in compliance with the covenants of the Credit Agreement at March 29, 2026.\n\n \n\nF-35\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE J**–**LONG-TERM DEBT (continued)**\n\n \n\nThe outstanding Term Loan borrowings under the Credit Agreement are payable quarterly in equal installments of 1.0% of the original principal amount of the Term Loan, or $600, 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 $2,400 during fiscal 2026 and $1,200 during fiscal 2025. Subsequent to the year ending March 29, 2026, on March 31, 2026, the Company paid its next quarterly mandatory debt principal repayment of $600.\n\n \n\nThe 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.\n\n \n\nThe Company’s obligations under the Credit Agreement are fully and unconditionally guaranteed by all of the Company’s wholly-owned subsidiaries.\n\n \n\nThe Credit Agreement provides that certain Change of Control events constitute an Event of Default. Such an Event of Default entitles the Lenders to, among other things, cause all outstanding debt obligations under the Credit Agreement to become immediately due and payable.\n\n \n\nAs 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”).\n\n \n\nPursuant 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”).\n\n \n\nPursuant to the Merger Agreement, the Buyer at the Effective Time shall pay all outstanding obligations under the Credit Facility.\n\n \n\nF-36\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE K**–**LEASES**\n\n \n\nThe 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 $84 in settlement income which is included in Other income, net, on the Consolidated Statement of Earnings.\n\n \n\n*Company as lessee*\n\n \n\nThe components of the net lease cost for the fiscal years ended March 29, 2026 and March 30, 2025 were as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nOperating lease cost\n\n \n**$**\n**1,589**\n \n \n$\n1,598\n \n\nVariable lease cost\n\n \n** **\n**1,996**\n \n \n \n1,996\n \n\nLess: Sublease income, net\n\n \n** **\n**(50**\n**)**\n \n \n(87\n)\n\n \n \n \n \n \n \n \n \n \n\nTotal net lease cost\n\n \n**$**\n**3,535**\n \n \n$\n3,507\n \n\n \n\nThe components of the net lease cost are included on the Consolidated Statement of Earnings for the fiscal years ended March 29, 2026 and March 30, 2025 as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nRestaurant operating expenses\n\n \n**$**\n**2,754**\n \n \n$\n2,769\n \n\nGeneral and administrative expenses\n\n \n** **\n**831**\n \n \n \n825\n \n\nLess: Other income, net\n\n \n** **\n**(50**\n**)**\n \n \n(87\n)\n\n \n \n \n \n \n \n \n \n \n\nTotal net lease cost\n\n \n**$**\n**3,535**\n \n \n$\n3,507\n \n\n \n\nCash paid for amounts included in the measurement of lease liabilities for the fiscal years ended March 29, 2026 and March 30, 2025 were as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nOperating cash flows from operating leases\n\n \n**$**\n**1,926**\n \n \n$\n1,887\n \n\n \n\nF-37\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE K**–**LEASES (continued)**\n\n \n\nThe weighted average remaining lease term and weighted average discount rate for operating leases for the fiscal years ended March 29, 2026 and March 30, 2025 were as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nWeighted average remaining lease term (years):\n\n \n** **\n**2.6**\n \n \n \n3.5\n \n\n \n \n \n \n \n \n \n \n \n\nWeighted average discount rate:\n\n \n** **\n**8.445**\n**%**\n \n \n8.474\n%\n\n \n\nFuture lease commitments to be paid and received by the Company as of March 29, 2026 were as follows:\n\n \n\n \n \n\nPayments\n\n \n \n\nReceipts\n\n \n \n \n \n \n\n \n \n\nOperating Leases\n\n \n \n\nSubleases\n\n \n \n\nNet Leases\n\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nFiscal year:\n\n \n \n \n \n \n \n \n \n \n \n \n \n\n2027\n\n \n \n1,940\n \n \n \n112\n \n \n \n1,828\n \n\n2028\n\n \n \n1,790\n \n \n \n115\n \n \n \n1,675\n \n\n2029\n\n \n \n440\n \n \n \n-\n \n \n \n440\n \n\n2030\n\n \n \n171\n \n \n \n-\n \n \n \n171\n \n\nTotal lease commitments\n\n \n$\n4,341\n \n \n$\n227\n \n \n$\n4,114\n \n\nLess: Amount representing interest\n\n \n \n(398\n)\n \n \n \n \n \n \n \n \n\nPresent value of lease liabilities (a)\n\n \n$\n3,943\n \n \n \n \n \n \n \n \n \n\n \n\n \n\n(a)\n\nThe present value of minimum operating lease payments of $1,940 and $2,003** **are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively, on the Consolidated Balance Sheet.\n\n \n\n*Company as lessor*\n\n \n\nThe components of lease income for the fiscal years ended March 29, 2026 and March 30, 2025 were as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nOperating lease income, net\n\n \n**$**\n**50**\n \n \n$\n87\n \n\n \n\nF-38\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS**\n\n \n\n \n\n*1.*\n\n*Dividends*\n\n \n\nOn July 1, 2025, September 5, 2025, December 5, 2025 and February 27, 2026, the Company paid quarterly dividends of $0.50 per share. Additionally, the Company paid a special cash dividend of $2.50 per share on December 5, 2025. For the year ending March 29, 2026, the Company paid dividends aggregating $18,403.\n\n \n\nOur ability to pay future dividends is limited by the terms of our Merger Agreement (as defined in NOTE N – MERGER). 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.\n\n \n\nEffective June 9**,**2026, as permitted under the Merger Agreement, the Board declared its first quarterly cash dividend of $0.50**per share for fiscal year 2027, which is payable on June 30, 2026 to stockholders of record as of the close of business on June 22, 2026.\n\n \n\n \n\n*2.*\n\n*Stock Incentive Plan*\n\n \n\nOn September 18, 2019, the Company’s shareholders approved the Nathan’s Famous, Inc. 2019 Stock Incentive Plan (the “2019 Plan”). The 2019 Plan became effective as of July 1, 2020 (the \"Effective Date\"). Following the Effective Date, (i) no additional stock awards were granted under the 2010 Plan and (ii) all outstanding stock awards previously granted under the 2010 Plan remained subject to the terms of the 2010 Plan. All awards granted on or after the Effective Date are subject to the terms of the 2019 Plan.\n\n \n\nAs of the Effective Date, we were able to issue up to: (a) 369,584 shares of common stock under the 2019 Plan which includes: (i) shares that have been authorized but not issued pursuant to the 2010 Plan as of the Effective Date up to a maximum of an additional 208,584 shares and (ii) any shares subject to any outstanding options or restricted stock grants under any plan of the Company that were outstanding as of the Effective Date and that subsequently expire unexercised, or were otherwise forfeited, up to a maximum of an additional 11,000 shares. As of March 29, 2026, there were up to 38,584 shares available to be issued for future option grants or up to 134,808 shares of restricted stock to be granted under the 2019 Plan.\n\n \n\nF-39\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued)**\n\n \n\nIn general, options granted under the Company’s stock incentive plans have terms of five or ten years and vest over periods of between three and five years. The Company has historically issued new shares of common stock for options that have been exercised and used the Black-Scholes option valuation model to determine the fair value of options granted at the grant date.\n\n \n\n*Share-based compensation:*\n\n \n\nThe Company recognizes compensation cost for unvested share-based awards on a straight-line basis over the requisite service period. Compensation expense under all share-based awards for the fiscal years ended March 29, 2026 and March 30, 2025 is as follows:\n\n \n\n \n \n\n**March 29,**\n\n \n \n\nMarch 30,\n\n \n\n \n \n\n**2026**\n\n \n \n\n2025\n\n \n\n \n \n \n \n \n \n \n \n \n\nStock options\n\n \n**$**\n**457**\n \n \n$\n318\n \n\nRestricted stock units\n\n \n** **\n**675**\n \n \n \n675\n \n\n \n \n**$**\n**1,132**\n \n \n$\n993\n \n\n \n\nAs of March 29, 2026, there was $2,149 of unamortized compensation expense related to share-based awards. The Company expects to recognize this expense over approximately 27****months,****which represents the weighted average remaining requisite service periods for such awards.\n\n \n\n*Stock options:*\n\n \n\nDuring the fiscal year ended March 29, 2026, there were no new options granted.\n\n \n\nDuring the fiscal year ended March 30, 2025, the Company granted options to purchase 110,000 shares at an exercise price of $74.47 per share, all of which expire five years from the date of grant. All such options vest ratable over a four-year period commencing August 19, 2024.\n\n \n\nF-40\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued)**\n\n \n\nThe weighted average option fair values, as determined using the Black-Scholes option valuation model, and the assumptions used to estimate these values for stock options granted during the fiscal year ended March 30, 2025 were as follows:\n\n \n\n \n \n\nMarch 30,\n\n2025\n\n \n\nWeighted-average option fair values\n\n \n$\n14.67\n \n\nExpected life (years)\n\n \n \n4.4\n \n\nInterest rate\n\n \n \n3.75\n%\n\nVolatility\n\n \n \n24.50\n%\n\nDividend yield\n\n \n \n2.69\n%\n\n \n\nThe expected dividend yield is based on historical and projected dividend yields. The Company estimates volatility based primarily on historical monthly price changes of the Company’s stock equal to the expected life of the option. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant. The expected option term is the number of years the Company estimates the options will be outstanding prior to exercise based on expected historical exercise patterns and employment termination behavior.\n\n \n\nA summary of the status of the Company’s stock options at March 29, 2026 and March 30, 2025 and changes during the fiscal years then ended is presented in the tables below:\n\n \n\n**March 29, 2026**\n\n \n** **\n** **\n** **\n \n** **\n** **\n** **\n \n\n**Weighted**\n\n \n \n** **\n** **\n** **\n\n \n \n** **\n** **\n** **\n \n\n**Weighted**\n\n \n \n\n**Average**\n\n \n \n** **\n** **\n** **\n\n \n \n** **\n** **\n** **\n \n\n**Average**\n\n \n \n\n**Remaining**\n\n \n \n\n**Aggregate**\n\n \n\n \n \n** **\n** **\n** **\n \n\n**Exercise**\n\n \n \n\n**Contractual**\n\n \n \n\n**Intrinsic**\n\n \n\n \n \n\n**Shares**\n\n \n \n\n**Price**\n\n \n \n\n**Life**\n\n \n \n\n**Value**\n\n \n\nOptions outstanding – beginning of year\n\n \n** **\n**130,000**\n \n \n**$**\n**74.28**\n \n \n** **\n**4.08**\n \n \n**$**\n**2,667**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nGranted\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nExercised\n\n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n \n** **\n**-**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOptions outstanding - end of year\n\n \n** **\n**130,000**\n \n \n**$**\n**74.28**\n \n \n** **\n**3.08**\n \n \n**$**\n**3,432**\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOptions exercisable - end of year\n\n \n** **\n**42,500**\n \n \n**$**\n**73.48**\n \n \n** **\n**2.56**\n \n \n**$**\n**1,156**\n \n\n \n\nF-41\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued)**\n\n \n\nMarch 30, 2025\n\n \n \n \n \n \n \n \n \n \n\nWeighted\n\n \n \n \n \n \n\n \n \n \n \n \n \n\nWeighted\n\n \n \n\nAverage\n\n \n \n \n \n \n\n \n \n \n \n \n \n\nAverage\n\n \n \n\nRemaining\n\n \n \n\nAggregate\n\n \n\n \n \n \n \n \n \n\nExercise\n\n \n \n\nContractual\n\n \n \n\nIntrinsic\n\n \n\n \n \n\nShares\n\n \n \n\nPrice\n\n \n \n\nLife\n\n \n \n\nValue\n\n \n\nOptions outstanding – beginning of year\n\n \n \n20,000\n \n \n$\n73.25\n \n \n \n3.36\n \n \n$\n23\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nGranted\n\n \n \n110,000\n \n \n$\n74.47\n \n \n \n4.39\n \n \n \n-\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOptions outstanding - end of year\n\n \n \n130,000\n \n \n$\n74.28\n \n \n \n4.08\n \n \n$\n2,667\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nOptions exercisable - end of year\n\n \n \n10,000\n \n \n$\n70.88\n \n \n \n1.86\n \n \n$\n239\n \n\n \n\n*Restricted stock units:*\n\n \n\nA summary of the status of the Company’s restricted stock units at March 29, 2026 and March 30, 2025 and changes during the fiscal years then ended are presented in the tables below:\n\n \n\n**March 29, 2026**\n\n \n** **\n** **\n** **\n \n\n**Weighted**\n\n \n\n \n \n** **\n** **\n** **\n \n\n**Average**\n\n \n\n \n \n** **\n** **\n** **\n \n\n**Grant-date**\n\n**Fair value**\n\n \n\n \n \n\n**Shares**\n\n \n \n\n**Per share**\n\n \n\n \n \n \n \n \n \n \n \n \n\nUnvested restricted stock units – beginning of year\n\n \n** **\n**30,000**\n \n \n**$**\n**67.59**\n \n\n \n \n \n \n \n \n \n \n \n\nVested\n\n \n** **\n**(10,000**\n**)**\n \n**$**\n**67.59**\n \n\n \n \n \n \n \n \n \n \n \n\nUnvested restricted stock units – end of year\n\n \n** **\n**20,000**\n \n \n**$**\n**67.59**\n \n\n \n\nMarch 30, 2025\n\n \n \n \n \n \n\nWeighted\n\n \n\n \n \n \n \n \n \n\nAverage\n\n \n\n \n \n \n \n \n \n\nGrant-date\n\nFair value\n\n \n\n \n \n\nShares\n\n \n \n\nPer share\n\n \n\n \n \n \n \n \n \n \n \n \n\nUnvested restricted stock units – beginning of year\n\n \n \n40,000\n \n \n$\n67.59\n \n\n \n \n \n \n \n \n \n \n \n\nVested\n\n \n \n(10,000\n)\n \n$\n67.59\n \n\n \n \n \n \n \n \n \n \n \n\nUnvested restricted stock units – end of year\n\n \n \n30,000\n \n \n$\n67.59\n \n\n \n\nF-42\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued)**\n\n \n\nThe aggregate fair value of restricted stock units vested for the fiscal years ended March 29, 2026 and March 30, 2025 was $899 and $856, respectively.\n\n \n\n \n\n*3.*\n\n*Stock Repurchase Programs*\n\n \n\nIn 2016, the Board authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company. As of March 29, 2026, Nathan’s had repurchased 1,101,884 shares at a cost of $39,000 under the sixth stock repurchase plan. The Company did not make any stock repurchases during fiscal 2026 and fiscal 2025. At March 29, 2026, 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.\n\n \n\n \n\n*4.*\n\n*Employment Agreements*\n\n \n\nEffective January 1, 2007, Howard M. Lorber, previously Chairman of the Board and Chief Executive Officer, assumed the position of Executive Chairman of the Board of Nathan’s and Eric Gatoff, previously Vice President and Corporate Counsel, became Chief Executive Officer of Nathan’s. In connection with the foregoing, the Company entered into an employment agreement with each of Messrs. Lorber (as amended, the “Lorber Employment Agreement”) and Gatoff (as amended, the “Gatoff Employment Agreement”).\n\n \n\nMr. Lorber receives a base salary of $1,000. On December 8, 2022, the Company entered into Amendment No. 3 to the Lorber Employment Agreement. Under the amendment, the term of the employment agreement was extended from December 31, 2022 to December 31, 2027. In addition, Mr. Lorber received a grant of 50,000 restricted stock units under the Company’s 2019 Stock Incentive Plan which vest in equal installments over five years. The Lorber Employment Agreement provides for a three-year consulting period after the termination of employment during which Mr. Lorber will receive a consulting fee of $200 per year in exchange for his agreement to provide no less than 15 days of consulting services per year, provided, Mr. Lorber is not required to provide more than 50 days of consulting services per year.****\n\n \n\nThe Lorber Employment Agreement provides Mr. Lorber with the right to participate in employment benefits offered to other Nathan’s executives. During and after the contract term, Mr. Lorber is subject to certain confidentiality, non-solicitation and non-competition provisions in favor of the Company.\n\n \n\nF-43\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued)**\n\n \n\nIn the event that Mr. Lorber’s employment is terminated without cause, he is entitled to receive his salary and bonus for the remainder of the contract term. The Lorber Employment Agreement further provides that in the event there is a change in control, as defined in the agreement, Mr. Lorber has the option, exercisable within one year after such event, to terminate the agreement. Upon such termination, he has the right to receive a lump sum cash payment equal to the greater of (A) his salary and annual bonuses for the remainder of the employment term (including a prorated bonus for any partial fiscal year), which bonus shall be equal to the average of the annual bonuses awarded to him during the three fiscal years preceding the fiscal year of termination; or (B) 2.99 times his salary and annual bonus for the fiscal year immediately preceding the fiscal year of termination, in each case together with a lump sum cash payment equal to the difference between the exercise price of any exercisable options having an exercise price of less than the then current market price of the Company’s common stock and such then current market price. In addition, Nathan’s will provide Mr. Lorber with a tax gross-up payment to cover any excise tax due.\n\n \n\nIn the event of termination due to Mr. Lorber’s disability or death, he or his beneficiary is entitled to receive an amount equal to his salary and annual bonuses for a three-year period, which bonus shall be equal to the average of the annual bonuses awarded to him during the three fiscal years preceding the fiscal year of termination.\n\n \n\nUnder the terms of the Gatoff Employment Agreement, Mr. Gatoff initially served as Chief Executive Officer from January 1, 2007 until December 31, 2008, which period automatically extends for additional one-year periods unless either party delivers notice of non-renewal no less than 180 days prior to the end of the term then in effect. Consequently, the Gatoff Employment Agreement is expected to be extended through December 31, 2027, based on the original terms, and no non-renewal notice has been given.\n\n \n\nPursuant to the agreement, Mr. Gatoff receives a base salary, currently $625 and an annual bonus based on his performance measured against the Company’s financial, strategic and operating objectives as determined by the Compensation Committee. The Gatoff Employment Agreement provides for an automobile allowance and the right of Mr. Gatoff to participate in employment benefits offered to other Nathan’s executives. The employment agreement automatically extends for successive one-year periods unless notice of non-renewal is provided in accordance with the agreement. During and after the contract term, Mr. Gatoff is subject to certain confidentiality, non-solicitation and non-competition provisions in favor of the Company.\n\n \n\nEach employment agreement terminates upon death or voluntary termination by the respective employee or may be terminated by the Company on up to 30-days’ prior written notice by the Company in the event of disability or “cause,” as defined in each agreement.\n\n \n\nF-44\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE L**–**STOCKHOLDERS**’**EQUITY, STOCK PLANS AND OTHER EMPLOYEE BENEFIT PLANS (continued)**\n\n \n\n \n\n*5.*\n\n*Defined Contribution and Union Pension Plans*\n\n \n\nThe Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Code covering all nonunion employees over age 21, who have been employed by the Company for at least one year. Employees may contribute to the plan, on a tax-deferred basis, up to 20% of their total annual salary. Historically, the Company has matched contributions at a rate of $.25 per dollar contributed by the employee on up to a maximum of 3% of the employee’s total annual salary. Employer contributions for each of the fiscal years ended March 29, 2026 and March 30, 2025 were $34****and are included in general and administrative expenses on the Consolidated Statements of Earnings.\n\n \n\nThe Company participates in a noncontributory, multi-employer, defined benefit pension plan (the “Union Plan”) covering substantially all of the Company’s union-represented employees. The risks of participating in the Union Plan are different from a single-employer plan in the following aspects: (a) assets contributed to the Union Plan by one employer may be used to provide benefits to employees of other participating employers; (b) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (c) if the Company chooses to stop participating in the Union Plan, the Company may be required to pay the Union Plan an amount based on the underfunded status of the Union Plan, referred to as a withdrawal liability. The most recent estimate of our potential withdrawal liability is $434 as of December 31, 2025. The Company has no plans or intentions to stop participating in the plan as of March 29, 2026 and does not believe that there is a reasonable possibility that a withdrawal liability will be incurred. Any adjustment for withdrawal liability will be recorded only when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. Contributions to the Union Plan were $10 and $9 for the fiscal years ended March 29, 2026 and March 30, 2025, respectively.\n\n \n\n \n\n*6.*\n\n*Other Benefits*\n\n \n\nThe Company provides, on a contributory basis, medical benefits to active employees. The Company does not provide medical benefits to retirees.\n\n \n\nF-45\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n \n\n**NOTE M**–**COMMITMENTS AND CONTINGENCIES**\n\n \n\n*Legal Proceedings*\n\n \n\nThe 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.\n\n \n\n*Service Provider Agreement*\n\n \n\nThe Company engaged a financial advisor in connection with the Merger Agreement as defined and disclosed in NOTE N – MERGER 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 this arrangement are based on (i) a fixed fee that was due and paid upon the delivery of a fairness opinion in January 2026 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.\n\n \n\n \n\n**NOTE N**–**MERGER**\n\n \n\nOn 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”).\n\n \n\nPursuant 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.\n\n \n\nF-46\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE N**–**MERGER (continued)**\n\n \n\nAt 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.\n\n \n\nImmediately 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.\n\n \n\nF-47\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE N**–**MERGER (continued)**\n\n \n\nThe 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.\n\n \n\nNotwithstanding 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.\n\n \n\nThe 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.\n\n \n\nF-48\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE N**–**MERGER (continued)**\n\n \n\nThe 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.\n\n \n\nUpon 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.\n\n \n\nOn 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.\n\n \n\nF-49\n\n \n\nNathan’s Famous, Inc. and Subsidiaries\n\n \n\nNOTES TO CONSOLIDATED FINANCIAL STATEMENTS\n\n(in thousands, except share and per share amounts)\n\n \n\nMarch 29, 2026 and March 30, 2025\n\n \n\n \n\n**NOTE N**–**MERGER (continued)**\n\n \n\nThe Company incurred approximately $3,210 in legal, accounting and advisory fees in connection with the proposed Merger during the fiscal year ended March 29, 2026, included within “General and administrative expenses” on the Consolidated Statement of Earnings.\n\n \n\nAdditional information regarding the Merger Agreement and the proposed Merger is included in the Company’s Current Report on Form 8-K filed with the SEC on January 21, 2026.\n\n \n\n \n\n \n\n**NOTE O **–** SUBSEQUENT EVENTS**\n\n \n\nThe Company evaluated subsequent events through the date the consolidated financial statements were issued and filed with the U.S. Securities and Exchange Commission. There were no subsequent events that required recognition or disclosure.\n\n \n\nF-50"}