NATHANS FAMOUS, INC.

Previous wording

At June 29, 2025, our restaurant system, excluding virtual kitchens, consisted of 225 locations, including 115 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 19 states, and 12** **foreign countries.

Current wording

At September 28, 2025, our restaurant system, excluding virtual kitchens, was comprised of 227** locations, including 112 franchise locations, and 115 Branded Menu Program locations, as well as four Company-owned restaurants (including one seasonal unit), located in 19 **states, and 12 foreign countries.

Previous wording

At June 30, 2024, our restaurant system, excluding virtual kitchens, consisted of 231** locations, including 118 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 17 states, and 13 **foreign countries.

Current wording

At September 29, 2024, our restaurant system, excluding virtual kitchens, was comprised of 243 locations, including 115 franchise locations, and 128 Branded Menu Program locations, as well as four Company-owned restaurants (including one seasonal unit), located in 17** **states, and 13 foreign countries.

Previous wording

Inflationary pressures impacted our results of operations during the first three months of fiscal 2026, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as labor inflation during fiscal 2026. In general, we have been able to offset some of these cost increases resulting from inflation through various actions, such as increasing prices at our Company-owned restaurants and entering into sales agreements with our Branded Product Program customers that are correlated to our cost of beef and beef trimmings. We continue to monitor these inflationary pressures and may need to adjust our prices further to mitigate the impact of these inflationary pressures. Inherent volatility in commodity markets, including beef and beef trimmings, could have a significant impact on our results of operations. Delays in implementing price increases, competitive pressures, a decline in consumer spending levels and other factors may limit our ability to implement further price increases in the future.

Current wording

Inflationary pressures impacted our results of operations during the first half of fiscal 2026, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as labor inflation during the remainder of fiscal 2026. In general, we have been able to offset some of these cost increases resulting from inflation through various actions, such as increasing prices at our Company-owned restaurants and entering into sales agreements with our Branded Product Program customers that are correlated to our cost of beef and beef trimmings. We continue to monitor these inflationary pressures and may need to adjust our prices further to mitigate the impact of these inflationary pressures. Inherent volatility in commodity markets, including beef and beef trimmings, could have a significant impact on our results of operations. Delays in implementing price increases, competitive pressures, a decline in consumer spending levels and other factors may limit our ability to implement further price increases in the future.

Previous wording

As discussed in our Form 10-K for the fiscal year ended March 30, 2025, the discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those condensed consolidated financial statements. These judgments can be subjective and complex, and consequently, actual results could differ from those estimates. Our most critical accounting estimates relate to impairment of intangible assets; impairment of long-lived assets; current expected credit losses; customer rebates and income taxes (including uncertain tax positions). During the thirteen week period ended June 29, 2025, there have been no changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 30, 2025.

Current wording

As discussed in our Form 10-K for the fiscal year ended March 30, 2025, the discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those condensed consolidated financial statements. These judgments can be subjective and complex, and consequently, actual results could differ from those estimates. Our most critical accounting estimates relate to impairment of intangible assets; impairment of long-lived assets; current expected credit losses; customer rebates and income taxes (including uncertain tax positions). There have been no changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the fiscal year ended March 30, 2025.

Previous wording

In addition to disclosing results that are determined in accordance with US GAAP, the Company has provided EBITDA, a non-GAAP financial measure, which is defined as net income excluding (i) interest expense; (ii) provision for income taxes and (iii) depreciation and amortization expense. The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding share-based compensation that the Company believes will impact the comparability of its results of operations.

Current wording

In addition to disclosing results that are determined in accordance with US GAAP, the Company has provided EBITDA, a non-GAAP financial measure, which is defined as net income excluding (i) interest expense; (ii) provision for income taxes and (iii) depreciation and amortization expense. The Company has also provided Adjusted EBITDA, a non-GAAP financial measure, which is defined as EBITDA, excluding (i) the loss on debt extinguishment and (ii) share-based compensation that the Company believes will impact the comparability of its results of operations.

Previous wording

Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen weeks ended June 29, 2025 are not necessarily indicative of those for a full fiscal year.

Current wording

Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen and twenty-six weeks ended September 28, 2025 are not necessarily indicative of those for a full fiscal year.

Previous wording

Total revenues increased by approximately 5% to $46,998,000 for the thirteen weeks ended June 29, 2025 (“fiscal 2026 period”) as compared to $44,767,000 for the thirteen weeks ended June 30, 2024 (“fiscal 2025 period”).

Current wording

Total revenues increased by approximately 11% to $45,687,000 for the thirteen weeks ended September 28, 2025 (“second quarter fiscal 2026”) as compared to $41,109,000 for the thirteen weeks ended September 29, 2024 (“second quarter fiscal 2025”).

Previous wording

Total Company-owned restaurant sales decreased by approximately 5% to $3,986,000 during the fiscal 2026 period as compared to $4,199,000 during the fiscal 2025 period. Restaurant sales were primarily impacted by lower sales at our Coney Island locations due to a reduction in customer traffic as a result of unfavorable weather conditions.

Current wording

Total Company-owned restaurant sales increased by approximately 5% to $5,624,000 during the second quarter fiscal 2026 as compared to $5,348,000 during the second quarter fiscal 2025. Restaurant sales were primarily impacted by higher sales at our Coney Island locations due to a 7% increase in customer traffic.

Previous wording

Interest expense of $758,000 in the fiscal 2026 period represented interest expense of $739,000 on the Secured Overnight Financing Rate (“SOFR”) Term Loan borrowings and amortization of debt issuance costs of $19,000.

Current wording

Interest expense of $739,000 in the second quarter fiscal 2026 represented interest expense of $722,000** **on the Secured Overnight Financing Rate (“SOFR”) Term Loan borrowings and amortization of debt issuance costs of $17,000.

Previous wording

Interest expense of $1,060,000 in the fiscal 2025 period represented interest expense of $991,000 on the 6.625% Senior Secured Notes due 2025 which were redeemed in August 2024 and amortization of debt issuance costs of $69,000.

Current wording

Interest expense of $1,441,000 in the second quarter fiscal 2025 represented interest expense of $458,000** and $930,000 on the 6.625% Secured Notes due 2025 (“2025 Notes”) which were redeemed in August 2024 and the SOFR Term Loan borrowings, respectively, and amortization of debt issuance costs of $35,000 and $18,000 **on the 2025 Notes and the SOFR Term Loan borrowings, respectively.

Previous wording

The reduction in interest expense of $302,000 is due to primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.

Current wording

The reduction in interest expense of $702,000 is due primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.

Previous wording

The amount of unrecognized tax benefits at June 29, 2025 was $579,000 all of which would impact the Company’s effective tax rate, if recognized. As of June 29, 2025, the Company had approximately $428,000 accrued for the payment of interest and penalties in conjunction with unrecognized tax benefits.

Current wording

The amount of unrecognized tax benefits at September 28, 2025 was $462,000 all of which would impact the Company’s effective tax rate, if recognized. As of September 28, 2025, the Company had approximately $418,000 accrued for the payment of interest and penalties in conjunction with unrecognized tax benefits.

Previous wording

Foodservice sales from the Branded Product Program increased by approximately 11% to $29,075,000 during the fiscal 2026 period as compared to $26,146,000 for the fiscal 2025 period. During the fiscal 2026 period, the total volume of hot dogs sold in the Branded Product Program was comparable to the fiscal 2025 period. Our average selling price increased by approximately 8% as compared to the fiscal 2025 period.

Current wording

Foodservice sales from the Branded Product Program increased by approximately 15% to $58,122,000 for the fiscal 2026 period as compared to $50,682,000 for the fiscal 2025 period. During the fiscal 2026 period, the total volume of hot dogs sold in the Branded Product Program increased by approximately 3% as compared to the fiscal 2025 period. Our average selling price increased by approximately 10% as compared to the fiscal 2025 period.

Previous wording

License royalties decreased by approximately 4% to $12,381,000 in the fiscal 2026 period as compared to $12,921,000 in the fiscal 2025 period. Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc. at retail and foodservice, decreased by approximately 4% to $11,464,000 in the fiscal 2026 period as compared to $12,010,000 in the fiscal 2025 period. The decrease is due to a 15% decrease in retail volume which was offset, in part, by a 12% increase in net selling price. The price increases year over year led to a reduction in promotional activities contributing to the decline in volume. The foodservice business earned higher royalties of $55,000 as compared to the fiscal 2025 period. Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $6,000 during the fiscal 2026 period as compared to the fiscal 2025 period primarily due to higher royalties earned on sales of French fries, onion rings, franks-in-a-blanket, mozzarella sticks and other hors d’oeuvres offset, in part, by lower royalties earned on sales of pickles and proprietary spices.

Current wording

License royalties decreased by approximately 4% to $21,608,000 in the fiscal 2026 period as compared to $22,412,000 in the fiscal 2025 period. Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc. at retail and foodservice, decreased 4% to $19,853,000 for the fiscal 2026 period as compared to $20,605,000 in the fiscal 2025 period. The decrease is due to a 17%** *decrease in retail volume which was offset, in part, by a 15% increase in net selling price. The price increases year over year led to a reduction in promotional activities contributing to the decline in volume. The foodservice business earned higher royalties of $109,000 as compared to the fiscal 2025 period. Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products decreased by $52,000 during the fiscal 2026 period as compared to the fiscal 2025 period primarily due to lower royalties earned on sales of pickles and proprietary spices offset, in part, by higher royalties earned on French fries, onion rings and beef sticks. *

Previous wording

Franchise fees and royalties were $1,129,000 in the fiscal 2026 period as compared to $1,073,000 in the fiscal 2025 period. Total royalties were $1,001,000 in the fiscal 2026 period as compared to $981,000 in the fiscal 2025 period. Royalties earned under the Branded Menu Program were $176,000 in the fiscal 2026 period as compared to $175,000 in the fiscal 2025 period. Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases. Virtual kitchen royalties were $15,000 in the fiscal 2026 period as compared to $14,000 in the fiscal 2025 period. Traditional franchise royalties were $810,000 in the fiscal 2026 period as compared to $792,000 in the fiscal 2025 period. Franchise restaurant sales increased* to $18,444,000 in the fiscal 2026 period as compared to $17,653,000 in the fiscal 2025 period principally due to higher sales at travel plazas and international venues offset by lower sales at casino locations, primarily in Las Vegas, Nevada. Comparable domestic franchise sales (consisting of 62* **Nathan’s franchised restaurants, excluding sales under the Branded Menu Program) were $13,877,000 in the fiscal 2026 period as compared to $14,336,000 in the fiscal 2025 period.

Current wording

Franchise fees and royalties increased by approximately 5% to $2,352,000 in the fiscal 2026 period as compared to $2,247,000 in the fiscal 2025 period. Total royalties were $2,139,000 in the fiscal 2026 period as compared to $2,047,000 in the fiscal 2025 period. Royalties earned under the Branded Menu Program were $425,000 in the fiscal 2026 period as compared to $423,000 in the fiscal 2025 period. Royalties earned under the Branded Menu Program are not based upon a percentage of restaurant sales but are based upon product purchases. Virtual kitchen royalties were $36,000 in the fiscal 2026 period as compared to $25,000 in the fiscal 2025 period. Traditional franchise royalties were $1,678,000 in the fiscal 2026 period as compared to $1,599,000 in the fiscal 2025 period. Franchise restaurant sales increased to $38,316,000 in the fiscal 2026 period as compared to $36,334,000 in the fiscal 2025 period principally due to higher sales at travel plazas and international venues offset by lower sales at casino locations, primarily in Las Vegas, Nevada. Comparable domestic franchise sales (consisting of 61 Nathan’s franchised restaurants, excluding sales under the Branded Menu Program) were $28,957,000 in the fiscal 2026 period as compared to $29,379,000 in the fiscal 2025 period.

Previous wording

At June 29, 2025, 225 franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 231 franchised locations, including domestic, international and Branded Menu Program units at June 30, 2024. Total franchise fee income was $128,000 in the fiscal 2026 period as compared to $92,000 in the fiscal 2025 period. Domestic franchise fee income was $23,000 in the fiscal 2026 period and the fiscal 2025 period. International franchise fee income was $54,000 in the fiscal 2026 period as compared to $60,000 in the fiscal 2025 period. We recognized $51,000 and $9,000 in forfeited fees in the fiscal 2026 and fiscal 2025 periods, respectively. During the fiscal 2026 period, eight franchise locations opened and thirteen franchise locations closed. During the fiscal 2025 period, three franchise locations opened and two franchise locations closed.

Current wording

At September 28, 2025, 227** franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 243 franchised locations, including domestic, international and Branded Menu Program units at September 29, 2024. Total franchise fee income was $213,000 in the fiscal 2026 period as compared to $200,000 in the fiscal 2025 period. Domestic franchise fee income was $50,000 in the fiscal 2026 period as compared to $58,000 in the fiscal 2025 period. International franchise fee income was $107,000 in the fiscal 2026 period as compared to $119,000 in the fiscal 2025 period. We recognized $56,000 and $23,000 in forfeited fees in the fiscal 2026 period and fiscal 2025 period, respectively. During the fiscal 2026 period, fourteen franchise locations opened and seventeen franchise locations closed. During the fiscal 2025 period, twenty-one franchise locations opened and eight **franchise locations closed.

Previous wording

Advertising fund revenue, after eliminating Company contributions, was $427,000 in the fiscal 2026 period as compared to $428,000 in the fiscal 2025 period.

Current wording

Advertising fund revenue, after eliminating Company contributions, was $993,000 during the fiscal 2026 period as compared to $988,000 during the fiscal 2025 period.

Previous wording

Overall, our cost of sales increased by approximately 13% to $28,423,000 in the fiscal 2026 period as compared to $25,241,000 in the fiscal 2025 period. Our gross profit (calculated as total Branded Products sales plus total Company-owned restaurant sales less cost of sales) was $4,638,000 during the fiscal 2026 period as compared to $5,104,000 during the fiscal 2025 period.

Current wording

Overall, our cost of sales increased by approximately 19% to $60,801,000 in the fiscal 2026 period as compared to $51,270,000 in the fiscal 2025 period. Our gross profit (calculated as total Branded Products sales plus total Company-owned restaurant sales less cost of sales) was $6,931,000 or 10% during the fiscal 2026 period as compared to $8,959,000 or 15% during the fiscal 2025 period.

Previous wording

Cost of sales in the Branded Product Program increased* by approximately 14% to $26,233,000 in the fiscal 2026 period as compared to $22,972,000 in the fiscal 2025 period, primarily due to a 12% increase in the average cost per pound of our hot dogs. A shrinking supply of cattle due to drought conditions and high input costs, combined with strong industry demand and inflationary pressures have resulted in higher commodity prices, including beef and beef trimmings, contributing to the increase in the average cost per pound of our hot dogs. We did not make any purchase commitments of beef during the fiscal 2026 and 2025 periods. If the cost of beef and beef trimmings increases and we are unable to pass on these higher costs through price increases or otherwise reduce any increase in our costs through the use of purchase commitments, our margins will be adversely impacted. With respect to Company-owned restaurants, our cost of sales during the fiscal 2026 period was $2,190,000 or 55% of restaurant sales, as compared to $2,269,000 or 54% of restaurant sales during the fiscal 2025 period. Food and paper costs as a percentage of Company-owned restaurant sales were 24%, down from 25% in the fiscal 2025 period, driven, in part, by a lower number of transactions and price increases across certain menu offerings. Labor and related expenses as a percentage of Company-owned restaurant sales were 31%, up from 29% primarily as a result of legislative increases in the New York State minimum wage which became effective January 1, 2025. *

Current wording

Cost of sales in the Branded Product Program increased by 21% to $55,823,000 during the fiscal 2026 period as compared to $46,290,000 during the fiscal 2025 period, primarily due to a 3% increase in the volume of hot dogs sold, as well as a 16% increase in the average cost per pound of our hot dogs. A shrinking supply of cattle due to drought conditions and high input costs, combined with strong industry demand and inflationary pressures have resulted in higher commodity prices, including beef and beef trimmings, contributing to the increase in the average cost per pound of our hot dogs. We did not make any purchase commitments of beef during the fiscal 2026 and 2025 periods. If the cost of beef and beef trimmings increases and we are unable to pass on these higher costs through price increases or otherwise reduce any increase in our costs through the use of purchase commitments, our margins will be adversely impacted. With respect to Company-owned restaurants, our cost of sales during the fiscal 2026 period was $4,978,000 or 52% of restaurant sales which was comparable to $4,980,000 or 52% of restaurant sales in the fiscal 2025 period. Food and paper costs as a percentage of Company-owned restaurant sales were 23.8%, down from 24.8% in the comparable period of the prior year primarily as a result of certain menu price increases. Labor and related expenses as a percentage of Company-owned restaurant sales were 28.0%, up from 27.4% primarily as a result of legislative increases in the New York State minimum wage which became effective January 1, 2025.** **

Previous wording

Restaurant operating expenses were $1,179,000 in the fiscal 2026 period as compared to $1,129,000 in the fiscal 2025 period. The increase is due primarily to higher credit card processing fees of $52,000. As a percentage of Company-owned restaurant sales, restaurant operating expenses were 29.6% in the fiscal 2026 period as compared to 26.9% in the fiscal 2025 period.

Current wording

Restaurant operating expenses were $2,611,000 in the fiscal 2026 period as compared to $2,518,000 in the fiscal 2025 period. The increase is due primarily to higher repairs and maintenance expenses of $27,000, higher utilities expenses of $16,000 and higher credit card processing fees of $48,000. As a percentage of Company-owned restaurant sales, restaurant operating expenses were 27.1% in the fiscal 2026 period as compared to 26.4% in the fiscal 2025 period.

Previous wording

Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment and the amortization of a definite-lived intangible asset, was $228,000 in the fiscal 2026 period as compared to $249,000 in the fiscal 2025 period.

Current wording

Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of a definite-lived intangible asset, was $464,000 in the fiscal 2026 period as compared to $496,000 in the fiscal 2025 period.

Previous wording

General and administrative expenses decreased by approximately 1% to $3,950,000 in the fiscal 2026 period as compared to $3,975,000 in the fiscal 2025 period. The reduction in general and administrative expenses was primarily attributable to lower salaries expense of $25,000 and lower trade show and travel expenses of $175,000, which were offset, in part, by higher professional fees of $97,000 and higher share-based compensation expense of $101,000.

Current wording

General and administrative expenses increased by approximately $175,000 or 2% to $7,402,000 in the fiscal 2026 period as compared to $7,227,000 in the fiscal 2025 period. The increase in general and administrative expenses was primarily attributable to higher professional fees of $120,000 and higher share-based compensation expense of $155,000 which were offset, in part, by lower trade show and travel expenses of $150,000.

Previous wording

Interest and dividend income of $203,000 in the fiscal 2026 period represented amounts earned by the Company on its interest bearing money market accounts and money market funds, as compared to $78,000 in the fiscal 2025 period. The increase is due to higher levels of invested cash earning interest at higher rates in the fiscal 2026 period as compared to the fiscal 2025 period.

Current wording

Interest and dividend income of $439,000 in the fiscal 2026 period represented amounts earned by the Company on its interest bearing money market accounts and money market funds, as compared to $297,000 in the fiscal 2025 period. The increase is due to higher levels of invested cash earning interest at higher rates in the fiscal 2026 period as compared to the fiscal 2025 period.

Previous wording

Other income, net was $21,000 in the fiscal 2026 period and the fiscal 2025 period, which primarily relates to sublease income from a franchised restaurant.

Current wording

Other income, net was $43,000 and $44,000 in the fiscal 2026 and fiscal 2025 periods, respectively, which primarily relates to sublease income.

Previous wording

The effective income tax rate for the fiscal 2026 period was 27.2% as compared to 27.4% in the fiscal 2025 period. The effective income tax rate for the fiscal 2026 period reflected income tax expense of $3,329,000 recorded on $12,257,000 of pre-tax income. The effective income tax rate for the fiscal 2025 period reflected income tax expense of $3,507,000 recorded on $12,784,000 of pre-tax income. The effective tax rates are higher than the U.S. Federal statutory rates primarily due to state and local taxes, as well as non-deductible compensation under the Internal Revenue Code Section 162(m).

Current wording

The effective income tax rate for the fiscal 2026 period was 26.7% which was comparable to the fiscal 2025 period. The effective income tax rate for the fiscal 2026 period reflected income tax expense of $5,151,000 recorded on $19,278,000 of pre-tax income. The effective income tax rate for the fiscal 2025 period reflected income tax expense of $5,576,000 recorded on $20,883,000 of pre-tax income. The effective tax rates are higher than the U.S. Federal statutory rates primarily due to state and local taxes as well as non-deductible compensation under the Internal Revenue Code Section 162(m).

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our condensed consolidated financial statements.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The OBBBA did not have a material impact to our provision for income taxes for the fiscal 2026 period.

Previous wording

Cash and cash equivalents at June 29, 2025 aggregated $26,867,000, a $935,000 decrease during the fiscal 2026 period as compared to cash of $27,802,000 at March 30, 2025. Net working capital increased to $34,939,000 at June 29, 2025 as compared to $28,371,000 at March 30, 2025.* *

Current wording

Cash and cash equivalents at September 28, 2025 aggregated $32,175,000, a $4,373,000 increase* during the fiscal 2026 period as compared to cash of $27,802,000 at March 30, 2025. Net working capital increased to $37,681,000 at September 28, 2025 as compared to $28,371,000 at March 30, 2025. *

Previous wording

Cash used in operations of $220,000 in the fiscal 2026 period is primarily attributable to net income of $8,928,000 in addition to other non-cash operating items of $567,000, offset by changes in other operating assets and liabilities of $9,715,000. Non-cash operating expenses consist principally of depreciation and amortization of $228,000, amortization of debt issuance costs of $19,000, share-based compensation expense of $288,000, and a provision for credit losses of $63,000. In the fiscal 2026 period, accounts and other receivables increased by $12,273,000 due primarily to higher Branded Product Program receivables of $4,624,000, higher franchise and license royalties receivable of $6,920,000 and higher receivables due to the Advertising Fund of $857,000. Prepaid expenses and other current assets decreased by $576,000 due principally to a decrease in prepaid income taxes of $493,000 and a decrease in prepaid marketing and other expenses of $125,000 which was offset by an increase in prepaid real estate taxes of $75,000. Accounts payable, accrued expenses and other current liabilities increased by $1,747,000 due principally to an increase in accounts payable of $1,272,000 due to the timing of seasonal product purchases for our Branded Product Program and Company-owned restaurants. Additionally, there was an increase in accrued corporate taxes of $2,697,000 due to the timing of estimated tax payments. Offsetting these increases was a reduction in accrued payroll and other benefits of $1,852,000 resulting from the payment of year-end compensation as well as the recognition of $645,000 of deferred revenue.

Current wording

Cash provided by operations of $9,938,000 in the fiscal 2026 period is primarily attributable to net income of $14,127,000 in addition to other non-cash operating items of $1,075,000, offset by changes in other operating assets and liabilities of $5,264,000. Non-cash operating expenses consist principally of depreciation and amortization of $464,000, amortization of debt issuance costs of $36,000, share-based compensation expense of $572,000, and a provision for credit losses of $63,000. In the fiscal 2026 period, accounts and other receivables increased by $7,612,000 due primarily to higher Branded Product Program receivables of $6,705,000, and higher receivables due to the Advertising Fund of $1,164,000. Prepaid expenses and other current assets decreased by $1,365,000 due principally to a decrease in prepaid income taxes of $493,000, a decrease in prepaid insurance of $288,000 and a decrease in prepaid marketing and other expenses of $588,000. Accounts payable, accrued expenses and other current liabilities increased by $1,020,000 due primarily to an increase in accounts payable of $1,979,000 due to the timing of seasonal product purchases for our Branded Product Program, an increase in accrued rebates of $319,000, and an increase in accrued corporate taxes of $639,000 due to the timing of estimated tax payments. Offsetting these increases was a reduction in accrued payroll and other benefits of $1,326,000 resulting from the payment of year-end compensation as well as the recognition of $677,000 of deferred revenue.

Previous wording

Cash used in investing activities of $115,000** **is primarily attributable to capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.

Current wording

Cash used in investing activities of $276,000** **is primarily attributable to capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.

Previous wording

During fiscal 2026, we made $600,000 of mandatory principal repayments on our Term Loan borrowings under the Credit Agreement.

Current wording

During fiscal 2026, we made $1,200,000 of mandatory principal repayments on our Term Loan borrowings under the Credit Agreement.

Previous wording

On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured 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.

Current wording

On July 10, 2024 (the “Effective Date”), the Company entered into a five-year unsecured Credit Agreement (the “Credit Agreement”) among the Company, as borrower, direct and indirect subsidiaries of the Company, as guarantors, the lenders from time to time party thereto (the “Lenders”) and Citibank, N.A., as administrative agent, swing line lender, L/C issuer and a Lender.

Previous wording

As discussed above, we had cash and cash equivalents at June 29, 2025 aggregating $26,867,000. Our Board routinely monitors and assesses its cash position and our current and potential capital requirements. The Company paid its first quarterly cash dividend of fiscal 2026 of $2,045,000** **on July 1, 2025.

Current wording

As discussed above, we had cash and cash equivalents at September 28, 2025 aggregating $32,175,000. Our Board routinely monitors and assesses its cash position and our current and potential capital requirements. The Company paid its first and second quarterly cash dividends of fiscal 2026 on July 1, 2025 and September 5, 2025 aggregating $4,089,000.

Previous wording

Effective August 8, 2025 the Company declared its second quarter fiscal 2026 dividend of $0.50 per common share to stockholders of record as of the close of business on August 25, 2025, which is payable on September 5, 2025.

Current wording

Effective November 6, 2025, the Company declared its third quarter fiscal 2026 dividend of $0.50 per common share to stockholders of record as of the close of business on November 24, 2025, which is payable on December 5, 2025.

Previous wording

If the Company pays regular quarterly cash dividends for the remainder of fiscal 2026 at the same rate as declared in the first quarter of fiscal 2026, the Company’s total cash requirement for dividends for all of fiscal 2026 would be approximately $8,179,000 based on the number of shares of common stock outstanding at August 1, 2025. The Company intends to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.

Current wording

If the Company pays regular quarterly cash dividends for the remainder of fiscal 2026 at the same rate as declared in the first and second quarter of fiscal 2026, the Company’s total cash requirement for dividends for all of fiscal 2026, inclusive of the special cash dividend of $2.50 per share, would be approximately $18,403,000 based on the number of shares of common stock outstanding at November 3, 2025. The Company intends to declare and pay quarterly cash dividends; however, there can be no assurance that any additional quarterly dividends will be declared or paid or of the amount or timing of such dividends, if any.

Previous wording

We expect that in the future we will make investments in certain existing restaurants, support the growth of the Branded Product and Branded Menu Programs, service the principal and interest obligations under the Credit Agreement, fund our dividend program and may continue our stock repurchase programs, funding those investments from our operating cash flow. We may also incur capital and other expenditures or engage in investing activities in connection with opportunistic situations that may arise on a case-by-case basis. While our Credit Agreement bears interest at a fluctuating interest rate based on the SOFR plus a spread adjustment, if the Company makes cash interest payments on the Term Loan borrowings at the interest rate effective at August 8, 2025, then for the remainder of the fiscal year ended March 29, 2026, we expect to make cash interest payments of approximately $2,150,000 on the Term Loan borrowings.

Current wording

We expect that in the future we will make investments in certain existing restaurants, support the growth of the Branded Product and Branded Menu Programs, service the principal and interest obligations under the Credit Agreement, fund our dividend program and may continue our stock repurchase programs, funding those investments from our operating cash flow. We may also incur capital and other expenditures or engage in investing activities in connection with opportunistic situations that may arise on a case-by-case basis. While our Credit Agreement bears interest at a fluctuating interest rate based on the SOFR plus a spread adjustment, if the Company makes cash interest payments on the Term Loan borrowings at the interest rate effective at November 6, 2025, then for the remainder of the fiscal year ended March 26, 2026, we expect to make cash interest payments of approximately $1,384,000 on the Term Loan borrowings.

Previous wording

At June 29, 2025, we sublet one property to a franchisee that we lease from a third party. We remain contingently liable for all costs associated with this property including rent, property taxes and insurance. We may incur future cash payments with respect to such property, consisting primarily of future lease payments, including costs and expenses associated with terminating such lease.

Current wording

At September 28, 2025, we sublet one property that we lease from a third party. We remain contingently liable for all costs associated with this property including rent, property taxes and insurance. We may incur future cash payments with respect to such property, consisting primarily of future lease payments, including costs and expenses associated with terminating such lease.

Previous wording

Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the fiscal 2026 period, and this trend may continue through the remainder of fiscal 2026. Our average cost of hot dogs during the fiscal 2026 period was approximately 12% higher than during the fiscal 2025 period. Our average cost of hot dogs during the fiscal year ended March 30, 2025 was approximately 7% higher than during the fiscal year ended March 31, 2024. Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations. This impact will depend on our ability to manage such volatility through price increases and product mix. We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during fiscal 2026. To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations. In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.

Current wording

Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the fiscal 2026 period, and this trend may continue through the remainder of fiscal 2026. Our average cost of hot dogs during the fiscal 2026 period was approximately 16% higher than during the fiscal 2025 period. Our average cost of hot dogs during the fiscal year ended March 30, 2025 was approximately 7% higher than during the fiscal year ended March 31, 2024. Inherent volatility experienced in certain commodity markets, such as those for beef and beef trimmings due to seasonal shifts, climate conditions, industry demand, inflationary pressures and other macroeconomic factors could have an adverse effect on our results of operations. This impact will depend on our ability to manage such volatility through price increases and product mix. We are unable to predict the future cost of our hot dogs and expect to experience price volatility for our beef products during the remainder of fiscal 2026. To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations. In the past, we entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future.

Previous wording

We have experienced competitive pressure on labor rates as a result of the increase in the minimum hourly wage for fast food workers where our Company-owned restaurants are located. On January 1, 2025, the minimum wage increased from $16.00 to $16.50 in New York City, Long Island and Westchester which will be followed by a $0.50 increase to $17.00 starting January 1, 2026. Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index. There has also been an increased demand for labor at all levels which has resulted in greater challenges retaining adequate staffing levels at our Company-owned restaurants; our franchised restaurants and Branded Menu Program locations; as well as for certain vendors in our supply chain that we depend on for our commodities. We remain in contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain.

Current wording

We have experienced competitive pressure on labor rates as a result of the increase in the minimum hourly wage for fast food workers where our Company-owned restaurants are located. On January 1, 2025, the minimum wage increased from $16.00 to $16.50 in New York City, Long Island and Westchester which will be followed by a $0.50 increase to $17.00 starting January 1, 2026. Further, beginning in 2027, the minimum wage across New York State will increase annually according to the Consumer Price Index.

Previous wording

We expect to continue experiencing volatility in oil and gas prices on our distribution costs for food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from rising rates.

Current wording

We expect to continue experiencing volatility in oil and gas prices on our distribution costs for food products and utility costs in the Company-owned restaurants, as well as volatile insurance costs resulting from rising rates.