NATHANS FAMOUS, INC.

Previous wording

Except for historical information contained in this news release, the matters discussed are forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, and similar expressions identify forward-looking statements, which are based on the current belief of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Among the factors that could cause actual results to differ materially include but are not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or the failure to satisfy the closing conditions; the possibility that the consummation of the proposed transaction is delayed or does not occur, including the failure of Nathan's stockholders to approve the proposed transaction; uncertainty as to whether the parties will be able to complete the proposed transaction on the terms set forth in the Merger Agreement; uncertainty regarding the timing of the receipt of required regulatory approvals for the proposed transaction and the possibility that the parties may be required to accept conditions that could reduce or eliminate the anticipated benefits of the proposed transaction as a condition to obtaining regulatory approvals or that the required regulatory approvals might not be obtained at all; the outcome of any legal proceedings that have been or may be instituted against the parties or others following announcement of the transactions contemplated by the Merger Agreement; challenges, disruptions and costs of integrating and achieving anticipated synergies, or that such synergies will take longer to realize than expected, risks that the proposed transaction and other transactions contemplated by the Merger Agreement disrupt current plans and operations that may harm Nathan's businesses; the amount of any costs, fees, expenses, impairments and charges related to the proposed transaction, and uncertainty as to the effects of the announcement or pendency of the proposed transaction on the market price of Nathan's common stock and/or on its financial performance; the impact of disease epidemics such as the COVID-19 pandemic; increases in the cost of food and paper products; the impact of price increases on customer visits; the status of our licensing and supply agreements, including our licensing revenue and overall profitability being substantially dependent on our agreement with Smithfield Foods, Inc.; the impact of our debt service and repayment obligations under our credit facility, including the effect on our ability to fund working capital, operations and make new investments; economic (including inflationary pressures like those currently being experienced); weather (including the imp…

Excerpt shortened here; the source contains the full paragraph.

Current wording

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Words such as “anticipate”, “believe”, “estimate”, “expect”, “intend”, and similar expressions identify forward-looking statements, which are based on the current belief of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. Among the factors that could cause actual results to differ materially include but are not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement or the failure to satisfy the closing conditions; the possibility that the consummation of the proposed transaction is delayed or does not occur, including the failure of Nathan's stockholders to approve the proposed transaction; uncertainty as to whether the parties will be able to complete the proposed transaction on the terms set forth in the Merger Agreement; uncertainty regarding the timing of the receipt of required regulatory approvals for the proposed transaction and the possibility that the parties may be required to accept conditions that could reduce or eliminate the anticipated benefits of the proposed transaction as a condition to obtaining regulatory approvals or that the required regulatory approvals might not be obtained at all; the outcome of any legal proceedings that have been or may be instituted against the parties or others following announcement of the transactions contemplated by the Merger Agreement; challenges, disruptions and costs of integrating and achieving anticipated synergies, or that such synergies will take longer to realize than expected, risks that the proposed transaction and other transactions contemplated by the Merger Agreement disrupt current plans and operations that may harm Nathan's businesses; the amount of any costs, fees, expenses, impairments and charges related to the proposed transaction, and uncertainty as to the effects of the announcement or pendency of the proposed transaction on the market price of Nathan's common stock and/or on its financial performance; the impact of disease epidemics such as the COVID-19 pandemic; increases in the cost of food and paper products; the impact of price increases on customer visits; the status of our licensing and supply agreements, including our licensing revenue and overall profitability being substantially dependent on our agreement with Smithfield Foods, Inc.; the impact of our debt service and repayment obligations under our credit facility, including the effect on our ability to fund working capital, operations and make new investments; economic (including inflationary pressures like those currently being experienced); weather (including the impact on sales at our restaurants particularly during the summer mon…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

At December 29, 2024, our restaurant system, excluding virtual kitchens, consisted of 236 locations, including 128 Branded Menu Program locations, and four Company-owned restaurants (including one seasonal unit), located in 17 states, and 12 foreign countries.

Current wording

At June 28, 2026, our restaurant system, excluding virtual kitchens, consisted of 223** locations, including 111 Branded Menu Program locations, as well as four Company-owned restaurants (including one seasonal unit), located in 19 states, and 11 **foreign countries.

Previous wording

At December 28, 2025, our restaurant system, excluding virtual kitchens, was comprised of 225 locations, including 112 Branded Menu Program locations, as well as four Company-owned restaurants (including one seasonal unit), located in 18 states, and 12 foreign countries.

Current wording

At June 29, 2025, our restaurant system, excluding virtual kitchens, consisted of 225 locations, including 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

Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof and in accordance with the General Corporation Law of the State of Delaware (“DGCL”), Merger Sub shall merge with and into the Company (the “Merger,” and the effective time of the Merger, the “Effective Time”). As a result of the Merger, at the Effective Time, the separate corporate existence of Merger Sub shall cease, the Company shall continue as the surviving corporation in the Merger (the “Surviving Corporation”) and the Surviving Corporation shall become a wholly owned subsidiary of Buyer. After the Merger, the Company will cease to be publicly traded.

Current wording

As previously announced, on 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 wholly owned subsidiary of Buyer (“Merger Sub”). Pursuant to the Merger Agreement, and upon the terms and subject to the conditions thereof and in accordance with the General Corporation Law of the State of Delaware (“DGCL”), Merger Sub shall merge with and into the Company (the “Merger,” and the effective time of the Merger, the “Effective Time”). As a result of the Merger, at the Effective Time, the separate corporate existence of Merger Sub shall cease, the Company shall continue as the surviving corporation in the Merger (the “Surviving Corporation”) and the Surviving Corporation shall become a wholly owned subsidiary of Buyer. After the Merger, the Company will cease to be publicly traded. Completion of the transaction remains contingent upon meeting several conditions specified in the Merger Agreement which include securing approval from the holders of a majority of Nathan’s outstanding stock, obtaining clearance from the Committee on Foreign Investment in the United States (CFIUS), and fulfilling other closing requirements. We expect the transaction to close in the second half of 2026. For more information regarding the Merger, see NOTE T – MERGER to the accompanying condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

Inflationary pressures negatively impacted our earnings during the thirty-nine week period ended December 28, 2025, most notably within our Branded Product Program segment, due primarily to commodity prices on beef and beef trimmings. We anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as rising labor costs 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.

Current wording

Inflationary pressures negatively impacted our earnings during the first three months of fiscal 2027, and we anticipate continued inflationary pressures on commodity prices, including beef and beef trimmings, as well as rising labor costs during the remainder of fiscal 2027. 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 recover such cost increases.

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). 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 29, 2026, 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 28, 2026, 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 29, 2026.

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 (i) the loss on debt extinguishment and (ii) 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) non-recurring transaction costs consisting primarily of professional fees incurred in connection with the Merger Agreement and (ii) share-based compensation that the Company believes will impact the comparability of its results of operations.

Previous wording

Our routine business pattern is affected by seasonal fluctuations, including the effects of weather and economic conditions. Historically, sales from our Company-owned restaurants, principally at Coney Island, and franchised restaurants from which franchised royalties are earned and the Company’s earnings have been highest during our first two fiscal quarters, with the fourth quarter representing the slowest period. Additionally, revenues from our Branded Product Program, Branded Menu Program and Product Licensing Program generally follow similar seasonal fluctuations, although not to the same degree. We expect that this seasonality will continue. Working capital requirements may vary throughout the year to support these seasonal patterns.

Current wording

Our routine business pattern is affected by seasonal fluctuations, including the effects of weather and economic conditions. Historically, sales from our Company-owned restaurants, principally at Coney Island, and franchised restaurants from which franchised royalties are earned and the Company’s earnings have been highest during our first two fiscal quarters, with the fourth quarter representing the slowest period. Routine seasonality is primarily attributable to weather conditions in the marketplace for our Company-owned and franchised restaurants, which are principally located in the Northeast of the United States. Additionally, revenues from our Branded Product Program, Branded Menu Program and Product licensing program generally follow similar seasonal fluctuations, although not to the same degree. We expect that this seasonality will continue. Working capital requirements may vary throughout the year to support these seasonal patterns.

Previous wording

Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen and thirty-nine weeks ended December 28, 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 weeks ended June 28, 2026 are not necessarily indicative of those for any other quarter or for a full fiscal year.

Previous wording

Foodservice sales from the Branded Product Program increased by approximately 14% to $81,871,000 for the fiscal 2026 period as compared to $71,781,000 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 1% as compared to the fiscal 2025 period. Our average selling price, which is partially correlated to the beef markets, increased by approximately 12% as compared to the fiscal 2025 period.

Current wording

Foodservice sales from the Branded Product Program increased by approximately 20% to $35,039,000 during the fiscal 2027 period as compared to $29,075,000 for the fiscal 2026 period. During the fiscal 2027 period, the total volume of hot dogs sold in the Branded Product Program increased by approximately 8% as compared to the fiscal 2026 period. Our average selling price, which is partially correlated to the beef markets, increased by approximately 17% as compared to the fiscal 2026 period.

Previous wording

Total Company-owned restaurant sales decreased by approximately 1% to $11,256,000 during the fiscal 2026 period as compared to $11,351,000 during the fiscal 2025 period. Restaurant sales were primarily impacted by a 2% decline in customer traffic offset, in part, by a 1% increase in average check.

Current wording

Total Company-owned restaurant sales decreased by approximately 1% to $3,951,000 during the fiscal 2027 period as compared to $3,986,000 during the fiscal 2026 period. Restaurant sales were primarily impacted by a 1% decline in average check.* *

Previous wording

License royalties decreased by approximately 2% to $28,993,000 in the fiscal 2026 period as compared to $29,517,000 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 2% to $26,315,000 for the fiscal 2026 period as compared to $26,751,000 in the fiscal 2025 period. The decrease is due to a 15%** 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 $72,000 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 $88,000 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 beef sticks.

Current wording

License royalties increased by approximately 10% to $13,587,000 in the fiscal 2027 period as compared to $12,381,000 in the fiscal 2026 period. Total royalties earned on sales of hot dogs from our license agreement with Smithfield Foods, Inc. at retail and foodservice, increased by approximately 10% to $12,617,000 in the fiscal 2027 period as compared to $11,464,000 in the fiscal 2026 period. The increase is due to a 3% increase in retail volume, as well as a 7% increase in net selling price. The royalties earned on the foodservice business decreased by $47,000 as compared to the fiscal 2026 period. Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by $53,000 during the fiscal 2027 period as compared to the fiscal 2026 period primarily due to higher royalties earned on sales of proprietary spices and beef sticks offset, in part, by lower royalties on franks-in-a-blanket, mozzarella sticks and other hors d’oeuvres.

Previous wording

Franchise fees and royalties were $3,372,000 in the fiscal 2026 period as compared to $3,238,000 in the fiscal 2025 period. Total royalties were $3,045,000 in the fiscal 2026 period as compared to $2,944,000 in the fiscal 2025 period. Royalties earned under the Branded Menu Program were $587,000 in the fiscal 2026 period as compared to $604,000 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 $82,000 in the fiscal 2026 period as compared to $42,000 in the fiscal 2025 period. Traditional franchise royalties were $2,376,000 in the fiscal 2026 period as compared to $2,298,000 in the fiscal 2025 period. Franchise restaurant sales increased to $54,278,000 in the fiscal 2026 period as compared to $52,400,000 in the fiscal 2025 period principally due to higher sales at travel plazas and international venues offset by lower sales at malls and casino locations primarily in Las Vegas, Nevada.* Comparable domestic franchise sales (consisting of 61* **Nathan’s units, excluding sales under the Branded Menu Program) were $41,030,000 in the fiscal 2026 period as compared to $42,009,000 in the fiscal 2025 period.

Current wording

Franchise fees and royalties were $1,074,000 in the fiscal 2027 period as compared to $1,129,000 in the fiscal 2026 period. Total royalties were $1,020,000 in the fiscal 2027 period as compared to $1,001,000 in the fiscal 2026 period. Royalties earned under the Branded Menu Program were $179,000 in the fiscal 2027 period as compared to $176,000 in the fiscal 2026 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 $48,000 in the fiscal 2027 period as compared to $15,000 in the fiscal 2026 period. Traditional franchise royalties were $793,000 in the fiscal 2027 period as compared to $810,000 in the fiscal 2026 period. Franchise restaurant sales decreased to $18,204,000 in the fiscal 2027 period as compared to $18,444,000 in the fiscal 2026 period principally due to lower sales at mall locations and casino locations, primarily in Las Vegas, Nevada, offset, in part, by higher sales at travel plazas and airports. Comparable domestic franchise sales (consisting of 60** **Nathan’s franchised restaurants, excluding sales under the Branded Menu Program) were $14,623,000 in the fiscal 2027 period as compared to $14,417,000 in the fiscal 2026 period.

Previous wording

At December 28, 2025, 225 franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 236 franchised locations, including domestic, international and Branded Menu Program franchise units at December 29, 2024. Total franchise fee income was $327,000 in the fiscal 2026 period as compared to $294,000 in the fiscal 2025 period. Domestic franchise fee income was $73,000 in the fiscal 2026 period as compared to $83,000 in the fiscal 2025 period. International franchise fee income was $160,000 in the fiscal 2026 period as compared to $178,000 during the fiscal 2025 period. We recognized $94,000** **and $33,000 in forfeited fees in the fiscal 2026 period and fiscal 2025 period, respectively. During the fiscal 2026 period, eighteen franchise locations opened and twenty-three franchise locations closed. During the fiscal 2025 period, twenty-four franchise locations opened and eighteen franchise locations closed.

Current wording

At June 28, 2026, 223 franchised locations, including domestic, international and Branded Menu Program units were operating as compared to 225 franchised locations, including domestic, international and Branded Menu Program units at June 29, 2025. Total franchise fee income was $54,000 in the fiscal 2027 period as compared to $128,000 in the fiscal 2026 period. Domestic franchise fee income was $27,000 in the fiscal 2027 period as compared to $23,000 in the fiscal 2026 period. International franchise fee income was $27,000 in the fiscal 2027 period as compared to $54,000 in the fiscal 2026 period. We recognized $51,000 in forfeited fees in the fiscal 2026 period. During the fiscal 2027 period, four franchise locations opened and two franchise locations closed. During the fiscal 2026 period, eight franchise locations opened and thirteen franchise locations closed.

Previous wording

Advertising fund revenue, after eliminating Company contributions, was $1,505,000 in the fiscal 2026 period, as compared to $1,508,000 during the fiscal 2025 period.

Current wording

Advertising fund revenue, after eliminating Company contributions, was $411,000 in the fiscal 2027 period as compared to $427,000 in the fiscal 2026 period.

Previous wording

Overall, our cost of sales increased by approximately 18% to $83,939,000 in the fiscal 2026 period as compared to $70,841,000 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 $9,188,000 or 10% of sales during the fiscal 2026 period as compared to $12,291,000 or 15% of sales during the fiscal 2025 period.

Current wording

Overall, our cost of sales increased by approximately 24% to $35,205,000 in the fiscal 2027 period as compared to $28,423,000 in the fiscal 2026 period. Our gross profit (calculated as total Branded Products sales plus total Company-owned restaurant sales less cost of sales) was $3,785,000 during the fiscal 2027 period as compared to $4,638,000 during the fiscal 2026 period.

Previous wording

Cost of sales in the Branded Product Program increased by 20% to $77,766,000 during the fiscal 2026 period as compared to $64,626,000 during the fiscal 2025 period, primarily due to a 1% increase in the volume of hot dogs sold, as well as a 19% 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 $6,173,000 or 55% of restaurant sales which was comparable to the fiscal 2025 period.** *Food and paper costs as a percentage of Company-owned restaurant sales were 24%, down from 25% in the comparable period of the prior year.*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 approximately 26% to $33,087,000 in the fiscal 2027 period as compared to $26,233,000 in the fiscal 2026 period, primarily due to an 8% increase in the volume of hot dogs sold, as well as a 22% *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 2027 and 2026 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 2027 period was $2,118,000 or 54% of restaurant sales, as compared to $2,190,000 or 55% of restaurant sales during the fiscal 2026 period. Food and paper costs as a percentage of Company-owned restaurant sales were 24%, which was comparable to the prior year. Labor and related expenses as a percentage of Company-owned restaurant sales were 29%, down from 31% primarily as a result of tighter management and staffing stabilization.

Previous wording

Restaurant operating expenses were $3,518,000 in the fiscal 2026 period as compared to $3,509,000 in the fiscal 2025 period. The increase is due primarily to higher repairs and maintenance expenses of $39,000, higher utilities expenses of $19,000 and higher delivery fees of $19,000 which were offset, in part, by lower credit card processing fees of $11,000 and lower occupancy expenses of $21,000.* * As a percentage of Company-owned restaurant sales, restaurant operating expenses were 31% in the fiscal 2026 period which was comparable to the fiscal 2025 period.

Current wording

Restaurant operating expenses were $1,216,000 in the fiscal 2027 period as compared to $1,179,000 in the fiscal 2026 period. The increase is due primarily to higher repairs and maintenance expense of $14,000 and higher utilities expense of $36,000 which were offset, in part, by lower credit card processing fees of $29,000. As a percentage of Company-owned restaurant sales, restaurant operating expenses were 30.8% in the fiscal 2027 period as compared to 29.6% in the fiscal 2026 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 $696,000 in the fiscal 2026 period as compared to $731,000 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 $239,000 in the fiscal 2027 period as compared to $228,000 in the fiscal 2026 period.

Previous wording

General and administrative expenses increased by $946,000 or 27% to $4,396,000 in the third quarter fiscal 2026 as compared to $3,450,000 in the third quarter fiscal 2025. The increase in general and administrative expenses was primarily attributable to higher professional fees of $852,000 related to our pending acquisition with Buyer pursuant to the Merger Agreement. Refer to NOTE S – SUBSEQUENT EVENTS in the accompanying condensed consolidated financial statements and “Recent Events – Merger Agreement” above for further information.

Current wording

General and administrative expenses increased by approximately 9% to $4,323,000 in the fiscal 2027 period as compared to $3,950,000 in the fiscal 2026 period. The increase in general and administrative expenses was primarily attributable to higher professional fees of $288,000 due primarily to our pending acquisition with Buyer pursuant to the Merger Agreement. Refer to NOTE T – MERGER in the accompanying condensed consolidated financial statements above for further information.

Previous wording

Interest expense of $707,000 in the third quarter fiscal 2026 represented interest expense of $690,000 on the Secured Overnight Financing Rate (“SOFR”) Term Loan borrowings and amortization of debt issuance costs of $17,000.

Current wording

Interest expense of $638,000 in the fiscal 2027 period represented interest expense of $620,000 on the Secured Overnight Financing Rate (“SOFR”) Term Loan borrowings and amortization of debt issuance costs of $18,000.

Previous wording

The reduction in interest expense of $135,000 is due 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 $120,000 is due primarily to lower outstanding long-term debt and a lower interest rate associated with our Credit Agreement.

Previous wording

Interest and dividend income of $645,000 in the fiscal 2026 period represented amounts earned by the Company on its interest bearing money market accounts and money market fund as compared to $480,000 in the fiscal 2025 period. The increase is due to a 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 $133,000 in the fiscal 2027 period represented amounts earned by the Company on its interest bearing money market accounts and money market funds as compared to $203,000 in the fiscal 2026 period. The decrease is due to lower levels of invested cash in the fiscal 2027 period as compared to the fiscal 2026 period.

Previous wording

Other income, net was $122,000** **in the third quarter of fiscal 2026 which primarily relates to sublease income and includes $84,000 of settlement income received in connection with the termination of a lease for certain premises located at 281 Walt Whitman Road, Huntington Station, New York on November 4, 2025. Other income, net was $21,000 in the third quarter of fiscal 2025 which primarily relates to sublease income.

Current wording

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

Previous wording

The effective income tax rate for the fiscal 2026 period was 28.4% compared to 26.5% in the fiscal 2025 period. The effective income tax rate for the fiscal 2026 period reflected income tax expense of $6,815,000 recorded on $24,026,000 of pre-tax income. The effective income tax rate for the fiscal 2025 period reflected income tax expense of $7,151,000 recorded on $26,942,000 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). The effective income tax rate for the fiscal 2026 period included an unfavorable discrete tax adjustment of 1.0% for non-deductible transaction costs.

Current wording

The effective income tax rate for the fiscal 2027 period was 27.4% as compared to 27.2% in the fiscal 2026 period. The effective income tax rate for the fiscal 2027 period reflected income tax expense of $3,334,000 recorded on $12,163,000 of pre-tax income. 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 tax rates are higher than the U.S. Federal statutory rates primarily due to state and local taxes, as well as non-deductible executive compensation under the Internal Revenue Code Section 162(m). The effective income tax rate for the fiscal 2027 period included an unfavorable discrete tax adjustment of 0.6% for non-deductible transaction costs offset, in part, by a favorable discrete tax adjustment of 0.4% for stock compensation activity.

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. The OBBBA did not have a material impact to our provision for income taxes for the fiscal 2026 period.

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 to be implemented through 2027. The OBBBA did not have a material impact to our provision for income taxes for the fiscal 2027 period.

Previous wording

The amount of unrecognized tax benefits at December 28, 2025 was $491,000 all of which would impact the Company’s effective tax rate, if recognized. As of December 28, 2025, the Company had approximately $438,000 accrued for the payment of interest and penalties in connection with unrecognized tax benefits.

Current wording

The amount of unrecognized tax benefits at June 28, 2026 was $375,000 all of which would impact the Company’s effective tax rate, if recognized. As of June 28, 2026, the Company had approximately $372,000 accrued for the payment of interest and penalties in conjunction with unrecognized tax benefits.

Previous wording

Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $55,000 during the fiscal year ending March 26, 2026 due primarily to the lapse of statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.

Current wording

Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $50,000 during the fiscal year ending March 28, 2027 due primarily to the lapse of statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.

Previous wording

Cash and cash equivalents at December 28, 2025 aggregated $24,545,000, a $3,257,000 decrease during the fiscal 2026 period as compared to cash of $27,802,000 at March 30, 2025. Net working capital decreased to $27,849,000 at December 28, 2025 as compared to $28,371,000 at March 30, 2025.

Current wording

Cash and cash equivalents at June 28, 2026 aggregated $24,686,000, a $282,000 increase during the fiscal 2027 period as compared to cash of $24,404,000 at March 29, 2026. Net working capital increased to $34,764,000 at June 28, 2026 as compared to $28,218,000 at March 29, 2026.* *

Previous wording

Our primary sources of liquidity and capital resources are cash flows from operations and our cash and cash equivalents. Our primary cash requirements are to fund our quarterly dividends, to satisfy the debt service under our credit facility, capital expenditures, lease obligations, working capital and general corporate needs.

Current wording

Our primary sources of liquidity and capital resources are cash flows from operations and our cash and cash equivalents. Our primary cash requirements are to fund the June 2026 Regular Cash Dividend, to satisfy the debt service under our credit facility, capital expenditures, lease obligations, working capital and general corporate needs.

Previous wording

Cash provided by operations of $15,692,000 in the fiscal 2026 period is primarily attributable to net income of $17,211,000 in addition to other non-cash operating items of $1,575,000, offset by changes in other operating assets and liabilities of $3,094,000. Non-cash operating expenses consist principally of depreciation and amortization of $696,000, amortization of debt issuance costs of $53,000, share-based compensation expense of $852,000, and a provision for credit losses of $63,000. In the fiscal 2026 period, accounts and other receivables increased by $3,725,000 due primarily to higher Branded Product Program receivables of $3,576,000, and higher receivables due to the Advertising Fund of $612,000. Prepaid expenses and other current assets decreased by $1,053,000 due principally to a decrease in prepaid income taxes of $493,000, and a decrease in prepaid marketing and other expenses of $545,000. Accounts payable, accrued expenses and other current liabilities decreased by $593,000 due primarily to the recognition of $1,642,000 of deferred revenue, net of new deferrals, and a reduction in accrued payroll and other benefits of $739,000 resulting from the payment of year-end compensation. Offsetting these decreases was an increase in accrued professional fees of $768,000, an increase in accrued rebates of $247,000 and an increase in accrued corporate taxes of $539,000 due to the timing of estimated tax payments.

Current wording

Cash provided by operations of $949,000 is primarily attributable to net income of $8,829,000 in addition to other non-cash operating items of $565,000, offset by changes in other operating assets and liabilities of $8,445,000. Non-cash operating expenses consist principally of depreciation and amortization of $239,000, amortization of debt issuance costs of $18,000, share-based compensation expense of $280,000 and a provision for credit losses of $57,000. In the fiscal 2027 period, accounts and other receivables increased by $11,493,000 due primarily to higher Branded Product Program receivables of $3,819,000, higher franchise and license royalties receivable of $6,975,000 and higher receivables due to the Advertising Fund of $685,000**.** Inventories increased by $508,000 due to timing and Branded Product Program inventory in transit. Prepaid expenses and other current assets decreased by $541,000 due primarily to a decrease in prepaid income taxes of $210,000 and a decrease in prepaid marketing and other expenses of $401,000 which were offset, in part, by an increase in prepaid real estate taxes of $92,000. Accounts payable, accrued expenses and other current liabilities increased by $3,100,000 due principally to an increase in accounts payable of $2,701,000 due to the timing of product purchases for our Branded Product Program and Company-owned restaurants. Additionally, there was an increase in accrued corporate taxes of $2,906,000 due to the timing of estimated tax payments. Offsetting these increases was a reduction in accrued payroll and other benefits of $1,848,000 resulting from the payment of fiscal year-end 2026 compensation as well as the recognition of $707,000 of deferred revenue.

Previous wording

Cash used in investing activities was $332,000 in the fiscal 2026 period primarily attributable to capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.

Current wording

Cash used in investing activities of $67,000** in the fiscal 2027 period **is primarily attributable to capital expenditures incurred for our Branded Product Program and our Coney Island restaurants.

Previous wording

During fiscal 2026, we made $1,800,000 of mandatory principal repayments on our Term Loan borrowings under the Credit Agreement.

Current wording

During fiscal 2027, we made $600,000 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 (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.

Current 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.

Previous wording

In 2016, the Board authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company. As of December 28, 2025, Nathan’s has repurchased 1,101,884 shares at a cost of $39,000,000** **under the sixth stock repurchase plan. At December 28, 2025, there were 98,116 shares remaining to be repurchased pursuant to the sixth stock repurchase plan. The plan does not have a set expiration date. Purchases under the Company’s stock repurchase program may be made from time to time, depending on market conditions, in open market or privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases. There were no stock repurchases during the fiscal 2026 period and the fiscal 2025 period. We may return capital to our stockholders through stock repurchases, subject to any restrictions in our Credit Agreement, although there is no assurance that the Company will make any repurchases under its existing stock repurchase plan.

Current wording

In 2016, the Board authorized increases to the sixth stock repurchase plan for the purchase of up to 1,200,000 shares of its common stock on behalf of the Company. As of June 28, 2026, Nathan’s has repurchased 1,101,884 shares at a cost of $39,000,000** **under the sixth stock repurchase plan. At June 28, 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. There were no stock repurchases during the fiscal 2027 period and the fiscal 2026 period. The terms of the Merger Agreement prohibit the Company from repurchasing any of its common stock subject to certain limited exceptions.

Previous wording

As discussed above, we had cash and cash equivalents at December 28, 2025 aggregating $24,545,000.** ** Our Board routinely monitors and assesses its cash position and our current and potential capital requirements. The Company paid its first, second and third quarterly cash dividends of $0.50 per share on July 1, 2025, September 5, 2025, and December 5, 2025, as well as a special cash dividend of $2.50 per share on December 5, 2025 aggregating $16,358,000.

Current wording

As discussed above, we had cash and cash equivalents at June 28, 2026 aggregating $24,686,000. Our Board routinely monitors and assesses its cash position and our current and potential capital requirements. The Company paid the June 2026 Regular Cash Dividend of $2,048,000** **on June 30, 2026. After the payment of the June 2026 Regular Cash Dividend, the Company is no longer permitted to declare and pay any further dividends under the Merger Agreement.

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 February 5, 2026, then for the remainder of the fiscal year ended March 29, 2026, we expect to make cash interest payments of approximately $650,000 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, and service the principal and interest obligations under the Credit Agreement, 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 as permitted pursuant to our Credit Agreement, and the Merger Agreement. 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 7, 2026, then for the remainder of the fiscal year ending March 28, 2027, we expect to make cash interest payments of approximately $1,802,000 on the Term Loan borrowings.

Previous wording

We may from time to time seek to make voluntary prepayments of our Term Loan borrowings under our Credit Agreement. Such voluntary prepayments, if any, will depend on market conditions, our liquidity requirements, satisfactory compliance of covenants and conditions pursuant to our Credit Agreement and other factors.

Current wording

We may from time to time seek to make voluntary prepayments of our Term Loan borrowings under our Credit Agreement. Such voluntary prepayments, if any, will depend on market conditions, our liquidity requirements, satisfactory compliance of covenants and conditions pursuant to our Credit Agreement, the Merger Agreement and other factors.

Previous wording

Management believes that available cash and cash equivalents and cash generated from operations should provide sufficient capital to finance our operations, satisfy our debt service requirements, fund dividend distributions and, if any, stock repurchases for at least the next 12 months.

Current wording

Management believes that available cash and cash equivalents and cash generated from operations should provide sufficient capital to finance our operations, fund our operating lease obligations, capital expenditures and satisfy our debt service requirements for the next 12 months.

Previous wording

At December 28, 2025, our contractual obligations primarily consist of the Term Loan borrowings under our Credit Agreement and the mandatory debt principal repayments and the related interest payments, operating leases, and employment agreements with certain executive officers. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. See NOTE P – LONG TERM DEBT and NOTE Q – LEASES in the accompanying condensed consolidated financial statements included in Part I, Item 1. for additional information and as disclosed in our Form 10-K for the fiscal year ended March 30, 2025 as filed with the SEC on June 10, 2025.

Current wording

At June 28, 2026, our contractual obligations primarily consist of the Term Loan borrowings under our Credit Agreement and the mandatory debt principal repayments and the related interest payments, operating leases, and employment agreements with certain executive officers. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. See NOTE P – LONG-TERM DEBT and NOTE Q - LEASES in the accompanying condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q and as disclosed in our Form 10-K for the fiscal year ended March 29, 2026 as filed with the SEC on June 9, 2026.