~~FORM 10-Q~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[ ~~X ]~~☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended ~~December~~ September 24, 2023.24~~, 201~~7.

~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT ofOF 1934
	For the transition period from to .

Commission File No. ~~file number 0~~001-3596201-35962

NATHAN'S FAMOUS, INC.

(Exact name of registrant as specified in its charter)

	Delaware		11-3166443
	(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

	~~One Jericho Plaza, Second Floor – Wing A, Jericho, New York 11753~~
	~~(Address of principal executive offices)~~ ~~(Zip Code)~~

One Jericho Plaza, Second Floor – Wing A, Jericho, New York 11753

(Address and Zip Code of principal executive offices)

(516) 338-8500

~~(Registrant's~~(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $.01 per share		NATH		The NASDAQ Global Market

Indicate by check mark whether the ~~registrant~~:registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X☒ No __☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes X☒ No __☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check One):~~

Large accelerated filer ~~___~~☐		Accelerated filer X☒
Non-accelerated filer ~~___ (do not check if a smaller reporting company)~~☐
~~Emerging growth company ___~~	Smaller reporting company ~~___~~☒
		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~___~~☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __☐ No X☒

At~~February 2, 2018~~ October 27, 2023 an aggregate of ~~4,184,549~~4,079,720 shares of the registrant's common stock, par value of $.01, were outstanding.

-1-

NATHAN'S FAMOUS, INC. AND SUBSIDIARIES

~~INDE~~XINDEX

		Page Number

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements.	3

	~~Consolidated Financial Statements~~
	Consolidated Balance Sheets – ~~December~~September 24, ~~2017~~2023 (Unaudited) and March 26, ~~2017~~2023	3

	Consolidated Statements of Earnings (Unaudited) -– Thirteen and ~~Thirty-nine~~Twenty-six Weeks Ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016~~2022	4

	Consolidated ~~Statement~~Statements of ~~Stockholders’ (Deficit)~~Stockholders’ Deficit (Unaudited) – ~~Thirty-nine~~Thirteen Weeks Ended ~~December~~September 24, ~~2017~~2023 and September 25, 2022	5

	Consolidated Statements of Stockholders’ Deficit (Unaudited) – Twenty-six Weeks Ended September 24, 2023 and September 25, 2022	6

	Consolidated Statements of Cash Flows (Unaudited) – ~~Thirty-nine~~Twenty-six Weeks Ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016~~2022	6 7

	Notes to Consolidated Financial Statements	7 8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	1820

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2830

Item 4.	Controls and Procedures.	2931

PART II.	OTHER INFORMATION	32

Item 1.	Legal Proceedings.	3032

Item 1A.	Risk Factors.	3032

Item 2.	Unregistered Sales of Equity Securities, ~~and~~ Use of ~~Proceeds.~~ Proceeds, and Issuer Purchases of Equity Securities.	3032

Item 3.	Defaults Upon Senior Securities.	3032

Item 4.	Mine Safety Disclosures.	3032

Item 5.	Other Information.	3032

Item 6.	Exhibits.	3133

SIGNATURES		3234

~~Exhibit Index~~		33

-2-

~~Nathan’s Famous, Inc. and Subsidiaries~~

~~CONSOLIDATED BALANCE SHEETS~~

~~December 24, 2017 and March 26, 2017~~

~~(in thousands, except share and per share amounts)~~

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

December 24, 2017

March 26, 2017

(Unaudited)

ASSETS

CURRENT ASSETS

Cash
$ 67,288 $ 56,915
Accounts and other receivables, net
11,873 8,948
Inventories
406 579
Prepaid expenses and other current assets (Note G)
3,352 1,093
Total current assets
82,919 67,535

Property and equipment, net of accumulated depreciation of $8,525 and $7,522, respectively
8,276 8,844
Goodwill
95 95
Intangible asset
1,353 1,353
Other assets
293 298
Total assets
$ 92,936 $ 78,125

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

CURRENT LIABILITIES

Accounts payable
$ 4,268 $ 4,809
Accrued expenses and other current liabilities (Note H)
26,644 5,865
Deferred franchise fees
198 98
Total current liabilities
31,110 10,772

Long-term debt, net of unamortized debt issuance costs of $5,374 and $3,525, respectively (Note N)
144,626 131,475
Other liabilities
1,484 1,555
Deferred income taxes
751 814

Total liabilities
177,971 144,616

COMMITMENTS AND CONTINGENCIES (Note O)

STOCKHOLDERS’ (DEFICIT)

Common stock, $.01 par value; 30,000,000 shares authorized; 9,311,922 and 9,303,870 shares issued; and 4,184,549 and 4,176,497 shares outstanding at December 24, 2017 and March 26, 2017, respectively
93 93
Additional paid-in capital
60,723 60,582
(Accumulated deficit)
(68,548 ) (49,863 )
Stockholders’ (deficit) equity before treasury stock
(7,732 ) 10,812
Treasury stock, at cost, 5,127,373 shares at December 24, 2017 and March 26, 2017, respectively
(77,303 ) (77,303 )
Total stockholders’ (deficit)
(85,035 ) (66,491 )

Total liabilities and stockholders’ (deficit)
$ 92,936 $ 78,125

Nathan’s Famous, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	September 24, 2023			March 26, 2023
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	36,978		$	29,861
Accounts and other receivables, net (Note G)		15,762			15,066
Inventories		921			539
Prepaid expenses and other current assets (Note H)		846			1,895
Total current assets		54,507			47,361

Property and equipment, net of accumulated depreciation of $11,411 and $10,871, respectively		2,949			3,321
Operating lease assets (Note Q)		6,638			6,421
Goodwill		95			95
Intangible asset, net (Note I)		782			869
Deferred income taxes		467			375
Other assets		154			168

Total assets	$	65,592		$	58,610

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable	$	5,611		$	6,461
Accrued expenses and other current liabilities (Note K)		6,638			8,130
Current portion of operating lease liabilities (Note Q)		1,875			1,782
Deferred franchise fees		336			336
Total current liabilities		14,460			16,709

Long-term debt, net of unamortized debt issuance costs of $768 and $952, respectively (Note P)		79,232			79,048
Operating lease liabilities (Note Q)		5,408			5,406
Other liabilities		783			737
Deferred franchise fees		1,080			1,272

Total liabilities		100,963			103,172

COMMITMENTS AND CONTINGENCIES (Note R)

STOCKHOLDERS’ DEFICIT
Common stock, $.01 par value; 30,000,000 shares authorized; 9,369,235 shares issued; and 4,079,720 shares outstanding at September 24, 2023 and March 26, 2023		94			94
Additional paid-in capital		62,924			62,565
Accumulated deficit		(11,727	)		(20,559	)
Stockholders’ equity before treasury stock		51,291			42,100

Treasury stock, at cost, 5,289,515 shares at September 24, 2023 and March 26, 2023		(86,662	)		(86,662	)
Total stockholders’ deficit		(35,371	)		(44,562	)

Total liabilities and stockholders’ deficit	$	65,592		$	58,610

The accompanying notes are an integral part of these consolidated financial statements.

-3-

Nathan’s’s Famous, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF EARNINGS

~~Thirteen~~ ~~and thirty-nine weeks ended December 24, 2017 and December 25, 2016~~

(in thousands, except ~~share and~~ per share amounts)

(Unaudited)

	Thirteen weeks ended						Thirty-nine weeks ended						Thirteen weeks ended						Twenty-six weeks ended
	December 24, 2017			December 25, 2016			December 24, 2017			December 25, 2016			September 24, 2023			September 25, 2022			September 24, 2023			September 25, 2022

REVENUES
Sales	$	16,767		$	14,859		$	63,639		$	58,012		$	28,545		$	27,301		$	57,373		$	54,195
License royalties		4,228			3,990			17,393			15,602			8,339			8,413			19,997			19,727
Franchise fees and royalties		1,088			1,088			3,575			3,752			1,291			1,199			2,366			2,292
Advertising fund revenue														569			584			993			1,003
Total revenues		22,083			19,937			84,607			77,366			38,744			37,497			80,729			77,217

COSTS AND EXPENSES
Cost of sales		12,599			10,785			48,165			41,732			24,187			21,898			48,871			44,565
Restaurant operating expenses		760			695			2,769			2,711			1,340			1,253			2,383			2,285
Depreciation and amortization		320			309			1,055			1,005			315			301			628			534
General and administrative expenses		3,034			3,394			10,064			10,309			3,229			3,372			7,287			6,961
Advertising fund expense														569			759			993			1,178
Total costs and expenses		16,713			15,183			62,053			55,757			29,640			27,583			60,162			55,523

Income from operations		5,370			4,754			22,554			21,609			9,104			9,914			20,567			21,694

Loss on debt extinguishment		(8,872	)		-			(8,872	)		-
Interest expense		(3,650	)		(3,663	)		(10,976	)		(11,002	)		(1,413	)		(1,943	)		(2,827	)		(3,887	)
Interest income		44			35			114			71			150			80			212			102
Other income, net		22			21			64			64			23			34			44			56

(Loss) income before provision for income taxes		(7,086	)		1,147			2,884			10,742
(Benefit) provision for income taxes		(3,307	)		448			621			3,986
Net (loss) income	$	(3,779	)	$	699		$	2,263		$	6,756
Income before provision for income taxes														7,864			8,085			17,996			17,965
Provision for income taxes														2,153			2,127			4,897			4,870
Net income													$	5,711		$	5,958		$	13,099		$	13,095

PER SHARE INFORMATION
(Loss) income per share:
Weighted average shares used in computing income per share:
Basic	$	( 0.90	)	$	. 17		$	.54		$	1.62			4,080			4,083			4,080			4,098
Diluted	$	(0.90	)	$	. 17		$	.54		$	1.61			4,092			4,083			4,090			4,098

Weighted average shares used in computing (loss) income per share:
Income per share:
Basic		4,185,000			4,175,000			4,180,000			4,171,000		$	1.40		$	1.46		$	3.21		$	3.20
Diluted		4,185,000			4,209,000			4,219,000			4,202,000		$	1.40		$	1.46		$	3.20		$	3.20

Dividends declared per share													$	0.50		$	0.45		$	1.00		$	0.90

The accompanying notes are an integral part of these consolidated financial statements.

-4-

Nathan’s’s Famous, Inc. and Subsidiaries

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’(DEFICIT)

T~~hirty-nine~~Thirteen weeks ended ~~December~~September 24, ~~2017~~2023 and September 25, 2022

(in thousands, except share amounts)

(Unaudited)

Additional

Total

Common

Common

Paid-in

(Accumulated

Treasury Stock, at Cost

Stockholders’

Shares

Stock

Capital

Deficit)

Shares

Amount

(Deficit)

Balance, March 26, 2017
9,303,870 $ 93 $ 60,582 $ (49,863 ) 5,127,373 $ (77,303 ) $ (66,491 )

Shares issued in connection with share-based compensation plans
8,052 - - - - - -

Withholding tax on net share settlement of share-based compensation plans
- - (157 ) - - - (157 )

Share-based compensation
- - 298 - - - 298

Cash dividends declared on common stock and restricted stock
- - - (20,948 ) - - (20,948 )

Net income
- - - 2,263 - - 2,263

Balance, December 24, 2017
9,311,922 $ 93 $ 60,723 $ (68,548 ) 5,127,373 $ (77,303 ) $ (85,035 )

					Additional										Total
	Common		Common		Paid-in		Accumulated			Treasury Stock, at Cost					Stockholders’
	Shares		Stock		Capital		Deficit			Shares		Amount			Deficit

Balance, June 25, 2023		9,369,235	$	94	$	62,742	$	(15,398	)		5,289,515	$	(86,662	)	$	(39,224	)

Dividends on common stock		-		-		-		(2,040	)		-		-			(2,040	)
Share-based compensation		-		-		182		-			-		-			182
Net income		-		-		-		5,711			-		-			5,711
Balance, September 24, 2023		9,369,235	$	94	$	62,924	$	(11,727	)		5,289,515	$	(86,662	)	$	(35,371	)

~~The accompanying not~~~~es are an integral part of these financial~~ ~~statement~~s.

~~-5-~~

					Additional										Total
	Common		Common		Paid-in		Accumulated			Treasury Stock, at Cost					Stockholders’
	Shares		Stock		Capital		Deficit			Shares		Amount			Deficit

Balance, June 26, 2022		9,369,235	$	94	$	62,315	$	(27,334	)		5,274,451	$	(85,840	)	$	(50,765	)

Repurchase of common stock											15,064		(822	)		(822	)
Dividends on common stock		-		-		-		(1,836	)		-		-			(1,836	)
Share-based compensation		-		-		8		-			-		-			8
Net income		-		-		-		5,958			-		-			5,958
Balance, September 25, 2022		9,369,235	$	94	$	62,323	$	(23,212	)		5,289,515	$	(86,662	)	$	(47,457	)

~~Nathan’s Famous, Inc. and Subsidiaries~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

T~~hirty-nine weeks ended December 24, 2017 and December 25, 2016~~

~~(in thousands)~~

~~(Unaudited)~~

December 24,
2017

December 25,
2016

Cash flows from operating activities:

Net income
$ 2,263 $ 6,756
Adjustments to reconcile net income to net cash provided by operating activities

Loss on debt extinguishment 8,872 -
Depreciation and amortization
1,055 1,005
Amortization of debt issuance costs
932 910
Share-based compensation expense
298 482
Income tax benefit on stock option exercises
194 659
Provision for doubtful accounts
42 34
Deferred income taxes
(63 ) 92
Changes in operating assets and liabilities:

Accounts and other receivables, net
(2,967 ) (1,523 )
Inventories
173 293
Prepaid expenses and other current assets
(2,259 ) 643
Other assets
5 15
Accounts payable, accrued expenses and other current liabilities
(779 ) 545
Deferred franchise fees
100 4
Other liabilities
(71 ) (142 )

Net cash provided by operating activities
7,795 9,773

Cash flows from investing activities:

Purchase of property and equipment
(488 ) (1,001 )

Net cash (used in) investing activities
(488 ) (1,001 )

Cash flows from financing activities:

Proceeds from issuance of long-term debt
150,000 -
Cash payments for extinguishment of debt
(135,000 ) -
Premium paid on extinguishment of debt
(6,750 ) -
Debt issuance costs
(4,902 ) -
Proceeds from exercise of stock options
- 44
Dividends paid upon vesting of restricted stock
(125 ) (375 )
Payments of withholding tax on net share settlement of share-based compensation plans
(157 ) (994 )
Repurchase of treasury stock
- (1,272 )

Net cash provided by (used in) financing activities
3,066 (2,597 )

Net increase in cash
10,373 6,175

Cash, beginning of period
56,915 50,228

Cash, end of period
$ 67,288 $ 56,403

Cash paid during the period for:

Interest
$ 9,038 $ 6,750
Income taxes paid
$ 3,447 $ 2,976

Noncash financing activity:

Dividends declared
$ 20,948 $ -

The accompanying notes are an integral part of these consolidated financial statements.

-5-

Nathan’s Famous, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

Twenty-six weeks ended September 24, 2023 and September 25, 2022

(in thousands, except share amounts)

(Unaudited)

					Additional										Total
	Common		Common		Paid-in		Accumulated			Treasury Stock, at Cost					Stockholders’
	Shares		Stock		Capital		Deficit			Shares		Amount			Deficit

Balance, March 26, 2023		9,369,235	$	94	$	62,565	$	(20,559	)		5,289,515	$	(86,662	)	$	(44,562	)

Cumulative effect of adoption of ASU 2016-13 (Note B)		-		-		-		(187	)		-		-			(187	)
Dividends on common stock		-		-		-		(4,080	)		-		-			(4,080	)
Share-based compensation		-		-		359		-			-		-			359
Net income		-		-		-		13,099			-		-			13,099
Balance, September 24, 2023		9,369,235	$	94	$	62,924	$	(11,727	)		5,289,515	$	(86,662	)	$	(35,371	)

					Additional										Total
	Common		Common		Paid-in		Accumulated			Treasury Stock, at Cost					Stockholders’
	Shares		Stock		Capital		Deficit			Shares		Amount			Deficit

Balance, March 27, 2022		9,369,235	$	94	$	62,307	$	(32,619	)		5,254,081	$	(84,770	)	$	(54,988	)

Repurchase of common stock		-		-		-		-			35,434		(1,892	)		(1,892	)
Dividends on common stock		-		-		-		(3,688	)		-		-			(3,688	)
Share-based compensation		-		-		16		-			-		-			16
Net income		-		-		-		13,095			-		-			13,095
Balance, September 25, 2022		9,369,235	$	94	$	62,323	$	(23,212	)		5,289,515	$	(86,662	)	$	(47,457	)

The accompanying notes are an integral part of these consolidated financial statements.

-6-

Nathan’s Famous, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-six weeks ended September 24, 2023 and September 25, 2022

(in thousands)

(Unaudited)

	September 24, 2023			September 25, 2022
Cash flows from operating activities:
Net income	$	13,099		$	13,095
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		628			534
Gain on disposal of property and equipment		-			(14	)
Amortization of debt issuance costs		184			254
Share-based compensation expense		359			16
Provision for doubtful accounts		55			80
Deferred income taxes		(27	)		15
Other non-cash items		(122	)		(123	)
Changes in operating assets and liabilities:
Accounts and other receivables, net		(1,003	)		(2,877	)
Inventories		(382	)		(201	)
Prepaid expenses and other current assets		1,049			573
Other assets		14			13
Accounts payable, accrued expenses and other current liabilities		(2,342	)		(1,384	)
Deferred franchise fees		(192	)		(259	)
Other liabilities		46			50

Net cash provided by operating activities		11,366			9,772

Cash flows from investing activities:
Insurance proceeds for property and equipment		-			42
Purchase of property and equipment		(169	)		(440	)

Net cash used in investing activities		(169	)		(398	)

Cash flows from financing activities:
Dividends paid to stockholders		(4,080	)		(3,688	)
Repurchase of treasury stock		-			(1,892	)

Net cash used in financing activities		(4,080	)		(5,580	)

Net increase in cash and cash equivalents		7,117			3,794

Cash and cash equivalents, beginning of period		29,861			50,063

Cash and cash equivalents, end of period	$	36,978		$	53,857

Cash paid during the period for:
Interest	$	2,650		$	3,644
Income taxes	$	4,265		$	3,576

Non-cash financing activity:
Dividends declared per share	$	1.00		$	0.90

The accompanying notes are an integral part of these consolidated financial statements.

-7-

NATHAN'S FAMOUS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~December~~September 24, ~~2017~~2023

(Unaudited)

NOTE A - BASIS OF PRESENTATION

The accompanying consolidated financial statements of Nathan's Famous, Inc. and subsidiaries (collectively ~~“Nathan’s,~~“Nathan’s,” the “Company,” “we,” “us” or “our”) as of and for the thirteen and ~~thirty-nine~~twenty-six week periods ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016~~2022 have been prepared in accordance with accounting principles generally accepted in the United States of ~~America.~~America (“GAAP”). The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of financial condition, results of operations and cash flows for the periods presented. However, our results of operations are seasonal in nature, and the results of any interim period are not necessarily indicative of results for any other interim period or the full fiscal year.

The Company uses a 52-53 week fiscal year ending on the Sunday closest to March 31. The 2024 fiscal year will end on March 31, 2024 and will contain 53 weeks.

Certain information and footnote disclosures normally included in financial statements in accordance with ~~accounting principles generally accepted in the United States of America~~GAAP have been omitted pursuant to the requirements of the U.S. Securities and Exchange ~~Commission.~~ Commission (“SEC”).

Management believes that the disclosures included in the accompanying consolidated interim financial statements and footnotes are adequate to make the information not misleading, but should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements and ~~notes~~Notes thereto included in Nathan’s Annual Report on Form 10-K for the fiscal year ended March 26, ~~2017.~~2023 as filed with the SEC on June 8, 2023.

Our significant interim accounting policies include the recognition of advertising fund expense in proportion to advertising fund revenue, and the recognition of income taxes using an estimated annual effective tax rate.

A summary of the ~~Company~~’sCompany’s significant accounting policies is identified in Note B of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 26, ~~2017. There have been no changes to the Company’s significant accounting policies subsequent to March 26, 2017.~~2023.

NOTE B–B – ADOPTION OF NEW ACCOUNTING ~~PRONOUNCEMENTS~~STANDARD

In ~~July 2015,~~June 2016, the Financial Accounting Standards Board (“FASB”) updated U.S. accounting guidance to simplify the ways businesses measure inventory. Companies that use the first-in, first-out (FIFO) method or the average cost method will measure inventory at the lowerissued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of ~~its cost or net realizable value. Net realizable value is the estimated selling price in the normal course~~Credit Losses on Financial Instruments,” (“CECL”) which requires measurement and recognition of business, minus the cost of completion, disposal, and transportation. Companies will no longer consider replacement cost or net realizable value less a normal profit margin when measuring inventory. The guidance was effectiveexpected versus incurred losses for ~~the Company beginning in the quarter ended June 25, 2017 and did not have a material impact on its results of operations or~~ financial ~~position.~~

~~In August 2016, the FASB issued ASU~~ ~~2016-15, “~~~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)~~”. This update addresses eight specific cash flow topics with the objective of reducing the existing diversity in practice for certain aspects under Topic 230. ASU 2016-15 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017.assets held. The Company ~~elected to early adopt~~adopted ASU ~~2016-15 during the quarter ending December 24, 2017. The adoption~~2016-13 as of ~~this guidance did not have a significant impact on the Company’s consolidated financial statements.~~

~~NOTE~~ ~~C – NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED~~

~~In May 2014, the FASB issued a new accounting standard that attempts to establish a uniform basis for recording~~ revenue to virtually all industries’ financial statements, under U.S. GAAP as further amended during 2016. The FASB issued certain updates to the standard, including clarifying reporting revenue between Principle versus Agent and clarification in determining performance obligations and licenses guidance. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled.In order to accomplish this objective, companies must evaluate the following five basic steps: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

~~There are two basic transition methods that are available~~ – full retrospective, or modified retrospective transition methods. Early adoption is prohibited. Public companies were originally expected to apply the new standard for annual periods beginning after December 15, 2016, including interim periods therein, which for Nathan’s would have been itsMarch 27, 2023 (the first ~~quarter~~day of fiscal 2018, beginning on March 27, 2017. On July 9, 2015, the FASB agreed to delay the standard’s effective date to annual reporting periods beginning after December 15, 2017 which will now be our first quarter (June 2018) of our fiscal year ending March 31, 2019.

~~The Company~~ has assigned internal resources to evaluate and implement the new standard, and will continue to provide updates during fiscal year 2018. The Company is continuing its evaluation of the impact of the new standard, but currently does not believe that the standard will materially impact its recognition of revenue for its Company-operated restaurants or its recognition of royalties from its franchised restaurants or retail licenses, which are based on a percentage of sales. The Company is still assessing the impact of the new standard on revenues from its Branded Product Program as well as decisions reached by the FASB Transition Resource Group in November 2016 on the treatment of minimum guarantees in licensing arrangements, which may affect the timing of the Company’s recognition of royalty revenues. Currently, franchise and international development fees are recognized when the Company has performed substantially all initial services required by the agreements, which is generally when the franchisee begins operations. Under the new guidance, these fees may be recognized over the term of the agreements. The Company also expects that the adoption of this new guidance may change the reporting of contributions to the advertising fund from franchisees and other third parties and the related advertising fund expenditures, which are currently reported on a net basis in the Consolidated Statements of Earnings and Consolidated Balance Sheets. The Company expects the new guidance will require these advertising fund contributions and expenditures to be reported on a gross basis in the Consolidated Statement of Earnings. For the fiscal year ended March 26, 2017, advertising fund contributions from franchisees and other third parties were $2,572,000, and therefore we expect this change may impact our total revenues and expenses. The Company plans to adopt this standard in the first quarter of fiscal 2019, beginning March 26, 2018, using2024) under the modified retrospective method.

~~-7-~~

~~In February 2016,~~ Accordingly, the ~~FASB issued a new accounting standard on leases.~~ The new standard, among other changes, will require lessees to recognize a right-of-use asset and a lease liability on the balance sheet for all leases. The lease liability will be measured at the present value of the lease payments over the lease term. The right-of-use asset will be measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs (e.g. commissions). The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within those annual reporting periods. This standard is required to take effect in Nathan’s first quarter (June 2019) of our fiscal year ending March 29, 2020. The adoption will require a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest period presented. The Company is currently evaluating the standard to determine the impact of the adoption on its consolidated financial statements ~~but expects that~~have not been adjusted prior to the ~~standard will result in a significant~~date of adoption.

Upon adoption, the Company recorded an increase to ~~its other assets~~the allowance for credit losses of $252 and ~~other liabilities.~~

~~In January 2017, the FASB issued an update~~a cumulative effect adjustment to ~~the accounting guidance to simplify the testing for goodwill impairment. The update removes the requirement to determine the implied fair value~~retained earnings of ~~goodwill to measure the amount~~$187, net of ~~impairment loss, if any, under the second step~~$65 of the current goodwill impairment test. A company will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill. The guidance is effective prospectively for public business entities for annual reporting periods beginning after December 15, 2019. This standard is required to take effect in Nathan’s first quarter (June 2020) of our fiscal year ending March 28, 2021. Nathan’s does not expect the adoption of this new guidance to have a material impact on its results of operations or financial position.income taxes.

The Company does not believe that any ~~other~~ recently issued, but not yet effective accounting standards, when adopted, will have a material effect on the accompanying consolidated financial statements.

-8-

N~~OTE~~

NOTE C – REVENUES

The Company’s disaggregated revenues for the thirteen and twenty-six weeks ended September 24, 2023 and September 25, 2022 are as follows (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	September 24, 2023		September 25, 2022		September 24, 2023		September 25, 2022

Branded Products	$	23,352	$	22,030	$	48,522	$	45,201
Company-owned restaurants		5,193		5,271		8,851		8,994
Total sales		28,545		27,301		57,373		54,195

License royalties		8,339		8,413		19,997		19,727

Franchise royalties		1,148		1,055		2,128		1,956
Franchise fees		143		144		238		336
Total franchise fees and royalties		1,291		1,199		2,366		2,292

Advertising fund revenue		569		584		993		1,003

Total revenues	$	38,744	$	37,497	$	80,729	$	77,217

The following table disaggregates revenues by primary geographical market (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	September 24, 2023		September 25, 2022		September 24, 2023		September 25, 2022

United States	$	37,444	$	36,095	$	77,326	$	74,012
International		1,300		1,402		3,403		3,205
Total revenues	$	38,744	$	37,497	$	80,729	$	77,217

Contract balances

The following table provides information about contract liabilities from contracts with customers (in thousands):

	September 24, 2023		March 26, 2023
Deferred franchise fees (a)	$	1,416	$	1,608
Deferred revenues, which are included in
“Accrued expenses and other current liabilities” (b)	$	742	$	1,406

(a)

Deferred franchise fees of $336 and $1,080 as of September 24, 2023 and $336 and $1,272 as of March 26, 2023 are included in Deferred franchise fees – current and long term, respectively.

(b)

Includes $242 of deferred license royalties and $500 of deferred advertising fund revenue as of September 24, 2023 and $906 of deferred license royalties and $500 of deferred advertising fund revenue as of March 26, 2023.

-9-

Significant changes in deferred franchise fees are as follows (in thousands):

	Twenty-six weeks ended
	September 24, 2023			September 25, 2022
Deferred franchise fees at beginning of period	$	1,608		$	2,097
New deferrals due to cash received and other		46			77
Revenue recognized during the period		(238	)		(336	)
Deferred franchise fees at end of period	$	1,416		$	1,838

Significant changes in deferred revenues are as follows (in thousands):

	Twenty-six weeks ended
	September 24, 2023			September 25, 2022
Deferred revenues at beginning of period	$	1,406		$	876
New deferrals due to cash received and other		500			-
Revenue recognized during the period		(1,164	)		(676	)
Deferred revenues at end of period	$	742		$	200

Anticipated future recognition of deferred franchise fees

The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied at the end of the period (in thousands):

	Estimate for fiscal year
2024 (a)	$	170
2025		330
2026		298
2027		185
2028		93
Thereafter		340
Total	$	1,416

(a)

Represents franchise fees expected to be recognized for the remainder of the 2024 fiscal year, which includes international development fees expected to be recognized over the duration of one year or less. Amount does not include $238 of franchise fee revenue recognized for the twenty-six weeks ended September 24, 2023.

We have applied the optional exemption, as provided for under ASC Topic 606 “Revenues from Contracts with Customers,” which allows us to not disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.

NOTE D – INCOME PER SHARE

Basic income per common share is calculated by dividing income by the ~~weighted-average~~weighted average number of common shares outstanding and excludes any dilutive effect of ~~stock options.~~share-based awards. Diluted income per common share gives effect to all potentially dilutive common shares that were outstanding during the period. Dilutive common shares used in the computation of diluted income per common share result from the assumed exercise of stock options ~~and warrants,~~ as determined using the treasury stock method.

-10-

The following chart provides a reconciliation of information used in calculating the per-share amounts for the thirteen and ~~thirty-nine~~twenty-six week periods ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016,~~2022, respectively.

Thirteen weeks
										Net (Loss) Income													Net Income
	Net (Loss) Income					Number of Shares				Per Share					Net Income				Number of Shares				Per Share
	2017			2016		2017		2016		2017			2016		2023		2022		2023		2022		2023		2022
	(in thousands)					(in thousands)									(in thousands)				(in thousands)
Basic EPS
Basic calculation	$	(3,779	)	$	699		4,185		4,175	$	(0.90	)	$	0.17	$	5,711	$	5,958		4,080		4,083	$	1.40	$	1.46
Effect of dilutive employee stock options		-			-		-		34		-			-
Effect of dilutive share-based awards																-		-		12		-		-		-
Diluted EPS
Diluted calculation	$	(3,779	)	$	699		4,185		4,209	$	(0.90	)	$	0.17	$	5,711	$	5,958		4,092		4,083	$	1.40	$	1.46

~~-8-~~

Thirty-nine weeks
Twenty-six weeks
									Net Income													Net Income
	Net Income				Number of Shares				Per Share					Net Income				Number of Shares				Per Share
	2017		2016		2017		2016		2017		2016			2023		2022		2023		2022		2023			2022
	(in thousands)				(in thousands)									(in thousands)				(in thousands)
Basic EPS
Basic calculation	$	2,263	$	6,756		4,180		4,171	$	0.54	$	1.62		$	13,099	$	13,095		4,080		4,098	$	3.21		$	3.20
Effect of dilutive employee stock options		-		-		39		31		-		(0.01	)
Effect of dilutive share-based awards															-		-		10		-		(.01	)		-
Diluted EPS
Diluted calculation	$	2,263	$	6,756		4,219		4,202	$	0.54	$	1.61		$	13,099	$	13,095		4,090		4,098	$	3.20		$	3.20

~~No options~~Options to purchase 10,000 shares of common stock ~~for~~in the ~~thirty-nine~~thirteen and twenty-six week periods ended ~~December 24, 2017 and December 25, 2016 or for the thirteen week period ended December 25, 2016~~September 24, 2023 were excluded ~~from~~in the computation of diluted earnings per ~~share. For~~share because the exercise price exceeded the average market price of common shares during these periods.

Options to purchase 20,000 shares of common stock in the thirteen and twenty-six week ~~period~~periods ended ~~December 24, 2017, 47,000 options to purchase common stock~~September 25, 2022 were excluded ~~from~~in the computation of ~~dilutive~~diluted earnings per share asbecause the ~~effect would be anti-dilutive.~~exercise price exceeded the average market price of common shares during these periods.

NOTE E – CASH AND CASH EQUIVALENTS

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents at September 24, 2023 were $15,075. The Company did not have any cash equivalents at March 26, 2023. The Company’s cash balances principally consist of cash in bank and money market accounts.

At September 24, 2023 and March 26, 2023, substantially all of the Company’s cash balances are in excess of Federal government insurance limits. The Company has not experienced any losses in such accounts.

NOTE E–F – FAIR VALUE MEASUREMENTS

~~Nathan~~’sNathan’s follows a three-level fair value hierarchy that prioritizes the inputs to measure fair value. This hierarchy requires entities to maximize the use of “observable inputs” and minimize the use of “unobservable inputs.” The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability on the measurement date. The three levels are defined as follows:

● Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for an identical asset or liability in an active market

● Level 2 - inputs to the valuation methodology include quoted prices for a similar asset or liability in an active market or model-derived valuations in which all significant inputs are observable for substantially the full term of the asset or liability

● Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement of the asset or liability

-11-

The ~~Company’s long-term debt had a~~ face value ~~of $150,000,000 as of December 24, 2017~~ and a fair value of ~~$155,625,000~~long-term debt as of ~~December~~September 24, ~~2017.~~ 2023 and March 26, 2023 were as follows (in thousands):

	September 24, 2023				March 26, 2023
	Face value		Fair value		Face value		Fair value

Long-term debt	$	80,000	$	79,048	$	80,000	$	80,080

The Company estimates the fair value of its long-term debt based upon review of observable pricing in secondary markets as of the last trading day of the fiscal period. Accordingly, the Company classifies its long-term debt as Level 2.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value due to the short-term maturity of the instruments.

Certain non-financial assets and liabilities are measured at fair value on a non-recurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when evidence of impairment exists. At ~~December 24, 2017,~~September 24, 2023, no fair value adjustment or material fair value measurements were required for non-financial assets or liabilities.

NOTE FG – ACCOUNTS AND OTHER RECEIVABLES, NET

Accounts and other receivables, net, consist of the following (in thousands):

	December 24,		March 26,		September 24,			March 26,
	2017		2017		2023			2023

Branded product sales	$	8,726	$	6,037	$	11,634		$	11,106
Franchise and license royalties		2,534		2,746		3,238			3,817
Other		1,093		622		1,223			623
		12,353		9,405		16,095			15,546

Less: allowance for doubtful accounts		480		457
Less: allowance for credit losses						(333	)		(480	)
Accounts and other receivables, net	$	11,873	$	8,948	$	15,762		$	15,066

~~Accounts~~The recently adopted CECL guidance requires companies to use a current expected credit loss model that immediately recognizes an estimate of credit losses expected to occur over the life of the consolidated financial instruments, including trade receivables. The Company is exposed to credit losses through its trade accounts receivable. Trade accounts receivable are generally due within 30 days and are ~~stat~~edstated at amounts due from franchisees, including virtual kitchens, retail licensees and Branded Product Program customers, net of an allowance for ~~doubtful accounts.~~credit losses. Accounts that are outstanding longer than the contractual payment terms are generally considered past due. ~~The Company does not recognize franchise and license royalties that are not deemed to be realizable.~~

Under the CECL guidance, the Company applies the credit loss methodology by pooling financial assets based on similar risk characteristics and delinquency status under an aging method at the measurement date. The risk characteristics the Company ~~individually~~generally reviews ~~each past due account~~when analyzing its trade accounts receivable pools include the type of receivable (for example, franchise receivable versus license receivable), payment terms, the Company’s previous loss history, current and ~~determines its allowance for doubtful accounts by considering a number of factors, including~~future economic conditions and the length of time accounts ~~receivable~~receivables are past ~~due,~~due. For those trade accounts receivable that no longer share similar risk characteristics with its pool and potential loss is evident, a specific reserve is recorded.

For pooled trade account receivables, the Company develops its allowance for credit losses by applying a historical loss rate to each pool based on historical account write-off trends. The Company believes that the past five years provide a reasonable representation of the Company’s ~~previous loss history,~~operations and performance through various business cycles, both favorable and unfavorable. The allowance for credit losses is then adjusted for current macroeconomic factors, including the ~~customer’s current~~effects of inflation and ~~expected~~reasonable and supportable forecasts of future ~~ability to pay its obligation to the Company, the condition of the general economy and the industry as a whole. Based on management’s assessment, the~~economic conditions. The Company provides for ~~estimated uncollectible amounts~~expected credit losses through a charge to earnings. After the Company has used reasonable collection efforts, it writes off accounts receivable through a charge to the allowance for ~~doubtful accounts.~~credit losses.

~~-9-~~-12-

Changes in the ~~Company~~’sCompany’s allowance for ~~doubtful accounts~~credit losses for the ~~thirty-nine~~twenty-six week period ended ~~December~~September 24, ~~2017~~2023 and the fiscal year ended March 26, ~~2017~~2023 are as follows (in thousands):

	September 24, 2023			March 26, 2023

Beginning balance	$	480		$	258
Cumulative effect of adoption of ASU 2016-13		252			-
Bad debt expense		55			457
Write offs and other		(454	)		(235	)
Ending balance	$	333		$	480

December 24,
2017

March 26,
2017

Beginning balance
$ 457 $ 471
Bad debt expense
42 53
Accounts written off
(19 ) (67 )
Ending balance
$ 480 $ 457

NOTE GH – PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following (in thousands):

	December 24,		March 26,		September 24,		March 26,
	2017		2017		2023		2023

Income taxes	$	2,751	$	-	$	-	$	146
Real estate taxes						92		78
Insurance		247		319		110		389
Marketing						266		814
Other		354		774		378		468
Total prepaid expenses and other current assets	$	3,352	$	1,093	$	846	$	1,895

NOTE I - INTANGIBLE ASSET

N~~OTE H~~The Company’s definite-lived intangible asset consists of trademarks, and the trade name and other intellectual property in connection with its Arthur Treacher’s co-branding agreements. Based upon review of the current Arthur Treacher’s co-branding agreements, the Company determined that the remaining useful lives of these agreements is five years concluding in fiscal year 2028, and the intangible asset is subject to annual amortization. The Company performs an annual impairment test, or more frequently if events or changes in circumstances indicate that the intangible asset may be impaired. The Company tests for recoverability of its definite-lived intangible asset based on the projected undiscounted cash flows to be derived from such co-branding agreements. Cash flow projections require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record an impairment charge in future periods and such impairment could be material.

There have been no significant events or changes in circumstances during the thirteen and twenty-six week periods ended September 24, 2023 that would indicate that the carrying amount of the Company’s intangible asset may be impaired as of September 24, 2023.

NOTE J - LONG LIVED ASSETS

Long-lived assets on a restaurant-by-restaurant basis are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Long-lived assets include property, equipment and right-of-use assets for operating leases with finite useful lives. Assets are grouped at the individual restaurant level which represents the lowest level for which cash flows can be identified largely independent of the cash flows of other assets and liabilities. The Company generally considers a history of restaurant operating losses to be its primary indicator of potential impairment for individual restaurant locations.

The Company tests for recoverability based on the projected undiscounted cash flows to be derived from such assets. If the projected undiscounted future cash flows are less than the carrying value of the asset, the Company will record on a restaurant-by-restaurant basis, an impairment loss, if any, based on the difference between the estimated fair value and the carrying value of the asset. The Company generally measures fair value by considering discounted estimated future cash flows from such assets. Cash flow projections and fair value estimates require significant estimates and assumptions by management. Should the estimates and assumptions prove to be incorrect, the Company may be required to record impairment charges in future periods and such impairments could be material.

There have been no significant events or changes in circumstances during the thirteen and twenty-six week periods ended September 24, 2023 that would indicate that the carrying amount of the Company’s long-lived assets may be impaired as of September 24, 2023.

-13-

NOTE K – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES ~~AND OTHER LIABILITIES~~

Accrued expenses and other current liabilities consist of the following (in thousands):

December 24,

March 26,

2017

2017

Payroll and other benefits
$ 2,087 $ 2,708
Accrued rebates
1,245 1,050
Rent and occupancy costs
207 215
Deferred revenue
17 723
Construction costs
70 160
Interest
1,470 463
Professional fees
168 109
Income taxes
33 143
Dividend payable
21,073 125
Other
274 169
Total accrued expenses and other current liabilities
$ 26,644 $ 5,865

~~Other liabilities consist of the following~~ ~~(in thousands):~~

December 24,

March 26,

2017

2017

Deferred development fees
$ 154 $ 67
Reserve for uncertain tax positions
419 366
Deferred rental liability
700 786
Dividend payable
- 125
Other
211 211
Total other liabilities
$ 1,484 $ 1,555

	September 24,		March 26,
	2023		2023
Payroll and other benefits	$	1,768	$	3,410
Accrued rebates		739		698
Rent and occupancy costs		169		70
Deferred revenue		742		1,406
Interest		2,135		2,143
Professional fees		167		99
Sales, use and other taxes		194		76
Corporate income taxes		467		-
Other		257		228
Total accrued expenses and other current liabilities	$	6,638	$	8,130

~~-10-~~

N~~OTE I – SALES~~

~~The Company’s sales for the thirteen and thirty-nine weeks ended December 24, 2017 and December 25, 2016 are as follows (in thousands):~~

Thirteen weeks ended Thirty-nine weeks ended

December 24,
2017

December 25,
2016

December 24,
2017

December 25,
2016

Branded Products
$ 14,674 $ 12,868 $ 50,741 $ 44,349
Company-operated restaurants
2,093 1,991 12,898 13,449
Other
- - - 214
Total sales
$ 16,767 $ 14,859 $ 63,639 $ 58,012

NOTE JL – INCOME TAXES

The income tax provisions for the ~~thirty-nine week periods~~thirteen weeks ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016~~2022 reflect effective tax rates of27.4% and 26.3%, respectively. The effective income tax rate for the thirteen weeks ended September 24, 2023 reflected $2,153 of income tax expense recorded on $7,864 of pre-tax income. The effective income tax rate for the thirteen weeks ended September 25, 2022 reflected $2,127 of income tax expense recorded on $8,085 of pre-tax income.

The income tax provisions for the twenty-six weeks ended September 24, 2023 and September 25, 2022 reflect effective tax rates of ~~21.5%~~27.2% and ~~37.1%~~27.1%, respectively. ~~Nathan’s~~The effective income tax rate for the twenty-six weeks ended September 24, 2023 reflected $4,897 of income tax expense recorded on $17,996 of pre-tax income. The effective income tax rate for the twenty-six weeks ended September 25, 2022 reflected $4,870 of income tax expense recorded on $17,965 of pre-tax income.

The effective income tax rates for the ~~thirty-nine~~thirteen and twenty-six week periods ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016~~2022 were ~~reduced by 670 BPS~~higher than the United States statutory income tax rate primarily due to state and ~~610 BPS, respectively, as~~local taxes. The effective tax rate for the thirteen week period ended September 24, 2023 includes a ~~result~~discrete adjustment of 0.8%. There were no discrete adjustments for the ~~tax benefits associated with stock compensation. For the thirty-nine~~thirteen week ~~periods~~period ended ~~December 24, 2017 and December~~September 25, ~~2016, excess tax benefits of $194,000 and $659,000, respectively, were reflected in the Consolidated Statements of Earnings as a reduction to the provision for income taxes.~~2022.

The amount of unrecognized tax benefits included in Other liabilities at ~~December~~September 24, ~~2017~~2023 and March 26, 2023 was ~~$207,000,~~$459 and $432, respectively, all of which would impact ~~Nathan’s~~the Company’s effective ~~tax~~ rate, if recognized. As of ~~December~~September 24, ~~2017, Nathan’s~~2023 and March 26, 2023, the Company had ~~$212,000~~approximately $335 and $305, respectively, accrued for the payment of ~~accrued~~ interest and penalties in connection with unrecognized tax benefits.

NOTE M – SEGMENT INFORMATION

~~During the fiscal year ending March 25, 2018, Nathan~~’s will seek to settle additional uncertain tax positions with the tax authorities. As a result, it is reasonably possible the amount of unrecognized tax benefits, excluding the related accrued interest and penalties, could be reduced by up to $5,000, which would favorably impact Nathan’s ~~effective tax rate, although no assurances can be given in this regard.~~

~~On December 22, 2017~~, the Enactment Date, President Trump signed the Tax Cuts and Jobs Act (“Act”) into law which among other provisions, permanently reduces the top corporate tax rate from 35 percent to a flat 21 percent beginning January 1, 2018 and eliminates the corporate Alternative Minimum Tax. The new law limits the deduction of business interest, net of interest income, to 30 percent of the adjusted taxable income of the taxpayer in any taxable year. Any amount disallowed under the limitation is treated as business interest paid or accrued in the following year. Disallowed interest will have an indefinite carryforward. The new law also repeals the performance-based exception to the $1.0 million deduction limitation on executive compensation and modifies the definition of “covered employees”. The new law allows businesses to immediately write of the full cost of new equipment.

~~Pursuant to Staff Accounting Bulletin #118, Nathan~~’s has determined reasonable estimates to its deferred assets and liabilities and pursuant to ASC 740, Income Taxes, the Company has recognized the effect(s) of the Act on current and deferred income taxes in its financial statements during the quarter ended December 24, 2017. Nathan’s has recorded the following discrete adjustment to its deferred tax liability and unrecognized tax benefits which reduced the provision for income taxes by $436,000 or 1510 BPS during the thirty-nine weeks ended December 24, 2017.

~~Nathan~~’s estimates that its blended federal tax rate will be 31% for its fiscal year ending March 25, 2018 and that its annual tax rate for the fiscal year ending March 25, 2018 will be in the range of approximately 40.8% to 43.1%, excluding the impact of the discrete items recorded and excess tax benefit associated with stock compensation. The final annual tax rate is subject to many variables, including the ultimate determination of revenue and income tax by state, among other factors, and therefore cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from our current estimates. In addition, the ultimate benefit of the Act on Nathan’s is unclear as the lower annual tax rate could be outweighed by the limitation of the deduction of interest expense and other provisions.

~~NOTE~~ ~~K – SEGMENT INFORMATION~~

~~Nathan~~’s considers itself to be a brand marketer of the Nathan’s Famous signature products to the foodservice industry pursuant to its various business structures. Nathan’s sells its products directly to consumers through its restaurant ~~system~~operations segment consisting of ~~Company-operated~~Company-owned and franchised restaurants, including virtual kitchens, to distributors that resell our products to the foodservice industry through the Branded Product Program ~~(“BPP”)~~ and by third party manufacturers pursuant to license agreements that sell our products to supermarkets, club stores and grocery stores nationwide. The Company’s Chief Executive Officer has been identified as the Chief Operating Decision Maker (“CODM”) who evaluates performance and allocates resources for the Branded Product Program, Product Licensing and Restaurant Operations segments based upon a number of factors, the primary profit measure being income from operations. Certain administrative expenses are not allocated to the segments and are reported within ~~Corporate.~~the Corporate segment.

Branded Product Program – This segment derives revenue principally from the sale of hot dog products either directly to foodservice operators or to various foodservice distributors who resell the products to foodservice operators.

Product licensing – This segment derives revenue, primarily in the form of royalties, from licensing a broad variety of Nathan’s Famous branded products, including our ~~hotdogs, sausage and corned beef products,~~hot dogs, sausages, frozen crinkle-cut French fries and additional products through retail supermarkets, grocery channels and club stores throughout the United States.

~~-11-~~-14-

Restaurant operations – This segment derives revenue from the sale of our products at Company-owned restaurants and earns fees and royalties from its franchised ~~restaurants.~~restaurants, including its virtual kitchens.

Revenues from operating segments are from transactions with unaffiliated third parties and do not include any intersegment revenues.

Income f~~rom~~from operations attributable to ~~corporate~~Corporate consists principally of administrative expenses not allocated to the operating segments such as executive management, finance, information technology, legal, insurance, corporate office costs, corporate incentive compensation and compliance ~~costs.~~costs and expenses of the Advertising Fund.

~~Interest~~Interest expense, interest income, and other income, net, are managed centrally at the corporate level, and, accordingly, such items are not presented by segment since they are excluded from the measure of profitability reviewed by the CODM.

Operating segment information is as follows (in thousands):

													Thirteen weeks ended						Twenty-six weeks ended
	Thirteen weeks ended						Thirty-nine weeks ended
	Dec. 24, 2017			Dec. 25, 2016			Dec. 24, 2017			Dec. 25, 2016			September 24, 2023			September 25, 2022			September 24, 2023			September 25, 2022

Revenues
Branded Product Program	$	14,674		$	12,868		$	50,741		$	44,563		$	23,352		$	22,030		$	48,522		$	45,201
Product licensing		4,228			3,990			17,393			15,602			8,339			8,413			19,997			19,727
Restaurant operations		3,181			3,079			16,473			17,201			6,484			6,470			11,217			11,286
Corporate		-			-			-			-
Corporate (1)														569			584			993			1,003
Total revenues	$	22,083		$	19,937		$	84,607		$	77,366		$	38,744		$	37,497		$	80,729		$	77,217

Income from operations
Branded Product Program	$	2,924		$	2,886		$	7,888		$	8,336		$	1,387		$	2,485		$	3,348		$	4,552
Product licensing		4,182			3,944			17,257			15,465			8,293			8,367			19,906			19,636
Restaurant operations		(21	)		48			3,209			4,083			1,639			1,476			2,308			2,117
Corporate		(1,715	)		(2,124	)		(5,800	)		(6,275	)		(2,215	)		(2,414	)		(4,995	)		(4,611	)
Income from operations	$	5,370		$	4,754		$	22,554		$	21,609		$	9,104		$	9,914		$	20,567		$	21,694

Loss on debt extinguishment		(8,872	)		-			(8,872	)		-
Interest expense		(3,650	)		(3,663	)		(10,976	)		(11,002	)		(1,413	)		(1,943	)		(2,827	)		(3,887	)
Interest income		44			35			114			71			150			80			212			102
Other income, net		22			21			64			64			23			34			44			56
(Loss) income before provision for income taxes	$	(7,086	)	$	1,147		$	2,884		$	10,742
Income before provision for income taxes													$	7,864		$	8,085		$	17,996		$	17,965

(1)

Represents advertising fund revenue

NOTE LN – SHARE-BASED COMPENSATION

Total share-based compensation during the ~~thirteen-week periods ended~~ ~~December 24, 2017~~thirteen and ~~December 25, 2016 was $99,000 and $136,000, respectively. Total share-based compensation during the thirty-nine~~twenty-six week periods ended ~~December~~September 24, ~~2017~~2023 and ~~December~~September 25, ~~2016~~2022 was ~~$298,000~~$182 and ~~$482,000,~~$8, and $359 and $16, respectively. Total share-based compensation is included in general and administrative ~~expense~~expenses in our accompanying Consolidated Statements of Earnings. As of ~~December~~September 24, ~~2017,~~2023, there was ~~$200,000~~$3,035 ofunamortized compensation expense related to share-based ~~incentive~~ awards. We expect to recognize this expense over approximately ~~seven~~forty-six months,, which represents the weighted average remaining requisite service periods for such awards.

The Company recognizes compensation cost for unvested ~~stock-based incentive~~share-based awards on a straight-line basis over the requisite service period. Compensation ~~cost charged to~~ expense under all ~~stock-based incentive~~share-based awards is as follows (in thousands):

	Thirteen weeks ended				Thirty-nine weeks ended				Thirteen weeks ended				Twenty-six weeks ended
	December 24, 2017		December 25, 2016		December 24, 2017		December 25, 2016		September 24, 2023		September 25, 2022		September 24, 2023		September 25, 2022

Stock options	$	38	$	38	$	114	$	114	$	13	$	8	$	21	$	16
Restricted stock		61		98		184		368
Restricted stock units										169		-		338		-
Total compensation cost	$	99	$	136	$	298	$	482	$	182	$	8	$	359	$	16

~~-12-~~-15-

Stock options ~~outstanding:~~

~~There were no new share-based awards granted during~~During the ~~thirty-nine~~twenty-six week period ended ~~December~~September 24, ~~2017.~~

~~In connection with the Company’s special cash dividend, paid on January 4, 2018, to stockholders of record as of December 22, 2017,~~2023, the Company ~~performed an analysis, pursuant to the anti-dilution provisions of the 2010 Plan (the “2010 Plan”), and issued replacement~~granted options to purchase ~~68,498~~10,000 shares at an exercise price of $33.438 for the unvested stock options outstanding as of the record date of December 22, 2017, cancelling 64,384 shares at an exercise price of $35.58 per share. Nathan’s performed its evaluation based on the closing price of its common stock on December 20, 2017, the day before the stock went ex-dividend, of $83.20 per share, or $78.20 per share excluding the dividend of $5.00 per share. No other terms or conditions of the outstanding options were modified. The anti-dilution provisions of the original award were structured to equalize the award’s fair value before and after the modification.

~~During the fiscal year ended March 29, 2015, the Company granted options to purchase 50,000 shares at an exercise price of $53.89~~$78.00 per share, all of which expire five years from the date of grant. All such ~~stock~~ options vest ratably over a four-year period commencing August ~~6, 2015.~~11, 2023.

~~In connection with~~The weighted average option fair value, as determined using the ~~Company’s special cash~~Black-Scholes option valuation model, and the assumptions used to estimate these values for stock options granted during the twenty-six week period ended September 24, 2023 are as follows:

Weighted average option fair values	$	16.23
Expected life (years)		4.4
Interest rate		4.31	%
Volatility		24.29	%
Dividend yield		2.56	%

The expected dividend ~~paid~~yield is based on ~~March 27, 2015, to stockholders~~historical and projected dividend yields. The Company estimates volatility based primarily on historical monthly price changes of ~~record as of March 20, 2015,~~ the ~~Company performed an analysis, pursuant~~Company’s stock equal to the ~~anti-dilution provisions~~expected life of the 2010 Plan, and issued replacement options to purchase 75,745 shares at an exercise price of $35.58 for the unvested stock options outstanding as of March 29, 2015, canceling 50,000 shares at an exercise price of $53.89. Nathan’s performed its evaluationoption. The risk-free interest rate is based on the ~~closing price~~U.S. Treasury yield in effect at the time of ~~its common stock~~grant. The expected option term is the number of years the Company estimates the options will be outstanding prior to exercise based on March 27, 2015 of $73.56 per share, or $48.56 per share excluding the dividend of $25.00 per share. No other terms or conditions of the outstanding options were modified. The anti-dilution provisions of the original award were structured to equalize the award’s fair value beforeexpected historical exercise patterns and ~~after the modification.~~employment termination behavior.

Transactions with respect to stock options for the ~~thirty-nine~~twenty-six weeks ended ~~December~~September 24, ~~2017~~2023 are as ~~follows:~~follows:

Weighted-

Weighted-

Aggregate

Average

Average

Intrinsic

Exercise

Remaining

Value

Shares

Price

Contractual Life

(in thousands)

Options outstanding at the beginning of the fiscal year
75,745 $ 35.58 2.36 $ 1,899

Granted
- - - -

Replacement options issued (A)
68,498 $ 33.438 1.61 $ 3,093

Expired
- - - -

Cancellation of outstanding options (A)
(64,384 ) $ 35.58 1.61 $ 3,093

Exercised
(11,361 ) $ 35.58 - 379

Options Outstanding at December 24, 2017 (A)
68,498 $ 33.438 1.61 $ 3,093

Options exercisable at December 24, 2017 (A)
48,348 $ 33.438 1.61 $ 2,183

A-

~~Represents the effects on outstanding options after giving effect to the replacement options issued in connection with the Company’s special dividend to shareholders of record on December 22, 2017.~~

~~-13-~~

				Weighted		Weighted		Aggregate
				Average		Average		Intrinsic
				Exercise		Remaining		Value
	Shares			Price		Contractual Life		(in thousands)

Options outstanding at March 26, 2023		20,000		$	79.20		1.92	$	40
Granted		10,000		$	78.00		4.88		-
Expired		(10,000	)	$	89.90		-		-
Options outstanding at September 24, 2023		20,000		$	73.25		3.88	$	27

Options exercisable at September 24, 2023		5,000		$	68.50		2.88	$	14

Restricted ~~stock:~~stock units

Transactions with respect to restricted stock units for the ~~thirty-nine~~twenty-six weeks ended ~~December~~September 24, ~~2017~~2023 are as follows:

	Shares			Weighted- Average Grant-date Fair value Per share		Shares		Weighted Average Grant-date Fair value Per share
Unvested restricted stock at March 26, 2017		10,000		$	49.80

Unvested restricted stock units at March 26, 2023							50,000	$	67.59
Granted		-			-		-	$	-
Vested		(5,000	)	$	49.80		-	$	-

Unvested restricted stock at December 24, 2017		5,000		$	49.80
Unvested restricted stock units at September 24, 2023							50,000	$	67.59

-16-

NOTE MO – STOCKHOLDERS’ EQUITY

1. ~~Dividend~~Dividendss

~~On November 1, 2017,~~Effective June 8, 2023, the ~~Company~~’sCompany’s Board of Directors (the “Board”) declared ~~a special~~its first quarterly cash dividend of ~~$5.00~~$0.50 per share ~~payable~~for fiscal 2024, which was paid on June 28, 2023 to stockholders of record as of ~~December 22, 2017~~the close of business on June 20, 2023.

Effective August 3, 2023, the Board declared its second quarterly cash dividend of $0.50 per share for fiscal 2024, which ~~approximately $20,923,000~~ was paid on January 4, 2018 to the stockholders. The Company also accrued $25,000 for the expected dividends payable on unvested restricted shares pursuant to the terms of the restricted stock agreement. As unvested restricted stock vests, the declared dividend is paid. We estimate that $25,000 (see Note H) will be paid during our fiscal year ending March 31, 2019.

~~On March 10, 2015, the Company’s Board of Directors declared a special cash dividend of $25.00 per share payable~~September 1, 2023 to stockholders of record as of ~~March 20, 2015~~the close of ~~which approximately $115,100,000 was paid~~business on ~~March 27, 2015 to~~August 21, 2023.

Effective November 2, 2023, the ~~stockholders. The Company accrued $1,000,000~~Board declared its third quarterly cash dividend of $0.50 per share for ~~the expected dividends~~fiscal 2024 payable on ~~unvested restricted shares pursuant~~December 1, 2023 to stockholders of record as of the close of business on November 20, 2023.

Our ability to pay future dividends is limited by the terms of the Indenture with U.S. Bank Trust Company, National Association, as trustee and collateral trustee. In addition to the terms of the ~~restricted stock agreements. As unvested restricted stock vests,~~Indenture, the ~~declared dividend~~declaration and payment of any cash dividends in the future is ~~paid. We have paid $875,000~~subject to final determination of the ~~accrued dividend~~Board and ~~estimate that the remaining $125,000(see Note H)~~ will be ~~paid during~~dependent upon our ~~fiscal year ending March 31, 2019.~~earnings and financial requirements.

2~~2. Common~~. Stock ~~Purchase Rights~~Repurchase Programs

On June 5, 2013, Nathan’s adopted a new stockholder rights plan (the “2013 Rights Plan”) under which all stockholders of record as of June 17, 2013 received rights to purchase shares of common stock (the “2013 Rights”) andIn 2016, the ~~previously existing “New Rights Plan” was terminated.~~

~~The 2013 Rights were distributed as a dividend. Initially, the 2013 Rights will attach to, and trade with, the Company’s common stock. Subject~~Board authorized increases to the terms, conditions and limitations of the 2013 Rights Plan, the 2013 Rights will become exercisable if (among other things) a person or group acquires 15% or more of the Company’s common stock. Upon such an event and payment ofsixth stock repurchase plan for the purchase ~~price~~ of ~~$100.00 (the “2013 Right Purchase Price”), each 2013 Right (except those held by the acquiring person or group) will entitle the holder~~up to acquire one share of the Company’s common stock (or the economic equivalent thereof) or, if the then-current market price is less than the then current 2013 Right Purchase Price, a number of shares of the Company’s common stock which at the time of the transaction has a market value equal to the then current 2013 Right Purchase Price at a purchase price per share equal to the then current market price of the Company’s Common Stock.

~~The Company~~’s Board of Directors may redeem the 2013 Rights prior to the time they are triggered. Upon adoption of the 2013 Rights Plan, the Company initially reserved 10,188,600 shares of common stock for issuance upon exercise of the 2013 Rights. The 2013 Rights will expire on June 17, 2018 unless earlier redeemed or exchanged by the Company.

~~At December 24, 2017, the Company has reserved 5,696,732 shares of common stock for issuance upon exercise of the Common Stock Purchase Rights approved by the Board of Directors on June 5, 2013.~~

3. ~~Stock Repurchase Programs~~

~~During the period from October 2001 through~~ ~~December 24, 2017, Nathan’s purchased 5,127,373~~1,200,000 shares of its common stock on behalf of the Company. As of September 24, 2023, Nathan’s had repurchased 1,101,884 shares at a cost of ~~approximately~~ ~~$77,303,000~~$39,000under the sixth stock repurchase plan. At September 24, 2023 there were 98,116 shares remaining to be repurchased pursuant to ~~various~~the sixth stock repurchase ~~plans previously authorized by~~plan. The plan does not have a set expiration date. Purchases under the ~~Board of Directors. During the thirty-nine week period ended December 24, 2017, we did not~~Company’s stock repurchase ~~anyshares of common stock.~~

~~As of~~ ~~December 24, 2017, an aggregate of 260,258 shares can still be purchased under Nathan’s existing stock buy-back program.~~

~~Purchase~~sprogram may be made from time to time, depending on market conditions, in open market or ~~privately-negotiated~~privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the ~~repurchases to be made under these stock-repurchase plans.~~repurchases.

~~-14-~~

NOTE NP – LONG-TERM DEBT

Long-term debt consists of the following (in thousands):

December 24,

March 26,

2017

2017

6.625% Senior secured notes due 2025
$ 150,000 -
10.000% Senior secured notes due 2020
- $ 135,000
Less: unamortized debt issuance costs
(5,374 ) (3,525 )
Total long-term debt
$ 144,626 $ 131,475

	September 24,			March 26,
	2023			2023

6.625% Senior Secured Notes due 2025	$	80,000		$	80,000
Less: unamortized debt issuance costs		(768	)		(952	)
Long-term debt, net	$	79,232		$	79,048

On November 1, 2017, the Company completed the issuance of $150,000,000 of 6.625% Senior Secured Notes due 2025 (the "2025 Notes") in a private offering in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2025 Notes were issued pursuant to an indenture, dated November 1, 2017, (the “Indenture”) by and among the Company, certain of its wholly-owned subsidiaries, as guarantors, and U.S. Bank National Association, as trustee and collateral trustee. The Company used the net proceeds of the 2025 Notes offering to satisfy and discharge the Indenture relating to the 2020 Notes (as hereinafter defined) and redeem the 2020 Notes (the "Redemption"), paid a portion of a special $5.00 per share cash dividend to Nathan's stockholders of record (see Note M.1), with the remaining net proceeds for general corporate purposes, including working capital. The Company also funded the majority of the special dividend through its existing cash. The Redemption occurred on November 16, 2017. The Company performed the required evaluation of the refinancing and determined that a portion of the Redemption of the 2020 Notes is accounted for as a modification of the debt and a portion as an extinguishment of the debt. In connection with the Redemption, the Company recorded a loss on early extinguishment of debt of $8,872,000 that primarily reflects a portion of the premium paid to redeem the 2020 Notes and the write-off of certain debt issuance costs.

~~On March 10, 2015, the Company completed the issuance of $135,000,000 of 10.000% Senior Secured Notes due 2020 (“the 2020 Notes”) in a Rule 144A transaction. The~~ 2020 Notes were issued pursuant to an indenture, dated March 10, 2015 by and among the Company, certain of its wholly-owned subsidiaries, as guarantors, and U.S. Bank National Association, a national banking association, as trustee and collateral trustee. The Company used the proceeds to pay a special cash dividend of approximately $116,100,000 (see Note M.1) with the remaining net proceeds for general corporate purposes, including working capital. Debt issuance costs of approximately $5,985,000 were incurred, which were being amortized into interest expense over the remaining 5-year term of the 2020 Notes, or until redeemed.

~~The 2020 Notes bore interest at 10.000% per annum, payable semi-annually on March 15~~^th ~~and September 15~~^th~~. An interest payment of $6,750,000 was paid on September 14, 2017.The 2020 Notes had no scheduled principal amortization payments prior to its final maturity on March 10, 2020.~~

~~The 2025 Notes~~ ~~will have no scheduled principal amortization payments prior to its final maturity on November 1, 2025.~~NOTE Q – LEASES

The Company ~~paid a 5% call premium of $6,750,000 associated with the~~ ~~Redemption~~is party as lessee to various leases for its Company-owned restaurants and ~~incurred debt issuance costs of $4,902,000 in connection with the issuance of the 2025 Notes. The~~ lessee/sublessor to one franchised location property, including land and buildings, as well as leases for its corporate office and certain office equipment.

Company ~~also incurred additional interest expense of approximately $562,500 from the closing of the 2025 Notes on November 1, 2017 until the Redemption on November 16, 2017.~~as lessee

The ~~2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1~~^stcomponents of the net lease cost for the thirteen and ~~November 1~~^st of each year, beginning on May 1, 2018. Semi-annual interest payments are expected to be $4,968,750. The Company expects to reduce its annual cash interest expense by approximately $3,562,500 per annum.twenty-six week periods ended September 24, 2023 and September 25, 2022 were as follows (in thousands):

~~The terms and conditions of the 2025 Notes are~~ ~~as follows:~~

~~There are no financial maintenance covenants associated with the~~ ~~2025 Notes. As of December 24, 2017, Nathan’s was in compliance with all covenants associated with the 2025 Notes.~~

~~The Indenture contain~~s certain covenants limiting the Company’s ability and the ability of its restricted subsidiaries (as defined in the Indenture) to, subject to certain exceptions and qualifications: (i) incur additional indebtedness; (ii) pay dividends or make other distributions on, redeem or repurchase, capital stock; (iii) make investments or other restricted payments; (iv) create or incur certain liens; (v) incur restrictions on the payment of dividends or other distributions from its restricted subsidiaries; (vi) enter into certain transactions with affiliates; (vii) sell assets; or (viii) effect a consolidation or merger. Certain Restricted Payments which may be made or indebtedness incurred by Nathan’s or its Restricted Subsidiaries may require compliance with the following financial ratios:

~~Fixed Charge Coverage Ratio~~~~: the ratio of the Consolidated Cash Flow to the Fixed Charges for the relevant period, currently set at 2.0 to 1.0 in the Indenture.The Fixed Charge Coverage Ratio applies to determining whether additional Restricted Payments may be made, certain additional debt may be incurred and acquisitions may be made.~~

	Thirteen weeks ended						Twenty-six weeks ended
	September 24, 2023			September 25, 2022			September 24, 2023			September 25, 2022

Operating lease cost	$	423		$	408		$	849		$	836
Variable lease cost		499			482			887			850
Less: Sublease income, net		(23	)		(20	)		(44	)		(42	)

Total net lease cost	$	899		$	870		$	1,692		$	1,644

~~-15-~~-17-

~~Priority Secured Leverage Ratio~~:The following table presents the ~~ratio~~components of ~~(a)~~the net lease cost on the Consolidated ~~Net Debt outstanding as~~Statements of ~~such date that is secured by a Priority Lien to (b) Consolidated Cash Flow of Nathan’s~~Earnings for the ~~Test Period then most recently~~thirteen and twenty-six week periods ended ~~in each case with such pro forma adjustments as are appropriate; currently set at 0.40 to 1.00~~September 24, 2023 and September 25, 2022 (in thousands):

	Thirteen weeks ended						Twenty-six weeks ended

	September 24, 2023			September 25, 2022			September 24, 2023			September 25, 2022

Restaurant operating expenses	$	732		$	712		$	1,347		$	1,319
General and administrative expenses		190			178			389			367
Less: Other income, net		(23	)		(20	)		(44	)		(42	)

Total net lease cost	$	899		$	870		$	1,692		$	1,644

Cash paid for amounts included in the ~~Indenture.~~measurement of lease liabilities for the thirteen and twenty-six week periods ended September 24, 2023 and September 25, 2022 were as follows (in thousands):

~~Secured Leverage Ratio~~: the ratio of (a) Consolidated Net Debt outstanding as of such date that is secured by a Lien on any property of Nathan’s or any Guarantor to (b) Consolidated Cash Flow of Nathan’s for the Test Period then most recently ended, in each case with such pro forma adjustments as are appropriate. The Secured Leverage Ratio under the Indenture is 3.75 to 1.00 and applies if Nathan’s wants to incur additional debt on the same terms as the 2025 Notes.

	Thirteen weeks ended				Twenty-six weeks ended

	September 24, 2023		September 25, 2022		September 24, 2023		September 25, 2022

Operating cash flows from operating leases	$	392	$	370	$	785	$	734

The ~~Indenture also contains customary events~~weighted average remaining lease term and weighted average discount rate for operating leases as of default, including, among other things, failure to pay interest, failure to comply with agreements related to the Indenture, failure to pay at maturity or acceleration of other indebtedness, failure to pay certain judgments, and certain events of insolvency or bankruptcy. Generally, if any event of default occurs, the Trustee or the holders of at least 25% in principal amount of the 2025 Notes may declare the 2025 Notes due and payable by providing notice to the Company. In case of default arising from certain events of bankruptcy or insolvency, the 2025 Notes, will become immediately due and payable.

~~The~~ ~~2025 Notes are general senior secured obligations, are fully and unconditionally guaranteed by substantially all of the Company’s wholly-owned subsidiaries and rank~~ ~~pari passu~~ in right of payment with all of the Company’s existing and future indebtedness that is not subordinated, are senior in right of payment to any of the Company’s existing and future subordinated indebtedness, are structurally subordinated to any existing and future indebtedness and other liabilities of the Company’s subsidiaries that do not guarantee the 2025 Notes, and are effectively junior to all existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes.

~~Pursuant to the terms of a collateral trust agreement, the liens securing the~~ ~~2025 Notes and the guarantees will be contractually subordinated to the liens securing any future credit facility.~~

~~The~~ ~~2025 Notes and the guarantees will be the Company and the guarantors’ senior secured obligations and will rank:~~September 24, 2023 were as follows:

Weighted average remaining lease term (years):		●	~~senior in right of payment to all of the Company and the guarantors’ future subordinated indebtedness;~~ 4.9

	●	~~effectively senior to all unsecured senior indebtedness to the extent of the value of the collateral securing the~~ ~~2025 Notes and the guarantees;~~

	●	~~pari passu~~ ~~with all of the Company and the guarantors’ other senior indebtedness;~~

	●	~~effectively junior to any future credit facility to the extent of the value of the collateral securing any future credit facility and the~~ ~~2025 Notes and the guarantees and certain other assets;~~

	●	~~effectively junior to any of the Company and the guarantors’ existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes and the guarantees to the extent of the value of any such assets; and~~

	●	~~structurally subordinated to the indebtedness of any of the Company’s current and future subsidiaries that do not guarantee the 2025 Notes.~~

The Company may redeem the 2025 Notes in whole or in part prior to November 1, 2020, at a redemption price of 100% of the principal amount of the 2025 Notes redeemed plus the Applicable Premium as of, plus accrued and unpaid interest. An Applicable Premium is the greater of 1% of the principal amount of the 2025 Notes; or the excess of the present value at such redemption date of (i) the redemption price of the 2025 Notes at November 1, 2020 plus (ii) all required interest payments due on the 2025 Notes through November 1, 2020 (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over the then outstanding principal amount of the 2025 Notes.

~~Prior to November 1, 2020, if using the net cash proceeds of certain equity offerings, the Company has the option to redeem up to 35% of the aggregate principal amount of the~~ ~~2025 Notes at a redemption price equal to 106.625% of the principal amount of the 2025 Notes redeemed, plus accrued and unpaid interest and any additional interest.~~

~~On or after November 1, 2020, the Company may redeem some or all of the~~ ~~2025 Notes at a decreasing premium over time, plus accrued and unpaid interest as follows:~~

~~YEAR~~

~~PERCENTAGE~~

~~On or after November 1, 2020 and prior to November 1, 2021~~Weighted average discount rate:

~~103.313~~8.498

Future lease commitments to be paid and received by the Company as of September 24, 2023 were as follows (in thousands):

	Payments			Receipts
	Operating Leases			Subleases		Net Leases

Fiscal year:
2024 (a)	$	773		$	84	$	689
2025		1,884			274		1,610
2026		1,919			278		1,641
2027		1,928			281		1,647
2028		1,778			129		1,649
Thereafter		602			495		107
Total lease commitments	$	8,884		$	1,541	$	7,343
Less: Amount representing interest		(1,601	)
Present value of lease liabilities (b)	$	7,283

~~On or after November 1, 2021 and prior to November 1, 2022~~

(a)

~~101.656~~

Represents future lease commitments to be paid and received by the Company for the remainder of the 2024 fiscal year. Amount does not include $895of lease commitments paid and received by the Company for the twenty-six week period ended September 24, 2023.

~~On or after November 1, 2022~~

(b)

~~100.000~~

The present value of minimum operating lease payments of $1,875 and $5,408are included in “Current portion of operating lease liabilities” and “Long-term operating lease liabilities,” respectively on the Consolidated Balance Sheet.

~~-16-~~-18-

~~In certain circumstances involving a change of control, the~~ Company ~~will be required to make an offer to repurchase all or, at the holder~~’s option, any part, of each holder’s 2025 Notes pursuant to the offer described below (the “Change of Control Offer”). In the Change of Control Offer, the Company will be required to offer payment in cash equal to 101% of the aggregate principal amount of 2025 Notes repurchased plus accrued and unpaid interest, to the date of purchase.

~~If the Company sells certain assets and does not use the net proceeds~~ as ~~required, the Company will be required to use such net proceeds to repurchase the~~ ~~2025 Notes at 100% of the principal amount thereof, plus accrued and unpaid interest and additional interest penalty, if any, to the date of repurchase.~~lessor

The ~~2025 Notes may be traded between qualified institutional buyers pursuant to Rule 144A~~components of net lease income for the ~~Securities Act. We have recorded the 2025 Notes at cost.~~thirteen and twenty-six week periods ended September 24, 2023 and September 25, 2022 were as follows (in thousands):

	Thirteen weeks ended				Twenty-six weeks ended
	September 24, 2023		September 25, 2022		September 24, 2023		September 25, 2022

Operating lease income, net	$	23	$	20	$	44	$	42

NOTE OR – COMMITMENTS AND CONTINGENCIES

1. ~~Commitments~~

On February 27, 2017, a wholly-owned subsidiary of the Company executed a Guaranty of Lease (the “Brooklyn Guaranty”) in connection with its re-franchising of a restaurant located in Brooklyn, New York. The Company is obligated to make payments under the Brooklyn Guaranty in the event of a default by the tenant/franchisee. The Brooklyn Guaranty has an initial term of 10 years and one 5-year option and is limited to 24 months of rent for the first three years of the term. Nathan’s has recorded a liability of $204,000 in connection with the Brooklyn Guaranty which does not include potential percentage rent, real estate tax increases, attorney’s fees and other costs as these amounts are not reasonably determinable at this time. Nathan’s has received a personal guaranty from the franchisee for all obligations under the Brooklyn Guaranty. For the remainder of the term, the Brooklyn Guaranty is limited to 12 months of rent plus reasonable costs of collection and attorney’s fees.

On December 6, 2017, the Company amended its employment agreement with Howard M. Lorber. Under the amendment, the term of the employment agreement was extended from December 31, 2017 to December 31, 2022 and the base compensation of Mr. Lorber will be $1,000,000 per annum. All other terms and conditions remained the same.

2. Contingencies

The Company and its subsidiaries are from time to time involved in ordinary and routine litigation. Management presently believes that the ultimate outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on the ~~Company~~’sCompany’s financial position, cash flows or results of operations. Nevertheless, litigation is subject to inherent uncertainties and unfavorable rulings could occur. An unfavorable ruling could include money damages and, in such event, could result in a material adverse impact on the Company’s results of operations for the period in which the ruling occurs.

NOTE S – SUBSEQUENT EVENTS

On October 30, 2023, the Compensation Committee of the Board approved a discretionary cash bonus payment of $500 to Howard M. Lorber, Executive Chairman of the Board, which will be paid on or before November 17, 2023.

The Company evaluated subsequent events through the date the Consolidated Financial Statements were issued and filed with the SEC. There were no other subsequent events that require recognition or disclosure.

~~-17-~~

-19-

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

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 1933, as amended, that involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes”, “expects”, “projects”, “may”, “would”, “should”, “seeks”, “intends”, “plans”, “estimates”, “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and, of course, it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements contained in this Form 10-Q are based upon information available to us on the date of this Form 10-Q.

Statements in this Form 10-Q quarterly report may be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties, many of which are not within our control, include but are not limited to: the impact of disease epidemics such as the recent 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 the 2025 Notes (as defined below), including the effect on our ability to fund working capital, operations and make investments; economic (including inflationary pressures like those currently being experienced); weather (including the ~~affects on the supply of cattle~~ ~~and the~~ impact ~~of weather~~ on sales at our restaurants particularly during ~~Summer~~the summer months)~~, and change~~; changes in the price of beef and beef trimmings; our ability to pass on the cost of any price increases in beef and beef ~~trimmings, or labor costs;~~trimmings; legislative and business conditions; the ~~collectibility~~collectability of receivables; changes in consumer tastes; the status of our licensing and supply agreements, including the impact of our supply agreement for hot dogs with John Morrell & Co., the impact of our debt service and repayment obligations under the 2025 Notes; the impact of the Tax Cuts and Jobs Act (“~~the Act~~”); the continued viability of Coney Island as a destination location for visitors; the ability to ~~continue to~~ attract franchisees; the impact of the ~~new~~ minimum wage legislation on labor costs in New York State or other changes in labor laws, including ~~court decisions~~regulations which could render a franchisor as a “joint employee” or the impact of our ~~new~~ union contracts; our ability to attract competent restaurant and managerial personnel; the enforceability of international franchising ~~agreements and~~agreements; the future effects of any food borne ~~illness;~~illness such as bovine spongiform encephalopathy, BSE or e-coli; as well as those risks discussed from time to time in this Form 10-Q and our Form 10-K annual report for the year ended March 26, ~~2017,~~2023, and in other documents we file with the U.S. Securities and Exchange Commission. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements. We generally identify forward-looking statements with the words “believe,” “intend,” “plan,” “expect,” “anticipate,” “estimate,” “will,” “should” and similar expressions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q.

Introduction

As used in this Report, the terms “we”, “us”, “our”, ~~“Nathan’s”~~“Nathan’s” or the “Company” mean Nathan’s Famous, Inc. and its subsidiaries (unless the context indicates a different meaning).

We are engaged primarily in the marketing of the ~~“Nathan~~’s“Nathan’s Famous” brand and the sale of products bearing the “Nathan’s Famous” trademarks through several different channels of distribution. Historically, our business has been the operation and franchising of quick-service restaurants featuring Nathan’s World Famous Beef Hot Dogs, crinkle-cut ~~French-fried potatoes,~~French fries, and a variety of other menu offerings. Our Company-owned and franchised ~~units~~restaurants operate under the name “Nathan’s Famous,” the name first used at our original Coney Island restaurant opened in 1916. Nathan’s product licensing program sells packaged hot dogs and other meat products to retail customers through supermarkets or grocery-type retailers for off-site consumption. Our Branded Product Program enables foodservice retailers and others to sell some of Nathan’s proprietary products outside of the realm of a traditional franchise relationship. In conjunction with this program, purchasers of Nathan’s products are granted a limited use of the Nathan’s Famous trademark with respect to the sale of the purchased products, including Nathan’s World Famous Beef Hot Dogs, certain other proprietary food items and paper goods. Our Branded Menu Program is a limited franchise program, under which foodservice operators may sell a greater variety of Nathan’s Famous menu items than under the Branded Product Program.

-20-

Our revenues are generated primarily from selling products under ~~Nathan~~’sNathan’s Branded Product Program, operating Company-owned restaurants, licensing agreements for the sale of Nathan’s products within supermarkets and club stores, the sale of Nathan’s products directly to other foodservice operators, ~~and~~ the manufacture of certain proprietary spices by third parties and the royalties, fees and other sums we can earn from franchising the Nathan’s restaurant concept (including the Branded Menu ~~Program)~~Program and virtual kitchens).

At ~~December~~September 24, ~~2017,~~2023, our restaurant system, excluding virtual kitchens, consisted of ~~285 units comprised of 280 Nathan’s franchised units,~~235locations, including ~~124~~117 Branded Menu ~~units,~~Program locations, and ~~five~~four Company-owned ~~units~~restaurants (including one seasonal unit), located in 19 17states, and 1213 foreign countries (including 2 Branded Menu Program locations in Ukraine which are temporarily closed as a result of the Russia-Ukraine conflict.) Our virtual kitchens in operation consisted of 262 locations located in 20 states and six foreign countries.

At ~~December~~September 25, ~~2016,~~2022, our restaurant system, excluding virtual kitchens, consisted of ~~287 units comprised of 282 Nathan’s franchised units,~~234 locations, including ~~114~~119 Branded Menu ~~units,~~Program locations, and ~~five~~four Company-owned ~~units~~restaurants (including one seasonal unit), located in 20 17states, and 1012 foreign ~~countries.~~

~~In addition to plans for expansion through our Branded Product Program, licensing and franchising, Nathan~~’s continues to seek to co-brand within its restaurant system. Nathan’s is also the owner of the Arthur Treacher’s brand. Currently there are seven locations operating under our Arthur Treacher’scountries (including 2 Branded Menu Program ~~agreement.~~locations in Ukraine which are temporarily closed as a result of the Russia-Ukraine conflict.) Our virtual kitchens in operation consisted of 229 locations located in 18 states and four foreign countries.

Our primary focus is to expand the market penetration of the Nathan’s Famous brand by increasing the number of distribution points for our products across all of our business platforms, including our Licensing Program for distribution of Nathan’s Famous branded consumer packaged goods, our Branded Products Program for distribution of Nathan’s Famous branded bulk products to the foodservice industry, and our namesake restaurant system comprised of both Company-owned restaurants and franchised locations, including virtual kitchens. The primary drivers of our growth have been our Licensing and Branded Product Programs which have been the largest contributors to the Company’s revenues and profits.

While we do not expect to significantly increase the number of Company-owned restaurants, we may opportunistically and strategically invest in a small number of new units as showcase locations for prospective franchisees and master developers as we seek to grow our franchise system. We continue to seek opportunities to drive sales in a variety of ways as we adapt to the ever-changing consumer and business climate.

As described in our Annual Report on Form 10-K for the year ended March 26, ~~2017,~~2023, our future results could be materially impacted by many developments including our dependence on ~~John Morrell & Co.~~Smithfield Foods, Inc. as our principal supplier and the dependence of our licensing revenue and overall profitability on our agreement with ~~John Morrell & Co.~~Smithfield Foods, Inc. In addition, our future operating results could be impacted by supply constraints on beef or by increased costs of beef, beef trimmings and other commodities due to inflationary pressures compared to earlier periods.

~~-18-~~

On November 1, 2017, the Company ~~completed the issuance of~~issued $150,000,000 of 6.625% Senior Secured Notes due 2025 (the “2025 Notes”) and used the majority of the proceeds of this offering to redeem the Company’s 10.000% Senior Secured Notes due 2020, ~~Notes~~ ~~(the “Redemption”),~~ paid a portion of the special $5.00 cash dividend and ~~will use any~~used the remaining proceeds for general corporate purposes, including working capital.

On January 26, 2022, the Company redeemed $40,000,000 in aggregate principal amount of its 2025 Notes. Subsequently, on March 21, 2023, the Company redeemed an additional $30,000,000 in aggregate principal amount of its 2025 Notes. $80,000,000 of the 2025 Notes were outstanding as of September 24, 2023. On May 1, 2023 and November 1, 2023, the Company paid its semi-annual interest payments for fiscal 2024.

Our future results ~~could also~~may be impacted by our interest obligations under the 2025 Notes. As a result of the ~~issuance~~outstanding balance of the 2025 Notes, ~~Nathan’s expects to incur interest expense of $9,937,500 per annum, reducing its cash interest expense by $3,562,500 per annum. Nathan’s~~the Company expects to incur annual ~~amortization~~interest expense of ~~debt issuance~~$5,300,000 and annual amortization costs of approximately $685,000. Please refer to Note N – Long Term Debt, for the effects of the Company’s refinancing from the preceding consolidated financial statements. The impact of interest expense on net income has been reflected in our results for the thirteen and thirty-nine week periods ended December 24, 2017 and December 25, 2016.$369,000.

On March 10, 2015, we consummated a $135,000,000 offering of 10.000% Senior Secured Notes due 2020 (the “2020 Notes”) and paid a dividend of $25.00 per share (or approximately $116,100,000 in the aggregate). As ~~a result of the issuance of the 2020 Notes, Nathan’s incurred interest expense of $13,500,000 per annum and annual amortization of debt issuance costs of approximately $1,200,000.~~

As described below, we are also including information relating to EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, in this Form 10-Q quarterly report. See “Reconciliation of GAAP and Non-GAAP Measures.”

~~On November 1, 2017,~~Recent events

Inflationary Factors

The Company continues to experience rising labor costs, as well as higher commodity prices, including beef and beef trimmings. This trend may continue throughout the ~~Board~~remainder of ~~Directors declared~~fiscal year 2024. In general, we have been able to offset cost increases resulting from inflation by increasing prices and adjusting product mix. We continue to monitor these inflationary pressures and will continue to implement mitigation plans as needed. Inherent volatility in commodity markets, including beef and beef trimmings, could have a ~~special cash dividend~~significant impact on our results of ~~$5.00 per share, or $20,923,000~~operations. Delays in implementing price increases, competitive pressures, consumer spending levels and other factors may limit our ability to ~~stockholders of record at~~implement further price increases in the ~~close of business on December 22, 2017, which was paid on January 4, 2018.~~future.

-21-

Critical Accounting Policies and Estimates

As discussed in our Form 10-K for the fiscal year ended March 26, ~~2017,~~2023, the discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of ~~America.~~America (“US GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the amounts of assets, liabilities, revenues and expenses reported in those consolidated financial statements. These judgments can be subjective and complex, and consequently, actual results could differ from those estimates. Our most critical accounting policies and estimates relate to revenue recognition; leases; impairment of ~~goodwill and other~~ intangible assets; impairment of long-lived assets; ~~share-based compensation~~ and income taxes (including uncertain tax positions). ~~Except for the adoption~~As discussed in Note B, ~~– simplifying~~ the ~~measurement~~Company adopted ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of ~~inventory and simplifying the elements of cash flow classification; there~~Credit Losses on Financial Instruments,”effective March 27, 2023. There have been no other significant changes to the Company’s ~~significant~~ accounting policies subsequent to March 26, ~~2017.~~2023.

Adoption of New Accounting Standard~~Pronouncements~~

Please refer to Note B of the preceding consolidated financial statements for our discussion of the Adoption of the New Accounting ~~Pronouncements.~~

~~New Accounting~~ ~~Pronouncements~~ ~~Not Yet Adopted~~

~~Please refer to Note C~~ ~~of the preceding consolidated financial statements for our discussion of New Accounting Pronouncements Not Yet Adopted.~~Standard.

EBITDA and Adjusted EBITDA

The Company believes that EBITDA and Adjusted EBITDA, which are non-GAAP financial measures, are useful to investors to assist in assessing and understanding the Company's operating performance and underlying trends in the Company's business because EBITDA and Adjusted EBITDA are (i) among the measures used by management in evaluating performance and (ii) are frequently used by securities analysts, investors and other interested parties as a common performance measure.

Reconciliation of GAAP and Non-GAAP Measures

The following is provided to supplement certain Non-GAAP financial measures.

In addition to disclosing results that are determined in accordance with ~~Generally Accepted Accounting Principles in the United States of America ("~~US ~~GAAP"),~~GAAP, the Company has provided EBITDA, a non-GAAP financial measure, which ~~excludes~~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 ~~loss~~(i) the gain on ~~early extinguishment~~disposal of ~~debt~~property and ~~stock-based~~equipment and (ii) share-based compensation that the Company believes will impact the comparability of its results of operations.

EBITDA and Adjusted EBITDA are not recognized terms under US GAAP and should not be viewed as alternatives to net income ~~(loss)~~ or other measures of financial performance or liquidity in conformity with US GAAP. Additionally, our definitions of EBITDA and Adjusted EBITDA may differ from other companies. Analysis of results and outlook on a ~~Non-US~~non-US GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with US GAAP.

~~-19-~~

The following is a reconciliation of ~~Net (loss)~~net income to EBITDA and Adjusted EBITDA (in thousands):

	Thirteen weeks ended					Thirty-nine weeks ended				Thirteen weeks ended					Twenty-six weeks ended
	December 24, 2017			December 25, 2016		December 24, 2017		December 25, 2016		September 24, 2023		September 25, 2022			September 24, 2023		September 25, 2022
										(unaudited)					(unaudited)
Net (loss) income	$	(3,779	)	$	699	$	2,263	$	6,756

Net income										$	5,711	$	5,958		$	13,099	$	13,095
Interest expense		3,650			3,663		10,976		11,002		1,413		1,943			2,827		3,887
(Benefit) provision for income taxes		(3,307	)		448		621		3,986
Provision for income taxes											2,153		2,127			4,897		4,870
Depreciation and amortization		320			309		1,055		1,005		315		301			628		534
EBITDA		(3,116	)		5,119		14,915		22,749		9,592		10,329			21,451		22,386

Loss on debt extinguishment		8,872			-		8,872		-
Stock-based compensation		99			136		298		482
Gain on disposal of property and equipment											-		(14	)		-		(14	)
Share-based compensation											182		8			359		16
Adjusted EBITDA	$	5,855		$	5,255	$	24,085	$	23,231	$	9,774	$	10,323		$	21,810	$	22,388

-22-

Seasonality

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 retail licensing program generally follow similar season fluctuations, although not to the same degree. Working capital requirements may vary throughout the year to support these seasonal patterns.

Due to the above seasonal factors, as well as inflationary pressures, our results of operations for the thirteen and twenty-six weeks ended September 24, 2023 are not necessarily indicative of those for a full fiscal year.

Results of Operations

Thirteen weeks ended ~~December 2~~4~~, 201~~7September 24, 2023 compared to thirteen weeks ended ~~December 2~~5~~, 201~~6September 25, 2022

Revenues

Total ~~sales~~ revenues increased by ~~12.8%~~approximately 3% to ~~$16,767,000~~$38,744,000 for the thirteen weeks ended ~~December~~September 24, ~~2017~~2023 (“~~third~~second quarter fiscal ~~2018”~~2024”) as compared to ~~$14,859,000~~$37,497,000 for the thirteen weeks ended ~~December~~September 25, ~~2016~~2022 (“~~third~~second quarter fiscal ~~2017”~~2023”). ~~Foodservice~~

Total sales increased by approximately 5% to $28,545,000 for the second quarter fiscal 2024 as compared to $27,301,000 for the second quarter fiscal 2023 which included foodservice sales from the Branded Product Program ~~increased~~increasing by ~~14.0%~~6% to ~~$14,674,000~~$23,352,000 for the ~~third~~second quarter fiscal ~~2018~~2024 as compared to sales of ~~$12,868,000 in~~$22,030,000 for the ~~third~~second quarter fiscal ~~2017.~~2023. During the ~~third~~second quarter fiscal ~~2018,~~2024, the volume of ~~business increased~~ hot dogs sold decreasedby approximately ~~10.4%.~~2% as compared to the second quarter fiscal 2023. Our average selling prices increased by approximately ~~3.0%~~9% as compared to the second quarter fiscal 2023. Total Company-owned restaurant sales decreased by approximately 1% to $5,193,000 during the second quarter fiscal 2024 as compared to $5,271,000 during the second quarter fiscal 2023. Sales were impacted by reduced traffic at our Coney Island locations as a result of ~~our pricing strategy, which is more closely correlated to the cost of beef which increased by approximately 8.0%,~~unfavorable weather conditions during the third quarter fiscal 2018 as compared to the third quarter fiscal 2017. Total Company-owned restaurant sales increased by 5.1% to $2,093,000 during the third quarter fiscal 2018 as compared to $1,991,000 during the third quarter fiscal 2017 due primarily to higher sales at our Coney Island and Yonkers locations attributable to a higher check average of 3.8% and higher customer counts.summer season.

License royalties ~~increased 6.0%~~decreased by approximately 1% to ~~$4,228,000~~$8,339,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$3,990,000~~$8,413,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. Total royalties earned on sales of hot dogs from our license agreement with ~~John Morrell & Co.~~Smithfield Foods, Inc. at retail and foodservice, ~~substantially from sales of hot dogs~~decreased 2% to ~~Sam’s Club, increased $180,000 to $3,680,000~~$7,507,000 for the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$3,500,000~~$7,655,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. The ~~increase~~decrease is due to ~~an increase~~a 7% decrease in retail volume, ~~during the third quarter fiscal 2018~~which was partially offset by a 5% increase in average net selling price as compared to the ~~third~~second quarter fiscal ~~2017, partly offset by lower average selling prices, on which our~~2023. The foodservice business earned higher royalties ~~are calculated.~~of $56,000 as compared to the second quarter fiscal 2023. Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increasedby ~~$58,000~~$74,000 during the ~~third~~second quarter fiscal ~~2018~~2024 as compared to the ~~third~~second quarter fiscal ~~2017.~~2023 primarily due to higher royalties earned on sales of french fries, onion rings and pickles.

Franchise fees and royalties were $~~1,088,000~~$1,291,000 in ~~both~~ the ~~third~~second quarter fiscal ~~2018 and~~2024 as compared to $1,199,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. Total royalties were ~~$963,000~~$1,148,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$984,000~~$1,055,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. Royalties earned under the Branded Menu ~~program~~Program were ~~$259,000~~$272,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$214,000~~$178,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. 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 $18,000 in the second quarter fiscal 2024 as compared to $37,000 in the second quarter fiscal 2023. Traditional franchise royalties ~~decreased to $704,000~~were $858,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$770,000~~$840,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. Franchise restaurant sales ~~decreased~~increased to ~~$15,596,000~~$19,171,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$17,184,000~~$18,595,000 in the ~~third~~second quarter fiscal ~~2017~~2023 primarily due to ~~the decline in comparable domestic~~higher sales at airport locations; highway travel plazas; shopping malls and ~~the impact of units closed in the previous fiscal year.~~movie theaters. Comparable domestic franchise sales (consisting of 92 63Nathan’s outlets, excluding sales under the Branded Menu Program) were ~~$12,251,000~~$15,627,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$12,863,000~~$15,353,000 in the ~~third~~second quarter fiscal ~~2017.~~2023.

At ~~December 24, 2017, 280~~ September 24, 2023, 235franchised ~~outlets,~~locations, including domestic, international and Branded Menu Program ~~outlets~~units were operating as compared to ~~282~~234 franchised ~~outlets,~~locations, including domestic, international and Branded Menu Program ~~outlets~~units at ~~December~~September 25, ~~2016.~~2022. Total franchise fee income was ~~$125,000~~$143,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$104,000~~$144,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. Domestic franchise fee income was ~~$33,000~~$28,000 in the ~~third~~second quarter fiscal ~~2018 as compared to $90,000 in~~2024 and the ~~third~~second quarter fiscal ~~2017, due primarily to the difference in the types of locations opened, and associated fees earned, between the two periods.~~2023. International franchise fee income was ~~$92,000~~$60,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$6,000~~$61,000 during the ~~third~~second quarter fiscal ~~2017, primarily due to the timing of new international development fees.~~ 2023.

-23-

We ~~also~~ recognized ~~$8,000~~$55,000 in forfeited fees in the ~~third~~second quarter fiscal ~~2017.~~ 2024 and the second quarter fiscal 2023.During the ~~third~~second quarter fiscal ~~2018, 8 new franchised outlets~~2024, seven franchise locations opened ~~including three units in Australia, one unit in the Philippines~~ and ~~two new Branded Menu Program outlets.~~seven franchise locations closed. Additionally, seven virtual kitchens opened. During the ~~third~~second quarter fiscal ~~2017, 22 new franchised outlets~~2023, one franchise location opened ~~including nine new Branded Menu Program outlets.~~and five franchise locations closed. Additionally, forty-threevirtual kitchens opened.

~~-20-~~

Advertising fund revenue, after eliminating Company contributions, was $569,000 during the second quarter fiscal 2024 as compared to $584,000 during the second quarter fiscal 2023.

Costs and Expenses

Overall, our cost of sales increasedby ~~16.8% or $1,814,000~~approximately 10% to ~~$12,599,000~~$24,187,000 in the ~~third~~second quarter fiscal ~~2018,~~2024 as compared to ~~$10,785,000~~$21,898,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. Our gross profit (representing the difference between sales and cost of sales) ~~was $4,168,000~~decreased to $4,358,000 or ~~24.9%~~15% of sales during the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$4,074,000~~$5,403,000 or ~~27.4%~~20% of sales during the ~~third~~second quarter fiscal 2017. The margin reduction was primarily due to the higher cost of beef in the Branded Product Program and in the Company-operated restaurants in addition to the higher labor costs at the Company-owned restaurants.2023.

Cost of sales in the Branded Product Program increased by ~~approximately $1,736,000 during~~13% to $21,442,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to $18,975,000 in the ~~third~~second quarter fiscal ~~2017,~~2023, primarily due to ~~the 10.4% increase in the volume of product sold and the 8.0%~~a 17% increase in the average cost per pound of our hot ~~dogs.~~dogs, which was partially offset by the 2% decline in the volume of hot dogs sold as discussed above. We continue to experience pricing pressures on commodities, including beef and beef trimmings. We did not make any ~~purchases~~purchase commitments of beef during the ~~third~~second quarter fiscal ~~2018~~2024 or ~~third~~the second quarter fiscal ~~2017 pursuant to any purchase commitments.~~2023. 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 ~~third~~second quarter fiscal ~~201~~82024 was ~~$1,434,000~~$2,745,000 or ~~68.5%~~53% of restaurant sales as compared to ~~$1,355,000~~$2,923,000 or ~~68.1%~~55% of restaurant sales during the second quarter fiscal 2023. The decrease in cost of sales during the fiscal 2024 period was primarily due to the 1% decrease in sales discussed above. Food and paper costs as a percentage of Company-owned restaurant sales were 27.6%, down from 28.3% in the ~~third quarter fiscal 2017 due primarily to the impact of higher food costs on higher revenues and higher labor costs principally associated with the effects~~comparable period of the ~~New York State minimum wage increase. We expect that our labor costs going forward will continue~~prior year. Labor and related expenses as a percentage of Company-owned restaurant sales were 25.3%, down from 27.2% in the comparable period of the prior year due to ~~be impacted by the multi-year new increase in minimum wage requirements in New York State~~tighter management and ~~any increase in food costs from higher commodity costs.~~staffing stabilization.

Restaurant operating expenses were $~~760,000~~$1,340,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$695,000~~$1,253,000 in the ~~third~~second quarter fiscal ~~2017. The increase in restaurant operating costs results primarily from~~2023. We incurred higher occupancy expenses of $17,000, higher contract maintenance costs ~~insurance~~of $12,000 and ~~utilities.~~higher credit card and bank fees of $40,000.

Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $~~320,000~~$315,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$309,000~~$301,000 in the ~~third~~second quarter fiscal ~~2017.~~2023.

General and administrative expenses decreased by ~~$360,000~~$143,000 or ~~10.6%~~4% to ~~$3,034,000~~$3,229,000 in the ~~third~~second quarter fiscal ~~2018~~2024 as compared to ~~$3,394,000~~$3,372,000 in the ~~third~~second quarter fiscal ~~2017.~~2023. The decrease in general and administrative expenses was primarily attributable to ~~lower~~a reduction in incentive compensation expenses ~~the timing~~ of ~~expenses in connection with our fiscal 2018 audit~~$233,000 and lower ~~bad debts.~~marketing and trade show expenses of $57,000, which were partially offset by higher share-based compensation expense of $174,000.

Advertising fund expense, after eliminating Company contributions, was $569,000 during the second quarter fiscal 2024 as compared to $759,000 in the second quarter fiscal 2023.

Other Items

On November 1, 2017, the Company completed the issuance of $150,000,000 of the 2025 Notes in a private offering in accordance with Rule 144A under the Securities Act. The 2025 Notes were issued pursuant to the Indenture by and among the Company, certain of its wholly-owned subsidiaries, as guarantors, and U.S. Bank National Association, as trustee and collateral trustee. The Company used the net proceeds of the 2025 Notes offering to satisfy and discharge the Indenture relating to the 2020 Notes and redeem the 2020 Notes, paid a portion of a special $5.00 per share cash dividend to Nathan's stockholders of record (see Note M.1), with the remaining net proceeds for general corporate purposes, including working capital. The Redemption occurred on November 16, 2017. The Company performed the required evaluation of the refinancing and determined that a portion of the Redemption of the 2020 Notes is accounted for as a modification of the debt and a portion as an extinguishment of the debt. In connection with the Redemption, the Company recorded a loss on early extinguishment of debt of $8,872,000 that primarily reflects a portion of the premium paid to redeem the 2020 Notes and the write-off of certain debt issuance costs.

Interest expense of ~~$3,650,000~~$1,413,000 in the ~~third~~second quarter fiscal ~~2018 represents~~2024 represented interest expense of ~~$1,847,000 on the 2020 Notes, $1,470,000 accrued interest~~$1,321,000 on the 2025 Notes and ~~total~~ amortization of debt issuance costs of ~~$333,000. On November 1, 2017,~~$92,000.

Interest expense of $1,943,000 in the ~~Company issued~~second quarter fiscal 2023 represented interest expense of $1,816,000 on the 2025 Notes and ~~the Redemption occurred on November 16, 2017.~~ amortization of debt issuance costs of $127,000.

The ~~Company incurred additional~~reduction in interest expense of ~~approximately $562,500 from~~$530,000 is due to the ~~time~~reduction in the outstanding balance of the Company’s 2025 Notes ~~closed until the Redemption. As~~as a result of the ~~issuance~~$30,000,000 partial redemption completed in March 2023.

Interest income of $150,000 in the ~~2025 Notes and the Redemption,~~second quarter fiscal 2024 represented amounts earned by the Company ~~expects to reduce~~on its ~~annual~~certificates of deposit, as well as its interest ~~expense by approximately $3,562,500 per annum.~~

I~~nterest income was $44,000 in the third quarter fiscal 2018~~bearing bank and money market accounts, as compared to ~~$35,000~~$80,000 in the ~~third quarter~~ fiscal ~~2017 due principally to rising interest rates earned on our money market account.~~2023 period.

Other income, net was $23,000 and $34,000 in the second quarter fiscal 2024 and the second quarter fiscal 2023, respectively, which primarily relates to a sublease ofincome from a franchised ~~restaurant, was $22,000 in the third quarter fiscal 2018 and $21,000 in the third quarter fiscal 2017~~.restaurant.

-24-

Provision for Income Taxes

InThe effective income tax rate for the ~~third~~second quarter fiscal ~~2018,~~2024 was 27.4% compared to 26.3% in the second quarter fiscal 2023. The effective income tax ~~benefit was $(3,307,000) or 46.7% of loss before income taxes as compared to~~rate for the second quarter fiscal 2024 reflected income tax ~~provision~~expense of ~~$448,000 or 39.1%~~$2,153,000 recorded on $7,864,000 of ~~earnings before~~pre-tax income. The effective income ~~taxes in~~tax rate for the ~~third~~second quarter fiscal ~~2017.~~2023 reflected income tax expense of $2,127,000 recorded on $8,085,000 of pre-tax income. The effective tax rates are higher than the U.S. Federal statutory rates primarily due to state and local taxes.

~~Nathan~~’sThe effective tax rate for the ~~thirteen week period ended December 25, 2016 was reduced by 330 BPS, as~~second quarter fiscal 2024 includes a result of the tax benefits associated with stock compensation. For the thirteen week period ended December 25, 2016, excess tax benefits of $39,000, were reflected in the Consolidated Statements of Earnings as a reduction to the provision for income taxes. Pursuant to Staff Accounting Bulletin #118, Nathan’s has determined reasonable estimates to its deferred assets and liabilities and pursuant to ASC 740, Income Taxes, the Company has recognized the effect(s) of the Act on current and deferred income taxes in its financial statements during the quarter ended December 24, 2017. Nathan’s has recorded the following discrete adjustment ~~to its deferred tax liability and~~of 0.8%. There were no discrete adjustments for the second quarter fiscal 2023.

The amount of unrecognized tax benefits at September 24, 2023 was $459,000 all of which ~~reduced~~would impact the ~~provision for income taxes by $436,000 during the thirteen weeks ended December 24, 2017. As described in Note J to the Consolidated Financial Statements, Nathan’s estimates that its blended federal~~Company’s effective tax rate, ~~will be 31% for its fiscal year ending March 25, 2018 and that its annual tax rate~~if recognized. As of September 24, 2023, the Company had approximately $335,000 accrued for the ~~fiscal year ending March 25, 2018 will be in the range~~payment of approximately 40.8% to 43.1%, excluding the impact of the discrete items recorded and excess tax benefit associated with stock compensation. The final annual tax rate is subject to many variables, including the ultimate determination of revenue and income tax by state, among other factors, and therefore cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from our current estimates. As of December 24, 2017, Nathan’s had $212,000 of accrued interest and penalties in ~~connection~~conjunction with unrecognized tax benefits.

Nathan’s estimates that its unrecognized tax ~~benefits, including the related~~benefit excluding accrued interest and penalties could be further reduced by up to ~~$5,000~~$19,000 during the ~~remainder~~fiscal year ending March 31, 2024 due primarily to the lapse of ~~fiscal 2018.~~statutes of limitations which would favorably impact the Company’s effective tax rate, although no assurances can be given in this regard.

~~-21-~~

Results of Operations

T~~hirty-nine~~Twenty-six weeks ended ~~Dec~~~~ember 2~~4~~, 201~~7September 24, 2023 compared to t~~hirty-nine~~twenty-six weeks ended ~~Dec~~~~ember 2~~5~~, 201~~6September 25, 2022

Revenues

Total revenues increased by approximately 5% to $80,729,000 for the twenty-six weeks ended September 24, 2023 (“fiscal 2024 period”) as compared to $77,217,000 for the twenty-six weeks ended September 25, 2022 (“fiscal 2023 period”).

Total sales increasedby ~~9.7%~~approximately 6% to ~~$63,639,000~~$57,373,000 for the ~~thirty-nine weeks ended December 24, 2017 (“~~fiscal ~~2018 period”)~~2024 period as compared to ~~$58,012,000~~$54,195,000 for the ~~thirty-nine weeks ended December 25, 2016 (“~~fiscal ~~2017 period”). Foodservice~~2023 period which included foodservice sales from the Branded Product Program ~~increased~~increasing by ~~14.4%~~7% to ~~$50,741,000~~$48,522,000 for the fiscal ~~2018~~2024 period as compared to sales of ~~$44,349,000~~$45,201,000 for the fiscal ~~2017~~2023 period. During the fiscal ~~2018~~2024 period, the volume of ~~business~~hot dogs sold in the Branded Product Program increased by approximately 10.9%. Our average selling prices increased by approximately 3.2% in the fiscal 2018 period as a result of our pricing strategy, which is more closely correlated to the cost of beef which increased by approximately 8.6%, during the fiscal 2018 period0.4% as compared to the fiscal ~~2017~~2023 period. Our average selling prices, which are partially correlated to the beef markets, increased by approximately 7% as compared to the fiscal 2023 period. Total Company-owned restaurant sales ~~were $12,898,000~~decreased by 2% to $8,851,000 during the fiscal ~~2018~~2024 period as compared to ~~$13,449,000~~$8,994,000 during the fiscal ~~2017 period due primarily to lower sales~~2023 period. Sales were impacted by reduced traffic at ~~both~~our Coney Island ~~locations. Sales at our Company-owned restaurants were unfavorably affected~~locations as a result of unfavorable weather conditions during the ~~fiscal 2018 period due primarily~~summer season.

License royalties increased by approximately 1% to ~~unfavorable weather conditions. Direct retail sales also decreased by $214,000 during~~$19,997,000 in the fiscal ~~2018~~2024 period as compared to ~~the fiscal 2017 period as we began to transition this business into our Branded Product Program during fiscal 2017.~~

~~License royalties were $17,393,000~~$19,727,000 in the fiscal ~~2018 period as compared to $15,602,000 in the fiscal 2017~~2023 period. Total royalties earned on sales of hot dogs from our license agreement with ~~John Morrell & Co.~~Smithfield Foods, Inc. at retail and foodservice, ~~substantially from sales of hot dogs~~increased 1% to ~~Sam’s Club, increased 11.5% to $15,853,000~~$18,303,000 for the fiscal ~~2018~~2024 period as compared to ~~$14,214,000 for~~$18,105,000 in the fiscal ~~2017~~2023 period. The increase is due to ~~an 8.5%~~a 2% increase in ~~volume during the fiscal 2018 period~~average net selling price as compared to the fiscal ~~2017~~2023 period, which was partially offset by a 1% decline in ~~addition~~retail volume. The foodservice business earned higher royalties of $111,000 as compared to ~~a 4.1% increase in average selling prices, on which our royalties are calculated.~~the fiscal 2023 period. Royalties earned from all other licensing agreements for the manufacture and sale of Nathan’s products increased by ~~$152,000~~$72,000 during the fiscal ~~2018~~2024 period as compared to the fiscal ~~2017 period.~~2023 period primarily due to higher royalties earned on sales of french fries, onion rings, cocktail franks and mozzarella sticks.

Franchise fees and royalties were $~~3,575,000~~$2,366,000 in the fiscal ~~2018~~2024 period as compared to ~~$3,752,000~~$2,292,000 in the fiscal ~~2017~~2023 period. Total royalties were ~~$3,293,000~~$2,128,000 in the fiscal ~~2018~~2024 period as compared to ~~$3,386,000~~$1,956,000 in the fiscal ~~2017~~2023 period. Royalties earned under the Branded Menu ~~program~~Program were ~~$873,000~~$453,000 in the fiscal ~~2018~~2024 period as compared to ~~$779,000~~$317,000 in the fiscal ~~2017~~2023 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 $50,000 in the fiscal 2024 period as compared to $82,000 in the fiscal 2023 period. Traditional franchise royalties were ~~$2,420,000~~$1,625,000 in the fiscal ~~2018~~2024 period as compared to ~~$2,607,000~~$1,557,000 in the fiscal ~~2017~~2023 period. Franchise restaurant sales ~~decreased~~increased to ~~$54,737,000~~$36,433,000 in the fiscal ~~2018~~2024 period as compared to ~~$58,118,000~~$34,541,000 in the fiscal ~~2017~~2023 period primarily due to ~~the decline in comparable domestic~~higher sales at airport locations; highway travel plazas; shopping malls and ~~the impact of units closed in the previous fiscal year.~~movie theaters. Comparable domestic franchise sales (consisting of 8964 Nathan’s outlets, excluding sales under the Branded Menu Program) were ~~$40,490,000~~$30,166,000 in the fiscal ~~2018~~2024 period as compared to ~~$41,709,000~~$28,431,000 in the fiscal ~~2017~~2023 period.

-25-

At ~~December 24, 2017, 280~~ September 24, 2023, 235franchised ~~outlets,~~locations, including domestic, international and Branded Menu Program ~~outlets~~units were operating as compared to ~~282~~ 234 franchised ~~outlets,~~locations, including domestic, international and Branded Menu Program ~~outlet~~sunits at ~~December~~September 25, ~~2016.~~2022. Total franchise fee income was ~~$282,000~~$238,000 in the fiscal ~~2018~~2024 period as compared to ~~$366,000~~$336,000 in the fiscal ~~2017~~2023 period. Domestic franchise fee income was ~~$140,000~~$55,000 in the fiscal ~~2018~~2024 period as compared to ~~$177,000~~$57,000 in the fiscal ~~2017 period due primarily to the difference in the types of locations opened, and associated fees earned, between the two periods.~~2023 period. International franchise fee income was ~~$132,000~~$120,000 in the fiscal ~~2018~~2024 period as compared to ~~$156,000 in~~$130,000 during the fiscal ~~2017 period due to the timing of new international development fees.~~ 2023 period.

We ~~also~~ recognized ~~$10,000~~ $63,000and ~~$33,000~~$149,000 in forfeited fees in the fiscal ~~2018~~2024 period and fiscal ~~2017 periods,~~2023 period, respectively.During the fiscal ~~2018~~2024 period, ~~35 new franchised outlets~~fourteen franchise locations opened ~~including 13 international~~and elevenfranchise locations ~~and 17 Branded Menu Program outlets.~~closed. Additionally, eleven virtual kitchens opened. During the fiscal ~~2017~~2023 period, ~~42 new franchised outlets~~four franchise locations opened ~~including 16 international~~and ninefranchise locations ~~and 20 Branded Menu Program outlets.~~closed. Additionally, fifty-eight virtual kitchens opened.

Advertising fund revenue, after eliminating Company contributions, was $993,000 during the fiscal 2024 period as compared to $1,003,000 during the fiscal 2023 period.

Costs and Expenses

Overall, our cost of sales increased by ~~$6,433,000~~approximately 10% to ~~$48,165,000~~$48,871,000 in the fiscal ~~2018~~2024 period as compared to ~~$41,732,000~~$44,565,000 in the fiscal ~~2017~~2023 period. Our gross profit (representing the difference between sales and cost of sales) ~~was $15,474,000~~decreased to $8,502,000 or ~~24.3%~~15% of sales during the fiscal ~~2018~~2024 period as compared to ~~$16,280,000~~$9,630,000 or ~~28.1%~~18% of sales during the fiscal ~~2017~~2023 period. The margin decline was primarily due to the higher cost of beef in the Branded Products Program and in the Company-operated restaurants, in addition to the higher labor costs at the Company-owned restaurants.

~~-22-~~

Cost of sales in the Branded Product Program increased by ~~approximately $6,677,000~~12% to $44,010,000 during the fiscal ~~2018~~2024 period as compared to $39,375,000 during the fiscal ~~2017~~2023 period, primarily due to ~~the 10.9% increase in volume of product sold and the 8.6%~~a 12% increase in the average cost per pound of our hot dogs. ~~During the fiscal 2017 period, we completed our purchase of approximately 662,000 lbs. of hot dogs pursuant~~We continue to ~~the open purchase commitment, representing approximately 4.1% of volume, which reduced our overall cost of hot dogs by approximately 36 BPS.~~experience pricing pressures on commodities, including beef and beef trimmings. We did not make any ~~purchases~~purchase commitments of beef during the fiscal ~~2018 period pursuant to any purchase commitments.~~2024 and 2023 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 ~~201~~82024 period was ~~$7,199,000~~$4,861,000 or ~~55.8%~~55% of restaurant sales, as compared to ~~$7,247,000~~$5,190,000 or ~~53.9%~~58% of restaurant sales in the fiscal ~~2017~~2023 period. The decrease in cost of sales during the fiscal 2024 period was primarily due ~~primarily~~ to the ~~impact~~2%decrease in sales discussed above. Food and paper costs as a percentage of ~~lower revenues and higher labor costs principally associated with~~Company-owned restaurant sales were 27.8%, down from 28.4% in the ~~effects~~comparable period of the ~~New York State minimum wage increase. We expect that our future labor costs will continue~~prior year. Labor and related expenses as a percentage of Company-owned restaurant sales were 27.1%, down from 29.3% in the comparable period of the prior year due to ~~be impacted by the multi-year new increase in minimum wage requirements in New York State~~tighter management and ~~any increase in food costs from higher commodity costs.~~staffing stabilization.

Restaurant operating expenses were $~~2,769,000~~$2,383,000 in the fiscal ~~2018~~2024 period as compared to ~~$2,711,000~~$2,285,000 in the fiscal ~~2017~~2023 period. ~~The increase in restaurant operating costs results primarily from~~We incurred higher occupancy expenses of $25,000, higher contract maintenance costs of $18,000 and ~~insurance costs.~~higher credit card and bank fees of $64,000.

Depreciation and amortization, which primarily consists of the depreciation of fixed assets, including leasehold improvements and equipment, was $~~1,055,000~~$628,000 in the fiscal ~~2018~~2024 period as compared to ~~$1,005,000~~$534,000 in the fiscal ~~2017~~2023 period.

General and administrative expenses ~~decreased $245,000~~increased by $326,000 or ~~2.4%~~5% to ~~$10,064,000~~$7,287,000 in the fiscal ~~2018~~2024 period as compared to ~~$10,309,000~~$6,961,000 in the fiscal ~~2017~~2023 period. The ~~decrease~~increase in general and administrative expenses was primarily attributable to ~~reduced marketing~~higher share-based compensation expense of $343,000 and ~~promotional activities~~higher professional fees of $102,000, offset, in ~~connection with the commemoration~~part, by a reduction in incentive compensation expenses of ~~our 100th anniversary~~$104,000.

Advertising fund expense, after eliminating Company contributions, was $993,000 during the fiscal ~~2017~~2024 period ~~partly offset by higher compensation expenses during~~as compared to $1,178,000 in the fiscal ~~2018~~2023 period.

Other Items

Interest expense of $~~10,976,000~~$2,827,000 in the fiscal ~~2018~~2024 period ~~represents~~represented interest expense of ~~$8,574,000 on the 2020 Notes, $1,470,000 accrued interest~~$2,643,000 on the 2025 Notes and ~~total~~ amortization of debt issuance costs of ~~$932,000. On November 1, 2017,~~$184,000.

Interest expense of $3,887,000 in the ~~Company issued~~fiscal 2023 period represented interest expense of $3,633,000 on the 2025 Notes and ~~the Redemption occurred on November 16, 2017.~~ amortization of debt issuance costs of $254,000.

-26-

The ~~Company incurred additional~~reduction in interest expense of ~~approximately $562,500 from~~$1,060,000 is due to the ~~time~~reduction in the ~~2025 Notes closed until the Redemption. As a result~~outstanding balance of the ~~issuance of the~~Company’s 2025 Notes ~~and the Redemption, the Company expects to reduce its annual interest expense by approximately $3,562,500 per annum.~~

~~Interest income was $114,000 in the fiscal 2018 period as compared to $71,000 in the fiscal 2017 period. Nathan’s established its interest bearing money market account during the fiscal 2017 period.~~

~~Other income, which primarily relates to a sublease of a franchised restaurant, was $64,000 in the fiscal 2018 period, as compared to $64,000 in the fiscal 2017 period.~~

~~Provision for Income Taxes~~

~~The income tax provisions for the thirty-nine week periods ended December 24, 2017 and December 25, 2016 reflect effective tax rates of 21.5% and 37.1%, respectively. Nathan’s effective tax rates for the thirty-nine week periods ended December 24, 2017 and December 25, 2016 were reduced by 670 BPS and 610 BPS, respectively,~~ as a result of the ~~tax benefits associated with stock compensation. For the thirty-nine week periods December 24, 2017 and December 25, 2016, excess tax benefits~~$30,000,000 partial redemption completed in March 2023.

Interest income of ~~$194,000 and $659,000, respectively, were reflected~~$212,000 in the ~~Consolidated Statements~~fiscal 2024 period represented amounts earned by the Company on its certificates of ~~Earnings~~deposit, as well as interest bearing bank and money market accounts, as compared to $102,000 in the fiscal 2023 period.

Other income, net was $44,000 and $56,000 in the fiscal 2024 and fiscal 2023 periods, respectively, which primarily relates to sublease income from a ~~reduction~~franchised restaurant.

Provision for Income Taxes

The effective income tax rate for the fiscal 2024 period was 27.2% compared to 27.1% in the ~~provision~~fiscal 2023 period. The effective income tax rate for the fiscal 2024 period reflected income tax expense of $4,897,000 recorded on $17,996,000 of pre-tax income. The effective income tax rate for the fiscal 2023 period reflected income tax expense of $4,870,000 recorded on $17,965,000 of pre-tax income. The effective tax rates are higher than the U.S. Federal statutory rates primarily due to state and local taxes.

The amount of unrecognized tax benefits at ~~December~~September 24, ~~2017~~2023 was ~~$207,000,~~$459,000 all of which would impact ~~Nathan’s~~the Company’s effective tax rate, if recognized. ~~Pursuant to Staff Accounting Bulletin #118, Nathan’s has determined reasonable estimates to its deferred assets and liabilities and pursuant to ASC 740, Income Taxes,~~As of September 24, 2023, the Company has recognized the effect(s) of the Act on current and deferred income taxes in its financial statements during the quarter ended December 24, 2017. Nathan’s has recorded the following discrete adjustments to its deferred tax liability and unrecognized tax benefits which reduced the provision for income taxes by $436,000 or 1510 BPS during the thirty-nine weeks ended December 24, 2017. As described in Note J to the Consolidated Financial Statements, Nathan’s estimates that its blended federal tax rate will be 31% for its fiscal year ending March 25, 2018 and that its annual tax ratehad approximately $335,000 accrued for the ~~fiscal year ending March 25, 2018 will be in the range~~payment of approximately 40.8% to 43.1%, excluding the impact of the discrete items recorded and excess tax benefit associated with stock compensation. The final annual tax rate is subject to many variables, including the ultimate determination of revenue and income tax by state, among other factors, and therefore cannot be determined until the end of the fiscal year; therefore, the actual tax rate could differ from our current estimates. As of December 24, 2017, Nathan’s had $212,000 of accrued interest and penalties in connection with unrecognized tax benefits.

~~-23-~~

Nathan’s estimates that its unrecognized tax benefit excluding accrued interest and penalties could be further reduced by up to $19,000 during the fiscal year ending March 31, 2024 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.

Off-Balance Sheet Arrangements

~~Nathan~~’sAt September 24, 2023 and September 25, 2022, Nathan’s did not have any open purchase commitments for hot ~~dogs outstanding as of December 24, 2017.~~dogs. Nathan’s may enter into purchase commitments in the future as favorable market conditions become available.

Liquidity and Capital Resources

Cash and cash equivalents at ~~December~~September 24, ~~2017~~2023 aggregated ~~$67,288,000,~~$36,978,000, a ~~$10,373,000~~$7,117,000 increase during the fiscal ~~2018~~2024 period as compared to cash of ~~$56,915,000~~$29,861,000 at March 26, ~~2017.~~2023. Net working capital ~~decreased~~increased to ~~$51,809,000~~$40,047,000 from ~~$56,763,000~~$30,652,000 at March 26, ~~2017, which primarily relates~~2023. We paid our semi-annual interest payments for fiscal 2024 of $2,650,000 on May 1, 2023 and November 1, 2023, respectively. We paid our first and second quarter fiscal 2024 dividend payments of $2,040,000 each on June 28, 2023 and September 1, 2023. We expect to ~~the special~~pay our third quarter dividend ~~of approximately $20,923,000 payable to the shareholders of record~~ on December ~~22, 2017 that was paid on January 4, 2018.~~

~~On November~~ 1, ~~2017, the Company~~ issued the 2025 Notes and used the majority of the proceeds for the Redemption, paid a portion of the special $5.00 cash dividend and will use any remaining proceeds for general corporate purposes, including working capital. Our future results could also be impacted by our obligations under the 2025 Notes, as well as the new limitation on the deduction of interest expense under the Act. As a result of the issuance of the 2025 Notes, Nathan’s expects to incur interest expense of $9,937,500 per annum, reducing its cash interest expense by $3,562,500 per annum. Nathan’s expects to incur annual amortization of debt issuance costs of approximately $685,000. Please refer to Note N – Long Term Debt, for the effects of the Company’s refinancing from the preceding consolidated financial statements. The impact of interest expense on net income has been reflected in our results for the thirteen and thirty-nine week periods ended December 24, 2017 and December 25, 2016.

~~On March 10, 2015,~~ we issued the 2020 Notes and paid a dividend of $25.00 per share (or approximately $116,100,000 in the aggregate). In connection with the 2020 Notes, Nathan’s incurred interest expense of $13,500,000 per annum and annual amortization of debt issuance costs of approximately $1,200,000.

~~Nathan's use~~d the net proceeds of the 2025 Notes offering to satisfy and discharge the Indenture relating to the 2020 Notes and the Redemption, paid a portion of a special $5.00 per share cash dividend to Nathan's stockholders of record (see Note M.1) with the remaining net proceeds for general corporate purposes, including working capital. The payment in connection with the Redemption was approximately $144,000,000. Nathan's also funded the majority of the special dividend through its existing cash. The Redemption occurred on November 16, 2017.

The Company paid a 5% call premium of $6,750,000 associated with the Redemption and incurred debt issuance costs of $4,902,000 in connection with the issuance of the 2025 Notes. The Company also incurred additional interest expense of approximately $562,500 from the closing of the 2025 Notes on November 1, 2017 until the Redemption.2023.

The 2025 Notes bear interest at 6.625% per annum, payable semi-annually on May 1^st and November 1^st of each ~~year, beginning on May 1, 2018. Semi-annual interest payments are expected to be $4,968,750.~~year. The 2025 Notes have no scheduled principal amortization payments prior to its final maturity on November 1, 2025. ~~As a result of the issuance of the 2025 Notes and the Redemption, the Company expects to reduce its annual interest expense by approximately $3,562,500 per annum.~~

~~The Indenture~~ for the 2025 Notes contains certain covenants limiting the Company’s ability and the ability of its restricted subsidiaries (as defined in the Indenture) to, subject to certain exceptions and qualifications: (i) incur additional indebtedness; (ii) pay dividends or make other distributions on, redeem or repurchase, capital stock; (iii) make investments or other restricted payments; (iv) create or incur certain liens; (v) incur restrictions on the payment of dividends or other distributions from its restricted subsidiaries; (vi) enter into certain transactions with affiliates; (vii) sell assets; or (viii) effect a consolidation or merger.

~~The Indenture~~ for the 2025 Notes also contains customary events of default, including, among other things, failure to pay interest, failure to comply with agreements related to the Indenture, failure to pay at maturity or acceleration of other indebtedness, failure to pay certain judgments, and certain events of insolvency or bankruptcy. Generally, if any event of default occurs, the Trustee or the holders of at least 25% in principal amount of the 2025 Notes may declare the 2025 Notes due and payable by providing notice to the Company. In case of default arising from certain events of bankruptcy or insolvency, the 2025 Notes will become immediately due and payable.

~~-24-~~

~~The~~ ~~2025 Notes and the guarantees will be the Company and the guarantors’ senior secured obligations and will rank:~~

	●	~~senior in right of payment to all of the Company and the guarantors’ future subordinated indebtedness;~~

	●	~~effectively senior to all unsecured senior indebtedness to the extent of the value of the collateral securing the~~ ~~2025 Notes and the guarantees;~~

	●	~~pari passu~~ ~~with all of the Company and the guarantors’ other senior indebtedness;~~

	●	~~effectively junior to any future credit facility to the extent of the value of the collateral securing any future credit facility and the~~ ~~2025 Notes and the guarantees and certain other assets;~~

	●	~~effectively junior to any of the Company and the guarantors’ existing and future indebtedness that is secured by assets other than the collateral securing the 2025 Notes and the guarantees to the extent of the value of any such assets; and~~

	●	~~structurally subordinated to the indebtedness of any of the Company’s current and future subsidiaries that do not guarantee the 2025 Notes.~~

Cash provided by operations of ~~$7,795,000~~$11,366,000 in the fiscal ~~2018~~2024 period is primarily attributable to net income of ~~$2,263,000~~$13,099,000 in addition to other non-cash operating items of ~~$11,330,000,~~$1,077,000, offset by ~~increases in~~ changes in other operating assets and liabilities of ~~$5,798,000.~~$2,810,000. Non-cash operating ~~items include $194,000~~expenses consist principally of ~~excess income tax benefits from stock-based~~depreciation and amortization of $628,000, amortization of debt issuance costs of $184,000, share-based compensation ~~arrangements as~~expense of $359,000, and a ~~result~~provision for uncollectible accounts of ~~the accounting for certain aspects of its share-based payments to employees.~~$55,000. In the fiscal ~~2018~~2024 period, accounts and other receivables increased by ~~$2,967,000 compared to the fiscal 2017 period~~$1,003,000 due primarily to higher ~~receivables from~~ Branded Product Program ~~sales~~receivables of ~~$2,489,000~~$528,000, and ~~increased seasonal advances~~higher receivables due to the Advertising Fund of ~~$593,000, partly~~$1,032,000 which were offset, in part, by lower ~~seasonal~~franchise and license royalties receivable of ~~$358,000. In the fiscal 2018 period, prepaid~~$579,000. Prepaid expenses and other current assets ~~increased~~decreased by ~~$2,259,000~~$1,049,000 due principally to a decrease in prepaid income taxes of ~~$2,751,000 which were deposited prior to the successful debt refinancing. The~~$146,000, a decrease in ~~accounts~~prepaid insurance of $279,000 and a decrease in prepaid marketing and other expenses of $638,000. Accounts payable, accrued expenses and other current liabilities ~~of $779,000 is primarily~~decreased by $2,342,000 due to ~~reductions~~a decline in ~~deferred revenue of $706,000 that was recognized into income during the fiscal 2018 period,~~ accrued payroll and other benefits of ~~$621,000 due~~$1,642,000 resulting primarily tofrom the payment of ~~prior year~~year-end fiscal 2023 incentive ~~compensation, lower~~compensation; earned deferred revenue of $664,000 and a decline in accounts payable of ~~$541,000 arising primarily from seasonally lower~~$850,000 due to the timing of seasonal product purchases for ~~the~~our Branded Product Program ~~which were partly offset by higher accrued interest of $1,007,000~~ and ~~accrued rebates of $195,000. The decrease in other liabilities of $71,000 is primarily due to dividend payments of $125,000 on vested restricted stock, offset by~~Company-owned restaurants. Additionally, there was an increase in ~~the accrual for uncertain tax positions~~accrued corporate taxes of ~~$53,000. The Company also declared a $5.00 per share special cash dividend~~$467,000 due to the ~~shareholders~~timing of record as of the close of business on December 22, 2017 which was paid on January 4, 2018 in the amount of $20,923,000 which has been presented as a noncash financing activity on the accompanying consolidated statement of cash flows.estimated tax payments.

Cash used in investing activities was ~~$488,000~~$169,000 in the fiscal ~~2018~~2024 period primarily in connection with capital expenditures incurred for our Branded Product Program and ~~select restaurant improvements.~~our Coney Island restaurants.

~~Cash~~ provided by financing activities of $3,066,000 in the fiscal 2018 period relates to the Company’s refinancing of the 2020 Notes. The Company received gross proceeds of $150,000,000 from the sale of 2025 Notes, repaid the 2020 Notes, paid a call premium of $6,750,000 in addition to $4,902,000 of debt issuance costs. The Company also paid $157,000 for withholding taxes on the net share vesting of employee restricted stock and dividends of $125,000 relating to the previously declared special cash dividend in connection with the vesting of 5,000 shares of the Company’s restricted stock.

~~During the period from October 2001 through December 2~~4, 2017, Nathan’s purchased 5,127,373 shares of its common stock at a cost of approximately $77,303,000 pursuant to its stock repurchase plans previously authorized by the Board of Directors. Since March 26, 2007, we have repurchased 3,236,273 shares at a total cost of approximately $70,145,000, reducing the number of shares then-outstanding by 53.8%.

-27-

~~On February 1, 2016 and March 11,~~In 2016, the ~~Company~~’s Board ~~of Directors~~ 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~~September 24, ~~2017,~~2023, Nathan’s has repurchased ~~939,742~~1,101,884 shares at a cost of ~~$29,641,000~~ $39,000,000under the sixth stock repurchase plan. At ~~December~~September 24, ~~2017,~~2023, there were ~~260,258~~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~~privately negotiated transactions, at prices deemed appropriate by management. There is no set time limit on the repurchases.

~~-25-~~

~~Management believes that available cash,~~ ~~marketable securities and cash generated from operations should provide sufficient capital to finance our operations, and satisfy our debt service requirements, for at least~~ There were no stock repurchases during the ~~next 12 months.~~fiscal 2024 period.

As discussed above, we had cash and cash equivalents at ~~December 24, 2017~~September 24, 2023 aggregating ~~$67,288,000.~~ $36,978,000.Our Board routinely monitors and assesses its cash position and our current and potential capital requirements. InThe Company paid its first quarter fiscal 2024 dividend of $2,040,000 on June 28, 2023 and its second quarter fiscal 2024 dividend of $2,040,000 on September 1, 2023.

Effective November ~~2017, we successfully refinanced $135.0 million 10.000% Notes due 2020 with $150.0 million 6.625% Notes due 2025 and, our Board~~2, 2023, the Company declared its third quarter dividend of ~~Directors announced the payment of a $5.00~~$0.50 per common share ~~special dividend~~ to ~~the shareholders~~stockholders of record as of the close of business on November 20, 2023, which is payable on December ~~22, 2017.~~1, 2023.

If the Company pays regular quarterly cash dividends for the remainder of fiscal 2024 at the same rate as declared in the first and second quarters of fiscal 2024, the Company’s total cash requirement for dividends for all of fiscal 2024 would be approximately $8,160,000based on the number of shares of common stock outstanding at October 27, 2023. 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.

Our ability to pay future dividends is limited by the terms of the Indenture for the 2025 Notes. In addition, the payment of any cash dividends in the future, are subject to final determination of the Board and will be dependent upon our earnings and financial requirements. We may ~~continue to~~also return capital to our ~~shareholders~~stockholders through stock repurchases, ~~or cash dividends,~~ subject to any restrictions in the Indenture, although there is no assurance that the Company will make any repurchases under its existing ~~stock-repurchase~~stock repurchase plan.

We may from time to time seek to redeem additional portions of our 2025 Notes, through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on market conditions, our liquidity requirements, and other factors.

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 outstanding debt, 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. We ~~are not required to make interest payments during the remainder of~~paid our ~~fiscal year ending March 25, 2018. Pursuant to the Indenture, we will be required to make~~ semi-annual interest payments for fiscal 2024 of ~~$4,968,750~~$2,650,000 on May 1, ~~2018~~2023 and November 1, ~~2018.~~2023, respectively.

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 stock repurchases for at least the next 12 months.

At ~~December~~September 24, ~~2017,~~2023, 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 ~~any of~~ such ~~leases.~~lease.

~~The following schedule represents Nathan’s cash~~Our contractual obligations primarily consist of the 2025 Notes and ~~commitments by maturity as of December 24, 2017 (in thousands):~~ the related interest payments, operating leases, and employment agreement with certain executive officers. These contractual obligations impact our short-term and long-term liquidity and capital resource needs. There have been no material changes in our contractual obligations since March 26, 2023.

Payments Due by Period

Cash Contractual Obligations

Total

Less than
1 Year

1-3 Years

3-5 Years

More than
5 Years

Long term debt (a)
$ 150,000 $ - $ - $ - $ 150,000
Employment Agreements
6,700 1,100 2,000 2,000 1,600
Dividends Payable
21,073 21,073 - - -
Operating Leases
11,540 1,652 2,717 2,137 5,034
Gross Cash Contractual Obligations
189,313 23,825 4,717 4,137 156,634
Sublease Income
2,175 329 640 474 732
Net Cash Contractual Obligations
$ 187,138 $ 23,496 $ 4,077 $ 3,663 $ 155,902
a)
~~Represents~~ ~~the Notes due 2025.~~
b)
At December 24, 2017, the Company had unrecognized tax benefits of $207,000. The Company believes that it is reasonably possible that the unrecognized tax benefits may decrease by $5,000 within the next year. A reasonable estimate of the timing of the remaining liabilities is not practicable.

~~On February 27, 2017, a wholly-owned subsidiary~~Inflationary Impact
Inflationary pressures on labor and rising commodity prices, most notably for beef and beef trimmings, have impacted our consolidated results of operations during the ~~Company executed a Guaranty of Lease (the “Brooklyn Guaranty”) in connection with its re-franchising of a restaurant located in Brooklyn, New York. The~~ ~~Company is obligated to make payments under the Brooklyn Guaranty in the event of a default by the tenant/franchisee. The Brooklyn Guaranty has an initial term of 10 years~~fiscal 2024 period, and one 5-year option and is limited to 24 months of rent for the first three years of the term. Nathan’s has recorded a liability of $204,015 in connection with the Brooklyn Guaranty which does not include potential percentage rent, real estate tax increases, attorney’s fees and other costs as these amounts are not reasonably determinable at this ~~time. Nathan’s has received a personal guaranty from the franchisee for all obligations under the Brooklyn Guaranty. For~~trend may continue through the remainder of ~~the term, the Brooklyn Guaranty is limited to 12 months of rent plus reasonable costs of collection and attorney’s fees.~~
~~-26-~~
~~Inflationary Impact~~           fiscal year 2024.

We do not believe that general inflation has materially impacted earnings since 2006. However, we have experienced significant volatility in our costs for our hot dogs and certain food products, distribution costs and utilities. From 2011 through 2014, we experienced unprecedented increases in theOur average cost ~~of beef. Beginning March 2015, the beef markets stabilized through June 2015 before subsequently declining by approximately 30%.~~ ~~As a result of the decline through March 2016, the market price~~ of hot dogs during the fiscal ~~year ended March 27, 2016~~2024 period was approximately ~~7.1% lower than the fiscal year ended March 29, 2015. During the fiscal 2017 period, beef prices remained favorable, and as such, our market price for hot dogs was 17.1% lower~~12% higher than during the ~~period ended September 25, 2016. Despite~~fiscal 2023 period. 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.
-28-
We have experienced competitive pressure on labor rates as a result of the ~~favorable pricing of~~increase in the minimum hourly wage for fast food workers which increased to $15.00 in New York state during fiscal ~~2017, prices began escalating~~2022 where our Company-owned restaurants are located. Additionally, there has 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.
New York State recently passed legislation which will increase the minimum wage on January ~~2017~~1, 2024 to $16.00 in New York City, Long Island and ~~continued through June 2017 before~~Westchester followed by $0.50 annual increases in 2025 and 2026. Further, beginning in 2027, the minimum wage across New York State will increase annually according to ~~slightly decline until July which is when~~ the costs stabilized for the balance of 2017 at approximately 10% higher than the last six months of 2016. As such, our market price for hot dogs during our fiscal 2018 period was approximately 8.2% higher than the fiscal 2017 period. Consumer Price Index.
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 ~~2018.~~2024. 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. ~~Most recently, we concluded a purchase commitment for approximately 2,600,000 pounds of hot dogs at approximately $2.01 per pound which we purchased between February and May 2016.~~ We may attempt to enter into similar purchase arrangements for hot dogs and other products in the future. Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from the uncertainty of the insurance markets.

In March 2010, the Federal government passed new legislation to reform the U.S. health care system. As part of the plan, employers will be expected to provide their employees that work more than 30 hours per week with minimum levels of healthcare coverage or incur certain financial penalties. As Nathan’s workforce includes numerous part-time workers that typically are not offered healthcare coverage, we may be forced to expand healthcare coverage or potentially incur new penalties which may increase our health care costs.
~~New York State recently passed legislation increasing the minimum~~ hourly wage for fast food workers of restaurant chains with 30 or more locations nationwide. The increase will be phased in differently between New York City and the rest of New York State. Effective December 31, 2017, the minimum wage increased to $13.50 and $11.75 in New York City and outside of New York City, respectively.
~~In New York City,~~ ~~the hourly rate of pay will increase to $15.00 on Dec. 31, 2018.~~
T~~he minimum hourly rate of pay for the remainder of New York State will increase to:~~
~~$12.75 on Dec. 31, 2018;~~ ~~$13.75 on Dec. 31, 2019; $14.50 on Dec. 31, 2020; and $15.00 on July 1, 2021.~~
~~All of~~ ~~Nathan’s Company-operated restaurants are within New York State, three of which operate within New York City that have been affected by this new legislation.~~
~~The Company is further studying the impact on the Company~~’s operations and is developing strategies and tactics, including pricing and potential operating efficiencies, to minimize the effects of these increases and future increases. We have recently increased certain selling prices to pass on recent cost of sales increases. However, if we are unable to fully offset these and future increases through pricing and operating efficiencies, our margins and profits will be negatively affected. We believe that these increases in the minimum wage ~~could~~and other changes in employment laws have had a significant financial impact on our financial results and the results of our franchisees that operate in New York State. Our business could be negatively impacted if the decrease in margins for our franchisees results in the potential loss of new franchisees or the closing of a significant number of franchised restaurants.
Effective April 1, 2014, the City of New York, passed legislation requiring employers to offer paid sick leave to all employees, including part-time employees, who work more than 80 hours for the employer. Nathan~~’s operates three restaurants that have been affected by this legislation.~~
~~Effective December 1, 2016, changes to the Fair Labor Standards Act~~ were to take effect until nationwide implementation was enjoined by a Federal District Court. The legislation would have increased the minimum salary threshold for overtime exemption from $23,660 to $47,476 per annum. Nathan’s performed its evaluation of its workforce and determined that the proposed legislation is not expected to have a significant impact on our results of operations.
On May 30, 2017, New York City Mayor Bill de Blasio signed into law the Fair Work Week Legislation package of bills that the city estimates will cover some 65,000 fast food workers by giving them more predictable work schedules effective November 27, 2017. A key component of the package is a requirement that fast food restaurants schedule their workers at least two weeks in advance or pay employees between $10 to $75 per scheduling change depending on the situation. Due to Nathan’s dependency on weather conditions at our two beach locations during the summer, we are unable to determine the potential impact on our results of operations, which could be material. We have estimated that the daily penalty could amount to as much as $10,000 per day during the height of the summer season for these two restaurants.

Continued increases in labor ~~food~~costs, commodity prices and other operating expenses, including health care, could adversely affect our ~~operations~~operations. We attempt to manage inflationary pressure, and ~~those of the restaurant industry~~rising commodity costs, at least in part, through raising prices. Delays in implementing price increases, competitive pressures, consumer spending levels and ~~we might have to further reconsider~~other factors may limit our ~~pricing strategy as a means~~ability to offset ~~reduced operating margins.~~these rising costs. Volatility in commodity prices, including beef and beef trimmings could have a significant adverse effect on our results of operations.

The ~~Company~~’sCompany’s business, financial condition, operating results and cash flows can be impacted by a number of factors, including but not limited to those set forth above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” any one of which could cause our actual results to vary materially from recent results or from our anticipated future results. For a discussion identifying additional risk factors and important factors that could cause actual results to differ materially from those anticipated, also see the discussions in “Forward-Looking Statements” and “Notes to Consolidated Financial Statements” in this Form 10-Q and “Risk Factors” in ~~this Form 10-Q and~~ our Form 10-K for our fiscal year ended March 26, ~~2017.~~2023.

~~-27-~~-29-

Item 3. ~~Quantitative and Qualitative Disclosures About Market Risk.~~
Quantitative and Qualitative Disclosures About Market Risk.

Cash and Cash Equivalents

We have historically invested our cash in money market funds or short-term, fixed rate, highly rated and highly liquid instruments which are generally reinvested when they mature. Although these existing investments are not considered at risk with respect to changes in interest rates or markets for these instruments, our rate of return on short-term investments could be affected at the time of reinvestment as a result of intervening events. As of ~~December~~September 24, ~~2017,~~2023, Nathan’s cash and cash equivalents balance aggregated ~~$67,288,000.~~ $36,978,000.Earnings on this cash would increase or decrease by approximately ~~$168,000~~$92,000 per annum for each 0.25% change in interest rates.

Borrowings

At ~~December~~September 24, ~~2017,~~2023, we had ~~$150.0 Million~~$80,000,000 of 6.625% 2025 Notes outstanding which are due in November 2025. Interest expense on these borrowings would increase or decrease by approximately ~~$375,000~~$200,000 per annum for each 0.25% change in interest rates. We currently do not anticipate entering into interest rate swaps or other financial instruments to hedge our borrowings.

Commodity Costs

~~We do not believe that general inflation has materially~~Inflationary pressures on labor and rising commodity prices have directly impacted ~~earnings since 2006. However, we have experienced significant volatility in~~ our ~~costs for~~consolidated results of operations during the fiscal 2024 period, most notably within our ~~hot dogs and certain food products, distribution costs and utilities.~~Branded Product Program segment. This trend may continue throughout the remainder of fiscal 2024. Our ~~commodity costs for beef have been especially volatile since fiscal 2004. From 2011 through 2014, we experienced unprecedented increases in the~~average cost ~~of beef. Beginning March 2015, the beef markets stabilized through June 2015 before subsequently declining by approximately 30%. As a result of the decline through March 2016, the market price~~ of hot dogs during the fiscal ~~2016~~2024 period was approximately ~~7.1% lower than the fiscal 2015 period. During the fiscal 2017 period, beef prices remained favorable, and as such, our market price for hot dogs~~ ~~was 17.1% lower~~12% higher than during the fiscal ~~2016~~2023 period. Despite the favorable pricing of fiscal 2017, prices began escalating in January 2017 and continued through June 2017 before beginning to slightly decline until July which is when the costs stabilized for the balance of 2017 at approximately 10% higher than the last six months of 2016. As such, our market price for hot dogs during our fiscal 2018 period was approximately 8.2% higher than the fiscal 2017 period.
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 ~~2018.~~2024.Factors that affect beef prices are outside of our control and include foreign and domestic supply and demand, inflation, weather and seasonality. To the extent that beef prices increase as compared to earlier periods, it could impact our results of operations. In the past, we have entered into purchase commitments for a portion of our hot dogs to reduce the impact of increasing market prices. ~~During fiscal 2017, we concluded a purchase commitment for approximately 2,600,000 pounds of hot dogs at approximately $2.01 per pound which we purchased between February and May 2016.~~ We may attempt to enter into ~~similar~~ purchase arrangements for hot dogs and other products in the future. Additionally, we expect to continue experiencing volatility in oil and gas prices on our distribution costs for our food products and utility costs in the Company-owned restaurants and volatile insurance costs resulting from ~~the uncertainty of the insurance markets.~~rising rates.

~~With the exception of purchase commitments, we~~We have not attempted to hedge against fluctuations in the prices of the commodities we purchase using future, forward, option or other instruments. As a result, we expect that the majority of our future commodity purchases will be subject to market changes in the prices of such commodities. We have attempted to enter sales agreements with our customers that are correlated to our cost of beef, thus reducing our market volatility, or have passed through permanent increases in our commodity prices to our customers that are not on formula pricing, thereby reducing the impact of long-term increases on our financial results. A short-term increase or decrease of ~~10.0%~~10% in the cost of our food and paper products for the ~~thirty-nine weeks~~period ended ~~December~~September 24, ~~2017~~2023 would have increased or decreased our cost of sales by approximately ~~$4,303,000.~~$4,537,000.

Foreign Currencies

Foreign franchisees generally conduct business with us and make payments in United States dollars, reducing the risks inherent with changes in the values of foreign currencies. As a result, we have not purchased future contracts, options or other instruments to hedge against changes in values of foreign currencies and we do not believe fluctuations in the value of foreign currencies would have a material impact on our financial results.

~~-28-~~-30-

Item 4.
~~Item 4.~~ Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule ~~13a-15.~~13a-15(e) and Exchange Act Rule 15d-15(e). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls

There were no changes in our internal controls over financial reporting that occurred during the quarter ended ~~December 24, 2017~~September 24, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures are effective at the reasonable assurance level.

~~-29-~~-31-

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

~~None~~None.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended March 2~~6, 2017,~~26, 2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing Nathan's. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

~~None~~
~~-30-~~
~~Item 6. Exhibits.~~
~~3.1~~
~~Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-1 No. 33- 56976.)~~
~~3.2~~
~~Amendment to the Certificate of Incorporation, filed December 15, 1992. (Incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-1 No. 33-56976.)~~
~~3.3~~
~~By-Laws, as amended. (Incorporated by reference to Exhibit 3.1 to Form 8-K dated November 6, 2006.)~~
~~4.1~~
~~Specimen Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-1 No. 33-56976.)~~
~~4.2~~
Rights Agreement, dated as of June 5, 2013, between Nathan’s Famous, Inc. and American Stock Transfer and Trust Company, LLC, as Rights Agent, which includes form of Rights Certificate as Exhibit A and the Summary of Rights to Purchase as Exhibit B. (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report filed on Form 8-K dated June 11, 2013.)
4.3
Indenture, dated as of November 1, 2017, by and among Nathan’s Famous, Inc., certain of its wholly owned subsidiaries, as guarantors, and U.S. Bank National Association, a National Banking Association, as trustee and collateral trustee (including the form of Note (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report filed on Form 8-K dated November 1, 2017.))
~~10.1~~ **Amendment, dated as of December 6, 2017 to the Employment Agreement dated as of December 15, 2016, as amended November 1, 2012 between Howard M. Lorber and Nathan’s Famous, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K dated December 12, 2017.)
~~10.2~~ *Parity Lien Security Agreement, dated November 1, 2017, by and among Nathan's Famous, Inc. and The Other Assignors Identified Herein and U.S. Bank National Association, as Collateral Trustee.
~~31.1~~
*Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
~~31.2~~
*Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
~~32.1~~
*Certification by Eric Gatoff, CEO, Nathan’s Famous, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~32.2~~
*Certification by Ronald G. DeVos, CFO, Nathan’s Famous, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
~~101~~.1
*The following materials from the Nathan’s Famous, Inc., Quarterly Report on Form 10-Q for the quarter ended December 24, 2017 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated Statement of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows and (v) related notes.
On October 30, 2023, the Compensation Committee of the Board approved a discretionary cash bonus payment of $500,000 to Howard M. Lorber, Executive Chairman of the Board, which will be paid on or before November 17, 2023.

*~~Filed herewith.~~
** Indicates a management plan or amendment.
~~-31-~~
~~SIGNATURES~~
        ~~Pursuant~~Effective November 2, 2023, the Board declared its quarterly cash dividend of $0.50 per share which is payable on December 1, 2023 to ~~the requirements~~shareholders of record as of the ~~Securities Exchange Act~~close of ~~1934, the registrant has duly caused this report to be signed~~business on ~~its behalf by the undersigned, thereunto duly authorized.~~November 20, 2023.
~~NATHAN'S FAMOUS, INC.~~
~~Date:~~ ~~February 2, 2018~~ ~~By:~~ ~~/s/ Eric Gatoff~~
~~Eric Gatoff~~
~~Chief Executive Officer~~
~~(Principal Executive Officer)~~
~~Date:~~ ~~February 2, 2018~~ ~~By:~~ ~~/s/ Ronald G. DeVos~~
~~Ronald G. DeVos~~
~~Vice President - Finance~~
~~and Chief Financial Officer~~
~~(Principal Financial and Accounting Officer)~~

-32-

~~Exhibit Index.~~Item 6. Exhibits.

~~3.1~~
~~Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registration Statement on Form S-1 No. 33- 56976.)~~
~~3.2~~
~~Amendment to the Certificate of Incorporation, filed December 15, 1992. (Incorporated by reference to Exhibit 3.2 to Registration Statement on Form S-1 No. 33-56976.)~~
~~3.3~~
~~By-Laws, as amended. (Incorporated by reference to Exhibit 3.1 to Form 8-K dated November 6, 2006.)~~
~~4.1~~
~~Specimen Stock Certificate. (Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-1 No. 33-56976.)~~
~~4.2~~
Rights Agreement, dated as of June 5, 2013, between Nathan’s Famous, Inc. and American Stock Transfer and Trust Company, LLC, as Rights Agent, which includes form of Rights Certificate as Exhibit A and the Summary of Rights to Purchase as Exhibit B. (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report filed on Form 8-K dated June 11, 2013.)
4.3
Indenture, dated as of November 1, 2017, by and among Nathan’s Famous, Inc., certain of its wholly owned subsidiaries, as guarantors, and U.S. Bank National Association, a National Banking Association, as trustee and collateral trustee (including the form of Note (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report filed on Form 8-K dated November 1, 2017.))
~~10.1~~ **Amendment, dated as of December 6, 2017 to the Employment Agreement dated as of December 15, 2016, as amended November 1, 2012 between Howard M. Lorber and Nathan’s Famous, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K dated December 12, 2017.)
~~10.2~~ *Parity Lien Security Agreement, dated November 1, 2013, by and among Nathan's Famous, Inc. and The Other Assignors Identified Herein and U.S. Bank National Association, as Collateral Trustee.

31.1
*Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2
*Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1
*Certification by Eric Gatoff, CEO, Nathan’s Famous, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2
*Certification by ~~Ronald G. DeVos,~~Robert Steinberg, CFO, Nathan’s Famous, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101~~.1101.1
*The following materials from the Nathan’s Famous, Inc., Quarterly Report on Form 10-Q for the quarter ended ~~December~~September 24, ~~2017~~2023 formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated ~~Statement~~Statements of Stockholders’ ~~Equity,~~Deficit, (iv) the Consolidated Statements of Cash Flows and (v) related notes.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed herewith.
** Indicates a management plan or amendment.
-33-
SIGNATURES

~~-33-~~Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NATHAN'S FAMOUS, INC.
Date: November 2, 2023
By:
/s/ Eric Gatoff
Eric Gatoff
Chief Executive Officer
(Principal Executive Officer)
Date: November 2, 2023
By:
/s/ Robert Steinberg
Robert Steinberg
Vice President - Finance
and Chief Financial Officer
(Principal Financial and Accounting Officer)
-34-

	December 24, 2017			March 26, 2017
	(Unaudited)
ASSETS

CURRENT ASSETS
Cash	$	67,288		$	56,915
Accounts and other receivables, net		11,873			8,948
Inventories		406			579
Prepaid expenses and other current assets (Note G)		3,352			1,093
Total current assets		82,919			67,535

Property and equipment, net of accumulated depreciation of $8,525 and $7,522, respectively		8,276			8,844
Goodwill		95			95
Intangible asset		1,353			1,353
Other assets		293			298
Total assets	$	92,936		$	78,125

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

CURRENT LIABILITIES
Accounts payable	$	4,268		$	4,809
Accrued expenses and other current liabilities (Note H)		26,644			5,865
Deferred franchise fees		198			98
Total current liabilities		31,110			10,772

Long-term debt, net of unamortized debt issuance costs of $5,374 and $3,525, respectively (Note N)		144,626			131,475
Other liabilities		1,484			1,555
Deferred income taxes		751			814

Total liabilities		177,971			144,616

COMMITMENTS AND CONTINGENCIES (Note O)

STOCKHOLDERS’ (DEFICIT)
Common stock, $.01 par value; 30,000,000 shares authorized; 9,311,922 and 9,303,870 shares issued; and 4,184,549 and 4,176,497 shares outstanding at December 24, 2017 and March 26, 2017, respectively		93			93
Additional paid-in capital		60,723			60,582
(Accumulated deficit)		(68,548	)		(49,863	)
Stockholders’ (deficit) equity before treasury stock		(7,732	)		10,812
Treasury stock, at cost, 5,127,373 shares at December 24, 2017 and March 26, 2017, respectively		(77,303	)		(77,303	)
Total stockholders’ (deficit)		(85,035	)		(66,491	)

Total liabilities and stockholders’ (deficit)	$	92,936		$	78,125

	December 24, 2017			December 25, 2016
Cash flows from operating activities:
Net income	$	2,263		$	6,756
Adjustments to reconcile net income to net cash provided by operating activities
Loss on debt extinguishment		8,872			-
Depreciation and amortization		1,055			1,005
Amortization of debt issuance costs		932			910
Share-based compensation expense		298			482
Income tax benefit on stock option exercises		194			659
Provision for doubtful accounts		42			34
Deferred income taxes		(63	)		92
Changes in operating assets and liabilities:
Accounts and other receivables, net		(2,967	)		(1,523	)
Inventories		173			293
Prepaid expenses and other current assets		(2,259	)		643
Other assets		5			15
Accounts payable, accrued expenses and other current liabilities		(779	)		545
Deferred franchise fees		100			4
Other liabilities		(71	)		(142	)

Net cash provided by operating activities		7,795			9,773

Cash flows from investing activities:
Purchase of property and equipment		(488	)		(1,001	)

Net cash (used in) investing activities		(488	)		(1,001	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt		150,000			-
Cash payments for extinguishment of debt		(135,000	)		-
Premium paid on extinguishment of debt		(6,750	)		-
Debt issuance costs		(4,902	)		-
Proceeds from exercise of stock options		-			44
Dividends paid upon vesting of restricted stock		(125	)		(375	)
Payments of withholding tax on net share settlement of share-based compensation plans		(157	)		(994	)
Repurchase of treasury stock		-			(1,272	)

Net cash provided by (used in) financing activities		3,066			(2,597	)

Net increase in cash		10,373			6,175

Cash, beginning of period		56,915			50,228

Cash, end of period	$	67,288		$	56,403

Cash paid during the period for:
Interest	$	9,038		$	6,750
Income taxes paid	$	3,447		$	2,976

Noncash financing activity:
Dividends declared	$	20,948		$	-

	December 24, 2017			March 26, 2017

Beginning balance	$	457		$	471
Bad debt expense		42			53
Accounts written off		(19	)		(67	)
Ending balance	$	480		$	457

	December 24,		March 26,
	2017		2017
Deferred development fees	$	154	$	67
Reserve for uncertain tax positions		419		366
Deferred rental liability		700		786
Dividend payable		-		125
Other		211		211
Total other liabilities	$	1,484	$	1,555

	Thirteen weeks ended				Thirty-nine weeks ended
	December 24, 2017		December 25, 2016		December 24, 2017		December 25, 2016

Branded Products	$	14,674	$	12,868	$	50,741	$	44,349
Company-operated restaurants		2,093		1,991		12,898		13,449
Other		-		-		-		214
Total sales	$	16,767	$	14,859	$	63,639	$	58,012

				Weighted-		Weighted-		Aggregate
				Average		Average		Intrinsic
				Exercise		Remaining		Value
	Shares			Price		Contractual Life		(in thousands)

Options outstanding at the beginning of the fiscal year		75,745		$	35.58		2.36	$	1,899

Granted		-			-		-		-

Replacement options issued (A)		68,498		$	33.438		1.61	$	3,093

Expired		-			-		-		-

Cancellation of outstanding options (A)		(64,384	)	$	35.58		1.61	$	3,093

Exercised		(11,361	)	$	35.58		-		379

Options Outstanding at December 24, 2017 (A)		68,498		$	33.438		1.61	$	3,093

Options exercisable at December 24, 2017 (A)		48,348		$	33.438		1.61	$	2,183

	December 24,			March 26,
	2017			2017

6.625% Senior secured notes due 2025	$	150,000			-
10.000% Senior secured notes due 2020		-		$	135,000
Less: unamortized debt issuance costs		(5,374	)		(3,525	)
Total long-term debt	$	144,626		$	131,475

	Payments Due by Period
Cash Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Long term debt (a)	$	150,000	$	-	$	-	$	-	$	150,000
Employment Agreements		6,700		1,100		2,000		2,000		1,600
Dividends Payable		21,073		21,073		-		-		-
Operating Leases		11,540		1,652		2,717		2,137		5,034
Gross Cash Contractual Obligations		189,313		23,825		4,717		4,137		156,634
Sublease Income		2,175		329		640		474		732
Net Cash Contractual Obligations	$	187,138	$	23,496	$	4,077	$	3,663	$	155,902

	4.3	Indenture, dated as of November 1, 2017, by and among Nathan’s Famous, Inc., certain of its wholly owned subsidiaries, as guarantors, and U.S. Bank National Association, a National Banking Association, as trustee and collateral trustee (including the form of Note (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report filed on Form 8-K dated November 1, 2017.))

	~~10.1~~	**Amendment, dated as of December 6, 2017 to the Employment Agreement dated as of December 15, 2016, as amended November 1, 2012 between Howard M. Lorber and Nathan’s Famous, Inc. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report filed on Form 8-K dated December 12, 2017.)

	~~10.2~~	*Parity Lien Security Agreement, dated November 1, 2017, by and among Nathan's Famous, Inc. and The Other Assignors Identified Herein and U.S. Bank National Association, as Collateral Trustee.

	~~NATHAN'S FAMOUS, INC.~~

~~Date:~~ ~~February 2, 2018~~	~~By:~~	~~/s/ Eric Gatoff~~
		~~Eric Gatoff~~ ~~Chief Executive Officer~~ ~~(Principal Executive Officer)~~

~~Date:~~ ~~February 2, 2018~~	~~By:~~	~~/s/ Ronald G. DeVos~~
		~~Ronald G. DeVos~~ ~~Vice President - Finance~~ ~~and Chief Financial Officer~~ ~~(Principal Financial and Accounting Officer)~~

	~~101~~.1101.1	*The following materials from the Nathan’s Famous, Inc., Quarterly Report on Form 10-Q for the quarter ended ~~December~~September 24, ~~2017~~2023 formatted in Inline Extensible Business Reporting Language ~~(XBRL)~~(iXBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Earnings, (iii) the Consolidated ~~Statement~~Statements of Stockholders’ ~~Equity,~~Deficit, (iv) the Consolidated Statements of Cash Flows and (v) related notes.

	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	NATHAN'S FAMOUS, INC.

Date: November 2, 2023	By:	/s/ Eric Gatoff
		Eric Gatoff
		Chief Executive Officer
		(Principal Executive Officer)

Date: November 2, 2023	By:	/s/ Robert Steinberg
		Robert Steinberg
		Vice President - Finance and Chief Financial Officer
		(Principal Financial and Accounting Officer)