Financial Analysis

5. Commitments and Contingencies There may be various claims in process, matters in litigation, and other contingencies brought against the company by employees, vendors, customers, franchisees, or other parties. Evaluating these contingencies is a complex process that may involve substantial judgment on the potential outcome of such matters, and the ultimate outcome of such contingencies may differ from our current analysis. We regularly review the adequacy of accruals and disclosures related to such contingent liabilities in consultation with legal counsel. While it is not possible to predict the outcome of these claims with certainty, it is managements opinion that any reasonably possible losses associated with such contingencies would be immaterial to our financial statements. …

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3. Notes Payable and Long-Term Debt Cadence Credit Facility The Company and its wholly owned subsidiaries (the Subsidiaries) maintain an amended and restated credit agreement with Cadence Bank (Cadence) pursuant to which, Cadence agreed to loan the Company up to $8,000,000, which has a maturity date of April 20, 2028 (as amended to date, the Cadence Credit Facility). The Cadence Credit Facility amended and restated the Companys prior credit facility with Cadence in its entirety. The Cadence Credit Facility accrues commitment fees on the daily unused balance of the facility at a rate of 0.25%. The loans may from time to time consist of a mixture of SOFR Rate Loans and Base Rate Loans with differing interest rates based upon varying additions to the Federal Funds Rate, the Cadence prime rate or Term SOFR. Each of the Subsidiaries are guarantors of the Cadence Credit Facility. Proceeds from the Cadence Credit Facility, if and when drawn, may be used (i) to fund new restaurant development, (ii) to finance the buyout of non-controlling partners in certain restaurants, (iii) to finance the redemption, purchase or other acquisition of equity interests in the Company and (iv) for working capital and other general corporate purposes. The Cadence Credit Facility includes customary affirmative and negative covenants and events of default. The Cadence Credit Facility also requires the Company to maintain various financial condition ratios, including minimum liquidity, an amended maximum …

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2. Goodwill and Intangible Assets The following table presents goodwill and intangible assets as of September 30, 2025 and September 24, 2024 (in thousands): September 30, 2025 September 24, 2024 Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Indefinite-lived intangible assets: Trademarks $ 3,900 $ - $ 3,900 $ 3,900 $ - $ 3,900 Goodwill $ 5,713 $ - $ 5,713 $ 5,713 $ - $ 5,713 There were no impairments to goodwill or intangible assets during the fiscal years ended September 30, 2025 and September 24, 2024.

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7. Income Taxes Deferred tax assets (liabilities) are comprised of the following at the period end (in thousands): September 30, 2025 Long Term September 24, 2024 Long Term Deferred income tax assets (liabilities): Tax effect of net operating loss carry-forward $ 3,650 $ 3,426 General business credits 8,576 7,399 Deferred revenue 25 52 Intangibles basis differences 174 547 Long-term lease liability 9,030 9,443 Other future benefits 597 664 Deferred tax assets 22,052 21,531 Less valuation allowance - - Deferred tax assets, net of valuation allowance 22,052 21,531 Partnership/joint venture basis differences (145 ) (95 ) Property and equipment basis differences (1,319 ) (1,599 ) ROU asset (7,447 ) (7,630 ) Other future expense (110 ) - Deferred tax liabilities (9,021 ) (9,324 ) Net deferred tax assets $ 13,031 $ 12,207 The Company has Federal net operating loss carry-forwards available for future periods, as discussed below, of approximately $734,000 from 2025, $11,787,000 from 2019 and $1,035,000 from 2017 and prior for income tax purposes. The net operating loss carry-forwards from periods prior to 2019 expire between 2029 and 2038. Based on the changes in control, which occurred in 2011, 2013, and 2017, the utilization of the loss carry-forwards incurred for periods prior to 2017 is limited to approximately $163,000 per year. In addition, the Company has general business tax credits of $8,576,000 from 2014 through 2025 which expire from 2034 through 2044. As of September 30, …

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6. Leases The Companys office space and the land and buildings related to the Drive Thru and Bad Daddys restaurant facilities are classified as operating leases and expire at various dates over the next 19 years. Some leases contain escalation clauses over the lives of the leases. Most of the leases contain one to three five-year renewal options at the end of the initial term. Certain leases include provisions for additional contingent rent payments if sales volumes exceed specified levels. For the fiscal year ended September 30, 2025, the Company incurred $29,000 of contingent rent expense. The Company incurred $54,000 of contingent rent expense for the fiscal year ended September 24, 2024. The Company determines if a contract contains a lease at inception. The Company's material long-term operating lease agreements are for the land and buildings for our restaurants as well as our corporate office. The initial lease terms for our restaurants range from 10 years to 20 years, most of which at lease inception included renewal options of 10 to 15 years. The lease term is generally the minimum of the noncancelable period or the lease term including renewal options which are reasonably certain of being exercised up to a term of approximately 20 years. Some of the leases provide for base rent, plus additional rent based on gross sales, as defined in each lease agreement. The Company is also generally obligated to pay certain real estate taxes, insurance and common area maintenance …

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Recent Accounting Pronouncements As of September 30, 2025, the Company adopted ASU 2023-07-Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The adoption of ASU 2023-07 did not impact the Companys results of operations, cash flow, or financial condition. See Note 10 for the Companys segment disclosures. Certain accounting pronouncements with future required implementation dates apply to the Companys consolidated financial statements. The company has reviewed the following pronouncements: ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures was issued December 2023 and is effective for fiscal years beginning after December 15, 2024. It is to be applied prospectively. The Company expects to implement ASU 2023-09 prospectively in fiscal year 2026 and does not expect that it will have a material effect on the Companys consolidated financial statements. ASU 2024-03 Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses was issued November 2024 and is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 17, 2027. It may be applied either prospectively or retrospectively and early implementation is allowed. The Company is assessing the timing and method of imp …

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9. Retirement Plan The Company sponsors a qualified defined contribution 401(k) plan for employees meeting certain eligibility requirements. Under the plan, employees are entitled to make contributions on both a pre-tax basis or after-tax basis (Roth contributions) and the Company makes a safe harbor matching contribution to all participating employees. The Company will match, on a dollar-for-dollar basis, the first 3% of eligible pay contributed by employees. The Company also matches 50% of each dollar contributed between 3% and 5% of eligible pay contributed by employees. The Company may, at its discretion, make additional contributions to the Plan or change the matching percentage. The Companys matching contribution expense in the fiscal years ended September 30, 2025 and September 24, 2024 were $276,000 and $246,000, respectively. Matching contributions are generally made at the same time employee contributions are made. …

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10. Segment Reporting Our chief operating decision maker (CODM) is the President and Chief Executive Officer. The CODM assesses performance, makes key decisions, and allocates resources at the concept level and has identified Good Times and Bad Daddy's as our separate operating and reportable segments. The Good Times segment includes the results of our Company-owned Good Times Burgers & Frozen Custard restaurants, which are located in the United States and operate within the quick-service restaurant segment of the industry. It also includes royalties and other fees from our franchised locations in the United States. The Bad Daddys segment includes the results of our Company-owned Bad Daddys Burger Bar restaurants, which are located in the United States and operate within the full-service dining restaurant segment of the industry. It also includes license fees from one licensed location in the United States. Unallocated costs such as human resources, finance, purchasing, restaurant development and administration are recorded at the Corporate level and are included in Other. The amounts reported for each operating segment contain allocations from Corporate for items such as technology support, repair and maintenance, marketing and restaurant accounting. In addition, Corporate collects rent from the Good Times segment related to one restaurant for which the real estate is included in Corporate assets. There are no material transactions between the Good Times and Bad Daddys s …

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8. Shareholders Equity Preferred Stock The Company has the authority to issue 5,000,000 shares of preferred stock. The Board of Directors has the authority to issue such preferred shares in series and determine the rights and preferences of the shares as may be determined by the Board of Directors. Common Stock The Company has the authority to issue 50,000,000 shares of common stock with a par value of $.001. The Company has issued 12,977,433 shares, and as of September 30, 2025 and September 24, 2024 there were 10,549,508 and 10,712,367 shares outstanding, respectively. Stock Plans The Company has traditionally maintained incentive compensation plans that include provision for the issuance of equity-based awards. The Company established the 2008 Omnibus Equity Incentive Compensation Plan in 2008 (the 2008 Plan) and has outstanding awards that were issued under the 2008 Plan. Subsequently, the 2008 Plan expired in 2018 and the Company established a new plan, the 2018 Omnibus Equity Incentive Plan (the 2018 Plan) that same year, pursuant to shareholder approval. Future awards will be issued under the 2018 plan. Stock-based compensation is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite service period (generally the vesting period of the grant). The Company recognizes the impact of forfeitures as forfeitures occur. The Company recorded $112,000 and $134,000 in total stock-based compensation expense …

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11. Subsequent Events None.

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