fat-20250330

Table o f Contents

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 March 30, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-38250

FAT Brands Inc.

(Exact name of registrant as specified in its charter)


Delaware						82-1302696
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

9720 Wilshire Blvd., Suite 500

Beverly Hills, CA 90212

(Address of principal executive offices, including zip code)

(310) 319-1850

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

FAT

The Nasdaq Stock Market LLC

Class B Common Stock, par value $0.0001 per share

FATBB

The Nasdaq Stock Market LLC

Series B Cumulative Preferred Stock, par value $0.0001 per share

FATBP

The Nasdaq Stock Market LLC

Warrants to purchase Class A Common Stock

FATBW

The Nasdaq Stock Market LLC

Indicate by check mark whether the 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 o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.


Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer	x	Smaller reporting company	x

Emerging growth company	o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2). Yes o No x

As of May 6, 2025, there were 16,550,997 shares of Class A common stock and 1,270,805 shares of Class B common stock outstanding.

Table o f Contents

FAT BRANDS INC.

QUARTERLY REPORT ON FORM 10-Q

March 30, 2025

TABLE OF CONTENTS


PART I.	FINANCIAL INFORMATION (Unaudited)	3
Item 1.	Condensed Consolidated Financial Statements	3

	FAT Brands Inc. and Subsidiaries:
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Changes in Stockholders’ Deficit	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

SIGNATURE		32

Table o f Contents

PART I — FINANCIAL INFORMATION (UNAUDITED)

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FAT BRANDS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)


	March 30, 2025		December 29, 2024
			Audited
Assets
Current assets
Cash	$	12,150	$	23,383
Restricted cash	29,381		25,239
Accounts receivable, net	17,075		19,422
Inventory	8,562		8,420
Assets classified as held-for-sale	370		370
Other current assets	15,543		11,200
Total current assets	83,081		88,034
Non-current restricted cash	17,810		18,767
Operating lease right-of-use assets	198,341		198,091
Goodwill	285,337		285,337
Other intangible assets, net	591,783		595,689
Property and equipment, net	91,463		97,390
Other assets	5,724		5,870
Total assets	$	1,273,539	$	1,289,178

Liabilities and Stockholders' Deficit
Liabilities
Current liabilities
Accounts payable	$	45,331	$	38,725
Accrued expenses and other liabilities	73,261		68,084
Deferred income, current portion	2,514		2,275
Accrued advertising	5,469		5,307
Accrued interest payable	31,553		24,837
Dividend payable on preferred shares	1,455		1,389
Liabilities related to assets classified as held-for-sale	393		393
Operating lease liability, current portion	16,254		16,229
Redeemable preferred stock	91,836		91,836
Long-term debt, current portion	48,528		49,241


Total current liabilities	316,594		298,316

Deferred income, net of current portion	19,830		20,347
Deferred income tax liabilities, net	14,881		13,772
Operating lease liability, net of current portion	201,264		200,132
Long-term debt, net of current portion	1,216,805		1,208,997
Other liabilities	3,661		3,326
Total liabilities	1,773,035		1,744,890

Commitments and contingencies (Note 13)

Table o f Contents



Stockholders’ deficit
Preferred stock and additional paid-in-capital, $0.0001 par value; 15,000,000 shares authorized; 4,352,423 shares issued and outstanding at March 30, 2025 and 3,591,706 shares issued and outstanding at December 29, 2024; liquidation preference $25 per share	42,793		40,837
Class A common stock and Class B common stock and additional paid-in capital as of March 30, 2025: $0.0001 par value per share; 51,600,000 shares authorized (Class A 50,000,000, Class B 1,600,000); 17,821,802 shares issued and outstanding (Class A 16,550,997, Class B 1,270,805). Common stock and additional paid-in capital as of December 29, 2024: $0.0001 par value; 51,600,000 shares authorized; 17,254,683 shares issued and outstanding (Class A 15,983,878, Class B 1,270,805)	(37,354)		(37,925)
Accumulated deficit	(499,375)		(458,624)
Stockholders’ deficit attributable to FAT Brands Inc.	(493,936)		(455,712)
Non-controlling interest	(5,560)		—
Total stockholders' deficit	(499,496)		(455,712)
Total liabilities and stockholders' deficit	$	1,273,539	$	1,289,178

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

Table o f Contents

FAT BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)


	Thirteen Weeks Ended
	March 30, 2025		March 31, 2024

Revenue
Royalties	$	21,773	$	21,947
Restaurant sales	99,415		105,938
Advertising fees	9,764		9,796
Factory revenues	8,811		9,474
Franchise fees	1,190		1,481
Other revenue	1,066		3,331
Total revenue	142,019		151,967

Costs and expenses
General and administrative expense	33,043		30,005
Cost of restaurant and factory revenues	96,097		99,050
Depreciation and amortization	10,391		10,194
Refranchising (gain) loss	(22)		1,508

Advertising fees	11,076		12,592
Total costs and expenses	150,585		153,349

Loss from operations	(8,566)		(1,382)

Other (expense) income, net
Interest expense	(31,444)		(29,623)
Interest expense related to preferred shares	(4,418)		(4,418)
Net (loss) gain on extinguishment of debt	(151)		427
Other income, net	37		204
Total other expense, net	(35,976)		(33,410)

Loss before income tax provision	(44,542)		(34,792)

Income tax provision	(1,769)		(3,524)

Net loss	(46,311)		(38,316)

Less: Net loss attributable to non-controlling interest	(342)		—

Net loss attributable to FAT Brands Inc.	$	(45,969)	$	(38,316)

Net loss attributable to FAT Brands Inc.	$	(45,969)	$	(38,316)
Dividends on preferred shares	(2,231)		(1,881)
	$	(48,200)	$	(40,197)

Basic and diluted loss per common share	$	(2.73)	$	(2.37)
Basic and diluted weighted average shares outstanding	17,632,860		16,947,400
Cash dividends declared per common share	$	—	$	0.14

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

Table o f Contents

FAT BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands)

For the Thirteen Weeks Ended March 30, 2025


	Common Stock										Preferred Stock
	Class A Shares	Class B Shares	Class A Par Value		Class B Par Value		Additional Paid-In Capital		Total Common Stock		Shares	Par Value		Additional Paid-In Capital		Total Preferred Stock		Accumulated Deficit		Stockholders’ deficit attributable to FAT Brands Inc.		Non- Controlling Interest		Total Deficit

Balance at December 29, 2024	15,983,878	1,270,805	$	2	$	—	$	(37,927)	$	(37,925)	3,951,706	$	—	$	40,837	$	40,837	$	(458,624)	$	(455,712)	$	—	$	(455,712)
Net loss	—	—	—		—		—		—		—	—		—		—		(45,969)		(45,969)		(342)		(46,311)
Issuance of common and preferred stock	567,119	—	—		—		204		204		400,717	—		4,187		4,187				4,391		—		4,391
Share-based compensation	—	—	—		—		367		367		—	—		—		—				367		—		367


Dividends paid on Series B preferred stock	—	—	—		—		—		—		—	—		(2,231)		(2,231)				(2,231)		—		(2,231)
Dividend of Twin Hospitality Group Inc. Class A common stock	—	—	—		—		—		—		—	—		—		—		5,218		5,218		(5,218)		—
Balance at March 30, 2025	16,550,997	1,270,805	$	2	$	—	$	(37,356)	$	(37,354)	4,352,423	$	—	$	42,793	$	42,793	$	(499,375)	$	(493,936)	$	(5,560)	$	(499,496)

Table o f Contents

For the Thirteen Weeks Ended March 31, 2024


	Common Stock						Preferred Stock
	Class A Shares	Class B Shares	Class A Par Value		Class B Par Value		Additional Paid-In Capital		Total Common Stock		Shares	Par Value		Additional Paid-In Capital		Total Preferred Stock		Accumulated Deficit		Stockholders’ deficit attributable to FAT Brands Inc.		Non- Controlling Interest		Total Deficit

Balance at December 31, 2023	15,629,294	1,270,805	$	2	$	—	$	(31,191)	$	(31,189)	3,591,804	$	—	$	44,103	$	44,103	$	(268,777)	$	(255,863)	$	—	$	(255,863)
Net loss	—	—	—		—		—		—		—	—		—		—		(38,316)		(38,316)		—		(38,316)
Issuance of common and preferred stock	72,171	—	—		—		63		63		58,783	—		861		861		—		924		—		924
Share-based compensation	—	—	—		—		745		745		—	—		—		—		—		745		—		745
Dividends paid on common stock	—	—	—		—		(2,375)		(2,375)		—	—		—		—		—		(2,375)		—		(2,375)

Dividends paid on Series B preferred stock	—	—	—		—		—		—		—	—		(1,881)		(1,881)		—		(1,881)		—		(1,881)

Balance at March 31, 2024	15,701,465	1,270,805	$	2	$	—	$	(32,758)	$	(32,756)	3,650,587	$	—	$	43,083	$	43,083	$	(307,093)	$	(296,766)	$	—	$	(296,766)

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

Table o f Contents

FAT BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Thirteen Weeks Ended March 30, 2025 and March 31, 2024


	2025		2024
Cash flows from operating activities:
Net loss	$	(46,311)	$	(38,316)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred income taxes	1,108		2,783
Depreciation and amortization	10,391		10,194
Share-based compensation	367		745
Operating lease assets and liabilities	770		230
Accretion of loan fees and interest	3,551		4,379

Net loss (gain) on extinguishment of debt	151		(427)
Provision for bad debts	230		168
Loss on disposal of fixed assets	53		—
Change in:
Accounts receivable	2,116		1,248
Inventory	(142)		123
Other current and noncurrent assets	(4,287)		(3,167)

Deferred income	(278)		(543)
Accounts payable	6,606		1,969
Accrued expenses and other liabilities	5,194		(8,399)
Accrued advertising	163		(1,218)
Accrued interest payable	6,716		1,985
Other current and noncurrent liabilities	385		(155)
Total adjustments	33,094		9,915
Net cash used in operating activities	(13,217)		(28,401)

Cash flows from investing activities:

Purchases of property and equipment	(4,546)		(4,126)
Proceeds from sale of property and equipment	4,432		—
Payments received on notes receivable	90		80
Payment of acquisition purchase price payable	—		(4,000)

Net cash used in investing activities	(24)		(8,046)

Cash flows from financing activities:
Proceeds from borrowings, net of issuance costs	26,813		80,012
Repayments of borrowings	(23,780)		(36,304)

Proceeds from issuance of common and preferred shares	4,391		924

Dividends paid on common shares	—		(2,375)
Dividends paid on preferred shares	(2,231)		(1,881)
Net cash provided by financing activities	5,193		40,376

Net (decrease) increase in cash and restricted cash	(8,048)		3,929
Cash and restricted cash at beginning of the period	67,389		91,903
Cash and restricted cash at end of the period	$	59,341	$	95,832

Supplemental disclosures of cash flow information:
Cash paid for interest	$	26,501	$	29,359
Cash paid for income taxes	$	347	$	288

Supplemental schedule of non-cash financing activity:
Dividend of Twin Hospitality Group Inc. Class A common stock	$	5,218	$	—

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

Table o f Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. ORGANIZATION AND RELATIONSHIPS

Organization and Nature of Business

FAT Brands Inc. (the "Company" or "FAT") is a leading multi-brand restaurant company that develops, markets, acquires and manages quick-service, fast casual, casual dining and polished casual dining restaurant concepts around the world. As of March 30, 2025, the Company owned eighteen restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses. As of March 30, 2025, the Company had approximately 2,300 locations open and under construction, of which approximately 92% were franchised.

Each franchising subsidiary licenses the right to use its brand name and provides franchisees with operating procedures and methods of merchandising. Upon signing a franchise agreement, the franchisor is committed to providing training, some supervision and assistance and access to operations manuals. As needed, the franchisor will also provide advice and written materials concerning techniques of managing and operating the restaurants.

The Company's operations have historically been comprised primarily of franchising a growing portfolio of restaurant brands. This growth strategy is centered on expanding the footprint of existing brands and acquiring new brands through a centralized management organization which provides substantially all executive leadership, marketing, training and accounting services. As part of these ongoing franchising efforts, the Company will, from time to time, make opportunistic acquisitions of operating restaurants and may convert them to franchise locations. During the refranchising period, the Company may operate the restaurants and classify the operational activities as refranchising gains or losses and the assets and associated liabilities as held-for sale. Through recent acquisitions, the Company also operates "company-owned" restaurant locations of certain brands.

Liquidity

The Company recognized loss from operations of $8.6 million and $1.4 million during the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively. The Company had negative cash flow from operations of $13.2 million and $28.4 million during the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively. The Company has a history of net losses and an accumulated deficit of $499.4 million as of March 30, 2025. Additionally, the Company had negative working capital of $233.5 million. Of this amount, $91.8 million represents redeemable preferred stock as discussed in Note 9. Since the Company did not deliver the applicable cash proceeds at the related due dates, the amount accrues interest until the payments are completed. The Company had $12.2 million of unrestricted cash at March 30, 2025 and plans on the combination of cash flows from operations, cash on hand, $73.6 million of issued but not sold aggregate principal amount of fixed rate secured notes and $75.6 million aggregate principal amount of repurchased but not re-sold fixed rate secured notes (see Note 8) to be sufficient to cover any working capital requirements for the next twelve months from the date of this report. If the Company does not achieve its operating plan, additional forms of financing may be required through the issuance of debt or equity. Although management believes it will have access to financing, no assurances can be given that such financing will be available on acceptable terms, in a timely manner or at all.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation – The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation and net income (loss) has been reduced by the portion attributable to non-controlling interest (See Note 16). Our revenues are derived primarily from two sales channels, franchised restaurants and company-owned locations, which we operate as one reportable segment.

Table o f Contents

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete financial statements. In the opinion of the Company, all adjustments considered necessary for the fair presentation of the Company’s results of operations, financial position and cash flows for the periods presented have been included and are of a normal, recurring nature. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2024 Annual Report on Form 10-K for the fiscal year ended December 29, 2024 filed with the SEC on February 28, 2025.

Nature of operations – The Company operates on a 52-week calendar and its fiscal year ends on the last Sunday of the calendar year. Consistent with industry practice, the Company measures its stores’ performance based upon 7-day work weeks. Using the 52-week cycle ensures consistent weekly reporting for operations and ensures that each week has the same days since certain days are more profitable than others. The use of this fiscal year means a 53rd week is added to the fiscal year every 5 or 6 years. In a 52-week year, all four quarters are comprised of 13 weeks. In a 53-week year, one extra week is added to the fourth quarter. Fiscal years 2025 and 2024 are both a 52-week year.

Use of estimates in the preparation of the condensed consolidated financial statements – The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Significant estimates include the determination of fair values of goodwill and other intangible assets, allowances for uncollectible notes receivable and accounts receivable, and the valuation allowance related to deferred tax assets. Estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Standards Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, Income Statement —Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In January 2025, the FASB issued update 2025-01—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The amendment requires disclosure in the notes to financial statements of specified information about certain costs and expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting within annual reporting periods beginning after December 15, 2027. The update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The amendments also require that all entities disclose on an annual basis the income taxes paid disaggregated by jurisdiction. The amendments eliminate the requirement for all entities to disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or make a statement that an estimate of the range cannot be made. The amendments are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company plans to adopt the standard when it becomes effective for us beginning in our fiscal year 2025 annual financial statements, and we expect the adoption of this standard will impact certain of our income tax disclosures.

NOTE 3. REFRANCHISING

As part of its ongoing franchising efforts, the Company may, from time to time, sell operating restaurants built or acquired by the Company in order to convert them to franchise locations or acquire existing franchised locations to resell them to another franchisee across all of its brands.

Table o f Contents

The following assets used in the operation of certain restaurants meet all of the criteria requiring that they be classified as held-for-sale, and have been classified accordingly in the accompanying condensed consolidated balance sheets as of March 30, 2025 and December 29, 2024 (in millions):


	March 30, 2025		December 29, 2024

Property and equipment	$	—	$	—
Operating lease right-of-use assets	0.4		0.4
Total	$	0.4	$	0.4

Operating lease liabilities related to the assets classified as held-for-sale in the amount of $0.4 million and $0.4 million have been classified as current liabilities in the accompanying condensed consolidated balance sheets as of March 30, 2025 and December 29, 2024, respectively.

The following table highlights the operating results of the Company's refranchising program (in millions):


	Thirteen Weeks Ended
	March 30, 2025		March 31, 2024
Restaurant costs and expenses, net of revenue	$	—	$	1.0
Loss on store sales or closures	—		0.5

Refranchising loss	$	—	$	1.5

NOTE 4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consists of the following (in millions):


	March 30, 2025		December 29, 2024
Real estate	$	90.2	$	89.6
Equipment	56.7		57.3
	146.9		146.9
Accumulated depreciation	(55.4)		(49.5)
Property and equipment, net	$	91.5	$	97.4

Depreciation expense during the thirteen weeks ended March 30, 2025 and March 31, 2024 was $6.0 million and $5.8 million, respectively.

Upon retirement or other disposal of property and equipment, the cost and related amounts of accumulated depreciation are eliminated from the asset and accumulated depreciation accounts, respectively. The difference, if any, between the net asset value and the proceeds, is recorded in earnings. Loss on disposals during the thirteen weeks ended March 30, 2025 and March 31, 2024 was $0.1 million and $0, respectively.

NOTE 5. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Changes in Carrying Value of Goodwill and Other Intangible Assets (in millions)


	Amortizing Intangible Assets		Non-Amortizing Intangible Assets
			Goodwill		Trademarks
December 29, 2024	$	142.0	$	285.3	$	453.7
Amortization	(3.9)		—		—

March 30, 2025	$	138.1	$	285.3	$	453.7

Table o f Contents

Gross Carrying Value and Accumulated Amortization of Other Intangible Assets (in millions)


	March 30, 2025							December 29, 2024
		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizing intangible assets
Franchise agreements		$	118.3	$	(36.6)	$	81.7	$	118.3	$	(34.2)	$	84.1
Customer relationships		73.9		(21.1)		52.8		73.9		(19.6)		54.3
Other		4.1		(0.5)		3.6		4.1		(0.5)		3.6
		$	196.3	$	(58.2)	$	138.1	$	196.3	$	(54.3)	$	142.0

Non-amortizing intangible assets
Trademarks						453.7						453.7
Total amortizing and non-amortizing intangible assets, net						$	591.8					$	595.7

Amortization expense for the thirteen weeks ended March 30, 2025 and March 31, 2024 was $3.9 million.

The expected future amortization of definite-life intangible assets by fiscal year (in millions):


Fiscal Year:
Remainder of 2025	$	11.7
2026	15.6
2027	15.6
2028	15.9
2029	15.0
Thereafter	64.3
Total	$	138.1

NOTE 6. INCOME TAXES

The following table presents the Company’s provision for income taxes (in millions):


	Thirteen Weeks Ended
	March 30, 2025			March 31, 2024
Provision for income taxes	$	(1.8)		$	(3.5)
Effective tax rate	4.0		%	10.1		%

The difference between the statutory tax rate of 21% and the effective tax rates of 4.0% in the thirteen weeks ended March 30, 2025 was primarily due to increases in the valuation allowance, nondeductible expenses and the impact of state income taxes.

The difference between the statutory tax rate of 21% and the effective tax rates of 10.1% in the thirteen weeks ended March 31, 2024 was primarily due to increases in the valuation allowance, nondeductible expenses and the impact of state income taxes.

NOTE 7. LEASES

The Company recognized lease expense of $7.7 million and $8.2 million for the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively.

Table o f Contents

Operating lease right-of-use assets and operating lease liabilities relating to the operating leases are as follows (in millions):


	March 30, 2025		December 29, 2024

Operating lease right-of-use assets	$	198.3	$	198.1
Right-of-use assets classified as held-for-sale	0.4		0.4
Total right-of-use assets	$	198.7	$	198.5

Operating lease liabilities	$	217.5	$	216.4
Lease liabilities related to assets held-for-sale	0.4		0.4
Total operating lease liabilities	$	217.9	$	216.8

The contractual future maturities of the Company’s operating lease liabilities as of March 30, 2025, including anticipated lease extensions, are as follows (in millions):


Fiscal year:
Remainder of 2025	$	31.0
2026	28.9
2027	28.4
2028	26.1
2029	25.2
Thereafter	309.5
Total lease payments	$	449.1
Less: imputed interest	(231.6)
Total	$	217.5

The current portion of the operating lease liability as of March 30, 2025 was $16.3 million.

Supplemental cash flow information for the thirteen weeks ended March 30, 2025 related to leases was as follows (in millions):


	Thirteen Weeks Ended
	March 30, 2025		March 31, 2024
Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	7.3	$	7.7

Operating lease right-of-use assets obtained in exchange for new lease obligations:
Operating lease liabilities	$	7.7	$	8.1

Table o f Contents

NOTE 8. DEBT

Long-term debt consisted of the following (in millions):


	March 30, 2025								December 29, 2024
	Final Maturity	Anticipated Call Date	Rate		Face Value		Book Value		Book Value
Senior Debt
FB Royalty Securitization	4/25/2051	7/25/2026	4.75	%	$	135.6	$	134.0	$	134.4
GFG Royalty Securitization	7/25/2051	7/25/2026	6.00	%	268.5		264.6		265.2
Twin Peaks Securitization	10/25/2054	10/25/2027	7.00	%	281.4		277.8		277.5
Fazoli's/Native Securitization	7/25/2051	7/27/2026	6.00	%	124.9		124.9		125.4
FB Resid Securitization	7/25/2027		10.00	%	53.9		53.8		53.8
Senior Subordinated Debt
FB Royalty Securitization	4/25/2051	7/25/2026	8.00	%	45.2		42.9		42.7
GFG Royalty Securitization	7/25/2051	7/25/2026	7.00	%	101.1		98.9		98.9
Twin Peaks Securitization	10/25/2054	10/25/2027	9.00	%	57.6		54.0		53.7
Fazoli's/Native Securitization	7/25/2051	7/27/2026	7.00	%	16.3		16.3		24.2
FB Resid Securitization	7/25/2027		10.00	%	56.0		55.9		55.9
Subordinated Debt
FB Royalty Securitization	4/25/2051	7/25/2026	9.00	%	15.6		15.4		15.5
GFG Royalty Securitization	7/25/2051	7/25/2026	9.50	%	44.4		41.8		49.2
Twin Peaks Securitization	10/25/2054	10/25/2027	10.00	%	77.7		70.5		45.6

Total Securitized Debt					1,278.2		1,250.8		1,242.0

Elevation Note	7/19/2026	N/A	6.00	%	1.8		1.8		2.0
Twin Peaks Equipment Notes	5/5/2027 to 7/31/2028	N/A	7.99% to 11.50%		4.4		4.4		4.7

Twin Peaks Construction Loan	10/1/2025	N/A	12.50	%	—		—		3.2

Promissory Note	7/25/2026	N/A	16.90% to 18.65%		8.3		8.3		6.3

Total Debt					$	1,292.7	1,265.3		1,258.2
Current portion of long-term debt							(48.5)		(49.2)
Long-term Debt							$	1,216.8	$	1,209.0

Terms of Outstanding Debt

FB Royalty Securitization

On April 26, 2021, FAT Brands Royalty I, LLC ("FB Royalty"), a special purpose, wholly-owned subsidiary of FAT Brands Inc., completed the issuance and sale of three tranches of fixed rate secured notes with a total aggregate principal amount of $144.5 million.

On July 6, 2022, FB Royalty issued an additional $76.5 million aggregate principal amount of three tranches of fixed rate secured notes. Of the $76.5 million aggregate principal amount, $30.0 million was sold privately during the third quarter of 2022, resulting in net proceeds of $27.1 million (net of debt offering costs of $0.6 million and original issue discount of $2.3 million). The remaining $46.5 million in aggregate principal was sold privately on October 21, 2022, when the Company entered into an Exchange Agreement with the Twin Peaks sellers and redeemed 1,821,831 shares of the Company's 8.25% Series B Cumulative Preferred Stock at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption, in exchange for $46.5 million aggregate principal amount of secured debt ($43.2 million net of debt offering costs and original issue discount) as discussed in Note 10.

Table o f Contents

Prior to the redemption, the Twin Peaks sellers held 2,847,393 shares of Series B Cumulative Preferred Stock.

Pursuant to the Exchange Agreement, (i) at any time prior to July 25, 2023, the Company may call from the Twin Peaks sellers all or a portion of the Class M-2 Notes at the outstanding principal balance multiplied by 0.86, plus any accrued plus unpaid interest thereon; (ii) at any time on or after the date of the Exchange Agreement, the Company may call from the Twin Peaks sellers, and at any time on or after July 25, 2023, the Twin Peaks sellers may put to the Company, all or a portion of the Class A-2 Notes and/or Class B-2 Notes at the outstanding principal balance multiplied by 0.94, plus any accrued plus unpaid interest thereon; and (iii) at any time on or after July 25, 2023, the Company may call from the Twin Peaks sellers, and the Twin Peaks sellers may put to the Company, all or a portion of the Class M-2 Notes at the outstanding principal balance multiplied by 0.91, plus any accrued plus unpaid interest thereon. If the Company does not remit the applicable call price or put price upon a duly exercised call or put, as applicable, the amount owed by the Company will accrue interest at 10% per annum, which interest is due and payable in cash monthly by the Company. On July 13, 2023, pursuant to the Exchange Agreement, the Twin Peaks sellers exercised their put option. During the first quarter of 2024, the Company paid $1.0 million to settle the 10% per annum interest in perpetuity and to settle the put option. As a result, as of March 30, 2025, the outstanding principal balance owned by the Twin Peaks sellers is no longer subject to the put option.

The FB Royalty securitization notes are generally secured by a security interest in substantially all the assets of FB Royalty and its subsidiaries.

GFG Royalty Securitization

In connection with the acquisition of GFG, on July 22, 2021, FAT Brands GFG Royalty I, LLC ("GFG Royalty"), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance and sale in a private offering of three tranches of fixed rate secured notes with a total aggregate principal amount of $350.0 million. Immediately following the closing of the acquisition of GFG the Company contributed the franchising subsidiaries of GFG to GFG Royalty, pursuant to a Contribution Agreement.

On December 15, 2022, GFG Royalty issued an additional $113.5 million aggregate principal amount of three tranches of fixed rate secured notes. Of the $113.5 million aggregate principal amount, $25.0 million was sold privately during the fourth quarter of 2022. In January 2023, an additional $40.0 million aggregate principal amount was sold privately, resulting in net proceeds of $34.8 million. On September 20, 2023, an additional $2.8 million aggregate principal amount was sold privately resulting in net proceeds of $2.5 million. In October 2023, $20.2 million aggregate principal amount previously issued to FAT Brands Inc. was sold privately resulting in net proceeds of $18.1 million. The remaining $25.3 million in aggregate principal amount remains issued to FAT Brands, Inc., pending sale to third party investors.

The GFG Royalty securitization notes are generally secured by a security interest in substantially all the assets of GFG Royalty and its subsidiaries.

Twin Peaks Securitization

In connection with the acquisition of Twin Peaks on October 1, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Twin Peaks I, LLC, of three tranches of fixed rate secured notes with a total aggregate principal amount of $250.0 million. Immediately following the closing of the acquisition of Twin Peaks the Company contributed the franchising subsidiaries of Twin Peaks to FAT Brands Twin Peaks I, LLC, pursuant to a Contribution Agreement.

On September 8, 2023, FAT Brands Twin Peaks I, LLC issued an additional $98.0 million aggregate principal amount of two tranches of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $98.0 million aggregate principal amount, $48.0 million was sold privately during the third quarter of 2023 resulting in net proceeds of $45.2 million. A portion of the proceeds was used to purchase $14.9 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. The remaining $50.0 million in aggregate principal of notes issued by FAT Twin Peaks I, LLC was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.

Table o f Contents

On March 20, 2024, FAT Brands Twin Peaks I, LLC issued an additional $50.0 million aggregate principal amount of one tranche of fixed rate secured notes to FAT Brands Inc., pending sale to third party investors. Of the $50.0 million aggregate principal amount, $38.8 million was sold privately during the first quarter of 2024 resulting in net proceeds of $36.4 million. A portion of the proceeds was used to purchase $7.4 million aggregate principal amount of outstanding Securitization Notes, which will be held pending re-sale to third party investors. In connection with the bonds repurchased, the Company recognized a $0.4 million net gain on extinguishment of debt. During the second quarter of 2024, the remaining $11.2 million in aggregate principal of notes was sold privately to a third party investor resulting in net proceeds of $10.7 million.

On November 21, 2024, Twin Hospitality I, LLC completed the issuance and sale in a private offering the following four tranches of fixed rate secured notes: (i) $12.0 million aggregate principal amount of 9.00% Fixed Rate Super Senior Notes, Class A-2-I, (ii) $269.3 million aggregate principal amount of 9.00% Fixed Rate Senior Notes, Class A-2-II, (iii) $57.6 million aggregate principal amount of 10.00% Fixed Rate Senior Subordinated Secured Notes, Class B-2 and (iv) $77.7 million aggregate principal amount of 11.00% Fixed Rate Subordinated Secured Notes, Class M-2, collectively the "Twin Securitization Notes."

Net Proceeds from the issuance and sale of the Twin Securitization notes were $407.5 million, which consisted of the aggregate principal amount of $416.7 million, net of aggregate original issue discounts $3.2 million and debt offering costs of $6.0 million. The net proceeds from the sale of the Twin Securitization Notes was used to redeem all of the Prior Securitization Notes, which included principal of $388.8 million and accrued interest of $2.3 million, with the remainder to be used for working capital and general corporate purposes. The Company recognized a loss on extinguishment of debt of $2.4 million.

The Twin Peaks securitization notes are generally secured by a security interest in substantially all the assets of FAT Brands Twin Peaks I, LLC and its subsidiaries.

Terms and Debt Covenant Compliance - Twin Securitization

The Twin Securitization Notes require that the principal (if any) and interest obligations be segregated to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of monthly cash flow that exceeds the required monthly interest reserve is generally remitted to the Company. Interest payments are required to be made on a quarterly basis. The legal final maturity date of the Twin Securitization Notes is October 26, 2054; however, it is currently anticipated that, unless earlier prepaid to the extent permitted under the Base Indenture, the Twin Securitization Notes will be repaid on October 25, 2027 (which we refer to as the "Anticipated Repayment Date"). If the Twin Securitization Notes are not repaid or refinanced by the Anticipated Repayment Date, additional interest will accrue on the then outstanding balance of each class of the Twin Securitization Notes at a rate of 5.0% per annum. Each class of the Twin Securitization Notes may be prepaid in whole or in part on any business day; provided that optional prepayment made after the Anticipated Repayment Date must be applied first to Class A-2-I, second to Class A-2-II, third to Class B-2 and fourth to Class M-2 of the Twin Securitization Notes.

Additionally, pursuant to the Base Indenture, upon each "Qualified Equity Offering" (as defined in the Base Indenture), which is a public or private offering by Twin Hospitality Group Inc. of our common equity securities for cash, subject to certain limited exceptions, Twin Hospitality Group Inc. is required to deposit 75% of the net proceeds from such offering into a segregated, non-interest bearing trust account to be used towards the repayment of the Twin Securitization Notes, until an aggregate of $75.0 million has been repaid in that manner. If the amount of net proceeds from our Qualified Equity Offerings used for repayment of the Twin Securitization Notes is not at least $25.0 million on or prior to each of April 25, 2025, July 25, 2025 and October 27, 2025, or is not at least $75.0 million on or prior to January 26, 2026, then under any such circumstance, a Cash Flow Sweeping Event (as defined in the Base Indenture) would occur, whereupon certain excess cash flows from our operations will be used to make additional principal payments, on a pro rata basis, on the three most senior classes of the Twin Securitization Notes.

The material terms of the Twin Securitization Notes contain covenants which are standard and customary for these types of agreements, including the following financial covenants: (i) debt service coverage ratio, (ii) interest-only debt service coverage ratio and (iii) senior leverage ratio. As of March 30, 2025, the Company was in compliance with these covenants.

Table o f Contents

In connection with the issuance and sale of the Twin Securitization Notes, we entered into a letter agreement, pursuant to which our subsidiary Twin Hospitality Group Inc. agreed to issue to the investors in the Twin Securitization Notes warrants (which we refer to as the "Noteholders' Warrants") exercisable for the aggregate number of shares of the subsidiary's Class A Common Stock equal to 5.0% of the number of issued and outstanding shares of the subsidiary's Class A Common Stock at the time of the Spin-Off, which occurred on January 29, 2025. The Noteholders' Warrants will be exercisable during the period commencing on October 25, 2025 and ending on the five-year anniversary of the date of issuance, at an exercise price of $0.01 per share. Under the letter agreement, we also agreed not to pay a dividend on our common stock until at least $25.0 million in proceeds from Qualified Equity Offerings (as defined in the Base Indenture) have been used to prepay the Twin Securitization Notes.

Fazoli's / Native Securitization

In connection with the acquisition of Fazoli's and Native Grill & Wings on December 15, 2021, the Company completed the issuance and sale in a private offering through its special purpose, wholly-owned subsidiary, FAT Brands Fazoli's Native I, LLC, of three tranches of fixed rate secured notes with a total aggregate principal amount of $193.8 million. Immediately following the closing of the acquisition of Fazoli's and Native the Company contributed the franchising subsidiaries of these entities to FAT Brands Fazoli's Native I, LLC, pursuant to a Contribution Agreement.

On March 28, 2025, the Company entered into an amendment to the Fazoli’s/Native Securitization pursuant to Omnibus Amendment No. 1, dated as of March 28, 2025 (the “Omnibus Amendment”), by and among the Company, FAT Brands Fazoli’s Native I, LLC (the “Issuer”), the subsidiaries of the Issuer (the “Guarantors”), UMB Bank, N.A., as trustee and securities intermediary, and each noteholder under the Fazoli’s/Native Securitization (the “Noteholders”). The Anticipated Call Date of all tranches of Notes issued under the Fazoli’s/Native Securitization has been extended from July 2023 to October 2025. If the Issuer has not repaid or refinanced the Notes by the Anticipated Call Date, additional interest equal to 1.0% per annum will accrue on each tranche of Notes. The Anticipated Repayment Date of the Class A-2 Notes has been extended from January 2025 to July 2026. If the Issuer has not repaid or refinanced the Class A-2 Notes by the Anticipated Repayment Date, additional interest equal to 2.5% per annum will accrue on the Class A-2 Notes. Certain financial covenants tied to debt service coverage ratios or leverage ratios of the Issuer that, if triggered, could cause a Rapid Amortization Event, Cash Flow Sweeping Event or Event of Default, have been relaxed or deferred to dates in 2026. The definition of Permitted Asset Dispositions in the Base Indenture has been amended to allow the disposition of leases and subleases of real estate which are producing negative cash flow and causing a material decrease in ongoing collections, including any sale of a Company Restaurant to a Franchisee for the conversion of a Company Restaurant to a Franchised Restaurant. This change is intended to permit the Company to refranchise all or a portion of its corporate-owned Fazoli’s restaurants. Provided that the Majority of Controlling Class Members have the right to instruct the Controlling Class Representative for purposes of the Amendment Documents.

The Fazoli's/Native securitization notes are generally secured by a security interest in substantially all the assets of FAT Brands Fazoli's Native I, LLC and its subsidiaries.

FB Resid Holdings 1, LLC

On July 8, 2023, FB Resid Holdings I, LLC (“FB Resid”), a special purpose, wholly-owned subsidiary of FAT Brands, completed the issuance of two tranches of fixed rate secured notes with a total aggregate principal amount of $150.0 million. Of the $150.0 million aggregate principal amount, $105.8 million was sold privately in 2023, resulting in net proceeds of $105.3 million. A portion of the proceeds was used to purchase $64.6 million of outstanding Securitization Notes, which will be held pending re-sale to third party investors. The remaining $44.2 million in aggregate principal of notes issued by FB Resid was issued to a wholly-owned subsidiary of FAT Brands, Inc., pending sale to third party investors.

Table o f Contents

On November 21, 2024, the Company modified the terms of the outstanding notes issued by FB Resid pursuant to an Omnibus Amendment executed with the noteholders as well as with the Company’s other whole business securitization subsidiaries, FAT Brands Royalty I, LLC, FAT Brands GFG Royalty I, LLC, Twin Hospitality I, LLC (f/k/a FAT Brands Twin Peaks I, LLC) and FAT Brands Fazoli’s Native I, LLC (the “Existing Issuers”). The Omnibus Amendment amended the treatment of “Excess Amounts” under the Company’s current securitization transactions, other than Twin Hospitality I, LLC, upon (i) the occurrence of an Event of Default under the FB Resid Indenture or (ii) if the Controlling Class Representative (currently 3|5|2 Capital ABS Master Fund LP) has notified the FB Resid Trustee that certain Excess Amounts are required to satisfy clauses (i) through (xiii) of the Priority of Payments on the next applicable Monthly Allocation Date under the FB Resid Indenture. In such event, all such Excess Amounts must be deposited into a segregated account to be included in Retained Collections and deposited in the Collection Account under the FB Resid Indenture for application in accordance with the waterfall of payments under Section 5.10 of the FB Resid Indenture. The Omnibus Amendment also amended the FB Resid Indenture to provide that with respect to (i) any Mandatory Prepayment Amount and/or (ii) from and after the occurrence of any Event of Default (as such terms are defined in the FB Resid Indenture), payments of interest and principal with respect to the Class A-1 Notes and the Class A-2 Notes shall be made in accordance with the Applicable Class A Payment Priority (defined in the Omnibus Amendment), and no amounts may be paid on the Class A-1B Notes or Class A-2B Notes until amounts then due and owing to the Class A-1A Notes and the Class A-2A Notes shall have been paid in full in cash.

In addition, under the Omnibus Amendment, the Company and FB Resid agreed not to permit (i) any equity interests of any Existing Issuer to be sold, transferred or disposed, other than the transactions contemplated by the Twin Peaks Listing Event, or (ii) any Specified Additional Issuance (as defined in the FB Resid Indenture). In addition, the Omnibus Amendment added a new Event of Default under the FB Resid Indenture if the Issuer should fail, by July 31, 2026, to have prepaid or purchased at least $20,000,000 of Class A-1A Notes and Class A-2A Notes held by the Controlling Class Representative or its managed funds. Also under the Omnibus Amendment, the Company agreed not to sell or otherwise dispose of any of its equity interests of Twin Hospitality until Twin Hospitality has used at least $75,000,000 of aggregate Qualified Equity Offering Proceeds or other proceeds to prepay the new Notes issued under the TWNP Indenture. The Company also agreed not to declare or pay any dividend or distribution in the form of equity interests in Twin Hospitality (i) until the third anniversary of the Closing Date (ii) or if any Potential Rapid Amortization Event, Rapid Amortization Event, Default or Event of Default has occurred or would result therefrom under the indentures of any Existing Issuer.

On November 21, 2024, the Company also entered into a Pledge and Security Agreement (the “Pledge Agreement”) and Securities Account Control Agreement (the “Control Agreement”) with UMB Bank, N.A., as trustee under the FB Resid Indenture and as securities intermediary (in such capacities, the “Pledge Trustee”). Under the Pledge Agreement, the Company pledged all of its shares of Class A Common Stock of Twin Hospitality (other than shares distributed to its shareholders at the time of the Twin Peaks Listing Event) (the “Pledged Shares”) along with all proceeds of the Pledged Shares for the payment and performance of all obligations of FB Resid under the FB Resid Indenture. The Company agreed that the “Applicable Percentage” (a formula that is defined in the Pledge Agreement) of any (i) proceeds of the sale or other disposal of Pledged Shares, (ii) dividend, distribution, rights, warrants or other consideration with respect to the Pledged Shares, and (iii) proceeds of any loan secured by the Pledged Shares (collectively, the “Proceeds”), will be applied to purchase first the Class A-2A Notes, and then the Class A-1A Notes, issued under the FB Resid Indenture at par plus any accrued and unpaid interest thereon and interest paid in kind. The Company also agreed that, if Twin Hospitality has not raised at least $25,000,000 in Qualified Equity Proceeds and is sold, then so long as either (i) the Issuer has repaid its debt in full under the TWNP Indenture or (ii) the Issuer’s noteholders have otherwise waived such payment and approved the sale in writing, then 50% of the Proceeds from the sale of Twin Hospitality will be applied to purchase first the Class A-2A Notes, and then the Class A-1A Notes, issued under the FB Resid Indenture at par plus any accrued and unpaid interest thereon and interest paid in kind. Also under the Pledge Agreement, upon the occurrence and during the continuance of an Event of Default and following the Grace Period, if applicable, under the FB Resid Indenture, all rights of the Company to vote or give consent with respect to the Pledged Shares shall be vested in the Pledge Trustee. Under the Control Agreement, the Company agreed to deposit all of the Pledged Shares at the time of the Twin Peaks Listing Event into a controlled account maintained by the Pledge Trustee, and the Pledge Trustee will distribute Proceeds of the Pledged Shares held in such account according to the Pledge Agreement. The Company will be entitled to enter any market order to sell Pledged Shares in a brokers’ transaction on an approved trading market, and may enter orders to sell Pledged Shares other than on a permitted trading market (i) with the prior written consent of the Pledge Trustee or (ii) in a trade to be executed within 5% of the 5-trading day volume weighted average price and with a value of at least $15,000,000. Upon an Event of Default under the FB Resid Indenture, the Controlling Class Representative will be entitled to exercise sole control of the Pledged Shares and direct sales or other dispositions of the Pledged Shares held in the controlled account.

Table o f Contents

Retained Notes

During the thirteen weeks ended March 30, 2025, the Company repurchased certain of its securitized notes to be held for resale to third party investors and sold certain of its securitized notes previously repurchased or issued and not sold (collectively, the "Retained Notes"). During the thirteen weeks ended March 30, 2025, cash proceeds from the sale of Retained Notes and cash used to repurchase Retained Notes was $25.0 million and $15.8 million including accrued interest, respectively. As of March 30, 2025, the Company held $149.2 million of Retained Notes, which have been eliminated in consolidation.

Terms and Debt Covenant Compliance - Securitization Notes

The FAT Royalty securitization notes, the GFG Royalty securitization notes, the Twin Peaks securitization notes, the Fazoli's/Native securitization notes and the FB Resid notes (collectively, the "Securitization Notes") require that the principal (if any) and interest obligations be segregated to ensure appropriate funds are reserved to pay the quarterly principal and interest amounts due. The amount of monthly cash flow that exceeds the required monthly interest reserve is generally remitted to the Company. Interest payments are required to be made on a quarterly basis. Beginning July 26, 2023, additional interest equal to 1.0% per annum and principal payments equal to 2.0% per annum of the initial principal amount on the FAT Royalty securitization notes, the GFG Royalty securitization notes, the Twin Peaks securitization notes and the Fazoli's/Native securitization notes will be made on the scheduled quarterly payment dates.

The material terms of the Securitization Notes contain covenants which are standard and customary for these types of agreements, including the following financial covenants: (i) debt service coverage ratio, (ii) leverage ratio and (iii) senior leverage ratio. As of March 30, 2025, the Company was in compliance with these covenants.

Elevation Note

On June 19, 2019, the Company completed the acquisition of Elevation Burger. A portion of the purchase price included the issuance to the Seller of a convertible subordinated promissory note (the “Elevation Note”) with a principal amount of $7.5 million, bearing interest at 6.0% per annum and maturing in July 2026. The Elevation Note is convertible, under certain circumstances, into shares of the Company’s common stock at $12.00 per share.

The Elevation Note is a general unsecured obligation of Company and is subordinated in right of payment to all indebtedness of the Company arising under any agreement or instrument to which Company or any of its Affiliates is a party that evidences indebtedness for borrowed money that is senior in right of payment.

Equipment Financings (Twin Peaks)

During 2022, one of our wholly-owned subsidiaries entered into certain equipment financing arrangements to borrow up to $1.4 million, the proceeds of which were used to purchase certain equipment for a company-owned restaurant that opened in 2022 and to retrofit certain existing company-owned restaurants with equipment (which we refer to as the "2022 Equipment Financings"). The 2022 Equipment Financings have maturity dates between May 5, 2027 and March 7, 2028 and bear interest at fixed rates between 7.99% and 8.49% per annum.

During 2023, one of our wholly-owned subsidiaries entered into certain equipment financing arrangements to borrow up to $1.4 million, the proceeds of which will be used to purchase certain equipment for a new company-owned restaurant (which we refer to as the "2023 Equipment Financing"). The 2023 Equipment Financing has maturity dates that are 48 months from the date of each draw, and bears interest at 11.5% per annum.

During 2024, one of our wholly-owned subsidiaries entered into certain equipment financing arrangements to borrow up to $4.2 million, the proceeds of which will be used to purchase certain equipment for three new company-owned Twin Peaks restaurants (which we refer to as the "2024 Equipment Financing"). The 2024 Equipment Financing has maturity dates that are 48 months from the date of each draw, and bears interest at 11.5% per annum.

The 2022 Equipment Financings, the 2023 Equipment Financing, and the 2024 Equipment Financing are secured by certain equipment of such respective company-owned restaurants. As of March 30, 2025, the total outstanding principal amount under them on a collective basis was $4.4 million, and as of December 29, 2024, the total outstanding principal amount was $4.7 million.

Table o f Contents

Construction Loan Agreement (Twin Peaks)

On September 20, 2024, an indirect subsidiary of the Company entered into a loan agreement to borrow $3.2 million with an initial maturity of October 1, 2025, bearing interest at 12.5% per annum and is secured by land and building of a new corporate restaurant. As of March 30, 2025, the total amount outstanding on this loan was $0.0 million.

Promissory Note

During 2024, one of our wholly-owned subsidiaries entered into a financing arrangement to borrow money, where the proceeds would be used for general corporate purposes. The total outstanding amount on the promissory note was $8.3 million as of March 30, 2025. The promissory note has a maturity date of July 25, 2026 and bears interest at fixed rates between 16.90% and 18.65% per annum.

NOTE 9. REDEEMABLE PREFERRED STOCK

GFG Preferred Stock Consideration

On July 22, 2021, the Company completed the acquisition of GFG. A portion of the consideration paid included 3,089,245 newly issued shares of the Company’s Series B Cumulative Preferred Stock valued at $67.3 million (the "GFG Preferred Stock Consideration"). Additionally, on July 22, 2021, the Company entered into a put/call agreement with the GFG sellers, pursuant to which the Company may purchase, or the GFG Sellers may require the Company to purchase, the GFG Preferred Stock Consideration for $67.5 million plus any accrued but unpaid dividends on or before August 20, 2022 (extended from the original date of April 22, 2022), subject to the other provisions of the Put/Call Agreement. Since the Company did not deliver the applicable cash proceeds to the GFG Sellers by that date, the amount accrues interest at the rate of 5% per annum until repayment is completed. On March 22, 2022, the Company received a put notice on the GFG Preferred Stock Consideration and reclassified the GFG Preferred Stock Consideration from redeemable preferred stock to current liabilities on its consolidated balance sheet. As of March 30, 2025, the carrying value of the redeemable preferred stock was $67.5 million.

On September 16, 2022, the Company entered into an agreement with one of the GFG sellers who held 1,544,623 put preferred shares. Pursuant to the agreement, effective August 23, 2022, the interest rate applicable to such holder's 1,544,623 put shares was increased from 5% to 10% per annum, payable monthly in arrears. During the thirteen weeks ended March 30, 2025 and March 31, 2024, the Company paid $0.6 million and $0.8 million of interest, respectively.

On March 9, 2023, the Company entered into an agreement with the second GFG seller who held 1,544,623 put preferred shares. Pursuant to the agreement, effective August 23, 2022, the interest rate applicable to such holder's 1,544,623 put shares was increased from 5% to 10% per annum, payable on the date of redemption.

Twin Peaks Preferred Stock Consideration

On October 1, 2021, the Company completed the acquisition of Twin Peaks. A portion of the consideration paid included 2,847,393 shares of the Company’s 8.25% Series B Cumulative Preferred Stock (the "Twin Peaks Preferred Stock Consideration") valued at $67.5 million.

On October 1, 2021, the Company and the Twin Peaks Seller entered into a Put/Call Agreement (the “Put/Call Agreement”) pursuant to which the Company was granted the right to call from the Twin Peaks Seller, and the Twin Peaks Seller was granted the right to put to the Company, the Initial Put/Call Shares at any time until March 31, 2022 for a cash payment of $42.5 million, and the Secondary Put/Call Shares at any time until September 30, 2022 for a cash payment of $25.0 million (the Initial Put/call Shares together with the Secondary Put/Call Shares total $67.5 million), plus any accrued but unpaid dividends on such shares. Unpaid balances, when due, accrue interest at a rate of 10.0% per annum until repayment is completed. On October 7, 2021, the Company received a put notice on the Initial Put/Call Shares and the Secondary Put/Call Shares.

On October 21, 2022, the Company entered into an Exchange Agreement with the Twin Peaks Seller and redeemed 1,821,831 shares of the Company’s 8.25% Series B Cumulative Preferred Stock at a price of $23.69 per share, plus accrued and unpaid dividends to the date of redemption in exchange for $46.5 million aggregate principal amount of secured debt ($43.2 million net of debt offering costs and original issue discount) as discussed in Note 8.

As of March 30, 2025, the carrying value of the Twin Peaks Preferred Stock Consideration totaled $24.3 million. The Company recognized interest expense relating to the Twin Peaks Preferred Stock Consideration for the thirteen weeks ended March 30, 2025 and March 31, 2024 in the amount of $0.6 million.

Table o f Contents

NOTE 10. SHARE-BASED COMPENSATION

Effective September 30, 2017, the Company adopted the 2017 Omnibus Equity Incentive Plan (the “Plan”). The Plan was amended on December 20, 2022 to increase the number of shares available for issuance under the Plan. The Plan is a comprehensive incentive compensation plan under which the Company can grant equity-based and other incentive awards to officers, employees and directors of, and consultants and advisers to, FAT Brands Inc. and its subsidiaries. The Plan provides a maximum of 5,000,000 shares available for grant.

The Plan provides that, in the event of a spin-off transaction or other change in capitalization by the Company, the Board may authorize an adjustment to outstanding awards under the Plan in such amount that it deems equitable or appropriate in its discretion. As a result of the January 29, 2025 spin-off of Class A Common Stock of Twin Hospitality Group Inc. in the form of a special dividend to holders of Class A common stock and Class B common stock of the Company (see Note 16), on March 18, 2025, the Board and the Compensation Committee approved a reduction in the exercise price of all outstanding stock options under the Plan held by officers, directors and employees on the dividend date in an amount equal to $2.599553 per share, with the difference rounded to the nearest whole cent. No cash payments will be made to option holders in connection with the adjustment. The reduction in exercise price is intended to provide an equitable adjustment to holders of stock options as a result of the Company’s payment of the special dividend and the ex-dividend adjustment to the FAT common stock, and was made with respect to unvested stock options under the Plan and vested but unexercised stock options under the Plan on the dividend date.

The Company has periodically issued stock options under the Plan. All of the stock options issued by the Company to date have included a vesting period of three years, with one-third of each grant vesting annually. As of March 30, 2025, there were 3,357,303 shares of stock options outstanding with a weighted average exercise price of $6.33.

During the thirteen weeks ended March 30, 2025, the Company granted a total of 232,544 stock options under the Plan with a grant date fair value of $0.1 million. During the thirteen weeks ended March 31, 2024, the Company didn't grant stock options under the Plan. The related compensation expense will be recognized over the vesting period.

The Company recognized share-based compensation expense in the amount of $0.4 million and $0.7 million during the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively. As of March 30, 2025, there remains $0.9 million of related share-based compensation expense relating to non-vested grants, which will be recognized over the remaining vesting period of approximately 3.0 years, subject to future forfeitures.

NOTE 11. WARRANTS

The Company’s warrant activity for the thirteen weeks ended March 30, 2025 was as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Warrants exercisable at December 29, 2024	745,904	$	2.53	0.6

Exercised	(567,119)	$	0.94	0.5
Warrants outstanding and exercisable at March 30, 2025	178,785	$	—	0.5

During the thirteen weeks ended March 30, 2025, 567,119 warrants were exercised in exchange for 567,119 shares of common stock with net proceeds to the Company of $0.5 million.

NOTE 12. COMMON STOCK

On July 19, 2024, we entered into an Equity Distribution Agreement (the “Noble Sales Agreement”) with Noble Capital Markets, Inc. (the “Sales Agent”), pursuant to which we may offer and sell from time to time through the Sales Agent shares (the “Placement Shares”) of our Class A Common Stock and/or 8.25% Series B Cumulative Preferred Stock. During the three months ended March 30, 2025, pursuant to the Noble Sales Agreement, the Company sold and issued 391,599 shares of 8.25% Series B Cumulative Preferred Stock, at a weighted average share price of $9.94, paid the Sales Agent commissions of $0.1 million for such sales and received net proceeds of $3.8 million (net of fees and commissions) for such sales.

Table o f Contents

NOTE 13. COMMITMENTS AND CONTINGENCIES

Government Investigations and Litigation

In December 2021, the U.S. Attorney’s Office for the Central District of California (the “U.S. Attorney”) and the U.S. Securities and Exchange Commission (the “SEC”) informed the Company that they had opened investigations relating to the Company and our former CEO, Andrew Wiederhorn, and were formally seeking documents and materials concerning, among other things, the Company’s December 2020 merger with Fog Cutter Capital Group Inc. (“FCCG”), transactions between those entities and Mr. Wiederhorn, as well as compensation, extensions of credit and other benefits or payments received by Mr. Wiederhorn or his family from those entities prior to the merger.

On May 10, 2024, the U.S. Department of Justice (“DOJ”) indicted the Company on two violations of Section 402 of the Sarbanes-Oxley Act for directly and indirectly extending and/or arranging for the extension of credit in 2019 and 2020 to former CEO Andrew Wiederhorn in the amount of $2.65 million. These charges allege that the Company, through its subsidiary Fatburger N.A., transferred approximately $0.6 million to Mr. Wiederhorn in the form of a personal loan on January 30, 2019, and lent approximately $2.0 million in 2020 to its former parent company FCCG which indirectly funded a personal loan from FCCG to Mr. Wiederhorn. The indictment also includes charges against Mr. Wiederhorn, the Company’s former CFO, Rebecca Hershinger, and the Company’s former tax advisor, William Amon, on violations of various federal tax and other laws related to loans from FCCG to Mr. Wiederhorn.

Concurrently with the DOJ’s charges, the SEC filed a complaint against the Company, claiming violations of Section 17(a)(2) of the Securities Act of 1933; Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B), 13(k), and 14(a) of the Securities Exchange Act of 1934; and Rules 10b-5(b), 12b-20, 13a-1, 13a-13, 14a-3, and 14a-9 thereunder. The SEC’s claims pertain principally to allegations that, for fiscal periods covering 2017 through 2020, the Company failed to disclose certain related party transactions, failed to disclose the salaries of Mr. Wiederhorn’s adult children working at the Company, failed to maintain proper books and records and internal accounting controls, made false or misleading statements regarding the Company’s liquidity and use of proceeds from certain transactions, and directly or indirectly extended credit to Mr. Wiederhorn in the form of a personal loan. The SEC’s complaint also names Mr. Wiederhorn, Ms. Hershinger, and the Company’s SVP of Finance, Ron Roe, as defendants. The SEC is seeking injunctive relief, disgorgement, and civil monetary penalties.

The Company is evaluating these charges and intends to vigorously defend itself against them.

Derivative Litigation

James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v. Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc., and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2021-0511-NAC). On June 10, 2021, plaintiffs James Harris and Adam Vignola, putative stockholders of the Company, filed a stockholder derivative action (“Harris I”) in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn) and the Company’s current and former majority stockholders, Fog Cutter Holdings, LLC and Fog Cutter Capital Group, Inc. Plaintiffs assert claims of breach of fiduciary duty, unjust enrichment and waste of corporate assets arising out of the Company’s December 2020 merger with Fog Cutter Capital Group, Inc. Since it was originally filed, the parties engaged in motion practice and substantial discovery, and the Company’s Board appointed a Special Litigation Committee. On June 3, 2024, the Court granted the United States’ request to extend the stay of all proceedings in this matter pending resolution of the charges in United States v. Wiederhorn, et al., 2:24-CR-295-RGK (C.D. Cal.). In January 2025, the principal parties to this matter participated in a mediation in Wilmington, DE and agreed in principle to settle this matter and the Harris II litigation. The settlement is subject to final documentation and approval of the Delaware court, as well as non-objection by the United States. We are obligated to indemnify our current and former directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition. The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management.

Table o f Contents

James Harris and Adam Vignola, derivatively on behalf of FAT Brands, Inc. v. Squire Junger, James Neuhauser, Edward Rensi, Andrew Wiederhorn and Fog Cutter Holdings, LLC, and FAT Brands Inc., nominal defendant (Delaware Chancery Court, Case No. 2022-0254-NAC). On March 17, 2022, plaintiffs James Harris and Adam Vignola, putative stockholders of the Company, filed a stockholder derivative action (“Harris II”) in the Delaware Court of Chancery nominally on behalf of the Company against the Company’s current and former directors (Squire Junger, James Neuhauser, Edward Rensi and Andrew Wiederhorn) and the Company’s majority stockholder, Fog Cutter Holdings, LLC. Plaintiffs assert claims of breach of fiduciary duty in connection with the Company’s June 2021 recapitalization transaction. Since it was originally filed, the parties engaged in motion practice and substantial discovery, and the Company’s Board appointed a Special Litigation Committee. In January 2025, the principal parties to this matter participated in a mediation in Wilmington, DE and agreed in principle to settle this matter and the Harris I litigation. The settlement is subject to final documentation and approval of the Delaware court, as well as non-objection by the United States. We are obligated to indemnify our current and former directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition. The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management.

Richard Collura v. Andrew A. Wiederhorn, et al. (Delaware Chancery Court, Case No. 2024-1305-NAC). In December 2024, plaintiff Richard Collura, a putative stockholder of the Company, filed a stockholder derivative action in the Delaware Court of Chancery nominally on behalf of the Company against certain of the Company’s current and former officers and directors (Andrew Wiederhorn, Kenneth Kuick, Robert Rosen, Ron Roe, John Allen, Kenneth Anderson, Donald Berchtold, Tyler Child, Lynne Collier, Mark Elenowitz, James Ellis, Peter Feinstein, Amy Forrestal, Matthew Green, Squire Junger, John Metz, James Neuhauser, Edward Rensi, Carmen Vidal, Mason Wiederhorn, Taylor Wiederhorn and Thayer Wiederhorn), and the Company’s majority stockholder, Fog Cutter Holdings, LLC. Plaintiff alleges that Mr. Wiederhorn and certain of the other defendants engaged in an unlawful scheme to distribute money to Mr. Wiederhorn and his family for their own personal benefit through 2020, which they allege attracted the attention of the U.S. Attorney’s office and the SEC, and that the Company indicated in public statements and filings that it was cooperating with the government investigations but allegedly was not actually cooperating and investigating the scheme, which caused the Company’s stock price to fall. Defendants dispute the premises and allegations of the lawsuit and intend to vigorously defend against the claims. We cannot predict the outcome of this lawsuit. This lawsuit does not assert any claims against the Company. However, subject to certain limitations, we are obligated to indemnify our current and former directors in connection with defense costs for the lawsuit and any related litigation, which may exceed coverage provided under our insurance policies, and thus could have an adverse effect on our financial condition. The lawsuit and any related litigation also may be time-consuming and divert the attention and resources of our management.

Other Litigation

Mitchell Kates v. FAT Brands, Inc., Andrew Wiederhorn, Kenneth J. Kuick and Robert G. Rosen (United States District Court for the Central District of California, Case No. 2:24-cv-04775-MWF-MAA). On June 7, 2024, plaintiff Mitchell Kates, a putative investor in the Company, filed a putative class action lawsuit against the Company, Andrew Wiederhorn, Kenneth J. Kuick and Robert G. Rosen, asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and Rule 10b-5 promulgated thereunder, alleging that the defendants made false and misleading statements and omitted material facts necessary to make statements not misleading in the Company’s reports filed with the SEC under the 1934 Act related to the subject matter of the government investigations and litigation discussed above, the Company’s handling of these matters and its cooperation with the government. Plaintiff alleges that the Company’s public statements wrongfully inflated the trading price of the Company’s common stock, preferred stock and warrants. Plaintiff is seeking to certify the complaint as a class action and is seeking compensatory damages in an amount to be determined at trial. Plaintiff’s motion for appointment as lead plaintiff, filed on August 6, 2024, remains sub judice. As this matter is still in the early stages, we cannot predict the outcome of this lawsuit.

Table o f Contents

Stratford Holding LLC v. Foot Locker Retail Inc. (U.S. District Court for the Western District of Oklahoma, Case No. 5:12-cv-772-HE). In 2012 and 2013, two property owners in Oklahoma City, Oklahoma sued numerous parties, including Foot Locker Retail Inc. and our subsidiary Fog Cutter Capital Group Inc. (now known as Fog Cutter Acquisition, LLC), for alleged environmental contamination on their properties, stemming from dry cleaning operations on one of the properties. The property owners seek damages in the range of $12.0 million to $22.0 million. From 2002 to 2008, a former Fog Cutter subsidiary managed a lease portfolio, which included the subject property. Fog Cutter denies any liability, although it did not timely respond to one of the property owners’ complaints and several of the defendants’ cross-complaints and thus is in default. The parties are currently conducting discovery. The court has vacated the current trial date and has not yet reset the trial date. The Company is unable to predict the ultimate outcome of this matter, however, reserves have been recorded on the balance sheet of FAT Brands relating to this litigation. There can be no assurance that the defendants will be successful in defending against these actions.

SBN FCCG LLC v FCCGI (Los Angeles Superior Court, Case No. BS172606). SBN FCCG LLC (“SBN”) filed a complaint against Fog Cutter Capital Group, Inc. (“FCCG”) in New York state court for an indemnification claim (the “NY case”) stemming from an earlier lawsuit in Georgia regarding a certain lease portfolio formerly managed by a former FCCG subsidiary. On February 28, 2018, SBN obtained a final judgment in the NY case for a total of $0.7 million, which included $0.2 million in interest dating back to March 2012. SBN then obtained a sister state judgment in Los Angeles Superior Court, Case No. BS172606 (the “California case”), which included the $0.7 million judgment from the NY case, plus additional statutory interest and fees, for a total judgment of $0.7 million. In May 2018, SBN filed a cost memo, requesting an additional $12,411 in interest to be added to the judgment in the California case, for a total of $0.7 million. In May 2019, the parties agreed to settle the matter for $0.6 million, which required the immediate payment of $0.1 million, and the balance to be paid in August 2019. FCCG wired $0.1 million to SBN on May 31, 2019, but has not yet paid the remaining balance of $0.5 million. The parties have not entered into a formal settlement agreement, and they have not yet discussed the terms for the payment of the remaining balance.

SBN FCCG LLC v FCCGI (Supreme Court of the State of New York, County of New York, Index No. 650197/2023). On January 13, 2023, SBN filed another complaint against FCCG in New York state court for an indemnification claim stemming from a lawsuit in Oklahoma City regarding the same lease portfolio formerly managed by Fog Cap (the “OKC Litigation”), and a bankruptcy proceeding involving Fog Cap (the “Bankruptcy Proceeding”). SBN alleges that under a February 2008 stock purchase agreement, Fog Cutter is required to indemnify SBN and its affiliates. According to the complaint, SBN has, at the time of filing the complaint, incurred costs subject to indemnification of approximately $12 million. On March 11, 2024, the court issued an order granting FCCG’s motion to dismiss SBN’s complaint without prejudice to refile the complaint, if at all, once the underlying proceedings (the OKC Litigation and the Bankruptcy Proceeding) were complete. On April 10, 2024, SBN filed a notice of appeal of the trial court's order dismissing SBN's complaint. We are unable at this time to express any opinion as to the eventual outcome of this matter or the possible range of loss, if any.

The Company is involved in other claims and legal proceedings from time-to-time that arise in the ordinary course of business, including those involving the Company’s franchisees. The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on its business, financial condition, results of operations, liquidity or capital resources. As of March 30, 2025, the Company had accrued an aggregate of $5.1 million the specific matters mentioned above and claims and legal proceedings involving franchisees as of that date.

NOTE 14. GEOGRAPHIC INFORMATION

Revenue by geographic area was as follows (in millions):


	Thirteen Weeks Ended
	March 30, 2025		March 31, 2024
United States	$	139.5	$	149.7
Other countries	2.5		2.3
Total revenue	$	142.0	$	152.0

Revenue is shown based on the geographic location of our company-owned and franchisees’ restaurants. All assets are located in the United States.

During the thirteen weeks ended March 30, 2025 and March 31, 2024, no individual franchisee accounted for more than 10% of the Company’s revenue.

Table o f Contents

NOTE 15. SEGMENT INFORMATION

We manage our business activities on a consolidated basis and operate as a single reporting segment as our businesses contain similar products and services managed by the Company, and are economically similar, and share similar types of customers, production and distribution: We primarily derive our revenue in the United States through the sale of food and beverages at our company restaurants and the collection of royalties, franchise fees and advertising revenue from sales of food and beverages at our franchised restaurants. The accounting policies of the single reporting segment are the same as those described in Note 2. Summary of Significant Accounting Policies.

Our Chief Operating Decision Maker (“CODM”) is made up of both our Co-Chief Executive Officers. Our CODMs regularly review and use the consolidated net loss, as reported on our Consolidated Statements of Operations in evaluating the overall performance of our single reporting segment and determining how to allocate resources of the Company as a whole, including investing in our existing company owned restaurants, acquisition strategy and stockholder return programs. The CODMs do not review assets in evaluating the results of our single reporting segment, and therefore, such information is not presented.

Geographically, we have no assets in a foreign country requiring separate disclosure. We have no single major customer representing greater than 10% of our total revenues. For more information regarding our domestic revenues and revenues generated in the foreign countries refer to Note 14. Geographic Information. Foreign revenues are based on the country in which the legal subsidiary is domiciled.

NOTE 16. NON-CONTROLLING INTEREST

On January 16, 2025, the Company announced that its Board of Directors declared a special stock dividend to the Company’s common stockholders of shares of Class A Common Stock (“Twin Common Stock”) of Twin Hospitality Group Inc., a Delaware corporation (“Twin Hospitality”), the operating unit for the Company’s Twin Peaks and Smokey Bones restaurant brands. The distribution (“Spin-Off”) of shares of Twin Common Stock was made on a pro rata basis to all holders of the Company’s Class A Common stock and Class B Common Stock of the Company as of the close of trading on January 27, 2025 (the “record date”). The distribution took the form of a special dividend of 0.1520207 share of Twin Common Stock distributed with respect to each one share of the Company’s Class A Common Stock and Class B Common Stock outstanding as of the record date.

On January 29, 2025, the Company completed the Spin-Off. Following the completion of the Spin-Off, Twin Hospitality became an independent, publicly traded company, and the Twin Common Stock began trading on the Nasdaq Global Market under the ticker symbol “TWNP”.

In connection with the Spin-Off, on January 24, 2025, the Company entered into a Master Separation Agreement (the “Master Separation Agreement”) and Tax Matters Agreement (the “Tax Matters Agreement”) with Twin Hospitality, which provide a framework for Twin Hospitality’s on-going relationship with FAT Brands following the Spin-Off. Pursuant to the Master Separation Agreement, on January 24, 2025, the Company exchanged its initial founder’s shares in Twin Hospitality (representing 100% of the issued and outstanding capital stock of Twin Hospitality) for 47,298,271 shares of Twin Hospitality’s Class A Common Stock and 2,870,000 shares of Twin Hospitality’s Class B Common Stock. In connection with the Spin-Off, on January 29, 2025, FAT Brands distributed 2,659,412 shares of Twin Hospitality Class A Common Stock to the FAT Brands Common Stockholders and recognized a $5.2 million non-controlling interest on its condensed consolidated balance sheets and condensed consolidated statements of changes in stockholders' deficit.

For financial accounting purposes, Twin Hospitality is a "controlled company" and FAT Brands is the "controlling stockholder". FAT Brands’ present controlling ownership of voting power of the outstanding shares of Twin Hospitality's common stock is approximately 98.6% (comprised of 94.4% of Class A Common Stock and 100% of Class B Common Stock) with the remaining 5.6% of Class A Common Stock constituting a non-controlling interest. FAT Brands will continue to consolidate 100% of Twin Hospitality and its subsidiaries into its consolidated financial statements. The portion of the non-controlling interest is segregated and presented as a separate line item on our consolidated financial statements.

Table o f Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our results of operations, financial condition, and liquidity and capital resources should be read in conjunction with our financial statements and related notes for the thirteen weeks ended March 30, 2025 and March 31, 2024, as applicable. Certain statements made or incorporated by reference in this report and our other filings with the Securities and Exchange Commission, in our press releases, and in statements made by or with the approval of authorized personnel constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created thereby. Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among other things, our industry, management’s beliefs, and future events and financial trends affecting us. Words such as “anticipates”, “expects”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “may”, “will”, and variations of these words or similar expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Although we believe the expectations reflected in any forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These differences can arise as a result of the risks described in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K filed on February 28, 2025 and elsewhere in this report, as well as other factors that may affect our business, results of operations, or financial condition. Forward-looking statements in this report speak only as of the date hereof, and forward-looking statements in documents incorporated by reference speak only as of the date of those documents. Unless otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking statements contained in this report will, in fact, transpire.

Executive Overview

Business overview

FAT Brands Inc. is a leading multi-brand restaurant franchising company that develops, markets, and acquires primarily quick-service, fast casual, casual dining and polished casual restaurant concepts around the world. As of March 30, 2025, the Company owned eighteen restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli's, Twin Peaks, Smokey Bones, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses. As of March 30, 2025, the Company had approximately 2,300 locations open or under construction, of which approximately 92% were franchised.

Under our franchised business model, we generate revenue by charging franchisees an initial franchise fee as well as ongoing royalties. This asset light franchisor model provides the opportunity for strong profit margins and an attractive free cash flow profile while minimizing restaurant operating company risk, such as long-term real estate commitments or capital investments. Our scalable management platform enables us to add new stores and restaurant concepts to our portfolio with minimal incremental corporate overhead cost, while taking advantage of significant corporate overhead synergies. The acquisition of additional brands and restaurant concepts as well as expansion of our existing brands are key elements of our growth strategy.

Our revenues are derived primarily from two sales channels, franchised restaurants and company owned restaurants, which we operate as one segment. The primary sources of revenues are the sale of food and beverages at our company restaurants and the collection of royalties, franchise fees and advertising revenue from sales of food and beverages at our franchised restaurants.

Results of Operations

We operate on a 52-week or 53-week fiscal year ending on the last Sunday of the calendar year. In a 52-week fiscal year, each quarter contains 13 weeks of operations. In a 53-week fiscal year, each of the first, second and third quarters includes 13 weeks of operations and the fourth quarter includes 14 weeks of operations, which may cause our revenue, expenses and other results of operations to be higher due to an additional week of operations. The 2025 fiscal year is a 52-week year. The 2024 fiscal year was also a 52-week year.

Table o f Contents

Results of Operations of FAT Brands Inc.

The following table summarizes key components of our condensed consolidated results of operations for the thirteen weeks ended March 30, 2025 and March 31, 2024.

(dollars in thousands)


	Thirteen Weeks Ended
	March 30, 2025		March 31, 2024
Statements of Operations Data:

Revenue
Royalties	$	21,773	$	21,947
Restaurant sales	99,415		105,938
Advertising fees	9,764		9,796
Factory revenues	8,811		9,474
Franchise fees	1,190		1,481
Other revenue	1,066		3,331
Total revenue	142,019		151,967

Costs and expenses
General and administrative expense	33,043		30,005
Cost of restaurant and factory revenues	96,097		99,050
Depreciation and amortization	10,391		10,194
Refranchising (gain) loss	(22)		1,508

Advertising fees	11,076		12,592
Total costs and expenses	150,585		153,349

Loss from operations	(8,566)		(1,382)

Total other expense, net	(35,976)		(33,410)

Loss before income tax provision	(44,542)		(34,792)

Income tax provision	(1,769)		(3,524)

Net loss	(46,311)		(38,316)

Less: Net loss attributable to non-controlling interest	(342)		—

Net loss attributable to FAT Brands Inc.	$	(45,969)	$	(38,316)

For the Thirteen Weeks Ended March 30, 2025 and March 31, 2024:

Revenue - Revenue consists of royalties, franchise fees, advertising fees, restaurant sales, factory revenue and other revenue. Total revenue decreased $9.9 million, or 6.5%, in the first quarter of 2025 to $142.0 million compared to $152.0 million in the same period of 2024 primarily driven by a decrease in restaurant revenue resulting from certain planned restaurant closures for restaurant conversions.

Table o f Contents

Costs and expenses – Costs and expenses consist of general and administrative expense, cost of restaurant and factory revenues, depreciation and amortization, refranchising net loss and advertising fees. Costs and expenses decreased $2.8 million, or 1.8%, in the first quarter of 2025 to $150.6 million compared to the same period in the prior year, primarily due to decreased activity from Company-owned restaurants.

General and administrative expense increased $3.0 million, or 10.1%, in the first quarter of 2025 to $33.0 million compared to $30.0 million in the same period in the prior year, primarily due to the increased professional fees related to pending litigation.

Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and dough factory and decreased $3.0 million, or 3.0%, in the first quarter of 2025 to $96.1 million compared to $99.1 million in the same period in the prior year, primarily due to the decreased costs at company-owned restaurants and factory revenue.

Depreciation and amortization increased $0.2 million, or 1.9% in the first quarter of 2025 to $10.4 million compared to $10.2 million in the same period in the prior year, primarily due to the depreciation of new property and equipment at company-owned restaurant locations.

Refranchising net gain in the first quarter of 2025 of $22.0 thousand was comprised of restaurant operating gain, net of food sales. Refranchising net loss in the first quarter of 2024 of $1.5 million was comprised of $1.0 million of restaurant operating costs, net of food sales, and $0.5 million of loss on store sales or closures.

Advertising expenses decreased $1.5 million in the first quarter of 2025 to $11.1 million compared to $12.6 million in the same period in the prior year. These expenses vary in relation to advertising revenues.

Total other expense, net, for the first quarter of 2025 and 2024 was $36.0 million and $33.4 million, respectively, which is inclusive of interest expense of $35.9 million and $34.0 million, respectively. Total other expense, net, for the first quarter of 2024 also consisted of a $0.4 million net loss on the extinguishment of debt.

Income tax provision – The effective rate was 4.0% and 10.1% for the first quarter of 2025 and 2024, respectively. The difference in effective rate was primarily due to increases in the valuation allowance, nondeductible expenses and the impact of state income taxes.

Liquidity and Capital Resources

Liquidity is a measurement of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund business operations, acquisitions and expansion of franchised restaurant locations and for other general business purposes. Our primary sources of funds for liquidity during the thirteen weeks ended March 30, 2025 consisted of cash on hand at the beginning of the period and net proceeds of $25.0 million from the sale of secured debt as discussed in Note 8 of the accompanying condensed consolidated financial statements.

We are involved in a world-wide expansion of franchise locations, which will require significant liquidity, primarily from our franchisees. If real estate locations of sufficient quality cannot be located and either leased or purchased, the timing of restaurant openings may be delayed. Additionally, if we or our franchisees cannot obtain capital sufficient to fund this expansion, the extent or timing of restaurant openings may be reduced or delayed.

We also may acquire additional restaurant concepts. These acquisitions typically require capital investments in excess of our normal cash on hand. We would expect that future acquisitions will necessitate financing with additional debt or equity transactions. If we are unable to obtain acceptable financing, our ability to acquire additional restaurant concepts likely would be negatively impacted.

We have liabilities of $91.8 million relating to put options exercised by others on our Series B Cumulative Preferred Stock. The Company has contractual options pursuant to the put/call agreements to extend this repayment via incremental interest payments and there are capital market options that the Company may consider. We believe that we have sufficient liquidity to meet our liquidity needs and capital resource requirements for at least the next twelve months primarily through currently available cash and cash equivalents, cash flows from operations and access to the capital markets.

Table o f Contents

Comparison of Cash Flows

Our cash and restricted cash balance was $59.3 million as of March 30, 2025, compared to $67.4 million as of December 29, 2024.

The following table summarizes key components of our consolidated cash flows for the 13 weeks ended March 30, 2025 and March 31, 2024:

For the Thirteen Weeks Ended

(in millions)


	March 30, 2025		March 31, 2024
Net cash used in operating activities	$	(13.2)	$	(28.5)
Net cash used in investing activities	—		(8.0)
Net cash provided by financing activities	5.2		40.4
Net cash flows	$	(8.0)	$	3.9

Operating Activities

Net cash used in operating activities decreased $15.2 million in the thirteen weeks ended March 30, 2025 to $13.2 million compared to $28.4 million in the same period in fiscal 2024, primarily due to changes in working capital.

Investing Activities

Net cash used in investing activities of $24,000 in the thirteen weeks ended March 30, 2025, compared to net cash used in investing activities of $8.0 million in the same period of fiscal 2024, primarily driven by decrease in purchases of property and equipment in connection with company-owned restaurants in addition to the payment of the acquisition purchase price payable of $4.0 million during the quarter ended March 31, 2024.

Financing Activities

Net cash provided by financing activities was $5.2 million in the thirteen weeks ended March 30, 2025 compared to $40.4 million in the same period in fiscal 2024, and is primarily comprised of proceeds from borrowings, partially offset by repayments of borrowings and dividends paid on our Class A and Class B Common Stock and our Series B Cumulative Preferred Stock.

Dividends

During the thirteen weeks ended March 30, 2025, we declared and paid cash dividends totaling $2.2 million on our Series B Cumulative Preferred Stock. No dividends were declared or paid on our Class A common stock or Class B common stock. We have paused the payment of cash dividends on our Series B Cumulative Preferred Stock beginning with the monthly dividend period for May 2025, which dividends will accrue and cumulate on our Series B Cumulative Preferred Stock until paid at the customary rate of $2.0625 per year, or $2.50 per year if unpaid for 12 monthly periods. The declaration and payment of future dividends, as well as the amount thereof, are subject to the discretion of our Board of Directors. The amount and size of any future dividends will depend upon our future results of operations, financial condition, capital levels, cash requirements, contractual restrictions and other factors. There can be no assurance that we will declare and pay dividends in future periods.

Capital Expenditures

As of March 30, 2025, we do not have any material commitments for capital expenditures.

Table o f Contents

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by the application of our accounting policies. Our significant accounting policies are described in our Annual Report on Form 10-K for the year ended December 29, 2024 filed on February 28, 2025. Critical accounting estimates are those that require application of management’s most difficult, subjective or complex judgments, often as a result of matters that are inherently uncertain and may change in subsequent periods. While we apply our judgment based on assumptions believed to be reasonable under the circumstances, actual results could vary from these assumptions. It is possible that materially different amounts would be reported using different assumptions. Our critical accounting estimates are identified and described in our annual consolidated financial statements and the related notes included in our Annual Report on Form 10-K for our fiscal year ended December 29, 2024 filed on February 28, 2025.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Required.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our principal executive officers and principal financial officer, we carried out an evaluation of the effectiveness of our Disclosure Controls and Procedures (as defined in the Securities and Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, our principal executive officers and principal financial officer have concluded that our Disclosure Controls and Procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting in connection with an evaluation that occurred during the thirteen weeks ended March 30, 2025 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Inherent Limitations Over Internal Controls

We do not expect that our Disclosure Controls and Procedures will prevent all error and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedures are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of frauds, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a description of our material pending legal proceedings, please see Note 13, Commitments and Contingencies, to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, which Note is incorporated by reference in this Item 1.

Table o f Contents

ITEM 1A. RISK FACTORS

You should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” and elsewhere in our Annual Report on Form 10-K filed on February 28, 2025, which could materially affect our business, financial condition, cash flows or future results. There have been no material changes in such factors discussed in our Annual Report. The risks described in our Annual Report are not the only risks facing our company. 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 or future results.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the fiscal quarter ended March 30, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

Table o f Contents

ITEM 6. EXHIBITS

Incorporated By Reference to

Filed

Herewith

Description

Form

Exhibit

Filing Date

2.1

Master Separation and Distribution Agreement, dated as of January 24, 2025, by and between FAT Brands Inc. and Twin Hospitality Group Inc.

Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by Twin Hospitality Group Inc. on January 30, 2025.

10.1

Tax Matters Agreement, dated as of January 24, 2025, by and between FAT Brands Inc. and Twin Hospitality Group Inc.

Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Twin Hospitality Group Inc. on January 30, 2025.

10.2

Omnibus Amendment No. 1, dated March 28, 2025, by and among FAT Brands Inc., FAT Brands Fazoli’s Native I, LLC, the Guarantors named therein, UMB Bank, N.A., as trustee and securities intermediary, and each Noteholder named therein.

8-K

10.1

4/3/2025

31.1

C o-C hief Executive Officer and Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

C o-C hief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certifications of the Co-Chief Executive Officer s and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document

X (Furnished)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

X (Furnished)

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

X (Furnished)

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

X (Furnished)

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

X (Furnished)

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

X (Furnished)

SIGNATURE

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.


	FAT BRANDS INC.

May 9, 2025	By	/s/ Kenneth J. Kuick
		Kenneth J. Kuick
		Co-Chief Executive Officer and Chief Financial Officer
		(Principal Financial Officer and duly authorized signatory for the registrant)