[10-Q] Fat Brands, Inc Quarterly Earnings Report
Filing Impact
Filing Sentiment
Form Type
10-Q
Rhea-AI Filing Summary
FAT Brands Inc.
The company disclosed “substantial doubt” about its ability to continue as a going concern after classifying the aggregate principal amount of its Securitization Notes as current, lifting the current portion of long‑term debt to $1,263,470,000. Cash used in operations was $54,672,000 year‑to‑date; unrestricted cash was $2,052,000 at quarter‑end.
During the quarter, trustees delivered multiple Notices of Potential Rapid Amortization Events and Events of Default under several securitizations. The filings state noteholders may accelerate amounts due and potentially foreclose on collateral if remedies are exercised. As of November 7, 2025, shares outstanding were 16,668,520 Class A and 1,270,805 Class B.
Positive
- None.
Negative
- None.
Insights
Defaults and going‑concern warning highlight acute liquidity stress.
FAT Brands posted Q3 revenue of
The company reclassified the aggregate principal of its Securitization Notes to current, pushing the current portion of long‑term debt to
Key dependencies now center on negotiations with noteholder representatives and any consensual refinancing or restructuring. If acceleration occurs, the filing states the company may need to reorganize. Subsequent filings may provide details on any executed waivers, standstills, or amendments.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended September 28, 2025
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
Commission file number 001-38250
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices, including zip code)
(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 | ||||||||||||
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 | ||||||||
| x | Smaller reporting company | ||||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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 November 7, 2025, there were 16,668,520 shares of Class A common stock and 1,270,805 shares of Class B common stock outstanding.
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FAT BRANDS INC.
QUARTERLY REPORT ON FORM 10-Q
September 28, 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 | 31 | ||||||
Item 4. | Controls and Procedures | 31 | ||||||
PART II. | OTHER INFORMATION | 31 | ||||||
Item 1. | Legal Proceedings | 32 | ||||||
Item 1A. | Risk Factors | 32 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 | ||||||
Item 3. | Defaults Upon Senior Securities | 32 | ||||||
Item 4. | Mine Safety Disclosures | 36 | ||||||
Item 5. | Other Information | 36 | ||||||
Item 6. | Exhibits | 37 | ||||||
SIGNATURE | 37 | |||||||
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PART I — FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FAT BRANDS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| September 28, 2025 | December 29, 2024 | ||||||||||
| Audited | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash | $ | $ | |||||||||
| Restricted cash | |||||||||||
| Accounts receivable, net | |||||||||||
| Inventory | |||||||||||
| Assets classified as held-for-sale | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Non-current restricted cash | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Property and equipment, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders' Deficit | |||||||||||
| Liabilities | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses and other liabilities | |||||||||||
| Deferred income, current portion | |||||||||||
| Accrued advertising | |||||||||||
| Accrued interest payable | |||||||||||
| Dividend payable on preferred shares | |||||||||||
| Liabilities related to assets classified as held-for-sale | |||||||||||
| Operating lease liability, current portion | |||||||||||
| Redeemable preferred stock | |||||||||||
| Long-term debt, current portion | |||||||||||
| Total current liabilities | |||||||||||
| Deferred income, net of current portion | |||||||||||
| Deferred income tax liabilities, net | |||||||||||
| Operating lease liability, net of current portion | |||||||||||
| Long-term debt, net of current portion | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
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| Stockholders’ deficit | |||||||||||
Preferred stock and additional paid-in-capital, $ | |||||||||||
Class A common stock and Class B common stock and additional paid-in capital as of September 28, 2025: $ | ( | ( | |||||||||
| Accumulated deficit | ( | ( | |||||||||
| Stockholders’ deficit attributable to FAT Brands Inc. | ( | ( | |||||||||
| Non-controlling interest | ( | ||||||||||
| Total stockholders' deficit | ( | ( | |||||||||
| Total liabilities and stockholders' deficit | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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FAT BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Royalties | $ | $ | $ | $ | |||||||||||||||||||
| Restaurant sales | |||||||||||||||||||||||
| Advertising fees | |||||||||||||||||||||||
| Factory revenues | |||||||||||||||||||||||
| Franchise fees | |||||||||||||||||||||||
| Other revenue | |||||||||||||||||||||||
| Total revenue | |||||||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| General and administrative expense | |||||||||||||||||||||||
| Cost of restaurant and factory revenues | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Refranchising loss (gain) | ( | ||||||||||||||||||||||
| Advertising fees | |||||||||||||||||||||||
| Total costs and expenses | |||||||||||||||||||||||
| Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
| Other (expense) income, net | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Interest expense related to preferred shares | ( | ( | ( | ( | |||||||||||||||||||
| Net gain on extinguishment of debt | |||||||||||||||||||||||
| Other income (loss), net | ( | ( | |||||||||||||||||||||
| Total other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Loss before income tax provision | ( | ( | ( | ( | |||||||||||||||||||
| Income tax provision | |||||||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Less: Net loss attributable to non-controlling interest | |||||||||||||||||||||||
| Net loss attributable to FAT Brands Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Net loss attributable to FAT Brands Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Dividends on preferred shares | ( | ( | ( | ( | |||||||||||||||||||
| $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||
| Basic and diluted loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Basic and diluted weighted average shares outstanding | |||||||||||||||||||||||
| Cash dividends declared per common share | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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FAT BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
(in thousands)
For the Thirty-Nine Weeks Ended September 28, 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 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common and preferred stock | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of warrants | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividend of Twin Hospitality Group Inc. Class A common stock | — | — | — | — | — | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 28, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Thirty-Nine Weeks Ended September 29, 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 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common and preferred stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid on common stock | — | — | — | — | ( | ( | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 29, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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For the Thirteen Weeks Ended September 28, 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 June 29, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common and preferred stock | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of warrants | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 28, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
For the Thirteen Weeks Ended September 29, 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 June 30, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common and preferred stock | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends paid on common stock | — | — | — | — | ( | ( | — | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends on Series B preferred stock | — | — | — | — | — | — | — | — | ( | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at September 29, 2024 | $ | $ | $ | ( | $ | ( | $ | $ | $ | $ | ( | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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FAT BRANDS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Thirty-Nine Weeks Ended September 28, 2025 and September 29, 2024
| 2025 | 2024 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Deferred income taxes | |||||||||||
| Depreciation and amortization | |||||||||||
| Share-based compensation | |||||||||||
| Operating lease assets and liabilities | ( | ||||||||||
| Accretion of loan fees and interest | |||||||||||
| Impairment of right-of-use assets | |||||||||||
| Impairment of property and equipment | |||||||||||
| Net gain on extinguishment of debt | ( | ( | |||||||||
| Provision for bad debts | |||||||||||
| Loss on disposal of fixed assets | |||||||||||
| Change in: | |||||||||||
| Accounts receivable | |||||||||||
| Inventory | |||||||||||
| Other current and noncurrent assets | ( | ( | |||||||||
| Deferred income | ( | ( | |||||||||
| Accounts payable | |||||||||||
| Accrued expenses and other liabilities | |||||||||||
| Accrued advertising | ( | ||||||||||
| Accrued interest payable | |||||||||||
| Other current and noncurrent liabilities | ( | ||||||||||
| Total adjustments | |||||||||||
| Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Purchases of property and equipment | ( | ( | |||||||||
| Proceeds from sale of property and equipment | |||||||||||
| Payments received on notes receivable | |||||||||||
| Payment of acquisition purchase price payable | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from borrowings, net of issuance costs | |||||||||||
| Repayments of borrowings | ( | ( | |||||||||
| Proceeds from issuance of common and preferred shares | |||||||||||
| Dividends paid on common shares | ( | ||||||||||
| Dividends paid on preferred shares | ( | ( | |||||||||
| Net cash provided by financing activities | |||||||||||
| Net decrease in cash and restricted cash | ( | ( | |||||||||
| Cash and restricted cash at beginning of the period | |||||||||||
| Cash and restricted cash at end of the period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $ | $ | |||||||||
| Cash paid for income taxes | $ | $ | |||||||||
| Supplemental schedule of non-cash financing activity: | |||||||||||
| Dividend of Twin Hospitality Group Inc. Class A common stock | $ | $ | |||||||||
| Issuance of warrants | $ | $ | |||||||||
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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 September 28, 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 September 28, 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.
Going Concern
The Company recognized loss from operations of $41.5 million and $12.9 million during the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively. The Company had negative cash flow from operations of $54.7 million and $45.8 million during the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively. The Company has a history of net losses and an accumulated deficit of $611.8 million as of September 28, 2025. Additionally, the Company had negative working capital of $1,517.0 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 $2.1 million of unrestricted cash at September 28, 2025, $73.4 million of issued but not sold aggregate principal amount of fixed rate secured notes and $78.5 million aggregate principal amount of repurchased but not re-sold fixed rate secured notes (see Note 8).
As discussed in Note 8, as of the date of the filing of this Quarterly Report on Form 10-Q, the Company was in default under its Securitization Notes in addition to triggering a warm back-up manager trigger event and rapid amortization event in one or more of the securitizations. As a result, the noteholders could remove FAT Brands and/or Twin Hospitality, as applicable, as manager of the Securitization Notes, cause the outstanding principal and interest under any or all of the Securitization Notes to be due and payable on an accelerated basis, and could allow the noteholders to foreclose on the collateral securing the Securitization Notes. As a result, the Company has classified the aggregate principal amount of its Securitization Notes within current liabilities in its condensed consolidated balance sheet as of September 28, 2025.
The Company does not currently have amounts on hand to pay such principal and maturity amounts, and any such acceleration or foreclosure would materially and adversely affect the Company’s business, financial condition and liquidity, and could cause the Company to seek to reorganize through a bankruptcy proceeding.
These factors create substantial doubt about the Company’s ability to continue as a going concern for the twelve-month period subsequent to the date that these financial statements are issued. While the Company believes its plans to restructure its indebtedness or obtain relief from the noteholders can alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not within the Company’s control and cannot be assessed as being probable of occurring. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
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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.
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.
Recent Legislation Disclosure
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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.
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 September 28, 2025 and December 29, 2024 (in millions):
| September 28, 2025 | December 29, 2024 | ||||||||||
| Operating lease right-of-use assets | $ | $ | |||||||||
| Total | $ | $ | |||||||||
Operating lease liabilities related to the assets classified as held-for-sale in the amount of $0.4 million have been classified as current liabilities in the accompanying condensed consolidated balance sheets as of December 29, 2024.
The following table highlights the operating results of the Company's refranchising program (in millions):
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Restaurant costs and expenses, net of revenue | $ | $ | $ | $ | |||||||||||||||||||
| Loss on store sales or closures | |||||||||||||||||||||||
| Refranchising loss | $ | $ | $ | $ | |||||||||||||||||||
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NOTE 4. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consists of the following (in millions):
| September 28, 2025 | December 29, 2024 | ||||||||||
| Real estate | $ | $ | |||||||||
| Equipment | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Depreciation expense during the thirteen weeks ended September 28, 2025 and September 29, 2024 was $3.5 million and $5.9 million, respectively. Depreciation expense during the thirty-nine weeks ended September 28, 2025 and September 29, 2024 was $13.5 million and $17.5 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 thirty-nine weeks ended September 28, 2025 and September 29, 2024 was $0.1 million and $0.3 million, respectively. Loss on disposals during the thirteen weeks ended September 28, 2025 and September 29, 2024 was $0.04 million and $0.1 million, 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 | $ | $ | $ | ||||||||||||||
| Amortization | ( | — | — | ||||||||||||||
| September 28, 2025 | $ | $ | $ | ||||||||||||||
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Gross Carrying Value and Accumulated Amortization of Other Intangible Assets (in millions)
| September 28, 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 | $ | $ | ( | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
| Customer relationships | ( | ( | ||||||||||||||||||||||||||||||||||||
| Other | ( | ( | ||||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||
| Non-amortizing intangible assets | ||||||||||||||||||||||||||||||||||||||
| Trademarks | ||||||||||||||||||||||||||||||||||||||
| Total amortizing and non-amortizing intangible assets, net | $ | $ | ||||||||||||||||||||||||||||||||||||
Amortization expense for the thirteen weeks ended September 28, 2025 and September 29, 2024 was $3.9 million and $4.3 million, respectively. Amortization expense for the thirty-nine weeks ended September 28, 2025 and September 29, 2024 was $11.7 million and $12.1 million, respectively.
The expected future amortization of definite-life intangible assets by fiscal year (in millions):
| Fiscal Year: | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total | $ | ||||
NOTE 6. INCOME TAXES
The following table presents the Company’s provision for income taxes (in millions):
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | |||||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | |||||||||||||||||||||||
| Provision for income taxes | $ | $ | $ | $ | ||||||||||||||||||||||
| Effective tax rate | ( | % | ( | % | ( | % | ( | % | ||||||||||||||||||
The difference between the statutory tax rate of 21 1.9 )% and (2.1 )% in the thirteen and thirty-nine weeks ended September 28, 2025, respectively, 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 0.3 )% and (4.8 )% in the thirteen and thirty-nine weeks ended September 29, 2024, respectively, was primarily due to increases in the valuation allowance, nondeductible expenses and the impact of state income taxes.
On July 4, 2025, the United States Congress passed budget reconciliation bill H.R. 1 referred to as the One Big Beautiful Bill Act (“OBBBA”). The OBBBA contains several changes to corporate taxation including modifications to capitalization of
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research and development expenses, limitations on deductions for interest expense and accelerated fixed asset depreciation. The Company is still in the process of evaluating the OBBBA and an estimate of the financial impact cannot be made at this time.
NOTE 7. LEASES
The Company recognized lease expense of $8.0 23.3 million and $24.0 million for the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively.
Operating lease right-of-use assets and operating lease liabilities relating to the operating leases are as follows (in millions):
| September 28, 2025 | December 29, 2024 | ||||||||||
| Operating lease right-of-use assets | $ | $ | |||||||||
| Right-of-use assets classified as held-for-sale | |||||||||||
| $ | $ | ||||||||||
| Operating lease liabilities | $ | $ | |||||||||
| Lease liabilities related to assets held-for-sale | |||||||||||
| Total operating lease liabilities | $ | $ | |||||||||
During the thirteen and thirty-nine weeks ended September 28, 2025, we recognized a $6.9
The contractual future maturities of the Company’s operating lease liabilities as of September 28, 2025, including anticipated lease extensions, are as follows (in millions):
| Fiscal year: | |||||
| Remainder of 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Thereafter | |||||
| Total lease payments | $ | ||||
| Less: imputed interest | ( | ||||
| Total | $ | ||||
The current portion of the operating lease liability as of September 28, 2025 was $15.4 million.
Supplemental cash flow information for the thirty-nine weeks ended September 28, 2025 related to leases was as follows (in millions):
| Thirty-Nine Weeks Ended | |||||||||||
| September 28, 2025 | September 29, 2024 | ||||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
| Operating lease right-of-use assets obtained in exchange for new lease obligations: | |||||||||||
| Operating lease liabilities | $ | $ | |||||||||
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NOTE 8. DEBT
Long-term debt consisted of the following (in millions):
| September 28, 2025 | December 29, 2024 | ||||||||||||||||||||||||||||||||||
| Final Maturity | Anticipated Repayment Date | Rate | Face Value | Book Value | Book Value | ||||||||||||||||||||||||||||||
| Senior Debt | |||||||||||||||||||||||||||||||||||
| FB Royalty Securitization | 4/25/2051 | 7/25/2026 | % | $ | $ | $ | |||||||||||||||||||||||||||||
| GFG Royalty Securitization | 7/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
| Twin Peaks Securitization | 10/26/2054 | 10/25/2027 | % | ||||||||||||||||||||||||||||||||
| Fazoli's/Native Securitization | 7/25/2051 | 7/27/2026 | % | ||||||||||||||||||||||||||||||||
| FB Resid Securitization | 7/25/2027 | % | |||||||||||||||||||||||||||||||||
| Senior Subordinated Debt | |||||||||||||||||||||||||||||||||||
| FB Royalty Securitization | 4/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
| GFG Royalty Securitization | 7/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
| Twin Peaks Securitization | 10/26/2054 | 10/25/2027 | % | ||||||||||||||||||||||||||||||||
| Fazoli's/Native Securitization | 7/25/2051 | 7/27/2026 | % | ||||||||||||||||||||||||||||||||
| FB Resid Securitization | 7/25/2027 | % | |||||||||||||||||||||||||||||||||
| Subordinated Debt | |||||||||||||||||||||||||||||||||||
| FB Royalty Securitization | 4/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
| GFG Royalty Securitization | 7/25/2051 | 7/25/2026 | % | ||||||||||||||||||||||||||||||||
| Twin Peaks Securitization | 10/26/2054 | 10/25/2027 | % | ||||||||||||||||||||||||||||||||
| Total Securitized Debt | |||||||||||||||||||||||||||||||||||
| Elevation Note | 7/19/2026 | N/A | % | ||||||||||||||||||||||||||||||||
| Twin Peaks Equipment Notes | 5/5/2027 to 7/31/2028 | N/A | |||||||||||||||||||||||||||||||||
| Twin Peaks Construction Loan | 10/1/2025 | N/A | % | ||||||||||||||||||||||||||||||||
| Promissory Note I | 7/25/2026 | N/A | |||||||||||||||||||||||||||||||||
| Promissory Note II | 7/25/2026 | N/A | |||||||||||||||||||||||||||||||||
| Promissory Note III | 6/30/2026 | N/A | % | ||||||||||||||||||||||||||||||||
| Total Debt | $ | ||||||||||||||||||||||||||||||||||
| Current portion of long-term debt | ( | ( | |||||||||||||||||||||||||||||||||
| Long-term Debt | $ | $ | |||||||||||||||||||||||||||||||||
Securitization Notes
Our long-term debt includes an aggregate of $1.3 billion in aggregate principal amount in fixed rate secured notes (collectively, the “Securitization Notes”) issued by five special purpose financing subsidiaries of the Company (the “Securitization Issuers”). During the fiscal quarter ended September 28, 2025, we received notices with respect to potential and actual Rapid Amortization Events, Manager Termination Events and Events of Default as described below. In addition to the Rapid Amortization Events, Manager Termination Events and Events of Default described below, due to liquidity constraints, the Company utilized certain cash receipts to support operation of the business during the fiscal quarter ended September 28, 2025, which would likely give rise to Events of Default and/or Manager Termination Events. These include commingling cash receipts owed to the Securitization Issuers and cash of non-securitization entities and causing amounts owed to the Securitization Issuers to be deposited into accounts not held by the Securitization Issuers or the Trustee, as required by the related GFG Indenture, FB Royalty Indenture, Fazoli’s Indenture, FB Resid Indenture and Twin Indenture. As a result of the foregoing matters, subject to notice from the applicable parties under the applicable indentures being provided (as further described below), FAT Brands and Twin Hospitality may be removed as Manager of the applicable Securitization Issuers, the
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Securitization Notes could be subject to acceleration and the assets of the Securitization Issuers subject to foreclosure at any time. As a result, the Company has classified the aggregate principal amount of its Securitization Notes within current liabilities in its condensed consolidated balance sheet as of September 28, 2025.
The Company is having ongoing discussions with the representatives of the noteholders regarding one or more potential transactions involving a refinancing, restructuring or similar transaction. The Company cannot provide any assurances that it will reach such an agreement on terms that are satisfactory to it and the noteholders promptly, or at all. If the Company is not able to agree upon the terms of a refinancing, restructuring or similar transaction with the noteholders, the noteholders could remove FAT Brands and/or Twin Hospitality, as applicable, as manager of the Securitization Issuers, cause the outstanding principal and interest under any or all of the Securitization Notes to be due and payable on an accelerated basis, and foreclose on the collateral securing the Securitization Notes. We do not currently have amounts on hand to pay such principal and maturity amounts, and any such acceleration or foreclosure would materially and adversely affect our business, financial condition, and liquidity, and could cause us to seek to reorganize through a bankruptcy proceeding.
As further described below, to date, the required parties have not provided such notices. Capitalized terms used in the following discussion are defined in the Base Indenture for the applicable Securitization Issuer, all of which are filed as exhibits to our most recent Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed on February 28, 2025.
Notice from Noteholders and Discussions
On August 22, 2025, Twin Royalty received a notice from counsel (the “August Letter”) on behalf of a group of noteholders holding a majority of the outstanding principal balance of the Twin Securitization Notes (the “Twin Majority Noteholders”) claiming that the payment of customary bonuses to Twin Hospitality’s management, in the aggregate amount of approximately $2.2 million for their performance during fiscal year 2024, was paid from funds that should have been deposited into a collection account under the Twin Indenture. The Twin Majority Noteholders claim in the August Letter that such payment is a breach of certain provisions of the applicable Management Agreement, which they claim triggers a “Manager Termination Event” that gives the holders of the Twin Securitization Notes the right to remove Twin Hospitality as the manager of Twin Royalty.
The notice from the Twin Majority Noteholders further claims that (i) a Level I Qualified Equity Offering Trigger Event occurred in April 2025 and July 2025, and (ii) the P&I DSCR was less than 1.35 x for the quarterly fiscal period ended June 2025, resulting in the commencement of a Cash Flow Sweeping Event, pursuant to which 50 % and 100 % of collections, respectively, were required to be used to amortize the Twin Securitization Notes. According to the Twin Majority Noteholders, the failure to pay principal under the Cash Flow Sweeping Event constituted an Event of Default pursuant to Section 9.2(b) of the Base Indenture. The notice from the Twin Majority Noteholders also claims that the failure to deliver a timely notice of the above events to the Trustee under the Twin Indenture constitutes a separate Event of Default under the Twin Indenture.
In addition, the August Letter was also on behalf of a group of noteholders holding a majority of the outstanding principal balance of the notes issued under each of the GFG Indenture, FB Royalty Indenture and Fazoli’s Indenture (collectively, the “FAT Brands Majority Noteholders”), as applicable, alleging that collections belonging to GFG Royalty, FB Royalty and Fazoli’s Royalty, as applicable, have been commingled with the funds of non-securitization entities at an account sitting outside of the securitizations. The FAT Brands Majority Noteholders allege such actions result in a covenant violation that would constitute a Default pursuant to Section 9.2(c) of the GFG Indenture, FB Royalty Indenture and Fazoli’s Indenture, as applicable, which provides that failure to comply in any material respect with Section 8.24 of the GFG Indenture, FB Royalty Indenture and Fazoli’s Indenture, as applicable, constitutes an Event of Default if such failure continues for a period of ten business days.
Notices from Trustee / Other Defaults
FAT Brands GFG Royalty I, LLC (“GFG Royalty”)
On August 11, 2025 and October 23, 2025, UMB Bank, National Association, as trustee (the “Trustee”), provided a “Notice of Potential Rapid Amortization Event” with respect to the Base Indenture, dated July 22, 2021 (the “GFG Indenture”), between GFG Royalty and the Trustee, and the Series 2022-1 Supplement to Base Indenture, dated December 15, 2022 (the “GFG Indenture Supplement”), between GFG Royalty and the Trustee. Such Notice stated that, pursuant to Section 5.9(b)(iv) of the GFG Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the GFG Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The
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Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Dates under the GFG Indenture occurring on September 5, 2025 and October 10, 2025 and, therefore, a Potential Rapid Amortization Event has occurred and is continuing under the GFG Indenture.
To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a notice declaring that a Manager Termination Event has occurred under the GFG Indenture or a Termination Notice seeking to remove FAT Brands as Manager. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and FAT Brands could be removed as manager of GFG Royalty at any time.
On October 31, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the GFG Indenture, stating that, due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the GFG Indenture and under the GFG Indenture Supplement. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the GFG Notes and exercise remedies (including foreclosure) with respect to the assets of GFG Royalty and any Guarantors.
FAT Brands Royalty I, LLC (“FB Royalty”)
On August 11, 2025 and October 23, 2025, the Trustee provided a “Notice of Potential Rapid Amortization Event” with respect to the Amended and Restated Base Indenture, dated April 26, 2021 (the “FB Royalty Indenture”), between FB Royalty and the Trustee, and the Series 2022-1 Supplement to Base Indenture, dated June 30, 2022 (the “FB Royalty Indenture Supplement”), between FB Royalty and the Trustee. Such Notice stated that, pursuant to Section 5.9(b)(iv) of the FB Royalty Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the FB Royalty Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Dates under the FB Royalty Indenture occurring on September 5, 2025 and October 10, 2025, and therefore a Potential Rapid Amortization Event has occurred and is continuing under the FB Royalty Indenture.
To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a notice declaring that a Manager Termination Event has occurred under the FB Royalty Indenture or a Termination Notice seeking to remove FAT Brands as Manager. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and FAT Brands could be removed as Manager of FB Royalty at any time.
On October 31, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the FB Royalty Indenture, stating that due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the FB Royalty Indenture and under the FB Royalty Indenture Supplement. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the FB Notes and exercise remedies (including foreclosure) with respect to the assets of FB Royalty and any Guarantors.
FAT Brands Fazoli's Native I, LLC (“Fazoli’s Royalty”)
On August 11, 2025 and October 23, 2025, the Trustee provided a “Notice of Potential Rapid Amortization Event” with respect to the Base Indenture, dated December 15, 2021 (the “Fazoli’s Indenture”), between Fazoli’s Royalty and the Trustee. Such Notice stated that pursuant to Section 5.9(b)(iv) of the Fazoli’s Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the Fazoli’s Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a
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written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Dates under the Fazoli’s Indenture occurring on September 5, 2025 and October 10, 2025, and therefore a Potential Rapid Amortization Event has occurred and is continuing under the Fazoli’s Indenture.
On October 27, 2025, the Manager notified the Trustee that (i) a Manager Termination Event occurred under the Fazoli’s Indenture because the Interest-Only DSCR under the Fazoli’s Indenture as calculated as of the most recent Quarterly Calculation Date was 1.16 x, which is less than the threshold of 1.20 x provided in Section 6.1(a)(ii) of the Management Agreement for Fazoli’s Royalty, and (ii) a Hot Back-up Management Trigger Event, as defined in the Back-up Management Agreement for Fazoli’s Royalty, occurred as a result of such Manager Termination Event. To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a Termination Notice seeking to remove FAT Brands as Manager. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and FAT Brands could be removed as Manager of Fazoli’s Royalty at any time.
On October 31, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the Fazoli’s Indenture, stating that due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the Fazoli’s Indenture. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the Fazoli’s Notes and exercise remedies (including foreclosure) with respect to the assets of Fazoli’s Royalty and any Guarantors.
FB Resid Holdings I, LLC (“FB Resid”)
On November 3, 2025, the Trustee provided a “Notice of Event of Default” with respect to the Base Indenture, dated July 10, 2023 (the “FB Resid Indenture”), between FB Resid and the Trustee, and the Series 2024-1 Supplement to the FB Resid Indenture, dated November 21, 2024, between FB Resid and the Trustee. Such Notice stated that pursuant to Section 5.9(c) of the FB Resid Indenture, the Manager is obligated to deposit funds in the Collection Account under the FB Resid Indenture, but the Trustee has not received sufficient funds in the Collection Account for the most recent quarter, and the Trustee is unable to distribute funds pursuant to the terms of Section 5.11 of the FB Resid Indenture. As a result, an Event of Default has occurred pursuant to Section 9.2 of the FB Resid Indenture. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the FB Resid notes and exercise remedies (including foreclosure) with respect to the assets of FB Resid and any Guarantors.
Twin Hospitality I, LLC (formerly FAT Brands Twin Peaks I, LLC) (“Twin Royalty”)
Under the Base Indenture, dated November 21, 2024 (the “Twin Indenture”), between Twin Royalty and the Trustee, upon each Qualified Equity Offering, which is defined as a public or private offering of common equity securities for cash by Twin Royalty’s parent company, Twin Hospitality Group Inc. (“Twin Hospitality”), Twin Hospitality is required, subject to certain limited exceptions, to use 75 % of the net proceeds from such offerings towards the repayment of the notes issued under the Twin Indenture (“Twin Securitization Notes”), until an aggregate of $75.0 million has been repaid in that manner. If the amount of net proceeds from Qualified Equity Offerings used for repayment of the Twin Securitization Notes is not at least $25.0 75.0 million on or prior to January 26, 2026, then under any such circumstance, a Cash Flow Sweeping Event would occur, whereupon certain excess cash flows from Twin Royalty’s operations are required to be used to make additional principal payments, on a pro rata basis, on the three most senior classes of the Twin Securitization Notes. Twin Hospitality did not satisfy the requirement to raise a Qualified Equity Offering and repay the Twin Securitization Notes in an amount equal to at least $25.0
Separately, on October 23, 2025, the Trustee provided a “Notice of Potential Rapid Amortization Event” with respect to the Twin Indenture. Such Notice stated that pursuant to Section 5.9(b)(iv) of the Twin Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the Twin Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in
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the Collection Account for the Monthly Allocation Date under the Twin Indenture occurring on October 10, 2025, and therefore a Potential Rapid Amortization Event has occurred and is continuing under the Twin Indenture.
To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a notice declaring that a Manager Termination Event has occurred under the Twin Indenture or a Termination Notice seeking to remove Twin Hospitality as Manager of Twin Royalty. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and Twin Hospitality could be removed as Manager of Twin Royalty at any time.
On October 30, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the Twin Indenture, stating that due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the Twin Indenture. As a result of such Event of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the Twin Notes and exercise remedies (including foreclosure) with respect to the assets of Twin Royalty and any Guarantors.
Retained Notes
During the thirty-nine weeks ended September 28, 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 thirty-nine weeks ended September 28, 2025, cash proceeds from the sale of Retained Notes and cash used to repurchase Retained Notes was $31.7 million and $26.0 million including accrued interest, respectively. As of September 28, 2025, the Company held $151.9 million of Retained Notes which have been eliminated in consolidation.
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. The construction loan was paid in full during the first quarter of 2025.
Promissory Note I
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 September 28, 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.
Promissory Note II
During 2025, 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 $6.1 million as of September 28, 2025. The promissory note has a maturity date of July 25, 2026 and bears interest at fixed rates between 17.00 % and 18.65 % per annum.
Promissory Note III
During 2025, 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 $9.5 million as of September 28, 2025. The promissory note has a maturity date of June 30, 2026 and bears interest at 13.50 % per annum.
Scheduled Principal Maturities
Scheduled principal maturities of long-term debt and redemptions of redeemable preferred stock (Note 9) for the next five fiscal years are as follows (in millions):
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| Fiscal Year | Long-Term Debt | Redeemable Preferred Stock (Note 9) | ||||||||||||
| Remainder of 2025 | $ | $ | ||||||||||||
| 2026 | ||||||||||||||
| 2027 | ||||||||||||||
| 2028 | ||||||||||||||
| 2029 | ||||||||||||||
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 September 28, 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 September 28, 2025 and September 29, 2024, the Company paid $0.3 million and $0.9 million of interest, respectively. During the thirty-nine weeks ended September 28, 2025 and September 29, 2024, the Company paid $0.8 million and $2.5 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 September 28, 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 September 28, 2025 and September 29, 2024 in the amount of $0.6 1.8
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NOTE 10. SHARE-BASED COMPENSATION
Fat Brands Inc.
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 September 28, 2025, there were 3,060,637 shares of stock options outstanding with a weighted average exercise price of $6.05 .
During the thirteen and thirty-nine weeks ended September 28, 2025, the Company granted a total of 0 and 257,544 stock options under the Plan with a grant date fair value of $0.1 million. During the thirteen and thirty-nine weeks ended September 29, 2024, the Company granted a total of 0 and 326,360 stock options under the Plan with a grant date fair value of $0.9 million. The related compensation expense will be recognized over the vesting period.
The Company recognized share-based compensation expense in the amount of $0.2 million and $0.5 million during the thirteen weeks ended September 28, 2025 and September 29, 2024, respectively. The Company recognized share-based compensation expense in the amount of $0.8 million and $2.0 million during the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively. As of September 28, 2025, there remains $0.5 million of related share-based compensation expense relating to non-vested grants, which will be recognized over the remaining vesting period of approximately 2.6 years, subject to future forfeitures.
Twin Hospitality Group Inc.
Twin Hospitality Group Inc. recognized share-based compensation expense in the amount of $3.4 million and $15.9 million during the thirteen and thirty-nine weeks ended September 28, 2025, respectively, and recorded within general and administrative expense on the accompanying condensed consolidated statements of operations and share-based compensation on the accompanying condensed consolidated statements of changes in stockholders' equity.
NOTE 11. WARRANTS
The Company’s warrant activity for the thirty-nine weeks ended September 28, 2025 was as follows:
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | |||||||||||||||
| Warrants exercisable at December 29, 2024 | $ | ||||||||||||||||
| Exercised | ( | $ | |||||||||||||||
| Warrants outstanding and exercisable at September 28, 2025 | $ | ||||||||||||||||
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During the thirty-nine weeks ended September 28, 2025, 626,261 warrants were exercised in exchange for 626,261 shares of common stock with net proceeds to the Company of $0.5 million.
On July 16, 2025, the common stock warrants (FATBW) issued by FAT Brands Inc. (the “Company”) on July 16, 2020 (the “Warrants”) expired by their terms and ceased to trade at 4:00 PM Eastern Time. Upon their expiration, the Warrants, which publicly traded under the symbol “FATBW," were removed from listing on the Nasdaq Stock Market LLC. The Company’s other listed securities (FAT, FATBB and FATBP) continue to trade on Nasdaq.
The Company’s transfer agent has established a two trading day broker protect period for any trades of the Warrants that occurred through the expiration date. In addition, any Warrants which were unexercised at the time of expiration will be automatically exercised via cashless exercise upon the termination of the underlying Warrant Agency Agreement on the 90-day anniversary of the expiration of the Warrants, or October 14, 2025.
NOTE 12. COMMON STOCK
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. The indictment included charges against Mr. Wiederhorn, the Company’s former CFO, Rebecca Hershinger, and the Company’s former tax advisor. On July 29, 2025, the DOJ moved to dismiss the indictment against all defendants in the case without prejudice, and on August 7, 2025 the court ordered the indictment to be dismissed against all defendants.
In May 2024, 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 intends to vigorously defend itself against the SEC complaint.
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. In January 2025, the principal parties to this matter participated in a mediation in Wilmington, DE and
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agreed in principle to settle this matter and the Harris II litigation. An Amended Stipulation of Settlement was signed by the parties on September 11, 2025, and a hearing at the Delaware Court of Chancery to consider and approve the settlement is scheduled for December 17, 2025. Assuming that the settlement terms are approved by the Court, as a result of the settlement, all of the claims asserted in this matter will be dismissed.
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. An Amended Stipulation of Settlement was signed by the parties on September 11, 2025, and a hearing at the Delaware Court of Chancery to consider and approve the settlement is scheduled for December 17, 2025. Assuming that the settlement terms are approved by the Court, as a result of the settlement, all of the claims asserted in this matter will be dismissed.
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. On June 2, 2025, defendants Andrew Wiederhorn, Kenneth Kuick, Robert Rosen, Mason Wiederhorn, Taylor Wiederhorn, Thayer Wiederhorn, and Fog Cutter Holdings, LLC filed their answer to plaintiff’s complaint. The court subsequently granted defendants Squire Junger, James Neuhauser, Edward Rensi, John Allen, Tyler Child, Lynne Collier, Mark Elenowitz, James Ellis, Peter Feinstein, Matthew Green, John Metz, Kenneth Anderson, and Amy Forrestal an extension of time to answer, move, or otherwise respond to the complaint to December 1, 2025. 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. On February 21, 2025, the court granted plaintiff’s motion for appointment as lead plaintiff and approved The Rosen Law Firm, P.A. as lead counsel. Plaintiff filed his First Amended Complaint against defendants on April 6, 2025, which defendants moved to dismiss on June 6, 2025. On October 15, 2025, the court granted the defendants’ motion to dismiss the case, with leave to amend on or before November 7, 2025. On November 7, 2025, the plaintiff in this case filed a Second Amended Complaint against the defendants, alleging substantially the same claims and adding new allegations arising from the same subject matter of the original complaint. We intend to vigorously defend against the amended complaint.
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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 September 28, 2025, the Company had accrued an aggregate of $5.1 million related to 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 | Thirty-Nine Weeks Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Other countries | |||||||||||||||||||||||
| Total revenue | $ | $ | $ | $ | |||||||||||||||||||
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 thirty-nine weeks ended September 28, 2025 and September 29, 2024, no individual franchisee accounted for more than 10% of the Company’s revenue.
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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 our Chief Executive Officer. Our CODM regularly reviews and uses 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 CODM does 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.
On June 4, 2025, (the "Effective Date") the Company entered into an Exchange Agreement with Twin Hospitality pursuant to which the Company exchanged assets due to it by Twin Hospitality for additional shares of Twin Common Stock at market value. In the transaction, the Company cancelled assets recorded as “due from affiliates” in its consolidated financial statements with a principal balance of $31.2 million in exchange for 7,139,667 shares of Twin Common Stock at $4.37 per share, which was the greater of (i) the Nasdaq Official Closing Price of the Common Stock on the date immediately preceding the Effective Date and (ii) the average Nasdaq Official Closing Price of the Common Stock for the five trading days immediately preceding the Effective Date.
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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 and thirty-nine weeks ended September 28, 2025 and September 29, 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 September 28, 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 September 28, 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.
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Results of Operations of FAT Brands Inc.
The following table summarizes key components of our condensed consolidated results of operations for the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024.
(dollars in thousands)
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||||||
| September 28, 2025 | September 29, 2024 | September 28, 2025 | September 29, 2024 | ||||||||||||||||||||
| Statements of Operations Data: | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Royalties | $ | 21,582 | $ | 22,353 | $ | 65,524 | $ | 67,618 | |||||||||||||||
| Restaurant sales | 96,643 | 99,238 | 298,446 | 312,587 | |||||||||||||||||||
| Advertising fees | 9,143 | 9,708 | 28,573 | 29,569 | |||||||||||||||||||
| Factory revenues | 9,649 | 9,490 | 28,711 | 28,599 | |||||||||||||||||||
| Franchise fees | 1,503 | 2,576 | 3,817 | 5,170 | |||||||||||||||||||
| Other revenue | 1,489 | — | 3,792 | 3,829 | |||||||||||||||||||
| Total revenue | 140,009 | 143,365 | 428,863 | 447,372 | |||||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||
| General and administrative expense | 42,665 | 34,481 | 120,125 | 94,044 | |||||||||||||||||||
| Cost of restaurant and factory revenues | 94,613 | 96,792 | 288,760 | 295,955 | |||||||||||||||||||
| Depreciation and amortization | 7,909 | 10,736 | 26,682 | 31,176 | |||||||||||||||||||
| Refranchising loss (gain) | 24 | 157 | (7) | 1,840 | |||||||||||||||||||
| Advertising fees | 12,164 | 10,032 | 34,787 | 37,275 | |||||||||||||||||||
| Total costs and expenses | 157,375 | 152,198 | 470,347 | 460,290 | |||||||||||||||||||
| Loss from operations | (17,366) | (8,833) | (41,484) | (12,918) | |||||||||||||||||||
| Total other expense, net | (40,989) | (35,779) | (116,325) | (103,944) | |||||||||||||||||||
| Loss before income tax provision | (58,355) | (44,612) | (157,809) | (116,862) | |||||||||||||||||||
| Income tax provision | 1,100 | 143 | 3,326 | 5,568 | |||||||||||||||||||
| Net loss | (59,455) | (44,755) | (161,135) | (122,430) | |||||||||||||||||||
| Less: Net loss attributable to non-controlling interest | 1,236 | — | 2,759 | — | |||||||||||||||||||
| Net loss attributable to FAT Brands Inc. | $ | (58,219) | $ | (44,755) | $ | (158,376) | $ | (122,430) | |||||||||||||||
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For the thirty-nine weeks ended September 28, 2025 and September 29, 2024:
Revenue
Revenue consists of royalties, franchise fees, advertising fees, restaurant sales, factory revenue and other revenue. Total revenue decreased $18.5 million, or 4.1%, in the first three quarters of 2025 to $428.9 million compared to $447.4 million in the same period of 2024 primarily driven by a decrease in restaurant revenue resulting from the closure of 11 underperforming Smokey Bones locations, the temporary closure of two Smokey Bones locations for conversion into a Twin Peaks lodge and lower same-store sales, partially offset by the opening of new Twin Peaks lodges.
Costs and expenses
General and administrative expense increased $26.1 million, or 27.7%, in the first three quarters of 2025 to $120.1 million compared to $94.0 million in the same period in the prior year, primarily due to increased share-based compensation related to Twin Hospitality Group Inc., $6.9 million in Smokey Bones store closure costs, a $1.4 million non-cash impairment of fixed assets related to the closure of underperforming Smokey Bones locations and the recognition of $3.4 million in Employee Retention Credits during the prior year period.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and dough factory and decreased $7.2 million, or 2.4%, in the first three quarters of 2025 to $288.8 million compared to $296.0 million in the same period in the prior year, primarily due to the closure of underperforming Smokey Bones locations, the temporary closure of two Smokey Bones locations for conversion into Twin Peaks lodges and lower same-store sales.
Depreciation and amortization decreased $4.5 million, or 14.4% in the first three quarters of 2025 to $26.7 million compared to $31.2 million in the same period in the prior year, primarily due to the planned closure of certain Company owned restaurant locations.
Advertising expenses decreased $2.5 million in the first three quarters of 2025 to $34.8 million compared to $37.3 million in the same period in the prior year. These expenses vary in relation to advertising revenues.
Total other expense, net, for the first three quarters of 2025 and 2024 was $116.3 million and $103.9 million, respectively, which is inclusive of interest expense of $116.7 million and $103.6 million. Total other expense, net, for the first three quarters of 2024 also consisted of a $0.4 million net gain on extinguishment of debt.
Income tax provision – The effective rate was (2.1)% and (4.8)% for the first three quarters 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.
For the Thirteen Weeks Ended September 28, 2025 and September 29, 2024:
Revenue
Revenue consists of royalties, franchise fees, advertising fees, restaurant sales, factory revenue and other revenue. Total revenue decreased $3.4 million, or 2.3%, in the third quarter of 2025 to $140.0 million compared to $143.4 million in the same period of 2024 primarily driven by a decrease in restaurant revenue resulting from the closure of 11 underperforming Smokey Bones locations, the temporary closure of two Smokey Bones locations for conversion into a Twin Peaks lodge and lower same-store sales, partially offset by the opening of new Twin Peaks lodges.
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Costs and expenses
General and administrative expense increased $8.2 million, or 23.7%, in the third quarter of 2025 to $42.7 million compared to $34.5 million in the same period in the prior year, primarily due to $6.9 million in Smokey Bones store closure costs and a $1.4 million non-cash impairment of fixed assets related to the closure of underperforming Smokey Bones locations.
Cost of restaurant and factory revenues was related to the operations of the company-owned restaurant locations and dough factory and decreased $2.2 million, or 2.3%, in the third quarter of 2025 to $94.6 million compared to $96.8 million in the same period in the prior year, primarily due to the closure of underperforming Smokey Bones locations, the temporary closure of two Smokey Bones locations for conversion into Twin Peaks lodges and lower same-store sales.
Depreciation and amortization decreased $2.8 million, or 26.3% in the third quarter of 2025 to $7.9 million compared to $10.7 million in the same period in the prior year, primarily due to the planned closure of certain Company owned restaurant locations.
Advertising expenses increased $2.1 million in the third quarter of 2025 to $12.2 million compared to $10.0 million in the same period in the prior year. These expenses vary in relation to advertising revenues.
Total other expense, net, for the third quarter of 2025 and 2024 was $41.0 million and $35.8 million, respectively, which is inclusive of interest expense of $41.5 million and $35.5 million, respectively.
Income tax provision – The effective rate was (1.9)% and (0.3)% for the third 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 thirty-nine weeks ended September 28, 2025 consisted of cash on hand at the beginning of the period and net proceeds of $31.7 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.
The Company recognized losses from operations of $41.5 million and $12.9 million during the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively. The Company had negative cash flows from operations of $54.7 million and $45.8 million during the thirty-nine weeks ended September 28, 2025 and September 29, 2024, respectively. The Company has a history of net losses and an accumulated deficit of $611.8 million as of September 28, 2025. As of September 28, 2025, the Company had $2.1 million of unrestricted cash, $73.4 million of issued but not sold aggregate principal amount of fixed rate secured notes and $78.5 million aggregate principal amount of repurchased but not re-sold fixed rate secured notes (see Note 8).
As discussed in Note 8 of the quarterly financial statements included elsewhere in this filing, as of the date of the filing of this Quarterly Report on Form 10-Q, the Company was in default under its Securitization Notes. As a result, the noteholders could remove FAT Brands and/or Twin Hospitality, as applicable, as manager of the Securitization Notes, cause the outstanding
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principal and interest under any or all of the Securitization Notes to be due and payable on an accelerated basis, and could allow the noteholders to foreclose on the collateral securing the Securitization Notes.
The Company does not currently have amounts on hand to pay such principal and maturity amounts, and any such acceleration or foreclosure would materially and adversely affect the Company’s business, financial condition and liquidity, and could cause the Company to seek to reorganize through a bankruptcy proceeding.
These factors create substantial doubt about the Company’s ability to continue as a going concern for the twelve-month period subsequent to the date that these financial statements are issued. While the Company believes its plans to restructure its indebtedness or obtain relief from the noteholders can alleviate the conditions that raise substantial doubt about the Company’s ability to continue as a going concern, these plans are not within the Company’s control and cannot be assessed as being probable of occurring. Without a restructuring of our debt or relief from our noteholders under our Securitized Notes, we will not be able to meet our cash obligations for the next twelve months.
Comparison of Cash Flows
Our cash and restricted cash balance was $22.7 million as of September 28, 2025, compared to $67.4 million as of December 29, 2024.
The following table summarizes key components of our consolidated cash flows for the thirty-nine weeks ended September 28, 2025 and September 29, 2024:
For the Thirty-Nine Weeks Ended
(in millions)
| September 28, 2025 | September 29, 2024 | ||||||||||
| Net cash used in operating activities | $ | (54.7) | $ | (45.8) | |||||||
| Net cash used in investing activities | (4.7) | (26.0) | |||||||||
| Net cash provided by financing activities | 14.7 | 46.6 | |||||||||
| Net cash flows | $ | (44.7) | $ | (25.2) | |||||||
Operating Activities
Net cash used in operating activities increased $8.9 million in the thirty-nine weeks ended September 28, 2025 to $54.7 million compared to $45.8 million in the same period of fiscal 2024, primarily due to higher debt service costs, partially offset by changes in working capital.
Investing Activities
Net cash used in investing activities decreased $21.3 million in the thirty-nine weeks ended September 28, 2025 to $4.7 million compared $26.0 million in the same period of fiscal 2024, primarily driven by decrease in purchases of property and equipment in addition to the payment of the acquisition purchase price payable of $4.0 million during the first three quarters of 2024.
Financing Activities
Net cash provided by financing activities decreased $31.9 million in the thirty-nine weeks ended September 28, 2025 to $14.7 million compared to $46.6 million in the same period of 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 thirty-nine weeks ended September 28, 2025, we declared and paid cash dividends totaling $2.9 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 April 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.
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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 September 28, 2025, we do not have any material commitments for capital expenditures.
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 September 28, 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
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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.
Settlement of Derivative Actions
On August 1, 2025, the Company and certain of its current and former directors and officers entered into a settlement agreement with stockholders of the Company to resolve two lawsuits brought derivatively on behalf of the Company in the Delaware Court of Chancery (the “Derivative Actions”). The Derivative Actions were filed in June 2021 (Case No. 2021-0511-NAC, relating to the Company’s December 2020 merger with Fog Cutter Capital Group), and March 2022 (Case No. 2022-0254-NAC, relating to the Company’s June 2021 recapitalization). The settlement agreement will resolve all claims asserted against the defendants in the Derivative Actions without any liability or wrongdoing attributed to them personally or the Company. Under the terms of the settlement agreement, the Company’s Board of Directors agreed to adopt and implement certain corporate governance modifications. In addition, the Company’s insurers will pay to the Company $10 million, from which fees and expenses of plaintiffs’ counsel will be deducted, and Fog Cutter Holdings LLC will contribute 200,000 shares of Twin Hospitality Group Inc. to the Company.
The Delaware Court of Chancery must approve the settlement of the Derivative Actions. An Amended Stipulation of Settlement was signed by the parties on September 11, 2025, and a hearing at the Delaware Court of Chancery to consider and approve the settlement is scheduled for December 17, 2025. Assuming that the settlement terms are approved, as a result of the settlement, all of the claims asserted in the Derivative Actions will be dismissed.
The “Notice of Pendency of Settlement” of the Derivative Actions is included as Exhibit 99.1, and the “Amended Stipulation and Agreement of Compromise, Settlement, and Release” of the Derivative Actions is included as Exhibit 99.2 to this Quarterly Report on Form 10-Q.
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. Other than matters discussed below under Item 3, 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
Securitization Notes
Our long-term debt includes an aggregate of $1,293.7 million in aggregate principal amount in fixed rate secured notes (collectively, the “Securitization Notes”) issued by five special purpose financing subsidiaries of the Company (the “Securitization Issuers”). During the fiscal quarter ended September 28, 2025, we received notices with respect to potential and actual Rapid Amortization Events, Manager Termination Events and Events of Default as described below. In addition to the Rapid Amortization Events, Manager Termination Events and Events of Default described below, due to liquidity constraints, the Company utilized certain cash receipts to support operation of the business during the fiscal quarter ended September 28, 2025, which would likely give rise to Events of Default and/or Manager Termination Events. These include commingling cash receipts owed to the Securitization Issuers and cash of non-securitization entities and causing amounts owed to the Securitization Issuers to be deposited into accounts not held by the Securitization Issuers or the Trustee, as required by the related GFG Indenture, FB Royalty Indenture, Fazoli’s Indenture, FB Resid Indenture and Twin Indenture. As a result of the foregoing matters, subject to notice from the applicable parties under the applicable indentures being provided (as further described below), FAT Brands and Twin Hospitality may be removed as Manager of the applicable Securitization Issuers, the Securitization Notes could be subject to acceleration and the assets of the Securitization Issuers subject to foreclosure at any time. As further described below, to date, the required parties have not provided such notices.
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The Company is having ongoing discussions with representatives of the noteholders regarding one or more potential transactions involving a refinancing, restructuring or similar transaction. The Company cannot provide any assurances that it will reach such an agreement on terms that are satisfactory to it and the noteholders promptly, or at all. If the Company is not able to agree upon the terms of a refinancing, restructuring or similar transaction with the noteholders, the noteholders could remove FAT Brands and/or Twin Hospitality, as applicable, as manager of the Securitization Issuers, cause the outstanding principal and interest under any or all of the Securitization Notes to be due and payable on an accelerated basis, and foreclose on the collateral securing the Securitization Notes. We do not currently have amounts on hand to pay such principal and maturity amounts, and any such acceleration or foreclosure would materially and adversely affect our business, financial condition, and liquidity, and could cause us to seek to reorganize through a bankruptcy proceeding.
Capitalized terms used in the following discussion are defined in the Base Indenture for the applicable Securitization Issuer, all of which are filed as exhibits to our most recent Annual Report on Form 10-K for the fiscal year ended December 29, 2024, filed on February 28, 2025.
Notice from Noteholders and Discussions
On August 22, 2025, Twin Royalty received a notice from counsel (the “August Letter”) on behalf of a group of noteholders holding a majority of the outstanding principal balance of the Twin Securitization Notes (the “Twin Majority Noteholders”) claiming that the payment of customary bonuses to Twin Hospitality’s management, in the aggregate amount of approximately $2.2 million for their performance during fiscal year 2024, was paid from funds that should have been deposited into a collection account under the Twin Indenture. The Twin Majority Noteholders claim in the August Letter that such payment is a breach of certain provisions of the applicable Management Agreement, which they claim triggers a “Manager Termination Event” that gives the holders of the Twin Securitization Notes the right to remove Twin Hospitality as the manager of Twin Royalty.
The notice from the Twin Majority Noteholders further claims that (i) a Level I Qualified Equity Offering Trigger Event occurred in April 2025 and July 2025, and (ii) the P&I DSCR was less than 1.35x for the quarterly fiscal period ended June 2025, resulting in the commencement of a Cash Flow Sweeping Event, pursuant to which 50% and 100% of collections, respectively, were required to be used to amortize the Twin Securitization Notes. According to the Twin Majority Noteholders, the failure to pay principal under the Cash Flow Sweeping Event constituted an Event of Default pursuant to Section 9.2(b) of the Base Indenture. The notice from the Twin Majority Noteholders also claims that the failure to deliver a timely notice of the above events to the Trustee under the Twin Indenture constitutes a separate Event of Default under the Twin Indenture.
In addition, the August Letter was also on behalf of a group of noteholders holding a majority of the outstanding principal balance of the notes issued under each of the GFG Indenture, FB Royalty Indenture and Fazoli’s Indenture (collectively, the “FAT Brands Majority Noteholders”), as applicable, alleging that collections belonging to GFG Royalty, FB Royalty and Fazoli’s Royalty, as applicable, have been commingled with the funds of non-securitization entities at an account sitting outside of the securitizations. The FAT Brands Majority Noteholders allege such actions result in a covenant violation that would constitute a Default pursuant to Section 9.2(c) of the GFG Indenture, FB Royalty Indenture and Fazoli’s Indenture, as applicable, which provides that failure to comply in any material respect with Section 8.24 of the GFG Indenture, FB Royalty Indenture and Fazoli’s Indenture, as applicable, constitutes an Event of Default if such failure continues for a period of ten business days.
Notices from Trustee / Other Defaults
FAT Brands GFG Royalty I, LLC (“GFG Royalty”)
On August 11, 2025 and October 23, 2025, UMB Bank, National Association, as trustee (the “Trustee”), provided a “Notice of Potential Rapid Amortization Event” with respect to the Base Indenture, dated July 22, 2021 (the “GFG Indenture”), between GFG Royalty and the Trustee, and the Series 2022-1 Supplement to Base Indenture, dated December 15, 2022 (the “GFG Indenture Supplement”), between GFG Royalty and the Trustee. Such Notice stated that, pursuant to Section 5.9(b)(iv) of the GFG Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the GFG Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Dates under the GFG Indenture occurring on September 5, 2025 and October 10, 2025 and, therefore, a Potential Rapid Amortization Event has occurred and is continuing under the GFG Indenture.
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To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a notice declaring that a Manager Termination Event has occurred under the GFG Indenture or a Termination Notice seeking to remove FAT Brands as Manager. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and FAT Brands could be removed as manager of GFG Royalty at any time.
On October 31, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the GFG Indenture, stating that, due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the GFG Indenture and under the GFG Indenture Supplement. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the GFG Notes and exercise remedies (including foreclosure) with respect to the assets of GFG Royalty and any Guarantors.
FAT Brands Royalty I, LLC (“FB Royalty”)
On August 11, 2025 and October 23, 2025, the Trustee provided a “Notice of Potential Rapid Amortization Event” with respect to the Amended and Restated Base Indenture, dated April 26, 2021 (the “FB Royalty Indenture”), between FB Royalty and the Trustee, and the Series 2022-1 Supplement to Base Indenture, dated June 30, 2022 (the “FB Royalty Indenture Supplement”), between FB Royalty and the Trustee. Such Notice stated that, pursuant to Section 5.9(b)(iv) of the FB Royalty Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the FB Royalty Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Dates under the FB Royalty Indenture occurring on September 5, 2025 and October 10, 2025, and therefore a Potential Rapid Amortization Event has occurred and is continuing under the FB Royalty Indenture.
To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a notice declaring that a Manager Termination Event has occurred under the FB Royalty Indenture or a Termination Notice seeking to remove FAT Brands as Manager. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and FAT Brands could be removed as Manager of FB Royalty at any time.
On October 31, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the FB Royalty Indenture, stating that due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the FB Royalty Indenture and under the FB Royalty Indenture Supplement. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the FB Notes and exercise remedies (including foreclosure) with respect to the assets of FB Royalty and any Guarantors.
FAT Brands Fazoli's Native I, LLC (“Fazoli’s Royalty”)
On August 11, 2025 and October 23, 2025, the Trustee provided a “Notice of Potential Rapid Amortization Event” with respect to the Base Indenture, dated December 15, 2021 (the “Fazoli’s Indenture”), between Fazoli’s Royalty and the Trustee. Such Notice stated that pursuant to Section 5.9(b)(iv) of the Fazoli’s Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the Fazoli’s Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Dates under the Fazoli’s Indenture occurring on September 5, 2025 and October 10, 2025, and therefore a Potential Rapid Amortization Event has occurred and is continuing under the Fazoli’s Indenture.
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On October 27, 2025, the Manager notified the Trustee that (i) a Manager Termination Event occurred under the Fazoli’s Indenture because the Interest-Only DSCR under the Fazoli’s Indenture as calculated as of the most recent Quarterly Calculation Date was 1.16x, which is less than the threshold of 1.20x provided in Section 6.1(a)(ii) of the Management Agreement for Fazoli’s Royalty, and (ii) a Hot Back-up Management Trigger Event, as defined in the Back-up Management Agreement for Fazoli’s Royalty, occurred as a result of such Manager Termination Event. To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a Termination Notice seeking to remove FAT Brands as Manager. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and FAT Brands could be removed as Manager of Fazoli’s Royalty at any time.
On October 31, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the Fazoli’s Indenture, stating that due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the Fazoli’s Indenture. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the Fazoli’s Notes and exercise remedies (including foreclosure) with respect to the assets of Fazoli’s Royalty and any Guarantors.
FB Resid Holdings I, LLC (“FB Resid”)
On November 3, 2025, the Trustee provided a “Notice of Event of Default” with respect to the Base Indenture, dated July 10, 2023 (the “FB Resid Indenture”), between FB Resid and the Trustee, and the Series 2024-1 Supplement to the FB Resid Indenture, dated November 21, 2024, between FB Resid and the Trustee. Such Notice stated that pursuant to Section 5.9(c) of the FB Resid Indenture, the Manager is obligated to deposit funds in the Collection Account under the FB Resid Indenture, but the Trustee has not received sufficient funds in the Collection Account for the most recent quarter, and the Trustee is unable to distribute funds pursuant to the terms of Section 5.11 of the FB Resid Indenture. As a result, an Event of Default has occurred pursuant to Section 9.2 of the FB Resid Indenture. As a result of such Event of Default and other potential Events of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may accelerate all amounts with respect to the FB Resid notes and exercise remedies (including foreclosure) with respect to the assets of FB Resid and any Guarantors.
Twin Hospitality I, LLC (formerly FAT Brands Twin Peaks I, LLC) (“Twin Royalty”)
Under the Base Indenture, dated November 21, 2024 (the “Twin Indenture”), between Twin Royalty and the Trustee, upon each Qualified Equity Offering, which is defined as a public or private offering of common equity securities for cash by Twin Royalty’s parent company, Twin Hospitality Group Inc. (“Twin Hospitality”), Twin Hospitality is required, subject to certain limited exceptions, to use 75% of the net proceeds from such offerings towards the repayment of the notes issued under the Twin Indenture (“Twin Securitization Notes”), until an aggregate of $75.0 million has been repaid in that manner. If the amount of net proceeds from 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 would occur, whereupon certain excess cash flows from Twin Royalty’s operations are required to be used to make additional principal payments, on a pro rata basis, on the three most senior classes of the Twin Securitization Notes. Twin Hospitality did not satisfy the requirement to raise a Qualified Equity Offering and repay the Twin Securitization Notes in an amount equal to at least $25.0 million on each of April 25, 2025 and July 25, 2025, and as such, a “Level I Qualified Equity Offering Trigger Event” and “Cash Flow Sweeping Event” under the Twin Securitization Notes have occurred.
Separately, on October 23, 2025, the Trustee provided a “Notice of Potential Rapid Amortization Event” with respect to the Twin Indenture. Such Notice stated that pursuant to Section 5.9(b)(iv) of the Twin Indenture, on the last business day of each month preceding a Monthly Allocation Date, the Manager is required to withdraw all Retained Collections with respect to the preceding Monthly Collection Period on deposit in the Concentration Account and deposit the same to the Collection Account. Pursuant to Section 6.1(a)(i) of the Management Agreement, failure to do so constitutes a Manager Termination Event, the assertion of which may be made by a Securitization Entity, the Back-Up Manager, the Control Party (acting at the direction of the Controlling Class Representative) or the Trustee (acting at the direction of the Control Party). In addition, pursuant to Section 9.1(b) of the Twin Indenture, the occurrence of a Manager Termination Event constitutes a Rapid Amortization Event to be declared by a written notice from the Control Party. The Trustee stated that it did not receive the Retained Collections in the Collection Account for the Monthly Allocation Date under the Twin Indenture occurring on October 10, 2025, and therefore a Potential Rapid Amortization Event has occurred and is continuing under the Twin Indenture.
To date, none of the Trustee, Control Party or the Controlling Class Representative has delivered a notice declaring that a Manager Termination Event has occurred under the Twin Indenture or a Termination Notice seeking to remove Twin
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Hospitality as Manager of Twin Royalty. However, as noted above, we have taken actions during the fiscal quarter ended September 28, 2025 that would likely give rise to Events of Default and Manager Termination Events and Twin Hospitality could be removed as Manager of Twin Royalty at any time.
On October 30, 2025 and following receipt of notice from us regarding such events, the Trustee provided a “Notice of Event of Default” with respect to the Twin Indenture, stating that due to the events described in the Notice of Potential Rapid Amortization Event described above, the Trustee was unable to make payments due to the noteholders from the Collection Account as of the Quarterly Payment Date of October 27, 2025, and that such occurrence constituted an Event of Default pursuant to Section 9.2 of the Twin Indenture. As a result of such Event of Default, the Trustee, at the direction of the Control Party (acting at the direction of the Controlling Class Representative) may acclerate all amounts with respect to the Twin Notes and exercise remedies (including foreclosure) with respect to the assets of Twin Royalty and any Guarantors.
Dividends Arrearage
As of September 28, 2025, we had 8,608,389 shares of our Series B Cumulative Preferred Stock (“Preferred Stock”) outstanding with an aggregate liquidation preference of $215.2 million. During the thirty-nine weeks ended September 28, 2025, we declared and paid cash dividends totaling $2.9 million on our Preferred Stock. We have paused the payment of cash dividends on our Preferred Stock beginning with the monthly dividend period for April 2025, which dividends currently accrue and cumulate on the Preferred Stock until paid at the customary rate of $2.0625 per year, or $2.50 per year if dividends remain unpaid for 12 monthly periods. The total amount of accumulated and unpaid dividends on the Preferred Stock was $8.9 million at September 28, 2025.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the fiscal quarter ended September 28, 2025, no director or officer of the Company adopted terminated
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ITEM 6. EXHIBITS
Incorporated By Reference to | Filed Herewith | |||||||||||||||||||||||||||||||
Description | Form | Exhibit | Filing Date | |||||||||||||||||||||||||||||
31.1 | Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||||||||||||
31.2 | Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | X | ||||||||||||||||||||||||||||||
32.1 | Certifications of the Chief Executive Officer 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 | X | ||||||||||||||||||||||||||||||
| 99.1 | Notice of Pendency of Settlement of Derivative Actions | X | ||||||||||||||||||||||||||||||
| 99.2 | Amended Stipulation and Agreement of Compromise, Settlement, and Release | X | ||||||||||||||||||||||||||||||
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. | ||||||||
| November 12, 2025 | By | /s/ Kenneth J. Kuick | ||||||
| Kenneth J. Kuick | ||||||||
Chief Financial Officer | ||||||||
| (Principal Financial and Accounting Officer) | ||||||||
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