[Front Matter](index=1&type=section&id=Front%20Matter) This section provides an overview of the company's filing information and cautionary statements regarding forward-looking statements and associated risks [Filing Information](index=1&type=section&id=Filing%20Information) This section details the company's 10-Q quarterly report filing with the SEC for the period ended June 29, 2025, identifying BT Brands, Inc. as a non-accelerated and smaller reporting company with 6,154,724 common shares outstanding as of August 15, 2025 - BT Brands, Inc. filed its 10-Q quarterly report for the period ended June 29, 2025[2](index=2&type=chunk) Registrant Status | Status | Value | |:---|:---| | Filing Type | Quarterly Report (10-Q) | | Period End Date | June 29, 2025 | | Commission File Number | 333-233233 | | Registrant Name | BT BRANDS, INC. | | State of Incorporation | Wyoming | | Principal Executive Offices | Minnetonka, Minnesota | | Telephone Number | (307) 274-3055 | | Registered Securities | Common Stock ($0.002/share, BTBD NASDAQ); Common Stock Warrants (BTBDW NASDAQ) | | All Reports Filed (13/15(d)) | Yes | | Interactive Data File Submitted | Yes | | Filer Status | Non-accelerated Filer, Smaller Reporting Company | | Shell Company | No | | Common Shares Outstanding (August 15, 2025) | 6,154,724 shares | [Cautionary Statement Regarding Risks and Uncertainties](index=2&type=section&id=Cautionary%20Statement%20Regarding%20Risks%20and%20Uncertainties) This section clarifies the nature of forward-looking statements in the report, emphasizing that actual results may differ materially due to various risks and uncertainties, and the company disclaims any obligation to update these statements unless legally required - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from expectations[7](index=7&type=chunk)[8](index=8&type=chunk) - Key risk factors include capital availability, challenges in executing growth strategies (especially acquisitions), hiring and retaining employees, supply disruptions, negative publicity, competition from better-resourced rivals, changes in economic conditions, and the impact of government laws and regulations[8](index=8&type=chunk) - The company assumes no obligation to publicly update or revise any forward-looking statements unless required by law[9](index=9&type=chunk)[11](index=11&type=chunk) [PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures [ITEM 1. CONDENSED FINANCIAL STATEMENTS (unaudited)](index=3&type=section&id=ITEM%201.%20CONDENSED%20FINANCIAL%20STATEMENTS%20(unaudited)) This section presents BT Brands, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, and cash flows, along with detailed notes on accounting policies and specific financial items [CONDENSED CONSOLIDATED BALANCE SHEETS](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Total assets decreased from $11.99 million to $11.21 million as of June 29, 2025, primarily due to reductions in cash and cash equivalents and net property, equipment, and leasehold improvements Condensed Consolidated Balance Sheets Highlights | Metric | June 29, 2025 | December 29, 2024 | Change | |:---|:---|:---|:---| | **Assets** | | | | | Cash and Cash Equivalents | $560,068 | $1,951,415 | $(1,391,347) | | Marketable Securities | $2,970,284 | $2,319,555 | $650,729 | | Total Current Assets | $5,553,017 | $5,119,404 | $433,613 | | Net Property, Equipment, and Leasehold Improvements | $2,728,924 | $3,343,340 | $(614,416) | | Total Assets | $11,216,271 | $11,996,797 | $(780,526) | | **Liabilities** | | | | | Total Current Liabilities | $1,189,451 | $1,442,935 | $(253,484) | | Total Liabilities | $4,432,127 | $5,031,570 | $(599,443) | | **Shareholders' Equity** | | | | | Total Shareholders' Equity | $6,784,144 | $6,965,227 | $(181,083) | [CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the 26 weeks ended June 29, 2025, the company reported a net loss of $(274,818), an improvement from the prior year's $(515,652) net loss, despite a 4.0% sales decrease Condensed Consolidated Statements of Operations Highlights | Metric | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | 13 Weeks Ended June 29, 2025 | 13 Weeks Ended June 30, 2024 | |:---|:---|:---|:---|:---| | Sales | $7,010,763 | $7,300,786 | $3,779,690 | $4,110,639 | | Total Costs and Expenses | $7,378,080 | $8,120,158 | $3,854,811 | $4,299,182 | | Operating Loss | $(367,317) | $(819,372) | $(75,121) | $(188,543) | | Net Income (Loss) | $(274,818) | $(515,652) | $55,031 | $(69,952) | | Net Income (Loss) Per Common Share - Basic and Diluted | $(0.04) | $(0.08) | $0.01 | $(0.01) | [CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Total shareholders' equity decreased from $6,965,227 to $6,784,144 as of June 29, 2025, primarily due to a net loss of $274,818 for the 26-week period, partially offset by stock-based compensation Changes in Shareholders' Equity (26 Weeks) | Metric | December 29, 2024 | June 29, 2025 | Change | |:---|:---|:---|:---| | Total Shareholders' Equity | $6,965,227 | $6,784,144 | $(181,083) | | Stock-Based Compensation | - | $93,735 | $93,735 | | Net Loss | - | $(274,818) | $(274,818) | [CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Operating activities generated $77,623 in cash for the 26 weeks ended June 29, 2025, a significant improvement from the prior year's cash used in operations, while investing activities used $1,375,045 Condensed Consolidated Statements of Cash Flows Highlights | Metric | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | |:---|:---|:---| | Net Cash Provided by (Used in) Operating Activities | $77,623 | $(326,369) | | Net Cash Used in Investing Activities | $(1,375,045) | $(956,384) | | Net Cash Used in Financing Activities | $(93,925) | $(282,384) | | Change in Cash and Cash Equivalents | $(1,391,347) | $(1,565,137) | | Cash and Cash Equivalents, End of Period | $560,068 | $3,735,309 | [NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS](index=6&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide detailed explanations of accounting policies and specific financial statement items, covering presentation basis, estimates, company operations, fiscal periods, and classifications of assets, liabilities, equity, and related party transactions [NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=6&type=section&id=NOTE%201%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the basis of presentation for the unaudited condensed consolidated financial statements, outlining the company's diverse restaurant operations, investments, and accounting policies for various financial instruments and assets - The company operates a diversified portfolio of restaurants, including Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, Schnitzel Haus, and six Burger Time fast-food locations, also holding a **40.7% equity investment** in Bagger Dave's Burger Tavern, Inc[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - The company closed its Village Bier Garten restaurant in January 2025 and ceased operations at the Ham Lake, Minnesota Burger Time location in February 2025, with another Burger Time in Minot, North Dakota, permanently closing in July 2025[34](index=34&type=chunk)[53](index=53&type=chunk) - Inventory includes **$292,372** of Disney-licensed water bottles related to the NGI Corporation investment, expected to be sold in the second half of 2025[36](index=36&type=chunk)[49](index=49&type=chunk) Fair Value of Investments (June 29, 2025) | Asset Type | Carrying Value | Level 1 (Fair Value) | Level 3 (Fair Value) | |:---|:---|:---|:---| | Common Stock | $2,754,784 | $2,754,784 | - | | Real Estate Investment Trusts | $215,500 | $215,500 | - | | Related Party Convertible Note Receivable | $333,136 | - | $333,136 | | Total | $3,303,420 | $2,970,284 | $333,136 | - As of June 29, 2025, a valuation allowance of approximately **$633,000** has been recorded, reducing the net deferred tax asset to zero due to uncertainty regarding future realization[56](index=56&type=chunk) [NOTE 2 – INTANGIBLE ASSETS](index=10&type=section&id=NOTE%202%20%E2%80%93%20INTANGIBLE%20ASSETS) Net intangible assets, primarily non-compete agreements and trade names, decreased from $367,799 to $331,708 as of June 29, 2025, reflecting ongoing amortization and impairment charges from 2024 Net Intangible Assets | Asset Type | June 29, 2025 (Net Book Value) | December 29, 2024 (Net Book Value) | |:---|:---|:---| | Non-Compete Agreements | $62,338 | $94,865 | | Trade Names | $269,370 | $322,012 | | Impairment Charges | - | $(49,078) | | Total Net Intangible Assets | $331,708 | $367,799 | - Total intangible asset amortization expense for the 26 weeks of 2025 was **$36,091**, lower than **$63,950** in 2024[60](index=60&type=chunk) [NOTE 3 – PROPERTY AND EQUIPMENT](index=10&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT) Net property and equipment decreased from $3,343,340 to $2,728,924 as of June 29, 2025, mainly due to increased accumulated depreciation and property held for sale, including the Richmond property sold in August 2025 Net Property and Equipment | Metric | June 29, 2025 | December 29, 2024 | |:---|:---|:---| | Total Property and Equipment (at cost) | $6,997,852 | $7,500,548 | | Accumulated Depreciation | $(3,586,034) | $(3,575,663) | | Net Property and Equipment (before held for sale/impairment) | $3,411,818 | $3,924,885 | | Less: Property Held for Sale | $(682,894) | $(258,751) | | Less: Impairment Charges | - | $(322,794) | | Net Property and Equipment | $2,728,924 | $3,343,340 | - Depreciation expense for the 26 weeks of 2025 was **$265,029**, slightly lower than **$267,943** in 2024[62](index=62&type=chunk) [NOTE 4 - ACCRUED EXPENSES](index=11&type=section&id=NOTE%204%20-%20ACCRUED%20EXPENSES) Total accrued expenses slightly increased from $371,356 to $377,034 as of June 29, 2025, driven by higher accrued payroll and sales tax, partially offset by reductions in accrued property taxes and gift card liabilities Accrued Expenses | Accrued Item | June 29, 2025 | December 29, 2024 | |:---|:---|:---| | Accrued Property Taxes | $23,173 | $46,401 | | Accrued Payroll | $215,177 | $177,275 | | Accrued Payroll Taxes | $2,304 | $6,851 | | Sales Tax Payable | $88,460 | $57,706 | | Accrued Vacation Pay | $2,423 | $17,663 | | Gift Card Liability | $28,729 | $38,425 | | Other Accrued Expenses | $16,768 | $27,035 | | Total Accrued Expenses | $377,034 | $371,356 | [NOTE 5 - LONG-TERM DEBT](index=11&type=section&id=NOTE%205%20-%20LONG-TERM%20DEBT) The company's long-term debt, primarily bank notes secured by seven properties, decreased from $2,091,335 to $1,992,334 as of June 29, 2025, reflecting ongoing principal repayments Long-Term Debt | Metric | June 29, 2025 | December 29, 2024 | |:---|:---|:---| | Bank Notes Payable | $2,213,218 | $2,307,143 | | Less: Unamortized Debt Issuance Costs | $(29,449) | $(30,799) | | Current Portion | $(191,435) | $(185,009) | | Long-Term Debt, Less Current Portion | $1,992,334 | $2,091,335 | [NOTE 6 - STOCK-BASED COMPENSATION](index=11&type=section&id=NOTE%206%20-%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense for the 26 weeks of 2025 was $93,735, lower than $110,000 in 2024, with 324,250 options outstanding at a weighted-average exercise price of $2.56 as of June 29, 2025 Stock-Based Compensation Expense | Period | 2025 (26 Weeks) | 2024 (26 Weeks) | |:---|:---|:---| | Total Stock-Based Compensation Expense | $93,735 | $110,000 | Stock Options Outstanding | Metric | June 29, 2025 | |:---|:---| | Number of Options Outstanding | 324,250 | | Weighted-Average Exercise Price | $2.56 | | Weighted-Average Remaining Term | 6.3 Years | | Number of Exercisable Options | 220,408 | | Weighted-Average Exercise Price of Exercisable Options | $2.60 | - The company anticipates remaining stock-based compensation expense of **$12,000** for 2025 and **$41,000** for 2026[70](index=70&type=chunk) - Remaining expense related to contingent incentive share awards for senior management is **$36,000**, expected to be recognized in 2025[73](index=73&type=chunk) [NOTE 7 – LEASES](index=12&type=section&id=NOTE%207%20%E2%80%93%20LEASES) The company has operating lease obligations for its restaurants, with total future minimum lease payments of $1,619,551 as of June 29, 2025, and total operating lease expense of approximately $147,000 for the 26 weeks of 2025 Future Minimum Lease Payments (as of June 29, 2025) | Period | Amount | |:---|:---| | Remainder of 2025 | $125,440 | | 2026 | $267,996 | | 2027 | $220,251 | | 2028 | $222,507 | | 2029 | $225,193 | | 2030 and Thereafter | $558,164 | | Total Future Minimum Lease Payments | $1,619,551 | | Less: Interest | $(189,602) | | Present Value of Lease Obligations | $1,436,949 | Operating Lease Expense | Period | 2025 (26 Weeks) | 2024 (26 Weeks) | |:---|:---|:---| | Total Operating Lease Expense | $147,000 | $155,000 | | Cash Paid for Leases | $141,000 | $146,000 | | Variable Lease Expense | $20,000 | $26,000 | [NOTE 8 – SHAREHOLDERS' EQUITY](index=13&type=section&id=NOTE%208%20%E2%80%93%20SHAREHOLDERS%27%20EQUITY) The company authorized a stock repurchase program in June 2024 for up to 625,000 shares, with 306,394 shares repurchased by December 29, 2024, and no repurchases in the first half of 2025 - The 2024 stock repurchase program authorized up to **625,000 shares**; **306,394 shares** were repurchased by December 29, 2024, with **533,606 shares** remaining available for repurchase, and no repurchases occurred in the first half of 2025[82](index=82&type=chunk) - BT Brands entered into an equity distribution agreement with Maxim Group LLC to sell up to **$3,005,000** of common stock through an 'at-the-market offering program,' with Maxim receiving a **3% commission**[83](index=83&type=chunk) [NOTE 9 - RELATED PARTY TRANSACTION](index=14&type=section&id=NOTE%209%20-%20RELATED%20PARTY%20TRANSACTION) As of June 29, 2025, BT Brands' total investment in related party NGI Corporation was $996,357, comprising notes receivable, senior secured promissory notes, and equity investments, plus $292,372 in Disney-licensed water bottle inventory Investment in NGI Corporation (June 29, 2025) | Investment Type | Amount | |:---|:---| | Note Receivable (15% interest, PIK, convertible to Series B Preferred Stock/Warrants) | $333,136 | | Senior Secured Promissory Note (12% interest) | $359,221 | | Equity Investment (Common Stock and Warrants) | $304,000 | | Total Investment in NGI | $996,357 | | Disney Licensed Water Bottle Inventory | $292,372 | - Kenneth Brimmer, BT Brands' Chief Operating Officer, serves as a board member and Chief Financial Officer of NGI[87](index=87&type=chunk) [NOTE 10 – CONTINGENCIES](index=14&type=section&id=NOTE%2010%20%E2%80%93%20CONTINGENCIES) The company has not identified any asserted or unasserted claims that could materially impact its financial condition - The company has not identified any asserted or unasserted legal claims that could materially impact its financial condition[88](index=88&type=chunk) [NOTE 11 – SUBSEQUENT EVENT – RICHMOND SALE](index=15&type=section&id=NOTE%2011%20%E2%80%93%20SUBSEQUENT%20EVENT%20%E2%80%93%20RICHMOND%20SALE) On August 13, 2025, the company completed the sale of its Richmond property, previously held for sale, for a total price of $550,000, with an estimated gain of $250,000 to be recognized in the third quarter - The Richmond property was sold on **August 13, 2025**, for **$550,000**, with an estimated gain of **$250,000** to be recognized in the third quarter[90](index=90&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=15&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on the company's financial performance, liquidity, and capital resources for the period ended June 29, 2025, highlighting improved profitability despite sales declines through operational efficiencies and cost management [Introduction and Business Overview](index=15&type=section&id=Introduction%20and%20Business%20Overview) BT Brands operates 16 restaurants, including Burger Time, Keegan's, Pie In The Sky, Schnitzel Haus, and a 40.7% stake in Bagger Dave's, focusing on the drive-thru and takeout segments with a value-driven, limited menu strategy - BT Brands operates **16 restaurants**, including Burger Time, Keegan's, Pie In The Sky, Schnitzel Haus, and holds a **40.7% equity stake** in Bagger Dave's[92](index=92&type=chunk)[97](index=97&type=chunk) - Burger Time's strategy focuses on the drive-thru and takeout market, offering high-value, limited menus for quality and quick service[92](index=92&type=chunk) - Average customer transaction value at Burger Time restaurants remained around **$15.00** during the first half of 2025[93](index=93&type=chunk) [Notable Recent Events and Material Trends](index=15&type=section&id=Notable%20Recent%20Events%20and%20Material%20Trends) The company closed two underperforming stores in early 2025, which had contributed $935,000 in revenue and $213,000 in operating losses in the prior year, while facing industry trends of labor shortages, cost inflation, and increased technology adoption by competitors - Village Bier Garden and Ham Lake Burger Time locations closed in early 2025, contributing **$935,000** in revenue and **$213,000** in operating losses in the prior 26-week period[95](index=95&type=chunk) - Key industry trends include labor shortages, rapid input cost inflation, and increased competition from technology-driven food delivery and loyalty programs[96](index=96&type=chunk) [Results of Operations for the Thirteen Weeks Ended June 29, 2025, and the Thirteen Weeks Ended June 30, 2024](index=16&type=section&id=Results%20of%20Operations%20for%20the%20Thirteen%20Weeks%20Ended%20June%2029%2C%202025%2C%20and%20the%20Thirteen%20Weeks%20Ended%20June%2030%2C%202024) Net sales decreased by 8.1% to $3.78 million for the 13 weeks ended June 29, 2025, but the company achieved a net profit of $55,031, a significant improvement from the prior year's net loss, driven by operational efficiencies and a restaurant-level EBITDA margin increase to 16.9% 13-Week Financial Performance Summary | Metric | 13 Weeks Ended June 29, 2025 | 13 Weeks Ended June 30, 2024 | Change (Amount) | Change (%) | |:---|:---|:---|:---|:---| | Net Sales | $3,779,690 | $4,110,639 | $(330,949) | -8.1% | | Total Costs and Expenses | $3,854,811 | $4,299,182 | $(444,371) | -10.3% | | Operating Loss | $(75,121) | $(188,543) | $113,422 | 60.2% (Improvement) | | Net Income (Loss) | $55,031 | $(69,952) | $124,983 | N/A (Turned Profitable) | | Restaurant-Level EBITDA Margin | 16.9% | -10.6% | 27.5 Percentage Points | N/A | 13-Week Cost and Expense Breakdown (as % of Sales) | Expense Category | 13 Weeks Ended June 29, 2025 (% of Sales) | 13 Weeks Ended June 30, 2024 (% of Sales) | |:---|:---|:---| | Food and Paper Costs | 33.1% | 38.1% | | Labor Costs | 36.4% | 37.7% | | Occupancy Costs | 8.0% | 8.4% | | Other Operating Expenses | 6.7% | 5.2% | | Depreciation and Amortization | 3.8% | 4.2% | | General and Administrative Expenses | 14.1% | 11.1% | - Food and paper costs as a percentage of sales decreased to **33.1%** (from **38.1%**) due to menu price increases, menu adjustments at BTND (including hand-cut fries), and cost-cutting measures across all locations[106](index=106&type=chunk) - Labor costs as a percentage of sales decreased to **36.4%** (from **37.7%**) due to enhanced labor cost controls and the closure of Village Bier Garten[107](index=107&type=chunk) - General and administrative expenses as a percentage of sales increased to **14.1%** (from **11.1%**), partly due to consulting fees for company-wide cost control initiatives[111](index=111&type=chunk) [Results of Operations – Twenty-Six Weeks Ended June 29, 2025 Compared to Twenty-Six Weeks Ended June 30, 2024](index=18&type=section&id=Results%20of%20Operations%20%E2%80%93%20Twenty-Six%20Weeks%20Ended%20June%2029%2C%202025%20Compared%20to%20Twenty-Six%20Weeks%20Ended%20June%2030%2C%202024) Net sales decreased by 4.0% to $7.01 million for the 26 weeks ended June 29, 2025, primarily due to two store closures, but net loss significantly improved to $(274,818) from $(515,652) in the prior year, reflecting substantial reductions in total costs and expenses 26-Week Financial Performance Summary | Metric | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | Change (Amount) | Change (%) | |:---|:---|:---|:---|:---| | Net Sales | $7,010,763 | $7,300,786 | $(290,023) | -4.0% | | Total Costs and Expenses | $7,378,080 | $8,120,158 | $(742,078) | -9.1% | | Operating Loss | $(367,317) | $(819,372) | $452,055 | 55.2% (Improvement) | | Net Loss | $(274,818) | $(515,652) | $240,834 | 46.7% (Reduction) | 26-Week Cost and Expense Breakdown (as % of Sales) | Expense Category | 26 Weeks Ended June 29, 2025 (% of Sales) | 26 Weeks Ended June 30, 2024 (% of Sales) | |:---|:---|:---| | Food and Paper Costs | 34.9% | 39.0% | | Labor Costs | 37.0% | 40.2% | | Occupancy Costs | 8.7% | 9.3% | | Other Operating Expenses | 6.3% | 5.7% | | Depreciation and Amortization | 4.3% | 4.5% | | General and Administrative Expenses | 14.0% | 12.5% | - Average sales for Burger Time locations open in both 26-week periods decreased from **$465,000** in 2024 to **$448,000** in 2025[117](index=117&type=chunk) - Realized gains on investments significantly increased to **$174,064** in 2025, compared to **$29,562** in 2024[128](index=128&type=chunk) [Restaurant-Level EBITDA](index=19&type=section&id=Restaurant-Level%20EBITDA) Restaurant-level EBITDA, a non-GAAP measure, showed significant improvement for both 13-week and 26-week periods, reaching $600,661 (15.9% of revenue) and $915,894 (13.1% of revenue) respectively, reflecting stronger operational performance and cost control Restaurant-Level EBITDA | Metric | 26 Weeks Ended June 29, 2025 | 26 Weeks Ended June 30, 2024 | 13 Weeks Ended June 29, 2025 | 13 Weeks Ended June 30, 2024 | |:---|:---|:---|:---|:---| | Revenue | $7,010,763 | $7,300,786 | $3,779,690 | $4,110,639 | | Operating Loss | $(367,317) | $(819,372) | $(75,121) | $(188,543) | | Depreciation and Amortization | $301,120 | $331,893 | $144,725 | $171,351 | | General and Administrative Expenses, Corporate-Level Expenses | $982,091 | $909,420 | $531,057 | $454,805 | | Restaurant-Level EBITDA | $915,894 | $421,941 | $600,661 | $437,613 | | Restaurant-Level EBITDA Margin | 13.1% | 5.8% | 15.9% | 10.6% | - The significant improvement in restaurant-level EBITDA is attributed to better labor and cost controls, selective menu price increases, and improved operating unit efficiencies[127](index=127&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 29, 2025, the company held $3.5 million in cash, cash equivalents, and marketable securities, with net working capital increasing by $627,000 to $4.4 million, partly due to a $424,000 increase in assets held for sale Liquidity Metrics | Metric | June 29, 2025 | December 29, 2024 | Change | |:---|:---|:---|:---| | Cash, Cash Equivalents, and Marketable Securities | $3.5 million | N/A | N/A | | Net Working Capital | $4.4 million | $3.773 million (Inferred from $0.627 million increase) | $627,000 | | Increase in Assets Held for Sale | $424,000 | N/A | N/A | - Loans to NGI Corporation and the purchase of Disney water bottle inventory reduced cash and investments on hand[132](index=132&type=chunk) [Summary of Cash Flows](index=20&type=section&id=Summary%20of%20Cash%20Flows) For the 26 weeks ended June 29, 2025, operating activities generated $77,623 in cash, while investing activities used $1,375,045, primarily for advances to NGI Corporation and Disney water bottle inventory purchases, and financing activities used $93,925 for debt repayments - Operating activities generated **$77,623** in cash for the 26 weeks ended June 29, 2025, an improvement from the prior period[134](index=134&type=chunk) - Investing activities included **$572,357** in advances to NGI Corporation and **$292,372** for Disney water bottle inventory purchases[135](index=135&type=chunk) - Cash used in financing activities was primarily for debt repayments[136](index=136&type=chunk) [Contractual Obligations](index=21&type=section&id=Contractual%20Obligations) As of June 29, 2025, the company had $3.6 million in contractual obligations, including $2.2 million in mortgage debt and $1.4 million in operating lease obligations, with monthly payments of approximately $36,000 Contractual Obligations (as of June 29, 2025) | Obligation Type | Amount | |:---|:---| | Total Contractual Obligations | $3.6 million | | Mortgage Debt | $2.2 million | | Operating Lease Obligations | $1.4 million | | Monthly Required Payments (Lease and Mortgage) | Approximately $36,000 | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](index=21&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) As a smaller reporting company, BT Brands, Inc. is exempt from providing quantitative and qualitative disclosures about market risk and has elected to comply with simplified reporting obligations - As a smaller reporting company, BT Brands is exempt from providing quantitative and qualitative disclosures about market risk[138](index=138&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=21&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) As of June 29, 2025, the company's disclosure controls and procedures were deemed ineffective due to a material weakness in internal control over financial reporting, which the company is addressing by engaging a third-party accounting service [Evaluation of Disclosure Controls and Procedures](index=21&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures were ineffective as of June 29, 2025, primarily due to a material weakness in internal control over financial reporting identified in the prior fiscal year - Disclosure controls and procedures were deemed ineffective as of June 29, 2025, due to a material weakness in internal control over financial reporting[140](index=140&type=chunk) [Changes in Internal Control over Financial Reporting](index=21&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) During the second quarter, the company engaged a third-party accounting service to manage accounts payable and payroll activities and prepare preliminary financial statements, aiming to enhance segregation of duties and improve internal controls - The company engaged a third-party accounting service to manage accounts payable and payroll and prepare preliminary financial statements to enhance segregation of duties[141](index=141&type=chunk) - The company is considering using external consultants to assist with accounting for significant acquisitions[141](index=141&type=chunk) [PART II—OTHER INFORMATION](index=21&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This part covers legal proceedings, risk factors, unregistered equity sales, defaults, mine safety, other information, exhibits, and signatures [ITEM 1. LEGAL PROCEEDINGS](index=21&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not currently involved in any material pending legal proceedings and has not identified any threatened or anticipated litigation that could significantly impact its financial condition - The company is not currently facing any material pending or threatened legal proceedings[143](index=143&type=chunk) [ITEM 1A. RISK FACTORS](index=21&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, BT Brands, Inc. is exempt from providing the information typically required under this item and has elected to comply with simplified disclosure reporting obligations - As a smaller reporting company, BT Brands is exempt from providing specific risk factor disclosures under Item 1A[144](index=144&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=21&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECU RITIES%20AND%20USE%20OF%20PROCEEDS) The company has not sold any unregistered equity securities since its last annual report, and proceeds from the November 2021 public offering were used for general working capital and various restaurant and equity acquisitions - The company has not sold any unregistered equity securities since its last annual report (Form 10-K)[145](index=145&type=chunk) - Proceeds from the November 2021 public offering were used for general working capital and acquisitions, including Keegan's Seafood Grille (**$1,150,000**), Pie in the Sky Bakery and Coffee Shop (**$1,160,000**), a **40.7% equity stake** in Bagger Dave's (**$1,390,000**), and Schnitzel Haus (**$943,000**)[146](index=146&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=22&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company has not reported any defaults upon senior securities - No defaults upon senior securities have been reported[147](index=147&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=22&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Mine safety disclosures are not applicable to the company[148](index=148&type=chunk) [ITEM 5. OTHER INFORMATION](index=22&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information is reported under this item - No other information is reported under this item[149](index=149&type=chunk) [ITEM 6. EXHIBITS](index=22&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with the 10-Q form, including agreements, certifications (302 and 906), and XBRL-related documents - Exhibits include agreements with NGI Corporation, CEO and CFO certifications (302 and 906), and Inline XBRL documents[149](index=149&type=chunk) [SIGNATURES](index=22&type=section&id=SIGNATURES) This report was signed by Kenneth Brimmer, Chief Operating Officer and Chief Financial Officer, on behalf of BT Brands, Inc. on August 19, 2025 - This report was signed by Kenneth Brimmer, Chief Operating Officer and Chief Financial Officer, on August 19, 2025[153](index=153&type=chunk)

PART I— FINANCIAL INFORMATION This section covers unaudited condensed financial statements, management's analysis, market risk, and internal controls [ITEM 1. CONDENSED FINANCIAL STATEMENTS (Unaudited)](index=4&type=section&id=ITEM%201.%20CONDENSED%20FINANCIAL%20STATEMENTS%20(unaudited)) Unaudited condensed consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and shareholders' equity at quarter-end Condensed Consolidated Balance Sheet Highlights | Metric | March 30, 2025 | December 29, 2024 | Change (QoQ) | Percentage Change (QoQ) | | :--------------------------------- | :--------------- | :---------------- | :----------- | :------------------------ | | Total Assets | $11,003,980 | $11,996,797 | $(992,817) | -8.28% | | Total Liabilities | $4,337,602 | $5,031,570 | $(693,968) | -13.79% | | Total Shareholders' Equity | $6,666,378 | $6,965,227 | $(298,849) | -4.29% | - Cash and cash equivalents decreased from **$1,951,415** at December 29, 2024, to **$1,070,101** at March 30, 2025, representing a **significant quarter-over-quarter decline**[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance, including sales, costs, and net loss for the thirteen weeks ended March 30, 2025 Condensed Consolidated Statements of Operations Highlights (13 Weeks Ended) | Metric | March 30, 2025 | March 31, 2024 | Change (YoY) | Percentage Change (YoY) | | :--------------------------------- | :--------------- | :--------------- | :----------- | :------------------------ | | Sales | $3,231,073 | $3,190,147 | $40,926 | 1.28% | | Total Costs and Expenses | $3,523,269 | $3,820,976 | $(297,707) | -7.79% | | Loss from Operations | $(292,196) | $(630,829) | $338,633 | -53.68% | | Net Loss | $(329,849) | $(445,700) | $115,851 | -26.00% | | Net Loss Per Common Share (Basic and Diluted) | $(0.05) | $(0.07) | $0.02 | -28.57% | - The company reported a realized investment gain of **$95,038** in Q1 2025, compared to none in Q1 2024, contributing to the **reduced net loss**[18](index=18&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%27%20of%20Shareholders%20Equity) This section outlines changes in shareholders' equity, including total equity, stock-based compensation, and net loss for the period Shareholders' Equity Changes (13 Weeks Ended) | Metric | March 30, 2025 | December 29, 2024 | March 31, 2024 | December 31, 2023 | | :------------------------- | :--------------- | :---------------- | :--------------- | :---------------- | | Total Shareholders' Equity | $6,666,378 | $6,965,227 | $8,797,029 | $9,188,729 | | Stock-based Compensation | $31,000 | N/A | $54,000 | N/A | | Net Loss | $(329,849) | N/A | $(445,700) | N/A | - Accumulated deficit increased from **$(4,361,099)** at December 29, 2024, to **$(4,690,948)** at March 30, 2025, primarily due to the **net loss incurred** during the period[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities for the thirteen weeks ended March 30, 2025 Condensed Consolidated Statements of Cash Flows Highlights (13 Weeks Ended) | Cash Flow Activity | March 30, 2025 | March 31, 2024 | Change (YoY) | | :--------------------------------- | :--------------- | :--------------- | :----------- | | Net Cash Used in Operating Activities | $(306,739) | $(408,875) | $102,136 | | Net Cash Used in Investing Activities | $(527,705) | $(62,319) | $(465,386) | | Net Cash Used in Financing Activities | $(46,870) | $(160,957) | $114,087 | | Change in Cash and Cash Equivalents | $(881,314) | $(632,151) | $(249,163) | | Cash and Cash Equivalents, End of Period | $1,070,101 | $4,668,295 | $(3,598,194) | - A significant increase in cash used in investing activities was driven by higher purchases of marketable securities (**$1,572,328** in 2025 vs. **$5,370,898** in 2024) and loans to a related company (**$60,000** in 2025 vs. **$0** in 2024)[21](index=21&type=chunk) [NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=6&type=section&id=NOTE%201%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section details the company's accounting policies, including business operations, fair value measurements, and deferred tax assets - The company operates **fifteen restaurants** as of March 30, 2025, including seven Burger Time locations, Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, Schnitzel Haus (acquired May 2024), and a **40.7% owned Bagger Dave's business**[27](index=27&type=chunk)[28](index=28&type=chunk)[32](index=32&type=chunk) - The company recorded a valuation allowance of approximately **$666,000** as of March 30, 2025, reducing net deferred tax assets to zero due to uncertainty regarding future realization of these assets[51](index=51&type=chunk) Fair Value of Level 1 Investments | Investment Type | March 30, 2025 (Fair Value) | December 29, 2024 (Fair Value) | | :---------------------- | :-------------------------- | :--------------------------- | | Common stocks | $2,446,909 | $2,129,986 | | Real Estate Investment Trust | $301,500 | $189,569 | | Total | $2,748,409 | $2,319,555 | [NOTE 2 – INTANGIBLE ASSETS](index=9&type=section&id=NOTE%202%20%E2%80%93%20INTANGIBLE%20ASSETS) This section provides details on the company's intangible assets, including covenants not to compete, tradenames, and associated amortization expenses Intangible Assets, Net | Asset Type | March 30, 2025 (Net Carrying Value) | December 29, 2024 (Net Carrying Value) | | :----------------------- | :-------------------------------- | :----------------------------------- | | Covenants not to Compete | $73,074 | $94,865 | | Tradenames | $275,100 | $322,012 | | Total Intangible Assets, Net | $348,174 | $367,799 | - The company closed its Village Bier Garten location on January 2, 2025, resulting in an impairment charge for associated intangible assets recognized in 2024 and the remaining carrying value charged to the impairment reserve in Q1 2025[55](index=55&type=chunk) - Total amortization expense for intangible assets decreased to **$19,625** for the first quarter of 2025, from **$26,142** in the same period of 2024[57](index=57&type=chunk) [NOTE 3 – PROPERTY AND EQUIPMENT](index=10&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT) This section details the company's property and equipment, including total values, accumulated depreciation, and net carrying amounts Property and Equipment, Net | Metric | March 30, 2025 | December 29, 2024 | | :------------------------- | :--------------- | :---------------- | | Total Property and Equipment | $6,997,852 | $7,500,548 | | Accumulated Depreciation | $(3,457,775) | $(3,575,663) | | Net Property and Equipment | $3,281,326 | $3,343,340 | - Depreciation expense for the 13-week period in 2025 was **$136,770**, a slight increase from **$133,975** in the same period of 2024[58](index=58&type=chunk) [NOTE 4 - ACCRUED EXPENSES](index=10&type=section&id=NOTE%204%20-%20ACCRUED%20EXPENSES) This section provides a breakdown of the company's accrued expenses, including real estate taxes, payroll, sales taxes, and gift card liabilities Accrued Expenses | Accrued Expense Type | March 30, 2025 | December 29, 2024 | | :--------------------- | :--------------- | :---------------- | | Accrued real estate taxes | $33,098 | $46,401 | | Accrued payroll | $171,971 | $177,275 | | Accrued sales taxes payable | $76,868 | $57,706 | | Accrued gift card liability | $32,833 | $38,425 | | Total Accrued Expenses | $349,056 | $371,356 | [NOTE 5 - LONG-TERM DEBT](index=10&type=section&id=NOTE%205%20-%20LONG-TERM%20DEBT) This section details the company's long-term debt, including notes payable to a bank, unamortized debt issuance costs, and current maturities Long-Term Debt | Metric | March 30, 2025 | December 29, 2024 | | :--------------------------------- | :--------------- | :---------------- | | Notes payable to a bank | $2,260,273 | $2,307,143 | | Less - unamortized debt issuance costs | $(29,449) | $(30,799) | | Current maturities | $(156,575) | $(185,009) | | Long-Term Debt, Less Current Portion | $2,074,249 | $2,091,335 | - The long-term debt consists of three notes payable to a bank, secured by mortgages on eight BTND properties and guaranteed by the company and a shareholder, with a **fixed interest rate of 3.45%** through June 28, 2031[61](index=61&type=chunk) [NOTE 6 - STOCK-BASED COMPENSATION](index=11&type=section&id=NOTE%206%20-%20STOCK-BASED%20COMPENSATION) This section outlines the company's stock-based compensation expense, available shares for grant, and projected future expenses Stock-Based Compensation Expense (13 Weeks Ended) | Period | Stock-Based Compensation Expense | | :------------------- | :------------------------------- | | March 30, 2025 | $31,000 | | March 31, 2024 | $54,000 | - As of March 30, 2025, **749,000 shares** were available for grant under the 2019 Incentive Plan[62](index=62&type=chunk) - The company projects approximately **$100,000** in stock-based compensation expense for stock options to be recognized over the next two years (**$59,000** in 2025 and **$41,000** in 2026)[65](index=65&type=chunk) [NOTE 7 – LEASES](index=12&type=section&id=NOTE%207%20%E2%80%93%20LEASES) This section details the company's lease obligations, including future minimum lease payments and total operating lease expenses Minimum Future Lease Payments (as of March 30, 2025) | Period | Total | | :------------------- | :--------------- | | Remainder 2025 | $192,439 | | 2026 | $267,996 | | 2027 | $220,251 | | 2028 | $222,507 | | 2029 | $225,193 | | 2030 and thereafter | $558,164 | | Total future minimum lease payments | $1,686,550 | | Less - interest | $(209,090) | | Present Value of Lease Obligations | $1,477,460 | - Total operating lease expenses for the 13 weeks in 2025 were approximately **$74,000**, a decrease from **$85,000** in 2024[76](index=76&type=chunk) [NOTE 8 – SHAREHOLDERS' EQUITY](index=13&type=section&id=NOTE%208%20%E2%80%93%20SHAREHOLDERS%27%20EQUITY) This section discusses changes in shareholders' equity, including stock repurchase programs and at-the-market offering programs - The company authorized a stock repurchase program on June 6, 2024, to repurchase up to **625,000 shares** (approximately **10.0%** of outstanding common stock), with **533,606 shares** still available as of December 29, 2024[79](index=79&type=chunk) - On December 13, 2024, BT Brands entered into an Equity Distribution Agreement with Maxim Group LLC to sell common stock through an 'at the market offering program' for up to **$3,005,000**[80](index=80&type=chunk) [NOTE 9 - RELATED PARTY TRANSACTION](index=13&type=section&id=NOTE%209%20-%20RELATED%20PARTY%20TRANSACTION) This section details the company's financial transactions and agreements with NGI Corporation, a related party - As of March 30, 2025, the company's total investment in equity and loans to NGI Corporation is **$484,000**, including **$180,000** in demand loans, of which **$60,000** was advanced in Q1 2025[81](index=81&type=chunk) - Effective April 2, 2025, notes to NGI were converted into the purchase of approximately **200,000 Disney-character aluminum bottles** from NGI's B Water subsidiary, with an option for NGI to repurchase them[81](index=81&type=chunk) - As consideration for the bottle purchase, BT Brands will be granted an option to purchase **10%** of the fully-diluted equity of NGI or its B Water, with terms expected to be finalized within 30 days[81](index=81&type=chunk) [NOTE 10 – CONTINGENCIES](index=13&type=section&id=NOTE%2010%20%E2%80%93%20CONTINGENCIES) This section addresses potential claims and their material impact on the company's financial position - The company is unaware of any significant asserted or potential claims that could materially impact its financial position[84](index=84&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=14&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides an overview of the company's business, recent operational events, material trends, and a detailed analysis of financial performance and liquidity [Introduction](index=14&type=section&id=Introduction) This section introduces the company's restaurant operations, including its various brands and their service models - As of March 30, 2025, BT Brands owns and operates **sixteen restaurants**, including Burger Time, Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, Schnitzel Haus, and a **40.7% interest in Bagger Dave's Burger Tavern, Inc.**[86](index=86&type=chunk)[91](index=91&type=chunk) - Burger Time restaurants focus on a limited menu of grilled hamburgers and other affordable foods, emphasizing quality, speed, and drive-thru/take-out service[86](index=86&type=chunk) - The average customer transaction at Burger Time restaurants remained approximately **$15.00** in Q1 2025, with new initiatives in third-party delivery expected to contribute to future sales growth[87](index=87&type=chunk) [Notable Recent Events](index=14&type=section&id=Notable%20Recent%20Events) This section highlights significant operational changes, including restaurant closures and their financial impact - During Q1 2025, the company closed its Village Bier Garden restaurant in Cocoa, Florida, and its Ham Lake, Minnesota location[89](index=89&type=chunk) - The two closed locations contributed **$507,458** in revenue and an operating loss of approximately **$94,000** in Q1 2024[89](index=89&type=chunk) [Material Trends and Uncertainties](index=14&type=section&id=Material%20Trends%20and%20Uncertainties) This section discusses key industry trends and uncertainties impacting the company's business, including labor, costs, and competition - Key industry trends impacting the business include difficulties in attracting food service workers, rapid inflation in input costs, and the fast-evolving landscape of technology and food delivery[90](index=90&type=chunk) - Competitors are aggressively adopting smartphone/mobile delivery applications, expanding drive-through operations, and developing loyalty programs, intensifying market competition[90](index=90&type=chunk) [Results of Operations for the Thirteen Weeks Ended March 30, 2025, and the Thirteen Weeks Ended March 31, 2024](index=15&type=section&id=Results%20of%20Operations%20for%20the%20Thirteen%20Weeks%20Ended%20March%2030%2C%202025%2C%20and%20the%20Thirteen%20Weeks%20Ended%20March%2031%2C%202024) This section analyzes the company's financial performance, comparing key metrics for the thirteen-week periods ended March 30, 2025, and March 31, 2024 Key Financial Performance Indicators (13 Weeks Ended) | Metric | March 30, 2025 | March 31, 2024 | Change (YoY) | Percentage Change (YoY) | | :--------------------------------- | :--------------- | :--------------- | :----------- | :------------------------ | | Sales | $3,231,073 | $3,190,147 | $40,926 | 1.28% | | Food and Paper Costs (% of Sales) | 37.1% | 40.1% | -3.0% | -7.48% | | Labor Costs (% of Sales) | 37.7% | 43.5% | -5.8% | -13.33% | | Occupancy Costs (% of Sales) | 9.6% | 10.5% | -0.9% | -8.57% | | Loss from Operations | $(292,196) | $(630,829) | $338,633 | -53.68% | | Restaurant-level EBITDA | $315,233 | $(15,672) | $330,905 | 2111.45% | - Net sales increased by **$40,926** to **$3,231,073** in Q1 2025, driven by sales increases at most locations and the acquisition of Schnitzel Haus (contributing approximately **$500,000**), partially offset by a **$507,000** decline from two closed locations[93](index=93&type=chunk) - Restaurant-level EBITDA significantly improved from a loss of **$(15,672)** in Q1 2024 to a gain of **$315,233** in Q1 2025, reflecting concerted cost-cutting efforts and improved operational efficiency[106](index=106&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's financial liquidity, capital resources, and their utilization for operational needs and debt service - As of March 30, 2024, the company had **$3.8 million** in cash and marketable securities and net working capital of **$3.5 million**, a decrease of approximately **$66,000** from December 29, 2024[107](index=107&type=chunk) - Operating cash flow for the thirteen weeks ending March 30, 2025, was a **negative $306,739**, impacted by seasonal business patterns[110](index=110&type=chunk) - The company's primary liquidity sources are operating cash flows and cash on hand, used to fund working capital, capital expenditures, and general corporate needs, including debt service and store maintenance[109](index=109&type=chunk) [Contractual Obligations](index=17&type=section&id=Contractual%20Obligations) This section outlines the company's total contractual obligations, including mortgages and operating lease liabilities - As of March 30, 2025, total contractual obligations amounted to **$3.7 million**, comprising **$2.2 million** related to mortgages and **$1.5 million** in operating lease obligations[113](index=113&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](index=17&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK.) As a smaller reporting company, BT Brands is not required to provide the information typically mandated for quantitative and qualitative disclosures about market risk - The company is exempt from providing quantitative and qualitative disclosure about market risk as it qualifies as a **smaller reporting company**[115](index=115&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=17&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) This section details the evaluation of the company's disclosure controls and procedures, concluding they were not effective due to a material weakness [Evaluation of Disclosure Controls and Procedures](index=17&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and procedures, citing a material weakness in internal control over financial reporting - As of March 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **not effective** at a reasonable assurance level[117](index=117&type=chunk) - This ineffectiveness is attributed to a **material weakness in internal control over financial reporting**, as previously disclosed in the company's Form 10-K for the fiscal year ended December 29, 2024[117](index=117&type=chunk) [Changes in Internal Control over Financial Reporting](index=18&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section discusses any material changes in the company's internal control over financial reporting during the most recently completed fiscal quarter - The company is considering utilizing outside consultants to assist in the accounting for significant acquisitions, though no acquisitions have been completed in fiscal 2025 so far[118](index=118&type=chunk) - Except for the consideration of outside consultants, there were no other material changes in the company's internal control over financial reporting during the most recently completed fiscal quarter[118](index=118&type=chunk) PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other required disclosures [ITEM 1. LEGAL PROCEEDINGS](index=18&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company reports no material pending legal proceedings, nor any known threatened or contemplated actions that could significantly impact its financial position - There are no material pending legal proceedings to which the company is a party, or any known threatened or contemplated proceedings against it[121](index=121&type=chunk) [ITEM 1A. RISK FACTORS](index=18&type=section&id=ITEM%201A.%20RISK%20FACTORS.) As a smaller reporting company, BT Brands is not required to provide specific risk factor disclosures under this item - The company is exempt from providing risk factor information as it is classified as a **smaller reporting company**[122](index=122&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=18&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) This section confirms no unregistered sales of equity securities since the last annual report and details the use of proceeds from the company's initial public offering [Unregistered Sales of Equity Securities](index=18&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) This section confirms that the company has not engaged in any unregistered sales of equity securities since its last annual report - The company has not sold any unregistered equity securities since filing its Annual Report on Form 10-K[123](index=123&type=chunk) [Use of Proceeds](index=18&type=section&id=Use%20of%20Proceeds) This section details how the proceeds from the company's initial public offering were utilized for working capital and various restaurant acquisitions - Proceeds from the November 2021 initial public offering were used for general working capital and to acquire restaurant assets including Keegan's Seafood Grille (**$1,150,000**), Pie in the Sky Bakery and Coffee Shop (**$1,160,000**), a **40.7% stake in Bagger Dave's** (**$1,390,000**), the Village Bier Garten (recently closed), and Schnitzel Haus (**$943,000**)[124](index=124&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=18&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The company reports no defaults upon senior securities - There have been no defaults upon senior securities[125](index=125&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=18&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This item is not applicable to the company's operations - Mine safety disclosures are not applicable to the company[126](index=126&type=chunk) [ITEM 5. OTHER INFORMATION](index=18&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) The company reports no other information required under this item - There is no other information to report under this item[127](index=127&type=chunk) [ITEM 6. EXHIBITS](index=18&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed with the Form 10-Q, including an agreement with NGI Corporation, certifications from executive officers, and various Inline XBRL documents - Exhibits filed include an agreement with NGI Corporation (Exhibit 10.1), certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1*, 32.2*), and various Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[127](index=127&type=chunk)[128](index=128&type=chunk) SIGNATURES [SIGNATURES](index=19&type=section&id=SIGNATURES.) The report is duly signed on behalf of BT Brands, Inc. by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer, on May 14, 2025 - The report was signed by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer of BT Brands, Inc., on May 14, 2025[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) BT Brands, Inc. operates seventeen restaurants across various segments in the eastern two-thirds of the United States, focusing on acquisitions and increasing shareholder value - BT Brands, Inc. owns and operates **seventeen restaurants**, including partially owned Bagger Dave's, across various segments and geographic regions in the eastern two-thirds of the United States[21](index=21&type=chunk)[22](index=22&type=chunk)[180](index=180&type=chunk) - The company's principal strategy is acquiring restaurant properties at attractive earnings multiples to build shareholder value in the food service industry, alongside efforts to increase sales, lower costs, and boost brand awareness[23](index=23&type=chunk)[47](index=47&type=chunk) - The business is subject to intense competition, seasonal fluctuations (e.g., lower Q1/Q4 revenue for Midwestern restaurants, higher summer revenue for PIE, winter travel season peak for Florida locations), and extensive federal, state, and local regulations[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [Item 1A. Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from health emergencies, acquisition challenges, intense competition, rising costs, and cybersecurity threats - Health emergencies, such as COVID-19 variants, could negatively impact the business through declines in customer traffic, staffing difficulties, temporary restaurant closures, supply chain disruptions, and increased commodity costs[68](index=68&type=chunk)[69](index=69&type=chunk) - Growth through acquisitions is subject to risks including challenges in securing favorable locations, remodeling costs, hiring personnel, integrating operations, retaining key employees, and the need for substantial additional capital which may not be available on acceptable terms[70](index=70&type=chunk)[71](index=71&type=chunk)[78](index=78&type=chunk)[81](index=81&type=chunk) - The restaurant industry is intensely competitive, with risks from changes in consumer tastes, dietary trends, economic conditions, and competition from other restaurant chains and food delivery services, potentially leading to declining sales and profit margins[86](index=86&type=chunk)[88](index=88&type=chunk) - Profitability is vulnerable to increases in commodity (beef, poultry, grains, dairy), energy, labor, and other operating costs due to inflation, shortages, or market changes, which may be difficult to offset with menu price increases[95](index=95&type=chunk)[96](index=96&type=chunk)[130](index=130&type=chunk) - The company relies on its computer systems and third-party vendors for point-of-sale processing, making it vulnerable to system failures, network security breaches, and cyber-attacks that could disrupt operations, compromise data, and lead to negative publicity or legal liabilities[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Item 1B. Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC [Item 1C. Cybersecurity](index=21&type=section&id=Item%201C.%20Cybersecurity) BT Brands maintains a proactive cybersecurity program overseen by the Board, with no material incidents reported to date - BT Brands maintains a proactive cybersecurity program aligned with NIST frameworks, employing controls, technologies, and processes to identify, protect against, detect, respond to, and mitigate cybersecurity risks[147](index=147&type=chunk)[148](index=148&type=chunk) - The Board of Directors, with the Audit Committee and CFO, oversees cybersecurity risk management, including annual risk assessments and evaluations, often incorporating reports from third-party advisors[149](index=149&type=chunk) - As of the report date, the company has not experienced any cybersecurity threats or incidents that have impacted its results of operations or financial condition, though it acknowledges the potential for future unauthorized access or disruptions[150](index=150&type=chunk) [Item 2. Properties](index=21&type=section&id=Item%202.%20Properties) BT Brands leases its corporate office and owns Burger Time real estate, while other restaurants operate under long-term triple-net leases - The company's principal corporate office is leased in Minnetonka, Minnesota, on a month-to-month basis[151](index=151&type=chunk)[155](index=155&type=chunk) Burger Time Restaurant Properties (as of Dec 29, 2024) | Location | Open Since | Building (Approx. Sq. Ft.) | Land (Sq. Ft.) | Real Estate Owner | Restaurant Business Owner | | :------------------------ | :--------- | :------------------------- | :------------- | :---------------- | :------------------------ | | Fargo, North Dakota | 1987 | 600 | 35,000 | BTND, LLC | BTND, LLC | | Moorhead, Minnesota | 1988 | 600 | 22,680 | BTND, LLC | BTND, LLC | | Grand Forks, North Dakota | 1989 | 650 | 29,580 | BTND, LLC | BTND, LLC | | Waite Park, Minnesota | 1989 | 700 | 17,575 | BTND, LLC | BTND, LLC | | Bismarck, North Dakota | 1989 | 600 | 30,750 | BTND, LLC | BTND, LLC | | Sioux Falls, South Dakota | 1991 | 650 | 17,688 | BTND, LLC | BTND, LLC | | Minot, North Dakota | 1992 | 800 | 33,600 | BTND, LLC | BTND, LLC | | Ham Lake, Minnesota | Closed | 1,664 | 31,723 | BTND LLC | (1) (3) | | Richmond, Indiana | held for sale | 1,062 | 23,086 | (4) (5) BTND IN, LLC | (2) | - Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, and Schnitzel Haus operate under long-term triple-net leases with varying terms and annual escalations. The Village Bier Garten location was closed in January 2025, and its lease was assigned[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) [Item 3. Legal Proceedings](index=22&type=section&id=Item%203.%20Legal%20Proceedings) BT Brands is not currently involved in any legal proceedings expected to have a material adverse effect on its business - The company is not currently involved in any legal proceedings that are expected to have a material adverse effect on its business, results of operations, financial condition, or cash flows[161](index=161&type=chunk) - Litigation, even without merit, can be expensive to defend, divert management attention, and generate negative publicity, potentially impacting customer traffic and sales[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to BT Brands, Inc PART II [Item 5. Market for Registrant's Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities](index=22&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) BT Brands' common stock and warrants trade on Nasdaq, with no cash dividends paid, and a share repurchase program in place - BT Brands' common stock (**BTBD**) and warrants (**BTBDW**) have been trading on the Nasdaq Stock Market since **November 12, 2021**[164](index=164&type=chunk) - As of **March 1, 2025**, there were **6,246,118 shares** of common stock outstanding, held by approximately **40 stockholders of record**[166](index=166&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so, intending to retain all available funds for operations, expansion, and debt repayment[167](index=167&type=chunk) Share Repurchase Program Activity | Period | Total number of shares purchased | Average price paid per share ($) | Shares purchased as part of publicly announced program | Maximum of shares that may yet be purchased under the program | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------------------------------- | :---------------------------------------------------------- | | January 1 – December 31, 2023 | 150,000 | $1.668 | 150,000 | 600,000 | | January 1, 2024 – December 29, 2024 | 91,394 | $1.561 | 91,394 | 508,606 | - The net proceeds from the November 2021 IPO, approximately **$10.68 million**, have been invested in restaurant business acquisitions, Bagger Dave's shares, and marketable equity securities, including Noble Roman's Inc[175](index=175&type=chunk)[177](index=177&type=chunk) [Item 6. Reserved](index=26&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) BT Brands reported a significant net loss in fiscal year 2024 due to impairment, increased affiliate loss, and tax provision, despite revenue growth Consolidated Statements of Operations Summary (2024 vs. 2023) | Metric | 2024 Amount | 2024 % of Sales | 2023 Amount | 2023 % of Sales | | :------------------------------------------ | :------------ | :-------------- | :------------ | :-------------- | | SALES | $14,823,472 | 100.0% | $14,076,653 | 100.0% | | Food and paper costs | $5,605,579 | 37.8% | $5,597,167 | 39.8% | | Labor costs | $6,128,574 | 41.3% | $5,458,351 | 38.8% | | Occupancy costs | $1,403,204 | 9.5% | $1,312,717 | 9.3% | | Other operating expenses | $962,287 | 6.5% | $841,894 | 6.0% | | Depreciation and amortization | $742,860 | 5.0% | $598,540 | 4.3% | | Impairment of assets | $371,872 | 2.5% | — | — | | General and administrative | $1,691,404 | 11.4% | $1,650,755 | 11.7% | | Gain on sale of asset | $(250,000) | (1.7%) | $(310,182) | (2.2%) | | Total costs and expenses | $16,655,780 | 112.3% | $15,149,242 | 107.6% | | Loss from operations | $(1,832,308) | (12.3%) | $(1,072,589) | (7.6%) | | Net Loss | $(2,311,208) | (15.5%) | $(887,368) | (6.3%) | - Net sales increased by **$746,819 (5.3%)** to **$14,823,472** in 2024, primarily driven by the acquisition of Schnitzel Haus (**$710,000** in sales) and sales increases at BTND (**7%**) and PIE (**19%**)[193](index=193&type=chunk) - Restaurant operating costs increased to **95.1% of sales** in 2024 (from 93.9% in 2023) due to continued price inflation in food and labor, and higher labor costs at PIE and Keegan's[195](index=195&type=chunk)[199](index=199&type=chunk) - The net loss increased significantly in 2024 to **$2,311,208** (from $887,368 in 2023), largely due to a **$371,872 impairment charge** for Village Bier Garten, an increased equity in loss of affiliate (Bagger Dave's) to **$415,085**, and a **$206,000 income tax provision**[203](index=203&type=chunk)[206](index=206&type=chunk) Restaurant-level EBITDA (2024 vs. 2023) | Metric | 2024 | 2023 | | :------------------------------------ | :----------- | :----------- | | Revenues | $14,832,108 | $14,076,653 | | Loss from operations | $(1,832,308) | $(1,072,589) | | Depreciation and amortization | $742,860 | $598,540 | | Gain on sale of assets | $(250,000) | $(310,182) | | Impairment of restaurant asset | $371,872 | - | | General and administrative, corporate-level expenses | $1,691,404 | $1,650,755 | | Restaurant-level EBITDA | $723,828 | $866,524 | | Restaurant-level EBITDA margin | 4.9% | 6.2% | - As of December 29, 2024, the company had **$4,270,970** in cash and marketable securities and a net working capital of **$3,556,469**, with primary liquidity needs for working capital, capital expenditures, and business acquisitions[211](index=211&type=chunk)[212](index=212&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, BT Brands is exempt from providing quantitative and qualitative market risk disclosures - BT Brands, as a smaller reporting company, is exempt from providing quantitative and qualitative disclosures about market risk[218](index=218&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=29&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for fiscal years 2024 and 2023, with an unqualified opinion from Boulay PLLP - The consolidated financial statements for fiscal years 2024 and 2023 were audited by Boulay PLLP, who issued an **unqualified opinion**, stating the financial position, results of operations, and cash flows are presented fairly in all material respects[223](index=223&type=chunk)[228](index=228&type=chunk) Consolidated Balance Sheet Summary | ASSETS | December 29, 2024 | December 31, 2023 | | :-------------------------------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $1,951,415 | $5,300,446 | | Marketable securities | $2,319,555 | $1,392,060 | | Total current assets | $4,999,404 | $7,228,573 | | Total assets | $11,996,797 | $14,609,212 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Total current liabilities | $1,442,935 | $1,550,090 | | Total liabilities | $5,031,570 | $5,420,483 | | Total shareholders' equity | $6,965,227 | $9,188,729 | | Total liabilities and shareholders' equity | $11,996,797 | $14,609,212 | Consolidated Statements of Cash Flows Summary | Cash Flow Activity | 2024 | 2023 | | :------------------------------------ | :------------- | :------------- | | Net cash used in operating activities | $(723,505) | $(258,787) | | Net cash provided (used by) investing activities | $(2,184,677) | $4,713,044 | | Net cash used in financing activities | $(440,849) | $(1,304,389) | | CHANGE IN CASH AND CASH EQUIVALENTS | $(3,349,031) | $3,149,868 | | CASH AND CASH EQUIVALENTS, END OF PERIOD | $1,951,415 | $5,300,446 | - The company's investment in Bagger Dave's Burger Tavern, Inc. (**39.6% ownership**) is accounted for under the equity method, resulting in a net investment of **$304,439** as of December 29, 2024, after recording its share of losses[242](index=242&type=chunk)[250](index=250&type=chunk) - BT Brands acquired Schnitzel Haus in May 2024 for **$943,000**, including property, intangible covenant not to compete, inventory, and a utility vehicle, and assumed a lease obligation[319](index=319&type=chunk) [Item 9. Changes in and Disagreements with on Accounting and Financial Disclosure](index=45&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20on%20Accounting%20and%20Financial%20Disclosure) BT Brands reported no changes in or disagreements with accountants on accounting and financial disclosure matters - There were no changes in or disagreements with accountants on accounting and financial disclosure[326](index=326&type=chunk) [Item 9A. Evaluation of Disclosure Controls and Procedures](index=45&type=section&id=Item%209A.%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in accounting for complex transactions, despite fair financial statement presentation - As of December 29, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were **not effective** due to a material weakness in internal control over financial reporting[329](index=329&type=chunk) - The identified material weakness, originating in fiscal year 2022, pertains to the design of controls over the accounting and reporting of significant, non-recurring events and complex transactions[334](index=334&type=chunk) - Despite the material weakness, management asserts that the consolidated financial statements for the periods presented fairly represent the company's financial position, results of operations, and cash flows in conformity with U.S. GAAP[330](index=330&type=chunk) - The company has an ongoing remediation plan, which includes potentially engaging experts to assist with accounting for complex transactions, with oversight from senior management and the Audit Committee[336](index=336&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) [Item 9B. Other Information](index=46&type=section&id=Item%209B.%20Other%20Information) BT Brands reported no other information required by this item - No other information was reported under Item 9B[339](index=339&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=46&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to BT Brands, Inc PART III [Item 10. Directors, Executive Officers, and Corporate Governance](index=46&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) BT Brands' board consists of five members, including three independent directors, overseeing risk management and adhering to a Code of Ethics and other corporate policies Executive Officers and Directors | Name | Age | Position | | :-------------------- | :-- | :----------------------------------- | | Gary Copperud | 67 | Chief Executive Officer and Director | | Kenneth Brimmer | 69 | Chief Operating Officer and Chairman | | Allan Anderson | 71 | Director | | Terri Tochihara-Dirks | 63 | Director | | Fred Croci | 77 | Director | - The board comprises five members, with Allan Anderson, Terri Tochihara-Dirks, and Fred Croci identified as **independent directors** under NASDAQ Listing Rules[350](index=350&type=chunk)[353](index=353&type=chunk) - The company separates the roles of Chief Executive Officer (Gary Copperud) and Chairman of the Board (Kenneth Brimmer) to distinguish strategic direction from board oversight[355](index=355&type=chunk) - The board oversees risk management through its Audit and Compensation Committees, which review financial risk, compensation-related risk, and compliance with the Code of Ethics[356](index=356&type=chunk)[357](index=357&type=chunk) - BT Brands has adopted a Code of Ethics and Business Conduct, an Insider Trading Policy (March 2024), and a Clawback Policy (March 2024) for executive officers, requiring recovery of erroneously awarded incentive-based compensation in case of accounting restatements[364](index=364&type=chunk)[365](index=365&type=chunk)[366](index=366&type=chunk) [Item 11. Executive Compensation](index=51&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation for 2024 included salaries for CEO Gary Copperud and COO/CFO Kenneth Brimmer, with employment agreements and an Incentive Plan for equity awards Summary Compensation Table (2024 vs. 2023) | Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Total ($) | | :-------------------------------- | :--- | :--------- | :--------------- | :---------------- | :-------- | | Gary Copperud, Chief Executive Officer | 2024 | $250,000 | | | $250,000 | | | 2023 | $250,000 | | $127,840 | $377,840 | | Kenneth W. Brimmer, Chief Operating and Financial Officer | 2024 | $150,000 | | | $150,000 | | | 2023 | $150,000 | | $95,880 | $245,880 | - CEO Gary Copperud and COO/CFO Kenneth Brimmer have three-year employment agreements, automatically extending, with annual base salaries of **$250,000** and **$150,000**, respectively, and eligibility for annual bonuses[372](index=372&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) - The 2019 Incentive Plan authorizes the issuance of **1,000,000 shares** of common stock for various equity awards, including stock options, SARs, restricted shares, and performance awards, to eligible participants[379](index=379&type=chunk)[381](index=381&type=chunk) Director Compensation (2024) | Name | Fees Earned or Paid in Cash | Stock Awards (1) | Total ($) | | :-------------------- | :-------------------------- | :--------------- | :-------- | | Allan Anderson | $2,750 | $1,897 | $4,647 | | Terri Tochihara-Dirks | $2,250 | $1,897 | $4,147 | | Steve Schussler | $2,250 | $8,050 | $10,300 | | Fred Croci | $500 | $5,940 | $6,440 | | Total: | $7,750 | $17,784 | $25,534 | [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=55&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 15, 2025, officers and directors collectively owned 20.78% of BT Brands' common stock, with Gary Copperud holding the largest individual stake Beneficial Ownership of Common Stock (as of March 15, 2025) | Name of Beneficial Owner | Number of Shares | Percentage | | :-------------------------------- | :--------------- | :--------- | | Officers and Directors: | | | | Gary Copperud | 1,114,225 | 18.10% | | Kenneth Brimmer | 140,000 | 2.42% | | Allan Anderson | 10,000 | * | | Terri Tochihara-Dirks | 10,000 | * | | Fred Croci | 9,000 | * | | Total for all Officers and Directors | 1,279,225 | 20.78% | | 5% Stockholders: | | | | Sally Copperud | 600,000 | 9.75% | | Jeffrey A. Zinnecker | 600,000 | 9.75% | | Samuel Vandeputte | 346,290 | 5.63% | | Trost Family Trust | 346,290 | 5.63% | - Beneficial ownership is calculated based on **6,154,724 shares** of common stock outstanding as of March 15, 2025, including shares subject to options or warrants exercisable within 60 days[398](index=398&type=chunk)[399](index=399&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=56&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) BT Brands has a Related-Party Transaction Policy and engages in transactions with related parties, including CEO Gary Copperud's personal guarantee on debt - BT Brands has a 'Related-Party Transaction Policy' requiring review and approval by the audit committee for transactions exceeding **$120,000** or **1% of average total assets** involving related parties[403](index=403&type=chunk)[405](index=405&type=chunk) - Related party transactions include CEO Gary Copperud personally guaranteeing mortgage debt and the company's **$424,000 investment** in NGI Corporation, where both Mr. Copperud (Chairman) and COO Kenneth Brimmer (board member, CFO) hold positions[408](index=408&type=chunk)[409](index=409&type=chunk)[320](index=320&type=chunk) - The company's articles of incorporation and bylaws provide for indemnification of directors and officers to the fullest extent permitted by Wyoming law, and the company maintains directors' and officers' liability insurance[409](index=409&type=chunk)[369](index=369&type=chunk) [Item 14. Principal Accounting Fees and Services](index=56&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Boulay, PLLP has served as BT Brands' principal accountant since 2015, with the Audit Committee overseeing their appointment and pre-approving all services - Boulay, PLLP has been the principal accountant for BT Brands since **2015**[412](index=412&type=chunk) - The Audit Committee is directly responsible for the appointment, retention, compensation, and oversight of the independent registered public accounting firm, including pre-approving all audit and non-audit services[412](index=412&type=chunk)[413](index=413&type=chunk) Fees Billed by Boulay, PLLP (2024 vs. 2023) | Fee Category | 2024 | 2023 | | :----------------- | :--------- | :--------- | | Audit fees | $196,920 | $165,830 | | Audit-related Fees | - | - | | Tax fees | - | - | | All other fees | $24,245 | - | | Total fees | $221,165 | $165,830 | - The increase in total fees from 2023 to 2024 was primarily due to audit services and fees related to the company's shelf registration statement and share distribution agreement[419](index=419&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=57&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the exhibits and financial statement schedules included in the 10-K report, with financial statements presented in Item 8 - The financial statements required under this item are included in Item 8 of Part II[418](index=418&type=chunk) - No separate financial statement schedules are provided as the information is either not required or is already presented in the financial statements or their notes[421](index=421&type=chunk) - A comprehensive list of exhibits is provided, including the Equity Distribution Agreement, Articles of Incorporation, Bylaws, specimen stock certificates, warrant agreements, purchase agreements for acquisitions (Keegan's, Pie In The Sky, Schnitzel Haus), employment agreements, and corporate policies (Code of Ethics, Insider Trading Policy, Clawback Policy)[420](index=420&type=chunk) [Item 16. Form 10–K Summary](index=59&type=section&id=Item%2016.%20Form%2010%E2%80%93K%20Summary) BT Brands reported that no Form 10-K Summary is provided - No Form 10-K Summary is provided[422](index=422&type=chunk) [SIGNATURES](index=59&type=section&id=SIGNATURES) The Form 10-K report was duly signed on March 31, 2025, by the registrant's Chief Executive Officer and other authorized directors - The report was signed on **March 31, 2025**, by Gary Copperud (CEO and Director), Kenneth Brimmer (COO, CFO, and Chairman), Allan Anderson (Director), Fred Croci (Director), and Terri Tochihara-Dirks (Director)[426](index=426&type=chunk)[427](index=427&type=chunk)

[PART I FINANCIAL INFORMATION](index=1&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Forward-Looking Statements and Risk Factors](index=2&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section outlines cautionary forward-looking statements, detailing inherent risks and uncertainties that could materially impact actual results - Forward-looking statements are subject to **risks and uncertainties**, and actual results may differ materially from expectations[5](index=5&type=chunk)[6](index=6&type=chunk)[8](index=8&type=chunk) - **Key risk factors** include capital availability, growth strategy execution, acquisition integration, labor shortages and costs, food safety, supply chain dependence, competition, economic conditions, and regulatory compliance[6](index=6&type=chunk) [ITEM 1. FINANCIAL STATEMENTS.](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) This section presents the unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flows, prepared under GAAP - Financial statements are **unaudited** and prepared in accordance with **GAAP** for interim reporting, consistent with prior annual reports[16](index=16&type=chunk) [Consolidated Condensed Balance Sheets](index=3&type=section&id=Consolidated%20Condensed%20Balance%20Sheets) Balance sheets show a decrease in total assets and shareholders' equity, driven by reduced cash and increased accumulated deficit Consolidated Condensed Balance Sheet Highlights | Metric | Sep 29, 2024 | Dec 31, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Total Assets | $13,680,060 | $14,609,212 | -$929,152 | | Total Liabilities | $5,175,346 | $5,420,483 | -$245,137 | | Total Shareholders' Equity | $8,504,714 | $9,188,729 | -$684,015 | | Cash and cash equivalents | $3,085,342 | $5,300,446 | -$2,215,104 | | Marketable securities | $1,969,964 | $1,392,060 | +$577,904 | | Goodwill | $796,220 | $671,220 | +$125,000 | | Accumulated deficit | $(2,785,022) | $(2,049,891) | -$735,131 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For both 13 and 39-week periods, sales increased, but net loss significantly widened due to higher labor and occupancy costs Condensed Consolidated Statements of Income Highlights (39 Weeks) | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Sales | $11,649,610 | $11,078,419 | +$571,191 | | Total costs and expenses | $12,543,993 | $11,368,110 | +$1,175,883 | | Loss from operations | $(894,383) | $(289,691) | -$604,692 | | Net Loss | $(735,131) | $(379,006) | -$356,125 | | Basic and Diluted EPS | $(0.12) | $(0.06) | -$0.06 | Condensed Consolidated Statements of Income Highlights (13 Weeks) | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Sales | $4,348,824 | $4,007,656 | +$341,168 | | Total costs and expenses | $4,423,835 | $3,967,041 | +$456,794 | | Income (loss) from operations | $(75,011) | $40,615 | -$115,626 | | Net Loss | $(219,479) | $(3,486) | -$215,993 | | Basic and Diluted EPS | $(0.04) | $0.00 | -$0.04 | [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased due to net loss and treasury stock purchases, partially offset by stock-based compensation Shareholders' Equity Changes (39 Weeks Ended Sep 29, 2024) | Item | Amount | | :------------------------- | :----------- | | Balances, Dec 31, 2023 | $9,188,729 | | Stock-based compensation | $165,000 | | Treasury stock purchase | $(113,884) | | Net loss | $(735,131) | | Balances, Sep 29, 2024 | $8,504,714 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents significantly decreased, primarily due to substantial cash used in investing, operating, and financing activities Cash Flow Summary (39 Weeks) | Activity | Sep 29, 2024 | Oct 1, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Net cash used in operating activities | $(197,102) | $(74,732) | -$122,370 | | Net cash provided by (used in) investing activities | $(1,668,704) | $4,845,886 | -$6,514,590 | | Net cash used in financing activities | $(349,298) | $(1,374,858) | +$1,025,560 | | Change in cash and cash equivalents | $(2,215,104) | $3,396,296 | -$5,611,400 | | Cash and cash equivalents, end of period | $3,085,342 | $5,546,874 | -$2,461,532 | - Investing activities for 39 weeks ended Sep 29, 2024, included **$943,000** for the acquisition of Schnitzel Haus and **$626,685** for marketable securities purchases[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details significant accounting policies and specific notes on assets, liabilities, equity, and operational events - The company operates eighteen restaurants, including Burger Time, Bagger Dave's (**40% owned**), Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, Schnitzel Haus, and Village Bier Garten[19](index=19&type=chunk)[21](index=21&type=chunk) - Financial statements are prepared in accordance with **GAAP** for interim financial information and SEC requirements for Form 10-Q[16](index=16&type=chunk) [NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=7&type=section&id=NOTE%201%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of financial statement presentation, management estimates, company operations, and key accounting policies - The Company operates eighteen restaurants across multiple brands: eight Burger Time, six Bagger Dave's (**40% owned**), Keegan's Seafood Grille, Pie In The Sky, Schnitzel Haus, and Village Bier Garten[19](index=19&type=chunk)[21](index=21&type=chunk)[23](index=23&type=chunk) - Noncurrent investments include a **$427,524** equity method investment in Bagger Dave's, a **$304,000** investment in NGI Corporation, and **$120,000** in demand loans to NGI[26](index=26&type=chunk) Fair Value of Level 1 Investments | Asset | Sep 29, 2024 (Fair Value) | Dec 31, 2023 (Fair Value) | | :---------------- | :------------------------ | :------------------------ | | Corporate bond fund | $0 | $178,500 | | Common stocks | $1,969,964 | $1,213,560 | [NOTE 2 – INTANGIBLE ASSETS](index=9&type=section&id=NOTE%202%20%E2%80%93%20INTANGIBLE%20ASSETS) Intangible assets, primarily covenants not to compete and tradenames, had a net carrying value of $423,205, with $83,567 amortization expense Intangible Assets (September 29, 2024) | Asset | Estimated Life (Years) | Original Cost | Accumulated Amortization | Net Carrying Value | | :-------------------- | :--------------------- | :------------ | :----------------------- | :----------------- | | Covenants not to Compete | 3 | $198,000 | $(108,705) | $89,295 | | Tradenames | 15 | $393,000 | $(59,090) | $333,910 | | **Total** | | **$591,000** | **$(167,795)** | **$423,205** | Amortization Expense | Period | 2024 | 2023 | | :-------------------- | :----------- | :----------- | | 13-week period | $19,625 | $12,221 | | 39-week period | $83,567 | $54,486 | [NOTE 3 – PROPERTY AND EQUIPMENT](index=10&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT) Net property and equipment increased to $3.7 million due to additions, with $389,853 in depreciation expense for the 39-week period Property and Equipment, Net | Item | Sep 29, 2024 | Dec 31, 2023 | | :---------------------------------- | :----------- | :----------- | | Total property and equipment (gross) | $7,486,591 | $6,893,550 | | Accumulated depreciation | $(3,527,852) | $(3,387,786) | | Less - property held for sale | $(258,751) | $(258,751) | | **Net property and equipment** | **$3,699,988** | **$3,247,013** | Depreciation Expense | Period | 2024 | 2023 | | :-------------------- | :----------- | :----------- | | 13-week period | $121,902 | $102,553 | | 39-week period | $389,853 | $416,315 | [NOTE 4 - ACCRUED EXPENSES](index=10&type=section&id=NOTE%204%20-%20ACCRUED%20EXPENSES) Accrued expenses decreased to $416,841, primarily due to lower bonus compensation and sales taxes, partially offset by increased payroll Accrued Expenses | Item | Sep 29, 2024 | Dec 31, 2023 | | :-------------------------- | :----------- | :----------- | | Accrued bonus compensation | $0 | $119,139 | | Accrued payroll | $231,767 | $149,587 | | Accrued sales taxes payable | $63,313 | $81,683 | | **Total accrued expenses** | **$416,841** | **$480,289** | [NOTE 5 - LONG TERM DEBT](index=11&type=section&id=NOTE%205%20-%20LONG%20TERM%20DEBT) Long-term debt, net of current portion, decreased to $2.15 million, secured by mortgages on ten operating locations with a 3.45% fixed interest rate Long-Term Debt | Item | Sep 29, 2024 | Dec 31, 2023 | | :---------------------------------- | :----------- | :----------- | | Notes payable to a bank | $2,353,367 | $2,489,299 | | Less - unamortized debt issuance costs | $(32,149) | $(36,199) | | Current maturities | $(170,203) | $(183,329) | | **Long-term debt, less current portion** | **$2,151,015** | **$2,269,771** | - Long-term debt is secured by mortgages on ten BTND operating locations and guaranteed by BT Brands, Inc. and a shareholder[47](index=47&type=chunk) [NOTE 6 - STOCK-BASED COMPENSATION](index=11&type=section&id=NOTE%206%20-%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense was $70,000 for Q3 2024 and $165,000 for the 39-week period, related to options and incentive awards Stock-Based Compensation Expense | Period | 2024 | 2023 | | :-------------------- | :----------- | :----------- | | 13-week period | $70,000 | $40,700 | | 39-week period | $165,000 | $118,000 | - A Contingent Incentive Share Award for senior executives, valued at **$265,000**, will be earned if the share price reaches **$8.50** for 20 consecutive trading days, with **$95,000** recognized in 2024 (39 weeks) and **$77,000** in 2023 (39 weeks)[53](index=53&type=chunk) Stock Options Outstanding (39 Weeks Ended Sep 29, 2024) | Item | Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Term (Years) | | :---------------------------------- | :---------------- | :------------------------------ | :-------------------------------------- | | Options outstanding at Dec 31, 2023 | 319,500 | $2.62 | 7.6 | | Granted | 15,000 | $1.61 | 9.5 | | Options outstanding at Sep 29, 2024 | 334,500 | $2.57 | 7.0 | [NOTE 7 – LEASES](index=12&type=section&id=NOTE%207%20%E2%80%93%20LEASES) Operating lease obligations for restaurant locations have a weighted average remaining term of 3.5 years, with $336,000 in expenses for the 39-week period Future Minimum Lease Payments (as of Sep 29, 2024) | Year | Amount | | :---------------------------------- | :----------- | | Remainder 2024 | $79,983 | | 2025 | $351,626 | | 2026 | $362,188 | | 2027 | $317,768 | | 2028 | $208,895 | | 2029 and thereafter | $823,390 | | **Total future minimum lease payments** | **$2,143,850** | | Less - interest | $(311,948) | | **Present value of lease liabilities** | **$1,831,902** | Operating Lease Expenses | Period | 2024 | 2023 | | :-------------------- | :----------- | :----------- | | 13-week period | $130,000 | $81,000 | | 39-week period | $336,000 | $180,000 | [NOTE 8 - RELATED PARTY TRANSACTION](index=13&type=section&id=NOTE%208%20-%20RELATED%20PARTY%20TRANSACTION) BT Brands has a related party investment in NGI Corporation, holding common shares, warrants, and demand notes, with shared executive leadership - BT Brands' CEO and CFO also hold leadership positions at NGI Corporation, a related party[62](index=62&type=chunk) - BT Brands holds **336,496** common shares and warrants for **392,697** common shares of NGI, and has **$120,000** in demand notes due from NGI[62](index=62&type=chunk) [NOTE 10 – ACQUISITION](index=13&type=section&id=NOTE%2010%20%E2%80%93%20ACQUISITION) On May 13, 2024, the company acquired Schnitzel Haus assets for $943,000, including $125,000 in goodwill - Acquired Schnitzel Haus assets on May 13, 2024, for **$943,000**, including **$125,000** in goodwill[63](index=63&type=chunk)[64](index=64&type=chunk) Schnitzel Haus Acquisition Assets | Asset | Amount | | :------------------------------------------------- | :----------- | | Property, including leasehold improvements and equipment | $625,000 | | Intangible covenant not to compete | $100,000 | | Inventory | $65,000 | | Vehicle and other | $28,000 | | Operating lease right-of-use asset | $182,878 | | **Total assets acquired** | **$1,000,878** | | Operating lease liability | $(182,878) | | Net assets acquired | $818,000 | | Goodwill | $125,000 | | **Net purchase price** | **$943,000** | [NOTE 11 – CONTINGENCIES](index=13&type=section&id=NOTE%2011%20%E2%80%93%20CONTINGENCIES) The company is unaware of any significant asserted or potential legal or regulatory claims that could materially impact its financial position - No significant legal or regulatory claims are known to be threatened or contemplated[65](index=65&type=chunk) [NOTE 12 – SUBSEQUENT EVENT](index=13&type=section&id=NOTE%2012%20%E2%80%93%20SUBSEQUENT%20EVENT) Post-quarter, the company sold the Hot-N-Now trademark for $250,000 upfront cash and potential future payments, expecting a $250,000 gain in Q4 2024 - Sold Hot-N-Now trademark for **$250,000** upfront cash and up to **$150,000** in future payments, expecting a **$250,000** gain in Q4 2024[65](index=65&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.](index=14&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION.) Management discusses financial condition, operations, liquidity, and capital resources, covering recent events, industry trends, and performance for the 13 and 39-week periods - The company operates eighteen restaurants across various brands, including Burger Time, Bagger Dave's (**40% owned**), Village Bier Garten, Keegan's, Pie In The Sky, and Schnitzel Haus[67](index=67&type=chunk) - The business environment is challenging due to intense competition, difficulties in attracting food service workers, and rapid inflation in input costs[68](index=68&type=chunk)[70](index=70&type=chunk) [Introduction](index=14&type=section&id=Introduction) The introduction outlines the company's restaurant portfolio and acknowledges the challenging and competitive business environment - The company operates eighteen restaurants across six brands, with Bagger Dave's being a **40% owned** affiliate[67](index=67&type=chunk) - The business faces intense competition and operates through a central management organization[68](index=68&type=chunk) [Notable Recent Events](index=14&type=section&id=Notable%20Recent%20Events) Recent acquisitions, including Schnitzel Haus, have diversified operations and reduced Burger Time dependency, with ongoing pursuit of new opportunities - Recent acquisitions, including Schnitzel Haus in Q2 2024, have diversified operations and reduced reliance on Burger Time restaurants[69](index=69&type=chunk) - The company continues to explore new acquisition opportunities[69](index=69&type=chunk) [Material Trends and Uncertainties](index=14&type=section&id=Material%20Trends%20and%20Uncertainties) The company faces significant industry challenges from labor shortages, rising costs, inflation, and competitive pricing pressures, alongside evolving technology and delivery trends - Key industry challenges include **labor shortages**, increasing wage rates, and rapid inflation in food and input costs[70](index=70&type=chunk)[71](index=71&type=chunk)[72](index=72&type=chunk) - The competitive restaurant industry makes it challenging to fully offset cost increases through menu price adjustments, impacting future margin improvements[71](index=71&type=chunk) - Technology and mobile delivery applications are rapidly changing the restaurant industry, requiring aggressive competition for customers[70](index=70&type=chunk) [Results of Operations for the Thirteen Weeks Ended September 29, 2024, and the Thirteen Weeks Ended October 1, 2023](index=15&type=section&id=Results%20of%20Operations%20for%20the%20Thirteen%20Weeks%20Ended%20September%2029%2C%202024%2C%20and%20the%20Thirteen%20Weeks%20Ended%20October%201%2C%202023) Q3 2024 net sales increased by 7.8% to $4.35 million, but an operating loss of $75,011 occurred due to higher labor and occupancy costs 13-Week Period Financial Performance | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Net Sales | $4,348,824 | $4,007,656 | +$341,168 (7.8%) | | Food and paper costs (% of sales) | 35.9% | 36.2% | -0.3% | | Labor costs (% of sales) | 39.0% | 37.7% | +1.3% | | Occupancy and other expenses (% of sales) | 14.2% | 13.7% | +0.5% | | Income (loss) from operations | $(75,011) | $40,615 | -$115,626 | [Net Sales](index=15&type=section&id=Net%20Sales) Q3 2024 net sales increased by 7.8% to $4.35 million, driven by improved Burger Time and Pie in the Sky sales, and the Schnitzel Haus acquisition Net Sales (13 Weeks) | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Net Sales | $4,348,824 | $4,007,656 | +7.8% | - Sales increase driven by improved Burger Time performance (average unit sales up **$25,000** to **$251,000**), **12%** sales increase at Pie in the Sky, and the addition of Schnitzel Haus[73](index=73&type=chunk)[74](index=74&type=chunk) - Average customer transaction at Burger Time increased by approximately **10%** due to significant menu price increases, with an average check of about **$18.00**[74](index=74&type=chunk) [Costs of Sales - food and paper](index=15&type=section&id=Costs%20of%20Sales%20-%20food%20and%20paper) Food and paper costs as a percentage of sales decreased to 35.9% in Q3 2024, due to moderating inflation and menu price increases Food and Paper Costs (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Food and paper costs | 35.9% | 36.2% | -0.3% | - Decrease in percentage due to moderating inflationary pressures and menu price increases, especially for Burger Time's "Deal of the Day"[75](index=75&type=chunk) [Restaurant Operating Costs](index=16&type=section&id=Restaurant%20Operating%20Costs) Restaurant operating costs as a percentage of sales increased to 89.1% in Q3 2024, driven by higher labor and occupancy costs Restaurant Operating Costs (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Restaurant operating expenses | 89.1% | 87.5% | +1.6% | - Increase driven by higher labor costs, additional occupancy costs, and stabilizing commodity costs[76](index=76&type=chunk) [Labor Costs](index=16&type=section&id=Labor%20Costs) Labor and benefits costs increased to 39.0% of sales in Q3 2024, reflecting tight labor markets, higher training, and wage pressure Labor Costs (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Labor costs | 39.0% | 37.7% | +1.3% | - Increase due to tight labor markets, higher training costs, and competitive hourly wage pressure, partially mitigated by menu price increases and staffing leverage from Schnitzel Haus[77](index=77&type=chunk) [Occupancy and Other Operating Expenses](index=16&type=section&id=Occupancy%20and%20Other%20Operating%20Expenses) Occupancy and other expenses increased to 14.2% of sales in Q3 2024, driven by higher maintenance, utility costs, and Schnitzel Haus lease expenses Occupancy and Other Operating Expenses (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Occupancy costs | 8.7% | 8.5% | +0.2% | | Other operating expenses | 5.5% | 5.2% | +0.3% | | **Total** | **14.2%** | **13.7%** | **+0.5%** | - Increase attributed to higher maintenance expenses, inflationary utility costs, and lease expense from the Schnitzel Haus acquisition[78](index=78&type=chunk) [Depreciation and Amortization Expense](index=16&type=section&id=Depreciation%20and%20Amortization%20Expense) Depreciation and amortization expenses increased to $141,527 in Q3 2024, primarily due to the Schnitzel Haus acquisition Depreciation and Amortization Expense | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Amount | $141,527 | $114,774 | +$26,753 | | % of Sales | 3.3% | 2.9% | +0.4% | - Increase mainly due to depreciation from the Schnitzel Haus acquisition[78](index=78&type=chunk) [General and Administrative Costs](index=16&type=section&id=General%20and%20Administrative%20Costs) General and administrative costs increased to $375,451 in Q3 2024, remaining consistent at 8.6% of sales General and Administrative Costs | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Amount | $375,451 | $343,027 | +$32,424 | | % of Sales | 8.6% | 8.6% | 0.0% | [Income from Operations](index=16&type=section&id=Income%20from%20Operations) Q3 2024 saw an operating loss of $75,011, a decline from prior year profit, driven by higher labor and operating costs Income (Loss) from Operations | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Amount | $(75,011) | $40,615 | -$115,626 | | % of Sales | (1.7)% | 1.0% | -2.7% | - Shift from profit to loss driven by higher hourly pay rates and manager wages, and other increased restaurant operating costs[79](index=79&type=chunk) [Restaurant-level EBITDA](index=16&type=section&id=Restaurant-level%20EBITDA) Restaurant-level EBITDA decreased to $441,967 in Q3 2024, with a lower margin of 10.2%, reflecting core restaurant profitability Restaurant-level EBITDA (13 Weeks) | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Revenues | $4,348,824 | $4,007,656 | +$341,168 | | Income (Loss) from operations | $(75,011) | $40,615 | -$115,626 | | Depreciation and amortization | $141,527 | $114,774 | +$26,753 | | General and administrative, corporate-level expenses | $375,451 | $343,027 | +$32,424 | | **Restaurant-level EBITDA** | **$441,967** | **$498,416** | **-$56,449** | | **Restaurant-level EBITDA margin** | **10.2%** | **12.4%** | **-2.2%** | - Restaurant-level EBITDA is a non-GAAP measure used to assess the profitability of core restaurant operations, excluding corporate-level expenses, depreciation, amortization, and impairment charges[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of operations for the 39 weeks ending September 29, 2024, compared to the 39 weeks ending October 1, 2023.](index=17&type=section&id=Results%20of%20operations%20for%20the%2039%20weeks%20ending%20September%2029%2C%202024%2C%20compared%20to%20the%2039%20weeks%20ending%20October%201%2C%202023.) For the 39 weeks, net sales increased by 5.2% to $11.65 million, but operating loss widened significantly due to higher labor and occupancy costs 39-Week Period Financial Performance | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Sales | $11,649,610 | $11,078,419 | +$571,191 (5.2%) | | Food and paper costs (% of sales) | 37.8% | 39.3% | -1.5% | | Labor costs (% of sales) | 39.8% | 37.2% | +2.6% | | Occupancy and other expenses (% of sales) | 14.7% | 13.1% | +1.6% | | Loss from operations | $(894,383) | $(289,691) | -$604,692 | [Net Revenues](index=17&type=section&id=Net%20Revenues) Net sales for the 39 weeks increased by 5.2% to $11.65 million, driven by improved Burger Time and Pie in the Sky sales, and the Schnitzel Haus acquisition Net Sales (39 Weeks) | Metric | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Net Sales | $11,649,610 | $11,078,419 | +5.2% | - Sales increase attributed to improved Burger Time performance (average unit sales up **$95,000** to **$716,000**), **10%** sales increase at Pie in the Sky, and the Schnitzel Haus acquisition[86](index=86&type=chunk)[87](index=87&type=chunk) - Average customer transaction at Burger Time increased by approximately **10%** due to menu price increases, with an average check of about **$18.00**[86](index=86&type=chunk) [Costs of Sales - food and paper](index=17&type=section&id=Costs%20of%20Sales%20-%20food%20and%20paper) Food and paper costs as a percentage of sales declined to 37.8% for the 39 weeks, primarily due to menu price increases and improved margins Food and Paper Costs (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Food and paper costs | 37.8% | 39.3% | -1.5% | - Decline in percentage due to menu price increases, especially at Burger Time, leading to improved margins[87](index=87&type=chunk) [Restaurant Operating Costs](index=18&type=section&id=Restaurant%20Operating%20Costs) Restaurant operating costs as a percentage of sales increased to 92.3% for the 39 weeks, driven by new locations and higher labor and occupancy costs Restaurant Operating Costs (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Restaurant operating expenses | 92.3% | 86.8% | +5.5% | - Increase driven by higher sales activity from new locations and increased labor and occupancy costs[88](index=88&type=chunk) [Labor Costs](index=18&type=section&id=Labor%20Costs) Labor and benefits costs increased to 39.8% of sales for the 39 weeks, due to staffing shortages, higher wages, and additional management labor Labor Costs (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Labor costs | 39.8% | 37.2% | +2.6% | - Increase due to staffing shortages, higher hourly wage rates, and additional management labor at PIE[89](index=89&type=chunk) [Occupancy and Other Operating Expenses](index=18&type=section&id=Occupancy%20and%20Other%20Operating%20Expenses) Occupancy and other expenses increased to 14.7% of sales for the 39 weeks, partly due to higher repair costs and a prior year property tax reversal Occupancy and Other Operating Expenses (% of Sales) | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Occupancy costs | 9.1% | 7.6% | +1.5% | | Other operating expenses | 5.6% | 5.5% | +0.1% | | **Total** | **14.7%** | **13.1%** | **+1.6%** | - Increase partly due to higher repair and maintenance costs and the impact of a 2023 reversal of property tax accrual for a St. Louis property[90](index=90&type=chunk) [Depreciation and Amortization Expense](index=18&type=section&id=Depreciation%20and%20Amortization%20Expense) Depreciation and amortization expenses slightly increased to $473,420 for the 39-week period, driven by new restaurant purchases and capital additions Depreciation and Amortization Expense | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Amount | $473,420 | $470,801 | +$2,619 | | % of Sales | 4.1% | 4.2% | -0.1% | - Slight increase due to new restaurant purchase and capital additions[91](index=91&type=chunk) [General and Administrative Costs](index=18&type=section&id=General%20and%20Administrative%20Costs) General and administrative costs for the 39 weeks slightly decreased to $1.28 million, remaining consistent at 11.1% of sales General and Administrative Costs | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Amount | $1,284,871 | $1,288,019 | -$3,148 | | % of Sales | 11.1% | 11.6% | -0.5% | [Income from Operations](index=18&type=section&id=Income%20from%20Operations) Operating loss for the first nine months widened to $894,383, primarily due to increased labor and occupancy costs, despite a prior year asset sale gain Income (Loss) from Operations | Period | Sep 29, 2024 | Oct 1, 2023 | Change | | :-------------------- | :----------- | :----------- | :----- | | Amount | $(894,383) | $(289,691) | -$604,692 | | % of Sales | (7.7)% | (2.6)% | -5.1% | - Widened operating loss primarily due to increased labor and occupancy costs; prior year benefited from a **$313,688** gain on asset sale[92](index=92&type=chunk) [Restaurant-level EBITDA](index=18&type=section&id=Restaurant-level%20EBITDA) Restaurant-level EBITDA decreased to $863,908 for the 39 weeks, providing insight into core restaurant profitability by excluding corporate expenses Restaurant-level EBITDA (39 Weeks) | Metric | Sep 29, 2024 | Oct 2, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Revenues | $11,649,610 | $11,078,419 | +$571,191 | | Income (loss) from operations | $(894,383) | $(289,691) | -$604,692 | | Gain on sale of assets | $0 | $(313,688) | +$313,688 | | Depreciation and amortization | $473,420 | $470,801 | +$2,619 | | General and administrative, corporate-level expenses | $1,284,871 | $1,288,019 | -$3,148 | | **Restaurant-level EBITDA** | **$863,908** | **$1,155,441** | **-$291,533** | - Restaurant-level EBITDA is a non-GAAP measure used to assess the profitability of core restaurant operations, excluding corporate-level expenses, depreciation, and amortization[93](index=93&type=chunk)[94](index=94&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 29, 2024, the company held $5.1 million in liquid assets, with net working capital at $4.3 million, and authorized a stock repurchase program Liquidity Snapshot | Metric | Sep 29, 2024 | Dec 31, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Cash, cash equivalents, marketable securities | $5.1 million | N/A | N/A | | Net working capital | $4.3 million | $5.7 million | -$1.4 million | - The company authorized a stock repurchase program for up to **625,000** shares (approx. **10%** of outstanding common stock), funded by operating cash flows[97](index=97&type=chunk) - Primary liquidity sources are operating cash flows and existing cash/marketable securities, used for working capital, capital expenditures, debt service, and acquisitions[98](index=98&type=chunk) [Summary of Cash Flows](index=19&type=section&id=Summary%20of%20Cash%20Flows) For the 39 weeks, cash flows were negative across operating, investing, and financing activities, with total contractual obligations at $4.2 million Cash Flow Summary (39 Weeks) | Activity | Sep 29, 2024 | | :---------------------------------- | :----------- | | Net cash used in operating activities | $(197,102) | | Net cash used in investing activities | $(1,668,704) | | Net cash used in financing activities | $(349,298) | - Contractual obligations totaled **$4.2 million** as of September 29, 2024, primarily for mortgages and capitalized lease obligations[100](index=100&type=chunk) [Cash Flows Provided by Operating Activities](index=19&type=section&id=Cash%20Flows%20Provided%20by%20Operating%20Activities) Operating cash flow for the 39 weeks was negative $197,102, influenced by seasonal patterns and increased labor and maintenance expenses Net Cash Used in Operating Activities | Period | Sep 29, 2024 | Oct 1, 2023 | | :---------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(197,102) | $(74,732) | - Negative operating cash flow influenced by seasonal patterns and increased labor/maintenance costs[99](index=99&type=chunk) [Cash Flows Used in Investing Activities](index=19&type=section&id=Cash%20Flows%20Used%20in%20Investing%20Activities) Investing activities used $1.67 million for the 39 weeks, primarily for the Schnitzel Haus acquisition, property, and marketable securities Net Cash Used in Investing Activities | Period | Sep 29, 2024 | Oct 1, 2023 | | :---------------------------------- | :----------- | :----------- | | Net cash used in investing activities | $(1,668,704) | $4,845,886 | - Significant investing cash outflow due to Schnitzel Haus acquisition, property/equipment purchases, and marketable securities investments[15](index=15&type=chunk)[99](index=99&type=chunk) [Cash Flows Used in Financing Activities](index=19&type=section&id=Cash%20Flows%20Used%20in%20Financing%20Activities) Financing activities used $349,298 for the 39 weeks, mainly for debt service and treasury share repurchases Net Cash Used in Financing Activities | Period | Sep 29, 2024 | Oct 1, 2023 | | :---------------------------------- | :----------- | :----------- | | Net cash used in financing activities | $(349,298) | $(1,374,858) | - Financing cash outflow driven by debt service and share repurchases[100](index=100&type=chunk) [Contractual Obligations](index=19&type=section&id=Contractual%20Obligations) Contractual obligations totaled $4.2 million as of September 29, 2024, primarily for mortgages and capitalized lease obligations, with monthly payments of $47,000 Contractual Obligations | Item | Amount (as of Sep 29, 2024) | | :---------------------------------- | :-------------------------- | | Total contractual obligations | $4.2 million | | Monthly required payments (lease & mortgage) | ~$47,000 | - Obligations primarily consist of mortgages and capitalized lease obligations[100](index=100&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.](index=19&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK.) As a smaller reporting company, BT Brands, Inc. is exempt from detailed quantitative and qualitative market risk disclosures - The company is exempt from providing detailed market risk disclosures due to its status as a smaller reporting company[101](index=101&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES.](index=19&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Disclosure controls and procedures were deemed ineffective as of September 29, 2024, due to a material weakness in internal control over financial reporting - Disclosure controls and procedures were deemed ineffective as of September 29, 2024, due to a **material weakness** in internal control over financial reporting[102](index=102&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=19&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) CEO and CFO concluded disclosure controls were ineffective due to a material weakness in internal control over financial reporting - CEO and CFO concluded that disclosure controls and procedures were not effective due to a **material weakness** in internal control over financial reporting[102](index=102&type=chunk) [Changes in Internal Control over Financial Reporting](index=20&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) A consultant was identified for acquisition accounting, with no other material changes to internal control over financial reporting during the quarter - A consultant was identified to assist with acquisition accounting, but no other material changes to internal control over financial reporting occurred during the quarter[103](index=103&type=chunk) [PART II—OTHER INFORMATION.](index=20&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION.) [ITEM 1. LEGAL PROCEEDINGS](index=20&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not a party to any material pending or threatened legal proceedings - No material pending or threatened legal proceedings against the company[104](index=104&type=chunk) [ITEM 1A. RISK FACTORS](index=20&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, BT Brands, Inc. is exempt from providing detailed risk factor disclosures - The company is exempt from providing detailed risk factor disclosures due to its status as a smaller reporting company[105](index=105&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=20&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) This section details the share repurchase program, including 289,181 shares repurchased, and grants of contingent incentive share awards and stock options - The company repurchased **289,181** shares for **$470,843** under its 2024 Share Repurchase Program, with **335,819** shares remaining available for repurchase[106](index=106&type=chunk) - Contingent incentive share awards of **250,000** common shares were approved for senior executives, tied to the stock price reaching **$8.50** for 20 consecutive trading days[108](index=108&type=chunk) - Stock options were granted to a consultant (**100,000** shares at **$2.50**) and independent directors (**15,000** shares at **$1.61**)[108](index=108&type=chunk) [Share Repurchase Program](index=20&type=section&id=Share%20Repurchase%20Program) The company authorized a 2024 Share Repurchase Program for up to 625,000 shares, with 289,181 shares repurchased as of September 29, 2024 - Authorized a 2024 Share Repurchase Program for up to **625,000** shares (approx. **10%** of outstanding common stock)[106](index=106&type=chunk) Share Repurchase Activity (Quarter Ended Sep 29, 2024) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that May Yet be Purchased under the Program | | :---------------------------------- | :------------------------------- | :--------------------------- | :-------------------------------------------------------------------- | | July 1 – July 31, 2024 | 13,328 | $1.55 | $255,000 | | August 1 – August 31, 2024 | 3,075 | $1.54 | $250,000 | | September 1 – September 29, 2024 | 7,342 | $1.70 | $260,000 | - As of September 29, 2024, **289,181** shares were repurchased for **$470,843**, with **335,819** shares remaining[106](index=106&type=chunk) [Unregistered Sales of Equity Securities](index=21&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) Contingent incentive share awards for senior executives and stock options for a consultant and independent directors were approved - Contingent incentive share award of **250,000** common shares for senior executives, tied to stock price performance (**$8.50** for 20 consecutive trading days)[108](index=108&type=chunk) - Granted a seven-year option to a consultant to purchase **100,000** shares at **$2.50**, vesting monthly over five years[108](index=108&type=chunk) - Granted options to independent directors for an aggregate of **15,000** shares at **$1.61**, with **20%** vesting upon grant and the remainder annually over four years[108](index=108&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=21&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The company reported no defaults upon senior securities - No defaults upon senior securities[109](index=109&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=21&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[109](index=109&type=chunk) [ITEM 5. OTHER INFORMATION](index=21&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No other information to report - No other information to report[109](index=109&type=chunk) [ITEM 6. EXHIBITS](index=21&type=section&id=ITEM%206.%20EXHIBITS) This section lists exhibits filed with Form 10-Q, including SOX certifications and Inline XBRL documents - Exhibits include certifications under Sarbanes-Oxley Act Sections 302 and 906 from the CEO and CFO[109](index=109&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Labels, Presentation Linkbase Documents) are filed[109](index=109&type=chunk) [SIGNATURES.](index=22&type=section&id=SIGNATURES.) The report is signed by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer, on November 13, 2024 - Report signed by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer, on November 13, 2024[110](index=110&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This quarterly report for BT BRANDS, INC covers the period ended June 30, 2024, detailing its filing status and shares outstanding - This is a Quarterly Report (Form 10-Q) for BT BRANDS, INC for the period ended June 30, 2024[1](index=1&type=chunk) - The registrant is a **Non-accelerated filer** and a **Smaller reporting company**[3](index=3&type=chunk) - As of August 1, 2024, there were **6,195,682 shares** of common stock outstanding[3](index=3&type=chunk) [Cautionary Statement Regarding Risks and Uncertainties](index=2&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20RISKS%20AND%20UNCERTAINTIES%20THAT%20MAY%20AFFECT%20FUTURE%20RESULTS) The report contains forward-looking statements subject to significant risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements identifiable by terms like 'believes,' 'expects,' 'may,' 'estimates,' and 'plans,' which are inherently subject to risks and uncertainties[4](index=4&type=chunk) - Key risk factors include capital requirements, growth strategy execution, public health matters, employee retention, food safety, supply chain issues, competition, and economic conditions[5](index=5&type=chunk) - The Company cautions that actual results may differ materially from expectations and undertakes no obligation to publicly update forward-looking statements[6](index=6&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) [PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis for the period [ITEM 1. Financial Statements (Unaudited)](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.%20(UNAUDITED)) This section presents the unaudited condensed consolidated financial statements and accompanying notes for the period [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) | Metric | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $14,030,625 | $14,609,212 | | Total Liabilities | $5,323,538 | $5,420,483 | | Total Shareholders' Equity | $8,707,087 | $9,188,729 | - Total assets decreased by approximately **$578,587** from December 31, 2023, to June 30, 2024, while total liabilities also saw a slight decrease[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) | Metric (Unaudited) | 26 Weeks Ended, June 30, 2024 | 26 Weeks Ended, July 2, 2023 | 13 Weeks Ended, June 30, 2024 | 13 Weeks Ended, July 2, 2023 | | :--- | :--- | :--- | :--- | :--- | | SALES | $7,300,786 | $7,070,763 | $4,110,639 | $3,999,965 | | Loss from operations | $(819,372) | $(330,306) | $(188,543) | $(79,548) | | NET LOSS | $(515,652) | $(375,520) | $(69,952) | $(233,734) | | NET LOSS PER COMMON SHARE - Basic and Diluted | $(0.08) | $(0.06) | $(0.01) | $(0.04) | - Sales increased for both the 13-week and 26-week periods year-over-year, but **net loss widened** for the 26-week period while narrowing for the 13-week period[11](index=11&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY) | Item | 26 Weeks Ended, June 30, 2024 | 26 Weeks Ended, July 2, 2023 | | :--- | :--- | :--- | | Balances, Beginning of Period | $9,188,729 | $10,152,622 | | Stock-based compensation | $110,000 | $77,300 | | Treasury stock purchase | $(75,990) | $(250,225) | | Net loss | $(515,652) | $(375,520) | | Balances, End of Period | $8,707,087 | $9,604,177 | - Total shareholders' equity decreased from **$9,188,729** to **$8,707,087** during the first half of 2024, driven by net loss and treasury stock purchases[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) | Cash Flow Activity | 26 Weeks Ended, June 30, 2024 | 26 Weeks Ended, July 2, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(326,369) | $(111,747) | | Net cash provided (used) in investing activities | $(956,384) | $4,996,865 | | Net cash used in financing activities | $(282,384) | $(1,330,817) | | Change in cash and cash equivalents | $(1,565,137) | $3,554,301 | | Cash and cash equivalents, End of Period | $3,735,309 | $5,704,879 | - The company experienced a significant **decrease in cash and cash equivalents**, with net cash used in operating, investing, and financing activities for the 26 weeks ended June 30, 2024[14](index=14&type=chunk)[15](index=15&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [NOTE 1 - Summary of Significant Accounting Policies](index=7&type=section&id=NOTE%201%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The financial statements are prepared in accordance with US GAAP for interim financial information and SEC requirements for Form 10-Q[16](index=16&type=chunk) - As of June 30, 2024, the Company operated **eighteen restaurants**, including eight Burger Time locations and a 40% ownership in six Bagger Dave's locations[19](index=19&type=chunk)[21](index=21&type=chunk) - Noncurrent investments include a **$544,023** equity method investment in Bagger Dave's and a **$304,000** investment in NGI Corporation[25](index=25&type=chunk) [NOTE 2 – Intangible Assets](index=10&type=section&id=NOTE%202%20%E2%80%93%20INTANGIBLE%20ASSETS) | Intangible Asset | June 30, 2024 Carrying Value | December 31, 2023 Net Carrying Value | | :--- | :--- | :--- | | Covenants not to Compete | $102,375 | $46,972 | | Tradenames | $340,455 | $348,141 | | Total | $442,830 | $395,113 | - Total amortization expense for intangible assets was **$63,950** for the 26-week period ending June 30, 2024[37](index=37&type=chunk) [NOTE 3 – Property and Equipment](index=11&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT) | Category | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total property and equipment | $7,687,758 | $6,893,550 | | Accumulated depreciation | $(3,655,737) | $(3,387,786) | | Net property and equipment | $3,773,270 | $3,247,013 | - Depreciation expense for the 26-week period in 2024 was **$267,943**, a decrease from $313,762 in the comparable 2023 period[41](index=41&type=chunk) [NOTE 4 - Accrued Expenses](index=11&type=section&id=NOTE%204%20-%20ACCRUED%20EXPENSES) | Accrued Expense | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Accrued real estate taxes | $34,760 | $49,357 | | Accrued bonus compensation | - | $119,139 | | Accrued payroll | $229,573 | $149,587 | | Accrued sales taxes payable | $111,907 | $81,683 | | Total Accrued Expenses | $452,680 | $480,289 | - Total accrued expenses decreased slightly, with a notable elimination of accrued bonus compensation and an increase in accrued payroll[42](index=42&type=chunk) [NOTE 5 - Long Term Debt](index=11&type=section&id=NOTE%205%20-%20LONG%20TERM%20DEBT) | Debt Component | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Three notes payable to a bank | $2,398,804 | $2,489,299 | | Less - unamortized debt issuance costs | $(33,499) | $(36,199) | | Current maturities | $(164,408) | $(183,329) | | Total Long-Term Debt, less current portion | $2,200,897 | $2,269,771 | - Long-term debt consists of three bank notes secured by mortgages on eight BTND operating locations, with a fixed interest rate of **3.45%** until July 2031[43](index=43&type=chunk) [NOTE 6 - Stock-Based Compensation](index=11&type=section&id=NOTE%206%20-%20STOCK-BASED%20COMPENSATION) - As of June 30, 2024, **765,750 shares** were available for grant under the 2019 Incentive Plan[44](index=44&type=chunk) - Total equity-based compensation expenses for stock options and warrants were **$110,000** for the 26-week period ended June 30, 2024[12](index=12&type=chunk)[47](index=47&type=chunk) | Stock Options Activity (26 Weeks Ended June 30, 2024) | Number of Options | Weighted Average Exercise Price | | :--- | :--- | :--- | | Options outstanding at December 31, 2023 | 319,250 | $2.62 | | Granted | 15,000 | $1.61 | | Options outstanding at June 30, 2024 | 334,250 | $2.57 | | Options exercisable at June 30, 2024 | 109,802 | $2.70 | - A Contingent Incentive Share Award for **250,000 common shares** to senior executives was established, contingent on the share price reaching **$8.50** for 20 consecutive trading days[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 7 – Leases](index=13&type=section&id=NOTE%207%20%E2%80%93%20LEASES) - The Company has operating leases for four restaurant locations with a weighted average remaining lease term of approximately **3.5 years**[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk) | Future Minimum Lease Payments (as of June 30, 2024) | Amount | | :--- | :--- | | Remainder 2024 | $172,274 | | 2025 | $351,626 | | 2026 | $362,188 | | 2027 | $317,768 | | 2028 | $208,895 | | 2029 and thereafter | $828,390 | | Total future minimum lease payments | $2,241,141 | | Less - interest | $(348,173) | | Present Value of Lease Obligations | $1,892,968 | - Total operating lease expenses were **$154,500** for the 26-week period in 2024, up from $97,900 in 2023[54](index=54&type=chunk) [NOTE 8 - Related Party Transaction](index=14&type=section&id=NOTE%208%20-%20RELATED%20PARTY%20TRANSACTION) - The Company's CEO and CFO also serve as Chairman and CFO of NGI Corporation, in which BT Brands holds **336,496 common shares** and warrants[56](index=56&type=chunk) - In June 2024, BT Brands advanced **$25,000** to NGI on a demand note[56](index=56&type=chunk) [NOTE 9 – Acquisition](index=14&type=section&id=NOTE%209%20%E2%80%93%20ACQUISITION) - On May 13, 2024, the Company's subsidiary acquired the assets of Schnitzel Haus, a German-themed restaurant in Hobe Sound, Florida[57](index=57&type=chunk) | Acquired Assets (Schnitzel Haus) | Amount | | :--- | :--- | | Property, including leasehold improvements and equipment | $625,000 | | Intangible covenant not to compete | $100,000 | | Inventory | $65,000 | | Vehicle and other | $28,000 | | Operating lease right-of-use asset | $182,878 | | Total assets acquired | $1,000,878 | | Operating lease liability | $(182,878) | | Net assets acquired | $818,000 | | Goodwill | $125,000 | | Net purchase price | $943,000 | [NOTE 10 – Contingencies](index=14&type=section&id=NOTE%2010%20%E2%80%93%20CONTINGENCIES) - The Company is unaware of any significant asserted or potential legal claims that could impact its financial position[57](index=57&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=14&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION.) Management discusses the company's financial condition, operational results, liquidity, and capital resources for the reporting period [Introduction](index=15&type=section&id=Introduction) - As of June 30, 2024, the Company owned and operated **eighteen restaurants** across multiple brands and geographic locations[61](index=61&type=chunk) - The business environment is challenging due to intense competition, but the Company operates with a central management organization for efficiency[61](index=61&type=chunk) [Notable Recent Events](index=15&type=section&id=Notable%20Recent%20Events) - Recent acquisitions have diversified operations into new restaurant segments and geographic regions, reducing dependency on Burger Time restaurants[62](index=62&type=chunk) - During the second quarter of 2024, the Company acquired assets and assumed lease obligations for the **Schnitzel Haus** restaurant[62](index=62&type=chunk) [Material Trends and Uncertainties](index=15&type=section&id=Material%20Trends%20and%20Uncertainties) - Industry trends include difficulties attracting food service workers, rapid inflation in input costs, and the rapid adoption of technology by competitors[63](index=63&type=chunk) - Food costs have increased over the last two years, and raising menu prices to fully cover these costs remains challenging due to competition[64](index=64&type=chunk) - The current labor market presents challenges in securing and retaining staff, leading to **higher wages** and increased competition for employees[65](index=65&type=chunk) [Results of Operations (13 Weeks)](index=16&type=section&id=Results%20of%20Operations%20for%20the%20Thirteen%20Weeks%20Ended%20June%2030%2C%202024%2C%20and%20the%20Thirteen%20Weeks%20Ended%20July%202%2C%202023) 13 Weeks Ended Financial Performance | Metric (Unaudited) | June 30, 2024 Amount | June 30, 2024 % | July 2, 2023 Amount | July 2, 2023 % | | :--- | :--- | :--- | :--- | :--- | | SALES | $4,110,639 | 100.0% | $3,999,965 | 100.0% | | Food and paper costs | $1,565,070 | 38.1% | $1,608,175 | 40.2% | | Labor costs | $1,551,762 | 37.7% | $1,412,376 | 35.3% | | Occupancy costs | $344,356 | 8.4% | $148,736 | 3.7% | | Loss from operations | $(188,543) | (4.6)% | $(79,548) | (2.0)% | | NET LOSS | $(69,952) | (1.7)% | $(233,734) | (5.8)% | | Restaurant-level EBITDA | $437,613 | 10.6% | $632,049 | 15.8% | - Net sales increased by **$110,674 (2.8%)** to $4,110,639, driven by improved Burger Time sales and the addition of Schnitzel Haus[67](index=67&type=chunk)[68](index=68&type=chunk) - Food and paper costs decreased as a percentage of sales (**38.1% vs 40.2%**), while labor costs increased (**37.7% vs 35.3%**) due to tight labor markets[69](index=69&type=chunk)[71](index=71&type=chunk) - Occupancy and other expenses increased significantly (**13.6% vs 8.7%**) due to maintenance, utility inflation, and new lease expenses[72](index=72&type=chunk) [Results of Operations (26 Weeks)](index=18&type=section&id=Results%20of%20operations%20for%20the%2026%20weeks%20ending%20June%2030%2C%202024%2C%20compared%20to%20the%2026%20weeks%20ending%20July%202%2C%202023) 26 Weeks Ended Financial Performance | Metric (Unaudited) | June 30, 2024 Amount | June 30, 2024 % | July 2, 2023 Amount | July 2, 2023 % | | :--- | :--- | :--- | :--- | :--- | | SALES | $7,300,786 | 100.0% | $7,070,763 | 100.0% | | Food and paper costs | $2,844,028 | 39.0% | $2,898,498 | 41.0% | | Labor costs | $2,938,448 | 40.2% | $2,615,136 | 37.0% | | Occupancy costs | $680,631 | 9.3% | $505,861 | 7.2% | | Loss from operations | $(819,372) | (11.2)% | $(330,306) | (4.7)% | | NET LOSS | $(515,652) | (7.1)% | $(375,520) | (5.3)% | | Restaurant-level EBITDA | $421,941 | 5.8% | $657,025 | 9.3% | - Net sales increased by **$230,023 (3.2%)** to $7,300,786, primarily due to improved Burger Time sales[78](index=78&type=chunk)[79](index=79&type=chunk) - **Operating loss widened** to $(819,372) from $(330,306) in the prior year, largely due to increased labor and occupancy costs[83](index=83&type=chunk) - Restaurant-level EBITDA decreased to **$421,941 (5.8% margin)** from $657,025 (9.3% margin) in the prior year, reflecting higher operating costs[86](index=86&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2024, the Company had **$5.2 million** in cash, cash equivalents, and marketable securities, with net working capital of **$4.4 million**[87](index=87&type=chunk) - Primary liquidity sources are operating cash flows and cash on hand, used for working capital, capital expenditures, and business acquisitions[88](index=88&type=chunk) - Operating cash flow for the 26 weeks ended June 30, 2024, was **negative $326,369**, impacted by seasonal patterns and increased costs[89](index=89&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosure About Market Risk](index=20&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK.) As a smaller reporting company, BT Brands, Inc is exempt from providing detailed quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and has elected to comply with scaled disclosure reporting obligations, thus not required to provide information on market risk[90](index=90&type=chunk) [ITEM 4. Controls and Procedures](index=20&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) This section addresses the effectiveness of disclosure controls and procedures, noting a material weakness in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=20&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of June 30, 2024, management concluded that the Company's disclosure controls and procedures were **not effective** at a reasonable assurance level[91](index=91&type=chunk) - This ineffectiveness is due to a **material weakness** in internal control over financial reporting, as disclosed in the Company's Form 10-K for the fiscal year ended December 31, 2023[91](index=91&type=chunk) [Changes in Internal Control over Financial Reporting](index=21&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - A consultant was identified as an extension of management to assist in the accounting for acquisitions[92](index=92&type=chunk) - No other material changes were made to the Company's internal control over financial reporting during the quarter ended June 30, 2024[92](index=92&type=chunk) [PART II - OTHER INFORMATION](index=21&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity sales, and other required disclosures [ITEM 1. Legal Proceedings](index=21&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The Company reports no pending or threatened legal proceedings that would materially impact its financial position - There are no pending legal proceedings to which the Company is a party, nor are any known to be threatened or contemplated against it[93](index=93&type=chunk) [ITEM 1A. Risk Factors](index=21&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, BT Brands, Inc is not required to provide specific risk factor disclosures under this item - The Company is a smaller reporting company and is not required to provide the information required under this item[94](index=94&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section details recent equity grants and outlines the utilization of proceeds from the Company's initial public offering - A Contingent Incentive Share Award of **250,000 common shares** was approved for the CEO and CFO, contingent on the stock price reaching **$8.50**[95](index=95&type=chunk) - A seven-year warrant to purchase **100,000 shares at $2.50 per share** was granted to a consultant[95](index=95&type=chunk) - IPO proceeds have been used for general working capital and acquisitions, including Keegan's Seafood Grille, Pie in the Sky, Bagger Dave's, Village Bier Garten, and Schnitzel Haus[96](index=96&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=22&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) The Company reports no defaults upon senior securities - None[97](index=97&type=chunk) [ITEM 4. Mine Safety Disclosures](index=22&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the Company's operations - Not applicable[97](index=97&type=chunk) [ITEM 5. Other Information](index=22&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The Company has no other information to report under this item - None[97](index=97&type=chunk) [ITEM 6. Exhibits](index=22&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed as part of the Form 10-Q, including acquisition agreements and officer certifications - Exhibits include the Business Asset Purchase Agreement for Schnitzel Haus, officer certifications, and Inline XBRL documents[97](index=97&type=chunk) [Signatures](index=23&type=section&id=SIGNATURES.) The report is duly signed on behalf of BT Brands, Inc by its Chief Operating Officer and Principal Financial Officer - The report was signed on August 14, 2024, by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer of BT Brands, Inc[99](index=99&type=chunk)

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) [Filing Details](index=1&type=section&id=Filing%20Details) BT Brands, Inc. filed a Form 10-Q for Q1 2024, identifying as a non-accelerated, smaller reporting company incorporated in Wyoming - BT Brands, Inc. filed a Quarterly Report on Form 10-Q for the period ended March 31, 2024[1](index=1&type=chunk) Filing Details | Detail | Value | | :--- | :--- | | State of Incorporation | Wyoming | | IRS Employer Identification No. | 90-1495764 | | Trading Symbol | BTBD | | Exchange | The NASDAQ Stock Market LLC | | Filer Status | Non-accelerated filer, Smaller reporting company | | Common Stock Outstanding (May 1, 2024) | 6,246,118 shares | [Cautionary Statement Regarding Risks and Uncertainties](index=2&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20RISKS%20AND%20UNCERTAINTIES%20THAT%20MAY%20AFFECT%20FUTURE%20RESULTS) [Forward-Looking Information](index=2&type=section&id=Forward-Looking%20Information) Forward-looking statements are subject to material risks and uncertainties, and the company disclaims any obligation to update them - Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially from expectations[5](index=5&type=chunk)[10](index=10&type=chunk)[26](index=26&type=chunk) - The company does not undertake to publicly update or revise any forward-looking statements, except as required by law[12](index=12&type=chunk)[28](index=28&type=chunk) [Key Risk Factors](index=2&type=section&id=Key%20Risk%20Factors) Key risks encompass capital, growth execution, public health, labor, food safety, supply chain, competition, economic shifts, and rising costs - Capital requirements and availability of capital to fund growth - Difficulties executing growth strategy, including completing profitable acquisitions - Impact of public health matters - Challenges related to hiring and retaining store employees at competitive wage rates - Failure to prevent food safety and foodborne illness incidents - Shortages or interruptions in the supply or delivery of food products - Dependence on a small number of suppliers and a single distribution company - Negative publicity relating to any one of our restaurants - Competition from other restaurant chains with significantly greater resources - Changes in economic conditions, consumer confidence, and discretionary spending - Changes in consumer tastes and nutritional/dietary trends - Inability to manage growth - Loss of key personnel - Labor shortages and increased labor costs - Vulnerability to increased food, commodity, and energy costs - Impact of governmental laws and regulations - Failure to obtain and maintain required licenses and permits - Inadequately protecting intellectual property - Breaches of security of confidential consumer information [PART I— FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94%20FINANCIAL%20INFORMATION%2E) [ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)](index=3&type=section&id=ITEM%201%2E%20FINANCIAL%20STATEMENTS%20(UNAUDITED)%2E) This section provides unaudited condensed consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed notes [Consolidated Condensed Balance Sheets](index=3&type=section&id=CONSOLIDATED%20CONDENSED%20BALANCE%20SHEETS) Total assets, liabilities, and shareholders' equity decreased from December 2023 to March 2024, with cash declining and marketable securities rising | Metric | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Cash and cash equivalents | $4,668,295 | $5,300,446 | | Marketable equity securities | $1,458,213 | $1,392,060 | | Total current assets | $6,702,564 | $7,228,573 | | Total assets | $14,001,317 | $14,609,212 | | Total current liabilities | $1,415,187 | $1,550,090 | | Total liabilities | $5,204,288 | $5,420,483 | | Total shareholders' equity | $8,797,029 | $9,188,729 | [Consolidated Condensed Statements of Operations](index=4&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20OPERATIONS) Q1 2024 saw a net loss of $(445,700), significantly higher than Q1 2023, driven by increased labor and other costs despite higher sales | Metric | 13 Weeks Ended March 31, 2024 ($) | 13 Weeks Ended April 2, 2023 ($) | | :--- | :--- | :--- | | Sales | $3,190,147 | $3,070,798 | | Food and paper costs | $1,278,958 | $1,290,323 | | Labor costs | $1,386,686 | $1,202,760 | | Occupancy costs | $336,275 | $357,125 | | Other operating expenses | $203,900 | $195,614 | | Depreciation and amortization expenses | $160,542 | $163,507 | | General and administrative expenses | $454,615 | $425,915 | | Total costs and expenses | $3,820,976 | $3,321,556 | | Loss from operations | $(630,829) | $(250,758) | | Net Loss | $(445,700) | $(141,786) | | Net Loss Per Common Share - Basic and Diluted ($) | $(0.07) | $(0.02) | | Weighted Average Shares Outstanding (shares) | 6,246,118 | 6,280,729 | [Consolidated Condensed Statements of Shareholders' Equity](index=5&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY) Shareholders' equity decreased to $8,797,029 by March 31, 2024, mainly due to a net loss, partially offset by stock-based compensation | Metric | December 31, 2023 ($) | March 31, 2024 ($) | | :--- | :--- | :--- | | Total Shareholders' Equity | $9,188,729 | $8,797,029 | | Net Loss | - | $(445,700) | | Stock-based compensation | - | $54,000 | [Consolidated Condensed Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS) Net cash decreased by $(632,151) in Q1 2024, primarily due to cash used in operating, financing, and investing activities | Cash Flow Activity | 13 Weeks Ended March 31, 2024 ($) | 13 Weeks Ended April 2, 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(408,875) | $(474,259) | | Net cash provided by (used in) investing activities | $(62,319) | $5,103,974 | | Net cash used in financing activities | $(160,957) | $(1,285,892) | | Change in cash | $(632,151) | $3,343,823 | | Cash, end of period | $4,668,295 | $5,494,401 | [Notes to Consolidated Condensed Financial Statements](index=6&type=section&id=NOTES%20TO%20CONSOLIDATED%20CONDENSED%20FINANCIAL%20STATEMENTS) These notes detail accounting policies, operations, asset valuations, debt, compensation, leases, related parties, and recent acquisitions like Schnitzel Haus [NOTE 1 - Summary of Significant Accounting Policies](index=6&type=section&id=NOTE%201%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note details the basis of financial statement presentation, restaurant operations, and accounting policies for various assets and liabilities - The financial statements are prepared in accordance with US GAAP for interim financial information and SEC requirements for Form 10-Q[16](index=16&type=chunk) - Operates **18 restaurants** as of March 31, 2024, including **11 owned** and operated by BT Brands and **6 Bagger Dave's** (40% owned affiliate)[17](index=17&type=chunk)[18](index=18&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk)[43](index=43&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk)[116](index=116&type=chunk) - Owned restaurants include seven Burger Time, one Dairy Queen (to be redeveloped into Burger Time), Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, and Village Bier Garten - Dairy Queen franchise agreement terminated effective May 1, 2024, with plans to redevelop the Ham Lake, Minnesota property into a Burger Time location by June 2024 - Equity method investment in Bagger Dave's Burger Tavern, Inc. (**41.2% ownership**) and NGI Corporation (less than **2% ownership**) Fair Value of Level 1 Investments | Investment Type | March 31, 2024 Fair Value ($) | December 31, 2023 Fair Value ($) | | :--- | :--- | :--- | | Corporate bond fund | $0 | $178,500 | | Common stocks | $1,458,213 | $1,213,560 | | Total | $1,458,213 | $1,392,060 | [NOTE 2 – Intangible Assets](index=9&type=section&id=NOTE%202%20%E2%80%93%20INTANGIBLE%20ASSETS) Intangible assets include trademarks and covenants, with goodwill tested annually for impairment; Q1 2024 amortization expense was $26,143 Intangible Assets (March 31, 2024) | Asset Type | Estimated Life (Years) | Original Cost ($) | Accumulated Amortization ($) | Net Carrying Value ($) | | :--- | :--- | :--- | :--- | :--- | | Covenants not to Compete | 3 | $98,000 | $(73,326) | $24,674 | | Trademarks, Tradenames, websites | 15 | $393,000 | $(48,704) | $344,296 | | Total | | $491,000 | $(122,030) | $368,970 | - Total amortization expense for intangible assets was **$26,143** for the first quarter of 2024, compared to **$14,718** for the same period in 2023[81](index=81&type=chunk) - Projected total amortization of intangible assets: **$58,900** in 2024, **$40,500** in 2025, and approximately **$26,200** per year thereafter through 2036, and **$7,500** in 2037[57](index=57&type=chunk) [NOTE 3 – Property and Equipment](index=9&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT) Net property and equipment slightly decreased to $3,225,456 by March 31, 2024, with impairment reviews based on cash flows Property and Equipment | Category | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Land | $435,239 | $435,239 | | Equipment | $4,101,014 | $3,994,685 | | Buildings and leasehold improvements | $2,469,715 | $2,463,626 | | Total property and equipment | $7,005,968 | $6,893,550 | | Accumulated depreciation | $(3,521,761) | $(3,387,786) | | Less - property held for sale | $(258,751) | $(258,751) | | Net property and equipment | $3,225,456 | $3,247,013 | - Depreciation expense for the first 13-week periods in 2024 and 2023 was **$133,975** and **$148,364**, respectively[99](index=99&type=chunk) [NOTE 4 - Accrued Expenses](index=10&type=section&id=NOTE%204%20-%20ACCRUED%20EXPENSES) Total accrued expenses decreased to $399,906 by March 31, 2024, mainly due to lower real estate taxes and bonus compensation Accrued Expenses | Category | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Accrued real estate taxes | $23,733 | $49,357 | | Accrued bonus compensation | $0 | $119,139 | | Accrued payroll | $199,201 | $149,587 | | Accrued payroll taxes | $7,989 | $11,343 | | Accrued sales taxes payable | $103,914 | $81,683 | | Accrued vacation pay | $17,663 | $17,663 | | Accrued gift card liability | $23,819 | $26,844 | | Other accrued expenses | $23,587 | $24,673 | | Total | $399,906 | $480,289 | [NOTE 5 - Long Term Debt](index=10&type=section&id=NOTE%205%20-%20LONG%20TERM%20DEBT) Long-term debt decreased slightly to $2,237,610 by March 31, 2024, primarily comprising three bank notes secured by ten BTND locations Long-Term Debt | Category | March 31, 2024 ($) | December 31, 2023 ($) | | :--- | :--- | :--- | | Three notes payable to a bank | $2,444,241 | $2,489,299 | | Less - unamortized debt issuance costs | $(34,849) | $(36,199) | | Current maturities | $(171,782) | $(183,329) | | Long-term debt, less current portion | $2,237,610 | $2,269,771 | - The notes are secured by mortgages covering ten BTND operating locations and guaranteed by BT Brands, Inc. and a shareholder[83](index=83&type=chunk) [NOTE 6 - Stock-Based Compensation](index=11&type=section&id=NOTE%206%20-%20STOCK-BASED%20COMPENSATION) Q1 2024 equity-based compensation was $23,000, with future projections for stock options and Contingent Incentive Share Awards Stock Options Outstanding | Metric | March 31, 2024 | April 2, 2023 | | :--- | :--- | :--- | | Options outstanding | 319,500 | 220,250 | | Weighted Average Exercise Price ($) | $2.62 | $2.74 | | Weighted Average Remaining Term (Years) | 7.4 | 8.9 | | Options exercisable | 106,802 | 94,950 | - Total equity-based compensation expenses for stock options and warrants were **$23,000** in Q1 2024 and **$26,400** in Q1 2023[61](index=61&type=chunk) - Projected stock-based compensation for stock options: **$57,000** in 2024, **$57,000** in 2025, **$6,000** in 2026[61](index=61&type=chunk)[84](index=84&type=chunk) - Projected stock-based compensation for consultant warrant: **$32,000** per year for the first four years, **$16,000** in 2028 - Projected stock-based compensation for Contingent Incentive Share Awards: **$126,000** in 2024, **$36,000** in 2025[86](index=86&type=chunk) [NOTE 7 – Leases](index=12&type=section&id=NOTE%207%20%E2%80%93%20LEASES) Operating leases for restaurant spaces have a weighted average remaining term of 5.0 years and a discount rate of 4.32%, with Q1 2024 expenses at $85,000 Approximate Minimum Future Lease Payments (as of March 31, 2024) | Year | Amount ($) | | :--- | :--- | | Remainder 2024 | $217,679 | | 2025 | $297,436 | | 2026 | $306,356 | | 2027 | $258,512 | | 2028 | $209,233 | | 2029 and thereafter | $816,797 | | Total future minimum lease payments | $2,106,013 | | Less - interest | $(340,527) | | Present Value of Lease Obligation | $1,765,486 | - Keegan's lease: 131 months, initial rent **$5,000/month**, annual escalation greater of **3%** or CPI, discounted at **3.75%**[64](index=64&type=chunk) - PIE lease: 60 months, initial rent **$10,000/month**, **3%** annual escalation after 24 months, discounted at **5%**[87](index=87&type=chunk) - VBG lease: 60 months, initial rent **$8,200/month**, **3%** annual escalation, discounted at **4.5%**[88](index=88&type=chunk) - Weighted average remaining lease term: approximately **5.0 years**[107](index=107&type=chunk) - Weighted average discount rate: approximately **4.32%**[108](index=108&type=chunk) - Total operating lease expenses: **$85,000** in Q1 2024 vs. **$81,000** in Q1 2023[109](index=109&type=chunk) [NOTE 8 - Related Party Transaction](index=13&type=section&id=NOTE%208%20-%20RELATED%20PARTY%20TRANSACTION) BT Brands holds an investment in NGI Corporation, a related party, carried at cost due to the absence of a readily determinable market value - BT Brands owns **330,418 common shares** and warrants to purchase **358,000 common shares** at **$1.00** (expiring March 31, 2028) and **34,697 warrants** at **$1.65** in NGI Corporation[112](index=112&type=chunk) - The investment in NGI is carried at a cost determined by BT Brands due to the absence of a readily determinable market value[112](index=112&type=chunk) [NOTE 9 – Contingencies](index=13&type=section&id=NOTE%209%20%E2%80%93%20CONTINGENCIES) The company is unaware of any significant asserted or potential claims that could materially impact its financial position - The company is unaware of any significant asserted or potential claims that could impact its financial position[113](index=113&type=chunk) [NOTE 10 – Subsequent Event – Asset Acquisition](index=13&type=section&id=NOTE%2010%20%E2%80%93%20SUBSEQUENT%20EVENT%20%E2%80%93%20ASSET%20ACQUISITION) Post-quarter, BT Brands acquired Schnitzel Haus for approximately $875,000 in cash, assuming its remaining 44-month lease obligation - On May 13, 2024, BT Brands acquired Schnitzel Haus, a restaurant near Stuart, Florida, for approximately **$875,000** in cash[114](index=114&type=chunk) - The acquisition included assuming the remaining **44 months** on the restaurant's lease obligation at approximately **$5,400 per month**[114](index=114&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION](index=13&type=section&id=ITEM%202%2E%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION%2E) This section analyzes BT Brands' financial condition, operations, liquidity, and capital resources for Q1 2024, focusing on sales, costs, and industry challenges [Introduction](index=13&type=section&id=Introduction) BT Brands operates seventeen restaurants, focusing on quick-service drive-thru and take-out, with recent diversification through acquisitions - Operates **17 restaurants**, including Burger Time, Village Bier Garten, Keegan's Seafood Grille, Pie In The Sky, and a **40% owned Bagger Dave's**[116](index=116&type=chunk)[118](index=118&type=chunk) - Primary strategy: serve the drive-thru and take-out segment of the quick-service restaurant industry - Recent acquisitions have diversified operations into new restaurant segments and geographic regions, reducing dependency on Burger Time restaurants - Average customer transaction at Burger Time restaurants increased by approximately **8%** in 2023, with an average check amount of about **$15.00**, primarily due to menu price increases[93](index=93&type=chunk) [Material Trends and Uncertainties](index=14&type=section&id=Material%20Trends%20and%20Uncertainties) The company faces challenges from rising food and labor costs, impacting margins, while adapting to technology and delivery trends in the restaurant industry - Food costs have increased, with some moderating inflationary pressure expected in 2024; beef and egg costs trended down slightly in 2023[94](index=94&type=chunk) - Difficulties attracting and retaining food service workers, leading to higher hourly wage costs[119](index=119&type=chunk) - Margin improvements are challenging due to competitive pricing and cost increases, requiring operational enhancements, equipment advances, and increased volumes - Industry trends include rapid adoption of smartphone/mobile delivery apps, expanded drive-through operations, loyalty programs, and database marketing[141](index=141&type=chunk) [Results of Operations for the Thirteen Weeks Ended March 31, 2024, and the Thirteen Weeks Ended April 2, 2023](index=14&type=section&id=Results%20of%20Operations%20for%20the%20Thirteen%20Weeks%20Ended%20March%2031%2C%202024%2C%20and%20the%20Thirteen%20Weeks%20Ended%20April%202%2C%202023) Q1 2024 net sales increased, but higher labor and G&A expenses led to a greater operating and net loss compared to Q1 2023 Key Financial Results (13 Weeks Ended) | Metric | March 31, 2024 ($) | % of Sales | April 2, 2023 ($) | % of Sales | | :--- | :--- | :--- | :--- | :--- | | Sales | $3,190,147 | 100.0% | $3,070,798 | 100.0% | | Food and paper costs | $1,278,958 | 40.1% | $1,290,323 | 42.0% | | Labor costs | $1,386,686 | 43.5% | $1,202,760 | 39.2% | | Occupancy costs | $336,275 | 10.5% | $357,125 | 11.6% | | Other operating expenses | $203,900 | 6.4% | $195,614 | 6.4% | | Depreciation and amortization | $160,542 | 5.0% | $163,507 | 5.3% | | General and administrative | $454,615 | 14.3% | $425,915 | 13.9% | | Total costs and expenses | $3,820,976 | 119.8% | $3,321,556 | 108.2% | | Loss from operations | $(630,829) | (19.8)% | $(250,758) | (8.2)% | | Net Loss | $(445,700) | (14.0)% | $(141,786) | (4.6)% | - Net sales increased by **$119,349** (**3.9%**) to **$3,190,147** in Q1 2024[142](index=142&type=chunk) - Burger Time average sales per unit increased to approximately **$209,000** in Q1 2024, up **$29,000** from Q1 2023[96](index=96&type=chunk) - Food and paper costs decreased as a percentage of sales to **40.1%** (from **42.0%**) due to moderating inflationary pressures[97](index=97&type=chunk) - Labor and benefits costs increased as a percentage of sales to **43.5%** (from **39.2%**) due to tighter labor markets and higher hourly wages, and PIE acquisition[98](index=98&type=chunk) - Occupancy and other expenses decreased to **16.9%** of sales (from **18.0%**) due to sales increase leveraging fixed costs[143](index=143&type=chunk) - General and administrative costs increased by **$28,700** to **$454,615**, representing **14.3%** of sales (up from **13.9%**)[144](index=144&type=chunk)[145](index=145&type=chunk) [Restaurant-level EBITDA](index=15&type=section&id=Restaurant-level%20EBITDA) Q1 2024 restaurant-level EBITDA was negative $(15,672) or (0.5)% of sales, a decline from positive results in Q1 2023 Restaurant-level EBITDA Reconciliation | Metric | 13 Weeks Ended March 31, 2024 ($) | 13 Weeks Ended April 2, 2023 ($) | | :--- | :--- | :--- | | Sales | $3,190,147 | $3,070,798 | | Loss from operations | $(630,829) | $(250,788) | | Gain on asset sale | $0 | $(313,688) | | Depreciation and amortization | $160,542 | $163,507 | | General and administrative, corporate-level expenses | $454,615 | $425,915 | | Restaurant-level EBITDA | $(15,672) | $24,946 | | Restaurant-level EBITDA as a percentage of sales | (0.5)% | 0.8% | - Restaurant-level EBITDA is a non-GAAP measure used to gauge the overall profitability of recurring and controllable core restaurant operations, excluding corporate-level expenses, depreciation, amortization, and impairment charges[127](index=127&type=chunk)[147](index=147&type=chunk) [Liquidity and Capital Resources](index=16&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company had $6.1 million in cash and marketable securities, with negative operating cash flow, funding needs for working capital, capital expenditures, and acquisitions - Cash and marketable securities: **$6.1 million** as of March 31, 2024[130](index=130&type=chunk) - Net working capital: **$5.3 million** as of March 31, 2024, a decrease of **$0.4 million** from December 31, 2023[133](index=133&type=chunk) - Operating cash flow for Q1 2024: negative **$(408,875)**, impacted by seasonal business patterns[148](index=148&type=chunk) - Primary liquidity requirements: funding working capital, capital expenditures, general corporate needs, and business acquisitions - Contractual obligations: **$4.2 million** relating to mortgages and **$1.8 million** in capitalized lease obligations, with monthly payments of approximately **$49,000**[149](index=149&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](index=16&type=section&id=ITEM%203%2E%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK%2E) As a smaller reporting company, BT Brands, Inc. is exempt from providing quantitative and qualitative market risk disclosures - As a smaller reporting company, BT Brands, Inc. is not required to provide quantitative and qualitative disclosure about market risk[134](index=134&type=chunk)[150](index=150&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=17&type=section&id=ITEM%204%2E%20CONTROLS%20AND%20PROCEDURES%2E) Disclosure controls and procedures were deemed ineffective as of March 31, 2024, due to a material weakness in internal control over financial reporting - As of March 31, 2024, the CEO and CFO concluded that disclosure controls and procedures were not effective at a reasonable assurance level due to a material weakness in internal control over financial reporting[151](index=151&type=chunk) - No other material changes in internal control over financial reporting occurred during the quarter, except for identifying a consultant to assist in accounting for acquisitions[152](index=152&type=chunk) [PART II—OTHER INFORMATION](index=17&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION%2E) [ITEM 1. LEGAL PROCEEDINGS](index=17&type=section&id=ITEM%201%2E%20LEGAL%20PROCEEDINGS%2E) BT Brands, Inc. is not currently involved in any pending or threatened legal proceedings - There are no pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to be threatened or contemplated against it[154](index=154&type=chunk) [ITEM 1A. RISK FACTORS](index=17&type=section&id=ITEM%201A%2E%20RISK%20FACTORS%2E) As a smaller reporting company, BT Brands, Inc. is exempt from providing risk factor disclosures under this item - As a smaller reporting company, BT Brands, Inc. is not required to provide risk factors under this item[155](index=155&type=chunk)[162](index=162&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=17&type=section&id=ITEM%202%2E%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS%2E) The company granted stock awards and options, and IPO proceeds funded working capital and restaurant acquisitions - Contingent Incentive Share Award: **250,000 common shares** to senior executives if common stock trades at **$8.50** for 20 consecutive days[156](index=156&type=chunk) - Consultant warrant: **100,000 shares** at **$2.50 per share**, expiring in 7 years, vesting monthly over 5 years - Director options: **15,000 shares** at **$1.61 per share** to three independent directors, vesting **20%** upon grant and annually over four years[163](index=163&type=chunk) - Proceeds from IPO (November 2021) used for general working capital and acquisitions: Keegan's Seafood Grille (**$1,150,000**), Pie in the Sky Bakery and Coffee Shop (**$1,160,000**), **41.2%** of Bagger Dave's (**$1,390,000**), and Village Bier Garten[164](index=164&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=18&type=section&id=ITEM%203%2E%20DEFAULTS%20UPON%20SENIOR%20SECURITIES%2E) This item is not applicable to BT Brands, Inc - This item is not applicable[158](index=158&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=18&type=section&id=ITEM%204%2E%20MINE%20SAFETY%20DISCLOSURES%2E) BT Brands, Inc. has no mine safety disclosures - None[165](index=165&type=chunk) [ITEM 5. OTHER INFORMATION](index=18&type=section&id=ITEM%205%2E%20OTHER%20INFORMATION%2E) This item reports no other information - None[139](index=139&type=chunk) [ITEM 6. EXHIBITS](index=18&type=section&id=ITEM%206%2E%20EXHIBITS%2E) This section lists Form 10-Q exhibits, including SOX certifications and Inline XBRL documents - Certification of Principal Executive Officer (Section 302 of Sarbanes-Oxley Act of 2002) - Certification of Principal Financial Officer (Section 302 of Sarbanes-Oxley Act of 2002) - Certification of Principal Executive Officer and Principal Financial Officer (18 USC Section 1350, Section 906 of Sarbanes-Oxley Act of 2002) - Inline XBRL Instance Document, Taxonomy Extension Schema Document, Calculation Linkbase Document, Definition Linkbase Document, Labels Linkbase Document, Presentation Linkbase Document - Cover Page Interactive Data File[159](index=159&type=chunk) [SIGNATURES](index=18&type=section&id=SIGNATURES%2E) [Signature of Authorized Officer](index=18&type=section&id=Signature%20of%20Authorized%20Officer) The report was signed by Kenneth Brimmer, COO and PFO of BT Brands, Inc., on May 15, 2024 - The report was signed by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer, on May 15, 2024[161](index=161&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)

(Mark One) ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Title of Class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting ...

In this articleBTBDAn EE mobile phone store, operated by BT Group, in Reading, U.K. in 2020.Jason Alden | Bloomberg | Getty ImagesBARCELONA — British telecommunications giant BT says it expects to launch its first so-called "standalone 5G" network in 2024.Howard Watson, BT's chief technology officer, told CNBC that the telco group plans to switch on its standalone 5G network, which is often referred to in the industry as "true" 5G, later this year."Others are talking about it. They're talking about it. But ...

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited condensed consolidated financial statements of BT Brands, Inc. and its subsidiaries, including balance sheets, statements of income, cash flows, and shareholders' equity, along with accompanying notes detailing significant accounting policies, business operations, and financial instrument disclosures [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets | ASSETS | October 1, 2023 ($) | January 1, 2023 ($) | | :----------------------------------------- | :-------------- | :-------------- | | Cash and cash equivalents | 5,546,874 | 2,150,578 | | Marketable securities | 1,366,973 | 5,994,295 | | Total current assets | 7,458,234 | 8,864,093 | | Total assets | 14,911,180 | 16,769,697 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Total current liabilities | 1,287,414 | 2,133,541 | | Total liabilities | 5,269,789 | 6,617,075 | | Total shareholders' equity | 9,641,391 | 10,152,622 | [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Statements of Income (13 weeks ended) | Metric | October 1, 2023 ($) | October 2, 2022 ($) | | :---------------------- | :-------------- | :-------------- | | SALES | 4,007,656 | 4,023,920 | | Income from operations | 40,615 | 8,991 | | NET LOSS | (3,486) | (174,906) | | NET LOSS PER COMMON SHARE | (0.00) | (0.04) | Condensed Consolidated Statements of Income (39 weeks ended) | Metric | October 1, 2023 ($) | October 2, 2022 ($) | | :---------------------- | :-------------- | :-------------- | | SALES | 11,078,419 | 9,621,996 | | Income from operations | (289,691) | 93,765 | | NET LOSS | (379,006) | (224,531) | | NET LOSS PER COMMON SHARE | (0.06) | (0.03) | [Condensed Consolidated Statements of Cash Flows](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (39 weeks ended) | Cash Flow Activity | October 1, 2023 ($) | October 2, 2022 ($) | | :---------------------------------- | :-------------- | :-------------- | | Net cash provided by (used in) operating activities | (74,732) | 484,504 | | Net cash provided by (used in) investing activities | 4,845,886 | (5,653,560) | | Net cash used in financing activities | (1,374,858) | (50,872) | | CHANGE IN CASH AND CASH EQUIVALENTS | 3,396,296 | (5,219,928) | | CASH AND CASH EQUIVALENTS, END OF PERIOD | 5,546,874 | 7,165,704 | [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) Condensed Consolidated Statements of Shareholders' Equity (39 weeks ended) | Shareholder Equity | January 1, 2023 ($) | October 1, 2023 ($) | | :---------------------------------- | :-------------- | :-------------- | | Common Stock Amount | 12,792 | 12,492 | | Additional Paid-in Capital | 11,409,235 | 11,527,235 | | Accumulated (Deficit) | (1,162,523) | (1,541,529) | | Treasury Stock | (106,882) | (356,807) | | Total | 10,152,622 | 9,641,391 | - Stock-based compensation for the 39 weeks ended October 1, 2023, was **$118,000**, contributing to additional paid-in capital[187](index=187&type=chunk) - The company purchased treasury stock totaling **$250,225** during the 39 weeks ended October 1, 2023[187](index=187&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Basis of Presentation and Use of Estimates](index=6&type=section&id=Basis%20of%20Presentation%20and%20Use%20of%20Estimates) The condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information, requiring management to make estimates and assumptions that affect reported amounts - Financial statements are prepared in conformity with GAAP for interim financial information and SEC requirements for Form 10-Q[188](index=188&type=chunk) - Management's estimates and assumptions affect reported asset, liability, revenue, and expense amounts, with potential for material differences in actual results[29](index=29&type=chunk) [The Company and Business Overview](index=7&type=section&id=The%20Company%20and%20Business%20Overview) BT Brands, Inc. operates a diverse portfolio of eighteen restaurants across the US, including Burger Time, Dairy Queen, Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, Village Bier Garten, and a 41.2% interest in Bagger Dave's Burger Tavern, with plans to sell its Dairy Queen business - As of October 1, 2023, BT Brands operates **eighteen restaurants**, including eight Burger Time, one Dairy Queen, Keegan's Seafood Grille, Pie In The Sky Coffee and Bakery, Village Bier Garten, and a **41.2% interest in Bagger Dave's Burger Tavern**[74](index=74&type=chunk)[119](index=119&type=chunk)[191](index=191&type=chunk) - The company plans to sell its Dairy Queen business, which has a book value of **$440,384** as of October 1, 2023, following an agreement to terminate the franchise[190](index=190&type=chunk) - BT Brands acquired **41.2% of Bagger Dave's Burger Tavern, Inc.** on June 2, 2022, for **$1,390,000**[49](index=49&type=chunk) [Fiscal Year Periods](index=7&type=section&id=Fiscal%20Year%20Periods) BT Brands' fiscal year is a 52/53-week year, ending on the Sunday closest to December 31, with fiscal 2023 being a 52-week year ending December 31, 2023 - The company's fiscal year is a 52/53-week year, ending on the Sunday closest to December 31[192](index=192&type=chunk) - Fiscal 2023 is a 52-week year ending December 31, 2023[192](index=192&type=chunk) [Cash and Cash Equivalents](index=7&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents include United States Treasury Bills with original maturities of 90 days or less, with the company maintaining cash deposits in bank and brokerage accounts, sometimes exceeding insured amounts, but not believing there is significant risk - Cash includes US Treasury Bills with original maturities of **90 days or less**[75](index=75&type=chunk) - Bank and brokerage deposits may exceed insured amounts, but the company assesses the risk as not significant[75](index=75&type=chunk) [Investments](index=7&type=section&id=Investments) Noncurrent investments as of October 1, 2023, include an **$811,615** equity method investment in Bagger Dave's and a **$304,000** total investment in NGI Corporation, which includes common shares and preferred stock with warrants - Noncurrent investments as of October 1, 2023, include[76](index=76&type=chunk) Investment Breakdown (October 1, 2023) | Investment | Amount (October 1, 2023) ($) | | :--------- | :----------------------- | | Bagger Dave's Burger Tavern, Inc. (equity method) | 811,615 | | NGI Corporation (total investment) | 304,000 | - BT Brands holds **330,418 common shares** and warrants for **358,000 common shares at $1.00** (expiring March 31, 2028) and **34,697 warrants at $1.65** in NGI Corporation[37](index=37&type=chunk) - For the 39 weeks ending October 1, 2023, Bagger Dave's had sales of **$5,009,164** and a net loss of **$617,164**, resulting in BT Brands' **41.2% equity share of loss** being approximately **$254,272**[52](index=52&type=chunk) [Fair Value of Financial Instruments](index=8&type=section&id=Fair%20Value%20of%20Financial%20Instruments) The company adheres to the FASB fair value hierarchy (Level 1, 2, 3) for measuring assets and liabilities, with marketable securities, including a bond fund and common stocks, valued at Level 1 quoted market prices - The company follows FASB fair value hierarchy (Level 1, 2, 3) for fair value measurements[78](index=78&type=chunk)[79](index=79&type=chunk) - As of October 1, 2023, marketable securities (bond fund and common stocks) had a total cost of **$1,366,973**, reflected at Level 1 quoted market price[79](index=79&type=chunk) [Receivables, Inventory, Property and Equipment](index=8&type=section&id=Receivables%2C%20Inventory%2C%20Property%20and%20Equipment) Receivables are estimated rebates, inventory is valued at the lower of cost or net realizable value (FIFO), and property and equipment are stated at cost, depreciated using the straight-line method, with long-lived assets reviewed for impairment based on estimated cash flows - Receivables consist of estimated rebates due from a primary vendor[56](index=56&type=chunk) - Inventory (food, beverages, supplies) is stated at the lower of cost (FIFO) or net realizable value[57](index=57&type=chunk) - Property and equipment are stated at cost and depreciated using the straight-line method over **3 to 30 years**[58](index=58&type=chunk) - Long-lived assets are reviewed for impairment based on estimated cash flows at the restaurant level[80](index=80&type=chunk) [Goodwill and Other Intangible Assets, Income Taxes](index=9&type=section&id=Goodwill%20and%20Other%20Intangible%20Assets%2C%20Income%20Taxes) Goodwill is not amortized but tested for impairment annually, while other intangible assets are amortized over their useful lives, and the company uses a net combined federal and state tax rate of approximately 27.5% for deferred taxes with no accrued interest or penalties related to income tax obligations - Goodwill is not amortized and is tested for impairment annually[81](index=81&type=chunk) - Other intangible assets, such as covenants not to compete and trademarks, are amortized over their expected useful lives (e.g., tradename assets over **15 years**)[81](index=81&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Total amortization expense for intangible assets was **$12,221** for 13 weeks and **$54,486** for 39 weeks ending October 1, 2023[61](index=61&type=chunk) - The company uses a net combined federal and state tax rate of approximately **27.5%** for estimating current tax benefit[59](index=59&type=chunk) - No accrued interest or penalties relating to income tax obligations; all periods since inception remain open for inspection[84](index=84&type=chunk) [Per Common Share Amounts](index=9&type=section&id=Per%20Common%20Share%20Amounts) Net income per common share is calculated by dividing net income or loss by the weighted average number of common shares outstanding, with no dilutive shares for the periods ending in 2023 and 2022 - Net income per common share is computed by dividing net income or loss by the weighted average number of common stock outstanding[85](index=85&type=chunk) - There were no dilutive shares for the periods ending in 2023 and 2022[85](index=85&type=chunk) [NOTE 3 – PROPERTY AND EQUIPMENT & Asset Held for Sale](index=9&type=section&id=NOTE%203%20%E2%80%93%20PROPERTY%20AND%20EQUIPMENT%20%26%20Asset%20Held%20for%20Sale) Property and equipment include land, equipment, and buildings, with the company completing the sale of its West St. Paul Burger Time location in February 2023 for a gain of **$313,688** and disposing of the St. Louis property, eliminating **$180,000** in accrued property taxes, while the Richmond location is currently offered for sale Property and Equipment | Property and Equipment | October 1, 2023 ($) | January 1, 2023 ($) | | :--------------------- | :-------------- | :-------------- | | Land | 435,239 | 485,239 | | Equipment | 3,875,840 | 3,893,274 | | Buildings and leasehold improvements | 2,453,547 | 2,402,157 | | Total property and equipment | 6,764,626 | 6,780,670 | | Accumulated depreciation | (3,267,565) | 3,741,170 | | Less - property held for sale | (258,751) | (446,526) | | Net property and equipment | 3,238,310 | 3,294,644 | - Depreciation expense for the 39-week periods was **$416,315** in 2023 and **$306,584** in 2022[63](index=63&type=chunk) - Sale of West St. Paul location in February 2023 resulted in a gain of **$313,688**[82](index=82&type=chunk) - Disposition of St. Louis property eliminated approximately **$180,000** of previously accrued property taxes[82](index=82&type=chunk) [NOTE 4 - ACCRUED EXPENSES](index=10&type=section&id=NOTE%204%20-%20ACCRUED%20EXPENSES) Accrued expenses include real estate taxes, bonus compensation, payroll, payroll taxes, sales taxes payable, vacation pay, gift card liability, and other accrued expenses Accrued Expenses | Accrued Expense | October 1, 2023 ($) | January 1, 2023 ($) | | :------------------------ | :-------------- | :-------------- | | Accrued real estate taxes | 33,487 | 202,436 | | Accrued bonus compensation | 59,139 | 59,139 | | Accrued payroll | 190,747 | 143,481 | | Accrued payroll taxes | 12,926 | 12,764 | | Accrued sales taxes payable | 99,330 | 70,270 | | Accrued vacation pay | 17,663 | 17,663 | | Accrued gift card liability | 19,705 | 25,965 | | Other accrued expenses | 43,038 | 802 | | Total | 476,035 | 532,520 | [NOTE 5 - LONG TERM DEBT](index=10&type=section&id=NOTE%205%20-%20LONG%20TERM%20DEBT) Long-term debt primarily consists of three bank notes totaling **$2,533,971** as of October 1, 2023, secured by mortgages on ten BTND operating locations and guaranteed by BT Brands, Inc. and a shareholder, also including a Minnesota Small Business Emergency Loan Long-Term Debt | Long-Term Debt Item | October 1, 2023 ($) | January 1, 2023 ($) | | :------------------------ | :-------------- | :-------------- | | Three notes payable to a bank | 2,533,971 | 2,864,484 | | Minnesota Small Business Emergency Loan | 458 | 3,208 | | Total | 2,534,429 | 2,867,692 | | Less - unamortized debt issuance costs | (37,549) | (41,599) | | Current maturities | (164,866) | (167,616) | | Net Long-Term Debt | 2,332,014 | 2,658,477 | - Bank notes are due in monthly installments, including principal and interest at a fixed rate of **3.45%** through June 28, 2031, then variable[89](index=89&type=chunk) [NOTE 6 - STOCK-BASED COMPENSATION](index=10&type=section&id=NOTE%206%20-%20STOCK-BASED%20COMPENSATION) The company grants stock options and contingent incentive share awards to employees and executives, with total equity-based compensation expenses of **$118,000** through Q3 2023 and an estimated **$372,000** projected over the next five years, including a Contingent Incentive Share Award for **250,000 shares** contingent on the share price reaching **$8.50** - Total equity-based compensation expenses through Q3 2023 were **$118,000**, compared to **$102,300** through Q3 2022[90](index=90&type=chunk) - Approximately **$372,000** in stock-based compensation expense for current grants is projected over the next five years (**$200,000** in 2024, **$95,000** in 2025, **$35,000** in 2026, **$28,000** in 2027, and **$14,000** in 2028)[90](index=90&type=chunk) - A Contingent Incentive Share Award for **250,000 common shares** was finalized for senior executives, contingent on the share price reaching **$8.50** for 20 consecutive trading days[92](index=92&type=chunk) - **$77,000** of stock-based compensation was recognized for the Contingent Incentive Share Award for the 39 weeks of 2023[92](index=92&type=chunk) Stock Options Activity (October 1, 2023) | Stock Options Activity | Number of Options | Weighted Average Exercise Price ($) | | :--------------------------------------- | :---------------- | :------------------------------ | | Options outstanding at January 1, 2023 | 220,250 | 2.74 | | Granted | 100,000 | 2.50 | | Canceled, forfeited, or expired | (750) | 0 | | Options outstanding at October 1, 2023 | 319,500 | 2.74 | | Options exercisable at October 1, 2023 | 106,802 | 3.18 | [NOTE 7 – LEASES](index=11&type=section&id=NOTE%207%20%E2%80%93%20LEASES) The company has operating leases for Keegan's, PIE, and VBG, with varying terms and annual escalations, and lease obligations are discounted using incremental borrowing rates (**4-5%**) due to the absence of implicit interest rates, resulting in total future minimum lease payments of **$2,272,158** and a present value of **$1,865,687** as of October 1, 2023 - Operating leases for Keegan's, PIE, and VBG are accounted for, with initial lease obligations and right-of-use assets recorded at inception[93](index=93&type=chunk)[94](index=94&type=chunk)[117](index=117&type=chunk) - Incremental borrowing rates (**4%** for Keegan's, **5%** for PIE and VBG) are used to determine the present value of future lease payments[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) Future Minimum Lease Payments (as of Oct 1, 2023) | Future Minimum Lease Payments | Amount ($) | | :------------------------------------------------ | :-------------- | | Remainder 2023 | 70,788 | | 2024 | 289,076 | | 2025 | 297,745 | | 2026 | 306,674 | | 2027 | 268,437 | | 2028 and thereafter | 1,039,438 | | Total future minimum lease payments | 2,272,158 | | Less - interest | (406,471) | | Present Value of Lease Payments | 1,865,687 | - The weighted average remaining lease term is approximately **5.3 years**[36](index=36&type=chunk) [NOTE 8 - RELATED PARTY TRANSACTION](index=12&type=section&id=NOTE%208%20-%20RELATED%20PARTY%20TRANSACTION) The company's CEO and CFO also serve as Chairman and CFO, respectively, of NGI Corporation, with BT Brands holding common shares and warrants in NGI, and the investment carried at a cost of **$75,000** due to the lack of a readily determinable market value - BT Brands' CEO and CFO also hold leadership positions at NGI Corporation[37](index=37&type=chunk) - BT Brands owns **330,418 common shares** and holds warrants for **358,000 common shares at $1.00** and **34,697 warrants at $1.65** in NGI[37](index=37&type=chunk) - The investment in NGI is carried at a cost of **$75,000**, as it does not have a readily determinable market value[37](index=37&type=chunk) [NOTE 9 – CONTINGENCIES](index=12&type=section&id=NOTE%209%20%E2%80%93%20CONTINGENCIES) The company is not aware of any significant asserted or potential claims or legal/regulatory actions that could impact its financial position - The company is unaware of any significant asserted or potential claims that could impact its financial position[38](index=38&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION](index=13&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION) This section provides an overview of BT Brands' financial condition, results of operations, liquidity, and capital resources, highlighting recent acquisitions, industry trends, and detailed financial performance for the thirteen and thirty-nine weeks ended October 1, 2023, compared to the prior year [Introduction and Company Overview](index=13&type=section&id=Introduction%20and%20Company%20Overview) BT Brands, Inc. operates Burger Time restaurants, established in 1987, focusing on grilled hamburgers and affordable foods through a drive-thru and take-out strategy, with the average customer transaction increasing by approximately **20%** in fiscal 2023 to **$15.60** due to menu price increases - Burger Time restaurants, established in 1987, focus on grilled hamburgers and affordable foods, primarily serving the drive-thru and take-out segment[6](index=6&type=chunk) - Average customer transaction at Burger Time increased by approximately **20%** in fiscal 2023 compared to 2022, reaching approximately **$15.60**, mainly due to menu price increases[7](index=7&type=chunk) [Notable Recent Events](index=13&type=section&id=Notable%20Recent%20Events) Recent acquisitions in 2022, including three operating restaurants and a **41.2%** ownership in BD (Bagger Dave's), have diversified BT Brands' operations into new restaurant segments and geographic regions, reducing dependency on Burger Time's financial performance, with the company planning to consider future acquisition opportunities - Recent acquisitions in 2022, including three operating restaurants and a **41.2% ownership in BD**, diversified operations into new restaurant segments and geographic regions[9](index=9&type=chunk) - The company expects to consider new acquisition opportunities in the future[9](index=9&type=chunk) [Industry Trends and Uncertainties](index=13&type=section&id=Industry%20Trends%20and%20Uncertainties) The restaurant industry faces challenges including intense competition, difficulties attracting food service workers, and rapid inflation in input costs, though beef and egg costs have trended down slightly in 2023, fully covering cost increases through menu price hikes remains challenging, with margin improvements expected through operational enhancements, equipment advances, and increased volumes - Current industry trends include difficulties attracting food service workers and rapid inflation in input costs[10](index=10&type=chunk) - Beef and egg costs have trended down slightly in 2023, but raising menu prices to fully cover cost increases remains challenging due to intense competition[11](index=11&type=chunk) - Future margin improvements are expected through operational enhancements, equipment advances, and increased volumes[11](index=11&type=chunk) - The labor market is challenging, leading to higher wages and increased competition for employees[121](index=121&type=chunk) [Results of Operations for the Thirteen Weeks Ended October 1, 2023, and October 2, 2022](index=14&type=section&id=Results%20of%20Operations%20for%20the%20Thirteen%20Weeks%20Ended%20October%201%2C%202023%2C%20and%20October%202%2C%202022) For the third fiscal quarter of 2023, net sales slightly decreased, primarily due to the closure of the West St. Paul location and a return to pre-pandemic customer purchasing patterns, while income from operations improved significantly, driven by moderating inflation and declining food and paper costs, despite increased labor and general and administrative expenses [Net Revenues (13 weeks)](index=14&type=section&id=Net%20Revenues%20%2813%20weeks%29) Net Revenues (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 ($) | 13 weeks ended Oct 2, 2022 ($) | Change ($) | Change (%) | | :----- | :------------------------- | :------------------------- | :--------- | :--------- | | Sales | 4,007,656 | 4,023,920 | (16,264) | (0.4%) | - Sales declined due to the closure of the West St. Paul location and a return to pre-pandemic customer purchasing patterns, along with staffing challenges at Burger Time[133](index=133&type=chunk) - PIE's sales for the quarter were **$1,292,740**, an increase of **2.9%** from the prior year, benefiting from lower input costs[135](index=135&type=chunk) [Costs of Sales - Food and Paper (13 weeks)](index=14&type=section&id=Costs%20of%20Sales%20-%20Food%20and%20Paper%20%2813%20weeks%29) Costs of Sales - Food and Paper (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 (%) | 13 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Food and paper costs (% of sales) | 36.2 | 39.9 | (3.7) | - The decrease in food and paper costs as a percentage of sales was primarily due to moderating inflationary pressures and declining prices for several key inputs[136](index=136&type=chunk) [Restaurant Operating Costs (13 weeks)](index=14&type=section&id=Restaurant%20Operating%20Costs%20%2813%20weeks%29) Restaurant Operating Costs (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 (%) | 13 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Restaurant operating costs (% of sales) | 88.6 | 88.4 | 0.2 | - The slight decrease in restaurant operating costs as a percentage of sales was attributed to declining and stabilizing commodity costs, particularly at PIE[137](index=137&type=chunk) [Labor Costs (13 weeks)](index=14&type=section&id=Labor%20Costs%20%2813%20weeks%29) Labor Costs (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 (%) | 13 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Labor costs (% of sales) | 37.7 | 33.2 | 4.5 | - The increase in labor costs as a percentage of sales was due to tighter labor markets, higher hourly wage costs, and higher labor costs associated with the PIE acquisition[138](index=138&type=chunk)[139](index=139&type=chunk) [Occupancy and Other Operating Expenses (13 weeks)](index=15&type=section&id=Occupancy%20and%20Other%20Operating%20Expenses%20%2813%20weeks%29) Occupancy and Other Operating Expenses (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 (%) | 13 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Occupancy and other expenses (% of sales) | 8.5 | 9.1 | (0.6) | - The decrease in occupancy and other expenses as a percentage of sales was influenced by the closure of the West St. Paul location, partially offset by rent and utility cost increases[140](index=140&type=chunk) [Depreciation and Amortization Expense (13 weeks)](index=15&type=section&id=Depreciation%20and%20Amortization%20Expense%20%2813%20weeks%29) Depreciation and Amortization Expense (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 ($) | 13 weeks ended Oct 2, 2022 ($) | Change ($) | Change (pp) | | :----- | :------------------------- | :------------------------- | :--------- | :---------- | | Depreciation and amortization expense | 114,774 | 168,855 | (54,081) | (1.3) | - The decrease in depreciation and amortization expense was due to reduced depreciation and amortization associated with recent acquisitions[141](index=141&type=chunk) [General and Administrative Costs (13 weeks)](index=15&type=section&id=General%20and%20Administrative%20Costs%20%2813%20weeks%29) General and Administrative Costs (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 ($) | 13 weeks ended Oct 2, 2022 ($) | Change ($) | Change (pp) | | :----- | :------------------------- | :------------------------- | :--------- | :---------- | | General and administrative costs | 343,027 | 288,922 | 54,105 | 1.4 | - The increase was associated with public company transition expenses, long-term management agreements, incentive stock options, and approximately **$100,000** in legal expenses for a proxy solicitation contest[142](index=142&type=chunk) [Income from Operations (13 weeks)](index=15&type=section&id=Income%20from%20Operations%20%2813%20weeks%29) Income from Operations (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 ($) | 13 weeks ended Oct 2, 2022 ($) | Change ($) | Change (pp) | | :----- | :------------------------- | :------------------------- | :--------- | :---------- | | Income from operations | 40,615 | 8,991 | 31,624 | 0.8 | - The improvement in income from operations was due to moderating inflation, partially offset by higher general and administrative expenses[143](index=143&type=chunk) [Restaurant-level EBITDA (13 weeks)](index=15&type=section&id=Restaurant-level%20EBITDA%20%2813%20weeks%29) - Restaurant-level EBITDA is a non-GAAP measure used to gauge the profitability of core restaurant operations, excluding corporate-level expenses, depreciation, amortization, and impairment charges[144](index=144&type=chunk)[145](index=145&type=chunk) Restaurant-level EBITDA (13 weeks) | Metric | 13 weeks ended Oct 1, 2023 ($) | 13 weeks ended Oct 2, 2022 ($) | Change ($) | | :----- | :------------------------- | :------------------------- | :--------- | | Revenues | 4,007,656 | 4,023,920 | (16,264) | | Income from operations | 40,615 | 8,991 | 31,624 | | Depreciation and amortization | 114,774 | 168,855 | (54,081) | | General and administrative, corporate-level expenses | 343,027 | 288,922 | 54,105 | | Restaurant-level EBITDA | 498,416 | 466,768 | 31,648 | [Results of Operations for the Thirty-nine Weeks Ended October 1, 2023, and October 2, 2022](index=16&type=section&id=Results%20of%20Operations%20for%20the%20Thirty-nine%20Weeks%20Ended%20October%201%2C%202023%2C%20and%20October%202%2C%202022) For the first 39 weeks of fiscal 2023, net sales increased significantly due to acquired restaurants, offsetting a decline in BTND revenue, however, the company reported an operating loss, primarily driven by increased general and administrative expenses, higher labor costs, and increased food and paper costs [Net Revenues (39 weeks)](index=16&type=section&id=Net%20Revenues%20%2839%20weeks%29) Net Revenues (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 ($) | 39 weeks ended Oct 2, 2022 ($) | Change ($) | Change (%) | | :----- | :------------------------- | :------------------------- | :--------- | :--------- | | Sales | 11,078,419 | 9,621,996 | 1,456,423 | 15.1% | - The increase in sales was principally due to approximately **$1.9 million** in incremental sales from acquired restaurants, offsetting a **4.5% decline** in BTND revenue[68](index=68&type=chunk) - Average sales for each Burger Time unit were approximately **$625,000** in 2023, a decline from **$626,000** in 2022, attributed to a return to pre-COVID patterns, labor challenges, and poorer weather[102](index=102&type=chunk) [Costs of Sales - Food and Paper (39 weeks)](index=16&type=section&id=Costs%20of%20Sales%20-%20Food%20and%20Paper%20%2839%20weeks%29) Costs of Sales - Food and Paper (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 (%) | 39 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Food and paper costs (% of sales) | 39.3 | 37.8 | 1.5 | - The increase was due to inflation early in the year, especially for Keegan's fresh seafood and meat costs at Burger Time[124](index=124&type=chunk) [Restaurant Operating Costs (39 weeks)](index=16&type=section&id=Restaurant%20Operating%20Costs%20%2839%20weeks%29) Restaurant Operating Costs (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 (%) | 39 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Restaurant operating costs (% of sales) | 89.6 | 84.6 | 5.0 | - The increase was due to rising hourly wages and commodity food costs[125](index=125&type=chunk) [Labor Costs (39 weeks)](index=16&type=section&id=Labor%20Costs%20%2839%20weeks%29) Labor Costs (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 (%) | 39 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Labor and benefits costs (% of sales) | 37.2 | 32.5 | 4.7 | - Significantly higher hourly wage rates at all locations and challenging hiring markets contributed to the increase[147](index=147&type=chunk) [Occupancy and Other Operating Expenses (39 weeks)](index=16&type=section&id=Occupancy%20and%20Other%20Operating%20Expenses%20%2839%20weeks%29) Occupancy and Other Operating Expenses (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 (%) | 39 weeks ended Oct 2, 2022 (%) | Change (pp) | | :----- | :------------------------- | :------------------------- | :---------- | | Occupancy and other expenses (% of sales) | 7.6 | 8.4 | (0.8) | - The decrease was principally due to reversing previously accrued property taxes, partially offset by higher lease occupancy costs at new locations[104](index=104&type=chunk) [Depreciation and Amortization Expenses (39 weeks)](index=17&type=section&id=Depreciation%20and%20Amortization%20Expenses%20%2839%20weeks%29) Depreciation and Amortization Expenses (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 ($) | 39 weeks ended Oct 2, 2022 ($) | Change ($) | Change (pp) | | :----- | :------------------------- | :------------------------- | :--------- | :---------- | | Depreciation and amortization expenses | 470,801 | 351,084 | 119,717 | 0.6 | - The increase resulted from the purchase of three new restaurants and capital improvements at several locations[105](index=105&type=chunk) [General and Administrative Costs (39 weeks)](index=17&type=section&id=General%20and%20Administrative%20Costs%20%2839%20weeks%29) General and Administrative Costs (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 ($) | 39 weeks ended Oct 2, 2022 ($) | Change ($) | Change (pp) | | :----- | :------------------------- | :------------------------- | :--------- | :---------- | | General and administrative costs | 1,288,019 | 1,035,639 | 252,380 | 0.8 | - The increase was due to approximately **$100,000** in legal and other costs associated with a proxy solicitation effort, public reporting expenses, stock-based compensation, and long-term management employment agreements[127](index=127&type=chunk) [Income from Operations (39 weeks)](index=17&type=section&id=Income%20from%20Operations%20%2839%20weeks%29) Income from Operations (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 ($) | 39 weeks ended Oct 2, 2022 ($) | Change ($) | | :----- | :------------------------- | :------------------------- | :--------- | | Income from operations | (289,691) | 93,765 | (383,456) | - The shift from operating profit to loss was primarily due to the increase in general and administrative expenses and other factors discussed in revenue and operating costs[149](index=149&type=chunk) [Restaurant-level EBITDA (39 weeks)](index=17&type=section&id=Restaurant-level%20EBITDA%20%2839%20weeks%29) - Restaurant-level EBITDA is a non-GAAP measure used to assess the profitability of core restaurant operations, excluding corporate-level expenses, depreciation, amortization, and impairment charges[129](index=129&type=chunk)[150](index=150&type=chunk) Restaurant-level EBITDA (39 weeks) | Metric | 39 weeks ended Oct 1, 2023 ($) | 39 weeks ended Oct 2, 2022 ($) | Change ($) | | :----- | :------------------------- | :------------------------- | :--------- | | Revenues | 11,078,419 | 9,621,996 | 1,456,423 | | Income (loss) from operations | (289,691) | 93,765 | (383,456) | | Depreciation and amortization | 470,801 | 351,084 | 119,717 | | General and administrative, corporate-level expenses | 1,288,019 | 1,035,639 | 252,380 | | Restaurant-level EBITDA | 1,469,129 | 1,480,488 | (11,359) | | Restaurant-level EBITDA margin | 13.3% | 15.4% | (2.1) pp | [Liquidity and Capital Resources](index=17&type=section&id=Liquidity%20and%20Capital%20Resources) As of October 1, 2023, BT Brands had **$6.9 million** in cash and marketable securities and **$6.2 million** in net working capital, a decrease of **$0.6 million** from January 1, 2023, with primary liquidity sources being operating cash flows and cash on hand, used to fund working capital, capital expenditures, and acquisitions, and operating cash flow for the 39 weeks was negative **$74,732**, impacted by public company expenses and proxy solicitation costs - As of October 1, 2023, the company had **$6.9 million** in cash and cash equivalents and marketable securities, and net working capital of **$6.2 million**, a decrease of **$0.6 million** from January 1, 2023[151](index=151&type=chunk) - Primary liquidity requirements are to fund working capital, capital expenditures, general corporate needs, and business investments/acquisitions[152](index=152&type=chunk) - Operating cash flow for the 39 weeks ending October 1, 2023, was a negative **$74,732**, negatively impacted by public company expenses and costs related to proxy solicitation[132](index=132&type=chunk) [Summary of Cash Flows](index=18&type=section&id=Summary%20of%20Cash%20Flows) - Operating cash flow for the 39 weeks ending October 1, 2023, was a negative **$74,732**[132](index=132&type=chunk) [Cash Flows Provided by Operating Activities](index=18&type=section&id=Cash%20Flows%20Provided%20by%20Operating%20Activities) - Operating cash flow was negatively impacted by ongoing public company expenses, including stock-based compensation and costs associated with contested proxy solicitation[132](index=132&type=chunk) [Cash Flows Used in Investing Activities](index=18&type=section&id=Cash%20Flows%20Used%20in%20Investing%20Activities) - During fiscal 2023, the company continued to seek acquisitions, purchasing two operating restaurants and a **41.2% interest** in a publicly traded casual dining business[156](index=156&type=chunk) [Cash Flows Used in Financing Activities](index=18&type=section&id=Cash%20Flows%20Used%20in%20Financing%20Activities) - A significant portion of cash flow used in financing activities is allocated to debt service[157](index=157&type=chunk) [Contractual Obligations](index=18&type=section&id=Contractual%20Obligations) - As of October 1, 2023, contractual obligations totaled **$4.4 million**, including amounts due under mortgages and **$1.9 million** in capitalized lease obligations[158](index=158&type=chunk) - Monthly required payments on lease and mortgage obligations are approximately **$47,000**[158](index=158&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK](index=19&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) As a smaller reporting company, BT Brands, Inc. is not required to provide the information typically mandated under this item - The registrant is a smaller reporting company and is not required to provide information under this item[164](index=164&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=18&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) The company's CEO and CFO concluded that disclosure controls and procedures were not effective as of October 1, 2023, due to a material weakness in internal control over financial reporting related to lack of segregation of duties and inadequate risk assessment, with no significant changes in internal control over financial reporting occurring during the quarter, apart from integrating controls into recent acquisitions [Evaluation of Disclosure Controls and Procedures](index=18&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - As of October 1, 2023, the CEO and CFO concluded that disclosure controls and procedures were not effective at a reasonable assurance level[160](index=160&type=chunk) - This ineffectiveness is due to a material weakness in internal control over financial reporting, as disclosed in the Company's Form 10-K for the fiscal year ended January 1, 2023[160](index=160&type=chunk) [Changes in Internal Control over Financial Reporting](index=18&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - A material weakness for lack of segregation of duties and inadequate risk assessment on monitoring internal controls was disclosed in the prior 10-K[161](index=161&type=chunk) - No significant change in internal control over financial reporting occurred during the most recent fiscal quarter, apart from integrating controls into recent acquisitions[161](index=161&type=chunk) [PART II - OTHER INFORMATION](index=19&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [ITEM 1. LEGAL PROCEEDINGS](index=19&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) There are no pending legal proceedings to which BT Brands, Inc. is a party, nor are any such proceedings known to be threatened or contemplated against it - There are no pending legal proceedings to which the Company is a party or as to which any of its property is subject[163](index=163&type=chunk) - No such proceedings are known to be threatened or contemplated against the Company[163](index=163&type=chunk) [ITEM 1A. RISK FACTORS](index=19&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a smaller reporting company, BT Brands, Inc. is not required to provide the information typically mandated under this item - The registrant is a smaller reporting company and is not required to provide information under this item[164](index=164&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=19&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) Since its initial public offering in November 2021, the company has used proceeds for general working capital and to acquire Keegan's Seafood Grille, Pie in the Sky Bakery and Coffee Shop, a **41.2%** interest in Bagger Dave's, and Village Bier Garten, with no other unregistered sales of equity securities occurring during the reporting period [Unregistered Sales of Equity Securities](index=19&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) - Other than previously set forth, no securities were sold since the filing of the Annual Report on Form 10-K through the date of this quarterly report[165](index=165&type=chunk) [Use of Proceeds](index=19&type=section&id=Use%20of%20Proceeds) - Proceeds from the November 2021 IPO were used for general working capital and acquisitions[166](index=166&type=chunk) Acquisition Item and Amount Used from Proceeds | Acquisition Item | Amount Used from Proceeds ($) | | :-------------------------------- | :------------------------ | | Keegan's Seafood Grille | 1,150,000 | | Pie in the Sky Bakery and Coffee Shop | 1,160,000 | | Bagger Dave's (41.2% interest) | 1,390,000 | | Village Bier Garten | (Amount not specified in chunk) | [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=19&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities during the reporting period - None[167](index=167&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=19&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to BT Brands, Inc - Not applicable[168](index=168&type=chunk) [ITEM 5. OTHER INFORMATION](index=19&type=section&id=ITEM%205.%20OTHER%20INFORMATION) There is no other information to report under this item - None[169](index=169&type=chunk) [ITEM 6. EXHIBITS](index=19&type=section&id=ITEM%206.%20EXHIBITS.) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - Exhibits include certifications pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002 from the Company's Principal Executive Officer and Principal Financial Officer[169](index=169&type=chunk)[170](index=170&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Labels, Presentation Linkbase Documents, and Cover Page Interactive Data File) are also included[170](index=170&type=chunk) [SIGNATURES](index=20&type=section&id=SIGNATURES) The report is duly signed on behalf of BT Brands, Inc. by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer, on November 15, 2023 - The report is signed by Kenneth Brimmer, Chief Operating Officer and Principal Financial Officer[171](index=171&type=chunk) - The report was signed on November 15, 2023[177](index=177&type=chunk)

Fair Value of Financial Instruments The Company's accounting for fair value measurements of assets and liabilities, including available-for-sale securities, is that they are recognized or disclosed at fair value in the statements on a recurring or nonrecurring basis, adhere to the Financial Accounting Standards Board (FASB) fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value. · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets ...