BT Brands(BTBD) - 2026 Q1 - Quarterly Report

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) Unaudited condensed consolidated financial statements, including balance sheets, operations, equity, cash flows, and detailed notes Condensed Consolidated Balance Sheets 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] Condensed Consolidated Statements of Operations 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] Condensed Consolidated Statements of Shareholders' Equity 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] Condensed Consolidated Statements of Cash Flows 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] NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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][28][32] - 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] 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 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] - 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] NOTE 3 – PROPERTY AND EQUIPMENT 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] NOTE 4 - ACCRUED EXPENSES 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 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] NOTE 6 - STOCK-BASED COMPENSATION 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] - 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] NOTE 7 – LEASES 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] NOTE 8 – SHAREHOLDERS' EQUITY 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] - 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] NOTE 9 - RELATED PARTY TRANSACTION 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] - 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] - 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] NOTE 10 – CONTINGENCIES 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] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 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][91] - 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] - 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] Notable Recent Events 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] - The two closed locations contributed $507,458 in revenue and an operating loss of approximately $94,000 in Q1 2024[89] Material Trends and Uncertainties 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] - Competitors are aggressively adopting smartphone/mobile delivery applications, expanding drive-through operations, and developing loyalty programs, intensifying market competition[90] Results of Operations for the Thirteen Weeks Ended March 30, 2025, and the Thirteen Weeks Ended March 31, 2024 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] - 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] Liquidity and Capital Resources 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] - Operating cash flow for the thirteen weeks ending March 30, 2025, was a negative $306,739, impacted by seasonal business patterns[110] - 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] Contractual Obligations 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] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 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] ITEM 4. CONTROLS AND PROCEDURES 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 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] - 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] Changes in Internal Control over Financial Reporting 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] - 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] PART II—OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other required disclosures ITEM 1. LEGAL PROCEEDINGS 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] ITEM 1A. RISK FACTORS 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] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 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 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] Use of Proceeds 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] ITEM 3. DEFAULTS UPON SENIOR SECURITIES The company reports no defaults upon senior securities - There have been no defaults upon senior securities[125] ITEM 4. MINE SAFETY DISCLOSURES This item is not applicable to the company's operations - Mine safety disclosures are not applicable to the company[126] ITEM 5. OTHER INFORMATION The company reports no other information required under this item - There is no other information to report under this item[127] ITEM 6. EXHIBITS 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][128] SIGNATURES 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][131][132]