BT Brands(BTBD) - 2023 Q1 - Quarterly Report

PART I— FINANCIAL INFORMATION Financial Statements This section presents BT Brands, Inc.'s unaudited condensed consolidated financial statements, reflecting increased total assets to $15.4 million and a significant decrease in net income to $42,650 Consolidated Financial Statements The consolidated financial statements show total assets at $15.4 million and a sharp decline in net income to $42,650 for the 13 weeks ended April 3, 2022 Consolidated Balance Sheet Highlights (Unaudited) | Account | April 3, 2022 ($) | January 2, 2022 ($) | | :--- | :--- | :--- | | Total Assets | 15,414,133 | 14,505,727 | | Total Current Assets | 11,492,535 | 12,564,579 | | Goodwill | 200,000 | 0 | | Total Liabilities | 4,634,764 | 3,877,374 | | Total Current Liabilities | 1,167,919 | 925,310 | | Total Shareholders' Equity | 10,779,369 | 10,628,353 | Consolidated Statement of Income (Unaudited) | Metric | 13 Weeks Ended April 3, 2022 ($) | 13 Weeks Ended April 4, 2021 ($) | | :--- | :--- | :--- | | Sales | 2,073,195 | 1,940,872 | | Income from Operations | 88,921 | 223,495 | | Net Income | 42,650 | 134,924 | | Net Income Per Share (Basic & Diluted) | 0.01 | 0.03 | - Net cash provided by operating activities was $337,394 for the 13 weeks ended April 3, 2022, compared to $242,292 in the prior-year period, while net cash used in investing activities significantly increased to $1,682,010 due to the Keegan's Seafood Grille acquisition[22] Notes to Condensed Consolidated Financial Statements These notes detail accounting policies and significant financial events, including the $1.15 million acquisition of Keegan's Seafood Grille and subsequent $1.17 million acquisition of Pie In The Sky Coffee and Bakery - As of April 3, 2022, the company operated eleven restaurants, including nine Burger Time, one Dairy Queen, and the newly acquired Keegan's Seafood Grille[28] - On March 2, 2022, the Company acquired Keegan's Seafood Grille for approximately $1.15 million in cash, provisionally recording $200,000 in Goodwill[48][50] - The company's long-term debt totaled approximately $3.0 million as of April 3, 2022, primarily from three bank notes with a fixed interest rate of 3.45%[56] - In Q1 2022, the company granted 215,750 stock options at an exercise price of $2.50 per share, recognizing $33,500 in stock-based compensation expense[59][60] - On May 11, 2022, the company acquired Pie In The Sky Coffee and Bakery for $1,173,500 in cash and entered into a five-year property lease[70] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q1 2022 financial performance, highlighting a 6.8% increase in net sales and a significant decline in net income due to a 176.3% surge in general and administrative costs - The company's principal growth strategy focuses on acquiring multi-unit restaurant concepts and individual properties at attractive earnings multiples[83] - Food costs, especially beef, have increased approximately 13.7% since 2020, prompting a planned menu price increase in Q2 2022 to mitigate inflationary pressures[80] - On March 2, 2022, the company acquired Keegan's Seafood Grille for $1,150,000, a restaurant operating for over 35 years in Indian Rocks Beach, Florida[93] Results of Operations Net sales increased 6.8% to $2.07 million in Q1 2022, but income from operations sharply declined due to a 176.3% rise in general and administrative expenses Q1 2022 vs Q1 2021 Performance | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Sales | $2,073,195 | $1,940,872 | | Food and Paper Costs (% of Sales) | 34.8% | 37.7% | | Labor Costs (% of Sales) | 29.3% | 29.1% | | General & Administrative Costs | $291,062 | $105,338 | | Income from Operations | $88,921 | $223,495 | | Net Income | $42,650 | $134,924 | - The increase in general and administrative costs was primarily due to the transition to a public company, leading to increased officer compensation and staff[105] - Restaurant-level EBITDA increased to $449,397 (21.6% margin) in Q1 2022 from $383,689 (19.8% margin) in Q1 2021[114] Liquidity and Capital Resources As of April 3, 2022, the company maintained a strong liquidity position with $11.1 million in cash and $9.9 million in working capital, largely from its November 2021 public offering - As of April 3, 2022, the Company had $11,073,645 in cash and $9,905,672 in working capital, primarily from its November 2021 public offering[110] - The company's primary liquidity sources are operating cash flows and cash on hand, utilized for debt service, store maintenance, and growth funding[112] - As of April 3, 2022, the company had $3 million in contractual obligations, mainly property mortgages, with monthly payments of approximately $32,000[118] Quantitative and Qualitative Disclosure About Market Risk The company is a smaller reporting company and is not required to provide the information under this item - As a smaller reporting company, BT Brands, Inc. is not required to provide quantitative and qualitative disclosures about market risk[132] Controls and Procedures Management concluded that as of April 3, 2022, the company's disclosure controls and procedures were not effective due to insufficient accounting resources and inadequate internal control monitoring - The CEO and CFO concluded that as of April 3, 2022, the company's disclosure controls and procedures were not effective[134] - Key reasons for ineffectiveness included a lack of accounting resources for segregation of duties, no effective risk assessment, and insufficient internal control monitoring[134] PART II—OTHER INFORMATION Legal Proceedings The company reports that there are no pending legal proceedings to which it is a party or to which its property is subject - There are no pending legal proceedings against the Company as of the report date[137] Risk Factors As a smaller reporting company, BT Brands, Inc. is not required to provide the information for this item - The company is a smaller reporting company and is not required to provide risk factors in its Form 10-Q[138] Unregistered Sales of Equity Securities and Use of Proceeds The company did not sell any unregistered equity securities during the period covered by this report - The Company did not sell any securities during the period covered by the report[139] Other Items (Defaults, Mine Safety, Other Information) The company reports no defaults upon senior securities, no mine safety disclosures as it is not applicable, and no other information to disclose under Item 5 - The company reported no defaults upon senior securities, no mine safety disclosures, and no other information[140][141][142] Exhibits This section lists the exhibits filed with the quarterly report, including certifications by the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act, and XBRL data files - The report includes required certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL filings[142]