BT Brands(BTBD) - 2023 Q4 - Annual Report

Financial Performance - Net loss for the fiscal year ending December 31, 2023, was $887,368, compared to a net loss of $562,285 for the previous fiscal year, indicating a 57.7% increase in losses[36] - The company reported a depreciation and amortization expense of $598,540 for the fiscal year ending December 31, 2023, compared to $449,038 in the previous year, reflecting a 33.4% increase[36] - The company generated net cash used in operating activities of $(258,787) for the fiscal year ending December 31, 2023, compared to $211,798 in the previous year[36] - Proceeds from the sale of marketable securities amounted to $5,237,835, compared to $19,629,514 in the previous year[36] Assets and Liabilities - Total current assets decreased from $8,864,093 to $7,228,573, a decline of approximately 18.4%[33] - Total assets decreased from $16,769,697 to $14,609,212, a reduction of approximately 12.9%[33] - Current liabilities decreased from $2,133,541 to $1,550,090, a decline of about 27.3%[33] - Long-term debt, less current portion, decreased from $2,658,477 to $2,269,771, a reduction of approximately 14.6%[33] - Long-term debt obligations as of December 31, 2023, totaled $2,489,299, with current maturities of $183,329[119] Cash and Cash Equivalents - Cash and cash equivalents increased from $2,150,578 to $5,300,446, representing a growth of about 146.5%[33] - Cash and cash equivalents include $5,000,000 face value of U.S. Treasury Bills, purchased for $4,907,378[71] Depreciation and Amortization - Depreciation expenses for 2023 were $539,675, compared to $412,016 in 2022, reflecting an increase of approximately 31%[57] - Total amortization expense for intangible assets was $58,865 in 2023, up from $37,022 in 2022, indicating a growth of about 59%[58] - Future amortization of intangible assets is projected to be approximately $58,900 in 2024, $40,500 in 2025, and $26,200 per year through 2036[58] Investments - The company holds a 39.6% ownership in Bagger Dave's after acquiring 11,095,085 shares for $1,260,000, or approximately $0.114 per share[63] - The company’s investment in Bagger Dave's is accounted for under the equity method, with a noncurrent investment of $688,806[68] - The company incurred a loss on equity method investment of $346,380 during the fiscal year[36] Stock Options and Compensation - The company granted stock options totaling 216,000 shares at an exercise price of $2.58, with a compensation expense of $174,000 recognized in 2023[115] - The company projects approximately $144,000 in stock-based compensation to be recognized over the next four years, with $32,000 per year for the first three years[107] - The estimated fair value of stock options granted during fiscal 2023 was $1.60, with an expected life of 6 years and a volatility of 63%[111] Lease Obligations - The company recorded an operating lease obligation and a right-of-use asset of $624,000 for a new lease[82] - The total operating lease expense for 2023 was $298,567, compared to $239,092 in 2022, with cash paid for leases amounting to $282,000 in 2023[99] - The total future minimum lease payments amount to $2,188,492, with a present value of lease obligations at $1,815,948[99] - The weighted average remaining lease term is approximately 5.3 years, with a weighted average discount rate of about 4.32%[85] Internal Controls - The company has identified a material weakness in internal controls over financial reporting, which could lead to misstatements in financial statements[131] - An ongoing improvement and remediation plan is in place for the identified material weakness, with potential engagement of an accounting expert for complex transactions in fiscal 2024[132] Miscellaneous - The estimated net operating loss carryforward is approximately $2.0 million at December 31, 2023, compared to $1.7 million in 2022[87] - Total accrued expenses as of December 31, 2023, amounted to $480,289, down from $532,520 at the beginning of the year[91] - The company completed a public offering of 2,400,000 common shares and 2,760,000 stock purchase warrants, resulting in net proceeds of $10,696,575 after fees and expenses[92] - On March 2, 2022, BT Brands acquired Keegan's Seafood Grille for approximately $1.15 million, with $547,900 recorded as goodwill[120] - As of December 31, 2023, approximately 60% of food and paper cost of goods sold was from one vendor, with amounts due totaling $268,849[125] - In fiscal 2022, the same vendor accounted for approximately 60% of purchases, with amounts due at $272,657 on January 1, 2023[125]