Cover
Cover | 9 Months Ended |
Sep. 27, 2020 | |
Cover [Abstract] | |
Entity Registrant Name | BT BRANDS, INC. |
Entity Central Index Key | 0001718224 |
Document Type | S-1 |
Amendment Flag | false |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Filer Category | Non-accelerated Filer |
Entity Ex Transition Period | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
CURRENT ASSETS | |||
Cash | $ 1,393,263 | $ 258,101 | $ 663,511 |
Receivables | 21,728 | 15,363 | 20,241 |
Inventory | 57,618 | 56,432 | 58,584 |
Prepaid expenses | 626 | 6,929 | 8,211 |
Deferred offering costs | 0 | 40,000 | |
Total current assets | 1,473,235 | 336,825 | 790,547 |
PROPERTY AND EQUIPMENT, net | 1,597,635 | 1,650,012 | 2,052,539 |
LAND AND BUILDINGS HELD FOR SALE | 349,244 | 449,244 | 353,092 |
INVESTMENT IN AND NOTE RECEIVABLE FROM RELATED COMPANY | 75,000 | 179,000 | |
OTHER ASSETS, net | 27,184 | 18,458 | 68,659 |
Total assets | 3,522,298 | 2,633,539 | 3,264,837 |
CURRENT LIABILITIES | |||
Current maturities of long-term debt | 240,680 | 277,666 | 254,397 |
Accounts payable | 422,054 | 321,855 | 288,659 |
Accrued expenses | 203,413 | 202,732 | 174,986 |
Income taxes payable | 235,898 | 2,898 | 13,725 |
Total current liabilities | 1,102,045 | 805,151 | 731,767 |
LONG-TERM DEBT, less current maturities | 3,001,206 | 3,221,035 | 3,516,028 |
DEFERRED INCOME TAXES | 0 | 48,500 | |
UNEARNED VENDOR REBATE | 0 | 3,668 | 9,780 |
Total liabilities | 4,103,251 | 4,029,854 | 4,306,075 |
COMMITMENTS AND CONTINGENCIES | 0 | 0 | 0 |
SHAREHOLDERS' EQUITY (DEFICIT) | |||
Preferred Stock Value | 0 | 0 | 0 |
Common Stock Value | 8,095 | 8,095 | 8,086 |
Additional paid-in capital | 497,671 | 497,671 | 484,180 |
Accumulated deficit | (1,086,719) | (1,902,081) | (1,533,504) |
Total shareholders' deficit | (580,953) | (1,396,315) | (1,041,238) |
Total liabilities and shareholders' deficit | $ 3,522,298 | $ 2,633,539 | $ 3,264,837 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
SHAREHOLDERS' DEFICIT | |||
Preferred stock, shares par value | $ 0.001 | $ 0.001 | $ .001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 0 | 0 | 0 |
Common stock, shares par value | $ .001 | $ .001 | $ .001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 | 50,000,000 |
Common stock, shares outstanding | 8,095,004 | 8,095,004 | 8,086,004 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||||
SALES | $ 2,374,454 | $ 1,850,167 | $ 6,074,222 | $ 5,116,161 | $ 6,480,564 | $ 7,051,467 |
COSTS AND EXPENSES | ||||||
Food and paper costs | 863,997 | 727,095 | 2,299,989 | 2,021,258 | 2,574,388 | 2,835,757 |
Labor costs | 624,696 | 570,220 | 1,718,703 | 1,624,219 | 2,140,157 | 2,237,378 |
Occupancy costs | 170,109 | 156,074 | 504,142 | 538,963 | 718,905 | 847,274 |
Other operating expenses | 121,827 | 108,148 | 313,101 | 259,289 | 353,502 | 328,709 |
Depreciation and Amortization | 49,668 | 51,097 | 140,588 | 171,563 | ||
Depreciation | 139,313 | 171,563 | 211,087 | 225,814 | ||
Amortization | 1,700 | 1,700 | ||||
Impairment of assets held for sale | 0 | 0 | 100,000 | 93,488 | 93,488 | 0 |
Loss (gain) on sale of property and equipment | 0 | 1,800 | 1,800 | (158,358) | ||
General and administrative | 188,292 | 135,695 | 371,455 | 426,968 | 607,585 | 492,378 |
Total costs and expenses | 2,018,589 | 1,748,329 | 5,447,978 | 5,135,748 | 6,702,612 | 6,810,652 |
Income (loss) from operations | 355,865 | 101,838 | 626,244 | (19,587) | (222,048) | 240,815 |
INTEREST INCOME | 28,507 | 0 | 92,707 | 0 | 4,402 | 89 |
OTHER INCOME | 0 | 0 | 466,758 | 0 | 8,410 | (29,421) |
INTEREST EXPENSE | (45,188) | (73,211) | (136,347) | (159,964) | (207,841) | (176,955) |
INCOME (LOSS) BEFORE TAXES | 339,184 | 28,627 | 1,049,362 | (179,551) | (417,077) | 34,528 |
PROVISION FOR INCOME TAXES | (85,000) | 0 | (234,000) | 0 | 48,500 | (13,725) |
NET INCOME (LOSS) | $ 254,184 | $ 28,627 | $ 815,362 | $ (179,551) | $ (368,577) | $ 20,803 |
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted | $ 0.03 | $ 0 | $ 0.10 | $ 0 | $ (0.05) | $ 0 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted | 8,095,004 | 8,086,004 | 8,095,004 | 8,086,004 | 8,087,977 | 7,216,835 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) |
Balance, shares at Dec. 31, 2017 | 6,596,000 | |||
Balance, amount at Dec. 31, 2017 | $ (1,524,735) | $ 6,596 | $ (6,596) | $ (1,524,735) |
Conversion of BTND ownership to common stock, shares | 820,000 | |||
Conversion of BTND ownership to common stock, amount | 0 | $ 820 | (820) | 0 |
Common stock and warrants issued in private placement, net of cash offering costs of $122,734 and placement agent warrant of $15,421 and common stock of $327,600, shares | 410,004 | |||
Common stock and warrants issued in private placement, net of cash offering costs of $122,734 and placement agent warrant of $15,421 and common stock of $327,600, amount | 149,245 | $ 410 | 148,835 | 0 |
Placement agent warrant | 15,421 | $ 0 | 15,421 | 0 |
Common stock issues as part of private placement offering costs, shares | 260,000 | |||
Common stock issues as part of private placement offering costs, amount | 327,600 | $ 260 | 327,340 | 0 |
Distributions | (29,572) | 0 | 0 | (29,572) |
Net Income | 20,803 | $ 0 | 0 | 20,803 |
Balance, shares at Dec. 30, 2018 | 8,086,004 | |||
Balance, amount at Dec. 30, 2018 | (1,041,238) | $ 8,086 | 484,180 | (1,533,504) |
Balance, shares at Dec. 31, 2018 | 8,086,004 | |||
Balance, amount at Dec. 31, 2018 | (1,041,238) | $ 8,086 | 484,180 | (1,533,504) |
Net Income | (179,551) | $ 0 | 0 | (179,551) |
Balance, shares at Sep. 29, 2019 | 8,086,004 | |||
Balance, amount at Sep. 29, 2019 | (1,220,789) | $ 8,086 | 484,180 | (1,713,055) |
Balance, shares at Dec. 31, 2018 | 8,086,004 | |||
Balance, amount at Dec. 31, 2018 | (1,041,238) | $ 8,086 | 484,180 | (1,533,504) |
Net Income | (368,577) | $ 0 | 0 | (368,577) |
Issuance of incentive compensation shares, shares | 9,000 | |||
Issuance of incentive compensation shares, amount | 13,500 | $ 9 | 13,491 | 0 |
Balance, shares at Dec. 29, 2019 | 8,095,004 | |||
Balance, amount at Dec. 29, 2019 | (1,396,315) | $ 8,095 | 497,671 | (1,902,081) |
Balance, shares at Jun. 30, 2019 | 8,086,004 | |||
Balance, amount at Jun. 30, 2019 | (1,249,416) | $ 8,086 | 484,180 | (1,741,682) |
Net Income | 28,627 | $ 0 | 0 | 28,627 |
Balance, shares at Sep. 29, 2019 | 8,086,004 | |||
Balance, amount at Sep. 29, 2019 | (1,220,789) | $ 8,086 | 484,180 | (1,713,055) |
Balance, shares at Jun. 28, 2020 | 8,095,004 | |||
Balance, amount at Jun. 28, 2020 | (835,137) | $ 8,095 | 497,671 | (1,340,903) |
Net Income | 254,184 | $ 0 | 0 | 254,184 |
Balance, shares at Sep. 27, 2020 | 8,095,004 | |||
Balance, amount at Sep. 27, 2020 | $ (580,953) | $ 8,095 | $ 497,671 | $ (1,086,719) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
NET INCOME (LOSS) | $ 815,362 | $ (179,551) | $ (368,577) | $ 20,803 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities- | ||||
Depreciation | 139,313 | 171,563 | 211,087 | 225,814 |
Stock-based incentive compensation | 13,500 | 0 | ||
Amortization of franchise agreement | 1,275 | 1,275 | 1,700 | 1,700 |
Amortization of debt issuance cost | 3,882 | 3,882 | 5,176 | 5,980 |
Loss on sale of property and equipment | 0 | 1,800 | 1,800 | (158,358) |
Impairment of property and equipment | 100,000 | 93,488 | ||
Impairment of asset held for sale | 100,000 | 93,488 | 93,488 | 0 |
Impairment of goodwill | 48,500 | 0 | ||
Deferred tax benefit | (10,000) | 0 | (48,500) | 0 |
Write-off of deferred offering costs | 40,000 | 0 | ||
Payment of in-kind interest | 39,368 | 0 | ||
Changes in operating assets and liabilities | ||||
Receivables | (6,365) | 1,582 | 4,878 | (1,137) |
Inventory | (1,186) | 4,042 | 2,152 | 12,111 |
Prepaid expenses | 6,303 | 5,954 | 1,282 | (3,338) |
Accounts payable | 70,999 | 62,183 | 33,196 | (63,162) |
Unearned vendor rebate | (3,668) | (4,890) | (6,112) | (4,890) |
Accrued expenses | 681 | (2,358) | 27,746 | (132) |
Income taxes payable | 233,000 | 0 | (10,827) | 13,725 |
Net cash provided by operating activities | 1,388,964 | 158,970 | 50,489 | 49,116 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Proceeds of sale of property and equipment | 0 | 300,000 | ||
Investment in notes receivable from related entity | (179,000) | (16,770) | ||
Proceeds (advances) on notes due from related entity | 104,000 | (30,000) | ||
Purchase of property and equipment | (57,736) | 0 | 0 | 66,652 |
Net cash provided by (used) in investing activities | 46,264 | (30,000) | (179,000) | 216,578 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from long-term debt | 77,500 | 0 | 0 | 139,000 |
Principal payments on long-term debt | (377,566) | (198,058) | (276,899) | (403,927) |
Issuance of common stock, net | 0 | 492,266 | ||
Debt issuance costs | 0 | (1,000) | ||
Deferred offering costs | 0 | (40,000) | ||
Distributions to members | 0 | (29,572) | ||
Net cash used in financing activities | (300,066) | (198,058) | (276,899) | 156,767 |
CHANGE IN CASH | 1,135,162 | (69,088) | (405,410) | 422,461 |
CASH, BEGINNING OF PERIOD | 663,511 | 663,511 | 241,050 | |
CASH, END OF PERIOD | 1,393,263 | 594,423 | 258,101 | 663,511 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||
Cash paid for interest | 93,096 | 157,377 | 202,665 | 170,975 |
SUPPLEMENTAL DISCLOSURE OF INVESTING AND FINANCING ACTIVITIES | ||||
Purchase of fixed assets included in accounts payable | 29,200 | 0 | ||
Transfer of property and equipment to assets held for sale | $ 0 | $ 189,640 | 189,640 | 0 |
Purchase of fixed assets in exchange for debt | $ 0 | $ 200,000 | ||
Common stock warrants issued for offering | 15,421 | |||
Common stock issued for offering costs | 327,600 | |||
Goodwill and deferred tax liability assumed in reverse merger | $ 0 | $ 48,500 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of BT Brands, Inc. and its subsidiaries. (the “Company”, “we”, “our”, “us”, or “BT Brands”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation and have prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ended December 29, 2019. In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The accompanying Condensed Consolidated Balance Sheet as of September 27, 2020 does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of December 29, 2019 and the related notes thereto included in the Company’s Form 10-K for the fiscal year ended December 29, 2019. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. The Company BT Brands, Inc. (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016 with the objective of acquiring an operating entity. Effective on July 30, 2018, the Company acquired 100% of the ownership BTND, LLC. in exchange for common stock in the Company through a Share Exchange Agreement (“Share Exchange”) with BTND, LLC (“BTND”), and its Members. On June 12, 2020, the Company adopted resolutions by written consent of 100% of its shareholders approving the reincorporation of the Company to the State of Wyoming from the State of Delaware which is expected to be completed in November 2020. Business The Company currently operates company-owned fast-food restaurants called Burger Time. The Company also operates one unit in Minnesota as a franchisee of International Dairy Queen. The Company operates three Burger Time locations in Minnesota, four in North Dakota, and two in South Dakota. The Company closed a store in Richmond, Indiana during 2018 which is listed for sale, resulting in a total of ten operating restaurants on September 27, 2020. The Company owns a restaurant property in St. Louis, Missouri currently held for sale. The Company’s Dairy Queen store is operated pursuant to the terms of a franchise agreement with International Dairy Queen. The Company is required to pay regular royalty and advertising payments to the franchisor and to remain in compliance with the terms of the franchise agreement. Fiscal Year Period The Company’s fiscal year is a 52/53-week year, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising the 52-week year. All references to years in this report refer to the 13-week periods in the respective fiscal year periods. Fiscal 2020 is a 53-week year ending January 3, 2021. Cash For purposes of reporting cash and cash flows, cash is net of outstanding checks and includes, amounts on deposit at banks and deposits in transit. Receivables Receivables consists of rebates due from a primary vendor. Inventory Inventory consists of food, beverages and supplies and is stated at lower of cost (first-in, first-out method) or net realizable value. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives which range from three to thirty years. The Company reviews long-lived assets to determine if the carrying value of these assets may not be recoverable based on estimated cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the restaurant level. In determining future cash flows, significant estimates are made by the Company with respect to future operating results of each restaurant over its remaining life. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. Assets Held for Sale From time-to-time the Company may sell an existing operating unit or may close an operating unit and list the property for sale. A property in the St. Louis area is currently listed for sale. Also, in September of 2018 the Company closed an operating Burger Time unit in Richmond, Indiana and the Richmond property is listed for sale. In the second quarter of fiscal 2019 it was concluded to record a charge of $93,488 for impairment of the value of the Richmond location and in the second quarter of 2020 an additional $100,000 impairment charge was recorded. Income Taxes We provide for income taxes under (Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 using an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability and valuation allowances are adjusted, as necessary. The Company had a net operating loss carry-forward from the prior year of $153,000. In 2019, the prior losses resulted in an increase in the related deferred tax assets; however, full valuation allowances were made which reduced these deferred tax assets to zero. As of September 27, 2020, the Company estimates a current tax provision at the statutory rates of approximately 27.5% and as a result of the net operating loss carryforward offset by other timing differences including current nondeductible status of the impairment loss reserve, taxes payable are currently estimated at $235,898. As of the of fiscal year 2019, the Company had no accrued interest or penalties relating to any income tax obligations. The Company currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception and all periods since 2016 are still open for examination. Per Common Share Amounts Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income or (loss) per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Common stock equivalents are excluded from the computation of diluted net loss per share because their effect would be anti-dilutive. There were no potentially dilutive shares outstanding as of the periods ending in 2020 and 2019, as the strike price for warrants outstanding was above the fair market price of the underlying stock in both periods. Other Assets Other assets are the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, which is being amortized over an estimated useful life of 14 years and deferred income tax benefits related to charges not currently deductible which the Company expect to realize in future periods. Payroll Protection Plan (PPP) Loans In May 2020, the Company borrowed $460,400 under the Small Business Administration’s Payroll Protection Program. Pursuant to the terms of the program, we expect that the loans will be forgiven, and the Company has filed the required documentation to complete the loan forgiveness. The Company is reasonably assured the entire amount of PPE advances will be forgiven and the anticipated loan forgiveness is reflected as “Other Income” for the nine-month period ending September 27, 2020. In accordance with current direction of the Internal Revenue Service, the payroll expenses paid with the Payroll Protection Plan proceeds have been reflected as a non-deductible expense in determining the provision for income taxes. Liquidity and Capital Resources The condensed consolidated financial statements have been prepared on a going concern basis. For the 39 weeks ended September 27, 2020, the Company earned an after-tax profit of $815,362. On September 27, 2020, the Company had $1,393,263 in cash and working capital of $371,190 an increase of $839,516 from the year-end deficit of $468,326. Covid-19 is having a significant adverse impact on the United States economy. It is difficult to predict either the ultimate impact of the Covid-19 pandemic and governmental responses on the Company’s operating results and financial condition as the situation is evolving. In May, 2020 the Company received pandemic-related loans totaling $487,900 of that amount, $460,400 was borrowed under the Small Business Administration’s Payroll Protection Program under the terms of the program we expect that the loans will be forgiven and the Company has filed the required documentation to complete the loan forgiveness. In May 2020, the Company also borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program. The Company expects to have sufficient cash assets to meet its obligations for a year from the issuance of these consolidated financial statements. | Recent Reverse Merger Transaction BT Brands (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of the ownership of BTND, LLC. in exchange for common stock in the Company through a Share Exchange Agreement (“Share Exchange”) with BTND, LLC (“BTND”), and its Members. Following the Share Exchange, BTND became a wholly-owned subsidiary of the Company. Effective with the Share Exchange, all outstanding membership interests in BTND were exchanged with former members of BTND, for an aggregate of 6,596,000 shares of the Company’s common stock, equal to approximately 85.9% of the total number of shares of common stock outstanding after giving effect to the Share Exchange. BTND was considered the acquirer for accounting purposes and the transaction was accounted for as a reverse acquisition. Consequently, after the giving effect to the merger, the assets and liabilities and the historical operations that will be reflected in future consolidated financial statements will be those of BTND at its historical cost basis. As part of the reverse merger, the Company assumed a deferred tax liability of $48,500 which was initially recognized as goodwill and was included in other assets. During 2019 this amount was determined to be impaired and is reflected as a general and administrative expense the current year. Business The Company currently operates company-owned fast-food restaurants called Burger Time. The Company also operates one unit in Minnesota as a franchisee of International Dairy Queen. The Company operates three Burger Time locations in Minnesota, four in North Dakota, and two in South Dakota. The Company closed a store in Richmond, Indiana during 2018, and the Richmond location is currently listed for sale. The Company owns a restaurant property in St. Louis, Missouri currently held for sale. The Company operated a total of ten restaurants at December 29, 2019 and December 30, 2018. The Company’s Dairy Queen store is operated pursuant to the terms of a franchise agreement with International Dairy Queen. The Company is required to pay regular royalty and advertising payments to the franchisor and to remain in compliance with the terms of the franchise agreement. Principles of Consolidation The accompanying consolidated financial statements include the accounts of BT Brands, Inc., BTND, LLC and its wholly-owned subsidiaries BTND IN, LLC, BTNDMO, LLC and BTNDDQ, LLC. Significant intercompany accounts and transactions have been eliminated in consolidation. Fiscal Year The Company’s fiscal year is a 52/53-week year, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising the 52-week year. Fiscal 2019 was a 52-week period ending December 29, 2019 and Fiscal 2018 was the 52-week period ending on December 30, 2018. All references to years in this report refer to the fiscal years described above. Fair Value of Financial Instruments The Company’s accounting for fair value measurements of assets and liabilities that 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows: ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access the measurement date. ● Level 2 Inputs are inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to fair value measurement in its entirety The carrying values of cash, receivables, accounts payable and other financial working capital items approximate fair value at year end due to the short maturity nature of these instruments. The fair value of the investment in notes receivable form related company approximates the carrying value as the 14% interest rate is a market rate at December 29, 2019. Cash For purposes of reporting cash and cash flows, cash is net of outstanding checks and includes, amounts on deposit at banks, a money market mutual fund, and deposits in transit. Revenue Recognition and Adoption of Accounting Standards Update 2014-09 The Company’s revenues consist of sales by Company-operated restaurants. The Company adopted Accounting Standards Update (ASU) 2014-09 (ASC 606) as of January 1, 2018 using the modified retrospective method. This method allows the standard to be applied retrospectively through a cumulative catch up adjustment recognized upon adoption. ASC 606 provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. This standard does not impact the Company’s recognition of revenues as the only revenue stream is from Company-operated restaurants as those sales are recognized on a cash basis at the time of the underlying sale and are presented net of sales tax and other sales-related taxes so no cumulative catch up adjustment or other adjustments were required by the Company . Receivables Receivables consists of rebates due from a primary vendor. Inventory Inventory consists of food, beverages and supplies and is stated at lower of cost (first-in, first-out method) or net realizable value. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives which range from three to thirty years. The Company reviews long-lived assets to determine if the carrying value of these assets may not be recoverable based on estimated cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the restaurant level. In determining future cash flows, significant estimates are made by the Company with respect to future operating results of each restaurant over its remaining life. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. Assets Held for Sale From time-to-time the Company may sell an existing operating unit or may close an operating unit and list the property for sale. During 2018, the Company sold a restaurant property in St. Louis, Missouri for a net gain of approximately $158,358. A second property in the St. Louis area is currently listed for sale. Also, in September of 2018 the Company closed an operating Burger Time unit in Richmond, Indiana and the Richmond property are listed for sale. As of June 30, 2019, it was concluded to record a charge of $93,488 for impairment of the value of the Richmond location. The net carrying of the Richmond and the St. Louis property held for sale is $325,000 and $124,244, respectively. Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. Advertising expense for fiscal 2019 and 2018 totaled $49,618 and $44,897, respectively. Income Taxes Following the July 30, 2018 Share Exchange, the Company began filing federal and state income tax returns as a “C” Corporation. Accordingly, subsequent to July 30, 2018, the Company provides for income taxes under (Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 using an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The following table presents a reconciliation of the tax expense computed at the statutory federal rate and the Company’s tax expense for the respective fiscal years: 2019 2018 Tax provision (benefit) at statutory federal rate $ (87,500 ) $ 7,200 State income taxes (benefit), net of federal tax effect (27,000 ) 2,000 Change in valuation allowance on deferred tax items 54,000 - Permanent and other items 12,000 4,525 $ (48,500 ) $ 13,725 Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit Carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The tax effect of the temporary differences and carryforwards are as follows for the respective fiscal years: 2019 2018 Deferred tax assets (liabilities): Net operating loss $ 43,000 $ - Property and equipment 11,000 (48,500 ) Valuation allowance on deferred tax items (54,000 ) - Deferred income tax liability - $ (48,500 ) Based on the taxable loss in 2019, as of December 29, 2019, the Company had a federal net operating loss carryforward (the “NOL”) of approximately $153,000 which may be used to offset future consolidated taxable income. Under the most recent tax legislation, the NOL may be carried forward indefinitely until the loss is fully recovered, subject to the limitation of 80% of taxable income in any one year. No benefit in terms of the realization of the future tax benefits has been recorded because of the uncertainty of future profitability and ultimate realization of the future tax benefit. Prior to 2018 Share Exchange, BTND, with the consent of its shareholders, elected to be taxed under sections of the Federal and state income tax laws which provide that, in lieu of corporation income taxes, the shareholders separately account for their pro rata shares of the Company’s items of income, deductions, losses and credits. Therefore, these consolidated statements do not include a provision for income taxes related to the Company for the periods prior to the July 30, 2018. As of the of fiscal year 2019 and 2018, the Company had no accrued interest or penalties relating to any income tax obligations. The Company currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception. The last three years of BTND, LLC are subject to federal and state tax examination. Per Common Share Amounts Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income or (loss) per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock equivalents Other Assets Other assets is the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, and is being amortized over an estimated useful life of 14 years. Amortization for each of the next five years is estimated to be approximately $2,000 per year. Accumulated amortization was approximately $7,000 and $5,000 at the end of 2019 and 2018, respectively. Restaurant Pre-opening expenses Restaurant pre-opening and other development expenses are non-capital expenditures and are expensed as incurred as part of other operating expenses. Restaurant pre-opening expenses may include the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stocking of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. Segment Reporting The Company follows the guidance of FASB Accounting Standards for reporting and disclosure on operating segments requiring segment disclosures about products and services, geographic areas, and major customers. The Company has determined that it did not have any separately reportable operating segments. Liquidity and Capital Resources The consolidated financial statements have been prepared on a going concern basis. For the year ended December 29, 2019, the Company incurred a net loss of $368,577. Cash flow provided by operating activities increased to $50,489 in 2019 from $49,116 for fiscal 2018. At December 29, 2019, the Company had $258,101 in cash and working capital deficit of $468,327. A cash flow forecast for the next 12 months prepared by management has been adjusted to reflect recent offers by banks, in the wake of the COVID-19 Pandemic, including the Company’s principal lenders, Northview Bank and Bremer Bank, to abate all loan payments for the next three months which totals approximately $93,600. As a result, the Company expects to have sufficient cash assets to meet its obligations for a year from the issuance of these consolidated financial statements. No adjustments have been made relating to recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
PROPERTY AND EQUIPMENT | ||
NOTE 2 - PROPERTY AND EQUIPMENT | Property and equipment consisted of the following at: 27/09/2020 29/12/2019 Land $ 525,240 $ 555,885 Equipment 2,422,521 2,390,545 Buildings 1,349,247 1,363,642 Total Property and Equipment 4,297,008 4,310,072 Accumulated depreciation (2,350,129 ) (2,210,816 ) Less - Property held for sale (349,244 ) (449,244 ) Net Property and Equipment $ 1,597,635 $ 1,650,012 Depreciation expense for the 39-week periods in 2020 and 2019 was $139,313 and $167,242, respectively. | Property and equipment consisted of the following at end of the respective fiscal years: 29/12/2019 30/12/2018 Land $ 555,885 $ 584,535 Equipment 2,390,545 2,417,185 Buildings 1,363,642 1,401,840 Vehicles - 4,000 Total property and equipment 4,310,072 4,407,560 Accumulated depreciation (2,210,816 ) (2,001,929 ) Less - property held for sale (449,244 ) (353,092 ) Net property and equipment $ 1,650,012 $ 2,052,539 Depreciation expense for the years 2019 and 2018 was $211,087 and $225,814, respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
ACCRUED EXPENSES | ||
NOTE 3 - ACCRUED EXPENSES | Accrued expenses consisted of the following at: 27/09/2020 29/12/2019 Accrued real estate taxes $ 40,162 $ 66,959 Accrued payroll 59,125 69,572 Accrued payroll taxes 11,709 7,058 Accrued sales taxes payable 66,578 35,380 Accrued vacation pay 25,211 23,204 Other accrued expenses 628 559 $ 203,413 $ 202,732 | Accrued expenses consisted of the following at the end of the respective fiscal years: 29/12/2019 30/12/2018 Accrued real estate taxes $ 66,959 $ 30,206 Accrued payroll 69,572 70,421 Accrued payroll taxes 7,058 4,025 Accrued sales taxes payable 35,380 45,219 Accrued vacation pay 23,204 23,227 Other accrued expenses 559 1,888 $ 202,732 $ 174,986 |
STOCKHOLDERS DEFICIT
STOCKHOLDERS DEFICIT | 12 Months Ended |
Dec. 29, 2019 | |
STOCKHOLDERS DEFICIT | |
NOTE 4 - STOCKHOLDERS' DEFICIT | During 2018 the Company issued 6,596,000 common shares in exchange for the member interests of BTND, LLC. and 820,000 shares were issued to Maxim Partners and others as part of the Share Exchange and 260,000 common shares were issued to consultants associated with the offering and this amount is reflected as an additional offering cost. Upon closing of the private offering 410,004 common shares and 205,002 common stock warrants to purchase shares at $2.00 through July 31, 2023 were issued to investors in consideration for a net amount of approximately $492,266, all of these warrants were outstanding as of the end of the year. Upon closing of the private offering, and outstanding at each fiscal year-end are an aggregate of 32,801 five-year stock purchase warrants to purchase shares at $1.65 per share issued to the placement agent. The estimated the fair value of the warrants at the issuance date was approximately $15,421 and this amount is also reflected as an additional cost of the offering. The 6,596,000 common shares were issued in exchange for all outstanding membership interests of BTND, LLC. in 2018 and the Company’s financial statements were retrospectively adjusted to prior periods as if the Share Exchange occurred on January 1, 2017. In October 2019, the board of directors of the Company and the holders of a majority of the outstanding shares of common stock adopted the 2019 Incentive Plan. Under the 2019 Incentive Plan, the Company reserved up to 500,000 shares of common stock for issuance to officers, directors, employees and consultants. On October 11, 2019, the company issued an aggregate of 9,000 shares of common stock as stock awards to 30 employees of the Company. In April 2019, the Company, through a written consent by the holders of a majority of the Company’s outstanding shareholders, amended its Articles of Incorporation to increase the number of preferred shares authorized from 500,000 shares to 2,000,000 and it also increased the number common shares authorized to 50,000,000 from 19,000,000. |
LONG TERM DEBT
LONG TERM DEBT | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
LONG TERM DEBT | ||
NOTE 5 - LONG TERM DEBT | As a result of the many uncertainties surrounding the economy during the COVID-19 response, two of the Company’s mortgage lenders suspended and deferred current payments for a period of three months during the first half of 2020. The loans will continue to accrue interest at the stated rate, which is included in the principal. The Company had the following long term debt obligations as of: 27/09/2020 29/12/2019 Note payable to bank dated October 30, 2015 due in monthly installments of $6,916 through October 30, 2030, which includes principal and interest at a fixed rate of 4.75%. This note is secured by two of the Company's Minnesota locations and the personal guaranty of a shareholder of the Company. $ 683,311 $ 699,311 Note payable to bank dated November 16, 2015 due in monthly installments of $14,846, which includes principal and interest at fixed rate of 4.75% through November 16, 2030. This note is secured by four of the Company's North Dakota locations and the personal guaranty of a shareholder of the Company. 1,474,383 1,509,435 Note payable to bank dated October 10, 2015 due in monthly installments of $4,153 through March 11, 2030, which includes principal and interest at fixed rate of 4.75%. This note is secured by the Company's Dairy Queen location and the personal guaranty of a shareholder of the Company. 405,128 414,562 Note payable to bank dated March 11, 2016 due in monthly installments of $3,692 through March 11, 2031 which includes principal and interest at a fixed rate of 4.75%. This note is secured by one of the Company's South Dakota locations and the personal guaranty of a shareholder of the Company. 375,812 384,208 Notes payable to bank dated November 10, 2016 payable in monthly installements of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be less than 4%. This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company. 143,698 151,234 Unsecured 8% notes payable to an entity controlled by shareholders of the Company dated December 26, 2017 originally due on demand after June 1, 2020. Effective May 31, 2019 a revised note was entered into due July 31, 2023 with monthly payments of $10,000. The remaining balance was paid in full in August, 2020. - 207,264 Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%. This note is secured by the West St. Paul location and the personal guaranty of a shareholder of the Company. 187,552 192,068 Minnesota Small business emergency loan dated April, 29, 2020 payable in monthly installments of $458.33 starting December 15, 2020 which includes principal and interest at 0%. This note is sescured by the personal guaranty of a shareholder of the Company. 27,500 - 3,297,384 3,558,082 Less - unamortized debt issuance costs (55,498 ) (59,381 ) Current maturities (240,680 ) (277,666 ) Total $ 3,001,206 $ 3,221,035 | The Company had the following long term debt obligations as of: 29/12/2019 30/12/2018 Note payable to bank dated October 30, 2015 due in monthly installments of $6,916 through October 30, 2030, which includes principal and interest at a fixed rate of 4.75%. This note is secured by two of the Company's Minnesota locations and the personal guaranty of a shareholder of the Company. $ 699,311 $ 747,456 Note payable to bank dated November 16, 2015 due in monthly installments of $14,846, which includes principal and interest at fixed rate of 4.75% through November 16, 2030. This note is secured by four of the Company's North Dakota locations locations and the personal guaranty of a shareholder of the Company. 1,509,435 1,612,400 Note payable to bank dated October 10, 2015 due in monthly installments of $4,153 through March 11, 2030, which includes principal and interest at fixed rate of 4.75%. This note is secured by the Company's Dairy Queen location and the personal guaranty of a shareholder of the Company. 414,562 443,406 Note payable to bank dated March 11, 2016 due in monthly installments of $3,692 through March 11, 2031 which includes principal and interest at a fixed rate of 4.75%. This note is secured by one of the Company's South Dakota locations and the personal guaranty of a shareholder of the Company. 384,208 409,352 Two notes payable to bank dated December 30, 2015 due in monthly installments of $5,190 which included interest at the fixed annual rate of 5%. These notes were paid in full during 2019. - 36,419 Notes payable to bank dated November 10, 2016 payable in monthly installments of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be less than 4%. This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company. 151,234 160,949 Unsecured 8% notes payable to an entity controlled by shareholders of the Company dated December 26, 2017, originally due on demand after June 1, 2020. Effective July 1, 2019, a revised note was entered into extending the due date to June 1, 2021 requiring monthly payments of $5,000, which includes principal and interest, beginning August 1, 2019. 207,264 225,000 Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%. This note is secured by the West St. Paul location and the personal guaranty of a shareholder of the Company. 192,068 200,000 3,558,082 3,834,982 Less - unamortized debt issuance costs (59,381 ) (64,557 ) Current maturities (277,666 ) (254,397 ) Total $ 3,221,035 $ 3,516,028 Scheduled maturities of long-term debt, excluding unamortized debt issuance costs, are as follows: 29/12/2019 $ 277,667 01/01/2021 406,303 02/01/2022 256,116 01/01/2023 419,908 31/12/2023 270,288 Thereafter 1,927,800 $ 3,558,082 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
RELATED PARTY TRANSACTIONS | ||
NOTE 6 - RELATED PARTY TRANSACTIONS | BTND Trading BTND Trading is an entity separate from the Company which is owned by certain significant shareholders of the Company, from time-to-time BTND Trading has advanced funds to the Company. At the June 28, 2020, $207,729 was due to BTND Trading at 8% annual interest. In August 2020, the amount due to BTND trading was repaid in full. Next Gen Ice In 2019, the Company made cash advances to Next Gen Ice, Inc. (NGI) in the form of Series C Notes totaling a principal amount of $179,000. The Company’s CEO, Gary Copperud, is Chairman of the Board of Directors of NGI and the Company’s Chief Operating Officer, Kenneth Brimmer, is also a member of the Board of Directors of NGI and serves as Chief Financial Officer of NGI on a part-time contract basis. Mr. Copperud, and a limited liability company controlled by him together own approximately 34% of the outstanding equity of NGI. On March 2, 2020, the Series C Notes, were modified and the maturity extended to August 31, 2020. As part of the Note modification, the Company received 179,000 shares of Common Stock in Next Gen Ice from the founders of NGI representing approximately 2% of NGI shares outstanding. The also Company holds warrants to purchase 358,000 shares at a price of $1.00 per share through March 31, 2023. The common stock and common stock purchase warrants received by the Company were recorded at a value determined by the Company of $75,000. This amount was also recorded at a discount to the note receivable and was recognized as interest income over the extended term of the Note. The Company has determined that its investment in NGI does not have a readily determinable market value and therefore is carried at the cost determined by the Company at the time the shares and warrants were received. The Series C Notes were repaid in August 2020, with interest, and currently there are no outstanding amounts due to the Company from NGI. | Next Gen Ice In 2019 the Company made a series of advances in the form of investments in Next Gen Ice, Inc. (NGI) Series C Notes totaling $179,000. The Company’s CEO, Gary Copperud, is Chairman of NGI and the Company’s Chief Operating Officer, Kenneth Brimmer, is a member of the Board of Directors of NGI and is currently serving as Chief Financial Officer of NGI on a part-time contract basis. Limited liability corporations controlled by Mr. Copperud together own approximately 55% of the outstanding equity of NGI. The Series C Notes were originally due on March 3, 2020 and under certain conditions were convertible into common stock of NGI at the option of the holder. On March 3, 2020, the Company and NGI entered into a Loan Modification and Extension Agreement pursuant to which the Company agreed to extend the maturity date of the NGI Notes to August 31, 2020. In consideration of the extension of the term of the NGI Notes, NGI granted to the Company a security interest in all of NGI’s assets and issued to the Company warrants entitling it to purchase 358,000 shares of common stock of NGI at a price of $1.00 per share at any time through March 31, 2023, and the founders of NGI including, the Company’s CEO, agreed to transfer to the Company 179,000 common shares of NGI, representing approximately 3% of the NGI common stock outstanding. Corporate Expense Sharing The Company pays the salary and benefits of the Company controller based in Fargo, North Dakota and the Company pays monthly rent, on a month-to-month basis, for the office space of $500 per month. From time-to-time the Company’s controller provides limited bookkeeping and administrative assistance for entities that are controlled by shareholders of Company. These are minimal services for which the Company has not been compensated. |
MAJOR VENDOR
MAJOR VENDOR | 12 Months Ended |
Dec. 29, 2019 | |
MAJOR VENDOR | |
NOTE 7 - MAJOR VENDOR | Approximately 83% of the Company’s purchases for the year ended December 29, 2019 were from one vendor. At December 29, 2019, the amount due to the major vendor totaled $222,926. In fiscal 2018, approximately 83% of the Company’s purchases were from the same vendor. At December 30, 2018, the amount due to this vendor was $210,642. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
CONTINGENCIES | ||
NOTE 8 - CONTINGENCIES | In the course of its business, the Company may be a party to claims and legal or regulatory actions arising from the conduct of its business. The Company is not aware of any significant asserted or potential claims which could impact its financial position. | In the course of its business, the Company may be a party to claims and legal or regulatory actions arising from the conduct of its business. The Company is not aware of any significant asserted or potential claims which could impact its financial position. |
LAND LEASE
LAND LEASE | 12 Months Ended |
Dec. 29, 2019 | |
LAND LEASE | |
NOTE 9 - LAND LEASE | The Company is a party to a month-to-month land lease agreement for one of its locations. The net book value of the building located on this land is approximately $38,000. The monthly lease payment is $1,600. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 29, 2019 | |
SUBSEQUENT EVENTS | |
NOTE 10 - SUBSEQUENT EVENTS | The Company has evaluated subsequent events through April 3, 2020 the date on which the consolidated financial statements were available to be issued. The $179,000 in Notes due from Next Gen, Ice, a related party, were originally due for repayment on March 2, 2020. Following the due date an agreement was entered into extending the date of repayment to August 31, 2020. In connection with the extension of the repayment due date to August 31, 2020, NGI issued to the Company warrants entitling it purchase 358,000 shares of NGI common stock at $1.00 per share at any time through March 31, 2023, and the founders of NGI agreed to transfer to the Company 179,000 common shares of NGI. On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (‘Covid-19”) a global pandemic. Indications are Covid-19 will have a significant adverse impact on the United States economy and on the markets in which we operate. At this time, all of our units continue to operate, however, it is impossible to predict either the near-term effects or the ultimate impact of the Covid-19 pandemic on the Company’s operating results and financial condition as the situation is rapidly evolving. |
COVID-19 PANDEMIC AND EMERGENCY
COVID-19 PANDEMIC AND EMERGENCY LOAN RELIEF | 9 Months Ended |
Sep. 27, 2020 | |
COVID-19 PANDEMIC AND EMERGENCY LOAN RELIEF | |
NOTE 11 - COVID-19 PANDEMIC AND EMERGENCY LOAN RELIEF | On March 13, 2020, President Donald Trump declared a national emergency in response to the coronavirus (“Covid-19”) global pandemic. Covid-19 has had a significant adverse impact on the United States economy. While we have experienced some product shortages and some labor shortages, for the most part, we have continued to operate all of our locations on a drive-through basis only with some reduced hours and with some limited access to the walk-up window and any indoor seating. Indoor seating is only available in our Dairy Queen and one other location. In October we closed our Moorhead location for approximately 3 days as a result of confirmed case of Covid-19 and we performed a deep cleaning of the location and testing for the virus of our crewmembers before reopening, In November our Minot location was closed for two days as a result of positive Covid-19 tests by our employees. At this time, it is difficult to predict if the Company will face store closures in the future and the ultimate impact of the Covid-19 pandemic on the Company’s operating results, although given the drive-through nature of our locations, the impact has been positive so far. The situation and regulations surrounding government response to the pandemic are constantly changing and it is not possible to determine if the current business trends will continue. On May 1, 2020, the Company received funding in connection with “Small Business Loans” under the federal Paycheck Protection Program (the “PPP”). Pursuant to the terms of the Promissory Notes dated May 1, 2020, by BTND and BTNDDQ, L.L.C. in favor of Northview Bank. BTND borrowed $418,900 original principal amount, and BTNDDQ, L.L.C. borrowed $41,500 original principal amount. Both PPP loans were funded on May 1, 2020. The PPP Loans bear interest at 1% per annum and mature in two years from the date of disbursement of funds. Interest and principal payments under the PPP Loans will be deferred for a period of six months. The PPP Loan contains certain covenants which, among other things, restrict the borrower’s use of the proceeds of the PPP Loan to the payment of payroll costs, interest on mortgage obligations, rent obligations and utility expenses, require compliance with all other loans or other agreements with any creditor. Under the terms of the Program, we expect that the PPP Loans will be forgiven, and this outcome is reflected in the accompanying consolidated financial statements reflecting $460,400 as a grant and in included in Other Income. On April 29, 2020, BTNDDQ, L.L.C. borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program from Central Minnesota Development Corporation. This loan is interest free and under certain conditions up to 50% of the loan may be forgiven, BTNDDQ, L.L.C., initially, is required to make 18 monthly payments of $458.33 beginning December 15, 2020, following the initial 18 months, in the event the note does not qualify for loan forgiveness, it will be repaid in equal installments over an additional 36 months. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Recent Reverse Merger Transaction | BT Brands (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of the ownership of BTND, LLC. in exchange for common stock in the Company through a Share Exchange Agreement (“Share Exchange”) with BTND, LLC (“BTND”), and its Members. Following the Share Exchange, BTND became a wholly-owned subsidiary of the Company. Effective with the Share Exchange, all outstanding membership interests in BTND were exchanged with former members of BTND, for an aggregate of 6,596,000 shares of the Company’s common stock, equal to approximately 85.9% of the total number of shares of common stock outstanding after giving effect to the Share Exchange. BTND was considered the acquirer for accounting purposes and the transaction was accounted for as a reverse acquisition. Consequently, after the giving effect to the merger, the assets and liabilities and the historical operations that will be reflected in future consolidated financial statements will be those of BTND at its historical cost basis. As part of the reverse merger, the Company assumed a deferred tax liability of $48,500 which was initially recognized as goodwill and was included in other assets. During 2019 this amount was determined to be impaired and is reflected as a general and administrative expense the current year. | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements include the accounts of BT Brands, Inc. and its subsidiaries. (the “Company”, “we”, “our”, “us”, or “BT Brands”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation and have prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ended December 29, 2019. In our opinion, all adjustments, which are normal and recurring in nature, necessary for a fair presentation of our financial position and results of operation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The accompanying Condensed Consolidated Balance Sheet as of September 27, 2020 does not include all of the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of December 29, 2019 and the related notes thereto included in the Company’s Form 10-K for the fiscal year ended December 29, 2019. | |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. | The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. |
The Company | BT Brands, Inc. (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016 with the objective of acquiring an operating entity. Effective on July 30, 2018, the Company acquired 100% of the ownership BTND, LLC. in exchange for common stock in the Company through a Share Exchange Agreement (“Share Exchange”) with BTND, LLC (“BTND”), and its Members. On June 12, 2020, the Company adopted resolutions by written consent of 100% of its shareholders approving the reincorporation of the Company to the State of Wyoming from the State of Delaware which is expected to be completed in November 2020. | |
Business | The Company currently operates company-owned fast-food restaurants called Burger Time. The Company also operates one unit in Minnesota as a franchisee of International Dairy Queen. The Company operates three Burger Time locations in Minnesota, four in North Dakota, and two in South Dakota. The Company closed a store in Richmond, Indiana during 2018 which is listed for sale, resulting in a total of ten operating restaurants on September 27, 2020. The Company owns a restaurant property in St. Louis, Missouri currently held for sale. The Company’s Dairy Queen store is operated pursuant to the terms of a franchise agreement with International Dairy Queen. The Company is required to pay regular royalty and advertising payments to the franchisor and to remain in compliance with the terms of the franchise agreement. | The Company currently operates company-owned fast-food restaurants called Burger Time. The Company also operates one unit in Minnesota as a franchisee of International Dairy Queen. The Company operates three Burger Time locations in Minnesota, four in North Dakota, and two in South Dakota. The Company closed a store in Richmond, Indiana during 2018, and the Richmond location is currently listed for sale. The Company owns a restaurant property in St. Louis, Missouri currently held for sale. The Company operated a total of ten restaurants at December 29, 2019 and December 30, 2018. The Company’s Dairy Queen store is operated pursuant to the terms of a franchise agreement with International Dairy Queen. The Company is required to pay regular royalty and advertising payments to the franchisor and to remain in compliance with the terms of the franchise agreement. |
Principles of Consolidation | The accompanying consolidated financial statements include the accounts of BT Brands, Inc., BTND, LLC and its wholly-owned subsidiaries BTND IN, LLC, BTNDMO, LLC and BTNDDQ, LLC. Significant intercompany accounts and transactions have been eliminated in consolidation. | |
Fiscal Year Period | The Company’s fiscal year is a 52/53-week year, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising the 52-week year. All references to years in this report refer to the 13-week periods in the respective fiscal year periods. Fiscal 2020 is a 53-week year ending January 3, 2021. | The Company’s fiscal year is a 52/53-week year, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising the 52-week year. Fiscal 2019 was a 52-week period ending December 29, 2019 and Fiscal 2018 was the 52-week period ending on December 30, 2018. All references to years in this report refer to the fiscal years described above. |
Fair Value of Financial Instruments | The Company’s accounting for fair value measurements of assets and liabilities that 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. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy are as follows: ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access the measurement date. ● Level 2 Inputs are inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. ● Level 3 Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair measurement in its entirety falls is based on the lowest level input that is significant to fair value measurement in its entirety The carrying values of cash, receivables, accounts payable and other financial working capital items approximate fair value at year end due to the short maturity nature of these instruments. The fair value of the investment in notes receivable form related company approximates the carrying value as the 14% interest rate is a market rate at December 29, 2019. | |
Cash | For purposes of reporting cash and cash flows, cash is net of outstanding checks and includes, amounts on deposit at banks and deposits in transit. | For purposes of reporting cash and cash flows, cash is net of outstanding checks and includes, amounts on deposit at banks, a money market mutual fund, and deposits in transit. |
Receivables | Receivables consists of rebates due from a primary vendor. | |
Revenue Recognition and Adoption of Accounting Standards Update 2014-09 | The Company’s revenues consist of sales by Company-operated restaurants. The Company adopted Accounting Standards Update (ASU) 2014-09 (ASC 606) as of January 1, 2018 using the modified retrospective method. This method allows the standard to be applied retrospectively through a cumulative catch up adjustment recognized upon adoption. ASC 606 provides that revenues are to be recognized when control of promised goods or services is transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services. This standard does not impact the Company’s recognition of revenues as the only revenue stream is from Company-operated restaurants as those sales are recognized on a cash basis at the time of the underlying sale and are presented net of sales tax and other sales-related taxes so no cumulative catch up adjustment or other adjustments were required by the Company . | |
Inventory | Inventory consists of food, beverages and supplies and is stated at lower of cost (first-in, first-out method) or net realizable value. | Inventory consists of food, beverages and supplies and is stated at lower of cost (first-in, first-out method) or net realizable value. |
Receivables | Receivables consists of rebates due from a primary vendor. | |
Property and Equipment | Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives which range from three to thirty years. The Company reviews long-lived assets to determine if the carrying value of these assets may not be recoverable based on estimated cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the restaurant level. In determining future cash flows, significant estimates are made by the Company with respect to future operating results of each restaurant over its remaining life. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. | Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives which range from three to thirty years. The Company reviews long-lived assets to determine if the carrying value of these assets may not be recoverable based on estimated cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is at the restaurant level. In determining future cash flows, significant estimates are made by the Company with respect to future operating results of each restaurant over its remaining life. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. |
Assets Held for Sale | From time-to-time the Company may sell an existing operating unit or may close an operating unit and list the property for sale. A property in the St. Louis area is currently listed for sale. Also, in September of 2018 the Company closed an operating Burger Time unit in Richmond, Indiana and the Richmond property is listed for sale. In the second quarter of fiscal 2019 it was concluded to record a charge of $93,488 for impairment of the value of the Richmond location and in the second quarter of 2020 an additional $100,000 impairment charge was recorded. | From time-to-time the Company may sell an existing operating unit or may close an operating unit and list the property for sale. During 2018, the Company sold a restaurant property in St. Louis, Missouri for a net gain of approximately $158,358. A second property in the St. Louis area is currently listed for sale. Also, in September of 2018 the Company closed an operating Burger Time unit in Richmond, Indiana and the Richmond property are listed for sale. As of June 30, 2019, it was concluded to record a charge of $93,488 for impairment of the value of the Richmond location. The net carrying of the Richmond and the St. Louis property held for sale is $325,000 and $124,244, respectively. |
Advertising and Marketing Costs | The Company expenses advertising and marketing costs as incurred. Advertising expense for fiscal 2019 and 2018 totaled $49,618 and $44,897, respectively. | |
Income Taxes | We provide for income taxes under (Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 using an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability and valuation allowances are adjusted, as necessary. The Company had a net operating loss carry-forward from the prior year of $153,000. In 2019, the prior losses resulted in an increase in the related deferred tax assets; however, full valuation allowances were made which reduced these deferred tax assets to zero. As of September 27, 2020, the Company estimates a current tax provision at the statutory rates of approximately 27.5% and as a result of the net operating loss carryforward offset by other timing differences including current nondeductible status of the impairment loss reserve, taxes payable are currently estimated at $235,898. As of the of fiscal year 2019, the Company had no accrued interest or penalties relating to any income tax obligations. The Company currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception and all periods since 2016 are still open for examination. | Following the July 30, 2018 Share Exchange, the Company began filing federal and state income tax returns as a “C” Corporation. Accordingly, subsequent to July 30, 2018, the Company provides for income taxes under (Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 using an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. The following table presents a reconciliation of the tax expense computed at the statutory federal rate and the Company’s tax expense for the respective fiscal years: 2019 2018 Tax provision (benefit) at statutory federal rate $ (87,500 ) $ 7,200 State income taxes (benefit), net of federal tax effect (27,000 ) 2,000 Change in valuation allowance on deferred tax items 54,000 - Permanent and other items 12,000 4,525 $ (48,500 ) $ 13,725 Deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit Carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The tax effect of the temporary differences and carryforwards are as follows for the respective fiscal years: 2019 2018 Deferred tax assets (liabilities): Net operating loss $ 43,000 $ - Property and equipment 11,000 (48,500 ) Valuation allowance on deferred tax items (54,000 ) - Deferred income tax liability - $ (48,500 ) Based on the taxable loss in 2019, as of December 29, 2019, the Company had a federal net operating loss carryforward (the “NOL”) of approximately $153,000 which may be used to offset future consolidated taxable income. Under the most recent tax legislation, the NOL may be carried forward indefinitely until the loss is fully recovered, subject to the limitation of 80% of taxable income in any one year. No benefit in terms of the realization of the future tax benefits has been recorded because of the uncertainty of future profitability and ultimate realization of the future tax benefit. Prior to 2018 Share Exchange, BTND, with the consent of its shareholders, elected to be taxed under sections of the Federal and state income tax laws which provide that, in lieu of corporation income taxes, the shareholders separately account for their pro rata shares of the Company’s items of income, deductions, losses and credits. Therefore, these consolidated statements do not include a provision for income taxes related to the Company for the periods prior to the July 30, 2018. As of the of fiscal year 2019 and 2018, the Company had no accrued interest or penalties relating to any income tax obligations. The Company currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception. The last three years of BTND, LLC are subject to federal and state tax examination. |
Payroll Protection Plan (PPP) Loans | In May 2020, the Company borrowed $460,400 under the Small Business Administration’s Payroll Protection Program. Pursuant to the terms of the program, we expect that the loans will be forgiven, and the Company has filed the required documentation to complete the loan forgiveness. The Company is reasonably assured the entire amount of PPE advances will be forgiven and the anticipated loan forgiveness is reflected as “Other Income” for the nine-month period ending September 27, 2020. In accordance with current direction of the Internal Revenue Service, the payroll expenses paid with the Payroll Protection Plan proceeds have been reflected as a non-deductible expense in determining the provision for income taxes. | |
Per Common Share Amounts | Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income or (loss) per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Common stock equivalents are excluded from the computation of diluted net loss per share because their effect would be anti-dilutive. There were no potentially dilutive shares outstanding as of the periods ending in 2020 and 2019, as the strike price for warrants outstanding was above the fair market price of the underlying stock in both periods. | Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income or (loss) per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock equivalents during each period. Common stock equivalents are excluded from the computation of diluted net loss per share because their effect would be anti-dilutive. There were no potentially dilutive shares outstanding as of the years ending in 2019 and 2018, as the strike price for 205,002 warrants outstanding at December 29,2019 and December 30, 2018 was above the fair market price of the underlying stock. |
Other Assets | Other assets are the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, which is being amortized over an estimated useful life of 14 years and deferred income tax benefits related to charges not currently deductible which the Company expect to realize in future periods. | Other assets is the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, and is being amortized over an estimated useful life of 14 years. Amortization for each of the next five years is estimated to be approximately $2,000 per year. Accumulated amortization was approximately $7,000 and $5,000 at the end of 2019 and 2018, respectively. |
Restaurant Pre-opening expenses | Restaurant pre-opening and other development expenses are non-capital expenditures and are expensed as incurred as part of other operating expenses. Restaurant pre-opening expenses may include the costs of hiring and training the initial hourly work force for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional costs, the cost of the initial stocking of operating supplies and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period. | |
Segment Reporting | The Company follows the guidance of FASB Accounting Standards for reporting and disclosure on operating segments requiring segment disclosures about products and services, geographic areas, and major customers. The Company has determined that it did not have any separately reportable operating segments. | |
Liquidity and Capital Resources | The condensed consolidated financial statements have been prepared on a going concern basis. For the 39 weeks ended September 27, 2020, the Company earned an after-tax profit of $815,362. On September 27, 2020, the Company had $1,393,263 in cash and working capital of $371,190 an increase of $839,516 from the year-end deficit of $468,326. Covid-19 is having a significant adverse impact on the United States economy. It is difficult to predict either the ultimate impact of the Covid-19 pandemic and governmental responses on the Company’s operating results and financial condition as the situation is evolving. In May, 2020 the Company received pandemic-related loans totaling $487,900 of that amount, $460,400 was borrowed under the Small Business Administration’s Payroll Protection Program under the terms of the program we expect that the loans will be forgiven and the Company has filed the required documentation to complete the loan forgiveness. In May 2020, the Company also borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program. The Company expects to have sufficient cash assets to meet its obligations for a year from the issuance of these consolidated financial statements. | The consolidated financial statements have been prepared on a going concern basis. For the year ended December 29, 2019, the Company incurred a net loss of $368,577. Cash flow provided by operating activities increased to $50,489 in 2019 from $49,116 for fiscal 2018. At December 29, 2019, the Company had $258,101 in cash and working capital deficit of $468,327. A cash flow forecast for the next 12 months prepared by management has been adjusted to reflect recent offers by banks, in the wake of the COVID-19 Pandemic, including the Company’s principal lenders, Northview Bank and Bremer Bank, to abate all loan payments for the next three months which totals approximately $93,600. As a result, the Company expects to have sufficient cash assets to meet its obligations for a year from the issuance of these consolidated financial statements. No adjustments have been made relating to recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern. |
Recently Adopted Accounting Pronouncements | In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), requiring companies to recognize the assets and liabilities for the rights and obligations created by leased assets, initially measured at the present value of the lease payments. The ASU is effective for the Company for annual periods beginning after December 15, 2018. The Company has concluded that there is no material impact from the standard on its consolidated financial statements as the Company does not have any leases with a term more than one year. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Table) | 12 Months Ended |
Dec. 29, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Unrecognized Tax Benefits Roll Forward | 2019 2018 Tax provision (benefit) at statutory federal rate $ (87,500 ) $ 7,200 State income taxes (benefit), net of federal tax effect (27,000 ) 2,000 Change in valuation allowance on deferred tax items 54,000 - Permanent and other items 12,000 4,525 $ (48,500 ) $ 13,725 |
Schedule of Deferred Tax Assets and Liabilities | 2019 2018 Deferred tax assets (liabilities): Net operating loss $ 43,000 $ - Property and equipment 11,000 (48,500 ) Valuation allowance on deferred tax items (54,000 ) - Deferred income tax liability - $ (48,500 ) |
PROPERTY AND EQUIPMENT (Table)
PROPERTY AND EQUIPMENT (Table) | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
PROPERTY AND EQUIPMENT | ||
Schedule of property and equipment | 29/12/2019 30/12/2018 Land $ 555,885 $ 584,535 Equipment 2,390,545 2,417,185 Buildings 1,363,642 1,401,840 Vehicles - 4,000 Total property and equipment 4,310,072 4,407,560 Accumulated depreciation (2,210,816 ) (2,001,929 ) Less - property held for sale (449,244 ) (353,092 ) Net property and equipment $ 1,650,012 $ 2,052,539 | 29/12/2019 30/12/2018 Land $ 555,885 $ 584,535 Equipment 2,390,545 2,417,185 Buildings 1,363,642 1,401,840 Vehicles - 4,000 Total property and equipment 4,310,072 4,407,560 Accumulated depreciation (2,210,816 ) (2,001,929 ) Less - property held for sale (449,244 ) (353,092 ) Net property and equipment $ 1,650,012 $ 2,052,539 |
ACCRUED EXPENSES (Table)
ACCRUED EXPENSES (Table) | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
ACCRUED EXPENSES | ||
Schedule of accrued expenses | 27/09/2020 29/12/2019 Accrued real estate taxes $ 40,162 $ 66,959 Accrued payroll 59,125 69,572 Accrued payroll taxes 11,709 7,058 Accrued sales taxes payable 66,578 35,380 Accrued vacation pay 25,211 23,204 Other accrued expenses 628 559 $ 203,413 $ 202,732 | 29/12/2019 30/12/2018 Accrued real estate taxes $ 66,959 $ 30,206 Accrued payroll 69,572 70,421 Accrued payroll taxes 7,058 4,025 Accrued sales taxes payable 35,380 45,219 Accrued vacation pay 23,204 23,227 Other accrued expenses 559 1,888 $ 202,732 $ 174,986 |
LONG TERM DEBT (Table)
LONG TERM DEBT (Table) | 9 Months Ended | 12 Months Ended |
Sep. 27, 2020 | Dec. 29, 2019 | |
LONG TERM DEBT | ||
Schedule of long term debt obligations | 27/09/2020 29/12/2019 Note payable to bank dated October 30, 2015 due in monthly installments of $6,916 through October 30, 2030, which includes principal and interest at a fixed rate of 4.75%. This note is secured by two of the Company's Minnesota locations and the personal guaranty of a shareholder of the Company. $ 683,311 $ 699,311 Note payable to bank dated November 16, 2015 due in monthly installments of $14,846, which includes principal and interest at fixed rate of 4.75% through November 16, 2030. This note is secured by four of the Company's North Dakota locations and the personal guaranty of a shareholder of the Company. 1,474,383 1,509,435 Note payable to bank dated October 10, 2015 due in monthly installments of $4,153 through March 11, 2030, which includes principal and interest at fixed rate of 4.75%. This note is secured by the Company's Dairy Queen location and the personal guaranty of a shareholder of the Company. 405,128 414,562 Note payable to bank dated March 11, 2016 due in monthly installments of $3,692 through March 11, 2031 which includes principal and interest at a fixed rate of 4.75%. This note is secured by one of the Company's South Dakota locations and the personal guaranty of a shareholder of the Company. 375,812 384,208 Notes payable to bank dated November 10, 2016 payable in monthly installements of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be less than 4%. This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company. 143,698 151,234 Unsecured 8% notes payable to an entity controlled by shareholders of the Company dated December 26, 2017 originally due on demand after June 1, 2020. Effective May 31, 2019 a revised note was entered into due July 31, 2023 with monthly payments of $10,000. The remaining balance was paid in full in August, 2020. - 207,264 Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%. This note is secured by the West St. Paul location and the personal guaranty of a shareholder of the Company. 187,552 192,068 Minnesota Small business emergency loan dated April, 29, 2020 payable in monthly installments of $458.33 starting December 15, 2020 which includes principal and interest at 0%. This note is sescured by the personal guaranty of a shareholder of the Company. 27,500 - 3,297,384 3,558,082 Less - unamortized debt issuance costs (55,498 ) (59,381 ) Current maturities (240,680 ) (277,666 ) Total $ 3,001,206 $ 3,221,035 | 27/09/2020 29/12/2019 Note payable to bank dated October 30, 2015 due in monthly installments of $6,916 through October 30, 2030, which includes principal and interest at a fixed rate of 4.75%. This note is secured by two of the Company's Minnesota locations and the personal guaranty of a shareholder of the Company. $ 683,311 $ 699,311 Note payable to bank dated November 16, 2015 due in monthly installments of $14,846, which includes principal and interest at fixed rate of 4.75% through November 16, 2030. This note is secured by four of the Company's North Dakota locations and the personal guaranty of a shareholder of the Company. 1,474,383 1,509,435 Note payable to bank dated October 10, 2015 due in monthly installments of $4,153 through March 11, 2030, which includes principal and interest at fixed rate of 4.75%. This note is secured by the Company's Dairy Queen location and the personal guaranty of a shareholder of the Company. 405,128 414,562 Note payable to bank dated March 11, 2016 due in monthly installments of $3,692 through March 11, 2031 which includes principal and interest at a fixed rate of 4.75%. This note is secured by one of the Company's South Dakota locations and the personal guaranty of a shareholder of the Company. 375,812 384,208 Notes payable to bank dated November 10, 2016 payable in monthly installements of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be less than 4%. This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company. 143,698 151,234 Unsecured 8% notes payable to an entity controlled by shareholders of the Company dated December 26, 2017 originally due on demand after June 1, 2020. Effective May 31, 2019 a revised note was entered into due July 31, 2023 with monthly payments of $10,000. The remaining balance was paid in full in August, 2020. - 207,264 Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%. This note is secured by the West St. Paul location and the personal guaranty of a shareholder of the Company. 187,552 192,068 Minnesota Small business emergency loan dated April, 29, 2020 payable in monthly installments of $458.33 starting December 15, 2020 which includes principal and interest at 0%. This note is sescured by the personal guaranty of a shareholder of the Company. 27,500 - 3,297,384 3,558,082 Less - unamortized debt issuance costs (55,498 ) (59,381 ) Current maturities (240,680 ) (277,666 ) Total $ 3,001,206 $ 3,221,035 |
Schedule of maturities of long-term debt | 29/12/2019 $ 277,667 01/01/2021 406,303 02/01/2022 256,116 01/01/2023 419,908 31/12/2023 270,288 Thereafter 1,927,800 $ 3,558,082 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | |
LONG TERM DEBT | ||||||
Tax provision (benefit) at statutory federal rate | $ (87,500) | $ 7,200 | ||||
State income taxes (benefit), net of federal tax effect | (27,000) | 2,000 | ||||
Change in valuation allowance on deferred tax items | 54,000 | 0 | ||||
Permanent and other items | 12,000 | 4,525 | ||||
INCOME TAX (PROVISION) BENEFIT | $ 85,000 | $ 0 | $ 234,000 | $ 0 | $ (48,500) | $ 13,725 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Deferred tax assets (liabilities): | ||
Net operating loss | $ 43,000 | |
Property and equipment | 11,000 | $ (48,500) |
Valuation allowance on deferred tax items | $ (54,000) | |
Deferred income tax liability | $ (48,500) |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Jun. 30, 2019 | Sep. 27, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | Mar. 03, 2020 | Mar. 02, 2020 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash | $ 1,393,263 | $ 1,393,263 | $ 594,423 | $ 1,393,263 | $ 1,393,263 | $ 594,423 | $ 258,101 | $ 663,511 | $ 663,511 | $ 241,050 | |||
Loss (gain) on sale of property and equipment | 0 | 1,800 | 1,800 | (158,358) | |||||||||
Net cash provided by operating activities | 1,388,964 | 158,970 | 50,489 | 49,116 | |||||||||
Working capital deficit | (468,327) | ||||||||||||
NET INCOME (LOSS) | 254,184 | $ 254,184 | 28,627 | 815,362 | (179,551) | (368,577) | 20,803 | ||||||
Advertising expense | $ 49,618 | 44,897 | |||||||||||
Estimated useful life of the acquired Dairy Queen | 14 years | ||||||||||||
Amortization current year | $ 2,000 | ||||||||||||
Amortization year two | 2,000 | ||||||||||||
Amortization year three | 2,000 | ||||||||||||
Amortization year four | 2,000 | ||||||||||||
Taxes payable | 235,898 | ||||||||||||
Amortization year five | 2,000 | ||||||||||||
Fair value of warrants | 205,002 | 205,002 | |||||||||||
Accumulated amortization | 7,000 | 5,000 | |||||||||||
Additional impairement charges | 100,000 | ||||||||||||
Operating Loss Carryforwards | $ 153,000 | ||||||||||||
Percentage of income taxable | 0.80% | ||||||||||||
Impairment of asset held for sale | $ 93,488 | $ 0 | $ 0 | 100,000 | 93,488 | $ 93,488 | 0 | ||||||
Deferred tax benefit | $ (10,000) | $ 0 | $ (48,500) | $ 0 | |||||||||
Total loan payments abated by bank | $ 93,600 | ||||||||||||
Loan Modification and Extension Agreement [Member] | Next Gen Ice, Inc. [Member] | |||||||||||||
Equity Method Investment, Ownership Percentage of related party | 55.00% | 55.00% | 2.00% | ||||||||||
Share Exchange [Member] | Maxim Partners [Member] | |||||||||||||
Shares issued to related party as consideration | 820,000 | ||||||||||||
St. Louis [Member] | |||||||||||||
Property held for sale, net carrying value | 124,244 | ||||||||||||
Richmond [Member] | |||||||||||||
Property held for sale, net carrying value | $ 325,000 | ||||||||||||
BTND, LLC [Member] | Share Exchange [Member] | January 1, 2017 [Member] | |||||||||||||
Deferred tax benefit | $ (48,500) | ||||||||||||
Equity Method Investment, Ownership Percentage of related party | 1.00% | ||||||||||||
Shares issued to related party as consideration | 6,596,000 | ||||||||||||
Business Acquisition, Percentage of Voting Interests granted As consideration to related party | 85.90% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
LONG TERM DEBT | |||
Land | $ 525,240 | $ 555,885 | $ 584,535 |
Equipment | 2,422,521 | 2,390,545 | 2,417,185 |
Buildings | 1,349,247 | 1,363,642 | 1,401,840 |
Vehicles | 0 | 0 | 4,000 |
Total Property and Equipment | 4,297,008 | 4,310,072 | 4,407,560 |
Accumulated depreciation | (2,350,129) | (2,210,816) | (2,001,929) |
Less - Property held for sale | (349,244) | (449,244) | (353,092) |
Net property and equipment | $ 1,597,635 | $ 1,650,012 | $ 2,052,539 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2019 | Dec. 29, 2019 | Dec. 30, 2018 | |
LONG TERM DEBT | |||||
Depreciation | $ 139,313 | $ 171,563 | $ 167,242 | $ 211,087 | $ 225,814 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Sep. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
LONG TERM DEBT | |||
Accrued real estate taxes | $ 40,162 | $ 66,959 | $ 30,206 |
Accrued payroll | 59,125 | 69,572 | 70,421 |
Accrued payroll taxes | 11,709 | 7,058 | 4,025 |
Accrued sales taxes payable | 66,578 | 35,380 | 45,219 |
Accrued vacation pay | 25,211 | 23,204 | 23,227 |
Other accrued expenses | 628 | 559 | 1,888 |
Accrued expenses | $ 203,413 | $ 202,732 | $ 174,986 |
LONG TERM DEBT (Details)
LONG TERM DEBT (Details) - USD ($) | Sep. 27, 2020 | Dec. 29, 2019 | Dec. 30, 2018 |
Notes payable to bank | $ 3,297,384 | $ 3,558,082 | $ 3,834,982 |
Less - unamortized debt issuance costs | (55,498) | (59,381) | (64,557) |
Current maturities | (240,680) | (277,666) | (254,397) |
Notes payable to bank, Total | 3,001,206 | 3,221,035 | 3,516,028 |
October 30, 2015 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 683,311 | 699,311 | 747,456 |
November 16, 2015 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 1,474,383 | 1,509,435 | 1,612,400 |
October 10, 2015 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 405,128 | 414,562 | 443,406 |
March 11, 2016 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 375,812 | 384,208 | 409,352 |
December 30, 2015 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 36,419 | ||
November 10, 2016 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 143,698 | 151,234 | 160,949 |
December 28, 2018 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | 187,552 | 192,068 | 200,000 |
December 26, 2017 [Member] | Long Term Debt [Member] | Shareholders [Member] | |||
Unsecured notes payable | 0 | 207,264 | 225,000 |
April 29, 2020 [Member] | Long Term Debt [Member] | |||
Notes payable to bank, Total | $ 27,500 | $ 0 | $ 0 |
LONG TERM DEBT (Details 1)
LONG TERM DEBT (Details 1) | Dec. 29, 2019USD ($) |
LONG TERM DEBT (Details 1) | |
29/12/2019 | $ 277,667 |
01/01/2021 | 406,303 |
02/01/2022 | 256,116 |
01/01/2023 | 419,908 |
31/12/2023 | 270,288 |
Thereafter | 1,927,800 |
Total | $ 3,558,082 |
STOCKHOLDERS DEFICIT (Details N
STOCKHOLDERS DEFICIT (Details Narrative) | 1 Months Ended | 12 Months Ended |
Oct. 11, 2019shares | Dec. 29, 2019USD ($)$ / sharesshares | |
Common stock issued to consultants | 260,000 | |
Stock warrants issued to placement agent | 32,801 | |
Stock warrants issued to placement agent, Exercise price | $ / shares | $ 1.65 | |
Stock warrants issued to placement agent, Fair value | $ | $ 15,421 | |
Articles of Incorporation amended changing the shares authorized | The number of preferred shares authorized from 500,000 shares to 2,000,000 and it also increased the number common shares authorized to 50,000,000 from 19,000,000. | |
Share Exchange [Member] | Maxim Partners [Member] | ||
Shares issued to related party as consideration | 820,000 | |
Share Exchange [Member] | January 1, 2017 [Member] | BTND, LLC [Member] | ||
Shares issued to related party as consideration | 6,596,000 | |
Private Placement [Member] | ||
Stock warrants issued to placement agent | 205,002 | |
Stock warrants issued to placement agent, Exercise price | $ / shares | $ 2 | |
Common shares issued | $ | $ 410,004 | |
Warrants and Rights Outstanding, Maturity Date | Jul. 31, 2023 | |
Net proceeds from stock issued | $ | $ 492,266 | |
Officers Directors Employees And Consultants [Member] | ||
Stock warrants issued to placement agent | 9,000 | |
Number of employees | 30 | |
Officers Directors Employees And Consultants [Member] | 2019 Incentive Plan [Member] | ||
Common shares reserved for future issuance | 500,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |||
Jun. 28, 2020 | Mar. 03, 2020 | Mar. 02, 2020 | Dec. 29, 2019 | May 01, 2020 | |
Monthly rent payment | $ 500 | ||||
Exercise price | $ 1.65 | ||||
Annual interst | 1.00% | ||||
Loan Modification and Extension Agreement [Member] | Next Gen Ice, Inc. [Member] | |||||
Exercise price | $ 1 | $ 1 | |||
Principle, Amount | $ 179,000 | ||||
Maturity Extended | Aug. 31, 2020 | ||||
Outstanding equity, percentage | 34.00% | ||||
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | Mar. 31, 2023 | Mar. 31, 2023 | |||
Ownership percentage | 55.00% | 2.00% | 55.00% | ||
Notes Due from Related Party | $ 179,000 | $ 179,000 | |||
Warrants holds upon shares purchase | 358,000 | ||||
Warrants holds upon shares purchase, amount | $ 75,000 | ||||
BTND, LLC. [Member] | |||||
Advance from related party | $ 207,729 | ||||
Annual interst | 8.00% |
MAJOR VENDOR (Details Narrative
MAJOR VENDOR (Details Narrative) - Vendor One [Member] - USD ($) | 12 Months Ended | |
Dec. 29, 2019 | Dec. 30, 2018 | |
Concentration of credit risk | 0.83% | 0.83% |
Due to related party | $ 222,926 | $ 210,642 |
LAND LEASE (Details Narrative)
LAND LEASE (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 29, 2019 | Sep. 27, 2020 | Dec. 30, 2018 | |
Book value of building | $ 1,650,012 | $ 1,597,635 | $ 2,052,539 |
Land Lease [Member] | |||
Book value of building | 38,000 | ||
Monthly lease payment | $ 1,600 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | ||
Mar. 03, 2020 | Mar. 02, 2020 | Dec. 29, 2019 | |
Exercise Price | $ 1.65 | ||
Loan Modification and Extension Agreement [Member] | Next Gen Ice, Inc. [Member] | |||
Exercise Price | $ 1 | $ 1 | |
Notes Due from Related Party | $ 179,000 | $ 179,000 | |
Issuance of warrants | 358,000 | ||
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | Mar. 31, 2023 | Mar. 31, 2023 | |
Transfer of shares | 179,000 |
COVID19 PANDEMIC AND EMERGENCY
COVID19 PANDEMIC AND EMERGENCY LOAN RELIEF (Details Narrative) - USD ($) | 1 Months Ended | ||
May 02, 2020 | Apr. 29, 2020 | May 01, 2020 | |
Loan received | $ 418,900 | ||
Interest rate | 1.00% | ||
Amount granted as other income | $ 460,400 | ||
Maturitiy term | 2 years | ||
BTNDDQ, L.L.C. [Member] | |||
Loan received | $ 27,500 | $ 41,500 | |
Debt description | This loan is interest free and under certain conditions up to 50% of the loan may be forgiven, BTNDDQ, L.L.C., initially, is required to make 18 monthly payments of $458.33 beginning December 15, 2020, following the initial 18 months, in the event the note does not qualify for loan forgiveness, it will be repaid in equal installments over an additional 36 months. |
Uncategorized Items - btb-20200
Label | Element | Value |
Common Stock | ||
NET INCOME (LOSS) | us-gaap_NetIncomeLoss | $ 0 |
Additional Paid-In Capital | ||
NET INCOME (LOSS) | us-gaap_NetIncomeLoss | 0 |
Accumulated (Deficit) | ||
NET INCOME (LOSS) | us-gaap_NetIncomeLoss | $ 815,362 |