Cover
Cover - USD ($) | 12 Months Ended | ||
Jan. 02, 2022 | Mar. 15, 2022 | Jul. 04, 2021 | |
Cover [Abstract] | |||
Entity Registrant Name | BT BRANDS, INC. | ||
Entity Central Index Key | 0001718224 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | Yes | ||
Current Fiscal Year End Date | --01-03 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | true | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Jan. 2, 2022 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 | ||
Entity Ex Transition Period | false | ||
Entity Common Stock Shares Outstanding | 6,461,118 | ||
Entity Public Float | $ 9,709,000 | ||
Entity Interactive Data Current | Yes | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 333-233233 | ||
Entity Incorporation State Country Code | WY | ||
Entity Tax Identification Number | 90-1495764 | ||
Icfr Auditor Attestation Flag | false | ||
Entity Address Address Line 1 | 405 Main Avenue West | ||
Entity Address Address Line 2 | Suite 2D | ||
Entity Address City Or Town | West Fargo | ||
Entity Address State Or Province | ND | ||
Entity Address Postal Zip Code | 58078 | ||
Trading Symbol | BTBD | ||
Security Exchange Name | NASDAQ | ||
City Area Code | 307 | ||
Local Phone Number | 291-9885 | ||
Security 12b Title | Common Stock, $0.002 par value | ||
Auditor Name | Boulay PLLP | ||
Auditor Firm Id | 542 | ||
Auditor Location | Minneapolis, Minnesota |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jan. 02, 2022 | Jan. 03, 2021 |
CURRENT ASSETS | ||
Cash | $ 12,385,632 | $ 1,321,244 |
Receivables | 72,251 | 19,030 |
Inventory | 79,510 | 60,576 |
Prepaid expenses and other current assets | 27,186 | 5,348 |
Total current assets | 12,564,579 | 1,406,198 |
PROPERTY AND EQUIPMENT, net | 1,592,338 | 1,632,457 |
LAND AND BUILDINGS HELD FOR SALE | 258,751 | 258,751 |
INVESTMENT IN RELATED COMPANY | 75,000 | 75,000 |
OTHER ASSETS, net | 15,059 | 16,759 |
Total assets | 14,505,727 | 3,389,165 |
CURRENT LIABILITIES | ||
Accounts payable | 291,973 | 270,487 |
Current maturities of long-term debt | 169,908 | 245,306 |
Accrued expenses | 254,341 | 420,734 |
Income taxes payable | 209,088 | 97,978 |
Total current liabilities | 925,310 | 1,034,505 |
LONG-TERM DEBT, less current maturities | 2,833,064 | 2,938,983 |
DEFERRED INCOME TAXES | 119,000 | 118,000 |
Total liabilities | 3,877,347 | 4,091,488 |
SHAREHOLDERS' EQUITY (DEFICIT) | ||
Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at January 2, 2022 and January 3, 2021 | 0 | 0 |
Common stock, $.002 par value, 50,000,000 authorized, 6,447,506 and 4,047,502 shares issued and outstanding at January 2, 2022 and January 3, 2021, respecitvely | 12,895 | 8,095 |
Additional paid-in capital | 11,215,969 | 497,671 |
Accumulated deficit | (600,238) | (1,208,089) |
Total shareholders' equity (deficit) | 10,628,353 | (702,323) |
Total liabilities and shareholders' equity (deficit) | $ 14,505,727 | $ 3,389,165 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jan. 02, 2022 | Jan. 03, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock, shares par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Preferred stock, shares issued | 0 | 0 |
Common stock, shares par value | $ 0.002 | $ 0.002 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares outstanding | 6,447,506 | 4,047,502 |
Common stock, shares issued | 6,447,506 | 4,047,502 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
SALES | $ 8,451,870 | $ 8,159,796 |
Restaurant operating expenses | ||
Food and paper costs | 3,285,752 | 3,090,816 |
Labor costs | 2,383,206 | 2,335,949 |
Occupancy costs | 681,560 | 709,704 |
Other operating expenses | 469,822 | 426,553 |
Depreciation and amortization | 234,027 | 189,389 |
Impairment of assets held for sale | 0 | 190,493 |
General and administrative | 416,791 | 687,524 |
Total costs and expenses | 7,471,158 | 7,630,428 |
Income from operations | 980,712 | 529,368 |
INTEREST INCOME | 0 | 103,623 |
OTHER INCOME | 0 | 466,758 |
INTEREST EXPENSE | (172,861) | (177,757) |
INCOME BEFORE TAXES | 807,851 | 921,992 |
INCOME TAX PROVISION | (200,000) | (130,000) |
NET INCOME | $ 607,851 | $ 791,992 |
NET INCOME PER COMMON SHARE - Basic and Diluted | $ 0.14 | $ 0.20 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted | 4,382,848 | 4,047,502 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) |
Balance, shares at Dec. 29, 2019 | 4,047,502 | |||
Balance, amount at Dec. 29, 2019 | $ (1,494,315) | $ 8,095 | $ 497,671 | $ (2,000,081) |
Net income | 791,992 | $ 0 | 0 | 791,992 |
Balance, shares at Jan. 03, 2021 | 4,047,502 | |||
Balance, amount at Jan. 03, 2021 | (702,323) | $ 8,095 | 497,671 | (1,208,089) |
Net income | 607,851 | $ 0 | 0 | 607,851 |
Common shares issued for fractional holdings, shares | 4 | |||
Common shares issued for fractional holdings, amount | 0 | $ 0 | 0 | 0 |
Stock-based compensation | 26,250 | 0 | 26,250 | 0 |
Aggregate value of warrants purchased by underwriter | 363,600 | $ 0 | 363,600 | 0 |
Issuance of 2,400,000 shares of common stock and 2,760,000 common stock purchase warrants, net of $1,315,422 in fees and expenses and $360,000 in excess of fair value of warrants puchased by underwriter, shares | 2,400,000 | |||
Issuance of 2,400,000 shares of common stock and 2,760,000 common stock purchase warrants, net of $1,315,422 in fees and expenses and $360,000 in excess of fair value of warrants puchased by underwriter, amount | 10,332,975 | $ 4,800 | 10,328,175 | 0 |
Balance, shares at Jan. 02, 2022 | 6,447,506 | |||
Balance, amount at Jan. 02, 2022 | $ 10,628,353 | $ 12,895 | $ 11,215,696 | $ (600,238) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income | $ 607,851 | $ 791,992 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Depreciation and amortization | 234,027 | 189,387 |
Amortization of debt issuance cost included in interest expense | 56,905 | 5,176 |
Noncash interest income | 0 | (75,000) |
Deferred taxes | 1,000 | 20,000 |
Stock-based compensation | 26,250 | 0 |
Deferred interest paid in-kind | 0 | 39,368 |
Impairment of assets held for sale | 0 | 190,493 |
Changes in operating assets and liabilities - | ||
Receivables | (53,221) | (3,667) |
Inventory | (18,934) | (4,144) |
Prepaid expenses and other current assets | (21,838) | 1,580 |
Accounts payable | 37,198 | (67,080) |
Accrued expenses | (166,393) | 214,334 |
Income taxes payable | 111,110 | 95,080 |
Net cash provided by operating activities | 813,955 | 1,397,519 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | (207,920) | (154,420) |
Proceeds on notes due from related entity | 0 | 179,000 |
Net cash provided by (used in) investing activities | $ (207,920) | 24,580 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net proceeds from sale of common stock and warrants | 10,696,575 | |
Proceeds from long-term debt | $ 3,107,100 | 77,500 |
Principal payments on long-term debt | (3,295,623) | (436,456) |
Payment of debt issuance costs | (49,699) | 0 |
Net cash provided by (used in) financing activities | 10,458,353 | (358,956) |
CHANGE IN CASH | 11,064,388 | 1,063,143 |
CASH, END OF PERIOD | 12,385,632 | 1,321,244 |
CASH, BEGINNING OF PERIOD | 1,321,244 | 258,101 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for interest | 119,300 | 133,213 |
Excess of fair value of warrants purchased by underwriter | 360,000 | 0 |
Purchase of property and equipment included in accounts payable | 0 | 15,712 |
Cash paid for income taxes | $ 114,179 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jan. 02, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization BT Brands, Inc. (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 (“BTND”) in exchange for common stock through a Share Exchange Agreement (“Share Exchange”). Following the Share Exchange, BTND became a wholly owned subsidiary of the Company. In 2020 BT Brands, Inc. was reincorporated in the State of Wyoming. Business The Company currently operates nine company-owned Burger Time fast-food restaurants. 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, in 2018, and this location is currently offered for sale. In addition, the Company owns a restaurant property in St. Louis, Missouri, which is also held for sale. The Company operated ten restaurants at the end of fiscal 2021 and 2020. The Company’s Dairy Queen store is operated under a franchise agreement with International Dairy Queen. Accordingly, the Company is required to pay royalty and advertising payments and remain in compliance with the franchise agreement terms. 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 were 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 2021 was 52 weeks ending January 2, 2022, and Fiscal 2020 was the 53-week period ending on January 3, 2021. All references to years in this report refer to the fiscal years described above. Reverse Stock Split Under the consent of a majority of the Company’s shareholders, the Company’s Board of Directors approved a 1-for-2 common shares reverse stock split effective January 25, 2021. All outstanding common shares and per share data presented herein reflect the effect of the reverse split. 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. In 2020, the Company received equity ownership in Next Gen Ice, Inc. as consideration for its agreement to modify the term of notes receivable. The notes receivable were repaid in full in August 2020. Upon repayment of the notes, $75,000 was attributed by Company management to the value of the equity received, and this amount was reflected as additional interest income in 2020. The fair value determined in 2020 continues to be reflected as the value of the investment. 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 and excludes transfers out in transit. Revenue Recognition The Company’s revenues consist of purchases of food products for cash or bank-issued credit and debit card transactions at the Company’s restaurants. The Company follows Accounting Standards Update (ASU) 2014-09 (ASC 606). Under ASC 606, revenues are 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. The Company’s sales are recognized at the point of sale and are presented net of discounts and incentives. Sales are reported net of applicable sales taxes. Receivables Receivables consist 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 ranging 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 at the restaurant level. In determining future cash flows, significant estimates are made by the Company for future operating results of each restaurant over its remaining life. If such assets are concluded to be impaired, the impairment recognized is measured by the amount by which the carrying value of the assets exceeds the carrying value of the assets. Assets Held for Sale The Company may sell an existing unit or close an operating unit and seek to liquidate the property. The Company is considering options for a property in the St. Louis area for which the land and building were fully reserved in the 2020 fourth-quarter impairment charge. The write-down of the St. Louis property resulted in an additional impairment charge of $90,493 during the fourth quarter of 2020. Also, in September 2018, the Company closed an operating Burger Time unit in Richmond, Indiana, and is offering the property for sale. In the second quarter of 2020, it was concluded to record an additional charge of $100,000 for impairment of the value of the Richmond location. The Company believes the Richmond property will be sold at or above its current carrying value. Advertising and Marketing Costs The Company expenses advertising and marketing costs as incurred. Advertising expenses for fiscal 2021 and 2020 totaled $28,934 and $29,924, respectively. Income Taxes The Company provides for income taxes under ASC 740, Accounting for Income Taxes, 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 assets are recognized for temporary deductible differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for temporary taxable 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 Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company assessed whether a valuation allowance should be recorded against its deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such an assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. 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: 2021 2020 Property and equipment $ (197,000 ) $ (183,000 ) Future tax benefit of impairment allowance 78,000 78,000 Paycheck Protection Program grant income - (13,000 ) Net deferred tax liability $ (119,000 ) $ (118,000 ) The following table summarizes the components of the provision for income taxes: 2021 2020 Current income tax expense $ 199,000 $ 110,000 Deferred income taxes 1,000 20,000 Total income tax expense $ 200,000 $ 130,000 Total income tax expense for the years ended January 2, 2022, and January 3, 2021, differed from the amounts computed by applying the U.S. Federal statutory tax rate of 21% to pre-tax income as follows: 2021 2020 Total expense computed by applying statutory federal rate $ 169,650 $ 193,600 State income tax, net of federal tax benefit 30,350 47,400 Paycheck Protection Program grant income - (111,000 ) Provision for income taxes $ 200,000 $ 130,000 Accounting Standards require that deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The Company had no accrued interest or penalties relating to 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 the Company’s tax years are subject to federal and state tax examination. With few exceptions, the Company is no longer subject to U.S. Federal and state income tax examinations by tax authorities for years before 2018. Per Common Share Amounts Net income 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 diluted net income (loss) computation per share because their effect is anti-dilutive. As a result, no dilutive shares were dilutive as of the years ending in 2021 and 2020. There are currently 2,760,000 five-year warrants exercisable at $5.50 per share outstanding. These warrants were issued as a part of the Company’s November 12, 2021, public stock offering. In addition, 102,503 private placement warrants are outstanding with an exercise price of $4.00 per share and 16,401 Placement Agent warrants outstanding at an exercise price of $3.30 per share. At the end of fiscal 2021 and 2020, all outstanding warrants were exercisable at prices above the underlying stock’s market price and therefore were not dilutive. Other Assets Other assets include the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, and amortized over an estimated useful life of 14 years. Amortization for each of the next five years is estimated to be $2,000 per year. Accumulated amortization was approximately $11,000 and $9,000 at the end of 2021 and 2020, 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 workforce for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional expenses, 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 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 significant. Stock-Based Compensation The Company recognizes all stock-based compensation as an expense in its consolidated financial statements. Equity -classified awards are measured at the grant date fair value of the award. The Company estimated the grant date fair value using the Black-Scholes option-pricing model. 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 significant customers. The Company has determined that it did not have any separately reportable operating segments. Covid-19 and the Paycheck Protection Program 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 Paycheck Protection Program (“PPP”). The Company accounted for the loan’s proceeds as a government grant under International Accounting Standard 20 (“IAS 20”), Accounting for Government Grants, and Disclosure of Government Assistance. Under IAS 20, the loan is initially recorded as deferred income, and forgiveness income is recognized systematically over the periods in which the qualifying expenses are incurred when the Company determines that the forgiveness is reasonably assured. Under the terms of the program, the Company applied for the forgiveness of the loans in 2020, and the loans were forgiven in 2021. As a result of the forgiveness of the PPP advances, the loan forgiveness is reflected as “Other Income” in 2020. Also, in May 2020, the Company borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program. Under the loan terms, the Company will seek forgiveness of this loan in 2022. Covid-19 continues to have an impact on the United States economy. However, as the situation is constantly changing, it is difficult to predict the ever-changing effect of the Covid-19 pandemic or the impact of governmental responses on the United States economy in general, and specifically the impact on the quick service drive-through segment of the foodservice industry and Company’s operating results and financial condition. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jan. 02, 2022 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following at the end of the respective fiscal years: January 2, 2022 January 3, 2021 Land $ 485,239 $ 485,239 Equipment 2,674,529 2,497,576 Buildings 1,322,085 1,306,896 Total property and equipment 4,481,853 4,289,711 Accumulated depreciation (2,630,764 ) (2,398,503 ) Less - property held for sale (258,751 ) (258,751 ) Net property and equipment $ 1,592,338 $ 1,632,457 Depreciation expense for 2021 and 2020 was $232,261 and $187,687, respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Jan. 02, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 3 – ACCRUED EXPENSES A January 2, 2022 January 3, 2021 Accrued real estate taxes $ 103,615 $ 106,935 Accrued bonus compensation 7,000 162,000 Accrued payroll 44,700 56,139 Accrued payroll taxes 8,424 8,519 Accrued sales taxes payable 50,414 66,632 Accrued vacation pay 17,663 19,657 Accrued gift card liability 10,036 - Accrued franchise royalty 2,614 - Other accrued expenses 9,875 852 $ 254,341 $ 420,734 |
SHAREHOLDERS EQUITY
SHAREHOLDERS EQUITY | 12 Months Ended |
Jan. 02, 2022 | |
SHAREHOLDERS EQUITY | |
SHAREHOLDERS EQUITY | NOTE 4 – SHAREHOLDERS’ EQUITY On November 12, 2021, the Company completed a public offering of Units consisting of share of common stock and one five-year stock purchase warrant to purchase one common share at $5.50. The Company has the right to redeem the warrants under certain conditions. The Company issued 2,400,000 common shares in the offering and 2,760,000 stock purchase warrants which included 360,000 warrants to purchase an aggregate of 360,000 shares of common stock purchase pursuant to a partial exercise of the over-allotment option granted to underwriters for $.01 per warrant, $3,600. The estimated fair value of the warrants at the date of issuance, net of the exercise proceeds, was $360,000, and this amount is reflected as an additional cost of the offering. After deducting all fees and expenses, net proceeds from the offering were $10,696,575. During 2018, the Company issued 3,708,000 common shares as part of the Share Exchange. Upon closing of a related private offering, 205,002 additional common shares, and 102,503 common stock warrants to purchase shares at $4.00 through July 31, 2023, were issued to investors for a net amount of approximately $492,266. All of these warrants were outstanding as of the end of the year. In addition, upon closing of the private offering, the placement agent was issued an aggregate of 16,401 five-year stock purchase warrants to purchase shares at $3.30 per share, which are also outstanding at year-end. 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 November 12, 2021, we issued options to purchase an aggregate of 15,000 shares to three outside members of our board of directors. The options issued to directors are ten-year options and were fully vested upon issuance. The Company recognized $26,250 of stock-based compensation expense resulting from the option issuance. The Company used the Black-Scholes option-pricing model to calculate the compensation expense using an estimated risk-free return of 2% with a 37.5% volatility factor for the 10-year option term. |
TERM DEBT
TERM DEBT | 12 Months Ended |
Jan. 02, 2022 | |
TERM DEBT | |
TERM DEBT | NOTE 5 – LONG-TERM DEBT The Company had the following long-term debt obligations as of: January 2, 2022 January 3, 2021 Three notes payable to a bank dated June 28, 2021 due in monthly installments totaling $22,213 which includes principal and interest at fixed rate of 3.45% through June 28, 2031. Beginning in July 2031, the interest rate will be equal to the greater of the "prime rate" plus .75%, or 3.45% . These notes mature on June 28, 2036. The notes are secured by mortgages covering the Company's ten operating locations. The notes are guarenteed by BT Brands, Inc. and a shareholder of the Company. $ 3,027,971 $ - Notes payable with interest at 4.75%. Secured by eight of the Company's locations and the personal guaranty of a Company shareholder. These notes were paid in full on June 28, 2021. - 2,884,650 Note payable with interest at 5.50%. Secured by the Company's West St. Paul location and the personal guaranty of a Company Shareholder. This note and was paid in full in April 2021. - 185,219 Note payable with interest at 4%. Secured by property held for sale in Richmond, Indiana and the personal guaranty of a shareholder of the Company. This note was paid in full in December 2021. - 141,125 Minnesota Small Business Emergency Loan dated April 29, 2020 payable in monthly installments of $458.33 beginning December 15, 2020 which includes principal and interest at 0%. This note is secured by the personal guaranty of a shareholder of the Company. 22,000 27,500 3,049,971 3,238,494 Less - unamortized debt issuance costs (46,999 ) (54,205 ) Current maturities (169,908 ) (245,306 ) Total $ 2,833,064 $ 2,938,983 Scheduled maturities of long-term debt, excluding amortization of debt issuance costs, are as follows: 1/1/2023 $ 169,908 12/31/2023 175,703 12/29/2024 181,597 12/28/2025 187,910 1/2/2027 188,840 Thereafter 2,146,013 $ 3,049,971 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jan. 02, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS Next Gen Ice In 2019, the Company made cash advances to Next Gen Ice, Inc. (NGI), totaling $179,000. The Company’s CEO, Gary Copperud, was and continues to serve as Chairman of the Board of Directors of NGI. The Company’s Chief Operating Officer, Kenneth Brimmer, is a member of the Board of Directors of NGI and serves as its Chief Financial Officer on a contract basis. At the time the loans were made, Mr. Copperud controlled approximately 34% of the outstanding equity of NGI. On March 2, 2020, the due date of the loans was extended to August 31, 2020. In consideration of the loan maturity extension, the Company received 179,000 shares of NGI common stock and warrants to purchase 358,000 shares at $1.00 per share through March 23, 2023, effective February 2, 2022, was extended to a March 23, 2028 expiration. The warrant term extension was granted in consideration for the Company’s investment of $229,000 in NGI Series A1 8% Cumulative Convertible Preferred Stock on February 2, 2022, including a five-year warrant to purchase 57,250 shares at $1.65 per share. The NGI common stock and common stock purchase warrants received by the Company in March 2020 were recorded in 2020 at a value determined by the Company of $75,000. The investment in NGI does not have readily determinable market value. The NGI investment is carried at the cost determined by the Company when the shares and warrants were received, which the Company continues to believe is reasonable. |
MAJOR VENDOR
MAJOR VENDOR | 12 Months Ended |
Jan. 02, 2022 | |
MAJOR VENDOR | |
MAJOR VENDOR | NOTE 7 – MAJOR VENDOR Approximately 75% of the Company’s product purchases for the year ended January 2, 2022, were from one vendor. On January 2, 2022, the amount due to the major vendor totaled $229,046. In fiscal 2020, approximately 83% of the Company’s purchases were from the same vendor. On January 3, 2021, the amount due to this vendor was $171,545 |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Jan. 02, 2022 | |
CONTINGENCIES | |
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. |
LAND LEASE
LAND LEASE | 12 Months Ended |
Jan. 02, 2022 | |
LAND LEASE | |
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 $19,200. The monthly lease payment is $1,600. |
ACQUISITION
ACQUISITION | 12 Months Ended |
Jan. 02, 2022 | |
ACQUISITION | |
ACQUISITION | NOTE 10 – ACQUISITION On March 2, 2022, a newly formed subsidiary of the Company acquired the assets of an operating restaurant located in Indian Rocks Beach, Florida. The acquired assets have operated as Keegan’s Seafood Grille (“Keegan’s”) for more than 35 years, primarily serving the Clearwater and St. Petersburg, Florida markets. As part of the purchase, we acquired the Keegan’s Seafood Grille tradename, and we plan to operate the property under the Keegan’s Seafood Grille name. The Keegan’s assets were acquired for $1,150,000 in cash. The Company has not yet finalized the allocation of the purchase price. At the time of purchase, we entered into a 132-month triple-net lease for the property occupied by Keegan’s with an initial rent of $5,000 per month increasing annually at the greater of 3% or the increase in the Consumer Price Index over that period. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jan. 02, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Organization | BT Brands, Inc. (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 (“BTND”) in exchange for common stock through a Share Exchange Agreement (“Share Exchange”). Following the Share Exchange, BTND became a wholly owned subsidiary of the Company. In 2020 BT Brands, Inc. was reincorporated in the State of Wyoming. |
Business | The Company currently operates nine company-owned Burger Time fast-food restaurants. 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, in 2018, and this location is currently offered for sale. In addition, the Company owns a restaurant property in St. Louis, Missouri, which is also held for sale. The Company operated ten restaurants at the end of fiscal 2021 and 2020. The Company’s Dairy Queen store is operated under a franchise agreement with International Dairy Queen. Accordingly, the Company is required to pay royalty and advertising payments and remain in compliance with the franchise agreement terms. |
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 were 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 2021 was 52 weeks ending January 2, 2022, and Fiscal 2020 was the 53-week period ending on January 3, 2021. All references to years in this report refer to the fiscal years described above. |
Reverse Stock Split | Under the consent of a majority of the Company’s shareholders, the Company’s Board of Directors approved a 1-for-2 common shares reverse stock split effective January 25, 2021. All outstanding common shares and per share data presented herein reflect the effect of the reverse split. |
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. In 2020, the Company received equity ownership in Next Gen Ice, Inc. as consideration for its agreement to modify the term of notes receivable. The notes receivable were repaid in full in August 2020. Upon repayment of the notes, $75,000 was attributed by Company management to the value of the equity received, and this amount was reflected as additional interest income in 2020. The fair value determined in 2020 continues to be reflected as the value of the investment. |
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 and excludes transfers out in transit. |
Revenue Recognition | The Company’s revenues consist of purchases of food products for cash or bank-issued credit and debit card transactions at the Company’s restaurants. The Company follows Accounting Standards Update (ASU) 2014-09 (ASC 606). Under ASC 606, revenues are 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. The Company’s sales are recognized at the point of sale and are presented net of discounts and incentives. Sales are reported net of applicable sales taxes. |
Receivables | Receivables consist 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 ranging 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 at the restaurant level. In determining future cash flows, significant estimates are made by the Company for future operating results of each restaurant over its remaining life. If such assets are concluded to be impaired, the impairment recognized is measured by the amount by which the carrying value of the assets exceeds the carrying value of the assets. |
Assets Held for Sale | The Company may sell an existing unit or close an operating unit and seek to liquidate the property. The Company is considering options for a property in the St. Louis area for which the land and building were fully reserved in the 2020 fourth-quarter impairment charge. The write-down of the St. Louis property resulted in an additional impairment charge of $90,493 during the fourth quarter of 2020. Also, in September 2018, the Company closed an operating Burger Time unit in Richmond, Indiana, and is offering the property for sale. In the second quarter of 2020, it was concluded to record an additional charge of $100,000 for impairment of the value of the Richmond location. The Company believes the Richmond property will be sold at or above its current carrying value. |
Advertising and Marketing Costs | The Company expenses advertising and marketing costs as incurred. Advertising expenses for fiscal 2021 and 2020 totaled $28,934 and $29,924, respectively. |
Income Taxes | The Company provides for income taxes under ASC 740, Accounting for Income Taxes, 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 assets are recognized for temporary deductible differences, and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for temporary taxable 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 Company continually reviews the realizability of its deferred tax assets, including an analysis of factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. The Company assessed whether a valuation allowance should be recorded against its deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. In assessing the need for a valuation allowance, the Company considered both positive and negative evidence related to the likelihood of realization of deferred tax assets. In making such an assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered in determining the amount of the recorded valuation allowance. 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: 2021 2020 Property and equipment $ (197,000 ) $ (183,000 ) Future tax benefit of impairment allowance 78,000 78,000 Paycheck Protection Program grant income - (13,000 ) Net deferred tax liability $ (119,000 ) $ (118,000 ) The following table summarizes the components of the provision for income taxes: 2021 2020 Current income tax expense $ 199,000 $ 110,000 Deferred income taxes 1,000 20,000 Total income tax expense $ 200,000 $ 130,000 Total income tax expense for the years ended January 2, 2022, and January 3, 2021, differed from the amounts computed by applying the U.S. Federal statutory tax rate of 21% to pre-tax income as follows: 2021 2020 Total expense computed by applying statutory federal rate $ 169,650 $ 193,600 State income tax, net of federal tax benefit 30,350 47,400 Paycheck Protection Program grant income - (111,000 ) Provision for income taxes $ 200,000 $ 130,000 Accounting Standards require that deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The Company had no accrued interest or penalties relating to 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 the Company’s tax years are subject to federal and state tax examination. With few exceptions, the Company is no longer subject to U.S. Federal and state income tax examinations by tax authorities for years before 2018. |
Per Common Share Amounts | Net income 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 diluted net income (loss) computation per share because their effect is anti-dilutive. As a result, no dilutive shares were dilutive as of the years ending in 2021 and 2020. There are currently 2,760,000 five-year warrants exercisable at $5.50 per share outstanding. These warrants were issued as a part of the Company’s November 12, 2021, public stock offering. In addition, 102,503 private placement warrants are outstanding with an exercise price of $4.00 per share and 16,401 Placement Agent warrants outstanding at an exercise price of $3.30 per share. At the end of fiscal 2021 and 2020, all outstanding warrants were exercisable at prices above the underlying stock’s market price and therefore were not dilutive. |
Other Assets | Other assets include the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, and amortized over an estimated useful life of 14 years. Amortization for each of the next five years is estimated to be $2,000 per year. Accumulated amortization was approximately $11,000 and $9,000 at the end of 2021 and 2020, 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 workforce for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional expenses, 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 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 significant. |
Stock-Based Compensation | The Company recognizes all stock-based compensation as an expense in its consolidated financial statements. Equity -classified awards are measured at the grant date fair value of the award. The Company estimated the grant date fair value using the Black-Scholes option-pricing model. |
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 significant customers. The Company has determined that it did not have any separately reportable operating segments. |
Covid-19 and the Paycheck Protection Program | 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 Paycheck Protection Program (“PPP”). The Company accounted for the loan’s proceeds as a government grant under International Accounting Standard 20 (“IAS 20”), Accounting for Government Grants, and Disclosure of Government Assistance. Under IAS 20, the loan is initially recorded as deferred income, and forgiveness income is recognized systematically over the periods in which the qualifying expenses are incurred when the Company determines that the forgiveness is reasonably assured. Under the terms of the program, the Company applied for the forgiveness of the loans in 2020, and the loans were forgiven in 2021. As a result of the forgiveness of the PPP advances, the loan forgiveness is reflected as “Other Income” in 2020. Also, in May 2020, the Company borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program. Under the loan terms, the Company will seek forgiveness of this loan in 2022. Covid-19 continues to have an impact on the United States economy. However, as the situation is constantly changing, it is difficult to predict the ever-changing effect of the Covid-19 pandemic or the impact of governmental responses on the United States economy in general, and specifically the impact on the quick service drive-through segment of the foodservice industry and Company’s operating results and financial condition. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of deferred tax liability | 2021 2020 Property and equipment $ (197,000 ) $ (183,000 ) Future tax benefit of impairment allowance 78,000 78,000 Paycheck Protection Program grant income - (13,000 ) Net deferred tax liability $ (119,000 ) $ (118,000 ) |
Schedule of provision for income taxes | 2021 2020 Current income tax expense $ 199,000 $ 110,000 Deferred income taxes 1,000 20,000 Total income tax expense $ 200,000 $ 130,000 |
Schedule of Federal statutory tax rate | 2021 2020 Total expense computed by applying statutory federal rate $ 169,650 $ 193,600 State income tax, net of federal tax benefit 30,350 47,400 Paycheck Protection Program grant income - (111,000 ) Provision for income taxes $ 200,000 $ 130,000 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | January 2, 2022 January 3, 2021 Land $ 485,239 $ 485,239 Equipment 2,674,529 2,497,576 Buildings 1,322,085 1,306,896 Total property and equipment 4,481,853 4,289,711 Accumulated depreciation (2,630,764 ) (2,398,503 ) Less - property held for sale (258,751 ) (258,751 ) Net property and equipment $ 1,592,338 $ 1,632,457 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | January 2, 2022 January 3, 2021 Accrued real estate taxes $ 103,615 $ 106,935 Accrued bonus compensation 7,000 162,000 Accrued payroll 44,700 56,139 Accrued payroll taxes 8,424 8,519 Accrued sales taxes payable 50,414 66,632 Accrued vacation pay 17,663 19,657 Accrued gift card liability 10,036 - Accrued franchise royalty 2,614 - Other accrued expenses 9,875 852 $ 254,341 $ 420,734 |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 12 Months Ended |
Jan. 02, 2022 | |
LONG-TERM DEBT (Tables) | |
Schedule of long term debt obligations | January 2, 2022 January 3, 2021 Three notes payable to a bank dated June 28, 2021 due in monthly installments totaling $22,213 which includes principal and interest at fixed rate of 3.45% through June 28, 2031. Beginning in July 2031, the interest rate will be equal to the greater of the "prime rate" plus .75%, or 3.45% . These notes mature on June 28, 2036. The notes are secured by mortgages covering the Company's ten operating locations. The notes are guarenteed by BT Brands, Inc. and a shareholder of the Company. $ 3,027,971 $ - Notes payable with interest at 4.75%. Secured by eight of the Company's locations and the personal guaranty of a Company shareholder. These notes were paid in full on June 28, 2021. - 2,884,650 Note payable with interest at 5.50%. Secured by the Company's West St. Paul location and the personal guaranty of a Company Shareholder. This note and was paid in full in April 2021. - 185,219 Note payable with interest at 4%. Secured by property held for sale in Richmond, Indiana and the personal guaranty of a shareholder of the Company. This note was paid in full in December 2021. - 141,125 Minnesota Small Business Emergency Loan dated April 29, 2020 payable in monthly installments of $458.33 beginning December 15, 2020 which includes principal and interest at 0%. This note is secured by the personal guaranty of a shareholder of the Company. 22,000 27,500 3,049,971 3,238,494 Less - unamortized debt issuance costs (46,999 ) (54,205 ) Current maturities (169,908 ) (245,306 ) Total $ 2,833,064 $ 2,938,983 |
Schedule of maturities of long-term debt | 1/1/2023 $ 169,908 12/31/2023 175,703 12/29/2024 181,597 12/28/2025 187,910 1/2/2027 188,840 Thereafter 2,146,013 $ 3,049,971 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Deferred tax assets (liabilities): | ||
Property and equipment | $ (197,000) | $ (183,000) |
Future tax benefit of impairment allowance | 78,000 | 78,000 |
Paycheck Protection Program loan forgiveness | 0 | (13,000) |
Total deferred tax liability | $ (119,000) | $ (118,000) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Current income tax expense | $ 199,000 | $ 110,000 |
Deferred income taxes (benefit) | 1,000 | 20,000 |
Total income tax expense (benefit) | $ 200,000 | $ 130,000 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Total expense (benefit) computed by applying statutory federal rate | $ 169,650 | $ 193,600 |
State income tax (benefit), net of federal tax benefit | 30,350 | 47,400 |
Paycheck Protection Program loan forgiveness | 0 | (111,000) |
Provision for income taxes (benefit) | $ 200,000 | $ 130,000 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Jun. 30, 2020 | May 31, 2020 | Jul. 31, 2020 | Mar. 31, 2020 | Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | Dec. 31, 2018 | |
Cash | $ 12,385,632 | $ 1,321,244 | $ 258,101 | $ 663,511 | ||||
Warrant Exercised | 2,760,000 | |||||||
Additional impairment | 151,500 | |||||||
Warrant Exercisable Term | 5 years | |||||||
Warrant excercise price | $ 5.50 | |||||||
Change in income tax benefit | 53,500 | |||||||
Estimated tax benefit | 43,000 | |||||||
Net Income (loss) | $ 607,851 | 791,992 | ||||||
INVESTMENT IN AND NOTES RECEIVABLE FROM RELATED COMPANY | 75,000 | 75,000 | 179,000 | |||||
Pandemic related loans | $ 487,900 | |||||||
Accumulated deficit | $ (600,238) | (1,208,089) | (2,000,081) | |||||
Borrowed amount | 460,400 | |||||||
Additional loan | 27,500 | |||||||
Change in working capital deficit, description | Working capital of $371,693, an increase of $789,688 from the year-end deficit of $471,995. | |||||||
Deferred payments | $ 93,602 | $ 93,602 | $ 0 | 39,368 | ||||
Advertising expense | $ 28,934 | 29,924 | ||||||
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 | |||||||
Amortization year five | 2,000 | |||||||
Fair value of warrants | $ 102,503 | $ 16,401 | ||||||
Stock warrants issued to placement agent, Exercise price | $ 4 | $ 3.30 | ||||||
Accumulated amortization | $ 11,000 | $ 9,000 | ||||||
Operating Loss Carryforwards | $ 159,000 | |||||||
After tax profit | 791,922 | |||||||
Impairment of asset held for sale | $ 90,493 | $ 0 | $ 190,493 | |||||
Shares issued to related party as consideration | 10,696,575 | |||||||
Share Exchange [Member] | During 2018 [Member] | ||||||||
Shares issued to related party as consideration | 3,708,000 | |||||||
Richmond [Member] | ||||||||
Impairment of asset held for sale | $ 100,000 | |||||||
BTND, LLC [Member] | Share Exchange [Member] | July 30, 2018 [Member] | ||||||||
Equity Method Investment, Ownership Percentage of related party | 100.00% | |||||||
Shares issued to related party as consideration | 3,298,000 | |||||||
Business Acquisition, Percentage of Voting Interests granted As consideration to related party | 0.859% | |||||||
BTND, LLC [Member] | Share Exchange [Member] | During 2018 [Member] | ||||||||
Shares issued to related party as consideration | 3,298,000 | |||||||
Maxim Partners [Member] | Share Exchange [Member] | ||||||||
Shares issued to related party as consideration | 410,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jan. 02, 2022 | Jan. 03, 2021 |
PROPERTY AND EQUIPMENT | ||
Land | $ 485,239 | $ 485,239 |
Equipment | 2,674,529 | 2,497,576 |
Buildings | 1,322,085 | 1,306,896 |
Total property and equipment | 4,481,853 | 4,289,711 |
Accumulated depreciation | (2,630,764) | (2,398,503) |
Less - property held for sale | (258,751) | (258,751) |
Net property and equipment | $ 1,592,338 | $ 1,632,457 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
PROPERTY AND EQUIPMENT | ||
Depreciation | $ 232,261 | $ 187,687 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Jan. 02, 2022 | Jan. 03, 2021 |
ACCRUED EXPENSES | ||
Accrued real estate taxes | $ 103,615 | $ 106,935 |
Accrued bonus compensation | 7,000 | 162,000 |
Accrued payroll | 44,700 | 56,139 |
Accrued payroll taxes | 8,424 | 8,519 |
Accrued sales taxes payable | 50,414 | 66,632 |
Accrued vacation pay | 17,663 | 19,657 |
Accured gift card liability | 10,036 | 0 |
Accured franchise royality | 2,614 | 0 |
Other accrued expenses | 9,875 | 852 |
Accrued expenses | $ 254,341 | $ 420,734 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | Nov. 12, 2021 | Jan. 02, 2022 | Feb. 22, 2022 |
Term of warrant | 5 years | ||
Stock warrants issued to placement agent | 16,401 | ||
Stock warrants issued to placement agent, Exercise price | $ 3.30 | $ 1.65 | |
Warrant Exercised | 2,760,000 | ||
Shares issued common shares | 10,696,575 | ||
Private Placement [Member] | |||
Stock warrants issued to placement agent | 205,002 | ||
Stock warrants issued to placement agent, Exercise price | $ 4 | ||
Proceed from issuance of common stock warrants | $ 102,503 | ||
Net proceeds from stock issued | $ 492,266 | ||
2019 Incentive Plan [Member] | During 2019 [Member] | Officers Directors Employees And Consultants Member [Member] | |||
Common shares reserved for future issuance | 500,000 | ||
Additional number of options granted | 15,000 | ||
Option term | 10 years | ||
Volatility factor for option term | 10 years | ||
Estimated risk free return | 2.00% | ||
Volatility risk free return | 37.50% | ||
Share Exchange [Member] | During 2018 [Member] | |||
Shares issued common shares | 3,708,000 | ||
Underwriting Agreement [Member] | |||
Warrant, purchase price per share | $ 5.50 | ||
Number of units to purchase | 2,400,000 | ||
Warrant Exercised | 2,760,000 | ||
Common stock purchase | 360,000 | ||
Warrant to Purchase | $ 360,000 | ||
Over allotment option granted to underwriters | 3,600 | ||
Fair value of warrant | 360,000 | ||
Net proceed from sales of common stock and warrants | $ 10,696,575 |
LONGTERM DEBT (Details)
LONGTERM DEBT (Details) - USD ($) | Jan. 02, 2022 | Jan. 03, 2021 |
Notes payable to bank | $ 3,049,971 | $ 3,238,494 |
Less - unamortized debt issuance costs | (46,999) | (54,205) |
Current maturities | (169,908) | (245,306) |
Total | 2,833,064 | 2,938,983 |
Long Term Debt [Member] | ||
Total | 0 | 2,884,650 |
Long Term Debt [Member] | April 29, 2020 [Member] | ||
Total | 22,000 | 27,500 |
Long Term Debt [Member] | December, 2021 [Member] | ||
Total | 0 | 141,125 |
Long Term Debt [Member] | April, 2021 [Member] | ||
Total | 0 | 185,219 |
Long Term Debt [Member] | Juner 28, 2021 [Member] | Shareholders [Member] | ||
Unsecured notes payable | $ 3,027,971 | $ 0 |
LONGTERM DEBT (Details 1)
LONGTERM DEBT (Details 1) | Jan. 02, 2022USD ($) |
LONG-TERM DEBT (Tables) | |
1/1/2023 | $ 169,908 |
12/31/2023 | 175,703 |
12/29/2024 | 181,597 |
12/28/2025 | 187,910 |
1/2/2027 | 188,840 |
Thereafter | 2,146,013 |
Total | $ 3,049,971 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Mar. 02, 2020 | Jan. 02, 2022 | Feb. 22, 2022 | Dec. 29, 2019 |
Investments | $ 229,000 | |||
Warrants purchase | 57,250 | |||
Cumulative preferred shares | 8.00% | |||
Exercise Price | $ 3.30 | $ 1.65 | ||
Next Gen Ice, Inc. [Member] | ||||
Debt instrument, principal amount | $ 179,000 | |||
Next Gen Ice, Inc. [Member] | Loan Modification and Extension Agreement [Member] | ||||
Exercise Price | $ 1 | |||
Ownership percentage | 34.00% | |||
Issuance of warrants | 358,000 | |||
Common stock warrants received | $ 75,000 | |||
Class of Warrant or Right, Date from which Warrants or Rights Exercisable | Mar. 23, 2023 | |||
Transfer of shares | 179,000 |
MAJOR VENDOR (Details Narrative
MAJOR VENDOR (Details Narrative) - Vendor One [Member] - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Concentration of credit risk | 75.00% | 83.00% |
Due to related party | $ 229,046 | $ 171,545 |
LAND LEASE (Details Narrative)
LAND LEASE (Details Narrative) - USD ($) | 12 Months Ended | |
Jan. 02, 2022 | Jan. 03, 2021 | |
Book value of building | $ 1,592,338 | $ 1,632,457 |
Land Lease [Member] | ||
Book value of building | 19,200 | |
Monthly lease payment | $ 1,600 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | Mar. 02, 2022 | Feb. 22, 2022 | Jan. 02, 2022 | Jan. 03, 2021 | Dec. 29, 2019 | Dec. 31, 2018 |
Cash | $ 12,385,632 | $ 1,321,244 | $ 258,101 | $ 663,511 | ||
Keegan's Seafood Grille [Member] | ||||||
Interest rate | 3.00% | |||||
Cash | $ 1,150,000 | |||||
Initial rent per month | $ 5,000 | |||||
Assets useful life | 35 years | |||||
Description of lease acquisition | 132-month triple-net lease for the property occupied |