Cover
Cover - shares | 6 Months Ended | |
Jul. 03, 2022 | Aug. 10, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | BT BRANDS, INC. | |
Entity Central Index Key | 0001718224 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-03 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Jul. 03, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 6,461,118 | |
Entity File Number | 333-233233 | |
Entity Incorporation State Country Code | WY | |
Entity Tax Identification Number | 91-1495764 | |
Entity Interactive Data Current | Yes | |
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 | |
City Area Code | 307 | |
Security 12b Title | Common Stock, $0.002 per share | |
Trading Symbol | BTBD | |
Security Exchange Name | NASDAQ | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Local Phone Number | 223-1663 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jul. 03, 2022 | Jan. 02, 2022 |
CURRENT ASSETS | ||
Cash | $ 8,295,952 | $ 12,385,632 |
Marketable securities | 527,750 | 0 |
Receivables | 36,068 | 72,251 |
Inventory | 146,892 | 79,510 |
Prepaid expenses and other current assets | 53,460 | 27,186 |
Total current assets | 9,060,122 | 12,564,579 |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | 2,977,153 | 1,592,338 |
OPERATING LEASES RIGHT-OF-USE ASSETS | 1,146,167 | 0 |
INVESTMENTS | 1,549,828 | 75,000 |
GOODWILL | 488,431 | 0 |
INTANGIBLE ASSETS | 425,000 | 0 |
OTHER ASSETS, net | 285,285 | 273,810 |
Total assets | 15,931,986 | 14,505,727 |
CURRENT LIABILITIES | ||
Accounts payable | 498,257 | 291,973 |
Current maturities of long-term debt | 171,358 | 169,908 |
Current operating lease obligations | 134,188 | 0 |
Accrued expenses | 575,790 | 254,341 |
Income taxes payable | 8,000 | 209,088 |
Total current liabilities | 1,387,593 | 925,310 |
LONG-TERM DEBT, LESS CURRENT PORTION | 2,750,279 | 2,833,064 |
NONCURRENT LEASE OBLIGATIONS | 1,015,610 | 0 |
DEFERRED INCOME TAXES | 51,510 | 119,000 |
Total liabilities | 5,204,992 | 3,877,374 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at July 3, 2022 and January 2, 2022 | 0 | 0 |
Common stock, $.002 par value, 50,000,000 authorized, 6,461,118 and 6,447,506 shares issued and outstanding at July 3, 2022 and January 2, 2022, respectively | 12,922 | 12,895 |
Additional paid-in capital | 11,363,935 | 11,215,696 |
Accumulated deficit | (649,863) | (600,238) |
Total shareholders' equity | 10,726,994 | 10,628,353 |
Total liabilities and shareholders' equity | $ 15,931,986 | $ 14,505,727 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 03, 2022 | Jan. 02, 2022 |
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 |
Common stock, shares par value | $ 0.002 | $ 0.002 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares Issued | 6,461,118 | 6,447,506 |
Common stock, shares outstanding | 6,461,118 | 6,447,506 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||
SALES | $ 3,524,881 | $ 2,382,683 | $ 5,598,076 | $ 4,323,555 |
Restaurant operating expenses | ||||
Food and paper costs | 1,311,373 | 908,760 | 1,786,828 | 1,636,053 |
Labor costs | 1,179,118 | 621,227 | 435,920 | 1,186,719 |
Occupancy costs | 261,282 | 167,106 | 332,181 | 303,654 |
Other operating expenses | 212,314 | 128,872 | 178,701 | 252,081 |
Depreciation and amortization expenses | 109,286 | 58,558 | 178,701 | 113,394 |
General and administrative expenses | 455,656 | 110,983 | 746,717 | 220,982 |
Total costs and expenses | 3,529,029 | 1,995,506 | 5,513,303 | 3,712,883 |
Income from operations | (4,148) | 387,177 | 84,773 | 610,672 |
UNREALIZED LOSS ON MARKETABLE SECURITIES | (80,238) | 0 | (80,238) | 0 |
INTEREST AND OTHER INCOME | 9,473 | 0 | 9,473 | 0 |
INTEREST EXPENSE | (26,190) | (89,661) | (54,461) | (128,232) |
EQUITY IN NET LOSS OF AFFILIATE | (14,172) | 0 | (14,172) | 0 |
INCOME (LOSS) BEFORE TAXES | (115,275) | 297,516 | (54,625) | 482,440 |
INCOME TAX (EXPENSE) BENEFIT | 23,000 | (85,000) | 5,000 | (135,000) |
NET INCOME (LOSS) | $ (92,275) | $ 212,516 | $ (49,625) | $ 347,440 |
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted | $ (0.01) | $ 0.05 | $ (0.01) | $ 0.09 |
WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted | 6,461,118 | 4,047,502 | 6,458,276 | 4,047,502 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jul. 03, 2022 | Jul. 04, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income (Losses) | $ (49,625) | $ 347,440 |
Adjustments to reconcile net income to net cash provided by operating activities- | ||
Depreciation and amortization | 178,701 | 113,394 |
Amortization of debt issuance premium included in interest expense | 2,700 | 54,205 |
Deferred taxes | (67,490) | 28,000 |
Stock-based compensation | 73,400 | 0 |
Unrealized loss on marketable securities | 80,238 | 0 |
Loss on equity method investment | 14,172 | 0 |
Changes in operating assets and liabilities, net of acquisitions - | ||
Receivables | 36,183 | (12,721) |
Inventory | (33,833) | (9,913) |
Prepaid expenses and other current assets | (26,274) | (5,888) |
Accounts payable | 206,284 | 127,814 |
Accrued expenses | 284,700 | (161,074) |
Income taxes payable | (201,088) | 14,994 |
Net cash provided by operating activities | 498,068 | 496,251 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of net assets of Keegan's Seafood Grille | (1,150,000) | 0 |
Acquisition of net assets of Pie In The Sky Coffee and Bakery | (1,159,600) | 0 |
Investment in Bagger Dave's Burger Tavern, Inc. | (1,260,000) | 0 |
Purchase of property and equipment | (159,491) | (67,003) |
Investment in related company | (229,000) | 0 |
Purchase of marketable securities | (607,988) | 0 |
Other assets | (12,500) | 0 |
Net cash used in investing activities | (4,578,579) | (67,003) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from long-term debt | 0 | 3,107,100 |
Principal payment on long-term debt | (84,035) | (3,077,784) |
Proceeds from exercise of common stock warrants | 74,866 | 0 |
Payment of debt issuance costs | 0 | (49,699) |
Payment of deferred offering costs | 0 | (9,192) |
Net cash used in financing activities | (9,169) | (29,575) |
CHANGE IN CASH | (4,089,680) | 399,673 |
CASH, BEGINNING OF PERIOD | 12,385,632 | 1,321,244 |
CASH, END OF PERIOD | 8,295,952 | 1,720,917 |
SUPPLEMENTAL DISCLOSURES | ||
Cash paid for interest | 51,761 | 68,700 |
Cash paid for income taxes | $ 209,088 | $ 92,006 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated (Deficit) |
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 (loss) | 347,440 | $ 0 | 0 | 347,440 |
Stock-based compensation | 0 | |||
Balance, shares at Jul. 04, 2021 | 4,047,502 | |||
Balance, amount at Jul. 04, 2021 | (354,883) | $ 8,095 | 497,671 | (860,649) |
Balance, shares at Apr. 04, 2021 | 4,047,502 | |||
Balance, amount at Apr. 04, 2021 | (567,399) | $ 8,095 | 497,671 | (1,073,165) |
Net income (loss) | 212,516 | $ 0 | 0 | 212,516 |
Balance, shares at Jul. 04, 2021 | 4,047,502 | |||
Balance, amount at Jul. 04, 2021 | (354,883) | $ 8,095 | 497,671 | (860,649) |
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) |
Net income (loss) | (49,625) | 0 | 0 | (49,625) |
Stock-based compensation | 73,400 | $ 0 | 73,400 | 0 |
Shares issued in exercise of warrants, shares | 13,612 | |||
Shares issued in exercise of warrants, amount | 74,866 | $ 27 | 74,839 | 0 |
Balance, shares at Jul. 03, 2022 | 6,461,118 | |||
Balance, amount at Jul. 03, 2022 | 10,726,994 | $ 12,922 | 11,363,935 | (649,863) |
Balance, shares at Apr. 03, 2022 | 6,461,118 | |||
Balance, amount at Apr. 03, 2022 | 10,779,369 | $ 12,922 | 11,324,035 | (557,588) |
Net income (loss) | (92,275) | 0 | 0 | (92,275) |
Stock-based compensation | 39,900 | $ 0 | 39,900 | 0 |
Balance, shares at Jul. 03, 2022 | 6,461,118 | |||
Balance, amount at Jul. 03, 2022 | $ 10,726,994 | $ 12,922 | $ 11,363,935 | $ (649,863) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jul. 03, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NOTE 1 - 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,” “BT Brands,” or “BT”) and have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) requirements for Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ended January 2, 2022. 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 July 3, 2022, 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 January 2, 2022, and the related notes included in our Form 10-K for the fiscal year ended January 2, 2022. 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. was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of BTND, LLC. Business As of July 3, 2022, BT Brands owned and operated twelve restaurants, including nine Burger Time restaurants in the North Central region of the United States, a Dairy Queen fast-food franchised location in suburban Minneapolis, Minnesota, collectively (“BTND”). We own Keegan’s Seafood Grille (“Keegan’s”), a dine-in restaurant located in Florida, and Pie In The Sky Coffee and Bakery (“PIE”), a casual dining coffee shop and bakery located in Woods Hole, Massachusetts. Our Burger Time restaurants feature a variety of burgers and other affordable foods, sides, and soft drinks. Our Dairy Queen restaurant offers the franchisor proscribed menu consisting of burgers, chicken, sides, ice cream, other desserts, and various beverages. Keegan’s Seafood Grille has operated in Indian Rocks Beach, Florida, for more than thirty-five years and offers a variety of traditional fresh seafood items for lunch and dinner. The menu at Keegan’s includes beer and wine. PIE features an array of fresh baked goods, freshly made sandwiches, and our locally roasted coffee. Our revenues are derived from food and beverages at our restaurants; retail goods such as apparel, private-labeled “Keegan’s Hot Sauce,” and other souvenir items account for an insignificant portion of our income. On June 2, 2022, BT Brands completed the purchase of 11,095,085 common shares representing 41.2% of Bagger Dave’s Burger Tavern, Inc. (“Bagger Dave’s”). We acquired the shares from the Bagger Dave’s founder for $1,260,000, or approximately $0.114 per share. Following the investment, representatives of BT Brands were appointed to two of the three positions on Bagger Dave’s Board of Directors. Bagger Dave’s specializes in locally sourced, never-frozen prime rib recipe burgers, all-natural lean turkey burgers, hand-cut fries, locally crafted beers on draft, milkshakes, salads, black bean turkey chili, and pizza. The first Bagger Dave’s opened in January 2008 in Berkley, Michigan. There are currently six Bagger Dave’s restaurants, including four in Michigan and single units in Ft. Wayne, Indiana, and Centerville, Ohio. Our Dairy Queen location is operated under a franchise agreement with International Dairy Queen. We pay royalty and advertising payments to the franchisor as required by the franchise agreement. Fiscal Year Period BT Brand’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 a 52-week year. Fiscal 2022 is 52 weeks ending January 1, 2023, and fiscal 2021 was a 52-weeks ending January 2, 2022. Cash At times, our bank deposits exceed the amount insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash deposits in brokerage accounts, including money market funds above the insured amount. We do not believe there is a significant risk related to cash. Investment Our 41.2% ownership of Bagger Dave’s is accounted for using the “equity method” of accounting. Under the equity method, our share of the net income (loss) is recognized as income (loss) in our condensed consolidated statements of income and added to (subtracted from) the investment account. Dividends received, if any, are deducted from the investment. See Note 9 for information regarding our related party investment. Fair Value of Financial Instruments Our accounting for fair value measurements of assets and liabilities, including available-for-sale securities, is that they 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 prioritizes 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 the fair value hierarchy are as follows : · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at 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 entire 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 due to the short maturity nature of these instruments. Investments in marketable equity securities are carried at fair value. On July 3, 2022, marketable securities consisted of Nasdaq-listed equity securities with a historical cost of $607,988. These investments are reflected in the accompanying financial statements on July 3, 2022, at the level-one fair value quoted in an active market of $527,750. Receivables Receivables consist of rebates due from a primary vendor. Inventory Inventory consists of food, beverages, and supplies and is stated at a 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. We review long-lived assets to determine if the carrying value of these assets is recoverable based on estimated cash flows. Assets are evaluated at the lowest level for which cash flows can be identified at the restaurant level. In determining future cash flows, estimates are made by us for the future operating results of each restaurant. 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. Goodwill Goodwill is the excess of the purchase price over the estimated fair value of acquired business assets. In accordance with GAAP, Goodwill is not amortized. We periodically assess goodwill for impairment and have determined there is no impairment of Goodwill at July 3, 2022. Intangible Assets Intangible assets with estimated finite lives result from business acquisitions and include allocated cost of trademarks, tradenames, a covenant not to compete, websites, and social media accounts. The costs of purchased intangible assets are recorded at the estimated value and are amortized over 4 to 20 years. Assets Held for Sale Income Taxes The Company provides for income taxes under Accounting Standards Codification (ASC), 740, Accounting for Income Taxes. ASC 740 uses an asset and liability approach in accounting for income taxes. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. If necessary, we provide a valuation allowance 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. As of July 3, 2022, we estimated a current tax provision at the net combined federal and state rate of approximately 27.5%. The Company has no accrued interest or penalties relating to income tax obligations. There currently are no federal or state examinations in progress. The Company has not had any federal or state tax examinations since its inception. All periods since inception remain open for inspection. Per Common Share Amounts Net income per common 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 or loss per share is calculated 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 per share amounts if their effect is anti-dilutive. There were no dilutive shares for the periods ending in 2022 and 2021. |
ACQUISITION
ACQUISITION | 6 Months Ended |
Jul. 03, 2022 | |
ACQUISITION | |
NOTE 2 - ACQUISITION | NOTE 2 – ACQUISITIONS Restaurant Acquisition - Keegan’s On March 2, 2022, BT Brands, through its 1519BT, LLC subsidiary (“1519BT “), purchased the net assets of Keegan’s, a fresh seafood restaurant located in Indian Rocks Springs, Florida. Concurrent with the purchase, we entered a 131-month lease for the approximately 2800 square foot space that Keegan’s has occupied for more than 35 years. We acquired Keegan’s tradename as part of the purchase and will continue to operate the business as Keegan’s Seafood Grille. The purchase price was approximately $1.15 million, paid in cash at closing. The Keegan’s acquisition was accounted for using the acquisition method of accounting following ASC 805 “Business Combinations.” Accordingly, the consolidated statements of operations include the results of these operations from the date of acquisition. The assets acquired were recorded at their estimated fair values. The Company recorded provisional amounts and will complete the acquisition accounting once it finalizes its valuation analysis. As a result of the Keegan’s acquisition, we provisionally recorded $200,000 in goodwill, representing the excess of fair value over the purchase price of the identifiable assets; the allocation to purchased goodwill is expected to be deductible for income tax purposes over fifteen years. The following table presents the preliminary estimate of the fair value of the assets acquired, and liabilities assumed in the Keegan’s transaction: Assets acquired: Inventory $ 10,049 Equipment 428,000 Leasehold improvements 450,000 Trademark, website, and other intangibles 75,000 Total identifiable assets 963,049 Assumed current liabilities (17,260 ) Net assets acquired 945,789 Goodwill 204,211 Purchase price $ 1,150,000 Restaurant Acquisition – Pie In the Sky Coffee and Bakery On May 11, 2022, our 10Water Street, LLC subsidiary (“10Water”) purchased the net assets of PIE, a bakery and coffee shop located in Woods Hole, Massachusetts. Concurrent with the purchase, we entered into a 60-month lease, including three additional five-year renewal options. The lease covers the approximately 3,500 square feet PIE has operated in for more than 20 years. We acquired the Pie in the Sky tradename and the piecoffee.com website URL as part of the purchase and will continue to operate as Pie in the Sky. The purchase price was approximately $1.16 million, including $1.15 million in cash paid at closing. The acquisition of PIE was accounted for following ASC 805 “Business Combinations.” Accordingly, the consolidated statements of operations include the results of these operations from the date of acquisition. The assets acquired were recorded at their estimated fair values based on information available as of the closing date. We recorded provisional amounts as of the purchase date and will complete the acquisition accounting once we finalize the valuation analysis. As a result of the PIE acquisition, we provisionally recorded $270,100 in goodwill, representing the excess of fair value over the purchase price of the identifiable assets, which is expected to be deductible for income tax purposes over fifteen years. The following table presents our preliminary estimate of the fair value of the assets acquired and liabilities assumed in the PIE transaction is: Assets acquired: Inventory $ 23,500 Equipment 400,000 Furniture and fixtures 125,000 Trademark, website, and other intangibles 50,000 Non-compete agreement 300,000 Total assets acquired 898,500 Assumed current liabilities (23,120 ) Net assets acquired 875,380 Goodwill 284,220 Purchase price $ 1,159,600 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 6 Months Ended |
Jul. 03, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 3 – INTANGIBLE ASSETS At July 3, 2022, based upon our preliminary evaluation of the value of acquired assets, Intangible Assets are the following: Estimated Useful Life (Years) Amount Covenant not to compete 4 $ 300,000 Trademarks, tradenames, websites and social media accounts 20 125,000 $ 425,000 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jul. 03, 2022 | |
PROPERTY AND EQUIPMENT | |
NOTE 3 - PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: July 3, 2022 January 2, 2022 Land $ 485,239 $ 485,239 Equipment 3,417,413 2,674,529 Buildings and leasehold improvements 1,998,516 1,322,085 Total property and equipment 5,901,168 4,481,853 Accumulated depreciation (2,680,610 ) (2,630,764 ) Less - property held for sale (258,751 ) (258,751 ) Net property and equipment $ 2,961,807 $ 1,592,338 Depreciation expense for the 26-week periods in 2022 and 2021 was $177,676 and $113,394, respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 6 Months Ended |
Jul. 03, 2022 | |
ACCRUED EXPENSES | |
NOTE 4 - ACCRUED EXPENSES | NOTE 5 - ACCRUED EXPENSES Accrued expenses consisted of the following at: July 3, 2022 January 2, 2022 Accrued real estate taxes $ 88,800 $ 103,615 Accrued bonus compensation 59,139 7,000 Accrued payroll 228,127 44,700 Accrued payroll taxes 13,398 8,424 Accrued sales taxes payable 118,468 50,414 Accrued vacation pay 17,664 17,663 Accrued gift card liability 29,295 10,036 Accrued franchise royalty 6,494 2,614 Other accrued expenses 14,405 9,875 $ 575,790 $ 254,341 |
LONG TERM DEBT
LONG TERM DEBT | 6 Months Ended |
Jul. 03, 2022 | |
LONG TERM DEBT | |
NOTE 5 - LONG TERM DEBT | NOTE 6 - LONG TERM DEBT Our long-term debt is as follows: |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jul. 03, 2022 | |
STOCK-BASED COMPENSATION | |
NOTE 6 -STOCK-BASED COMPENSATION | NOTE 7 - STOCK-BASED COMPENSATION In 2019, the Company adopted the 2019 BT Brands Incentive Plan (the “2019 Incentive Plan”), under which it may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units, and other stock and cash awards to eligible participants. The number of common shares reserved for issuance is 250,000. As of July 3, 2022, there were 13,400 shares available for a grant under the 2019 Incentive Plan. During the year ended January 2, 2022, we issued options to purchase 15,000 shares of common stock under the “2019 Incentive Plan as stock awards to three directors of the Company in connection with their joining the board of directors. The options are exercisable at $5 per share through 2031. In the first half of 2022, we granted 220,750 options to employees and consultants to purchase shares at $2.50 per share. Stock options granted to employees and directors vest over two to five years, in monthly or annual installments, as outlined in each agreement. Options expire ten years from the date of grant. Compensation expense equal to the fair value of the options at the grant date is recognized in general and administrative expense over the applicable service period. Compensation expense for the 26 weeks in 2022 was $73,400 and was zero in a similar period in 2021. Based on current estimates, we project that for current grants, approximately $230,000 in stock-based compensation expense will be recognized in future periods. We utilize the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions: · Stock price – Published trading market values of the Company’s common stock as of grant date. · Exercise price – The stated exercise price of the stock option. · Expected life – The simplified method · Expected dividend – The rate of dividends expected to be paid over the term of the stock option. · Volatility – Estimated volatility. · Risk-free interest rate – The daily United States Treasury yield curve rate corresponding to the expected life of the award. Information regarding our stock options is summarized below: Number of Weighted Average Weighted Average Remaining Term Aggregate Intrinsic Options Exercise Price (In Years) Value Options outstanding at January 2, 2022 15,000 $ 5.00 9.3 $ 0 Granted 220,750 2.50 $ 0 Exercised 0 0 $ 0 Canceled, forfeited, or expired (8,200 ) 2.50 $ 0 Options outstanding at July 3, 2022 227,550 $ 2.67 9.8 $ 0 Options exercisable at July 3, 2022 59,150 $ 3.18 9.7 $ 0 The Black-Scholes option-pricing model was used to estimate the fair value of the stock options with the following weighted-average assumptions for grants during the period ended July 3, 2022: Fair value of options granted during the period $ 1.39 Expected life (in years) 4.83 Expected dividend $ - Expected stock volatility 63 % Risk-free interest rate 2 % On February 9, 2022, the independent members of the Board of Directors comprising its Compensation Committee approved a proposal wherein, so long as the Company’s publicly traded warrants are outstanding, senior management of the Company will be granted 250,000 shares of common stock as an award upon the Company’s share price reaching $8.50 per share for 20 consecutive trading days. Final approval of the proposal is contingent upon shareholder approval of an increase in the number of shares available under the 2019 Incentive Plan, which is expected to be proposed at the next meeting of shareholders. |
LEASES
LEASES | 6 Months Ended |
Jul. 03, 2022 | |
LEASES | |
NOTE 7 - LEASES | NOTE 8 – LEASES Concurrent with the closing of the acquisition of Keegan’s net assets, we entered into a lease for approximately 2,800 square feet of restaurant space. The 131-month Keegan’s lease provides for an initial rent of $5,000 per month with an annual escalation equal to the greater of 3% or the Consumer Price Index. The lease is being accounted for as an operating lease. At the inception of the lease, we recorded an operating lease obligation and a right-of-use asset of $624,000. The present value discounted at 4% of the remaining lease obligation of $607,220 is reflected as a liability in the accompanying financial statements. Keegan’s lease does not provide an implicit interest rate; we used our incremental borrowing rate of 4% to determine the present value. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the lease term. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales tax. Concurrent with the acquisition of PIE assets, we entered into a lease for approximately 3,500 square feet of restaurant and bakery production space. The terms of the 60-month lease provide for an initial rent of $10,000 per month with an annual escalation after 24 months of 3%. The PIE lease includes three five-year renewal option periods. The PIE lease is accounted for as an operating lease. At the inception of the lease, we recorded an operating lease obligation and a right-of-use asset of $554,849. The present value discounted at 5% of the remaining lease obligation of $542,578 is reflected as a liability in the accompanying financial statements. The weighted-average remaining lease term is approximately 6.9 years. The PIE lease did not provide an implicit interest rate; we used our estimated incremental borrowing rate of 5% to determine the present value of future lease payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the lease term. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales tax. Following is a schedule of the approximate minimum future lease payments on the operating leases as of July 3, 2022: Total Remainder 2022 $ 90,000 2023 181,350 2024 185,990 2025 190,600 2026 196,000 2027 and thereafter 495,054 Total future minimum lease payments 1,338,994 Less - interest (189,196 ) $ 1,149,798 The Company is a party to a month-to-month land lease agreement for one of its Burger Time locations. The net book value of the building on this land is approximately $18,500. The monthly lease payment is $1,600 plus the cost of property taxes. The Company also pays a monthly rent, for month-to-month arrangements, for corporate and administrative office spaces in West Fargo, North Dakota, and Minnetonka, Minnesota, for a combined monthly rent of approximately $2,200. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jul. 03, 2022 | |
RELATED PARTY TRANSACTIONS | |
NOTE 8 - RELATED PARTY TRANSACTIONS | NOTE 9 - RELATED PARTY TRANSACTION Next Gen Ice In 2019, BT Brands made cash advances to Next Gen Ice, Inc. (NGI) in the form of Series C Notes totaling a principal amount of $179,000 (“Notes”). Our CEO, Gary Copperud, is Chairman of the Board of Directors of NGI. Our Chief Operating Officer, Kenneth Brimmer, is also a member of the Board of Directors of NGI and serves as Chief Financial Officer of NGI. When the loan was made, Mr. Copperud and an entity controlled by him together owned approximately 34% of the outstanding equity of NGI. As part of a Note modification, BT Brands received 179,000 shares of common stock in NGI from the founders of NGI, representing approximately 2% of NGI shares outstanding. BT Brands also holds warrants expiring March 31, 2028, to purchase 358,000 shares of common stock for $1.00 per share. The common stock and warrants were recorded at a value determined by BT Brands of $75,000. The investment in NGI does not have a readily determinable market value. Therefore, it is carried at a cost determined by BT Brands. On February 2, 2022, BT Brands invested $229,000 in NGI Series A1 8% Cumulative Convertible Preferred Stock, which included a five-year warrant to purchase 57,250 shares at $1.65 per share. The total value of our investment in NGI at July 3, 2022, is its fair value of $304,000, comprised of the $75,000 value determined by BT Brands for the initial common shares and warrants and the $229,000 cost of the investment in the NGI Convertible Preferred Stock and warrants. |
CONTINGENCIES
CONTINGENCIES | 6 Months Ended |
Jul. 03, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
NOTE 9 - CONTINGENCIES | NOTE 10 – 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. We are not aware of any significant asserted or potential claims that could impact our financial position. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 6 Months Ended |
Jul. 03, 2022 | |
SUBSEQUENT EVENT | |
NOTE 10 - SUBSEQUENT EVENT | NOTE 11 – SUBSEQUENT EVENT Acquisition of Village Bier Garten Restaurant On August 4, 2022, BT Brands, through our 1519BT, LLC subsidiary, completed the purchase of the assets and the business operating as Van Stephan Village Bier Garten, a full-service bar and restaurant in Cocoa, Florida. The restaurant features a German-themed menu, specialty imported European beers, and regular entertainment. The purchase price was $6,900,000, paid in cash at closing. Concurrent with the purchase, we entered into a five-year lease with three five-year renewal options for the property currently occupied by the business. The terms of the triple net lease call for an initial monthly rent of $8,200. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jul. 03, 2022 | |
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,” “BT Brands,” or “BT”) and have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) requirements for Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ended January 2, 2022. 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 July 3, 2022, 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 January 2, 2022, and the related notes included in our Form 10-K for the fiscal year ended January 2, 2022. |
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. was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of BTND, LLC. |
Business | As of July 3, 2022, BT Brands owned and operated twelve restaurants, including nine Burger Time restaurants in the North Central region of the United States, a Dairy Queen fast-food franchised location in suburban Minneapolis, Minnesota, collectively (“BTND”). We own Keegan’s Seafood Grille (“Keegan’s”), a dine-in restaurant located in Florida, and Pie In The Sky Coffee and Bakery (“PIE”), a casual dining coffee shop and bakery located in Woods Hole, Massachusetts. Our Burger Time restaurants feature a variety of burgers and other affordable foods, sides, and soft drinks. Our Dairy Queen restaurant offers the franchisor proscribed menu consisting of burgers, chicken, sides, ice cream, other desserts, and various beverages. Keegan’s Seafood Grille has operated in Indian Rocks Beach, Florida, for more than thirty-five years and offers a variety of traditional fresh seafood items for lunch and dinner. The menu at Keegan’s includes beer and wine. PIE features an array of fresh baked goods, freshly made sandwiches, and our locally roasted coffee. Our revenues are derived from food and beverages at our restaurants; retail goods such as apparel, private-labeled “Keegan’s Hot Sauce,” and other souvenir items account for an insignificant portion of our income. On June 2, 2022, BT Brands completed the purchase of 11,095,085 common shares representing 41.2% of Bagger Dave’s Burger Tavern, Inc. (“Bagger Dave’s”). We acquired the shares from the Bagger Dave’s founder for $1,260,000, or approximately $0.114 per share. Following the investment, representatives of BT Brands were appointed to two of the three positions on Bagger Dave’s Board of Directors. Bagger Dave’s specializes in locally sourced, never-frozen prime rib recipe burgers, all-natural lean turkey burgers, hand-cut fries, locally crafted beers on draft, milkshakes, salads, black bean turkey chili, and pizza. The first Bagger Dave’s opened in January 2008 in Berkley, Michigan. There are currently six Bagger Dave’s restaurants, including four in Michigan and single units in Ft. Wayne, Indiana, and Centerville, Ohio. Our Dairy Queen location is operated under a franchise agreement with International Dairy Queen. We pay royalty and advertising payments to the franchisor as required by the franchise agreement. |
Fiscal Year Period | BT Brand’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 a 52-week year. Fiscal 2022 is 52 weeks ending January 1, 2023, and fiscal 2021 was a 52-weeks ending January 2, 2022. |
Cash | At times, our bank deposits exceed the amount insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash deposits in brokerage accounts, including money market funds above the insured amount. We do not believe there is a significant risk related to cash. |
Investment | Our 41.2% ownership of Bagger Dave’s is accounted for using the “equity method” of accounting. Under the equity method, our share of the net income (loss) is recognized as income (loss) in our condensed consolidated statements of income and added to (subtracted from) the investment account. Dividends received, if any, are deducted from the investment. See Note 9 for information regarding our related party investment. |
Fair Value of Financial Instruments | Our accounting for fair value measurements of assets and liabilities, including available-for-sale securities, is that they 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 prioritizes 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 the fair value hierarchy are as follows : · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at 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 entire 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 due to the short maturity nature of these instruments. Investments in marketable equity securities are carried at fair value. On July 3, 2022, marketable securities consisted of Nasdaq-listed equity securities with a historical cost of $607,988. These investments are reflected in the accompanying financial statements on July 3, 2022, at the level-one fair value quoted in an active market of $527,750. |
Receivables | Receivables consist of rebates due from a primary vendor. |
Inventory | Inventory consists of food, beverages, and supplies and is stated at a 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. We review long-lived assets to determine if the carrying value of these assets is recoverable based on estimated cash flows. Assets are evaluated at the lowest level for which cash flows can be identified at the restaurant level. In determining future cash flows, estimates are made by us for the future operating results of each restaurant. 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. |
Goodwill | Goodwill is the excess of the purchase price over the estimated fair value of acquired business assets. In accordance with GAAP, Goodwill is not amortized. We periodically assess goodwill for impairment and have determined there is no impairment of Goodwill at July 3, 2022. |
Intangible Assets | Intangible assets with estimated finite lives result from business acquisitions and include allocated cost of trademarks, tradenames, a covenant not to compete, websites, and social media accounts. The costs of purchased intangible assets are recorded at the estimated value and are amortized over 4 to 20 years. |
Assets Held for Sale | As of July 3, 2022, a property in the St. Louis area, which has a carrying value of $0, and a property in Richmond, Indiana, are held for sale. We believe the Richmond property will be sold at or above its current-carrying cost. The remaining book value of $258,751 is included in Other Assets in the accompanying balance sheet. |
Income Taxes | The Company provides for income taxes under Accounting Standards Codification (ASC), 740, Accounting for Income Taxes. ASC 740 uses an asset and liability approach in accounting for income taxes. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. If necessary, we provide a valuation allowance 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. As of July 3, 2022, we estimated a current tax provision at the net combined federal and state rate of approximately 27.5%. The Company has no accrued interest or penalties relating to income tax obligations. There currently are no federal or state examinations in progress. The Company has not had any federal or state tax examinations since its inception. All periods since inception remain open for inspection. |
Per Common Share Amounts | Net income per common 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 or loss per share is calculated 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 per share amounts if their effect is anti-dilutive. There were no dilutive shares for the periods ending in 2022 and 2021. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
ACQUISITION (Tables) | |
Fair Value Of the Assets & Liabilities | Assets acquired: Inventory $ 10,049 Equipment 428,000 Leasehold improvements 450,000 Trademark, website, and other intangibles 75,000 Total identifiable assets 963,049 Assumed current liabilities (17,260 ) Net assets acquired 945,789 Goodwill 204,211 Purchase price $ 1,150,000 |
Estimate of the fair value of the assets acquired and liabilities assumed | Assets acquired: Inventory $ 23,500 Equipment 400,000 Furniture and fixtures 125,000 Trademark, website, and other intangibles 50,000 Non-compete agreement 300,000 Total assets acquired 898,500 Assumed current liabilities (23,120 ) Net assets acquired 875,380 Goodwill 284,220 Purchase price $ 1,159,600 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
INTANGIBLE ASSETS | |
Schedule of property and equipment | July 3, 2022 January 2, 2022 Land $ 485,239 $ 485,239 Equipment 3,417,413 2,674,529 Buildings and leasehold improvements 1,998,516 1,322,085 Total property and equipment 5,901,168 4,481,853 Accumulated depreciation (2,680,610 ) (2,630,764 ) Less - property held for sale (258,751 ) (258,751 ) Net property and equipment $ 2,961,807 $ 1,592,338 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | July 3, 2022 January 2, 2022 Accrued real estate taxes $ 88,800 $ 103,615 Accrued bonus compensation 59,139 7,000 Accrued payroll 228,127 44,700 Accrued payroll taxes 13,398 8,424 Accrued sales taxes payable 118,468 50,414 Accrued vacation pay 17,664 17,663 Accrued gift card liability 29,295 10,036 Accrued franchise royalty 6,494 2,614 Other accrued expenses 14,405 9,875 $ 575,790 $ 254,341 |
LONG TERM DEBT (Tables)
LONG TERM DEBT (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
LONG TERM DEBT | |
Schedule of maturities of long-term debt | July 3, 2022 January 2, 2022 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 ten BTND operating locations. The notes are guaranteed by BT Brands, Inc. and a shareholder of the Company. $ 2,946,685 $ 3,027,971 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. 19,250 22,000 2,965,935 3,049,971 Less - unamortized debt issuance costs (44,298 ) (46,999 ) Current maturities (171,358 ) (169,908 ) $ 2,750,279 $ 2,833,064 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
STOCK-BASED COMPENSATION (Tables) | |
Company's stock options | Number of Weighted Average Weighted Average Remaining Term Aggregate Intrinsic Options Exercise Price (In Years) Value Options outstanding at January 2, 2022 15,000 $ 5.00 9.3 $ 0 Granted 220,750 2.50 $ 0 Exercised 0 0 $ 0 Canceled, forfeited, or expired (8,200 ) 2.50 $ 0 Options outstanding at July 3, 2022 227,550 $ 2.67 9.8 $ 0 Options exercisable at July 3, 2022 59,150 $ 3.18 9.7 $ 0 |
Estimate the fair value of the stock options | Fair value of options granted during the period $ 1.39 Expected life (in years) 4.83 Expected dividend $ - Expected stock volatility 63 % Risk-free interest rate 2 % |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
LEASES | |
Schedule of future minimum operating lease | Total Remainder 2022 $ 90,000 2023 181,350 2024 185,990 2025 190,600 2026 196,000 2027 and thereafter 495,054 Total future minimum lease payments 1,338,994 Less - interest (189,196 ) $ 1,149,798 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 6 Months Ended |
Jul. 03, 2022 USD ($) $ / shares shares | |
Fair value | $ 527,750 |
Remaining book value of assets | 258,751 |
Cost | 607,988 |
Carrying value Of property | $ 0 |
Ownership percentage | 41.20% |
Common shares | shares | 11,095,085 |
Acquired amount | $ 1,260,000 |
Common excercise price | $ / shares | $ 0.114 |
Business Acquisition, Percentage of Voting Interests granted As consideration to related party | 27.50% |
Maximum [Member] | |
Finite-lived intangible assets, remaining amortization period | 20 years |
Minimum [Member] | |
Finite-lived intangible assets, remaining amortization period | 4 years |
July 30, 2018 [Member] | Share Exchange [Member] | BTND, LLC [Member] | |
Equity Method Investment, Ownership Percentage of related party | 100% |
ACQUISITION (Details)
ACQUISITION (Details) - USD ($) | Jul. 03, 2022 | Jan. 02, 2022 |
Goodwill | $ 488,431 | $ 0 |
Assets acquired: | ||
Assumed current liabilities | 1,387,593 | $ 925,310 |
Keegan [Membe] | ||
Inventory | 10,049 | |
Equipment | 428,000 | |
Leasehold improvements | 450,000 | |
Trademark, website and other intangibles | 75,000 | |
Total identifiable assets acquired | 963,049 | |
Gift card liability | (17,260) | |
Net assets acquired | 945,789 | |
Goodwill | 204,211 | |
Purchase price | 1,150,000 | |
PIE [Member] | ||
Inventory | 23,500 | |
Equipment | 400,000 | |
Trademark, website and other intangibles | 50,000 | |
Total identifiable assets acquired | 898,500 | |
Net assets acquired | 875,380 | |
Goodwill | 284,220 | |
Purchase price | 1,159,600 | |
Assets acquired: | ||
Furniture and fixtures | 125,000 | |
Non-compete agreement | 300,000 | |
Assumed current liabilities | $ 23,120 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) | May 11, 2022 | Mar. 02, 2022 | Jul. 03, 2022 | Jan. 02, 2022 | Jul. 04, 2021 | Jan. 03, 2021 |
Goodwill | $ 488,431 | $ 0 | ||||
Cash paid | $ 8,295,952 | $ 12,385,632 | $ 1,720,917 | $ 1,321,244 | ||
Keegan's Seafood Grille [Member] | ||||||
Purchase price | $ 1,150,000 | |||||
Lease term | 131 years | |||||
Goodwill | $ 200,000 | |||||
Pie In the Sky Coffee and Bakery [Member] | ||||||
Purchase price | $ 1,160,000 | |||||
Lease term | 60 years | |||||
Goodwill | $ 270,100 | |||||
Description of lease | The lease covers the approximately 3,500 square feet PIE has operated in for more than 20 years. | |||||
Lease renewal, description | three additional five-year renewal options. | |||||
Cash paid | $ 1,150,000 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 6 Months Ended | |
Jul. 03, 2022 | Jan. 02, 2022 | |
Value of acquired asset | $ 425,000 | |
Value of acquired assets | 15,931,986 | $ 14,505,727 |
Trademarks Tradenames Websites And Social Media Accounts [Member] | ||
Value of acquired assets | $ 125,000 | |
Property Plant And Equipment Useful Life | 4 years | |
Covenant Not To Compete [Member] | ||
Value of acquired assets | $ 300,000 | |
Property Plant And Equipment Useful Life | 20 years |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jul. 03, 2022 | Jan. 02, 2022 |
PROPERTY AND EQUIPMENT | ||
Land | $ 485,239 | $ 485,239 |
Equipment | 3,417,413 | 2,674,529 |
Buildings and leasehold improvements | 1,998,516 | 1,322,085 |
Total property and equipment | 5,901,168 | 4,481,853 |
Accumulated depreciation | (2,680,610) | (2,630,764) |
Less - property held for sale | (258,751) | (258,751) |
Net property and equipment | $ 2,961,807 | $ 1,592,338 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 6 Months Ended | |
Jul. 03, 2022 | Jul. 03, 2021 | |
PROPERTY AND EQUIPMENT | ||
Depreciations | $ 177,676 | $ 113,394 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Jul. 03, 2022 | Jan. 02, 2022 |
ACCRUED EXPENSES | ||
Accrued real estate taxes | $ 88,800 | $ 103,615 |
Accrued bonus compensation | 59,139 | 7,000 |
Accrued payroll | 228,127 | 44,700 |
Accrued payroll taxes | 13,398 | 8,424 |
Accrued sales taxes payable | 118,468 | 50,414 |
Accrued vacation pay | 17,664 | 17,663 |
Accured gift card liability | 29,295 | 10,036 |
Accured franchise royality | 6,494 | 2,614 |
Other accrued expenses | 14,405 | 9,875 |
Accrued expenses | $ 575,790 | $ 254,341 |
LONGTERM DEBT (Details)
LONGTERM DEBT (Details) - USD ($) | Jul. 03, 2022 | Jan. 02, 2022 |
Notes payable to bank | $ 2,965,935 | $ 3,049,971 |
Less - unamortized debt issuance costs | (44,298) | (46,999) |
Current maturities | (171,358) | (169,908) |
Total | 2,750,279 | 2,833,064 |
April 29, 2020 [Member] | Long Term Debt [Member] | ||
Total | 19,250 | 22,000 |
Juner 28, 2021 [Member] | Long Term Debt [Member] | Shareholders [Member] | ||
Unsecured notes payable | $ 2,946,685 | $ 3,027,971 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 6 Months Ended |
Jul. 03, 2022 USD ($) $ / shares shares | |
STOCK-BASED COMPENSATION (Details) | |
Number of Options begining balance | shares | 15,000 |
Number of Options Granted | shares | 220,750 |
Number of Options Exercised | shares | 0 |
Number of Options Canceled, forfeited, or expired | shares | (8,200) |
Number of Options ending balance | shares | 227,550 |
Numbeer of Options exercisable | shares | 59,150 |
Weighted Average Exercise Price begining | $ / shares | $ 5 |
Weighted Average Exercise Price Granted | $ / shares | 2.50 |
Weighted Average Exercise Price Exercised | $ / shares | 0 |
Weighted Average Exercise Price Canceled, forfeited, or expired | $ / shares | 2.50 |
Weighted Average Exercise Price ending balance | $ / shares | 2.67 |
Weighted Average Exercise Price exercisable | $ / shares | $ 3.18 |
Remaining Contract term begining | 9 years 3 months 18 days |
Remaining Contract term Ending | 9 years 9 months 18 days |
Remaining Contract term exercisable | 9 years 8 months 12 days |
Aggregate Intrinsic value begining | $ | $ 0 |
Aggregate Intrinsic value Granted | $ | 0 |
Aggregate Intrinsic value Exercised | $ | 0 |
Aggregate Intrinsic value Canceled, forfeited, or expired | $ | 0 |
Aggregate Intrinsic value ending | $ | 0 |
Aggregate Intrinsic value exercisable | $ | $ 0 |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details 1) | 6 Months Ended |
Jul. 03, 2022 USD ($) $ / shares | |
STOCK-BASED COMPENSATION (Details) | |
Fair value of options granted during the period | $ / shares | $ 1.39 |
Expected life (in years) | 4 years 9 months 29 days |
Expected dividend | $ | $ 0 |
Expected stock volatility | 63% |
Risk-free interest rate | 2% |
STOCK-BASED COMPENSATION (Det_3
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Feb. 09, 2022 | Jan. 02, 2022 | Jul. 03, 2022 | Jul. 03, 2022 | Jul. 04, 2021 | |
Common shares reserved for issuance | 250,000 | ||||
Shares available for a grant | 13,400 | ||||
Options to purchase | 15,000 | ||||
Exercisable price | $ 5 | ||||
Granted Options to purchase | 250,000 | 220,750 | |||
Purchase price per shares | $ 8.50 | $ 2.50 | |||
Trading days | 20 years | ||||
Stock-based compensation expense | $ 39,900 | $ 73,400 | $ 0 | ||
Employees And Director [Member] | |||||
Compensation expense | 73,400 | ||||
Stock-based compensation expense | $ 230,000 |
LEASES (Details)
LEASES (Details) | Jul. 03, 2022 USD ($) |
LEASES | |
2022 | $ 90,000 |
2023 | 181,350 |
2024 | 185,990 |
2025 | 190,600 |
2026 | 196,000 |
2027 and thearafter | 495,054 |
Total future minimum lease payments | 1,338,994 |
Less - interest | 189,196 |
Present value of lease payments | $ 1,149,798 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 6 Months Ended | ||
Jul. 03, 2022 USD ($) ft² | Jan. 02, 2022 USD ($) | Jan. 19, 2016 USD ($) | |
Book value | $ 2,961,807 | $ 1,592,338 | |
Restaurant space | ft² | 2,800 | ||
Incremental borrowing rate | 4% | ||
Remaining lease obligation | $ 607,220 | ||
Right-of-use asset | $ 1,146,167 | $ 0 | $ 624,000 |
Annual escalation | 3% | ||
Present value discounted | 4% | ||
Monthly lease payment | $ 5,000 | ||
PIE Assets [Member] | |||
Monthly rent | $ 10,000 | ||
Restaurant space | ft² | 3,500 | ||
Lease term | 6 years 10 months 24 days | ||
Incremental borrowing rate | 5% | ||
Remaining lease obligation | $ 542,578 | ||
Right-of-use asset | $ 554,849 | ||
Annual escalation | 3% | ||
Description of lease term period | The terms of the 60-month lease provide for an initial rent of $10,000 per month with an annual escalation after 24 months of 3% | ||
Land Lease [Member] | |||
Book value | $ 18,500 | ||
Lease payment, monthly | 1,600 | ||
Corporate Office Space [Member] | |||
Monthly rent | $ 2,200 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 6 Months Ended | ||||
Mar. 02, 2020 | Jul. 03, 2022 | Feb. 22, 2022 | Jan. 02, 2022 | Dec. 29, 2019 | |
Investments | $ 1,549,828 | $ 229,000 | $ 75,000 | ||
Warrants purchase | 57,250 | ||||
Cumulative preferred shares | 8% | ||||
Exercise Price | $ 1.65 | ||||
Next Gen Ice, Inc. [Member] | |||||
Debt instrument, principal amount | $ 304,000 | $ 179,000 | |||
Initial common shares value | 75,000 | ||||
Warrants cost | $ 229,000 | ||||
Loan Modification and Extension Agreement [Member] | Next Gen Ice, Inc. [Member] | |||||
Exercise Price | $ 1 | ||||
Warrants expire | March 31, 2028 | ||||
Ownership percentage | 34% | ||||
Issuance of warrants | 358,000 | ||||
Common stock warrants received | $ 75,000 | ||||
Transfer of shares | 179,000 |
SUBSEQUENT EVENT (Details Narra
SUBSEQUENT EVENT (Details Narrative) - Subsequent Event [Member] - Village Bier Garten Restaurant [Member] | Aug. 04, 2022 USD ($) |
Purchase price | $ 6,900,000 |
Lease term, description | five-year |
Lease renewal, description | three five-year renewal options |
Initial monthly rent | $ 8,200 |