Cover
Cover - shares | 9 Months Ended | |
Oct. 01, 2023 | Nov. 11, 2023 | |
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 | --01-01 | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Oct. 01, 2023 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2024 | |
Entity Ex Transition Period | false | |
Entity Common Stock Shares Outstanding | 6,246,118 | |
Entity File Number | 333-233233 | |
Entity Incorporation State Country Code | WY | |
Entity Tax Identification Number | 90-1495764 | |
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 | |
Security Exchange Name | NASDAQ | |
Entity Address Postal Zip Code | 58078 | |
City Area Code | 307 | |
Local Phone Number | 223-1663 | |
Security 12b Title | Common Stock, $0.002 per share | |
Trading Symbol | BTBD | |
Entity Address State Or Province | ND | |
Document Quarterly Report | true | |
Document Transition Report | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Oct. 01, 2023 | Jan. 01, 2023 |
CURRENT ASSETS | ||
Cash and cash equivalents | $ 5,546,874 | $ 2,150,578 |
Marketable securities | 1,366,973 | 5,994,295 |
Receivables | 55,200 | 76,948 |
Inventory | 192,991 | 158,351 |
Prepaid expenses and other current assets | 37,445 | 37,397 |
Assets held for sale | 258,751 | 446,524 |
Total current assets | 7,458,234 | 8,864,093 |
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET | 3,238,310 | 3,294,644 |
OPERATING LEASES RIGHT-OF-USE ASSETS | 1,834,408 | 2,004,673 |
INVESTMENTS | 1,115,615 | 1,369,186 |
DEFERRED INCOME TAXES | 143,000 | 61,000 |
GOODWILL | 671,220 | 671,220 |
INTANGIBLE ASSETS, NET | 400,766 | 453,978 |
OTHER ASSETS, NET | 49,627 | 50,903 |
Total assets | 14,911,180 | 16,769,697 |
CURRENT LIABILITIES | ||
Accounts payable | 431,187 | 448,605 |
Broker margin loan | 0 | 791,370 |
Current maturities of long-term debt | 164,866 | 167,616 |
Current operating lease obligations | 215,326 | 193,430 |
Accrued expenses | 476,035 | 532,520 |
Total current liabilities | 1,287,414 | 2,133,541 |
LONG-TERM DEBT, LESS CURRENT PORTION | 2,332,014 | 2,658,477 |
NONCURRENT LEASE OBLIGATIONS | 1,650,361 | 1,825,057 |
Total liabilities | 5,269,789 | 6,617,075 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at October 1, 2023 and January 1, 2023 | 0 | 0 |
Common stock, $.002 par value, 50,000,000 authorized, 6,246,118 issued and outstanding at October 1, 2023, and 6,396,118 issued and outstanding at January 1, 2023 | 12,492 | 12,792 |
Less cost of 215,000 and 65,000 common shares held in Treasury at October 1, 2023 and January 1, 2023, respectively | (356,807) | (106,882) |
Additional paid-in capital | 11,527,235 | 11,409,235 |
Accumulated deficit | (1,541,529) | (1,162,523) |
Total shareholders' equity | 9,641,391 | 10,152,622 |
Total liabilities and shareholders' equity | $ 14,911,180 | $ 16,769,697 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Oct. 01, 2023 | Jan. 01, 2023 |
CONDENSED 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 issued | 6,246,118 | 6,396,118 |
Common stock, shares outstanding | 6,246,118 | 6,396,118 |
common shares held in Treasury | 215,000 | 65,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 01, 2023 | Oct. 02, 2022 | Oct. 01, 2023 | Oct. 02, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) | ||||
SALES | $ 4,007,656 | $ 4,023,920 | $ 11,078,419 | $ 9,621,996 |
Restaurant operating expenses | ||||
Food and paper costs | 1,449,796 | 1,604,858 | 4,348,294 | 3,637,814 |
Labor costs | 1,509,721 | 1,336,039 | 4,124,857 | 3,122,867 |
Occupancy costs | 340,002 | 367,872 | 845,863 | 803,792 |
Other operating expenses | 209,721 | 248,383 | 603,964 | 577,035 |
Depreciation and amortization expenses | 114,774 | 168,855 | 470,801 | 351,084 |
General and administrative expenses | 343,027 | 288,921 | 1,288,019 | 1,035,639 |
Gain on sale of assets | 0 | 0 | (313,688) | 0 |
Total costs and expenses | 3,967,041 | 4,014,928 | 11,368,110 | 9,528,231 |
Income (loss) from operations | 40,615 | 8,992 | (289,691) | 93,765 |
UNREALIZED GAIN (LOSS) ON MARKETABLE SECURITIES | 56,248 | (74,982) | 33,184 | (155,220) |
INTEREST AND OTHER INCOME | 32,821 | 46,364 | 123,630 | 55,836 |
INTEREST EXPENSE | (23,948) | (33,638) | (73,857) | (88,099) |
EQUITY IN NET LOSS OF AFFILIATE | (109,222) | (121,641) | (254,272) | (135,813) |
LOSS BEFORE TAXES | (3,486) | (174,905) | (461,006) | (229,531) |
INCOME TAX BENEFIT | 0 | 0 | 82,000 | 5,000 |
NET LOSS | $ (3,486) | $ (174,906) | $ (379,006) | $ (224,531) |
NET LOSS PER COMMON SHARE - Basic and Diluted | $ 0 | $ (0.04) | $ (0.06) | $ (0.03) |
WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted | 6,246,118 | 6,461,118 | 6,257,652 | 6,459,223 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Oct. 01, 2023 | Oct. 02, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Loss | $ (379,006) | $ (224,531) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities- | ||
Depreciation and amortization of franchise cost | 417,590 | 306,584 |
Amortization of intangible assets | 53,212 | 44,500 |
Amortization of debt issuance premium included in interest expense | 4,050 | 4,050 |
Deferred taxes | (82,000) | (67,490) |
Stock-based compensation | 118,000 | 102,300 |
Unrealized (gain) loss on marketable securities | (33,184) | 155,220 |
Loan forgiveness | 0 | (13,750) |
Investment gains | (51,603) | 0 |
Loss on equity method investment | 253,571 | 135,813 |
Gain on sale of assets | (313,688) | 0 |
Non-cash operating lease expense | 17,465 | 0 |
Property tax liability settlement | (181,339) | 0 |
Changes in operating assets and liabilities, net of acquisitions - | ||
Receivables | 21,748 | 14,648 |
Inventory | (34,640) | (15,755) |
Prepaid expenses and other current assets | (48) | (23,189) |
Accounts payable | (9,714) | 62,512 |
Accrued expenses | 124,854 | 204,680 |
Income taxes payable | 0 | (201,088) |
Net cash provided by (used in) operating activities | (74,732) | 484,504 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of net assets of Keegan's Seafood Grille | 0 | (1,150,000) |
Acquisition of net assets of Pie In The Sky Coffee and Bakery | 0 | (1,159,600) |
Acquisition of net assets of Village Beer Garden | (690,000) | |
Investment in Bagger Dave's Burger Tavern, Inc. | 0 | (1,260,000) |
Proceeds from sale of assets | 496,000 | 0 |
Purchase of property and equipment | (362,223) | (349,739) |
Investment in related company | 0 | (229,000) |
Purchase of marketable securities | (928,739) | (808,619) |
Proceeds from the sale of marketable securities | 5,640,848 | 0 |
Other assets | 0 | (6,602) |
Net cash provided by (used in) investing activities | 4,845,886 | (5,653,560) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of broker margin loan | (791,370) | |
Principal payment on long-term debt | (333,263) | (125,738) |
Proceeds from exercise of common stock warrants | 0 | 74,866 |
Purchase of treasury shares | (250,225) | 0 |
Net cash used in financing activities | (1,374,858) | (50,872) |
CHANGE IN CASH AND CASH EQUIVALENTS | 3,396,296 | (5,219,928) |
CASH and CASH EQUIVALVENTS, BEGINNING OF PERIOD | 2,150,578 | 12,385,632 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 5,546,874 | 7,165,704 |
SUPPLEMENTAL DISCLOSURES | ||
Cash paid for interest | 69,807 | 84,049 |
Cash paid for income taxes | 0 | 209,088 |
Purchase of property and equipment included in accounts payable | $ 7,704 | $ 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Accumulated (Deficit) | Treasury Stock |
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) | $ 0 |
Stock-based compensation | 102,300 | $ 0 | 102,300 | 0 | 0 |
Shares issued in exercise of warrants, shares | 13,612 | ||||
Shares issued in exercise of warrants, amount | 74,866 | $ 27 | 74,839 | 0 | 0 |
Net loss | (224,531) | $ 0 | 0 | (224,531) | 0 |
Balance, shares at Oct. 02, 2022 | 6,461,118 | ||||
Balance, amount at Oct. 02, 2022 | 10,580,988 | $ 12,922 | 11,392,835 | (824,769) | 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) | 0 |
Stock-based compensation | 28,900 | 0 | 28,900 | 0 | 0 |
Net loss | (174,906) | $ 0 | 0 | (174,906) | 0 |
Balance, shares at Oct. 02, 2022 | 6,461,118 | ||||
Balance, amount at Oct. 02, 2022 | 10,580,988 | $ 12,922 | 11,392,835 | (824,769) | 0 |
Balance, shares at Jan. 01, 2023 | 6,396,118 | ||||
Balance, amount at Jan. 01, 2023 | 10,152,622 | $ 12,792 | 11,409,235 | (1,162,523) | (106,882) |
Stock-based compensation | 118,000 | 0 | 118,000 | 0 | 0 |
Net loss | (379,006) | $ 0 | 0 | (379,006) | 0 |
Treasury stock purchase, shares | (150,000) | ||||
Treasury stock purchase, amount | (250,225) | $ (300) | 0 | (249,925) | |
Balance, shares at Oct. 01, 2023 | 6,246,118 | ||||
Balance, amount at Oct. 01, 2023 | 9,641,391 | $ 12,492 | 11,527,235 | (1,541,529) | (356,807) |
Balance, shares at Jul. 02, 2023 | 6,246,118 | ||||
Balance, amount at Jul. 02, 2023 | 9,604,177 | $ 12,492 | 11,486,535 | (1,538,043) | (356,807) |
Stock-based compensation | 40,700 | 0 | 40,700 | 0 | 0 |
Net loss | (3,486) | $ 0 | 0 | (3,486) | 0 |
Balance, shares at Oct. 01, 2023 | 6,246,118 | ||||
Balance, amount at Oct. 01, 2023 | $ 9,641,391 | $ 12,492 | $ 11,527,235 | $ (1,541,529) | $ (356,807) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Oct. 01, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
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 US 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 ending January 1, 2023. In our opinion, all regular and recurring adjustments 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 October 1, 2023, does not include all the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of January 1, 2023, and the related notes included in our Form 10-K for the fiscal year ending January 1, 2023. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. The Company BT Brands, Inc. (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of BTND, LLC. We operate restaurants in the eastern two-thirds of the United States. As of October 1, 2023, including our 41.2% owned Bagger Dave’s business, we operated eighteen restaurants comprising the following: · Eight Burger Time fast-food restaurants and one Dairy Queen franchise located in the North Central region of the United States, collectively (“BTND”); · Bagger Dave’s Burger Tavern, Inc., a 41.2% owned affiliate, operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana (“Bagger Dave’s”); · Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”); · Pie In The Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”). · Village Bier Garten is a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida (“VBG”). Our Dairy Queen store 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. Effective October 17, 2023, we agreed with International Dairy Queen to sell the business, which has a current book value at October 1, 2023, of $440,384, including remaining goodwill, to an approved buyer. Under the terms of the agreement with International Dairy Queen, we will continue to operate under the agreement for six months, during which time we plan to sell the business. Business As of October 1, 2023, BT Brands owned and operated thirteen restaurants, including eight 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 and operate Keegan's Seafood Grille ("Keegan's"), a dine-in restaurant located in Florida, Pie In The Sky Coffee and Bakery ("PIE"), a casual dining coffee shop bakery located in Woods Hole, Massachusetts, and the Village Bier Garten (“VBG”), a German-themed restaurant in Cocoa, Florida. Our Burger Time restaurants feature a variety of burgers and other affordable foods, sides, and soft drinks. Our Dairy Queen restaurant offers a proscribed menu of burgers, chicken, sides, ice cream, proprietary desserts, novelty items, and various beverages. Keegan's 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. VBG is a full-service restaurant and bar featuring a German-themed menu, specialty imported European beers, and regular entertainment. 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, which account for an insignificant portion of our income. On June 2, 2022, BT Brands purchased 11,095,085 common shares, or 41.2%, of Bagger Dave's Burger Tavern, Inc. ("Bagger Dave's"). We acquired the shares from the founder of Bagger Dave’s for $1,390,000, or approximately $.114 per share. Following the investment, two representatives of BT Brands were appointed to comprise 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 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 the franchise agreement requires. Following the end of the quarter, we entered into an agreement to terminate the franchise agreement with International Dairy Queen. We plan to sell the Dairy Queen business. Fiscal Year Periods 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 2023 is 52 weeks ending December 31, 2023, and fiscal 2022 was a 52-weeks ending January 1, 2023. References in this report to periods refer to the 39-week periods in the respective fiscal periods Cash and Cash Equivalents Cash includes United States Treasury Bills with original maturities at the time of purchase of 90 days or less. Our bank deposits often 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. Investments As of October 1, 2023, noncurrent investments include our net equity method investment of $811,615 in Bagger Dave’s and our $304,000 total investment in NGI Corporation. (NGI). In 2020, the Company received equity ownership in NGI as consideration for a loan to NGI. Upon repayment of the loan to NGI, we attributed $75,000 to the value of the equity received, which was reflected as additional interest income in 2020. The fair value determined in 2020 continues to be reflected as the value of the investment. On February 12, 2022, we invested $229,000 in Series A1 8% Cumulative Convertible Preferred Stock of NGI, including a five-year warrant to purchase 34,697 common shares of NGI at $1.65 per share. Bagger Dave’s common stock is traded on the OTC Pink Sheets market and files quarterly and annual financial reports with OTCMarkets, Inc. under the Alternative Reporting Standard. The listing with OTC Markets does not require the information to be audited. For the 39 weeks ending October 1, 2023, Bagger Dave’s had sales of $5,009,164 and a net loss of $617,164. For the 39 weeks, our 41.2% equity share in the loss was approximately $254,272 and is included in the accompanying statement of operations. See Note 8 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. On October 1, 2023, the cost of marketable securities includes a bond fund at a cost of $ 574,836 and common stocks at a cost of $792,137 for a total cost of $1,366,973 prior to a mark-to-market reduction of $110,205. At January 1, 2023, the fair value of Level 1 investments included common stocks of $713,900 and a corporate bond exchange-traded fund (ETF) of $316,000, a total carrying value of $1,029,900, net of an unrealized mark-to-market loss of $86,422. These investments are reflected in the accompanying financial statements at October 1, 2023, at the level-one quoted market price in an active market of $1,366,973. 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. Receivables Receivables consist of estimated 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, we estimate 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 and other Intangible Assets and Other Assets Goodwill is not amortized. Goodwill is tested for impairment at least annually. The cost of other intangible assets is amortized over the expected useful life. Other assets includes the allocated fair value of the acquired Dairy Queen franchise agreement which is being amortized over 14 years. Asset Held for Sale We closed the Burger Time store in West St. Paul in 2022 and the Richmond, Indiana, store in 2018. The West St. Paul location sale was completed in February of 2023 for a gain of $313,688. The Richmond location is currently offered for sale. We believe the Richmond property will be sold at or above its current carrying value. In the second quarter of 2023, we completed the disposition of the St. Louis property in lieu of unpaid property taxes, eliminating approximately $180,000 of previously accrued property taxes, which was reflected as a reduction of occupancy costs during the second quarter of this fiscal year. Income Taxes The Company follows Accounting Standards Codification (ASC) 740, Accounting for Income Taxes. ASC 740 using the 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 October 1, 2023, we used a net combined federal and state rate of approximately 27.5% in estimating our current tax benefit. 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 2023 and 2022. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Oct. 01, 2023 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | N OTE 2 – INTANGIBLE ASSETS At October 1, 2023, the value of acquired assets, Intangible Assets being amortized are the following Estimated Useful Life (Years) Original Cost Accumulated Amortization Net Carrying Value Covenants not to Compete 3 $ 98,000 $ (50,100 ) $ 47,900 Trademarks 15 393,000 (40,134 ) 352,866 $ 491,000 $ (90,234 ) $ 400,766 Tradename assets are being amortized over 15 years at $26,000 annually. The total amortization of intangible assets, including covenants not to compete, will approximate $58,900 in 2023 and 2024, $40,500 in 2025, $26,200 per year thereafter following six years and $7,500 in 2037. Total amortization expense for the 13 weeks was $12,221, and for the 39 weeks ending October 1, 2023, was $54,486. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Oct. 01, 2023 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following: October 1, 2023 January 1, 2023 Land $ 435,239 $ 485,239 Equipment 3,875,840 3,893,274 Buildings and leasehold improvements 2,453,547 2,402,157 Total property and equipment 6,764,626 6,780,670 Accumulated depreciation (3,267,565 ) 3,741,170 Less - property held for sale (258,751 ) (446,526 ) Net property and equipment $ 3,238,310 $ 3,294,644 Depreciation expense for the 39-week periods in 2023 and 2022 was $416,315 and $306,584, respectively. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 9 Months Ended |
Oct. 01, 2023 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 4 - ACCRUED EXPENSES Accrued expenses consisted of the following at: October 1, 2023 January 1, 2023 Accrued real estate taxes $ 33,487 $ 202,436 Accrued bonus compensation 59,139 59,139 Accrued payroll 190,747 143,481 Accrued payroll taxes 12,926 12,764 Accrued sales taxes payable 99,330 70,270 Accrued vacation pay 17,663 17,663 Accrued gift card liability 19,705 25,965 Other accrued expenses 43,038 802 $ 476,035 $ 532,520 |
LONG TERM DEBT
LONG TERM DEBT | 9 Months Ended |
Oct. 01, 2023 | |
LONG TERM DEBT | |
LONG TERM DEBT | NOTE 5 - LONG TERM DEBT Our long-term debt is as follows: October 1, 2023 January 1, 2023 Three notes payable to a bank dated June 28, 2021, due in monthly installments totaling $22,213, including principal and interest at a 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. $ 2,533,971 $ 2,864,484 Minnesota Small Business Emergency Loan dated April 29, 2020, payable in monthly installments of $458 beginning December 15, 2020, including principal and interest at 0%. This note is secured by the personal guarantee of a shareholder of the Company. Under the terms of the loan, $13,750 of the loan was forgiven on June 22, 2022. 458 3,208 Total 2,534,429 2,867,692 Less - unamortized debt issuance costs (37,549 ) (41,599 ) Current maturities (164,866 ) (167,616 ) $ 2,332,014 $ 2,658,477 |
STOCK BASED COMPENSATION
STOCK BASED COMPENSATION | 9 Months Ended |
Oct. 01, 2023 | |
STOCK BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 6 - STOCK-BASED COMPENSATION In 2019, we adopted the BT Brands, Inc. 2019 Incentive Plan (the “Plan”), under which the Company 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. As of October 1, 2023, there were 429,750 shares available for grant under the Plan. 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. Total equity-based compensation expenses through the third quarter of 2023 were $118,000, and $102,300 through the third quarter of 2022, including approximately $77,000 for the Contingent Share Award described below. Based on current estimates, we project that approximately $372,000 in stock-based compensation expense for current grants will be recognized over the next five years at approximately $200,000 in 2024, $95,000 in 2025, $35,000 in 2026, $28,000 in 2027 and $14,000 in 2028. As outlined in each agreement, stock options granted to employees and directors vest over four years in annual installments. Options expire ten years from the date of the 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. 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 the 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 1, 2023 220,250 $ 2.74 9.0 $ 0 Granted 100,000 2.50 6.7 Exercised 0 0 Canceled, forfeited, or expired (750 ) 0 Options outstanding at October 1, 2023 319,500 $ 2.74 8.8 $ 0 Options exercisable at October 1, 2023 106,802 $ 3.18 8.3 $ 0 On February 27, 2023, the Company finalized a Contingent Incentive Share Award with senior executives. The Contingent Share Awards provides that so long as the Company’s publicly traded warrants are outstanding, senior management of the Company will be deemed to earn an aggregate award of 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, provided, however, participants must be employed by the Company at the time the Incentive Shares are earned. The estimated fair value of the plan is $1.00 per share, and $250,000 of compensation expense will be recognized over the remaining 2.1 years available under the Plan. $77,000 of stock-based compensation was recognized for this Agreement for the 39 weeks of 2023. We utilized a lattice model when determining the fair value of the Contingent Incentive Share Awards. Assumptions utilized in the model include a risk-free rate of 4.4% and volatility of 63%. |
LEASES
LEASES | 9 Months Ended |
Oct. 01, 2023 | |
LEASES | |
LEASES | NOTE 7 – 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 $558,571 is reflected as a liability in the accompanying financial statements as of October 1, 2023. 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 $1,055,000. The present value discounted at 5% of the remaining lease obligation of $933,235 is reflected as a liability in the accompanying financial statements as of October 1, 2023. 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. Concurrent with the acquisition of Village Bier Garten assets, we entered into a five-year lease with the seller for approximately 3,000 square feet of restaurant space and access to an additional 3,000 square feet of shared entertainment and seating area. The terms of the triple-net 60-month provide for an initial rent of $8,200 per month with an annual escalation of 3%. The VBG lease includes three five-year renewal option periods. The VBG lease does 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. The VBG 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 $469,949. The present value discounted at 5% of the remaining lease obligation of $452,871 is reflected as a liability in the accompanying financial statements as of October 1, 2023. The weighted average remaining lease term is approximately 5.0 years. Following is a schedule of the approximate minimum future lease payments on the operating leases as of October 1, 2023: Total Remainder 2023 $ 70,788 2024 289,076 2025 297,745 2026 306,674 2027 268,437 2028 and thereafter 1,039,438 Total future minimum lease payments 2,272,158 Less - interest (406,471 ) $ 1,865,687 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 total operating lease expense for the 39-week and 13-week period in 2023 was $81,000 and $26,333, respectively, and cash paid for leases during the 39 weeks in 2023 totaled $76,000 and variable expenses for lease properties were approximately $26,000. The weighted average remaining lease term is approximately 5.3 years. The Company also pays a monthly rent under 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 | 9 Months Ended |
Oct. 01, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 8 - RELATED PARTY TRANSACTION NGI Corporation Our CEO and CFO also serve as Chairman and CFO, respectively, of NGI Corporation (NGI). BT Brands owns 330,418 common shares and holds warrants to purchase 358,000 common shares at $1.00, expiring March 31, 2028, and 34,697 warrants to purchase additional shares at $1.65 of NGI. We received 179,000 shares of common stock in NGI as consideration for modifying a note that was subsequently paid. The common stock and warrants received in the note modification transaction 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. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Oct. 01, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
CONTINGENCIES | NOTE 9 – 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 unaware of any significant asserted or potential claims that could impact our financial position. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Oct. 01, 2023 | |
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 US 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 ending January 1, 2023. In our opinion, all regular and recurring adjustments 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 October 1, 2023, does not include all the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of January 1, 2023, and the related notes included in our Form 10-K for the fiscal year ending January 1, 2023. |
Use of Estimates | The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. |
The Company | BT Brands, Inc. (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of BTND, LLC. We operate restaurants in the eastern two-thirds of the United States. As of October 1, 2023, including our 41.2% owned Bagger Dave’s business, we operated eighteen restaurants comprising the following: · Eight Burger Time fast-food restaurants and one Dairy Queen franchise located in the North Central region of the United States, collectively (“BTND”); · Bagger Dave’s Burger Tavern, Inc., a 41.2% owned affiliate, operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana (“Bagger Dave’s”); · Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”); · Pie In The Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”). · Village Bier Garten is a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida (“VBG”). Our Dairy Queen store 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. Effective October 17, 2023, we agreed with International Dairy Queen to sell the business, which has a current book value at October 1, 2023, of $440,384, including remaining goodwill, to an approved buyer. Under the terms of the agreement with International Dairy Queen, we will continue to operate under the agreement for six months, during which time we plan to sell the business. |
Business | As of October 1, 2023, BT Brands owned and operated thirteen restaurants, including eight 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 and operate Keegan's Seafood Grille ("Keegan's"), a dine-in restaurant located in Florida, Pie In The Sky Coffee and Bakery ("PIE"), a casual dining coffee shop bakery located in Woods Hole, Massachusetts, and the Village Bier Garten (“VBG”), a German-themed restaurant in Cocoa, Florida. Our Burger Time restaurants feature a variety of burgers and other affordable foods, sides, and soft drinks. Our Dairy Queen restaurant offers a proscribed menu of burgers, chicken, sides, ice cream, proprietary desserts, novelty items, and various beverages. Keegan's 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. VBG is a full-service restaurant and bar featuring a German-themed menu, specialty imported European beers, and regular entertainment. 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, which account for an insignificant portion of our income. On June 2, 2022, BT Brands purchased 11,095,085 common shares, or 41.2%, of Bagger Dave's Burger Tavern, Inc. ("Bagger Dave's"). We acquired the shares from the founder of Bagger Dave’s for $1,390,000, or approximately $.114 per share. Following the investment, two representatives of BT Brands were appointed to comprise 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 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 the franchise agreement requires. Following the end of the quarter, we entered into an agreement to terminate the franchise agreement with International Dairy Queen. We plan to sell the Dairy Queen business. |
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 2023 is 52 weeks ending December 31, 2023, and fiscal 2022 was a 52-weeks ending January 1, 2023. References in this report to periods refer to the 39-week periods in the respective fiscal periods |
Cash and Cash Equivalents | Cash includes United States Treasury Bills with original maturities at the time of purchase of 90 days or less. Our bank deposits often 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 | As of October 1, 2023, noncurrent investments include our net equity method investment of $811,615 in Bagger Dave’s and our $304,000 total investment in NGI Corporation. (NGI). In 2020, the Company received equity ownership in NGI as consideration for a loan to NGI. Upon repayment of the loan to NGI, we attributed $75,000 to the value of the equity received, which was reflected as additional interest income in 2020. The fair value determined in 2020 continues to be reflected as the value of the investment. On February 12, 2022, we invested $229,000 in Series A1 8% Cumulative Convertible Preferred Stock of NGI, including a five-year warrant to purchase 34,697 common shares of NGI at $1.65 per share. Bagger Dave’s common stock is traded on the OTC Pink Sheets market and files quarterly and annual financial reports with OTCMarkets, Inc. under the Alternative Reporting Standard. The listing with OTC Markets does not require the information to be audited. For the 39 weeks ending October 1, 2023, Bagger Dave’s had sales of $5,009,164 and a net loss of $617,164. For the 39 weeks, our 41.2% equity share in the loss was approximately $254,272 and is included in the accompanying statement of operations. See Note 8 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. On October 1, 2023, the cost of marketable securities includes a bond fund at a cost of $ 574,836 and common stocks at a cost of $792,137 for a total cost of $1,366,973 prior to a mark-to-market reduction of $110,205. At January 1, 2023, the fair value of Level 1 investments included common stocks of $713,900 and a corporate bond exchange-traded fund (ETF) of $316,000, a total carrying value of $1,029,900, net of an unrealized mark-to-market loss of $86,422. These investments are reflected in the accompanying financial statements at October 1, 2023, at the level-one quoted market price in an active market of $1,366,973. 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. |
Receivables | Receivables consist of estimated 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, we estimate 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, Other Intangible Assets and Other Assets | Goodwill is not amortized. Goodwill is tested for impairment at least annually. The cost of other intangible assets is amortized over the expected useful life. Other assets includes the allocated fair value of the acquired Dairy Queen franchise agreement which is being amortized over 14 years. |
Asset Held for Sale | We closed the Burger Time store in West St. Paul in 2022 and the Richmond, Indiana, store in 2018. The West St. Paul location sale was completed in February of 2023 for a gain of $313,688. The Richmond location is currently offered for sale. We believe the Richmond property will be sold at or above its current carrying value. In the second quarter of 2023, we completed the disposition of the St. Louis property in lieu of unpaid property taxes, eliminating approximately $180,000 of previously accrued property taxes, which was reflected as a reduction of occupancy costs during the second quarter of this fiscal year. |
Income Taxes | The Company follows Accounting Standards Codification (ASC) 740, Accounting for Income Taxes. ASC 740 using the 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 October 1, 2023, we used a net combined federal and state rate of approximately 27.5% in estimating our current tax benefit. 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 2023 and 2022. |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
INTANGIBLE ASSETS | |
Schedule of intangible assets | Estimated Useful Life (Years) Original Cost Accumulated Amortization Net Carrying Value Covenants not to Compete 3 $ 98,000 $ (50,100 ) $ 47,900 Trademarks 15 393,000 (40,134 ) 352,866 $ 491,000 $ (90,234 ) $ 400,766 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | October 1, 2023 January 1, 2023 Land $ 435,239 $ 485,239 Equipment 3,875,840 3,893,274 Buildings and leasehold improvements 2,453,547 2,402,157 Total property and equipment 6,764,626 6,780,670 Accumulated depreciation (3,267,565 ) 3,741,170 Less - property held for sale (258,751 ) (446,526 ) Net property and equipment $ 3,238,310 $ 3,294,644 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | October 1, 2023 January 1, 2023 Accrued real estate taxes $ 33,487 $ 202,436 Accrued bonus compensation 59,139 59,139 Accrued payroll 190,747 143,481 Accrued payroll taxes 12,926 12,764 Accrued sales taxes payable 99,330 70,270 Accrued vacation pay 17,663 17,663 Accrued gift card liability 19,705 25,965 Other accrued expenses 43,038 802 $ 476,035 $ 532,520 |
LONG TERM DEBT (Tables)
LONG TERM DEBT (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
LONG TERM DEBT | |
Summary of long term debt obligations | October 1, 2023 January 1, 2023 Three notes payable to a bank dated June 28, 2021, due in monthly installments totaling $22,213, including principal and interest at a 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. $ 2,533,971 $ 2,864,484 Minnesota Small Business Emergency Loan dated April 29, 2020, payable in monthly installments of $458 beginning December 15, 2020, including principal and interest at 0%. This note is secured by the personal guarantee of a shareholder of the Company. Under the terms of the loan, $13,750 of the loan was forgiven on June 22, 2022. 458 3,208 Total 2,534,429 2,867,692 Less - unamortized debt issuance costs (37,549 ) (41,599 ) Current maturities (164,866 ) (167,616 ) $ 2,332,014 $ 2,658,477 |
STOCK BASED COMPENSATION (Table
STOCK BASED COMPENSATION (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
STOCK BASED COMPENSATION | |
Schedule of stock options | Number of Weighted Average Weighted Average Remaining Term Aggregate Intrinsic Options Exercise Price (In Years) Value Options outstanding at January 1, 2023 220,250 $ 2.74 9.0 $ 0 Granted 100,000 2.50 6.7 Exercised 0 0 Canceled, forfeited, or expired (750 ) 0 Options outstanding at October 1, 2023 319,500 $ 2.74 8.8 $ 0 Options exercisable at October 1, 2023 106,802 $ 3.18 8.3 $ 0 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Oct. 01, 2023 | |
LEASES | |
Schedule of future minimum operating lease | Total Remainder 2023 $ 70,788 2024 289,076 2025 297,745 2026 306,674 2027 268,437 2028 and thereafter 1,039,438 Total future minimum lease payments 2,272,158 Less - interest (406,471 ) $ 1,865,687 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 17, 2023 | Feb. 12, 2022 | Oct. 01, 2023 | Oct. 01, 2023 | Jan. 01, 2023 | |
Cost of bond fund | $ 574,836 | $ 574,836 | |||
Cost of common stock | 792,137 | 792,137 | |||
Cost of marketable securities | 1,366,973 | 1,366,973 | |||
Mark-to-market reduction | 110,205 | 110,205 | |||
Common stock Issued | $ 713,900 | ||||
Corporate bond exchange-traded fund | 316,000 | ||||
Total carrying value of investment | 1,029,900 | ||||
Quoted market price | 1,366,973 | 1,366,973 | |||
Gain on sale of Burger time store in St.Paul location | 313,688 | ||||
Gain on reversal of accrued property taxes | $ 180,000 | ||||
Business Acquisition, Percentage of Voting Interests granted As consideration to related party | 27.50% | ||||
Amortized estimated useful life | 14 years | ||||
Total investment | 1,115,615 | $ 1,115,615 | $ 1,369,186 | ||
NGI Corporation | |||||
Total investment | 304,000 | 304,000 | |||
Repayment of loan | $ 75,000 | ||||
Description of investment | we invested $229,000 in Series A1 8% Cumulative Convertible Preferred Stock of NGI, including a five-year warrant to purchase 34,697 common shares of NGI at $1.65 per share | ||||
International Dairy Queen [Member] | |||||
Business book value | $ 440,384 | ||||
BT Brands [Member] | |||||
Purchase of common share | 11,095,085 | ||||
Amount of share acquire from founder | $ 1,390,000 | ||||
Baggers Dave | |||||
Cost of sale | $ 5,009,164 | ||||
Ownership percentage | 41.20% | 41.20% | |||
Equity method investment | $ 811,615 | $ 811,615 | |||
Net loss | $ 617,164 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) | 9 Months Ended |
Oct. 01, 2023 USD ($) | |
Original cost | $ 491,000 |
Accumulated Amortization | (90,234) |
Net carrying value | 400,766 |
Covenant Not To Compete [Member] | |
Original cost | 98,000 |
Accumulated Amortization | (50,100) |
Net carrying value | $ 47,900 |
Estimated Useful Life (Years) | 3 years |
Trademarks [Member] | |
Original cost | $ 393,000 |
Accumulated Amortization | (40,134) |
Net carrying value | $ 352,866 |
Estimated Useful Life (Years) | 15 years |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) | 3 Months Ended | 9 Months Ended |
Oct. 01, 2023 USD ($) | Oct. 01, 2023 USD ($) | |
Amortization expense | $ 12,221 | $ 54,486 |
Trademarks [Member] | ||
Amortization expense | $ 26,000 | |
Estimated Useful Life (Years) | 15 years | |
2023 | 58,900 | $ 58,900 |
2024 | 40,500 | 40,500 |
2025 | 26,200 | 26,200 |
Thereafter 2037 | $ 7,500 | $ 7,500 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Oct. 01, 2023 | Jan. 01, 2023 |
PROPERTY AND EQUIPMENT | ||
Land | $ 435,239 | $ 485,239 |
Equipment | 3,875,840 | 3,893,274 |
Buildings and leasehold improvements | 2,453,547 | 2,402,157 |
Total property and equipment | 6,764,626 | 6,780,670 |
Accumulated depreciation | 3,267,565 | 3,741,170 |
Less - property held for sale | (258,751) | (446,526) |
Net property and equipment | $ 3,238,310 | $ 3,294,644 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 9 Months Ended | |
Oct. 01, 2023 | Oct. 01, 2022 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 416,315 | $ 306,584 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Oct. 01, 2023 | Jan. 01, 2023 |
ACCRUED EXPENSES | ||
Accrued real estate taxes | $ 33,487 | $ 202,436 |
Accrued bonus compensation | 59,139 | 59,139 |
Accrued payroll | 190,747 | 143,481 |
Accrued payroll and payroll taxes | 12,926 | 12,764 |
Accrued sales taxes payable | 99,330 | 70,270 |
Accrued vacation pay | 17,663 | 17,663 |
Accured gift card liability | 19,705 | 25,965 |
Other accrued expenses | 43,038 | 802 |
Accrued expenses | $ 476,035 | $ 532,520 |
LONGTERM DEBT (Details)
LONGTERM DEBT (Details) - USD ($) | Oct. 01, 2023 | Jan. 01, 2023 |
Notes payable to bank | $ 2,534,429 | $ 2,867,692 |
Less - unamortized debt issuance costs | (37,549) | (41,599) |
Current maturities | (164,866) | (167,616) |
Total | 2,332,014 | 2,658,477 |
April 29, 2020 [Member] | Long Term Debt [Member] | ||
Total | 458 | 3,208 |
Juner 28, 2021 [Member] | Long Term Debt [Member] | Shareholders [Member] | ||
Unsecured notes payable | $ 2,533,971 | $ 2,864,484 |
STOCKBASED COMPENSATION (Detail
STOCKBASED COMPENSATION (Details) | 9 Months Ended |
Oct. 01, 2023 USD ($) $ / shares shares | |
STOCK BASED COMPENSATION | |
Number of Options, Begining | shares | 220,250 |
Number of Options Granted | shares | 100,000 |
Number of Options Exercised | shares | 0 |
Number of Options Canceled, forfeited, or expired | shares | (750) |
Number of Options, Ending | shares | 319,500 |
Numbeer of Options exercisable | shares | 106,802 |
Weighted Average Exercise Price, Begining | $ / shares | $ 2.74 |
Weighted Average Exercise Price Granted | $ / shares | 2.50 |
Weighted Average Exercise Price Exercised | $ / shares | 0 |
Weighted Average Exercise Price Canceled, forfeited, or expired | $ / shares | 0 |
Weighted Average Exercise Price, Ending | $ / shares | 2.74 |
Weighted Average Exercise Price exercisable | $ / shares | $ 3.18 |
Weighted Average Remaining Contract term (In Years) beg of the period | 9 years |
Weighted Average Remaining Contract term (In Years) granted | 6 years 8 months 12 days |
Weighted Average Remaining Contract term (In Years) end of period | 8 years 9 months 18 days |
Weighted Average Remaining Contract term (In Years), Exercisable | 8 years 3 months 18 days |
Aggregate Intrinsic value, Begining | $ | $ 0 |
Aggregate Intrinsic value, Ending | $ | 0 |
Aggregate Intrinsic value exercisable | $ | $ 0 |
STOCKBASED COMPENSATION (Deta_2
STOCKBASED COMPENSATION (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Feb. 27, 2023 integer $ / shares shares | Oct. 01, 2023 USD ($) shares | Oct. 02, 2022 USD ($) | Oct. 01, 2023 USD ($) shares | Oct. 02, 2022 USD ($) | |
Fair value compensation expense | shares | 250,000 | ||||
Expected life (in years) | 2 years 1 month 6 days | ||||
Expected stock volatility | 63% | ||||
Risk-free interest rate | 4.40% | ||||
Granted Options to purchase | shares | 250,000 | ||||
Trading days | integer | 20 | ||||
Fair value price per shares | $ / shares | $ 1 | ||||
Share Price | $ / shares | $ 8.50 | ||||
Stock-based compensation expense | $ 40,700 | $ 28,900 | $ 118,000 | $ 102,300 | |
2024 [Member] | |||||
Stock-based compensation expense recognized | 200,000 | ||||
2025 [Member] | |||||
Stock-based compensation expense recognized | 95,000 | ||||
2026 [Member] | |||||
Stock-based compensation expense recognized | 35,000 | ||||
2027 [Member] | |||||
Stock-based compensation expense recognized | 28,000 | ||||
2028 [Member] | |||||
Stock-based compensation expense recognized | $ 14,000 | ||||
2019 Incentive Plan | |||||
Number of shares available for grant | shares | 429,750 | 429,750 | |||
Stock-based compensation expense | $ 118,000 | $ 102,300 | |||
Stock-based compensation expense for grants | $ 372,000 | ||||
Senior executives | |||||
Stock-based compensation expense | $ 77,000 |
LEASES (Details)
LEASES (Details) | Oct. 01, 2023 USD ($) |
LEASES | |
Remainder 2023 | $ 70,788 |
2024 | 289,076 |
2025 | 297,745 |
2026 | 306,674 |
2027 | 268,437 |
2028 and thearafter | 1,039,438 |
Total future minimum lease payments | 2,272,158 |
Less - interest | (406,471) |
Present value of lease payments | $ 1,865,687 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 3 Months Ended | 9 Months Ended | |
Jul. 02, 2023 USD ($) | Oct. 01, 2023 USD ($) ft² | Jan. 01, 2023 USD ($) | |
Weighted average remaining lease term | 5 years 3 months 18 days | ||
Cash paid for leases | $ 76,000 | ||
Variable expenses | 26,000 | ||
Total operating lease expense | $ 26,333 | 81,000 | |
Book value | 3,238,310 | $ 3,294,644 | |
Right-of-use asset | 1,834,408 | $ 2,004,673 | |
PIE Assets [Member] | |||
Monthly rent | $ 10,000 | ||
Lease term | 60 months | ||
Restaurant space | ft² | 3,500 | ||
Remaining lease obligation | $ 933,235 | ||
Discount rate | 5% | ||
Right-of-use asset | $ 1,055,000 | ||
Annual escalation | 3% | ||
VBG Assets [Member] | |||
Weighted average remaining lease term | 5 years | ||
Monthly rent | $ 8,200 | ||
Lease term | 60 months | ||
Restaurant space | ft² | 3,000 | ||
Entertainment and seating area | ft² | 3,000 | ||
Discount rate | 5% | ||
Remaining Operating lease obligation | $ 452,871 | ||
Right-of-use asset | $ 469,949 | ||
Annual escalation | 3% | ||
Keegan Assets [Member] | |||
Lease term | 131 months | ||
Restaurant space | ft² | 2,800 | ||
Remaining lease obligation | $ 558,571 | ||
Discount rate | 4% | ||
Right-of-use asset | $ 624,000 | ||
Annual escalation | 3% | ||
Monthly lease payment | $ 5,000 | ||
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 ($) | 9 Months Ended | |
Oct. 01, 2023 | Jan. 01, 2023 | |
Common stock shares received | 215,000 | 65,000 |
Next Gen Ice, Inc. [Member] | ||
Common stock shares received | 179,000 | |
Common shares, owned | 330,418 | |
Next Gen Ice, Inc. [Member] | Loan Modification and Extension Agreement [Member] | ||
Issuance of warrants | 358,000 | |
Additional Warrants purchase | 34,697 | |
Exercise Price | $ 1 | |
Warrants expire | March 31, 2028 | |
Common stock and warrants, value | $ 75,000 |