UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: ~~October~~July 3, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~_________~~________ to ~~_______~~

_________

Commission File Number: 333-233233

BT BRANDS, INC.

(Exact name of registrant as specified in its charter)

Wyoming		91-1495764
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

405 Main Avenue West, Suite 2D, West Fargo, NDNorth Dakota		58078
(Address of principal executive offices)		(Zip Code)

~~(701) 277-0080~~(307) 223-1663

(Registrant’s telephone number, including area code)

NONE

(Former name former address and former fiscal year if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange

on which registered

~~common stock,~~Common Stock, $0.002 per share

BTBD

The NASDAQ Stock Market LLC

~~warrants~~Warrant to ~~purchase common stock~~Purchase Common Stock

BTBDW

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for a such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such a shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ☐

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated ~~filer~~Filer	☒	Smaller reporting company	☒
		Emerging ~~Growth Company~~growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

At ~~November 16, 2021,~~August 10, 2022, there were ~~6,447,506~~6,461,118 shares of common stock outstanding.

CAUTIONARY STATEMENT REGARDING RISKS

AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition, and prospects of BT Brands, Inc. and its ~~wholly owned~~wholly-owned subsidiaries (together, “BT Brands” or the “Company”). Forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, can be identified by the use of forward-looking terminology such as “believes,” “projects,” “expects,” “may,” “estimates,” “should,” “plans,” “targets,” “intends,” “could,” “would,” “anticipates,” “potential,” “confident,” “optimistic” or the negative thereof, or other variations thereon, or comparable terminology, or by discussions of strategy, objectives, estimates, guidance, expectations, and future plans. Forward-looking statements can also be identified by the fact these statements do not relate strictly to historical or current matters. ~~Rather, forward-looking~~Forward-looking statements relate to anticipated or expected events, activities, trends, or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

While ~~the Company believes~~we believe the expectations reflected in forward-looking statements are reasonable, there can be no assurances such expectations will prove ~~to be~~ accurate. ~~Security holders are cautioned such forward-looking statements involve risks and uncertainties.~~ Certain factors may cause results to differ materially from those anticipated by the forward-looking statements made in this quarterly report. Such factors may include, without limitation, the risks, uncertainties, and regulatory developments (1) related to ~~the COVID-19 pandemic,~~public health, which include risks and uncertainties related to ~~the current unknown duration of the COVID-19 pandemic,~~COVID in its various forms, the impact of governmental regulations that have been and may in the future be, imposed in response to the pandemic which potentially could have an impact on discretionary consumer spending and (2) those discussed and described in ~~the Company’s 2020~~our 2021 annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March ~~11, 2021.~~17, 2022. Many of these risks and uncertainties are beyond ~~the~~our ability ~~of the Company~~ to control ~~nor can the Company predict,~~or predict; in many cases, ~~all of~~ the risks and uncertainties ~~that~~ could cause its actual results to differ materially from those indicated by the forward-looking statements. The forward-looking statements contained in this quarterly report speak only as of the date of this quarterly ~~report, and the Company~~report. We expressly ~~disclaims~~disclaim any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in ~~the Company’s~~our expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law.

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TABLE OF CONTENTS

~~PART I — FINANCIAL INFORMATION~~

~~ITEM 1.~~	~~FINANCIAL STATEMENTS~~		4
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION		13	16
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK		23	25
ITEM 4.	CONTROLS AND PROCEDURES.		23	26

PART II—OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS		24	27
ITEM 1A.	RISK FACTORS		24	27
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		24	27
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES		24	27
ITEM 4.	MINE SAFETY DISCLOSURES		24	27
ITEM 5.	OTHER INFORMATION		24	27
ITEM 6.	EXHIBITS.		25	28
SIGNATURES		26	29

Table of Contents

~~PART I — FINANCIAL INFORMATION~~

~~ITEM 1. FINANCIAL STATEMENTS~~

~~BT BRANDS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED BALANCE SHEETS~~

October 3,
2021
(Unaudited)

January 3,
2021

ASSETS

CURRENT ASSETS

Cash

$ 2,078,812

$ 1,321,244

Receivables

31,751

19,030

Inventory

69,443

60,576

Prepaid expenses and other current assets

66,366

5,348

Total current assets

2,246,372

1,406,198

PROPERTY AND EQUIPMENT, net

1,546,038

1,632,457

LAND AND BUILDINGS HELD FOR SALE

258,751

258,751

INVESTMENT IN RELATED COMPANY

75,000

75,000

OTHER ASSETS, net

15,200

16,759

Total assets

$ 4,141,361

$ 3,389,165

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES

Current maturities of long-term debt

$ 178,611

$ 245,306

Accounts payable

419,007

270,487

Accrued expenses

304,598

420,734

Income taxes payable

177,088

97,978

Total current liabilities

1,079,304

1,034,505

LONG-TERM DEBT, less current maturities

3,005,113

2,938,983

DEFERRED INCOME TAXES

176,000

118,000

Total liabilities

4,260,417

4,091,488

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT

Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at October 3, 2021 and January 3, 2021

0

0

Common stock, $.002 par value, 50,000,000 authorized, 4,047,506 shares outstanding at October 3, 2021 and January 3, 2021

8,095

8,095

Additional paid-in capital

497,671

497,671

Accumulated deficit

(624,822 )

(1,208,089 )

Total shareholders' deficit

(119,056 )

(702,323 )

Total liabilities and shareholders' deficit

$ 4,141,361

$ 3,389,165

~~See Notes to Condensed Consolidated Financial Statements~~

BT BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	July 3, 2022
	(Unaudited)			January 2, 2022
ASSETS
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

LIABILITIES AND SHAREHOLDERS' EQUITY
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

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares outstanding at July 3, 2022 and January 2, 2022		0			0
Common stock, $0.002 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

See Notes to Condensed Consolidated Financial Statements

Table of Contents

~~BT BRANDS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF INCOME~~

~~(Unaudited)~~

39 Weeks Ended,

13 Weeks Ended,

October 3,
2021

September 27,
2020

October 3,
2021

September 27,
2020

SALES

$ 6,604,554

$ 6,074,222

$ 2,280,999

$ 2,374,454

COSTS AND EXPENSES

Restaurant operating expenses

Food and paper costs

2,580,224

2,299,989

944,171

863,997

Labor costs

1,794,499

1,718,703

607,780

624,696

Occupancy costs

436,196

504,142

132,542

170,109

Other operating expenses

355,024

313,101

102,943

121,827

Depreciation and amortization

173,799

140,588

60,405

49,668

Impairment of assets held for sale

0

100,000

0

0

General and administrative

295,397

371,455

74,415

188,292

Total costs and expenses

5,635,139

5,447,978

1,922,256

2,018,589

Income from operations

969,415

626,244

358,743

355,865

INTEREST EXPENSE

(161,148 )

(136,347 )

(32,916 )

(45,188 )
INTEREST INCOME

0

92,707

0

28,507

OTHER INCOME

0

466,758

0

0

INCOME BEFORE TAXES

808,267

1,049,362

325,827

339,184

PROVISION FOR INCOME TAXES

(225,000 )

(234,000 )

(90,000 )

(85,000 )

NET INCOME

$ 583,267

$ 815,362

$ 235,827

$ 254,184

NET INCOME PER COMMON SHARE -

Basic and Diluted

$ 0.14

$ 0.20

$ 0.06

$ 0.06

WEIGHTED AVERAGE NUMBER OF SHARES USED

IN COMPUTING PER COMMON SHARE AMOUNTS -

Basic and Diluted

4,047,506

4,047,506

4,047,506

4,047,506

~~See Notes to Condensed Consolidated Financial Statements~~

BT BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
*(Unaudited)*

	26 Weeks Ended			26 Weeks Ended,			13 Weeks Ended,			13 Weeks Ended,
	July 3, 2022			July 4, 2021			July 3, 2022			July 4, 2021
SALES	$	5,598,076		$	4,323,555		$	3,524,881		$	2,382,683

COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		1,786,828			1,636,053			1,311,373			908,760
Labor costs		435,920			1,186,719			1,179,118			621,227
Occupancy costs		332,181			303,654			261,282			167,106
Other operating expenses		178,701			252,081			212,314			128,872
Depreciation and amortization expenses		178,701			113,394			109,286			58,558
General and administrative expenses		746,717			220,982			455,656			110,983
Total costs and expenses		5,513,303			3,712,883			3,529,029			1,995,506
Income from operations		84,773			610,672			(4,148	)		387,177

UNREALIZED LOSS ON MARKETABLE SECURITIES		(80,238	)		0			(80,238	)		0
INTEREST AND OTHER INCOME		9,473			0			9,473			0
INTEREST EXPENSE		(54,461	)		(128,232	)		(26,190	)		(89,661	)
EQUITY IN NET LOSS OF AFFILIATE		(14,172	)		0			(14,172	)		0
INCOME (LOSS) BEFORE TAXES		(54,625	)		482,440			(115,275	)		297,516
INCOME TAX (EXPENSE) BENEFIT		5,000			(135,000	)		23,000			(85,000	)
NET INCOME (LOSS)	$	(49,625	)	$	347,440		$	(92,275	)	$	212,516
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted	$	(0.01	)	$	0.09		$	(0.01	)	$	0.05

WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted		6,458,276			4,047,502			6,461,118			4,047,502

See Notes to Consolidated Condensed Financial Statements

Table of Contents

~~BT BRANDS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)~~

~~(Unaudited)~~

Common Stock

Additional
Paid-in

Accumulated

For the 39-week periods -

Shares

Amount

Capital

(Deficit)

Total

Balances, January 3, 2021

4,047,502

$ 8,095

$ 497,671

$ (1,208,089 )

$ (702,323 )
Shares issued for fractional holdings

4

0

0

0

0

Net income

-

0

0

583,267

583,268

Balances, October 3, 2021

4,047,506

$ 8,095

$ 497,671

$ (624,822 )

$ (119,056 )

Common Stock

Additional
Paid-in

Accumulated

Shares

Amount

Capital

(Deficit)

Total

Balances, December 29, 2019

4,047,506

$ 8,095

$ 497,671

$ (1,902,081 )

$ (1,396,315 )
Net income

-

0

0

815,362

815,362

Balances, September 27, 2020

4,047,506

$ 8,095

$ 497,671

$ (1,086,719 )

$ (580,953 )

Additional

Common Stock

Paid-in

Accumulated

For the 13-week periods -

Shares

Amount

Capital

(Deficit)

Total

Balances, July 4, 2021

4,047,506

$ 8,095

$ 497,671

$ (860,649 )

$ (354,883 )
Net income

-

0

0

237,827

235,828

Balances, October 3, 2021

4,047,506

$ 8,095

$ 497,671

$ (624,822 )

$ (119,056 )

Additional

Common Stock

Paid-in

Accumulated

Shares

Amount

Capital

(Deficit)

Total

Balances, June 28, 2020

4,047,506

$ 8,095

$ 497,671

$ (1,340,903 )

$ (835,137 )
Net income

-

0

0

254,184

254,184

Balances, September 27, 2020

4,047,506

$ 8,095

$ 497,671

$ (1,086,719 )

$ (580,953 )

~~See Notes Condensed Consolidated Financial Statements~~

BT BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
*(Unaudited)*

	26 Weeks ended,
	July 3, 2022			July 4, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)	$	(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

See Notes to Consolidated Condensed Financial Statements

Table of Contents

~~BT BRANDS, INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(Unaudited)~~

39 Weeks
Ended

39 Weeks
Ended

October 3,
2021

September 27,
2020

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income

$ 583,267

$ 815,362

Adjustments to reconcile net income to net cash provided by operating activities-

Depreciation and amortization

173,799

140,588

Amortization of debt issuance cost included in interest expense

55,555

3,882

Deferred taxes

58,000

(10,000 )
Payment on in-kind interest

0

39,368

Impairment of assets held for sale

0

100,000

Changes in operating assets and liabilities -

Receivables

(12,721 )

(6,365 )
Inventory

(8,867 )

(1,186 )
Prepaid expenses and other current assets

(29,195 )

6,303

Accounts payable

148,520

70,999

Unearned vendor rebate

0

(3,668 )
Accrued expenses

(116,136 )

681

Income taxes payable

79,110

233,000

Net cash provided by operating activities

931,332

1,388,964

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment

(85,821 )

(57,736 )
Proceeds on notes due from related entity

0

104,000

Net cash provided by (used in) investing activities

(85,821 )

46,264

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt

3,107,100

77,500

Principal payments on long-term debt

(3,113,521 )

(377,566 )
Payment of debt issuance costs

(49,699 )

0

Payment of deferred offering costs

(31,823 )

0

Net cash used in financing activities

(87,943 )

(300,066 )

CHANGE IN CASH

757,568

1,135,162

CASH, BEGINNING OF PERIOD

1,321,244

258,101

CASH, END OF PERIOD

$ 2,078,812

$ 1,393,263

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid for interest

$ 127,800

$ 93,096

Transfer of property and equipment to assets held for sale

$ 0

$ 189,640

Cash paid for Income taxes

$ 88,006

$ 0

BT BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
	*(Unaudited)*

*For the 26-week periods-*			Common Stock		Additional		Accumulated
	Shares		Amount		Paid-in Capital		(Deficit)			Total

Balances, January 2, 2022		6,447,506	$	12,895	$	11,215,696	$	(600,238	)	$	10,628,353
Stock-based compensation		-		0		73,400		0			73,400
Shares issued in exercise of warrants		13,612		27		74,839		0			74,866
Net loss		-		0		0		(49,625	)		(49,625	)
Balances, July 3, 2022		6,461,118	$	12,922	$	11,363,935	$	(649,863	)	$	10,726,994

			Common Stock		Additional		Accumulated
	Shares		Amount		Paid-in Capital		(Deficit)			Total

Balances, January 3, 2021		4,047,502	$	8,095	$	497,671	$	(1,208,089	)	$	(702,323	)
Net income		-		0		0		347,440			347,440
Balances, July 4, 2021		4,047,502	$	8,095	$	497,671	$	(860,649	)	$	(354,883	)

*For the 13-week periods-*			Common Stock		Additional		Accumulated
	Shares		Amount		Paid-in Capital		(Deficit)			Total
Balances, April 3, 2022		6,461,118	$	12,922	$	11,324,035	$	(557,588	)	$	10,779,369
Stock-based compensation		-		0		39,900		0			39,900
Net loss		-		0		0		(92,275	)		(92,275	)
Balances, July 3, 2022		6,461,118	$	12,922	$	11,363,935	$	(649,863	)	$	10,726,994

			Common Stock		Additional		Accumulated
	Shares		Amount		Paid-in Capital		(Deficit)			Total

Balances, April 4, 2021		4,047,502	$	8,095	$	497,671	$	(1,073,165	)	$	(567,399	)
Net income		-		0		0		212,516			212,516
Balances, July 4, 2021		4,047,502	$	8,095	$	497,671	$	(860,649	)	$	(354,883	)

See Notes to Condensed Consolidated Financial Statements

Table of Contents

BT BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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”,~~“Company,” “we,” “our,” “us,” “BT Brands,” or ~~“BT Brands”~~“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 and~~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 ~~3, 2021.~~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 ~~October~~July 3, ~~2021,~~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 ~~3, 2021,~~2, 2022, and the related notes ~~thereto~~ included in ~~the Company’s~~our Form 10-K for the fiscal year ended January ~~3, 2021.~~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. ~~(the “Company”)~~ was incorporated as Hartmax of NY Inc. on January 19, ~~2016, with the objective of acquiring an operating entity.~~2016. Effective on July 30, 2018, the Company acquired 100% of ~~the ownership~~ BTND, LLC. ~~in exchange for common stock in the Company through a Share Exchange Agreement (“Share Exchange”) with members of BTND, LLC (“BTND”).~~

Business

~~The Company currently operates company-owned fast-food~~As of July 3, 2022, BT Brands owned and operated twelve restaurants, ~~called Burger Time. The Company also operates one unit in Minnesota as a franchisee of International Dairy Queen. The Company operates three~~including nine Burger Time ~~locations~~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 ~~North Dakota,~~Michigan and ~~two~~single units in ~~South Dakota. The Company closed a store in Richmond,~~Ft. Wayne, Indiana, ~~during 2018 which is listed for sale. There were a total of ten operating restaurants on October 3, 2021.~~and Centerville, Ohio.

~~The Company’s~~Our Dairy Queen ~~store~~location is operated ~~pursuant to the terms of~~under a franchise agreement with International Dairy Queen. ~~The Company is required to~~We pay ~~regular~~ royalty and advertising payments to the franchisor ~~and to remain in compliance with the terms of~~as required by the franchise agreement.

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Fiscal Year Period

~~The Company’s~~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 ~~the~~a 52-week year. ~~All references to years in this report refer to the 26-week periods in the respective~~Fiscal 2022 is 52 weeks ending January 1, 2023, and fiscal ~~year periods. Fiscal~~ 2021 iswas a ~~52-week year~~52-weeks ending January 2, 2022.

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Cash

~~For purposes of reporting~~At times, our bank deposits exceed the amount insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash ~~and cash flows, cash is net of outstanding checks and includes, amounts on deposit at banks and~~ deposits in ~~transit.~~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 ~~mainly~~ 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, ~~which range~~ranging from three to thirty years.

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~~The Company reviews~~

We review long-lived assets to determine if the carrying value of these assets ~~may not be~~is recoverable based on estimated cash flows. Assets are ~~reviewed~~evaluated at the lowest level for which cash flows can be identified ~~which is~~ at the restaurant level. In determining future cash flows, ~~significant~~ estimates are made by us for the ~~Company with respect to~~ future operating results of each ~~restaurant over its remaining life.~~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

~~From time-to-time the Company may sell an existing operating unit or may close an operating unit and list the property for sale. The carrying value~~As of July 3, 2022, a property in the St. Louis area, ~~was fully reserved for in 2020. In September~~which has a carrying value of ~~2018 the Company closed an operating Burger Time unit~~$0, and a property in Richmond, Indiana, ~~and the Richmond property is listed~~are held for sale. In the second quarter of fiscal 2019 it was concluded to record a charge of $93,488 for impairment of the value of the Richmond location and in the second quarter of 2020 an additional $100,000 impairment charge was recorded. The Company believesWe believe the Richmond property will be sold at or above its ~~current carrying cost~~current-carrying cost. The remaining book value of ~~assets held for sale.~~

$258,751 is included in Other Assets in the accompanying balance sheet.

Income Taxes

~~We provide~~The Company provides for income taxes under ~~(Accounting~~Accounting Standards Codification (ASC), ~~740),~~740, Accounting for Income Taxes. ASC 740 ~~using~~uses an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and ~~liabilities and~~liabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. ~~The Company provides~~If necessary, we provide a valuation allowance ~~if necessary,~~ to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability, and valuation allowances are adjusted as necessary. ~~The Company estimates~~

As of July 3, 2022, we estimated a current tax provision ~~for~~at the net combined federal and state ~~income taxes at the combined statutory~~ rate of approximately 27.5%.

The Company ~~currently~~ has no accrued interest or penalties relating to ~~any~~ income tax obligations. ~~The Company~~There currently ~~has~~are no federal or state examinations in ~~progress, nor~~progress. The Company has itnot had any federal or state tax examinations since its ~~inception and all~~inception. All periods since inception remain open for ~~examination.~~

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inspection.

Per Common Share Amounts

Net income per common share is computed ~~pursuant to section 260-10-45 of the FASB ASC. Basic net income per share is computed~~ by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income or loss per share is ~~computed~~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 ~~net income~~per share amounts if their effect ~~would be~~is anti-dilutive. There were no ~~potentially~~ dilutive shares ~~outstanding as of~~for the periods ending in ~~2021~~2022 and ~~2020, as the strike price for warrants outstanding was above the fair market price of the underlying stock in both periods.~~2021.

~~Other Assets~~

Other assets are the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, which is being amortized over an estimated useful life of 14 years.

~~NOTE 2 – PROPERTY AND EQUIPMENT~~

~~Property and equipment consisted of the following at:~~

October 3,
2021

January 3,
2021

Land

$ 485,239

$ 485,239

Equipment

2,566,295

2,497,576

Buildings

1,322,085

1,306,896

Total property and equipment

4,373,619

4,289,711

Accumulated depreciation

(2,568,830 )

(2,398,503 )
Less - property held for sale

(258,751 )

(258,751 )
Net property and equipment

$ 1,546,038

$ 1,632,457

~~Depreciation expense for the 39-week periods in 2021 and 2020 was $172,261 and $139,313, respectively.~~

~~NOTE 3 – ACCRUED EXPENSES~~

~~Accrued expenses consisted of the following at:~~

October 3,
2021

January 3,
2021

Accrued real estate taxes

$ 103,129

$ 106,935

Accrued bonus compensation

7,000

162,000

Accrued payroll

93,217

56,139

Accrued payroll taxes

9,699

8,519

Accrued sales taxes payable

59,897

66,632

Accrued vacation pay

17,663

19,657

Other accrued expenses

13,993

852

$ 304,598

$ 420,734

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NOTE 4 2 – ~~LONG TERM DEBT~~ 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 ~~Company’s long-term debt is as follows:~~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.

October 3,
2021

January 3,
2021

Notes payable to bank with interest at 4.75%. Secured by eight of the Company's locations and the personal guaranty of a Company shareholder. These notes were paid in full on June 27, 2021.

$ 0

$ 2,884,650

Three notes payable to bank dated June 28, 2021 due in monthly installments totaling $22,213 which includes principal and interest at fixed rate of 3.45% through June 28, 2031. Beginning in July 2031, the interest rate will be equal to the greater of the "prime rate" plus .75%, or 3.45% . These notes mature on June 28, 2036. The notes are secured by mortgages covering the Company's ten operating locations. The notes are guaranteed by BT Brands, Inc. and a shareholder of the Company.

3,076,200

0

Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%. This note is secured by the West St. Paul location and the personal guaranty of a shareholder of the Company. This note was paid in full on April 6, 2021.

0

185,219

Notes payable to bank dated November 10, 2016 payable in monthly installments of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be be less than 4%. This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company.

133,318

141,125

Minnesota Small Business Emergency Loan dated April 29, 2020 payable in monthly installments of $458.33 beginning December 15, 2020 which includes principal and interest at 0%. This note is secured by the personal guaranty of a shareholder of the Company.

23,375

27,500

3,232,893

3,238,494

Less - unamortized debt issuance costs

(48,349 )

(54,205 )
Current maturities

(178,611 )

(245,306 )
Total

$ 3,005,933

$ 2,938,983

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.

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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

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

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.

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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

NOTE 6 - LONG TERM DEBT

Our long-term debt is as follows:

	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

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.

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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	$	0
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.

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.

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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.

NOTE 9 - RELATED PARTY ~~TRANSACTIONS~~TRANSACTION

Next Gen Ice

In 2019, ~~the Company~~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”). ~~The Company’s~~Our CEO, Gary Copperud, is Chairman of the Board of Directors of ~~NGI and the Company’s~~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 on a part-time contract basis.~~NGI. When the loan was made, Mr. Copperud and ~~a limited liability company~~an entity controlled by him together ~~own~~owned approximately 34% of the outstanding equity of NGI. ~~On March 2, 2020, the Notes, were modified and the maturity extended to August 31, 2020.~~ As part of ~~the~~a Note modification, ~~the Company~~BT Brands received 179,000 shares of common stock in ~~Next Gen Ice~~NGI from the founders of NGI, representing approximately 2% of NGI shares outstanding. ~~The Company~~BT Brands also holds warrants expiring March 31, 2028, to purchase 358,000 shares of common stock ~~at a price of~~for $1.00 per ~~share through March 31, 2023.~~share. The common stock and ~~common stock purchase~~ warrants ~~received by the Company~~ were recorded at a value determined by ~~the Company~~BT Brands of $75,000. ~~This amount was also recorded at a discount to the note receivable and was recognized as interest income over the extended term of the Notes.~~

The ~~Company has determined that its~~ investment in NGI does not have a readily determinable market ~~value and therefore~~value. Therefore, it is carried at ~~the~~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 ~~Company at~~$75,000 value determined by BT Brands for the ~~time the~~initial common shares and warrants ~~were received. The Notes were repaid~~and the $229,000 cost of the investment in ~~August 2020, with interest,~~the NGI Convertible Preferred Stock and ~~currently there are no outstanding amounts due to the Company from NGI.~~warrants.

NOTE 6 10 – CONTINGENCIES

~~During~~In the course of its business, the Company may be a party to claims and legal or regulatory actions arising from the conduct of its business. ~~The Company is~~We are not aware of any significant asserted or potential claims ~~which~~that could impact ~~its~~our financial position.

NOTE 711 – SUBSEQUENT EVENT

~~Effective November 12, 2021,~~Acquisition of Village Bier Garten Restaurant

On August 4, 2022, BT Brands, through our 1519BT, LLC subsidiary, completed the ~~Company~~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 ~~an Underwriting Agreement~~a five-year lease with ~~Maxim Group LLC. and Joseph Gunnar & Company, LLC as representatives of an Underwriting Group to purchase 2,400,000 units, each unit consisting of one share of Common Stock and one~~three five-year ~~stock purchase warrant to purchase an additional share at $5.50 per share. Under~~renewal options for the ~~Underwriting Agreement,~~property currently occupied by the ~~gross proceeds to the Company are approximately $4.55 per share after deducting underwriting discounts and expenses.~~business. The Company also granted to the Underwriters an “overallotment option” wherein the Underwriters were granted the option to purchase an additional 300,000 units for 30 days following the offering. We estimate that the net proceeds from the saleterms of the units, after deducting underwriting discounts and commissions and estimated offering expenses incurred by us, will be approximately $10,665,000. If the underwriters fully exercise the over-allotment option, thetriple net ~~proceeds will be approximately $12,321,000.~~lease call for an initial monthly rent of $8,200.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion of the financial condition, results of operations, liquidity and capital resources of BT Brands, Inc. and its wholly-owned subsidiaries (together, “BT Brands” or the “Company”) should be read in conjunction with the Company’s condensed consolidated financial statements and accompanying notes included under Part I, Item 1 of this quarterly report on Form 10-Q, as well as with the audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s annual report on Form 10-K for the year ended January ~~3, 2021.~~2, 2022.

~~Overview~~Introduction

~~We own~~As of July 3, 2022, including our partially owned Bagger Dave’s business, we owned and ~~operate ten fast food~~operated eighteen restaurants, ~~including nine~~comprising the following:

	·	Nine Burger Time fast-food restaurants and one Dairy Queen franchise, all of which are in the North Central region of the United States;

	·	Bagger Dave’s Burger Tavern, Inc, a 41.2% owned affiliate, operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana;

	·	Keegan’s Seafood Grille in Indian Rocks Beach, Florida;

	·	Pie in the Sky Coffee Shop and Bakery in Woods Hole, Massachusetts.

The first Burger Time ~~restaurants and one Dairy Queen~~ restaurant ~~all~~opened in Fargo, North Dakota, in 1987. BTND, LLC purchased the assets of ~~which are~~Burger Time in ~~the North Central region of the United States. Our~~May 2007. Burger Time restaurants feature ~~a wide variety of burgers and other affordably priced~~additional affordable foods such as chicken sandwiches, pulled pork sandwiches, sides, and soft drinks. Our Dairy Queen restaurant offers the established Dairy Queen menu consisting of burgers, chicken, sides, ice cream and other desserts, and a wide array of beverages. Our revenues are derived from the sale of food and beverages at our restaurants.

~~Our~~ Burger ~~Time~~Time’s operating principles include: (i) offering ~~a “Bigger Burger” to deliver our customers “more good food~~bigger burgers and more value for ~~your money”;~~the money; (ii) offering a limited menu to permit attention to quality and speed of preparation; (iii) providing fast service by way of single and double drive-thru designs and a point-of-sale system that expedites the ordering and preparation ~~process;~~process, and (iv) great tasting and quality food made fresh to order at a fair price. Our primary strategy is to serve the drive-thru and take-out segment of the quick-service restaurant industry.

Operationally, we ~~take several steps to maintain~~strive for efficiency at our Burger Time restaurants, including maintaining an inventory of ~~$5,000 to~~approximately $15,000 per store, ~~at any given time (which also has the advantage of~~ allowing for frequent ~~deliveries~~fresh food deliveries. Historically, our Burger Time investment model targeted an average cash investment of ~~fresh food)..~~between $325,000 and $535,000.

~~Our~~The average customer transaction at our Burger Time restaurants increased by approximately 4% in the first ~~nine~~six months of fiscal ~~2021~~2022 compared to ~~2020~~2021 and currently is approximately ~~$11.90.~~$12.50. This recent increase is principally because of a menu price increase implemented in 2021 and a 2022 price increase of approximately 10% on our popular “Deal of the ~~middle of 2020. Our sales trends are influenced by many~~Day” offering. Many factors ~~including the COVID pandemic, which had been a positive for~~influence our sales ~~however, the~~trends. The business environment is challenging for smaller restaurant chains as competition ~~from the major fast-food hamburger-focused business~~ is intense.

BT Brands operates Burger Time restaurants and newly acquired businesses through a central management organization which we believe provides continuity across our restaurant base and allows for efficiencies of a central management team.

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Highlights

During the first two quarters of 2022, we acquired two restaurants and a 41.2% interest in an operator of six restaurants with the net proceeds from our November 2021 initial public offering. We expect to continue to consider acquisition opportunities. Our recent acquisitions have allowed us to diversify our operations into new restaurant segments and new geographic regions, which we expect will reduce our dependency on the financial performance of our Burger Time restaurants.

Keegan’s Seafood Grille, which we acquired in March 2022, has served customers in the Clearwater and St. Petersburg, Florida markets for over 35 years. The operation is primarily a dine-in restaurant offering a variety of traditional fresh seafood items for lunch and dinner and a selection of beer and wine.

In May 2022, through our 10Water Street, LLC subsidiary, we acquired the assets and business operations of the iconic Pie In The Sky Coffee Shop and Bakery “PIE,” which is adjacent to the ferry dock in Woods Hole, Massachusetts. The business has operated in the same location for over thirty years, offering a range of breakfast and lunch options, freshly roasted coffee, and branded merchandise serving locals and tourists.

In June 2022, BT Brands acquired approximately 41.2% of the stock of Bagger Dave’s Burger Tavern, Inc., which owns and operates six Bagger Dave’s restaurants, a casual restaurant, and bar concept. Bagger Dave’s provides a warm, inviting, and entertaining atmosphere specializing in locally sourced, never-frozen prime rib recipe burgers, all-natural turkey burgers, hand-cut fries, locally crafted draft beers, milkshakes, salads, black bean turkey chili, pizza, and other items. Bagger Dave’s opened its first restaurant in Berkley, Michigan, in January 2008 and operates four restaurants in Michigan, one restaurant in Ft. Wayne, Indiana, and one location in Centerville, Ohio.

Material Trends and Uncertainties

There are industry trends ~~which may~~that currently have an impact on our business. ~~These~~Current trends ~~principally relate to~~include difficulties attracting food service workers and rapid inflation in the cost of many input items. Recent trends also include the rapidly changing area of technology and food delivery. The major companies in the restaurant industry have rapidly adopted and developed ~~applications for the smart phone~~smartphone and mobile delivery applications, have aggressively expanded drive-through operations, and ~~have~~ developed loyalty programs and ~~data base~~database marketing supported by a robust technology platform. We expect these trends to continue as restaurants aggressively ~~complete~~compete for customers. ~~Further, the major industry participants have continued~~Competitors likely will continue to ~~strategically~~ discount prices through ~~promotions such as a “dollar menu.” We expect these significant trends will continue.~~aggressive promotions.

The cost of food has increased over the last two years, and we expect to see continued inflationary pressure in the remainder of ~~2021.~~2022. Beef costs were stable in 2020, continued to rise in 2021, and have recently ~~have~~ increased by approximately ~~13.7%~~4% per ~~pound following an increase of approximately 5% in 2019.~~pound. Given the competitive nature of the fast-food burger restaurant industry, ~~in response to recent commodity price increases, we are planning to implement a price increase in the fourth quarter of 2021, however,~~ it may be difficult to raise menu prices to ~~fully~~ cover future cost ~~increases.~~increases fully. During 2020 and ~~continuing into~~early 2021, our Burger Time business experienced a significant increase in business volume ~~contributed~~contributing to improved profit margins. Additional margin improvements may have to be ~~achieved~~made through operational ~~improvements,~~enhancements, equipment advances, and increased volumes to help offset ~~any~~ food cost increases due to the competitive state of the restaurant industry.

Labor is a critical factor in operating our stores. In most areas where we operate our restaurants, there historically has been a shortage of suitable labor, and recently, securing staff has become more challenging. The ~~general state~~current labor market has resulted in higher wages as the competition for employees intensifies, not only in the restaurant industry but in practically all retail and service industries. We must develop and retain quality employees.

Since March 2020, we have faced the effects of COVID and its variants. COVID infections have adversely affected workforces, customers, economies, and financial markets globally and have disrupted the normal flow of the ~~economy influences~~U.S. economy. Our stores have, with only a few exceptions, remained open for drive-through business during the last two years; however, many businesses experienced a disruption of normal operations. More recently, food service businesses, including ours, have faced challenges in attracting and hiring workers. Labor shortages may continue and become more acute as market participants compete to attract employees.

We can’t predict the duration or magnitude of the effects of COVID and the impact on our business or the results of operations. The response to public health matters may influence restaurant customer traffic and our ability to staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level. Further, such conditions could impact the availability of the menu items we offer and the ability of suppliers to deliver such products. We also may be adversely affected ~~if jurisdictions in which we have restaurants sre ordered to close, or we may be forced to implement temporary~~by mandatory closures, seek voluntary closures, or impose restrictions on ~~operations as a result of a shortage in available workers.~~operations. Even if such measures are not implemented, the perceived risk of infection or significant health risk may adversely affect our business.

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We continue to monitor public health issues and their impact on our customer base and throughout the country. It is difficult to predict the future in light of many factors, including the spread of new variants of the original coronavirus disease among the U.S. population and the efficacy of existing treatments and vaccines.

Our strategy to acquire additional restaurant properties presents numerous risks and uncertainties to our operations, including our management’s ability to:

	·	identify suitable targets;
	·	complete comprehensive due diligence as to targets,
	·	integrate a target’s operations with our existing operations,
	·	retain management and key employees of the target;
	·	operate new restaurant concepts in new geographic areas outside of our traditional Burger Time platform;
	·	develop and implement appropriate and effective sales and marketing strategies for our new restaurants individually and our restaurant group as a whole;
	·	maintain and grow revenue at our new properties;
	·	identify and retain experienced managerial personnel to effectively administer our operations;
	·	improve existing, and implement new operational, financial, and management controls;
	·	install enhanced management information systems; and
	·	create a corporate brand identifying our restaurants as BT Brands’ properties.

Our failure to manage any of these aspects of our growth could adversely impact our business and our results of operations.

Future conditions may influence restaurant customer traffic and our ability to adequately staff our restaurants, receive deliveries on a timely basis or perform functions at the corporate level. Further, such conditions could impact the availability of the menu items we offer and the ability of suppliers to deliver such products. We also may be adversely affected if jurisdictions impose mandatory closures, seek voluntary closures, or impose restrictions on operations. Even if such measures are not implemented, the perceived risk of infection or significant health risk may adversely affect our business.

Growth Strategy and Outlook

We are seeking to increase value for our shareholders in the ~~foodservice~~food service industry. Our principal strategy ~~is to acquire~~comprises acquiring individual and multi-unit ~~restaurant concepts and individual~~ restaurant properties at attractive ~~multiples of earnings.~~earnings multiples. Though we do not ~~currently~~ plan to do so, ~~under certain circumstances,~~ we may develop additional Burger Time locations ~~through the acquisition~~by acquiring and ~~conversion of~~converting existing ~~properties.~~properties under certain circumstances. Other key elements of our growth strategy ~~encompass~~include increasing ~~same store~~same-store sales and ~~boosting~~introducing a campaign to boost brand awareness.

Expansion Through Acquisitions

We intend to continue to make strategic and opportunistic acquisitions that provide an entrance into targeted restaurant segments and geographic areas. Restaurant businesses become available for acquisition frequently, and we believe that we may be able to purchase either individual restaurant properties or multi-unit businesses at prices providing an attractive return on our investment. ~~Alternatively, we~~We may acquire operating assets where a franchise program of the acquired foodservice business is ~~concluded by management to be~~ the most appropriate growth plan. We intend to follow a disciplined strategy of evaluating acquisition opportunities ~~that seek~~ to ensure and enable the accretive and efficient acquisition and integration of additional restaurant concepts. Successful execution of our acquisition strategy will allow us to diversify our operations ~~both~~ into other dining concepts and geographic locations.

In evaluating potential acquisitions, we may consider the following characteristics, among others, that management considers relevant to each ~~distinct~~ opportunity:

	·	the value proposition offered by acquisition targets when comparing the purchase price to the potential return on our investment;
	·	established, recognized brands within their geographic footprint;
	·	steady cash flow;
	·	track records of long-term operating performance;
	·	sustainable operating results;
	·	geographic diversification; and
	·	growth potential.

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Assuming we are successful in acquiring new businesses, we will operate the business or businesses with a shared central management organization. Following the acquisition, we expect to pursue a growth plan to ~~both~~ expand the number of locations and to increase comparable store sales and profits, as described below. We anticipate that by leveraging our management services platform, we will ~~be able to~~ achieve post-acquisition cost benefits by reducing the corporate overhead of the acquired business. If we acquire one or more restaurant chains or individual units ~~in close proximity to~~near each other, we believe the concentration of operations will provide economic synergies ~~with respect to~~for management functions, marketing, and advertising, supply chain assistance, staff training, and operational oversight.

~~Future Development of Additional Burger Time Restaurants~~

We may consider developing additional Burger Time location. Conditions which might give rise to developing additional Burger Time locations include the opportunity to acquire and convert a property that previously had operated as a fast-food establishment at a highly attractive price in a location that fits naturally within Burger Time’s geographic footprint so that we may share service expenses, including advertising costs.

If we elect to open additional Burger Time restaurants, we expect that development of these restaurants will, based on our experience, require a minimum six to nine months after opening to achieve the targeted restaurant-level sales and operating margins. In a case where we open a restaurant in new and untested markets, achieving targeted sales may take longer since the local population will not be familiar with our brand and building brand awareness takes time in a new an untested market. How quickly new restaurants achieve their targeted sales and operating margin depends on many factors, including the level of consumer familiarity with our brand, as well as the availability of experienced managers and other staff. However, every restaurant has a unique opening sales pattern, and this pattern is difficult to predict.

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Increase Same-Store Sales

Same-store sales growth reflects the change in year-over-year sales for the comparable store ~~base.~~base and is a benchmark for the performance of our restaurants. We ~~intend to deploy~~use a multi-faceted same-store sales growth strategy to optimize restaurant performance. We ~~will apply~~use techniques proven in the restaurant industry to increase ~~same store sales at our Burger Time restaurants and at our acquired properties and to develop new approaches that reflect our corporate character and restaurant composition.~~same-store sales. We ~~expect to~~ utilize customer feedback and analyze sales data to ~~introduce,~~ test and ~~hone~~improve existing and new menu items. In addition, we ~~will investigate utilizing~~may use social media and public relations, and experiential marketing to engage customers. ~~We expect that our~~Our strategies to increase same-store sales will evolve as we acquire new restaurant concepts in new markets.

Increase Brand Awareness

~~We appreciate that increasing~~Increasing brand awareness is ~~important~~essential to the growth of our Company. We ~~will~~intend to develop and implement forward-looking branding ~~strategies both for our Burger Time concept and for any businesses that we acquire.~~strategies. We will seek to leverage social media and employ targeted digital advertising to expand the reach of our brands and drive traffic to our stores. In addition, we intend to develop mobile applications that will allow consumers to find restaurants, order online and earn rewards. We ~~will~~expect to deploy internet advertising to match specific menu items targeted to ~~specific~~ demographic groups. We will deploy cross-over ads with radio and social ~~media interacting with each other. We expect that our~~media. Our branding initiatives will evolve as we ~~consummate acquisitions of~~acquire restaurant concepts that appeal to distinct consumer markets in differing geographic areas.

~~Our ability~~Results of Operations for the Thirteen Weeks Ended July 3, 2022, and the Thirteen Weeks Ended July 4, 2021

The following table sets forth our Condensed Statements of Income and percentages of total revenues for the thirteen-week-fiscal periods. Percentages below may not reconcile because of rounding.

13 weeks ended,
July 3, 2022

13 weeks ended,
July 4, 2021

Amount

%

Amount

%

SALES

$ 3,524,881

100.0 %

$ 2,382,683

100.0 %
COSTS AND EXPENSES

Restaurant operating expenses

Food and paper costs

1,311,373

37.2

908,760

38.1

Labor costs

1,179,118

33.5

621,227

26.1

Occupancy costs

261.282

7.4

167,106

7.0

Other operating expenses

212,314

6.0

128.872

5.4

Depreciation and amortization

109,286

3.1

58.558

2.5

General and administrative

455,656

12.9

110,983

4.7

Total costs and expenses

3,529,029

100.1

1,995,506

83.8

Income (loss) from operations

(4,148 )

(.1 )

387,177

16.2

INTEREST EXPENSE

(26,190 )

(.7 )

(89,661 )

(3.8 )
INTEREST AND OTHER INCOME

9,473

.3

‒

‒

UNREALIZED LOSS AND LOSS FROM AFFILIATE

(94,410 )

(2.7 )

‒

‒

INCOME TAX BENEFIT (EXPENSE)

23,000

.6

(85,000 )

(3.5 )
NET INCOME (LOSS)

$ (92,275 )

(2.6 )%

$ 212,516

8.9 %
Net Revenues:
Net sales for the second fiscal quarter of 2022 increased $1,142,198 to ~~acquire or open new restaurants is predicated on~~$3,524,881 from $2,382,683 in fiscal 2021. The increase during the ~~availability of capital for such purposes. We cannot be certain that capital will be available~~period resulted from sales from the recently acquired businesses contributing $1,639,588 in revenue. Revenues at the Burger Time locations declined approximately 20.1% as customer purchasing patterns returned to ~~us on acceptable terms if at all.~~pre-pandemic levels. Burger Time was also adversely impacted by weather and staffing challenges, which resulted in limited hours and store closures during the quarter.

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~~Results of Operations~~Restaurant unit sales for Burger Time for the ~~Thirteen Weeks Ended October 3, 2021, and the Thirteen Weeks Ended September 27, 2020~~
The following table sets forth, for the fiscal periods indicated, our Condensed Statements of Operations expressed as percentage of total revenues. Percentages below may not reconcile because of rounding.

13 Weeks Ended,

October 3,
2021

September 27,
2020

SALES

100.0 %

100.0 %

COSTS AND EXPENSES

Restaurant operating expenses

Food and paper costs

41.4

36.4

Labor costs

26.6

26.3

Occupancy cost

5.8

7.2

Other operating expenses

4.5

5.1

Depreciation and amortization

2.6

2.1

General and administrative

3.3

7.9

Total costs and expenses

84.2

85.0

Income from operations

15.8

15.0

INTEREST EXPENSE

(1.4 )

(1.9 )
INTEREST INCOME

-

1.2

INCOME TAXES

(3.9 )

(3.6 )
NET INCOME

10.5 %

10.7 %
~~Net Revenues:~~
Net sales for fiscal third quarter of 2021 decreased $93,455 to $2,280,999 from $2,374,454 in fiscal 2020. Sales in 2021 have continued to be strong relative to the 2019 the pre-pandemic level. We have maintained the majority of the gains realized during the period of significant dining restrictions at the height of the pandemic which contributed to a continuing favorable impact on drive-through locations. This trend has led to an increase in consumers choosing Burger Time as a meal alternative.
~~Restaurant gross unit sales at the Company’s nine Burger Time locations for the 13-week period~~13 weeks ranged from a low of approximately ~~$147,000~~$139,000 to a high of approximately ~~$298,000 and~~$272,000. The average sales for each Burger Time unit during the period was approximately ~~$227,000~~$208,000 in ~~2021 a decline of~~2022, approximately ~~$10,000 from~~$29,200 below the same period in ~~2020.~~
~~Costs of Sales - food and paper:~~
Cost of sales - food and paper for third quarter of fiscal 2021 increased as a percentage of sales to 41.4% of restaurant sales from 36.4% of restaurant sales in the third quarter of fiscal 2020. This increase was the net result of inflationary pressures of certain items, a favorable six-month verbal fixed price arrangement on the price of ground beef patties at $2.51 per pound which, more recently, has increased to $2.95 per pound, increases in cost have been mitigated by the impact of a price increase taken at the end of second quarter in 2020 fully realized in 2021 we are planning to implement a menu price increase in the fourth quarter of 2021 to, in part, offset increasing costs.
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~~Restaurant Operating Costs:~~
Restaurant operating costs (which refer to all the costs associated with the operation of our restaurants, but do not include general and administrative costs, impairment charges and depreciation and amortization) as a percent of restaurant sales decreased to 36.9% of sales in the third fiscal quarter of 2021 from 38.6% in similar period of fiscal 2020. This was due to the net effect of improved utilization of store labor, offset by by higher cost incurred for personal protection equipment, a tighter labor markets and the matters discussed in the “Cost of Sales,” “Labor Costs,” “Occupancy and Other Operating Cost” sections below all of which were offset by the midyear 2020 price increase.
~~Labor Costs:~~
~~For the third quarter of fiscal 2021, labor and benefits costs increased slightly as a percentage of sales to 26.6% of restaurant sales from 26.3%~~of restaurant sales in fiscal 2020. The increase in the percentage was the result of tighter labor markets leading to higher hourly wage costs offset by the leveraging of existing staffing. Payroll costs are semi-variable in nature, meaning that they do not decrease proportionally to decreases in revenue, thus they increase as a percentage of restaurant sales when there is a decrease in restaurant sales.
~~Occupancy and Other Operating Expenses~~
For the third fiscal quarter of 2021, occupancy and other expenses decreased slightly to $235,485 (10.3% of sales) from $291,936 (12.3% of sales) in 2020. The decrease is the result of a reduction in one time maintenance charges incurred in 2020.
~~Depreciation and Amortization Expense:~~
~~For third fiscal quarter of 2021, depreciation and amortization increased $10,737 to $60,405 (2.6% of sales) from $49,668 (2.1% of sales) in the third quarter of fiscal 2020.~~
~~General and Administrative Costs~~
~~General and administrative costs decreased $113,887 from $188,292 (7.9% of sales) to $74,415 (3.3% of sales) in the third fiscal quarter of~~ 2021. ~~The decline is, in part, the result of a decrease in corporate staff during the 2021 period. The Company expects to fill a vacant position during the fourth quarter.~~
~~Income from Operations~~
The income from operations for the 13-week period was $358,743 in fiscal 2021 compared to an income from operations of $355,865 in the similar period in 2020. The increase in the percentage of income from operations to 15.8% in fiscal 2021 from 15.0% in fiscal 2020 was the result of higher input costs resulting from inflationary pressures in the marketplace offset by a significant decline in General and Administrative costs.
~~Restaurant-level EBITDA~~:
To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles, (GAAP), the Company uses restaurant-level EBITDA, which is not a measure defined by GAAP. This non-GAAP operating measure is useful to both management and, we believe, to investors because it represents one means of gauging the overall profitability of our recurring and controllable core restaurant operations. This measure is not, however, indicative of our overall results, nor does restaurant-level profit accrue directly to the benefit of stockholders, primarily due to the exclusion of corporate-level expenses. Restaurant-level EBITDA should not be considered a substitute for, or superior to, operating income, which is calculated in accordance with GAAP, and the reconciliations to operating income set forth below should be carefully evaluated.
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We define restaurant-level EBITDA as operating income before pre-opening costs, if any, general and administrative costs, depreciation and amortization and impairment charges. General and administrative costs are excluded as they are generally not specifically identifiable to restaurant specific costs. Depreciation and amortization and impairment charges are excluded because they are not ongoing controllable cash expenses, and they are not related to the health of ongoing operations.

13-Week Period

October 3,
2021

September 27,
2020

Revenues

$ 2,280,999

$ 2,374,454

Reconciliation:

Income from operations

358,743

355,865

Depreciation and amortization

60,405

49,668

General and administrative, corporate level expenses

74,415

188,292

Restaurant-level EBITDA

493,563

593,825

Restaurant-level EBITDA margin

21.6 %

25.0 %
~~Results of Operations for the Thirty-Nine Weeks Ended October 3, 2021, and the Thirty-Nine Weeks Ended September 27, 2020~~
The following table sets forth, for the fiscal periods indicated, our Condensed Statements of Operations expressed as percentage of total revenues. Percentages below may not reconcile because of rounding.

39 Weeks Ended,

October 3,
2021

September 27,
2020

SALES

100.0 %

100.0 %

COSTS AND EXPENSES

Restaurant operating expenses

Food and paper costs

39.1

37.9

Labor costs

27.2

28.3

Occupancy costs

6.6

8.3

Other operating expenses

5.4

5.2

Depreciation and amortization

2.6

2.3

Impairment of assets held for sale

-

1.6

General and administrative

4.5

6.1

Total costs and expenses

85.3

89.7

Income from operations

14.7

10.3

INTEREST EXPENSE

(2.4 )

(2.2 )
INTEREST INCOME

-

1.5

OTHER INCOME (PAYROLL PROTECTION GRANT)

-

7.7

INCOME TAXES

(3.4 )

(3.9 )
NET INCOME

8.8 %

13.4 %
~~Net Revenues:~~
Net sales for the 39-week period representing the first three quarters of fiscal 2021 increased $530,332 or 8.7% to $6,604,554 from $6,074,222 in fiscal 2020. The increase in sales was principally the result of moderating but still favorable impact in the first half of the 39-week period of the consumer response to the pandemic resulting in consumers choosing Burger Time as a meal alternative combined with generally favorable weather conditions during the period.
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Gross restaurant sales for the 39-week period for our nine Burger Time locations ranged from a low of approximately $418,000 to high of approximately $886,000 and average sales for each Burger Time unit during the period was approximately $617,000 in 2021 an increase from approximately $556,000 in same 39-week period in 2020.

Costs of Sales - food and paper:

Cost of sales - food and paper for the ~~39-week~~fiscal 2022 period ~~representing the first three quarters of fiscal 2021 increased~~decreased as a percentage of sales declined to ~~39.1%~~37.2% of restaurant sales from ~~37.9%~~38.1% of restaurant sales in the ~~similar period in 2020.~~second quarter of fiscal 2021. This ~~increase~~decrease was ~~mainly due to~~the net result of inflationary pressures ~~in the general economy increasing product cost . Average beef prices paid~~of certain items, offset by the ~~Company were approximately~~inclusion of ~~$2.51 per pound in 2021~~results of PIE which ~~was unchanged from 2020. Although, near the end of the period beef prices increased 13.7% per pound which we expect will impact fourth quarter results to some degree.~~operates at a significantly lower food and labor cost than our Burger Time business.

Restaurant Operating Costs:

Restaurant operating costs (which refer to all the costs associated with the operation of our restaurants but do not include general and administrative ~~costs, impairment charge,~~expenses and depreciation and amortization) as a percent of restaurant sales ~~declined~~increased to ~~39.2%~~78.2% of sales in the ~~2021 period~~second fiscal quarter of 2022 from ~~41.8%~~76.6% in the similar period of fiscal ~~2020 period.~~2021. This increase was ~~due primarily to~~because of higher labor and occupancy cost, including lease costs associated with our two recently acquired locations and the ~~increase in sales activity and its impact as further~~matters discussed in the “Cost of Sales,” “Labor Costs,” and “Occupancy and Other Operating Cost” sections below.

Labor Costs

For the ~~39-week period representing the first three quarters~~second quarter of fiscal ~~2021,~~2022, labor and benefits ~~costs decreased~~cost increased as a percentage of sales to ~~27.2%~~33.5% of restaurant sales from ~~28.3% of restaurant sales~~26.1%in fiscal 2021. The increase in the ~~fiscal 2020 period. The Company was able~~percentage resulted from tighter labor markets leading to favorably leverage staffing levels against the significant increase in volume during the second half of the period. While the hiring markets have become more challenging in terms of filling open positions, the Company continued to benefit from limited turnover in its unit restaurant management which tends to cause unfavorable variations in labor costs.higher hourly wage costs offset by leveraging existing staffing. Payroll costs are semi-variable, ~~in nature,~~ meaning ~~that~~ they do not decrease proportionally to decreases in revenue, thus they may increase as a percentage of restaurant sales when there is a decrease in restaurant sales conversely in tight labor markets occasionally the labor percentage cost decreases significantly as managers help fill spot shortages in staff.revenue.

Occupancy and Other Operating Expenses

For the ~~first 39 weeks~~second fiscal quarter of ~~fiscal 2021,~~2022, occupancy and other expenses increased ~~$28,225~~ to ~~$791,220 (12.0%~~13.4% of ~~sales)~~sales from ~~$817,243 (13.5% of restaurant sales)~~12.4% in ~~the similar period in 2020. Many of these~~2021. This increase results from higher occupancy costs, ~~are fixed and the lower percentage reflect the increase in restaurant sales, this was offset by an increased focus on maintenance projects resulting from high volume at~~including lease costs associated with our ~~stores impacting our major systems such as HVAC and refrigeration.~~two new locations.

Depreciation and Amortization Expense:

~~Depreciation~~For the second fiscal quarter of 2022, depreciation and amortization ~~expense in the first three quarters of fiscal 2021~~ increased ~~by $33,211~~ to ~~$173,799 (2.6%~~$109,286 (3.1% of sales) from ~~$140,588 (2.3%~~$58,558 (2.5% of sales) in the second quarter of fiscal ~~2020 period~~2021. The increase results from depreciation and ~~is the result of capital additions at several of~~amortization associated with our ~~locations.~~recent acquisitions.

General and Administrative Costs

General and administrative costs ~~decreased 25.7%, or $76,058,~~increased by $344,673 from ~~$371,455 (6.1%~~$110,983 to $455,656; the increase is associated with the Company’s transition to a public company in November 2021, including the costs related to long-term management agreements. Second quarter general and administrative expenses were 12.9% of ~~sales)~~sales, a significant increase from 4.7% in the ~~first three quarters of fiscal 2020 to $295,397 (4.5% of sales) for the fiscal 2021 period. In part from the result of lower management headcount~~earlier year.
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Income (Loss) from Operations

~~Income~~The loss from operations for the second quarter of fiscal 2022 was ~~$969,415~~$4,148 compared to a profit from operations of $387,177 in the ~~39-week~~same period ~~of fiscal 2021 compared to $626,244~~ in 2021; the ~~fiscal 2020 period. The change in~~percentage of income from operations as a percentage of sales declined to negative .1% from 16.0%, reflecting a decline in ~~the fiscal 2021 period compared to fiscal 2020 was due primarily to the impact of the 2020 impairment charge, continued robust sales activity~~profit margin at Burger Time, higher general and administrative expenses and the matters discussed in the “Net Revenues” and “Restaurant Operating Costs” sections above.

Restaurant-level EBITDA:

To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses restaurant-level EBITDA, which is not a measure defined by GAAP. This non-GAAP operating measure is useful to both management and, we believe, to investors because it represents one means of gauging the overall profitability of our recurring and controllable core restaurant operations. This measure is not ~~however,~~ indicative of our overall results, nor does restaurant-level profit accrue directly to the benefit of stockholders, primarily due to the exclusion of corporate-level expenses. Restaurant-level EBITDA should not be considered a substitute for or superior to operating income, ~~which is~~ calculated ~~in accordance with GAAP, and the~~under GAAP. The reconciliations to operating income set forth below should be carefully evaluated.
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We define restaurant-level EBITDA as operating income before pre-opening costs, if any, general and administrative costs, depreciation and amortization, and impairment charges. General and administrative ~~costs~~expenses are excluded as they are generally not specifically identifiable ~~to restaurant specific~~as restaurant-specific costs. Depreciation, ~~and~~ amortization, and impairment charges are excluded because they are not ongoing controllable cash expenses and are not related to the health of ongoing operations.

13 weeks ended,

July 3, 2022

July 4, 2021

Revenues

$ 3,524,881

$ 2,382,683

Reconciliation:

Income (loss) from operations

(4,148 )

387,177

Depreciation and amortization

109,286

58,558

General and administrative, corporate level expenses

455,656

110,983

Restaurant-level EBITDA

$ 560,795

$ 556,716

Restaurant-level EBITDA margin

15.9 %

23.4 %
Our Results of Operations for the Twenty-Six Weeks Ended July 3, 2022, and the Twenty-Six Weeks Ended July 4, 2021
The following table sets forth our Condensed Statements of Income and percentages of total revenues for the twenty-six-week fiscal periods. Percentages below may not reconcile because of rounding.

26 weeks ended,
July 3, 2022

26 weeks ended,
July 4, 2021

Amount

%

Amount

%

SALES

$ 5,598,076

100.0 %

$ 4,323,555

100.0 %
COSTS AND EXPENSES

Restaurant operating expenses

Food and paper costs

2,032,956

36.3

1,636,053

37.8

Labor costs

1,786,828

31.9

1,186,719

27.4

Occupancy costs

435,920

7.8

261,282

6.0

Other operating expenses

332,181

5.9

303,654

7.0

Depreciation and amortization

178,701

3.2

113,394

2.6

General and administrative

746,717

13.3

220,982

5.1

Total costs and expenses

5,513,303

98.5

3,712,883

85.9

Income from operations

84,773

1.5

610,672

14.1

INTEREST EXPENSE

(54,461 )

(1.0 )

(128,232 )

(3.0 )
INTEREST AND OTHER INCOME

9,473

.2

‒

‒

UNREALIZED LOSS AND LOSS FROM AFFILIATE

(94,410 )

(1.7 )

‒

‒

INCOME TAX BENEFIT (EXPENSE)

5,000

.1

(135,000 )

(3.1 )
NET INCOME (LOSS)

$ (49,625 )

(.9 )%

$ 347,440

8.0 %
Net Revenues:
Net sales for 26-week period representing the first half of fiscal 2022 increased $1,274,521 or 29.5% to $5,598,076 from $4,323,555 in fiscal 2021. The increase in sales was principally the result of a favorable impact in the 26 weeks of two acquired restaurants which contributed approximately $1,775,247 in sales, offsetting a decline of approximately $500,726 or 11.6% in Burger Time revenues.
Burger Time unit sales for the 26 weeks ranged from a low of approximately $226,000 to a high of approximately $509,000. Average sales for each Burger Time unit were approximately $389,000 in 2022, a decline from approximately $438,200 in the same 26-week period in 2021. The sales decline in the first half of 2022 is the combined result of a return to pre-covid customer purchasing patterns as competitive dining options returned to normal, labor challenges resulting in some contraction of hours, and poorer weather conditions relative to the year-earlier period.
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Costs of Sales - food and paper:
Cost of sales - food and paper for the first half of fiscal 2022 decreased as a percentage of sales to 36.3% from 37.8% of restaurant sales in the same period in 2021. This decrease resulted from a strong performance at our PIE business which operates at lower food and paper costs than our traditional business and Keegan’s location.
Restaurant Operating Costs:
Restaurant operating costs, which are associated with operations, not including general and administrative expenses, and depreciation and amortization, increased as a percentage of restaurant sales to 81.9% of sales in 2021 from 77.0% in fiscal 2021. This increase was due to the increase in sales activity from new locations and its impact, as further discussed in the “Cost of Sales,” “Labor Costs,” and “Occupancy and Other Operating Cost” sections below.
Labor Costs:
For the first half of fiscal 2022, labor and benefits cost increased to 31.9% of restaurant sales from 27.4% in the fiscal 2021 period. Shortages in staffing levels combined with higher hourly wage rates at all locations increased the overall labor percentage. The hiring markets have become more challenging in terms of filling open positions. Payroll costs are semi-variable, meaning they do not decrease proportionally to decreases in revenue. Thus, they increase as a percentage of restaurant sales when there is a decrease.
Occupancy and Other Operating Expenses:
For the first 26 weeks of fiscal 2022, occupancy and other expenses increased to 13.7% of sales from 13.0% in 2021. Many of these costs are fixed, and the percentage reflects lower maintenance costs offset by higher lease occupancy costs at our new locations.
Depreciation and Amortization Expense:
Depreciation and amortization expenses in the first half of fiscal 2022 increased by $65,307 to $178,701 (3.2% of sales) from $113,394 (2.6% of sales) in the first half of fiscal 2021 and are the result of the purchase of two new restaurants and capital additions at several of our locations.
General and Administrative Costs:
General and administrative costs increased 238.4%, or $526,735 to $746,717, from $220,982 (5.1% of sales) in the first half of fiscal 2021. The increase results from the transition to a public reporting company, stock-based compensation costs, and the expense associated with long-term management employment agreements.
Income from Operations:
Operating income was $84,773 in the first half of fiscal 2022 compared to $610,672 in the first half of fiscal 2021. The change in income from operations in the first half of fiscal 2022 compared to fiscal 2021 was due primarily to the increase in general and administrative expenses, which included higher costs associated with the transition to a public company near the end of 2021, including the “Net Revenues” and “Restaurant Operating Costs” sections above.
Restaurant-level EBITDA:
To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use restaurant-level EBITDA, which is not a measure defined by GAAP. This non-GAAP operating measure is useful to both management and, we believe, investors because it represents one means of gauging the overall profitability of our recurring and controllable core restaurant operations. This measure is not indicative of our overall results, nor does restaurant-level profit accrue directly to the benefit of stockholders, primarily due to the exclusion of corporate-level expenses. Restaurant-level EBITDA should not be considered a substitute for or superior to operating income, calculated under GAAP. The reconciliations to operating income set forth below should be carefully evaluated.
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We define restaurant-level EBITDA as operating income before pre-opening costs, if any, general and administrative costs, depreciation and amortization, and impairment charges. General and administrative expenses are excluded as they are generally not specifically identifiable as restaurant-specific costs. Depreciation, amortization, and impairment charges are excluded because they are not ongoing controllable cash expenses and are not related to the health of ongoing operations.

39-Week Period

26 weeks ended,

October 3,
2021

September 27,
2020

July 3, 2022

July 3, 2021

Revenues

$ 6,604,554

$ 6,074,222

$ 5,598,076

$ 4,323,555

Reconciliation:

Income from operations

969,415

626,244

84,773

653,044

Depreciation and amortization

173,799

140,588

178,701

113,394

General and administrative, corporate level expenses

295,397

371,455

746,717

220,982

Restaurant-level EBITDA

1,438,611

1,138,287

$ 1,010,191

$ 987,420

Restaurant-level EBITDA margin

21.8 %

18.7 %

18.0 %

22.8 %

Liquidity and Capital Resources

~~Since March of 2020,~~Initially, the ~~Covid-19 pandemic has had a positive impact of the Company’s~~public response to COVID positively impacted our sales and liquidity. More recently, as customer activities have returned to normal patterns, our Burger Time business has experienced a decline from the peak level we experienced during the height of COVID restrictions. For the 3926 weeks ended ~~October~~July 3, ~~2021, the Company earned an after-tax profit~~2022, operations reflected a net loss of ~~$583,268.~~$49,625. On ~~October~~July 3, ~~2021, the Company~~2022, we had ~~$2,078,812~~$8,295,952 in cash and working capital of ~~$1,1760,68 an increase~~$7.7 million, a decrease of ~~$765,794~~$3.9 million from January ~~3, 2021. The increase is partially~~2, 2022, resulting from the ~~result~~purchase of ~~Company completing a refinancing~~two restaurants for $2.3 million and investment of ~~the mortgages covering all its Burger Time properties including approximately $185,000~~$1.3 million in shares of current maturities of long-term debt which was included in the long-term refinancing. In the 39-week period ending October 3, 2021, the Company continued to benefit from excellent results and positive operating cash flow even as government restrictions on inside dining were eased.Bagger Dave’s.

~~Covid-19,~~In the future, COVID and its variants ~~the various variants, likely will to~~may continue to ~~have a significant~~ impact on the United States economy. It is difficult to predict ~~either~~ the ultimate impact ~~of the COVID-19 pandemic or the impact of governmental responses~~ on the United States economy in general, ~~and specifically~~ the impact on the quick service drive-through segment of the food service industry, and ~~on Company’s~~our operating results and financial ~~condition as the situation is evolving.~~condition.
In May 2020, the Company received pandemic-related loans totaling $487,900. Included in that amount was $460,400 borrowed under the Small Business Administration’s Paycheck Protection Program (“PPP”). Under the terms of the program, the loans were forgiven in 2021. The SBA’s forgiveness of the PPP is accounted for as a “grant” and $466,400 was reflected as “Other Income” in the second quarter of 2020. Also, in May 2020, the Company borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program which under certain circumstance, may become a grant.
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Our primary requirements for liquidity are to fund our working capital needs, capital expenditures, and general corporate needs, as well as to invest in or acquire ~~businesses that are synergistic with or complimentary to our business.~~businesses. Our operations do not require significant working capital, and, like many restaurant companies, we ~~able~~generally operate with negative working capital. We anticipate that working capital deficits may be incurred in the ~~future.~~future and possibly increase. Our primary ~~sources of~~ liquidity and cash ~~flows~~flow sources are operating cash flows and cash on hand. We use this to service debt, ~~and to~~ maintain our stores to operate ~~in an efficient manner,~~efficiently, and to increase our working capital. Our working capital position benefits from the fact that we collect cash from sales from our customers at the point of ~~sale,~~purchase or within a few days from our credit card ~~processor, and in general,~~processor; generally, payments to our vendors are not due for thirty days.

Summary of Cash Flows

Cash Flows Provided by Operating Activities

Operating cash flow in ~~2020 included $466,758~~the first half of ~~Paycheck Protection loan forgiveness “other income” in operating cash flow which did not reoccur in 2021 contributing to a decline in~~2022 was $498,068. The cash flow from operations in the first six months of 2021 compared to 2020. As a result continued strong sales over the prior year, we generated $931,322 in pre-tax cash flow from operations in the 39-week period ending October 3, 2021. The winter months have historically been seasonally the slowest part of the Company’s business generating a lower level ofwas impacted positively by our recent acquisitions. We expect operating cash flow in ~~comparison~~future periods to ~~the balance of the year.~~be significantly impacted by our recent acquisitions.

Cash Flows Used in Investing Activities

~~In 2020 through the third quarter of 2021 the Company has~~During fiscal 2022, we have focused on ~~its primary business~~identifying acquisitions in the food service and ~~building its working capital reserves.~~related industries, purchasing two operating restaurants, and purchasing a 41.2% interest in a publicly traded casual dining business.

Cash Flows Used in Financing Activities

A significant portion of ~~the Company’s~~our cash flow used in financing activities is allocated to service ~~the Company’s~~our debt.

Contractual Obligations

As of ~~October~~July 3, ~~2021,~~2022, we had ~~approximately $3,210,000~~$4.1 million in contractual obligations relating ~~principally~~ to amounts due under mortgages on the real property ~~on which are~~where stores are ~~situated.~~situated, including $2.9 million in capitalized lease obligations related to our recent acquisitions. Our monthly required payment is approximately ~~$24,000. At the end~~$39,000. In the second quarter of fiscal 2021, ~~the Company~~we refinanced most of ~~its~~our outstanding mortgage debt with a new lender lowering ~~its~~our nominal interest cost from 4.75% to 3.45% fixed for the next ten years.

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Qualitative and Quantitative Disclosure about Market Risk

Commodity Price Risk

We are subject to volatility in food costs ~~as a result of~~due to market risk associated with commodity prices. Our ability to recover increased costs through higher pricing is, at times, limited by the competitive environment in which we operate. WeGenerally, we do not ~~enter into~~have pricing agreements with ~~any of~~ our suppliers to manage these risks. Beef is our largest single food purchase, and the price we pay for beef fluctuates weekly based on beef commodity prices. We do not currently manage this risk with commodity future and option contracts. ~~Assuming there was no corresponding menu price increase, a ten percent increase in the cost of beef would result in approximately $150,000 of additional food costs for the Company annually.~~
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Seasonality and Inflation
Many of our restaurants experience significant seasonal fluctuations in activity and revenue.

Seasonal factors and the timing of holidays cause our revenue at our Burger Time locations to fluctuate from quarter to quarter. Our revenue per Burger Time restaurant is typically slightly lower in the first and fourth quarters due to holiday closures and the impact of cold weather at all our locations. Adverse weather conditions may also affect customer traffic, especially in the first and fourth quarters, when customers do not use our outdoor seating areas, which impacts the use of these areas and may adversely affect our revenue. PIE benefits from robust tourism on Cape Cod in the late spring through early fall months. The results of operations during the second and third fiscal quarters at this location will be materially more significant than during the first and fourth fiscal quarters.

~~Management does not believe that inflation~~Keegan’s will benefit from additional customer traffic in Florida during the colder months in the northern part of the country; as tourists and seasonal residents seek to escape to warmer climates, daily customer counts increase at Keegan’s.
Inflation has had a material effect on ~~income during the recent years. Increases in~~our business as food, labor, orand other operating costs ~~could~~have adversely ~~affect~~affected operations. Generally, we have been able to increase menu prices or modify our operating procedures to offset increases in operating costs substantially. As inflation continues, we may not be able to raise prices to keep pace with increasing costs, particularly when compared to larger competitors that may be able to manage the ~~Company’s~~risk of rising prices better.
Inflation has had a material effect on our business as food, labor, and other operating costs have adversely affected operations. ~~In the past, however, the Company~~However, we generally ~~has~~have been able to increase menu prices or modify its operating procedures to ~~substantially~~ offset increases in its operating ~~costs.~~costs substantially.

Our business is subject to a wide range of federal, state, and local regulations, which are subject to change in ways we cannot now anticipate. We are uncertain as to the effect ~~if any,~~ that changes in the regulatory environment may have on our Company.

Off-Balance Sheet Arrangements

~~During~~The Company did not have during the periods presented, and ~~currently,~~ we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.

Recent Accounting Pronouncements

There has been no impact to our financial statements and our results of operations and financial condition as the result of the adoption of Recent Accounting Pronouncements, see “Part I, Item 1, Note 1. Summary of Significant Accounting Policies” of the Notes to Condensed Consolidated Financial Statements included in this quarterly report. The Company follows ASC 842, covering accounting for leases, and has recorded Right to Use Assets and related lease liabilities for the lease contracts.

Critical Accounting Policies and Estimates

Our discussion and analysis of operating results and financial condition are based upon our condensed consolidated financial statements. The preparation of our condensed consolidated financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures of contingent assets and liabilities. We base our estimates on ~~past~~ experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
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Table of Contents

Our critical accounting policies are those that materially affect our financial statements and involve subjective or complex judgments by management. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results may be materially different from the estimates. ~~All of our~~Our significant accounting policies are disclosed in our annual report Form 10-K for the fiscal year ended January ~~3, 2021.~~2, 2022.

Jumpstart Our Business Startups Act of 2012

We qualify as an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition ~~period and, as~~period. As a result, we will adopt new or revised accounting standards on the relevant dates on which ~~adoption of~~ such standards isare required for other public ~~companies.~~companies are adopted.

Subject to certain conditions set forth in the JOBS Act, we are also eligible for and intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including (i) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, (ii) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (iii) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We may take advantage of these exemptions until we are no longer an emerging growth company. We will continue to be an emerging growth company until the earliest to occur of (i) the last day of the fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which we had total annual gross revenue of $1 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1 billion in non-convertible debt in the prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the completion of our initial public offering.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, ~~and~~as amended (the “Exchange Act”). We are not required to provide the information under this item.

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Table of Contents
ITEM 4. CONTROLS AND ~~PROCEDURES~~PROCEDURES.

Disclosure Controls and Procedures

~~Our management carried out an evaluation,~~(1) Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports we filed under the ~~supervision~~Exchange Act is recorded, processed, summarized, and ~~with~~reported within the ~~participation of~~periods specified by the SEC’s rules and forms. Disclosure controls are also designed to ensure that this information is accumulated and communicated to our ~~principal~~management, including our chief executive officer and ~~principal~~chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
As of July 3, 2022, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness ~~of the design and operation~~ of our disclosure controls and procedures ~~(as defined in~~pursuant to Rule ~~13a-15(e) of~~13a-15(b) promulgated under the Exchange ~~Act)~~Act. Based upon that evaluation and the material weakness in our internal control over financial reporting as disclosed in the Company’s Form 10-K for the fiscal year ended January 3, 2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~the end of the period covered by this quarterly report. Based on this evaluation, our principal executive officer and principal financial officer concluded that~~July 3, 2022, our disclosure controls and procedures were not effective asat a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations, and forms of the ~~end of the period covered~~SEC, including ensuring that such material information is accumulated by ~~this quarterly report.~~and communicated to our management, including our Chief Executive Officer, Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that the degree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, disclosure controls and procedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can provide only reasonable assurance of achieving their control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.
(2) Changes in Internal Control over Financial Reporting

~~There have~~The Company disclosed a material weakness for lack of segregation of duties and not performing an adequate risk assessment on monitoring of internal controls over financial reporting in its Form 10-K for the fiscal year ended January 3, 2022. While we are addressing these deficiencies, there has been no ~~changes~~significant change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Exchange Act that occurred during our most recent fiscal quarter that ~~have~~has materially affected or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting. As a result of recent restaurant acquisitions, we are integrating our controls and procedures into the acquired businesses. We will include the internal controls for the acquired businesses in our assessment of the effectiveness of our internal controls over financial reporting as of the end of our current fiscal year. Other than the recent acquisitions, during the period covered by this report, there were no changes in the Company’s internal controls over financial reporting which materially affected or are reasonably expected to impact our internal financial reporting controls.

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PART ~~II—~~II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are ~~presently~~ no pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known ~~to the Company~~ to be threatened or contemplated against it.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the ~~Securities~~ Exchange Act ~~of 1934, as amended,~~ and are not required to provide the information required under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~During~~Unregistered Sales of Equity Securities
On February 9, 2022, the ~~quarter ended October 3,~~independent members of the Board of Directors and the Compensation Committee of the board of Directors approved a grant of 250,000 shares of common stock to each of Gary Copperud and Kenneth Brimmer, the Company’s chief executive officer and chief financial officer, respectively, if, so long as the Company’s publicly traded warrants are outstanding, the Company’s common stock trades at $8.50 per share for 20 consecutive trading days. Final approval of the awards is contingent upon shareholder approval of an increase in the number of shares available for grant under the 2019 Incentive Plan, which is expected to be proposed at the next annual meeting of shareholders. The award of the shares is tied directly to the price at which the common stock purchase warrants issued in the Company’s initial public offering completed in November 2021 are redeemable by the Company. The warrants initially are exercisable at $5.50 per share (subject to adjustment under certain circumstances). The Company expects that if and when the warrants become redeemable, holders will exercise their warrants, and the Company will receive additional capital to fund acquisitions and growth.
Other than as set forth above, since the date on which the Company filed its annual report on Form 10-K and through the date of this quarterly report, we did not sell any securities.
Use of Proceeds
Since the closing of the Company’s initial public offering in November 2021, the Company has used the proceeds received from the sale of securities to acquire (i) the restaurant assets of Keegan’s Seafood Grille ($1,150,000) and Pie in the Sky Bakery and Coffee Shop ($1,160,000) and (ii) a 41.2% of the outstanding shares of common stock of Bagger Dave’s ($1,260,000), all as more fully described under Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION~~INFORMATION~~

Effective November 12, 2021, the Company entered into an Underwriting Agreement with Maxim Group LLC and Joseph Gunnar & Company, LLC to purchase 2,400,000 units, each unit consisting of one share of common stock and one five-year warrant to purchase a share of common stock at an exercise price of $5.50 per share. Pursuant to the Underwriting Agreement, the gross proceeds to the Company will be approximately $4.55 per share after deducting underwriting discounts and expenses. The Company also granted to the underwriters an option to purchase an additional 360,000 units for 30 days following the closing of the offering. We estimate that the net proceeds from the sale of the units, after deducting underwriting discounts and commissions and estimated offering expenses incurred by us, will be approximately $10,665,000. If the underwriters fully exercise the over-allotment option, the net proceeds will be approximately $12,321,000. We expect the offering to close on November 16, 2021.None

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ITEM 6. ~~EXHIBITS~~EXHIBITS.

Exhibit
Description

31.1
Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~July 3, ~~2021.~~2022.
31.2
Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~July 3, ~~2021.~~2022.
32.1*
Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2*

32.2*
Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH

Inline XBRL Taxonomy Extension Schema Document.
101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB

Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

*
In accordance with Item 601 of Regulation S-K, this Exhibit is hereby furnished to the SEC as an accompanying document and is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BT BRANDS, INC.

Date: ~~November~~August 16, ~~2021~~2022
By:
/s/ Kenneth Brimmer

Name:
Kenneth Brimmer

Title:
Chief Operating Officer
and Principal Financial Officer

26
29

	October 3, 2021 (Unaudited)			January 3, 2021
ASSETS
CURRENT ASSETS
Cash	$	2,078,812		$	1,321,244
Receivables		31,751			19,030
Inventory		69,443			60,576
Prepaid expenses and other current assets		66,366			5,348

Total current assets		2,246,372			1,406,198

PROPERTY AND EQUIPMENT, net		1,546,038			1,632,457
LAND AND BUILDINGS HELD FOR SALE		258,751			258,751
INVESTMENT IN RELATED COMPANY		75,000			75,000
OTHER ASSETS, net		15,200			16,759

Total assets	$	4,141,361		$	3,389,165

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Current maturities of long-term debt	$	178,611		$	245,306
Accounts payable		419,007			270,487
Accrued expenses		304,598			420,734
Income taxes payable		177,088			97,978

Total current liabilities		1,079,304			1,034,505

LONG-TERM DEBT, less current maturities		3,005,113			2,938,983
DEFERRED INCOME TAXES		176,000			118,000
Total liabilities		4,260,417			4,091,488

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at October 3, 2021 and January 3, 2021		0			0
Common stock, $.002 par value, 50,000,000 authorized, 4,047,506 shares outstanding at October 3, 2021 and January 3, 2021		8,095			8,095
Additional paid-in capital		497,671			497,671
Accumulated deficit		(624,822	)		(1,208,089	)

Total shareholders' deficit		(119,056	)		(702,323	)

Total liabilities and shareholders' deficit	$	4,141,361		$	3,389,165

	39 Weeks Ended,						13 Weeks Ended,
	October 3, 2021			September 27, 2020			October 3, 2021			September 27, 2020

SALES	$	6,604,554		$	6,074,222		$	2,280,999		$	2,374,454

COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		2,580,224			2,299,989			944,171			863,997
Labor costs		1,794,499			1,718,703			607,780			624,696
Occupancy costs		436,196			504,142			132,542			170,109
Other operating expenses		355,024			313,101			102,943			121,827
Depreciation and amortization		173,799			140,588			60,405			49,668
Impairment of assets held for sale		0			100,000			0			0
General and administrative		295,397			371,455			74,415			188,292

Total costs and expenses		5,635,139			5,447,978			1,922,256			2,018,589

Income from operations		969,415			626,244			358,743			355,865

INTEREST EXPENSE		(161,148	)		(136,347	)		(32,916	)		(45,188	)
INTEREST INCOME		0			92,707			0			28,507
OTHER INCOME		0			466,758			0			0

INCOME BEFORE TAXES		808,267			1,049,362			325,827			339,184

PROVISION FOR INCOME TAXES		(225,000	)		(234,000	)		(90,000	)		(85,000	)

NET INCOME	$	583,267		$	815,362		$	235,827		$	254,184

NET INCOME PER COMMON SHARE -
Basic and Diluted	$	0.14		$	0.20		$	0.06		$	0.06

WEIGHTED AVERAGE NUMBER OF SHARES USED
IN COMPUTING PER COMMON SHARE AMOUNTS -
Basic and Diluted		4,047,506			4,047,506			4,047,506			4,047,506

	Common Stock				Additional Paid-in		Accumulated
For the 39-week periods -	Shares		Amount		Capital		(Deficit)			Total

Balances, January 3, 2021		4,047,502	$	8,095	$	497,671	$	(1,208,089	)	$	(702,323	)
Shares issued for fractional holdings		4		0		0		0			0
Net income		-		0		0		583,267			583,268

Balances, October 3, 2021		4,047,506	$	8,095	$	497,671	$	(624,822	)	$	(119,056	)

					Additional
	Common Stock				Paid-in		Accumulated
For the 13-week periods -	Shares		Amount		Capital		(Deficit)			Total

Balances, July 4, 2021		4,047,506	$	8,095	$	497,671	$	(860,649	)	$	(354,883	)
Net income		-		0		0		237,827			235,828

Balances, October 3, 2021		4,047,506	$	8,095	$	497,671	$	(624,822	)	$	(119,056	)

	39 Weeks Ended			39 Weeks Ended
	October 3, 2021			September 27, 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	583,267		$	815,362
Adjustments to reconcile net income to net cash provided by operating activities-
Depreciation and amortization		173,799			140,588
Amortization of debt issuance cost included in interest expense		55,555			3,882
Deferred taxes		58,000			(10,000	)
Payment on in-kind interest		0			39,368
Impairment of assets held for sale		0			100,000
Changes in operating assets and liabilities -
Receivables		(12,721	)		(6,365	)
Inventory		(8,867	)		(1,186	)
Prepaid expenses and other current assets		(29,195	)		6,303
Accounts payable		148,520			70,999
Unearned vendor rebate		0			(3,668	)
Accrued expenses		(116,136	)		681
Income taxes payable		79,110			233,000
Net cash provided by operating activities		931,332			1,388,964

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(85,821	)		(57,736	)
Proceeds on notes due from related entity		0			104,000
Net cash provided by (used in) investing activities		(85,821	)		46,264
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt		3,107,100			77,500
Principal payments on long-term debt		(3,113,521	)		(377,566	)
Payment of debt issuance costs		(49,699	)		0
Payment of deferred offering costs		(31,823	)		0
Net cash used in financing activities		(87,943	)		(300,066	)

CHANGE IN CASH		757,568			1,135,162

CASH, BEGINNING OF PERIOD		1,321,244			258,101

CASH, END OF PERIOD	$	2,078,812		$	1,393,263

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest	$	127,800		$	93,096
Transfer of property and equipment to assets held for sale	$	0		$	189,640
Cash paid for Income taxes	$	88,006		$	0

	October 3, 2021			January 3, 2021

Notes payable to bank with interest at 4.75%. Secured by eight of the Company's locations and the personal guaranty of a Company shareholder. These notes were paid in full on June 27, 2021.	$	0		$	2,884,650

Three notes payable to bank dated June 28, 2021 due in monthly installments totaling $22,213 which includes principal and interest at fixed rate of 3.45% through June 28, 2031. Beginning in July 2031, the interest rate will be equal to the greater of the "prime rate" plus .75%, or 3.45% . These notes mature on June 28, 2036. The notes are secured by mortgages covering the Company's ten operating locations. The notes are guaranteed by BT Brands, Inc. and a shareholder of the Company.		3,076,200			0

Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%. This note is secured by the West St. Paul location and the personal guaranty of a shareholder of the Company. This note was paid in full on April 6, 2021.		0			185,219

Notes payable to bank dated November 10, 2016 payable in monthly installments of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be be less than 4%. This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company.		133,318			141,125

Minnesota Small Business Emergency Loan dated April 29, 2020 payable in monthly installments of $458.33 beginning December 15, 2020 which includes principal and interest at 0%. This note is secured by the personal guaranty of a shareholder of the Company.		23,375			27,500
		3,232,893			3,238,494
Less - unamortized debt issuance costs		(48,349	)		(54,205	)
Current maturities		(178,611	)		(245,306	)
Total	$	3,005,933		$	2,938,983

	13 weeks ended, July 3, 2022						13 weeks ended, July 4, 2021
	Amount			%			Amount			%
SALES	$	3,524,881			100.0	%	$	2,382,683			100.0	%
COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		1,311,373			37.2			908,760			38.1
Labor costs		1,179,118			33.5			621,227			26.1
Occupancy costs		261.282			7.4			167,106			7.0
Other operating expenses		212,314			6.0			128.872			5.4
Depreciation and amortization		109,286			3.1			58.558			2.5
General and administrative		455,656			12.9			110,983			4.7
Total costs and expenses		3,529,029			100.1			1,995,506			83.8
Income (loss) from operations		(4,148	)		(.1	)		387,177			16.2
INTEREST EXPENSE		(26,190	)		(.7	)		(89,661	)		(3.8	)
INTEREST AND OTHER INCOME		9,473			.3		‒			‒
UNREALIZED LOSS AND LOSS FROM AFFILIATE		(94,410	)		(2.7	)	‒			‒
INCOME TAX BENEFIT (EXPENSE)		23,000			.6			(85,000	)		(3.5	)
NET INCOME (LOSS)	$	(92,275	)		(2.6	)%	$	212,516			8.9	%

	13-Week Period
	October 3, 2021			September 27, 2020
Revenues	$	2,280,999		$	2,374,454
Reconciliation:
Income from operations		358,743			355,865
Depreciation and amortization		60,405			49,668
General and administrative, corporate level expenses		74,415			188,292
Restaurant-level EBITDA		493,563			593,825
Restaurant-level EBITDA margin		21.6	%		25.0	%

	39 Weeks Ended,
	October 3, 2021			September 27, 2020

SALES		100.0	%		100.0	%

COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		39.1			37.9
Labor costs		27.2			28.3
Occupancy costs		6.6			8.3
Other operating expenses		5.4			5.2
Depreciation and amortization		2.6			2.3
Impairment of assets held for sale		-			1.6
General and administrative		4.5			6.1
Total costs and expenses		85.3			89.7
Income from operations		14.7			10.3
INTEREST EXPENSE		(2.4	)		(2.2	)
INTEREST INCOME		-			1.5
OTHER INCOME (PAYROLL PROTECTION GRANT)		-			7.7
INCOME TAXES		(3.4	)		(3.9	)
NET INCOME		8.8	%		13.4	%

	26 weeks ended, July 3, 2022						26 weeks ended, July 4, 2021
	Amount			%			Amount			%
SALES	$	5,598,076			100.0	%	$	4,323,555			100.0	%
COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		2,032,956			36.3			1,636,053			37.8
Labor costs		1,786,828			31.9			1,186,719			27.4
Occupancy costs		435,920			7.8			261,282			6.0
Other operating expenses		332,181			5.9			303,654			7.0
Depreciation and amortization		178,701			3.2			113,394			2.6
General and administrative		746,717			13.3			220,982			5.1
Total costs and expenses		5,513,303			98.5			3,712,883			85.9
Income from operations		84,773			1.5			610,672			14.1
INTEREST EXPENSE		(54,461	)		(1.0	)		(128,232	)		(3.0	)
INTEREST AND OTHER INCOME		9,473			.2		‒			‒
UNREALIZED LOSS AND LOSS FROM AFFILIATE		(94,410	)		(1.7	)	‒			‒
INCOME TAX BENEFIT (EXPENSE)		5,000			.1			(135,000	)		(3.1	)
NET INCOME (LOSS)	$	(49,625	)		(.9	)%	$	347,440			8.0	%

	39-Week Period						26 weeks ended,
	October 3, 2021			September 27, 2020			July 3, 2022			July 3, 2021
Revenues	$	6,604,554		$	6,074,222		$	5,598,076		$	4,323,555
Reconciliation:
Income from operations		969,415			626,244			84,773			653,044
Depreciation and amortization		173,799			140,588			178,701			113,394
General and administrative, corporate level expenses		295,397			371,455			746,717			220,982
Restaurant-level EBITDA		1,438,611			1,138,287		$	1,010,191		$	987,420
Restaurant-level EBITDA margin		21.8	%		18.7	%		18.0	%		22.8	%

Exhibit		Description

31.1		Certification of the Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~July 3, ~~2021.~~2022.

31.2		Certification of the Company’s Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended ~~October~~July 3, ~~2021.~~2022.

32.1*		Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2*
32.2*		Certification of the Company’s Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

	BT BRANDS, INC.

Date: ~~November~~August 16, ~~2021~~2022	By:	/s/ Kenneth Brimmer
	Name:	Kenneth Brimmer
	Title:	Chief Operating Officer and Principal Financial Officer