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: OctoberJuly 3, 20212022

 

or

 

☐   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

 

btbd_10qimg2.jpgbtbd_10qimg1.jpg

 

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

warrantsWarrant to purchase common stockPurchase 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 filerFiler

Smaller reporting company

 

 

Emerging Growth Companygrowth 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 6,447,5066,461,118 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 ownedwholly-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-lookingForward-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 believeswe 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 2020our 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 theour 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 Companyreport. We expressly disclaimsdisclaim any obligation or undertaking to report any updates or revisions to any such statement to reflect any change in the Company’sour expectations or any change in events, conditions, or circumstances on which any such statement is based, except as required by law.

 

2

2

 

 

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

 

 

3

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

 

 
4

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

 

 
5

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

 

 
6

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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

 

 
7

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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 andconsolidation. 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 OctoberJuly 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’sour 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-foodAs 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 threeincluding nine Burger Time locationsrestaurants 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 twosingle 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’sOur Dairy Queen storelocation is operated pursuant to the terms ofunder a franchise agreement with International Dairy Queen. The Company is required toWe pay regular royalty and advertising payments to the franchisor and to remain in compliance with the terms ofas required by the franchise agreement.

8

Table of Contents

 

Fiscal Year Period

 

The Company’sBT 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 thea 52-week year. All references to years in this report refer to the 26-week periods in the respectiveFiscal 2022 is 52 weeks ending January 1, 2023, and fiscal year periods. Fiscal 2021 iswas a 52-week year52-weeks ending January 2, 2022.

8

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Cash

 

For purposes of reportingAt 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 rangeranging 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 beis recoverable based on estimated cash flows. Assets are reviewedevaluated 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 valueAs of July 3, 2022, a property in the St. Louis area, was fully reserved for in 2020. In Septemberwhich 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 listedare 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 costcurrent-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 provideThe Company provides for income taxes under (AccountingAccounting Standards Codification (ASC), 740),740, Accounting for Income Taxes. ASC 740 usinguses 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 andliabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company providesIf 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 forat 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 CompanyThere currently hasare no federal or state examinations in progress, norprogress. The Company has itnot had any federal or state tax examinations since its inception and allinception. All periods since inception remain open for examination.

9

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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 computedcalculated 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 incomeper share amounts if their effect would beis anti-dilutive. There were no potentially dilutive shares outstanding as offor the periods ending in 20212022 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 TRANSACTIONSTRANSACTION

 

Next Gen Ice

 

In 2019, the CompanyBT 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’sOur CEO, Gary Copperud, is Chairman of the Board of Directors of NGI and the Company’sNGI. 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 companyan entity controlled by him together ownowned 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 thea Note modification, the CompanyBT Brands received 179,000 shares of common stock in Next Gen IceNGI from the founders of NGI, representing approximately 2% of NGI shares outstanding. The CompanyBT Brands also holds warrants expiring March 31, 2028, to purchase 358,000 shares of common stock at a price offor $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 CompanyBT 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 thereforevalue. Therefore, it is carried at thea 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 theinitial common shares and warrants were received. The Notes were repaidand 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

 

DuringIn 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 isWe are not aware of any significant asserted or potential claims whichthat could impact itsour 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 Companypurchase 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 Agreementa 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 onethree five-year stock purchase warrant to purchase an additional share at $5.50 per share. Underrenewal 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.

 

OverviewIntroduction

 

We ownAs of July 3, 2022, including our partially owned Bagger Dave’s business, we owned and operate ten fast foodoperated eighteen restaurants, including ninecomprising 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 allopened in Fargo, North Dakota, in 1987. BTND, LLC purchased the assets of which areBurger Time in the North Central region of the United States. OurMay 2007. Burger Time restaurants feature a wide variety of burgers and other affordably pricedadditional 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 TimeTime’s operating principles include: (i) offering a “Bigger Burger” to deliver our customers “more good foodbigger 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 maintainstrive for efficiency at our Burger Time restaurants, including maintaining an inventory of $5,000 toapproximately $15,000 per store, at any given time (which also has the advantage of allowing for frequent deliveriesfresh food deliveries. Historically, our Burger Time investment model targeted an average cash investment of fresh food)..between $325,000 and $535,000.

 

OurThe average customer transaction at our Burger Time restaurants increased by approximately 4% in the first ninesix months of fiscal 20212022 compared to 20202021 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 manyDay” offering. Many factors including the COVID pandemic, which had been a positive forinfluence our sales however, thetrends. 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 maythat currently have an impact on our business. TheseCurrent trends principally relate toinclude 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 phonesmartphone and mobile delivery applications, have aggressively expanded drive-through operations, and have developed loyalty programs and data basedatabase marketing supported by a robust technology platform. We expect these trends to continue as restaurants aggressively completecompete for customers. Further, the major industry participants have continuedCompetitors 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 intoearly 2021, our Burger Time business experienced a significant increase in business volume contributedcontributing to improved profit margins. Additional margin improvements may have to be achievedmade 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 statecurrent 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 influencesU.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 temporaryby 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 foodservicefood service industry. Our principal strategy is to acquirecomprises 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 acquisitionby acquiring and conversion ofconverting existing properties.properties under certain circumstances. Other key elements of our growth strategy encompassinclude increasing same storesame-store sales and boostingintroducing 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, weWe 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 tonear each other, we believe the concentration of operations will provide economic synergies with respect tofor 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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Table of Contents

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 deployuse a multi-faceted same-store sales growth strategy to optimize restaurant performance. We will applyuse 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 honeimprove existing and new menu items. In addition, we will investigate utilizingmay use social media and public relations, and experiential marketing to engage customers. We expect that ourOur strategies to increase same-store sales will evolve as we acquire new restaurant concepts in new markets.

 

Increase Brand Awareness

 

We appreciate that increasingIncreasing brand awareness is importantessential to the growth of our Company. We willintend 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 willexpect 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 ourmedia. Our branding initiatives will evolve as we consummate acquisitions ofacquire restaurant concepts that appeal to distinct consumer markets in differing geographic areas.

 

Our abilityResults 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 availableperiod 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 OperationsRestaurant 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 period13 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 of2022, 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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Table of Contents

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-weekfiscal 2022 period representing the first three quarters of fiscal 2021 increaseddecreased 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 increasedecrease was mainly due tothe net result of inflationary pressures in the general economy increasing product cost . Average beef prices paidof certain items, offset by the Company were approximatelyinclusion of $2.51 per pound in 2021results 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 declinedincreased to 39.2%78.2% of sales in the 2021 periodsecond fiscal quarter of 2022 from 41.8%76.6% in the similar period of fiscal 2020 period.2021. This increase was due primarily tobecause 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 furthermatters 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 quarterssecond quarter of fiscal 2021,2022, labor and benefits costs decreasedcost increased as a percentage of sales to 27.2%33.5% of restaurant sales from 28.3% of restaurant sales26.1%in fiscal 2021. The increase in the fiscal 2020 period. The Company was ablepercentage 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 weekssecond 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 these2021. 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 atincluding lease costs associated with our stores impacting our major systems such as HVAC and refrigeration.two new locations.

 

Depreciation and Amortization Expense:

 

DepreciationFor 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 period2021. The increase results from depreciation and is the result of capital additions at several ofamortization 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 headcountearlier year.

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Table of Contents

 

Income (Loss) from Operations

 

IncomeThe 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-weeksame period of fiscal 2021 compared to $626,244 in 2021; the fiscal 2020 period. The change inpercentage 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 activityprofit 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 theunder GAAP. The reconciliations to operating income set forth below should be carefully evaluated.

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Table of Contents

 

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 costsexpenses are excluded as they are generally not specifically identifiable to restaurant specificas 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’spublic 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 OctoberJuly 3, 2021, the Company earned an after-tax profit2022, operations reflected a net loss of $583,268.$49,625. On OctoberJuly 3, 2021, the Company2022, 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 partially2, 2022, resulting from the resultpurchase of Company completing a refinancingtwo 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 tomay 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’sour 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 ablegenerally 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 flowsflow 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 $466,758the first half of Paycheck Protection loan forgiveness “other income” in operating cash flow which did not reoccur in 2021 contributing to a decline in2022 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 comparisonfuture 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 hasDuring fiscal 2022, we have focused on its primary businessidentifying 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’sour cash flow used in financing activities is allocated to service the Company’sour debt.

 

Contractual Obligations

 

As of OctoberJuly 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 arewhere 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 Companywe refinanced most of itsour outstanding mortgage debt with a new lender lowering itsour 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 ofdue 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 intohave 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 inflationKeegan’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 inour business as food, labor, orand other operating costs couldhave adversely affectaffected 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’srisk 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 CompanyHowever, we generally hashave 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

 

DuringThe 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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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 ourOur 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, asperiod. 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, andas amended (the “Exchange Act”). We are not required to provide the information under this item.

 

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ITEM 4. CONTROLS AND PROCEDURESPROCEDURES.

 

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 supervisionExchange Act is recorded, processed, summarized, and withreported within the participation ofperiods specified by the SEC’s rules and forms. Disclosure controls are also designed to ensure that this information is accumulated and communicated to our principalmanagement, including our chief executive officer and principalchief 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 inpursuant to Rule 13a-15(e) of13a-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 thatJuly 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 coveredSEC, 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 haveThe 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 changessignificant 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 havehas materially affected or areis 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

 

DuringUnregistered 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 INFORMATIONINFORMATION

 

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. EXHIBITSEXHIBITS.

 

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 OctoberJuly 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 OctoberJuly 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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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: NovemberAugust 16, 20212022

By:

/s/ Kenneth Brimmer

 

 

Name:

Kenneth Brimmer

 

 

Title:

Chief Operating Officer

and Principal Financial Officer

 

 

 
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