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: April ~~3, 2022~~2, 2023

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

For the transition period from to

Commission File Number: 333-233233

BT BRANDS, INC.
(Exact name of registrant as specified in its charter)

Wyoming		90-1495764
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

405 Main Avenue West, Suite 2D, West Fargo, ND		58078
(Address of principal executive offices)		(Zip Code)
(307) ~~291-9885~~274-3055
(~~Registrant's~~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,~~stock, $0.002 per share	BTBD	The NASDAQ Stock Market LLC
Warrant to Purchase Common Stock	BTBDW	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 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~~“large accelerated filer,~~" "accelerated~~” “accelerated filer,~~" "smaller~~” “smaller reporting company,"” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

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

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

Indicate by check mark whether ~~the registrant is~~any of those error corrections are restatements that required a ~~shell company (as defined in Rule 12b-2~~recovery analysis of incentive-based compensation received by any of the ~~Exchange Act)~~registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ ~~Yes ☒ No~~

At May ~~16, 2022,~~1, 2023, there were ~~6,461,118~~6,246,118 shares of common stock outstanding.

CAUTIONARY STATEMENT REGARDING RISKS

AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS

Forward-Looking Information

This quarterly report contains forward-looking statements about the business, financial condition and prospects of BT Brands, Inc. and its wholly-owned subsidiaries (together, the ~~"Company"~~“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"~~“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 that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties.

While the Company believes the expectations reflected in forward-looking statements are reasonable, there can be no assurances that such expectations will prove to be accurate. Security holders are cautioned that such forward-looking statements involve risks and uncertainties. You should evaluate all forward-looking statements made in this report in the context of the factors that could cause outcomes to differ materially from our expectations. These factors include, but are not limited to:

	·	capital requirements and the availability of capital to fund our ~~growth and to service our existing bank debt;~~growth;
	·	difficulties executing our growth strategy, including completing profitable acquisitions;
	·	~~our anticipated use~~the impact of ~~the net proceeds from this offering;~~public health matters;
	·	~~economic uncertainties and business interruptions resulting from the coronavirus global pandemic and its aftermath;~~
	·	~~following the global pandemic, it will be difficult for us to maintain recent sales gains, and we will likely experience a decline in comparable-store sales;~~
	·	all risks of acquiring an existing restaurant business, including identifying a suitable target, completing comprehensive due diligence, the impact on our financial condition of ~~the~~any debt we may incur in acquiring the target, ~~and~~ the ability to integrate the ~~target's~~target’s operations with our existing operations, our ability to retain management and key employees of the target, among other factors ~~attendant~~relevant to acquisitions;
	·	~~difficulties in increasing restaurant revenue and comparable restaurant sales;~~
	·	challenges related to hiring and retaining store employees at competitive wage rates;
	·	our failure to prevent food safety and foodborne illness incidents;
	·	shortages or interruptions in the supply or delivery of food products;
	·	our dependence on a small number of suppliers and a single distribution company;
	·	negative publicity relating to any one of our restaurants;
	·	competition from other restaurant chains with significantly greater resources than we have;
	·	changes in economic conditions, including the effects on consumer confidence and discretionary spending;
	·	changes in consumer tastes and nutritional and dietary trends;
	·	our inability to manage our growth;
	·	our inability to maintain an adequate level of cash flow or access to capital to ~~meet growth expectations;~~grow;
	·	changes in management, loss of key personnel, ~~or an inability to attract, hire, integrate~~ and ~~retain~~difficulty hiring and retaining skilled personnel;
	·	labor shortages and increased labor costs;
	·	our vulnerability to increased food, commodity, and energy costs;
	·	the impact of governmental laws and ~~regulation;~~regulations;
	·	failure to obtain and maintain required licenses and permits to comply with food control regulations;
	·	changes in economic conditions and adverse weather, and other unforeseen conditions, ~~especially~~ in ~~the north-central United States~~regions where ~~most of~~ our restaurants ~~currently~~ are located;
	·	inadequately protecting our intellectual ~~property or~~ property;
	·	breaches of security of confidential ~~information.~~consumer information; and
	·	other factors discussed in the Company’s Annual Report on Form 10-K under “Business” and “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

Table of Contents

We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences we anticipate or affect us or our operations in the ways we expect. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we update one or more forward-looking statements, no inference should be made that we will make additional updates regarding those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

From time to time, oral or written forward-looking statements are also included in our reports on Forms 10-K, 10-Q, and 8-K, our Schedule 14A, our press releases and other materials released to the public. Although we believe that at the time made, the expectations reflected in all of these forward-looking statements are and will be reasonable, any or all of the forward-looking statements may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this Quarterly Report on Form 10-Q, certain of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Quarterly Report on Form 10-Q or other public communications that we might make as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent periodic reports filed with the Securities and Exchange Commission.

Table of Contents

TABLE OF CONTENTS

PART I— FINANCIAL INFORMATION.		5
ITEM 1.	FINANCIAL STATEMENTS.	5
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.	1617
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.	2322
ITEM 4.	CONTROLS AND PROCEDURES.	2322
PART II—OTHER INFORMATION.		2423
ITEM 1.	LEGAL PROCEEDINGS.	2423
ITEM 1A.	RISK FACTORS.	2423
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	2423
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	2423
ITEM 4.	MINE SAFETY DISCLOSURES.	2423
ITEM 5.	OTHER INFORMATION.	2423
ITEM 6.	EXHIBITS.	2524
SIGNATURES.		2625

Table of Contents

PART I — FINANCIAL INFORMATION

~~ITEM 1. FINANCIAL STATEMENTS~~

BT BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	April 3, 2022			January 2, 2022			Unaudited
	(Unaudited)						April 2, 2023			January 1, 2023
ASSETS
CURRENT ASSETS
Cash	$	11,073,645		$	12,385,632		$	5,494,401		$	2,150,578
Maketable securities		254,100			0
Marketable securities								1,378,337			5,994,295
Receivables		15,830			72,251			14,596			76,948
Inventory		97,850			79,510			173,007			158,351
Prepaid expenses and other current assets		51,110			27,186			64,424			37,397

Assets held for sale								258,751			446,524
Total current assets		11,492,535			12,564,579			7,383,516			8,864,093

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET		2,411,600			1,592,338			3,258,759			3,294,644
LAND AND BUILDINGS HELD FOR SALE		258,751			258,751
OPERERATING LEASE RIGHT-OF-USE ASSET		615,701			0
INVESTMENT IN RELATED COMPANY		304,000			75,000
OPERATING LEASES RIGHT-OF-USE ASSETS								1,946,394			2,004,673
INVESTMENTS								1,314,787			1,369,186
DEFERRED INCOME TAXES								91,000			61,000
GOODWILL		200,000			0			671,220			671,220
OTHER ASSETS, net		131,546			15,059

INTANGIBLE ASSETS, NET								439,260			453,978
OTHER ASSETS, NET								50,477			50,903
Total assets	$	15,414,133		$	14,505,727
							$	15,155,413		$	16,769,697
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	403,328		$	291,973		$	400,711		$	448,605
Broker margin loan								-			791,370
Current maturities of long-term debt		171,357			169,908			166,241			167,616
Current operating lease obligation		34,400			0
Current operating lease obligations								193,430			193,430
Accrued expenses		360,085			254,341			410,101			532,520
Income taxes payable		198,749			209,088

Total current liabilities		1,167,919			925,310			1,170,483			2,133,541

LONG-TERM DEBT, LESS CURRENT PORTION		2,790,728			2,833,064			2,416,905			2,658,477
NONCURRENT OPERATING LEASE OBLIGATION		582,117			0
DEFERRED INCOME TAXES		94,000			119,000
NONCURRENT LEASE OBLIGATIONS								1,771,514			1,825,057
Total liabilities		4,634,764			3,877,374			5,358,902			6,617,075

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares outstanding at April 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 April 3, 2022 and January 2, 2022, respectively		12,922			12,895
Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at April 2, 2023 and January 1, 2023								-			-
Common stock, $.002 par value, 50,000,000 authorized, 6,461,118 issued and 6,246,118 shares outstanding at April 2, 2023 and 6,461,118 shares issued and 6,396,118 shares outstanding at January 1, 2023								12,492			12,792
Less cost of 215,000 and 65,000 common shares held in Treasury at April 2, 2023 and January 1, 2023, respectively.								(356,807	)		(106,882	)
Additional paid-in capital		11,324,035			11,215,696			11,445,135			11,409,235
Accumulated deficit		(557,588	)		(600,238	)	$	(1,304,309	)		(1,162,523	)

Total shareholders' equity		10,779,369			10,628,353			9,796,511			10,152,622

Total liabilities and shareholders' equity	$	15,414,133		$	14,505,727		$	15,155,413		$	16,769,697

See Notes to Consolidated Condensed ~~Consolidated~~ Financial Statements

Table of Contents

BT BRANDS, INC. ~~AND SUBSIDIARIES~~

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

~~CONSOLIDATED STATEMENTS OF INCOME~~

~~(Unaudited)~~

	13 Weeks Ended,			13 Weeks Ended,			13 Weeks Ended,			13 Weeks Ended,
	April 3, 2022			April 4, 2021			April 2, 2023			April 3, 2022

SALES	$	2,073,195		$	1,940,872		$	3,070,798		$	2,073,195

COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		721,583			731,954			1,290,323			721,583
Labor costs		607,710			565,492			1,202,760			607,710
Occupancy costs		174,638			136,548			357,125			174,638
Other operating expenses		119,867			123,209			195,614			119,867
Depreciation and amortization expenses		69,415			54,836			163,507			69,415
General and administrative expenses		291,061			105,338			425,915			291062

Gain on sale of assets held for sale								(313,688	)		-
Total costs and expenses		1,984,274			1,717,377			3,321,556			1,984,274

Income from operations		88,921			223,495
Income (loss) from operations								(250,758	)		88,921
UNREALIZED GAIN ON MARKETABLE SECURITIES								69,856			-
INTEREST EXPENSE		(28,271	)		(38,571	)		(25,533	)		(28,271	)
INCOME BEFORE TAXES		60,650			184,924
INCOME TAXES		(18,000	)		(50,000	)
NET INCOME	$	42,650		$	134,924
NET INCOME PER COMMON SHARE - Basic and Diluted	$	0.01		$	0.03
INTEREST AND DIVIDEND INCOME								89,048			-
EQUITY IN LOSS OF AFFILIATE								(54,399	)		-
INCOME (LOSS) BEFORE TAXES								(171,786	)		60,650
INCOME TAX (EXPENSE) BENEFIT								30,000			(18,000	)
NET INCOME (LOSS)							$	(141,786		$	42,650
NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted							$	(0.02	)	$	0.01

WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted		6,455,434			4,047,502			6,280,729			6,455,434

See Notes to Consolidated Condensed ~~Consolidated~~ Financial Statements

Table of Contents

BT BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS'~~SHAREHOLDERS’ EQUITY

(Unaudited)

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

134,924

134,924

Balances, April 4, 2021

4,047,502

8,095

497,671

(1,073,165 )

(567,399 )

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

33,500

0

33,500

Exercise of common stock warrants

13,612

27

74,839

0

74,866

Net income

-

0

0

42,650

42,650

Balances, April 3, 2022

6,461,118

12,922

11,324,035

(557,588 )

10,779,369

Outstanding

Common Stock

Additional
Paid-in

Accumulated

Treasury

Shares

Par Amount

Capital

Deficit

Stock

Total

Balances, January 1, 2022

6,447,506

$ 12,895

$ 11,215,696

$ (600,238 )

$ -

$ 10,628,353

Net income

-

-

-

42,650

-

42,650

Stock based compensation

-

-

33,500

-

-

33,500

Shares issued for exercise of warrants

13,612

27

74,839

-

-

74,866

Balances, April 3, 2022

6,461,118

$ 12,922

$ 11,324,035

$ (557,588 )

$ -

$ 10,779,369

Outstanding
Common Stock

Additional
Paid-in

Accumulated

Treasury

Shares

Par Amount

Capital

Deficit

Stock

Total

Balances, January 1, 2023

6,396,118

$ 12,792

$ 11,409,235

$ (1,162,523 )

$ (106,882 )

$ 10,152,622

Net income (loss)

-

-

-

(141,786 )

-

(141,786 )
Stock based compensation

-

-

35,900

-

-

35,900

Treasury stock purchase

(150,000 )

(300 )

-

-

(249,925 )

(250,225 )
Balances, April 2, 2023

6,246,118

$ 12,492

$ 11,445,135

$ (1,304,309 )

$ (356,807 )

$ 9,796,511

See Notes to Consolidated Condensed ~~Consolidated~~ Financial Statements

7
Table of Contents

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

13 Weeks ended,

13 Weeks ended,

April 3,
2022

April 4,
2021

April 2, 2023

April 3, 2022

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income

$ 42,650

$ 134,924

Adjustments to reconcile net income to net cash

provided by operating activities-

Net Income (Loss)

$ (141,786 )

$ 42,650

Adjustments to reconcile net income (loss) to net cash provided by operating activities-

Depreciation and amortization

69,415

56,301

163,507

69,415

Amortization of debt issuance premium included interest expense

1,350

0

Amortization of debt issuance costs included in interest expense

1,350

1,350

Deferred taxes

(25,000 )

10,000

(30,000 )

(25,000 )
Stock-based compensation

33,500

0

35,900

33,500

Unrealized loss on available-for-sale securities

6,746

0

Changes in operating assets and liabilities, net of acquisition -

Unrealized loss (gain) on marketable securities

(69,856 )

6,746

Investment gains

(29,177 )

-

Loss on equity method investment

54,399

-

Non-cash operating lease expense

4,736

-

Gain on sale of assets held for sale

(313,688 )

Changes in operating assets and liabilities, net of acquisitions -

Receivables

56,421

14,483

62,352

56,421

Inventory

(8,291 )

(7,018 )

(14,656 )

(8,291 )
Prepaid expenses and other current assets

(23,924 )

(7,143 )

(27,027 )

(23,924 )
Other assets

(10,000 )

0

-

(10,000 )
Accounts payable

111,355

178,716

(47,894 )

111,355

Accrued expenses

93,511

(177,971 )

(122,419 )

93,511

Income taxes payable

(10,339 )

40,000

-

(10,339 )
Net cash provided by operating activities

337,394

242,292

Net cash provided by (used in) operating activities

(474,259 )

337,394

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of assets of Keegan's Seafood Grille

(1,150,000 )

Acquisition of net assets of Keegan’s Seafood Grille

-

(1,150,000 )
Proceeds from sale of assets held for sale

496,000

Purchase of property and equipment

(10,164 )

(40,709 )

(107,017 )

(10,164 )
Investment in related company

(229,000 )

-

(229,000 )
Purchase of marketable securities

(1,026,917 )

(260,846 )
Proceeds from sale of marketable securities

5,741,908

-

Other assets

(32,000 )

-

(32,000 )
Purchase of Maketable securities

(260,846 )

Net cash used in investing activities

(1,682,010 )

(40,709 )
Net cash provided by (used in) investing activities

5,103,974

(1,682,010 )
CASH FLOWS FROM FINANCING ACTIVITIES

Payment on margin loan to finance the purchase of marketable secutities

(791,370
)

-

Proceeds from exercise of common stock warrants

74,866

0

-

74,866

Principal payments on long-term debt

(42,237 )

(62,729 )

(244,297 )

(42,237 )
Purchase of treasury shares

(250,225 )

-

Net cash provided by (used in) financing activities

32,629

(62,729 )

(1,285,892 )

32,629

CHANGE IN CASH

(1,311,987 )

138,854

3,343,823

(1,311,987 )

CASH, BEGINNING OF PERIOD

12,385,632

1,321,244

2,150,578

12,385,632

-

CASH, END OF PERIOD

$ 11,073,645

$ 1,460,098

$ 5,494,401

$ 11,073,645

SUPPLEMENTAL DISCLOSURES

Cash paid for interest

$ 26,291

$ 37,106

$ 24,183

$ 26,291

See Notes to Consolidated Condensed ~~Consolidated~~ Financial Statements

8
Table of Contents
~~BT BRANDS, INC.~~
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of BT Brands, Inc., and its subsidiaries (the ~~"Company,~~“Company,” ~~"we,~~“we,” ~~"our,~~“our,” ~~"us,~~“us,” or ~~"BT Brands"~~“BT Brands”) and have been prepared in accordance with the U.S. generally accepted accounting principles ~~("GAAP"~~(“GAAP”) for interim financial information and with the instructions to ~~Securities and Exchange Commission (“SEC”) requirements for~~ Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation and have been prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ~~ended~~ending January ~~2, 2022.~~1, 2023. 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 April ~~3, 2022,~~2, 2023, does not include all of the disclosures required by GAAP. ~~These~~Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of January ~~2, 2022,~~1, 2023, and the related notes thereto included in the ~~Company's~~Company’s Form 10-K for the fiscal year ended January ~~2, 2022.~~1, 2023.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material.

The Company

BT Brands, Inc. (the ~~"Company"~~“Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective on July 30, 2018, the Company acquired 100% of BTND, LLC.

~~Business~~

~~As of April 3, 2022, we owned and operated eleven~~We operate restaurants including nine Burger Time fast-food restaurants, one Dairy Queen fast-food restaurant, and Keegan's Seafood Grille ("Keegan's"), a dine-in restaurant located in Florida. Our fast-food restaurants are all located in the ~~North Central region~~eastern two-thirds of the United States. ~~Our Burger Time~~As of April 1, 2023, including our 41.2% owned Bagger Dave’s business, we operated seventeen restaurants ~~feature a wide variety of burgers and other affordable foods such as chicken sandwiches, pulled pork sandwiches, sides, and soft drinks. Our Dairy Queen restaurant offers~~comprising the established Dairy Queen 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. Our revenues are derived principally from the sale of food and beverages at our restaurants, and branded retail merchandise accounts for an insignificant portion of our income.following:

	·	Eight Burger Time fast-food restaurants and one Dairy Queen franchise located in the North Central region of the United States, collectively (“BTND”);
	·	Bagger Dave’s Burger Tavern, Inc, a 41.2% owned affiliate, operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana (“Bagger Dave’s”);
	·	Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”);
	·	Pie In The Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”).
	·	Village Bier Garten is a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida (“VBG”).

~~The Company's~~

Our Dairy Queen store is operated under a franchise agreement with International Dairy Queen. ~~The Company pays~~We pay royalty and advertising payments to the franchisor as required by the franchise agreement.

Table of Contents

Fiscal Year Period

~~The Company's~~Our fiscal year is a 52/53-week year, ending on ~~the~~ Sunday, closest to December 31. Most years consist of four 13-week accounting periods comprising the 52-week year. All references to years in this report refer to the 13-week periods in the respective fiscal year periods. The fiscal year ~~2022~~2023 is 52 weeks ending ~~January 1,~~December 31, 2023.

Cash

~~Table of Contents~~

~~Cash~~

~~Cash~~For purposes of reporting cash and cash flows, ~~are reported~~cash includes money market funds and is net of outstanding checks and ~~include~~includes, amounts on deposit at banks and deposits in ~~transit. At times, the bank deposits exceed the amount~~transit and excludes transfers out in transit and includes brokerage account money market funds which are not insured by the Federal Deposit Insurance Corporation. The Company also maintains cash deposits in brokerage in excess of the insured amount. The Company believes there is not a significant risk related to cash.deposits.

Fair Value of Financial Instruments

The ~~Company's~~Company’s 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 the Company 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.

Equity investments in marketable securities are carried at fair value. At April 3, 2022, the $6,745 reduction from cost to fair value was not considered material and is included in general and administrative expenses. On April ~~3, 2022,~~2, 2023, the cost of marketable securities ~~consisted of~~include a ~~single Nasdaq-listed level-one security with~~bond fund at a cost of ~~$260,845. This investment is~~$416,570 and common stocks at a cost of $978,333 was a total cost of $1,394,903 prior to a mark-to-market reduction of $16,566. These investments are reflected in the accompanying financial statements at April ~~3, 2022,~~2, 2023, at the level-one ~~fair value~~ quoted market price in an active market of ~~$254,100.~~  $1,378,337. At January 1, 2023, the fair value of Level 1 investments included common stocks of $713,900 and a corporate bond exchange-traded fund (ETF) of $316,000, a total carrying value of $1,029,900, net of an unrealized mark-to-market loss of $86,422, as determined by quoted market prices in an active market.
Investments
Noncurrent investments at April 2, 2023, include our net equity method investment of $1,010,787 in Bagger Dave’s and our $304,000 total investment in Next Gen Ice, Inc. (NGI). In 2020, the Company received equity ownership in NGI as consideration for a loan to NGI. Upon repayment of the note, $75,000 was attributed by us to the value of the equity received, and this amount was reflected as additional interest income in 2020. The fair value determined in 2020 continues to be reflected as the value of the investment. On February 12, 2022, we invested $229,000 in Series A1 8% Cumulative Convertible Preferred Stock of NGI, including a five-year warrant to purchase 34,697 common shares of NGI at $1.65 per share. See also Note 8.
Bagger Dave’s common stock is traded on the OTC Pink market and files quarterly and annual financial reports with OTCMarkets, Inc. under the Alternative Reporting Standard. The listing with OTC Markets does not require the information to be audited. For the thirteen weeks ended March 26, 2023, Bagger Dave’s had sales of $2,014,158 and a net loss of $136,153. Our 41.2% equity share in the loss was approximately $54,399 and is included in the accompanying statement of operations.
Short-Term Investments
Marketable Securities at January 1, 2023, include $5,000,000 face value of a United States Treasury Bills maturing March 16, 2023, purchased for $4,907,378 in August 2023. At January 1, 2023, the Treasury Bills were planned to be held until maturity and had an amortized cost value of $4,964,395. The amortized cost value approximates fair value.
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Receivables

Receivables consist mainly of estimated rebates due from a primary vendor.

Inventory

Inventory consists of food, beverages and supplies and is stated at lower of cost (first-in, first-out method) or net realizable value.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives, ranging from three to thirty years.

The Company reviews long-lived assets to determine if the carrying value of these assets is recoverable based on estimated cash flows. Assets are evaluated at the lowest level for which cash flows can be identified at the restaurant level. In determining future cash flows, estimates are made by the Company for future operating results of each restaurant. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets.

~~Goodwill~~
~~Goodwill~~Land, building and equipment, operating right of use assets and certain other assets, including definite-lived intangible assets are reviewed regularly for impairment and whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is ~~the excess~~measured by comparison of the ~~purchase price over~~carrying amount of the ~~estimated~~assets to the future undiscounted net cash flow expected to be generated and is determined at the restaurant level. If an asset is determined to be impaired, the recognized impairment is measured by the amount by which the carrying amount of the asset exceeds the fair value of acquired business assets.  In accordance with GAAP, goodwill is not amortized.  The Company periodically assesses goodwill for impairment. Management has estimated there is no impairment of goodwill at April 3, 2022,value.
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Impairment and Disposal of Long-Lived Assets ~~Held for Sale~~

~~As of April 3,~~
We closed the Burger Time store in West St. Paul in 2022 ~~a property in~~and the ~~St. Louis area, which has a carrying value of $0, and a property in~~ Richmond, Indiana, ~~are held~~store in 2018. The West St. Paul location sale was completed in February of 2023 for a gain of $313,688. The Richmond location is currently offered for sale. ~~The Company believes~~We believe the Richmond property will be sold at or above its current carrying value. Following the ~~current-carrying cost~~end first quarter of ~~assets held~~2023, we completed the disposition of the St. Louis area property in lieu of unpaid property taxes. The second quarter of 2023 will reflect a gain of approximately $180,000 for ~~sale.~~
~~Income Taxes~~the reversal of previously accrued property taxes.

~~Ths Company provides~~Income Taxes
We provide for income taxes under (Accounting Standards Codification (ASC), 740), Accounting for Income Taxes. ASC 740 uses an asset and liability approach in accounting for income taxes. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides 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.
As of April ~~3, 2022,~~2, 2023, the Company estimates a current tax provision at the ~~combined federal and state~~ statutory rate of approximately 27.5%

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

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Per Common Share Amounts

Net income per common share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share is calculated by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Common stock equivalents are excluded from the computation of diluted ~~per share~~per-share amounts if their effect is anti-dilutive. There were no dilutive shares ~~as of~~for the periods ending in ~~2022~~2023 and ~~2021.~~2022.

Goodwill, Other Intangible Assets and Other Assets

~~Other assets include intangible assets that are the allocated fair value~~Goodwill is not amortized. Goodwill is tested for impairment at least annually. The cost of ~~trademarks and~~ other ~~assets purchased in the acquisition of Keegan's and the acquired Dairy Queen franchise. Where appropriate, the cost of~~ intangible assets is amortized over the expected useful life. Other assets include the allocated fair value of the acquired Dairy Queen franchise agreement related to our location in Ham Lake, Minnesota, and is amortized over an estimated useful ~~life.~~life of 14 years

NOTE 2 – ~~ACQUISITION~~INTANGIBLE ASSETS

~~Restaurant Acquisition - Keegan's~~At April 2, 2023, the value of Intangible Assets are as follows:

Estimated
Useful Life
(Years)

Original Cost

Accumulated
Amortization

Net Carrying Value

Covenants not to Compete

3

$ 98,000

$ 26,528

$ 71,472

Trademarks

15

393,000

25,512

367,788

$ 491,000

$ 51,740

$ 439,260

On ~~March 2, 2022,~~January 1, 2023, intangible assets comprise4 the ~~Company, through its 1519BT, LLC subsidiary ("1519BT"), purchased~~following:

Estimated
Useful Life
(Years)

Original Cost

Accumulated
Amortization

Net
Carrying
Value

Covenants not to compete

3

$ 98,000

$ (18,361 )

$ 79,639

Tradenames

15

393,000

(18,661 )

374,339

$ 491,000

$ (37,022 )

$ 453,978

Tradename assets are being amortized over 15 years at $26,000 in amortization expense per year. The total amortization of intangible assets, including the ~~assets of Keegan’s Seafood Grille, a fresh seafood restaurant located~~covenants not to compete, will approximate $58,900 in ~~Indian Rocks Springs, Florida (“Keegan’s). Concurrent with the purchase, the Company entered into a 131-month lease for a location~~2023 and 2024 and $40,500 in 2025 and $26,200 per year thereafter for the following six years and approximately ~~2800 square foot space Keegan's has operated~~$7,500 in for more than 35 years. The Company acquired the Keegan's tradename as part of the purchase and will continue to operate under the Keegan's Seafood Grille name. The purchase price was approximately $1.150 million, paid in cash at closing.2037.

The Keegan's acquisition was accounted for using the acquisition method of accounting following ASC 805 "Business Combinations." Accordingly, the consolidated statements of operations include the results of these operations from the date of acquisition. The assets acquired were recorded at their estimated fair values based on information available as of April 3, 2022. The Company recorded provisional amountsTotal amortization expense for the ~~acquired assets including goodwill as of April 3, 2022 and will complete the acquisition accounting once it finalizes its valuation analysis.~~2023 13-week period was $14,718.
As a result of the Keegan’s acquisition, the Company provisionally recorded $200,000 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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~~Table of Contents~~
~~The following table presents the preliminary estimate of the fair value of the assets acquired and liabilities assumed in the Keegan's transaction is:~~
Assets acquired:

Inventory

$ 10,049

Equipment

428,000

Leasehold improvements

450,000

Trademark, website and other intangibles

75,000

Total identifiable assets acquired

963,049

Liabilities assumed:

Gift card liability

13,049

Net assets acquired

950,000

Goodwill

200,000

Purchase price

$ 1,150,000

NOTE 3 -– PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

April 3,
2022

January 2,
2022

April 2, 2023

January 1, 2023

Land

$ 485,239

$ 485,239

$ 435,239

$ 485,239

Equipment

3,082,831

2,674,529

3,754,748

3,893,274

Buildings and leasehold improvements

1,800,014

1,322,085

2,367,557

2,402,157

Total property and equipment

5,368,084

4,481,853

6,557,544

6,780,670

Accumulated depreciation

(2,697,733 )

(2,630,764 )

(3,040,034 )

(3,039,500 )
Less - property held for sale

(258,751 )

(258,751 )

(258,751 )

(446,526 )
Net property and equipment

$ 2,411,600

$ 1,592,338

$ 3,258,759

$ 3,294,644

Depreciation expense for the 13-week periods in 2023 and 2022 was $148,364 and ~~2021 was~~ $68,902, ~~and $54,269,~~ respectively.
~~NOTE 4 - ACCRUED EXPENSES~~
~~Accrued expenses consisted of the following at:~~

April 3,
2022

January 2,
2022

Accrued real estate taxes

$ 73,211

$ 103,615

Accrued bonus compensation

7,000

7,000

Accrued payroll

126,432

44,700

Accrued payroll taxes

14,599

8,424

Accrued sales taxes payable

80,714

50,414

Accrued vacation pay

17,663

17,663

Accrued gift card liability

23,622

10,036

Accrued franchise royalty

2,931

2,614

Other accrued expenses

13,913

9,875

$ 360,085

$ 254,341

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NOTE 4 - ACCRUED EXPENSES
Accrued expenses consisted of the following at:

April 2, 2023

January 1, 2023

Accrued real estate taxes

$ 195,093

$ 202,436

Accrued bonus compensation

59,139

59,139

Accrued payroll and payroll taxes

25,286

156,245

Accrued sales taxes payable

91,172

70,270

Accrued vacation pay

17,663

17,663

Accrued gift card liability

21,748

25,965

Other accrued expenses

-

802

$ 410,101

$ 532,520

NOTE 5 - LONG TERM DEBT

~~The Company's~~Our long-term debt is as follows:

April 3,
2022

January 2,
2022

April 2, 2023

January 1, 2023

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 on Company owned properties. The notes are guarenteed by BT Brands, Inc. and a shareholder of the Company.

$ 2,987,109

$ 3,027,971

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

$ 2,621,668

$ 2,864,484

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.

20,625

22,000

3,007,734

3,049,971

Minnesota Small Business Emergency Loan dated April 29, 2020, payable in monthly installments of $458.33 beginning December 15, 2020, including principal and interest at 0%. This note is secured by the personal guarantee of a shareholder of the Company. Pursuant to the terms of the loan, $13,750 of the loan was forgiven on June 22, 2022

1,727

3,208

Total

2,623,501

2,867,692

Less - unamortized debt issuance costs

(45,649 )

(46,999 )

(40,249 )

(41,599 )
Current maturities

(171,357 )

(169,908 )

(166,241 )

(167,616 )

$ 2,416,905

$ 2,658,477

$ 2,790,728

$ 2,833,064

NOTE 6 - STOCK-BASED COMPENSATION

In 2019, ~~the Company~~we adopted the ~~2019~~ BT Brands, Inc 2019 Incentive Plan (the ~~"2019 Incentive Plan"~~“Plan”), under which itthe Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units, and other stock and cash awards to eligible participants. ~~The number of common shares reserved for issuance is 250,000.~~ As of April ~~3, 2022,~~2, 2023, there were ~~5,000~~529,750 shares available for a grant under the ~~2019~~ 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 quarter of 2022, the company granted 215,750 options to employees and consultants to purchase shares at $2.50 per share.
Stock options granted to employees and directors generally 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 ~~grant date~~ 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 ~~first-quarter period in 2022 was $33,500 and was zero in the~~ first quarter of ~~2021.~~2023 was $26,400 in 2023, and $9,500 related to the Contingent Share Award described below and $33,500 in 2022. Based on current estimates, we project that for current grants, approximately $180,000 in stock-based compensation expense will be recognized over the next three years at approximately $60,000 per year.

~~The Company utilizes~~As outlined in each agreement, stock options granted to employees and directors vest over four years in annual installments. Options expire ten years from the date of the grant. Compensation expense equal to the fair value of the options at the grant date is recognized in general and administrative expense over the applicable service period.
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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~~Company’s common stock as of the grant date.

●·
Exercise price – The stated exercise price of the stock option.

●·
Expected life – The simplified method

●·
Expected dividend – The rate of dividends ~~that the Company expects~~expected to ~~pay~~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.~~award
Information regarding our stock options is summarized below:

Number of

Weighted Average

Weighted Average Remaining Term

Aggregate
Intrinsic

Options

Exercise Price

(In Years)

Value

Options outstanding at January 1, 2023

220,250

$ 2.74

9.0

$ 0

Granted

0

0

Exercised

0

0

Canceled, forfeited, or expired

0

0

Options outstanding at April 2, 2023

220,250

$ 2.74

8.9

$ 0

Options exercisable at April 2, 2023

94,950

$ 3.18

8.9

$ 0

On February 27, 2023, the Company finalized a Contingent Incentive Share Award with senior executives. The Contingent Share Awards provides that so long as the Company’s publicly traded warrants are outstanding, senior management of the Company will be deemed to earn an aggregate award of 250,000 shares of common stock as an award upon the Company’s share price reaching $8.50 per share for 20 consecutive trading days, provided, however, participants must be employed by the Company at the time the Incentive Shares are earned. The estimated fair value of the plan is $1.00 per share, and $250,000 of compensation expense will be recognized over the remaining 2.1 years available under the Plan and $9,500 of stock-based compensation was recognized for this Agreement in the first quarter of 2023. We utilized a lattice model when determining the fair value of the Contingent Incentive Share Awards. Assumption utilized in the model include a risk-free rate of 4.4% and volatility of 63%.

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~~The Company recognized stock-based compensation expense in its consolidated statements of operations for the three and nine months ended April 3, 2022, as follows:~~
~~Information regarding the Company's stock options is summarized below:~~

Number of

Weighted Average

Weighted Average Remaining Contract Term

Aggregate
Intrinsic

Options

Exercise Price

(In Years)

  Value

Options outstanding at January 2, 2022

15,000

$ 5.00

9.3

$ 0

Granted

215,750

2.50

0

Exercised

0

0

Canceled, forfeited, or expired

0

0

Options outstanding at April 3, 2022

230,750

$ 2.66

9.8

$ 0

Options exercisable at April 3, 2022

58,150

$ 3.13

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 the period ended April 3, 2022:~~
Fair value of options granted during the period

$ 1.392

Expected life (in years)

4.833

Expected dividend

$ —

Expected stock volatility

63 %
Risk-free interest rate

2 %
On February 9, 2022, the Board of Directors and its Compensation Committee approved a proposal wherein 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. Final approval of the plan is contingent upon shareholder approval of an expanded Incentive Stock Plan which is expected to be proposed at the next meeting of shareholders of the company.
NOTE 7 – LEASES

~~Concurrent with~~With the acquisition of ~~Keegan's~~Keegan’s net assets, ~~the Company~~we entered into a lease for approximately 2,800 square feet of ~~space the~~ restaurant ~~occupies.~~space. The ~~terms of the~~ 131-month Keegan’s lease ~~provide~~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, ~~the Company~~we recorded ~~both~~ an operating lease obligation and a right-of-use asset of $624,000. The present value discounted at 4%3.75% of the remaining lease obligation of ~~$616,517~~$563,546 is reflected as a liability in the accompanying financial statements.

~~Because our~~Keegan’s lease ~~for the Keegan location~~ does not provide an implicit interest ~~rate,~~rate; we used our incremental borrowing rate of 4% to determine the ~~lease payments'~~ 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 ~~costs~~expenses, and sales tax. ~~In addition~~
Upon acquiring PIE assets, we leased 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 of after 24 months of 5%. The PIE lease includes three five-year renewal option periods. The PIE lease is accounted for as an operating lease. At the inception of the lease, we recorded an operating lease obligation and a right-of-use asset of $1,055,000. The present value discounted at 5% of the remaining lease obligation of $1,029,806 is reflected as a liability in the accompanying financial statements.
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.
With the acquisition of assets of Village Bier Garten, we entered into a five-year lease with the seller for approximately 3,000 square feet of restaurant space and access to an additional 3,000 square feet of shared entertainment and seating area. The terms of the triple-net 60-month provide for an initial rent of $8,200 per month with an annual escalation of 3%. The VBG lease includes three five-year renewal option periods. The VBG lease does not provide an implicit interest rate; we used our estimated incremental borrowing rate of 5% to determine the present value of future lease payments. The incremental borrowing rate represents an estimate of the interest rate we would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the lease term. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales tax.
The VBG lease is accounted for as an operating lease. At the inception of the lease, we recorded an operating lease ~~cost,~~obligation and a right-of-use asset of $469,949. The present value discounted at 4.5% of the ~~Company will incur certain variable~~remaining lease ~~costs, which are expected to average approximately $3,000 per month beginning~~obligation of $371,592 is reflected as a liability in ~~April 2022.~~ the accompanying financial statements.

Following is a schedule of the approximate minimum future lease payments on the operating ~~lease for the Keegans operating location~~leases as of April ~~3, 2022:~~2, 2023:

2022

$ 50,000

2023

61,650

Total

Remainder 2023

$ 211,380

2024

63,500

289,076

2025

67,400

297,745

2026

69,400

306,674

2027 and thereafter

459,050

2027

268,437

2028 and thereafter

1,039,438

Total future minimum lease payments

762,000

2,412,750

Less - interest

145,483

(447,806 )
Present value of lease payments

$
616,517

$ 1,964,944

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 ~~located~~ on this land is approximately ~~$ 18,500.~~$18,500. The monthly lease payment is ~~$1,600~~$1,800 plus the cost of property taxes.

The ~~Company also rents corporate office space in West Fargo, North Dakota, and Minnetonka, Minnesota, for a monthly rent of~~weighted average remaining lease term is approximately ~~$2,200.~~5.9 years.

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The Company also pays a monthly rent, under month-to-month arrangements, for corporate and administrative office spaces in West Fargo, North Dakota, and Minnetonka, Minnesota, for a combined monthly rent of approximately $2,200.
The total operating lease expense for the 13-week period in 2023 was $93,151. Cash paid for leases during the 13-week period in 2023 totaled $97,887 and variable expenses for leased properties were $14,196.
NOTE 8 - RELATED PARTY ~~TRANSACTIONS~~TRANSACTION

Next Gen Ice

~~In 2019, the Company made cash advances to~~Our CEO and CFO also serve as Chairman and CFO of Next Gen Ice, Inc. (NGI) ~~in the form of~~. BT Brands owns 179,000 common shares, and 138,788 NGI Series ~~C Notes totaling a principal amount of $179,000 ("Notes"). The Company's CEO, Gary Copperud, is Chairman of the Board of Directors of NGI. The Company's Chief Operating Officer, Kenneth Brimmer, is~~A1 Preferred Shares and also ~~a member of the Board of Directors~~holds warrants to purchase 358,000 common shares at $1.00 expiring March 31, 2028, and 34,697 warrants to purchase additional shares at $1.65  of NGI ~~and serves~~ as Chief Financial Officer of NGI on a part-time contract basis. Mr. Copperud and a limited liability company controlled by him together own approximately 34% of the outstanding equity of NGI. The Notes were modified on March 2, 2020, and the maturity was extended to August 31, 2020. As part of ~~the~~a Note modification, ~~the Company~~BT Brands We received 179,000 shares of common stock in ~~Next Gen Ice from the founders~~NGI as consideration for modification of NGI, representing approximately 2% of NGI shares outstanding. The Company also holds warrants to purchase 358,000 shares of common stock for $1.00 per share, which were initially set to expire on March 31, 2023. Effective with the Company’s agreement to make an additional investment in February 2022, the expiration date of the 358,000 $1.00 stock purchase warrantsa note that subsequently was ~~extended by five years to March 31, 2028.~~paid. The common stock and ~~common stock purchase~~ warrants received byin the ~~Company~~note modification transaction were recorded at a value determined by ~~the Company~~BT Brands of $75,000. The ~~Company has determined that its~~ investment in NGI does not have a readily determinable market value. Therefore, it is carried at ~~the~~a cost determined by the Company when the shares and warrants were received. The Notes were repaid in August 2020 with interest. On February 2, 2022, the Company made an additional investment into NGI of $229,000 in NGI Series A1 8% Cumulative Convertible Preferred Stock, including a five-year warrant to purchase 57,250 shares at $1.65 per share. The total value of the Company’s investment in NGI at April 3, 2022, is $304,000, comprised of the $75,000 value determined by the Company for the initial common shares and warrants and the $209,000 cost of the February 2, investment in the NGI Convertible Preferred Stock and Warrants.BT Brands.

NOTE 9 -– CONTINGENCIES

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

NOTE 10 – SUBSEQUENT EVENT

~~On May 11, 2022,~~In April 2023, we completed the Company acquired the assets of an operating bakery and coffee shop located in Woods Hole, Massachusetts. The acquired assets have operated as Pie In The Sky Coffee and Bakery (“Pie Coffee”) for more than 20 years, near the Ferry Terminal in Woods Hole. Pie Coffee serves the local Woods Hole market and a significant seasonal market of visitors to Cape Cod and the Ferry Terminal. The Pie Coffee assets were acquired for $1,173,500 of cash. The Company has not yet finalized the allocationdisposition of the ~~purchase price. At the time~~St. Louis area property in lieu of ~~purchase, we entered into~~unpaid property taxes, aa a ~~five-year triple-net lease~~result second quarter of 2023 will reflect a gain of approximately $180,000 for the reversal of previously accrued property ~~occupied by Pie Coffee with three 5-year renewal options. The initial rent of $10,000 per month for 24 months increases annually at 3% during the lease term and option periods.~~taxes.

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Table of Contents

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, the ~~"Company"~~“Company”) should be read in conjunction with the ~~Company's~~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~~Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the ~~Company's~~Company’s annual report on Form 10-K for the year ended January ~~2, 2022.~~1, 2023.

Introduction

As of April 2, ~~2022,~~2023, including our partially owned Bagger Dave’s business, we owned and operated ~~eleven~~eighteen restaurants ~~including nine~~comprising the following:
·
Eight Burger Time fast-food restaurants and one Dairy Queen franchise (“BTND”);
·
Village Bier Garten is a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida. (“VBG”):
·
Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”);
·
Pie In The Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”).
·
Unconsolidated affiliate Bagger Dave’s Burger Tavern, Inc, 41.2% owned, operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana (“BD”).
Burger Time ~~fast-food restaurants, one Dairy Queen fast-food~~opened its first restaurant ~~and Keegan's Seafood Grille, a dine-in restaurant located~~ in ~~Florida. Our fast-food restaurants are all located~~Fargo, North Dakota, in ~~the North Central region of the United States. Our~~1987. Burger Time restaurants feature ~~a wide variety of burgers~~grilled hamburgers and other 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, 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. Our revenues are derived principally from the sale of food and beverages at our restaurants and branded retail merchandise, which accounts for an insignificant portion of our income.
                ~~Our~~ Burger ~~Time~~Time’s operating principles ~~include:~~include (i) offering ~~a "Bigger Burger" to deliver our customers "more good food~~bigger burgers and more value for ~~your money";~~the money; (ii) offering a limited menu to permit attention to quality and speed of preparation; (iii) providing fast service by way of single and double drive-thru designs and a point-of-sale system that expedites the ordering and preparation ~~process;~~process, and (iv) great tasting and quality food made fresh to order at a fair price. Our primary strategy is to serve the drive-thru and take-out segment of the quick-service restaurant industry.

Operationally, we take several steps to maintain efficiency at our restaurants, including maintaining an inventory of typically less than $20,000 per store at any given time (which also allows for frequent deliveries of fresh food).
~~Our~~The average customer transaction at our Burger Time restaurants increased by 4%approximately 20% in ~~the first three months of~~ fiscal ~~2022~~2023 compared to ~~2021~~2022 and currently is ~~approximately $12.10.~~about $15.60. This recent increase is principally ~~the result~~because of athe menu price ~~increase~~increases implemented in ~~2021.~~2022. Many factors influence our sales trends. Our ~~sales trends are influenced by many factors, including the COVID pandemic, which was a positive for our sales. The~~business environment ~~remains~~is challenging ~~for smaller restaurant chains~~ as competition ~~from the major fast-food hamburger-focused business~~ is intense.

InWe operate through a central management organization that provides continuity across our restaurant base by utilizing the ~~fourth quarter~~efficiencies of ~~2021, we completed an initial public offering of units~~a central management team.
Notable Recent Events
Our recent acquisitions have allowed us to diversify our operations into new restaurant segments and new geographic regions, reducing our dependency on the financial performance of our ~~securities at~~Burger Time restaurants. During the 2022 fiscal year, we acquired three operating restaurants and a ~~public offering price~~41.2% ownership interest in BD, an operator of ~~$5.00 per unit, each unit comprising one share of common stock and one warrant~~six casual restaurants. We expect to ~~purchase one share of common stock at an exercise price of $5.50 per share. The net proceeds to~~consider new acquisition opportunities in the Company from the offering, including the exercise of the underwriter's option to purchase additional warrants, were approximately $10.7 million, after deducting underwriting discounts and commissions and payment of estimated offering expenses totaling approximately $1.3 million.future.

Material Trends and Uncertainties

~~There are industry~~Industry trends ~~that may~~ have ana direct impact on our business. ~~These~~Current trends ~~principally relate to~~include difficulties attracting food service workers and rapid inflation in the cost of input items. Recent trends also include the rapidly changing area of technology and food ~~delivery area.~~delivery. The major companies in the restaurant industry have rapidly adopted and developed ~~applications for the~~ smartphone and mobile delivery ~~have~~applications, aggressively expanded drive-through operations, and ~~have~~ developed loyalty programs and database marketing supported by a robust technology platform. We expect these trends to continue as restaurants aggressively compete for customers. ~~Further, the major industry participants have continued~~Competitors 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~~Food costs have increased over the last two years, and we expect to see continued inflationary pressure during 2023. Beef and egg costs continued to increase in ~~the remainder of 2022. Beef costs were stable in 2020 and since 2020 have increased by approximately 13.7% per pound.~~2023. 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 second quarter of 2022. It~~it may be ~~difficult~~challenging to raise menu prices to cover ~~future~~ cost ~~increases. In 2020 and 2021,~~increases fully. As a ~~significant increase in business volume contributed to improved profit margins. Additional~~result, future margin improvements may ~~have~~be difficult to achieve. Margin improvement will be achieved through operational enhancements, equipment advances, and increased ~~sales~~ volumes ~~to help offset any~~offsetting food cost ~~increases due to the competitive state of the restaurant industry.~~
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~~Table of Contents~~
The general state of the economy influences restaurant customer traffic, 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 are ordered to close, or we may be forced to implement temporary voluntary closures or impose restrictions on operations due to a shortage of available workers. 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 food service industry. Our principal strategy is to acquire multi-unit restaurant concepts and individual properties at attractive earnings multiples. Though we do not have plans to do so, we may, under certain circumstances, develop additional Burger Time locations. Other critical elements of our growth strategy encompass increasing same-store sales and introducing a campaign to boost brand awareness.
~~Expansion Through Acquisitions~~
We intend to make strategic and opportunistic acquisitions that provide an entrance into targeted restaurant segments and geographic areas. Restaurant businesses become available for acquisition frequently. We believe that we may be able to purchase either individual restaurant properties or multi-unit businesses at prices that provide an attractive return on our investment. Alternatively, we may acquire operating assets where a franchise program of the acquired foodservice business is concluded by management to be the most appropriate growth plan. We intend to follow a disciplined strategy of evaluating acquisition opportunities 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 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.~~
Assuming we successfully acquire 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 expand the number of locations and 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 near each other, we believe the concentration of operations will provide economic synergies for management functions, marketing, and advertising, supply chain assistance, staff training, and operational oversight.increases.

17
Table of Contents

~~Future Development of Additional Burger Time Restaurants~~
~~We may consider developing additional Burger Time locations. Conditions that might give rise~~Labor is a critical factor in operating our stores. Securing staff to ~~developing additional Burger Time~~run our locations ~~include~~at full capacity has become more challenging in most areas where we operate our restaurants. The current labor market has resulted in higher wages as the opportunity to acquire and convert a property that previously had operated as a fast-food establishment at an attractive price in a location that fits 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 the development of these restaurants will, based on our experience, require a minimum of six to nine months after opening to achieve the targeted restaurant-level sales and operating margins. When we open a restaurant in new and untested markets, achieving targeted sales may take longer since the local population willcompetition for employees intensifies, not be familiar with our brand. Building brand awareness takes time in a new and untested market. How quickly new restaurants achieve their targeted sales and operating margin depends on many factors, including consumer familiarity with our brand and the availability of experienced managers and other staff. However, every restaurant has a unique opening sales pattern, which is difficult to predict.
~~Increase Same-Store Sales~~
Same-store sales growth reflects the change in year-over-year sales for the comparable store base. We intend to deploy a multi-faceted same-store sales growth strategy to optimize restaurant performance. We will apply techniques provenonly in the restaurant industry but in practically all retail and service industries. To succeed, we must identify, develop and retain quality employees.
Result of operations for the 13 weeks ending April 2, 2023, compared to the 13 weeks ending April 3, 2022.
The following table sets forth, for the periods indicated, our Consolidated Statements of Operations expressed as a percentage of total revenues. The percentages amounts below may not reconcile because of rounding.

  13 weeks ended,
April 2, 2023

13 weeks ended,
April 3, 2022

Amount

            %

Amount

%

SALES

$ 3,070,798

100.0 %

$ 2,073,195

100.0 %
COSTS AND EXPENSES

Restaurant operating expenses

Food and paper costs

1,290,323

42.0

721,583

34.8

Labor costs

1,202,760

39.2

607,710

29.3

Occupancy costs

357,125

11.6

174,638

8.4

Other operating expenses

195,614

6.4

119,867

5.8

Depreciation and amortization

163,507

5.3

69,415

3.3

Gain on sale of assets held for sale

(313,688 )

(10.2 )

0

0

General and administrative

425,915

13.9

291,061

14.0

Total costs and expenses

3,321,556

108.2

1,984,275

95.7

Income (loss) from operations

(250,758 )

(8.2 )

88,921

4.3

UNREALIZED GAIN ON MARKETABLE SECURITIES

69,856

2.3

-

-

INTEREST AND DIVIDEND INCOME

89,048

2.9

INTEREST EXPENSE

(25,533 )

(0.8 )

(28,271 )

(1.4 )
EQUITY IN AFFILIATE LOSS

(54,399 )

(1.8 )

-

-

INCOME TAX (EXPENSE) BENEFIT

30,000

1.0

(18,000 )

(0.9 )
NET INCOME (LOSS)

$ (141,786 )

(4.6 )%

$ 42,650

2.0 %
Net Revenues:
Net sales for the first quarter of 2023 increased $997,603 or 48.1% to $3,070,798 from $2,073,195 in 2022. The sales increase ~~same-store~~resulted from acquiring three restaurants in 2022 contributing $1,307,000 in revenue during the quarter. In addition, the BTND business experienced a sales ~~at our~~decrease of approximately $195,000 as the unusually harsh winter weather impacted sales. Sales also reflect the closing of the West St Paul Burger Time location in the fourth quarter of 2022.
For BTND locations open at quarter-end, first-quarter restaurant sales ranged from a low of $93,000 to a high of $232,000. The average sales for each Burger Time unit open at quarter-end were approximately $157,000 in 2023, a decline of approximately 13.2% from $181,000 in 2022.
Restaurant Operating Costs:
During 2023, restaurant operating costs (which refer to all the costs associated with operating our restaurants but do not include general and ~~our acquired properties~~administrative expenses and ~~develop~~depreciation and amortization and the gain on the sale of property and equipment) increased to 99.2% in restaurant sales in 2023 from 78.3% in 2022. This increase was due primarily to the inclusion of three new ~~approaches that reflect our corporate character and restaurant composition. We expect to utilize customer feedback and analyze sales data to introduce, test and hone existing and new menu items.~~restaurants for the entire first quarter of 2023. In addition, we will investigate using public relations and experiential marketing to engage customers. We expect our strategies to increase same-store sales will evolve as we acquire new restaurant concepts in new markets.
~~Increase Brand Awareness~~
We appreciate that increasing brand awareness is essential to the growth of our Company. We will develop and implement forward-looking branding strategies for Burger Time and any acquired businesses. We will seek to leverage social media and employ targeted digital advertising to expand the reach of our brands and drive traffic to our stores. In addition, we intend to develop mobile applications that will allow consumers to find restaurants, order online and earn rewards. We will deploy cross-over ads with radio and social media interaction. We expect our branding initiatives to evolve as we consummate acquisitions of restaurant concepts that appeal to distinct consumer markets in differing geographic areas.
~~Our ability to acquire or open new restaurants is predicated~~Keegan’s was purchased on ~~the availability of capital for such purposes. We cannot be certain that capital will be available to us on acceptable terms, if at all.~~
~~First Quarter Highlights~~
On March 2, 2022, ~~we consummated the acquisition~~and therefore only one month of ~~substantially~~results was included in 2022. For all of ~~the assets of Keegan's Seafood Grille, Inc., an operating restaurant located in Indian Rocks Beach, Florida. We acquired the assets for a purchase~~our locations, we continued to see price ~~of $1,150,000. The acquired assets have operated as Keegan's Seafood Grille for more than 35 years, primarily serving the Clearwater~~inflation on input costs, including food and ~~St. Petersburg, Florida markets. As part of the purchase, we acquired the "Keegan's Seafood Grille" tradename, and we plan to continue to operate the property under the Keegan's Seafood Grille name.~~
~~Key Performance Indicators~~
We use comparable store sales metrics as indicators of sales growth to evaluate how our established stores have performed over time. We use comparable guest traffic to determine how established stores have performed over time, excluding growth achieved through menu price and sales mix change. Finally, we use average checks per guest to identify trends in guest preferenceslabor, and the ~~effectiveness~~matters discussed in the “Cost of ~~menu changes. We believe these performance indicators are useful for investors by providing a consistent comparison of sales results~~Sales,” “Labor Costs,” and ~~trends across comparable periods within our core, established store base, unaffected by results of store openings, closings,~~“Occupancy and ~~other transitional changes.~~Other Operating Costs” sections below.

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Table of Contents

~~Results~~The impact of ~~Operations for the Thirteen Weeks Ended~~ ~~April 3, 2022,~~cost increases and the ~~Thirteen Weeks Ended April 4, 2021~~addition of three non-BTND restaurants during the year may be detailed as follows:

~~The following table sets forth our Condensed Statements of Operations for the fiscal periods indicated as a percentage of total revenues. Percentages below may not reconcile because of rounding.~~

13 Weeks Ended,

April 3,
2022

April 4,
2021

SALES

100.0
%

100.0
%
COSTS AND EXPENSES

Food and paper costs

34.8

37.7

Labor costs

29.3

29.1

Occupancy costs

8.4

7.0

Other operating expenses

5.8

6.3

Depreciation and amortization

3.3

2.8

General and administrative

14.0

5.4

Total costs and expenses

95.7

88.5

Income from operations

4.3

11.5

INTEREST EXPENSE

(1.4 )

(2.0 )
INCOME BEFORE TAXES

2.9

9.5

PROVISION FOR INCOME TAXES

(0.9 )

(2.6 )
NET INCOME

2.0
%

6.9
%
~~Net Revenues:~~
Net sales for the fiscal first quarter of 2022 increased $132,323 or 6.8% to $2,073,195 from $1,940,872 in the first quarter of fiscal 2021. A decline in sales at Burger Time locations was attributable principally to the labor issues resulting in some curtailment of restaurant operating hours and poorer weather conditions than in the year-earlier period. These negative effects were offset by the contribution to sales of approximately one-month for Keegan's Seafood Grille, which was acquired on March 2, 2022, and contributed approximately $345,000 in sales during the quarter.
Restaurant operating costs for the period ended April 3, 2022

$ 1,623,798

Increase in food and paper costs

568,740

Increase in labor costs

595,050

Increase in occupancy and operating cost

258,234

Restaurant operating costs for the periods ended April 2, 2023

$ 3,045,822

Costs of Sales - food and paper:

Cost of sales - food and paper - for 2023 increased to 39.2% of restaurant sales from 34.8% of restaurant sales in 2022. As previously noted, Keegan’s was purchased on March 2, 2022, and only one month of results was included in 2022. For all of our locations, we continued to see price inflation on input costs, including food costs, where ground beef costs are approximately 40% higher compared to the first quarter of ~~fiscal 2022 decreased as~~2022. The increase results from including Keegan’s and VBG, which operates at a ~~percentage~~higher food cost than BTND, PIE because of ~~sales to 34.8% of restaurant sales from 37.7% of restaurant sales in~~its coffee-focused menu, has significantly lower food and paper costs than BTND, Keegan’s and Village Bier Garten. However, the first quarter ~~of fiscal 2021. This decrease resulted from a menu price increase in~~is seasonally the ~~second half of 2021 and relatively favorable pricing negotiated with the Company's ground beef supplier.~~
~~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 expenses and depreciation and amortization) as a percent of restaurant sales were relatively stable at 79.7% of sales in the first fiscalslowest quarter of 2022 compared to 80.2% in the same period of fiscal 2021. This was due primarily to an increase in sales which favorably impacted both fixed and semi-fixed costs and the matters discussed in the "Cost of Sales,” "Labor Costs,” "Occupancy,” and “Other Operating Cost" sections below.for PIE.

Labor Costs:

~~For the first quarter of fiscal 2022,~~In 2023, labor and benefits cost increased ~~by $42,218~~ to ~~$607,710, and labor costs as a percentage of sales increased to 29.3%~~39.6% of restaurant sales from ~~29.1% of restaurant sales the~~29.3% in ~~fiscal 2021 first quarter.~~2022. The increase is the net result of lower BTND activity in 2023 and higher wages because of labor shortages in some of our markets, contributing to an unfavorable utilization of the ~~rate resulted from an increase in new-hire wage rates offset by leveraging existing staffing levels as sales increased significantly from the previous year. The Company continued to~~fixed portion of labor costs. PIE and Keegan’s businesses run at higher labor costs than BTND. We benefit from minimal turnover in ~~its~~ unit restaurant ~~management, which tends to cause unfavorable variations in labor costs.~~management. Payroll costs are semi-variable, meaning that they do not ~~change~~decrease proportionally to ~~changes~~decreases in ~~revenue.~~revenue; thus, they increase as a percentage of restaurant sales when there is a decrease in restaurant sales.
Occupancy and Other Operating Costs:
For 2023, occupancy and other costs increased to 18.0% of sales or $552,739 compared to $294,505, or 14.2% of restaurant sales in 2022, principally because of the impact on these costs of three leased restaurant locations added in 2022, all of which operate at a higher occupancy cost than our BTND locations where we own the majority of the real estate.
Depreciation and Amortization Costs:
For 2023, depreciation and amortization costs increased by $94,092 to $163,507 (5.3% of sales) from $69,415 (3.3% of sales) in 2022. Depreciation and amortization costs increased principally due to the purchase of three restaurants during 2022 for approximately $2.4 million and capital additions in the last two years, including major parking lot repairs and significant replacement of HVAC equipment at several locations. These capital additions offset the decrease in depreciation and amortization resulting from a significant amount of our equipment reaching a fully depreciated status.
General and Administrative Costs
General and administrative costs in 2023 increased 46.3%, or $134,853, to $425,915 (13.9% of sales) from $291,062 (14.0% of sales) in 2022. The dollar amount increase was principally the result of our acquiring three businesses during 2022 and the ongoing costs of operating as a public company, including administrative salaries and audit expenses.
Income (loss) from Operations:
The loss from operations was $250,758 in 2023 compared to an operating income of $88,921 in 2022. The change in income from operations in 2023 compared to 2022 was primarily due to the decline in BTND sales, seasonally slow sales at PIE and poor margins at Keegan’s offset by the $313,618 gain on the sale of West St. Paul property, together with other matters discussed in the “Net Revenues,” “General and Administrative Costs” and “Restaurant Operating Costs,” sections above.

19
Table of Contents

~~Occupancy and Other Operating Expenses~~Interest expense:

~~For~~In 2023, our interest expense decreased by $2,738 to $25,533 (0.8% of restaurant sales) from $28,271 (1.4% of restaurant sales) in 2022. The decrease in the ~~first fiscal quarter of 2022, occupancy and other expenses increased by $34,748. As a~~ percentage of sales ~~these costs increased to 14.2% of restaurant sales compared with 13.3% in a similar period in 2021. This increase~~ is ~~primarily the result of winter conditions increasing heating costs and snow removal expenses compared~~due to the ~~milder weather a year ago.~~sales from the newly acquired businesses in 2022. The actual dollar value only decreased slightly.

~~Depreciation~~Interest and ~~Amortization Expense:~~Dividends:

~~For~~Interest and dividend income was $89,048 in 2023, resulting from income earned on the first fiscal quarter of 2022, depreciation and amortization increased by $14,579 to $69,415 (3.3% of sales) from $54,836 (2.8% of sales) in the same period in fiscal of 2021. The company continues to reinvest in its properties to maintain and upgrade items such as point-of-sale equipment and HVAC equipment.Company’s available cash balance.

~~General and Administrative Costs~~Net Income (loss):

~~General and administrative costs increased 176.3% or $185,724 from $105,338 (5.4% of sales)~~The net loss was $141,786 in the first fiscal quarter of 2022 to $291,062 (14.0% of sales) in the first quarter of 2021. The increase in general and administrative costs is primarily the result of the transition to a public company following the Company's IPO in November 2021. Following the recent stock offering, the Company increased officer compensation over the year-earlier level and increased staff.
~~Income from Operations~~
~~Income from operations for the first fiscal quarter of 2022 was $88,921~~2023, compared to net income ~~from operations~~ of ~~$223,495~~$42,650 in ~~the 2021 period.~~2022. The change in ~~income~~2023 from ~~operations in fiscal~~ 2022 ~~compared~~was primarily attributable to ~~fiscal 2021 was due to the significant increase in General and Administrative Expenses following the Company's initial public offering and~~ the matters discussed in the ~~"Net Revenues"~~“Net Revenues,” “Restaurant Operating Costs,” “General and ~~"Restaurant Operating Costs" sections above.~~Administrative Costs,” and “Other Income” sections.

Restaurant-level EBITDA:

To supplement the ~~condensed~~ consolidated financial statements, which are prepared and presented ~~according to~~in accordance with GAAP, ~~the Company uses~~we use restaurant-level EBITDA (earnings before interest, taxes, depreciation, and amortization), 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. However, 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~~Accordingly, 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.

We define restaurant-level EBITDA as operating income before pre-opening costs, if any, general and administrative costs, ~~and~~ depreciation, and amortization. General and administrative ~~costs~~expenses are excluded as they are generally ~~not specifically identifiable~~unrelated to restaurant-specific costs. Depreciation and amortization are excluded because they are not ongoing controllable cash expenses and are ~~not related~~unrelated to ~~the health of~~ ongoing ~~operations.~~operations’ health.

13-Week Period

April 3,
2022

April 4,
2021

Revenues

$ 2,073,195

$ 1,940,872

Reconciliation:

Income from operations

95,667

223,495

Depreciation and amortization

69,415

54.836

General and administrative, corporate-level expenses

284,315

105,338

Restaurant-level EBITDA

449,397

383,689

Restaurant-level EBITDA margin

21.6 %

19.8 %
20
~~Table of Contents~~

13 Weeks ended,

April 2, 2023

April 3, 2022

Revenues

$ 3,070,798

$ 2,073,195

Reconciliation:

Income (loss) from operations

(250,788 )

88,921

Depreciation and amortization

163,507

69,415

General and administrative, corporate-level expenses

425,915

291,062

Restaurant-level EBITDA

$ 338,664

$ 449,398

Restaurant-level EBITDA margin

11.0 %

21.7 %

Liquidity and Capital Resources

For the 13 weeks ~~ended~~ending April ~~3, 2022,~~2, 2023, the Company earned an after-tax ~~profit~~loss of ~~$42,650. Principally, as a result of~~$41,786 due to lower than expected sales in the ~~Company's public offering of common stock and warrants in November 2021, on~~first quarter. At April ~~3, 2022,~~2, 2023, the Company had ~~$11,073,645~~$5,494,401 in cash and a working capital of ~~$9,905,672.~~
In May 2020, the Company received pandemic-related loans totaling $487,900; $460,400 was borrowed under the Small Business Administration's Paycheck Protection Program ("PPP"). The Company accounted for the loan's proceeds as a government grant under International Accounting Standard 20 ("IAS 20"), Accounting for Government Grants, and Disclosure of Government Assistance. Under IAS 20, the loan is initially recorded as deferred income on the balance sheet. Forgiveness income is recognized systematically over the qualifying expenses incurred when the Company determines that the forgiveness is reasonably assured. The loans were forgiven in 2021. As a result of the forgiveness of the PPP advances, the loan forgiveness was reflected as "Other Income" in 2020. Also, in May 2020, the Company borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program. Under the loan terms, the Company will seek loan forgiveness in 2022.$6,213,033.

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 our business. Our operations do not require significant working capital, and, like many restaurant companies, we may operate with negative working capital. Our primary ~~sources of~~ liquidity and cash ~~flows~~flow sources are operating cash flows and cash on hand. We use this to service debt, maintain our stores to operate efficiently, and 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 purchase or within a few days from our credit card processor. Generally, payments to our vendors are not due for thirty days.

20
Table of Contents
Summary of Cash Flows

Cash Flows Provided by Operating Activities

~~Primarily as a result of a positive one-month contribution from the operations Keegan's in March 2022, we generated positive~~The first quarter cash flow used in operations in 2023 was $474,259 compared to cash flow from operations of $337,394 in the ~~13 weeks ending April 3, 2022.~~prior year. The winter months have historically been seasonally the slowest part of the ~~Company's business.~~Company’s business, and the first quarter of 2023 was impacted by harsh winter weather.

Cash Flows ~~Used in~~provided by Investing Activities

In the first quarter, cash from investing activities was $5,103,974 which was primarily the result of payment at maturity of $5 million in Treasury Bills held at the end of 2022 and proceeds from the sale of the West St. Paul location. In 2022, the Company ~~has~~ focused on identifying potential acquisition ~~opportunities, including its purchase of Keegans on March 2, 2022.~~opportunities.

Cash Flows Used in Financing Activities

A significant portion of the ~~Company's~~Company’s cash flow is allocated to service the ~~Company's debt.~~Company’s debt and purchase of Treasury shares.

Contractual Obligations

As of April ~~3, 2022,~~2, 2023, we had $3$2.6 million in contractual obligations relating principally to amounts due under mortgages on the real property on which stores are situated. Our monthly required payment is approximately $32,000.

~~Qualitative and Quantitative Disclosure about Market Risk~~
~~Commodity Price Risk~~
We are subject to volatility in food costs due to market risk associated with commodity prices. Our ability to recover increased costs through higher pricing is, at times, limited by the competitive environment in which we operate. To manage these risks, we do not enter into pricing agreements with our suppliers. 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. A ten percent increase in the cost of beef would result in approximately $175,000 of additional food costs for the Company annually.

21
Table of Contents

~~Seasonality and Inflation~~
Seasonal factors and the timing of holidays cause our revenue to fluctuate from quarter to quarter. Our revenue per 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.
Management believes that inflation has had a material effect on income in recent periods. A continuation of current cost trends in food, labor, and other operating costs could adversely affect the Company's operations. The Company generally has been able to increase menu prices or modify its operating procedures to offset increases in its operating costs.
The cost of construction has also increased in recent history. We expect that costs to construct new restaurants in our existing and contiguous markets will be more expensive than several years ago, but we expect to achieve higher restaurant sales volumes and margin improvements to offset these or additional construction cost increases. Construction cost increases could have an adverse effect on our business and operations, particularly for new restaurant development.
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 that changes in the regulatory environment may have on our Company.
~~Off-Balance Sheet Arrangements~~
~~We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have any as defined in the rules and regulations of the Securities and Exchange Commission.~~
~~Recent Accounting Pronouncements~~
There has been no impact on 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.
~~Critical Accounting Policies and Estimates~~
Our discussion and analysis of operating results and financial conditions are based on our financial statements. Under GAAP, our financial statements require 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 experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
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.
~~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 to comply with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of specific accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period. As a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.
22
~~Table of Contents~~
Subject to certain conditions outlined 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act is recorded, processed, summarized, and reported within the periods specified by the ~~SEC's~~SEC’s rules and forms. Disclosure ~~Controls~~controls are also designed to ensure that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of April ~~3, 2022,~~2, 2023, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures under Rule 13a-15(b) promulgated under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of April ~~3, 2022,~~2, 2023, our disclosure controls and procedures were not effective at a reasonable assurance as of the end of the period covered by this report because we lack the necessary corporate accounting resources to maintain adequate segregation of duties. We did not perform an effective risk assessment or monitor internal controls over financial reporting. Management is developing and implementing a series of accounting systems, ~~and~~ procedure changes, and internal controls intended to provide adequate controls over financial reporting.

Changes in internal control over financial reporting

There have been no significant changes 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 Securities Exchange Act of 1934 that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.

2322
Table of Contents

PART 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

Since the date on which the Company filed its annual report on Form 10-K and through the date of this quarterly report, the Company did not sell any securities.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None

2423
Table of Contents

ITEM 6. EXHIBITS.

Exhibit
Description
31.1
Certification of the ~~Company's~~Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the ~~registrant's~~registrant’s Quarterly Report on Form 10-Q for the quarter ended April ~~3, 2022.~~2, 2023.
31.2
Certification of the ~~Company's~~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 April ~~3, 2022.~~2, 2023.
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*
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

XBRL Instance Document
101.SCH

XBRL Taxonomy Extension Schema Document
101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF

XBRL Taxonomy Extension Definition Linkbase Document
101.LAB

XBRL Taxonomy Extension Label Linkbase Document
101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

2524
Table of Contents

SIGNATURES

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

BT BRANDS, INC.
Date: May ~~18, 2022~~16, 2023
By:
/s/ Kenneth Brimmer

Name:
Kenneth Brimmer
Title:
Chief Operating Officer and Principal Financial Officer

26
25

			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		134,924			134,924
Balances, April 4, 2021		4,047,502		8,095		497,671		(1,073,165	)		(567,399	)

			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		33,500		0			33,500
Exercise of common stock warrants		13,612		27		74,839		0			74,866
Net income		-		0		0		42,650			42,650
Balances, April 3, 2022		6,461,118		12,922		11,324,035		(557,588	)		10,779,369

				Outstanding
				Common Stock			Additional Paid-in		Accumulated			Treasury
	Shares			Par Amount			Capital		Deficit			Stock			Total

Balances, January 1, 2022		6,447,506		$	12,895		$	11,215,696	$	(600,238	)	$	-		$	10,628,353
Net income		-			-			-		42,650			-			42,650
Stock based compensation		-			-			33,500		-			-			33,500
Shares issued for exercise of warrants		13,612			27			74,839		-			-			74,866
Balances, April 3, 2022		6,461,118		$	12,922		$	11,324,035	$	(557,588	)	$	-		$	10,779,369

				Outstanding Common Stock			Additional Paid-in		Accumulated			Treasury
	Shares			Par Amount			Capital		Deficit			Stock			Total

Balances, January 1, 2023		6,396,118		$	12,792		$	11,409,235	$	(1,162,523	)	$	(106,882	)	$	10,152,622
Net income (loss)		-			-			-		(141,786	)		-			(141,786	)
Stock based compensation		-			-			35,900		-			-			35,900
Treasury stock purchase		(150,000	)		(300	)		-		-			(249,925	)		(250,225	)
Balances, April 2, 2023		6,246,118		$	12,492		$	11,445,135	$	(1,304,309	)	$	(356,807	)	$	9,796,511

	·	Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company 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.

	Estimated Useful Life (Years)		Original Cost		Accumulated Amortization		Net Carrying Value
Covenants not to Compete		3	$	98,000	$	26,528	$	71,472
Trademarks		15		393,000		25,512		367,788
			$	491,000	$	51,740	$	439,260

Assets acquired:
Inventory	$	10,049
Equipment		428,000
Leasehold improvements		450,000
Trademark, website and other intangibles		75,000
Total identifiable assets acquired		963,049

Liabilities assumed:
Gift card liability		13,049
Net assets acquired		950,000
Goodwill		200,000
Purchase price	$	1,150,000

	April 3, 2022		January 2, 2022
Accrued real estate taxes	$	73,211	$	103,615
Accrued bonus compensation		7,000		7,000
Accrued payroll		126,432		44,700
Accrued payroll taxes		14,599		8,424
Accrued sales taxes payable		80,714		50,414
Accrued vacation pay		17,663		17,663
Accrued gift card liability		23,622		10,036
Accrued franchise royalty		2,931		2,614
Other accrued expenses		13,913		9,875

	$	360,085	$	254,341

	●·	Stock price – Published trading market values of the ~~Company's~~Company’s common stock as of the grant date.
	●·	Exercise price – The stated exercise price of the stock option.
	●·	Expected life – The simplified method
	●·	Expected dividend – The rate of dividends ~~that the Company expects~~expected to ~~pay~~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.~~award

	Number of		Weighted Average		Weighted Average Remaining Term		Aggregate Intrinsic
	Options		Exercise Price		(In Years)		Value
Options outstanding at January 1, 2023		220,250	$	2.74		9.0	$	0
Granted		0		0
Exercised		0		0
Canceled, forfeited, or expired		0		0
Options outstanding at April 2, 2023		220,250	$	2.74		8.9	$	0
Options exercisable at April 2, 2023		94,950	$	3.18		8.9	$	0

	Number of		Weighted Average		Weighted Average Remaining Contract Term		Aggregate Intrinsic
	Options		Exercise Price		(In Years)		Value
Options outstanding at January 2, 2022		15,000	$	5.00		9.3	$	0
Granted		215,750		2.50				0
Exercised		0		0
Canceled, forfeited, or expired		0		0
Options outstanding at April 3, 2022		230,750	$	2.66		9.8	$	0
Options exercisable at April 3, 2022		58,150	$	3.13		9.7	$	0

Fair value of options granted during the period	$	1.392
Expected life (in years)		4.833
Expected dividend	$	—
Expected stock volatility		63	%
Risk-free interest rate		2	%

2022	$	50,000
2023		61,650
			Total
Remainder 2023			$	211,380
2024		63,500		289,076
2025		67,400		297,745
2026		69,400		306,674
2027 and thereafter		459,050

2027				268,437
2028 and thereafter				1,039,438
Total future minimum lease payments		762,000		2,412,750
Less - interest		145,483		(447,806	)
Present value of lease payments	$	616,517
			$	1,964,944

	·	~~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.~~

	13 weeks ended, April 2, 2023						13 weeks ended, April 3, 2022
	Amount			%			Amount			%
SALES	$	3,070,798			100.0	%	$	2,073,195			100.0	%
COSTS AND EXPENSES
Restaurant operating expenses
Food and paper costs		1,290,323			42.0			721,583			34.8
Labor costs		1,202,760			39.2			607,710			29.3
Occupancy costs		357,125			11.6			174,638			8.4
Other operating expenses		195,614			6.4			119,867			5.8
Depreciation and amortization		163,507			5.3			69,415			3.3
Gain on sale of assets held for sale		(313,688	)		(10.2	)		0			0
General and administrative		425,915			13.9			291,061			14.0
Total costs and expenses		3,321,556			108.2			1,984,275			95.7
Income (loss) from operations		(250,758	)		(8.2	)		88,921			4.3
UNREALIZED GAIN ON MARKETABLE SECURITIES		69,856			2.3			-			-
INTEREST AND DIVIDEND INCOME		89,048			2.9
INTEREST EXPENSE		(25,533	)		(0.8	)		(28,271	)		(1.4	)
EQUITY IN AFFILIATE LOSS		(54,399	)		(1.8	)		-			-
INCOME TAX (EXPENSE) BENEFIT		30,000			1.0			(18,000	)		(0.9	)
NET INCOME (LOSS)	$	(141,786	)		(4.6	)%	$	42,650			2.0	%

Restaurant operating costs for the period ended April 3, 2022	$	1,623,798
Increase in food and paper costs		568,740
Increase in labor costs		595,050
Increase in occupancy and operating cost		258,234
Restaurant operating costs for the periods ended April 2, 2023	$	3,045,822

	13-Week Period
	April 3, 2022			April 4, 2021
Revenues	$	2,073,195		$	1,940,872
Reconciliation:
Income from operations		95,667			223,495
Depreciation and amortization		69,415			54.836
General and administrative, corporate-level expenses		284,315			105,338
Restaurant-level EBITDA		449,397			383,689
Restaurant-level EBITDA margin		21.6	%		19.8	%

	13 Weeks ended,
	April 2, 2023			April 3, 2022
Revenues	$	3,070,798		$	2,073,195
Reconciliation:
Income (loss) from operations		(250,788	)		88,921
Depreciation and amortization		163,507			69,415
General and administrative, corporate-level expenses		425,915			291,062
Restaurant-level EBITDA	$	338,664		$	449,398
Restaurant-level EBITDA margin		11.0	%		21.7	%

Exhibit		Description
31.1		Certification of the ~~Company's~~Company’s Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the ~~registrant's~~registrant’s Quarterly Report on Form 10-Q for the quarter ended April ~~3, 2022.~~2, 2023.
31.2		Certification of the ~~Company's~~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 April ~~3, 2022.~~2, 2023.
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*		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		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	BT BRANDS, INC.

Date: May ~~18, 2022~~16, 2023	By:	/s/ Kenneth Brimmer
	Name:	Kenneth Brimmer
	Title:	Chief Operating Officer and Principal Financial Officer