| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of BT Brands, Inc. and its subsidiaries (the "Company," "we," "our," "us," "BT Brands," or "BT") and have been prepared in accordance with the US generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Securities and Exchange Commission ("SEC") requirements for Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ending December 31, 2023. In our opinion, all regular and recurring adjustments necessary for a fair presentation of our financial position and results of operation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year. The accompanying Condensed Consolidated Balance Sheet as of June 30, 2024, does not include all the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of December 31, 2023, and the related notes included in our Form 10-K for the fiscal year ending December 31, 2023. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. The Company BT Brands, Inc. (the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, the Company acquired 100% of BTND, LLC. As of June 30, 2024, including our approximately 40% owned Bagger Dave’s business, we operated eighteen restaurants comprising the following: · Eight Burger Time fast-food restaurants located in the North Central region of the United States, collectively (“BTND”), including our former Dairy Queen franchise located in Ham Lake, Minnesota, which commenced operations as a Burger Time effective July 1, 2024; · Bagger Dave’s Burger Tavern, Inc., an approximately 40% owned affiliate, operates six Bagger Dave’s restaurants in Michigan, Ohio, and Indiana (“Bagger Dave’s” or “BD”); · Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”); · Pie In The Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”); · Schnitzel Haus in Hobe Sound, Florida (“Schnitzel”); · Village Bier Garten is a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida (“VBG”). See Note 8 for information regarding our related party investment in NGI. Business In addition to eight Burger Time restaurants, collectively ("BTND"), we own and operate Keegan's Seafood Grille ("Keegan's"), a dine-in restaurant located in Florida, Pie In The Sky Coffee and Bakery ("PIE"), a casual dining coffee shop bakery located in Woods Hole, Massachusetts, Schnitzel Haus (“Schnitzel”), a German-themed restaurant in Hobe Sound, Florida and the Village Bier Garten (“VBG”), a German-themed restaurant in Cocoa, Florida. Our Burger Time restaurants feature a variety of burgers and other affordable foods, sides, and soft drinks. Keegan's has operated in Indian Rocks Beach, Florida, for more than thirty-five years, offering a variety of traditional fresh seafood items for lunch and dinner. The menu at Keegan's includes beer and wine. PIE features an array of fresh baked goods, freshly made sandwiches, and our locally roasted coffee. Schnitzel is a full-service restaurant and bar featuring a German-themed menu with specialty imported European beers. Our revenues are derived from food and beverages at our restaurants, retail goods such as apparel, private-labeled "Keegan's Hot Sauce," and other souvenir items, which account for an insignificant portion of our income. On June 2, 2022, BT Brands purchased 11,095,085 common shares of Bagger Dave’s Burger Tavern, Inc. “Bagger”). At the time of the purchase, our ownership represented 41.2% ownership of Bagger and currently represents approximately 40% ownership. We acquired the shares from the founder of Bagger Dave’s for $1,390,000, or approximately $0.114 per share. Following the investment, two representatives of BT Brands were appointed to comprise the Board of Directors of Bagger. The Bagger concept offers burgers, hand-cut fries, locally crafted beers on draft, milkshakes, salads, chili, and pizza. The first Bagger Dave's opened in January 2008 in Berkley, Michigan. There are six Bagger Dave's restaurants, including four in Michigan and single units in Ft. Wayne, Indiana, and Centerville, Ohio. Fiscal Year Periods BT Brand's fiscal year is 52/53 weeks, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising a 52-week year. Fiscal 2023 was the 52 weeks ending December 31, 2023, and Fiscal 2024 is comprised of the 52 weeks ending December 29, 2024. References in this report to periods refer to the 13-week periods in the respective fiscal periods. Cash and Cash Equivalents Cash and cash equivalents may include money market mutual funds and United States Treasury Bills with original maturities at the time of purchase of three months or less. Our bank deposits often exceed the amount insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash deposits in brokerage accounts, including money market funds above the insured amount. We do not believe there is a significant risk related to cash. Investments As of June 30, 2024, noncurrent investments include our net equity method investment of $544,023 in Bagger Dave’s, our $304,000 investment in NGI Corporation (NGI), and a $25,000 short-term demand loan to NGI made on June 27, 2024. As of June 30, 2024, NGI is engaged in private funding raising, and the $25,000 loan is expected to be repaid upon closing the current round of funding with interest to be determined. In 2020, the Company received equity ownership in NGI as consideration for a loan to NGI. At the time of the loan, we attributed $75,000 to the value of equity received. 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. In August 2023, our preferred stock in NGI was converted into 157,496 common shares of NGI. Our current ownership of NGI represents less than 2% of its outstanding shares. Bagger Dave’s common stock is traded on the OTC Pink Sheets market and files quarterly and annual financial reports with OTCMarkets, Inc. under the Alternative Reporting Standard. The listing with OTC Markets does not require the financial information to be audited. For the thirteen weeks ending June 30, 2024, Bagger Dave’s had sales of $1,854,000 and a net loss of $211,000. For the second-quarter thirteen-week period, our approximately 40% equity share in the loss was approximately $81,000, which is included in the accompanying consolidated statements of operations. For the 26 weeks ended June 30, 2024, sales totaled $3,746,732, with a net loss of $438,750 and our share of the loss was $175,500. See Note 8 for information regarding our related party investment in NGI. Fair Value of Financial Instruments Our accounting for fair value measurements of assets and liabilities, including available-for-sale securities, is that they are recognized or disclosed at fair value in the statements on a recurring or nonrecurring basis, adhere to the Financial Accounting Standards Board (FASB) fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value. The hierarchy prioritizes unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows : · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at the measurement date. · Level 2 inputs are inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the entire term of the asset or liability. · Level 3 inputs are unobservable inputs for the asset or liability. The carrying values of cash equivalents, receivables, accounts payable, and other financial working capital items approximate fair value due to the short maturity nature of these instruments. The following is a summary of the fair value of Level 1 investments. June 30, 2024 December 31, 2023 Fair value Carrying Amount Level 1 Fair value Carrying Amount Level 1 Corporate bond fund $ 176,250 $ 176,250 $ 178,500 $ 178,500 Common stocks 1,319,389 1,319,389 1,213,560 1,213,560 Total $ 1,495,639 $ 1,495,639 $ 1,392,060 $ 1,392,060 Total cost of marketable securities at June 30, 2024 and December 31, 2023 was $1,180,708 and $1,477,178, respectively. Receivables Receivables consist of estimated rebates due from a primary vendor. Inventory Inventory consists of food, beverages, and supplies and is stated at a lower of cost (first-in, first-out method) or net realizable value. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives, ranging from three to thirty years. We review long-lived assets to determine if the carrying value of these assets is recoverable based on estimated cash flows. Assets are evaluated at the lowest level, for which cash flows can be identified at the restaurant level. In determining future cash flows, we estimate the future operating results of each restaurant. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the assets' carrying value exceeds the assets' fair value. Goodwill and other Intangible Assets and Other Assets Goodwill is not amortized and is assessed for impairment at least annually. The cost of other intangible assets is amortized over their expected useful lives. Asset Held for Sale We closed a Burger Time store in Richmond, Indiana, in 2018. The Richmond location is currently offered for sale. We believe the Richmond property will be sold at or above its current carrying value. In the first quarter of 2023, our former West St. Paul Burger Time location was sold, resulting in a gain of $313,688 during the 2023 period. Income Taxes The Company follows Accounting Standards Codification (ASC.), 740, Accounting for Income Taxes. ASC 740 using the asset and liability approach in accounting for income taxes. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. If necessary, we provide a valuation allowance to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability, and valuation allowances are adjusted as necessary. As of June 30, 2024, we estimated our annual tax provision using a net combined federal and state rate for the year of approximately 27.5%. The Company has no accrued interest or penalties related to income tax obligations. No federal or state examinations are in progress, and the company has not had any examinations since its inception. Per Common Share Amounts Net income per common share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income or loss per share is calculated by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Common stock equivalents are excluded from the computation of diluted per-share amounts if their effect is anti-dilutive. There were no dilutive shares for the periods ending in 2024 and 2023. The Company's Board of Directors has authorized a stock repurchase program of up to 625,000 shares. |
