What changed in this filing

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Item 1. Financial Statements

2021-05-18 compared with 2020-11-10 · 62 added, 133 removed, 158 unchanged (55% of the section changed)

1 unchanged sentence

BT BRANDS, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 27, 2020 AND SEPTEMBER 29, 2019

BT BRANDS, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 27,

CURRENT ASSETS

3 unchanged sentences

LAND AND BUILDINGS HELD FOR SALE

INVESTMENT IN AND NOTE RECEIVABLE FROM RELATED COMPANY

INVESTMENT IN RELATED COMPANY

OTHER ASSETS, net

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES

5 unchanged sentences

LONG-TERM DEBT, less current maturities

UNEARNED VENDOR REBATE

DEFERRED INCOME TAXES

Total liabilities

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY (DEFICIT)

Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at September 27, 2020 and December 29, 2019

Common stock, $.001 par value, 50,000,000 authorized, 8,095,004 shares outstanding at September 27, 2020 and December 29, 2019

SHAREHOLDERS' DEFICIT

Preferred stock, $.001 par value, 2,000,000 shares authorized, no shares outstanding at April 4, 2021 and January 3, 2021

Common stock, $.002 par value, 50,000,000 authorized, 4,047,502 shares outstanding at April 4, 2021 and January 3, 2021

Additional paid-in capital

7 unchanged sentences

13 Weeks Ended,

September 27,

September 29,

September 27,

September 29,

COSTS AND EXPENSES

3 unchanged sentences

Other operating expenses

Depreciation and amortization

Impairment of asset held for sale

General and administrative

1 unchanged sentence

Income (loss) from operations

INTEREST INCOME

INTEREST EXPENSE

2 unchanged sentences

NET INCOME (LOSS)

NET INCOME (LOSS) PER COMMON SHARE

Basic and Diluted -

WEIGHTED AVERAGE SHARES USED IN

COMPUTING PER COMMON SHARE AMOUNTS

Basic and Diluted -

NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted

WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted

See Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

Paid-in Capital

Balances, December 29, 2019

$ (1,902,081 )

$ (1,396,315 )

Balances, March 29, 2020

$ (2,018,325 )

$ (1,512,599 )

Paid-in Capital

Balances, January 3, 2021

$ (1,208,089 )

Balances, April 4, 2021

$ (1,073,165 )

See Notes to Condensed Consolidated Financial Statements

BT BRANDS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

13 Weeks ended,

39 Weeks Ended

September 27,

September 29,

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Amortization of debt issuance cost

Loss on sale of property and equipment

Impairment of property and equipment

Deferred tax benefit

Payment of in-kind interest

Changes in operating assets and liabilities

Deferred tax liability

Changes in operating assets and liabilities, net of acquisition

Prepaid expenses

5 unchanged sentences

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds (advances) on notes due from related entity

Purchase of property and equipment

Net cash provided by (used) in investing activities

Investment in notes receivable from relate company

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

3 unchanged sentences

CHANGE IN CASH

CASH, BEGINNING OF PERIOD

CASH, BEGINNING OF YEAR

CASH, END OF PERIOD

1 unchanged sentence

Cash paid for interest

SUPPLEMENTAL DISCLOSURE OF INVESTING AND FINANCING ACTIVITIES

Purchase of fixed assets included in accounts payable

Transfer of property and equipment to assets held for sale

See Notes to Condensed Consolidated Financial Statements

BT BRANDS, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)

Balances, December 29, 2019

$ (1,902,081 )

$ (1,396,315 )

Balances, September 27, 2020

$ (1,086,719 )

Balances, December 31, 2018

$ (1,533,504 )

$ (1,041,238 )

Balances, September 29, 2019

$ (1,713,055 )

$ (1,220,789 )

Balances, June 28, 2020

$ (1,340,903 )

Balances, September 27, 2020

$ (1,086,719 )

Balances, June 30 , 2019

$ (1,741,682 )

$ (1,249,416 )

Balances, September 29, 2019

$ (1,713,055 )

$ (1,220,789 )

See Notes to Condensed Consolidated Financial Statements

BT BRANDS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

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”, or “BT Brands”) have been prepared in accordance with U.S.

The accompanying unaudited condensed consolidated financial statements include the accounts of BT Brands, Inc., and its subsidiaries (the “Company”, “we”, “our”, “us”, or “BT Brands”) and have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.

All intercompany accounts and transactions have been eliminated in consolidation and have prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ended December 29, 2019.

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 January 3, 2021.

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 September 27, 2020 does not include all of the disclosures required by GAAP.

These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of December 29, 2019 and the related notes thereto included in the Company’s Form 10-K for the fiscal year ended December 29, 2019.

The accompanying Condensed Consolidated Balance Sheet as of April 4, 2021 does not include all of the disclosures required by GAAP.

These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of January 3, 2021 and the related notes thereto included in the Company’s Form 10-K for the fiscal year ended January 3, 2021.

Use of Estimates

6 unchanged sentences

in exchange for common stock in the Company through a Share Exchange Agreement (“Share Exchange”) with BTND, LLC (“BTND”), and its Members.

On June 12, 2020, the Company adopted resolutions by written consent of 100% of its shareholders approving the reincorporation of the Company to the State of Wyoming from the State of Delaware which is expected to be completed in November 2020.

The Company currently operates company-owned fast-food restaurants called Burger Time.

1 unchanged sentence

The Company operates three Burger Time locations in Minnesota, four in North Dakota, and two in South Dakota.

The Company closed a store in Richmond, Indiana during 2018 which is listed for sale, resulting in a total of ten operating restaurants on September 27, 2020.

The Company owns a restaurant property in St.

Louis, Missouri currently held for sale.

The Company closed a store in Richmond, Indiana during 2018 which is listed for sale.

There were a total of ten operating restaurants on April 4, 2021.

The Company’s Dairy Queen store is operated pursuant to the terms of a franchise agreement with International Dairy Queen.

6 unchanged sentences

For purposes of reporting cash and cash flows, cash is net of outstanding checks and includes, amounts on deposit at banks and deposits in transit.

Receivables consists of rebates due from a primary vendor.

Receivables consist mainly of rebates due from a primary vendor.

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

9 unchanged sentences

A property in the St.

Louis area is currently listed for sale.

Also, in September of 2018 the Company closed an operating Burger Time unit in Richmond, Indiana and the Richmond property is listed for sale.

Louis area was written-off in 2020 and certain signage originally purchased for use in that location has been used in other locations.

In September of 2018 the Company closed an operating Burger Time unit in Richmond, Indiana and the Richmond property is listed for sale.

In the second quarter of fiscal 2019 it was concluded to record a charge of $93,488 for impairment of the value of the Richmond location and in the second quarter of 2020 an additional $100,000 impairment charge was recorded.

The Company believes the Richmond property will be sold at or above its current carrying cost of assets held for sale.

We provide for income taxes under (Accounting Standards Codification (ASC), 740), Accounting for Income Taxes.

4 unchanged sentences

The deferred tax assets are reviewed periodically for recoverability and valuation allowances are adjusted, as necessary.

The Company had a net operating loss carry-forward from the prior year of $153,000.

In 2019, the prior losses resulted in an increase in the related deferred tax assets;

however, full valuation allowances were made which reduced these deferred tax assets to zero.

As of September 27, 2020, the Company estimates a current tax provision at the statutory rates of approximately 27.5% and as a result of the net operating loss carryforward offset by other timing differences including current nondeductible status of the impairment loss reserve, taxes payable are currently estimated at $235,898.

As of the of fiscal year 2019, the Company had no accrued interest or penalties relating to any 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 and all periods since 2016 are still open for examination.

As of April 4, 2021, the Company estimates a current tax provision at the statutory rates of approximately 27.5%

The Company currently has no accrued interest or penalties relating to any 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 and all periods since inception remain open for examination.

Per Common Share Amounts

2 unchanged sentences

Diluted net income per share is computed by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period.

Common stock equivalents are excluded from the computation of diluted net loss per share because their effect would be anti-dilutive.

Common stock equivalents are excluded from the computation of diluted net income (loss) if their effect would be anti-dilutive.

There were no potentially dilutive shares outstanding as of the periods ending in 2021 and 2020, as the strike price for warrants outstanding was above the fair market price of the underlying stock in both periods.

Other assets are the allocated fair value of the acquired Dairy Queen franchise agreement related to the Company’s location in Ham Lake, Minnesota, which is being amortized over an estimated useful life of 14 years and deferred income tax benefits related to charges not currently deductible which the Company expect to realize in future periods.

Payroll Protection Plan (PPP) Loans

In May 2020, the Company borrowed $460,400 under the Small Business Administration’s Payroll Protection Program.

Pursuant to the terms of the program, we expect that the loans will be forgiven, and the Company has filed the required documentation to complete the loan forgiveness.

The Company is reasonably assured the entire amount of PPE advances will be forgiven and the anticipated loan forgiveness is reflected as “Other Income” for the nine-month period ending September 27, 2020.

In accordance with current direction of the Internal Revenue Service, the payroll expenses paid with the Payroll Protection Plan proceeds have been reflected as a non-deductible expense in determining the provision for income taxes.

Liquidity and Capital Resources

The condensed consolidated financial statements have been prepared on a going concern basis.

For the 39 weeks ended September 27, 2020, the Company earned an after-tax profit of $815,362.

On September 27, 2020, the Company had $1,393,263 in cash and working capital of $371,190 an increase of $839,516 from the year-end deficit of $468,326.

Covid-19 is having a significant adverse impact on the United States economy.

It is difficult to predict either the ultimate impact of the Covid-19 pandemic and governmental responses on the Company’s operating results and financial condition as the situation is evolving.

In May, 2020 the Company received pandemic-related loans totaling $487,900 of that amount, $460,400 was borrowed under the Small Business Administration’s Payroll Protection Program under the terms of the program we expect that the loans will be forgiven and the Company has filed the required documentation to complete the loan forgiveness.

For the 13 weeks ended April 4, 2021, the Company earned an after-tax profit of $134,924.

At April 4, 2021, the Company had $1,460,098 in cash, and working capital of $296,321, a decrease of $75,372 from January 3, 2021.

As efforts to vaccinate the U.S population progress, Covid-19 continues to a have significant impact on the United States economy.

It is difficult to predict either the ultimate impact of the Covid-19 pandemic or the impact of governmental responses on the Company’s operating results and financial condition.

In May 2020, the Company received pandemic-related loans totaling $487,900, and of that amount, $460,400 was borrowed under the Small Business Administration’s Paycheck Protection Program under the terms of the program the loans were forgiven in 2020.

In May 2020, the Company also borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program.

The Company expects to have sufficient cash assets to meet its obligations for a year from the issuance of these consolidated financial statements.

The Company expects to have sufficient cash assets to meet its obligations for at least a year from the issuance of these consolidated financial statements.

NOTE 2 - PROPERTY AND EQUIPMENT

8 unchanged sentences

Accrued real estate taxes

Accrued bonus compensation

Accrued payroll

4 unchanged sentences

NOTE 4 - LONG TERM DEBT

As a result of the many uncertainties surrounding the economy during the COVID-19 response, two of the Company’s mortgage lenders suspended and deferred current payments for a period of three months during the first half of 2020.

The loans will continue to accrue interest at the stated rate, which is included in the principal.

The Company had the following long term debt obligations as of:

The Company’s long-term debt is as follows:

Note payable to bank dated October 30, 2015 due in monthly installments of $6,916 through October 30, 2030, which includes principal and interest at a fixed rate of 4.75%.

6 unchanged sentences

This note is secured by one of the Company's South Dakota locations and the personal guaranty of a shareholder of the Company.

Notes payable to bank dated November 10, 2016 payable in monthly installements of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be less than 4%.

Notes payable to bank dated November 10, 2016 payable in monthly installments of $1,331 which includes principal and interest at 4%, the interest rate is subject to adjustment based on 5-year Treasury Note rate 2021 and cannot be less than 4%.

This note is secured by property held for sale in Richmond Indiana and the personal guaranty of a shareholder of the Company.

Unsecured 8% notes payable to an entity controlled by shareholders of the Company dated December 26, 2017 originally due on demand after June 1, 2020.

Effective May 31, 2019 a revised note was entered into due July 31, 2023 with monthly payments of $10,000.

The remaining balance was paid in full in August, 2020.

Note payable to bank dated December 28, 2018 due in monthly installments of $1,644 through December 31, 2023 which includes principal and interest at a fixed rate of 5.50%.

1 unchanged sentence

Paul location and the personal guaranty of a shareholder of the Company.

Minnesota Small business emergency loan dated April, 29, 2020 payable in monthly installments of $458.33 starting December 15, 2020 which includes principal and interest at 0%.

This note is sescured by the personal guaranty of a shareholder of the Company.

This note was paid in full on April 6, 2021, and is included in current liabilities at April 4, 2021.

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.

Provided certain employment levels are achieved, the principal balance may be forgiven resulting in the note becoming a grant.

Less - unamortized debt issuance costs

1 unchanged sentence

NOTE 5 - RELATED PARTY TRANSACTIONS

BTND Trading is an entity separate from the Company which is owned by certain significant shareholders of the Company, from time-to-time BTND Trading has advanced funds to the Company.

At the June 28, 2020, $207,729 was due to BTND Trading at 8% annual interest.

In August 2020, the amount due to BTND trading was repaid in full.

In 2019, the Company made cash advances to Next Gen Ice, Inc.

(NGI) in the form of Series C Notes totaling a principal amount of $179,000.

(NGI) in the form of 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 and the Company’s Chief Operating Officer, Kenneth Brimmer, is also a member of the Board of Directors of NGI and serves as Chief Financial Officer of NGI on a part-time contract basis.

Copperud, and a limited liability company controlled by him together own approximately 34% of the outstanding equity of NGI.

On March 2, 2020, the Series C Notes, were modified and the maturity extended to August 31, 2020.

On March 2, 2020, the Notes, were modified and the maturity extended to August 31, 2020.

As part of the Note modification, the Company received 179,000 shares of common stock in Next Gen Ice from the founders of NGI representing approximately 2% of NGI shares outstanding.

The also Company holds warrants to purchase 358,000 shares at a price of $1.00 per share through March 31, 2023.

The Company also holds warrants to purchase 358,000 shares of common stock at a price of $1.00 per share through March 31, 2023.

The common stock and common stock purchase warrants received by the Company were recorded at a value determined by the Company of $75,000.

This amount was also recorded at a discount to the note receivable and was recognized as interest income over the extended term of the Note.

This amount was also recorded at a discount to the note receivable and was recognized as interest income over the extended term of the Notes.

The Company has determined that its investment in NGI does not have a readily determinable market value and therefore is carried at the cost determined by the Company at the time the shares and warrants were received.

The Series C Notes were repaid in August 2020, with interest, and currently there are no outstanding amounts due to the Company from NGI.

The Notes were repaid in August 2020, with interest, and currently there are no outstanding amounts due to the Company from NGI.

NOTE 6 - CONTINGENCIES

1 unchanged sentence

The Company is not aware of any significant asserted or potential claims which could impact its financial position.

NOTE 7 – COVID-19 PANDEMIC AND EMERGENCY LOAN RELIEF

On March 13, 2020, President Donald Trump declared a national emergency in response to the coronavirus (“Covid-19”) global pandemic.

Covid-19 has had a significant adverse impact on the United States economy.

While we have experienced some product shortages and some labor shortages, for the most part, we have continued to operate all of our locations on a drive-through basis only with some reduced hours and with some limited access to the walk-up window and any indoor seating.

Indoor seating is only available in our Dairy Queen and one other location.

In October we closed our Moorhead location for approximately 3 days as a result of confirmed case of Covid-19 and we performed a deep cleaning of the location and testing for the virus of our crewmembers before reopening, In November our Minot location was closed for two days as a result of positive Covid-19 tests by our employees.

At this time, it is difficult to predict if the Company will face store closures in the future and the ultimate impact of the Covid-19 pandemic on the Company’s operating results, although given the drive-through nature of our locations, the impact has been positive so far.

The situation and regulations surrounding government response to the pandemic are constantly changing and it is not possible to determine if the current business trends will continue.

On May 1, 2020, the Company received funding in connection with “Small Business Loans” under the federal Paycheck Protection Program (the “PPP”).

Pursuant to the terms of the Promissory Notes dated May 1, 2020, by BTND and BTNDDQ, L.L.C.

in favor of Northview Bank.

BTND borrowed $418,900 original principal amount, and BTNDDQ, L.L.C.

borrowed $41,500 original principal amount.

Both PPP loans were funded on May 1, 2020.

The PPP Loans bear interest at 1% per annum and mature in two years from the date of disbursement of funds.

Interest and principal payments under the PPP Loans will be deferred for a period of six months.

The PPP Loan contains certain covenants which, among other things, restrict the borrower’s use of the proceeds of the PPP Loan to the payment of payroll costs, interest on mortgage obligations, rent obligations and utility expenses, require compliance with all other loans or other agreements with any creditor.

Under the terms of the Program, we expect that the PPP Loans will be forgiven, and this outcome is reflected in the accompanying consolidated financial statements reflecting $460,400 as a grant and in included in Other Income.

On April 29, 2020, BTNDDQ, L.L.C.

borrowed $27,500 at no interest under the Minnesota Small Business Emergency Loan Program from Central Minnesota Development Corporation.

This loan is interest free and under certain conditions up to 50% of the loan may be forgiven, BTNDDQ, L.L.C., initially, is required to make 18 monthly payments of $458.33 beginning December 15, 2020, following the initial 18 months, in the event the note does not qualify for loan forgiveness, it will be repaid in equal installments over an additional 36 months.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements