BT Brands, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of BT Brands, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of BT Brands, Inc. (the “Company”) as of December 31, 2023 and January 1, 2023 and the related consolidated statements of operations, shareholders’ equity, and cash flows for the fiscal years then ended (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2023 and January 1, 2023 and the results of its operations and its cash flows for the fiscal years then ended in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Boulay PLLP We have served as the Company’s auditor since 2015. Minneapolis, Minnesota April 1, 2024 PCAOB ID: 542 30 Table of Contents BT BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2023 January 1, 2023 ASSETS CURRENT ASSETS Cash and cash equivalents $ 5,300,446 $ 2,150,578 Marketable securities 1,392,060 5,994,295 Receivables 28,737 76,948 Inventory 201,333 158,351 Prepaid expenses and other current assets 47,246 37,397 Assets held for sale 258,751 446,524 Total current assets 7,228,573 8,864,093 PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET 3,247,013 3,294,644 OPERATING LEASE RIGHT-OF-USE ASSETS 1,789,285 2,004,673 INVESTMENTS 1,022,806 1,369,186 DEFERRED INCOME TAXES 206,000 61,000 GOODWILL 671,220 671,220 INTANGIBLE ASSETS, NET 395,113 453,978 OTHER ASSETS, NET 49,202 50,903 Total assets $ 14,609,212 $ 16,769,697 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 555,247 $ 448,605 Broker margin loan 115,899 791,370 Current maturities of long-term debt 183,329 167,616 Current operating lease obligations 215,326 193,430 Accrued expenses 480,289 532,520 Total current liabilities 1,550,090 2,133,541 LONG-TERM DEBT, LESS CURRENT PORTION 2,269,771 2,658,477 NONCURRENT LEASE OBLIGATIONS 1,600,622 1,825,057 Total liabilities 5,420,483 6,617,075 COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, $ 0.001 par value, 2,000,000 shares authorized, no shares outstanding at December 31, 2023 and January 1, 2023 - - Common stock, $.002 par value, 50,000,000 authorized, 6,461,118 issued and 6,246,118 outstanding at December 31, 2023, and 6,396,118 outstanding at January 1, 2023 12,492 12,792 Less cost of 215,000 and 65,000 common shares held in Treasury at December 31, 2023 and January 1, 2023, respectively ( 357,107 ) ( 106,882 ) Additional paid-in capital 11,583,235 11,409,235 Accumulated deficit ( 2,049,891 ) ( 1,162,523 ) Total shareholders' equity 9,188,729 10,152,622 Total liabilities and shareholders' equity $ 14,609,212 $ 16,769,697 See Notes to Consolidated Financial Statements 31 Table of Contents BT BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS 52 Weeks Ended, December 31, 2023 January 1, 2023 SALES $ 14,076,653 $ 12,601,169 COSTS AND EXPENSES Restaurant operating expenses Food and paper costs 5,597,167 4,854,321 Labor costs 5,458,351 4,126,837 Occupancy costs 1,312,717 1,147,744 Other operating expenses 841,894 780,564 Depreciation and amortization expenses 598,540 449,038 General and administrative expenses 1,650,755 1,633,829 Gain on sale of assets ( 310,182 ) - Total costs and expenses 15,149,242 12,992,333 Loss from operations ( 1,072,589 ) ( 391,164 ) UNREALIZED GAIN (LOSS) ON MARKETABLE SECURITIES 80,139 ( 86,422 ) INTEREST AND DIVIDEND INCOME 300,923 125,529 INTEREST EXPENSE ( 97,608 ) ( 114,766 ) OTHER INCOME (EXPENSE) 103,848 ( 80,649 ) EQUITY IN NET LOSS OF AFFILIATE ( 347,081 ) ( 194,813 ) INCOME (LOSS) BEFORE TAXES ( 1,032,368 ) ( 742,285 ) INCOME TAX (EXPENSE) BENEFIT 145,000 180,000 NET INCOME (LOSS) $ ( 887,368 ) $ ( 562,285 ) NET INCOME (LOSS) PER COMMON SHARE - Basic and Diluted $ ( 0.14 ) $ ( 0.09 ) WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted 6,261,631 6,455,379 See Notes to Consolidated Financial Statements 32 Table of Contents BT BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY For the 52-week periods- Common Stock Additional Paid-in Accumulated Treasury Shares Amount Capital (Deficit) Stock Total Balances, January 2, 2022 6,447,506 $ 12,895 $ 11,215,696 $ ( 600,238 ) $ - $ 10,628,353 Stock-based compensation - - 118,700 - - 118,700 Shares issued in exercise of warrants 13,612 27 74,839 - - 74,866 Treasury stock purchase ( 65,000 ) ( 130 ) - - ( 106,882 ) ( 107,012 ) Net loss - - - ( 562,285 ) - ( 562,285 ) Balances, January 1, 2023 6,396,118 12,792 11,409,235 ( 1,162,523 ) ( 106,882 ) 10,152,622 Stock-based compensation - - 174,000 - - 174,000 Treasury stock purchase ( 150,000 ) ( 300 ) - - ( 250,225 ) ( 250,525 ) Net loss - - - ( 887,368 ) - ( 887,368 ) Balances, December 31, 2023 6,246,118 $ 12,492 $ 11,583,235 $ ( 2,049,891 ) $ ( 357,107 ) $ 9,188,729 See Notes to Consolidated Financial Statements 33 Table of Contents BT BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 52 Weeks ended, December 31, 2023 January 1, 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ ( 887,368 ) $ ( 562,285 ) Adjustments to reconcile net loss income to net cash provided by (used in) operating activities- Depreciation and amortization 598,540 449,038 Amortization of debt issuance costs included in interest expense 5,400 5,400 Deferred taxes ( 145,000 ) ( 180,000 ) Loan forgiveness - ( 13,750 ) Stock-based compensation 174,000 118,700 Unrealized (gain) loss on marketable securities ( 80,139 ) 86,422 Realized gain on sale of marketable securities ( 23,058 ) ( 47,708 ) Loss on equity method investment 346,380 194,813 Gain on sale of property and equipment ( 310,182 ) - Non-cash operating lease expense 12,849 13,814 Property tax liability settlement ( 181,339 ) - Changes in operating assets and liabilities, net of acquisitions - Receivables 48,211 ( 4,697 ) Inventory ( 42,982 ) ( 22,851 ) Prepaid expenses and other current assets ( 9,849 ) ( 10,211 ) Accounts payable 106,642 156,632 Accrued expenses 129,108 237,569 Income taxes payable - ( 209,088 ) Net cash provided by (used in) operating activities ( 258,787 ) 211,798 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of net assets of Keegan's Seafood Grille - ( 1,150,000 ) Acquisition of net assets of Pie In The Sky Coffee and Bakery - ( 1,159,600 ) Investment in Village Bier Garten - ( 690,000 ) Investment in Bagger Dave's Burger Tavern, Inc. - ( 1,259,999 ) Proceeds from sale of property and equipment 496,000 - Purchase of property and equipment ( 488,388 ) ( 478,396 ) Investment in related company - ( 229,000 ) Purchase of marketable securities ( 532,403 ) ( 25,662,523 ) Proceeds from the sale of marketable securities 5,237,835 19,629,514 Other assets - ( 37,543 ) Net cash provided by (used in) investing activities 4,713,044 ( 11,037,547 ) CASH FLOWS FROM FINANCING ACTIVITIES Broker margin loan (reduction) ( 675,471 ) 791,370 Principal payment on long-term debt ( 378,393 ) ( 168,529 ) Proceeds from exercise of common stock warrants - 74,866 Purchase of treasury shares ( 250,525 ) ( 107,012 ) Net cash provided by (used in) financing activities ( 1,304,389 ) 590,695 CHANGE IN CASH snd CASH EQUIVALENTS 3,149,868 ( 10,235,054 ) CASH and CASH EQUIVALVENTS, BEGINNING OF PERIOD 2,150,578 12,385,632 - CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,300,446 $ 2,150,578 SUPPLEMENTAL DISCLOSURES Cash paid for interest $ 85,923 $ 109,366 Cash paid for income taxes $ - $ 209,088 See Notes to Consolidated Financial Statements 34 Table of Contents NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization BT Brands, Inc. (“BT Brands,” “we,” “us,” “our” or the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, we acquired 100% of the ownership of BTND, LLC (“BTND”) in exchange for common stock through a Share Exchange Agreement (the “Share Exchange”). In 2020 BT Brands, Inc. was reincorporated in the State of Wyoming. Business As of December 31, 2023, the Company owned and operated twelve restaurants and owned a 39.6%, as of year-end, interest in an operator of six restaurants. During 2023 we collectively owned and operated eight Burger Time restaurants in the North Central region of the United States, and a Dairy Queen fast-food franchised location in suburban Minneapolis, Minnesota (“BTND”). We closed stores in West St. Paul in 2022 and in Richmond, Indiana, in 2018. The West St. Paul location was sold in February of 2023 for a gain of approximately $ 313,000 . The Richmond location is currently offered for sale. In February, 2024, we closed a leased location in Sioux Falls, South Dakota. The net book value of the closed location was approximately $ 69,000 . We own 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, 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. Our Dairy Queen restaurant offers a proscribed menu consisting of burgers, chicken, sides, ice cream, other desserts, and various beverages. Keegan’s Seafood Grille has operated in Indian Rocks Beach, Florida, for over thirty-five years, offering a variety of 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 locally roasted coffee. VBG is a full-service restaurant and bar featuring a German-themed menu, specialty imported European beers, and regular entertainment. Our revenues are derived from food and beverages at our restaurants, retail goods such as apparel, private-labeled “Keegan’s Hot Sauce,” and other items that account for an insignificant portion of our income. On June 2, 2022, the Company purchased 11,095,085 common shares at the time of the 2022 purchase our ownership represented 41.2 % ownership of Bagger Dave’s Burger Tavern, Inc. (“BDVB”). We acquired the shares from its founder for $ 1,260,000 , or approximately $ 0.11 4 per share. During 2023, Bagger Dave Following the investment, representatives of BT Brands were appointed to two of the three positions on Bagger Dave’s board of directors. Bagger Dave’s specializes in locally sourced, never-frozen prime rib recipe burgers, all-natural lean turkey burgers, hand-cut fries, locally crafted beers on draft, milkshakes, salads, black bean turkey chili, and pizza. The first Bagger Dave’s opened in January 2008 in Berkley, Michigan. There are six Bagger Dave’s restaurants, including four in Michigan and single units in Ft. Wayne, Indiana, and Centerville, Ohio. Our investment in Bagger Dave’s is accounted for under the “Equity Method.” During the fourth quarter of 2023 BDVB, issued an additional one million shares reducing our ownership to approximately 39.6%. Our Dairy Queen location is operated under a franchise agreement with International Dairy Queen. We pay royalty and advertising payments to the franchisor as the franchise agreement requires. Effective October 17, 2023, we agreed with International Dairy Queen to sell the business, which has a current book value at December 31, 2023 of approximately $ 438,500 , including remaining franchise agreement intangible asset, to an approved buyer. Under the terms of the agreement with International Dairy Queen, we will continue to operate the location during the six-month period we plan to sell the business. However, we may retain ownership of the physical assets, including the land and building. Principles of Consolidation The accompanying consolidated financial statements include the accounts of BT Brands, Inc., BTND, LLC, and its wholly owned subsidiaries 10Water Street, LLC, 1519BT, LLC and BTNDDQ, LLC. Significant intercompany accounts and transactions were eliminated in consolidation. Use of Estimates in Preparation of Financial Statements The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the period. Our significant estimates include the valuation of deferred tax assets and liabilities, valuation of long-lived assets in acquisitions, amortization period for intangible assets, valuation of equity-based compensation, and valuation of equity method and fair value investments. Actual results may differ from the estimates used in preparing the consolidated financial statements. 35 Table of Contents Fiscal Year The Company’s fiscal year is a 52/53-week year, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising the 52-week year. Fiscal 2023 was the 52 weeks ending December 31, 2023, and Fiscal 2022 was the 52 weeks ending January 1, 2023; all references to years in this report refer to the fiscal years described above. Fair Value of Financial Instruments Our accounting for fair value measurements of assets and liabilities that are recognized or disclosed at fair value in the statements on a recurring or nonrecurring basis adheres to the Financial Accounting Standards Board (FASB) fair value hierarchy that prioritizes the input to valuation techniques used to measure fair value. The hierarchy gives the highest priority to 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 fair value hierarchy are as follows: · Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access 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 at year-end due to the short maturity nature of these instruments. Investments Noncurrent investments include our equity method investment of $ 688,806 in BDVB 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. 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 shares at $1.65 per share . See Note 11. 36 Table of Contents BDVB files quarterly and annual financial reports with OTCMarkets, Inc. The listing with OTC Markets does not require the information to be audited. Below is summary information filed by Bagger Dave’s for the fiscal years ended December 31, 2023, and December 25, 2022. Unaudited summary financial information for Bagger Dave’s - Balance Sheet Information - December 31, 2023 December 25, 2022 Total current assets $ 1,606,842 $ 1,751,396 Total noncurrent assets 3,158,659 4,006,043 Total assets $ 4,765,501 5,757,439 Total current liabilities $ 640,092 $ 739,644 Total noncurrent liabilities 2,030,286 2,160,211 Total liabilities 2,670,378 2,899,855 Stockholders’ equity 2,095,123 2,857,584 Total liabilities and stockholders’ equity $ 4,765,501 $ 5,757,439 Statements of Operations information - December 31, 2023 (53 WKS) December 25, 2022 (52 WKS) Revenue $ 7,964,854 $ 7,979,411 Costs and expenses ( 8,817,315 ) ( 8,867,037 ) Net loss $ ( 852,461 ) $ ( 887,626 Fair Value Measurements The following is a summary of the fair value of Level 1 investments. As required, fair values have been determined by reference to quoted market prices in active markets as of the indicated year-end: December 31, 2023 January 1, 2023 Fair value Carrying Amount Level 1 Fair value Carrying Amount Level 1 Corporate bond fund $ 178,500 $ 178,500 $ 316,000 $ 316,000 Common stocks 1,213,560 1,213,560 713,900 713,900 Total $ 1,392,060 $ 1,392,060 $ 1,029,900 $ 1,029,900 Cash and Cash Equivalents Cash and cash equivalents includes United States Treasury Bills with a maturity at the time of purchase of 3 months or less. Our bank deposits often exceed the amounts insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash deposits in brokerage accounts including money funds in excess of the amounts covered by insurance. We do not believe there is a significant risk related to cash. 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 2022 . The amortized cost value approximates fair value. Broker Margin Loan The broker margin account loan of $ 115,899 at December 31, 2023 and $ 791,372 at January 1, 2023, bear a variable margin interest rate as set by the lending brokerage firm 6.8 % and 4.6 % on December 31, 2023 and January 1, 2023 respectively. This broker margin loan is reflected as a current liability. The loan is collateralized by Treasury Bills and any other marginable securities held in the margin account and is due on demand under Federal Reserve margin account regulations and the margin account agreement. 37 Table of Contents Revenue Recognition Our revenues consist principally of selling food products for cash or bank-issued credit and debit card transactions at our restaurants. We follow Accounting Standards Update (ASU) 2014-09 (ASC 606). Under ASC 606, revenues are recognized when control of promised goods or services is transferred to a customer in an amount that reflects the expected consideration for those goods or services. Our sales are recognized at the point of purchase, net of discounts and incentives net of applicable sales taxes. Receivables In these consolidated financial statements, receivables consist of rebates due from a primary vendor. Inventory Inventory consists of food, beverages, supplies, and merchandise for resale 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 or the term of the lease for leasehold improvements if less than its useful life: We review long-lived assets to determine if their carrying value may not be recoverable based on estimated cash flows. Assets are reviewed at the lowest level, for which cash flows can be identified at the restaurant level. In determining future cash flows, significant estimates are made for each restaurant's future operating results over its remaining life. If such assets are concluded to be impaired, the impairment recognized is measured by the amount by which the carrying value of the assets exceeds the carrying value of the assets. Estimated Useful life In years Equipment 3 - 7 Leasehold Improvements 5 - 10 Building 15 - 25 Impairment and Disposal of Long-Lived Assets 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 measured by comparing the carrying amount of the assets to the future undiscounted net cash flow expected to be generated, and it 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. We may sell an existing unit or close an operating unit and seek to liquidate the property. In the first quarter of 2023 we completed the abandonment of a property in the St. Louis area in lieu of approximately $ 180,000 of property taxes. and our results of operations include a gain of approximately $80,000 reflecting the reversal of the accrued property taxes and the remaining $ 100,000 is included in other income. We closed stores in West St. Paul in the fourth quarter of 2022 and in Richmond, Indiana, in 2018. The West St. Paul location sale was completed in February of 2023 for a gain of $313,000 reflected in our 2023 statement of operations. The Richmond location is currently offered for sale. We believe the Richmond property will be sold at or above its current carrying value. Leases Three of our restaurant locations are subject to leases . We evaluate leases at commencement to determine their operating or finance lease classification. As required by FASB ASC Topic 842, we recognize operating and finance lease liabilities based on the present value of minimum future lease payment over the expected lease term and recognize a corresponding right-of-use asset. We recognize lease expense related to operating leases on a straight-line basis. At lease inception, we determine the likelihood of exercising any future lease option periods. Where we are reasonably certain to exercise our renewal option, we include that option period in calculating the present value of future lease payments. See Note 4 for additional information. 38 Table of Contents Goodwill, Other Intangible Assets and Other Assets Goodwill is not amortized, but instead, Goodwill is tested for impairment at least annually. The cost of other 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 amortized over an estimated useful life of 14 years. Amortization for each of the next five years is estimated to be $ 2,000 per year. Accumulated amortization was approximately $ 11,000 and $ 9,000 at the end of 2023 and 2022, respectively. Advertising and Marketing Costs We expense advertising and marketing costs as incurred. Advertising expenses for fiscal 2023 and 2022 totaled $ 81,594 and $ 76,701 , respectively. Income Taxes We provide for income taxes under ASC 740, Accounting for Income Taxes, using an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. ASC 740 requires the net of deferred tax assets and deferred tax liability to be presented as a single amount on the balance sheet. Per Common Share Amounts Net income per common share is computed as required by section 260-10-45 of the FASB Accounting Standards Codification. Basic net income or (loss) per share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income 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 diluted net income (loss) computation per share because their effect is anti-dilutive. As a result, no common stock equivalents were dilutive as of the years ending in 2023 and 2022. There are currently 2,746,838 five-year warrants exercisable at $ 5.50 per share outstanding. These warrants were issued as a part of our November 12, 2021, initial public offering. At the end of fiscal 2023 and 2022, all outstanding warrants were exercisable at prices above the underlying stock’s market price and, therefore, were not dilutive. Restaurant Pre-opening expenses Restaurant pre-opening and other development expenses are non-capital expenditures and are expensed as incurred as part of other operating expenses. Restaurant pre-opening expenses may include the costs of hiring and training the initial hourly workforce for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional expenses, the cost of the initial stocking of operating supplies, and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles accepted in the United States of America 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 significant. Stock-Based Compensation In our consolidated financial statements, we recognize stock-based compensation as an expense. Equity classified awards are measured at the grant date fair value of the award. We estimated the grant date fair value using the Black-Scholes option-pricing model. We recognize a compensation expense, net of estimated forfeitures, on a straight-line basis over the employee service periods for awards granted. 39 Table of Contents Segment Reporting We follow the guidance of FASB Accounting Standards for reporting and disclosure on operating segments, which require segment disclosures about products and services, geographic areas, and significant customers. We have determined that we did not have separately reportable operating segments. NOTE 2 – PROPERTY AND EQUIPMENT Property and equipment consisted of the following at the end of the respective fiscal year: December 31, 2023 January 1, 2023 Land $ 435,239 $ 485,239 Equipment 3,994,685 3,893,274 Buildings and leasehold improvements 2,463,626 2,402,157 Total property and equipment 6,893,550 6,780,670 Accumulated depreciation ( 3,387,786 ) ( 3,039,500 ) Less - property held for sale ( 258,751 ) ( 446,526 ) Net property and equipment $ 3,247,013 $ 3,294,644 Depreciation expenses for 2023 and 2022 were $ 539,675 and $ 412,016 , respectively. NOTE 3 – INTANGIBLE ASSETS At year end 2023 and 2022 based on the value of acquired assets, intangible assets comprise the following: December 31, 2023- Estimated Useful Life (Years) Original Cost Accumulated Amortization Net Carrying Value Covenants not to compete 3 $ 98,000 $ ( 51,028 ) $ 46,972 Tradenames 15 393,000 ( 44,859 ) 348,141 $ 491,000 $ ( 95,887 ) $ 395,113 January 1, 2023- 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. Total amortization expense for 2023 and 2022 was $ 58,865 and $ 37,022 , respectively. The total amortization of intangible assets including the covenants not to compete will approximate $ 58,900 in 2024, $ 40,500 in 2025 and $ 26,200 per year through 2036 and approximately $ 7,500 in 2037. NOTE 4 – LEASES With Keegan’s acquisition, we entered into a lease for approximately 2,800 square feet of restaurant space. The 131 -month Keegan’s lease provides for an initial rent of $ 5,000 per month with an annual escalation equal to the greater of 3 % or the Consumer Price Index. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales tax. The lease is being accounted for as an operating lease. At the inception of the lease, we recorded an operating lease obligation and a right-of-use asset of $ 624,000 . The present value discounted at 3.75 % of the remaining lease obligation of $ 547,687 at December 31, 2023 $ 588,363 at the end of fiscal 2022 are reflected as a liabilities in the accompanying financial statements. 40 Table of Contents When we acquired the PIE assets, we entered into a lease for approximately 3,500 square feet of restaurant and bakery production space. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales tax. The terms of the 60 -month lease provide for an initial rent of $ 10,000 per month with an annual escalation of 3 % after 24 months. The PIE lease includes three five-year renewal option periods at our option. The PIE lease is accounted for as an operating lease. At the inception of the lease, we concluded it was reasonably certain the initial five-year option would be exercised and recorded as an operating lease obligation and a right-of-use asset of approximately $ 1,055,000 . The present value discounted at 5 % of the remaining lease obligation of $ 923,885 at December 31, 2023 and $ 995,206 at the end of fiscal 2022 are reflected as a liabilities in the accompanying financial statements. With the acquisition of VBG assets, we entered 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 seating area. The terms of the triple-net 60 -month lease provide for an initial rent of $ 8,200 per month with an annual escalation of 3 %. The VBG lease includes three five-year renewal periods at our option. 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 obligation and a right-of-use asset of $ 470,000 . The present value discounted at 4.5 % of the remaining lease obligation of $ 344,376 as of December 31, 2023 and $ 352,100 at the end of fiscal 2022 are reflected as a liabilities in the accompanying financial statements. The following is a schedule of the approximate minimum future lease payments on the operating leases as of December 31, 2023, including amounts assuming we exercise the option to extend leases where we believe that exercise of the option is likely. Total 2024 $ 289,076 2025 297,909 2026 306,038 2027 258,184 2028 208,895 Thereafter 828,390 Total future minimum lease payments 2,188,492 Less - interest ( 372,544 ) Present value of lease obligations $ 1,815,948 The weighted average remaining lease term is approximately 5.3 years, and the weighted average discount rate is approximately 4.32 %. We cannot determine the interest rate implicit in our leases. Therefore, the discount rate represents our estimated incremental interest rate to borrow an amount approximating the aggregate lease payments collateralized by the property at the commencement of the lease. The total operating lease expense for 2023 and 2022 was $ 298,567 and $ 239,092 , respectively. Cash paid for leases was $ 282,000 in 2023 and $ 207,000 in 2022, and variable expenses for leased properties were $ 16,500 in 2023 and $ 17,000 in 2022. We pay $ 550 per month under an annual rental agreement, for corporate and administrative office spaces in West Fargo, North Dakota, and $ 1,350 per month in Minnetonka, Minnesota, for a combined monthly rent of approximately $ 1,900 . NOTE 5 – INCOME TAXES Principally, due to bonus tax depreciation, which allows for the depreciation of assets acquired in a business acquisition, the 2023 and 2022 losses for tax purposes resulted an estimated net operating loss carryforward of approximately $ 1.7 million in 2022 and a total of $ 2.0 million at December 31, 2023. We believe will be fully realized in future periods. Combined with other timing differences, there is a net deferred tax asset of $ 206,000 and $ 61,000 for fiscal 2023 and 2022 respectively. Deferred tax assets are recognized for temporary deductible differences, operating loss and tax credit carryforwards and deferred tax liabilities are recognized for temporary taxable differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. We continually review the realizability of its deferred tax assets, including analyzing factors such as future taxable income, reversal of existing taxable temporary differences, and tax planning strategies. We assessed whether a valuation allowance should be recorded against its deferred tax assets based on consideration of all available evidence using a “more likely than not” standard. In assessing the need for a valuation allowance, We considered both positive and negative evidence related to the likelihood of the realization of deferred tax assets. In making such an assessment, more weight was given to evidence that could be objectively verified, including recent cumulative losses. Future sources of taxable income were also considered when determining the amount of the recorded valuation allowance. 41 Table of Contents Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The tax effect of the temporary differences and carryforwards are as follows for the respective fiscal years: 2023 2022 Property and equipment tax depreciation difference $ ( 349,000 ) $ ( 445,000 ) Stock-based compensation 78,000 34,000 Goodwill deducted for tax purposes. ( 17,000 ) ( 9,000 ) Unrealized loss on short-term investments 2,000 19,000 Reserve for property tax - 23,000 Accrued compensation 22,000 12,000 Future tax benefit of impairment allowance 49,000 78,000 Net operating loss carryforward 421,000 349,000 Net deferred tax benefit $ 206,000 $ 61,000 The following table summarizes the components of the provision for income taxes: 2023 2022 Current income tax expense (benefit) $ — $ — Deferred income taxes (benefit) ( 145,000 ) ( 180,000 ) Total income tax expense (benefit) $ ( 145,000 ) $ ( 180,000 ) Total income tax expense for the years ended December 31, 2023, and January 1, 2023, differed from the amounts computed by applying the U.S. Federal statutory tax rate of 21 % to pre-tax income as follows: 2023 2022 Total expense (benefit) computed by applying the statutory federal rate $ ( 216,000 ) $ ( 160,000 ) State income tax (benefit), net of federal tax benefit ( 36,000 ) ( 35,000 ) Equity in loss of unconsolidated subsidiary 85,000 40,000 Other 22,000 ( 25,000 ) Income taxes benefit $ ( 145,000 ) $ ( 180,000 ) Accounting Standards require that deferred tax assets and liabilities, along with any related valuation allowance, be classified as a noncurrent item on the balance sheet. The Company had no accrued interest or penalties relating to income tax obligations and currently has no federal or state examinations in progress, nor has it had any federal or state tax examinations since its inception. The last three years are subject to federal and state tax examinations. With few exceptions, the Company is no longer subject to U.S. Federal and state income tax examinations by tax authorities for years before 2019. NOTE 6 – ACCRUED EXPENSES Accrued expenses consisted of the following at the end of the respective reporting periods: December 31, 2023 January 1, 2023 Accrued real estate taxes $ 49,357 $ 202,436 Accrued bonus compensation and consulting fees 119,139 59,139 Accrued payroll 149,587 143,481 Accrued payroll taxes 11,343 12,764 Accrued sales taxes payable 81,683 70,270 Accrued vacation pay 17,663 17,663 Accrued gift card liability 26,844 25,965 Other accrued expenses 24,673 802 $ 480,289 $ 532,520 42 Table of Contents NOTE 7 – SHAREHOLDERS’ EQUITY On November 12, 2021, the Company completed a public offering of Units consisting of one share of common stock and one five-year stock purchase warrant to purchase one common share at $ 5.50 . The Company has the right to redeem the warrants under certain conditions. We issued 2,400,000 common shares in the offering and 2,760,000 stock purchase warrants, which included 360,000 warrants to purchase an aggregate of 360,000 shares of common stock purchase pursuant to a partial exercise of the over-allotment option granted to underwriters for $.01 per warrant, totaling $ 3,600 . The estimated fair value of the warrants at the date of issuance, net of the exercise proceeds, was $ 360,000 , and this amount is reflected as an additional cost of the offering. After deducting all fees and expenses, net proceeds from the offering were $ 10,696,575 . In 2018, We issued 3,708,000 common shares as part of the Share Exchange. Upon closing of a related private offering, 205,002 additional common shares and 102,503 common stock warrants to purchase shares at $ 4.00 through July 31, 2023, were issued to investors for a net amount of approximately $ 492,266 . During 2022, 13,612 public warrants were exercised for $ 74,866 . The remaining warrants were outstanding as of the end of the year. In addition, upon closing the private offering, the placement agent was issued an aggregate of 16,401 five-year stock purchase warrants to purchase shares at $ 3.30 per share, which are also outstanding at year-end. At December 31, 2023 and January 1, 2022, respectively, there were 215,000 and 65,000 common shares held as treasury shares for potential future issuance. NOTE 8 – STOCK-BASED COMPENSATION In 2019, we adopted the BT Brands, Inc. 2019 Incentive Plan (the "Plan") 2019 Plan, under which the 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. In December 2022, the stockholders authorized the increase of shares available for grant under the 2019 Plan from 250,000 to 1,000,000 shares. As of January 1, 2023, there were 779,750 shares available for a grant under the 2019 Plan. During 2021, we issued options to purchase 15,000 shares of common stock under the 2019 Plan as stock awards to three Company directors in connection with their joining the board of directors. The options are exercisable at $ 5 per share through 2031. In 2022, we granted 216,000 options, including 175,000 options to company officers and 41,000 options to employees and a consultant to purchase shares at $ 2.58 per share. In 2023 we granted a consultant warrants to purchase 100,000 shares at $2.50 per share for seven years with the option vesting warrants vesting monthly over five years so long as the consultant continues in this capacity. Assuming the consulting agreement continues to full term, we project that approximately $144,000 in stock based compensation will recognized at the rate of $32,000 per year in each of the four years and $16,000 in 2028 . 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 fee over the applicable service period. Compensation expense for 2023 was $ 174,000 in 2023 and $ 118,700 in 2022. Based on current estimates, we project that approximately $ 120,000 in stock-based compensation expense will be recognized over the next three years including approximately $ 57,000 in 2024, $ 57,000 in 2025, $ 6,000 in 2026. On February 27, 2023, the board of directors Compensation Committee approved an “Incentive Shares” proposal wherein, so long as the Company’s publicly traded warrants are outstanding, senior management will be granted 250,000 shares of common stock as an award upon our share price reaching $ 8.50 per share for twenty consecutive trading days. The total estimated expense of the award was determined using a lattice model with assumptions similar to the stock option calculation. The total estimated expense of this award was determined to be $265,000. For 2023, Stock based compensation included $ 105,000 of expense for the award. We project approximately $160,000 of stock-based compensation will be recognized over the next two years including approximately $ 126,000 in 2024 and $ 36,000 in 2025. 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 our 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 expected to be paid over the term of the stock option; · Volatility – Estimated volatility; · Risk-free interest rate – The daily US Treasury yield corresponding to the expected life of the award. 43 Table of Contents 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 outstandingat January 2, 2022 15,000 $ 5.00 8.3 0 Granted 216,000 2.58 9.3 $ 0 Exercised 0 0 0 Canceled, forfeited, or expired ( 10,750 ) 2.58 0 Options outstanding at January 1, 2023 220,250 $ 2.74 9.0 $ 0 Options exercisable at January 1, 2023 56,250 3.23 9.0 Options outstanding on January 1, 2023 220,250 $ 2.74 9.0 0 Granted 100,000 2.50 6.2 0 Exercised 0 Canceled, forfeited, or expired ( 1,000 ) 2.58 Options outstanding at December 31, 2023 319,250 $ 2.62 7.6 $ 0 Options exercisable at December 31, 2023 106,702 $ 2.85 8.3 $ 0 The Black-Scholes option-pricing model was used to estimate the fair value of the stock options with the following weighted-average assumptions for grants during the year ended January 1, 2023 there were no options granted during the year ended December 31, 2023: Fiscal 2023 Fiscal 2022 The fair value of options and warrants granted during the period $ 1.60 $ 1.39 Expected life (in years) 6.0 4.83 Expected dividend — — Expected stock volatility 63 % 63 % Risk-free interest rate 3.75 % 2 % NOTE 9 – LONG-TERM DEBT We had the following long-term debt obligations: December 31, 2023 January 1, 2023 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 equal the greater of the "prime rate" plus .75%, or 3.45%. These notes mature on June 28, 2036. The notes are secured by mortgages covering ten BTND operating locations. The notes are guaranteed by BT Brands, Inc., and a shareholder of the Company. $ 2,489,299 $ 2,864,484 Minnesota Small Business Emergency Loan paid in full, June 2023 - 3,208 Total long-term debt 2,489,299 2,867,692 Less - unamortized debt issuance costs ( 36,199 ) ( 41,599 ) Current maturities ( 183,329 ) ( 167,616 ) Long-term debt, less current portion $ 2,269,771 $ 2,658,477 Scheduled maturities of long-term debt, excluding amortization of debt issuance costs, are as follows: 12/29/2024 $ 183,329 12/28/2025 189,829 1/2/2027 196,502 1/2/2028 203,410 12/31/2028 210,519 Thereafter 1,581,299 $ 2,489,299 44 Table of Contents NOTE 10 – ACQUISITIONS We acquired three separate restaurant properties in 2022. The acquisitions were 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. Keegan’s On March 2, 2022, BT Brands, through its 1519BT, LLC subsidiary (“1519BT“), purchased the net assets of Keegan’s, a fresh seafood restaurant in Indian Rocks Springs, Florida. Concurrent with the purchase, we entered a 131 -month lease for the approximately 2800 square foot space that Keegan’s has occupied for over thirty-five years . We acquired Keegan’s tradename as part of the purchase and continue to operate the business as Keegan’s Seafood Grille. The purchase price was approximately $ 1.15 million, paid in cash at closing. For Keegan’s acquisition, based on an appraisal of asset values, we recorded $ 547,900 in goodwill, representing the excess of fair value over the purchase price of the identifiable assets; the allocation to purchased goodwill is expected to be deductible for income tax purposes over fifteen years. Pie In The Sky Coffee and Bakery On May 11, 2022, our 10Water Street, LLC subsidiary (“10Water”) purchased the net assets of PIE, a bakery and coffee shop in Woods Hole, Massachusetts. Concurrent with the purchase, we entered into a 60 -month lease, including three additional five-year renewal options . The lease covers the approximately 3,500 square feet PIE has operated in for over twenty years . We acquired the Pie In The Sky tradename and the piecoffee.com website URL as part of the purchase. We continue to operate the assets as Pie In The Sky. The purchase price was approximately $ 1.16 million, including $ 1.15 million in cash paid at closing. For PIE, based on an appraisal of asset values, we recorded $ 40,320 in goodwill, representing the excess of fair value over the purchase price of the identifiable assets; the allocation to purchased goodwill is expected to be deductible for income tax purposes over fifteen years. Village Bier Garten On August 4, 2022, through our 1519BT, LLC subsidiary, we purchased the assets and the business operating as Van Stephan Village Bier Garten, now rebranded as the Village Bier Garten (“VBG”), a full-service bar and restaurant in Cocoa, Florida. The restaurant features a German-themed menu; specialty imported European beers and regular entertainment. The purchase price was $690,0000, paid in cash at closing. Concurrent with the purchase, we entered a five-year lease with three five-year renewal options for the property currently occupied by the business . Triple net lease terms call for an initial monthly rent of $ 8,200 . For VBG, based on an appraisal of asset values, we recorded $ 83,000 in goodwill, representing the excess of fair value over the purchase price of the identifiable assets; the allocation to purchased goodwill is expected to be deductible for income tax purposes over fifteen years. The following table presents the fair value of the assets acquired and liabilities assumed in the acquisitions. Goodwill recognized in acquired businesses is the excess over the fair value of the acquired assets and represents the value of existing repetitive customers of the businesses, employees, management, and management systems acquired and are in use in the acquired businesses: Assets acquired: Keegan’s PIE VBG Inventory $ 10,490 $ 23,500 $ 22,000 Equipment 119,000 646,000 154,000 Furniture and fixtures 22,000 78,000 12,000 Leasehold improvements 287,000 175,000 329,000 Trademarks and tradenames 181,000 163,000 49,000 Non-compete agreement 0 57,000 41,000 Total assets acquired 619,490 1,142,500 607,000 Current liabilities assumed ( 17,390 ) ( 23,220 ) 0 Net assets acquired 602,100 1,119,280 607,000 Goodwill 547,900 40,320 83,000 Net purchase price $ 1,150,000 $ 1,159,600 $ 690,000 45 Table of Contents NOTE 11 – RELATED PARTY TRANSACTIONS Next Gen Ice In 2019, the Company made cash advances to Next Gen Ice, Inc. (“NGI”), totaling $ 179,000 . Our CEO, Gary Copperud, was and continues to serve as Chairman of the board of directors of NGI. Our Chief Operating Officer, Kenneth Brimmer, is a member of the board of directors of NGI and serves as its Chief Financial Officer on a contract basis. At the time the loans were made, Mr. Copperud controlled approximately 34 % of the outstanding equity of NGI. As consideration for a loan maturity extension in 2020, we received 179,000 shares of NGI common stock and warrants to purchase 358,000 shares at $ 1.00 per share through March 23, 2028 . The Company invested $ 229,000 in NGI Series A1 8 % Cumulative Convertible Preferred Stock on February 2, 2022, including a five-year warrant to purchase 34,697 shares at $ 1.65 per share. All outstanding preferred share were converted to common stock during 2023 and we received 157,496 common shares of NGI in exchange for the preferred shares and accrued dividends. The NGI common stock and common stock purchase warrants received in March 2020 were recorded in 2020 at a value determined by us of $ 75,000 . The investment in NGI does not have a readily determinable market value. The NGI investment is carried at the cost we determined when the shares and warrants were received. NOTE 12 – MAJOR VENDOR For the year ended December 31, 2023, approximately 60 % of our food and paper cost of goods sold is represented by product purchases from one vendor. On December 31, 2023, the amount due to the major vendor totaled $ 268,849 . In fiscal 2022, approximately 60 % of our purchases were from the same vendor. On January 1, 2023, the amount due to this vendor was $ 272,657 . NOTE 13 – CONTINGENCIES In the course of its business, the Company may be a party to claims and legal or regulatory actions arising from its business. We are not aware of any significant asserted or potential claims which could impact its financial position. 46 Table of Contents Item 9. Changes in and Disagreements with on Accounting and Financial Disclosure. None. Item 9A. Evaluation of Disclosure Controls and Procedures. (a) DISCLOSURE CONTROLS AND PROCEDURES The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such 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. No matter how well conceived and operated, a control system can provide only reasonable, not absolute, assurance that the objectives of the control system are met. As of December 31, 2023, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934. Based on the evaluation of our disclosure controls and procedures, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2023, due to the material weaknesses in our internal control over financial reporting described below. In light of this fact, our management has performed additional analysis and has concluded that, notwithstanding this material weaknesses in our internal controls over financial reporting, the consolidated financial statements for the periods covered by and including this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP. (b) REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(e) and 15d-15(f) of the Exchange Act. The Company has designed internal controls to provide reasonable, but not absolute, assurance that financial statements are prepared in accordance with U.S. GAAP. The Company assesses the effectiveness of internal controls based on the criteria set forth in the 2013 Internal Control - Integrated Framework developed by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this evaluation, management has concluded that, as of December 31, 2023, our internal control over financial reporting was not effective due to the material weaknesses in internal control over financial reporting described below. (c) MATERIAL WEAKNESS IN INTERNAL CONTROL OVER FINANCIAL REPORTING As of December 31, 2023, the company identified a material weakness which originated in fiscal 2022 and continues in its design of controls over accounting and reporting of significant, non-recurring events and complex transactions. This material weakness could result in a misstatement of account balances or disclosures that would result in a material misstatement of the annual or interim financial statements, which would not be prevented or detected. (d) REMEDIATION PLAN The Company has an ongoing improvement and remediation plan for the identified material weakness. In fiscal 2024, for transactions it considers complex, the Company may engage an accounting expert to assist with the accounting for significant, non-recurring events and complex transactions. The remediation actions are subject to ongoing senior management review and Audit Committee oversight. The Company will not be able to conclude whether the steps to be taken will fully remediate the material weaknesses in internal controls over financial reporting until remediation efforts are completed, tested, and evaluated for effectiveness. 47 Table of Contents (e) CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING In addition to the matters discussed previously, the Company identified consultants as an extension of management to assist in the accounting for acquisitions during the fiscal year ending December 31, 2023. For fiscal 2023 the Company did not make any new acquisitions. Except for the items described above, there were no other changes in the Company’s internal control over financial reporting that occurred during our most recently completed fiscal quarter, which ended December 31, 2023, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. Item 9B. Other Information. None Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. Item 10. Directors, Executive Officers, and Corporate Governance. The following table sets forth information regarding our executive officers and directors as of the date of this Annual Report: Name Age Position Executive Officers and Directors: Gary Copperud 65 Chief Executive Officer and Director Kenneth Brimmer 68 Chief Operating Officer and Chairman Allan Anderson 70 Director Terri Tochihara-Dirks 62 Director Steven W. Schussler 68 Director Background Information about our Officers and Directors Gary Copperud has served as the Chief Executive Officer and a director of the Company since July 31, 2018, when we completed the Share Exchange. He was a founding member of the predecessor to BT Brands in 2007. He served as its managing manager and Chief Financial Officer from its inception until the completion of the Share Exchange. Mr. Copperud was a founding shareholder of Next Gen Ice, Inc., now NGI Corporation, a provider of automated ice delivery systems to convenience stores and other markets. Since July 2019, he has served as the chairman of its board of directors. Mr. Copperud has served as CEO of Bagger Dave’s Burger Tavern since June, 2022. Before that, Mr. Copperud is self-employed in real estate investment and development. We believe Mr. Copperud’s tenure with Burger Time and prior experience as a member of the board of directors of a public company qualifies him to serve on our board of directors. Kenneth Brimmer has served as the Chief Operating Officer, Chairman of our board of directors, and Principal Accounting Officer since July 31, 2018. Since October 2019, Mr. Brimmer has been a member of the board of directors of NGI Corporation (formerly Next Gen Ice, Inc.). and currently serves as its Chief Financial Officer. Sinc June, 2022, Mr. Brimmer has served as also Chairman, COO, and Chief Financial Officer of Bagger Dave’s Burger Tavern , Inc. Mr. Brimmer has a wide range of experience with several early-stage and rapidly growing businesses, serving at various times as President, Chief Executive Officer, director, and Audit Committee Chairman of several public and private companies. Mr. Brimmer previously was the Chief Executive Officer of Hypertension Diagnostic, Inc. (“HDI”). He served on the board of HDI since 1998 and was its CEO from September 2012 until May 2020. Mr. Brimmer is the CEO of privately-held Brimmer Company, LLC, which has provided consulting management services to BT Brands and NGI Corporation, Inc. Mr. Brimmer was a Director of Landry’s Restaurants from June 2004 until April 2017 and served on the Audit and Compliance Committee of its Golden Nugget – New Jersey Casino. Previously, he was President of Rainforest Cafe, Inc., which grew from start-up to over 6,000 employees from April 1997 until April 2000, and he was Treasurer from its inception in 1995 until April 2000. During the time Mr. Brimmer served as Treasurer of Rainforest Cafe, it raised over $200 million through a combination of private and public stock offerings. Prior to Rainforest, Mr. Brimmer was employed by Berman Consulting, LLC, a financial and investment management company, from 1990 until April 1997. Mr. Brimmer has a degree in accounting and worked as a certified public accountant (inactive) in the audit division of Arthur Andersen & Co. from 1977 through 1981. We believe Mr. Brimmer’s extensive career as a business executive, particularly his service as the chief operating officer of a major restaurant chain, qualifies him to serve on and chair our board of directors. 48 Table of Contents Allan Anderson joined our board of directors as an independent director and has served as the chairman of our audit committee since our common stock and warrants were listed on The Nasdaq Stock Market. In 2021, Mr. Anderson founded privately held ReliaFund Inc., for which he has served in various executive capacities. ReliaFund provides electronic payment processing and reporting services for small businesses. From 1975 to 1984, Mr. Anderson was employed as an Audit Manager in the Audit Division of Arthur Andersen & Co. Mr. Anderson has served as a chief financial officer (or equivalent) for several private companies. He previously served as an independent member of the board of directors of publicly the STEN Corporation, including serving as Chairman of its Audit Committee. STEN Corporation is the entity from which the Company purchased its restaurant assets in 2007. Messrs. Copperud and Brimmer were also directors of STEN. Mr. Anderson holds a Bachelor of Arts degree in accounting from Southwest State University and was formerly licensed as a certified public accountant, which is now inactive. We believe Mr is qualified to serve on our board of directors and as the chair of our audit committee because of his education, experience in accounting and audit work, and experience working at several companies as the chief financial officer. Terri Tochihara-Dirks joined our board of directors as an independent director, serves as the chair of our compensation committee, and is a member of the audit committee, commencing on the date our common stock and warrants were listed on The Nasdaq Stock Market. Since 2008, Ms. Tochihara-Dirks has been the co-owner, with her husband, of The Oberon Assisted Living, a privately held healthcare community in Arvada, Colorado. Her responsibilities include operations and infection prevention. From 1986 to 2006, she held various positions with AT&T retiring in 2006 as the Mountain States Region Vice President of Sales. Ms. Tochihara-Dirks has served on several not-for-profit Boards of Directors, including the Denver Chamber of Commerce and Denver Junior Achievement. Ms. Tochihara-Dirks is qualified to serve on our board, as the chair of the compensation committee, and as a member of our audit committee because of her broad business experience both operating her own business and as an executive of a multi-national corporation. Steven W. Schussler joined our board of directors as an independent director and has been a member of our audit committee since November 12, 2021, when our common stock and warrants were listed on The Nasdaq Stock Market. From March 2012 until January 2019, Mr. Schussler served as a director of Kona Grill, a publicly traded restaurant company based in Scottsdale, Arizona, which operated more than 40 restaurants in 23 U.S. states and three foreign countries. Mr. Schussler also served as Co-CEO of Kona Grill from March 2012 until January 2019. Following Mr. Schussler’s resignation from Kona Grill, Kona Grill filed for bankruptcy protection on April 30, 2019. In September 2019, the assets of the Kona Grill were sold to One Group Hospitality, Inc. Mr. Schussler was the founder and, from November 2018 to January 2019, served as the Executive Vice-President and a member of the board of directors of Rainforest Cafe, Inc. This publicly traded restaurant company was sold to Landry’s Restaurants, Inc. in 2000. Since 2000, Mr. Schussler has been the owner and Chief Executive Officer of Schussler Creative, Inc., a restaurant development concept company that has created several restaurant concepts, including The Boathouse, a waterfront restaurant located in Disney Springs in Orlando, Florida, T-Rex Café, a restaurant and retail store located in Downtown Disney Marketplace in Orlando, Florida, as well as Yak & Yeti, an Asian restaurant located inside Disney’s Animal Kingdom in Orlando, Florida. Schussler Creative, Inc. sold a controlling interest in T-Rex Café and Yak & Yeti to Landry’s in 2006. Mr. Schussler frequently speaks on the topics of entrepreneurship and leadership. He is the author of “It’s A Jungle In There: Inspiring Lessons, Hard-Won Insights, and Other Acts of Entrepreneurial Daring.” We believe Mr. Schussler is qualified to serve on our board and as an audit committee member based on his extensive restaurant and public company experience. Term of Office All our directors will hold office until their successors have been elected and qualified or appointed or the earlier of their death, resignation, or removal. Executive officers are appointed and serve at the board of director’s discretion. Family Relationships There are no family relationships among our directors or officers. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our directors, executive officers, and ten percent stockholders to file initial reports of ownership and announcements of changes in ownership of our common stock with the SEC. Directors, executive officers, and ten percent of stockholders must also furnish us with copies of all Section 16(a) forms they file. Based upon a review of these filings, we believe all required Section 16(a) reports were made during 2023. 49 Table of Contents Board Composition Our bylaws provide that the size of our board of directors will be determined from time to time by the resolution of our board of directors. Currently, our board comprises five members, three of whom qualify as “independent” directors under any applicable standard. Election of Directors Our bylaws provide that a majority vote of our stockholders will elect a member of our board of directors. Independence of our Board of Directors and Board Committees Rule 5605 of the NASDAQ Listing Rules requires a majority of a listed Company’s board of directors to be comprised of “independent directors,” as defined in such rule, subject to specified exceptions. In addition, the NASDAQ Listing Rules require that, subject to limited exceptions, each member of a listed company’s audit, compensation and nominating committees be independent as defined under the NASDAQ Listing Rules; audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act; and compensation committee members also satisfy an additional independence test for compensation committee members under the NASDAQ Listing Rules. If a listed company does not have a nominating committee, as permissible under NASDAQ Listing Rules, director nominees must either be selected or recommended for the board’s selection by independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate. Our board of directors has evaluated the independence of its members based on the rules of the NASDAQ Stock Market and the SEC. Applying these standards, our board of directors determined that Mr. Anderson, Ms. Tochihara-Dirks, and Mr. Schussler are “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. The other seated directors will not be considered independent because each is an officer of the Company. Leadership Structure of the Board Our bylaws provide our board of directors with the flexibility to combine or separate the positions of Chairman of our board of directors and Chief Executive Officer in accordance with its determination that utilizing one or the other structure would be in the Company's best interests. The board of directors currently separates the roles of Chief Executive Officer and Chairman of the board of directors to recognize the differences between the two roles. Our Chief Executive Officer, who is also a member of our board of directors, is responsible for setting the strategic direction of the Company and the day-to-day leadership and performance of the Company, while the Chairman of the board of directors provides guidance to the Chief Executive Officer, sets the agenda for the board meetings, presides over meetings of the board of directors and seeks to reach a consensus on board decisions. Although these roles are currently separate, the board believes it should be able to freely select the Chairman of the board of directors based on criteria that it deems to be in the best interest of the Company and its stockholders. Therefore, one person may, in the future, serve as both the Chief Executive Officer and Chairman of the board of directors. Role of Board in Risk Oversight Process Our board of directors has oversight responsibility for the risk management process. The board of directors administers its oversight function through committees, retaining responsibility for general oversight of risks. The committee chairs will be responsible for reporting findings regarding material risk exposure to the board of directors as quickly as possible. The board of directors delegates to the audit committee oversight responsibility to review our code of ethics, including whether the code of ethics is successful in preventing illegal or improper conduct, and our management’s risk assessments and management financial risk management policies, including the policies and guidelines used by management to identify, assess and manage our exposure to financial risk. Our compensation committee assesses and monitors any significant compensation-related risk exposure and the steps management should take to monitor or mitigate such exposure. Meetings of the Board During fiscal 2023, our board of directors held four in-person or telephonic meetings. Each director attended at least 75% of the aggregate number of meetings of the board of directors and meetings of the committees of the board of directors on which they serve. In addition, our board of directors acted unanimously with written consent on five occasions. 50 Table of Contents Board Committees To assist it in performing its duties, the board of directors has delegated certain authority to an Audit Committee and a Compensation Committee. Each of these committees has adopted a written charter that satisfies the applicable standards of the SEC and the NASDAQ Listing Rules, which are posted on the investor relations section of our website. In addition, as permitted by the Nasdaq Listing Rule, the independent directors on our board will fulfill the responsibilities of a nominating and corporate governance committee. The composition and duties of each committee are described below. Members will serve on committees until their resignation or otherwise determined by our board of directors. The following table sets forth the members of each board committee as of December 31, 2023, and the number of meetings held by the board and committees during our fiscal year ended December 31, 2023: Director Board of Directors Audit Committee Compensation Committee Gary Copperud X Kenneth Brimmer X Allan Anderson X Chair X Terri Tochihara-Dirks X X Chair Steven W. Schussler X X X Number of meetings held 4 2 1 The primary functions of each committee of the board are described below: Audit Committee Our audit committee comprises Mr. Anderson, Ms. Tochihara-Dirks, and Mr. Schussler. Our board of directors has determined that all of the members of the Audit Committee are “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. Mr. Anderson is the chair of the audit committee. Our board of directors has determined that Mr. Anderson qualifies as an “audit committee financial expert” within the meaning of applicable SEC regulations and meets the financial sophistication requirements of the Nasdaq Marketplace Rules. Our independent registered public accounting firm and management periodically met privately with our audit committee four times during 2023. Our audit committee assists our board of directors in its oversight of our accounting and financial reporting process and the audits of our financial statements. Under its charter, our audit committee is responsible for, among other things: · selecting, retaining, and replacing independent auditors and evaluating their qualifications, independence, and performance; · reviewing and approving the scope of the annual audit and audit fees; · discussing with management and independent auditors the results of the annual audit and review of quarterly financial statements; · reviewing adequacy and effectiveness of internal control policies and procedures; · approving the retention of independent auditors to perform any proposed permissible non-audit services; · overseeing internal audit functions and annually reviewing audit committee charter and committee performance; · Preparing the audit committee report that the SEC requires in our annual proxy statement; and · reviewing and evaluating the performance of the Audit Committee, including compliance with its charter. Compensation Committee Our compensation committee comprises Ms. Tochihara-Dirks and Mr. Anderson. Ms. Tochihara-Dirks is the chair of the compensation committee. Our board of directors have determined that Ms. Tochihara-Dirks and Mr. Anderson are independent as defined under the NASDAQ Listing Rules and satisfy NASDAQ’s additional independence standards for compensation committee members. In addition, both Ms. Tochihara-Dirks and Mr. Anderson are non-employee directors within the meaning of Rule 16b-3 under the Exchange Act and outside directors as defined by Section 162(m) of the Internal Revenue Code. 51 Table of Contents Our compensation committee assists our board of directors in discharging its responsibilities relating to the compensation of our executive officers. Under its charter, our compensation committee is responsible for, among other things: · recommending to our board of directors for approval of compensation and benefit plans; · reviewing and approving goals and objectives annually to serve as the basis for the CEO’s and COO’s compensation, evaluating performance and determining executive compensation; · retaining or obtaining the advice of a compensation consultant, outside legal counsel, or other advisors; · approving any grants of stock options, restricted stock, performance shares, stock appreciation rights, and other equity-based incentives to the extent provided under our equity compensation plans; · making recommendations to our board of directors regarding the compensation of non-employee directors; and · reviewing and evaluating the performance of the compensation committee, including compliance with its charter. Board Diversity Pursuant to Nasdaq’s Board Diversity Rule 5605(f), approved by the SEC on August 6, 2021, we have taken steps to meet the diversity objective set out in this rule within the applicable transition period. The following is our Board Diversity Matrix as of March 15, 2024: Board Diversity Matrix (As of March 15, 2024) Total Number of Directors: five Female Male Non- Binary Did Not Disclose Part I: Gender Identity Directors 1 4 0 0 Part II: Demographic Background African American or Black Asian 0 0 Hispanic or Latinx 1 Native Hawaiian or Pacific Islander White Two or More Ethnicities 4 LGBTQ+ Did Not Disclose Demographic Background Code of Ethics We have adopted a Code of Ethics and Business Conduct applicable to our directors, officers, and employees, in accordance with Section 406 of the Sarbanes-Oxley Act, the rules of the SEC promulgated thereunder, and the Nasdaq Listing Rules. You can review this document by accessing our public filings at the SEC’s website at www.sec.gov. In addition, a copy of the Code of Ethics and Business Conduct will be provided without charge upon request. If we make any amendments to our Code of Ethics and Business Conduct other than technical, administrative, or other non-substantive amendments or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics and Business Conduct applicable to our principal executive officer, principal financial officer principal accounting officer or controller or persons performing similar functions requiring disclosure under applicable SEC or Nasdaq rules, we will disclose the nature of such amendment or waiver in a Current Report on Form 8-K. We also intend to post any amendments to our Code of Ethics and Business Conduct or waivers of its requirements on our website, www.itsburgertime.com. Insider Trading Policy On March 14, 2024 we adopted an Insider Trading Policy that sets forth restrictions on trading in our securities and prohibits all of our directors, officers and certain employees, as well as any other person having access or potential access to material information, from entering into any purchases, sales, giving away or otherwise trading the Company’s securities while in possession of material nonpublic information about the Company or providing that information to others outside the Company, entering into hedging or monetization transactions or similar arrangements with respect to the Company’s securities; short sales; and puts, calls or other derivative securities on the Company’s securities, unless advance approval is obtained from the Company’s Chief Operating Officer. Additionally, a director, officer, or certain employee may not hold Company securities in a margin account or pledge Company securities as collateral for a loan, unless advance approval is obtained from the Company’s Chief Operating Officer. This policy also applies to the foregoing persons’ family members and friends. This policy was adopted to promote compliance with federal securities laws and applicable Nasdaq requirements. Our Insider Trading Policy allows for purchases or sales of Company securities made in compliance with a written plan that meets the requirements of Rule 10b5-1 of the Exchange Act, and sets forth the applicable trading window periods where directors and designated employees can trade in the Company’s securities. Clawback Policy In March 2024, our Board adopted a Clawback Policy that applies to all of our current and former executive officers. Under the Clawback Policy, if we are required to prepare an accounting restatement, we are required to recover from any current or former executive officers incentive-based compensation that was erroneously awarded during the three years preceding the date such a restatement was required. Incentive compensation includes any annual bonuses and other short- and long-term cash incentives; stock options; stock appreciation rights; restricted stock; restricted stock units and performance shares; provided that, such compensation is granted, earned, or vested based wholly or in part on the attainment of a financial reporting measure. The recoverable amount is the amount of incentive-based compensation received in excess of the amount that otherwise would have been received had it been determined based on the restated financial measure. The Board will determine the method for recouping incentive compensation hereunder which may include, requiring reimbursement of cash incentive compensation previously paid; seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; cancelling outstanding vested or unvested equity awards; and/or taking any other remedial and recovery action permitted by law, as determined by the Board. 52 Table of Contents Certain Legal Proceedings None of the Company’s directors or executive officers have been involved, in the past ten years and in a manner material to an evaluation of such director’s or officer’s ability or integrity to serve as a director or executive officer in any of those “Certain Legal Proceedings” more fully detailed in Item 401(f) of Regulation S-K, which include but are not limited to, bankruptcies, criminal convictions and an adjudication finding that an individual violated federal or state securities laws. Limitation of liability and indemnification matters Our articles of incorporation contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Wyoming law. Consequently, our directors will not be personally liable to our stockholders or us for monetary damages for any breach of fiduciary duties as directors, except liability for: · Any act or omission that involves intentional misconduct, fraud, or a knowing violation of law; or · any unlawful payment of distributions in violation of the Wyoming Business Corporation Act. Each of our articles of incorporation and bylaws provides that the Company is required to indemnify our directors and officers, in each case, to the fullest extent permitted by Wyoming law. Our bylaws also obligate us to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding and permit us to secure insurance on behalf of any officer, director, employee, or another agent for any liability arising out of their actions in that capacity regardless of whether we would otherwise be permitted to indemnify them under Wyoming law. We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers, and other employees as determined by our board of directors. With specified exceptions, these agreements provide for indemnification for related expenses, including, among other things, attorneys’ fees, judgments, fines, and settlement amounts incurred by any of these individuals in any action or proceeding. We believe these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance. The limitation of liability and indemnification provisions included in our articles of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit our stockholders and us. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage. 53 Table of Contents Item 11. Executive Compensation. Summary Compensation Table The following Summary Compensation Table sets forth all compensation earned in all capacities during the 2022 and 2023 fiscal years by our principal executive officer and principal financial officer (the named executive officers). No other officer or employee of the Company received total compensation for either 2022 or 2023, as determined in accordance with Item 402 of Regulation S-K, which exceeded $100,000: Officer Compensation In fiscal 2023, the Company paid Mr. Copperud a salary of $250,000 to serve as our Chief Executive Officer, which included compensation payable under an Employment Agreement that we entered into with Mr. Copperud in July 2022, as described below under the heading “ Employment Agreements. ” During fiscal year 2022, we paid Mr. Copperud a salary of $150,000 to serve as the Chief Executive Officer. In addition, the Audit Committee approved a $100,000 bonus for Mr. Copperud for the 2022 fiscal year for the successful completion of our IPO that closed in November 2021. During fiscal 2023, the Company paid Mr. Brimmer a salary of $175,000 to serve as our Chief Financial Officer, which included salary payable under an Employment Agreement that we entered into with Mr. Brimmer in July 2022, as described below under the heading “ Employment Agreements. ” Employment Agreements On July 7, 2022, the Company entered into an employment agreement with Gary Copperud pursuant to which Mr. Copperud was appointed to serve as our Chief Executive Officer. Under the Agreement, Mr. Copperud receives an annual base salary of $250,000, which shall be reviewed at least annually by the board. Mr. Copperud is eligible to receive an annual bonus subject to the discretion of the board's Compensation Committee. The employment agreement is for a term of three years subject to automatic extension for successive one-year periods unless terminated by either party. The employment agreement may be terminated by us with or without cause (as defined therein). In the event we terminate the employment agreement with cause or Mr. Copperud terminates the agreement without good reason, including any failure to renew Mr. Copperud’s employment, we will be required to pay Mr. Copperud all accrued but unpaid base salary and accrued but unused vacation continued payment of his base salary, any earned but unpaid bonus. In the event we terminate the employment agreement without cause, we will be required to pay Mr. Copperud continued payment of his base salary for 12 months and a prorated bonus for the year of termination based on performance through the date of termination. If Mr. Copperud’s employment is terminated during the term on account of his death or disability (as defined in the agreement), Mr. Copperud will be entitled to receive all accrued but unpaid base salary and accrued but unused vacation continued payment of his base salary, any earned but unpaid bonus. In the event that Mr. Copperud’s employment hereunder is terminated by him for good reason (as defined in the agreement) or by the Company on account of its failure to renew the agreement cause (as defined in the agreement), in each case following a change in control )(as defined in the agreement), Mr. Copperud will be entitled to receive (i) all accrued but unpaid base salary, (ii) accrued but unused vacation, (iii) a lump sum payment equal to 2 times the sum of his base salary and bonus for the year in which the termination occurs, and (iv) (A) all outstanding unvested stock options will fully vest and become immediately exercisable for the remainder of their full term, (B) all outstanding equity-based compensation awards other than stock options that do not vest based on the attainment of performance goals will fully vest and any restrictions thereon will lapse, and (C) all outstanding equity-based compensation awards other than stock options that vest based on the attainment of performance goals shall remain outstanding and shall vest or be forfeited in accordance with the terms of the applicable award agreements, if the applicable performance goals are satisfied. Upon his appointment as chief executive officer, Mr. Copperud received a $100,000 signing bonus. On July 7, 2022, the Company entered into an employment agreement with Kenneth Brimmer pursuant to which Mr. Brimmer was appointed to serve as our Chief Financial Officer. Under the Agreement, Mr. Brimmer receives an annual base salary of $200,000 which shall be reviewed at least annually by the board. Mr. Brimmer is eligible to receive an annual bonus subject to the discretion of the board's Compensation Committee. The employment agreement is for a term of three years subject to automatic extension for successive one-year periods unless terminated by either party. The employment agreement may be terminated by us with or without cause (as defined therein). In the event we terminate the employment agreement with cause or Mr. Brimmer terminates the agreement without good reason, including any failure to renew Mr. Brimmer’s employment, we will be required to pay Mr. Brimmer all accrued but unpaid base salary and accrued but unused vacation continued payment of his base salary, any earned but unpaid bonus. In the event we terminate the employment agreement without cause, we will be required to pay Mr. Brimmer continued payment of his base salary for 12 months and a prorated bonus for the year of termination based on performance through the date of termination. If Mr. Brimmer’s employment is terminated during the term on account of his death or disability (as defined in the agreement), Mr. Brimmer will be entitled to receive all accrued but unpaid base salary and accrued but unused vacation continued payment of his base salary, any earned but unpaid bonus. In the event that Mr. Brimmer’s employment hereunder is terminated by him for good reason (as defined in the agreement) or by the Company on account of its failure to renew the agreement cause (as defined in the agreement), in each case within 12 months following a change in control )(as defined in the agreement), Mr. Brimmer will be entitled to receive (i) all accrued but unpaid base salary, (ii) accrued but unused vacation, (iii) a lump sum payment equal to 2 times the sum of his base salary and bonus for the year in which the termination occurs, and (iv) (A) all outstanding unvested stock options will fully vest and become immediately exercisable for the remainder of their full term, (B) all outstanding equity-based compensation awards other than stock options that do not vest based on the attainment of performance goals will fully vest and any restrictions thereon will lapse, and (C) all outstanding equity-based compensation awards other than stock options that vest based on the attainment of performance goals shall remain outstanding and shall vest or be forfeited in accordance with the terms of the applicable award agreements, if the applicable performance goals are satisfied. 54 Table of Contents Compensation Plans Summary of 2019 Incentive Plan The principal features of the 2019 Incentive Plan (the “2019 Plan”), as amended by the stockholders at the 2022 annual meeting, are summarized below. The following summary does not purport to be a complete description of all of the provisions of the 2019 Plan. It is qualified in its entirety by referencing the full text of the 2019 Plan, as amended. Eligibility Eligibility to participate in the 2019 Plan is limited to our and our affiliates’ employees, officers, directors, and consultants as determined from time to time by the compensation committee. Incentive stock options may be granted only to employees of the Company or its subsidiaries. Administration The Compensation Committee of the board administers the 2019 Plan. The compensation committee reviews and approves (or it deems appropriate, makes recommendations to our full board regarding) modifications to the 2019 Plan. Subject to the terms of the 2019 Plan, the compensation committee has the authority to (i) grant and amend equity awards, (ii) interpret any provision of the 2019 Plan, any equity award, or any award agreement and (ii) make all determinations and decisions necessary for the administration of the 2019 Plan. All determinations and decisions by the compensation committee under the 2019 Plan are at the sole discretion of the Compensation Committee and are binding. However, the board has retained the right to exercise the compensation committee's authority to the extent consistent with applicable law and the applicable stock exchange requirements. Number of Authorized Shares The 2019 Plan allows the issuing of 1,000,000 shares of common stock upon awards granted. Common stock covered by any unexercised portions of terminated or forfeited options granted under the 2019 Plan (including canceled options), restricted stock or restricted stock units forfeited, other stock-based awards terminated or forfeited as provided under the 2019 Plan, and common stock subject to any awards that are otherwise surrendered may again be subject to new awards under the 2019 Plan. In addition, shares of common stock surrendered to or withheld by the Company in payment or satisfaction of the purchase price of an option or tax withholding obligation with respect to an award are available for the grant of new awards under the 2019 Plan. In the event of the exercise of stock appreciation rights, only the number of shares of common stock issued in payment of such stock appreciation rights shall be charged against the number of shares of common stock available for the grant of awards under the 2019 Plan. Awards under the 2019 Plan Awards under the Plan may include incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted shares of common stock, restricted stock units, performance share or Unit awards, stock bonuses, and other stock-based awards and cash-based incentive awards. Stock Options . The Plan Administrator may grant a participant options to purchase our common stock that qualifies as incentive stock options for purposes of Section 422 of the Internal Revenue Code (“incentive stock options”). These options do not qualify as incentive stock options (“non-qualified stock options”) or a combination thereof. The terms and conditions of stock option grants, including the quantity, price, vesting periods, and other conditions on exercise, will be determined by the Plan administrator. The Plan Administrator, in its discretion, will determine the exercise price for stock options, but non-qualified stock options and incentive stock options may not be less than 100% of the fair market value of one share of our company’s common stock on the date when the stock option is granted. Additionally, in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise price may not be less than 110% of the fair market value of one share of common stock on the date the stock option is granted. Stock options must be exercised within a period fixed by the Plan administrator that may not exceed ten years from the date of grant, except that in the case of incentive stock options granted to a holder of more than 10% of the total combined voting power of all classes of our stock on the date of grant, the exercise period may not exceed five years. At the Plan administrator’s discretion, payment for shares of common stock on the exercise of stock options may be made in cash, shares of our common stock held by the participant or in any other form of consideration acceptable to the Plan administrator (including one or more forms of “cashless” or “net” exercise). 55 Table of Contents Stock Appreciation Rights . The Plan Administrator may grant to a participant an award of SARs, which entitles the participant to receive, upon its exercise, a payment equal to (i) the excess of the fair market value of a share of common stock on the exercise date over the SAR exercise price, times (ii) the number of shares of common stock with respect to which the SAR is exercised. The Plan Administrator will determine the exercise price for a SAR at its discretion, provided that in no event shall the exercise price be less than the fair market value of our common stock on the date of grant. Restricted Shares and Restricted Units . The Plan Administrator may award a participant shares of common stock subject to specified restrictions (“restricted shares”). Restricted shares are subject to forfeiture if the participant does not meet certain conditions, such as continued employment over a specified forfeiture period and the attainment of specified performance targets over the forfeiture period. The Plan administrator also may award to a participant Units representing the right to receive shares of common stock in the future subject to the achievement of one or more goals relating to the completion of service by the participant and the achievement of performance or other objectives (“restricted units”). The Plan Administrator determines the terms and conditions of restricted shares and restricted unit awards. Stock Bonuses . Stock bonuses may be granted as additional compensation for service or performance and may be settled in the form of common stock, cash, or a combination thereof, and may be subject to restrictions, which may vest subject to continued service and the achievement of performance conditions. Performance Awards . The Plan Administrator may grant performance awards to participants under such terms and conditions as the Plan Administrator deems appropriate. A performance award entitles a participant to receive a payment from us based on attaining predetermined performance targets over a specified award period. Performance awards may be paid in cash, shares of common stock, or a combination thereof, as determined by the Plan administrator. Other Stock-Based Awards . The Plan Administrator may grant equity-based or equity-related awards referred to as “other stock-based awards,” other than options, SARs, restricted shares, restricted Units, or performance awards. The Plan Administrator will determine the terms and conditions of each other stock-based award. Payment under any other stock-based awards will be made in common stock or cash, as determined by the Plan administrator. Cash-Based Awards . The Plan Administrator may grant cash-based incentive compensation awards, including performance-based annual cash incentive compensation, to covered employees subject to Section 162(m) of the Code. The Plan Administrator will determine the terms and conditions of each cash-based award. 56 Table of Contents Outstanding Equity Awards at Fiscal Year-End The following table sets forth outstanding equity awards to our named executive officers as of January 1, 2023. Option Awards Stock Awards Name Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Unexercisable (1) Option Exercise Price Option Expiration Date Number of Shares of Stock not Vested Market Value of Shares Vested Gary Copperud, Chief Executive Officer 40,000 60,000 $ 2.58 2/9/32 0 Kenneth W. Brimmer, Chief Operating Officer 30,000 30,000 $ 2.58 2/9/32 0 Director Compensation We have not adopted a compensation program for members of our board of directors and its committees. We expect that the compensation of our directors will be designed to attract and retain committed and qualified directors and to align their compensation with the long-term interests of our stockholders. Such compensation may consist of cash for meetings attended and options or other awards to purchase our common stock at the fair market value per share of common stock on the grant date, both upon joining the board and for each year of service. Such awards will be subject to vesting as determined by the board's Compensation Committee. directors who are also executive officers will not be entitled to compensation for their service as a director, committee member, or chair of our board of directors or any committee of our board of directors. In addition to such compensation, we will reimburse each non-employee director for all pre-approved expenses within 30 days of receiving satisfactory written documentation setting out the expense incurred by such director. These include reasonable transportation and lodging costs incurred for attendance at any board of directors meeting. Upon closing our IPO and listing on The Nasdaq Stock Market in the fourth quarter of 2021, Allan Anderson, Teri Tochihara-Dirks, and Steven Schussler joined our board as non-employee directors. We agreed to pay each employee director $500 for each board meeting attended, and $250 for each committee meeting attended. In addition, we issued to each such person fully vested options to purchase 5,000 shares of common stock under the 2019 Plan, which are exercisable at $5.00 per share and expire ten years after the date of the grant we also have agreed to issue to each such person options to purchase 2,000 shares of common stock during each year that such person serves on the board of directors. The following table sets forth all compensation awarded to, earned by, or paid to our directors for the year ended December 31, 2023. Please note that Mr. Copperud and Mr. Brimmer receive no compensation for their role as directors, and the entirety of their compensation is reported in the Summary Compensation Table above. Name Fees Earned or Paid in Cash Stock Awards 1 Total ($) Allan Anderson $ 4,000 $ 0 $ 4,000 Terri Tochihara-Dirks 4,000 0 4,000 Steven W. Schussler 4,000 0 4,000 Total: $ 12,000 $ 0 $ 12,000 1. Reflects the full grant date fair value of the options granted to directors in 2022, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth the number of shares of and percent of our common stock beneficially owned as of March 29, 2024, by (i) each person (or group of affiliated persons) whom we know to own more than five percent (5%) of the outstanding shares of our common stock, (ii) each director and executive officer, and (iii) all of our directors and executive officers as a group. The percentage of shares beneficially owned is computed based on 6,461,118 shares of our common stock outstanding as of March 29, 2024. 57 Table of Contents We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting or investment power with respect to such securities. In addition, pursuant to such rules, we deemed outstanding shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 29, 2024. However, we did not deem such shares outstanding for computing the percentage ownership of any other person. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the beneficial owners named in the table below have sole voting and investment power with respect to all shares of our common stock that they beneficially own, subject to applicable community property laws. The inclusion in the table below of any shares deemed beneficially owned does not constitute an admission of beneficial ownership of those shares. Unless otherwise indicated, the address of each person listed below is c/o BT Brands, Inc. 405 Main Avenue West, Suite 2D, West Fargo, ND 58078. Name of Beneficial Owner Number of Shares Percentage Officers and Directors Gary Copperud (1)(2) 948,540 14.83 % Kenneth Brimmer (3) 110,000 1.72 % Allan Anderson (4) 5,000 * Terri Tochihara-Dirks (4) 5,000 * Steven W. Schussler (4) 5,000 * Total for all Officers and Directors 1,728,340 15.55 % 5% Stockholders Sally Copperud (1) 758,540 11.70 % Jeffrey A. Zinnecker 760,540 11.70 % Samuel Vandeputte 346,290 5.34 % Trost Family Trust 346,290 5.34 % __________ * Less than 1%. (1) Gary Copperud and Sally Copperud are husband and wife. Each such person disclaims beneficial ownership of the other’s shares of common stock. (2) Includes 758,540 shares of common stock, warrants to purchase 5,000 shares of common stock acquired by this individual in the IPO in 2019, and 20,000 shares of common stock underlying currently exercisable options. Does not include (i) 60,000 shares issuable upon the exercise of options that will not vest until 60 days after the date of this filing. (3) Includes 80,000 shares of common stock owned by Brimmer Company, LLC, an affiliate of Mr. Brimmer, and 30,000 shares of common stock underlying currently exercisable options. Does not include (i) 30,000 that will not vest until 60 days after the date of this filing. (4) Represents options to purchase shares of our common stock. Item 13. Certain Relationships and Related Transactions, and Director Independence. Policies and Procedures for Transactions with Related Parties Our board of directors has approved policies and procedures with respect to the review and approval of certain transactions between us and Related Parties (as defined below), which we refer to as our “Related-Party Transaction Policy.” The following is a summary of material provisions of our Related-Party Transaction Policy. Pursuant to the terms of our Related-Party Transaction Policy, any Related-Party Transaction (as defined below) will be required to be reported to the chair of the audit committee of our board. The audit committee will then be required to review and decide whether to approve any such Related-Party Transaction. Our Related-Party Transaction Policy defines a “Related-Party Transaction” as a transaction, arrangement, or relationship (or any series of similar transactions, arrangements, or relationships) in which we (including any of our subsidiaries) were, are or will be a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any Related Party had, has or will have a direct or indirect interest. Our Related-Party Transaction Policy defines a “Related Party” as any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer or a nominee to become a director; any person who is known to be the beneficial owner of more than five percent of our common stock; any immediate family member of any of the foregoing persons, including any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, and any person (other than a tenant or employee) sharing the household of any of the foregoing persons; and any firm, corporation or other entity in which any of the foregoing persons is a general partner or, for other ownership interests, a limited partner or other owners in which such person has a beneficial ownership interest of 10% or more. 58 Table of Contents Transactions with Related Parties Below we describe transactions and any series of related transactions to which we were a party or may be a party and which we have entered into since January 3, 2021, or is currently proposed, in which the amounts involved exceed or will exceed the lesser of $120,000 or 1% of the average of our total assets as of the end of the last two completed fiscal years and any of our directors, executive officers or holders of more than five percent of our capital stock, or an affiliate or immediate family member or such persons, had or will have a direct or indirect material interest. In connection with the refinancing of our mortgage debt in June 2021, Gary Copperud personally guaranteed each of the promissory notes evidencing loans on the real properties owned by the Company. In 2019, the Company made cash advances to Next Gen Ice, Inc. (NGI), totaling $179,000. Our CEO, Gary Copperud, is Chairman of the board of directors of NGI. Our Chief Operating Officer, Kenneth Brimmer, is a member of the board of directors of NGI and serves as its Chief Financial Officer. The Company invested $229,000 in NGI Series A1 8% Cumulative Convertible Preferred Stock on February 2, 2022, Indemnification of Officers and Directors Our articles of incorporation and amended bylaws provide that the Company will indemnify each of our directors and officers to the fullest extent permitted by the Wyoming Business Corporation Act. Further, we intend to enter into indemnification agreements with each of our directors and officers. We have purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement, or payment of a judgment under certain circumstances. For further information, see “Executive Compensation—Limitations of Liability and Indemnification Matters.” To the best of our knowledge, during the past two fiscal years, other than as set forth above, there were no material transactions, or series of similar transactions, or any currently proposed transactions, or series of similar transactions to which we were or are to be a party, in which the amount involved exceeds the lesser of (A) $120,000 or (B) one percent of our average total assets at year-end for the last two completed fiscal years, and in which any director or executive officer, or any security holder whom we know to own of record or beneficially more than 5% of any class of our common stock, or any member of the immediate family of any of the foregoing persons, has an interest (other than compensation to our officers and directors in the ordinary course of business). Item 14. Principal Accounting Fees and Services. Boulay, PLLP (“Boulay”) has been our principal accountant since 2015. Pursuant to its charter, the Audit Committee is directly responsible for the appointment, retention, compensation, and oversight of our independent registered public accounting firm. In addition to assuring the regular rotation of the lead audit partner as required by law, the Audit Committee participates in evaluating the lead audit partner and considers whether the firm should be regularly rotated. The Audit Committee is also required to review and pre-approve all of the audit and non-audit services to be performed by our independent registered public accounting firm, including the firm’s engagement letter for the annual audit of the consolidated financial statements and internal controls over financial reporting of the Company, the proposed fees in connection with such audit services, and any additional services that management chooses to hire the independent auditors to perform. Additionally, the Audit Committee can establish pre-approval policies and procedures with respect to the engagement of independent registered public accounting firm for non-audit services. In accordance with the Audit Committee Charter, all the foregoing audit and non-audit fees paid to, and the related service provided by, Boulay were pre-approved by the Audit Committee. Services Boulay and its affiliates provided services consisting of the audit of the annual consolidated financial statements and review of the quarterly financial statements of the Company, accounting consultations and consents, and other services related to SEC filings by the Company and its subsidiaries and other pertinent matters and other permitted services to the Company. The following is a summary of the fees billed to us by Boulay for professional services rendered for the fiscal years ended December 31, 2023 (fiscal 2023) and January 1, 2023 (fiscal 2022): 2023 2022 Fee Category Audit fees (1) $ 165,830 $ 193,123 Audit-related Fees — — Tax fees — — All other fees — — Total fees $ 165,830 $ 193,123 (1) Audit fees consist of aggregate fees billed for professional services rendered for the audit of the Company’s annual consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports or services that are typically provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements during the fiscal years ended December 31, 2023, and January 1, 2023, respectively. 59 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (a) (1) Consolidated Financial Statements The financial statements required under this item are included in Item 8 of Part II. (2) Schedules None. (3) Exhibits Exhibit Number Description Location Reference 3.1 Amended and Restated Certificate of Incorporation. 1 3.1(a) Amendment to Articles of Incorporation 3 3.2 Amended and Restated Bylaws. 1 3.2.1 First Amendment to Amended and Restated Bylaws 2 4.1 Specimen stock certificate evidencing shares of common stock. 1 4.2 Form of Warrant issued to investors in the 2018 Private Placement of Securities. 1 4.3 Form of Placement Agent Warrant issued to Maxim Group, LLC in connection with the 2018 Private Placement of Securities. 1 4.4 Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. * 10.1 Share Exchange Agreement dated July 31, 2018, by and among Burger Time, Inc., BTND, LLC, Maxim Partners, LLC, Dayspring Capital, LLC, Gary Copperud, Sally Copperud, Jeffrey Zinnecker, Samuel Vandeputte, the Trost Family Trust, the Katelyn J. Copperud Trust, and the Blake W. Copperud Trust. 1 10.2 Form of Securities Purchase Agreement, dated July 31, 2018, by and between the registrant and the investors in connection with the 2018 Private Placement of Securities. 1 10.3 Form of Registration Rights Agreement, dated July 31, 2018, by and between the registrant and the investors in connection with the 2018 Private Placement of Securities. 1 10.4 Form of Placement Agent Agreement between the registrant and Maxim Group, LLC in connection with the 2018 Private Placement of Securities. 1 10.5 Form of Registration Rights Agreement, dated July 31, 2019, by and between the registrant and certain stockholders. 1 10.6 Operating Agreement dated October 15, 1974, between American Dairy Queen Corporation and William N. Empey. 1 10.7 Assignment of Dairy Queen Operating Agreement by Weyer Investments Ltd. to BTNDDQ, LLC, including consent of American Dairy Queen Corporation 1 10.8 Distribution Agreement between Sysco Western Minnesota, Inc. and, Sysco Cincinnati, Inc., and BTND, LLC, dated June 3, 2018. 1 10.9 Promissory Note dated July 1, 2019, in the principal amount of $225,000 made by the registrant in favor of BTND Trading. LLC 1 10.10 2019 Incentive Plan and award agreements thereunder. 2+ 10.11 Loan Modification and Extension Agreement dated March 2, 2020, between the registrant and Next Gen Ice, Inc. 4 10.12 Purchase Agreement dated March 2, 2022, by and between BT Brands, Inc. and Keegan’s Seafood Grille, Inc. 5 10.13 Lease Agreement dated March 2, 2022, by and between BT Brands, Inc. and NFK Properties, LLC, with respect to the real property located at 1519 Gulf Boulevard, Indian Rocks Beach, Florida 33785. 5 10.14 Purchase Agreement dated May 11, 2022, by and between BT Brands, Inc., Pie in the Sky and Erik Gura, the owner of the assets. 6 10.15 Lease Agreement dated May 11, 2022, by and between BT Brands, Inc., and Martha Ertmann LLC, with respect to the real property located at 10 Water Street, Woods Hole, Massachusetts. 6 10.16 Employment Agreement dated as of July 7, 2022, by and between Gary Copperud and the Registrant *+ 10.17 Employment Agreement dated as of July 7, 2022, by and between Kenneth Brimmer and the Registrant *+ 10.18 Purchase Agreement dated July 8, 2022, by and between 1519BT, LLC, a wholly owned subsidiary of the registrant, and L. Fagan Enterprises, Inc., as the owner of the assets. 7 10.19 Lease Agreement dated August 4, 2022, by and between 1519BT, LLC, a wholly-owned subsidiary of the registrant, and Stephan Properties of Florida Inc., with respect to the real property located at 415 Delannoy Avenue, Cocoa, Florida and 409 Delannoy Avenue, Cocoa, Florida. 7 21.1 Subsidiaries of the Registrant * 60 Table of Contents 31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. * 32.1 Certification of Chief Executive 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 Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. * 1 Incorporated by reference from the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on August 13, 2019. 2 Incorporated by reference from the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on October 18, 2019. 3 Incorporated by reference from the Company’s registration statement on Form S-1 filed with the Securities and Exchange Commission on September 17, 2021. 4 Incorporated by reference from the Company’s annual report on Form 10-K for the fiscal year ended January 2, 2022, as filed with the Securities and Exchange Commission on March 17, 2022. 5 Incorporated by reference from the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 8, 2022. 6 Incorporated by reference from the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 19, 2022. 7 Incorporated by reference from the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11, 2022. * Filed herewith. + Denotes management contract or compensatory plan or arrangement. (b) Financial Statement Schedules. No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or notes thereto. _____________ Item 16. Form 10–K Summary. None. 61 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BT BRANDS, INC. Date: April 1, 2024 By: /s/ Gary Copperud Chief Executive Officer and Director (Principal Executive Officer) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Capacity Date By /s/ Gary Copperud Chief Executive Officer and Director (Principal Executive Officer) April 1, 2024 By: /s/ Kenneth Brimmer Chief Operating Officer, Chief Financial Officer, (Principal Financial Officer and Principal Accounting Officer and Chairman) April 1, 2024 By: /s/Allan Anderson Director April 1, 2024 By: /s/ Steven Schussler Director April 1, 2024 By: /s/ Terri Tochihara-Dirks Director April 1, 2024 62