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Item 8. Financial Statements and Supplementary Data

2026-03-30 compared with 2025-03-31 · 419 added, 344 removed, 319 unchanged (71% of the section changed)

Financial Statements and Supplementary Data.

The information required by this Item is included in Part II, Item 8 of this Annual Report, “Financial Statements and Supplementary Data,” and is presented in accordance with Article 8 of Regulation S-X applicable to smaller reporting companies.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of BT Brands, Inc.

(the Company) as of December 29, 2024, and December 31, 2023, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the fiscal years then ended (collectively referred to as the “consolidated” financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 29, 2024, and December 31, 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.

and Subsidiaries (the Company) as of December 28, 2025 and December 29, 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the fiscal years then ended, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of 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.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

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.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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.

As part of our audit, 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.

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Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there were no critical audit matters.

/s/ Boulay PLLP

We have served as the Company’s auditors since 2015.

We have served as the Company’s auditor since 2015

Minneapolis, Minnesota

March 30, 2026

PART I FINANCIAL INFORMATION

PART II, ITEM 8

BT BRANDS, INC.

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Marketable securities

Inventory – bottled water held for resale, net

Prepaid expenses and other current assets

Deferred transaction costs

Assets held for sale

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OPERATING LEASE RIGHT-OF-USE ASSETS

EQUITY INVESTMENT IN UNCONSOLIDATED SUBSIDIARY

EQUITY METHOD INVESTMENT IN UNCONSOLIDATED AFFILIATE

INVESTMENT IN EQUITY AND NOTES RECEIVABLE FROM RELATED COMPANY

DEFERRED INCOME TAXES

INTANGIBLE ASSETS, NET

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Accounts payable

Broker margin loan

Current maturities of long-term debt

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SHAREHOLDERS’ EQUITY

Preferred stock, $ 0.001 par value, 2,000,000 shares authorized, no shares outstanding at December 29, 2024 and December 31, 2023

Common stock, $ 0.002 par value, 50,000,000 authorized, 6,461,724 issued and 6,154,724 outstanding at December 29, 2024 and 6,246,118 outstanding at December 31, 2023

Less cost of 306,394 and 215,000 common shares held in Treasury at December 29, 2024 and December 31, 2023, respectively

Preferred stock, $ 0.001 par value, 2,000,000 shares authorized, no shares outstanding at

December 28, 2025 and December 29, 2024

Common stock, $ 0.002 par value, 50,000,000 authorized, 6,461,118 issued and 6,154,724 outstanding at December 28, 2025 and at December 29, 2024

Less cost of 306,394 common shares held in Treasury at December 28, 2025 and December 29, 2024

Additional paid-in capital

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Depreciation and amortization expenses

Restaurant asset impairment charge

Impairment of restaurant and right-of-use assets

General and administrative expenses

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( 1,832,308 )

( 1,072,589 )

UNREALIZED GAIN (LOSS) ON MARKETABLE SECURITIES

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INTEREST EXPENSE

EQUITY IN NET LOSS OF AFFILIATE

OTHER INCOME (EXPENSE)

IMPAIRMENT OF RELATED PARTY INVESTMENT AND RECEIVABLES

EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE

LOSS BEFORE TAXES

( 2,105,208 )

( 1,032,368 )

INCOME TAX BENEFIT (EXPENSE)

INCOME TAX EXPENSE

$ ( 687,839 )

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For the 52-week periods-

Balances, January 1, 2023

Balances, December 31, 2023

$ ( 2,049,891 )

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Treasury stock purchases

Balances, December 31, 2023

( 2,311,208 )

Stock-based compensation

Treasury stock purchases

Balances, December 29, 2024

$ ( 4,361,099 )

$ ( 499,718 )

Stock-based compensation

Balances, December 28, 2025

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December 28, 2025

December 31, 2023

CASH FLOWS FROM OPERATING ACTIVITIES

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$ ( 2,311,208 )

Adjustments to reconcile net loss to net cash used in operating activities-

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

Depreciation and amortization

Amortization of debt issuance premium included in interest expense

Amortization of debt issuance costs included in interest expense

Deferred taxes

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Unrealized loss (gain) on marketable securities

Investment gains

Realized investment gain

Loss on equity method investment

Charge for impairment of restaurant assets

Impairment of restaurant and right-to-use assets

Gain on sale of assets

Impairment of related party investment and water bottle inventory

Loss on disposal of assets

Non-cash operating lease expense

Property tax liability settlement

Changes in operating assets and liabilities, net of acquisitions-

Restaurant inventory

Prepaid expenses and other current assets

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Accrued expenses

Net cash used in operating activities

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of net assets of Schnitzel Haus

Proceeds from sale of assets

Proceeds from the sale of assets

Purchase of property and equipment

Loans to related company

Loans to a related company

Purchase of secured note due from related company

Purchase of marketable securities

( 4,851,623 )

( 2,296,923 )

Repayment of loans to related company

Proceeds from the sale of marketable securities

Net cash provided (used by) investing activities

Purchase of water bottle inventory

Net cash used in investing activities

( 1,060,404 )

( 2,184,677 )

CASH FLOWS FROM FINANCING ACTIVITIES

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Principal payment on long-term debt

Payment of deferred transaction costs

Purchase of treasury shares

Net cash used in financing activities

( 1,304,389 )

CHANGE IN CASH AND CASH EQUIVALENTS

( 1,105,248 )

CASH AND CASH EQUIVALVENTS, BEGINNING OF PERIOD

( 3,349,031 )

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

CASH AND CASH EQUIVALENTS, END OF PERIOD

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Cash paid for interest

Purchase of property and equipment included in accounts payable

Acquisition of water bottle inventory through related party loan foreclosure

Purchase of property and equipment is included in accounts payable.

See Notes to Consolidated Financial Statements

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – BUSINESS DESCRIPTION

BT Brands, Inc.

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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”).

Effective July 30, 2018, we acquired 100 % of the ownership interests of BTND, LLC (“BTND”) in exchange for shares of our common stock pursuant to a Share Exchange Agreement (the “Share Exchange”).

In 2020, BT Brands Inc.

was reincorporated in the State of Wyoming.

As of December 29, 2024, the Company owned and operated twelve restaurants and owned a 39.6 %, as of year-end, interest in an operator of six restaurants.

During 2024, we owned and operated eight Burger Time restaurants in the North Central region of the United States.

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, Schnitzel Haus a fine dining German-themed restaurant in Hobe Sound, Florida featuring German and American menu items German and American beer, wine and cocktails, The Village Bier Garten (“VBG”), a German-themed restaurant in Cocoa, Florida operated during 2024 and closed January 3, 2025.

Our Burger Time restaurants feature a variety of burgers and other affordable foods, sides, and soft drinks.

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 freshly baked goods, freshly made sandwiches, and locally roasted coffee.

Our revenues are derived from food and beverages at our restaurants, retail goods such as apparel, private-labeled “Keegan’s Hot Sauce,” and other items that account for an insignificant portion of our income.

On June 2, 2022, the Company purchased 11,095,085 common shares of Bagger Dave’s Burger Tavern, Inc.

(“Bagger Dave’s” or “BDVB”).

Initially, our ownership represented 41.2 % ownership of BDVB, and in 2024, it represented 39.6%.

We acquired the shares for $ 1,260,000 , or approximately $ 0.114 per share.

In 2023 and 2022, 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.”

As of December 28, 2025, the Company owned and operated nine restaurants and held a nonconsolidated 40.7% equity interest in an operator of five restaurants.

During fiscal 2025, we owned and operated six Burger Time restaurants in the north-central United States.

In July 2025, we closed a leased Burger Time location in Minot, North Dakota and subsequently converted the property to a land lease on which payments are expected to commence in 2026.

The net book value of the closed location was approximately $ 128,000 , including land and equipment, with certain equipment relocated to other Burger Time units.

We also own and operate Keegan’s Seafood Grille (“Keegan’s”), a dine-in restaurant located in Indian Rocks Beach, Florida;

Pie In The Sky Coffee and Bakery (“PIE”), located in Woods Hole, Massachusetts;

and Schnitzel Haus, a German-themed restaurant located in Hobe Sound, Florida.

We operated The Village Bier Garten (“VBG”), a German-themed restaurant in Cocoa, Florida, during fiscal 2024 and closed the restaurant on January 3, 2025.

Burger Time restaurants offer a variety of burgers and other affordable items, including sides and soft drinks.

Keegan’s has operated in Indian Rocks Beach, Florida, for more than 35 years and offers a variety of fresh seafood for lunch and dinner, along with beer and wine.

PIE offers freshly baked goods, sandwiches, and locally roasted coffee.

Schnitzel Haus offers German and American menu items and beer, wine, and cocktails.

Our revenues are derived primarily from the sale of food and beverages at our restaurants.

We also generate revenue from retail items at PIE and Keegan’s, including apparel, and from other merchandise, which collectively represent an insignificant portion of total revenue.

Proposed Business Combination with Aero Velocity

On September 2, 2025, BT Brands entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Aero Merger Sub Inc., a Delaware corporation, and a direct, wholly owned subsidiary of BT Brands (“Merger Sub”) and Aero Velocity Inc., a Delaware corporation (“Aero”).

Pursuant to the terms of the Merger Agreement, Aero will merge with and into the Merger Sub, with Aero continuing as the surviving corporation (the “Merger”), resulting in a combined entity (the “Merged Company”).

The Merger Agreement contemplates a spin-off of shares of a newly formed subsidiary, BT Group, Inc., to BT Brands shareholders.

BT Group, Inc., will retain all of BT Brands’ restaurant assets and liabilities, including cash and investments.

Management of BT Group, Inc.

plans to pursue a listing for BT Group common stock.

Completion of the Merger is subject to conditions, including shareholder approval.

Upon the closing of the Merger, Aero shareholders will receive Merged Company Series A-1 and Series A-2 Convertible Preferred stock, with a stated value of $ 101,100,000 , convertible into the Merged Company’s common stock at $ 1.48 per share.

The Series A-1 shares will carry a 50-to-1, as converted, voting preference.

The Series A-1 and A-2 together will represent 89% of the Merged Company’s ownership.

BT Brands shareholders, along with its Advisor, Maxim Group, will retain an 11% ownership stake in the Merged Company.

Concurrent with the closing of the Merger, Aero stockholders, or their designees, will invest $ 3 million, up to a maximum of $ 5 million, into newly authorized Series B Convertible Preferred of the Company.

Additional information regarding the proposed transaction can be found at the BT Brands filings on Forms 8-K and S-4 at SEC.GOV.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

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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 certain long-lived assets and valuation of equity method investments.

Our significant estimates include legal contingencies and valuation of certain long-lived assets, equity method investments, investment in and receivables from NGI Corporation and water bottle inventory.

Actual results may differ from the estimates used in preparing the consolidated financial statements.

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.

Most years consist of four 13-week accounting periods, which together comprise the 52-week year.

Fiscal 2025 was the 52 weeks ending December 28, 2025, and Fiscal 2024 was the 52 weeks ending December 29, 2024;

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:

Fair Value Measurements

The Company measures certain assets and liabilities at fair value on a recurring or nonrecurring basis in accordance with Financial Accounting Standards Board (“FASB”) guidance, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The fair value hierarchy consists of the following three levels:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities for which we have the ability to access the measurement date.

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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 equivalents, receivables, accounts payable and other financial working capital items approximate fair value at year-end due to the short maturity nature of these instruments.

Carrying value of debt approximate fair value due to its variable interest rate.

Equity Method

Investments in companies in which the Company has the ability to exercise significant influence, but not control, are accounted for using the equity method.

This method recognizes the Company's share of the investee's net income or loss, and dividends received, as adjustments to the investment carrying amount.

The Company's share of the investee's net income or loss is recognized in the income statement, while dividends received reduce the investment carrying amount.

Bagger Dave’s-

Our investments include our net investment of $ 304,439 in Bagger Dave’s as determined under the “Equity Method” of accounting, net of recording our equity share in Bagger Dave’s losses.

NGI related party investment-

Our CEO, Gary Copperud, is Chairman of the board of directors of NGI.

Our COO, Kenneth Brimmer, is also an NGI board member and serves as its CFO.

Our total investment in equity and loans to NGI Corporation (“NGI”) is $ 424,000 , which includes $ 120,000 in demand loans to NGI during 2024;

the notes bear interest at 15% with interest payable-in-kind, the balance on NGI notes is convertible into NGI Series B preferred shares and warrants at any time at the option of the holder, and $ 6,600 in accrued interest has not been recognized as the conversion option is evaluated.

The Company also has made $ 304,000 in prior equity investments in NGI.

A portion of the NGI investment includes equity in the form of 179,000 common shares received in 2020 as consideration for extending the maturity of a note receivable repaid in August 2020.

Under the Note modification terms, we acquired 179,000 NGI common shares from its founders.

We also received warrants expiring on March 31, 2029, to purchase 358,000 shares of common stock for $1.00 per share.

We attributed $75,000 to the value of the equity received.

This amount was reflected as interest income in 2020.

On February 12, 2022, we invested $229,000 in 138,788 shares of NGI Series A1 8% Cumulative Convertible Preferred Stock, convertible share for share into NGI common shares.

This investment is reflected at the cost of $229,000.

The preferred investment included a five-year warrant to purchase 34,697 shares at $1.65 .

The investment in NGI does not have a readily determinable market value, and it is carried at the historic cost determined by BT Brands, which the Company believes is reasonable relative to recent stock sales by NGI.

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 a summary of information filed by Bagger Dave’s for the fiscal years ending December 29, 2024, and December 31, 2023.

In February 2025, the Bagger Dave’s location in Chesterfield, Michigan, was closed because of poor performance.

The sale of all six of Bagger Dave’s locations is currently being negotiated at a value over the carrying value.

While the sale of the restaurant assets is being pursued, there is no assurance the sale will ultimately occur.

Unaudited summary financial information for Bagger Dave’s -

Balance Sheet Information -

Total current assets

Total noncurrent assets

Total current liabilities

Total noncurrent liabilities

Total liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Statements of Operations information -

Depreciation and amortization

Other costs and expenses

( 7,696,912 )

( 8,161,248 )

$ ( 1,047,650 )

$ ( 852,461 )

The carrying values of cash and cash equivalents, receivables, accounts payable, and other current working capital items approximate fair value due to their short-term nature.

Equity Method Investments

Investments in entities in which the Company has the ability to exercise significant influence, but does not control, are accounted for using the equity method of accounting.

Under this method, the investment is initially recorded at cost and subsequently adjusted for the Company’s proportionate share of the investee’s net income or loss and dividends received.

The Company’s share of the investee’s net income or loss is recognized in the consolidated statements of operations as equity income (loss) from unconsolidated affiliate.

Fair Value Measurements

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December 29, 2024

Corporate bond fund

Common stocks

Listed limited partnership units

Exchange-traded funds

Debt securities

Real estate investment trust

We hold an investment in a debt security that is classified as a trading security.

Trading debt securities are recorded at quoted market price (fair value) on the consolidated balance sheets, with unrealized holding gains (losses) recognized on the statement of operations .

Cash and Cash Equivalents

Cash and cash equivalents may include United States Treasury Bills with a maturity at the time of purchase of three months or less.

Cash and cash equivalents include money market funds and may include United States Treasury Bills with a maturity of three months or less at the time of purchase.

Our bank deposits often exceed the amounts insured by the Federal Deposit Insurance Corporation.

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We do not believe there is a significant risk related to cash.

Broker Margin Loan

At December 31, 2023, we had a broker margin loan outstanding of $ 115,899 which was repaid during 2024.

The broker margin loans carried variable margin interest rate as set by the lending brokerage firm and was 6.8 % at December 31, 2023;

there was no amount due to brokers at December 29, 2024.

Any broker margin loan is collateralized by marginable securities held in the margin account and is due on demand under Federal Reserve margin account regulations and the margin account agreement.

Deferred Transaction Costs

Deferred transaction costs for the year ended December 31, 2024, primarily consist of legal fees that were capitalized as incurred and will be offset against the proceeds from future ATM offerings.

Deferred transaction costs for the year ended December 28, 2025, primarily consist of legal and accounting fees related to our proposed At-the-Market (ATM) equity offering, which were capitalized as incurred and will be offset against the proceeds from future ATM offerings.

The deferred transaction costs will be reviewed periodically to assess the probability that future securities will be offered.

In the event that no future offering will occur, any deferred transaction costs will be expensed.

Total costs incurred, but not accounted for as a reduction in equity, were $ 10,000 as of December 31, 2024.

In the event that no future offering occurs, any deferred transaction costs will be expensed.

Total costs incurred but not accounted for as a reduction in equity were $ 150,450 and $ 10,000 as of December 28, 2025, and December 29, 2024, respectively.

Revenue Recognition

Our revenues consist principally of selling food products for cash or bank-issued credit and debit card transactions at our restaurants.

Our revenues consist principally of cash sales of food products and 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 and net of applicable sales taxes.

Our sales are recognized at the point of purchase, net of discounts, incentives, and applicable sales taxes.

In these consolidated financial statements, receivables consist of rebates due from a primary vendor.

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.

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

Property and Equipment

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We review long-lived assets to determine if their carrying value may not be recoverable based on estimated cash flows.

Assets are evaluated at the lowest level, for which cash flows can be identified at the restaurant level.

Significant estimates are made for each restaurant’s future operating results over its remaining life in determining future cash flows.

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.

Assets are evaluated at the lowest level at which cash flows can be identified, typically the restaurant level.

Significant estimates are made for each restaurant’s future operating results to determine future cash flows.

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 fair value of the assets.

Estimated Useful life in years

Leasehold Improvements

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Land, building, 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.

Recoverability is measured by comparing the carrying amount of the assets to the undiscounted future net cash flows expected to be generated and is determined at the restaurant level.

If an asset is determined to be impaired, the recognized impairment is measured by the amount by which the carrying amount of the asset exceeds the fair value.

We may sell an existing unit or close an operating unit and seek to liquidate the property.

Historically, we have closed certain operating locations and liquidated the properties.

We may close units in the future.

We closed stores in West St.

Paul in 2022 and Richmond, Indiana, in 2018.

Paul, Minnesota, in 2022 and in Richmond, Indiana, in 2018.

Paul location was sold in 2023 for a gain of $ 310,182 .

The Richmond location is currently offered for sale, and we believe the Richmond property will be sold above its carrying value of approximately $258,000.

In 2024, we closed a leased location in Sioux Falls, South Dakota, resulting in a loss on the disposal of equipment of approximately $90,000, which is included in operating expenses.

Following the end of our 2024 fiscal year on January 2, 2025, we closed the Village Bier Garten, sold certain equipment for $34,500 and assigned the remaining lease to an unrelated party .

As a result, we reviewed VBG’s assets for impairment, resulting in recording an impairment loss of 371,872 in 2024.

The Ham Lake, Minnesota, location was closed in January 2025.

We are currently assessing alternatives for the property that we believe have value above its net book value of $ 424,000 .

Sale of Hot-N-Now Trademark

Effective October 9, 2024, we completed the sale of a trademark property.

The Hot-N-Now trademark, with no cost basis, was sold for an upfront cash payment of $ 250,000 and potential future payments of up to $150,000 based upon $10,000 per unit for each Hot-N-Now unit opened by the purchaser .

A gain on the sale of an asset of $ 250,000 was recognized in 2024.

The Richmond location was sold in 2025 for $ 550,000 , resulting in a gain of approximately $288,000.

In 2024, we closed a leased location in Sioux Falls, South Dakota, resulting in a $90,000 loss on the disposal of equipment, which is included in 2024 operating expenses.

On January 2, 2025, we closed the Village Bier Garten, sold certain equipment for $34,500 and assigned the remaining lease to an unrelated party .

As a result, in 2024, we reviewed VBG’s assets for impairment and recorded an impairment loss of $ 371,872 .

A BTND location in Ham Lake, Minnesota, was closed in January 2025.

We are evaluating options for the property, including its sale, the proceeds of which we estimate will exceed its net book value of $ 424,000 .

Three of our restaurant locations are subject to leases .

We evaluate leases at commencement to determine their operating or finance lease classification.

Under FASB ASC Topic 842 requirements, we recognize operating and finance lease liabilities based on the present value of the minimum future lease payment over the expected lease term and recognize a corresponding right-of-use asset.

We evaluate leases at commencement to determine whether they are operating or finance leases.

Under FASB ASC Topic 842, we recognize operating and finance lease liabilities based on the present value of the minimum future lease payments 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.

As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments.

As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available as of the commencement date to determine the present value of the lease payments.

For lease agreements that contain both lease and non-lease components, the Company has elected to account for the lease and non-lease components as a single lease component.

The Company has elected to not apply the requirements of ASC 842 for short-term leases.

Short-term leases are defined as leases that, at the commencement date, have lease terms of twelve months or less.

The Company has elected not to apply the requirements of ASC 842 to short-term leases.

Short-term leases are defined as leases with lease terms of twelve months or less as of the commencement date.

At lease inception, we determine the likelihood of exercising any future lease option periods.

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See Note 5 for additional information.

Minot Ground Lease

The Company closed its Burger Time restaurant location in Minot, North Dakota, in July 2025.

On September 9, 2025, the Company entered into a ground lease agreement with a third party related to the Minot property.

During 2025, the Company wrote-off the remaining net book value of the building, approximately $ 47,000 , which is included in the gain on sale of assets and recorded a charge for the estimated demolition cost of the existing building.

Substantially all of the equipment at the location was either fully depreciated or relocated for future use.

The Minot ground lease provides for an initial base rent of $ 5,833 per month, with rent commencing on the earlier of (i) the date the tenant opens for business at the location or (ii) August 25, 2026 (the “Commencement Date”).

The initial lease term is 15 years from the Commencement Date and includes six renewal options, each for five years.

The lease qualifies as an operating lease under Accounting Standards Codification Topic 842, Leases (“ASC 842”).

As of December 28, 2025, the Company had not recognized any lease revenue under this agreement because the commencement date had not yet occurred.

The Company will recognize rental income on a straight-line basis over the lease term beginning on the Commencement Date.

Goodwill, Other Intangible Assets, and Other Assets

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The Company has one reporting unit.

If the Company performs the quantitative test, it compares the carrying value of the reporting unit to an estimate of the reporting unit’s fair value to identify potential impairment.

If the Company conducts the quantitative test, it compares the carrying value of the reporting unit to an estimate of the reporting unit’s fair value to identify potential impairment.

The fair value of the reporting unit is estimated using a discounted cash flow model.

Where available, and as appropriate, comparable market multiples are also used to corroborate the results of the discounted cash flow models.

In determining the estimated future cash flow, the Company considers and applies certain estimates and judgments, including current and market projected future levels of income based on management’s plans, business trends, prospects and economic conditions and market-participant considerations.

If the estimated fair value of the reporting to unit is less than the carrying value, a goodwill impairment loss is recorded for the difference, up to the amount of the total goodwill.

Where available and appropriate, comparable market multiples are used to corroborate the results of the discounted cash flow models.

In determining estimated future cash flow, the Company considers and applies certain estimates and judgments, including current and projected market income levels based on management’s plans, business trends, prospects, economic conditions, and market participant considerations.

If the estimated fair value of the reporting unit is less than the carrying value, a goodwill impairment loss is recorded for the difference, up to the amount of the total goodwill.

During the year ended December 28, 2025, no impairment losses were identified.

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Advertising and Marketing Costs

We expense advertising and marketing costs as incurred.

We record advertising and marketing costs as incurred as an expense.

Advertising expenses for fiscal years 2025 and 2024 totaled $ 54,921 and $ 59,438 , respectively.

We provide for income taxes under ASC 740, Accounting for Income Taxes, using an asset and liability approach in accounting for income taxes.

We account for income taxes under ASC 740, Accounting for Income Taxes, using an asset and liability approach.

Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse.

Deferred tax 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.

ASC 740 requires the net of deferred tax assets and deferred tax liability to be presented as a single amount on the balance sheet.

ASC 740 requires the net of deferred tax assets and deferred tax liabilities to be presented as a single amount on the balance sheet.

It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

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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 loss per share is computed by dividing net loss 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 ended in 2024 and 2023.

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 2024 and 2023, all outstanding warrants were exercisable at prices above the underlying stock’s market price and, therefore, were not dilutive.

Net income (loss) per common share is computed in accordance with ASC 260, Earnings Per Share .

Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding plus the effect of potentially dilutive securities outstanding during the period.

Potentially dilutive securities are excluded from the computation of diluted net loss per share when their effect would be anti-dilutive

For the years ended December 28, 2025, and December 29, 2024, the Company reported a net loss;

therefore, all potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive.

Potentially dilutive securities include stock options, warrants, and other equity-based awards.

As of December 28, 2025, the Company excluded approximately 800 potentially dilutive shares from the computation of diluted net loss per share.

The Company had 2,746,838 five-year warrants outstanding with an exercise price of $ 5.50 per share issued in connection with its initial public offering on November 12, 2021.

At December 28, 2025 and December 29, 2024, the exercise price of these warrants exceeded the Company’s market price per share and, therefore, the warrants were not dilutive.

Restaurant Pre-opening expenses

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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.

Stock-Based Compensation

Stock-based compensation relates to the issuance of stock options and restricted stock.

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.

St ock-Based Compensation

Stock-based compensation consists of stock options and restricted stock awards granted to employees, outside directors and consultants.

The Company recognizes stock-based compensation expense in its consolidated financial statements based on the grant-date fair value of equity-classified awards in accordance with ASC 718, Compensation—Stock Compensation .

The grant-date fair value of stock options is estimated using the Black-Scholes option-pricing model and the simplified method for estimating expected term.

Stock-based compensation expense is recognized, net of estimated forfeitures, on a straight-line basis over the requisite service period of the awards.

Reclassifications

In 2024, the Company made certain reclassifications to its consolidated balance sheet and statement of operations presentation to enhance financial reporting consistency.

These reclassifications involved adjusting certain 2023 comparative amounts to conform to the current year’s presentation.

The reclassifications did not impact previously reported total assets, total liabilities, stockholders’ equity, or net income for the year ending December 31, 2023.

These adjustments were made solely for presentation purposes and did not affect the Company’s overall financial position, results of operations, or cash flows.

Segment Reporting - Recently Adopted Accounting Guidance:

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.

In November 2023, the FASB issued ASU 2023-07:

Improvements to Reportable Segment Disclosures.

This ASU, which amends Topic 280:

Segment Reporting , improves disclosure requirements for reportable segments and enhances disclosures for companies with single reportable segments.

The Company has concluded it has a single reportable segment based on the nature of its operations and the regulatory environment under which it operates.

The business’s nature and the segment’s accounting policies are the same as described in Note 1 - Business .

The Company’s Chief Operating Decision Maker (“CODM”) is its executive team made up of its CEO and Chief Financial Officer.

The CODM assesses the reportable segment’s performance and allocates resources for the reportable segment based on the net income and total assets, which are the same amounts in all material respects as those reported on the consolidated statements of operations and consolidated balance sheets.

The Company adopted the standard on January 1, 2024.

The adoption did not have an impact on the Company’s consolidated financial statements.

Certain prior-year amounts have been reclassified to conform to the current-year presentation.

These reclassifications had no effect on previously reported total assets, total liabilities, stockholders’ equity, net loss, or cash flows.

Recently Adopted Accounting Guidance

Segment Reporting

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-07, Improvements to Reportable Segment Disclosures , which amends ASC Topic 280, Segment Reporting .

The update enhances disclosure requirements for reportable segments, including entities with a single reportable segment.

The Company has determined that it operates as a single reportable segment based on the nature of its operations and the regulatory environment in which it operates.

The Company’s Chief Operating Decision Maker (“CODM”) is its executive management team, consisting of the Chief Executive Officer and Chief Financial Officer.

The CODM evaluates performance and allocates resources based primarily on consolidated net income and total assets, which are consistent with the amounts reported in the consolidated statements of operations and consolidated balance sheets.

The Company adopted ASU 2024-07 on January 1, 2025.

The adoption did not have a material impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures , which amends ASC Topic 740, Income Taxes .

This update enhances transparency by modifying disclosure requirements related to income taxes.

The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-09 on January 1, 2025, using the retrospective method of adoption.

The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures.

NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at the end of the respective fiscal year:

December 29, 2024

Buildings and leasehold improvements

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December 28, 2025-

Original Cost

Accumulated Amortization

Covenants not to compete

$ ( 138,730 )

Impairment charge

$ ( 174,123 )

December 29, 2024-

Original Cost

Accumulated Amortization

Covenants not to compete

Following the end of 2024, on January 2, 2025, the Company closed its Village Bier Garten location.

In connection with the closure, the Company recognized the impairment of Village Bier Garten assets and has recorded an allowance to fully reserve for the remaining carrying value of intangible assets associated with the location.

$ ( 103,135 )

Impairment allowance

$ ( 174,123 )

On January 2, 2025, the Company closed its Village Bier Garten location.

In connection with the closure, the Company recognized an impairment of Village Bier Garten’s intangible assets in 2024.

Tradename assets are amortized over 15 years.

Total amortization expense for 2025 was approximately $ 64,000 .

The total amortization of intangible assets, including the covenants not to compete will approximate $ 62,600 in 2025, $ 56,300 in 2026, $ 36,800 in 2027 and $ 26,200 per year through 2036 and approximately $ 5,600 in 2037.

Total amortization expense of intangible assets in 2024 includes $ 11,660 of expense to write off the intangible asset related to the Company’s former franchise asset upon termination of the franchise agreement.

The total amortization of intangible assets, including the covenants not to compete, will approximate $ 56,300 in 2026, $ 36,800 in 2027, $ 22,900 per year through 2036, and approximately $ 5,600 in 2037.

Total amortization expense of approximately $ 90,000 for intangible assets in 2024 included $ 11,660 to write off the intangible asset related to the Company’s former franchise asset upon termination of the franchise agreement.

This amount was included in other assets in the 2024 consolidated balance sheet.

NOTE 5 – 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 $ 505,626 at December 29, 2024 and $ 547,687 at the end of 2023 are reflected as liabilities in the accompanying financial statements.

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 4.5 % of the remaining lease obligation of $ 847,949 on December 29, 2024, and $ 923,885 at the end of 2023 are reflected as liabilities in the accompanying financial statements.

With the acquisition of VBG assets, we assumed a five-year lease from 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 $ 256,462 as of December 29, 2024, and $ 352,100 at December 31, 2023 are reflected as liabilities in the accompanying consolidated financial statements.

In May 2024, with the acquisition of Schnitzel Haus, we assumed the remaining 44 months on the restaurant’s lease obligation for approximately $ 5,400 per month for approximately 4,200 square feet.

In connection with the acquisition of Keegan’s, the Company entered into a lease for approximately 2,800 square feet of restaurant space.

The lease has a term of 131 months and provides for an initial base rent of $ 5,000 per month, with annual increases equal to the greater of 3 % or the Consumer Price Index (CPI).

Current monthly base rent is $ 5,628 .

Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales taxes.

The lease is accounted for as an operating lease.

At lease commencement, the Company recorded a right-of-use asset and corresponding operating lease liability of approximately $ 624,000 .

The operating lease liability was $ 458,587 as of December 28, 2025, and $ 505,626 as of December 29, 2024, discounted using a rate of 3.75 %, and is reflected as operating lease liabilities in the accompanying consolidated balance sheets.

Upon acquisition of the PIE assets, the Company entered into a lease for approximately 3,500 square feet of restaurant and bakery production space.

The lease has an initial term of 60 months and provides for an initial base rent of $ 10,000 per month, with a 3 % annual escalation beginning after the first 24 months.

Current monthly base rent is $ 10,609 .

Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales taxes.

The PIE lease includes three five-year renewal options exercisable at the Company’s option.

The lease is accounted for as an operating lease.

At lease commencement, the Company determined that it is reasonably certain to exercise the initial five-year renewal option and therefore included this period in the lease term.

As a result, the Company recorded a right-of-use asset and corresponding operating lease liability of approximately $ 1,055,000 .

The operating lease liability related to the PIE lease was $ 771,907 as of December 28, 2025 and $ 847,949 as of December 29, 2024, discounted using a rate of 4.5 %, and is reflected as operating lease liabilities in the accompanying consolidated balance sheets.

In May 2025, in connection with the acquisition of Schnitzel Haus, the Company assumed the remaining 44 months of the restaurant’s approximately 4,200 -square-foot lease, with a monthly base rent of approximately $ 5,400 .

The Schnitzel Haus lease is accounted for as an operating lease.

At its inception, we recorded an operating lease obligation and a right-of-use asset of $ 182,878 .

The present value, discounted at 6.5 % of the remaining lease obligation of $ 161,774 , is reflected as a liability in the accompanying consolidated balance sheet at December 29, 2024.

The following is a schedule of the approximate minimum future lease payments on the operating leases as of December 29, 2024, including amounts assuming we exercise the option to extend leases where we believe that exercise of the option is likely.

At lease commencement, the Company recorded a right-of-use asset and corresponding operating lease liability of $ 182,478 .

The operating lease liability related to this lease was $ 122,953 as of December 28, 2025, and $ 161,774 as of December 29, 2024, discounted using a rate of 6.5 %, and is reflected as a liability in the accompanying consolidated balance sheets.

Village Bier Garten Lease –

The Company’s acquisition of Village Bier Garten assets in 2023 included a 60 -month triple-net lease for approximately 3,000 square feet of restaurant space.

The lease provided for initial rent of approximately $ 8,200 per month, subject to annual escalation of 3 %.

On January 2, 2025, the Company ceased operations at the Village Bier Garten location in Cocoa, Florida and entered into an agreement to assign the lease to a third party.

Following the transfer of possession, the assignee operated a restaurant on the premises and made rent payments directly to the landlord for several months, which the landlord accepted.

In November 2025, the landlord issued a notice of default alleging nonpayment of rent beginning in August 2025.

The landlord subsequently regained possession of the premises denied the Company further access and initiated legal proceedings seeking recovery of amounts allegedly due under the lease.

The landlord is currently seeking a replacement tenant.

As a result of the cessation of operations and loss of use of the premises, the Company evaluated the related right-of-use asset for impairment in accordance with ASC 842 and ASC 360 and recorded a full impairment charge of approximately $ 215,000 during the year ended December 28, 2025.

Given the outstanding litigation seeking acceleration of the unpaid rent under the lease, as of December 28, 2025, the Company has included a net lease liability of approximately $ 215,000 representing approximately total unpaid lease payments under the full lease term including 2025 in the current amount payable.

The ultimate resolution of the matter is subject to ongoing litigation and may differ from the amounts recorded.

Following is a schedule of the approximate minimum future lease payments on the operating leases as of January 1, 2023, including amounts assuming we exercise to extend leases where we believe that exercise of the option is likely.

The following table presents future minimum lease payments under the Company’s operating leases as of December 28, 2025, including amounts related to the PIE lease, assuming exercise of the initial five-year renewal option, which the Company believes is reasonably certain:

Lease Payments

Total future minimum lease payments

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Present value of lease obligations

The weighted average remaining lease term is approximately 6.6 years, and the weighted average discount rate is approximately 4.79 %.

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 over a similar term at the commencement of the lease.

The total operating lease expense for 2024 and 2023 were $ 408,696 and $ 298,567 , respectively.

Cash paid for leases was approximately $ 330,000 in 2024 and $ 282,000 in 2023.

Variable expenses for leased properties were $ 57,525 in 2024 and $ 16,500 in 2023.

Through January 2025, we paid $ 550 per month under an annual rental agreement for corporate and administrative office spaces in West Fargo, North Dakota, which was terminated in January 2025, and we paid $ 1,350 per month in Minnetonka, Minnesota, for a combined monthly rent of approximately $ 1,900 in 2024.

The weighted-average remaining lease term of the Company’s operating leases was approximately 5.6 years, and the weighted-average discount rate was approximately 4.50 %.

The Company is unable to readily determine the interest rate implicit in its leases.

Therefore, the discount rate used represents the Company’s estimated incremental borrowing rate at lease commencement for a similar term, collateralized by the leased assets.

Total operating lease expense was approximately $ 326,000 and $ 408,696 for the years ended December 28, 2025, and December 29, 2024, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities totaled approximately $ 288,000 in 2025 and $ 330,000 in 2024.

Variable lease costs were approximately $ 37,000 in 2025 and $ 57,525 in 2024.

In 2025, we paid approximately $ 1,350 per month for our corporate office under a month-to-month rental arrangement.

NOTE 6 – INCOME TAXES

Income taxes are accounted for in accordance with ASC 740, Income Taxes , which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events included in the financial statements or tax returns.

As of December 29, 2024, the Company has recorded total deferred tax assets of $ 616,000 , primarily attributable to net operating loss carryforwards (NOLs) offset by temporary differences related to property and equipment.

Management assesses the realizability of deferred tax assets annually and considers all available positive and negative evidence, including historical operating performance, taxable income projections, and reversal of deferred tax liabilities.

Based on this evaluation, the Company has determined that sufficient uncertainty exists regarding the future realization of these deferred tax assets.

Accordingly, a valuation allowance of $ 616,000 has been recorded as of December 29, 2024, reducing the net deferred tax asset balance to zero.

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

The Company will continue to assess the need for a valuation allowance in future periods.

Should circumstances change and sufficient positive evidence emerge to support the realization of deferred tax assets, all or a portion of the valuation allowance may be reversed.

Principally, due to accelerated tax depreciation in prior years, which allowed for the depreciation of assets acquired in a business acquisition, and the operating results in the current year, the losses for tax purposes resulted in a total estimated net operating federal loss carryforward of approximately $ 3.3 million at year-end 2024 and $ 1.9 million on December 31, 2023.

These carryforwards are available for future utilization subject to taxable income limitations and under Internal Revenue Code Section 382 due to ownership changes.

The Company has various state net operating loss carryforwards of $ 3.1 million, a portion of which will expire after 15 years beginning in 2037 and a portion of which has indefinite life subject to limitation consistent with federal tax rules.

The 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 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:

The Company accounts for income taxes in accordance with ASC 740, Income Taxes , which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating loss (“NOL”) and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which temporary differences are anticipated to be reversed.

The effect of changes in tax laws or rates is recognized in income in the period of enactment.

Deferred Tax Assets and Valuation Allowance

As of December 28, 2025, the Company had gross deferred tax assets of approximately $ 1,303,000 , primarily attributable to federal and state net operating loss carryforwards, stock-based compensation, and impairment-related temporary differences.

Management evaluates the realizability of deferred tax assets quarterly, considering all available positive and negative evidence, including historical operating results, cumulative losses, projected future taxable income, the scheduled reversal of deferred tax liabilities, and tax planning strategies.

If sufficient positive evidence becomes available to support the realization of deferred tax assets, the valuation allowance may be reduced or reversed in a future period.

As of December 28, 2025, the Company recorded a valuation allowance of $ 933,000 (December 29, 2024 – $ 616,000 ).

After consideration of deferred tax liabilities, the Company had no net deferred tax asset recorded on the balance sheet on December 28, 2025, and December 29, 2024.

Net Operating Loss Carryforwards

As of December 28, 2025, the Company had federal net operating loss carryforwards of approximately $ 2.8 million and state net operating loss carryforwards of approximately $ 3.0 million.

Federal NOLs generated after 2017 may be carried forward indefinitely but are generally limited to 80% of taxable income in any future year.

Certain state NOLs begin to expire in 2037, while others may be carried forward indefinitely, subject to applicable state limitations.

If ownership changes occur, the Company’s ability to utilize its NOL carryforwards may be limited under Internal Revenue Code Section 382.

Components of Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carryforwards are as follows:

Deferred tax assets:

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Stock-based compensation

Future tax benefit of impairment allowances

Accrued compensation

Unrealized gain on short-term investments

Equity method losses

Total deferred tax assets

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Property and equipment tax depreciation difference

Unrealized loss (gain) on short-term investments

Unrealized (gain) on short-term investments

Total deferred tax liabilities

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The following table summarizes the components of the provision for income taxes:

Current income tax expense (benefit)

Deferred income taxes (benefit)

Current income tax expense

Deferred income tax (benefit) expense

Change in valuation allowance

Total income tax expense (benefit)

Total income tax expense

$ ( 206,000 )

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Federal statutory tax rate of 21 % to pre-tax income as follows:

Total (benefit) computed by applying the statutory federal rate

federal statutory income tax rate

$ ( 145,000 )

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State income tax benefit, net of federal tax benefit

Equity in loss of unconsolidated subsidiary

Equity method investment loss

Adjustments to deferred tax assets related to prior periods

Change in valuation allowance

Income tax expense (benefit)

$ ( 145,000 )

Change in unrecognized benefit

Income tax expense

There is no current income tax expense for the United States, foreign or state jurisdictions for fiscal 2025, In addition, no cash was paid for income taxes during the 2025 or 2024 fiscal years.

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.

The Company had no accrued interest or penalties relating to income tax obligations and is not currently subject to any federal or state income tax examinations.

The Company has not had any federal or state income tax examinations since its inception.

The Company’s federal and state income tax returns remain subject to examination by tax authorities for the three most recent tax years.

With few exceptions, the Company is no longer subject to U.S.

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Accrued real estate taxes

Accrued bonus compensation and consulting fees

Accrued payroll

Accrued payroll taxes

Accrued payroll and payroll taxes

Accrued sales taxes payable

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NOTE 8 – 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 , which is reflected as an additional cost of the offering.

After deducting all fees and expenses, the 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 a related private offering, 205,002 additional common shares and 102,503 common stock warrants to purchase shares at $ 4.00 through July 31, 2024, 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 2024.

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 2024.

On June 6, 2024, we authorized a stock repurchase program, under which we may repurchase up to 625,000 shares, or approximately 10.0%, of our currently issued and outstanding common stock (the “2024 Share Repurchase Program”).

We have not established any maximum aggregate price to be paid for shares that we repurchase.

As of December 29, 2024, we repurchased an aggregate of 306,394 including 91,394 shares under the 2024 Share Repurchase Program .

We may purchase up to an additional 533,606 shares under the 2024 Share Repurchase Program.

We are purchasing the shares with available cash and may repurchase shares of our common stock from time to time, in amounts, at prices, and at such times as we deem appropriate, subject to market conditions, legal requirements and other considerations.

Our repurchases may be executed using open market purchases, unsolicited or solicited privately negotiated transactions or other transactions.

The 2024 Share Repurchase Program does not obligate us to repurchase any specific number of shares and may be suspended, modified or terminated at any time without prior notice.

The 2024 Share Repurchase Program does not contain a time limitation during which repurchases are permitted to occur.

Potential Sale and Issuance of Stock

On December 13, 2024, BT Brands, Inc.

(the “Company”) entered into an Equity Distribution Agreement (the “Distribution Agreement ”) with Maxim Group LLC (“Maxim”) to sell shares of the Company's common stock, par value $ 0.002 per share (the “Common Stock”), subject to the maximum aggregate sales proceeds of up to $ 3,005,000 pursuant to the applicable prospectus supplement, from time to time, through an “at the market offering” program under which Maxim will act as sales agent.

Under the Distribution Agreement, the Company will set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, any limitation on the number of shares that may be sold in any one day and any minimum price below which sales may not be made.

Pursuant to General Instruction I.B.6 of Form S-3, the Company may not sell the shelf securities in a public primary offering with a value exceeding more than one-third of the aggregate market value of its voting and non-voting ordinary shares held by non-affiliates in any 12-month period as long as the aggregate market value of the Company's outstanding ordinary shares held by non-affiliates is less than $75 million.

The $3,005,000 of shares of Common Stock that may be offered, issued and sold under the offering prospectus is included in the $25,000,000 of securities that may be offered , issued and sold by the Company under the base prospectus.

Subject to the terms and conditions of the Distribution Agreement, Maxim may sell the shares by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended.

Maxim agreed to use commercially reasonable efforts in conducting such sales activities consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of The Nasdaq Stock Market LLC.

The Distribution Agreement may be terminated by the Company or Maxim upon notice to the other party in accordance with the terms of the Distribution Agreement.

The offering of the shares of Common Stock pursuant to the Distribution Agreement will terminate upon the termination of the Distribution Agreement in accordance with its terms.

The shares of Common Stock will be issued pursuant to the Company's shelf registration statement on Form S-3 (File No.

333-283830), filed with the Securities and Exchange Commission (the “SEC”) on December 13, 2024 (the “Registration Statement”).

The Registration Statement was declared effective by the SEC on December 20, 2024.

The Company will file a final prospectus supplement with the SEC following the effectiveness of the Registration Statement relating to the offer and sale of the shares of Common Stock pursuant to the Distribution Agreement.

The Distribution Agreement contains representations, warranties and covenants that are customary for transactions of this type.

Under the terms of the Distribution Agreement, the Company will pay Maxim a commission in an amount equal to 3.0% of the aggregate gross proceeds from each sale of shares of Common Stock made under the Distribution Agreement and reimburse Maxim's expenses, including certain legal fees.

The Company has no obligation to sell any shares of Common Stock under the Distribution Agreement and may at any time suspend solicitation and offers under the Distribution Agreement.

The Company has also provided Maxim with customary indemnification and contribution rights.

Maxim is not under any obligation to purchase any of the shares of Common Stock on a principal basis pursuant to the Distribution Agreement.

Maxim's obligations to sell the shares of Common Stock under the Distribution Agreement are subject to the satisfaction of certain conditions, including customary closing conditions.

Authorized Shares

The Company is authorized to issue up to 50,000,000 shares of common stock, par value $ 0.002 per share, and up to 2,000,000 shares of preferred stock, par value $ 0.001 per share.

The preferred stock is currently undesignated and may be issued from time to time in one or more series with such rights, preferences, and privileges as determined by the Company’s board of directors.

As of December 28, 2025, and December 29, 2024, 6,154,724 shares of common stock were issued and outstanding, and no shares of preferred stock were issued or outstanding.

Initial Public Offering and Warrants

On November 12, 2021, the Company completed its initial public offering (“IPO”) of units, each consisting of one share of common stock and one five-year stock purchase warrant exercisable to purchase one share of common stock at an exercise price of $ 5.50 per share.

The Company may redeem the warrants under certain conditions.

In the IPO, the Company issued 2,400,000 shares of common stock and an aggregate of 2,760,000 stock purchase warrants, which included 360,000 warrants issued to the underwriters pursuant to a partial exercise of their overallotment option at $ 0.01 per warrant.

The estimated fair value of the warrants at the date of issuance, net of the exercise proceeds, was $ 360,000 and was recorded as an additional cost of the offering.

After deducting underwriting discounts, commissions, and other offering costs, the Company received net proceeds from the IPO of $ 10,696,575 .

During 2022, holders exercised 13,612 public warrants for aggregate proceeds of $ 74,866 .

As of December 28, 2025, 2,746,838 public warrants remained outstanding, each exercisable to purchase one share of common stock at an exercise price of $ 5.50 per share.

All remaining public warrants expire on November 12, 2026, unless earlier exercised or redeemed in accordance with their terms.

Share Repurchase Authorization

On June 6, 2024, the Company’s board of directors authorized a share repurchase program pursuant to which the Company may repurchase up to 625,000 shares of its common stock, representing approximately 10.0% of the Company’s outstanding shares at the time of authorization (the “Repurchase Program”).

There is no predetermined overall limit on the aggregate purchase price of shares that may be repurchased under the Repurchase Program.

As of December 28, 2025, the Company had repurchased an aggregate of 306,394 shares, including 91,394 shares under the Repurchase Program, all of which were repurchased during fiscal 2024.

As a result, the Company may repurchase up to an additional 533,606 shares under the Repurchase Program .

The Company expects to fund repurchases with available cash.

Repurchases may be made from time to time in open market purchases, privately negotiated transactions, or otherwise, subject to market conditions, applicable legal requirements, and other considerations.

The Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be suspended, modified, or terminated at any time without prior notice.

The Repurchase Program does not have an expiration date.

Shares repurchased under the Repurchase Program are recorded as treasury stock and accounted for under the cost method.

At-the-Market Offering Program

On December 13, 2024, as amended on November 21, 2025, the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell shares of its common stock, par value $ 0.002 per share, from time to time through an “at-the-market” offering program, with Maxim acting as sales agent.

Pursuant to the applicable prospectus supplement, the Company may offer and sell shares of common stock with aggregate gross sales proceeds of up to $ 3,565,880 under the Distribution Agreement.

The shares offered pursuant to the Distribution Agreement are included within the $ 25,000,000 of securities that may be offered, issued, and sold under the Company’s shelf registration statement.

Under the Distribution Agreement, the Company specifies the parameters for any sales, including the number of shares to be sold, the timing of sales, any limitation on daily sales volume, and minimum acceptable prices.

Sales may be made by any method deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

Pursuant to General Instruction I.B.6 of Form S-3, for so long as the aggregate market value of the Company’s outstanding common stock held by non-affiliates is less than $ 75 million, the Company may not sell securities in a primary offering with a value exceeding one-third of such aggregate market value during any 12-month period.

Under the terms of the Distribution Agreement, the Company pays Maxim a commission equal to 3.0% of the aggregate gross proceeds from each sale of shares and reimburses certain expenses, including legal fees.

The Distribution Agreement contains customary representations, warranties, covenants, indemnification, and contribution provisions.

Maxim is not obligated to purchase any shares as principal.

Either party may terminate the Distribution Agreement upon notice in accordance with its terms.

NOTE 9 – 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, 2024, there were 660,750 shares available for a grant under the 2019 Plan.

In 2024, we issued 15,000 ten-year options to the then-existing outside members of our Board of Directors to purchase shares at $1.61 per share;

we also granted 5,000 fully-vested options to purchase shares at $1.70 per share to a new member of the Board.

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 issued a consultant warrant to purchase 100,000 shares at $2.50 per share for seven years, with the warrants vesting monthly for over five years as long as the consultant continues in this capacity.

Assuming the consulting agreement continues to full term, we project that we will recognize approximately $112,000 in stock-based compensation at $32,000 annually through 2027 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 expenses over the applicable service period.

Compensation expense for 2024 was approximately $ 72,500 and will be approximately $ 59,000 in 2025 and $ 9,000 in 2026.

Based on current estimates, we project that we will recognize approximately $183,000 in stock-based compensation expense related to options and consultant warrants over the next four years, including approximately $91,000 in 2025, $41,000 in 2026, $35,000 in 2028, and $16,000 in 2029 .

2019 Incentive Plan (the “Plan”), under which the Company, as of December 28, 2025, may grant up to 1,000,000 stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units, and other stock and cash awards to eligible participants.

Stockholders have authorized the 1,000,000 shares available for grant under the 2019 Plan.

As of December 28, 2025, there were 718,250 shares available for a grant under the 2019 Plan.

In July 2025, the Board approved a grant of 62,500 options with an exercise price of $1.50 per share.

This grant included 22,500 fully vested one-year options and 40,000 options, which vested 20% on the grant date and an additional 20% on each of the following four anniversary dates .

In 2024, we issued 15,000 ten-year options to the then-existing outside members of our Board of Directors to purchase shares at $1.61 per share, and we also granted 5,000 fully vested options to a new Board member to purchase shares at $1.70 per share .

In 2023, outside of the 2019 Plan, we issued a consultant a warrant to purchase 100,000 shares at $2.50 per share, valid for seven years, with the warrants vesting monthly for over five years , provided the consultant remains in this capacity.

Assuming the consulting agreement continues for its full term, we project we will recognize approximately $80,000 in stock-based compensation, including $32,000 in 2026 and 2027 and $16,000 in 2028 .

As outlined in each agreement, stock options granted to employees and directors vest and expire as determined at the date of grant.

Compensation expense equal to the fair value of the options at the grant date is recognized in general and administrative costs over the applicable service period.

Stock-based compensation expense for 2025 was $141,000.

Based on current estimates, we project approximately $121,000 in stock-based compensation expense related to options and consultant warrants over the next four years, including approximately $49,000 in 2026, $43,000 in 2027, $24,000 in 2028, and $5,000 in 2029 .

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 grant date fair value of the award was determined using a lattice model with assumptions similar to the stock option calculation.

The total estimated grant-date fair value of the award was determined using a lattice model with assumptions similar to those used for the stock option calculation.

The total of this award was determined to be $ 265,000 .

For 2024, stock-based compensation included approximately $ 126,000 in expenses for the award.

We project the remainder of approximately $ 36,000 of stock-based compensation will be recognized in 2025

We utilize the Black-Scholes option pricing model at the date of grant when determining the compensation cost associated with stock options issued using the following significant assumptions:

For 2025, stock-based compensation expenses for this award totaled approximately $ 36,000 .

We utilize the Simplified Method and the Black-Scholes option pricing model at the date of grant 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;

7 unchanged sentences

Weighted Average

Exercise Price

W eighted Average Remaining Term

Aggregate Intrinsic Value

Options outstanding at January 1, 2023

Canceled, forfeited, or expired

Weighted Average Remaining Term

Aggregate Intrinsic

Options outstanding at December 31, 2023

Options exercisable at December 31, 2023

Canceled, forfeited, or expired

Options outstanding at December 29, 2024

Options exercisable on December 29, 2024

Canceled, forfeited, or expired

Options outstanding at December 28, 2025

Options exercisable at December 29, 2024

The Black-Scholes option-pricing model was used to estimate the fair value of the stock options at the date of grant with the following weighted-average assumptions for grants during the year ended December 29, 2024.

The fair value of options and warrants granted during the period

$ 1.08 to $ 1.19

Expected life (in years)

Options exercisable on December 28, 2025

The Black-Scholes option-pricing model was used to estimate the fair value of stock options at the grant date, with the following weighted-average assumptions applied to grants during the year ended December 28, 2025.

The average fair value of options granted during the period

Expected average life (in years)

Expected dividend

6 unchanged sentences

These notes mature on June 28, 2036.

The notes are secured by mortgages covering eight BTND operating locations.

The notes are guaranteed by BT Brands, Inc., and a shareholder of the Company.

The notes are secured by mortgages covering seven BTND properties.

BT Brands, Inc., and a shareholder of the Company guarantee the notes.

Less - unamortized debt issuance costs

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NOTE 12 – RELATED PARTY TRANSACTIONS

Officers of BT Brands, Inc.

also serve as officers and directors of NGI Corporation.

Our total investment in equity and loans to NGI Corporation (“NGI”) is $ 424,000 , which includes $ 120,000 in demand loans to NGI during 2024, the notes bear interest at 15 % with interest payable-in-kind, and the balance on NGI notes is convertible into NGI Series B preferred shares and warrants at any time at the option of the holder, $ 6,600 in accrued interest has not been recognized as the conversion option is evaluated.

The Company also has made $ 304,000 in prior equity investments in NGI.

A portion of the NGI investment includes equity in the form of 179,000 common shares received in 2020 as consideration for extending the maturity of a note receivable repaid in August 2020.

Under the Note modification terms, we acquired 179,000 NGI common shares from its founders.

We also received warrants expiring on March 31, 2029 , to purchase 358,000 shares of common stock for $ 1.00 per share.

We attributed $ 75,000 to the value of the equity received.

This amount was reflected as interest income in 2020.

The fair value of this investment remains consistent with its 2020 valuation.

On February 12, 2022, we invested $ 229,000 in 138,788 shares of NGI Series A1 8 % Cumulative Convertible Preferred Stock, convertible share for share into NGI common shares.

This investment is reflected at the cost of $229,000.

The preferred investment included a five-year warrant to purchase 34,697 shares at $ 1.65 .

Our CEO, Gary Copperud, is Chairman of the board of directors of NGI.

Our COO, Kenneth Brimmer, is also an NGI board member and serves as its CFO.

Bagger Dave’s Burger Tavern

NGI Corporation

Equity Investment and Impairment -

Before 2023, BT Brands, Inc.

(“BT Brands” or the “Company”) made a series of equity investments in NGI Corporation (“NGI”), resulting in a minority ownership interest with an aggregate carrying value of $ 304,000 .

As of September 28, 2025, the Company evaluated the recoverability of its investment and concluded that impairment indicators were present, including recurring operating losses at NGI and insufficient capital to sustain operations without continued external financing.

In addition, there were no observable market transactions or other valuation inputs to support the investment’s carrying value.

Based on this assessment, the Company determined that its equity investment in NGI was impaired and recorded an impairment charge of 304,000 as of September 28, 2025, fully writing down the carrying value of its equity investment.

NGI Loan Agreements, Foreclosure, and Inventory Acquisition and Allowance -

The Company also provided loans to NGI and purchased inventory from NGI in the ordinary course of business.

During fiscal 2025, the Company advanced additional loans to NGI and funded certain costs related to aluminum water bottles inventory totaling $ 670,718 .

In connection with these transactions, the Company took ownership of bottle inventory with a carrying value of $ 380,861 .

Effective December 26, 2025, the Company exercised its rights under loan agreements with NGI that provided the Company with a senior secured interest in substantially all of NGI’s assets.

investment in and receivables from NGI Corporation.

As a result of the foreclosure and prior purchases, the Company held Bottle Inventory with a gross carrying value of $ 790,718 as of December 28, 2025, representing approximately 850,000 bottles.

The Bottle Inventory is recorded within current assets at the lower of cost or net realizable value.

Based on management’s evaluation of expected selling prices and estimated costs to sell, the Company recorded a write-down of $ 216,718 , reducing the carrying value of the Bottle Inventory to its estimated net realizable value of $ 574,000 as of December 28, 2025.

Management is actively pursuing third-party sales of the Bottle Inventory;

however, the amount and timing of any proceeds cannot be predicted with certainty.

As of December 28, 2025, and to reflect the foreclosure of the remaining loans to NGI, physical control of the bottle inventory is as follows:

Investment in

Loan Activity

Bottle Inventory

Balance, December 31, 2023

2024 Activity

Balance, December 29, 2024

Water bottle inventory payments

Acquisition of NGI secured promissory note

Allowance for impairment

Loan repayment, June 2025

Foreclosure on the bottle inventory collateral

Allowance to reduce the value of bottles to the estimated net realizable value

Balance, December 28, 2025, reflected as inventory — bottled water available for sale

NGI R elated Party Matters-

Kenneth Brimmer, the Company’s Chief Operating Officer, serves as a member of NGI’s board of directors and as Chief Financial Officer.

Effective April 1, 2025, Gary Copperud resigned from NGI’s board of directors.

Bagger Dave’s Burger Tavern, Inc.-

On June 2, 2022, the Company purchased 11,095,085 shares of common stock of Bagger Dave’s Burger Tavern, Inc.

(“Bagger Dave’s” or “BDVB”), representing approximately a 40.7% ownership interest at the time of purchase, for an aggregate purchase price of $ 1,260,000 .

The Company accounts for its investment in BDVB under the equity method of accounting because it has the ability to exercise significant influence over BDVB’s operating and financial policies but does not control the entity.

Bagger Dave’s operates five casual dining restaurants and bar locations, including three locations in Michigan and one location each in Fort Wayne, Indiana and Centerville, Ohio.

BDVB’s common stock is quoted on the OTC Pink market, and BDVB files quarterly and annual financial information with OTC Markets Group, Inc.

under the Alternative Reporting Standard.

Financial information reported by BDVB is not required to be audited.

During the first fiscal quarter of 2026, BDVB sold its closed Chesterfield, Michigan, leasehold interest for approximately $ 400,000 in a combination of notes and cash.

BDVB expects to recognize a gain of approximately $ 350,000 related to this sale.

As of December 28, 2025, and December 29, 2024, the carrying value of the Company’s investment in BDVB was $ 0 and $ 304,439 , respectively.

During fiscal 2025, the Company’s cumulative share of BDVB’s net losses exceeded the carrying value of its investment, resulting in a reduction of the investment balance to zero.

In accordance with applicable accounting guidance, the Company ceased recognizing additional equity losses after the carrying value of the investment was reduced to zero, as the Company has not committed to providing additional financial support to BDVB and has not guaranteed any of its obligations.

The Company’s proportionate 40.7 % share of BDVB’s net loss for the period was $ 386,559 , of which $ 304,439 was recognized as equity in loss of unconsolidated affiliate in the Company’s consolidated statements of operations, reducing the carrying value of the investment to zero.

The remaining portion of the Company’s share of BDVB’s losses was not recognized.

The Company discontinued recognizing additional losses after the investment balance reached zero.

The Company will resume recognizing its share of BDVB’s earnings, if any, only after its equity in cumulative unrecognized losses have been recovered.

The following tables present unaudited summary financial information of BDVB as of and for the periods indicated, as reported by BDVB:

Balance Sheet Information -

Total current assets

Total noncurrent assets, net

Total current liabilities

Total noncurrent liabilities

Total liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Statements of Operations information -

Depreciation and amortization

Other costs and expenses

( 5,698,417 )

( 7,696,912 )

$ ( 942,771 )

$ ( 1,047,650 )

Officers of BT Brands, Inc.

2 unchanged sentences

The investment is accounted for on the equity method.

BT Brands Officer received no compensation from Bagger Dave’s in 2024 and there were no intercompany related party transactions.

The BT Brands Officers received no compensation from Bagger Dave’s in 2025, and there were no additional related party transactions.

Related Party Employment

Blake Copperud, son of the Company’s Chief Executive Officer, is employed by the Company as a full-time Operations Specialist.

Total compensation for the year ended December 28, 2025, was approximately $ 100,000 , including a $ 40,000 discretionary bonus earned and accrued during the year.

In addition, the Company granted Blake Copperud options to purchase 20,000 shares at $ 1.50 per share.

As of the grant date, the fair value of the option grant was approximately $ 24,000 .

The options vest over four years, with 4,000 options immediately vested.

Total compensation for a partial year of employment in 2024 was approximately $ 24,000 , consisting of salary.

The terms of employment, including compensation, were established by management.

NOTE 13 – MAJOR VENDORS

For the year ended December 29, 2024, approximately 30 % of our food and paper cost of goods sold is represented by product purchases from one vendor.

On December 29, 2024, the amount due to the major vendor totaled $ 35,686 .

In fiscal 2023, approximately 30 % of our purchases were from the same vendor.

In July 2024, we commenced purchasing the majority of BTND food items from a different primary vendor, which also accounted for approximately 21% of 2024 food purchases.

The amount due to this new vendor at December 31, 2024 was $ 257,268 .

We purchase products from a variety of vendors.

The food supply business is highly competitive, and the Company has several alternative suppliers available.

In July 2024, BTND changed its primary supplier relationship.

For the year ended December 28, 2025, approximately 38.7 % of our food and paper cost of goods sold was attributable to product purchases from a single vendor.

On December 28, 2025, the amount due to the major vendor totaled approximately $ 14,000 .

On December 29, 2024, the amount due to the former primary vendor was $ 257,268 .

NOTE 14 – 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.

Changes in and Disagreements with on Accounting and Financial Disclosure.

Village Bier Garten Lease Litigation

The Company’s acquisition of Village Bier Garten assets in 2023 included a 60 -month triple-net lease for approximately 3,000 square feet of restaurant space.

The lease provided for initial rent of approximately $ 8,200 per month, subject to annual escalation of 3 %.

On January 2, 2025, the Company ceased operations at the Village Bier Garten location in Cocoa, Florida and entered into an agreement to assign the lease to a third party.

Following the transfer of possession, the assignee operated a restaurant on the premises and made rent payments directly to the landlord for several months, which the landlord accepted.

In November 2025, the landlord issued a notice of default asserting nonpayment of rent beginning in August 2025.

The landlord subsequently filed a lawsuit against 1519BT, LLC and BT Brands, Inc., seeking recovery of unpaid rent and other amounts allegedly due under the lease.

The lease agreement was not formally terminated, however, under the terms of the lease the landlord took full possession of the premises through court proceedings and the landlord is currently seeking a replacement tenant.

The Company disputes the landlord’s claims and intends to defend the matter.

The Company believes that the landlord’s acceptance of rent payments from the assignee following the transfer of possession, as well as the landlord’s obligation under Florida law to mitigate damages following repossession of the premises, may affect the amount of any adjudicated damages, if any, that could ultimately be recoverable.

The Company also believes it has contractual rights against the assignee for any amounts that may be determined to be payable under the lease and has asserted a separate claim for approximately $ 200,000 in unpaid consulting fees.

As of December 28, 2025, the Company fully wrote down the remaining book value of the right-to-use asset of approximately $ 215,000 , representing approximating the remaining contractual lease payments associated with unpaid rent under the original lease agreement.

The recorded amount does not reflect any reduction for the landlord’s obligation to mitigate damages or the Company’s potential recovery from the assignee.

The ultimate outcome of the matter will be determined through litigation or negotiated settlement and may differ from the amount recorded.

Management will continue to evaluate the matter and adjust the recorded liability as additional information becomes available.

Other Matters

In the ordinary course of business, the Company may be subject to claims, legal proceedings, and regulatory matters arising from its operations, including employment practices, contractual disputes, personal injury claims, food safety matters, and other matters typical of the restaurant industry.

As of December 28, 2025, the Company was not a party to any material pending legal or regulatory proceedings other than the lease-related matter described above.

The outcome of any such matters is inherently uncertain.

The Company accounts for loss contingencies in accordance with ASC 450, Contingencies.

A liability is recorded when it is both probable that a loss has been incurred and the amount can be reasonably estimated.

If a loss is reasonably possible or cannot be reasonably estimated, the Company provides disclosure but does not record an accrual.

NOTE 15 – SUBSEQUENT EVENT

Bagger Dave’s Burger Tavern, Inc.

During the first quarter 2026, Bagger Dave’s Burger Tavern, Inc.

(“BDVB”), an unconsolidated equity method investee of the Company, completed the sale of its former Chesterfield, Michigan, leasehold interest for aggregate consideration of approximately $ 400,000 , consisting of cash and promissory notes.

BDVB expects to recognize a gain on the transaction in the first quarter of fiscal 2026.

This transaction did not affect the carrying value of the Company’s investment in BDVB as of December 28, 2025, and has not resulted in the recognition of any equity income by the Company.

Changes in and Disagreements with Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data