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Item 9A. Controls and Procedures

2021-03-11 compared with 2020-04-15 · 67 added, 59 removed, 261 unchanged (33% of the section changed)

1 unchanged sentence

(1) Evaluation of Disclosure Controls and Procedures

As of December 29, 2019, our management, with the participation of our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act.

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 29, 2019, our disclosure controls and procedures were effective at a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations and forms of the SEC, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosure.

We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Disclosure controls are also designed with the objective of ensuring that this information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of January 3, 2020, our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) promulgated under the Exchange Act.

Based upon that evaluation and the material weakness in our internal control over financial reporting discussed below, our Chief Executive Officer and Chief Financial Officer concluded that, as of January 3, 2021, our disclosure controls and procedures were not effective at a reasonable assurance level in ensuring that material information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules, regulations and forms of the SEC, including ensuring that such material information is accumulated by and communicated to our management, including our Chief Executive Officer, Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(2) Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f).

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S.

GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of January 3, 2021.

As of January 3.

2021, management has not completed an effective assessment of the Company’s internal controls over financial reporting based on the 2013 Committee of Sponsoring Organizations (COSO) framework.

Management has concluded that, during the period covered by this report, our internal controls and procedures were not effective to detect the inappropriate application of U.S.

Management identified the following material weaknesses set forth below in our internal control over financial reporting.

We lack the necessary corporate accounting resources to maintain adequate segregation of duties.

We did not perform an effective risk assessment or monitor internal controls over financial reporting.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only the management’s report in this annual report.

A material weakness, as defined in Exchange Act Rule 12b-2, is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of this assessment, management concluded that we did not design and maintain effective controls over the completeness and accuracy of the accounting for, and disclosure of, the income tax effects of acquired assets.

Specifically, we did not design appropriate controls to identify and reconcile deferred income taxes associated with the accounting for acquired assets and the related tax provision.

This material weakness resulted in material errors in connection with the accounting for our Share Exchange in 2018 and the calculation of Goodwill that were corrected through a revision of the consolidated financial statements as of and for the years ended December 29, 2019.

We evaluated the revision in accordance with Accounting Standards Codification (ASC) 250, Accounting Changes and Error Corrections and evaluated the materiality of the revision on prior periods’ financial statements in accordance with the Securities and Exchange Commission Staff Accounting Bulletin No.

99, Materiality.

We concluded that the revision was not material to any prior annual or interim period and therefore, amendments of previously filed reports are not required.

In accordance with ASC 250, we have corrected the error in all prior periods presented by revising the consolidated financial statements appearing herein.

As a result of the material weakness in internal control over financial reporting described above, management has concluded that we did not maintain effective internal control over financial reporting as of January 3, 2021.

Management is in the process of developing and implementing a series of accounting systems and procedure changes and internal controls intended to provide adequate controls over financial reporting.

(3) Changes in Internal Control over Financial Reporting

During the fiscal year ended December 29, 2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management Report on Internal Control over Financial Reporting

This annual report does not include a report of management’s assessment regarding internal control over financial reporting due to a transition period established by rules of the SEC for newly public companies.

Except as described above, there has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934 that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

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During part of 2015, Mr.

Copperud was the principal executive officer of Pretoria Resources Two, Inc., d/b/a It’s Burger Time Restaurant Group, Inc., i.e.

Pretoria, while a merger between BTND and Pretoria was briefly in effect.

Copperud was the principal executive officer of Pretoria Resources Two, Inc., d/b/a It’s Burger Time Restaurant Group, Inc., i.e., Pretoria, while a merger between BTND and Pretoria was briefly in effect.

From 1992 to 2013, Mr.

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Brimmer has also served as a member of the Board of Directors of Next Gen Ice, Inc.

since November 2, 2019 and is currently serving as Chief Financial Officer of Next Gen Ice on a part-time contract basis.

since November 2, 2019 and is currently serving as Chief Financial Officer of Next Gen Ice on a contract basis.

Brimmer has a wide range of experience including several early stage and rapidly growing businesses, serving at various times as President, Chief Executive Officer, and a director of several public and private companies.

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and its subsidiary HDI Plastics, Inc.

He has served on the board of HDI since 1998 and has been CEO since September 2012.

He has served on the board of HDI 1998 until April 2020 and was CEO from September 2012 until April 2020.

He is also CEO of privately held Brimmer Company, LLC.

The operations of Brimmer Company, LLC include Stencor Company, LLC.

a Jacksonville, Texas, based injection molding and contract manufacturing business.

He also has served as CEO of STEN Corporation, a, diversified business since October 2003.

He also has served as CEO of STEN Corporation, a, diversified business (currently inactive) since October 2003.

Brimmer was a Director of Landry’s Restaurants from June of 2004 until April of 2017 and served on the Audit and Compliance Committee of its Golden Nugget – New Jersey Casino.

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Copperud or Brimmer that prevent them from providing similar services to other companies in our industry, which could potentially give rise to a conflict of interest if they chose to offer their services to a competitor.

However, under Delaware law, as directors, Messrs.

However, under Wyoming law, as directors, Messrs.

Copperud, Brimmer and Zinnecker will owe a duty of loyalty to our stockholders, which places limits on their ability to enter into transactions that conflict with the interests of our stockholders.

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Our business and affairs are managed under the direction of our board of directors, which currently consists of three members.

The members of our board of directors were elected in compliance with the provisions of our certificate of incorporation and bylaws.

The members of our board of directors were elected in compliance with the provisions of our articles of incorporation and bylaws.

None of our stockholders have any special rights regarding the election or designation of members of our board of directors.

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Limitation of Liability and Indemnification

Our certificate of incorporation provides that to the fullest extent permitted by the General Corporation Law, a director shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director.

Our articles of incorporation provide that to the fullest extent permitted by the Wyoming Business Corporation Act, a director shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director.

Our bylaws provide that we shall indemnify and hold harmless our directors and officers, to the fullest extent permitted by applicable law, except that we will not be required to indemnify or hold harmless any director or officer in connection with any proceeding initiated by such person unless the proceeding was authorized by our board of directors.

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Name and Principal Position

Option Awards

Qualified Deferred Compensation Earnings

Other Compensation ($)

Gary Copperud,

Chief Executive Officer (1)

Kenneth Brimmer, (2)

Chief Operating Officer

Non-Qualified Deferred Compensation

All other Compensation

Gary Copperud , Chief Executive Officer (1)

Brimmer , Chief Operating Officer (2)

During the year ended December 30, 2018, prior to the Share Exchange, BTND paid annual compensation of $150,000 to Mr.

Copperud, its managing member, who currently serves as our Chief Executive Officer.

Effective in December 2019, the Company contracted with Brimmer Company, LLC for Mr.

Brimmer’s services as Chief Operating Officer and Chief Financial officer for a fee of $4,500 per month.

Effective in December 2019, the Company agreed with Brimmer Company, LLC to a fee for Mr.

Brimmer’s services as Chairman, Director and Chief Operating Officer and Chief Financial officer for a fee of $4,500 per month.

Effective in January 2021 this amount has been increased to $5,500 per month.

Director Compensation

We have not paid any compensation to our directors since the January 1, 2018.

We have not paid any compensation to our directors since December 30, 2019.

Officer Compensation

During the year ended December 31, 2018, prior to the Share Exchange, the Company did not pay compensation to any officer.

During 2019, we paid to Mr.

Copperud salary of $150,000 for 2018 which was pro-rated commencing upon the closing of the Share Exchange for serving as the Chief Executive Officer and will receive the same salary for 2020.

Effective in December 2019, the Company contracted with Brimmer Company, LLC for Mr.

Brimmer’s services as Chief Operating Officer and Chief Financial officer for a fee of $4,500 per month.

The Company is not party to employment agreements with any of its officers.

During fiscal 2020, we paid to Mr.

Copperud salary of $150,000 for serving as the Chief Executive Officer and he will receive the same salary for 2021.

Effective in December 2019, the Company agreed with Brimmer Company, LLC for Mr.

Brimmer’s services as Chief Operating Officer and Chief Financial officer for a fee of $4,500 per month and this amount has been increased to $5,500 per month for 2021.

Except as described above, the Company is not party to any agreements with of its officers.

Compensation Plans

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Certain Relationships and Related Transactions, and Director Independence.

Below we describe transactions and any series of related transactions to which we were a party, or may be a party, and which we have entered into since January 1, 2017, or is currently proposed, in which the amounts involved exceeds or will exceed the lesser of $120,00 or 1% of the average of our total assets as of the end of the last two completed fiscal years and any of our directors, executive officers or holders of more than five percent of our capital stock or an affiliate or immediate family member or such persons , had or will have a direct or indirect material interest.

In July 2017, Greater Des Moines Ice Rink, LLC., an affiliate of the Company by virtue of common ownership, loaned our wholly owned subsidiary, BTND, LLC, the sum of $75,000.

The amount was evidenced by a promissory note which provided for interest at the rate of 8% per year and which was paid in December 2018.

Greater Des Moines Ice Rink is controlled by persons who were members of BTND at the time the advances, which such person are now stockholders in the Company.

Below we describe transactions and any series of related transactions to which we were a party, or may be a party, and which we have entered into since December 31, 2018, or is currently proposed, in which the amounts involved exceeds or will exceed the lesser of $120,000 or 1% of the average of our total assets as of the end of the last two completed fiscal years and any of our directors, executive officers or holders of more than five percent of our capital stock or an affiliate or immediate family member or such persons , had or will have a direct or indirect material interest.

During fiscal 2017 and 2018, BTND Trading, LLC., an affiliate of the Company by virtue of common ownership, loaned the Company funds for working capital.

As of December 29, 2019, all amounts due by the Company to BTND Trading are evidenced by a promissory note in the original principal amount of $225,000 dated June 30, 2019 which bears interest at the rate of 8% per year.

On August 1, 2019, the Company commenced making monthly payments of $5,000 under the note which matures on June 1, 2021 at which time the Company will make a balloon payment of approximately $143,339.

At December 29, 2019, $207,265 was the amount due for the BTND Trading Note.

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

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

Gary Copperud has personally guaranteed each of the promissory notes evidencing loans on the real properties owned by the Company.

The Company pays the salary and benefits of the Company controller based in Fargo, North Dakota and the Company pays monthly rent for the office space of $500 per month.

From time-to-time, the Company’s controller provides limited bookkeeping and administrative assistance for entities that are controlled by shareholders of the Company.

The Company has paid the salary and benefits of the Company controller based in Fargo, North Dakota and the Company pays monthly rent for the office space of $500 per month.

From time-to-time, the Company’s controller has provided limited bookkeeping and administrative assistance for entities that are controlled by shareholders of the Company.

These are minimal services for which the Company has not been compensated.

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Copperud controls in excess of 50% of the outstanding stock of NGI and serves Chairman of its Board of Directors.

Originally, the NGI Notes were either (i) payable on March 2, 2020 with interest accrued at 14% per year, or (ii) convertible, at the option of the Company, into shares of the series of NGI preferred stock sold to purchasers in a transaction or series of related transactions resulting in aggregate gross proceeds to NGI of at least $1,000,000, which is referred to in the agreement as a qualified financing, at a price per share equal to 75% of the price paid by such purchasers.

In the event that the Company did not convert the NGI Notes into securities of NGI by reason of its completion of a Qualified Financing by the maturity date of the NGI Notes and elected to receive repayment of the NGI Note in cash, NGI was obligated to issue to the Company a Class A warrant entitling the Company to purchase a number of shares of NGI common stock calculated by dividing the total amount of the loan by $0.4412, or 405,712 shares of NGI common stock, at a price of $0.4412 per share at any time through August 3, 2022.

The shares of NGI common stock issuable to the Company either (i) upon the conversion of the NGI preferred stock it would have received upon conversion of the principal amount of the NGI Notes or (ii) upon the exercise of the Class A warrants are subject to registration rights equivalent to the registration rights that NGI grants to purchasers in a Qualified Financing, if any.

NGI did not close a Qualified Financing by March 2, 2020, the maturity date of the NGI Notes, and the Company notified NGI that it elected to receive cash in satisfaction of the NGI Notes, which triggered NGI’s obligation to issue the Class A warrants to the Company.

On March 3, 2020, the Company and NGI entered into a Loan Modification and Extension Agreement pursuant to which the Company agreed to extend the maturity date of the NGI Notes to August 31, 2020.

The NGI Notes were repaid in full including accrued interest in August 2020 following a March 3, 2020, Loan Modification and Extension Agreement pursuant to which the Company agreed to extend the maturity date of the NGI Notes to August 31, 2020.

In consideration of the extension of the term of the NGI Notes:

1 unchanged sentence

Copperud is one, agreed to transfer to the Company 179,000 shares of NGI common stock.

Director Independence

Our securities are not listed on a national securities exchange or on any inter-dealer quotation system, which has a requirement that a majority of directors be independent.

We evaluate independence by the standards for director independence set forth in the NASDAQ Marketplace Rules and the rules and regulations of the SEC.

Under such rules, our board of directors has determined that of the members of our board of directors are independent directors.

In making such independence determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

In considering the independence of the directors, our board of directors considered the association of our directors with the holders of more than 5% of our common stock.

We expect to transition the composition and functioning of our board of directors and each of our committees to comply with all applicable requirements of the NASDAQ Stock Market and the rules and regulations of the SEC.

There are no family relationships among any of our directors or executive officers.

Principal Accounting Fees and Services.

The following is a summary of the fees billed to the Company by Boulay, PLLP, the Company’s independent registered public accounting firm, for professional services rendered for the fiscal years ended December 29, 2019 and December 30, 2018:

Audit Fees (1)

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All Other Fees

Audit Fees consist of aggregate fees billed for professional services rendered for the audit of the Company’s annual consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports or services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements during the fiscal years ended December 29, 2019 and December 30, 2018, respectively.

Audit Fees consist of aggregate fees billed for professional services rendered for the audit of the Company’s annual consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports or services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements during the fiscal years ended January 3, 2021 and December 29, 2019, respectively.

The entire Board of Directors of the Company is responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm and approves in advance any services to be performed by the independent registered public accounting firm, whether audit-related or not.

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No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or notes thereto.

_____________

Form 10–K Summary.

1 unchanged sentence

BT BRANDS, INC.

April 14, 2020

March 11, 2021

/s/ Gary Copperud

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Chief Executive Officer and Director

April 14, 2020

March 11, 2021

(Principal Executive Officer)

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Chief Operating Officer, Chief Financial Officer,

April 14, 2020

March 11, 2021

(Principal Financial Officer and Principal Accounting Officer and Chairman)

/s/ Jeffrey A.

April 14, 2020

March 11, 2021

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 9A. Controls and Procedures