BTBD 10-Q
BT Brands, Inc. (BTBD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended:
or
For the transition period from _______________ to _______________
Commission File Number:
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
10501 Wayzata Blvd South, Suite 102, Minnetonka MN 55305
(Former name former address and former fiscal year if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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| The | ||
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| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
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| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
At August 17, 2026, there were
CAUTIONARY STATEMENT REGARDING RISKS
AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS
Forward-Looking Information
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and may be identified by words such as “anticipate,” “believe,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” “estimate,” “continue,” and similar expressions. These statements relate to, among other things, our business strategy, growth plans, operating and financial performance, liquidity and capital resources, capital expenditures, acquisitions, and other strategic transactions.
Forward-looking statements are based on our current expectations, estimates, assumptions, and beliefs as of the date of this Quarterly Report and are subject to significant risks, uncertainties, and other factors, many of which are beyond our control, that could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, but are not limited to:
| · | risks associated with any possible merger or acquisition; |
| · | we may seek to enter into a reverse merger, business combination, or other strategic transaction, which could result in substantial dilution to our existing stockholders and other risks. |
| · | risks associated with operating in a business outside the restaurant industry; |
| · | our ability to execute our growth strategy, including identifying and integrating acquisitions; |
| · | labor shortages, wage inflation, and our ability to attract and retain employees; |
| · | increases in food, commodity, and energy costs and supply chain disruptions; |
| · | changes in consumer preferences and discretionary spending; |
| · | competition in the restaurant industry and broader economic conditions; |
| · | cybersecurity risks and potential disruptions to our information systems; and |
| · | other risks described in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025, and in other filings with the Securities and Exchange Commission. |
We caution readers not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or otherwise.
We caution you that the key factors referenced above may not contain all of the factors that are important to you. We cannot guarantee that expected results or developments will occur, or that, if they do, they will have the anticipated impact on us or our operations. The forward-looking statements included in this report are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as required by law. If we update one or more forward-looking statements, no inference should be made that we will make additional updates regarding those or other forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.
From time to time, oral or written forward-looking statements are also included in our reports on Forms 10-K, 10-Q and 8-K, our Schedule 14A, our press releases and other materials released to the public. Although we believe that at the time made, the expectations reflected in all of these forward-looking statements are and will be reasonable, any or all of the forward-looking statements may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this Quarterly Report on Form 10-Q, certain of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Quarterly Report on Form 10-Q or other public communications that we might make as a representation that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent periodic reports filed with the Securities and Exchange Commission.
| 2 |
TABLE OF CONTENTS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. |
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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
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| Table of Contents |
PART I FINANCIAL INFORMATION
BT BRANDS, INC. AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS |
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| June 28, 2026 |
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| December 28, 2025 |
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ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
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Marketable securities |
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Receivables |
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Inventory |
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Inventory - bottled water held for resale |
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Prepaid expenses and other current assets |
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Deferred transaction costs |
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Assets held for sale |
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Total current assets |
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PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET |
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OPERATING LEASES RIGHT-OF-USE ASSETS |
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NOTE RECEIVABLE FROM UNCONSOLIDATED AFFILIATE, NET |
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GOODWILL |
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INTANGIBLE ASSETS, NET |
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OTHER ASSETS, NET |
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Total assets |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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CURRENT LIABILITIES |
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Accounts payable |
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Current maturities of long-term debt |
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Current operating lease obligations |
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Accrued expenses |
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Total current liabilities |
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LONG-TERM DEBT, LESS CURRENT PORTION |
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NONCURRENT OPERATING LEASE OBLIGATIONS |
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Total liabilities |
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COMMITMENTS AND CONTINGENCIES |
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SHAREHOLDERS' EQUITY |
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Preferred stock, $.001 par value, |
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Common stock, $.002 par value, |
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Less cost of |
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Additional paid-in capital |
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Accumulated deficit |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
| $ |
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| $ |
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See Notes to Condensed Consolidated Financial Statements
| 4 |
| Table of Contents |
BT BRANDS, INC. AND SUBSIDIARIES | ||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|
| 26 Weeks Ended |
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| 26 Weeks Ended |
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| 13 Weeks Ended |
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| 13 Weeks Ended |
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| June 28, 2026 |
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| June 29, 2025 |
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| June 28, 2026 |
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| June 29, 2025 |
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SALES |
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COSTS AND EXPENSES |
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Restaurant operating expenses |
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Food and paper costs |
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Labor costs |
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Occupancy costs |
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Other operating expenses |
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Depreciation and amortization expenses |
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General and administrative expenses |
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Total costs and expenses |
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Income (loss) from operations |
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UNREALIZED GAIN ON MARKETABLE SECURITIES |
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REALIZED INVESTMENT GAIN (LOSS) |
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INTEREST AND DIVIDEND INCOME |
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INTEREST EXPENSE |
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OTHER INCOME (EXPENSE) |
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EQUITY IN NET INCOME (LOSS) OF AFFILIATE |
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INCOME (LOSS) BEFORE TAXES |
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INCOME TAX (EXPENSE) BENEFIT |
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NET INCOME (LOSS) |
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NET INCOME (LOSS) PER COMMON SHARE - Basic |
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NET INCOME (LOSS) PER COMMON SHARE - Diluted |
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WEIGHTED AVERAGE SHARES USED IN COMPUTING |
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PER COMMON SHARE AMOUNTS - Basic |
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PER COMMON SHARE AMOUNTS - Diluted |
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See Notes to Condensed Consolidated Financial Statements
| 5 |
| Table of Contents |
BT BRANDS, INC. AND SUBSIDIARIES | |||||||||||||
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY |
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| Common Stock |
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| Additional Paid-in |
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| Accumulated |
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For the 26-week periods: |
| Shares |
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| Amount |
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| Capital |
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| Treasury |
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| Total |
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Balances at December 28, 2025 |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
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Stock-based compensation |
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| - |
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Exercise of stock options |
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Net loss |
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Balances at June 28, 2026 |
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Balances at December 29, 2024 |
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Stock-based compensation |
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Net loss |
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Balances at June 29, 2025 |
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| Common Stock |
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For the 13-week periods: |
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| Total |
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Balances at March 29, 2026 |
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Stock-based compensation |
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Exercise of stock options |
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Net income |
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Balances at June 28, 2026 |
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Balances at March 30, 2025 |
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Stock-based compensation |
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Net income |
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Balances at June 29, 2025 |
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| $ |
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| $ | ( | ) |
| $ | ( | ) |
| $ |
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See Notes to Condensed Consolidated Financial Statements
| 6 |
| Table of Contents |
BT BRANDS, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| 26 Weeks ended, |
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| June 28, 2026 |
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| June 29, 2025 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
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Adjustments to reconcile net loss to net cash provided by operating activities- |
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Depreciation and amortization |
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Amortization of debt issuance costs included in interest expense |
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Provision for uncollectible loans made to unconsolidated affiliate |
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Stock-based compensation |
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Unrealized gain on marketable securities |
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Realized investment (gain) loss |
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Loss on equity method investment |
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Write down of inventory - bottled water held for sale |
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Non-cash operating lease expense |
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Changes in operating assets and liabilities |
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Receivables |
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Inventory |
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Prepaid expenses and other current assets |
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Other assets |
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Accounts payable |
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Accrued expenses |
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Net cash provided by operating activities |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Purchase of property and equipment |
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Proceeds from sale of equipment |
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Loans to unconsolidated affiliates |
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Purchase of marketable securities |
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Proceeds from the sale of marketable securities |
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Purchase of inventory - bottled water held for resale |
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Other assets |
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Net cash provided by (used in) investing activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from stock option exercises |
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Principal payments on long-term debt |
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Payment of deferred transaction costs |
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Net cash used in financing activities |
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CHANGE IN CASH AND CASH EQUIVALENTS |
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
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CASH AND CASH EQUIVALENTS, END OF PERIOD |
| $ |
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| $ |
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SUPPLEMENTAL DISCLOSURES |
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Cash paid for interest |
| $ |
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| $ |
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See Notes to Condensed Consolidated Financial Statements
| 7 |
| Table of Contents |
BT BRANDS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements include the accounts of BT Brands, Inc. and its subsidiaries (the “Company,” “we,” “our,” “us,” “BT Brands,” or “BT”) and have been prepared in accordance with the U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) requirements for Form 10-Q and Article 10 of Regulation S-X. All intercompany accounts and transactions have been eliminated in consolidation. The financial statements have been prepared on a basis consistent in all material respects with the accounting policies for the fiscal year ended December 28, 2025. In our opinion, all regular and recurring adjustments necessary for a fair presentation of our financial position and results of operations have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.
The accompanying Condensed Consolidated Financial Statements as of and for the quarter ended June 28, 2026, do not include all the disclosures required by GAAP. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of December 28, 2025, and the related notes included in our Form 10-K for the fiscal year ended December 28, 2025.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material.
Overview of Our Company
As of June 28, 2026, we owned and operated nine restaurants across multiple states in the Midwest, Massachusetts, and Florida, and held a minority ownership interest in an unconsolidated affiliate that operated an additional five restaurants, for a total of fourteen operating restaurant locations. BT Brands operating restaurants comprise the following:
| ● | Six Burger Time fast-food restaurants are located in the North Central region of the United States (collectively, “BTND”). Sioux Falls, South Dakota, Burger Time closed in 2024, a location in Ham Lake, Minnesota, closed at the end of 2024, and a location in Minot, North Dakota, closed in July 2025. |
| ● | Keegan’s Seafood Grille is a casual seafood restaurant located in Indian Rocks Beach, Florida; |
| ● | Pie In the Sky Coffee, a coffee shop and bakery located in Woods Hole, Massachusetts, and |
| ● | Schnitzel Haus is a German-themed fine dining restaurant and bar in Hobe Sound, Florida (“Schnitzel”). |
In addition, we own a 40.7% interest in Bagger Dave’s Burger Tavern, Inc. (“BDVB”), an unconsolidated affiliate operating five casual-dining restaurants in Michigan, Ohio, and Indiana. We do not own a controlling interest in BDVB, but we exercise significant influence over its operating and financial policies; we account for BDVB under the equity method.
Village Bier Garten, a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida, ceased operations in January 2025.
We operate our businesses under a centralized management structure. By leveraging our shared management services platform, we aim to drive company-wide efficiencies, including reducing corporate overhead across existing and acquired operations.
Historically, our objective has been to create long-term shareholder value in the food service industry. Our core strategy has focused on acquiring restaurant properties and operating businesses at attractive valuation multiples, enabling diversification across restaurant concepts and geographic markets while reducing reliance on any single brand or location. Additional elements of our strategy have included driving same-store sales growth, improving cost efficiency, and enhancing brand awareness.
Segment Reporting
The Company has determined that it operates as a single reportable segment based on the nature of its operations and the regulatory environment under which it operates. The Company’s Chief Operating Decision Maker (“CODM”) is its Chief Executive Officer. The CODM evaluates performance and allocates resources based primarily on the net income and total assets, which are consistent with the amounts reported in the consolidated statements of operations and consolidated balance sheets.
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Termination of 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”). The proposed transaction contemplated that Aero would merge with and into Merger Sub, with Aero continuing as the surviving corporation, and that the combined company would focus primarily on Aero’s unmanned aerial vehicle manufacturing and Drones-as-a-Service operations.
The Merger Agreement also contemplated, prior to closing, a spin-off of the Company’s existing restaurant operations and related assets and liabilities into a newly formed subsidiary, BT Group, Inc. (“BT Group”), to be distributed to pre-merger holders of BT Brands common stock. The spin-off was not expected to qualify as a tax-free transaction for U.S. federal income tax purposes.
On May 1, 2026, the Company delivered written notice to Aero terminating the Merger Agreement pursuant to Section 7.1(b) thereof. The Company exercised its termination right because the registration statement relating to the proposed transaction had not been declared effective by the Securities and Exchange Commission, and the closing had not occurred by April 30, 2026, the applicable deadline and Aero did not request an extension of time in which to achieve effectiveness of the registration statement. Termination was effective upon delivery of the notice. Upon termination, the Merger Agreement ceased to be of further force or effect, other than certain customary surviving provisions, and all transactions contemplated thereby were abandoned. The Company does not believe any termination fee or material penalty is payable. Under Section 5.8 of the Merger Agreement, each party is responsible for its own transaction expenses. On May 4, 2026, counsel for Aero delivered a letter asserting that the Company’s termination was invalid. The Company disputes Aero’s assertions. The Company has filed a Current Report on Form 8-K with the Securities and Exchange Commission reporting the termination.
For additional information regarding the proposed Merger and subsequent termination, see our Reports on Form 8-K filed on May 7, 2026, and on December 1, 2025, available at www.sec.gov.
Fiscal Year Periods
BT Brands' fiscal year is 52/53 weeks, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods comprising a 52-week year. Fiscal 2025 was 52 weeks ended December 28, 2025, and Fiscal 2026 is 53 weeks ending January 3, 2027. References in this report for periods refer to the 26-week and 13-week periods in the respective fiscal periods.
Cash and Cash Equivalents
Cash and cash equivalents may include money market mutual funds and United States Treasury Bills with original maturities of three months or less at the time of purchase. Our bank deposits often exceed the amount insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash deposits in brokerage accounts, including money market funds, which exceed the amount insured. We do not believe there is a significant risk related to cash.
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
The Company follows ASC 820, Fair Value Measurement, which establishes a three-level hierarchy for measuring fair value based on the observability of inputs used in valuation techniques. The three levels are defined as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities.
Level 2 — Observable inputs other than quoted prices, such as quoted prices for similar assets or liabilities in active markets, or inputs that are observable either directly or indirectly.
Level 3 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the asset or liability.
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The level in the fair value hierarchy within which a fair value 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 and cash equivalents, receivables, accounts payable, and other current working capital items approximate fair value due to their short-term nature.
Marketable Securities
The summary of fair value measurements of marketable securities as of the respective dates is as follows:
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| June 28, 2026 |
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| December 28, 2025 |
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| Fair Value |
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| Fair Value |
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| Carrying Amount |
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| Level 1 |
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| Carrying Amount |
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| Level 1 |
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Common stocks |
| $ |
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| $ |
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| $ |
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| $ |
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Listed limited partnership units |
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Exchange-traded funds |
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Debt securities |
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Total |
| $ |
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| $ |
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| $ |
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| $ |
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We hold debt securities classified as trading securities. Trading debt securities are recorded at quoted market price (fair value) on the consolidated balance sheets, with unrealized holding gains or losses recognized on the statement of operations.
Receivables
Receivables consist of estimated rebates due from vendors.
Inventory
Inventory consists of food, beverages, and supplies and is stated at a lower of cost (first-in, first-out method) or net realizable value.
Deferred Transaction Costs
Deferred transaction costs consist primarily of legal, accounting, and other direct costs incurred in connection with the Company’s At-the-Market (“ATM”) equity offering program. These costs are capitalized as incurred and will be recorded as a reduction of additional paid-in capital upon the issuance of shares under the ATM program. The deferred transaction costs are periodically evaluated for recoverability based on the Company’s expectation of completing future equity issuances. If it is determined that the related equity offering is no longer probable, the deferred costs will be expensed in the period in which such a determination is made.
Costs incurred in connection with the now-terminated proposed business combination with Aero Velocity Inc., including legal, advisory, and other transaction-related expenses, were recorded as expenses as incurred and included in general and administrative expenses in the accompanying condensed consolidated statements of operations.
As of June 28, 2026, and December 28, 2025, deferred transaction costs totaled $
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over their estimated useful lives, which range from three to thirty years.
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We review long-lived assets to determine whether their carrying values are recoverable based on estimated cash flows. Assets are evaluated at the lowest level at which cash flows can be identified, the restaurant level. To determine future cash flow, we estimate each restaurant’s future operating results. If such assets are considered impaired, the impairment is the amount by which the assets’ carrying value exceeds the assets’ fair value.
Goodwill and Intangible Assets and Other Assets
Goodwill is not amortized and is tested for impairment at least annually. The cost of other intangible assets is amortized over their expected useful lives.
Asset Held for Sale
In 2025, we closed a Burger Time store in Ham Lake, Minnesota. The Ham Lake property is currently offered for sale; management expects to sell the property for an amount in excess of its current book value.
Income Taxes
The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 – Income Taxes (“ASC 740”). ASC 740 requires the use of the asset and liability approach in accounting for income taxes. Deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities. They are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. If necessary, we provide a valuation allowance to reduce deferred tax assets to their estimated realizable value. The deferred tax assets are reviewed periodically for recoverability, and valuation allowances are adjusted as required.
As of June 28, 2026, we used a net combined federal and state rate of approximately
The Company has no accrued interest or penalties relating to income tax obligations. There are currently no federal or state examinations in progress. The Company has not had any federal or state tax examinations since its inception. All periods since inception remain open for inspection.
Per Common Share Amounts
Net income or loss per common share is computed by dividing net income or loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income or loss per share is calculated by dividing net income by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Common stock equivalents are excluded from the computation of diluted per-share amounts if their effect is anti-dilutive. There were no dilutive shares for the periods ending in 2026 and 2025.
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NOTE 2 – INTANGIBLE ASSETS
At June 28, 2026, and December 28, 2025, the value of acquired intangible assets subject to amortization consisted of the following:
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| Estimated |
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| Net |
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| Life |
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| Original |
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| Accumulated |
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| Carrying |
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June 28, 2026 |
| (Years) |
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| Cost |
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| Amortization |
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| Value |
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Covenants not to compete |
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| $ |
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| $ | ( | ) |
| $ |
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Tradenames |
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| ( | ) |
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| $ |
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| $ | ( | ) |
| $ |
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| Estimated |
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| Net |
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| Life |
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| Original |
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| Accumulated |
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| Carrying |
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December 28, 2025 |
| (Years) |
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| Cost |
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| Amortization |
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| Value |
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Covenants not to compete |
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| $ |
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| $ | ( | ) |
| $ |
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Tradenames |
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| ( | ) |
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| $ |
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| $ | ( | ) |
| $ |
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The total remaining amortization of intangible assets, including the covenants not to compete, will approximate $
The total amortization expense was $
NOTE 3 – PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
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| June 28, 2026 |
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| December 28, 2025 |
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Land |
| $ |
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| $ |
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Equipment |
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Building and leasehold improvements |
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Total property and equipment |
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Accumulated depreciation |
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Net |
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Less - property held for sale |
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| ( | ) |
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| ( | ) |
Net property and equipment |
| $ |
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| $ |
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Depreciation expense was $
NOTE 4 – ACCRUED EXPENSES
Accrued expenses consisted of the following at:
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| June 28, 2026 |
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| December 28, 2025 |
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Accrued payroll and payroll taxes |
| $ |
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| $ |
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Accrued sales taxes payable |
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Accrued real estate taxes |
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Accrued gift card liability |
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Accrued vacation pay |
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Other accrued expenses |
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| $ |
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| $ |
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NOTE 5 – LONG-TERM DEBT
Our long-term debt is as follows:
|
| June 28, 2026 |
|
| December 28, 2025 |
| ||
Three notes payable to a bank dated June 28, 2021, due in monthly installments totaling $22,213, including principal and interest at a fixed rate of 3.45% through June 28, 2031. Beginning in July 2031, the interest rate will equal the greater of the “prime rate” plus .75%, or 3.45%. These notes mature on June 28, 2036. The notes are secured by mortgages covering seven owned properties, BT Brands and an officer of the Company, both of whom guarantee payment of the notes. |
| $ |
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| $ |
| ||
Less: unamortized debt issuance costs |
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| ( | ) |
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| ( | ) |
Less: current maturities |
|
| ( | ) |
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| ( | ) |
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| $ |
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| $ |
| ||
NOTE 6 – STOCK-BASED COMPENSATION
In 2019, we adopted the BT Brands, Inc. 2019 Incentive Plan (the “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. As of June 28, 2026,
In July 2025,
In April 2026, the Board amended vesting terms for certain Board members, an employee of the company who is deemed to be a related party, and an external consultant. The amended vesting terms were such that all outstanding stock options as of the date of this amendment became immediately vested and exercisable.
In July 2026, the Board approved the grant of
In 2024,
In 2023, outside of the plan,
At the date of grant, the Board of Directors determines the vesting provision in each agreement. Generally, stock options granted to employees and directors vest 20% upon grant and 20% each year for 4 years. Options expire ten years from the date of the grant.
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We utilize the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions:
| · | Stock price – Published trading market values of the Company’s common stock as of the grant date. |
| · | Exercise price – The stated exercise price of the stock option. |
| · | Expected life – The simplified method. |
| · | Expected dividend – The rate of dividends expected to be paid over the term of the stock option. |
| · | Volatility – Estimated volatility. |
| · | Risk-free interest rate – The daily United States Treasury yield curve rate corresponding to the expected life of the award. |
Information regarding our stock options is summarized below:
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| Weighted |
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| Weighted Average |
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| Aggregate |
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| Number |
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| Average |
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| Remaining Term |
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| Intrinsic |
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26-Week period ended June 28, 2026 |
| of Options |
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| Exercise Price |
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| (in Years) |
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| Value |
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Options outstanding at December 28, 2025 |
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| $ |
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Granted |
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Exercised |
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Cancelled, forfeited, or expired |
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Options outstanding at June 28, 2026 |
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| $ |
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Options exercisable at June 28, 2026 |
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| Weighted |
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| Number |
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| Average |
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| Remaining Term |
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| Intrinsic |
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26-Week period ended June 29, 2025 |
| of Options |
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| Exercise Price |
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| Value |
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Options outstanding at December 29, 2024 |
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Granted |
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Exercised |
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Cancelled, forfeited, or expired |
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Options outstanding at June 29, 2025 |
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| $ |
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Options exercisable at June 29, 2025 |
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| $ |
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| $ |
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On February 27, 2023, the Company finalized a Contingent Incentive Share Award with senior executives. The Contingent Incentive Share Award provides that so long as the Company’s publicly traded warrants are outstanding, senior management of the Company will be deemed to earn an aggregate award of
NOTE 7 – LEASES
In connection with the acquisition of Keegan’s, the Company agreed to a lease for approximately
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 $
Upon acquisition of the PIE assets, the Company leased approximately
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The PIE lease includes two remaining 5-year option periods extending to May 2041. The lease is accounted for as an operating lease. At lease commencement, the Company determined that it was 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 $
The operating lease liability related to the PIE lease as of June 28, 2026, was approximately $
In May 2024, in connection with the acquisition of Schnitzel Haus, the Company assumed the remaining
The Schnitzel Haus 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 $
Village Bier Garten Lease –
The Company’s acquisition of Village Bier Garten assets in 2023 included a
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. After possession was transferred, the assignee operated a restaurant on the premises and paid rent 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 later regained possession, barred the Company from accessing the premises, and initiated legal proceedings to recover amounts allegedly owed under the lease.
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 $
Given the outstanding litigation seeking acceleration of unpaid rent under the lease, as of June 28, 2026 and December 28, 2025, the Company has included a net lease liability of approximately $
The ultimate resolution of the matter is subject to ongoing litigation and may differ from the amounts recorded.
The following table presents future minimum lease payments under the Company’s operating leases as of June 28, 2026, including amounts related to the PIE lease, assuming exercise of the initial five-year renewal option. During the first quarter of 2026, the Company exercised the initial five-year renewal option.
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| Lease Payments |
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2026 remaining |
| $ |
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2027 |
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2028 |
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2029 |
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2030 |
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Thereafter |
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Total future minimum lease payments |
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Less: interest |
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| ( | ) |
Present value of lease obligation |
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| Table of Contents |
The weighted-average remaining lease term of the Company’s operating leases was approximately
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.
The total operating lease expenses for the second 13-week period in 2026 and 2025 were approximately $
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. The net proceeds from the offering were $
On June 6, 2024, we authorized a stock repurchase program, under which we may repurchase up to
Upon the announcement of a potential merger transaction, we suspended the 2024 Share Repurchase Program. Prior to suspending the 2024 Share Repurchase Program, we had not purchased any shares of common stock under the 2024 Share Repurchase Program during 2025.
Potential Sale and Issuance of Stock
On December 13, 2024, as amended on November 21, 2025, 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 $
On May 14, 2026, the Company terminated the Distribution Agreement, by and between the Company and Maxim. Under the terms of the Distribution Agreement, the Company could from time to time offer and sell shares of its common stock, par value $.002 per share, through or to Maxim, as sales agent or principal, in an at-the-market offering. The Company elected to terminate the Agreement in accordance with its terms, and no further shares will be offered or sold thereunder. The Company did not incur any termination penalties in connection with the termination of the Distribution Agreement and intends to sell shares in the future through its existing at-the-market offering program.
NOTE 9 – RELATED PARTY TRANSACTIONS
NGI Corporation
Equity Investment and Impairment
Prior to 2025, the Company held a minority equity investment in NGI Corporation (“NGI”) with an aggregate carrying value of $
| 16 |
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Loans, Foreclosure, and Inventory Acquisition
The Company previously provided loans to NGI and, in connection with those arrangements, obtained a senior secured interest in substantially all of NGI’s assets. During fiscal 2025, the Company advanced additional funds and funded certain costs related to aluminum water bottle inventory.
Effective December 26, 2025, the Company exercised its rights under the loan agreements and foreclosed on the collateral securing the loans. As a result, the Company obtained control of bottled water inventory, which is recorded within current assets as “Inventory – bottled water held for resale.”
The bottled water inventory is carried at the lower of cost or net realizable value. As of December 28, 2025, the Company recorded a write-down of approximately $
The Company is actively pursuing the sale of this inventory; however, the timing and amount of any proceeds are uncertain. Future adjustments to the carrying value may be required based on changes in estimated selling prices, costs to sell, or market conditions.
Related Party Considerations
Kenneth Brimmer, the Company’s former Chief Financial Officer, served as a member of NGI’s board of directors and as its Chief Financial Officer during the same time he served as the Company’s Chief Financial Officer. Accordingly, transactions with NGI are considered related party transactions.
Bagger Dave’s Burger Tavern, Inc.:
On June 2, 2022, the Company purchased
Bagger Dave’s operates five casual dining restaurant and bar locations in Michigan, Indiana, and Ohio. BDVB’s common stock is quoted on the OTC Pink market, and BDVB reports financial information under the Alternative Reporting Standard of OTC Markets Group, Inc. Such financial information is not required to be audited.
As of December 28, 2025, the carrying value of the Company’s investment in BDVB was $0. During fiscal 2025, the Company’s cumulative share of BDVB’s net losses exceeded the carrying value of its investment. Accordingly, the Company reduced the investment balance to zero and discontinued recognizing additional equity method losses, as the Company has not guaranteed any obligations of BDVB and had not previously committed to provide further financial support.
The Company advanced a total of approximately $
The Company will continue to recognize its share of BDVB’s earnings or losses only to the extent of its net investment balance, including any additional financial support provided. Any share of losses in excess of the Company’s investment balance will not be recognized unless the Company commits to further financial support or guarantees obligations of BDVB.
During the first quarter of fiscal 2026, BDVB sold its closed leasehold interest in Chesterfield, Michigan, for approximately $
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| Table of Contents |
The following tables present unaudited summary financial information of BDVB as of and for the periods indicated, as reported by BDVB:
|
| June 28, |
|
| December 28, |
| ||
Balance Sheet Information |
| 2026 |
|
| 2025 |
| ||
Total current assets |
| $ |
|
| $ |
| ||
Total non-current assets, net |
|
|
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| ||
Total assets |
| $ |
|
| $ |
| ||
|
|
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Current liabilities |
| $ |
|
| $ |
| ||
Total non-current liabilities |
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Total liabilities |
| $ |
|
| $ |
| ||
Stockholders' equity |
|
|
|
|
|
| ||
Total liabilities and stockholders' equity |
| $ |
|
| $ |
| ||
|
| 26 Weeks Ended |
|
| 26 Weeks Ended |
|
| 13 Weeks Ended |
|
| 13 Weeks Ended |
| ||||
|
| June 28, 2026 |
|
| June 29, 2025 |
|
| June 28, 2026 |
|
| June 29, 2025 |
| ||||
Revenue |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Depreciation and amortization |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Other costs and expenses |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Operating loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Gain on sale of assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) |
| $ |
|
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) | |
Gary Copperud, the Chief Executive Officer and a director of the Company also serves as the president and a director of Bagger Dave’s Burger Tavern, Inc. BT Brands owns approximately
NOTE 10 – CONTINGENCIES
The Company accounts for loss contingencies in accordance with ASC 450, Contingencies. A liability is recorded when it is probable that a loss has been incurred and the amount can be reasonably estimated. If a loss is reasonably possible but cannot be reasonably estimated, or if a loss is at least reasonably possible, the Company provides disclosure but does not record an accrual.
Village Bier Garten Lease Litigation
In 2023, the Company acquired assets of Village Bier Garten, including a
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 landlord subsequently took possession of the premises through court proceedings.
The Company disputes the landlord’s claims and intends to defend the matter vigorously. The Company believes that the landlord’s acceptance of rent payments from the assignee following the transfer of possession, combined with the landlord’s obligation under Florida law to mitigate damages following repossession, may substantially reduce any amounts ultimately recoverable. The Company also has asserted a separate claim against the assignee for approximately $
| 18 |
| Table of Contents |
As of December 28, 2025, the Company wrote off the remaining $
Aero Velocity Merger Termination
On September 2, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Aero Velocity Inc. (“Aero”). On May 1, 2026, the Company delivered written notice terminating the Merger Agreement pursuant to Section 7.1(b). The Company exercised its termination right because the registration statement relating to the proposed transaction had not been declared effective by the Securities and Exchange Commission, and the closing had not occurred by April 30, 2026, the applicable deadline under the Merger Agreement. The Company believes the termination was valid and effective in accordance with the terms of the Merger Agreement.
As of the date of this Quarterly Report, no formal legal proceedings have been initiated. The Company cannot predict whether Aero will commence litigation or the outcome of any such proceeding. In accordance with ASC 450, Contingencies, no accrual has been recorded related to this matter because the Company cannot conclude that a loss is both probable and reasonably estimable at this time. The Company will continue to monitor the matter and update its disclosures as appropriate.
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 June 28, 2026, the Company was not a party to any material pending legal or regulatory proceedings other than the Village Bier Garten lease litigation and the Aero Velocity dispute described above. The outcome of any such matter is inherently uncertain.
| 19 |
| Table of Contents |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition, results of operations, liquidity, and capital resources of BT Brands, Inc. and its wholly-owned subsidiaries (together, “BT Brands” “we,” “our,” or the “Company”) should be read in conjunction with the Company’s condensed consolidated financial statements and accompanying notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as with the audited consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 28, 2025.
Introduction
As of June 28, 2026, we owned and operated nine restaurants. In addition, we held a non-controlling 40.7% ownership interest in Bagger Dave’s Burger Tavern, Inc. (“BDVB”), an unconsolidated affiliate that operated five restaurant locations at year-end. BT Brands owned restaurant portfolio consisted of nine restaurant locations, comprised of
| · | Six Burger Time fast-food restaurants (“BTND”); |
| · | Keegan’s Seafood Grille in Indian Rocks Beach, Florida (“Keegan’s”); |
| · | Pie In the Sky Coffee and Bakery in Woods Hole, Massachusetts (“PIE”); |
| · | Schnitzel Haus in Hobe Sound, Florida (“Schnitzel”). |
We hold a 40.7% unconsolidated ownership interest in Bagger Dave’s Burger Tavern, Inc., which operates five restaurants.
Burger Time opened its first restaurant in Fargo, North Dakota, in 1987. Burger Time restaurants feature flame-broiled hamburgers, other quick-service menu items, and soft drinks. Burger Time’s operating principles emphasize value, a limited menu to support quality and speed of service, efficient single- and double-drive-thru designs supported by point-of-sale systems, and food prepared fresh to order at competitive prices.
We estimate that the average customer transaction at Burger Time restaurants did not change significantly in the first two quarters of 2026 compared to fiscal 2025, and based on our analysis, it is approximately $18. We continually evaluate menu pricing to manage gross margins amid fluctuating input costs. Our operating environment remains highly competitive, and numerous factors, including consumer demand, pricing sensitivity, competition, and broader economic conditions, influence sales trends.
In recent periods, we have also begun evaluating potential growth opportunities outside the restaurant industry as part of our broader effort to enhance shareholder value. While restaurants remain our primary operating focus, we believe that certain non-restaurant businesses with strong fundamentals and scalable operating models may complement our existing structure. These efforts remain exploratory and subject to ongoing evaluation.
We operate under a centralized management structure that ensures operational continuity across our restaurant portfolio and enables us to leverage shared services and administrative efficiencies.
Recent Events
Our acquisitions have diversified our operations across restaurant concepts and geographic regions, reducing our dependence on the Burger Time brand. In May 2024, we acquired the Schnitzel Haus restaurant. In 2022, we acquired three operating restaurants and purchased 40.7% ownership interest in BDVB, a non-controlled affiliate.
Due to underperformance, we closed the Village Bier Garten restaurant in early 2025 and entered into an agreement to assign the lease. In November 2025, the landlord of the Village Bier Garten premises in Cocoa, Florida, issued a notice of default alleging nonpayment of rent by the Assignee beginning in August 2025. Subsequent to the notice, the landlord filed a lawsuit against the Assignee of the lease, our 1519BT, LLC subsidiary and BT Brands, Inc., seeking recovery of unpaid rent and other amounts alleged to be due under the lease. We recorded an impairment charge of $215,000 in 2025 to write off the remaining right-of-use asset. We believe this matter is a contractual dispute that will be resolved through negotiation or litigation. The Company’s position is that the landlord’s prior acceptance of rent payments from the assignee following the transfer of possession constituted constructive consent to the lease assignment. See Note 10 to Consolidated Financial Statements.
In January 2025, our unconsolidated affiliate, Bagger Dave’s, closed its Chesterfield, Michigan, location. This location was sold during the first quarter of 2026. BDVB is currently exploring strategic alternatives, including the potential sale of all Bagger Dave’s restaurant locations.
| 20 |
| Table of Contents |
Material Trends and Uncertainties
Industry trends materially affect our business. These trends include ongoing challenges in attracting and retaining restaurant employees, rising wages, and increased labor competition across the retail and service industries. We also face rapidly evolving technological trends, including mobile ordering, delivery platforms, loyalty programs, and digital marketing, which larger competitors have adopted aggressively.
Food cost inflation moderated in 2025; however, we expect volatility to persist due to inflationary pressures and tariffs. Given the competitive nature of the restaurant industry, our ability to recover cost increases through menu pricing may be limited. Margin improvement efforts focus on operational efficiencies, equipment upgrades, and improved unit-level performance. If labor inflation, commodity volatility, or competitive pricing pressures persist, we believe they are reasonably likely to continue to impact restaurant-level margins and operating results.
Public health matters, inflationary pressures, supply chain disruptions, and labor availability continue to present uncertainty. We have implemented menu price increases and may continue to do so; however, such increases may not fully offset higher costs and could adversely affect consumer demand. The termination of the proposed Aero Velocity merger eliminates certain transaction-related uncertainties; however, the Company may continue to incur transaction-related costs and faces uncertainty related to the dispute asserted by Aero Velocity regarding the validity of the termination.
Results of Operations for the Thirteen Weeks Ended June 28, 2026, and the Thirteen Weeks Ended June 29, 2025
The following table sets forth our Condensed Statements of Operations and percentages of total sales for the thirteen-week fiscal periods. The percentages below may not reconcile because of rounding.
|
| 13 Weeks Ended |
|
| 13 Weeks Ended |
| ||||||||||
|
| June 28, 2026 |
|
| June 29, 2025 |
| ||||||||||
|
| Amount |
|
| % |
|
| Amount |
|
| % |
| ||||
SALES |
| $ | 3,550,865 |
|
|
| 100.0 | % |
| $ | 3,779,690 |
|
|
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper costs |
|
| 1,132,214 |
|
|
| 31.9 |
|
|
| 1,249,220 |
|
|
| 33.1 |
|
Labor costs |
|
| 1,256,264 |
|
|
| 35.4 |
|
|
| 1,374,603 |
|
|
| 36.4 |
|
Occupancy costs |
|
| 327,331 |
|
|
| 9.2 |
|
|
| 302,021 |
|
|
| 8.0 |
|
Other operating expenses |
|
| 232,601 |
|
|
| 6.6 |
|
|
| 253,185 |
|
|
| 6.7 |
|
Depreciation and amortization expenses |
|
| 151,575 |
|
|
| 4.3 |
|
|
| 144,725 |
|
|
| 3.8 |
|
General and administrative expenses |
|
| 333,675 |
|
|
| 9.4 |
|
|
| 531,057 |
|
|
| 14.1 |
|
Total costs and expenses |
|
| 3,433,660 |
|
|
| 96.7 |
|
|
| 3,854,811 |
|
|
| 102.0 |
|
Income (loss) from operations |
|
| 117,205 |
|
|
| 3.3 |
|
|
| (75,121 | ) |
|
| (2.0 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNREALIZED GAIN ON MARKETABLE SECURITIES |
|
| 829,976 |
|
|
| 23.4 |
|
|
| 82,128 |
|
|
| 2.2 |
|
REALIZED INVESTMENT GAIN (LOSS) |
|
| (64,649 | ) |
|
| (1.8 | ) |
|
| 79,026 |
|
|
| 2.1 |
|
INTEREST AND DIVIDEND INCOME |
|
| 18,233 |
|
|
| 0.5 |
|
|
| 40,367 |
|
|
| 1.1 |
|
INTEREST EXPENSE |
|
| (19,032 | ) |
|
| (0.5 | ) |
|
| (19,550 | ) |
|
| (0.5 | ) |
OTHER INCOME (EXPENSE) |
|
| (270,994 | ) |
|
| (7.6 | ) |
|
| 18,586 |
|
|
| 0.5 |
|
EQUITY IN NET LOSS OF AFFILIATE |
|
| (34,306 | ) |
|
| (1.0 | ) |
|
| (70,405 | ) |
|
| (1.9 | ) |
INCOME BEFORE TAXES |
|
| 576,433 |
|
|
| 16.2 |
|
|
| 55,031 |
|
|
| 1.5 |
|
INCOME TAX (EXPENSE) BENEFIT |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
NET INCOME |
| $ | 576,433 |
|
|
| 16.2 | % |
| $ | 55,031 |
|
|
| 1.5 | % |
Net income for the thirteen weeks ended June 28, 2026, was $576,433, compared to $55,031 for the prior year period. The increase in net income was primarily attributable to an unrealized gain of $829,976 on marketable securities during the current period, compared to an unrealized gain of $82,128 in the prior year period.
| 21 |
| Table of Contents |
Changes in the fair value of our marketable securities can result in significant unrealized gains or losses from period to period. Unrealized gains and losses are non-cash and do not affect cash flows unless and until the applicable securities are sold.
The Company also recorded a write down on its inventory of bottled water of approximately $174,000 in the 13-week period ended June 28, 2026.
Excluding the impact of investment gains and losses and the write down of the inventory of bottled water held for sale, the Company’s operating results improved compared to the prior year period, reflecting reduced general and administrative expenses and lower food costs at Burger Time.
Sales:
Net sales for the second fiscal quarter of 2026 decreased by approximately $229,000 to approximately $3.6 million from $3.8 million in fiscal 2025. The decrease resulted from a decline in Burger Time sales during the quarter, including the closure of the Minot Burger Time location in mid-2025.
Our various restaurants each experience unique seasonal sales patterns. The first quarter is seasonally slower for BTND and PIE. PIE revenues are significantly higher in the second and third quarters of the year, resulting from tourist traffic in the Cape Cod area. In 2025, approximately 40% of sales occurred during the seasonally strong third quarter.
Costs of Sales - food and paper:
Cost of sales – food and paper – for the second quarter of fiscal 2026 decreased as a percentage of restaurant sales to 31.9% from 33.1% in the second quarter of fiscal 2025. This decrease was the result of menu changes, including the switch to “hand-cut” fries at Burger Time, combined with only moderate inflationary pressures on food costs.
Restaurant Operating Costs:
Restaurant operating costs (which refer to all costs associated with the operation of our restaurants, excluding general and administrative expenses and depreciation and amortization) as a percentage of restaurant sales decreased to 83.0% in the second quarter of 2026 from 84.1% in the comparable period of 2025. The decrease resulted from a concerted effort to monitor scheduling and actual hours across all locations, as well as the matters discussed in the “Cost of Sales - food and paper,” “Labor Costs,” and “Occupancy and Other Operating Costs” sections above and below.
Labor Costs:
For the second quarter of fiscal 2026, labor and benefits costs decreased as a percentage of restaurant sales to 35.4% from 36.4% in fiscal 2025. The decrease resulted from a concerted effort to monitor scheduling and actual hours across all locations.
Occupancy and Other Operating Expenses:
For the second quarter of 2026, occupancy and other expenses increased to 15.8% of sales from 14.7% in 2025, due to the impact of a sales decrease on fixed costs.
Depreciation and Amortization Expense:
For the second quarter of 2026, depreciation and amortization expenses were $151,575 (4.3% of sales), an increase from the prior year of $144,725 (3.8% of sales). The increase is primarily due to depreciation associated with asset purchases made in the 2026 period.
General and Administrative Costs:
General and administrative costs in the second quarter of 2026 were $333,675, a decrease of approximately $197,000 from the previous year’s second quarter of $531,057. General and administrative costs were 9.4% of sales, a decrease from 14.1% in the previous year. The decrease is the result of a concerted cost-reduction effort throughout the Company.
| 22 |
| Table of Contents |
Income (Loss) from Operations:
Income from operations in the second quarter of 2026 was $117,205, as compared to a loss from operations of $75,121 in the second quarter of 2025, reflecting primarily lower general and administrative expenses and cost-cutting in virtually all other areas of the Company’s businesses, the closing of an unprofitable location, and the items discussed in the “Net Revenues” and “Restaurant Operating Costs” sections above.
Results of Operations for the Twenty-Six Weeks Ended June 28, 2026, and the Twenty-Six Weeks Ended June 29, 2025
The following table sets forth our Condensed Statements of Operations and percentages of total sales for the twenty-six-week fiscal periods. The percentages below may not reconcile because of rounding.
|
| 26 Weeks Ended |
|
| 26 Weeks Ended |
| ||||||||||
|
| June 28, 2026 |
|
| June 29, 2025 |
| ||||||||||
|
| Amount |
|
| % |
|
| Amount |
|
| % |
| ||||
SALES |
| $ | 6,394,499 |
|
|
| 100.0 | % |
| $ | 7,010,763 |
|
|
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restaurant operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Food and paper costs |
|
| 2,095,508 |
|
|
| 32.8 |
|
|
| 2,449,549 |
|
|
| 34.9 |
|
Labor costs |
|
| 2,369,626 |
|
|
| 37.1 |
|
|
| 2,592,500 |
|
|
| 37.0 |
|
Occupancy costs |
|
| 647,455 |
|
|
| 10.1 |
|
|
| 611,715 |
|
|
| 8.7 |
|
Other operating expenses |
|
| 456,739 |
|
|
| 7.1 |
|
|
| 441,105 |
|
|
| 6.3 |
|
Depreciation and amortization expenses |
|
| 303,151 |
|
|
| 4.7 |
|
|
| 301,120 |
|
|
| 4.3 |
|
General and administrative expenses |
|
| 669,165 |
|
|
| 10.5 |
|
|
| 982,091 |
|
|
| 14.0 |
|
Total costs and expenses |
|
| 6,541,644 |
|
|
| 102.3 |
|
|
| 7,378,080 |
|
|
| 105.2 |
|
Loss from operations |
|
| (147,145 | ) |
|
| (2.3 | ) |
|
| (367,317 | ) |
|
| (5.2 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNREALIZED GAIN ON MARKETABLE SECURITIES |
|
| 399,190 |
|
|
| 6.2 |
|
|
| 38,104 |
|
|
| 0.5 |
|
REALIZED INVESTMENT GAIN (LOSS) |
|
| (143,899 | ) |
|
| (2.3 | ) |
|
| 174,064 |
|
|
| 2.5 |
|
INTEREST AND DIVIDEND INCOME |
|
| 37,348 |
|
|
| 0.6 |
|
|
| 80,967 |
|
|
| 1.2 |
|
INTEREST EXPENSE |
|
| (37,468 | ) |
|
| (0.6 | ) |
|
| (41,104 | ) |
|
| (0.6 | ) |
OTHER INCOME (EXPENSE) |
|
| (257,856 | ) |
|
| (4.0 | ) |
|
| 45,173 |
|
|
| 0.6 |
|
EQUITY IN NET INCOME (LOSS) OF AFFILIATE |
|
| (24,748 | ) |
|
| (0.4 | ) |
|
| (204,705 | ) |
|
| (2.9 | ) |
LOSS BEFORE TAXES |
|
| (174,578 | ) |
|
| (2.7 | ) |
|
| (274,818 | ) |
|
| (3.9 | ) |
INCOME TAX (EXPENSE) BENEFIT |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
NET LOSS |
| $ | (174,578 | ) |
|
| (2.7 | )% |
| $ | (274,818 | ) |
|
| (3.9 | )% |
Net loss for the twenty-six weeks ended June 28, 2026, was $174,578, compared to a net loss of $274,818 for the prior year period. The reduction in net loss was primarily attributable to an unrealized gain of $399,190 on marketable securities during the current period, compared to an unrealized gain of $38,104 in the prior year period.
Changes in the fair value of our marketable securities can result in significant unrealized gains or losses from period to period. Unrealized gains and losses are non-cash and do not affect cash flows unless and until the applicable securities are sold.
The Company also recorded a write down on its inventory of bottled water held for sale of approximately $174,000 in the twenty-six-week period ended June 28, 2026.
Excluding the impact of investment gains and losses and the write down of the inventory of bottled water held for sale, the Company’s operating results improved compared to the prior year period, reflecting reduced general and administrative expenses and lower food costs at Burger Time.
Sales:
Net sales for the twenty-six week period ended June 28, 2026 decreased by approximately $616,000 to approximately $6.4 million from $7.0 million in fiscal 2025. The decrease resulted from a decline in Burger Time sales during the 2026 period as compared to the 2025 period, as well as the closure of the Minot Burger Time location in mid-2025.
| 23 |
| Table of Contents |
Our various restaurants each experience unique seasonal sales patterns. The first quarter is seasonally slower for BTND and PIE. PIE revenues are significantly higher in the second and third quarters of the year, resulting from tourist traffic in the Cape Cod area. In 2025, approximately 40% of sales occurred during the seasonally strong third quarter.
Costs of Sales - food and paper:
Cost of sales – food and paper – decreased as a percentage of restaurant sales to 32.8% from 34.9% in the comparable 2025 period. This decrease was the result of menu changes, including the switch to “hand-cut” fries at Burger Time, combined with only moderate inflationary pressures on food costs.
Restaurant Operating Costs:
Restaurant operating costs (which refer to all costs associated with the operation of our restaurants, excluding general and administrative expenses and depreciation and amortization) as a percentage of restaurant sales increased slightly to 87.1% from 86.9% in the comparable period of fiscal 2025. The increase resulted from the net effect of higher labor cost as the fixed components, including minimum staffing levels, increased as a percentage of sales early in the 2026 period, and lower food and paper costs resulting from menu changes, as well as the matters discussed in the “Cost of Sales - food and paper,” “Labor Costs,” and “Occupancy and Other Operating Costs” sections below.
Labor Costs:
Labor and benefits costs increased slightly as a percentage of restaurant sales to 37.1% from 37.0% in the comparable 2025 period. The increase resulted from lower sales, including the impact of minimum staffing levels, which were offset by a concerted effort to monitor scheduling and actual hours across all locations.
Occupancy and Other Operating Expenses:
Occupancy and other expenses increased to 17.2% of sales from 15.0% in 2025, primarily due to the impact of a sales decrease on fixed costs.
Depreciation and Amortization Expense:
Depreciation and amortization expenses were $303,151 (4.7% of sales), a slight increase from the prior year of $301,120 (4.3% of sales).
General and Administrative Costs:
General and administrative costs were $669,165, a decrease of approximately $313,000 from the comparable period in 2025 of $982,091. General and administrative costs were 10.5% of sales, a decrease from 14.0% in the previous year. The decrease is the result of a concerted cost-reduction effort throughout the Company.
Loss from operations:
The loss from operations improved to a loss of $147,145 from a loss of $367,317 in the comparable period in 2025, reflecting lower general and administrative expenses and cost-cutting in virtually all other areas of the Company’s businesses, the closing of an unprofitable location, and the items discussed in the “Net Revenues” and “Restaurant Operating Costs” sections above.
Restaurant-level EBITDA:
To supplement the condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company uses restaurant-level EBITDA. Restaurant-level EBITDA is not a measure defined by GAAP. This non-GAAP operating measure is useful to both management and, we believe, investors because it represents one means of gauging the overall profitability of our recurring and controllable core restaurant operations. This measure is not indicative of our overall results, nor does restaurant-level profit accrue directly to stockholders, primarily because corporate-level expenses are excluded. Restaurant-level EBITDA should not be considered a substitute or superior to operating income calculated under GAAP. The reconciliations to operating income set forth below should be carefully evaluated.
| 24 |
| Table of Contents |
We define restaurant-level EBITDA as operating income before pre-opening costs, if any, general and administrative costs, depreciation and amortization, and impairment charges. General and administrative expenses are excluded because they are not specifically identifiable as restaurant costs. Depreciation, amortization, and impairment charges are excluded because they are not ongoing controllable cash expenses and are not related to the health of ongoing operations.
|
| 26 Weeks Ended |
|
| 26 Weeks Ended |
|
| 13 Weeks Ended |
|
| 13 Weeks Ended |
| ||||
Restaurant-level EBITDA |
| June 28, 2026 |
|
| June 29, 2025 |
|
| June 28, 2026 |
|
| June 29, 2025 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenues |
| $ | 6,394,499 |
|
| $ | 7,010,763 |
|
| $ | 3,550,865 |
|
| $ | 3,779,690 |
|
Reconciliation: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
| (147,145 | ) |
|
| (367,317 | ) |
|
| 117,205 |
|
|
| (75,121 | ) |
Depreciation and amortization |
|
| 303,151 |
|
|
| 301,120 |
|
|
| 151,575 |
|
|
| 144,725 |
|
General and administrative - corporate-level expenses |
|
| 654,276 |
|
|
| 982,091 |
|
|
| 324,449 |
|
|
| 531,057 |
|
Restaurant-level EBITDA |
| $ | 810,281 |
|
| $ | 915,894 |
|
| $ | 593,229 |
|
| $ | 600,661 |
|
Restaurant-level EBITDA margin |
|
| 12.7 | % |
|
| 13.1 | % |
|
| 16.7 | % |
|
| 15.9 |
|
Liquidity and Capital Resources
We had $4.4 million in cash and marketable securities and net working capital of $4.5 million, which is a decrease of approximately $200,000 from what we had in net working capital as of December 28, 2025. The Company maintains a portfolio of marketable securities, the value of which is subject to market volatility. As a result, the Company may continue to recognize significant unrealized gains or losses in future periods, which could materially impact reported net income but would not directly affect cash flows unless such investments are sold.
Unforeseen public health matters may again impact the United States at any time, and recently announced tariffs may impact the economy in the future. It is difficult to predict the United States economy in general, the impact on the quick service drive-through segment of the food service industry, and our operating results and financial condition.
Although we had approximately $4.5 million of working capital at June 28, 2026, our working capital may fluctuate based on operating performance, investment activity, capital expenditures, acquisitions and other strategic transactions. Our primary sources of liquidity and cash flow are operating cash flows and cash on hand. We use this to service debt, maintain our stores’ efficient operations, and increase our working capital. Our working capital position benefits from the fact that we collect cash from our customers at the point of purchase or within a few days through our credit card processor; generally, payments to our vendors are not due for 30 days.
Summary of Cash Flows
Cash Flows Provided by Operating Activities
Operating cash flow for the 26 weeks ending June 28, 2026, was approximately $117,000. The cash flows provided by operating activities were mainly the result of improved restaurant performance during the year due to lower overall costs relative to revenue as discussed above.
Cash Flows Provided by (Used in) Investing Activities
Cash flow from investing activities is primarily the net result of our short-term investments. We have continued to improve our existing businesses, and we may pursue acquisitions in the food service and related industries, as well as other potential mergers.
Cash Flows used in Financing Activities
A significant portion of our cash flow used in financing activities is allocated to service our debt.
Contractual Obligations
As of June 28, 2026, we had $3.5 million in contractual obligations, including $2.0 million for amounts due under mortgages on the real property on which our stores are situated and $1.5 million in operating lease obligations related to our recent acquisitions. Our monthly required payments on lease and mortgage obligations are approximately $53,000.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
As a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act and Item 10(f)(1) of Regulation S-K, we have elected to comply with certain scaled disclosure reporting obligations and are not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure Controls and Procedures
(1) Evaluation of Disclosure Controls and Procedures
We maintain a set of disclosure controls and procedures designed to ensure that information required to be disclosed by us in the reports we filed under the Exchange Act is recorded, processed, summarized, and reported within the periods specified by the SEC’s rules and forms. Disclosure controls are also designed to ensure 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.
Management, with the participation of Gary Copperud, our Chief Executive Officer, who serves as both our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 28, 2026 pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, are designed to provide reasonable assurance that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on that evaluation, and in light of the material weakness in our internal control over financial reporting previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025, Mr. Copperud concluded that our disclosure controls and procedures were not effective as of June 28, 2026.
(2) Changes in Internal Control over Financial Reporting
In addition to the matters discussed previously, the Company is considering utilizing outside consultants as an extension of management, potentially to assist in the accounting for significant acquisitions. In recent years, the Company has not completed any acquisitions.
Effective May 26, 2026, Kenneth Brimmer resigned as the Company's Chief Financial Officer, principal financial officer and principal accounting officer. Following Mr. Brimmer's resignation, Gary Copperud, our Chief Executive Officer, was designated as the Company’s principal financial officer effective August 5, 2026. Management evaluated the effect of these changes on the Company's internal control over financial reporting. Based on that evaluation, management concluded that these changes did not materially affect, and are not reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as described in the Notes to the Financial Statements, Note 10, Contingencies, there are no material pending legal proceedings to which the Company is a party or as to which any of its property is subject, and no such proceedings are known to be threatened or contemplated against it.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Unregistered Sales of Equity Securities
Since the date on which the Company filed its Annual Report on Form 10-K and through the date of this quarterly report, we have not sold any unregistered securities.
Use of Proceeds
Since the closing of the Company’s initial public offering in November 2021, the Company has used the proceeds received from the sale of securities for general working capital purposes and to acquire (i) the restaurant assets of Keegan’s Seafood Grille ($1,150,000), (ii) Pie in the Sky Bakery and Coffee Shop ($1,160,000), (iii) a 40.7% of the outstanding shares of common stock of Bagger Dave’s ($1,260,000), (iv) the Village Bier Garten, (recently closed) and (v) Schnitzel Haus ($943,000).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended June 28, 2026, none of the Company's directors or officers, as defined in Rule 16a-1(f) under the Exchange Act, adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
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ITEM 6. EXHIBITS.
Exhibit |
| Description |
| Location Reference |
|
| Filed herewith | ||
|
| Filed herewith | ||
101. INS. |
| Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
| Furnished herewith |
101. SCH. |
| Inline XBRL Taxonomy Extension Schema Document. |
| Furnished herewith |
101. CAL. |
| Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| Furnished herewith |
101. DEF. |
| Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| Furnished herewith |
101. LAB. |
| Inline XBRL Taxonomy Extension Labels Linkbase Document. |
| Furnished herewith |
101. PRE. |
| Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| Furnished herewith |
104 |
| Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
| Furnished herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BT BRANDS, INC. |
| |
|
|
|
|
Date: August 17, 2026 | By: | /s/ Gary Copperud |
|
| Name: | Gary Copperud |
|
| Title: | Chief Executive Officer, Principal Executive Officer and Principal Financial Officer |
|
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