BT Brands, Inc. (BTBD) - 10-Q Summary
Business Context and Reporting Period
This Quarterly Report on Form 10-Q covers the 26-week and 13-week periods ended June 28, 2026. BT Brands, Inc. operates a portfolio of nine restaurants across the Midwest, Massachusetts, and Florida, including six Burger Time locations, Keegan's Seafood Grille, Pie In the Sky Coffee, and Schnitzel Haus. The Company also holds a 40.7% non-controlling interest in Bagger Dave's Burger Tavern, Inc. (BDVB), which operates five locations. The Company is classified as a smaller reporting company and a non-accelerated filer.
Key Financial Metrics
| Metric | 26 Weeks Ended June 28, 2026 |
13 Weeks Ended June 28, 2026 |
|---|---|---|
| Sales | $6,394,499 | $3,550,865 |
| Net Income (Loss) | $(174,578) | $576,433 |
| Operating Income (Loss) | $(147,145) | $117,205 |
| Restaurant-Level EBITDA | $810,281 | $593,229 |
| Cash and Cash Equivalents | $1,592,910 | $1,592,910 |
| Marketable Securities | $2,833,260 | $2,833,260 |
| Total Debt (Current + Long-Term) | $1,998,014 | $1,998,014 |
| Net Working Capital | $4,466,308 | $4,466,308 |
Note: Debt includes $199,976 current maturities and $1,798,038 long-term debt. Working capital is calculated as Total Current Assets ($5,751,470) minus Total Current Liabilities ($1,285,162).
Material Changes vs. Prior Period
- Revenue Decline: Sales decreased 8.8% for the 26-week period ($6.39M vs. $7.01M) and 6.1% for the 13-week period ($3.55M vs. $3.78M) compared to the prior year. This was primarily due to the closure of the Minot, North Dakota Burger Time location in July 2025 and a general decline in Burger Time sales.
- Profitability Improvement: Despite lower sales, the Net Loss for the 26-week period narrowed to $(174,578) from $(274,818) in the prior year. The 13-week period turned profitable with Net Income of $576,433 compared to $55,031 previously.
- Investment Gains: The improvement in net income was significantly driven by non-operating items. The Company recorded an unrealized gain on marketable securities of $399,190 (26 weeks) and $829,976 (13 weeks), compared to $38,104 and $82,128 in the prior year periods, respectively.
- Expense Reduction: General and administrative expenses decreased significantly, dropping from $982,091 to $669,165 for the 26-week period (a 32% reduction) due to concerted cost-cutting efforts.
- Inventory Write-Down: The Company recorded a $174,000 write-down on bottled water inventory held for resale during the 13-week period ended June 28, 2026.
Guidance, Outlook, Risks, and Unusual Items
- Merger Termination: On May 1, 2026, BT Brands terminated its proposed merger with Aero Velocity Inc. due to the failure of the registration statement to become effective by the deadline. Aero Velocity has disputed the termination and asserted a claim for approximately $1.5 million in damages. The Company disputes this claim and has not accrued a liability as the loss is not deemed probable or estimable.
- Legal Contingencies: The Company is involved in litigation regarding the Village Bier Garten lease in Florida. The landlord is seeking unpaid rent following the Company's cessation of operations and assignment of the lease. A liability of approximately $209,000 has been recorded, though the ultimate outcome is uncertain.
- Related Party Transactions: The Company advanced approximately $227,000 to its affiliate, BDVB, during the 26-week period. Due to BDVB's operating losses, the Company recorded a $50,000 allowance against the note receivable.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of June 28, 2026, citing a material weakness previously disclosed in the 2025 10-K. The CFO resigned in May 2026, and the CEO assumed the role of Principal Financial Officer.
- Outlook: The Company faces ongoing challenges with labor costs, inflation, and competitive pressures. While restaurant-level EBITDA margins improved slightly in the quarter (16.7% vs 15.9% prior year), the Company continues to evaluate growth opportunities outside the restaurant industry.
Investor Verification Checklist
- Investment Volatility: Verify the composition and fair value of the $2.83 million in marketable securities, as unrealized gains significantly distorted net income in the current quarter.
- Merger Dispute: Monitor the status of the dispute with Aero Velocity Inc. regarding the $1.5 million damages claim and any potential litigation filings.
- Lease Litigation: Track the resolution of the Village Bier Garten lease dispute to determine if the recorded $209,000 liability is sufficient or if additional costs will arise.
- Internal Controls: Assess the Company's remediation plan for the material weakness in internal controls over financial reporting following the CFO resignation.
- Affiliate Support: Review the financial health of Bagger Dave's Burger Tavern (BDVB) and the Company's exposure to further losses or required capital injections.