BTBD

BT Brands, Inc. (BTBD) - Q1 2026 Filing Summary

Business Context and Reporting Period

This Form 10-Q covers the 13-week period ended March 29, 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

Note: Total Debt calculated as Current Maturities ($198,500) + Long-Term Debt ($1,849,963). Working Capital calculated as Current Assets ($5,239,820) - Current Liabilities ($1,273,857).

Material Changes vs. Prior Period

• Revenue Decline: Sales decreased by 12.0% ($387,439) year-over-year, primarily due to the closure of the Minot, North Dakota Burger Time location in July 2025 and lower seasonal sales at Burger Time and Pie In the Sky.
• Widened Net Loss: Net loss increased by 127.7% to $751,011. This deterioration was driven by non-operating investment losses rather than core restaurant performance.
• Investment Losses: The Company recorded an unrealized loss on marketable securities of $435,615 (vs. $44,024 loss in Q1 2025) and a realized investment loss of $79,395 (vs. $95,038 gain in Q1 2025).
• Operating Improvement: Excluding investment volatility, core operations improved. Operating loss narrowed by $59,385 due to a 22.6% reduction in General and Administrative expenses ($348,901 vs. $451,034) and lower food costs (33.9% of sales vs. 37.1%).
• Liquidity: Cash and marketable securities totaled approximately $3.6 million, a decrease from the prior year-end due to operating cash outflows and investment activity.

Guidance, Outlook, and Risks

• Merger Termination: On May 1, 2026 (post-quarter), BT Brands terminated its proposed merger with Aero Velocity Inc. due to the failure of the SEC registration statement to become effective by the April 30, 2026 deadline. Aero Velocity has disputed the termination and asserted a claim for approximately $1.5 million in damages. BT Brands disputes this claim and has not accrued a liability.
• Legal Contingency: Ongoing litigation exists regarding the Village Bier Garten lease in Florida. The Company recorded a $215,000 liability for unpaid rent but disputes the landlord's claims, citing mitigation obligations and prior acceptance of rent from an assignee.
• Related Party Support: The Company advanced $88,227 to its affiliate, Bagger Dave's, during the quarter, resuming the recognition of equity income ($9,558) after the affiliate returned to profitability.
• Operational Risks: Management cites labor shortages, wage inflation, and food cost volatility as ongoing challenges. The Company is evaluating growth opportunities outside the restaurant industry.
• Internal Controls: The Company disclosed a material weakness in internal controls over financial reporting, which remains unremediated as of the filing date.

Investor Verification Checklist

• Investment Portfolio Volatility: Verify the composition and fair value of the $2.6 million marketable securities portfolio, as unrealized losses significantly impacted net income.
• Aero Velocity Dispute: Monitor developments regarding the $1.5 million damages claim asserted by Aero Velocity following the merger termination.
• Village Bier Garten Litigation: Track the resolution of the lease dispute to determine if the recorded $215,000 liability is accurate or if additional exposure exists.
• Bagger Dave's Performance: Assess the sustainability of Bagger Dave's recent profitability and the impact of the $88,227 loan advance on BT Brands' liquidity.
• Internal Control Remediation: Review the Company's plan to address the material weakness in internal controls over financial reporting.