{"url_path":"/sec/btbd/10-q/2026/cover-page","section_key":"cover-page","section_title":"Cover Page","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-18","source_url":"https://www.sec.gov/Archives/edgar/data/1718224/0001477932-26-003265-index.html","accession_number":"0001477932-26-003265","cik":"0001718224","ticker":"BTBD","issuer_name":"BT Brands, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1718224/0001477932-26-003265-index.html","primary_entity_key":"0001718224","primary_entity_name":"BT Brands, 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STATES**\n\n**SECURITIES AND EXCHANGE COMMISSION**\n\n**Washington, D.C. 20549**\n\n \n\n**FORM 10-Q**\n\n \n\n☒   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n\n \n\nFor the quarterly period ended: **March 29, 2026**\n\n \n\nor\n\n \n\n☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934\n\n \n\nFor the transition period from _______________ to _______________\n\n \n\nCommission File Number: **001-41061**\n\n \n\n \n\n**BT BRANDS, INC.**\n\n (Exact name of registrant as specified in its charter)\n\n \n\n**Wyoming**\n\n \n\n**90-1495764**\n\n(State or other jurisdiction of incorporation or organization)\n\n \n\n(I.R.S. Employer Identification No.)\n\n \n\n \n\n \n\n**10501 Wayzata Blvd South, Suite 102,**\n\n**Minnetonka, MN**\n\n**55305**\n\n(Address of principal executive offices)\n\n \n\n(Zip Code)\n\n \n\n**(307) 274-3055**\n\n(Registrant’s telephone number, including area code)\n\n \n\n**NONE**\n\n(Former name former address and former fiscal year if changed since last report)\n\n \n\nSecurities registered pursuant to Section 12(b) of the Act:\n\n \n\n**Title of each class**\n\n \n\n**Trading Symbol(s)**\n\n \n\n**Name of each exchange on which registered**\n\nCommon stock, $0.002 per share\n\n \n\nBTBD\n\n \n\nThe NASDAQ Stock Market LLC\n\nWarrant to Purchase Common Stock\n\n \n\nBTBDW\n\n \n\nThe NASDAQ Stock Market LLC\n\n \n\nIndicate 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. ☒ Yes     ☐ No\n\n \n\nIndicate 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). ☒ Yes     ☐ No\n\n \n\nIndicate 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.\n\n \n\nLarge accelerated filer\n\n☐\n\nAccelerated filer\n\n☐\n\nNon-accelerated filer\n\n☒\n\nSmaller reporting company\n\n☒\n\n \n\n \n\nEmerging Growth Company\n\n☐\n\n \n\nIf 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. ☐\n\n \n\nIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes    ☒ No\n\n \n\nIndicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐ \n\n \n\nAt May 18, 2026, there were 6,184,724 shares of common stock outstanding.\n\n \n\n \n\n \n\n \n\n**CAUTIONARY STATEMENT REGARDING RISKS**\n\n**AND UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS**\n\n \n\n**Forward-Looking Information**\n\n \n\n**CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS**\n\n \n\nThis 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.\n\n \n\nForward-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:\n\n \n\n \n\n·\nrisks associated with any possible merger or acquisition;\n\n \n\n·\nwe 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.\n\n \n\n·\nrisks associated with operating in a business outside the restaurant industry;\n\n \n\n·\nrisks related to the ownership, governance, and control of the combined company following the transaction;\n\n \n\n·\nour ability to execute our growth strategy, including identifying and integrating acquisitions;\n\n \n\n·\nlabor shortages, wage inflation, and our ability to attract and retain employees;\n\n \n\n·\nincreases in food, commodity, and energy costs and supply chain disruptions;\n\n \n\n·\nchanges in consumer preferences and discretionary spending;\n\n \n\n·\ncompetition in the restaurant industry and broader economic conditions;\n\n \n\n·\ncybersecurity risks and potential disruptions to our information systems; and\n\n \n\n·\nother 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.\n\n \n\nWe 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.\n\n \n\nWe 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.\n\n \n\nFrom 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.\n\n \n\nWe 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.\n\n \n\n \n\nPage 2 of 30\n\n \n\n \n\n**TABLE OF CONTENTS**\n\n \n\n[**PART I— FINANCIAL INFORMATION.**](#P1)\n\n** **\n\n**4**\n\n[**ITEM 1.**](#I1)\n\n[**CONDENSED FINANCIAL STATEMENTS (unaudited)**](#I1)\n\n** **\n\n**4**\n\n** **\n\n[**ITEM 2.**](#I2)\n\n[**MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.**](#I2)\n\n** **\n\n**21**\n\n** **\n\n[**ITEM 3.**](#I3)\n\n[**QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.**](#I3)\n\n** **\n\n**27**\n\n** **\n\n[**ITEM 4.**](#I4)\n\n[**CONTROLS AND PROCEDURES.**](#I4)\n\n** **\n\n**27**\n\n** **\n\n** **\n\n** **\n\n** **\n\n** **\n\n[**PART II—OTHER INFORMATION.**](#P2)\n\n** **\n\n**28**\n\n[**ITEM 1.**](#P2I1)\n\n[**LEGAL PROCEEDINGS.**](#P2I1)\n\n** **\n\n**28**\n\n** **\n\n[**ITEM 1A.**](#P2I1A)\n\n[**RISK FACTORS.**](#P2I1A)\n\n** **\n\n**28**\n\n** **\n\n[**ITEM 2.**](#P2I2)\n\n[**UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.**](#P2I2)\n\n** **\n\n**28**\n\n** **\n\n[**ITEM 3.**](#P2I3)\n\n[**DEFAULTS UPON SENIOR SECURITIES.**](#P2I3)\n\n** **\n\n**28**\n\n** **\n\n[**ITEM 4.**](#P2I4)\n\n[**MINE SAFETY DISCLOSURES.**](#P2I4)\n\n** **\n\n**28**\n\n** **\n\n[**ITEM 5.**](#P2I5)\n\n[**OTHER INFORMATION.**](#P2I5)\n\n** **\n\n**28**\n\n** **\n\n[**ITEM 6.**](#P2I6)\n\n[**EXHIBITS.**](#P2I6)\n\n** **\n\n**29**\n\n** **\n\n[**SIGNATURES.**](#SIG)\n\n \n\n**30**\n\n \n\n \n\nPage 3 of 30\n\n*Table of Contents*\n\n \n\n**PART I FINANCIAL INFORMATION**\n\n   \n\n**BT BRANDS, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED BALANCE SHEETS**\n\n \n\n \n\n \n\n**(Unaudited)**\n\n \n\n \n\n \n\n \n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**December 28,**\n\n**2025**\n\n \n\n**ASSETS**\n\n \n\n \n\n \n\n \n\n \n\n \n\n**CURRENT ASSETS**\n\n \n\n \n\n \n\n \n\n \n\n \n\nCash and cash equivalents\n\n \n$1,014,989\n \n\n \n$846,167\n \n\nMarketable securities\n\n \n\n \n2,629,120\n \n\n \n\n \n3,596,133\n \n\nReceivables\n\n \n\n \n17,033\n \n\n \n\n \n54,506\n \n\nNote receivable from unconsolidated affiliate\n\n \n\n \n88,227\n \n\n \n\n \n-\n \n\nInventory\n\n \n\n \n218,061\n \n\n \n\n \n230,443\n \n\nInventory – bottled water held for resale\n\n \n\n \n584,324\n \n\n \n\n \n574,000\n \n\nPrepaid expenses and other current assets\n\n \n\n \n100,313\n \n\n \n\n \n22,152\n \n\nDeferred transaction costs\n\n \n\n \n163,630\n \n\n \n\n \n150,450\n \n\nAssets held for sale\n\n \n\n \n424,123\n \n\n \n\n \n424,123\n \n\nTotal current assets\n\n \n\n \n5,239,820\n \n\n \n\n \n5,897,974\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET**\n\n \n\n \n2,359,322\n \n\n \n\n \n2,456,718\n \n\n**OPERATING LEASES RIGHT-OF-USE ASSETS**\n\n \n\n \n1,218,169\n \n\n \n\n \n1,267,699\n \n\n**EQUITY INVESTMENT IN UNCONSOLIDATED AFFILIATE**\n\n \n\n \n9,558\n \n\n \n\n \n-\n \n\n**GOODWILL**\n\n \n\n \n796,220\n \n\n \n\n \n796,220\n \n\n**INTANGIBLE ASSETS, NET**\n\n \n\n \n291,204\n \n\n \n\n \n305,270\n \n\n**OTHER ASSETS, NET**\n\n \n\n \n64,587\n \n\n \n\n \n21,171\n \n\nTotal assets\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n$9,978,880\n \n\n \n$10,745,052\n \n\n**LIABILITIES AND SHAREHOLDERS’ EQUITY**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**CURRENT LIABILITIES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nAccounts payable\n\n \n$327,048\n \n\n \n$245,226\n \n\nCurrent maturities of long-term debt\n\n \n\n \n198,500\n \n\n \n\n \n191,531\n \n\nCurrent operating lease obligations\n\n \n\n \n349,875\n \n\n \n\n \n358,939\n \n\nAccrued expenses\n\n \n\n \n398,434\n \n\n \n\n \n421,867\n \n\nTotal current liabilities\n\n \n\n \n1,273,857\n \n\n \n\n \n1,217,563\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**LONG-TERM DEBT, LESS CURRENT PORTION**\n\n \n\n \n1,849,963\n \n\n \n\n \n1,899,592\n \n\n**NONCURRENT OPERATING LEASE OBLIGATIONS**\n\n \n\n \n1,171,308\n \n\n \n\n \n1,209,509\n \n\nTotal liabilities\n\n \n\n \n4,295,128\n \n\n \n\n \n4,326,664\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**COMMITMENTS AND CONTINGENCIES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**SHAREHOLDERS’ EQUITY**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPreferred stock, $0.001 par value, 2,000,000 shares authorized, no shares outstanding at March 29, 2026 and December 28, 2025\n\n \n\n \n-\n \n\n \n\n \n-\n \n\nCommon stock, $0.002 par value, 50,000,000 authorized, 6,461,118 issued and 6,154,724 outstanding at March 29, 2026, and December 28, 2025\n\n \n\n \n12,309\n \n\n \n\n \n12,309\n \n\nLess cost of 306,394 common shares held in Treasury at March 29, 2026 and December 28, 2025\n\n \n\n \n(499,718 )\n \n\n \n(499,718 )\n\nAdditional paid-in capital\n\n \n\n \n11,971,110\n \n\n \n\n \n11,954,735\n \n\nAccumulated deficit\n\n \n\n \n(5,799,949 )\n \n\n \n(5,048,938 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal shareholders’ equity\n\n \n\n \n5,683,752\n \n\n \n\n \n6,418,388\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nTotal liabilities and shareholders’ equity\n\n \n$9,978,880\n \n\n \n$10,745,052\n \n\n \n\nSee Notes to Condensed Consolidated Financial Statements\n\n \n\n \n\nPage 4 of 30\n\n*Table of Contents*\n\n \n\n**BT BRANDS, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**\n\n***(Unaudited)***\n\n \n\n \n\n \n\n**13 Weeks Ended,**\n\n \n\n \n\n**13 Weeks Ended,**\n\n \n\n \n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**March 30,**\n\n**2025**\n\n \n\n**SALES**\n\n \n$2,843,634\n \n\n \n$3,231,073\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**COSTS AND EXPENSES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nRestaurant operating expenses\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nFood and paper costs\n\n \n\n \n963,763\n \n\n \n\n \n1,200,329\n \n\nLabor costs\n\n \n\n \n1,110,584\n \n\n \n\n \n1,217,897\n \n\nOccupancy costs\n\n \n\n \n304,023\n \n\n \n\n \n309,694\n \n\nOther operating expenses\n\n \n\n \n197,599\n \n\n \n\n \n187,920\n \n\nDepreciation and amortization expenses\n\n \n\n \n151,575\n \n\n \n\n \n156,395\n \n\nGeneral and administrative expenses\n\n \n\n \n348,901\n \n\n \n\n \n451,034\n \n\nTotal costs and expenses\n\n \n\n \n3,076,445\n \n\n \n\n \n3,523,269\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nLoss from operations\n\n \n\n \n(232,811 )\n \n\n \n(292,196 )\n\n**UNREALIZED LOSS ON MARKETABLE SECURITIES**\n\n \n\n \n(435,615 )\n \n\n \n(44,024 )\n\n**REALIZED INVESTMENT GAIN (LOSS)**\n\n \n\n \n(79,395 )\n \n\n \n95,038\n \n\n**INTEREST EXPENSE**\n\n \n\n \n(21,440 )\n \n\n \n(21,554 )\n\n**INTEREST AND DIVIDEND INCOME**\n\n \n\n \n21,234\n \n\n \n\n \n40,600\n \n\n**OTHER INCOME**\n\n \n\n \n(12,542 )\n \n\n \n26,587\n \n\n**EQUITY IN NET INCOME (LOSS) OF AFFILIATE**\n\n \n\n \n9,558\n \n\n \n\n \n(134,300 )\n\n**LOSS BEFORE TAXES**\n\n \n\n \n(751,011 )\n \n\n \n(329,849 )\n\n**INCOME TAX BENEFIT**\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n**NET LOSS**\n\n \n$(751,011 )\n \n$(329,849 )\n\n**NET LOSS PER COMMON SHARE - Basic and Diluted**\n\n \n$(0.12 )\n \n$(0.05 )\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**WEIGHTED AVERAGE SHARES USED IN COMPUTING PER COMMON SHARE AMOUNTS - Basic and Diluted**\n\n \n\n \n6,154,724\n \n\n \n\n \n6,154,724\n \n\n \n\nSee Notes to Condensed Consolidated Financial Statements\n\n \n\n \n\nPage 5 of 30\n\n*Table of Contents*\n\n \n\n**BT BRANDS, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY**\n\n***(Unaudited)***\n\n \n\n***For the 13-week period-***\n\n \n\n**Common Stock**\n\n \n\n \n\n**Additional**\n\n**Paid-in**\n\n \n\n \n\n**Accumulated**\n\n \n\n \n\n**Treasury**\n\n \n\n \n\n \n\n \n\n \n\n \n\n**Shares**\n\n \n\n \n\n**Amount**\n\n \n\n \n\n**Capital**\n\n \n\n \n\n**(Deficit)**\n\n \n\n \n\n**Stock**\n\n \n\n \n\n**Total**\n\n \n\n**Balances, December 28, 2025**\n\n \n\n \n6,154,724\n \n\n \n$12,309\n \n\n \n$11,954,735\n \n\n \n$(5,048,938)\n \n$(499,718)\n \n$6,418,388\n \n\n**Stock-based compensation**\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n16,375\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n16,375\n \n\n**Net loss**\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n(751,011)\n \n\n \n-\n \n\n \n\n \n(751,011)\n\n**Balances, March 29, 2026**\n\n \n\n \n6,154,724\n \n\n \n$12,309\n \n\n \n$11,971,110\n \n\n \n$(5,799,949)\n \n$(499,718)\n \n$5,683,752\n \n\n***For the 13-week period-***\n\n \n\n**Common Stock**\n\n \n\n \n\n**Additional**\n\n**Paid-in**\n\n \n\n \n\n**Accumulated**\n\n \n\n \n\n**Treasury**\n\n \n\n \n\n \n\n \n\n \n\n \n\n**Shares**\n\n \n\n \n\n**Amount**\n\n \n\n \n\n**Capital**\n\n \n\n \n\n**(Deficit)**\n\n \n\n \n\n**Stock**\n\n \n\n \n\n**Total**\n\n \n\n**Balances, December 29, 2024**\n\n \n\n \n6,154,724\n \n\n \n$12,309\n \n\n \n$11,813,735\n \n\n \n$(4,361,099)\n \n$(499,718)\n \n$6,965,227\n \n\n**Stock-based compensation**\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n31,000\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n31,000\n \n\n**Net loss**\n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n-\n \n\n \n\n \n(329,849)\n \n\n \n-\n \n\n \n\n \n(329,849)\n\n**Balances, March 30, 2025**\n\n \n\n \n6,154,724\n \n\n \n$12,309\n \n\n \n$11,844,735\n \n\n \n$(4,690,948)\n \n$(499,718)\n \n$6,666,378\n \n\n \n\nSee Notes to Condensed Consolidated Financial Statements\n\n \n\n \n\nPage 6 of 30\n\n*Table of Contents*\n\n  \n\n**BT BRANDS, INC. AND SUBSIDIARIES**\n\n**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n***(Unaudited)***\n\n \n\n \n\n \n\n**13 Weeks Ended,**\n\n \n\n \n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**March 30,**\n\n**2025**\n\n \n\n**CASH FLOWS FROM OPERATING ACTIVITIES**\n\n \n\n**Net loss**\n\n \n$(751,011)\n \n$(329,849)\n\nAdjustments to reconcile net loss to net cash used in operating activities-\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nDepreciation and amortization\n\n \n\n \n151,575\n \n\n \n\n \n156,395\n \n\nAmortization of debt issuance costs included in interest expense\n\n \n\n \n1,350\n \n\n \n\n \n1,350\n \n\nStock-based compensation\n\n \n\n \n16,375\n \n\n \n\n \n31,000\n \n\nUnrealized loss on marketable securities\n\n \n\n \n435,615\n \n\n \n\n \n44,024\n \n\nRealized investment (gain) loss\n\n \n\n \n79,395\n \n\n \n\n \n(95,038)\n\nLoss (income) on equity method investment\n\n \n\n \n(9,558)\n \n\n \n134,300\n \n\nNon-cash operating lease expense\n\n \n\n \n2,266\n \n\n \n\n \n1,547\n \n\nChanges in operating assets and liabilities\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nReceivables\n\n \n\n \n37,473\n \n\n \n\n \n34,028\n \n\nInventory\n\n \n\n \n2,058\n \n\n \n\n \n34,356\n \n\nPrepaid expenses and other current assets\n\n \n\n \n(78,161)\n \n\n \n20,136\n \n\nOther assets\n\n \n\n \n(43,416)\n \n\n \n-\n \n\nAccounts payable\n\n \n\n \n81,822\n \n\n \n\n \n(316,688)\n\nAccrued expenses\n\n \n\n \n(23,433)\n \n\n \n(22,300)\n\nNet cash used in operating activities\n\n \n\n \n(97,650)\n \n\n \n(306,739)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**CASH FLOWS FROM INVESTING ACTIVITIES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPurchase of property and equipment\n\n \n\n \n(40,113)\n \n\n \n(124,365)\n\nProceeds from the sale of equipment\n\n \n\n \n-\n \n\n \n\n \n34,500\n \n\nLoans to unconsolidated affiliates\n\n \n\n \n(88,227)\n \n\n \n(60,000)\n\nPurchase of marketable securities\n\n \n\n \n(685,472)\n \n\n \n(1,572,328)\n\nProceeds from the sale of marketable securities\n\n \n\n \n1,137,475\n \n\n \n\n \n1,194,488\n \n\nNet cash provided by (used in) investing activities\n\n \n\n \n323,663\n \n\n \n\n \n(527,705\n) \n\n**CASH FLOWS FROM FINANCING ACTIVITIES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nPrincipal payment on long-term debt\n\n \n\n \n(44,011)\n \n\n \n(46,870)\n\nPayment of deferred transaction costs\n\n \n\n \n(13,180)\n \n\n \n\n-\n\n \n\nNet cash used in financing activities\n\n \n\n \n(57,191)\n \n\n \n(46,870)\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**CHANGE IN CASH and CASH EQUIVALENTS**\n\n \n\n \n168,822\n \n\n \n\n \n(881,314)\n\n**CASH and CASH EQUIVALENTS, BEGINNING OF PERIOD**\n\n \n\n \n846,167\n \n\n \n\n \n1,951,415\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**CASH AND CASH EQUIVALENTS, END OF PERIOD**\n\n \n$1,014,989\n \n\n \n$1,070,101\n \n\n**SUPPLEMENTAL DISCLOSURES**\n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCash paid for interest\n\n \n$20,090\n \n\n \n$20,204\n \n\n \n\nSee Notes to Condensed Consolidated Financial Statements\n\n \n\n \n\nPage 7 of 30\n\n*Table of Contents*\n\n \n\n**BT BRANDS, INC.**\n\n**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**\n\n**(Unaudited)**\n\n \n\n**NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**\n\n \n\n**Basis of Presentation**\n\n \n\nThe 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 US 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 ending December 28, 2025. In our opinion, all regular and recurring adjustments necessary for a fair presentation of our financial position and results of operation have been included. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year.\n\n \n\nThe accompanying Condensed Consolidated Balance Sheet as of March 29, 2026, does 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 ending December 28, 2025.\n\n \n\n**Use of Estimates**\n\n \n\nThe 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.\n\n \n\n**Overview of Our Company**\n\n \n\nAs of March 29, 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:\n\n \n\n \n\n●\n\nSix 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.\n\n \n\n●\n\nKeegan’s Seafood Grille is a casual seafood restaurant located in Indian Rocks Beach, Florida;\n\n \n\n●\n\nPie In the Sky Coffee, a coffee shop and bakery located in Woods Hole, Massachusetts, and\n\n \n\n●\n\nSchnitzel Haus is a German-themed fine dining restaurant and bar in Hobe Sound, Florida (“Schnitzel”).\n\n \n\nIn 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.\n\n \n\nVillage Bier Garten, a German-themed restaurant, bar, and entertainment venue in Cocoa, Florida, ceased operations in January 2025.\n\n \n\n \n\nPage 8 of 30\n\n*Table of Contents*\n\n \n\n \n\nWe 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.\n\n \n\nHistorically, 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.\n\n \n\n**Termination of Proposed Business Combination with Aero Velocity**\n\n \n\nOn 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.\n\n \n\nThe 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.\n\n \n\nOn May 1, 2026, subsequent to the end of the fiscal quarter covered by this Report, 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. 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.\n\n \n\nFor 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.\n\n \n\n**Fiscal Year Periods**\n\n \n\nBT 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 ending December 28, 2025, and Fiscal 2026 is 53 weeks ending January 3, 2027. References in this report for periods refer to the 13-week periods in the respective fiscal periods.\n\n \n\n**Cash and Cash Equivalents**\n\n \n\nCash 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.\n\n \n\n \n\nPage 9 of 30\n\n*Table of Contents*\n\n \n\n \n\n**Equity Method Investments**\n\n \n\nInvestments 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.\n\n \n\n**Fair Value Measurements**\n\n \n\nThe 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:\n\n \n\nLevel 1 — Quoted prices in active markets for identical assets or liabilities.\n\nLevel 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.\n\nLevel 3 — Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the asset or liability.\n\n \n\nThe 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.\n\n \n\nThe 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.\n\n \n\n**Marketable Securities**\n\n \n\nThe Summary of fair value measurements of marketable securities as of the respective dates is as follows:\n\n \n\n \n\n \n\n**March 29, 2026**\n\n \n\n \n\n**December 28, 2025**\n\n \n\n \n\n \n\n**Fair value Carrying Amount**\n\n \n\n \n\n**Level 1**\n\n \n\n \n\n**Fair value Carrying Amount**\n\n \n\n \n\n**Level 1**\n\n \n\nCommon stocks\n\n \n$2,355,170\n \n\n \n$2,355,170\n \n\n \n$3,269,333\n \n\n \n$3,269,333\n \n\nListed limited partnership units\n\n \n\n \n-\n \n\n \n\n \n\n \n\n \n\n \n\n \n162,500\n \n\n \n\n \n162,500\n \n\nExchange-traded funds\n\n \n\n \n75,630\n \n\n \n\n \n75,630\n \n\n \n\n \n63,220\n \n\n \n\n \n63,220\n \n\nDebt securities\n\n \n\n \n198,320\n \n\n \n\n \n198,320\n \n\n \n\n \n101,080\n \n\n \n\n \n101,080\n \n\nTotal\n\n \n$2,629,120\n \n\n \n$2,629,120\n \n\n \n$3,596,133\n \n\n \n$3,596,133\n \n\n \n\nWe 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.\n\n \n\n**Receivables**\n\n \n\nReceivables consist of estimated rebates due from vendors.\n\n \n\n**Inventory**\n\n \n\nInventory consists of food, beverages, and supplies and is stated at a lower of cost (first-in, first-out method) or net realizable value.\n\n \n\n \n\nPage 10 of 30\n\n*Table of Contents*\n\n \n\n \n\n**Deferred Transaction Costs**\n\n \n\nDeferred 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.\n\n \n\nCosts 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.\n\n \n\nAs of March 29, 2026, and December 28, 2025, deferred transaction costs totaled $163,630 and $150,450, respectively.\n\n \n\n**Property and Equipment**\n\n \n\nProperty 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.\n\n \n\nWe 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.\n\n \n\n**Goodwill and Intangible Assets and Other Assets**\n\n \n\nGoodwill is not amortized and is tested for impairment at least annually. The cost of other intangible assets is amortized over their expected useful lives.\n\n \n\n***Asset Held for Sale***\n\n \n\nIn 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.\n\n \n\n**Income Taxes**\n\n \n\nThe Company follows Accounting Standards Codification (ASC 740), Accounting for Income Taxes. 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.\n\n \n\nAs of March 29, 2026, we used a net combined federal and state rate of approximately 25% in estimating our current tax benefit. Given the recent losses, the Company has determined that sufficient uncertainty exists regarding the future realization of the deferred tax assets. Accordingly, a valuation allowance of approximately $1,200,000 has been recorded as of March 29, 2026, reducing the net deferred tax asset balance to zero. The Company will continue to assess the need for a valuation allowance in future periods. Should circumstances change and sufficient positive evidence emerge to support the realization of deferred tax assets, all or a portion of the valuation allowance may be reversed. As of December 28, 2025, the Company has approximately $2.8 million in federal operating tax loss carryforwards.\n\n \n\n \n\nPage 11 of 30\n\n*Table of Contents*\n\n \n\n \n\nThe 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.\n\n \n\n**Per Common Share Amounts**\n\n \n\nNet 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.\n\n \n\nN**OTE 2 – INTANGIBLE ASSETS**\n\n \n\nAt March 29, 2026, and December 28, 2025, the value of acquired intangible assets subject to amortization  consisted of the following:\n\n \n\n**March 29, 2026-**\n\n \n\n**Estimated**\n\n**Life**\n\n**(Years)**\n\n \n\n \n\n**Original Cost**\n\n \n\n \n\n**Accumulated**\n\n**Amortization**\n\n \n\n \n\n**Net**\n\n**Carrying**\n\n**Value**\n\n \n\nCovenants not to Compete\n\n \n\n \n3\n \n\n \n$100,000\n \n\n \n$(49,845 )\n \n$50,155\n \n\nTradenames\n\n \n\n \n15\n \n\n \n\n \n344,000\n \n\n \n\n \n(102,951 )\n \n\n \n241,049\n \n\n \n\n \n\n \n\n \n\n \n\n \n$444,000\n \n\n \n$(152,796 )\n \n$291,204\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n**December 28, 2025-**\n\n \n\n**Estimated**\n\n**Life**\n\n**(Years)**\n\n \n\n \n\n**Original Cost**\n\n \n\n \n\n**Accumulated**\n\n**Amortization**\n\n \n\n \n\n**Net**\n\n**Carrying**\n\n** Value**\n\n \n\nCovenants not to Compete\n\n \n\n \n3\n \n\n \n$100,000\n \n\n \n$(41,542 )\n \n$58,458\n \n\nTradenames\n\n \n\n \n15\n \n\n \n\n \n344,000\n \n\n \n\n \n(97,188 )\n \n\n \n246,812\n \n\n \n\n \n\n \n\n \n\n \n\n \n$444,000\n \n\n \n$(138,730 )\n \n$305,270\n \n\n \n\nThe total remaining amortization of intangible assets, including the covenants not to compete, will approximate $42,200 in 2026, $36,800 in 2027, and $23,000 per year through 2036 and approximately $5,200 in 2037.\n\n \n\nThe total amortization expense for the first quarter of 2026 was $14,030, and for the thirteen weeks ended March 30, 2025, it was $19,625.\n\n \n\n**NOTE 3 – PROPERTY AND EQUIPMENT**\n\n \n\nProperty and equipment consisted of the following:\n\n \n\n \n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**December 28,**\n\n**2025**\n\n \n\nLand\n\n \n$366,285\n \n\n \n$366,285\n \n\nEquipment\n\n \n\n \n3,926,430\n \n\n \n\n \n3,890,916\n \n\nBuildings and leasehold improvements\n\n \n\n \n2,416,940\n \n\n \n\n \n2,412,371\n \n\nTotal property and equipment\n\n \n\n \n6,709,655\n \n\n \n\n \n6,669,572\n \n\nAccumulated Depreciation\n\n \n\n \n(3,926,210 )\n \n\n \n(3,788,731 )\n\nNet\n\n \n\n \n2,783,445\n \n\n \n\n \n2,880,841\n \n\nLess – property held for sale\n\n \n\n \n(424,123 )\n \n\n \n(424,123 )\n\nNet property and equipment\n\n \n$2,359,322\n \n\n \n$2,456,718\n \n\n \n\nDepreciation expense for the 13-week periods in 2026 and 2025 was $137,479 and $136,770, respectively. \n\n \n\n \n\nPage 12 of 30\n\n*Table of Contents*\n\n \n\n**NOTE 4 – ACCRUED EXPENSES**\n\n \n\nAccrued expenses consisted of the following at: \n\n \n\n \n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**December 28,**\n\n**2025**\n\n \n\nAccrued real estate taxes\n\n \n$41,572\n \n\n \n$44,744\n \n\nAccrued payroll and payroll taxes\n\n \n\n \n137,947\n \n\n \n\n \n225,866\n \n\nAccrued audit fees\n\n \n\n \n50,000\n \n\n \n\n \n-\n \n\nAccrued sales taxes payable\n\n \n\n \n76,919\n \n\n \n\n \n54,231\n \n\nAccrued vacation pay\n\n \n\n \n30,000\n \n\n \n\n \n30,000\n \n\nAccrued gift card liability\n\n \n\n \n40,404\n \n\n \n\n \n46,779\n \n\nOther accrued expenses\n\n \n\n \n21,592\n \n\n \n\n \n20,247\n \n\n \n\n \n$398,434\n \n\n \n$421,867\n \n\n \n\n**NOTE 5 – LONG-TERM DEBT**\n\n \n\nOur long-term debt is as follows:\n\n \n\n \n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**December 28,**\n\n**2025**\n\n \n\nThree 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, Inc., and a shareholder of the Company guarantees the notes.\n\n \n$2,072,512\n \n\n \n$2,116,522\n \n\nLess - unamortized debt issuance costs\n\n \n\n \n(24,049 )\n \n\n \n(25,399 )\n\nLess current maturities\n\n \n\n \n(198,500 )\n \n\n \n(191,531 )\n\n \n\n \n$1,849,963\n \n\n \n$1,899,592\n \n\n \n\n**NOTE 6 – STOCK-BASED COMPENSATION**\n\n \n\nIn 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 March 29, 2026, 718,250 shares were available for grant under the 2019 Incentive Plan.\n\n \n\nIn July 2025, the Board granted 62,500 options with an exercise price of $1.50 per share. This grant included 22,000 fully vested one-year options and 40,000 options that vest 20% upon grant and an additional 20% on each of the succeeding four anniversary dates.\n\n \n\nIn 2024, we issued 15,000 ten-year options to the then-existing outside member of our Board of Directors to purchase shares at $1.61 per share; we also granted 5,000 fully vested options to purchase shares at $1.70 per share to a new member of the Board. In 2022, we granted 216,000 options, including 175,000 to company officers and 41,000 to employees and a consultant, to purchase shares at $2.58 per share.\n\n \n\nIn 2023, outside of the plan, we granted a consultant a warrant to purchase 100,000 shares at $2.50 per share, exercisable for seven years. The warrant vests monthly over five years, provided the consultant continues in this capacity. Assuming the consulting agreement runs full term, we project that approximately $80,000 in stock-based compensation will be recognized, with $32,000 recognized in each of the next two years and $16,000 recognized in 2028.\n\n \n\n \n\n \n\nPage 13 of 30\n\n*Table of Contents*\n\n \n\nCompensation expense equal to the fair value of the options at the grant date is recognized in general and administrative expense over the applicable service period. Total equity-based compensation expenses for stock options and warrants in the first quarters of 2026 and 2025 were $16,375 and $31,000, respectively. As of March 29, 2026, we estimated that approximately $121,000 in stock-based compensation expense for stock options, including consultant warrants, would be recognized over the next four years: $49,000 in 2026, and $43,000 in 2027, $24,000 in 2028 and $5,000 in 2029. Following the end of the quarter, the Board of Directors accelerated the vesting of certain outstanding options, resulting in the recognition of this expense in the second quarter of 2026.\n\n \n\nAt 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.\n\n \n\nWe utilize the Black-Scholes option pricing model when determining the compensation cost associated with stock options issued using the following significant assumptions:\n\n \n\n \n\n·\n\nStock price – Published trading market values of the Company’s common stock as of the grant date.\n\n \n\n·\n\nExercise price – The stated exercise price of the stock option.\n\n \n\n·\n\nExpected life – The simplified method\n\n \n\n·\n\nExpected dividend – The rate of dividends expected to be paid over the term of the stock option.\n\n \n\n·\n\nVolatility – Estimated volatility.\n\n \n\n·\n\nRisk-free interest rate – The daily United States Treasury yield curve rate corresponding to the expected life of the award\n\n \n\nInformation regarding our stock options is summarized below: \n\n \n\n \n\n \n\n \n\n \n\n**Weighted Average**\n\n \n\n \n\n**Weighted Average**\n\n**Remaining**\n\n \n\n \n\n**Aggregate**\n\n \n\n**13-Week period ended March****29, 2026-**\n\n \n\n**Number**\n\n**of Options**\n\n \n\n \n\n**Exercise**\n\n**Price**\n\n \n\n \n\n**Term**\n\n**(In Years)**\n\n \n\n \n\n** Intrinsic**\n\n**Value**\n\n \n\nOptions outstanding at December 28, 2025\n\n \n\n \n381,750\n \n\n \n$2.40\n \n\n \n\n \n6.6\n \n\n \n$0\n \n\nGranted\n\n \n\n \n0\n \n\n \n\n \n0\n \n\n \n\n \n\n \n\n \n\n \n\n \n0\n \n\nExercised\n\n \n\n \n0\n \n\n \n\n \n0\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCanceled, forfeited, or expired\n\n \n\n \n0\n \n\n \n\n \n0\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOptions outstanding at March 29, 2026\n\n \n\n \n381,750\n \n\n \n$2.40\n \n\n \n\n \n6.1\n \n\n \n$11,000\n \n\nOptions exercisable at March 29, 2026\n\n \n\n \n298,741\n \n\n \n$2.40\n \n\n \n\n \n5.4\n \n\n \n$5,580\n \n\n \n\n \n\n \n\n \n\n \n\n**Weighted Average**\n\n \n\n \n\n**Weighted Average**\n\n**Remaining**\n\n \n\n \n\n**Aggregate**\n\n \n\n**13-Week period ended March 30, 2025-**\n\n \n\n**Number**\n\n**of Options**\n\n \n\n \n\n**Exercise**\n\n**Price**\n\n \n\n \n\n**Term**\n\n**(In Years)**\n\n \n\n \n\n**Intrinsic**\n\n**Value**\n\n \n\nOptions outstanding at December 30, 2024\n\n \n\n \n339,250\n \n\n \n$2.53\n \n\n \n\n \n7.4\n \n\n \n$0\n \n\nGranted\n\n \n\n \n0\n \n\n \n\n \n0\n \n\n \n\n \n\n \n\n \n\n \n\n \n0\n \n\nExercised\n\n \n\n \n0\n \n\n \n\n \n0\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCanceled, forfeited, or expired\n\n \n\n \n(5,000 )\n \n\n \n2.50\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nOptions outstanding at March 30, 2025\n\n \n\n \n334,250\n \n\n \n$2.56\n \n\n \n\n \n4.5\n \n\n \n$0\n \n\nOptions exercisable at March 30, 2025\n\n \n\n \n227,407\n \n\n \n$2.63\n \n\n \n\n \n6.5\n \n\n \n$0\n \n\n \n\n \n\nPage 14 of 30\n\n*Table of Contents*\n\n \n\n \n\nOn February 27, 2023, the Company finalized a Contingent Incentive Share Award with senior executives. The Contingent Incentive Share Awards 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 250,000 shares of common stock as an award upon the Company’s share price reaching $8.50 per share for 20 consecutive trading days, provided, however, participants must be employed by the Company at the time the Incentive Shares are earned. The total expense associated with this award was $265,000 and was fully expensed in 2025.\n\n \n\n**NOTE 7 – LEASES**\n\n \n\nIn connection with the acquisition of Keegan’s, the Company agreed to a lease for approximately 2,800 square feet of restaurant space. The lease has a term of 131 months and provides for an initial base rent of $5,000 per month, with annual increases equal to the greater of 3% or the Consumer Price Index (CPI). Current monthly base rent is $5,628. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales taxes.\n\n \n\nThe lease is accounted for as an operating lease. At lease commencement, the Company recorded a right-of-use asset and corresponding operating lease liability of approximately $624,000. The operating lease liability was $446,111 as of March 29, 2026, and $458,587 as of December 28, 2025, discounted using a rate of 3.75% and is reflected as operating lease liabilities in the accompanying consolidated balance sheets.\n\n \n\nUpon acquisition of the PIE assets, the Company leased approximately 3,500 square feet of restaurant and bakery production space. The lease has an initial term of 60 months and has been renewed for an additional five-year term. The lease provided for an initial base rent of $10,000 per month, with a 3% annual escalation beginning after the first 24 months. Current monthly base rent is $10,609. Variable lease costs consist primarily of property taxes, insurance, certain utility expenses, and sales taxes.\n\n \n\nThe 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 $1,055,000.\n\n \n\nThe operating lease liability related to the PIE lease as of March 29, 2026, was $749,466 and was $771,907 as of December 28, 2025, discounted using a rate of 4.5% and is reflected as operating lease liabilities in the accompanying consolidated balance sheets.\n\n \n\nIn May 2024, in connection with the acquisition of Schnitzel Haus, the Company assumed the remaining 44 months of the restaurant’s 4,200-square-foot lease, with a monthly base rent of approximately $5,400.\n\n \n\nThe 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 $182,478. The operating lease liability related to this lease was $110,606 as of March 29, 2026, and approximately $122,953 as of December 28, 2025, discounted using a rate of 6.5%, and is reflected as a liability in the accompanying consolidated balance sheets.\n\n \n\n*Village Bier Garten Lease –*\n\n \n\nThe Company’s acquisition of Village Bier Garten assets in 2023 included a 60-month triple-net lease for approximately 3,000 square feet of restaurant space. The lease provided for an initial rent of approximately $8,200 per month, subject to an annual escalation of 3%.\n\n \n\nOn 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. The landlord has secured a replacement tenant, which would mitigate any damages awarded.\n\n \n\n \n\nPage 15 of 30\n\n*Table of Contents*\n\n \n\n \n\nAs a result of the cessation of operations and loss of use of the premises, the Company evaluated the related right-of-use asset for impairment in accordance with ASC 842 and ASC 360 and recorded a full impairment charge of approximately $215,000 during the year ended December 28, 2025.\n\n \n\nGiven the outstanding litigation seeking acceleration of unpaid rent under the lease, as of March 29, 2026 and December 28, 2025, the Company has included a net lease liability of approximately $215,000, representing the total unpaid lease payments under the full lease term.\n\n \n\nThe ultimate resolution of the matter is subject to ongoing litigation and may differ from the amounts recorded.\n\n \n\nThe following table presents future minimum lease payments under the Company’s operating leases as of March 29, 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.\n\n \n\n**YEAR**\n\n \n\n**Lease Payments**\n\n \n\n2026 remaining\n\n \n$338,840\n \n\n2027\n\n \n\n \n322,686\n \n\n2028\n\n \n\n \n219,824\n \n\n2029\n\n \n\n \n214,859\n \n\n2030\n\n \n\n \n215,034\n \n\nThereafter\n\n \n\n \n347,669\n \n\nTotal future minimum lease payments\n\n \n\n \n1,658,912\n \n\nLess - interest\n\n \n\n \n(137,729 )\n\nPresent value of lease obligations\n\n \n$1,521,183\n \n\n \n\nThe weighted-average remaining lease term of the Company’s operating leases was approximately 5.3 years, and the weighted-average discount rate was approximately 4.50%.\n\n \n\nThe 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.\n\n \n\nThe total operating lease expenses for the 13 weeks in 2026 and 2025 were approximately $82,000 and $76,000, respectively. Cash paid for leases during the thirteen weeks in 2026 totaled approximately $80,000, and $74,000 during the thirteen weeks in 2025. Variable expenses for lease properties were approximately $9,000 in the first quarter of 2026 and $9,000 in the first quarter of 2025.\n\n \n\nThe Company pays approximately $1,400 in monthly rent under month-to-month arrangements for corporate and administrative office space in Minnetonka, Minnesota.\n\n \n\n**NOTE 8 – SHAREHOLDERS’ EQUITY**\n\n \n\nOn 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 $10,696,575.\n\n \n\nOn June 6, 2024, we authorized a stock repurchase program, under which we may repurchase up to 625,000 shares, or approximately 10.0%, of our currently issued and outstanding common stock (the “2024 Share Repurchase Program”). We have not established any maximum aggregate price to be paid for shares that we repurchase. As of March 29, 2026, we have repurchased 306,394 shares, including 91,394 shares under the 2024 Share Repurchase Program. We may purchase up to an additional 533,606 shares under the 2024 Share Repurchase Program. We are purchasing the shares with available cash. We may purchase shares of our common stock from time to time, in amounts, at prices, and at such times as we deem appropriate, subject to market conditions, legal requirements and other considerations. Our purchases may be executed through open-market purchases, unsolicited or solicited privately negotiated transactions, or other transactions. The 2024 Share Repurchase Program does not obligate us to repurchase any specific number of shares and may be suspended, modified, or terminated at any time without prior notice. The 2024 Share Repurchase Program does not include a time limitation on when repurchases may occur.\n\n \n\n \n\nPage 16 of 30\n\n*Table of Contents*\n\n \n\n*Potential Sale and Issuance of Stock*\n\n \n\nOn 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 $0.002 per share (the “Common Stock”), subject to the maximum aggregate sales proceeds of up to $3,565,880 pursuant to the applicable prospectus supplement, from time to time, through an “at the market offering program under which Maxim will act as sales agent.\n\n \n\n**NOTE 9 – RELATED PARTY TRANSACTIONS**\n\n \n\n**NGI Corporation**\n\n \n\n**Equity Investment and Impairment**\n\n \n\nPrior to 2025, the Company held a minority equity investment in NGI Corporation (“NGI”) with an aggregate carrying value of $304,000. During fiscal 2025, the Company evaluated the recoverability of this investment and identified impairment indicators, including recurring operating losses at NGI and its limited access to capital. As a result, the Company determined the investment was impaired and recorded a full impairment charge of $304,000, reducing the carrying value to zero. As of March 29, 2026 and December 28, 2025, the Company has no remaining carrying value related to its equity investment in NGI.\n\n \n\n**Loans, Foreclosure, and Inventory Acquisition**\n\n \n\nThe 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.\n\n \n\nEffective 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 bottle inventory, which is recorded within current assets as “Inventory – bottled water held for resale.”\n\n \n\nThe bottle 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 $217,000 to reflect the estimated net realizable value. As of March 29, 2026, the carrying value of the bottle inventory, which includes ongoing carrying costs, was $584,324.\n\n \n\nThe 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.\n\n \n\n**Related Party Considerations**\n\n \n\nKenneth Brimmer, the Company’s Chief Operating Officer, serves as a member of NGI’s board of directors and as its Chief Financial Officer. Accordingly, transactions with NGI are considered related party transactions.\n\n \n\n \n\nPage 17 of 30\n\n*Table of Contents*\n\n \n\n*Bagger Dave’s Burger Tavern, Inc.-*\n\n \n\nOn June 2, 2022, the Company purchased 11,095,085 shares of common stock of Bagger Dave’s Burger Tavern, Inc. (“Bagger Dave’s” or “BDVB”), representing approximately a 40.7% ownership interest at the time of purchase, for an aggregate purchase price of $1,260,000. The Company accounts for its investment in BDVB under the equity method of accounting, as it has the ability to exercise significant influence over BDVB’s operating and financial policies but does not control the entity.\n\n \n\nBagger 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.\n\n \n\nAs 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.\n\n \n\nDuring the first quarter of fiscal 2026, the Company advanced $88,227 to BDVB pursuant to authorization from the Company’s Board of Directors to provide up to $297,000 of financing on terms to be determined. The advance represents additional financial support. As a result, the Company resumed recognition of its share of BDVB’s losses to the extent of the additional investment. As a result of net income totaling $218,248 in the first quarter of 2026, BT Brands’ cumulative share of Bagger Dave’s net income, amounting to $9,558, due to prior year losses in excess of equity investment of $79,269 is recognized in the current period.\n\n \n\nThe 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.\n\n \n\nDuring the first quarter of fiscal 2026, BDVB sold its closed leasehold interest in Chesterfield, Michigan, for approximately $400,000, consisting of cash and notes receivable. BDVB recognized a gain of approximately $350,000 related to this transaction.\n\n \n\nThe following tables present unaudited summary financial information of BDVB as of and for the periods indicated, as reported by BDVB\n\n \n\n**Balance Sheet Information -**\n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**December 28,**\n\n**2025**\n\n \n\nTotal current assets\n\n \n$298,871\n \n\n \n$173,665\n \n\nTotal noncurrent assets, net\n\n \n\n \n1,721,957\n \n\n \n\n \n1,650,670\n \n\nTotal assets\n\n \n\n \n2,020,828\n \n\n \n\n \n1,824,335\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\n \n\nCurrent liabilities\n\n \n\n \n606,882\n \n\n \n\n \n615,819\n \n\nDue to BT Brands, Inc.\n\n \n\n \n88,227\n \n\n \n\n \n-\n \n\nTotal noncurrent liabilities\n\n \n\n \n1,035,936\n \n\n \n\n \n1,136,980\n \n\nTotal liabilities\n\n \n\n \n1,731,045\n \n\n \n\n \n1,752,799\n \n\nStockholders’ equity\n\n \n\n \n289,783\n \n\n \n\n \n71,536\n \n\nTotal liabilities and stockholders’ equity\n\n \n$2,020,828\n \n\n \n$1,824,335\n \n\n \n\n \n\nPage 18 of 30\n\n*Table of Contents*\n\n \n\n \n\n \n\n**13 Week ended,**\n\n \n\n**Statements of Operations information -**\n\n \n\n**March 29,**\n\n**2026**\n\n \n\n \n\n**March 30,**\n\n**2025**\n\n \n\nRevenue\n\n \n$1,460,235\n \n\n \n$1,567,917\n \n\nDepreciation and amortization\n\n \n\n \n(10,886)\n \n\n \n(77,799)\n\nOther costs and expenses\n\n \n\n \n(1,593,092)\n \n\n \n(1,800,299)\n\nOperating loss\n\n \n\n \n(143,743)\n \n\n \n(310,181\n \n\nGain on sale of assets\n\n \n\n \n361,991\n \n\n \n\n \n-\n \n\nNet income (loss)\n\n \n$218,248\n \n\n \n$(310,181)\n\n \n\nOfficers of BT Brands, Inc. also serve as officers and directors of Bagger Dave’s Burger Tavern, Inc. BT Brands owns approximately 40.7% of the outstanding shares of Bagger Dave’s. The investment is accounted for on the equity method. In 2025 through the first quarter of 2026, officers of BT Brands received no compensation from Bagger Dave’s and there were no additional related party transactions.\n\n \n\n**NOTE 10 – CONTINGENCIES**\n\n \n\nThe 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.\n\n \n\n**Village Bier Garten Lease Litigation**\n\n \n\nIn 2023, the Company acquired assets of Village Bier Garten, including a 60-month triple-net lease for approximately 3,000 square feet of restaurant space in Cocoa, Florida, at an initial rent of approximately $8,200 per month, subject to annual escalation of 3%. On January 2, 2025, the Company ceased operations at the location and entered into an agreement to assign the lease to a third party. Following the transfer of possession, the assignee operated a restaurant on the premises and remitted rent payments directly to the landlord for several months, which the landlord accepted.\n\n \n\nIn 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.\n\n \n\nThe 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 $200,000 in unpaid consulting fees and believes it has contractual rights against the assignee for any amounts that may be determined payable under the lease.\n\n \n\nAs of December 28, 2025, the Company wrote off the remaining $215,000 book value of the right-of-use asset attributable to the lease. The recorded liability does not reflect any reduction for the landlord’s mitigation obligation or the Company’s potential recovery from the assignee. The ultimate outcome will be determined through litigation or negotiated settlement and may differ materially from the amount recorded. Management will continue to evaluate the matter as additional information becomes available.\n\n \n\n \n\nPage 19 of 30\n\n*Table of Contents*\n\n \n\n \n\n**Aero Velocity Merger Termination**\n\n \n\nOn 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, subsequent to the fiscal quarter ended March 29, 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.\n\n \n\nOn May 4, 2026, counsel for Aero delivered a letter asserting that the termination was invalid and seeking payment of approximately $1,500,000 in damages and other amounts. The Company disputes Aero’s assertions and does not believe that any termination fee or other material payment obligation is owed. Under Section 5.8 of the Merger Agreement, each party is generally responsible for its own transaction expenses.\n\n \n\nAs 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.\n\n \n\n**Other Matters**\n\n \n\nIn 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 March 29, 2026, the Company was not a party to any material pending legal or regulatory proceedings other than the Village Bier Garten lease litigation described above. Subsequent to the quarter end, the Aero Velocity dispute described above arose. The outcome of any such matter is inherently uncertain.\n\n \n\n \n\nPage 20 of 30\n\n*Table of Contents*"}