Company: BTBDW
Filing Date: 2025-11-17
Form Type: 10-Q
Source: 0001477932-25-008407
Chunk: 54

Company: BT Brands, Inc.
Filing Date: 2025-11-17
Form: 10-Q
Item: Part I, Item 2
Chunk 54
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 central focus of management in future quarters.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. The accounting areas that require the most significant judgment include the valuation of equity-method investments, the collectability of related-party notes receivable, and the assessment of inventory realizability.

Our investment in Bagger Dave’s Burger Tavern, Inc. is accounted for under the equity method. We evaluate this investment for impairment when indicators of a loss in value are present. During the third quarter of 2025, our investment balance was reduced to zero as our cumulative share of losses exceeded our recorded investment. We have suspended recognition of additional losses unless further financial support is provided.

We also assess the recoverability of loans and notes receivable from NGI Corporation based on the borrower’s financial condition, collateral value, and repayment capacity. The valuation of our Disney-licensed inventory similarly requires estimates regarding future sales and market demand.

Management believes these estimates are reasonable and consistent with current conditions; however, changes in underlying assumptions or market factors could materially affect our results of operations and financial position.

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Liquidity and Capital Resources

As of September 28, 2025, we had approximately  $4.7 million in cash, cash equivalents, and marketable securities, along with net working capital of approximately $5.7 million, representing an increase of approximately $2.0 million from December 29, 2024. 

Liquidity is needed to support working capital, capital expenditures, general corporate activities, and potential investments or acquisitions.  Our operations do not require significant working capital, and, like many restaurant companies, we generally operate with negative working capital requirements. For the 39 weeks ended September 28, 2025, restaurant EBITDA improved significantly from the 2024 level, driven by the closure of underperforming locations. Loans to NGI Corporation and the purchase of inventory, as described in Note 9 to the financial statements accompanying this report, have reduced cash and investments on hand. In 2025, our equity investment in Bagger Dave’s was reduced to zero as our cumulative share of losses exceeded our recorded investment. While this adjustment did not directly impact cash flows, it reflects the continuing operating challenges of Bagger Dave’s. Any future recognition of income would