BT Brands, Inc. BTBD US Equity☆

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations is intended to provide information relevant to an assessment of our financial condition and results of operations and should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report.

Fiscal Year

Our fiscal year consists of 52 or 53 weeks and ends on the Sunday closest to December 31. The 52-week fiscal year 2025 ended on December 28, 2025, and the 52-week fiscal year 2024 ended on December 29, 2024.

Introduction

As of December 28, 2025, 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. Accordingly, our owned and minority-owned restaurant portfolio consisted of fourteen restaurant locations, comprised of

· 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”).

In addition, 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.

The average customer transaction at Burger Time restaurants did not change significantly in fiscal 2025 compared to fiscal 2024, and based on our recent analysis, it is approximately $14.50. 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. In November 2025, the landlord of the Village Bier Garten premises in Cocoa, Florida, issued a notice of default alleging nonpayment of rent 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 15 to Consolidated Financial Statements.

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In September 2025, we entered into the Merger Agreement to enter into a business combination with Aero Velocity, a private aerospace company, as described elsewhere in this Report. This proposed transaction did not impact the 2025 results of operation. If the merger is completed, we intend to spin off our restaurant operations and other existing assets into a separate company, BT Group, Inc. The forward-looking growth strategy described in this Report reflects management’s current views regarding BT Group, assuming the merger closes. There can be no assurance that the merger will be completed or that the spin-off will occur.

In January 2025, our unconsolidated affiliate, Bagger Dave’s, closed its Chesterfield, Michigan, location. BDVB is currently exploring strategic alternatives, including the potential sale of all Bagger Dave’s restaurant locations.

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. In addition, our entry into an agreement to merge with Aero Velocity and the related plan to spin off our restaurant operations introduce additional uncertainties to our outlook.

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Fiscal 2025 Compared to Fiscal 2024

The following table presents our consolidated statements of operations expressed as a percentage of sales for the periods indicated. Percentages may not sum or may be adjusted to reflect the rounding.

Amount % Amount %

COSTS AND EXPENSES

Restaurant operating expenses

UNREALIZED GAIN (LOSS) ON MARKETABLE SECURITIES 128,822 1.0 (93,458 ) (0.6 )

IMPAIRMENT OF RELATED PARTY INVESTMENTS AND RECEIVABLES (520,718 ) (3.9 ) - -

Net Sales:

Net sales, which represent sales at our restaurant locations, for fiscal 2025 decreased $1.3 million, or 7.5%, to $13.5 million from $14.8 million in fiscal 2024. Among several factors, this decrease reflects the closure of the Village Bier Garten location at the beginning of the year; VBG contributed approximately $1.3 million in sales during fiscal 2024.

Comparable restaurant sales represent sales from Burger Time locations open for the full 52-week periods in both fiscal 2025 and fiscal 2024. A Burger Time restaurant in Minot, North Dakota, was closed during fiscal 2025. The Minot location generated approximately $560,000 in sales during fiscal 2024 and $281,000 during fiscal 2025. Schnitzel Haus, acquired in May 2024, contributed approximately $1.5 million in sales during fiscal 2025, an increase of approximately $0.8 million compared to fiscal 2024.

For Burger Time locations open for the full year, sales declined approximately $224,000, or 3.9%. The decline in comparable restaurant sales was primarily attributable to reduced customer traffic, partially offset by modest menu price increases. Average annual sales for the six Burger Time restaurants open at year-end were approximately $914,000 in fiscal 2025, compared with $952,000 in fiscal 2024, a 3.9% decline. For BTND locations that were open at year-end 2025, restaurant sales ranged from $691,000 to $1,224,000.

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Restaurant Operating Costs:

In 2025, restaurant operating costs (which refer to the costs associated with operating our restaurants, excluding general and administrative expenses, depreciation, amortization, and restaurant impairment charges) declined to 87.2% of restaurant sales from 95.1% in 2024. This decrease was due to the closure of less-profitable locations, improved margins at Pie In the Sky, and the matters discussed in the “Cost of Sales,” “Labor Costs,” and “Occupancy and Other Operating Costs” sections discussed below.

The change in restaurant operating costs from fiscal 2024 to fiscal 2025 is summarized below:

Restaurant operating costs for the period ended December 29, 2024 $ 14,099,644

Decrease in food and paper costs. (1,111,130 )

Decrease in labor costs. (1,017,477 )

Decrease in occupancy and operating cost (205,317 )

Restaurant operating costs for the period ended December 28, 2025 $ 11,765,720

Costs of Sales - food and paper:

Food and paper costs decreased to 33.3% of restaurant sales in fiscal 2025 from 37.8% in fiscal 2024. This decrease reflects cost control initiatives, a more moderate inflationary environment, and menu price increases.

Labor Costs:

In 2025, labor and benefits costs decreased to 37.9% of restaurant sales from 41.3% in 2024. The decrease results from the closure of unprofitable locations and a greater focus on controlling labor costs across all locations. Payroll costs are semi-variable and therefore do not decline proportionally with declining revenues, which can cause labor costs to increase as a percentage of restaurant sales.

Occupancy and Other Operating Costs:

For 2025, occupancy and other costs were unchanged at 17.0% of restaurant sales, or $2,160,878, compared to $2,355,806, or in 2024.

Depreciation and Amortization Costs:

For 2025, depreciation and amortization costs decreased 12.7%, or $94,156, to $648,704 (4.5% of sales) from $742,860 (5.0% of sales) in 2024. The decline in total depreciation is attributable in part to the closing of VBG and the 2024 charge-off of the remaining asset value.

General and Administrative Costs:

General and administrative expenses declined by $227,375 to $1.5 million in fiscal 2025, down from $1.7 million in fiscal 2024, and decreased to 10.9% of sales from 11.4% in fiscal 2024, reflecting cost-control efforts across administrative activities.

Restaurant Impairment and Related Charges:

In 2024, the Company recorded an impairment charge of $371,872 related to its decision to close the Village Bier Garten location. In 2025, the Company recorded a $215,000 lease litigation accrual related to the former Village Bier Garten location in Cocoa, Florida. This amount reflects the remaining contractual lease payments associated with unpaid rent under the original lease agreement. The Company disputes the landlord’s claims and intends to vigorously defend the matter. The ultimate outcome of the litigation is uncertain and may differ from the amount recorded, including as a result of the landlord’s obligation to mitigate damages and the Company’s potential recovery from the assignee. The Company will continue to evaluate the matter and adjust the recorded amount as additional information becomes available.

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Loss from Operations:

Loss from operations improved to a loss of $364,585 in fiscal 2025 from a loss of $1.8 million in fiscal 2024. The fiscal 2024 loss included a $371,872 impairment charge related to Village Bier Garten. The 2025 loss includes a $215,000 litigation charge related to the closure of the Village Bier Garten and a lease liability dispute. Operating margins improved across the portfolio, particularly at PIE and Burger Time locations. Menu changes and improved cost controls increased operating margins at the Burger Time location, as discussed in the “Net Revenues,” “General and Administrative Costs,” and “Restaurant Operating Costs” sections above.

Interest and Other Income (Expense):

Interest expense increased slightly to $81,261 in fiscal 2025 as a result of ongoing amortization of principal on mortgage notes. Interest and dividend income declined to $148,666 from $178,279, reflecting lower average invested balances.

Net Loss

Net loss improved to a net loss of $687,839 in fiscal 2025 from a $2.3 million loss in fiscal 2024. The improvement reflects higher restaurant-level profitability, impairment and lease liability charges of $215,000 in 2025 and a 2024 charge of $371,872 for Village Bier Garten assets, and a lower equity loss from BDVB as the equity in BDVB reached zero. We also recorded a $216,248 charge to reduce the NGI bottle inventory to its estimated net realizable value of $574,000. Net loss for 2024 also reflects the impact of fully reserving for deferred tax benefits, resulting in a $206,000 income tax provision in 2024.

Restaurant-level EBITDA:

To supplement the consolidated financial statements, which are prepared and presented in accordance with GAAP, we use restaurant-level EBITDA (earnings before interest, taxes, depreciation, and amortization), which is not a measure defined by GAAP. This non-GAAP operating measure is useful to both management and, we believe, investors because it provides a means to gauge the overall profitability of our recurring, controllable core restaurant operations. However, this measure is not indicative of our overall results, nor does restaurant-level profit accrue directly to stockholders, primarily because it excludes corporate-level expenses. Restaurant-level EBITDA should not be considered a substitute for or superior to operating income, which is calculated in accordance with GAAP, and the reconciliations to operating income set forth below should be carefully evaluated.

We define restaurant-level EBITDA as operating income before general and administrative expenses, depreciation and amortization, and restaurant impairment and related charges. General and administrative expenses are excluded as they are generally unrelated to restaurant-specific costs. Depreciation and amortization are excluded because they are not ongoing controllable cash expenses and are unrelated to the health of ongoing operations. There were no pre-opening costs in fiscal 2025 or fiscal 2024.

Year

Reconciliation:

General and administrative, corporate-level expenses 1,464,021 1,691,404

Restaurant-level EBITDA margin 12.4 % 4.9 %

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Liquidity and Capital Resources

Overview

Our primary sources of liquidity are cash generated from restaurant operations, proceeds from the sale of marketable securities, and existing cash and marketable securities on hand. Our primary uses of cash are operating expenses, capital expenditures, debt service, transaction-related expenses, and strategic investments.

As of December 28, 2025, we had $4,442,300 in cash and marketable securities and $4,680,411 in working capital, compared to $4,270,970 in cash and marketable securities and $3,556,469 in working capital as of December 29, 2024. The increase in working capital was primarily attributable to improved operating performance and disciplined capital expenditures during fiscal 2025.

For fiscal 2025, we recorded a net loss of $687,839 compared to a net loss of $2,311,208 in fiscal 2024. Despite the net loss, operating cash flow improved significantly year over year due to stronger restaurant-level performance.

Our primary liquidity requirements are to fund working capital needs, capital expenditures, and general corporate needs, and to invest in or acquire businesses that are synergistic with our business. Our operations do not require significant working capital, as restaurants generally operate with negative working capital. Working capital deficits may be incurred in the future. Our liquidity and cash flow sources are cash and cash equivalents and marketable securities. We have used available cash to make acquisitions, service debt, and maintain our stores. Our working capital position benefits from the fact that we collect cash from sales to our customers at the point of purchase or within a few days from our credit card processor, and, in general, payments to our vendors are not due for 30 days.

The Company is currently involved in litigation related to a lease dispute at its former Village Bier Garten location in Cocoa, Florida. As of December 28, 2025, the Company recorded an accrued liability of $215,000 associated with this matter. While the Company disputes the landlord’s claims and intends to vigorously defend the matter, the timing and amount of any cash outflows related to this litigation remain uncertain. The Company believes that certain factors, including the landlord’s obligation to mitigate damages and the Company’s potential recovery from the assignee of the lease, may reduce the ultimate amount of any required payments. However, the resolution of this matter will be determined through litigation or negotiated settlement, and actual cash outflows may differ from the amount currently recorded. The Company does not currently expect this matter to have a material adverse impact on its overall liquidity position; however, management will continue to monitor developments and assess the potential impact on future cash flows.

The ultimate capital structure, liquidity profile, and operating model of BT Group will depend on the final terms and structure of the merger and spin-off. The separation could result in incremental transaction costs, advisory fees, audit and legal expenses, and standalone public company costs, including governance, compliance, and reporting expenses. In addition, the separation may require the establishment of new credit facilities or other financing arrangements for BT Group, and there can be no assurance regarding the availability or terms of such financing.

We are currently evaluating BT Group’s anticipated working capital needs, capital structure, and ongoing liquidity requirements. While we expect that existing cash balances and operating cash flow will support near-term operational needs of the restaurant business, completion of the merger and spin-off could materially change our capital allocation strategy, liquidity profile, and risk exposure. There can be no assurance that the merger will be completed or that the spin-off will occur.

Summary of Cash Flows

Operating Activities

Net cash provided by operating activities was $284,876 in fiscal 2025, compared to net cash used in operating activities of $284,876 in fiscal 2024. The improvement was primarily driven by reduced operating losses, improved restaurant-level margins, and the effect of the impairment charge recorded in the prior year.

Restaurant operations typically generate cash quickly due to point-of-sale transactions and short settlement cycles for credit card receipts, while vendor payment terms are generally 30 days. As a result, our restaurant operations do not require significant working capital investment.

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Investing Activities

Cash used in investing activities during fiscal 2025 primarily consisted of net purchases of marketable securities, approximately $172,925 in capital expenditures related to restaurant improvements and equipment upgrades, $380,861 for the purchase of Water Bottle Inventory, loans made to related party and purchase of a secured note totaling approximately $650,000, and proceeds from the sale of property of approximately $550,000. In fiscal 2024, investing activities included the acquisition of Schnitzel Haus for approximately $943,000 and net purchases of marketable securities.

We expect capital expenditures in fiscal 2026 to consist primarily of maintenance capital, equipment replacement, and operational enhancements. We do not currently anticipate significant expansionary capital expenditures.

Financing Activities

Cash used in financing activities during fiscal 2025 totaled $329,720 and consisted of scheduled principal payments on long-term debt and $140,450 in payments for deferred transaction costs. In 2024, cash used in financing activities was $450,849, including $142,794 for share repurchases. We did not acquire additional treasury shares during fiscal 2025.

Contractual Obligations

As of December 28, 2025, we had approximately $3.7 million in contractual obligations, including long-term debt and future lease liabilities. Our monthly required payments total approximately $47,000.

Investment in BDVB

As of December 28, 2025, the carrying value of our equity-method investment in Bagger Dave’s Burger Tavern, Inc. (“BDVB”) was zero. We are not obligated to fund additional losses of BDVB and have not guaranteed its indebtedness. In the future, any decision to advance or guarantee BDVB debt will result in additional equity losses. Proposed Merger with Aero Velocity and

Planned Spin-Off

In September 2025, we entered into an Agreement and Plan of Merger with Aero Velocity Inc., a private aerospace drone services company. If completed, the merger will result in a fundamental change in our capital structure and strategic focus.

Pursuant to the Merger Agreement, prior to closing, we intend to spin off our existing restaurant operations into a newly formed entity, (“BT Group, Inc.”) BT Group is expected to retain all of our existing restaurant operations, related assets, cash balances, and liabilities. Following the spin-off, BT Group would operate as a standalone company.

The proposed merger did not affect our fiscal 2025 liquidity or results of operations. However, if completed, the transaction will materially alter our capital structure, ownership profile, and financial risk. The combined post-merger entity is expected to issue convertible preferred stock to Aero stockholders, resulting in significant dilution to existing stockholders and a shift in voting control.

We intend to seek a listing of BT Group’s common stock on a national securities exchange; however, there can be no assurance that BT Group will meet applicable listing requirements or that such listing will be achieved in a timely manner. Failure to obtain a listing could adversely affect the liquidity and marketability of BT Group shares.

Completion of the merger and spin-off may result in incremental transaction costs, including advisory, legal, audit, and regulatory expenses. In addition, BT Group may incur ongoing standalone public company costs, including governance, compliance, and reporting expenses. The ultimate capital structure and liquidity profile of BT Group and the post-merger entity will depend on the final structure and terms of the transaction. There can be no assurance that the merger will be completed or that the spin-off will occur.

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Capital Allocation

We evaluate capital allocation priorities based on liquidity, operating performance, growth opportunities, and market conditions. While we have a Board-authorized Share Repurchase Program in place, we did not repurchase shares during fiscal 2025. Future repurchases, if any, will depend on liquidity, capital requirements, and strategic considerations, including the outcome of the proposed merger.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. These estimates are based on historical experience and other assumptions we believe to be reasonable under the circumstances. Because these estimates involve judgment and are based on currently available information, actual results could differ materially from those estimates.

We believe the following accounting estimates involve a higher degree of judgment and are most critical to understanding our financial condition and results of operations.

Impairment of Long-Lived Assets

We review long-lived assets, including restaurant property and equipment and right-of-use lease assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Indicators include declining operating performance, negative cash flow trends, store closures, or changes in market conditions.

Recoverability is assessed by comparing the carrying value of the asset group to the estimated undiscounted future cash flows expected to result from its use and eventual disposition. If the carrying value exceeds estimated undiscounted cash flows, an impairment charge is recorded based on the excess of carrying value over fair value.

These analyses require significant judgment regarding projected sales, operating margins, and terminal values. Changes in assumptions or operating performance could result in future impairment charges.

During fiscal 2024, we recorded a $371,872 impairment charge related to Village Bier Garten and entered into a lease assignment with a third party and in 2025, following receiving notice of default by the assignee to the lease we recorded a $215,000 charge representing the total amount of unpaid lease payments under the original lease.

Equity Method Investments

We account for our 40.7% ownership interest in Bagger Dave’s Burger Tavern, Inc. (“BDVB”) under the equity method of accounting. Under this method, we record our proportionate share of BDVB’s net income or loss and adjust the carrying value of the investment accordingly.

During fiscal 2025, cumulative equity losses reduced the carrying value of our investment in BDVB to zero. Once an equity-method investment is reduced to zero, we discontinue recognizing additional losses unless we have guaranteed obligations or otherwise committed to providing additional financial support, which we have not done. Determining whether additional losses should be recognized requires judgment regarding the nature of our involvement and any potential obligations.

We also evaluate equity-method investments for impairment if events or circumstances indicate that the decline in value may be other-than-temporary. This assessment requires judgment regarding the affiliate’s financial condition and prospects.

Impairment of Related-Party Investment (NGI Corporation)

Prior to 2023, we made a series of equity investments in NGI Corporation (“NGI”), a related party, resulting in an aggregate carrying value of $304,000. During fiscal 2025, we evaluated the recoverability of this investment. We determined that indicators of impairment were present, including recurring operating losses at NGI and insufficient capital to sustain operations without continued external financing.

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Because there were no observable market transactions or other valuation inputs to support the investment’s carrying value, management concluded that the decline in value was other than temporary. Accordingly, we recorded a full impairment charge of $304,000 during fiscal 2025. Following our foreclosure on the water bottle inventory in satisfaction of outstanding loans to NGI, we recorded a $216,718 adjustment to reduce the inventory’s value to its estimated net realizable value of $574,000.

Determining whether an investment is impaired and whether any impairment is other-than-temporary requires significant judgment regarding financial performance, liquidity, and future prospects of the investee. Changes in these factors could affect the timing and amount of impairment charges.

Contingencies and Litigation Reserve

The Company is involved in a legal dispute with the landlord of its former Village Bier Garten location in Cocoa, Florida. In connection with the Company’s cessation of operations and subsequent assignment of the lease to a third party in January 2025, the landlord asserted a claim for unpaid rent and other amounts under the lease and initiated litigation against the Company.

As of December 28, 2025, the Company recorded an accrued liability of $215,000, representing the remaining contractual lease payments associated with unpaid rent under the original lease agreement.

The determination of this liability required significant judgment. In evaluating the appropriate amount to record, management considered the nature of the landlord’s claims, the status of the litigation, and the terms of the underlying lease. The recorded amount reflects the full contractual lease payments remaining and does not incorporate potential reductions related to the landlord’s obligation to mitigate damages or potential recoveries from the assignee of the lease.

Management believes that certain factors, including the landlord’s acceptance of rent payments from the assignee following the transfer of possession and the landlord’s obligation under Florida law to mitigate damages after regaining possession of the premises, may affect the ultimate amount of damages, if any, that could be recoverable. Additionally, the Company has asserted a claim against the assignee for approximately $200,000 in unpaid consulting fees, which could offset any amount ultimately owed.

The ultimate resolution of this matter is subject to significant uncertainty and will be determined through litigation or negotiated settlement. As a result, actual outcomes may differ materially from the amount recorded. Management will continue to monitor developments in the matter and will adjust the recorded liability as additional information becomes available.

Lease Accounting

We recognize right-of-use assets and lease liabilities for operating leases based on the present value of future lease payments. Because our leases typically do not provide an implicit rate, we estimate an incremental borrowing rate to discount lease payments. This rate is based on our estimated secured borrowing rate for a similar term. Changes in assumptions regarding discount rates, renewal options, or lease terms could materially affect the measurement of lease assets and liabilities.

Marketable Securities Valuation

We hold marketable equity securities that are measured at fair value, with changes in fair value recognized in earnings. The fair value of these securities is based on quoted market prices. Market volatility may cause significant fluctuations in unrealized gains and losses, which could materially impact our results of operations in future periods. Given the marketable securities are liquid and tradable, management does not anticipate any losses on settlement. We do not believe that fluctuations in value will impact our overall liquidity and available capital resources.

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Item 7A. Quantitative and Qualitative Disclosures 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 are required to comply with certain scaled disclosure reporting obligations. We are not required to provide the information required by this item.

Item 8. Financial Statements and Supplementary Data.

The information required by this Item is included in Part II, Item 8 of this Annual Report, “Financial Statements and Supplementary Data,” and is presented in accordance with Article 8 of Regulation S-X applicable to smaller reporting companies.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of BT Brands, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of BT Brands, Inc. and Subsidiaries (the Company) as of December 28, 2025 and December 29, 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the fiscal years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the fiscal years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.

/s/ Boulay PLLP

We have served as the Company’s auditor since 2015

Minneapolis, Minnesota

March 30, 2026

PCAOB ID: 542

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PART II, ITEM 8

BT BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

CURRENT ASSETS

Inventory – bottled water held for resale, net 574,000 -

Prepaid expenses and other current assets 22,152 117,621

PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS, NET 2,456,718 3,343,340

EQUITY METHOD INVESTMENT IN UNCONSOLIDATED AFFILIATE - 304,439

INVESTMENT IN EQUITY AND NOTES RECEIVABLE FROM RELATED COMPANY - 424,000

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY

See Notes to Consolidated Financial Statements

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BT BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

52 Weeks Ended, 52 Weeks Ended,

COSTS AND EXPENSES

Restaurant operating expenses

Impairment of restaurant and right-of-use assets 215,000 371,872

UNREALIZED GAIN (LOSS) ON MARKETABLE SECURITIES 128,822 (93,458 )

IMPAIRMENT OF RELATED PARTY INVESTMENT AND RECEIVABLES (520,718 ) -

EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE (304,439 ) (415,085 )

NET LOSS PER COMMON SHARE - Basic and Diluted $ (0.11 ) $ (0.37 )

See Notes to Consolidated Financial Statements

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BT BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the 52-week periods- Common Stock AdditionalPaid-in Accumulated Treasury

Shares Amount Capital (Deficit) Stock Total

See Notes to Consolidated Financial Statements

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BT BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

52 Weeks ended,

CASH FLOWS FROM OPERATING ACTIVITIES

Amortization of debt issuance costs included in interest expense 4,050 5,400

Unrealized loss (gain) on marketable securities (128,822 ) 93,458

Impairment of restaurant and right-to-use assets 215,000 371,872

Impairment of related party investment and water bottle inventory 520,718 -

Loss on disposal of assets - 90,087

Changes in operating assets and liabilities, net of acquisitions-

Prepaid expenses and other current assets 95,489 (70,375 )

Net cash provided by (used in) operating activities 284,876 (713,505 )

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of net assets of Schnitzel Haus - (943,000 )

Purchase of secured note due from related company (359,221 ) -

Repayment of loans to related company 360,000 -

Purchase of water bottle inventory (380,861 ) -

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of broker margin loan - (115,899 )

Payment of deferred transaction costs (140,450 ) (10,000 )

Purchase of treasury shares - (142,794 )

SUPPLEMENTAL DISCLOSURES

Purchase of property and equipment is included in accounts payable. $ - $ 15,109

See Notes to Consolidated Financial Statements

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NOTE 1 – BUSINESS DESCRIPTION

Organization

BT Brands, Inc. (“BT Brands,” “we,” “us,” “our,” or the “Company”) was incorporated as Hartmax of NY Inc. on January 19, 2016. Effective July 30, 2018, we acquired 100% of the ownership interests of BTND, LLC (“BTND”) in exchange for shares of our common stock pursuant to a Share Exchange Agreement (the “Share Exchange”). In 2020, BT Brands Inc. was reincorporated in the State of Wyoming.

Business

As of December 28, 2025, the Company owned and operated nine restaurants and held a nonconsolidated 40.7% equity interest in an operator of five restaurants. During fiscal 2025, we owned and operated six Burger Time restaurants in the north-central United States. In July 2025, we closed a leased Burger Time location in Minot, North Dakota and subsequently converted the property to a land lease on which payments are expected to commence in 2026. The net book value of the closed location was approximately $128,000, including land and equipment, with certain equipment relocated to other Burger Time units.

We also own and operate Keegan’s Seafood Grille (“Keegan’s”), a dine-in restaurant located in Indian Rocks Beach, Florida; Pie In The Sky Coffee and Bakery (“PIE”), located in Woods Hole, Massachusetts; and Schnitzel Haus, a German-themed restaurant located in Hobe Sound, Florida. We operated The Village Bier Garten (“VBG”), a German-themed restaurant in Cocoa, Florida, during fiscal 2024 and closed the restaurant on January 3, 2025.

Burger Time restaurants offer a variety of burgers and other affordable items, including sides and soft drinks. Keegan’s has operated in Indian Rocks Beach, Florida, for more than 35 years and offers a variety of fresh seafood for lunch and dinner, along with beer and wine. PIE offers freshly baked goods, sandwiches, and locally roasted coffee. Schnitzel Haus offers German and American menu items and beer, wine, and cocktails.

Our revenues are derived primarily from the sale of food and beverages at our restaurants. We also generate revenue from retail items at PIE and Keegan’s, including apparel, and from other merchandise, which collectively represent an insignificant portion of total revenue.

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”). Pursuant to the terms of the Merger Agreement, Aero will merge with and into the Merger Sub, with Aero continuing as the surviving corporation (the “Merger”), resulting in a combined entity (the “Merged Company”). The Merger Agreement contemplates a spin-off of shares of a newly formed subsidiary, BT Group, Inc., to BT Brands shareholders. BT Group, Inc., will retain all of BT Brands’ restaurant assets and liabilities, including cash and investments. Management of BT Group, Inc. plans to pursue a listing for BT Group common stock.

Completion of the Merger is subject to conditions, including shareholder approval. Upon the closing of the Merger, Aero shareholders will receive Merged Company Series A-1 and Series A-2 Convertible Preferred stock, with a stated value of $101,100,000, convertible into the Merged Company’s common stock at $1.48 per share. The Series A-1 shares will carry a 50-to-1, as converted, voting preference. The Series A-1 and A-2 together will represent 89% of the Merged Company’s ownership. BT Brands shareholders, along with its Advisor, Maxim Group, will retain an 11% ownership stake in the Merged Company. Concurrent with the closing of the Merger, Aero stockholders, or their designees, will invest $3 million, up to a maximum of $5 million, into newly authorized Series B Convertible Preferred of the Company.

Additional information regarding the proposed transaction can be found at the BT Brands filings on Forms 8-K and S-4 at SEC.GOV.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of BT Brands, Inc., BTND, LLC, and its wholly owned subsidiaries, 10Water Street, LLC, 1519BT, LLC, and BTNDDQ, LLC. Significant intercompany accounts and transactions were eliminated in consolidation.

Use of Estimates in Preparation of Financial Statements

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (GAAP), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and of revenues and expenses during the period. Our significant estimates include legal contingencies and valuation of certain long-lived assets, equity method investments, investment in and receivables from NGI Corporation and water bottle inventory. Actual results may differ from the estimates used in preparing the consolidated financial statements.

Fiscal Year

The Company’s fiscal year is a 52/53-week year, ending on the Sunday closest to December 31. Most years consist of four 13-week accounting periods, which together comprise the 52-week year. Fiscal 2025 was the 52 weeks ending December 28, 2025, and Fiscal 2024 was the 52 weeks ending December 29, 2024; all references to years in this report refer to the fiscal years described above.

Fair Value Measurements

The Company measures certain assets and liabilities at fair value on a recurring or nonrecurring basis in accordance with Financial Accounting Standards Board (“FASB”) guidance, which establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The fair value hierarchy consists of the following three levels:

· Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair 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.

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.

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Investments

Fair Value Measurements

The following is a summary of the fair value of Level 1 investments. As required, fair values have been determined by reference to quoted market prices in active markets as of the year-end indicated:

Fair value Carrying Amount Level 1 Fair value Carrying Amount Level 1

We hold an investment in a debt security that is classified as a trading security. Trading debt securities are recorded at quoted market price (fair value) on the consolidated balance sheets, with unrealized holding gains (losses) recognized on the statement of operations.

Cash and Cash Equivalents

Cash and cash equivalents include money market funds and may include United States Treasury Bills with a maturity of three months or less at the time of purchase. Our bank deposits often exceed the amounts insured by the Federal Deposit Insurance Corporation. In addition, we maintain cash deposits in brokerage accounts, including money funds in excess of the amounts covered by insurance. We do not believe there is a significant risk related to cash.

Deferred Transaction Costs

Deferred transaction costs for the year ended December 28, 2025, primarily consist of legal and accounting fees related to our proposed At-the-Market (ATM) equity offering, which were capitalized as incurred and will be offset against the proceeds from future ATM offerings. The deferred transaction costs will be reviewed periodically to assess the probability that future securities will be offered. In the event that no future offering occurs, any deferred transaction costs will be expensed. Total costs incurred but not accounted for as a reduction in equity were $150,450 and $10,000 as of December 28, 2025, and December 29, 2024, respectively.

Revenue Recognition

Our revenues consist principally of cash sales of food products and bank-issued credit and debit card transactions at our restaurants. We follow Accounting Standards Update (ASU) 2014-09 (ASC 606). Under ASC 606, revenues are recognized when control of promised goods or services is transferred to a customer in an amount that reflects the expected consideration for those goods or services. Our sales are recognized at the point of purchase, net of discounts, incentives, and applicable sales taxes.

Receivables

In these consolidated financial statements, receivables consist of rebates due from a primary vendor.

Inventory

Inventory consists of food, beverages, supplies, and merchandise for resale and is stated at the lower of cost (first-in, first-out method) or net realizable value.

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Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives or the term of the lease for leasehold improvements if less than its useful life:

We review long-lived assets to determine if their carrying value may not be recoverable based on estimated cash flows. Assets are evaluated at the lowest level at which cash flows can be identified, typically the restaurant level. Significant estimates are made for each restaurant’s future operating results to determine future cash flows. If such assets are concluded to be impaired, the impairment recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets.

Estimated Useful life in years

Equipment 3-7

Leasehold Improvements 5-10

Impairment and Disposal of Long-Lived Assets

Land, building, equipment, operating right-of-use assets, and certain other assets, including definite-lived intangible assets, are reviewed regularly for impairment and whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of the assets to the undiscounted future net cash flows expected to be generated and is determined at the restaurant level. If an asset is determined to be impaired, the recognized impairment is measured by the amount by which the carrying amount of the asset exceeds the fair value.

Historically, we have closed certain operating locations and liquidated the properties. We may close units in the future. We closed stores in West St. Paul, Minnesota, in 2022 and in Richmond, Indiana, in 2018. The West St. Paul location was sold in 2023 for a gain of $310,182. The Richmond location was sold in 2025 for $550,000, resulting in a gain of approximately $288,000. In 2024, we closed a leased location in Sioux Falls, South Dakota, resulting in a $90,000 loss on the disposal of equipment, which is included in 2024 operating expenses. On January 2, 2025, we closed the Village Bier Garten, sold certain equipment for $34,500 and assigned the remaining lease to an unrelated party. As a result, in 2024, we reviewed VBG’s assets for impairment and recorded an impairment loss of $371,872. A BTND location in Ham Lake, Minnesota, was closed in January 2025. We are evaluating options for the property, including its sale, the proceeds of which we estimate will exceed its net book value of $424,000.

Leases

Three of our restaurant locations are subject to leases. We evaluate leases at commencement to determine whether they are operating or finance leases. Under FASB ASC Topic 842, we recognize operating and finance lease liabilities based on the present value of the minimum future lease payments over the expected lease term and recognize a corresponding right-of-use asset. We recognize lease expense related to operating leases on a straight-line basis. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available as of the commencement date to determine the present value of the lease payments. For lease agreements that contain both lease and non-lease components, the Company has elected to account for the lease and non-lease components as a single lease component. The Company has elected not to apply the requirements of ASC 842 to short-term leases. Short-term leases are defined as leases with lease terms of twelve months or less as of the commencement date. At lease inception, we determine the likelihood of exercising any future lease option periods. Where we are reasonably certain to exercise our renewal option, we include that option period in calculating the present value of future lease payments. See Note 5 for additional information.

Minot Ground Lease

The Company closed its Burger Time restaurant location in Minot, North Dakota, in July 2025. On September 9, 2025, the Company entered into a ground lease agreement with a third party related to the Minot property. During 2025, the Company wrote-off the remaining net book value of the building, approximately $47,000, which is included in the gain on sale of assets and recorded a charge for the estimated demolition cost of the existing building. Substantially all of the equipment at the location was either fully depreciated or relocated for future use.

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The Minot ground lease provides for an initial base rent of $5,833 per month, with rent commencing on the earlier of (i) the date the tenant opens for business at the location or (ii) August 25, 2026 (the “Commencement Date”). The initial lease term is 15 years from the Commencement Date and includes six renewal options, each for five years.

The lease qualifies as an operating lease under Accounting Standards Codification Topic 842, Leases (“ASC 842”). As of December 28, 2025, the Company had not recognized any lease revenue under this agreement because the commencement date had not yet occurred. The Company will recognize rental income on a straight-line basis over the lease term beginning on the Commencement Date.

Goodwill, Other Intangible Assets, and Other Assets

Goodwill is not amortized. Goodwill is tested for impairment annually or more frequently if the conditions indicate additional review is necessary. The Company assesses qualitative factors to determine if it is more likely than not that the fair value is less than its carrying amount and if it is necessary to perform the qualitative goodwill impairment test. The Company has one reporting unit. If the Company conducts the quantitative test, it compares the carrying value of the reporting unit to an estimate of the reporting unit’s fair value to identify potential impairment. The fair value of the reporting unit is estimated using a discounted cash flow model. Where available and appropriate, comparable market multiples are used to corroborate the results of the discounted cash flow models. In determining estimated future cash flow, the Company considers and applies certain estimates and judgments, including current and projected market income levels based on management’s plans, business trends, prospects, economic conditions, and market participant considerations. If the estimated fair value of the reporting unit is less than the carrying value, a goodwill impairment loss is recorded for the difference, up to the amount of the total goodwill. During the year ended December 28, 2025, no impairment losses were identified. The cost of other intangible assets is amortized over the expected useful life.

Advertising and Marketing Costs

We record advertising and marketing costs as incurred as an expense. Advertising expenses for fiscal years 2025 and 2024 totaled $54,921 and $59,438, respectively.

Income Taxes

We account for income taxes under ASC 740, Accounting for Income Taxes, using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. ASC 740 requires the net of deferred tax assets and deferred tax liabilities to be presented as a single amount on the balance sheet. It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense (benefit).

Per Common Share Amounts

Net income (loss) per common share is computed in accordance with ASC 260, Earnings Per Share. Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income per share is calculated by dividing net income (loss) by the weighted-average number of shares of common stock outstanding plus the effect of potentially dilutive securities outstanding during the period. Potentially dilutive securities are excluded from the computation of diluted net loss per share when their effect would be anti-dilutive

For the years ended December 28, 2025, and December 29, 2024, the Company reported a net loss; therefore, all potentially dilutive securities were excluded from the computation of diluted net loss per share as their effect would have been anti-dilutive. Potentially dilutive securities include stock options, warrants, and other equity-based awards.

As of December 28, 2025, the Company excluded approximately 800 potentially dilutive shares from the computation of diluted net loss per share.

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The Company had 2,746,838 five-year warrants outstanding with an exercise price of $5.50 per share issued in connection with its initial public offering on November 12, 2021. At December 28, 2025 and December 29, 2024, the exercise price of these warrants exceeded the Company’s market price per share and, therefore, the warrants were not dilutive.

Restaurant Pre-opening expenses

Restaurant pre-opening and other development expenses are non-capital expenditures and are expensed as incurred as part of other operating expenses. Restaurant pre-opening expenses may include the costs of hiring and training the initial hourly workforce for each new restaurant, travel, the cost of food and supplies used in training, grand opening promotional expenses, the cost of the initial stocking of operating supplies, and other direct costs related to the opening of a restaurant, including rent during the construction and in-restaurant training period.

Stock-Based Compensation

Stock-based compensation consists of stock options and restricted stock awards granted to employees, outside directors and consultants.

The Company recognizes stock-based compensation expense in its consolidated financial statements based on the grant-date fair value of equity-classified awards in accordance with ASC 718, Compensation—Stock Compensation. The grant-date fair value of stock options is estimated using the Black-Scholes option-pricing model and the simplified method for estimating expected term. Stock-based compensation expense is recognized, net of estimated forfeitures, on a straight-line basis over the requisite service period of the awards.

Reclassifications

Certain prior-year amounts have been reclassified to conform to the current-year presentation. These reclassifications had no effect on previously reported total assets, total liabilities, stockholders’ equity, net loss, or cash flows.

Recently Adopted Accounting Guidance

Segment Reporting

In November 2024, the Financial Accounting Standards Board (“FASB”) issued ASU 2024-07, Improvements to Reportable Segment Disclosures, which amends ASC Topic 280, Segment Reporting. The update enhances disclosure requirements for reportable segments, including entities with a single reportable segment.

The Company has determined that it operates as a single reportable segment based on the nature of its operations and the regulatory environment in which it operates. The Company’s Chief Operating Decision Maker (“CODM”) is its executive management team, consisting of the Chief Executive Officer and Chief Financial Officer. The CODM evaluates performance and allocates resources based primarily on consolidated net income and total assets, which are consistent with the amounts reported in the consolidated statements of operations and consolidated balance sheets.

The Company adopted ASU 2024-07 on January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, which amends ASC Topic 740, Income Taxes. This update enhances transparency by modifying disclosure requirements related to income taxes. The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company adopted ASU 2023-09 on January 1, 2025, using the retrospective method of adoption. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures.

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NOTE 3 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at the end of the respective fiscal year:

Less - impairment charge - (322,794 )

Depreciation expenses for 2025 and 2024 were $585,047 and $652,967, respectively.

NOTE 4 – INTANGIBLE ASSETS

At year end 2025 and 2024, based on the value of acquired assets, intangible assets comprise the following:

Impairment allowance - - (49,078 )

On January 2, 2025, the Company closed its Village Bier Garten location. In connection with the closure, the Company recognized an impairment of Village Bier Garten’s intangible assets in 2024.

Tradename assets are amortized over 15 years. Total amortization expense for 2025 was approximately $64,000. The total amortization of intangible assets, including the covenants not to compete, will approximate $56,300 in 2026, $36,800 in 2027, $22,900 per year through 2036, and approximately $5,600 in 2037.

Total amortization expense of approximately $90,000 for intangible assets in 2024 included $11,660 to write off the intangible asset related to the Company’s former franchise asset upon termination of the franchise agreement. This amount was included in other assets in the 2024 consolidated balance sheet.

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NOTE 5 – LEASES

In connection with the acquisition of Keegan’s, the Company entered into 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.

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 $624,000. The operating lease liability was $458,587 as of December 28, 2025, and $505,626 as of December 29, 2024, discounted using a rate of 3.75%, and is reflected as operating lease liabilities in the accompanying consolidated balance sheets.

Upon acquisition of the PIE assets, the Company entered into a lease for approximately 3,500 square feet of restaurant and bakery production space. The lease has an initial term of 60 months and provides 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.

The PIE lease includes three five-year renewal options exercisable at the Company’s option. The lease is accounted for as an operating lease. At lease commencement, the Company determined that it is 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.

The operating lease liability related to the PIE lease was $771,907 as of December 28, 2025 and $847,949 as of December 29, 2024, discounted using a rate of 4.5%, and is reflected as operating lease liabilities in the accompanying consolidated balance sheets.

In May 2025, in connection with the acquisition of Schnitzel Haus, the Company assumed the remaining 44 months of the restaurant’s approximately 4,200-square-foot lease, with a monthly base rent of approximately $5,400.

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 $182,478. The operating lease liability related to this lease was $122,953 as of December 28, 2025, and $161,774 as of December 29, 2024, discounted using a rate of 6.5%, and is reflected as a liability in the accompanying consolidated balance sheets.

Village Bier Garten Lease –

The 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 initial rent of approximately $8,200 per month, subject to annual escalation of 3%.

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. Following the transfer of possession, the assignee operated a restaurant on the premises and made rent payments 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 subsequently regained possession of the premises denied the Company further access and initiated legal proceedings seeking recovery of amounts allegedly due under the lease. The landlord is currently seeking a replacement tenant.

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 $215,000 during the year ended December 28, 2025.

Given the outstanding litigation seeking acceleration of the unpaid rent under the lease, as of December 28, 2025, the Company has included a net lease liability of approximately $215,000 representing approximately total unpaid lease payments under the full lease term including 2025 in the current amount payable.

The ultimate resolution of the matter is subject to ongoing litigation and may differ from the amounts recorded.

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Following is a schedule of the approximate minimum future lease payments on the operating leases as of January 1, 2023, including amounts assuming we exercise to extend leases where we believe that exercise of the option is likely.

The following table presents future minimum lease payments under the Company’s operating leases as of December 28, 2025, including amounts related to the PIE lease, assuming exercise of the initial five-year renewal option, which the Company believes is reasonably certain:

YEAR Lease Payments

Total future minimum lease payments 1,724,011

Present value of lease obligations $ 1,568,448

The weighted-average remaining lease term of the Company’s operating leases was approximately 5.6 years, and the weighted-average discount rate was approximately 4.50%.

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.

Total operating lease expense was approximately $326,000 and $408,696 for the years ended December 28, 2025, and December 29, 2024, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities totaled approximately $288,000 in 2025 and $330,000 in 2024.

Variable lease costs were approximately $37,000 in 2025 and $57,525 in 2024.

In 2025, we paid approximately $1,350 per month for our corporate office under a month-to-month rental arrangement.

NOTE 6 – INCOME TAXES

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for net operating loss (“NOL”) and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which temporary differences are anticipated to be reversed. The effect of changes in tax laws or rates is recognized in income in the period of enactment.

Deferred Tax Assets and Valuation Allowance

As of December 28, 2025, the Company had gross deferred tax assets of approximately $1,303,000, primarily attributable to federal and state net operating loss carryforwards, stock-based compensation, and impairment-related temporary differences. Management evaluates the realizability of deferred tax assets quarterly, considering all available positive and negative evidence, including historical operating results, cumulative losses, projected future taxable income, the scheduled reversal of deferred tax liabilities, and tax planning strategies. If sufficient positive evidence becomes available to support the realization of deferred tax assets, the valuation allowance may be reduced or reversed in a future period. As of December 28, 2025, the Company recorded a valuation allowance of $933,000 (December 29, 2024 – $616,000). After consideration of deferred tax liabilities, the Company had no net deferred tax asset recorded on the balance sheet on December 28, 2025, and December 29, 2024.

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Net Operating Loss Carryforwards

As of December 28, 2025, the Company had federal net operating loss carryforwards of approximately $2.8 million and state net operating loss carryforwards of approximately $3.0 million.

Federal NOLs generated after 2017 may be carried forward indefinitely but are generally limited to 80% of taxable income in any future year. Certain state NOLs begin to expire in 2037, while others may be carried forward indefinitely, subject to applicable state limitations.

If ownership changes occur, the Company’s ability to utilize its NOL carryforwards may be limited under Internal Revenue Code Section 382.

Components of Deferred Tax Assets and Liabilities

The tax effects of temporary differences and carryforwards are as follows:

Deferred tax assets:

Deferred tax liabilities:

Property and equipment tax depreciation difference (278,000 ) (430,000 )

Unrealized (gain) on short-term investments (10,000 ) (21,000 )

Net deferred tax asset $ - $ -

The following table summarizes the components of the provision for income taxes:

Current income tax expense $ - $ -

Total income tax expense $ - $ (206,000 )

Total income tax expense for the years ended December 28, 2025, and December 29, 2024, differed from the amounts computed by applying the U.S. Federal statutory tax rate of 21% to pre-tax income as follows:

Amount % Amount %

Equity method investment loss - - 87,000 4.2

Change in unrecognized benefit - - - -

Tax credits - - - -

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There is no current income tax expense for the United States, foreign or state jurisdictions for fiscal 2025, In addition, no cash was paid for income taxes during the 2025 or 2024 fiscal years.

Accounting Standards require that deferred tax assets and liabilities, along with any related valuation allowance, be classified as a noncurrent item on the balance sheet.

The Company had no accrued interest or penalties relating to income tax obligations and is not currently subject to any federal or state income tax examinations. The Company has not had any federal or state income tax examinations since its inception. The Company’s federal and state income tax returns remain subject to examination by tax authorities for the three most recent tax years. With few exceptions, the Company is no longer subject to U.S. Federal and state income tax examinations by tax authorities for years before 2022.

NOTE 7 – ACCRUED EXPENSES

Accrued expenses consisted of the following at the end of the respective reporting periods:

NOTE 8 – SHAREHOLDERS’ EQUITY

Authorized Shares

The Company is authorized to issue up to 50,000,000 shares of common stock, par value $0.002 per share, and up to 2,000,000 shares of preferred stock, par value $0.001 per share. The preferred stock is currently undesignated and may be issued from time to time in one or more series with such rights, preferences, and privileges as determined by the Company’s board of directors.

As of December 28, 2025, and December 29, 2024, 6,154,724 shares of common stock were issued and outstanding, and no shares of preferred stock were issued or outstanding.

Initial Public Offering and Warrants

On November 12, 2021, the Company completed its initial public offering (“IPO”) of units, each consisting of one share of common stock and one five-year stock purchase warrant exercisable to purchase one share of common stock at an exercise price of $5.50 per share. The Company may redeem the warrants under certain conditions.

In the IPO, the Company issued 2,400,000 shares of common stock and an aggregate of 2,760,000 stock purchase warrants, which included 360,000 warrants issued to the underwriters pursuant to a partial exercise of their overallotment option at $0.01 per warrant. The estimated fair value of the warrants at the date of issuance, net of the exercise proceeds, was $360,000 and was recorded as an additional cost of the offering. After deducting underwriting discounts, commissions, and other offering costs, the Company received net proceeds from the IPO of $10,696,575.

During 2022, holders exercised 13,612 public warrants for aggregate proceeds of $74,866. As of December 28, 2025, 2,746,838 public warrants remained outstanding, each exercisable to purchase one share of common stock at an exercise price of $5.50 per share. All remaining public warrants expire on November 12, 2026, unless earlier exercised or redeemed in accordance with their terms.

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Share Repurchase Authorization

On June 6, 2024, the Company’s board of directors authorized a share repurchase program pursuant to which the Company may repurchase up to 625,000 shares of its common stock, representing approximately 10.0% of the Company’s outstanding shares at the time of authorization (the “Repurchase Program”). There is no predetermined overall limit on the aggregate purchase price of shares that may be repurchased under the Repurchase Program.

As of December 28, 2025, the Company had repurchased an aggregate of 306,394 shares, including 91,394 shares under the Repurchase Program, all of which were repurchased during fiscal 2024. As a result, the Company may repurchase up to an additional 533,606 shares under the Repurchase Program. The Company expects to fund repurchases with available cash.

Repurchases may be made from time to time in open market purchases, privately negotiated transactions, or otherwise, subject to market conditions, applicable legal requirements, and other considerations. The Repurchase Program does not obligate the Company to repurchase any specific number of shares and may be suspended, modified, or terminated at any time without prior notice. The Repurchase Program does not have an expiration date.

Shares repurchased under the Repurchase Program are recorded as treasury stock and accounted for under the cost method.

At-the-Market Offering Program

On December 13, 2024, as amended on November 21, 2025, the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Maxim Group LLC (“Maxim”), pursuant to which the Company may sell shares of its common stock, par value $0.002 per share, from time to time through an “at-the-market” offering program, with Maxim acting as sales agent.

Pursuant to the applicable prospectus supplement, the Company may offer and sell shares of common stock with aggregate gross sales proceeds of up to $3,565,880 under the Distribution Agreement. The shares offered pursuant to the Distribution Agreement are included within the $25,000,000 of securities that may be offered, issued, and sold under the Company’s shelf registration statement.

Under the Distribution Agreement, the Company specifies the parameters for any sales, including the number of shares to be sold, the timing of sales, any limitation on daily sales volume, and minimum acceptable prices. Sales may be made by any method deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended.

Pursuant to General Instruction I.B.6 of Form S-3, for so long as the aggregate market value of the Company’s outstanding common stock held by non-affiliates is less than $75 million, the Company may not sell securities in a primary offering with a value exceeding one-third of such aggregate market value during any 12-month period.

Under the terms of the Distribution Agreement, the Company pays Maxim a commission equal to 3.0% of the aggregate gross proceeds from each sale of shares and reimburses certain expenses, including legal fees. The Distribution Agreement contains customary representations, warranties, covenants, indemnification, and contribution provisions. Maxim is not obligated to purchase any shares as principal. Either party may terminate the Distribution Agreement upon notice in accordance with its terms.

NOTE 9 – STOCK-BASED COMPENSATION

In 2019, we adopted the BT Brands, Inc. 2019 Incentive Plan (the “Plan”), under which the Company, as of December 28, 2025, may grant up to 1,000,000 stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units, and other stock and cash awards to eligible participants.

Stockholders have authorized the 1,000,000 shares available for grant under the 2019 Plan. As of December 28, 2025, there were 718,250 shares available for a grant under the 2019 Plan.

In July 2025, the Board approved a grant of 62,500 options with an exercise price of $1.50 per share. This grant included 22,500 fully vested one-year options and 40,000 options, which vested 20% on the grant date and an additional 20% on each of the following four anniversary dates.

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In 2024, we issued 15,000 ten-year options to the then-existing outside members of our Board of Directors to purchase shares at $1.61 per share, and we also granted 5,000 fully vested options to a new Board member to purchase shares at $1.70 per share.

In 2023, outside of the 2019 Plan, we issued a consultant a warrant to purchase 100,000 shares at $2.50 per share, valid for seven years, with the warrants vesting monthly for over five years, provided the consultant remains in this capacity. Assuming the consulting agreement continues for its full term, we project we will recognize approximately $80,000 in stock-based compensation, including $32,000 in 2026 and 2027 and $16,000 in 2028.

As outlined in each agreement, stock options granted to employees and directors vest and expire as determined at the date of grant. Compensation expense equal to the fair value of the options at the grant date is recognized in general and administrative costs over the applicable service period. Stock-based compensation expense for 2025 was $141,000. Based on current estimates, we project approximately $121,000 in stock-based compensation expense related to options and consultant warrants over the next four years, including approximately $49,000 in 2026, $43,000 in 2027, $24,000 in 2028, and $5,000 in 2029.

On February 27, 2023, the board of directors’ Compensation Committee approved an “Incentive Shares” proposal wherein, so long as the Company’s publicly traded warrants are outstanding, senior management will be granted 250,000 shares of common stock as an award upon our share price reaching $8.50 per share for twenty consecutive trading days. The total estimated grant-date fair value of the award was determined using a lattice model with assumptions similar to those used for the stock option calculation. The total of this award was determined to be $265,000. For 2025, stock-based compensation expenses for this award totaled approximately $36,000.

We utilize the Simplified Method and the Black-Scholes option pricing model at the date of grant when determining the compensation cost associated with stock options issued using the following significant assumptions:

· Exercise price – The stated exercise price of the stock option;

· Expected life – The simplified method;

· Volatility – Estimated volatility;

Information regarding our stock options, including consultant warrants, is summarized below:

Exercised - - - -

Canceled, forfeited, or expired - - - -

Exercised - - - -

Canceled, forfeited, or expired (20,000 ) 2.5 - -

The Black-Scholes option-pricing model was used to estimate the fair value of stock options at the grant date, with the following weighted-average assumptions applied to grants during the year ended December 28, 2025.

The average fair value of options granted during the period $ 0.83 $ 1.14

Expected average life (in years) 2.5 6.0

Expected dividend - -

Expected stock volatility 65 % 63 %

Risk-free interest rate 4.19 % 3.75 %

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NOTE 10 – LONG-TERM DEBT

Less - unamortized debt issuance costs (25,399 ) (30,799 )

Scheduled maturities of long-term debt, excluding amortization of debt issuance costs, are as follows at December 28, 2025:

Fiscal year ending--

NOTE 11 – ACQUISITION

On May 13, 2024, our 1519 BT, LLC subsidiary completed the purchase of certain assets from LC Food Concepts. The acquired assets comprised a business operating as a high-end German-themed restaurant with approximately 175 seats located in Hobe Sound, Florida, doing business as “Schnitzel Haus. The aggregate purchase price was $943,000, including $850,000 paid at closing as payment for certain assets, separate payments of $65,000 for inventory on hand at closing, and $28,000 for the purchase of a utility vehicle and other items used in the business. With the acquisition, we assumed the seller’s remaining lease obligation of $5,400 monthly for 44 months. Aside from the lease obligation, no liabilities of the seller were assumed in the purchase of assets. A summary of the assets acquired is approximately as follows:

Property, including leasehold improvements and equipment $ 625,000

Intangible covenant not to compete 100,000

Operating lease right-of-use asset 182,878

Total identifiable assets acquired 1,000,878

Operating lease liability (182,878 )

Net identifiable assets acquired 818,000

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NOTE 12 – RELATED PARTY TRANSACTIONS

NGI Corporation

Equity Investment and Impairment -

Before 2023, BT Brands, Inc. (“BT Brands” or the “Company”) made a series of equity investments in NGI Corporation (“NGI”), resulting in a minority ownership interest with an aggregate carrying value of $304,000. As of September 28, 2025, the Company evaluated the recoverability of its investment and concluded that impairment indicators were present, including recurring operating losses at NGI and insufficient capital to sustain operations without continued external financing. In addition, there were no observable market transactions or other valuation inputs to support the investment’s carrying value.

Based on this assessment, the Company determined that its equity investment in NGI was impaired and recorded an impairment charge of 304,000 as of September 28, 2025, fully writing down the carrying value of its equity investment.

NGI Loan Agreements, Foreclosure, and Inventory Acquisition and Allowance -

The Company also provided loans to NGI and purchased inventory from NGI in the ordinary course of business. During fiscal 2025, the Company advanced additional loans to NGI and funded certain costs related to aluminum water bottles inventory totaling $670,718. In connection with these transactions, the Company took ownership of bottle inventory with a carrying value of $380,861.

Effective December 26, 2025, the Company exercised its rights under loan agreements with NGI that provided the Company with a senior secured interest in substantially all of NGI’s assets. investment in and receivables from NGI Corporation. As a result of the foreclosure and prior purchases, the Company held Bottle Inventory with a gross carrying value of $790,718 as of December 28, 2025, representing approximately 850,000 bottles. The Bottle Inventory is recorded within current assets at the lower of cost or net realizable value. Based on management’s evaluation of expected selling prices and estimated costs to sell, the Company recorded a write-down of $216,718, reducing the carrying value of the Bottle Inventory to its estimated net realizable value of $574,000 as of December 28, 2025. Management is actively pursuing third-party sales of the Bottle Inventory; however, the amount and timing of any proceeds cannot be predicted with certainty.

As of December 28, 2025, and to reflect the foreclosure of the remaining loans to NGI, physical control of the bottle inventory is as follows:

Investment inNGI Loan Activity Bottle Inventory

Water bottle inventory payments 380,861

Acquisition of NGI secured promissory note 359,221 -

Allowance for impairment (304,000 ) - -

Foreclosure on the bottle inventory collateral (409,857 ) 409,857

NGI Related Party Matters-

Kenneth Brimmer, the Company’s Chief Operating Officer, serves as a member of NGI’s board of directors and as Chief Financial Officer. Effective April 1, 2025, Gary Copperud resigned from NGI’s board of directors.

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Bagger Dave’s Burger Tavern, Inc.-

On 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 because it has the ability to exercise significant influence over BDVB’s operating and financial policies but does not control the entity.

Bagger Dave’s operates five casual dining restaurants and bar locations, including three locations in Michigan and one location each in Fort Wayne, Indiana and Centerville, Ohio. BDVB’s common stock is quoted on the OTC Pink market, and BDVB files quarterly and annual financial information with OTC Markets Group, Inc. under the Alternative Reporting Standard. Financial information reported by BDVB is not required to be audited.

During the first fiscal quarter of 2026, BDVB sold its closed Chesterfield, Michigan, leasehold interest for approximately $400,000 in a combination of notes and cash. BDVB expects to recognize a gain of approximately $350,000 related to this sale.

As of December 28, 2025, and December 29, 2024, the carrying value of the Company’s investment in BDVB was $0 and $304,439, respectively. During fiscal 2025, the Company’s cumulative share of BDVB’s net losses exceeded the carrying value of its investment, resulting in a reduction of the investment balance to zero. In accordance with applicable accounting guidance, the Company ceased recognizing additional equity losses after the carrying value of the investment was reduced to zero, as the Company has not committed to providing additional financial support to BDVB and has not guaranteed any of its obligations.

The Company’s proportionate 40.7% share of BDVB’s net loss for the period was $386,559, of which $304,439 was recognized as equity in loss of unconsolidated affiliate in the Company’s consolidated statements of operations, reducing the carrying value of the investment to zero. The remaining portion of the Company’s share of BDVB’s losses was not recognized. The Company discontinued recognizing additional losses after the investment balance reached zero. The Company will resume recognizing its share of BDVB’s earnings, if any, only after its equity in cumulative unrecognized losses have been recovered.

The following tables present unaudited summary financial information of BDVB as of and for the periods indicated, as reported by BDVB:

Balance Sheet Information - December 28,2025 December 29,2024

Statements of Operations information - December 28,2025 December 29,2024

Officers 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. The BT Brands Officers received no compensation from Bagger Dave’s in 2025, and there were no additional related party transactions.

Related Party Employment

Blake Copperud, son of the Company’s Chief Executive Officer, is employed by the Company as a full-time Operations Specialist. Total compensation for the year ended December 28, 2025, was approximately $100,000, including a $40,000 discretionary bonus earned and accrued during the year. In addition, the Company granted Blake Copperud options to purchase 20,000 shares at $1.50 per share. As of the grant date, the fair value of the option grant was approximately $24,000. The options vest over four years, with 4,000 options immediately vested. Total compensation for a partial year of employment in 2024 was approximately $24,000, consisting of salary.

The terms of employment, including compensation, were established by management.

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NOTE 13 – MAJOR VENDORS

We purchase products from a variety of vendors. The food supply business is highly competitive, and the Company has several alternative suppliers available. In July 2024, BTND changed its primary supplier relationship. For the year ended December 28, 2025, approximately 38.7% of our food and paper cost of goods sold was attributable to product purchases from a single vendor. On December 28, 2025, the amount due to the major vendor totaled approximately $14,000. On December 29, 2024, the amount due to the former primary vendor was $257,268.

NOTE 14 – CONTINGENCIES

Village Bier Garten Lease Litigation

The 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 initial rent of approximately $8,200 per month, subject to annual escalation of 3%.

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. Following the transfer of possession, the assignee operated a restaurant on the premises and made rent payments directly to the landlord for several months, which the landlord accepted.

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 lease agreement was not formally terminated, however, under the terms of the lease the landlord took full possession of the premises through court proceedings and the landlord is currently seeking a replacement tenant.

The Company disputes the landlord’s claims and intends to defend the matter. The Company believes that the landlord’s acceptance of rent payments from the assignee following the transfer of possession, as well as the landlord’s obligation under Florida law to mitigate damages following repossession of the premises, may affect the amount of any adjudicated damages, if any, that could ultimately be recoverable. The Company also believes it has contractual rights against the assignee for any amounts that may be determined to be payable under the lease and has asserted a separate claim for approximately $200,000 in unpaid consulting fees.

As of December 28, 2025, the Company fully wrote down the remaining book value of the right-to-use asset of approximately $215,000, representing approximating the remaining contractual lease payments associated with unpaid rent under the original lease agreement.

The recorded amount does not reflect any reduction for the landlord’s obligation to mitigate damages or the Company’s potential recovery from the assignee. The ultimate outcome of the matter will be determined through litigation or negotiated settlement and may differ from the amount recorded. Management will continue to evaluate the matter and adjust the recorded liability as additional information becomes available.

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 December 28, 2025, the Company was not a party to any material pending legal or regulatory proceedings other than the lease-related matter described above. The outcome of any such matters is inherently uncertain.

The Company accounts for loss contingencies in accordance with ASC 450, Contingencies. A liability is recorded when it is both probable that a loss has been incurred and the amount can be reasonably estimated. If a loss is reasonably possible or cannot be reasonably estimated, the Company provides disclosure but does not record an accrual.

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NOTE 15 – SUBSEQUENT EVENT

Bagger Dave’s Burger Tavern, Inc.

During the first quarter 2026, Bagger Dave’s Burger Tavern, Inc. (“BDVB”), an unconsolidated equity method investee of the Company, completed the sale of its former Chesterfield, Michigan, leasehold interest for aggregate consideration of approximately $400,000, consisting of cash and promissory notes. BDVB expects to recognize a gain on the transaction in the first quarter of fiscal 2026. This transaction did not affect the carrying value of the Company’s investment in BDVB as of December 28, 2025, and has not resulted in the recognition of any equity income by the Company.

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Item 9. Changes in and Disagreements with Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) DISCLOSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed pursuant to the Securities Exchange Act of 1934 as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such 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. No matter how well conceived and operated, a control system can provide only reasonable, not absolute, assurance that its objectives are met.

As of December 28, 2025, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officer, respectively, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act.

Based on the evaluation of our disclosure controls and procedures, our President and Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 28, 2025, due to the material weaknesses in our internal control over financial reporting described below.

In light of this, our management has conducted additional analysis. It has been concluded that, notwithstanding these material weaknesses in our internal controls over financial reporting, the consolidated financial statements for the periods covered by and including this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

(b) REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(e) and 15d-15(f) of the Exchange Act. The Company has designed internal controls to provide reasonable, but not absolute, assurance that financial statements are prepared in accordance with U.S. GAAP. The Company assesses the effectiveness of internal controls based on the criteria set forth in the 2013 Internal Control-Integrated Framework developed by the Committee of Sponsoring Organizations of the Treadway Commission.

As a result of this evaluation, management has concluded that, as of December 28, 2025, our internal control over financial reporting was not effective due to the material weaknesses in internal control over financial reporting described below.

(c) MATERIAL WEAKNESS IN INTERNAL CONTROL OVER FINANCIAL REPORTING

As of December 28, 2025, management identified a material weakness that originated in fiscal year 2022 and continues to affect its design of controls over the accounting and reporting of significant, nonrecurring events and complex transactions.

This material weakness could result in a misstatement of account balances or disclosures that would result in a material misstatement of the annual or interim financial statements, which would not be prevented or detected.

(d) REMEDIATION PLAN

The Company has an ongoing improvement and remediation plan for the identified material weakness. In the future, transactions that are considered complex may require the Company to engage experts to assist with accounting for significant non-recurring events and complex transactions.

The remediation actions are subject to ongoing review by senior management and oversight by the Audit Committee. The Company will not be able to conclude whether the steps to be taken will fully remediate the material weaknesses in internal controls over financial reporting until remediation efforts are completed, tested, and evaluated for effectiveness.

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(e) CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

In addition to the matters discussed previously, the Company has considered engaging consultants as an extension of management to assist with accounting for acquisitions. Except for the items described above, there were no other changes in the Company’s internal control over financial reporting during our fiscal year ended December 28, 2025, that have materially affected or are reasonably likely to affect our internal control over financial reporting materially.

Item 9B. Other Information.

Insider Trading Arrangements

During the registrant’s last fiscal quarter, no director or officer (as defined in Rule 16a-1(f)) adopted, modified, or terminated (i) any contract, instruction, or written plan for the purchase or sale of the registrant’s securities that is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) (a “Rule 10b5-1 trading arrangement”), or (ii) any “non-Rule 10b5-1 trading arrangement,” in each case as defined in Item 408(a) of Regulation S-K.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Item 10. Directors, Executive Officers, and Corporate Governance.

The following table sets forth information regarding our executive officers and directors as of the date of this Annual Report:

Name Age Position

Executive Officers and Directors:

Gary Copperud 68 Chief Executive Officer and Chairman

Kenneth Brimmer 70 Chief Operating Officer and Chief Financial Officer

Allan Anderson 72 Director

Terri Tochihara-Dirks 64 Director

Fred Croci 78 Director

Background Information about our Officers and Directors

Gary Copperud has served as the Company’s Chief Executive Officer and a director since July 31, 2018, and Chairman since 2025. He was a founding member of the predecessor to BT Brands in 2007. Mr. Copperud was a founding shareholder of Next Gen Ice, Inc., now NGI Corporation. Since April 1, 2025, he served as the chairman of its board of directors. Mr. Copperud has served as CEO and a director of Bagger Dave’s Burger Tavern since June 2022. Mr. Copperud is self-employed in real estate investment and development. We believe Mr. Copperud’s tenure with Burger Time and prior experience as a member of the board of directors of a public company qualify him to serve on our board of directors.

Kenneth Brimmer has served as the Chief Operating Officer and Principal Accounting Officer since July 31, 2018, and was Chairman until April 1, 2025. Since October 2019, Mr. Brimmer has been a member of NGI Corporation’s board of directors and currently serves as Chief Financial Officer. Since June 2022, Mr. Brimmer has served as Chairman, COO, and Chief Financial Officer of Bagger Dave’s Burger Tavern, Inc. Mr. Brimmer has extensive experience with early-stage and rapidly growing businesses, having served as President, Chief Executive Officer, director, and Audit Committee Chairman at several public and private companies. Mr. Brimmer is the CEO of privately held Brimmer Company, LLC, which has provided consulting management services to BT Brands and NGI Corporation, Inc. Mr. Brimmer was a member of the board of directors of Landry’s Restaurants from June 2004 until April 2017 and served on the Audit and Compliance Committee of its Golden Nugget New Jersey Casino subsidiary. Previously, he was President of Rainforest Cafe, Inc., which grew from a start-up to more than 6,000 employees from April 1997 to April 2000, and he served as Treasurer from its inception in 1995 to April 2000. During the time Mr. Brimmer served as Treasurer of Rainforest Cafe, it raised over $200 million through a combination of private and public stock offerings. Mr. Brimmer holds a degree in accounting from Saint John’s University, Collegeville, Minnesota and worked as a certified public accountant (inactive) in Arthur Andersen & Co.’s audit division from 1977 through 1981. We believe Mr. Brimmer’s extensive career as a business executive, particularly his service as the chief operating officer of a major restaurant chain, qualifies him to serve on our board of directors.

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Allan Anderson joined our board of directors as an independent director and has served as the chairman of our audit committee since our November 12, 2021, initial public offering. Mr. Anderson founded privately held ReliaFund Inc., for which he has served in various executive capacities. ReliaFund provides electronic payment processing and reporting services for small businesses. From 1975 to 1984, Mr. Anderson was employed as an Audit Manager in Arthur Andersen & Co.’s Audit Division. Mr. Anderson has served as a chief financial officer (or equivalent) for several private companies. He previously served as an independent member of the board of directors of the publicly traded STEN Corporation, including serving as Chairman of its Audit Committee. STEN Corporation is the entity from which the Company purchased its restaurant assets in 2007. Messrs. Copperud and Brimmer were also directors of STEN. Mr. Anderson holds a Bachelor of Arts degree in accounting from Southwest State University and was formerly licensed as a certified public accountant, which is now inactive. We believe Mr. Anderson is qualified to serve on our board of directors and as chair of our audit committee due to his education, accounting and audit experience, and service as chief financial officer at several companies.

Terri Tochihara-Dirks joined our board of directors as an independent director, serves as chair of our compensation committee, and is a member of the audit committee, effective as of our November 12, 2021, initial public offering. Since 2008, Ms. Tochihara-Dirks has been the co-owner, with her husband, of The Oberon Assisted Living, a privately held healthcare community in Arvada, Colorado. Her responsibilities include operations and infection prevention. From 1986 to 2006, she held various positions at AT&T, retiring as the Mountain States Region Vice President of Sales. Ms. Tochihara-Dirks has served on several not-for-profit Boards of Directors, including the Denver Chamber of Commerce and Denver Junior Achievement. Ms. Tochihara-Dirks is qualified to serve on our board, as chair of the compensation committee, and as a member of our audit committee due to her broad business experience, including operating her own business and serving as an executive at a multinational corporation.

Fred Croci has been a director and member of our Audit Committee and Compensation Committee since October 25, 2025. Since 2017, Mr. Croci has owned and managed Commercial Brokers Alliance, LLC, a real estate brokerage and consulting firm located in Fort Collins, Colorado. Mr. Croci is also Managing Broker of Commercial Broker’s Alliance NOCO, LLC, a commercial brokerage firm. He has worked in the real estate industry for more than 50 years and has owned and operated seven restaurants. While owning and operating commercial real estate brokerage firms, he has also been involved in project development, construction, management, property rehabilitation and commercial remodels, single-family and multifamily housing projects and subdivisions, self-storage and commercial new construction, property management and maintenance, fee-based client consulting and investment counseling. We believe that Mr. Croci is qualified to serve on our board, given his decades of real estate experience and his successful ownership and management of food and beverage operations.

Term of Office

All our directors will hold office until their successors have been elected and qualified, or appointed, or until the earlier of their death, resignation, or removal. Executive officers are appointed and serve at the board of directors’ discretion.

Family Relationships

There are no family relationships among our directors or officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers, and ten percent stockholders to file initial reports of ownership and announcements of changes in ownership of our common stock with the SEC. Directors, executive officers, and ten percent of stockholders must also furnish us with copies of all Section 16(a) forms they file. Based upon a review of these filings, we believe all required Section 16(a) reports were made during 2025.

Board Composition

Our bylaws provide that the size of our board of directors will be determined from time to time by the resolution of our board of directors. Currently, our board comprises five members, three of whom qualify as “independent” directors under any applicable standard.

Election of Directors

Our bylaws provide that a majority of our stockholders will elect a member of our board of directors.

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Independence of our Board of Directors and Board Committees

Rule 5605 of the NASDAQ Listing Rules requires a majority of a listed Company’s board of directors to be comprised of “independent directors,” as defined in such rule, subject to specified exceptions. In addition, the NASDAQ Listing Rules require that, subject to limited exceptions, each member of a listed company’s audit, compensation and nominating committees be independent as defined under the NASDAQ Listing Rules; audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act; and compensation committee members also satisfy an additional independence test for compensation committee members under the NASDAQ Listing Rules. If a listed company does not have a nominating committee, as permissible under NASDAQ Listing Rules, director nominees must either be selected or recommended for the board’s selection by independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate.

Our board of directors has evaluated the independence of its members in accordance with NASDAQ and SEC rules. Applying these standards, our board of directors determined that Mr. Anderson, Ms. Tochihara-Dirks, and Mr. Croci are “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. The other seated directors will not be considered independent because each is an officer of the Company.

Leadership Structure of the Board

Our bylaws provide our board of directors with the flexibility to combine or separate the positions of Chairman of our board of directors and Chief Executive Officer, in accordance with its determination that either structure would be in the Company’s best interests.

The board of directors currently combines the roles of Chief Executive Officer and Chairman of the board of directors. The board believes that this leadership structure promotes unified leadership and direction for the Company and facilitates effective execution of its strategic initiatives. In this combined role, the Chief Executive Officer and Chairman is responsible for setting the strategic direction of the Company, overseeing its day-to-day operations, presiding over meetings of the board of directors, setting board agendas, and facilitating communication between management and the board.

The board of directors continues to believe that it should maintain the flexibility to determine the appropriate leadership structure based on the Company’s needs and the best interests of its stockholders. Accordingly, the board may determine in the future to separate or combine the roles of Chief Executive Officer and Chairman of the board of directors.

Role of the Board in Risk Oversight Process

Our board of directors has oversight responsibility for the risk management process. The board of directors exercises its oversight function through committees, retaining responsibility for overall risk oversight. The committee chairs will be responsible for reporting findings regarding material risk exposure to the board of directors as quickly as possible. The board of directors delegates to the audit committee oversight responsibility to review our code of ethics, including whether the code of ethics is successful in preventing illegal or improper conduct, and our management’s risk assessments and management financial risk management policies, including the policies and guidelines used by management to identify, assess and manage our exposure to financial risk. Our compensation committee assesses and monitors any significant compensation-related risk exposure and the steps management should take to monitor or mitigate such exposure.

Board Committees

To assist it in performing its duties, the board of directors has delegated certain authority to an Audit Committee and a Compensation Committee. Each of these committees has adopted a written charter that satisfies the applicable standards of the SEC and the NASDAQ Listing Rules, which are posted on the investor relations section of our website. In addition, as permitted by the Nasdaq Listing Rule, the independent directors on our board will fulfill the responsibilities of a nominating and corporate governance committee. The composition and duties of each committee are described below. Members will serve on committees until their resignation or otherwise determined by our board of directors.

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The following table sets forth the members of each board committee as of December 28, 2025, and the number of meetings held by the board and committees during our year ended December 28, 2025:

Director Board of Directors Audit Committee Compensation Committee

Gary Copperud X

Kenneth Brimmer X

Allan Anderson X Chair X

Terri Tochihara-Dirks X X Chair

Fred Croci X X X

Number of meetings held 6 2 0

The primary functions of each committee of the board are described below:

Audit Committee

Our audit committee comprises Mr. Anderson, Ms. Tochihara-Dirks, and Mr. Croci. Our board of directors has determined that all of the members of the Audit Committee are “independent” as that term is defined under Rule 5605(a)(2) of the NASDAQ Listing Rules. Mr. Anderson is the chair of the audit committee. Our board of directors has determined that Mr. Anderson qualifies as an “audit committee financial expert” within the meaning of applicable SEC regulations and meets the financial sophistication requirements of the Nasdaq Marketplace Rules. Our independent registered public accounting firm and management periodically met privately with our audit committee four times during 2025.

Our audit committee assists our board of directors in overseeing our accounting and financial reporting processes and the audits of our financial statements. Under its charter, our audit committee is responsible for, among other things:

· reviewing and approving the scope of the annual audit and audit fees;

Compensation Committee

Our compensation committee comprises Ms. Tochihara-Dirks, Mr. Croci and Mr. Anderson. Ms. Tochihara-Dirks is the chair of the compensation committee. Our board of directors has determined that Ms. Tochihara-Dirks and Mr. Anderson are independent as defined under the NASDAQ Listing Rules and satisfy NASDAQ’s additional independence standards for compensation committee members. In addition, both Ms. Tochihara-Dirks and Mr. Anderson are non-employee directors within the meaning of Rule 16b-3 under the Exchange Act and outside directors as defined by Section 162(m) of the Internal Revenue Code.

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Our compensation committee assists our board of directors in discharging its responsibilities relating to the compensation of our executive officers. Under its charter, our compensation committee is responsible for, among other things:

Board and Committee Meetings

During 2025, our board of directors held six meetings via video conference. Each director attended at least 75% of the aggregate number of meetings of the board of directors and meetings of the committees of the board of directors on which they serve. In addition, our board of directors acted unanimously with written consent on five occasions.

During 2025, the Audit Committee met two times and the Compensation Committee did not meet. Our independent directors meet in executive sessions without management at least quarterly. All directors participated in such meetings through the use of electronic transmission.

During 2025, each member of the Board of Directors attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the Board of Directors on which such person served (during the periods that such person served).

Code of Ethics

We have adopted a Code of Ethics and Business Conduct applicable to our directors, officers, and employees, in accordance with Section 406 of the Sarbanes-Oxley Act, the rules of the SEC promulgated thereunder, and the Nasdaq Listing Rules. You can review this document by accessing our public filings at the SEC’s website at www.sec.gov. In addition, a copy of the Code of Ethics and Business Conduct will be provided without charge upon request. If we make any amendments to our Code of Ethics and Business Conduct other than technical, administrative, or other non-substantive amendments or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics and Business Conduct applicable to our principal executive officer, principal financial officer principal accounting officer or controller or persons performing similar functions requiring disclosure under applicable SEC or Nasdaq rules, we will disclose the nature of such amendment or waiver in a Current Report on Form 8-K. We also intend to post any amendments to our Code of Ethics and Business Conduct, or waivers of its requirements, on our website at www.itsburgertime.com.

Insider Trading Policy

On March 14, 2025 we adopted an Insider Trading Policy that sets forth restrictions on trading in our securities and prohibits all of our directors, officers and certain employees, as well as any other person having access or potential access to material information, from entering into any purchases, sales, giving away or otherwise trading the Company’s securities while in possession of material nonpublic information about the Company or providing that information to others outside the Company, entering into hedging or monetization transactions or similar arrangements with respect to the Company’s securities; short sales; and puts, calls or other derivative securities on the Company’s securities, unless advance approval is obtained from the Company’s Chief Operating Officer. Additionally, a director, officer, or certain employee may not hold Company securities in a margin account or pledge Company securities as collateral for a loan, unless advance approval is obtained from the Company’s Chief Operating Officer. This policy also applies to the foregoing persons’ family members and friends. This policy was adopted to promote compliance with federal securities laws and applicable Nasdaq requirements. Our Insider Trading Policy allows for purchases or sales of Company securities made in compliance with a written plan that meets the requirements of Rule 10b5-1 of the Exchange Act, and sets forth the applicable trading window periods where directors and designated employees can trade in the Company’s securities.

Clawback Policy

In March 2025, our Board adopted a Clawback Policy applicable to all current and former executive officers. Under the Clawback Policy, if we are required to prepare an accounting restatement, we are required to recover from any current or former executive officers’ incentive-based compensation that was erroneously awarded during the three years preceding the date such a restatement was needed. Incentive compensation includes any annual bonuses and other short- and long-term cash incentives; stock options; stock appreciation rights; restricted stock; restricted stock units and performance shares; provided that such compensation is granted, earned, or vested based wholly or in part on the attainment of a financial reporting measure. The recoverable amount is the amount of incentive-based compensation received in excess of the amount that otherwise would have been received had it been determined based on the restated financial measure. The Board will determine the method for recouping incentive compensation hereunder which may include, requiring reimbursement of cash incentive compensation previously paid; seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards; cancelling outstanding vested or unvested equity awards; and/or taking any other remedial and recovery action permitted by law, as determined by the Board.

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Certain Legal Proceedings

None of the Company’s directors or executive officers have been involved, in the past ten years and in a manner material to an evaluation of such director’s or officer’s ability or integrity to serve as a director or executive officer in any of those “Certain Legal Proceedings” more fully detailed in Item 401(f) of Regulation S-K, which include but are not limited to, bankruptcies, criminal convictions and an adjudication finding that an individual violated federal or state securities laws.

Limitation of liability and indemnification matters

Our articles of incorporation contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Wyoming law. Consequently, our directors will not be personally liable to our stockholders or us for monetary damages for any breach of fiduciary duties as directors, except for liability for:

Each of our articles of incorporation and bylaws provides that the Company is required to indemnify our directors and officers, in each case, to the fullest extent permitted by Wyoming law. Our bylaws also obligate us to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding and permit us to secure insurance on behalf of any officer, director, employee, or another agent for any liability arising out of their actions in that capacity regardless of whether we would otherwise be permitted to indemnify them under Wyoming law. We have entered into, and expect to continue to enter into, indemnification agreements with our directors, executive officers, and other employees, as determined by our board of directors. With specified exceptions, these agreements provide for indemnification for related expenses, including, among other things, attorneys’ fees, judgments, fines, and settlement amounts incurred by any of these individuals in any action or proceeding. We believe these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation-of-liability and indemnification provisions in our articles of incorporation and bylaws may discourage stockholders from bringing lawsuits against our directors and officers for breach of fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit our stockholders and us. Further, a stockholder’s investment may be adversely affected to the extent we pay settlement costs and damages.

Item 11. Executive Compensation.

Summary Compensation Table

The following Summary Compensation Table sets forth all compensation earned in all capacities during the 2025 and 2024 fiscal years by our principal executive officer and principal financial officer (the named executive officers). No other officer or employee of the Company received total compensation for either 2024 or 2025, as determined in accordance with Item 402 of Regulation S-K, which exceeded $100,000:

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Officer Compensation

In fiscal 2025, the Company paid Gary Copperud, our Chief Executive Officer, an annual base salary of $250,000 pursuant to his employment agreement entered into in July 2022, as described below under “Employment Agreements.” Mr. Copperud did not receive any bonus or equity compensation during fiscal 2025.

During fiscal 2025, the Company paid Kenneth W. Brimmer, our Chief Operating Officer and Financial Officer, an annual base salary of $150,000. Mr. Brimmer did not receive any bonus or equity compensation during fiscal 2025.

Employment Agreement with Gary Copperud

On July 7, 2022, the Company entered into an employment agreement with Mr. Copperud pursuant to which he serves as Chief Executive Officer. The agreement provides for an annual base salary of $250,000, which the Board reviews at least annually. Mr. Copperud is also eligible to receive a yearly bonus at the discretion of the Compensation Committee.

The agreement has an initial term of three years and is automatically renewed for successive one-year periods unless either party provides notice of non-renewal. The Company may terminate the agreement with or without “cause” (as defined in the agreement), and Mr. Copperud may terminate the agreement with or without “good reason” (as defined in the agreement).

If the Company terminates Mr. Copperud’s employment for cause, or if Mr. Copperud resigns without good reason, Mr. Copperud is entitled to receive accrued but unpaid base salary, accrued but unused vacation, and any earned but unpaid bonus, in each case through the date of termination.

If the Company terminates Mr. Copperud’s employment without cause, Mr. Copperud is entitled to receive (i) accrued but unpaid base salary, accrued but unused vacation, and any earned but unpaid bonus through the date of termination, (ii) continued payment of his base salary for 12 months, and (iii) a prorated bonus for the year of termination based on performance through the date of termination. If Mr. Copperud’s employment is terminated due to death or disability (as defined in the agreement), he (or his estate, as applicable) is entitled to receive accrued but unpaid base salary, accrued but unused vacation, and any earned but unpaid bonus, in each case through the date of termination.

If, following a change in control (as defined in the agreement), Mr. Copperud resigns for good reason or the Company terminates his employment other than for cause (or fails to renew the agreement), Mr. Copperud is entitled to receive (i) accrued but unpaid base salary, (ii) accrued but unused vacation, (iii) a lump-sum payment equal to two times the sum of his base salary and bonus for the year in which the termination occurs, and (iv) accelerated vesting treatment for outstanding equity awards as provided in the agreement, including full vesting of unvested stock options and other time-based equity awards, with performance-based awards remaining subject to the applicable performance conditions.

The employment agreement does not provide for any tax gross-up or reimbursement for excise taxes that may be imposed under Sections 280G and 4999 of the Internal Revenue Code. Any such excise taxes, if applicable, would be borne solely by Mr. Copperud.

Compensation Plans

Summary of 2019 Incentive Plan

The principal features of the 2019 Incentive Plan (the “2019 Plan”), as amended by the stockholders at the 2022 annual meeting, are summarized below. The following summary does not purport to be a complete description of all of the provisions of the 2019 Plan. It is qualified in its entirety by referencing the full text of the 2019 Plan, as amended.

Eligibility

Eligibility to participate in the 2019 Plan is limited to our and our affiliates’ employees, officers, directors, and consultants, as determined from time to time by the compensation committee. Incentive stock options may be granted only to employees of the Company or its subsidiaries.

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Administration

The board’s Compensation Committee administers the 2019 Plan. The compensation committee reviews and approves (or, if it deems appropriate, recommends modifications to our full board to the 2019 Plan. Subject to the terms of the 2019 Plan, the compensation committee has the authority to (i) grant and amend equity awards, (ii) interpret any provision of the 2019 Plan, any equity award, or any award agreement, and (iii) make all determinations and decisions necessary for the administration of the 2019 Plan. All determinations and decisions by the Compensation Committee under the 2019 Plan are at the Compensation Committee’s sole discretion and are binding. However, the board has retained the right to exercise the compensation committee’s authority to the extent consistent with applicable law and the applicable stock exchange requirements.

Number of Authorized Shares