BT Brands Pivots to Drones, Plans Restaurant Spin-Off

TL;DR

**BTBD is ditching burgers for drones, but existing shareholders are getting massively diluted – proceed with extreme caution.**

AI Summary

BT Brands, Inc. (BTBD) reported a strategic pivot in fiscal 2025, moving away from its historical focus on the food service industry towards a proposed business combination with Aero Velocity Inc., an unmanned aerial vehicle manufacturer. This shift is expected to result in substantial dilution for existing stockholders, with Aero stockholders projected to hold approximately 89% of the Merged Company on an as-converted basis, while existing BT Brands stockholders and Maxim Group will retain about 11%. Concurrently, BT Brands plans to spin off its restaurant operations, including six Burger Time locations, Keegan's Seafood Grille, Pie In The Sky Coffee, and Schnitzel Haus, into a newly formed entity, BT Group, Inc. The company also closed its Village Bier Garten location in January 2025, selling equipment for $34,500. The proposed merger and spin-off are subject to significant risks, including stockholder and regulatory approvals, and the potential for the transactions not to be completed on anticipated terms or timeline.

Why It Matters

This strategic pivot by BT Brands fundamentally alters its business model, shifting from a diversified restaurant operator to a drone manufacturing and services company. For investors, this represents a high-risk, high-reward proposition, as the substantial dilution to existing shareholders (89% to Aero stockholders) could significantly impact their investment value, while the new drone venture introduces an entirely different risk profile. Employees of the restaurant segment will transition to BT Group, Inc., facing potential operational changes under a new, standalone entity. Customers of the existing restaurant brands may see continuity under BT Group, but the broader market will observe a micro-cap company making a dramatic sector change, potentially influencing other small-cap strategies for growth or reinvention.

Risk Assessment

Risk Level: high — The risk level is high due to the proposed business combination with Aero Velocity Inc. and the subsequent spin-off of restaurant operations. The filing explicitly states that Aero stockholders are expected to represent approximately 89% of the equity ownership of the Merged Company on an as-converted basis, leading to 'substantial dilution' and a 'significant shift in voting power and control' for existing BT Brands stockholders. Furthermore, the completion of both the Merger and spin-off is subject to 'numerous conditions, including stockholder and regulatory approvals,' with 'no assurance that either transaction will be completed on the anticipated terms, timeline, or at all.'

Analyst Insight

Investors should carefully evaluate the significant dilution risk and the complete change in business focus from restaurants to unmanned aerial vehicles. Consider selling BTBD shares if you are not comfortable with the high-risk, speculative nature of the new drone business and the substantial loss of ownership for current shareholders.

Key Numbers

• $8,185,783 — Aggregate market value of voting and non-voting common equity held by non-affiliates (As of June 30, 2025)
• 6,154,724 — Shares of common stock outstanding (As of March 27, 2026)
• $101,100,000 — Stated value of Series A-1 and Series A-2 Convertible Preferred Stock for Aero stockholders (Upon completion of the Merger)
• $1.48 — Conversion price per share for Series A Preferred Stock (For Aero stockholders' preferred stock)
• 89% — Expected equity ownership of Merged Company by Aero stockholders (On an as-converted basis)
• 11% — Expected equity ownership of Merged Company by existing BT Brands stockholders and Maxim Group (On an as-converted basis)
• $3,000,000 — Minimum investment by Aero stockholders in Series B Convertible Preferred Stock (Concurrently with the closing of the Merger)
• $5,000,000 — Maximum investment by Aero stockholders in Series B Convertible Preferred Stock (Concurrently with the closing of the Merger)
• $34,500 — Proceeds from sale of Village Bier Garten equipment (Following closure in January 2025)
• 9 — Number of restaurants owned and operated by BT Brands (As of December 28, 2025, prior to spin-off)

Key Players & Entities

• BT Brands, Inc. (company) — Registrant and acquiring company
• Aero Velocity Inc. (company) — Target company in proposed merger
• BT Group, Inc. (company) — Newly formed entity for restaurant spin-off
• Maxim Group (company) — Financial advisor to BT Brands
• Burger Time (company) — Restaurant brand owned by BT Brands
• Keegan's Seafood Grille (company) — Restaurant brand owned by BT Brands
• Pie In The Sky Coffee and Bakery (company) — Restaurant brand owned by BT Brands
• Schnitzel Haus (company) — Restaurant brand owned by BT Brands
• Village Bier Garten (company) — Restaurant brand closed by BT Brands in January 2025
• Bagger Dave's Burger Tavern, Inc. (company) — Unconsolidated affiliate with 40.7% ownership

FAQ

Risk Factors

• Proposed Business Combination Risks [high — financial]: The proposed business combination with Aero Velocity Inc. is subject to significant risks, including the need for stockholder and regulatory approvals. There is a substantial risk that the transaction may not be completed on the anticipated terms or timeline, or at all, which could have a material adverse effect on BT Brands' business, financial condition, and results of operations.
• Dilution from Business Combination [high — financial]: The proposed merger with Aero Velocity Inc. is expected to result in substantial dilution for existing BT Brands stockholders. Aero stockholders are projected to hold approximately 89% of the Merged Company on an as-converted basis, while existing BT Brands stockholders and Maxim Group will retain only about 11%.
• Restaurant Closures and Spin-off Impact [medium — operational]: BT Brands has experienced restaurant closures, including Village Bier Garten in January 2025 and three Burger Time locations in 2024 and July 2025. The planned spin-off of its restaurant operations into BT Group, Inc. introduces operational complexities and potential disruptions.
• Regulatory Approvals for Merger [medium — regulatory]: The completion of the proposed business combination with Aero Velocity Inc. is contingent upon obtaining necessary regulatory approvals. Failure to secure these approvals could prevent the merger from closing, impacting the company's strategic direction.
• Dependence on Unconsolidated Affiliate [low — financial]: BT Brands holds a 40.7% interest in Bagger Dave's Burger Tavern, Inc. (BDVB), an unconsolidated affiliate. While BT Brands exercises significant influence, it does not have a controlling interest, making its financial results partially dependent on the performance of BDVB.

Industry Context

BT Brands is undergoing a significant strategic transformation, moving away from its established food service operations. The company historically focused on acquiring and operating restaurants, aiming for diversification and efficiency. However, it is now pivoting towards the unmanned aerial vehicle (UAV) manufacturing sector through a proposed business combination with Aero Velocity Inc.

Regulatory Implications

The proposed business combination with Aero Velocity Inc. is subject to obtaining necessary stockholder and regulatory approvals. Failure to secure these approvals could prevent the merger from closing, impacting the company's strategic direction and financial future.

What Investors Should Do

1. Monitor Merger Approval Status
2. Assess Dilution Impact
3. Evaluate Spin-off Execution
4. Review Aero Velocity's Business Prospects

Key Dates

• 2025-01-01: Closure of Village Bier Garten — Marks a step in the company's strategic shift away from certain restaurant operations and resulted in the sale of equipment for $34,500.
• 2025-09-02: Agreement for Business Combination with Aero Velocity Inc. — Signifies a major strategic pivot from the food service industry to the unmanned aerial vehicle sector, subject to approvals.
• 2025-12-28: Owned and Operated Nine Restaurants — Represents the state of BT Brands' restaurant portfolio prior to the planned spin-off of its restaurant operations.

Glossary

Business Combination

A merger or acquisition where two or more companies combine into a single entity. (BT Brands is pursuing a business combination with Aero Velocity Inc., a key event that will fundamentally change the company's business and ownership structure.)

As-converted basis

A calculation of ownership or dilution that includes the effect of converting preferred stock or other convertible securities into common stock. (Used to illustrate the significant dilution expected for existing BT Brands stockholders, with Aero stockholders projected to own 89% of the merged company on this basis.)

Spin-off

A corporate action where a company divides a subsidiary or business unit into a separate, independent company. (BT Brands plans to spin off its restaurant operations into a new entity, BT Group, Inc., separating them from the proposed Aero Velocity merger.)

Unconsolidated Affiliate

A company in which BT Brands has a significant influence but not control, and whose financial results are accounted for using the equity method. (BT Brands has a 40.7% interest in Bagger Dave's Burger Tavern, Inc., which operates under this classification.)

Series A-1 and Series A-2 Convertible Preferred Stock

Types of preferred stock issued by Aero Velocity Inc. that can be converted into common stock, with a stated value of $101,100,000 for Aero stockholders upon merger completion. (These securities are central to the proposed merger with Aero Velocity and contribute to the ownership structure of the combined entity.)

Series B Convertible Preferred Stock

A class of convertible preferred stock that Aero stockholders may invest in concurrently with the merger closing, with a minimum investment of $3,000,000 and a maximum of $5,000,000. (Represents an additional investment component of the proposed merger transaction.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and new risks, is not available in the provided text excerpt. The excerpt focuses on the current fiscal year's strategic pivot and proposed transactions.

Key Financial Figures

• $0.002 — nge on Which Registered Common Stock, $0.002 par value BTBD The NASDAQ Stock Mar
• $5.00 — ecurities at a public offering price of $5.00 per unit, each unit comprising one shar
• $5.50 — n stock at an initial exercise price of $5.50 per share (the "IPO"). The net proceeds
• $10.7 m — roceeds from the IPO were approximately $10.7 million, after deducting underwriting dis
• $101,100,000 — Merged Company, with a stated value of $101,100,000, convertible into common stock at $1.48
• $1.48 — 0,000, convertible into common stock at $1.48 per share. The Series A-1 Preferred Sto
• $3 m — their designees are expected to invest $3 million, and up to a maximum of $5 millio
• $5 m — vest $3 million, and up to a maximum of $5 million, in newly authorized Series B Con
• $1,150,000 — ted in Indian Rocks Beach, Florida, for $1,150,000. Keegan's Seafood Grille has operated i
• $80,000 — toration, and we replaced approximately $80,000 worth of equipment. Keegan's is a fami
• $34,500 — BG location, sold certain equipment for $34,500 and assigned the lease to an unrelated
• $250,000 — was sold for an upfront cash payment of $250,000, plus contingent payments of up to $150
• $150,000 — ,000, plus contingent payments of up to $150,000, payable at $10,000 per unit for each H
• $10,000 — payments of up to $150,000, payable at $10,000 per unit for each Hot-N-Now restaurant

Filing Documents

• btbd_10k.htm (10-K) — 1255KB
• btbd_ex45.htm (EX-4.5) — 30KB
• btbd_ex211.htm (EX-21.1) — 5KB
• btbd_ex231.htm (EX-23.1) — 2KB
• btbd_ex311.htm (EX-31.1) — 13KB
• btbd_ex312.htm (EX-31.2) — 9KB
• btbd_ex321.htm (EX-32.1) — 4KB
• btbd_ex322.htm (EX-32.2) — 4KB
• btbd_10kimg4.jpg (GRAPHIC) — 4KB
• 0001477932-26-001755.txt ( ) — 5983KB
• btbd-20251228.xsd (EX-101.SCH) — 55KB
• btbd-20251228_lab.xml (EX-101.LAB) — 376KB
• btbd-20251228_cal.xml (EX-101.CAL) — 58KB
• btbd-20251228_pre.xml (EX-101.PRE) — 307KB
• btbd-20251228_def.xml (EX-101.DEF) — 138KB
• btbd_10k_htm.xml (XML) — 794KB

Business

Business 4 Item 1A.

Risk Factors

Risk Factors 12 Item 1B. Unresolved Staff Comments 20 Item 1C. Cybersecurity 20 Item 2.

Properties

Properties 22 Item 3.

Legal Proceedings

Legal Proceedings 23 Item 4. Mine Safety Disclosures 23 PART II 24 Item 5. Market for Registrant ' s Common Equity Related Stockholder Matters and Issuer Purchases of Equity Securities 24 Item 6. Reserved 26 Item 7. Management ' s Discussion and Analysis of Financial Condition and Results of Operations 26 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 35 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 35 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. 59 Item 9A. Evaluation of Disclosure Controls and Procedures 59 Item 9B. Other Information 60 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 60 PART III Item 10. Directors, Executive Officers, and Corporate Governance 60 Item 11.

Executive Compensation

Executive Compensation 65 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 70 Item 13. Certain Relationships and Related Transactions, and Director Independence 71 Item 14. Principal Accounting Fees and Services 73 PART IV Item 15. Exhibits, Financial Statement Schedules 74 Item 16. Form 10–K Summary 75

SIGNATURES

SIGNATURES 76 2 Table of Contents BASIS OF PRESENTATION Our fiscal year is 52 or 53 weeks, ending on the Sunday closest to December 31. Most years comprise four 13-week quarters, totaling 52 weeks. Fiscal 2025 was the 52 weeks ending on December 28, 2025, and fiscal 2024 was the 52 weeks ending December 29, 2024. All references to years in this Annual Report on Form 10-K ("Annual Report") refer to the fiscal years described above.

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and may be identified by words such as "anticipate," "believe," "expect," "intend," "may," "plan," "potential," "should," "will," "estimate," "continue," and similar expressions. Forward-looking statements in this Annual Report include, among others, statements regarding our business strategy, growth plans, operating and financial performance, liquidity and capital resources, capital expenditures, acquisitions and other strategic transactions, pricing strategies, labor availability and costs, food, commodity, and energy costs, supply chain conditions, competition, consumer demand and preferences, seasonality, public health matters, regulatory and legal matters, cybersecurity risks, weather-related events (including hurricanes), and general economic conditions. This Annual Report also includes forward-looking statements regarding our proposed business combination with Aero Velocity Inc. (the "Aero Transaction") and the contemplated spin-off of our restaurant operations and related assets into a newly formed entity, BT Group, Inc. These statements include, among others, statements regarding the anticipated timing, structure, benefits, risks, completion, and post-transaction operations, as well as the expected capital structure, ownership, governance, and strategic focus of the combined company and the expected separation and ongoing operations of BT Group, Inc. The Aero Transaction, if completed, is expected to result in substantial dilution to our existing stockholders and a significant shift in voting power and control. Forward-looking statements are based on our current expectations, estimates, assumptions, and beliefs as of the date of this Annual Report and are subject to significant risks, uncertainties, and other factors, many of which

Business

Item 1. Business. In this Annual Report, and unless otherwise indicated, the terms "BT Brands," the "Company," "we," "us," "our," "our Company," and "our business" refer to BT Brands, Inc. together with its consolidated subsidiaries. The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report. Due to rounding, figures in tables may not sum exactly. Overview of Our Company As of December 28, 2025, we owned and operated nine restaurants across multiple states in the Midwest, Massachusetts, and Florida, and held a minority ownership interest in an unconsolidated affiliate that operated an additional five restaurants, for a total of 14 operating restaurant locations. Operating restaurants comprise: Six Burger Time fast-food restaurants are located in the North Central region of the United States (collectively, "BTND"). A Sioux Falls, South Dakota, Burger Time closed in 2024, a location in Ham Lake, Minnesota, closed at the end of 2024, and a location in Minot, North Dakota, closed in July 2025; Keegan's Seafood Grille is a casual seafood restaurant located in Indian Rocks Beach, Florida; Pie In The Sky Coffee, a coffee shop and bakery located in Woods Hole, Massachusetts, and Schnitzel Haus is a German-themed fine dining restaurant and bar in Hobe Sound, Florida ("Schnitzel"). In addition, we own a 40.7% interest in Bagger Dave's Burger Tavern, Inc. ("BDVB"), an unconsolidated affiliate operating five casual-dining restaurants in Michigan, Ohio, and Indiana. We do not own a controlling interest in BDVB, but we exercise significant influence over its operating and financial policies; we account for BDVB under the equity method. Village Bier Garten, a German-themed restaurant, bar, and entertainment venue located in Cocoa, Florida, ceased operations and was permanently closed in January 2025. We operate our businesses under a centralized management structure. By l

View Full Filing

View this 10-K filing on SEC EDGAR