What was the current portion of contract liabilities for 1 800 Packouts as of December 3, 2022?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
expressing an opinion on the\neffectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
- Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
- Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.
Tanner LLC
April 30, 2023
| As of December 3: | ||||
|---|---|---|---|---|
| 2022 | 2021 | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 3,760,121 | $ | 1,614,389 |
| Restricted cash | 543,616 | 439,024 | ||
| Accounts receivable, net of an allowance for doubtful accounts | ||||
| of $58,660 and $32,710, respectively | 2,360,599 | 907,535 | ||
| Current portion of contract assets | 1,350,919 | 169,463 | ||
| Prepaid and other current assets | 792,682 | 33,886 | ||
| Total current assets | 8,807,937 | 3,164,297 | ||
| Goodwill, net | 63,918,327 | 39,262,725 | ||
| Intangible assets, net | 54,137,918 | 33,635,333 | ||
| Investment in unconsolidated subsidiary | - | 597,537 | ||
| Contract assets, net of current portion | 9,616,933 | 379,746 | ||
| Operating lease right-of-use asset | 1,153,787 | - | ||
| Other assets | _ | 703,934 | 293,037 | |
| Total assets | $ | 138,338,836 | $ | 77,332,675 |
| Liabilities and Members' Equity | ||||
| Current liabilities: | ||||
| Accounts payable | 602,708 | $ | 333,610 | |
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, the current portion of contract liabilities as of December 3, 2022, was $1,960,914. This represents the amount of contract liabilities that 1 800 Packouts expects to settle within one year from that date. Contract liabilities typically arise when a company receives payment for goods or services that have not yet been fully delivered or performed. In 1 800 Packouts' case, this likely relates to franchise fees or other payments received from franchisees for which 1 800 Packouts has not yet fulfilled its obligations. The equivalent figure on December 3, 2021, was $297,574.
The current portion of contract liabilities is a key indicator of 1 800 Packouts' short-term financial obligations. A higher number suggests that 1 800 Packouts has a greater amount of deferred revenue that it needs to recognize in the near term. This can impact the company's cash flow and profitability, as it needs to allocate resources to fulfill these obligations. For a prospective franchisee, understanding the trend in contract liabilities can provide insights into 1 800 Packouts' business model and its ability to meet its commitments.
It's important to note that the current portion of contract liabilities only represents a snapshot in time. The total contract liabilities, including both the current and non-current portions, provide a more comprehensive view of 1 800 Packouts' overall obligations to its customers and franchisees. Reviewing these figures over multiple periods can help identify any significant changes or trends that may warrant further investigation. Additionally, prospective franchisees should inquire about the specific nature of these contract liabilities and how they are expected to be resolved.