What is the relationship between 1 800 Packouts' 'Prepaid and other current assets' and its operating expenses?
1_800_Packouts Franchise · 2025 FDDAnswer from 2025 FDD Document
opinion on the effectiveness of the Company'sinternal 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.
April 23, 2025
| (1) | 2024 | 2023 | |
|---|---|---|---|
| Assets | |||
| Current assets: | |||
| Cash | $ | 3,690,691 | $ 1,455,349 |
| Restricted cash | - | 840,143 | |
| Accounts receivable, net of an allowance for credit losses | |||
| of $74,296 and $105,953, respectively | 6,102,611 | 3,565,178 | |
| Other | 820,000 | - | |
| current | |||
| receivable | |||
| Current | 1,797,429 | 1,382,859 | |
| portion | |||
| of | |||
| contract | |||
| assets | |||
| Prepaid and other current assets | 1,803,912 | 1,537,556 | |
| Total current assets | 14,214,643 | 8,781,085 | |
| Goodwill, net | 52,556,496 | 66,184,756 | |
| Intangible assets, net | 45,678,810 | 50,358,496 | |
| Contract assets, net of current portion | 13,317,603 | 10,981,453 | |
| Operating lease right-of-use assets | 1,603,081 | 1,272,436 | |
| Other assets | 2,206,748 | 828,551 | |
| Total assets | $ | 129,577,381 | $ 138,406,777 |
| Liabilities and Members' Equity |
Source: Item 23 — RECEIPT (FDD pages 67–238)
What This Means (2025 FDD)
According to 1 800 Packouts' 2025 Franchise Disclosure Document, 'prepaid and other current assets' are listed as part of the company's assets. In 2024, this was valued at $1,803,912, and in 2023, it was $1,537,556. These assets are distinct from operating expenses, though advertising and marketing costs are included within operating expenses.
Advertising and marketing costs, a component of 1 800 Packouts' operating expenses, primarily consist of collateral marketing materials. These costs are expensed as they are incurred and are included in selling, general, and administrative expenses. For the year ending December 31, 2024, these costs amounted to $1,995,154, and for the year ending December 31, 2023, they were $2,089,788.
'Prepaid and other current assets' and advertising/marketing expenses are related in that both impact 1 800 Packouts' overall financial health, but they are accounted for differently. 'Prepaid and other current assets' represent value already paid for items or services that will be used in the future, while advertising and marketing expenses reflect costs incurred in the present for promoting the business. A prospective franchisee should understand how these different types of assets and expenses are managed, as they both affect the profitability and cash flow of the franchise.