Notes to Consolidated Financial Statements December 31, 2024 and 2023

NOTE 1 – BUSINESS AND ORGANIZATION

BBDOTQ USA, INC. (the "Company") was incorporated under the laws of the State of New Jersey on August 19, 2014. The Company is a majority-owned subsidiary of GENESIS BBQ GLOBAL CO., LTD. (the "Parent Company"), incorporated under the laws of Korea.

The following entities are subsidiaries of BBDOTQ USA, INC. and all accounts are included in the consolidated financial statements.

Notes to Consolidated Financial Statements December 31, 2023 and 2022

NOTE 1 – BUSINESS AND ORGANIZATION

BBDOTQ USA, INC. (the "Company") was incorporated under the laws of the State of New Jersey on August 19, 2014. The Company is a majority-owned subsidiary of GENESIS BBQ GLOBAL CO., LTD. (the "Parent Company"), incorporated under the laws of Korea.

The Company is authorized to issue 5,000,000 common shares with no par value and 4,250,000 common shares are issued and outstanding as of December 31, 2023.

NOTE 8 – RELATED PARTY TRANSACTIONS

The Company engages in regular purchases of products from the Parent Company and remunerated it with royalties in accordance with the terms outlined in the contract.

• a. Total purchases, including food items and related supplies, from the Parent Company is $5,430,056 and $3,706,669 for the years ended December 31, 2023 and 2022, respectively.
• b. As of December 31, 2023, the Company has account payable to the Parent Company of $7,288,694, and loan payable of $2,000,000 to the Parent Company with annual interest rate of 4.6%.
• c. Total royalty expenses to the Parent Company are $3,351,968 and $2,393,571 for the year ended December 31, 2023 and 2022, respectively.

Notes to Consolidated Financial Statements December 31, 2023 and 2022

NOTE 9 – LEASE COMMITMENTS

The Company leases certain office space, restaurant site, vehicles and equipment. The Company assessed whether an arrangement qualifies as a lease (conveys the right to control the use of identified asset for a period of time in exchange for consideration) at inception and only reassesses its determination if the terms and conditions of the arrangement are changed. Lease with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized for these leases on a straight-line basis over the lease term.

Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The excise of lease renewal options is at the Company's sole discretion.

Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities, and operating lease liabilities in our balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in balance sheets. The Company does not have finance lease as of December 31, 2023.

Notes to Consolidated Financial Statements December 31, 2024 and 2023

NOTE 10 – LEASE COMMITMENTS

The Company leases certain office space, restaurant site, vehicles and equipment. The Company assessed whether an arrangement qualifies as a lease (conveys the right to control the use of identified asset for a period of time in exchange for consideration) at inception and only reassesses its determination if the terms and conditions of the arrangement are changed. The lease asset and liability were calculated utilizing the risk-free discount rate according to the Company's elected policy. Lease with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense is recognized for these leases on a straight-line basis over the lease term.

Certain leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The excise of lease renewal options is at the Company's sole discretion. Operating leases are included in operating lease right-of-use ("ROU") assets, other current liabilities, and operating lease liabilities in our balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in balance sheets. The Company does not have finance lease as of December 31, 2024.

Maturities of lease liabilities

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 62)