When does Better Blend record revenues?

December 31, 2023 were not material to the financial statements.

Revenue Recognition

Revenues are recorded when: (i) a contract with a client has been identified, (ii) the performance obligation(s) in the contract have been identified, (iii) the transaction price has been determined, (iv) the transaction price has been allocated to each performance obligation in the contract, and (v) the Company has satisfied the applicable performance obligation.

NOTES TO FINANCIAL STATEMENTS

NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

The Company's revenue consists of fees from franchised restaurants operated by conventional franchisees. Revenue from conventional franchised restaurants include initial franchise fees, royalties based on percent of sales, marketing fees based on percent of sales, and development fees for locations the franchisee opens in addition to the initial location.

Royalties are collected on a weekly basis and are based on certain percentage as specified on the franchise agreement. Marketing fees are based on up to 1% of gross revenue. The marketing fund is used for marketing expenses related to maximizing public recognition of the Company's brand and marketing fund.

The initial franchise fees collected are determined on a franchisee-by-franchisee basis. The Company had ten franchisees under contract and four were operational as of December 31, 2023.

The Company had no contract assets and approximately $145,000 of contract liabilities as of December 31, 2022.

Advertising

The Company expenses advertising costs as incurred. Advertising expenses were approximately $50,000 for the years ended December 31, 2023.

NOTE 2 - DEFERRED REVENUE

Deferred revenue represents unearned revenue generated from the sale of new franchises and the approval of new franchisee locations.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)