What specific statements are included in the audited financial statements of Better Blend?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
pective franchisee. | |
INDEPENDENT AUDITOR'S REPORT
Board of Members of Better Blend Franchising, LLC
Opinion
We have audited the financial statements of Better Blend Franchising, LLC (the "Company"), which comprise the balance sheet as of December 31, 2023, the related statements of operations, member's deficit, and cash flows for the year then ended, and the related notes to the financial statements.
In our opinion, the accompanying financial statements presents fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statement section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statement
Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of a financial statements that is free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statement is issued or available to be issued.
3565 Piedmont Road, NE Building One, Suite 400 Atlanta, GA 30305 T: 678.456.5157 | F: 470.558.3884
Board of Managers Better Blend Franchising, LLC Page 2
Auditor's Responsibility for the Audit of the Financial Statement
Our objectives are to obtain reasonable assurance about whether the financial statement as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we:
- · Exercise professional judgment and maintain professional skepticism throughout the audit.
- Identify and assess the risks of material misstatement of the financial statement, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 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.
May 2, 2024
Singer Lewak LLP
BALANCE SHEET DECEMBER 31, 2023
ASSETS
| | We have not been in business for three years or more, and therefore cannot include | |---|---| | all financial statements required by the Franchise Rule of the Federal Trade Commission. | | | Exhibit F contains our audited financial statements for the year ended December 31, 2023, and our | | | audited balance sheet as of December 31, 2022. Our fiscal year end is December 31. | | See notes to financial statement.
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2023
| Royalty revenue | $ 43,805 | |-------------------------------------|-----------------| | Franchise fee revenue | 18,979 | | Services revenue | 1,402 | | Development fee revenue | 5,938 | | Total revenue | 70,124 | | General and administrative expenses | 377,935 | | Net loss | $ (307,811) | See notes to financial statements.
STATEMENT OF MEMBER'S DEFICIT YEAR ENDED DECEMBER 31, 2023
| | Ac | ccumulated Deficit | Total | |-------------------------------------|----|-----------------------|-----------------| | Member's deficit, December 31, 2022 | $ | (105,205) | $ (105,205) | | Net loss | | (307,811) | (307,811) | | Member's deficit, December 31, 2023 | $ | (413,016) | $ (413,016) | See notes to financial statements.
STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2023
| Net loss | $ (307,811) | |-------------------------------------------------------------------------------|-----------------| | Adjustments to reconcile net loss to net cash | | | flows used by operating activities: | | | Changes in operating assets and liabilities: | | | Royalties and marketing receivable | (3,659) | | Deposits | (5) | | Accounts payable and accrued expenses | 50,589 | | Deferred revenue | 185,083 | | Cash flows used by operating activities Cash flows from financing activities | (75,803) | | - | 49,220 | | Proceeds from issuance of note payable to related party | 49,220 | | Cash flows provided by financing activities | 49,220 | | Net decrease in cash | (26,583) | | Cash, beginning of year | 63,295 | | Cash, end of year | $ 36,712 | See notes to financial statements.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 43)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, the audited financial statements include an independent auditor's report containing an opinion on the company's financial statements. For the 2023 financial statements, the auditor's opinion states that the balance sheet as of December 31, 2023, the related statements of operations, member's deficit, and cash flows for the year then ended, and the related notes to the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of Better Blend in accordance with accounting principles generally accepted in the United States of America. For the 2022 financial statements, the auditor's opinion states that the balance sheet as of December 31, 2022, and the related notes present fairly, in all material respects, the financial position of Better Blend in accordance with accounting principles generally accepted in the United States of America.
The financial statements also include notes that describe Better Blend's nature of business and significant accounting policies. These notes cover items such as the company's formation as a limited liability company in Ohio on June 22, 2022, its involvement in franchising related activities, and the basis of accounting used, which is generally accepted accounting principles in the United States of America (U.S. GAAP). The notes also address the use of estimates in preparing the financial statements, where management makes assumptions affecting the reported amounts of assets, liabilities, revenues, and expenses.
Additional statements within the notes to the financial statements include how Better Blend recognizes revenue, which consists of fees from franchised restaurants, including initial franchise fees, royalties, marketing fees, and development fees. The notes also discuss deferred revenue, which represents unearned revenue from the sale of new franchises and approval of new locations, and how franchise fee and development fee revenues are recognized over the term of the franchise agreement. Deferred revenue was $145,000 at December 31, 2022. Furthermore, the notes address potential litigation, concentration of credit risk, and subsequent events, providing a comprehensive overview of Better Blend's financial position and potential risks.