| - | (51,000) | | Other payable | 130 | (2,382) | | Unearned revenue | | | | | (5,384) | 8,573 | | Net cash provided by (used in) operating activities | 7,942 | (36,531) | | Cash Flows from Investing Activities | | | | Website | | (43,350) | | Net cash provided by (used in) investing activities | - | (43,350) | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 7,942 | (79,881) | | Cash, Cash Equivalents and Restricted Cash - Beginning of year | 613,945 | 693,826 | | Cash, Cash Equivalents and Restricted Cash - End of year | $ 621,887 | $ 613,945 |

Notes to the Financial Statements December 31, 2024 and 2023

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant accounting policies of Body and Brain Center, LLC (the "Company") is presented to assist in understanding the Company's financial statements. The financial statements and notes are the representations of the Company's management who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.

Nature of Operation

Body and Brain Center, LLC is an Arizona limited liability Company that was organized on December 12, 2007. The Company is a wholly-owned subsidiary of Body & Brain Yoga and Health Centers, Inc. The Company is engaged in the business of franchising a chain of studios providing yoga classes, including dieting programs, exercise programs, relaxation programs, healing programs, life coaching and other mind-body practice programs, known as "Body & Brain" franchisees. Each franchisee independently operates a center using the Marks, the Unique System, the Body and Brain name, as well as the support, guidance and other methods and materials provided or developed by the Company.

Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates. Estimates are based on management's previous experience including expectations of future events under normal conditions. The aforementioned judgments, estimates and assumptions are periodically re-assessed in order to be in line with current available data and reflect current risks.

Goodwill

Goodwill represents the excess of the amount paid by the Company over the book value of the assets purchased for a direct center. Goodwill is not amortized but tested at least annually for impairment. To determine whether goodwill is impaired, annually or more frequently if needed, the Company performs a multi-step impairment test. The Company may first assess qualitative factors to determine if it is more likely than not that the carrying value of a reporting unit exceeds its estimated fair value.

The Company may also elect to skip the qualitative testing and proceed directly to the quantitative testing. When performing quantitative testing, the Company first estimates the fair values of its reporting units using discounted cash flows. To determine fair values, The Company must make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis included financial projections of free

Notes to the Financial Statements December 31, 2024 and 2023

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Goodwill (Continued)

cash flow (including significant assumptions about operations, capital requirements and income taxes), long-term growth rates for determining terminal value and discount rates. Comparative market multiples are used to corroborate the results of the discounted cash flow test. If the fair value is less than the carrying value of the reporting unit, then the implied value of goodwill would be calculated and compared to the carrying amount of goodwill to determine whether goodwill is impaired.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fine, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company discloses contingent liabilities in the note to the financial statements when the conditions for liability recognition are not met or when a loss form the outcome of future events is more than remote.

Cash and Cash Equivalents

Cash and cash equivalents include cash at banks and on hand, as well as short term (up to 3 months) investments of high liquidation and low risk.

Restricted Cash

Restricted cash consists of amounts in a non-interest bearing checking account held by the Company only to be used for local, regional or national marketing, advertising, sales promotion. As of December 31, 2024, the Company has $539,884 of restricted cash which is classified as a non-current asset.

Accounts Receivable

Accounts receivable are recorded at the amount the Company expects to collect on balances at year-end. The Company maintains an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, current circumstances, and relationship with customer and current payment patterns. As of December 31, 2024, the allowance for doubtful accounts was $5,783.

Accounts receivable is consisted of the following:

Notes to the Financial Statements December 31, 2024 and 2023

NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Lease

The Company adopted ASC Topic 842, Leases ("ASC 842") on January 1, 2022 using the modified retrospective transition method. ASC 842 provides a number of optional practical expedients in transition. The Company elected the package of practical expedients permitted under the transition guidance, which allows the Company to carry forward the historical lease classification, the assessment whether a contract is or contains a lease and initial direct costs for any leases that exist prior to adoption of the new standard. The Company has also elected the practical expedient to not separate the non-lease components from lease components. In addition, the Company elected the short-term lease recognition exemption for all leases that have a lease term of 12 months or less; instead, for short-term leases, lease expense is recognized on a straight-line basis over the lease term.

The Company determines if a contract contains a lease at inception of the arrangement based on whether it has the right to obtain substantially all the economic benefits from the use of an identified asset and whether it has the right to direct the use of an identified asset in exchange for consideration.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 42)