What was the change in prepaid expenses and other assets for Brain Balance in 2023?
Brain_Balance Franchise · 2025 FDDAnswer from 2025 FDD Document
| Years Ended December 31, 2024, 2023, and 2022 | ||||
|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||
| Cash Flows from Operating Activities | ||||
| Net (loss) income | $(324,837) $ | 161,876 $ | 307,374 | |
| Adjustments to reconcile net (loss) income to net cash and | ||||
| restricted cash from operating activities: | ||||
| Depreciation and amortization | 49,819 | 29,920 | 24,806 | |
| Credit loss expense | 59,741 | 5,560 | - | |
| Changes in operating assets and liabilities that (used) | ||||
| provided cash and restricted cash: | ||||
| Accounts receivable | (126,097) | 42,623 | (75,804) | |
| Deferred franchise costs | 20,050 | 23,393 | 19,952 | |
| Prepaid expenses and other assets | (33,382) | (10,615) | 53,332 | |
| Accounts payable and accrued expenses | (66,584) | (46,246) | 81,063 | |
| Deferred revenue | 16,809 | (89,332) | (96,172) | |
| Accrued advertising expenses | (56,130) | (98,824) | 84,461 | |
| Net cash and restricted cash (used in) provided | ||||
| by operating activities | (460,611) | 18,355 | 399,012 | |
| Cash Flows from Investing Activities | ||||
| Issuance of notes receivable | (61,946) | - | - | |
| Purchases of website and software development assets | (52,423) | (146,179) | (41,022) | |
| Payments on notes receivable | 31,221 | - | 20,000 | |
| Net cash and restricted cash used in investing | ||||
| activities | (83,148) | (146,179) | (21,022) | |
| Cash Flows from Financing Activities | ||||
| Advance to related party | - | - | (422,848) | |
| Payments on debt | (3,515) | (7,507) | (3,006) | |
| Member contribution | 539,393 | 109,029 | - | |
| Net cash and restricted cash provided by (used | ||||
| in) financing activities | 535,878 | 101,522 | (425,854) | |
| Net Decrease in Cash and Restricted Cash | (7,881) | (26,302) | (47,864) | |
| Cash and Restricted Cash - Beginning of year | 155,826 | 182,128 | 229,992 | |
| Cash and Restricted Cash - End of year | $147,945 $ | 155,826 $ | 182,128 | |
| Classification of Cash and Restricted Cash | ||||
| Cash | $64,403 $ | 21,796 $ | 61,068 | |
| Restricted cash | 83,542 | 134,030 | 121,060 | |
| $147,945 $ | 155,826 $ | 182,128 | ||
| Total cash and restricted cash | ||||
| Supplemental Cash Flow Information - Cash paid for interest | $5,988 $ | 5,671 $ | 5,784 | |
| Significant Noncash Transactions - Amounts advanced to | ||||
| related parties in 2022 and reclassified as distributions in 2022 | $ | - $ | - $ | 422,848 |
Source: Item 23 — RECEIPTS (FDD pages 72–292)
What This Means (2025 FDD)
According to Brain Balance's 2025 Franchise Disclosure Document, the change in prepaid expenses and other assets in 2023 was a decrease of $10,615. This figure is part of the broader 'Cash Flows from Operating Activities' section within the financial statements. This indicates that Brain Balance used $10,615 in cash for prepaid expenses and other assets during its operating activities in 2023.
For a prospective franchisee, this information provides insight into how Brain Balance manages its operating assets. Prepaid expenses are costs that have been paid in advance but not yet consumed, such as insurance premiums or rent. Other assets can include items like deposits or short-term investments. A decrease in these assets could mean that Brain Balance used more of these prepaid resources during the year than it acquired, or it could reflect changes in how the company manages these assets.
It's important to note that this is just one line item in the overall financial picture. A potential franchisee should consider this figure in the context of Brain Balance's total cash flow, net income, and balance sheet to get a comprehensive understanding of the company's financial health. Reviewing trends over several years, as presented in the FDD, can also provide a more insightful perspective on how Brain Balance manages its assets and liabilities.
Franchisees should seek clarification from Brain Balance regarding the specific components of 'prepaid expenses and other assets' to fully understand what this line item includes. Understanding the nature of these expenses can help a franchisee better assess the financial stability and operational efficiency of Brain Balance.