What was the net cash used in operating activities for Brain Balance in 2024?
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 net cash used in operating activities for the year 2024 was a negative amount, specifically $(460,611). This indicates that Brain Balance used more cash than it generated from its core business operations during that year.
For a prospective franchisee, this figure is important because it provides insight into the financial health and stability of Brain Balance. A negative cash flow from operating activities could suggest that the company is facing challenges in generating revenue, managing expenses, or both. It's essential to consider this in conjunction with other financial metrics and trends to get a comprehensive understanding of the company's performance.
It is also important to note that the FDD includes cash flow information for 2023 and 2022 for comparison. In 2023, Brain Balance had net cash provided by operating activities of $18,355, while in 2022, the net cash provided was $399,012. The prospective franchisee should investigate the reasons for the significant change in cash flow from operating activities between 2022, 2023 and 2024 to determine if this is an ongoing trend or a one-time occurrence.