Who is the Certified Public Accountant (CPA) that prepared the financial statements for Chicken Guy?

Concentrations and Credit Risk

Cash is maintained at various financial institutions, which are insured by the Federal Deposit Insurance Corporation up to $250,000 per institution and, at times, may exceed the federally insured limit. The Company places its funds with high credit quality financial institutions and does not believe it is exposed to any significant credit risk on cash.

At December 29, 2024, the Company had five customers comprising approximately 32%, 24%, 16%, 14% and 11%, respectively, of total outstanding royalty receivables, net. The Company also had three customers comprising approximately 34%, 23%, and 10%, respectively, of total royalty revenues and three customers comprising approximately 50%, 28%, and 19%, respectively, of total franchise fee revenues for the year ended December 29, 2024.

At December 31, 2023, the Company had two customers comprising 67% and 21%, respectively, of total outstanding royalty receivables, net. The Company also had four customers comprising approximately 32%, 20%, 16% and 16%, respectively, of total royalty revenues and one customer comprising approximately 73% of total franchise fee revenues for the year ended December 31, 2023.

At December 25, 2022, the Company had four customers comprising 36%, 20%, 19%, and 10%, respectively, of total outstanding royalty receivables, net. The Company also had two customers comprising approximately 52% and 30%, respectively, of total royalty revenues and two customers each comprising approximately 47% of total franchise fee revenues for the year ended December 25, 2022.

Due From/To Related Parties

Amounts due from/to related parties are comprised of non-interest-bearing cash advances between various entities related through common control that are due upon demand.

Royalty Receivables and Allowance for Credit Losses

Royalty receivables represent amounts due from franchisees for sales-based royalties due under normal trade terms. An allowance for credit losses is established to provide for expected credit losses by evaluating factors such as customer creditworthiness, historical payment and loss experiences, current and forecasted economic conditions, and the age and status of outstanding receivables. Royalty receivables are charged off against the allowance for credit losses account when they become uncollectible and collection efforts have ceased. Based upon the information available to management, the Company recorded an allowance for expected credit losses of $20,366 at December 29, 2024. No allowance for credit losses was recorded at December 31, 2023, and December 25, 2022. Royalty receivables, net were $127,714, $237,320, $42,689, and $30,335 at December 29, 2024, December 31, 2023, December 25, 2022, and at the beginning of the year ended December 25, 2022, respectively.

Revenue Recognition

The Company recognizes revenue from development and franchise fees as well as franchise royalties. In accordance with Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), revenues are recognized when control of promised goods or services (performance obligations) are transferred to a customer in an amount that reflects the consideration expected to be received for those goods or services.

The Company's development and franchise agreements typically require an upfront non-refundable fee to be paid upon execution of the agreement. The Company's standard initial development and franchise fee is $50,000 per restaurant for any franchise agreement entered into by a new franchisee. This fee may be reduced to $40,000 per restaurant if the franchisee commits to opening multiple restaurants. The services provided by the Company under its development and franchise agreements are highly interrelated with the franchise right and are not considered distinct. As a result, initial development and franchise fees are recognized over the term of the development and franchise agreements, which is generally ten years.

The Company also recognizes accelerated franchise revenue resulting from terminated franchise agreements. During the year ended December 29, 2024, the Company recognized accelerated franchise revenue of $381,500 as a result of three terminated franchise agreements. In connection with one of the termination agreements, the Company agreed to refund $200,000 of upfront franchise and development fees to the franchisee. This amount is included as due to franchisee in the accompanying balance sheet at December 29, 2024. During the year ended December 31, 2023, the Company recognized accelerated franchise revenue of $33,000 as a result of one terminated franchise agreement. No accelerated franchise revenue was recognized during the year ended December 25, 2022.

Franchise royalties, which are generally 5% - 6% of the net sales of the franchisee, are recognized as revenue in the period in which the franchisee sales are reported to have occurred. Franchise royalties are generally due to the Company weekly.

Contract Assets

The Company may incur certain incremental contract costs, such as sales commissions, in order to obtain its development and franchise agreements. These costs are capitalized and amortized over the expected period of benefit of the related franchise agreement, which is generally ten years. Total contract assets were $187,250 at December 29, 2024 and $127,500 at each of December 31, 2023 and December 25, 2022 and at the beginning of the year ended December 25, 2022. During the year ended December 29, 2024, the Company recognized commission expense of $250. During the years ended December 31, 2023, and December 25, 2022, no commission expense was recognized as no units had been opened under the related development and franchise agreements during those years.

Contract Liabilities

Contract liabilities consist of deferred development and franchise fees. The Company recognizes revenue from franchisees as the related performance obligations are satisfied. A contract liability is recorded when the Company receives a payment in advance of the satisfaction of its performance obligations. Contract liabilities that are expected to be recognized as revenues during the succeeding twelve-month period are presented as contract liabilities, current portion, and the remaining portion is presented as contract liabilities, long-term portion on the accompanying balance sheets. Total contract liabilities at each of

December 29, 2024, December 31, 2023, and December 25, 2022, were $1,177,499, $1,611,833, and $1,578,500, respectively. Total contract liabilities as of the beginning of the year ended December 25, 2022, were $397,000.

Customer Deposits

Customer deposits represent payments received in advance from potential future franchisees that are subject to cancellation and refund provisions.

Income Taxes

The Company was formed as a limited liability company and is treated as a pass-through entity for federal income tax purposes. The Company's member includes the Company's income or loss in its individual income tax return. Accordingly, no provisions or liabilities for federal and state income taxes have been included in the accompanying financial statements.

The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheets. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company's open tax years subject to examination by the Internal Revenue Service generally remain open for three years from the date of filing.

Fair Value of Financial Instruments

The Company follows the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosure, which clarifies the definition of fair value, establishes a framework for measuring fair value, and expands required disclosure about fair value measurements of assets and liabilities. ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

**Level 1―**Valuation based on quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.

**Level 2―**Valuation based on quoted market prices for similar assets and liabilities in active markets.

**Level 3―**Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management's best estimate of what market participants would use as fair value.

The Company does not have any Level 1, 2, or 3 financial instruments.

The respective carrying values of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments which consist primarily of cash, restricted cash, royalty receivables, accounts payable, due to franchisee and due from/to related parties.

Recently Adopted Accounting Standard

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments (Topic 326). Topic 326 introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses requires entities to incorporate considerations of historical information, current information, and reasonable and supportable forecasts, and will generally result in earlier recognition of allowances for losses. The Company adopted the new standard effective December 26, 2022. The adoption of Topic 326 did not have a material impact on the Company's financial statements.

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to December 29, 2024, as of July 2, 2025, which is the date the financial statements were available to be issued. No material events have occurred since December 29, 2024, that require recognition or disclosure in the financial statements, except as follows:

Subsequent to December 29, 2024, the Company terminated the development and franchise agreement for one of its franchisees.

Note 2 - Contingencies

Litigation

In the normal course of conducting its business, the Company may be involved in litigation. The Company is not a party to any litigation which management believes could result in judgments that would have a material adverse effect on its financial position, liquidity, or results of future operations.

CERTIFIED PUBLIC ACCOUNTANTS

Gainesville | Ocala | Tallahassee | Sarasota | Orlando | Tampa purvisgray.com

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 50)