What was the net cash used by financing activities for Closet Storage Concepts?

RIBUTIONS | (269,850) | | RETAINED EARNINGS, ENDING | $ 9,739 |

CLOSETS UNLIMITED OF NEW JERSEY, INC. STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2024

NOTE 1 ORGANIZATION AND NATURE OF ACTIVITIES

Closets Unlimited of New Jersey, Inc. (the "Company"), trading as Closet & Storage Concepts and More Space Place, designs, manufactures, and installs organizational and storage products used in residential and business settings. In addition, since 2000, the Company has sold and supported, with product and marketing, franchises in markets throughout the United States. At the end of 2024, the Company serviced seven individually owned franchises trading as Closet & Storage Concepts and twenty‐eight individually owned franchises trading as More Space Place.

The Company is headquartered in West Berlin, NJ and operates four Closet & Storage Concepts company‐owned locations servicing New Jersey, Pennsylvania, Delaware, and Maryland. Most of the products installed are for residential closet use; designs often include multiple levels of hanging poles for clothing, shelving for folded garments, shoe racks, tie racks, belt racks, drawers, baskets, as well as other space saving home furnishings such as Murphy wall beds. Other design and products are developed to the customer's specific needs.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements and income tax returns are prepared using the accrual basis of accounting, in accordance with accounting generally accepted in the United States of America.

Use of Estimates

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.

Leases

Leases are classified as either finance or operating leases based upon criteria established in ("ASU" 2016‐02"), "Leases" (FASB Topic 842). The standards require lessees to record leases on their balance sheet recognizing a lease liability for the obligation to make lease payments, and a right‐of‐use asset for the right to use the underlying asset for the lease term, calculated based upon the present value of future minimum lease payments at lease commencement and recognizing the expense on the statement of operations on a straight line basis over the life of the leases.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leases (Continued)

The Company made an election not to record the operating right‐of‐use assets or operating lease liabilities for leases with an initial term of 12 months or less ("short term"). Short term lease costs in costs of revenues consist of equipment leased and charged specifically to jobs as incurred. Short term lease costs in general and administrative includes leased office and warehouse space. Payments on these leases are recognized on a straight‐line basis on the statement of operations over the lease term.

The Company also elected not to combine the lease and non‐lease components on all new or modified operating leases into a single lease component for all classes of assets. The Company adopted ASU 2023‐ 01 of (FASB Topic 842), to use the written terms and conditions of a common control arrangement to determine if a lease exists and the accounting and classification for the lease.

Revenue Recognition

Franchise Revenue

Franchise revenues consist primarily of royalties, National Advertising Program contributions, and initial franchise fees.

The Company's primary performance obligation under the franchise license is granting certain rights to use the Company's intellectual property, and all other services the Company provides under the franchise agreement are highly interrelated, not distinct within the contract, and therefore accounted for under ASC 606 as a single performance obligation, which is satisfied by granting certain rights to use our intellectual property.

Royalties are calculated as a percentage of the franchisee's sales. Franchisee contributions to national advertising funds are based on a fixed dollar assessment. Under our franchise agreements, advertising contributions paid by franchisees, must be spent on advertising, marketing and related activities. Our franchise royalties, represent sales‐based royalties that are related entirely to our performance obligation under the franchise agreement and are recognized as franchise sales occur.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)