What is the address for David Dailey's Coffee News franchise?

| Non-cash financing activities | | | | Forgiveness of short-term debt | $ ( 20,000) | $ - | See accompanying notes to financial statements

Statements of Cash Flows

December 31, 2024, 2023 and 2022

Notes to Financial Statements December 31, 2024, 2023 and 2022

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements include the activities of Coffee News USA, Inc.

Nature of businesses

Coffee News USA, Inc. (the Company) owns the franchise rights for Coffee News, a weekly restaurant publication, for the United States, Mexico, Central America and the Caribbean. Revenues are generated from the sale of franchises, promotional material, the collection of weekly royalty fees and transfer fees, and the operation of a training school for all new publishers in North America, including Canada. Receivables arise from the sale of franchises and collection of franchise fees.

Cash

For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with a maturity of three months or less to be cash equivalents.

Accounts receivable

Effective January 1, 2024, the Company adopted FASB Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which modifies the measurement of expected claims and credit losses on certain financial instruments. Topic 326 requires measurement and recognition of expected versus incurred losses for financial assets held. Financial assets held by the Company that are subject to ASU 2016-13 include franchisee accounts receivable. The adoption of this ASU did not have a material impact on the Company's financial statements.

Accounts receivable consist of amounts due for the sale of franchises and monthly royalties. The sale of franchises and the collection of royalties are due and payable in advance. The franchisee agreement provides for a 60 day grace period for franchise fees before the rights are lost. Franchises are either returned to the franchisor, sold or transferred by the franchisee, and any outstanding accounts receivable subsequently paid. An allowance for credit losses is recorded when needed based upon management's estimate of uncollectible accounts, determined by analysis of specific customer accounts, historical experience, current conditions, and reasonable and supportable forecasts. The allowance for credit losses was $80,00 at December 31, 2024 and $120,000 at December 31, 2023 and 2022. Accounts are written off when management determines they are not collectible.

Accounts receivable over 90 days old totaled $86,445 in 2024, $131,366 in 2023 and $112,351 in 2022.

Management Estimates

The preparation 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 disclosures 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.

Repurchased Licenses

The Company occasionally repurchases franchise rights from sub-franchisors who have not made significant progress in developing the areas or who choose to focus on other countries. Repurchased franchise rights are recorded at cost when repurchased and are expensed as licenses when sold.

Furniture and Equipment

Furniture and equipment are depreciated by straight-line and accelerated methods over the asset's estimated useful lives. The Company capitalizes equipment with an estimated useful life greater than one year.

Notes to Financial Statements

December 31, 2024, 2023 and 2022

1. Summary of Significant Accounting Policies

Revenue Recognition

Revenue from the collection of royalty payments, training fees, and product promotional sales are recognized monthly since they are earned at a point in time. Revenues from the sale of franchises are recognized over the term of the initial franchise agreement, generally four years. The Company provides franchisees with the weekly content and other support in accordance with the franchise agreement.

Advertising Costs

Advertising costs of $41,044, $29,523, and $38,230 for years ended 2024, 2023 and 2022 are charged to expense as they are incurred.

Investments

Investments are stated at fair value based on the last reported sales price on the last business day of the fiscal year.

Income Taxes

Coffee News USA, Inc. is an S corporation under provisions of the United States Internal Revenue Code. As such, its income for federal income tax purposes is taxed at the shareholder level, and no income taxes are provided for the Company. Federal and state returns for 2024, 2023, and 2022 are subject to examination by the IRS, generally for three years after they were filed.

2. Revenue and Deferred Franchise Revenues

Disaggregation of revenue from contracts with customers

The following table disaggregates the Company's revenue based on the timing of satisfaction of performance obligations for the years ended December 31:

Revenue from performance obligations satisfied over time consist of initial franchise sale contracts, all of which have four year terms.

Performance obligations

For performance obligations related to monthly royalty fees, local advertising sales, promotional product sales, and seminar fees, control transfers to the franchisee at a point in time. Accordingly, these revenues are recognized monthly.

For performance obligations satisfied over time, control transfers to the franchisee over the term of the franchise agreement, generally four years. As a result, franchise sales revenue is recognized on the straight line basis over the term of the contracts. The Company's franchise sales agreements do not contain variable consideration and contract modifications are generally minimal.

Notes to Financial Statements

December 31, 2024, 2023 and 2022

2. Revenue and Deferred Franchise Revenues

Sales of franchise income are as follows:

Coffee News USA, Inc., has a $15,000 unsecured line of credit, of which $0 was outstanding at year end.

The Company had a six-year office lease with an unrelated party for $2,125 per month. Total lease expense for the office was $14,875 in 2022. The lease was terminated in July 2022 and was not renewed.

The Company has elected not to record leases with an initial term of 12 months or less on the statement of financial position.

Source: Item 23 — Receipts (FDD pages 36–118)