----------------------------------------------------------|------|----------|------|----------|------|----------| | OPERATING ACTIVITIES | | | | | | | | Net income | $ | 63,830 | $ | 64,157 | $ | 53,570 | | Adjustments to reconcile to cash provided by operating activities: | | | | | | | | Amortization, depreciation and other (including amortization | | | | | | | | classified in cost reimbursement revenue) | | 1,270 | | 1,292 | | 1,573 | | Accounts receivable | | (1,990) | | (1,196) | | 635 | | Due from related parties | | (66,581) | | (61,623) | | (54,537) | | Accounts payable | | (45) | | (1,221) | | (468) | | Deferred income | | 4,010 | | (1,506) | | (1,889) | | Contract acquisition costs | | (67) | | 511 | | 1,223 | | Interest receivable | | (427) | | (414) | | (107) | | Net cash provided by operating activities | | - | | - | | - | | INVESTING ACTIVITIES | | | | | | | | Net cash provided by investing activities | | - | | - | | - | | FINANCING ACTIVITIES | | | | | | | | Net cash provided by financing activities | | - | | - | | - | | INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | - | | - | | - | | CASH AND CASH EQUIVALENTS, beginning of period | | - | | - | | - | | CASH AND CASH EQUIVALENTS, end of period | $ | - | $ | - | $ | - |

Notes to Financial Statements (continued) ($ in Thousands)

1. Description of Business

MIF, L.L.C. ("we" or the "Company") was formed on March 20, 2012 and is incorporated as a limited liability company ("LLC"), in the state of Delaware. The Company's sole member is Marriott International, Inc. ("Marriott" or the " Parent"). Upon the completion of its franchise disclosure document in 2012, the Company began offering franchises as a unit franchised business. Using the Marriott name, designs, and systems, licensed from Marriott, the Company sells Marriott-branded products and other items across various locations in the United States of America.

The Marriott franchise system is characterized by certain patents, trademarks, logos, operating systems, operating manuals, training, and distinctive hotel design and color schemes, and includes materials and methods for marketing and selling Marriott branded products and other products.

During the years ended December 31, 2024, 2023, and 2022, the Company transferred three, nine, and 12 franchise agreements to Marriott, respectively.

During the year ended December 31, 2024, the Company acquired and relicensed six franchise agreements from Marriott and its wholly owned subsidiary. The Company also entered into several new franchise agreements with franchisees in 2024.

Notes to Financial Statements (continued) ($ in Thousands)

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying financial statements present the results of operations, financial position, and cash flows of the Company in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). Preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements, the reported amounts of revenues and expenses during the reporting periods, and the disclosures of contingent liabilities. Accordingly, ultimate results could differ from those estimates.

Revenue Recognition and Cost Reimbursements

Our revenues primarily include franchise fees, licensing fees, and cost reimbursements. For our franchised properties, we have a performance obligation to provide franchisees and operators a license to our hotel system intellectual property for use of certain of our brand names. As compensation for such services, we are typically entitled to initial application fees and ongoing royalty fees. Our ongoing royalty fees represent variable consideration, as the transaction price is based on a percentage of certain revenues of the properties, as defined in each contract. We recognize royalty fees on a monthly basis over the term of the agreement as those amounts become payable. Initial application and relicensing fees are fixed consideration payable upon submission of a franchise application or renewal and are recognized on a straight-line basis over the initial or renewal term of the franchise agreements.

Under our franchise agreements, franchisees participate in certain centralized programs and services, such as marketing, sales, reservations, and insurance programs, which Marriott operates for their benefit. These programs and services do not generate a profit over the long term, and accordingly, when we recover the costs incurred for these programs and services from our franchisees, we do not seek a mark-up.

Source: Item 21 — FINANCIAL STATEMENTS (FDD page 132)