What was the reported value of Exit's digital assets (net) in 2022?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| ASSETS | ||||||
|---|---|---|---|---|---|---|
| 2024 | 2023 | 2022 | ||||
| Current assets | ||||||
| Cash and cash equivalents | $ - | $ - | $ 165,530 | |||
| $458,976 | respectively | 644,643 | 859,378 | 621,432 | ||
| Short-term investment | 531,970 | 189,022 | 186,041 | |||
| Income tax receivable | 220,618 | 672,410 | - | |||
| Prepaid expenses | 103,497 | 237,657 | 116,502 | |||
| Current portion - notes receivable | 1,409,859 | 1,056,201 | 1,355,483 | |||
| Due from shareholders | 278,107 | - | - | |||
| Total current assets | 3,188,694 | 3,014,668 | 2,444,988 | |||
| Other assets | ||||||
| Advances to related parties | 2,256,933 | 2,287,705 | 2,199,967 | |||
| Notes receivable (net) | 7,601,842 | 8,704,995 | 11,839,353 | |||
| Property and equipment (net) | 205,458 | 271,020 | 328,683 | |||
| Digital assets (net) | - | 943,094 | 943,094 | |||
| Regional rights | 11,049,112 | 11,049,112 | 8,679,201 | |||
| Deferred income tax asset - United States taxes | 767,000 | 428,000 | 485,000 | |||
| Total other assets | 21,880,345 | 23,683,926 | 24,475,298 | |||
| Total assets | $ 25,069,039 | $ 26,698,594 | $ 26,920,286 |
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the reported net value of their digital assets in 2022 was $943,094. This figure reflects the company's accounting of digital assets, which are initially recorded at cost and subsequently remeasured on the consolidated balance sheets at cost, net of any impairment losses incurred since acquisition. This accounting practice aligns with ASC 350, Intangibles - Goodwill and Other.
For a prospective franchisee, this indicates that Exit holds a portion of its assets in digital form, such as Bitcoin and Ethereum. The value of these assets can fluctuate, as demonstrated by the $1,820,185 impairment loss recognized in 2022 due to market price decreases. The FDD also notes that during the year ended December 31, 2024, the digital assets were sold for a gain of $2,125,033.
It's important to note that Exit's approach to digital assets involves using third-party custodial services to secure them. The company determines the fair value of its digital assets based on quoted prices on active exchanges, which are considered Level 1 inputs according to ASC 820, Fair Value Measurement. This means the value is based on readily available market data, providing transparency but also exposing the company to market volatility. Franchisees should be aware of how these digital assets are managed and how fluctuations in their value could impact the company's overall financial health.
Therefore, while digital assets can offer potential gains, they also carry inherent risks. Prospective franchisees should consider Exit's strategy for managing these assets and how it aligns with their own risk tolerance. Understanding the potential impact of digital asset performance on Exit's financial stability is crucial for making an informed investment decision.