CONFIRMED · BAM’s own audited financial statements (2026 FDD)
The clearest evidence about BAM Franchising’s condition is not an accusation from anyone. It is BAM’s own audited financial statements, filed inside its 2026 Franchise Disclosure Document and signed off by BAM’s own chosen auditor, Gilbert & Stewart, CPA, of Provo, Utah, in a report dated March 26, 2026. Read against the standard professional test for going-concern distress, recurring losses, a deepening stockholders’ deficit, a worsening working-capital shortfall, and operating cash flow that is negative once one-time or non-recurring items are stripped out: the audited numbers meet it on three of four counts outright, and on the fourth once the arithmetic is done. The company’s own auditor issued a clean opinion anyway. Both facts are true at once, and the gap between them is the story.
BAM’s audited Consolidated Statement of Financial Condition as of December 31, 2025 reports Total Stockholders’ Equity of −$621,091, down from −$492,495 the year before. That is not a one-year dip. The equity line has eroded for four straight years running: +$142,667 (FY2020) → +$129,513 (FY2021) → −$181,935 (FY2022) → −$276,860 (FY2023) → −$492,495 (FY2024) → −$621,091 (FY2025). The company was solvent and small through 2021. It has been insolvent on its own books, and getting more insolvent every year since, for four years running.
The same statement shows Total Current Assets of $3,774,970 against Total Current Liabilities of $5,456,122, a working-capital deficit of −$1,681,152, also worsening every year: −$550,269 (FY22) → −$864,972 (FY23) → −$1,306,190 (FY24) → −$1,681,152 (FY25). Cash on hand is $1,095,239. Sitting against that cash are two liability lines that grew the fastest of anything on the balance sheet: Gift Card Payable of $1,017,015 (up from $673,228) and Deferred Revenue of $2,683,713 (up from $2,372,048), a combined pre-sold float of $3,700,728, money already collected for stores not yet opened and gift cards not yet redeemed. That float is roughly six times the size of the equity deficit, and it has grown 125-fold since 2020, when it stood at $29,574.
The one number that argues against distress is the Consolidated Statement of Cash Flows, which reports Net Cash Provided (Used) by Operating Activities of a positive $361,911 for FY2025 and a positive $532,025 for FY2024. On its face, a company generating positive operating cash is not a company in going-concern trouble. But the same statement that reports that number also reports what is inside it, line by line, and the arithmetic does not survive the subtraction.
For FY2025, the cash-flow statement lists, among the reconciling items feeding that $361,911: “Increase (Decrease) in Gift Card Payable” of $343,787 and “Increase (Decrease) in deferred revenue” of $311,665. Those two lines alone total $655,452, money that hit the operating-cash-flow statement not because the business earned it by delivering a store or a product, but because BAM collected new prepaid obligations faster than it fulfilled old ones. Subtract that growth from the reported total and the sign flips:
CONFIRMED
FY2025: $361,911 (reported operating cash flow) − $655,452 (growth in gift-card + deferred-revenue float) = −$293,541. Operations, stripped of new prepaid intake, burned nearly $294,000 in 2025.
CONFIRMED
FY2024: $532,025 (reported) − $255,861 (gift-card growth) − $956,048 (deferred-revenue growth) = $532,025 − $1,211,909 = −$679,884. The prior year was worse: operations burned nearly $680,000 once the float is stripped.
Both years, the only thing keeping operating cash flow positive on paper is the growth in money owed for stores and gift cards not yet delivered. A healthy franchisor’s operating cash comes from royalties on stores that are already open and paying rent. BAM’s comes from selling new obligations faster than it retires old ones. The same statement carries a fourth corroborating signal: Accounts Payable and Accrued Expenses grew $658,129 in the year (from $454,997 to $1,113,126), the company also stretched its own vendors to help the number look positive. Stretching payables is itself a recognized distress indicator under the professional standard for evaluating an entity’s ability to continue as a going concern.
The honest caveat belongs here too. On a pure trade-solvency basis, BAM is not defaulting on its phone bill: strip out the float liabilities (deferred revenue and gift cards) and the remaining hard current liabilities are roughly $1,755,394, nominally covered by $3,774,970 of current assets. But that coverage is soft, only $1,095,239 of the current assets is actual cash, and accounts receivable jumped $611,099 in a single year, meaning franchisees are taking longer to pay BAM, which is either their own distress or the aggressive recognition of revenue not yet collected. The $3.7 million of float obligations are not stretchable trade debt; they are promises to deliver a store or honor a card, backed by just over $1 million of cash, serviceable only by more intake.
Here is what BAM’s own auditor actually wrote, verbatim, in the Independent Auditor’s Report dated March 26, 2026:
“In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position [of] BAM Franchising, Inc. and subsidiaries as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.”
That is a clean, unqualified opinion. No “except for.” No modification. The word “going concern” appears exactly twice in the report, and both times it describes a duty, not a finding. Under “Responsibilities of Management,” the report recites that “management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about BAM Franchising, Inc.’s ability to continue as a going concern within one year.” Under “Auditor’s Responsibilities,” the report recites that the auditor’s job is to “conclude whether, in our judgment, there are conditions or events… that raise substantial doubt.” Neither sentence states that such doubt exists. This is standard boilerplate present in essentially every post-2021 audit report; it is not a finding, and this site does not claim otherwise.
CONFIRMED
Under professional auditing standards, an auditor who actually concludes there is substantial doubt must add a separate, titled section headed “Substantial Doubt About the Entity’s Ability to Continue as a Going Concern,” and management must add a footnote disclosing the conditions and its plans to address them. Neither exists anywhere in BAM’s 2026 audited financials. The recital is duty language, not a conclusion, and the conclusion that was reached was silence.
The other reading. A clean audit opinion is a real professional judgment, not nothing, and negative book equity is not the same as insolvency-in-fact. Spending deferred revenue as it comes in is ordinary franchisor accounting, and plenty of growing franchise systems carry a large deferred-revenue balance without being in distress. That reading is fair as far as it goes, but it does not survive the subtraction above. The question is not whether collecting money in advance is normal; it is whether the business, once that new intake is backed out, is generating cash. Twice running, the answer on BAM’s own statement is no: −$293,541 in 2025, −$679,884 in 2024. A franchisor whose growth model requires an ever-larger float just to keep operating cash flow above zero is not describing ordinary growth; it is describing dependence on continuous new intake, which is a structural fact about the business, not a rhetorical one.
The same 2026 FDD that carries these numbers discloses, in Note 6 (Deferred Revenue), that “during 2025 the company finalized 55 franchise agreements,” each one written at the Initial Franchise Fee stated in Item 5 of the same document: $40,000 for a single-area franchise, payable at signing. Roughly 55 people paid roughly $40,000 apiece in the same year BAM’s own audited books show a deepening equity deficit and operations that were cash-negative once the float is stripped out. That is the intake this system runs on: new franchise fees plug the operating hole that the existing store base does not fill.
They paid into that system on the strength of an Item 3 that told them nothing was wrong. Item 3 of the 2026 FDD certifies, in the franchisor’s own words: “Other than these actions, no litigation is required to be disclosed in this Item”, the only “actions” referenced being a 2019 Washington state Assurance of Discontinuance. When that certification issued, it was not true. In February 2024, Plastic Palette LLC and Christina Cooper had already sued BAM in Clackamas County, Oregon (Plastic Palette LLC & Christina Maria Cooper v. BAM Franchising, Inc., No. 24CV06902) for interference, conversion, and Oregon elder financial abuse, a suit BAM compelled into private arbitration two months later. And filed twelve days before the April 8, 2026 issuance date, three franchisees were suing BAM in Utah’s Business and Chancery Court (BAMF Salem 1, LLC; Chrystal Law; Benjamin Gorman v. BAM Franchising, Inc., No. 260200029), fraud in the inducement as the First Cause of Action alongside negligent misrepresentation. Both are unadjudicated allegations and BAM is presumed innocent of each; what is not in dispute is that the Utah suit was pending on a public docket, and the Oregon dispute pending in arbitration, at the moment Item 3 certified that no litigation needed disclosing. Routing a dispute into arbitration does not necessarily clear the duty, either: on this site’s reading, Item 3 reaches material arbitration, not only court cases. See how the disputes disappear.
The company did not need to look outside its own document to know that. Bound into the very same 2026 FDD, four pages after the audited balance sheet, Note 10 of the financial statements, headed “LITIGATION”, states in full: “The Company is a defendant in certain legal actions and pending actions. The ultimate liability that might result from the resolution of the above matters is not presently determinable. Management is of the opinion that the final outcome of the cases will not have an adverse effect on the financial statements.” The following note, Note 11 (Subsequent Events), discloses that BAM “settled a legal dispute” after the balance-sheet date for $18,000, “accrued on the financial statements.”
CONFIRMED
Item 3, printed page 4 of the 2026 FDD: “Other than these actions, no litigation is required to be disclosed in this Item.” Note 10 of the audited financial statements, same document: “The Company is a defendant in certain legal actions and pending actions.” Both sentences were authored inside the same disclosure booklet, filed the same day, by the same company. One says there is nothing to disclose. Fifteen pages later, its own auditor-reviewed financial notes say the company is a defendant in pending litigation.
What is proven, from BAM’s own co-authored, audited records: a stockholders’ deficit that has deepened for four straight years to −$621,091; a working-capital shortfall that has worsened every year to −$1,681,152; operating cash flow that is negative in both of the last two years once the growth in prepaid float is backed out (−$293,541 in 2025, −$679,884 in 2024); a pre-sold float of $3,700,728 that has grown 125-fold since 2020; and a clean, unqualified audit opinion sitting on top of all of it, issued the same year roughly 55 buyers paid $40,000 each on an Item 3 that said there was nothing to disclose while the franchisor’s own financial notes, in the same booklet, said otherwise.
What is not proven by the numbers alone is where the money went, whether the float represents ordinary, if aggressive, growth accounting or something closer to extraction. That destination question is a separate inquiry from the mechanism this exhibit establishes. The mechanism itself, though, requires no speculation: it is arithmetic performed on statements BAM’s own chosen accountant signed.
Source: BAM Franchising, Inc., 2026 Franchise Disclosure Document (issuance date April 8, 2026) and Wisconsin renewal amendment (April 15, 2026); audited consolidated financial statements (auditor Gilbert & Stewart, CPA, Provo, Utah; report dated March 26, 2026): Consolidated Statement of Financial Condition, Consolidated Statement of Cash Flows, Notes 6, 10, and 11; Item 3 and Item 5. Litigation dockets: Plastic Palette LLC & Cooper v. BAM Franchising, Inc., Or. Cir. Ct., Clackamas Co., No. 24CV06902 (filed 2024-02-07; compelled to arbitration Apr. 25, 2024); BAMF Salem 1, LLC; Law; Gorman v. BAM Franchising, Inc., Utah Bus. & Chancery Ct. No. 260200029 (filed 2026-03-27). The figures and quotations above are BAM’s own. See The law ↗, BAM’s words ↗, and the full map ↗.
The BAM Map is independent reporting on matters of public concern. Nothing here is a finding of any person’s guilt; the criminal charges referenced are unadjudicated and every defendant is presumed innocent. Sources are linked so readers can check the record. · Home · Map · The law · Bodycam