FroYoMan, I am aware that SOME franchisee money went into escrow, and good for you if your funds are held that way. That's why the company has about $4.6 million in restricted cash.
You are incorrect in your assumption that ALL franchisee money went into escrow, and I have personal knowledge that VEND does not handle all franchisee deposits that way.
Here's the applicable language from the 10-Q:
"Certain states require the Company to maintain customer deposits in escrow accounts until the Company has substantially performed its obligations. Furthermore, certain franchisees have elected to pay their remaining balance due directly to an escrow account for the beneficiary of the Company’s contract manufacturer and inventory suppliers. At December 31, 2018 and June 30, 2018, the Company had approximately $4,582,000 and $3,710,000, respectively maintained in escrow accounts for these purposes."
That's good news/bad news, of course. The franchisees whose funds went into escrow have some protection, but the company does not get to make use of those funds other than as payment upon delivery of kiosks. The $409,000 in free cash that they had as of 12-31-18 needs to cover a lot of things. AND, the franchisee deposits may not be sufficient to cover the manufacturing costs - VEND's cost of goods sold is a higher percentage of the kiosk price than the franchisees are required to deposit, so for every kiosk manufactured, VEND has to cough up more cash than it has collected.