What is the purpose of the cash flows from investing activities section in All Team's financial statements?
All_Team Franchise · 2025 FDDAnswer from 2025 FDD Document
$ | 667,144 | $ | 787,144 |
ALL TEAM FRANCHISE CORPORATION STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
| 2024 | 2023 | ||
|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Net income | $ (43,528) | $ 201,944 | |
| Adjustments to reconcile net income to net cash | |||
| provided by operating activities: | |||
| Allowance for credit losses | 6,000 | 5,501 | |
| Changes in account balances: | |||
| Accounts receivable - trade | 479,748 | 1,387,458 | |
| Prepaid expenses | (61,295) | (16,270) | |
| Advances | (434,801) | (605,008) | |
| Due from IRS | 49,780 | (49,780) | |
| Accounts payable-trade | (882) | 3,528 | |
| Accrued expenses | (107,077) | (45,671) | |
| Other funding liabilities | 213,416 | (326,541) | |
| Total Adjustments | 144,889 | 353,217 | |
| Total Cash Provided by Operating Activities | 101,361 | 555,161 | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Payments on note receivable - franchises | - | - | |
| Total Cash Provided by Investing Activities | - | - | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from credit line payable | 9,972,228 | 15,371,492 | |
| Principal payments on credit line payable | (10,433,329) | (15,758,708) | |
| Principal payment on related party note | (24,606) | (30,000) | |
| Stockholder distributions | (2,261) | (16,373) | |
| Total Cash Used in Financing Activities | (487,968) | (433,589) | |
| NET INCREASE IN CASH | (386,607) | 121,572 | |
| CASH, BEGINNING OF YEAR | 1,015,879 | 894,307 | |
| CASH, END OF YEAR | $ 629,272 | $ 1,015,879 |
For the years ended December 31, 2024 and 2023
NOTE 1 – BACKGROUND INFORMATION
The Company is engaged in franchising businesses that provide temporary employment services and management placement throughout the United States.
The Company was formed June 18, 1986 in the State of Missouri and commenced activities on July 1, 1986.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
The Company maintains its books and prepares its financial statements on the accrual basis of accounting wherein revenue is recognized when earned and invoiced and expenses are recognized when incurred. Furthermore, initial franchise fee income is earned upon execution of the franchise agreement, which is nonrefundable. The Company receives royalties based upon a percentage of annual sales volume of its affiliates and franchisees. Additionally, funding and processing fees are based on a percentage of gross billings.
In 2019, the Company adopted ASC 606, Revenue from Contracts with Customers, which amended the existing accounting standards for revenue recognition. Consequently, the Company recognizes revenue when the services are provided, persuasive evidence of an arrangement exists, the price is fixed and collection is reasonably assured in accordance with ASC 606.
Use of 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.
Accounts Receivable/Allowance for Credit Losses
The Company extends credit to its customers and charges fees in accordance with the franchise agreement. The Company provides an allowance for credit losses on accounts receivable which is based on a review of the current status of existing receivables and management's evaluation of a periodic aging of accounts.
Advertising Expense
The Company expenses advertising costs as incurred. Advertising expense for the years ended December 31, 2024 and 2023 were $2,771 and $446, respectively. For the years ended December 31, 2024 and 2023
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentrations of Credit Risk
The Company maintains demand deposits with a financial institution located in Tampa, Florida. Accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 in total. Uninsured balances aggregated $370,793 and $767,656 at December 31, 2024 and 2023, respectively.
Intangible Assets
Intangible assets are recorded at cost. Prior to December 31, 2002, amortization was on a straightline basis over 40 years. On January 1, 2002, the Company adopted Statement of Financial Accounting Standards (SFAS 142), which requires that intangibles with a definite useful life be amortized over that life.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 33)
What This Means (2025 FDD)
According to All Team's 2025 Franchise Disclosure Document, the statement of cash flows includes a section detailing cash flows from investing activities. For both 2024 and 2023, the total cash provided by investing activities is listed as zero. Similarly, in the 2023 and 2022 statements, the total cash provided by investing activities is also zero.
This section of the cash flow statement typically reflects transactions related to the purchase and sale of long-term assets, such as property, plant, and equipment (PP&E), as well as investments in securities. Since the amounts are zero for the periods presented, All Team apparently did not have any significant investing activities during these years.
For a prospective franchisee, this information suggests that All Team's capital expenditures and investment strategies have been relatively stable during the reported periods. However, it is important to inquire whether this is expected to remain the case, as future investments could impact the company's financial performance and, consequently, the support and services it can provide to franchisees.