What was the face value of the note payable issued by Beehive Homes to repurchase shares?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
' Equity Transactions
On October 31, 2023, the Company's two founding shareholders entered into an agreement for the Company to repurchase the common stock of one of the shareholder's which was equal to 50% of the total outstanding stock of the corporation. At December 31, 2023 of the 850 shares of common stock issued and outstanding, the Company repurchased 425 shares for a total of $1,406,076 by issuing a note payable. The note payable has a face value of $1,750,000. At December 31, 2023, the present value of the future cash flow for the note payable is $1,406,076, with an unamortized discount of $343,924. At December 31, 2024, the present value of the future cash flow for the note payable is $1,289,991, with an unamortized discount of $276,000. As part of the agreement, the Company also agreed to pay the premiums of a life insurance policy owned by the former shareholder for a period of ten years. The former shareholder is the beneficiary of the policy and the amount will be treated as compensation to them over the period of the policy. Additional information on the note payable can be found within Note C to these
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, on October 31, 2023, Beehive Homes repurchased 425 shares of common stock, representing 50% of the total outstanding stock, for a total of $1,406,076. This repurchase was financed through the issuance of a note payable. The face value of this note payable was $1,750,000. The present value of the future cash flow for the note payable was $1,406,076 as of December 31, 2023, reflecting an unamortized discount of $343,924. As of December 31, 2024, the present value was $1,289,991, with an unamortized discount of $276,000.
In addition to the note payable, Beehive Homes also agreed to pay the premiums on a life insurance policy owned by the former shareholder for ten years, with the former shareholder as the beneficiary. These premium payments will be treated as compensation to the former shareholder over the policy's term. Further details regarding the note payable are available in Note C of the financial statements.
For a prospective franchisee, this transaction indicates that Beehive Homes has undergone significant financial activity related to shareholder equity. Understanding the terms of the note payable, the life insurance policy agreement, and their potential impact on the company's financial stability is crucial. Reviewing Note C in the financial statements, as referenced in the FDD, would provide additional clarity on the obligations and terms associated with this transaction.