What was the total shareholders' deficit for City Publications on December 31, 2022?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
Debt expense | 312 | - | 26,102 | | | Depreciation expense | 3,000 | 3,000 | 3,000 | | | TOTAL OPERATING EXPENSES | 1,140,130 | 1,172,585 | 1,153,845 | | | OPERATING INCOME | 273,141 | 99,917 | (13,378) | | | OTHER (EXPENSE) | | | | | | Interest expense | (9,194) | (414) | (460) | | | NET INCOME | $ 263,947 | $ 99,503 | $ (13,838) | |
CITY PUBLICATIONS FRANCHISE GROUP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022
| Common Stock | Additional Paid-In Capital | Due From Affiliates | Retained Earnings | Total Shareholders' (Deficit) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| BALANCE, DECEMBER 31, 2021 | $ 1,000 | $ | 17,000 | $ (1,770,163) | $ 1,715,261 | $ (36,902) | |||||
| Advances from (to) affiliates | (11,790) | (11,790) | |||||||||
| Capital (distributions) | (72,470) | (72,470) | |||||||||
| Net (loss) | (13,838) | (13,838) | |||||||||
| BALANCES, DECEMBER 31, 2022 | 1,000 | 17,000 | (1,781,953) | 1,628,953 | (135,000) | ||||||
| Advances from (to) affiliates | - | - | (67,140) | - | (67,140) | ||||||
| Capital additions | - | - | - | 17,027 |
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, the total shareholders' deficit as of December 31, 2022, was ($135,000). This figure is derived from the consolidated statements of changes in shareholders' deficit, reflecting the cumulative financial position of the company at that point in time. The statement includes details about common stock, additional paid-in capital, due from affiliates, and retained earnings, which collectively contribute to the total shareholders' deficit.
For a prospective franchisee, a shareholders' deficit indicates that the company's liabilities and obligations exceed its assets. This can be a sign of financial instability or accumulated losses over time. While not necessarily a definitive indicator of failure, it suggests that City Publications has faced financial challenges in the past. It is important to note that this deficit is a snapshot in time, and the company's financial position may have changed since then, as indicated by the different deficit figures for 2023 and 2024.
It is essential for potential franchisees to carefully evaluate the financial statements and consider the implications of this deficit. Further investigation into the reasons behind the deficit, the company's plans to address it, and its current financial performance is advisable. Consulting with a financial advisor can provide additional insights and help assess the risks and opportunities associated with investing in a City Publications franchise. Understanding the context of the deficit within the broader financial health of the company is crucial for making an informed decision.
It is also worth noting that the FDD includes financial statements audited by an independent auditor, which provides some assurance of the accuracy and reliability of the information presented. However, the auditor's opinion only states that the financial statements present fairly the company's financial position in accordance with accounting principles. It does not guarantee the future financial success of City Publications or its franchisees.