What was the total shareholders' deficit for City Publications on December 31, 2024?
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, 2024, was ($73,998). This figure represents the cumulative shortfall in the company's equity, taking into account common stock, additional paid-in capital, retained earnings, and due from affiliates. In comparison, the total shareholders' deficit as of December 31, 2023, was ($85,610).
The shareholders' deficit is a key indicator of City Publications' financial health. A deficit means that the company's liabilities and obligations exceed its assets. While the deficit decreased from 2023 to 2024, it still indicates that the company has more debt than equity. This can impact the company's ability to invest in growth, secure financing, and meet its financial obligations.
For a prospective franchisee, this information is crucial for assessing the financial stability of City Publications. A significant shareholders' deficit may raise concerns about the franchisor's long-term viability and its ability to support franchisees. It is important to consider the trend of the deficit over time and understand the factors contributing to it. Further investigation into the company's financial statements and discussions with existing franchisees can provide additional insights into the implications of the shareholders' deficit.
It is also important to note that a significant component of the shareholders' deficit is due from affiliates, which amounted to ($1,994,105) as of December 31, 2024. These advances to affiliates bear no interest and have no repayment terms, and are classified as a component of shareholders' deficit because the affiliates are under common control through common ownership. This related-party transaction should be carefully evaluated to understand its potential impact on the company's financial performance and stability.