What was the non-cash lease expense for Craters & Freighters in the earlier of the two years presented?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Adjustments to Reconcile Net Income to Net Cash and Cash Equivalents | ||
|---|---|---|
| From Operating Income: | ||
| Amortization Expense | 101,989 | 99,763 |
| Depreciation Expense | 26,134 | 21,995 |
| Gain on Sale of Fixed Assets | (15,729) | - |
| Gain on Sale of Marketable Securities | (841) | (3,643) |
| Bad Debt Expense | 10,000 | 24,928 |
| Non-Cash Lease Expense | 1,865 | 83,132 |
| Unrealized Holding (Gain) Loss on Marketable Securities | (97,174) | 69,301 |
| Reinvested Dividends | (13,827) | (13,279) |
| (Increase) Decrease in Assets: | ||
| Accounts Receivable | 138,330 | (159,098) |
| Prepaid Expenses and Deposits | (166,615) | 462 |
| (Decrease) Increase in Liabilities: | ||
| Accounts Payable | (179,894) | 225,116 |
| Accrued Bonus | (132,340) | 132,340 |
| Accrued Liabilities and Payables | 1,332 | (3,152) |
| Operating Lease Liability Change | - | (70,918) |
| Net Cash Flows from Operating Activities | 2,306,460 | 2,844,694 |
| Cash Flows from Investing Activities: | ||
| Investment in Software Development | (113,648) | (106,716) |
| Proceeds from Sale of Investments | 77,025 | 77,160 |
| Purchase of Investments | (71,427) | (71,880) |
| Due from Related Party | (163,077) | (16,876) |
| Note Receivable | (100,000) | (60,000) |
| Purchase of Property and Equipment | (89,688) | - |
| Net Cash Flows from Investing Activities | (460,815) | (178,312) |
Source: Item 23 — RECEIPTS (FDD pages 50–193)
What This Means (2025 FDD)
According to Craters & Freighters' 2025 Franchise Disclosure Document, the non-cash lease expense for the earlier of the two years presented was $1,865. The table provided in Item 23 of the FDD details adjustments to reconcile net income to net cash and cash equivalents.
For a prospective franchisee, understanding non-cash expenses is crucial for assessing the true financial performance of Craters & Freighters. Non-cash expenses, like the lease expense, impact the net income but do not represent actual cash outflows during that period. This distinction is important for evaluating the company's cash flow and overall financial health.
The table also includes other adjustments such as amortization expense ($101,989 and $99,763), depreciation expense ($26,134 and $21,995), gains on sales of assets and securities, bad debt expense ($10,000 and $24,928), and unrealized gains or losses on marketable securities. These adjustments provide a more comprehensive view of the company's financial activities beyond just the net income. Reviewing these adjustments can help a franchisee understand how the franchisor accounts for various financial transactions and their impact on cash flow.
It is important for potential franchisees to consult with a financial advisor to fully understand the implications of these non-cash expenses and other financial adjustments. This will help in making an informed decision about investing in a Craters & Freighters franchise.