How many shares were issued by Endless Summer Sweets as of April 30, 2023?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
Endless Summer Sweets Franchising Inc. Statements of Stockholder's Equity For the Period Ended December 31, 2023
| Common Stock | |||||
|---|---|---|---|---|---|
| Number of | Retained | ||||
| Shares | Amount | Earnings | Total | ||
| Share Issued | 2,000 | $ | 2,000 | - | $ 2,000 |
| Net Income | - | - | $ (15,648) | $ (15,648) | |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, as of April 30, 2023, the company had issued 2,000 shares of common stock. These shares were issued at a par value of $1 per share, contributing to a total common stock amount of $2,000. However, retained earnings were reported as a deficit of $(15,648), resulting in a total stockholders' equity of $(13,648).
For a prospective franchisee, this indicates the initial capitalization structure of Endless Summer Sweets. The fact that the company had a deficit in retained earnings at that time suggests that it had incurred losses since its formation in March 2023. This is not uncommon for new businesses, especially during their initial stages when expenses often outweigh revenues.
It's important for potential franchisees to understand the financial health and history of the franchisor. While the number of shares issued provides insight into the ownership structure, the deficit in retained earnings highlights the importance of further investigating the company's financial performance and future prospects. This information, combined with other financial statements and disclosures in the FDD, can help franchisees make informed decisions about investing in the Endless Summer Sweets franchise system.