What was the net income (loss) for Endless Summer Sweets?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
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Endless Summer Sweets Franchising Inc. Statement of Cash Flows From March 9 to December 31, 2023
| Net Income | $ | (15,648) |
|---|---|---|
| Net cash provided (consumed) by operating activities | (15,648) | |
| Cash flows from financing activities: | ||
| Stockholders' Contribution | 2,000 | |
| Short Term Loan-Endless Summer Sweets, LLC | 15,648 | |
| Net cash provided (consumed) by financing activities | 17,648 | |
| Net increase (decrease) in cash and equivalents | 2,000 | |
| Cash and equivalents, beginning of year | - | |
| Cash and equivalents, end of year | $ | 2,000 |
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies Endless Summer Sweets Franchising Inc (the company) is presented to assist in the understanding of the financial statements. The financial statements and notes are representations of the company's management who is responsible for their integrity and objectivity. These accounting policies confirm to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
Ownerships & Control
Antoinette Sanchez has 100% ownership in the company.
Nature of Operations
The principal line of business is to sell restaurant franchises. The registration of the offer and sale of franchises with California Department of Financial Protection Innovation is filed on August 8,2023 and is effective until April 30,2024.
The company was formed in March, 2023.
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 38)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, the company experienced a net loss of $15,648 from March 9 to December 31, 2023. This figure is reflected in the Statement of Income & Stockholders' Equity, as well as the Statement of Cash Flows. The loss is further detailed within the supplementary schedules, where the total selling, general, and administrative expenses are listed as $15,648, primarily due to advertising and promotion expenses of $10,000 and professional fees of $5,648.
This net loss indicates that Endless Summer Sweets' expenses exceeded its revenues during its initial period of operations. For a prospective franchisee, this highlights the importance of understanding the factors contributing to these expenses and the strategies the company has in place to improve profitability. It's crucial to assess whether the franchisor has a clear plan to manage costs and increase revenue generation in the future.
It is important to note that Endless Summer Sweets was newly formed in March 2023, so the reported financials cover a partial year of operations. The company's financial statements were audited by FACT Professional, Inc., and their report expresses an opinion that the financial statements present fairly the financial position of Endless Summer Sweets. However, the auditor also notes management's responsibility to evaluate conditions that raise substantial doubt about the company's ability to continue as a going concern.
Given the initial net loss, a potential franchisee should carefully review the complete financial statements and supplementary schedules provided in Item 21 of the FDD. Understanding the details behind the expenses, the company's plans for future growth, and the auditor's opinion is essential for making an informed investment decision. It would be prudent to discuss these financial results with the franchisor and seek professional financial advice before committing to a franchise agreement.