What is management's belief regarding Exit's ability to meet its obligations?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has generated losses from its operations, has net capital deficiencies in 2024, 2023 and 2022, respectively and has consolidated bank overdrafts in 2024 and 2023. The Company has projected that the 2025 budgeted operations will be sufficient to fund the Company's operations and strategic objectives and to meet its obligations as they become due. An integral part of the Company's plan includes the Company streamlining its operations by implementing cost cutting measures.
As a result of the measures taken as outlined above, management believes that it is probable that the Company will meet its obligations as they become due and to continue in operational existence for at least one year from the date that these consolidated financial statements were available to be issued. Accordingly, management has determined that there is no substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. If for any reason the Company is unable to continue as a going concern, it could have an impact on the Company's ability to realize assets at their recognized values, and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, management believes that the company will be able to meet its obligations as they become due and continue operations for at least one year from the date the consolidated financial statements were available to be issued. This belief is based on the expectation that the 2025 budgeted operations will be sufficient to fund the company's operations, strategic objectives, and obligations. An integral part of Exit's plan includes streamlining operations by implementing cost-cutting measures.
Exit's management has taken measures to improve operating cash flows, and they believe that these actions, along with projected decreases in interest rates that could stimulate the housing market, will enable the company to meet its funding requirements for the next year. The FDD states that the company has generated losses from its operations and has net capital deficiencies in 2024, 2023, and 2022, as well as consolidated bank overdrafts in 2024 and 2023.
Furthermore, the stockholders of Exit intend to provide any necessary financial assistance if the company's cash flows from operations and cash balances are insufficient to meet its working capital needs. Management believes that the stockholders have both the intent and the ability to provide the necessary funds to continue funding the company's operations for at least one year from the date the financial statements were issued. Because of this, management has determined that there is no substantial doubt about the company's ability to continue as a going concern.