What was the net decrease in cash and cash equivalents for Exit in 2023?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Cash flows from operating activities | |||
| Net income (loss) | $ 70,717 | (1,327,749) | (2,138,260) |
| Adjustments to reconcile net income (loss) to net cash (used | |||
| in) provided by operating activities | |||
| Amortization and depreciation | 65,562 | 92,338 | 125,888 |
| Credit loss (recovery) expense | - | 1,304,738 | 382,936 |
| Deferred tax expense (benefit) | (236,005) | 154,000 | (402,000) |
| Regional rights disposed | - | - | 975,000 |
| Gain on sale of property and equipment | - | - | (20,291) |
| Impairment of digital assets | - | - | 1,820,185 |
| Gain from disposal of digital assets | (2,125,033) | - | - |
| Litigation settlement accrual | 1,500,000 | - | - |
| (Increase) decrease in assets: | |||
| Trade accounts receivable | 214,735 | (1,542,684) | (109,189) |
| Prepaid expenses | 134,060 | (121,155) | 210,754 |
| Notes receivable | 471,387 | 3,433,640 | (1,610,436) |
| Increase (decrease) in liabilities: | |||
| Accounts payable and accrued liabilities | (974,870) | 1,436,092 | 487,204 |
| Income taxes receivable (payable) | 436,792 | (1,009,378) | (327,032) |
| Deferred revenue | (1,043,229) | (812,304) | 955,007 |
| Net cash (used in) provided by operating activities | (1,485,884) | 1,607,538 | 349,766 |
| Cash flows from investing activities | |||
| Purchase of propert |
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the net decrease in cash and cash equivalents for the company in 2023 was $165,530. This indicates that Exit used more cash than it generated during the year.
This decrease in cash could be due to a variety of factors, such as investments in the business, operating losses, or debt repayments. For a prospective franchisee, this information is useful in assessing the financial stability and cash flow management of Exit. A significant decrease in cash could raise concerns about the company's ability to support its franchisees or invest in future growth.
It's important to note that while a decrease in cash can be a red flag, it's essential to consider the context. For example, if Exit was investing heavily in expansion or new technologies, a temporary decrease in cash might be acceptable. However, if the decrease is due to ongoing operating losses, it could be a sign of deeper financial problems. Franchisees should investigate the reasons for the decrease by asking Exit for more details and comparing these figures to previous years.
Ultimately, understanding the reasons behind changes in cash flow is crucial for prospective franchisees to evaluate the financial health and stability of Exit before making a decision.