What was the total amount of long-term notes payable for Hyper Kidz as of December 31, 2022?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
ings, and certain internal control—related matters that we identified during the audit.
Ft. Collins, Colorado March 23, 2024
BOOMERANG FRANCHISE, LLC BALANCE SHEETS
| AS OF DECEMBER 31, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| ASSETS: | ||||
| CURRENT ASSETS | ||||
| Cash and equivalents | $ | 18,203 | $ | 7,376 |
| Accounts receivable | 20,155 | 18,006 | ||
| TOTAL CURRENT ASSETS | 38,358 | 25,382 | ||
| TOTAL ASSETS | $ | 38,358 | $ | 25,382 |
| LIABILITIES AND MEMBERS' (DEFICIT): | ||||
| CURRENT LIABILITIES | ||||
| Accounts payable and accrued expenses | $ | 6,745 | $ | 3,813 |
| Non-refundable deferred franchise sales, current portion | 20,700 | 7,900 | ||
| Notes payable, current portion | - | 341 | ||
| TOTAL CURRENT LIABILITIES | 27,445 | 12,054 | ||
| LONG-TERM LIABILITIES | ||||
| Non-refundable deferred franchise sales | 157,095 | 55,958 | ||
| Notes payable | 79,000 | 78,659 | ||
| TOTAL LIABILITIES | 263,540 | 146,671 | ||
| MEMBERS' (DEFICIT) | ||||
| Members' equity (deficit) | (62,130) | 55,63 |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, the total amount of long-term notes payable as of December 31, 2022, was $78,659. This figure represents the outstanding balance of notes payable that are not due within the next 12 months.
Specifically, this amount reflects a note payable with the Small Business Administration (SBA) with a face amount of $79,000. The note is payable in 360 monthly installments of $407, including interest at a rate of 3.75%, with the final payment due on September 21, 2050. The note is collateralized by the assets of Hyper Kidz. However, the current maturities, which amount to $431, have been deducted from the $79,000, resulting in the reported $78,569.
For a prospective Hyper Kidz franchisee, understanding the franchisor's debt obligations is crucial. A high level of long-term debt could indicate financial strain on the franchisor, which might affect their ability to support franchisees. However, in this case, the note payable is with the SBA, suggesting it was obtained to support the business, and is being paid down according to the terms of the note. Franchisees should consider the franchisor's debt level in relation to their assets and overall financial health.
It is important to note that while the total notes payable with the SBA was $79,000, the long-term portion is reported as $78,659 due to the deduction of current maturities. This distinction is important for assessing the franchisor's short-term versus long-term financial obligations.