What was the balance of retained interests for Kidokinetics at December 31, 2022?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
---|-------------| | | Common Stock | | | Paid-in Members' | | | Retained | | | Total | | | | Shares | A | Mount | | Capital | | Interests | | Earnings | | Equity | | Balance at January 1, 2021 | 100 | $ | 1 | $ | 4,999 | $ | - | $ | (12,903) | $ | (7,903) | | Conversion to LLC | (100) | | (1) | | (4,999) | | 5,000 | | - | | - | | Member contributions | - | | - | | - | | 422,077 | | | | 422,077 | | Net loss | | | - | | - | | | | (411,716) | | (411,716) | | Balance at December 31, 2021 | - | | - | | - | | 427,077 | | (424,619) | | 2,458 | | Adoption of ASC 842, Leases | - | | | | - | | - | | (1,015) | | (1,015) | | Member distributions | - | | - | | - | | (20,691) | | - | | (20,691) | | Net loss | | | - | | - | | | _ | (811,320) | _ | (811,320) | | Balance at December 31, 2022 | - | | - | | - | | 406,386 | | (1,236,954) | | (830,568) | | Member distributions | - | | - | | - | | - | | (17,133) | | (17,133) | | Net loss | | | - | | - | | - | | (749,072) | | (749,072) | | Balance at December 31, 2023 | | $ | - | $ | - | S | 406,386 | $ | (2,003,159) | $ | (1,596,773) |
STATEMENTS OF CASH FLOWS
For the years ended December 31, 2023, 2022, and 2021
| 2023 | 2022 | 2021 | |
|---|---|---|---|
| Cash flow from oper |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the balance of retained interests at December 31, 2022, was $406,386. This figure is part of the broader statement of members' equity (deficit), which also factors in items like common stock, paid-in members' capital, and net losses to arrive at the total equity. Retained interests reflect the accumulated earnings or losses of Kidokinetics that have not been distributed to its members.
For a prospective Kidokinetics franchisee, understanding the retained interests is crucial as it provides insight into the financial stability and profitability of the franchisor. A positive retained interest balance generally indicates that the company has been profitable and has accumulated earnings over time. However, it's important to note that retained interests do not represent cash available for distribution, as these funds may have been reinvested into the business.
In Kidokinetics's case, the retained interests of $406,386 should be considered alongside the accumulated deficit of $(1,236,954) at the same date. The combination of these figures results in a total members' deficit of $(830,568). This indicates that, despite the retained interests, the company's accumulated losses exceed its accumulated earnings, resulting in an overall deficit. A potential franchisee should investigate the reasons behind the accumulated deficit and assess the franchisor's plans to address it.
It is important for prospective franchisees to consult with a financial advisor to fully understand the implications of these financial figures. Analyzing trends in retained earnings and accumulated deficits over several years, as presented in the financial statements, can provide a more comprehensive view of the franchisor's financial health and sustainability. Additionally, understanding the franchisor's strategies for managing its finances and improving profitability is essential for making an informed investment decision.