As of December 31, 2024, what was Ledgers' negative working capital?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
CES, LLC (FORMERLY FIDE HOLDING, LLC) Notes to Financial Statement
NOTE 9 - PRIOR PERIOD ADJUSTMENT (Continued)
The effect of these restatement is to decrease members' equity as of January 1 as follows:
| Previously | As | |
|---|---|---|
| 2023 Restatement | Reported | Restated |
| Members' equity - January 1, 2024 | $1,374,619 | $1,155,501 |
| Notes Receivable | 792,878 | 40,760 |
| Deferred Revenue | 680,989 | 147,989 |
| Bad Debt Expense | 75,206 | 294,324 |
| Net loss | (287,482) | (506,600) |
NOTE 10 - GOING CONCERN CONSIDERATIONS
As of December 31, 2024, the Company had negative working capital of $468,670. For the year ended December 31, 2024, the Company had operating losses of $490,281 and negative operating cash flows of $471,328. Ma
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, as of December 31, 2024, the company had a negative working capital of $468,670. This indicates that Ledgers' current liabilities exceeded its current assets at that time. This situation, combined with operating losses of $490,281 and negative operating cash flows of $471,328 for the year ended December 31, 2024, raises concerns about the company's ability to meet its short-term obligations.
Ledgers' management has acknowledged these conditions and is implementing strategic measures to mitigate the financial strain. These measures include reducing personnel costs and maintaining a cash reserve of $250,000 to support the company until new franchisee agreements become effective in May 2025. Additionally, Ledgers has entered into a strategic relationship with Bookkeeping Express in 2025, which is expected to generate new franchisee referrals.
These actions are intended to improve Ledgers' financial stability and ensure it can meet its liquidity needs for the year following the issuance of these financial statements. Prospective franchisees should carefully consider these factors and seek further clarification from Ledgers regarding its financial strategies and projections before making a final investment decision. Understanding the specific details of the Bookkeeping Express relationship and the projected impact of new franchisee agreements is crucial for assessing the potential risks and opportunities associated with investing in a Ledgers franchise.