What was the deferred revenue amount for Ledgers in 2023?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
F CREDIT RISK
The Company maintains its cash in financial institutions insured by the Federal Deposit Insurance Corporation. Deposit accounts, at times, may exceed federally insured limits.
NOTE 8 - COMMITMENT AND CONTINGENCY
The Company is subject to various claims and legal proceedings that arise in the ordinary course of its business activities. Management believes that any liability that may ultimately result from the resolution of these matters will not have a material adverse effect on the financial condition or results of operations of the Company.
NOTE 9 - PRIOR PERIOD ADJUSTMENT
During the year ended December 31, 2023, the Company's financial statements included balances for a note receivable and deferred revenue for a franchise agreement that was terminated in 2023 but not properly written off in 2023. During the year ended December 31, 2024, the Company identified this error and restated its financial statements to properly recognize the termination of the franchise agreement recording $219,118 in bad debt expense for the year ended December 31, 2023 and removing the $752,118 note receivable, and $533,000 deferred revenue balances at December 31, 2023.
LOYALTY BUSINESS SERVICES, 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. Management of the Company has evaluated these conditions and taken strategic measures to reduce personnel costs and maintain a cash reserve of $250,000 to support the Company until new franchisee agreements become effective in May 2025. Also the Company has entered into a new strategic relationship in 2025 with Bookkeeping Express, which is expected to generate new franchisee referrals. Based on these strategic measures, cash reserves, and 2025 forecasted results, the Company is expected to meet its liquidity needs through one year from the date these financial statements were available to be issued.
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to Ledgers' 2025 Franchise Disclosure Document, the company restated its financial statements for the year ended December 31, 2023, due to a franchise agreement termination that was not properly written off. The restatement involved removing a $752,118 note receivable and a $533,000 deferred revenue balance.
As a result of this restatement, the deferred revenue for 2023 was adjusted. The 'Previously Reported' deferred revenue was $680,989, while the 'Restated' deferred revenue was $147,989. This change also affected other financial metrics, such as members' equity, notes receivable, bad debt expense, and net loss.
Additionally, the assets and liabilities table shows a breakdown of deferred revenue. The 'Deferred revenue - current' liability was $94,000 in 2023, and the 'Deferred revenue' non-current liability was $53,989. The sum of these two amounts ($94,000 + $53,989) equals the restated deferred revenue of $147,989. This restatement could indicate potential financial reporting issues that a prospective franchisee should investigate further.