What was the net cash used by Pearce Bespoke for operating activities in 2024?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
| 60,463 | \$ | (502,101) | \$ | (441,638) |
PEARCE BESPOKE FRANCHISING, LLC STATEMENT OF CASH FLOWS YEAR ENDED DECEMBER 31, 2024
| 2024 | |
|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |
| Net (loss) | $ (22,237) |
| Adjustments to reconcile net income (loss) to net | |
| cash provided by operating activities: | |
| Amortization expense | 1,010 |
| Recognition of deferred commissions | 145,502 |
| Recognition of non-refundable deferred franchise fees | (872,417) |
| Changes in assets and liabilities | |
| Accounts receivable | (83,157) |
| Deferred commissions | (156,000) |
| Accounts payable and accrued expenses | 32,700 |
| Franchisee payable | 151,944 |
| Non-refundable deferred franchise fees | 433,500 |
| Net cash (used) by operating activities | (369,155) |
| CASH FLOWS FROM INVESTING ACTIVITIES | |
| Net cash (used) for investing activities | - |
| CASH FLOWS FROM FINANCING ACTIVITIES | |
| Member contributions | 52,583 |
| Proceeds from notes payable | 409,200 |
| Payments on notes payable | (242,818) |
| Advances to related party | - |
| Net cash (used) by financing activities | 218,965 |
| NET INCREASE (DECREASE) IN CASH | (150,190) |
| CASH, BEGINNING | 170,147 |
| CASH, ENDING | $ 19,957 |
| SUPPLEMENTAL DISCLOSURES | |
| Cash paid for interest | $ 63,396 |
| Cash pai |
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the net cash used by operating activities in 2024 was $(369,155). This figure represents the cash outflow resulting from the company's core business operations during the specified period. It is calculated by adjusting the net loss of $(22,237) to account for non-cash items and changes in working capital accounts.
Several adjustments were made to reconcile the net loss to the net cash used by operating activities. These adjustments include amortization expense of $1,010, recognition of deferred commissions of $145,502, and recognition of non-refundable deferred franchise fees of $(872,417). Changes in assets and liabilities also impacted the net cash flow, including accounts receivable ($\83,157), deferred commissions ($\156,000), accounts payable and accrued expenses of $32,700, franchisee payable of $151,944, and non-refundable deferred franchise fees of $433,500.
For a prospective franchisee, this indicates that Pearce Bespoke's franchising operations consumed more cash than they generated in 2024. While the company experienced a net loss, various non-cash adjustments and changes in asset and liability accounts contributed to the overall cash usage. It is important to consider these factors when evaluating the financial health and sustainability of Pearce Bespoke's business model. Franchisees should further investigate the reasons behind the negative cash flow and assess the company's strategies for improving its operating cash flow in the future.