What was the amount of cash provided by operating activities for Stretch Zone in 2022?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
) |
Statements of Cash Flows
| Year Ended | |
|---|---|
| December 31, |
| 2023 | 2022 | |
|---|---|---|
| Cash flows from operating activities: | ||
| Net loss | $ (13,663,363) | $ (16,997,533) |
| Reconciliation of net loss to net cash provided by | ||
| operating activities: | ||
| Depreciation expense | 6,977 | 6,531 |
| Bad debt expense | - | 8,351 |
| Amortization of celebrity endorsement | 97,297 | 106,650 |
| Amortization of contract asset | 6,167 | 3,700 |
| Amortization of debt issuance costs | 146,390 | - |
| Change in operating lease right-of use asset | 160,413 | 158,817 |
| UAR liability | 12,466,993 | 17,897,523 |
| (Increase) decrease in: | ||
| Accounts receivable | (243,840) | (494,155) |
| Contract asset | (27,750) | (37,000) |
| Due from/to related party, net | 27,016 | (24,089) |
| Furniture inventory | 26,051 | (51,091) |
| Prepaid expenses | (17,121) | 22,724 |
| Increase (decrease) in: | ||
| Accounts payable | 267,483 | (629) |
| Accrued expenses | 65,779 | 537 |
| Deferred revenue | 3,692,827 | 5,017,476 |
| Operating lease liability | (161,310) | (135,227) |
| Net cash provided by operating activities | 2,850,009 | 5,482,585 |
| Cash flows from investing activities: | ||
| Property and equipment purchases | - | (32,380) |
| Net cash used in investing activities | - | (32,380) |
| Cash flows from financing activities: | ||
| Debt issuance costs | (972,564) | - |
| Proceeds from term note | 40,000,000 | - |
| Contribution from member | 1,059,487 | - |
| Distributions to member and former member | (46,013,579) | (2,520,000) |
| Net cash used in financing activities | (5,926,656) | (2,520,000) |
| Net change in cash | (3,076,647) | 2,930,205 |
| Cash, beginning of year | 6,160,442 | 3,230,237 |
| Cash, end of year | $ 3,083,795 | $ 6,160,442 |
| Supplementary disclosure of cash flow information: | ||
| Cash paid for interest | $ 3,428,028 | $ - |
| Non-cash transactions: | ||
| Celebrity endorsement issued for Class |
Source: Item 3 — Franchisee/Debtor's Warranties. (FDD pages 263–364)
What This Means (2025 FDD)
According to Stretch Zone's 2025 Franchise Disclosure Document, the net cash provided by operating activities in 2022 was $5,482,585. This figure represents the cash flow generated from the company's core business operations during that year.
To arrive at this number, Stretch Zone started with a net loss of $(16,997,533) and made several adjustments to reconcile it to the actual cash provided by operations. These adjustments included adding back non-cash expenses like depreciation ($6,531), bad debt expense ($8,351), amortization of celebrity endorsement ($106,650), amortization of contract asset ($3,700), and changes in operating lease right-of-use asset ($158,817). A significant adjustment was also made for UAR liability, amounting to $17,897,523.
Additionally, changes in various balance sheet accounts were considered, such as accounts receivable ($(494,155)), contract asset ($(37,000)), due from/to related party, net ($(24,089)), furniture inventory ($(51,091)), prepaid expenses ($22,724), accounts payable ($(629)), accrued expenses ($537), deferred revenue ($5,017,476), and operating lease liability ($(135,227)). These adjustments reflect the actual cash inflows and outflows related to Stretch Zone's operations, providing a clearer picture of the company's financial performance in terms of cash generation.