What was the cash balance at the beginning of 2022 for Stretch Zone?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
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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 cash balance at the beginning of 2022 was $3,230,237. This figure represents the amount of cash Stretch Zone had on hand as it entered the 2022 fiscal year. This is an unaudited figure.
For a prospective franchisee, understanding the franchisor's cash position is crucial. A healthy cash balance suggests financial stability and the ability to support franchisees. It can indicate Stretch Zone's capacity to invest in system-wide improvements, marketing, and franchisee support programs.
However, it is important to note that this is just one data point. A franchisee should also consider Stretch Zone's overall financial performance, including revenues, expenses, and profitability, to get a comprehensive understanding of its financial health. Reviewing trends over multiple years, as presented in the provided table, offers a more insightful perspective than a single year's beginning cash balance.
It is also important to note that the financial statements were prepared in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP).