What was the reported net change in cash for Stretch Zone in 2022?
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 net change in cash for the company in 2022 was $2,930,205.
This figure represents the overall increase in Stretch Zone's cash holdings during that year, taking into account all cash inflows (money coming in) and cash outflows (money going out). It's a key indicator of the company's financial health and its ability to manage its cash flow effectively.
A prospective franchisee should consider this number in the context of Stretch Zone's overall financial performance, including its revenues, expenses, and profitability. A positive net change in cash suggests that the company is generating more cash than it is using, which can be a sign of financial stability and growth potential. However, it's important to also look at the sources of cash inflows and outflows to understand the underlying drivers of this change. For example, is the increase in cash due to strong operating performance, or is it the result of borrowing money or selling assets?
It is also important to note that past financial performance is not necessarily indicative of future results. A prospective franchisee should conduct their own due diligence and consult with a financial advisor to assess the risks and opportunities associated with investing in a Stretch Zone franchise.