It’s been a while since I’ve provided an update to the owners from the Treasurer of the board. At the bottom of this post is a link to our certified financials for 2015 full year.
I want to begin by saying we’ve just received the final CPA certified end of year financials for 2015. I wanted to give a little narrative around some of the key factors of our 2015 financial year and then discuss a little more on what’s going on in 2016.
2015 was a year of discovery for a lot of board members, as we spent a good portion of the year reviewing our finances and understanding the Market’s operational expenses, liabilities and lack of revenue growth. Sales were flat at about $3.97m for 2015 compared to $3.92m for 2014. We maintained our margins on sales at about 33.5% for both 2015 and 2014. Management was able to reduce operational expenses by $40k (3%) over 2014, while spending more on advertising and some other repairs and maintenance.
The Market posted a net loss of $131,302 in 2015 less than the net loss of $169,742 in 2014. It was because of this loss, subsequent years’ losses, and the fact that we’re continuing to increase our liabilities as a means of financing the operations of the Market, our CPA requested that we provide some narrative against a statement of going concern about the Market (p.2). Depreciation of assets actually makes up a significant portion of our net losses ($90k for 2015). This is important because it shows that of the $131k net loss, only about $40k was cash loss.
What you’ll see in the balance sheet are that our assets are depreciating, our liabilities (primarily payables) are increasing, and our equity is decreasing. Since the operations of the store have not posted any net profits, we’re using our accounts payable to continually fund the continued store operations. While we’ve remained current with our primary debtors, we have yet to begin payments on any of the owner loans. Our short-term goals are to continue working with some of our larger debt holders to refinance or otherwise improve our ability to generate some operational cash.
In 2016, we’ve started to see some promising factors. The Board adopted a new vision and ends to begin focusing on the neighborhood around the Market to help grow sales. Along with that, management began a relationship with a new foods distributor, Spartan Nash, and began bringing in a blend of products to provide every day items at a lower cost.
Overall sales remain flat into the 3rd quarter of 2016. Continuing efforts to manage operational expenses as well as sales margin have allowed us to continue to reduce our cash losses. Preliminary 3Q16 financials show us with an almost break-even EBIDTA (earnings before interest, depreciation, taxes and amortization). Basically, we’re closer to cash neutral.
There will be more financial details to come as we move into the final quarter of 2016.
2015 Financial Statements as prepared by CPA