01
Executive Overview
A 19-month financial and operational analysis of Sola Retail Group (Aug 2024 – Feb 2026),
built to answer one question: Should the owner sell the business or expand to a second location?
Data-Driven Recommendation
🏗 EXPAND TO SECOND LOCATION
Based on DSCR of 2.65x (well above 1.25x lender threshold),
growing Hotspot revenue trend (+$1,397/mo), and strong asset base of $304,924 net equity.
A $200,000 loan is serviceable. Location 2 projected to break even in ~75 months.
A $200,000 loan is serviceable. Location 2 projected to break even in ~75 months.
64%
Expand Signal
↑ Recommended
36%
Sell Signal
↓ Alternative
TTM Revenue
$1,223,329
Aug 2025–Feb 2026
TTM Net Income
$125,717
Net margin 10.3%
Cash on Hand
$231,407
Feb 2026 balance
Total Equity
$304,924
Net worth (restated)
TTM Cash from Ops
$152,994
12-month operating CF
Gross Margin
34.0%
TTM gross profit margin
Business Valuation
$444,292–$533,150
Recommended asking range
DSCR
2.65x
Debt coverage ratio
📖 Analysis Story — How We Got to the Recommendation
The journey from raw data to a strategic decision
Step 1 — Foundation
Financial Statements Built
Income Statement, Balance Sheet, and Cash Flow Statement were constructed from raw POS, invoice, and bank data across 5 revenue streams: Retail, Hotspot, Lottery, ATM, and Commissions. 19 months of data processed (May 2024 – Feb 2026).
Step 2 — Verification
Revenue Cross-Validation Performed
POS system revenue was cross-validated against bank deposits and daily deposit logs to verify accuracy and detect cash control issues. Over/short analysis showed 93.9% cash handling accuracy.
Step 3 — Discovery
Inventory Discrepancies Found During Physical Count
A physical inventory count revealed $22,415 in missing inventory (at selling price) — $17,260 in Hotspot vouchers and $5,155 in Lottery scratch-offs. Balance Sheet was restated to reflect true asset values.
Step 4 — Valuation
Business Value Computed via 3 Methods
SDE multiple (2x–3x), asset-based (Total Assets − Liabilities), and revenue multiple (0.5x). The asset-based method dominates at $473,425 due to strong cash reserves and inventory holdings. Recommended asking price: $444,292 – $533,150.
Step 5 — Decision
Expand vs. Sell Feasibility Scored
12 weighted signals evaluated across profitability, cash capacity, debt serviceability, revenue trends, and operational health. Expand scored 64% vs Sell at 36%. Primary driver: DSCR of 2.65x means a $200,000 loan is comfortably serviceable.
02
Business Health
Revenue performance, profitability trends, and cash position across all 5 revenue streams.
Revenue by Stream — TTM (Last 12 Months)
Monthly breakdown: Retail, Hotspot, Lottery
Monthly Net Income Trend
Green = profit month · Red = loss month · Dashed = trend line
Cash Position Over Time
Bank ending balance vs expansion thresholds
Operating Income vs Net Income
Identifying profitable vs loss months
Key Insight: TTM revenue of $1,223,329 is driven primarily by Hotspot ($790,410, 65% of TTM), followed by Retail ($384,930, 31%) and Lottery ($317,241, 26%).
Hotspot shows a strong upward trend (+$1,397/month). However, net income declined in the last 3 months — the most recent month (Feb 2026) showed a loss of -$579. This is a caution flag that requires monitoring.
03
Inventory & Shrinkage Discovery
Physical inventory count conducted March 2026 revealed missing stock across Hotspot and Lottery categories.
This was a key discovery that required Balance Sheet restatement.
Discovery: Physical count found $22,415 in missing inventory (at selling price)
— equivalent to $10,356 at cost. This triggered a Balance Sheet restatement
adjusting Hotspot inventory and increasing Lottery Payable to the state authority.
Shrinkage by Category
Loss at selling price vs cost
Inventory Reconciliation Summary
Physical count vs expected stock per category
| Category | Expected | Counted | Variance | Loss (SP) | Status |
|---|---|---|---|---|---|
| Retail | — | — | 0 | $0.00 | ✓ Clean |
| Hotspot | — | — | 415 units | $17,260.00 | ⚠ Missing |
| Lottery | — | — | 320 tickets | $5,155.00 | ⚠ Missing |
| TOTAL SHRINKAGE | $22,415.00 | Restated ✓ | |||
Retail Reconciliation
No discrepancy found ✓
Hotspot Reconciliation
$17,260 missing (SP)
Lottery Reconciliation
$5,155 missing (SP)
Impact on Expansion: Shrinkage of $22,415 at a single location.
At 2 locations without tighter controls, this risk doubles to ~$44,830/year.
Inventory control procedures must be improved before scaling to a second location.
04
Business Valuation — If Selling
Three valuation methods triangulated to determine a fair asking price range for the business.
Valuation by Method
Three independent approaches — the asset-based method is dominant here
Recommended Asking Range
$444,292 – $533,150
Asset-based dominates; balance sheet is strong
What a Buyer Gets
Tangible assets included in the sale
Balance Sheet — Equity Trend
Net worth over time
Why the asset-based value is higher than SDE-based:
The business holds $231,407 in cash and $234,214 in inventory
on the balance sheet. This means a buyer is acquiring nearly $465,621 in tangible assets
on top of an ongoing business — which pushes value well above what earnings alone would suggest.
The restated Balance Sheet (after inventory shrinkage adjustment) already reflects the true, honest asset position.
05
Expansion Feasibility — Second Location
Can the business fund, support, and sustain a second location — with or without a loan?
Capital Requirements vs Available Cash
After maintaining a 3-month operating reserve
Expansion Feasibility Checklist
Key criteria for a viable second location
-
Loan Serviceability (DSCR)
DSCR = 2.65x — well above the 1.25x lender minimum. A $200,000 loan is comfortably serviceable at $3,960/month. -
Self-Fund Capability
Cannot fully self-fund. $280,551 gap — loan or 22 months of savings needed. -
Revenue Trend — Hotspot (Primary Driver)
Hotspot growing at +$1,397/month. This is the highest-margin line and should anchor Location 2. -
Retail Revenue Trend
Retail growing at +$59/month. Moderate but positive — consistent demand signal. -
Recent Profitability (Last 3 Months)
Avg net income last 3 months = $5,741. Declining trend — needs monitoring before committing to expansion. -
Inventory Controls
$22,415 shrinkage found at 1 location. Must fix controls before operating 2 locations simultaneously. -
Near-Zero Debt
Current liabilities only $5,852 (mainly Lottery Payable). Clean balance sheet = strong loan candidacy.
Safety Reserve
$66,958
3-month opex buffer
Available Cash
$164,449
After reserve
Capital Needed
$445,000
Startup + Inventory
Self-Fund Gap
$280,551
22 months to save
Loan Payment
$3,960/mo
$200,000 @ 7%, 5yr
Loc 2 Break-Even
~75 months
Startup cost recovery
06
Decision & Action Plan
Weighted signal scoring and concrete next steps for each path.
Decision Signal Strength
Score based on 12 weighted criteria
Revenue Mix — TTM
Share of revenue by stream
🏷 Path A — If Selling
Recommended asking range: $444,292 – $533,150
Step 1
Prepare sale package
All financial statements, reconciliation reports, and this dashboard are your sale package. Books are transparent, restated, and verified.
Step 2
Price at asset-based value
Lead with $473,425. Don't undervalue to SDE-only. The balance sheet supports a premium price.
Step 3
Disclose shrinkage proactively
$22,415 already reconciled and restated — this shows honest, well-managed books and increases buyer confidence.
Step 4
Set floor at $444,292
2.5x SDE is your walk-away number. Asset base supports holding firm above this.
🏗 Path B — If Expanding ★ Recommended
DSCR 2.65x · Break-even ~75 months · Loan feasible
Step 1 — Immediate
Fix inventory controls
Implement daily count verification for Hotspot vouchers and Lottery tickets. At 2 locations, current shrinkage rate doubles to ~$44,830/year.
Step 2 — Month 1–2
Apply for $200,000 loan
DSCR of 2.65x and near-zero existing debt make this a strong loan application. Monthly payment: $3,960.
Step 3 — Month 2–4
Scout second location
Target similar demographic area. Budget $150,000 for fit-out, licenses, equipment.
Step 4 — Month 4–6
Stock and open Location 2
~$295,000 inventory needed. Negotiate supplier credit terms to reduce cash drain.
Step 5 — Month 6 Review
Performance gate check
If Location 2 is below 60% of Location 1 revenue at month 6, pause expansion and reassess. Break-even target: 75 months.
07
Full Detailed Reports
Click any report to open the full interactive version with complete data tables, all metrics, and detailed notes.
📁 Financial Statements
📊 Income Statement (P&L)
💵 Cash Flow Statement
⚖️ Balance Sheet (Restated)
✅ Revenue Cross-Validation
📦 Inventory Reports
⚖️ Strategic Analysis