An auditor's report of the finances of the Chattanooga Football Club (CFC) says payments in excess of that authorized by the board were made to general manager Sean McDaniel.

It says the payments above authorized amounts were $104,392 and $34,041 for 2016 and 2017.

The report says, "Since authorization for these payments was not given, they have been reclassified as an employee receivable."

Mr. McDaniel resigned from the CFC over the summer and joined a new competing pro soccer club, the Chattanooga Red Wolves.

A spokesperson for the Red Wolves said, "We have no comment at this time."

The report also says that while Mr. McDaniel was the CFC general manager that two loans worth $64,284 with interest rates over 25 percent were taken out with cloud-based lender, Kabbage.

One loan for $21,106 had an interest rate of 25.51 percent.

Another for $46,183 bore interest at 26.40 percent.

The report says, "The two notes payable to Kabbage were negotiated by a stockholder without approval of the board of directors. The loans were negotiated based on material misrepresentations by the stockholder and the funds were used for unauthorized purposes.

"As such, the company is disputing the validity of the notes payable."

The report says CFC stockholder Tim Kelly has loaned $15,000 to the club for working capital. None of that loan has been repaid.

The report from the Henderson, Hutcherson accounting firm says the CFC had small profits in 2015 and 2016 of $19,012 and $8,518. However, it says the CFC lost $132,161 in 2017.

It notes in the filing, "The club will be facing competition from a new team that has announced it will also be playing in Chattanooga although the club feel strongly that it's fan loyalty will sustain is business model there is a risk of lower attendance and revenue due to the competition from the new club."

It says last Nov. 8, the CFC stockholders "voted to transfer substantially all assets and liabilities from the company to Beautiful Game, Inc., which intends to continue the operations of the company."

The report says, "Substantially all assets of the company were transferred to Beautiful Game, Inc., and Chattanooga FC, Inc. ceased operations. A stockholder in the company objected to this transaction and asserted dissenters' rights under Tenn. Code Ann. Title 48, Chapter 23. As a result, the stockholder has the opportunity to tender his shares in exchange for payment to him of their fair value. The company believes, however, that any liability it may incur would not have a material adverse effect on its financial condition or its results of operations."

The report was part of the filing with the U.S. Security and Exchange Commission necessary become the CFC could begin selling shares to the public last week.