The state of Raith Rovers accounts were laid bare at the club AGM on Thursday night.
Chairman Alan Young announced that losses were made in each of the past two seasons totalling almost quarter of a million, a situation which prompted the recent takeover by stadium landlord John Sim.
In season 2015-16, despite finishing fourth and qualifing for the promotion play-offs under Ray McKinnon, the club made a loss of £49,000, blamed on increased wage costs.
This shortfall was incurred despite Rangers and Hibs competing in the same division, and a 7000 home attendance in a 3-3 draw against the Gers at Stark's Park in April.
The following season, 2016-17, went from "bad to worse", said Young, as the club made a loss of £199,000 on the way to suffering relegation from the Championship.
The majority of the deficit was apportioned to a decrease in prize money from the previous season, down £130,000 for finishing ninth instead of fourth.
Further outgoings included £47,000 on medical bills, an increased number of first team squad players, and the start-up of the development squad.
There was also the added expense of redundancy costs following the sacking of Gary Locke and his assistant Darren Jackson in February following a run of three months without a victory.
Young added: "Due to the size of the loss and the financial position, the board had no option but to take steps to find some financial security for the club.
"The board had no alternative but to enter into a transaction to have Stark's Park Properties take control of the club, which is 73 per cent owned by John Sim, making him the ultimate owner."
Due to the club's complex structure of companies within companies, in order to complete the takeover Sim had to acquire shares in Raith Rovers Football Club and Raith Rovers Holdings from New Raith Rovers.
"The amount paid for these shares was £1," Young added.
In addition, Sim also committed funds to the football club to the tune of £150,000, which covered creditors at the end of last season, and ensured costs were met throughout the close season.
A commitment to further provide support of £100,000 during the current season enabled the club to stay full-time in League One.
Raith's overall balance sheet shows a deficit in the region of £1m, with around £830,000 considered to be 'internal debt' due to directors, Stark's Park Properties and New Raith Rovers investments.
Young added, however, that an agreement has been put in place that will see £420,000 of this 'internal debt' written off, bringing the club's overall deficit down to approximately £580,000.
Another shortfall is projected for the current campaign, placing emphasis on earning promotion at the first attempt, but Young added that the board of directors, which includes recent new additions Dave Sinton and Bill Clark, is actively looking for additional funds.
"The focus is on looking forward rather than back," he added.