Business context and reporting period
The supplied filing is Franchise Holdings International, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2012, with year-to-date results for the nine months ended that date. It does not identify Worksport Ltd.; the company and period in the request metadata therefore do not match the filing. The company described itself as a development-stage business evaluating franchise opportunities and checked the box indicating it was a shell company.
Key financial metrics
| Metric | Three months ended June 30, 2012 | Nine months ended June 30, 2012 |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expense | $3,841 | $18,942 |
| Net loss | $3,841 | $18,942 |
| Operating cash used | Not stated | $18,944 |
| Cash provided by financing | Not stated | $19,272 |
At June 30, 2012, cash and total assets were $328; working capital was $328; reported liabilities were $0; and shareholders’ equity was $328. No debt balance was reported at that date. The company had 2,840,864 common shares outstanding. Profit margins are not meaningful because there was no revenue.
Material changes versus prior comparable periods
Quarterly general and administrative expense increased to $3,841 from $1,733, and the quarterly net loss increased to $3,841 from $1,733. For the nine months, expenses and net loss rose to $18,942 from $9,306. Year-to-date operating cash use increased to $18,944 from $9,346, while financing cash inflows rose to $19,272 from $10,067. The company received $19,272 in working-capital contributions from its president and two shareholders. Cash increased from $0 at September 30, 2011 to $328 at June 30, 2012.
Outlook, risks and unusual items
Management said overhead should remain fairly constant, believed short-term capital was sufficient for current operations, and did not anticipate raising capital in the next 12 months. These expectations depend on generating sales and/or continued support; management disclosed there were no funding arrangements with its sole officer and director and no assurance of future contributions or successful financing. The filing states that operating losses and limited operating history raise substantial going-concern uncertainty. The company reported no material legal proceedings or off-balance-sheet arrangements. Historical cumulative results include a $388,095 gain on debt relief, but there was no debt-relief gain in the current quarter or nine-month period.
Most important facts to verify
- Confirm whether this is the intended filing: it is for Franchise Holdings International, Inc., not Worksport Ltd., and covers the quarter ended June 30, 2012.
- Verify the company’s actual operating plans and whether it generated any sales after the reporting date; this filing reports no revenue.
- Assess the going-concern risk and the company’s ability to fund operations without committed officer or shareholder support.
- Review the underlying financial statements and subsequent filings for changes in cash, liabilities, financing, or business activity.