Filing summary
Entity and period: The supplied filing is for Franchise Holdings International, Inc., not Worksport Ltd. It is a Form 10-Q for the quarter ended March 31, 2012, the second quarter of the company’s September 30 fiscal year, and reports three- and six-month results. The company describes itself as a development-stage business evaluating franchise opportunities.
Financial results
| Metric | Three months ended March 31, 2012 | Six months ended March 31, 2012 |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expense | $3,370 | $15,101 |
| Operating loss and net loss | $3,370 | $15,101 |
| Basic and diluted loss per share | $0.00 (rounded) | $0.01 |
No gross or operating margin is meaningful because the company reported no revenue. For the six months, operating cash outflow was $15,103, compared with $8,665 in the prior-year period; financing provided $15,436, all from contributions by the president and two shareholders. Investing cash flow was $0. Cash at March 31 was $333, versus $0 at September 30, 2011. Working capital was $333, compared with a $2 deficit at September 30. The balance sheet reported no liabilities at March 31; it reported a $2 bank overdraft at September 30. No debt balance was reported.
Changes versus the prior period
Quarterly expense increased to $3,370 from $1,998, and quarterly net loss increased by the same amounts. Six-month expense and net loss rose to $15,101 from $7,573. Revenue remained zero in both comparable periods. Six-month related-party contributions increased to $15,436 from $8,433. Shares outstanding remained 2,840,864.
Outlook, risks, and other items
Management said current operating expenses should remain fairly constant, believed short-term capital was sufficient for the current level of operations, and did not anticipate raising capital in the next 12 months. However, the company had only $333 of cash, had no funding commitment from its sole officer and director, and depended on possible future officer/shareholder support. Management also acknowledged that further financing might be needed if expenses could not be adjusted. The filing states the company has suffered losses since inception and that these conditions may raise substantial doubt about its ability to continue as a going concern. Management’s expectation that it could attract sales and become profitable is forward-looking and not assured; the filing reports no revenue.
No income tax provision was recorded because deferred tax assets from net operating losses were fully allowed for. No material legal proceedings, unregistered equity sales, defaults on senior securities, or off-balance-sheet arrangements were reported. Management said disclosure controls were effective and there were no material changes in internal control over financial reporting during the quarter. No specific guidance or quantified forecasts were provided.
Key facts for investors to verify
- Confirm the issuer: the document identifies Franchise Holdings International, Inc., not Worksport Ltd.
- Verify the intended reporting period: the filing covers the quarter ended March 31, 2012, with six-month year-to-date results.
- Assess the going-concern risk, minimal cash balance, and reliance on discretionary related-party contributions without a funding commitment.
- Reconcile management’s sales and profitability expectations with the reported absence of revenue and the company’s development-stage status.