Business context and reporting period
The supplied filing is Franchise Holdings International, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2011 (fiscal Q3; nine-month period ended June 30, 2011). It does not identify Worksport Ltd. The company describes itself as a development-stage business evaluating franchise opportunities and checks the “shell company” box.
Financial results and liquidity
- Revenue: $0 for both the three and nine months ended June 30, 2011, unchanged from the comparable 2010 periods.
- Expenses and net loss: General and administrative expenses were $1,733 for the quarter and $9,306 for nine months, versus $2,795 and $11,594, respectively, in 2010. Net losses matched those amounts. No income tax provision was recorded.
- Margins: Not meaningful because the company reported no revenue.
- Cash flow: Nine-month operating cash use was $9,346, compared with $650 of operating cash provided in 2010. Financing provided $10,067, comprising officer and shareholder contributions; investing cash flow was $0. Cash increased $721 to $1,391.
- Liquidity and liabilities: At June 30, cash was $1,391, accounts payable and total liabilities were $1,516, and shareholders’ deficit was $125. The filing reports a $125 working-capital deficit. The balance sheet presents no borrowing balance; it does not clearly discuss debt beyond the accounts payable shown.
Changes, outlook, and risks
Quarterly and nine-month losses narrowed year over year, while revenue remained zero. Nine-month operating cash flow shifted from positive to negative; the company relied on related-party contributions to fund the shortfall. Management expected overhead to remain fairly constant and said it did not anticipate raising capital in the next 12 months, but also cautioned that funding contributions were not assured and that additional financing might be needed if costs could not be adjusted. It stated that profitability depends on generating sales and cannot be guaranteed. The filing identifies going-concern uncertainty given the company’s losses, limited operating history, and dependence on officer/shareholder support. No material legal proceedings or off-balance-sheet arrangements were reported.
Most important facts to verify
- Confirm the filing is for the intended issuer: the document names Franchise Holdings International, Inc., not Worksport Ltd.
- Verify the period: the filing covers the quarter ended June 30, 2011, not a calendar-year Q3.
- Assess the company’s ability to continue as a going concern and its access to funding; no support arrangements were in place.
- Confirm the reported zero revenue, cash balance, liabilities, and related-party contributions against the underlying filing and any subsequent disclosures.