Business context and reporting period
Entity mismatch: The supplied filing is for Franchise Holdings International, Inc., not Worksport Ltd. It is a Form 10-Q for the quarter ended March 31, 2014, covering the second fiscal quarter and six months of the company’s September 30 fiscal year. The financial statements are unaudited.
The company described itself as a development-stage business evaluating franchise opportunities. It reported that it was a shell company and had no revenue during the periods presented.
Financial performance and condition
- Revenue: $0 for both the three and six months ended March 31, 2014, unchanged from the comparable 2013 periods.
- Expenses and loss: General and administrative expenses were $3,767 for the quarter and $10,671 for six months, versus $2,478 and $9,257, respectively, in 2013. Net losses were equal to those expense amounts; basic and diluted loss per share was reported as $0.00.
- Cash flow: Six-month operating cash use was $7,881, compared with $8,351 in 2013. Financing provided $7,404, all from officer and shareholder contributions, versus $8,299 in 2013. Cash declined by $477 to $505.
- Liquidity and balance sheet: At March 31, cash was $505, accounts payable and total liabilities were $3,762, and shareholders’ deficit was $3,257. Management reported negative working capital of $3,257, compared with positive working capital of $10 at September 30, 2013.
- Debt: No notes payable were reported as outstanding on the balance sheet. The notes describe prior debt settlements finalized in 2009; no interest expense was reported for the current periods.
- Margins: Not meaningful because the company had no revenue.
Material changes versus prior comparable periods
Quarterly and six-month losses increased from the 2013 periods as expenses rose, while revenue remained zero. Cash and working capital weakened from September 30, 2013. The company continued to rely on officer and shareholder contributions to fund its operations.
Outlook, risks and other matters
- Management expected current operating overhead to remain fairly constant and said it did not anticipate raising additional capital in the next 12 months. It also stated that funding from its sole officer and director was not arranged or assured, and that additional financing might be needed if expenses could not be adjusted.
- The filing identifies substantial uncertainty about the company’s ability to continue as a going concern, citing limited operations, recurring losses, very low cash, and dependence on future funding. It gives no assurance that the company can raise funds or achieve profitability.
- Management’s expectation of sufficient short-term capital and its belief that sales could support profitability are forward-looking statements, not demonstrated by reported revenue.
- No material legal proceedings or subsequent events requiring disclosure were reported. The company reported effective disclosure controls and no material changes to internal control over financial reporting.
Investor facts to verify
- Confirm the intended issuer: this filing names Franchise Holdings International, Inc., not Worksport Ltd.
- Verify the reporting period and issuer identity against the original SEC filing and filing accession details.
- Assess the going-concern risk, minimal cash, negative working capital, and dependence on uncommitted related-party support.
- Confirm whether any subsequent financing, operating activity, or business-plan changes occurred after May 7, 2014; the filing reports no revenue and no committed funding arrangement.