SEC Filing Summary
Issuer and period discrepancy: The supplied filing is for Franchise Holdings International, Inc., not Worksport Ltd. It is a Form 10-Q for the quarter ended March 31, 2013 (the company’s fiscal second quarter, with six-month results also presented). The filing describes a development-stage company evaluating franchise opportunities; it does not discuss Worksport’s business.
Financial results
- Revenue: $0 for both the three and six months ended March 31, 2013, unchanged from the comparable 2012 periods. With no revenue, a meaningful operating margin is not available.
- Expenses and loss: Quarterly general and administrative expense and net loss were each $2,478, versus $3,370 in the prior-year quarter. Six-month expense and net loss were each $9,257, versus $15,101 in the prior-year period.
- Cash flow: Six-month operating cash use was $8,351, compared with $15,103 in 2012. Financing provided $8,299, all from officer/shareholder contributions, versus $15,436 in 2012. Cash declined by $52 during the six months to $266.
- Liquidity and liabilities: At March 31, 2013, cash was $266 and accounts payable and total liabilities were $2,436; negative working capital was $2,170. At September 30, 2012, cash was $318, liabilities were $1,530, and negative working capital was $1,212. The balance sheet reports no outstanding notes payable.
- Equity: Shareholders’ deficit was $2,170 at March 31, 2013, compared with $1,212 at September 30, 2012. Common shares outstanding were 2,840,864.
Changes, outlook, and risks
- Six-month operating expenses and losses decreased from the prior-year period, but the company continued to report no revenue.
- Management said overhead should remain fairly constant, asserted short-term capital was sufficient for current operations, and did not anticipate raising additional capital in the next 12 months. It also acknowledged that continued operations depend on generating sales or securing support, and that there are no funding arrangements with its sole officer and director.
- The filing raises substantial going-concern uncertainty: the company had a limited operating history and losses since inception, relied on officer/shareholder contributions, and gave no assurance that future support or required financing would be available. It reported no material legal proceedings or off-balance-sheet arrangements.
- No specific financial guidance or revenue targets were provided. Management’s expectation that expenses remain stable and that sales could support profitability is not a quantified forecast.
Important facts to verify
- Confirm the issuer: this filing names Franchise Holdings International, Inc., not Worksport Ltd.
- Confirm the intended reporting period: the filing covers the quarter ended March 31, 2013, with six-month results, rather than a quarter ended June 30.
- Verify the filing’s issuer identity and business context before relying on its financial figures for Worksport analysis.
- Assess the company’s ability to fund operations given $266 cash, negative working capital, no revenue, and dependence on discretionary insider contributions.