Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Jul. 03, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Franchise Holdings International, Inc. | |
Entity Central Index Key | 1,096,275 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 122,327,240 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 61,918 | $ 66,961 |
Accounts receivable | 83,628 | 189,502 |
Inventory | 131,747 | 44,635 |
Prepaid inventory | 84,800 | 19,684 |
Prepaid expenses and deposits | 445,307 | 392,047 |
Total Current Assets | 807,400 | 712,829 |
Prepaid Expenses - long term | 136,466 | |
Property and Equipment, net | 42,674 | 43,079 |
Intangible Assets, net | 11,598 | 13,096 |
Total Assets | 861,672 | 905,470 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 236,189 | 230,770 |
Income taxes payable | 4,987 | 5,114 |
Related party loan | 22,211 | 22,211 |
Current portion of notes payable | 275,844 | 275,844 |
Total Current Liabilities | 539,231 | 533,939 |
Notes Payable, Net of Current Portion | ||
Total Liabilities | 539,231 | 533,939 |
Comittments and Contingencies | ||
Shareholders' Equity | ||
Common stock, $0.0001 par value, 299,000,000 shares authorized, 122,327,240 shares issued and outstanding, respectively | 12,233 | 12,233 |
Additional paid-in capital | 7,464,617 | 7,464,617 |
Share subscriptions receivable | (10,755) | (10,755) |
Share subscriptions payable | 2,181,079 | 1,531,080 |
Accumulated deficit | (9,282,707) | (8,591,261) |
Cumulative translation adjustment | (52,026) | (44,383) |
Total Shareholders' Equity | 322,441 | 371,531 |
Total Liabilities and Shareholders' Equity | 861,672 | 905,470 |
Series A Preferred Stock [Member] | ||
Shareholders' Equity | ||
Series A Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, 1,000,000 shares issued and outstanding | $ 10,000 | $ 10,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Shareholder's Equity | ||
Common stock, shares authorized | 299,000,000 | 299,000,000 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares issued | 122,327,240 | 122,327,240 |
Common stock, shares outstanding | 122,327,240 | 122,327,240 |
Series A Preferred Stock [Member] | ||
Shareholder's Equity | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 1,000,000 | 1,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statements Of Operations And Comprehensive Loss | ||
Net Sales | $ 150,878 | $ 101,263 |
Cost of Goods Sold | 139,937 | 70,991 |
Gross Profit | 10,941 | 30,272 |
Operating Expenses | ||
General and administrative | 66,818 | 1,395,531 |
Sales and marketing | 1,582 | 1,103 |
Professional fees | 121,526 | 26,053 |
Loss on foreign exchange | 30 | 27,773 |
Total operating expenses | 189,956 | 1,450,460 |
Loss from operations | (179,015) | (1,420,188) |
Other Income (Expense) | ||
Interest expense | (7,290) | (8,310) |
Loss on derivative | (484,720) | |
Debt issuance costs | (2,971) | |
Finance charges | (9,198) | (25,464) |
Loss on settlement of debt | (495,943) | (11,765) |
Total other income (expense) | (512,431) | (533,230) |
Net Loss | (691,446) | (1,953,418) |
Other Comprehensive Income (Loss) | ||
Foreign currency translation adjustment | (7,643) | 24,798 |
Comprehensive Loss | $ (699,089) | $ (1,928,620) |
Loss per Share (basic and diluted) | $ (0.01) | $ (0.01) |
Weighted Average Number of Shares (basic and diluted) | 122,327,240 | 136,849,459 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Operating Activities | ||
Net Loss | $ (691,446) | $ (1,953,418) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Depreciation and amortization | 1,903 | 299 |
Accretion of debt discount | 2,971 | |
Shares issued for current and future services | 1,360,000 | |
Financing fees paid in shares | 21,000 | |
Financing fees paid through promissory note | 3,823 | |
Loss on settlement of debt | 495,943 | 11,765 |
Loss on derivative | 484,720 | |
Total items not involving cash flow from operating activities | (193,600) | (68,840) |
Changes in operating assets and liabilities | 196,200 | 31,404 |
Net cash provided by (used in) operating activities | 2,600 | (37,436) |
Financing Activities | ||
Repayment of overdraft | (2,635) | |
Proceeds from share subscriptions receivable | 1,750 | |
Proceeds from notes payable | 47,755 | |
Repayment of promissory notes | (4,950) | |
Net cash provided by financing activities | 41,920 | |
Effects of Foreign Currency Translation | (7,643) | 24,798 |
Change in cash | (5,043) | 29,282 |
Cash and cash equivalents - beginning of year | 66,961 | |
Cash and cash equivalents end of year | 61,918 | 29,282 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 11,919 | |
Supplemental Disclosure of non-cash investing and financing Activities | ||
Stock issued for settlement of notes payable and accounts payable | 650,000 | 1,360,000 |
Common Shares issued for conversions of promissory notes | $ 1,314,904 |
Basis of Presentation and Going
Basis of Presentation and Going Concern | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 1 Basis of Presentation and Going Concern | a) Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, all adjustments and reclassifications considered necessary in order to make the financial statements not misleading and for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three-month period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on June 15, 2018. b) Functional and Reporting Currency These interim financial statements are presented in United States Dollars. The functional currency of the Company is the Canadian Dollar. For purposes of preparing these interim financial statements, balances denominated in Canadian Dollars outstanding at March 31, 2018 were converted into United States Dollars at a rate of 1.29 Canadian Dollars to one United States Dollar. Balances denominated in Canadian Dollars outstanding at December 31, 2017 were converted into United States Dollars at a rate of 1.26 Canadian Dollars to one United States Dollar. Transactions denominated in Canadian Dollars for the period ended March 31, 2018 were converted into United States Dollars at an average rate of 1.26 Canadian Dollars to one United States Dollar. Transactions denominated in Canadian Dollars for the period ended March 31, 2017 were converted into United States Dollars at an average rate of 1.32 Canadian Dollars to one United States Dollar. c) Use of Estimates The preparation of condensed unaudited financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. d) Going Concern These unaudited condensed consolidated financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. During the three-month period ended March 31, 2018, the Company incurred a net loss of $691,446 and as of that date, the Companys accumulated deficit was $9,282,707. While the Company has demonstrated the ability to generate revenue, there are no assurances that it will be able to achieve level of revenues adequate to generate sufficient cash flow from operations or obtain additional financing through private placements, public offerings and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on acceptable terms. These conditions raise substantial doubt about our ability to continue as a going concern. If adequate working capital is not available we may be forced to discontinue operations, which would cause investors to lose their entire investment. The accompanying condensed consolidated financial statements do not include any adjustments that might result relating to the recoverability and classification of the asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this risk and uncertainty. |
Significant Accounting Policies
Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 2 Significant Accounting Policies | The accounting polices used in the preparation of these interim financial statements are consistent with those of the Company's audited financial statements for the year ended December 31, 2017. The Company also implemented the following accounting standard effective January 1, 2018. In May 2014, ASC 606 was issued related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The standard became effective for the Companys fiscal year beginning January 1, 2018. The adoption of ASC 606 on January 1, 2018 did not have an impact on the way we recognized revenue during the three months ended March 31, 2018. |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 3 Inventory | Inventory consists of the following at March 31, 2018 and December 31, 2017: 2018 2017 Finished goods 131,468 $ 44,635 Raw materials 279 - $ 131,747 $ 44,635 Prepaid inventory $ 84,800 $ 19,684 |
Secured Notes Payable
Secured Notes Payable | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 4 Secured Notes Payable | Secured notes payable consists of the following at March 31, 2018 and December 31, 2017: 2018 2017 Balance owing, December 31, $ 275,844 $ 275,844 Less amounts due within one year (275,844 ) (275,844 ) Long-term portion $ - $ - |
Derivative Liability
Derivative Liability | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 5 Derivative Liability | During the period ended December 31, 2016, the Company issued two convertible promissory notes payable, which contain features that entitles the holder to convert any outstanding amounts payable under the convertible promissory note into a share of the common stock of the Company, the number of which is dependent on several factors. As such, ASC 815 determines the convertible promissory note to be a hybrid financial instrument that includes an embedded derivative that requires separation from the main financial instrument and recognition at fair value. During the period ended March 31, 2017, certain convertible promissory notes to which the derivative liabilities relate, were converted to shares of the Company's common stock. During the period ended March 31, 2017, the Company recognized an aggregate loss on the value of the derivative liability of $484,720 related to the changes in value from January 1, 2017 to the dates upon which the convertible promissory notes were converted. |
Common Stock
Common Stock | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 6 Common Stock | During the period ended March 31, 2017, the Company issued 62,144,524 common shares pursuant to the conversion of the convertible promissory notes. During the period ended March 31, 2017, the Company issued 72,000,000 common shares of the Company to its CEO pursuant to the Company's employee stock incentive plan at a deemed cost of $0.001 per share. The fair value of the common shares of $1,360,000 has been included as general and administrative expense during the period ended March 31, 2017. |
Share Payable_ Claim Extinguish
Share Payable/ Claim Extinguishment Agreement | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 7 Share Payable/ Claim Extinguishment Agreement | During the three months ended March 31, 2018, the Company entered into a share issuance/ claim extinguishment agreement with two parties, pursuant to which the Company agreed to issue 50,000,000 shares of its common stock in exchange for the assumption of aggregate accounts payable of the Company totaling $154,057. The fair value of the shares to be issued was estimated to be $650,000 resulting in a loss on the settlement of debt in the amount of $495,943 recognized during the three months ended March 31, 2018. No shares were issued during the three months ended March 31, 2018. During the year ended December 31, 2017, the Company entered into a share issuance/ claim extinguishment agreement with another party, pursuant to which the Company agreed to issue 35,000,000 shares of its common stock in exchange for the assumption of aggregate accounts payable of the Company of $183,443. The fair value of the shares to be issued pursuant to the Agreement was estimated to be $1,218,000 resulting in a loss on the settlement of debt in the amount of $1,034,557 recognized during the year ended December 31, 2017. During the year ended December 31, 2017, the Company issued 10,400,000 of the shares leaving 24,600,000 shares with a value of $856,080 to be issued as at December 31, 2017. No shares were issued during the three months ended March 31, 2018. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 8 Related Party Transactions | During the period ended March 31, 2018, the Company recorded salaries expense of $17,969 (2017 - $14,865) related to services rendered to the Company by its major shareholder and CEO. As mentioned in Note 6 the Company issued the CEO 72,000,000 shares valued at $1,360,000. |
Concentration of Customer Risk
Concentration of Customer Risk | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 9 Concentration of Customer Risk | The following table includes the percentage of the Company's sales to significant customers for the three months ended March 31, 2018 and 2017, as well as the balance included in accounts receivable for each significant customer as at March 31, 2018 and 2017. A customer is considered to be significant if they account for greater than 10% of the Company's annual sales. 2018 2017 $ % $ % Customer A 45,297 66.5 4,415 66.0 Customer B 2,786 25.0 n/a n/a Customer C n/a n/a 298 10.6 The loss of any of these key customers could have an adverse effect on the Company's business. |
Evaluation of Subsequent Events
Evaluation of Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Notes to Financial Statements | |
NOTE - 10 Evaluation of Subsequent Events | The Company has evaluated subsequent events through July 3, 2018 which is the date the financial statements were available to be issued. |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Inventory Tables | |
Inventory | 2018 2017 Finished goods 131,468 $ 44,635 Raw materials 279 - $ 131,747 $ 44,635 Prepaid inventory $ 84,800 $ 19,684 |
Secured Notes Payable (Tables)
Secured Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Secured Notes Payable Tables | |
Secured notes payable | 2018 2017 Balance owing, December 31, $ 275,844 $ 275,844 Less amounts due within one year (275,844 ) (275,844 ) Long-term portion $ - $ - |
Concentration of Customer Risk
Concentration of Customer Risk (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Concentration Of Customer Risk Tables | |
Significant customer risk percentage | 2018 2017 $ % $ % Customer A 45,297 66.5 4,415 66.0 Customer B 2,786 25.0 n/a n/a Customer C n/a n/a 298 10.6 |
Basis of Presentation and Goi19
Basis of Presentation and Going Concern (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Basis Of Presentation And Going Concern Details Narrative | |||
Net loss | $ (691,446) | $ (1,953,418) | |
Accumulated deficit | $ (9,282,707) | $ (8,591,261) |
Inventory (Details)
Inventory (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Inventory Details | ||
Finished goods | $ 131,468 | $ 44,635 |
Raw materials | 279 | |
Inventory | 131,747 | 44,635 |
Prepaid inventory | $ 84,800 | $ 19,684 |
Secured Notes Payable (Details)
Secured Notes Payable (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Secured Notes Payable Details | ||
Balance owing | $ 275,844 | $ 275,844 |
Less amounts due within one year | (275,844) | (275,844) |
Long-term portion |
Derivative Liability (Details N
Derivative Liability (Details Narrative) - Convertible Promissory Note [Member] | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Loss on derivative liability | $ 484,720 |
Debt instrument, convertible, description | the changes in value from January 1, 2017 to the dates upon which the convertible promissory notes were converted. |
Common Stock (Details Narrative
Common Stock (Details Narrative) | 3 Months Ended |
Mar. 31, 2017USD ($)$ / sharesshares | |
Common stock, shares issued, conversion of convertible promissory notes | 62,144,524 |
General and administrative expense | $ | $ 1,360,000 |
CEO [Member] | |
Common stock, shares issued, employee stock incentive plan | 72,000,000 |
Common stock, deemed cost, per share | $ / shares | $ 0.001 |
Share Payable_ Claim Extingui24
Share Payable/ Claim Extinguishment Agreement (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Common stock, issued | 122,327,240 | 122,327,240 |
Common stock value | $ 12,233 | $ 12,233 |
Claim Extinguishment Agreement [Member] | ||
Issuance of common stock shares related to agreement | 50,000,000 | 35,000,000 |
Aggregate accounts payable | $ 154,057 | $ 183,443 |
Fair value of common stock reserved for future issuance | 650,000 | 1,218,000 |
Loss on settlement of debt | $ 495,943 | $ 1,034,557 |
Common stock, issued | 10,400,000 | |
Common stock reserved for future issuance | 24,600,000 | |
Common stock value | $ 856,080 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Major Shareholder and CEO [Member] | ||
Salary expense | $ 17,969 | $ 14,865 |
CEO [Member] | ||
Common stock, shares issued, employee stock incentive plan | 72,000,000 | |
Common stock, value, employee stock incentive plan | $ 1,360,000 |
Concentration of Customer Ris26
Concentration of Customer Risk (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Customer A [Member] | ||
Concentration of risk, percentage | 66.50% | 66.00% |
Concentration of revenues | $ 45,297 | $ 4,415 |
Customer B [Member] | ||
Concentration of risk, percentage | 25.00% | |
Concentration of revenues | $ 2,786 | |
Customer C [Member] | ||
Concentration of risk, percentage | 10.60% | |
Concentration of revenues | $ 298 |