Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 20, 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 | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 140,771,669 | |
Trading Symbol | FNHI | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 77,130 | $ 66,961 |
Accounts receivable | 107,078 | 189,502 |
Inventory | 76,583 | 44,635 |
Prepaid inventory | 84,800 | 19,684 |
Prepaid expenses and deposits | 437,500 | 392,047 |
Total Current Assets | 783,091 | 712,829 |
Prepaid Expenses - long term | 136,466 | |
Property and Equipment, net | 42,282 | 43,079 |
Intangible Assets, net | 11,366 | 13,096 |
Total Assets | 836,739 | 905,470 |
Current Liabilities | ||
Accounts payable and accrued liabilities | 336,473 | 230,770 |
Income taxes payable | 4,898 | 5,114 |
Related party loan | 22,211 | 22,211 |
Current portion of notes payable | 275,844 | 275,844 |
Total Current Liabilities | 639,426 | 533,939 |
Notes Payable, Net of Current Portion | ||
Total Liabilities | 639,426 | 533,939 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Series A Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, 100,000 and 0 shares issued and outstanding | 10,000 | 10,000 |
Common stock, $0.0001 par value, 299,000,000 shares authorized, 128,271,689 and 122,327,240 shares issued and outstanding, respectively | 12,827 | 12,233 |
Additional paid-in capital | 7,541,301 | 7,464,617 |
Share subscriptions receivable | (10,755) | (10,755) |
Share subscriptions payable | 2,271,801 | 1,531,080 |
Accumulated deficit | (9,570,917) | (8,591,261) |
Cumulative translation adjustment | (56,944) | (44,383) |
Total Shareholders' Equity | 197,313 | 371,531 |
Total Liabilities and Shareholders' Equity | $ 836,739 | $ 905,470 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Series A Preferred Stock, par value | $ 0.0001 | $ 0.0001 |
Series A Preferred Stock, shares authorized | 1,000,000 | 1,000,000 |
Series A Preferred Stock, shares issued | 100,000 | 0 |
Series A Preferred Stock, shares outstanding | 100,000 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 299,000,000 | 299,000,000 |
Common stock, shares issued | 128,271,689 | 122,327,240 |
Common stock, shares outstanding | 128,271,689 | 122,327,240 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Net Sales | $ 143,281 | $ 68,484 | $ 294,159 | $ 169,747 |
Cost of Goods Sold | 111,066 | 62,582 | 251,003 | 133,573 |
Gross Profit | 32,215 | 5,902 | 43,156 | 36,174 |
Operating Expenses | ||||
General and administrative | 27,447 | 25,311 | 94,265 | 1,420,842 |
Sales and marketing | 6,733 | 414 | 8,315 | 1,517 |
Professional fees | 274,079 | 44,562 | 395,605 | 70,615 |
Loss on foreign exchange | 1,146 | (1,675) | 1,176 | 26,098 |
Total operating expenses | 309,405 | 68,612 | 499,361 | 1,519,072 |
Loss from operations | (277,190) | (62,710) | (456,205) | (1,482,898) |
Other Income (Expense) | ||||
Interest expense | (19,837) | (2,488) | (27,127) | (10,798) |
Loss on derivative | (484,720) | |||
Debt issuance costs | (2,971) | |||
Finance charges | 8,785 | (3,627) | (413) | (29,091) |
Loss on settlement of debt | (1,034,557) | (495,943) | (1,046,322) | |
Total other income (expense) | (11,052) | (1,040,672) | (523,483) | (1,573,902) |
Net Loss | (288,242) | (1,103,382) | (979,688) | (3,056,800) |
Other Comprehensive Income (Loss) | ||||
Foreign currency translation adjustment | (4,918) | (7,596) | (12,561) | (17,202) |
Comprehensive Loss | $ (293,160) | $ (1,110,978) | $ (992,249) | $ (3,074,002) |
Loss per Share (basic and diluted) | $ 0 | $ (0.01) | $ (0.01) | $ (0.02) |
Weighted Average Number of Shares (basic and diluted) | 124,809,537 | 209,399,110 | 123,575,246 | 173,324,698 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Operating Activities | ||
Net Loss | $ (979,688) | $ (3,056,800) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Depreciation and amortization | 2,527 | 784 |
Accretion of debt discount | 2,971 | |
Shares issued for current and future services | 18,000 | 1,380,445 |
Financing fees paid in shares | 21,000 | |
Interest paid in shares | 3,823 | |
Loss on settlement of debt | 495,943 | 1,046,322 |
Loss on derivative | 484,720 | |
Total items not involving cash flow from operating activities | (463,218) | (116,735) |
Changes in operating assets and liabilities | 485,948 | 85,529 |
Net cash provided by (used in) operating activities | 22,730 | (31,206) |
Cash Flows from Investing Activities | ||
Purchase of property and equipment | (4,873) | |
Net cash used in investing activities | (4,873) | |
Financing Activities | ||
Repayment of overdraft | (2,635) | |
Proceeds from share subscriptions receivable | 1,750 | |
Proceeds from notes payable | 52,081 | |
Repayment of promissory notes | (7,894) | |
Net cash provided by financing activities | 43,302 | |
Effects of Foreign Currency Translation | (12,561) | 17,202 |
Change in cash | 10,169 | 24,425 |
Cash and cash equivalents - beginning of year | 66,961 | |
Cash and cash equivalents end of year | 77,130 | 24,425 |
Supplemental disclosure of cash flow information: | ||
Interest paid | 16,724 | |
Supplemental Disclosure of non-cash investing and financing Activities | ||
Shares issued for settlement of notes and accounts payable | 650,000 | 1,314,904 |
Shares issued for consulting agreement | $ 150,000 |
Basis of Presentation and Going
Basis of Presentation and Going Concern | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Going Concern | 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 and six-month period ended June 30, 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 June 30, 2018 were converted into United States Dollars at a rate of 1.31 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 June 30, 2018 were converted into United States Dollars at an average rate of 1.28 Canadian Dollars to one United States Dollar. Transactions denominated in Canadian Dollars for the period ended June 30, 2017 were converted into United States Dollars at an average rate of 1.33 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 six-month period ended June 30, 2018, the Company incurred a net loss of $979,688 and as of that date, the Company’s accumulated deficit was $9,570,917. 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 working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, the Company 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 the Company 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 | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | 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. Effective January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, The Company’s products consist of truck bed covers for light duty trucks with its primary markets being in the United States and Canada. The Company plans to expand globally as they find suitable markets with a demand for the products they manufacture. The Company’s sales their product through the aftermarket and other markets. Revenue generated in Canada for the three and six months ended June 30, 2018, was $19,574 and $124,947, respectively. Revenue generated in the United States for the three and six months ended June 30, 2018 was $141,410 and $171,041, respectively. The implementation of ASC 606 had no effect on this period or prior periods. Had the implementation of ASC 606 been applicable, the Company’s prior periods would have needed to be revised to present revenue as if ASC 606 had been applicable for all periods presented. |
Inventory
Inventory | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Inventory | 3. Inventory Inventory consists of the following at June 30, 2018 and December 31, 2017: 2018 2017 Finished goods 76,305 $ 44,635 Raw materials 278 - $ 76,583 $ 44,635 Prepaid inventory $ 84,800 $ 19,684 |
Secured Notes Payable
Secured Notes Payable | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Secured Notes Payable | 4. Secured Notes Payable Secured notes payable consists of the following at June 30, 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 | 6 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | 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 June 30, 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 June 30, 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 | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Common Stock | 6. Common Stock During the period ended June 30, 2017, the Company issued 62,144,524 common shares pursuant to the conversion of the convertible promissory notes. During the period ended June 30, 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 June 30, 2017. |
Share Payable_ Claim Extinguish
Share Payable/ Claim Extinguishment Agreement | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share Payable/ Claim Extinguishment Agreement | 7. Share Payable/ Claim Extinguishment Agreement During the six months ended June 30, 2018, the Company entered into an agreement with an investor relations company to provide various services to the Company. These services were valued at $150,000 and will be charged to expense as certain milestones are met. The agreement is to be settled through the issuance of 7,500,000 common shares. From April through June, the investor relations company had met milestones that corresponded to $63,600 of expense being recorded. None of the shares had been issued through June 30, 2018. During the six months ended June 30, 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 six months ended June 30, 2018. During the period ended June 30, 2018 5,944,449 shares have been issued under this agreement. During the six months ended June 30, 2018, the Company entered into a share issuance agreement with a public relations company whereby they would issue shares in satisfaction for service rendered. Through June 30, 2018, the public relations company has provided services valued at $18,000. The Company has yet to issue the shares for these services. 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. 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 six months ended June 30, 2018. |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 8. Related Party Transactions During the three and six month period ended June 30, 2018, respectively, the Company recorded salaries expense of $10,814 (2017 - $7,150) and $28,783(2017 - $22,015) related to services rendered to the Company by its major shareholder and CEO. As mentioned in Note 6, during the six months ended June 30, 2017, the Company issued the CEO 72,000,000 shares valued at $1,360,000. |
Concentration of Customer Risk
Concentration of Customer Risk | 6 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentration of Customer Risk | 9. Concentration of Customer Risk The following table includes the percentage of the Company’s sales to significant customers for the three months ended June 30, 2018 and 2017, as well as the balance included in accounts receivable for each significant customer as at June 30, 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 121,079 41.0 % 4,415 66.0 Customer B 87,788 30.0 % n/a n/a Customer C 42,687 14.0 % 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 | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Evaluation of Subsequent Events | 10. Evaluation of Subsequent Events In July 2018, 12,500,000 shares were issued under the share payable agreements mentioned in Note 6 above. The Company has evaluated subsequent events through August 20, 2018 which is the date the financial statements were available to be issued and noted no other subsequent events. |
Inventory (Tables)
Inventory (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | Inventory consists of the following at June 30, 2018 and December 31, 2017: 2018 2017 Finished goods 76,305 $ 44,635 Raw materials 278 - $ 76,583 $ 44,635 Prepaid inventory $ 84,800 $ 19,684 |
Secured Notes Payable (Tables)
Secured Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Secured Notes Payable | Secured notes payable consists of the following at June 30, 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 $ - $ - |
Concentration of Customer Risk
Concentration of Customer Risk (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Concentration Of Customer Risk Tables | |
Schedule of Significant Customer Risk Percentage | 2018 2017 $ % $ % Customer A 121,079 41.0 % 4,415 66.0 Customer B 87,788 30.0 % n/a n/a Customer C 42,687 14.0 % 298 10.6 |
Basis of Presentation and Goi19
Basis of Presentation and Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Basis Of Presentation And Going Concern Details Narrative | |||||
Net loss | $ (288,242) | $ (1,103,382) | $ (979,688) | $ (3,056,800) | |
Accumulated deficit | $ (9,570,917) | $ (9,570,917) | $ (8,591,261) |
Significant Accounting Polici20
Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue | $ 143,281 | $ 68,484 | $ 294,159 | $ 169,747 |
Canada [Member] | ||||
Revenue | 19,574 | 124,947 | ||
United States [Member] | ||||
Revenue | $ 141,410 | $ 171,041 |
Inventory - Schedule of Invento
Inventory - Schedule of Inventory (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 76,305 | $ 44,635 |
Raw materials | 278 | |
Inventory | 76,583 | 44,635 |
Prepaid inventory | $ 84,800 | $ 19,684 |
Secured Notes Payable - Schedul
Secured Notes Payable - Schedule of Secured Notes Payable (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Disclosure [Abstract] | ||
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 Notes [Member] | 6 Months Ended |
Jun. 30, 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) | 6 Months Ended |
Jun. 30, 2017USD ($)$ / sharesshares | |
Common stock, shares issued, conversion of convertible promissory notes | 62,144,524 |
General and administrative expense | $ | $ 1,360,000 |
Chief Executive Officer [Member] | |
Common stock, shares issued, employee stock incentive plan | 72,000,000 |
Common stock, deemed cost, per share | $ / shares | $ 0.001 |
Share Payable_ Claim Extingui25
Share Payable/ Claim Extinguishment Agreement (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Common stock, issued | 128,271,689 | 128,271,689 | 122,327,240 |
Common stock value | $ 12,827 | $ 12,827 | $ 12,233 |
Claim Extinguishment Agreement [Member] | |||
Issuance of common stock shares | 5,944,449 | 35,000,000 | |
Aggregate accounts payable | $ 183,443 | ||
Fair value of common stock reserved for future issuance | 650,000 | 650,000 | 24,600,000 |
Loss on settlement of debt | $ 495,943 | ||
Common stock, issued | 10,400,000 | ||
Common stock value | $ 856,080 | ||
Claim Extinguishment Agreement [Member] | Investor Relations [Member] | |||
Issuance of shares for services, value | $ 63,600 | $ 150,000 | |
Issuance of shares for services, shares | 7,500,000 | ||
Claim Extinguishment Agreement [Member] | Two Parties [Member] | |||
Issuance of common stock shares | 50,000,000 | ||
Aggregate accounts payable | $ 154,057 | $ 154,057 | |
Share Issuance Agreement [Member] | |||
Issuance of shares for services, value | $ 18,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Salary expense | $ 10,814 | $ 7,150 | $ 28,783 | $ 22,015 |
Chief Executive Officer [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 Ris27
Concentration of Customer Risk - Schedule of Significant Customer Risk Percentage (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Concentration of revenues | $ 111,066 | $ 62,582 | $ 251,003 | $ 133,573 |
Customer A [Member] | ||||
Concentration of revenues | $ 121,079 | $ 4,415 | ||
Concentration of risk, percentage | 41.00% | 66.00% | ||
Customer B [Member] | ||||
Concentration of revenues | $ 87,788 | |||
Concentration of risk, percentage | 30.00% | |||
Customer C [Member] | ||||
Concentration of revenues | $ 42,687 | $ 298 | ||
Concentration of risk, percentage | 14.00% | 10.60% |
Evaluation of Subsequent Even28
Evaluation of Subsequent Events (Details Narrative) | 1 Months Ended |
Jul. 31, 2018shares | |
Subsequent Event [Member] | Share Payable Agreement [Member] | |
Number of shares issued | 12,500,000 |