10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarterly Period Ended March 31, 2019

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from ______________________ to _____________________

Commission File Number: 000-27631

FRANCHISE HOLDINGS INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

NEVADA	65-0782227
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3120 Rutherford Road

Suite 414

Vaughan, Ontario, Canada L4K 0B2

(Address of principal executive offices) (Zip Code)

(888) 554-8789

Registrant’s telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One).

Large accelerated filer	[  ]	Accelerated filer	[  ]
Non-accelerated filer	[  ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)		Emerging growth company	[  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [  ]

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

As of May 31, 2019, the number of shares outstanding of the registrant’s class of common stock, $0.0001 par value, was 28,177,965.

FRANCHISE HOLDINGS INTERNATIONAL, INC.

TABLE OF CONTENTS

		Pages
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets at March 31, 2019 and December 31, 2018 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2019 and 2018 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months Ended March 31, 2019 and 2018 (Unaudited)	5
	Consolidated Statement of Shareholders’ Deficit for the three months ended March 31, 2019 and 2018 (Unaudited)	6
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	13
PART II OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Mine Safety Disclosures	14
Item 5.	Other Information	14
Item 6.	Exhibits	15
SIGNATURES		16

2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Franchise Holdings International, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	March 31, 2019			December 31, 2018
Assets
Current Assets
Cash and cash equivalents	$	21,900		$	25,323
Accounts receivable		355,068			61,882
Inventory		164,693			289,516
Prepaid expenses and deposits		5,426			124,114
Total Current Assets		547,087			500,835
Property and Equipment, net		43,493			43,860
Intangible Assets, net		12,567			12,673
Total Assets	$	603,147		$	557,368
Liabilities and Shareholders’ Equity (Deficit)
Current Liabilities
Accounts payable and accrued liabilities	$	555,891		$	401,766
Payroll taxes payable		65,376			82,365
Related party loan		5,323			9,372
Current portion of notes payable		287,425			287,425
Total Current Liabilities		914,015			780,928
Commitments and Contingencies
Shareholders’ Deficit
Series A Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, 1,000,000 shares issued and outstanding, respectively,		10,000			10,000
Common stock, $0.0001 par value, 49,833,333 shares authorized, 26,634,052 and 24,634,054 shares issued and outstanding, respectively		2,563			2,463
Additional paid-in capital		8,256,733			8,103,934
Share subscriptions receivable		(1,577	)		(1,577	)
Share subscriptions payable		1,896,633			2,019,532
Accumulated deficit		(10,480,772	)		(10,354,299	)
Cumulative translation adjustment		5,552			(3,613	)
Total Shareholders’ Deficit		(310,868	)		(223,560	)
Total Liabilities and Shareholders’ Deficit	$	603,147		$	557,368

The accompanying notes form an integral part of these condensed consolidated financial statements.

3

Franchise Holdings International, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

	2019			2018
Net Sales	$	572,278		$	150,878
Cost of Goods Sold		432,948			139,937
Gross Profit		139,330			10,941
Operating Expenses
General and administrative		40,571			66,818
Sales and marketing		27,368			1,582
Professional fees		172,502			121,526
(Gain) loss on foreign exchange		(13,798	)		30
Total operating expenses		226,644			189,956
Loss from operations		(87,314	)		(179,015	)
Other Income (Expense)
Interest expense		(39,160	)		(7,290	)
Finance charges		-			(9,198	)
Loss on settlement of debt		-			(495,943	)
Total other income (expense)		(39,160	)		(512,431	)
Net Loss	$	(126,473	)	$	(691,446	)
Other Comprehensive Income (Loss)
Foreign currency translation adjustment		9,165			(7,643	)
Comprehensive Loss	$	(117,308	)	$	(699,089	)
Loss per Share
Basic	$	(0.005	)	$	(0.01	)
Diluted	$	(0.005	)	$	(0.01	)
Weighted Average Number of Shares (basic and diluted)		25,000,716			20,387,873

The accompanying notes form an integral part of these condensed consolidated financial statements.

4

Franchise Holdings International, Inc.

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2019 and 2018

(Unaudited)

Supplemental Disclosure for non-cash investing and financing Activities

	2019			2018
Operating Activities
Net Loss	$	(126,473	)	$	(691,446	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization		473			1,903
Loss on settlement of debt		-			495,943
		(126,000	)		(193,600	)
Changes in operating assets and liabilities		87,462			196,200
Net cash provided by (used in) operating activities		(38,539	)		2,600
Financing Activities
Issuance of common stock for cash		30,000
Proceeds from notes payable		11,058			-
Shareholder assumption of debt		(11,058	)		-
Repayment of shareholder loans		(4,049	)		-
Net cash provided by financing activities		25,951			-
Effects of exchange rate changes on cash		9,165			(7,643	)
Changes in cash		(3,423	)		(5,043	)
Cash and cash equivalents – beginning of year		25,323			66,961
Cash and cash equivalents – end of year	$	21,900		$	61,918
Supplemental disclosure of cash flow information:
Interest paid	$	39,160		$	39,572
Supplemental disclosure of non-cash flow investing and financing activities:
Shares issued for share subscription payable	$	152,799		$	611,548
Reverse stock split	$	101		$	12,312

The accompanying notes form an integral part of these condensed consolidated financial statements.

5

Franchise Holdings International, Inc.

Consolidated Statement of Shareholders’ Equity

For The Three Months Ended March 31, 2019 and 2018

(Unaudited)

	Preferred Stock				Common Stock				Additional Paid-in		Share Subscriptions			Share Subscription			Accumulated			Cumulative Translation			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Capital		Receivable			Payable			Deficit			Adjustment			(Deficit)
Balance at January 1, 2018		1,000,000	$	10,000		20,387,873	$	2,039	$	7,474,811	$	(10,755	)	$	1,531,080		$	(8,591,261	)	$	(44,383	)	$	371,530
Issuance for services		-		-		-		-		-		-			150,000			-			-			-
Issuance for settlement of payables		-		-		-		-		-		-			650,000			-			-			650,000
Net loss		-		-		-		-		-		-			-			(691,446	)					(691,446	)
Foreign currency translation adjustment		-		-		-		-		-		-			-			-			(7,643	)		(7,643	)
Balance at March 31, 2018		1,000,000	$	10,000		20,387,873	$	2,039	$	7,474,811	$	(10,755	)	$	2,331,080		$	(9,282,707	)	$	(52,026	)	$	322,441
Balance at January 1, 2019		1,000,000	$	10,000		24,634,051	$	2,463	$	8,103,934	$	(1,577	)	$	2,019,532		$	(10,354,299	)	$	(3,613	)	$	(223,560	)
Issuance for services		-		-		1,000,000		100		152,799		-			(152,899	)		-			-			-
Issuance for settlement of payables		-		-		-		-		-		-			30,000			-			-			30,000
Net loss		-		-		-		-		-		-			-			(126,473	)		-			(126,473	)
Foreign currency translation adjustment		-		-		-		-		-		-			-			-			9,165			9,165
Balance at March 31, 2019		1,000,000	$	10,000		25,634,052	$	2,563	$	8,256,733	$	(1,577	)	$	1,896,633		$	(10,480,772	)	$	5,552		$	(310,868	)

The accompanying notes form an integral part of these consolidated financial statements.

6

Franchise Holdings International, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

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, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. 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, 2018 filed with the SEC on May 13, 2019.

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, 2019 were converted into United States Dollars at a rate of 1.34 Canadian Dollars to one United States Dollar. Balances denominated in Canadian Dollars outstanding at December 31, 2018 were converted into United States Dollars at a rate of 1.36 Canadian Dollars to one United States Dollar. Transactions denominated in Canadian Dollars for the period ended March 31, 2019 and December 31, 2018 were converted into United States Dollars at an average rate of 1.33 and 1.30 Canadian Dollars to one United States Dollar, respectfully.

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, 2019, the Company incurred a net loss of $126,473 and as of that date, the Company’s accumulated deficit was $10,480,772. 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.

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, 2018.

The Company also implemented the following accounting standard effective January 1, 2018.

In January 2019, ASC 842 was implemented related to the valuation of leases. Under this guidance, leases should be capitalized that contain terms over one year and values over the capitalization policies. This standard became effective for the Company’s fiscal year beginning January 1, 2019. The adoption of ASC 842 on January 1, 2019 did not have any impact on the way leases were recognized as there are no capital leases during the three months ended March 31, 2019.

7

Franchise Holdings International, Inc.

Notes to the Condensed Consolidated Financial Statements

Unaudited

3. Inventory

Inventory consists of the following at March 31, 2019 and December 31, 2018:

	2019		2018
Finished goods	$	156,921	$	282,239
Promotional items		1,060		700
Raw materials		6,712		6,577
	$	164,693	$	289,516
Prepaid inventory	$	-	$	-

4. Secured Notes Payable

Secured notes payable consists of the following at March 31, 2019 and December 31, 2018:

	2019			2018
Balance owing	$	287,425		$	287,425
Less amounts due within one year		(287,425	)		(287,425	)
Long-term portion	$	-		$	-

5. Shareholders’ Deficit

During the three-month period ended March 31, 2019, the Company issued 1,000,000 common shares pursuant to a subscription payable to Consultant with a value of $152,899. During the same period, the Company entered into a share subscription agreement with a consultant of the Company for 1,500,000 common shares valued at $30,000.

During the three-month period, Steven Rossi was issued 13,583,397 shares of Franchise Holdings International, Inc common stock as approved by the board of directors, due to a conversion of all 1,000,000 shares of his Series A Preferred stock.

In 2018 and 2019, the Company was authorized to issue 49,833,333 shares of its common stock with a par value of $0.0001. All shares were ranked equally with regards to the Company’s residual assets. During 2018 and 2019, the Company was authorized to issue 1,000,000 shares of its Series A Preferred Stock with a par value of $0.0001. These shares have voting rights equal to 299 shares of common stock, per share of preferred.

6. Earnings per Share

For the three months ended March 31, 2019, Earnings per Share (EPS) is 0.005 (basic and diluted) compared to the EPS for the three months ended March 31, 2018 of 0.01 (basic and diluted). There are 49,833,333 shares authorized, 26,634,052 and 24,634,054 shares issued and outstanding, respectively.

7. Reverse Stock Split

A 1 for 6 reverse stock split of common shares was deemed declared effective, by FINRA, on March 29th, 2019 occurred. On march 8th, 2019; The Board of Directors authorized the submission of a Certificate of Change/Amendment to the Nevada Secretary of State in which the Company sought to affect a reverse split of its common stock at the rate of 1 for 6 for the purpose of increasing the per share price for the Company’s stock in an effort to meet the minimum listing requirements of the Canadian Stock Exchange (“CSE”). The Certificate of Change was submitted to the Nevada Secretary of State on March 20, 2019 and the FINRA corporate action was filed on March 21, 2019. FINRA declared the 1 for 6 reverse stock split effective on March 29, 2019.

8

Franchise Holdings International, Inc.

Notes to the Condensed Consolidated Financial Statements

Unaudited

8. 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, 2019 and 2018, as well as the balance included in revenue and accounts receivable for each significant customer as at March 31, 2019 and 2018. A customer is considered to be significant if they account for greater than 10% of the Company’s annual sales.

	2019				2018
	$		%		$		%
Customer A		482,247		79.2		45,297		66.5
Customer B		77,503		12.7		2,786		25.0

The loss of any of these key customers could have an adverse effect on the Company’s business.

9. Evaluation of Subsequent Events

The Company has evaluated subsequent events through May 31, 2019 which is the date the financial statements were available to be issued and the following events after March 31, 2019 occurred:

● On April 3, 2019, Steven Rossi was issued 13,583,397 shares of Franchise Holdings International, Inc. common stock as approved by the board of directors, due to a conversion of all 1,000,000 shares of his Series A Preferred stock.

● On April 2, 2019, Mr. Craig Loverock was appointed to our Board of Directors and as Chairman of our Audit Committee. Per the language in the Written Consent of Board of Directors dated April 2, 2019, Mr. Loverock shall be paid $1,000 CDN for each month of service as Director, and such payment shall be made quarterly. Mr. Loverock shall be eligible to participate in all employee compensations plans that are available to other Officers and Directors of the Corporation from time to time.

● On May 9, 2019, Franchise Holdings International, Inc. issued 1,680,084 common stock as approved by the board of directors to a consultant for services rendered.

9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis (“MD&A”) should be read in conjunction with financial statements of FNHI, and its wholly owned subsidiary, Worksport, Ltd. for the three months ended March 31, 2019 and 2018, and the notes thereto. Additional information relating to FNHI is available at Worksport.ca.

Safe Harbor for Forward-Looking Statements

Certain statements included in this MD&A constitute forward-looking statements, including those identified by the expressions anticipate, believe, plan, estimate, expect, intend, and similar expressions to the extent they relate to FNHI or its management. These forward-looking statements are not facts, promises, or guarantees; rather, they reflect current expectations regarding future results or events. These forward-looking statements are subject to risks and uncertainties that could cause actual results, activities, performance, or events to differ materially from current expectations. These include risks related to revenue growth, operating results, industry, products, and litigation, as well as the matters discussed in FNHI’s MD&A under Risk Factors . Readers should not place undue reliance on any such forward-looking statements. FNHI disclaims any obligation to publicly update or to revise any such statements to reflect any change in the Company’s expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included in this report.

Revenue

For the three months ended March 31, 2019, revenue generated from the entire line of Worksport products was $572,278, compared to $150,878 for the three months ended March 31, 2018. The year over year increase of approximately 279% was mainly attributable to the availability of inventory to partially satisfy customer orders.

For the three months ended March 31, 2019, revenue generated in Canada was $25,602 compared to $102,141 for the same period in 2018, a decrease of 75%. The decrease was primarily due to a higher demand in the United States, resulting in temporarily limited factory capacity to handle Canadian market sales. The rate of exchange between the Canadian Dollar and the United States Dollar during the first three months of fiscal 2019 was consistent, which limited the historically negative effect on reported revenues as a result of translating the sales denominated in Canadian Dollars to United States Dollars for financial statement reporting purposes. For the three months ended March 31, 2019, gross revenue generated in the United States was $583,422 compared to $48,736 for the same period in 2018. This represents a year-over-year increase in US-sourced revenue of approximately 1,097% and is primarily attributable to re-entering the US market as of mid-2018 and continuing to increase sales which included online retailers and the support of four private labels, after the allowance of use of the Worksport trademark.

Currently, Worksport works closely with one major distributor in Canada, along with its own contracted distribution and inventory facility in Breinigsville, PA and Depew, NY. This does not include multiple independent online retailers.

Although Worksport currently supports a total of 10 dealers and distributors, Worksport believes the trend of increasing sales through online retailers will continue to outpace the traditional distribution business model. Moreover, reputable online retailer’s customers tend to provide larger sales volumes, greater margin of profit as well as greater protection against price erosion.

Cost of Sales

Cost of sales increased for the first three months of fiscal 2019, when compared to the first three months of fiscal 2018, by 209% from $139,937 to $432,948. The increase was primarily due to the higher volume of sales for the first quarter of 2019 when compared to the same period of 2018. Our cost of sales, as a percentage of sales, was approximately 76% and 93% for three months ended March 31, 2019 and 2018, respectively.

Within cost of sales, freight costs accounted for 9% of cost of sales during the three months ended March 31, 2019, whereas in 2018, it accounted for 26% of cost of sales. The large decrease in the percentage of cost of sales is due to the increase in sales for the quarter ended March 31, 2019 being larger US orders with economies to scale in shipping. Also, in 2019, retail online orders were drop-shipped sales FOB China to our online vendors reducing intermediary costs.

10

Worksport provides its distributors and online retailers an “all-in” wholesale price. This includes any import duty charges, taxes and shipping charges. Discounts are applied if the distributor or retailer chooses to use their own shipping process. Certain exceptions apply on rare occasions where product is shipped outside the contiguous United States or from the United States to Canada. Volume discounts are also offered to certain higher volume customers.

Gross Margin

Gross margin percentage for the three-month periods ended March 31, 2019 and 2018 were 24% and 8% respectively. The increase in gross margin reflects an increase in one-time shipping costs in landing product in our US warehouse for 2018. In addition, the gross margin percentage for the three months ended March 31, 2018 were abnormally low as a result of the fluctuation in foreign exchange rates used to translate Canadian Dollar sales into United States Dollars for purposes of financial reporting.

Operating Expenses

Operating expenses for the three months ended March 31, 2019 were $226,644 compared to $189,956 for the three months ended March 31, 2018. Although there were decreases in general and administrative expenses and foreign exchange, theses expenses were offset by larger increases in sales and marketing, and professional fees incurred for the period.

● General and administrative expense decreased by $26,247, from $66,818 to $40,571 during the three months ended March 31, 2018. The main reason for the decrease was a major reduction in salaries provided to the CEO for the first quarter.

● The Company also realized a gain on foreign exchange in the amount of $9,165 during the three months ended March 31, 2019, a decrease of $16,808 when compared to a loss on foreign exchange of ($7,643) during the three months ended March 31, 2018. The current gains and previous loss were the result of the Company converting Canadian cash generated by sales to Canadian customers into United States Dollars in order to purchase inventory and pay operating expenses denominated in United States Dollars.

● Professional fees which include accounting, legal and consulting fees, increased from $121,526 for the three months ended March 31, 2018 to $172,502 for the three months ended March 31, 2019. The increase is related to increased accounting and audit fees, consulting, legal services and SEC filing fees between the two periods.

Other Income and Expenses

Other income and expenses for the first quarter at March 31, 2019 was $39,160 compared with $512,431 at March 31, 2018. The major difference consisted of a loss on debt settlement of $495,943 and financing charges of $9,198 that occurred in the first quarter of 2018.

During the three-month period ended March 31, 2019, the Company incurred interest of $39,160 an increase of $31,870 when compared to interest expense of $7,290 incurred during the three months ended March 31, 2018. This was due to the interest accruals not previously being recorded in 2018 until the end of the year. The Company had assumed Canadian and US dollar promissory notes in 2017 in the amount of $123,392 with terms of 12% and 18%. In addition, two lines of credit in both Canadian and US dollar currencies were assumed with an interest rate of 18% in 2016. The interest from these loans were 95% of the interest expense and the other 5% was for bank interest.

Net Loss

Net loss for the three months ended March 31, 2019 was $126,473 compared to a net loss of $691,446 for the three months ended March 31, 2018, a difference of $564,973 or 82%. The decrease in the net loss was mainly due to the loss of debt settlement in the amount of $495,943; financing costs of $9,198; and an increase in professional fees of $50,976 as discussed above.

11

Liquidity and Capital Resources

Cash Flow Activities

Cash decreased from $25,323 at December 31, 2018 to $21,900 at March 31, 2019. The decrease was primarily the result of the timing of inbound payments from customers, and outbound payments to vendors. Accounts receivable increased by $293,186 from $61,882 at December 31, 2018 to $355,068 at March 31, 2018. Inventory decreased at December 31, 2018 from $289,516 at March 31, 2018 to $164,693 largely as a result of the timing of the receipt of inventory shipments. Prepaid expenses decreased by $118,688 from $124,114 at December 31, 2018 to $5,426 at March 31, 2019 due to the completion of a large amount of consulting services for this quarter. Payroll taxes payable decreased from $82,365 to $65,376 due to a larger reduction in salaries to related parties. Accounts payable and accrued liabilities increased by $154,125 from $401,766 at December 31, 2018 to $555,891 at March 31, 2018. The increase in payables is related to large purchases related to increased sales during the three months ended March 31, 2019.

Financing Activities

During the first three months of fiscal 2019, Worksport issued $30,000 in issuance of common stock for cash and repayment of $4,049 of shareholder loans. During the first quarter of 2018, there were no changes in financing activities for the period.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements with any party.

Critical Accounting Policies

Our discussion and analysis of results of operations and financial condition are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an ongoing basis, including those related to provisions for uncollectible accounts receivable, inventories, valuation of intangible assets and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The accounting policies that we follow are set forth in Note 2 to our financial statements as included in the Form 10K filed on May 13, 2019. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.

12

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) (the Company’s principal financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. The framework used by management in making that assessment was the criteria set forth in the document entitled “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures are not effective as of March 31, 2019 to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reason described below.

Because of our limited operations, we have limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

13

PART II OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any material or legal proceeding and, to our knowledge, none is contemplated or threatened.

Item 1A. Risk Factors

We are a smaller reporting company and, as a result, are not required to provide the information under this item. Please review the risk factors identified in Item 1.A of our 2018 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During the three months ended March 31, 2019, the Company did not complete registration of 1,500,000 common shares as they were unregistered equity securities.

Item 3. Defaults Upon Senior Securities

There have been no defaults upon senior securities.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item.

14

Item 6. Exhibits

(a) Exhibits

EXHIBIT NO.	DESCRIPTION
3.1*	Articles of Incorporation
3.2*	By-Laws
31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1	Section 906 Certification of Chief Executive Officer
32.2	Section 906 Certification of Chief Financial Officer
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.

* Filed as an exhibit to the registrant’s Form 10-QSB, filed October 13, 1999 and incorporated by reference herein.

15

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FRANCHISE HOLDINGS INTERNATIONAL, INC.
Dated: May 31, 2019	By:	/s/ Steven Rossi
		Steven Rossi
		Chairman of the Board,
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: May 31, 2019
	By:	/s/ Michael Johnston
		Michael Johnston
		Interim Chief Financial Officer

16

EX-31.1

EXHIBIT 31.1

Certification of Principal Executive and Financial Officer

I, Steven Rossi, certify that:

1.	I have reviewed this Form 10-Q of Franchise Holdings International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and;
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 31, 2019
By:	/s/ Steven Rossi
	Steven Rossi
	Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Certification of Principal Executive and Financial Officer

I, Michael Johnston, certify that:

1.	I have reviewed this Form 10-Q of Franchise Holdings International, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and;
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 31, 2019
By:	/s/ Michael Johnston
	Michael Johnston
	Interim Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, 

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of Franchise Holdings International, Inc.’s (the “Company”) Quarterly Report on Form 10-Q for the period ending March 31, 2019 (the “Report”), I, Steven Rossi , the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Steven Rossi
	Steven Rossi
	Chief Executive Officer
Date: May 31, 2019

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of Franchise Holdings International, Inc.’s (the “Company”) Quarterly Report on Form 10-Q for the period ending March 31, 2019 (the “Report”), I, Michael Johnston, the Interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

By:	/s/ Michael Johnston
	Michael Johnston
	Chief Financial Officer
Date: May 31, 2019

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 31, 2019
Document And Entity Information
Entity Registrant Name	Franchise Holdings International, Inc.
Entity Central Index Key	0001096275
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		28,177,965
Trading Symbol	FNHI
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current Assets
Cash and cash equivalents	$ 21,900	$ 25,323
Accounts receivable	355,068	61,882
Inventory	164,693	289,516
Prepaid expenses and deposits	5,426	124,114
Total Current Assets	547,087	500,835
Property and Equipment, net	43,493	43,860
Intangible Assets, net	12,567	12,673
Total Assets	603,147	557,368
Current Liabilities
Accounts payable and accrued liabilities	555,891	401,766
Payroll taxes payable	65,376	82,365
Related party loan	5,323	9,372
Current portion of notes payable	287,425	287,425
Total Current Liabilities	914,015	780,928
Commitments and Contingencies
Shareholders' Deficit
Series A Preferred Stock, $0.0001 par value, 1,000,000 shares authorized, 1,000,000 shares issued and outstanding, respectively,	10,000	10,000
Common stock, $0.0001 par value, 49,833,333 shares authorized, 26,634,052 and 24,634,054 shares issued and outstanding, respectively	2,563	2,463
Additional paid-in capital	8,256,733	8,103,934
Share subscriptions receivable	(1,577)	(1,577)
Share subscriptions payable	1,896,633	2,019,532
Accumulated deficit	(10,480,772)	(10,354,299)
Cumulative translation adjustment	5,552	(3,613)
Total Shareholders' Deficit	(310,868)	(223,560)
Total Liabilities and Shareholders' Deficit	$ 603,147	$ 557,368

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
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	1,000,000	1,000,000
Series A Preferred Stock, shares outstanding	1,000,000	1,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	49,833,333	49,833,333
Common stock, shares issued	26,634,052	24,634,054
Common stock, shares outstanding	26,634,052	24,634,054

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net Sales	$ 572,278	$ 150,878
Cost of Goods Sold	432,948	139,937
Gross Profit	139,330	10,941
Operating Expenses
General and administrative	40,571	66,818
Sales and marketing	27,368	1,582
Professional fees	172,502	121,526
(Gain) loss on foreign exchange	(13,798)	30
Total operating expenses	226,644	189,956
Loss from operations	(87,314)	(179,015)
Other Income (Expense)
Interest expense	(39,160)	(7,290)
Finance charges		(9,198)
Loss on settlement of debt		(495,943)
Total other income (expense)	(39,160)	(512,431)
Net Loss	(126,473)	(691,446)
Other Comprehensive Income (Loss)
Foreign currency translation adjustment	9,165	(7,643)
Comprehensive Loss	$ (117,308)	$ (699,089)
Loss per Share
Basic	$ (0.005)	$ (0.01)
Diluted	$ (0.005)	$ (0.01)
Weighted Average Number of Shares (basic and diluted)	25,000,716	20,387,873

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating Activities
Net Loss	$ (126,473)	$ (691,446)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation and amortization	473	1,903
Loss on settlement of debt		495,943
Total items not involving cash flow from operating activities	(126,000)	(193,600)
Changes in operating assets and liabilities	87,462	196,200
Net cash provided by (used in) operating activities	(38,539)	2,600
Financing Activities
Issuance of common stock for cash	30,000
Proceeds from notes payable	11,058
Shareholder assumption of debt	(11,058)
Repayment of shareholder loans	(4,049)
Net cash provided by financing activities	25,951
Effects of exchange rate changes on cash	9,165	(7,643)
Changes in cash	(3,423)	(5,043)
Cash and cash equivalents - beginning of year	25,323	66,961
Cash and cash equivalents - end of year	21,900	61,918
Supplemental disclosure of cash flow information:
Interest paid	39,160	39,572
Supplemental disclosure of non-cash flow investing and financing activities:
Shares issued for share subscription payable	152,799	611,548
Reverse stock split	$ 101	$ 12,312

XML

Consolidated Statement of Shareholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Share Subscriptions Receivable [Member]	Share Subscription Payable [Member]	Accumulated Deficit [Member]	Cumulative Translation Adjustment [Member]	Total
Balance at Dec. 31, 2017	$ 10,000	$ 2,039	$ 7,474,811	$ (10,755)	$ 1,531,080	$ (8,591,261)	$ (44,383)	$ 371,530
Balance, shares at Dec. 31, 2017	1,000,000	20,387,873
Issuance for services					150,000
Issuance for services, shares
Issuance for settlement of payables					650,000			650,000
Issuance for settlement of payables, shares
Net loss						(691,446)		(691,446)
Foreign currency translation adjustment							(7,643)	(7,643)
Balance at Mar. 31, 2018	$ 10,000	$ 2,039	7,474,811	(10,755)	2,331,080	(9,282,707)	(52,026)	322,441
Balance, shares at Mar. 31, 2018	1,000,000	20,387,873
Balance at Dec. 31, 2018	$ 10,000	$ 2,463	8,103,934	(1,577)	2,019,532	(10,354,299)	(3,613)	(223,560)
Balance, shares at Dec. 31, 2018	1,000,000	24,634,051
Issuance for services		$ 100	152,799		(152,899)
Issuance for services, shares		1,000,000
Issuance for settlement of payables					30,000			30,000
Issuance for settlement of payables, shares
Net loss						(126,473)		(126,473)
Foreign currency translation adjustment							9,165	9,165
Balance at Mar. 31, 2019	$ 10,000	$ 2,563	$ 8,256,733	$ (1,577)	$ 1,896,633	$ (10,480,772)	$ 5,552	$ (310,868)
Balance, shares at Mar. 31, 2019	1,000,000	25,634,052

XML

Basis of Presentation and Going Concern

3 Months Ended

Mar. 31, 2019

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 period ended March 31, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. 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, 2018 filed with the SEC on May 13, 2019.

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, 2019 were converted into United States Dollars at a rate of 1.34 Canadian Dollars to one United States Dollar. Balances denominated in Canadian Dollars outstanding at December 31, 2018 were converted into United States Dollars at a rate of 1.36 Canadian Dollars to one United States Dollar. Transactions denominated in Canadian Dollars for the period ended March 31, 2019 and December 31, 2018 were converted into United States Dollars at an average rate of 1.33 and 1.30 Canadian Dollars to one United States Dollar, respectfully.

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, 2019, the Company incurred a net loss of $126,473 and as of that date, the Company’s accumulated deficit was $10,480,772. 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.

XML

Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

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, 2018.

The Company also implemented the following accounting standard effective January 1, 2018.

In January 2019, ASC 842 was implemented related to the valuation of leases. Under this guidance, leases should be capitalized that contain terms over one year and values over the capitalization policies. This standard became effective for the Company’s fiscal year beginning January 1, 2019. The adoption of ASC 842 on January 1, 2019 did not have any impact on the way leases were recognized as there are no capital leases during the three months ended March 31, 2019.

XML

Inventory

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Inventory

3. Inventory

Inventory consists of the following at March 31, 2019 and December 31, 2018:

	2019		2018
Finished goods	$	156,921	$	282,239
Promotional items		1,060		700
Raw materials		6,712		6,577
	$	164,693	$	289,516
Prepaid inventory	$	-	$	-

XML

Secured Notes Payable

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Secured Notes Payable

4. Secured Notes Payable

Secured notes payable consists of the following at March 31, 2019 and December 31, 2018:

	2019			2018
Balance owing	$	287,425		$	287,425
Less amounts due within one year		(287,425	)		(287,425	)
Long-term portion	$	-		$	-

XML

Shareholders' Deficit

3 Months Ended

Mar. 31, 2019

Equity [Abstract]

Shareholders' Deficit

5. Shareholders’ Deficit

During the three-month period ended March 31, 2019, the Company issued 1,000,000 common shares pursuant to a subscription payable to Consultant with a value of $152,899. During the same period, the Company entered into a share subscription agreement with a consultant of the Company for 1,500,000 common shares valued at $30,000.

During the three-month period, Steven Rossi was issued 13,583,397 shares of Franchise Holdings International, Inc common stock as approved by the board of directors, due to a conversion of all 1,000,000 shares of his Series A Preferred stock.

In 2018 and 2019, the Company was authorized to issue 49,833,333 shares of its common stock with a par value of $0.0001. All shares were ranked equally with regards to the Company’s residual assets. During 2018 and 2019, the Company was authorized to issue 1,000,000 shares of its Series A Preferred Stock with a par value of $0.0001. These shares have voting rights equal to 299 shares of common stock, per share of preferred.

XML

Earnings Per Share

3 Months Ended

Mar. 31, 2019

Loss per Share

Earnings Per Share

6. Earnings per Share

For the three months ended March 31, 2019, Earnings per Share (EPS) is 0.005 (basic and diluted) compared to the EPS for the three months ended March 31, 2018 of 0.01 (basic and diluted). There are 49,833,333 shares authorized, 26,634,052 and 24,634,054 shares issued and outstanding, respectively.

XML

Reverse Stock Split

3 Months Ended

Mar. 31, 2019

Stockholders' Equity Note [Abstract]

Reverse Stock Split

7. Reverse Stock Split

A 1 for 6 reverse stock split of common shares was deemed declared effective, by FINRA, on March 29th, 2019 occurred. On march 8th, 2019; The Board of Directors authorized the submission of a Certificate of Change/Amendment to the Nevada Secretary of State in which the Company sought to affect a reverse split of its common stock at the rate of 1 for 6 for the purpose of increasing the per share price for the Company’s stock in an effort to meet the minimum listing requirements of the Canadian Stock Exchange (“CSE”). The Certificate of Change was submitted to the Nevada Secretary of State on March 20, 2019 and the FINRA corporate action was filed on March 21, 2019. FINRA declared the 1 for 6 reverse stock split effective on March 29, 2019.

XML

Concentration of Customer Risk

3 Months Ended

Mar. 31, 2019

Risks and Uncertainties [Abstract]

Concentration of Customer Risk

8. 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, 2019 and 2018, as well as the balance included in revenue and accounts receivable for each significant customer as at March 31, 2019 and 2018. A customer is considered to be significant if they account for greater than 10% of the Company’s annual sales.

	2019				2018
	$		%		$		%
Customer A		482,247		79.2		45,297		66.5
Customer B		77,503		12.7		2,786		25.0

The loss of any of these key customers could have an adverse effect on the Company’s business.

XML

Evaluation of Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Evaluation of Subsequent Events

9. Evaluation of Subsequent Events

The Company has evaluated subsequent events through May 31, 2019 which is the date the financial statements were available to be issued and the following events after March 31, 2019 occurred:

● On April 3, 2019, Steven Rossi was issued 13,583,397 shares of Franchise Holdings International, Inc. common stock as approved by the board of directors, due to a conversion of all 1,000,000 shares of his Series A Preferred stock.

● On April 2, 2019, Mr. Craig Loverock was appointed to our Board of Directors and as Chairman of our Audit Committee. Per the language in the Written Consent of Board of Directors dated April 2, 2019, Mr. Loverock shall be paid $1,000 CDN for each month of service as Director, and such payment shall be made quarterly. Mr. Loverock shall be eligible to participate in all employee compensations plans that are available to other Officers and Directors of the Corporation from time to time.

● On May 9, 2019, Franchise Holdings International, Inc. issued 1,680,084 common stock as approved by the board of directors to a consultant for services rendered.

XML

Inventory (Tables)

3 Months Ended

Mar. 31, 2019

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consists of the following at March 31, 2019 and December 31, 2018:

	2019		2018
Finished goods	$	156,921	$	282,239
Promotional items		1,060		700
Raw materials		6,712		6,577
	$	164,693	$	289,516
Prepaid inventory	$	-	$	-

XML

Secured Notes Payable (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Secured Notes Payable

Secured notes payable consists of the following at March 31, 2019 and December 31, 2018:

	2019			2018
Balance owing	$	287,425		$	287,425
Less amounts due within one year		(287,425	)		(287,425	)
Long-term portion	$	-		$	-

XML

Concentration of Customer Risk (Tables)

3 Months Ended

Mar. 31, 2019

Risks and Uncertainties [Abstract]

Schedule of Significant Customer Risk Percentage

	2019				2018
	$		%		$		%
Customer A		482,247		79.2		45,297		66.5
Customer B		77,503		12.7		2,786		25.0

XML

Basis of Presentation and Going Concern (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Accounting Policies [Abstract]
Net loss	$ (126,473)	$ (691,446)
Accumulated deficit	$ (10,480,772)		$ (10,354,299)

XML

Inventory - Schedule of Inventory (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Inventory Disclosure [Abstract]
Finished goods	$ 156,921	$ 282,239
Promotional items	1,060	700
Raw materials	6,712	6,577
Inventory	164,693	289,516
Prepaid inventory

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Secured Notes Payable - Schedule of Secured Notes Payable (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Balance owing	$ 287,425	$ 287,425
Less amounts due within one year	(287,425)	(287,425)
Long-term portion

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Shareholders' Deficit (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Common stock, shares authorized	49,833,333	49,833,333
Common stock, par value	$ 0.0001	$ 0.0001
Preferred stock voting rights	These shares have voting rights equal to 299 shares of common stock, per share of preferred.
Series A Preferred Stock [Member]
Common shares converted into preferred stock	1,000,000
Common stock, shares authorized	1,000,000	1,000,000
Common stock, par value	$ 0.0001	$ 0.0001
Consultant Agreement [Member]
Number of common stock shares issued	1,000,000
Number of common stock shares issued, value	$ 152,899
Consultant Agreement [Member] | Share Subscription Agreement [Member]
Number of common stock shares issued	1,500,000
Number of common stock shares issued, value	$ 30,000
Steven Rossi [Member]
Number of common stock shares issued	13,583,397

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Earnings Per Share (Details Narrative) - $ / shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Loss per Share
Earnings per share, basic and diluted	$ 0.005	$ 0.01
Common stock, shares authorized	49,833,333		49,833,333
Common stock, shares issued	26,634,052		24,634,054
Common stock, shares outstanding	26,634,052		24,634,054

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Reverse Stock Split (Details Narrative)	Mar. 29, 2019
FINRA [Member]
Reverse stock split of common shares	1 for 6 reverse stock split of common shares was deemed declared

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Concentration of Customer Risk - Schedule of Significant Customer Risk Percentage (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Concentration of revenues	$ 432,948	$ 139,937
Customer A [Member]
Concentration of revenues	$ 482,247	$ 45,297
Concentration of risk, percentage	79.20%	66.50%
Customer B [Member]
Concentration of revenues	$ 77,503	$ 2,786
Concentration of risk, percentage	12.70%	25.00%

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Evaluation of Subsequent Events (Details Narrative) - CAD ($)				3 Months Ended
	May 09, 2019	Apr. 03, 2019	Apr. 02, 2019	Mar. 31, 2019
Series A Preferred Stock [Member]
Common shares converted into preferred stock				1,000,000
Steven Rossi [Member]
Number of shares issued				13,583,397
Consultant Agreement [Member]
Number of shares issued				1,000,000
Subsequent Event [Member] | Series A Preferred Stock [Member]
Common shares converted into preferred stock		1,000,000
Subsequent Event [Member] | Steven Rossi [Member]
Number of shares issued		13,583,397
Subsequent Event [Member] | Mr. Craig Loverock [Member]
Quarterly cash payment to director for services rendering			$ 1,000
Subsequent Event [Member] | Consultant Agreement [Member]
Common shares, issued for services	1,680,084