Nature of Organization
Franchise Holdings International, Inc. (referenced as we,
us, our in the accompanying notes) was incorporated in the State of Nevada on April 2, 2003. FSGI Corporation
was incorporated in the State of Florida on May 15, 1997, and in a reorganization on December 21, 1998 with another corporation
named The Martial Arts Network On-Line, Inc. (originally incorporated in Florida on May 23, 1996) changed its name to TMAN Global.Com,
Inc. Franchise Holdings International, Inc. and TMAN Global.Com, Inc. consummated a merger on April 30, 2003 whereby Franchise
Holdings International, Inc. exchanged 1 common share for all the 90,861 outstanding common shares of TMAN Global.Com, Inc. The
purpose of the transaction was a change of domicile. Pursuant to the merger terms, Franchise Holdings International, Inc. was the
surviving corporation and TMAN Global.Com, Inc. ceased to exist. The accompanying financial statements include the activities of
Franchise Holdings International, Inc. and its predecessor corporations. Currently we are engaged in evaluating franchise
opportunities, and are considered to be in the development stage.
The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business. As shown in the accompanying financial statements, the Company has a limited operating history and has suffered
operating losses since Inception (March 12, 2001). These factors, among others, may indicate that the Company may be
unable to continue as a going concern.
In recent years, we have relied upon our president and certain
shareholders to contribute capital to maintain our limited operations (see Notes 2 and 3). There is no assurance that these loans
will continue, or that we will be successful in raising the capital required to continue our operations.
The financial statements do not include any adjustments relating
to the recoverability and classification of assets and/or liabilities that might be necessary should we be unable to continue as
a going concern. Our continuation as a going concern is dependent upon our ability to meet our obligations on a timely
basis, and, ultimately to attaining profitability.
Development Stage Company
We are in the development stage in accordance with the Accounting
and Reporting by Development Stage Enterprises Topic of the Financial Accounting Standards Boards Accounting Standards Codification
(FASB ASC) 915.
Use of Estimates
The preparation of financial statements in accordance with
generally accepted accounting principles permits management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets and liabilities at the date of financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
We consider all highly liquid securities with original maturities
of three months or less when acquired, to be cash equivalents. We had no financial instruments that qualified as cash
equivalents at September 30, 2012 and 2011.
Fair Value of Financial Instruments
The carrying amounts of cash and current liabilities approximate
fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties
and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could
significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we
utilize derivative instruments.
The FASB ASC clarifies that fair value is an exit price, representing
the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.
It also requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which
these assets and liabilities must be grouped, based on significant levels of inputs as follows:
||Quoted prices in active markets for identical assets or liabilities.|
||Quoted prices in active markets for similar assets and liabilities and inputs that are observable for the asset or liability.|
||Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.|
The determination of where assets and liabilities fall within
this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Earnings (Loss) per Common Share
We report earnings (loss) per share using a dual presentation
of basic and diluted earnings (loss) per share. Basic earnings (loss) per share excludes the impact of common stock
equivalents. Diluted earnings (loss) per share utilizes the average market price per share when applying the treasury
stock method in determining common stock equivalents. At September 30, 2012 and 2011, there were no variances between
the basic and diluted loss per share as there were no potentially dilutive securities outstanding.
We account for income taxes as required by the Income Tax
Topic of the FASB ASC, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences
of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected to reverse.
We have analyzed filing positions in all of the federal and
state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions.
The Company has identified its federal tax return and its state tax return in Colorado as major tax jurisdictions,
as defined. We are not currently under examination by the Internal Revenue Service or any other jurisdiction.
The Company believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any
adjustments that will result in a material adverse effect on the Companys financial condition, results of operations, or
cash flow. Therefore, no reserves for uncertain income tax positions have been recorded.
Stock-based compensation is accounted for under ASC 718 "Share-Based
Payment", using the modified prospective method. ASC 718 requires the recognition of the cost of employee services received
in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of
the award. ASC 718 also requires the stock option compensation expense to be recognized over the period during which an employee
is required to provide service in exchange for the award (generally the vesting period).
The Company operates on a September 30 year-end.