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FFLO Free Flow

Filed: 17 May 21, 5:06pm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

 

 

TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM July 1, 2020 to September 30, 2020

 

Commission file number 000-54868

Picture 

Free Flow Inc.
(Exact name of registrant as specified in its charter)

 

Delaware (DE)

 

45-3838831

(State or other jurisdiction

 

(IRS Employer

of incorporation)

Identification No.)

 

6269 Caledon Road; King George, VA 22485

(Address of Principal Executive Offices)

 

(703) 789-3344

(Registrant’s Telephone Number)

----------------------------------------------------

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. Yes [X ] NO [   ]


 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X ] NO [   ]

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 the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

Non-accelerated filer

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected transaction 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]

Applicable Only to Issuer Involved in Bankruptcy Proceeding During the receding Five Years.

N/A.

Applicable Only to Corporate Registrants

Securitas registered to Pursuant to Section 12(b) of the Act.

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

N/A

 

FFLO

 

OTC QB

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:  26,221,000 shares as of May 12, 2021


 

 

 

Table of Contents

 

PART I

 

 

 

 

 

Item 1.

Condensed Financial Statements

1

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

9

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

11

 

 

 

Item 4.

Controls and Procedures

11

 

 

 

PART II 

 

 

 

 

Item 1.

Legal Proceedings

12

 

 

 

Item 1A.

Risk Factors

12

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

12

 

 

 

Item 3.

Defaults Upon Senior Securities

12

 

 

 

Item 4.

Mining Safety Disclosures

12

 

 

 

Item 5.

Other Information

12

 

 

 

Item 6.

Exhibits

13

 

 

 

 

Signatures

13


 

ITEM 1.  FINANCIAL STATEMENTS

FREE FLOW, INC.

Balance Sheet

 

 

As of

 

As of

 

As of

 

 

March 31,

 

March 31,

 

December 31,

2021

 

2020

 

2020

 

(Unaudited)

 

(Unaudited)

 

(Audited)

Current Assets

 

 

 

 

 

 

Cash in hand and bank

$           60,324

 

$10,141

 

$83,516

 

Trade Receivables - current

141,506

 

77,563

 

202,669

 

Other Receivables

34,149

 

8,850

 

0

 

Rounding off decimal error

 

 

 

 

(2)

 

Advance for Inventory Purchases

40,929

 

28,000

 

0

 

Deposit for Sales' leads

20,000

 

20,000

 

0

 

Inventory

          1,839,095

 

840,156

 

1,778,824

TOTAL CURRENT ASSETS

2,136,003

 

984,711

 

2,065,008

 

 

 

 

 

 

 

Fixed Assets

 

 

 

 

 

 

Land and Building

          1,712,413

 

776,704

 

1,712,413

 

Less: Accumulated depreciation

         (144,813)

 

(90,230)

 

(144,813)

 

Writendown value

 

 

 

 

 

TOTAL FIXED ASSETS

1,567,600

 

686,474

 

1,567,600

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

Delivery Trucks, at cost

3,500

 

3,500

 

3,500

 

Less: Accumulated depreciation

(3,298)

 

(2,895)

 

(3,298)

 

Writtendown value

 

 

 

 

 

 

Improvements in progress

9,341

 

 

 

9,441

 

Furniture

-   

 

100

 

0

 

Equipment

36,356

 

35,000

 

35,000

 

Accumulated depreciation

(15,064)

 

(11,032)

 

(15,064)

 

Writtendown value

 

 

 

 

 

TOTAL OTHER ASSETS

30,834

 

24,673

 

29,578

 

 

 

 

 

 

TOTAL  ASSETS

$    3,734,437

 

$1,695,858

 

$3,662,186

 

 

 

 

 

 

LIABILITES & STOCKHOLDERS' EQUITY (DIFICIT)

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

Accounts Payable

10,967

 

11,677

 

9,829

 

PayPal

-   

 

60,206

 

 

 

Notes payable

937,666

 

 

 

940,000

 

Notes payable - related parties

10,118

 

10,343

 

1,689

TOTAL CURRENT LIABILITIES

958,751

 

82,226

 

951,518

 

 

 

 

 

 

Long Term Liabilities

 

 

 

 

 

 

Loan - secured

1,092,158

 

885,520

 

1,047,231

 

PayPal Advance

60,269

 

 

 

62,943

 

Line of Credit

349,500

 

328,012

 

349,500

 

 

 

 

TOTAL LONG TERM  LIABILLITIES

1,501,927

 

1,213,532

 

1,459,675

 

 

 

 

 

Total Liabilities

2,460,678

 

1,295,758

 

2,411,193

 

 

 

 

 

Redeemable Preferred Stock

 

 

 

 

 

 

Series B; 500,000 shares authorized, 330,000 ad 0 issued and outstanding as of March 31, 2020 (Classified as Mezzanine equity)

330,000

 

330,000

 

330,000

 

Series C; 500,000 shares authorized, 470,935 and 0 issued and outstanding as of March 31, 2020 (Classified as Mezzanine equity) As equity in Accurate

470,935

 

470,935

 

470,935

Stockholders' (Deficit)

 

 

 

 

 

 

Preferred stock ($0.0001) par value, 20,000,000 shares authorized 10,000 shares part value $0.0001 Class A issued on March 31, 2020 and December 31, 2016

1

 

1

 

1

Additional Paid in capital

 

 

 

 

 

 

Common Stock, ($0.0001 par value 100,000,000 shares authorized 26,200,000 shares issued and outstanding as of March 31, 2020 and December 31, 2016

                   2,622

 

2,622

 

2,620

 

 

 

 

 

 

 

Additional paid-in capital

131,033

 

131,033

 

131,033

Subscription received - pending acceptance

500

 

 

 

25,500

Current Period - Profit

48,708

 

25,214

 

850,610

(Accumulated Deficit)  Surplus Reserve

289,960

 

(559,705)

 

(559,705)

 

 

 

 

 

 

 

TOTAL  STOCKHOLDERS' EQUITY (DIFICIT)

472,824

 

(400,835)

 

(57,688)

 

 

 

 

 

 

 

 

TOTAL LIABILITIES & STOCKHOLDERS' (DEFICIT)

$3,734,437

 

$1,695,858

 

$3,662,186

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements


 

Free Flow, Inc.

Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3 months  

 

3 months  

 

Year Ended

 

 

 

Ended

 

Ended

 

December 31,

 

 

 

March 31,

 

March 31,

 

2020

 

2021

 

2020

 

(Audited)

 

 

 

(Un-audited)

 

(Un-audited)

 

 

 

 

 

 

 

 

 

 

REVENUES

 

 

 

 

 

 

 

Sales

 

$216,440

 

$116,379

 

$411,694

 

 

 

 

 

 

 

 

TOTAL REVENUES

 

             216,440

 

               116,379

 

$411,694

COST OF GOODS SOLD

 

                73,540

 

                 33,622

 

               173,177

 

 

 

 

 

 

 

 

GROSS PROFIT

 

             142,900

 

                 82,757

 

               238,517

 

 

 

 

 

 

 

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

 

 

 

 

 

 

General & Administrative Expenses

 

                95,092

 

               121,112

 

               393,254

 

Depreciation Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Profit (Loss)

 

                47,808

 

               (38,355)

 

            (154,737)

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSES)

 

                      901

 

                 63,569

 

           1,005,347

 

 

 

 

 

                            -

 

 

 

 

 

 

 

 

 

 

Net Profit (Loss)

 

                48,708

 

                 25,214

 

       ��       850,610

 

 

 

 

 

 

 

BASIS INCOME (LOSS)  PER SHARE

 

                  0.002

 

                   (0.01)

 

                      0.03

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

 

   26,221,000.00


 

FREE FLOW, INC. & SUBSIDIARY ACCURATE AUTO PARTS, INC.

Statements of Cash Flow

 

 

 

 

Period  

 

Period  

 

 

 

 

 

Ending

 

Ending

 

 

 

 

 

March 31,

 

March 31,

 

 

2021

 

2020

 

CASH FLOW FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

Net Profit (Loss)

 

$         48,708

 

$          25,214

 

Depreciation allowance

 

 

 

 

 

 

(Increase) in Other Assets

 

(1,256)

 

 

 

 

Increase in Trades Payable

 

(30,723)

 

29,520

 

 

(Increase) Advance for Inventory Purchases

 

 

 

(30,779)

 

 

(Increase) Trade Receivables

 

3,097

 

(20,000)

 

 

(Increase) Decrease in Inventory

 

(60,271)

 

(63,568)

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

$       (40,445)

 

$       (59,614)

 

 

 

 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from notes payable - related parties

 

 

 

 

 

 

Proceeds from Line of Credit

 

 

 

17,000

 

 

Proceeds from Pay Pal Advance

 

(2,674)

 

49,349

 

 

Proceeds from Loan from River Valley Bank

 

44,927

 

(3,820)

 

 

Proceeds from Subscription Money

 

(25,000)

 

 

 

 

Rounding off the decimals - error

 

(1)

 

 

 

 

(Increase) in Fixed Assets - Land, Building

 

 

 

 

 

 

Proceeds from Accounts Payable - trade (Decrease in Accounts Payable)

 

 

 

 

 

 

 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 

$         17,252

 

$          62,529

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

(23,193)

 

2,915

 

 

 

 

 

 

 

 

 

CASH AT BEGINNING PERIOD

 

83,516

 

7,226

 

 

 

 

 

 

 

 

 

CASH AT END PERIOD

 

$        60,324

 

$         10,141

 

 


FREE FLOW, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of  Changes in Shareholders' (Deficit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADDITIONAL

 

 

 

 

 

COMMON STOCK

 

 

 

PREFERRED STOCK

 

 

 

PAID-IN

 

ACCUMULATED

 

TOTAL

SHARES

 

AMOUNT

 

SHARES

 

AMOUNT

 

CAPITAL

 

(DEFICIT)

 

 

 

 

 

 

Series -A

 

 

 

 

 

SURPLUS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2021

26,221,000

 

$    2,622

 

10,000

 

1

 

$      145,481

 

$            353,914

 

$(57,688)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional subscription

 

 

              -   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit  for the three months ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

$              48,708

 

$   48,708

 

BALANCE, MARCH 31, 2021

26,221,000

 

$    2,622

 

10,000

 

1

 

$      145,481

 

$            402,622

 

$ 472,824

 


 

Free Flow, Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2021

(Unaudited)

 

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2021 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31. 2021 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on April 8, 2021.

 

NOTE 2 GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has established itself as a stable ongoing business entity with established revenues sufficient to cover its operating costs and allow it to continue as a going concern. However, the ability of the Company to continue as a going concern is also dependent on the Company obtaining adequate Sales so that the Company can liquidate its inventories and continue as a going business.

In order to continue as a going concern, the Company will need, among other things, Sales of its product lines. Management has obtained such sales through Internet sales and marketing companies who specialize in promotion of such businesses. Management has obtained capital from commercial lines of credits and significant shareholders sufficient to meet its minimal operating expense and is continuing to expand its cash flow from sales and is able to augment the operating capital needs. However, management cannot provide an assurance that the Company will be successful in accomplishing any of its plans as, in most of the businesses, market circumstances could change. The impact of COVID19 has been quite significant due to less automobiles being on the road thereby reducing the rate of wear and tear which otherwise necessitates replacement of automobile parts.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually reaching is targeted sales level. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


 

NOTE 3 – INCORPORATION OF SUBSIDIARY

In February 2015, the company incorporated a subsidiary, Promedaff, Inc. and purchased a skin care product line and formulations for $2,000,000 against a promissory note. An e commerce platform was set up for sales and marketing. The efforts did not bear any success and the entire inventory was sold through the Seller and the Promissory Note was cancelled and marked “VOID”. The name of this entity has been changed to Motors & Metals, Inc. In August 2018 Motors & Metals, Inc. received firm expression of interest from an overseas buyer willing to place long term purchase orders to buy 3,000 to 5,000 MT of Processed Scrap Metal. For over eight (8) months, the management scouted around to find a seller but learnt that no scrap metal processor was willing to entertain the business due to their loyalty agreements they have with their Buyer(s). Ultimately, the management decided to set up its own Scrap Metal Processing facility at the company owned 20 acre facility in King George, Virginia

After getting the Zoning re-validated, the application was approved by the State of Virginia in early 2020. Thus Motors & Metals, Inc. has a valid license to operate as a Recycling Facility – Scrap Metal Processor. Concurrently, the management began preparation of feasibility study and conclude to purchase the machinery and equipment from the Chinese manufacturer who has a presence in the USA. A Sales Order/Proforma Invoice has been received but do to an embargo by the Chinese Government not to finance any such trade for USA, the proposal is moving slow which alternate financing arrangements are still being sought.

The Management is also in discussion with a USA manufacturer to facilitate financing even though the prices are higher than the Chinese.

The cost of the project is estimated at $7,000,000 with an EBITDA of 20% p.a.

As reported in 10Qs for the earlier quarters, as well as in 10-K for the Annual reports, on February 4, 2016 the company incorporated another subsidiary in the State of Virginia under the name of JK Sales, Corp. (on December 7, 2017 the name was changed to Accurate Auto Parts, Inc.,) and has since remained in the business of buying end of life and salvage vehicles and selling auto parts.

On April 17, 2018 the company incorporated in Virginia, another subsidiary named Accurate Investments, Inc. the objectives of acquiring real estate property, which plan did not materialize. However, Accurate Investments, Inc. continues to pursue other investment opportunities that could add revenues to the Company.

On January 4, 2017 the company incorporated in Virginia another subsidiary named City Autos, Corp. with the objectives of operating an auto dealership but the entity remained inactive due to lack of qualified personnel. The company has entered in to an arrangement with a qualified person and has made an application to the DMV, State of Virginia for a dealer’s license. Bond was obtained and submitted to the DMV.

On December 22, 2020 the company through another subsidiary named FFLO – Inside Auto Parts, Inc. acquired the assets and business of an auto recycling entity located on a 16 acre facility in Mineral, Virginia.

 

NOTE 4 – RELATED PARTY

As of December 31, 2019, the Company had a note payable in the amount of $10,343 to Redfield Holdings, Ltd. a related party. During the nine months ended the Company reduced the borrowing by $225 thus owing a total sum of $10,118 as of September 30, 2020. The note is unsecured and does not bear any interest and has a maturity date of December 30, 2020.


Redfield Holdings Ltd. is 100% owned by the CEO, Mr. Sabir Saleem. St. Gabriel Foundation has also been incorporated by Mr. Sabir Saleem as a not-for-profit entity which has not yet constituted its functional board of directors/trustees. It is expected that St. Gabriel Foundation will soon define its mission and may become an arm to mobilize end of life automobiles to sell them to Accurate Auto Parts, Inc. and use the proceeds for charitable purposes.

 

NOTE 5 – CAPITAL STOCK

The Company has authorized 100,000,000 shares of common shares with a par value of $0.0001 per shares and 20,000,000 shares of preferred stock, with a par value of $0.0001 per shares.

On August 5, 2020 the company filed the following Amendment to the Capital Stock:

The amount of the total Common Stock of the corporation is Hundred Million (100,000,000) shares of Common Stock, par value ($.0001) per shares.

The total amount of Preferred Stock of the corporation is Twenty Million (20,000,000) shares, par value ($.0001) per share. The preferences being that there will be various series of Preferred Share, such preferences are more specifically defined as under along with the number of shares allocated to each series:

Series “A”: Number of shares allocated are Ten Thousand (10,000) – par value $.0001 per share; one share of this class of Preferred Stock Series “A” will carry voting rights equal to Ten Thousand (10,000) shares of Common Shares; thus the voting rights attributed to all of these 10,000 shares would be equal to One Hundred Million common shares.

Series “B”: Number of shares allocated are Five Hundred Thousand (500,000) – par value $.0001 per share; one share of this class of Preferred Stock Series “B” will carry voting rights equal to one share of Common Shares; and are redeemable with 365 days’ notice.

Series “C”: Number of shares allocated are Five Hundred Thousand (500,000) – par value $.0001 per share; one share of this class of Preferred Stock Series “C” will carry voting rights equal to one share of Common Shares and could be used to assign corresponding capital in to any subsidiary of Free Flow, Inc. with a view to extend comfort to any lender. Such shares are redeemable upon such lender authorizing the redemption of capital in the respective subsidiary company.

Series “D”:  Number of shares allocated are Fifteen Million  (15,000,000) – par value $.0001 per share; one share of this class of Preferred Stock Series “D” will carry voting rights equal to one share of Common Shares This series of shares could be issued against subscription of any amount as the board of directors and/or majority of the shareholders approve. Series “D” shares could be converted in to common shares as approved by the majority shareholders.

Series “E”: Number of shares allocated are Three Million Nine Hundred Ninety Thousand (3,990,000) – par value $.0001 per share; one share of this class of Preferred Stock Series “E” will carry voting rights equal to one share of Common Shares This series of shares could be issued against subscription in cash or kind including but not limited to subscription directly into capital account of any subsidiary for any amount as the board of directors and/or majority of the shareholders approve. Series “E” shareholders could be entitled to a specifically defined profit sharing in a specific project or transaction(s). Series E shares could be redeemable and/or converted in to common shares as agreed between the subscriber(s) and approved by the majority shareholders and/or by the Board of Directors of the Company.

The amendment effected herein was authorized by the affirmative vote of the holders of a majority of the outstanding shares entitled to vote thereon at a meeting of the shareholders pursuant to Section 242 of the General Corporation Law of the State of Delaware


Pursuant to the resolution of the shareholders meeting held on March 30, 2015 the Company designated 500,000 shares of the preferred authorized shares as preferred shares – Series “B” shares. The preferred shares – Series “B” were assigned the following preferences:

a)Each share to carry one vote. 

b)Each share will be redeemable with a 365 days written notice to the company. 

c)Each share will be junior to any debt incurred by the Company.  

d)The redemption value will be the par value at which such “preferred shares – series B” are bought by the subscriber. 

e)Each share will carry a dividend right at par with the common shares. 

On December 31, 2014 the Company had a Note outstanding in the principal amount of $330,000 plus interest payable to GS Pharmaceuticals, Inc. By mutual consent this note and accrued interest was converted to 330,000 preferred shares – Series “B”.

On March 31, 2015 an amount of $58,000 was subscribed by Redfield Holdings, Ltd. by cancellation of a Note against the issuance of 9,700 shares of preferred shares – Series “A”. These shares were issued to Redfield Holding, Ltd. thus making a total of entire designated preferred shares – Series “A” shares to Redfield Holdings, Ltd. Each share of preferred shares – Series “A” carries voting right equal to 10,000 common shares.

On September 30, 2017 total preferred shares issued and outstanding are 10,000 Series “A” and 330,000 Series “B”.

On April 2, 2019, in a private transaction the Company accepted a sum of $14,490.00 against issuance of 21,000 restricted Common shares of the Company. Thus the total common shares issued and outstanding as on September 30, 2019 stood at 26,221,000

On August 17, 2020 the Company completed its Private Placement Memorandum to raise $19.5 million with no minimum, against issuance of 15,000,000 Series “D” shares at a price of $1.30 per share. The memorandum can be accessed on Company’s website, i.e., www.FreeFlowPLC.com

 

NOTE 6 – SUBSEQUENT EVENTS

None that is reportable.

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ALALYIS OR PLAN OF OPERATION

 

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING CERTAIN FORWARD LOOKING STATEMENTS IN THE FLOWING DISCUSSION AND ELSEWHERE IN THE THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR AN BEHALF, WHETHER OR NOT IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, FORWARD-LOOKING STATEMENTS ARE STATEMENT NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS. FORWARD-LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE UNCERTAINTIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE, THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE ACTUAL RESULTS TO


DIFFER MATERIALLY FORM THOSE EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS AND COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS MADE BY, OR ON OUR BEHALF, WE DIS TO UPDATE FORWARD-LOOKING STATEMENTS.

 

PLAN OF OPERATION

The Company through its subsidiaries, namely, Accurate Auto Parts, Inc. and FFLO – Inside Auto Parts, Inc. has made a sale of $216,440 of Automobile Parts and Services. The Company continues seeking additional sales both in the domestic and international markets.

RESULTS OF OPERATIONS

The Company did recognize revenue for a sum of $216,440 during the three months ended March 31, 2021 and $116,379 of revenues during the Three month ended March 31, 2020. The net revenues for the period ended March 31, 2021were more by $100,061 than for the same period during 2020 and the Cost of Goods Sold was high by $39,918 during the period ended March 31, 2021 as compared to the same period during 2020. The Gross Profit had an increase, i.e. by $ 60,142 during the period ended March 31, 2021 as compared to the same period during 2020.  

During the Three months ended March 31, 2021, the Company incurred operational expenses of $95,092. This compares to $121,112 for the three months ended March 31, 2020. This decrease in operational expenses reflects the decrease in operation staff.

During the three months ended March 31, 2021 the company recognized a net profit of $48,708 as compared to a profit of $25,214 for the corresponding period in the year 2020, thus recognizing a significant increase as compared to the three months ended March 31, 2020. The optimal utilization of staff and infrastructure that has been build up will take time to show the desired results. Staff is being trained to achieve the productivity that will result in better revenues in near future.

The books show an operating net profit of $48,708 the Company has also increased its inventory by $998,938 thus showing a total inventory at cost of $1,839,095 as on March 31, 2021 compared to an inventory at cost for a sum of $1,778,824 as on December 31, 2020 and $840,156 as on March 31, 2020. While the Company cannot predict if this inventory will be sold at the list price which approximately is three (3) times its book value cost price (it has been calculated at less than 30% of the selling price) but the management is confident that the marked list price of the inventory is realistic with the current market conditions.

The inventory valuation is based on the industry standards, the management reviewed financial statements of other companies that are listed on NASDAQ and are audited by PCAOB firms like BDO. The management found that their approach was exactly same thus the inventory valuation is managements view is substantially accurate. Selling price of parts do not have too much fluctuations, in spite of this fact, the management does review their inventory price and the internal monthly reports do reflect any downward change which is subsequently reported in the quarterly reports. The Company has limited history, but the management has access to records to the previous owners’ activities which go back to over 10 years.

The tax returns for the previous years have been filed and there are no tax liabilities due to the fact that the books reflect a net loss.

The company’s administrative office has been relocated at 6269 Caledon Road, King George, VA 22485.

 

LIQUIDITY

THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT ON THE COMPANY’S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017, AND FOR EACH OF THE PRECEDING YEARS THEN ENDED, INCLUDES A “GOING CONCERN” EXPLANATORY PARAGRAPH, THAT DESCRIBES SUBSTANTIALLY DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.

On March 31, 2021 the Company had total current assets of $2,136,003 consisting of $60,324 in cash and $141,506 in trade receivables, and $1,839,095 in inventory at book value. The suggested sale price is over $4,000,000.


NEED FOR ADDITONAL CAPITAL

The Company is seeking additional capital to increase its inventory which directly affects the Sales. Management feels that with an additional infusion of $1,000,000 in working capital for inventory the company’s annual sales could grow between $3,000,000 and $4,000,000.

REVENUE RECOGNITION

The Company recognizes revenues on arrangements in accordance with Securitas and Exchange Commission Staff Accounting Bulletin Topic 13, REVENUE RECOGNITION and FASB ASC 605-15-25, REVENUE RECONGNITION. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonable assured. The Company reported gross revenues of $411,694 for the year ending December 31, 2020.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABUT MARKET RISKS

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEURES

Management's Report on Disclosure Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control so as to

(1)  maintain the records  in reasonable detail, which will accurately and fairly reflect the transactions and dispositions of the Company's assets;

(2) to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that the Company's receipts and expenditures are  made  within the delegated authority ; and

(3) to provide reasonable assurance for the  prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on company’s financial statements.

However, the management asserts that the company does not have any accounting staff due to limited financial resources though has plans to recruit gradually.  Also, this company does not have a well written document on accounting policies and procedures, though has plans to have them shortly.  Consequently, this can result in possible errors in the presentation and disclosure of financial information in our annual, quarterly, and other filings.

The SIC Code of 1700 as showing in Edgar for this company is no longer valid, since this company is now dealing with the auto parts, as OEM Recycled Auto Parts. Segregation of duties is an important factor in Internal Control. Though it is achieved to a certain extent, the management is committed to strengthen the internal controls effectively in the coming months.  

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during the period ended March 31, 2021, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

 

PART II – OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTOR

Not Applicable to Smaller Reporting Companies.

 

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the period of January 1, 2015 and March 31, 2015, the Company issued 9,700 shares of Preferred Shares – Series “A” for a sum of $58,000 and 330,000 shares of Preferred Shares – Series “B” for a sum of $330,000 which were the result of conversion of certain debts of the company.

On April 2, 2019, in a private transaction the Company accepted a sum of $14,490.00 against issuance of 21,000 restricted Common shares of the Company. Thus the total common shares issued and outstanding as on June 30, 2019 stood at 26,221,000

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

 

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

 

ITEM 5. OTHER INFORMATION

 

PART II. OTHER INFORMATION

ITEM 6.     EXHIBITS.

The following exhibits are included with this quarterly filing.  Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Registration Statement on Form S-1, filed under SEC File Number 000-54868, at the SEC website at www.sec.gov:

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

Free Flow Inc.

 

 

Registrant

 

 

 

 

 

 

 

 

Dated:  May 17, 2021

 

By:

/s/ Sabir Saleem

 

 

Sabir Saleem, Chief Executive Officer,

 

 

Chief Financial and Accounting Officer