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FFLO Free Flow Inc (PK)

0.20
0.00 (0.00%)
06 Jun 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
Free Flow Inc (PK) USOTC:FFLO OTCMarkets Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 0.20 0.203 0.888 0.00 21:00:28

Quarterly Report (10-q)

09/11/2021 10:04pm

Edgar (US Regulatory)


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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 SEPTEMBER 30, 2021

Commission file number 000-54868

PICTURE  

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

Delaware

 

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO x

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 September 30, 2021.


1


 

ITEM 1.  FINANCIAL STATEMENTS

3

Notes to Condensed Consolidated Financial Statements

7

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

9

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

10

ITEM 4. CONTROLS AND PROCEDURES

11

PART II – OTHER INFORMATION

12

ITEM 1. LEGAL PROCEEDINGS

12

ITEM 1A. RISK FACTOR

12

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

12

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

12

ITEM 4. MINE SAFETY DISCLOSURE

12

ITEM 5. OTHER INFORMATION

12

PART II. OTHER INFORMATION

12

ITEM 6. EXHIBITS.

12

SIGNATURES

13


2


 

FREE FLOW, INC. & SUBSIDIRIES

BALANCE SHEET

 

 

 

As of

 

As of

 

 

September 30,

 

December 31,

 

2021

 

2020

 

 

(Un-audited)

 

(Audited)

ASSETS

 

 

 

 

Current Assets

 

 

 

 

Cash and cash equivalents

 

$32,790  

 

$83,516  

Trade Receivables - current

 

199,784  

 

202,669  

Rounding off the decimals - error

 

 

 

(2) 

Intr-company

 

 

 

 

Advances for Inventory Purchases

 

 

 

 

Inventory

 

2,180,109  

 

1,778,824  

TOTAL CURRENT ASSETS

 

$2,412,684  

 

$2,065,007  

 

 

 

 

 

Fixed Assets

 

 

 

 

Land and Building, without current depreciation

 

$1,712,413  

 

$1,712,413  

Allownace for Depreciation

 

(144,813) 

 

$(144,813) 

TOTAL FIXED ASSETS

 

$1,567,600  

 

$1,567,600  

 

 

 

 

 

Other Assets

 

 

 

 

Delivery Turcks, before depreciation allowance

 

$3,500  

 

$3,500  

Allowance for Depreciation

 

(3,298) 

 

(3,298) 

Improvements in progress

 

9,441  

 

9,441  

Equipment and Delivery Trucks, before depreciation allowance

 

36,256  

 

35,000  

Allowance for Depreciation

 

(15,064) 

 

(15,064) 

TOTAL OTHER ASSETS

 

$30,834  

 

$29,579  

 

 

 

 

 

TOTAL ASSETS

 

$4,011,118  

 

$3,662,186  

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

Accounts Payable

 

$18,830  

 

$9,829  

Notes Payable

 

937,666  

 

940,000  

Notes Payable - Related Parties

 

9,057  

 

1,689  

TOTAL CURRENT LIABILITIES

 

$965,553  

 

$951,518  

 

 

 

 

 

Long Term Liabilities

 

 

 

 

Revolving Line of Creidt - $350,000 amount drawn

 

$335,801  

 

$349,500  

PPP 1 & 2

 

72,725  

 

27,800  

EIDL

 

146,300  

 

146,300  

PayPal Advance

 

53,584  

 

62,943  

Loan - secured

 

860,559  

 

873,131  

TOTAL LONG TERM LIABILITIES

 

$1,468,968  

 

$1,459,674  

Total Liabilities

 

$2,434,521  

 

$2,411,192  

 

 

 

 

 

Redeemable Preferred Stock

 

 

 

 

Series B; 500,000 shares authorized; 330,000 and 0 issued and outstanding as of December 31, 2018 and 2017 respectively ( Classified as Mezzanine Equity)

 

$330,000  

 

$330,000  

Series C; 500,000 shares authorized; 470,935 and 0 issued and outstanding as of December 31, 2018 and 2017 respectively ( Classified as Mezzanine Equity) - As equity in Accurate Auto Parts, Inc.

 

470,935  

 

470,935  

Stockholders' Equity (Deficit)

 

 

 

 

Preferred Stock ($0.0001) par value, 20,000,000 shares authorized 10,000 shares par value $0.0001 Class A issued on December 31, 2015

 

 

 

 

Additional Paid in capital

 

 

 

 

Common stock, ($0.0001) par value, 100,000,000 shares authorized and 26,200,000 shares issued and outstanding as of December 31, 2018 26,221,000 and 26,200,000 issued as on Dec. 31, 2019 and 2018 respectively

 

2,622  

 

2,620  

Additional Paid in capital

 

131,033  

 

131,033  

Subscription Received - pending acceptance

 

500  

 

25,500  

Current Period Profit (Loss)

 

351,546  

 

850,610  

(Accumulated Deficit) / Net worth

 

289,960  

 

(559,705) 

TOTAL STOCKHOLDERS' EQUITY / (DEFICIT)

 

$1,576,597  

 

$1,250,994  

 

 

 

 

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

 

$4,011,118  

 

$3,662,186  

 

The accompanying notes are an integral part of unaudited condensed consolidated financial statements.


3


 

Free Flow, Inc.

Statements of Operations

Condensed Statements of Operations

(Unaudited)

 

 

 

Nine months ended Sept. 30,

 

Three months ended Sept. 30,

 

2021

 

2020

 

2021

 

2020

REVENUES

 

 

 

 

 

 

 

 

Revenues

 

$616,806 

 

$360,236  

 

$187,904  

 

$79,456  

TOTAL REVENUES

 

616,806 

 

360,236  

 

187,904  

 

79,456  

COST OF GOODS SOLD

 

293,835 

 

158,801  

 

68,398  

 

67,404  

GROSS PROFIT

 

322,971 

 

201,435  

 

119,506  

 

12,052  

 

 

 

 

 

 

 

 

 

GENERAL & ADMINISTRATIVE EXPENSES

 

 

 

 

 

 

 

 

Administrative expenses

 

158,113 

 

157,772  

 

52,295  

 

128,655  

Professional fees

 

35,046 

 

25,004  

 

10,753  

 

10,045  

Selling expenses

 

63,440 

 

29,264  

 

21,769  

 

12,061  

Financial expenses

 

62,490 

 

23,744  

 

34,711  

 

713  

 

 

 

 

 

 

 

 

 

TOTAL GENERAL & ADMINISTRATIVE EXPENSES

 

319,088 

 

235,785  

 

119,527  

 

151,475  

 

 

 

 

 

 

 

 

 

PROFIT (LOSS) FROM OPERATION

 

3,882 

 

(34,350) 

 

(22) 

 

(139,423) 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE) INCOME

 

1,381 

 

111,805  

 

 

 

111,805  

Other Income - Additional Inventory recovered

 

346,282 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

$351,546 

 

$77,455  

 

$(22) 

 

$(27,618) 

 

 

 

 

 

 

 

 

 

BASIC EARNING PER SHARE

 

0.013 

 

0.003  

 

(0.000) 

 

(0.001) 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBERO OF
COMMON SHARESS OUTSTANDING

  

26,221,000 

 

26,221,000  

 

26,221,000  

 

26,200,000  

 

The accompanying notes are an integral part of unaudited condensed consolidated financial statements.


4


 

FREE FLOW, INC.

Statement of  Changes in Shareholders' (Deficit)

 

 

 

 

 

 

 

 

 

 

 

ADDITIONAL

 

 

 

 

 

 

COMMON STOCK

 

PREFERRED STOCK

 

PAID-IN

 

ACCUMULATED

 

 

 

SHARES

 

AMOUNT

 

SHARES

 

AMOUNT

 

CAPITAL

 

(DEFICIT)

 

TOTAL

 

 

 

 

 

 

Series -A

 

 

 

Surplus

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

26,221,000 

 

$2,622 

 

10,000 

 

1 

 

145,481 

 

353,914 

 

1,250,994 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the quarter ended 30-Sep-21

 

 

 

 

 

 

 

 

 

 

 

351,546 

 

351,546 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE, September 30, 2021

  

26,221,000 

 

$2,622 

 

10,000 

 

1 

 

$145,481 

 

705,460 

 

1,576,597 


5


Free Flow, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Nine months ended
September 30,

 

2021

 

2020

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

 

Net Profit

 

$351,546  

 

$77,455  

Adjustments to reconcile net profit to net cash used in operating activities:

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

(Increase) decrease in inventory

 

(401,285) 

 

(110,955) 

Increase (decrease) due to inventory adjustment 2020

 

(944) 

 

 

(Increase) decrease Intercompany advances

 

 

 

(2,766) 

Increase (decrease) Accounts payable

 

6,667  

 

(244) 

(Increase) in Accounts Receivable Trade

 

2,885  

 

(112,826) 

Advance related parties

 

7,368  

 

(224) 

NET CASH USED IN OPERATING ACTIVITIES

 

(33,764) 

 

(149,560) 

 

 

 

 

 

CASH FLOW FROM FINANCING ACTIVITIES

 

 

 

 

Proceeds from Loan River Valley Bank

 

(26,271) 

 

25,680  

Proceeds from Loan from PayPal

 

(9,359) 

 

47,789  

Proceeds from Loan from SBA

 

44,925  

 

35,800  

Proceeds from Loan from PPP 1

 

 

 

146,300  

Purchase of Fixed Assets

 

(1,256) 

 

(5,049) 

Proceeds from subscription not yet accepted

 

(25,000) 

 

 

Proceeds from relied party notes

 

 

 

 

NET CASH PROVIDED BY FINANCING ACIVITIES

 

(16,962) 

 

250,520  

 

 

 

 

 

NET INCREASE IN CASH

 

(50,726) 

 

100,960  

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

83,516  

 

7,226  

CASH AT END OF PERIOD

  

$32,790  

 

$108,186  

 

The accompanying notes are an integral part of these financial statements


6


 

Free Flow, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 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 September 30, 2021 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 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 08, 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 and / or sufficient reserves 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 working capital line of credit from its commercial bank to meet its minimal operating expense and is expecting that cash flow from sales will soon be available to augment the operating capital needs. However, management cannot provide an assurance that the Company will be successful in accomplishing any of its plans.

 

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 fulfill the purchase orders to attain profitable operations. 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 was changed to Motors & Metals, Inc. and had remained inactive but was in good standing, until it received a letter of intent from an overseas buyer willing to enter a long term contract to purchase shredded steal derived from automobile other scrap metals. Thus Motors & Metals, Inc. has embarked upon substituting its automobile crushing and shredding business to only shredding of automobiles and other metals to recover ferrous metals.

 

Proposals form renowned manufacturers of auto shredding equipment have been received and are being evaluated to determine the most suitable and competitive supplier. The initial plan is laid out to have an output of 3,000 to 5,000 tons of shredded steel per month.

 

As was reported in 10Qs for the earlier quarters as well as in 10Ks for the Annual reports, on February 4, 2016 the company incorporated another subsidiary in the State of Virginia under the name 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.

 


7


On April 17, 2018 the company incorporated in Virginia, another subsidiary named Accurate Investments, Inc. with the objectives of acquiring real estate property, and has remained dormant until any business is transacted.

 

On January 4, 2017 a subsidiary named City Autos, Corp. was incorporated in the Commonwealth of Virginia which remained dormant until July 21, 2020 whereby a business license has been obtained and City Auto is preparing to start business of auto “Lease – Rent To Own”. The premises were already zoned for use as an Auto Dealership, and there existed a used car deanship operated by the former owners. City Autos is preparing to obtain a dealership license from the State and expects to start with a 50 cars fleet to Lease – Rent to own.

 

On December 22, 2020 the company purchased business and assets from Inside Auto Parts, Inc. and auto recycling facility against a promissory note for approximately $940,000. The assets and business was purchased by another wholly owned subsidiary which was incorporated in September , 2019 and remained dormant until November 2020 when the name was changed to FFLO – Inside Auto Parts, Inc. to facilitate the purchase of business and assets. The license from the State has been transferred to FFLO – Inside Auto Parts, Inc. With the acquisition the sales of the company has doubled.

 

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 debited an additional $25 thus owing a total sum of $10,318 as of September 30, 2020. The note is unsecured and does not bear any interest and has a maturity date of December 30, 2021.

 

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.

 

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

 

January 1, 2019, by consent of the related party note holder i.e., by Redfield Holdings, Ltd. the debt for a sum of $470,935 was converted to Preferred Shares Series “C” to be described as Mezzanine Equity in its subsidiary, namely Accurate Auto Parts, Inc. The total number of shares classified as Preferred Shares Series “C” are 500,000.

 

On April 2, 2019, in a private transaction the Company accepted a sum of $14,490 against issuance of 21,000 restricted Common shares of the Company. Thus the total common shares issued and outstanding as on September 30, 2021 stood at 26,221,000.

 

NOTE 6 – SUBSEQUENT EVENTS

 

None.


8


 

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

 

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED FINANCIAL STATEMENT SAND 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

 

N.B.   Market conditions may change, which my adversely affect the future results.

 

Free Flow Inc. the Company’s used auto parts subsidiaries has made a sale of $616,806 of Automobile Parts and Services. The Company continues seeking additional sales both in the domestic and international markets.

 

In May 2020 the company hired a marketing manager as independent contractor to develop marketing strategy and thus improve sales. Thus far, the ground work was completed and a data was complied, the plan could not take off due to the Covid19 Pandemic. The Company is working again to effectuate this plan.

 

Regarding scrap metal processing: Motors & Metals, Inc., the subsidiary which is licensed to operate as scrap metal processor completed its scope of equipment and machinery and thereafter, on July 4, 2020 the company received a firm quotation from an equipment manufacturer. The cost of the project is estimated at $9,000,000 with a projected EBITDA of about 20% on an estimated annual revenue of $10,000,000. Financing arrangements are currently being worked upon and the Company expects to secure and firm up the plans as soon as possible. Due to Covit19, the response from Investors and Lenders/Equipment Leasing companies is rather slow.

 

The company is concurrently seeking equity financing for $12,000,000 to pay off all debts and have the company become a debt free entity. The targeted accredited investors are those that wish to invest in “Sharia Compliant” entities. Discussions are under way, and it is hoped that the efforts will be result in success.

 

the surveyors had completed the demarcation of the property, the area dedicated to the scrap metal processing has been determined to be around 9 acres. Motors & Metals, Inc. is beginning the clean-up process. Part of the sought financing will be deployed to prepare the infrastructure for installation of the equipment.

 

A firm contract with the machinery suppliers will be executed as soon as financing is arranged.

 

City Autos, Corp. – the subsidiary of the Company has received the business license to operate as used car dealership which encompasses the business of auto leasing and renting. Application to the DMV in the Commonwealth of Virginia will soon be filed to obtain the dealer license. City Autos plans to confine its business to auto “Lease – Rent To Own” only. The model City Autos has chosen is a weekly program to Lease – Rent To Own on affordable weekly payments.  City Autos plans to stay with a 50 cars fleet until such time that adequate staff is hired and trained. City Autos is also in the process of negotiation with a used car dealership that could be acquired by FFLO to jump start the business.

 

RESULTS OF OPERATIONS

 

The Company did recognize revenue for a sum of $616,806 during the nine months ended September 30, 2021 and $360,236 of revenues during the nine months ended September 30, 2020. While the net revenues for the period ended September 30, 2021 were higher by  $256,570 than for the same period during 2020 and the Cost of Goods Sold was also higher by $135,034 during the period ended September 30, 2021 as compared to the same period during 2020. This 85 % increase in cost of goods sold was due to increase in number of costly automobiles being dismantled while the overheads for dismantling increased. The general and administrative expenses for the period ended September 30 2021were $158,113 as compared to 157,772 for the same period during 2020. During the period of 2021 the Company was making purchases in excess to what it did during the same period in 2020, excess purchases lead to excess administrative expenses. Also because the company is now in a stabilized mode and costs are being controlled.


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During the nine months ended September 30, 2021 the company recognized a gross profit of $322,971 as compared to $201,435 for the corresponding period in the year 2020, this increase of $121,536 in Gross profit equates to approximately 60% as compared to the nine months ended September 30 2020.

 

During the nine month ended September 30, 2021 the company recognized a net operating profit of $3,882 as compared to operating loss of $(34,350) for the corresponding period in the year 2020, this increase in net operating profit by $38,232 is due to the fact that the sales were higher by $256,570 and the fixed administrative, professional and financial expenses were significantly high thus yielding a low margin of profit. .

 

The Company began selling on eBay and continues to attain a rating of five star (5/5). This excellent rating is based on review by the customers. Uploading the inventory is a lengthy and slow process (to log on inventory with photographs and price) on the eBay platform.

 

Management has opted to provide for the depreciation of equipment, trucks and building at the end of the year instead of providing for it on quarterly basis.

 

LIQUIDITY

 

THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT ON THE COMPANY’S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2020, 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.

 

BALANCE SHEET:

 

On September 30, 2021 the Company had total current assets of $2,412,684 consisting of $32,790 in cash and $199,784 in trade receivables, and $2,180,109 in inventory. As on September 30, 2020 the Company has a total current assets of $1,224,484 consisting of $108,186 in cash and $219,917 in trade receivables, and $887,543 in inventory at cost.

 

EQUITY LINE OF CREDIT

 

The Company has obtained an equity line of credit from Incredible Bank (f/k/a River Valley Bank), additionally personally guaranteed by the CEO, Mr. Sabir Saleem against which, a sum of $335,801 was drawn as on September 30, 2021. The line of credit is being used for operating expenses, primarily for purchase of inventory.

 

OTHER LOANS

 

As of September 30, 2021 the Company had an outstanding loan from PayPal in the amount of $53,584 and received a loan under SBA Payroll Protection and Economic Injury Disaster Loan in the amount of a total sum of $219,025. The PPP1 loan in the amount of $27,800 is likely to be forgiven, request for the same has been submitted to the SBA.

 

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 $616,806for the nine months ended September 30, 2021.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABUT MARKET RISKS

 

Not Applicable.


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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 September 30, 2021, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.


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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.

 

In April 2019 the Company, as a private transaction, issued 21,000 restricted shares of Common Shares for a sum of $14,490.

 

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:

 

Exhibit No.

 

Description

 

 

 

3.1

 

Articles of Incorporation*

3.2

 

Bylaws*

31.1

 

Sec. 302 Certification of Principal Executive Officer

31.2

 

Sec. 302 Certification of Principal Financial Officer

32.1

 

Sec. 906 Certification of Principal Executive Officer

32.2

 

Sec. 906 Certification of Principal Financial Officer

101

  

Interactive data files pursuant to Rule 405 of Regulation S-T


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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: November 9, 2021

By:

/s/ Sabir Saleem

 

 

Sabir Saleem, Chief Executive Officer,

 

 

Chief Financial and Accounting Officer


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