FFLO 10-K
Free Flow USA, Inc. (FFLO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
ACT OF 1934
For the fiscal year ended
Or
FOR THE TRANSITION PERIOD FROM January 1, 2022 to December 31, 2022
Commission file number
(Exact name of registrant as specified in its charter)
| ||
(State or other jurisdiction |
| (IRS Employer |
(
(
(
----------------------------------------------------
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
YES [ ]
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
YES [ ]
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.
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).
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 | ☐ |
| ☒ | 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES
Applicable Only to Issuer Involved in Bankruptcy Proceedings During the Preceding Five Years.
N/A
Applicable Only to Corporate Registrants
Securities registered 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:
TABLE OF CONTENTS
PART I | |||
|
|
|
|
ITEM 1 |
| 4 | |
ITEM 1A |
| 8 | |
ITEM 1B |
| 13 | |
ITEM 2 |
| 14 | |
ITEM 3 |
| 14 | |
ITEM 4 |
| 14 | |
|
|
|
|
PART II | |||
|
|
|
|
ITEM 5 |
| 15 | |
ITEM 6 |
| 16 | |
ITEM 7 | Management's Discussion and Analysis of Financial Condition and Results of Operations |
| 17 |
ITEM 7A |
| 19 | |
ITEM 8 |
| 20 | |
ITEM 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
| 33 |
ITEM 9A |
| 33 | |
ITEM 9B |
| 34 | |
|
|
|
|
PART III | |||
|
|
|
|
ITEM 10 |
| 35 | |
ITEM 11 |
| 37 | |
ITEM 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
| 39 |
ITEM 13 | Certain Relationships and Related Transactions, and Director Independence |
| 40 |
ITEM 14 |
| 40 | |
|
|
|
|
PART IV | |||
|
|
|
|
ITEM 15 |
| 41 | |
|
|
|
|
| 39 | ||
FORWARD LOOKING STATEMENTS
THIS DOCUMENT INCLUDES FORWARD-LOOKING STATEMENTS, INCLUDING, WITHOUT LIMITATION, STATEMENTS RELATING TO FREE FLOW, INC. ("FREE FLOW") PLANS, STRATEGIES, OBJECTIVES, EXPECTATIONS, INTENTIONS AND ADEQUACY OF RESOURCES. THESE FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS THAT MAY CAUSE FREE FLOW'S ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, AMONG OTHERS, THE FOLLOWING: FREE FLOW'S ABILITY TO IMPLEMENT ITS BUSINESS STRATEGY; ABILITY TO OBTAIN ADDITIONAL FINANCING; FREE FLOW'S LIMITED OPERATING HISTORY; UNKNOWN LIABILITIES ASSOCIATED WITH FUTURE ACQUISITIONS; ABILITY TO MANAGE GROWTH; SIGNIFICANT COMPETITION; ABILITY TO ATTRACT AND RETAIN TALENTED EMPLOYEES; AND FUTURE GOVERNMENT REGULATIONS; AND OTHER FACTORS DESCRIBED IN THIS DOCUMENT OR IN OTHER OF FREE FLOW'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FREE FLOW IS UNDER NO OBLIGATION, TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
For further information about these and other risks, uncertainties and factors, please review the disclosure included in this report under Item 1A "Risk Factors."
PART I
ITEM 1. BUSINESS
HISTORY
Free Flow, Inc. (the "Company" or "Free Flow") was incorporated on October 28, 2011 under the laws of State of Delaware to enter the green energy industry. The Company began with the idea of developing swimming pool solar pump system to create a blend of green energy harvesting while maintaining the present system. Having received firm enquiries from overseas farmers, Free Flow began with focus on the sale of solar panels to the agriculture sector, providing alternate means of electricity to operate pumps for water wells in India and Pakistan. In August 2014 the Company contracted to acquire as its subsidiary a special purpose entity in India but the contract was not effectuated due to the Sellers’ inability to comply with the terms of the contract, viz-a-viz to provide Audited Financial statements of the entity being acquired.
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”.
In October 2015, the company entered into a Sales Contract (the “Sales Contract”) pursuant to which the Company contracted to sell to Salim's Paper Private Limited, Jaipur, India (the “Purchaser”), with a principal place of business at SP-6 SKS Industrial Area, Reengus Sikar, Rajasthan, India 330 404; Tissue Paper comprising 30,000 Metric Tons (MT), to be shipped in five (5) years at the rate of 6,000 MT per annum. Shipments to commence within twelve (12) months from the date of signing of the Contract at a price to be determined on a quarterly basis based on the current index price for wood pulp as quoted on the Chicago Indes by FOEX Indexes, Ltd. In accordance with the terms of the Sales Contract the Purchaser has caused a pre-advice from their commercial bankers for a revolving commercial letter of credit in favor of the Registrant
In connection with effectuation of the Sales Contract, the Company worked to set up a paper manufacturing facility in the South East Asia or Middle East. The efforts to set up the manufacturing did not succeed and hence the sales contract expired and was declared cancelled with mutual consent of the Buyers and the Company.
4
In February 2016 the Company incorporated a subsidiary named JK Sales Corp. (the name was changed on December 7, 2017 to Accurate Auto Parts, Inc.) and began operating business of selling used auto parts from a recycling facility in King George, Virginia. The company thus begun realizing revenues from its operations. The Company's fiscal year end is December 31.
Around July 2017 the Company learnt that the landlord filed a bankruptcy hence the long term lease was automatically terminated and the Company went into a pause mode. In April, 2018 the Company entered into a contract with the bank (who took over the ownership of the property) to purchase the property for $700,000.00.
In October 2018 the Company, singly and jointly with its CEO, Mr. Sabir Saleem, executed, as co-signers, a guarantee on behalf of its subsidiary, namely Accurate Auto Parts, Inc. against a term loan to Accurate Auto Parts, Inc. by River Valley Bank, (name has been changed to Incredible Bank) Minnesota in the amount of $900,100.00. The 19+ acre property in King George, VA from where the Company operates its auto parts business, was purchased.
In December 2020 the Company acquired over $2,000,000 worth of Assets of a second recycling facility named Inside Auto Parts, Inc. incorporated in 1993, which is centrally located between Richmond, Charlottesville, and Fredericksburg, Virginia with easy access to main transport routs. The salvage dealership, specializing in used foreign car and truck parts has been acquired by Free Flow, Inc.’s subsidiary named “FFLO - Inside Auto Parts, Inc.” and had 21,953.9 square feet fully enclosed and another 17,392.35 square feet under roof enclosed on 3 sides, all located on 16 acres of land in Mineral, Virginia. The facility was sold back to the original sellers in early January 2022.
The Company's capitalization is 100,000,000 common shares with a par value of $0.0001 per share and 20,000,000 preferred shares with a par value of $ 0.0001 per share.
Of the 20,000,000 authorized preferred shares, the Company has designated:
10,000 shares as "Preferred Shares - Series A". Each share of "Preferred Shares - Series A" carries voting rights equal to ten thousand (10,000) votes. In other words, the 10,000 "Preferred Shares - Series A" collectively have a voting right equal to one hundred million (100,000,000) common shares of the Corporation.
500,000 shares as “Preferred Shares – Series B”. These preferred shares - Series "B" was assigned the following preferences:
a) Each share to carry one vote.
b) Each share will be redeemable with a 365-day 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.
500,000 shares as “Preferred Shares – Series C”. These preferred shares – Series, “C” was assigned the following preferences:
a) Each share to carry one vote.
b) Each share will be redeemable upon repayment of Loan(s) made by River Valley Bank to Accurate Auto Parts, Inc.
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 C" 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. On March 31, 2015, 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.
5
On November 22, 2011, the Company issued a total of 25,000,000 shares of common stock to one director for cash in the amount of $0.0008 per share for a total of $20,000.
On December 6, 2011, the Company issued a total of 1,200,000 shares of common stock to Garden Bay International for cash in the amount of $0.000833 per share for a total of $1,000.
On August 1, 2014, the Company issued 300 Preferred Shares--Series A stock issued to Redfield Holdings, Ltd. for $1 each for a total of $300.
On March 31, 2015, the Company issued 9,700 Preferred Shares—Series A issued to Redfield Holdings, Ltd. for a total sum of $ 58,000.00.
On June 30, 2019, the Company issued 21,000 common shares – under rule 144 for a sum of $14,490.00 to an existing shareholder.
On January 1, 2019, at the request of the lending bank, namely, River Valley Bank, by mutual consent of Redfield Holdings, Ltd. (owned by Mr. Sabir Saleem) the debt in the amount of $470,935 was booked as capital in the subsidiary entity, namely Accurate Auto Parts, Inc. and 470,935 Preferred shares Series “C” were issued thereagainst. Series “C” Preferred shares are redeemable anytime with the concurrence (approval) of the lending bank. This action was taken to provide comfort to the lending bank that the subsidiary company was adequately capitalized.
As of February 28, 2022, the Company had 24,841,900 shares of common stock issued and outstanding and 10,000 Preferred Shares - Series A, 330,000 Series B and 470,935 Series C shares issued and outstanding.
COMPANY OVERVIEW
Since the new management took over the company’s control on March 13, 2014, from S. Douglas Henderson, former CEO, it has remained focused in developing the solar energy business along with pharmaceutical (skin care product line), neither one of which had produced any revenues. However, the management continued its efforts to deploy “Solar Well” operation in India and Pakistan, due to economic instability no contract could be concluded.
Concurrent to the above efforts, a few prospects had shown keen interest in promotion of HYGIENiQ to the automotive industry. Approx.35% of the inventory was sold and paid for during the first quarter of 2016.
Upon taking over, the Company appointed Ferdinando (Fred) Ferrara as a Director and Sabir Saleem as CEO. There was no family relationship or other relationship between the Seller and the Purchaser.
On November 25, 2020, Mr. Shah Wali Khan was appointed to serve as a director of the Company. In addition to his management and oversight role on the Board of Directors, Mr. Khan will use his business management skills to assist with the planned global expansion of Free Flow’s subsidiary operations.
On December 22, 2020 upon acquiring the assets of the Mineral, VA facility, the Company appointed Dr. Melody Jackson as a director of the Company.
On December 27, 2021, for personal reasons Dr. Melody Jackson resigned as member of the Board of Directors of Free Flow, Inc.
PURCHASE OF SHARES OF SKY ENERGY (PVT) LTD., INDIA.
On August 7, 2014, the Company entered into a stock purchase contract with Riyazuddin Kazi and Ahteshamuddin Kagzi to purchase 225,000 shares for a sum of $4,005,000 of Sky Energy (Pvt) Ltd. being 90% of the issued and outstanding shares. As consideration thereof, Bills of Exchange are lodged with the Escrow Agent. The effectuation of the contract (the effective date of the closing of the transaction) was subject to the Sellers delivering the audited financial statements to the Company; which has since been cancelled due to Sellers failure in providing the audited financial statements.
6
INCORPORATION OF SUBSIDIARIES
On January 24, 2015, Free Flow, Inc. incorporated Promedaff, Inc. in the Commonwealth of Virginia as its wholly-owned subsidiary. This subsidiary purchased a skin care product line and set up an e commerce platform for sale. The marketing efforts did not succeed; thus the entire inventory was sold back to the Sellers. Promedaff, Inc. was looking into developing other business. In October 2016, the name of Promedaff, Inc. was changed to Motors & Metals, Inc. with the objectives to develop export business. A contract was signed with a United Emirates company. A trial shipment of approximately $12,000 was made from Germany but the business could not be continued due to poor management of the Agent that resulted from severe illness of the principal agent However, in March 2019, Motors & Metals, Inc. received a letter of intent from an overseas customer indicating their willingness to buy 36,000 tons of processed scrap metal at market price.
Progress discussed below under “Plan of Operations”, see Item 7, Part II.
On September 11, 2019 a subsidiary was incorporated for the purpose of acquiring an intellectual property related to rotary engine but the transaction did not materialize. This subsidiary remained in good standing. On November 24, 2020 the name of this subsidiary was changed to “FFLO – Inside Auto Parts, Inc.” and was thus used to facilitate the acquisition of assets of Inside Auto Parts, Inc., as described in the foregoing paragraphs.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements.
BACKLOG OF ORDERS
We currently have no orders for sales at this time.
GOVERNMENT CONTRACTS
We have no government contracts.
NUMBER OF PERSONS EMPLOYED
As of December 31, 2022, we had three. CEO works full time.
DESCRIPTION OF PROPERTIES/ASSETS
Real Estate | Cost | $772,413 |
Title to Equipment and Delivery Trucks | Cost | $10,697 |
Patents and Patent Applications |
| None. |
ITEM 1A. RISK FACTORS
DUE TO FACTORS BEYOND HUMAN CONTROL, OUR BUSINESS IS A NOT STABLISED AND THERE ARE STILL “THING TO HAPPEN” AND THEREFORE RISKY.
We have not had a complete smooth year 2022; mainly due to COVID 19 that led to scarcity of skilled as well as unskilled workers. It was not easy to find wrecked and end of life vehicles and the prices had sky-rocked while the price of parts did not increase in the same ratio. Beginning January 2022, the company decided to suspend its used auto parts business and sold almost all its inventory as scrap metal. The business was focused on sale of scrap metal to overseas buyers. Due to political turmoil in the buyers’ country, the consistency of shipment could not be maintained. Potential investors should be made aware of the risk and difficulties being encountered by the company.
7
WE HAVE HISTORICALLY INCURRED LOSSES AND CANNOT ASSURE INVESTORS AS TO FUTURE PROFITABILITY.
Like most business that are dependent on a number of factors including but not limited to market conditions, and acts of God, like COVID 19, and political turmoil in the buyers’ country there can be no assurance to investors for future profitability. We had historically incurred losses from operations. However, during the year ended December 31, 2021, we have recognized a profit of $543,898; which sum is included in as “other income” and had resulted from the dismantling of automobiles and recovering of useable OEM parts, while the operating results showed a loss of $121,197.00. In the year 2022 we incurred an operating loss of $342,362; and the net adjusted loss due to sale of inventories amounted to $2,418,950. During the year 2021 the company made a gain in the amount of $691,657 due to inventory valuation based on actual recovery of saleable inventory upon dismantling of automobiles.
In addition, the independent registered public accounting firm's report on the Company's financial statements as of December 31, 2021 includes a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. If we are unable to continue as a going concern, realization of assets and settlement of liabilities in other than the normal course of business may be at amounts significantly different from those in the financial statements included in this registration statement.
WE HAVE A LACK OF LONG REVENUE HISTORY AND INVESTORS CANNOT VIEW OUR PAST PERFORMANCE SINCE WE HAVE LIMITED HISTORY.
We were formed on October 28, 2011, for engaging in any lawful business and any new enterprise. We have had moderate revenues in the last eleven years. We have only had operational activities during the last five to six years; during which period there have been more than one interruptions including Covid19 pandemic. We are cash surplus only to a limited extent and hence can be classified marginable cash surplus, and the business effort continue as if in an early development stage. We must be regarded as a new or developmental venture, and may be subject to unforeseen costs, expenses and problems. As a development venture, we may not be able to adequately forecast and budget our costs. It should be assumed that any or all these events could occur, with the result that anyone, if significant enough could prevent the proposed business from being successful and potential investors could lose all their investment.
BASED ON OUR CURRENT CASH RESERVES, WE WILL HAVE RELATIVELY SMALL OPERATIONAL BUDGET FOR THE OPERATIONS WHICH WE CANNOT EXPAND WITHOUT ADDITIONAL RAISING OF CAPITAL.
If we are unable to continue to generate enough revenue to cover our operational costs, we will need to seek additional sources of funds. Currently, we have no committed source for any additional funds as of date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, we may not be able to carry out our business plan and could fail in business because of these uncertainties.
WE CANNOT GIVE ANY ASSURANCES THAT WE WILL BE ABLE TO RAISE ENOUGH CAPITAL TO FUND ACQUISITIONS AND PRODUCT DEVELOPMENT.
We will need to raise additional funds to support not only our budget, but our expansion operations. We cannot make any assurances that we will be able to raise such funds or whether we would be able to raise such funds with terms that are favorable to us. We may seek to borrow money from lenders at commercial rates, but such lenders will probably be at higher than bank rates, which higher rates could, depending on the amount borrowed, make the net operating income insufficient to cover the interest.
WE MAY IN THE FUTURE ISSUE MORE SHARES WHICH COULD DILUTE THE PERCENTAGE OF OWNERSHIP OF STOCKHOLDERS.
8
We may issue further shares as consideration for the cash or assets or services out of our authorized but unissued common stock that would, upon issuance dilute the percentage of shares holding of shareholders.
ONE OF OUR OFFICERS AND DIRECTORS IS A MAJORITY SHAREHOLDER OF THE COMPANY. AS SUCH THERE IS A POSSIBILITY OF HIM CONTROLLING THE COMPANY TO THE DETRIMENT OF OUTSIDERS.
Mr. Saleem, President, CEO and Director, through direct and indirect ownership, is sole owner and shareholder of Redfield Holdings, Ltd. ("Redfield"), the majority shareholder of our Company. As such, he will be able to control the operations and the direction of the Company with very little outside influence.
Mr. Saleem does not hold direct shares of common stock of the Company. However, as an officer, director and beneficial shareholder of Redfield Holdings, Ltd. he can vote the shares of Redfield, our majority shareholder. As such, he is the beneficial holder of the 17,990,000 common shares and 10,000 Preferred Shares - Series A, held by Redfield. Through his ownership in Redfield, Mr. Saleem controls majority of the voting stock of the Company.
WE WILL DEPEND UPON MANAGEMENT, BUT WE WILL HAVE LIMITED PARTICIPATION OF MANAGEMENT.
We currently have two individuals who are serving as our officers and directors for the Company, one of them on a full-time basis and one director who is not on full time basis. The full time directors are also acting as our officer. None of the officers have an employment agreement with the Company. We will be heavily dependent upon their skills, talents, and abilities, as well as several consultants to us, to implement our business plan, and may, from time to time, find that the inability of the officers and directors to devote their full-time attention to our business results in a delay in progress toward implementing our business plan. Because investors will not be able to manage our business, they should critically assess all the information concerning our officers and directors.
OUR OFFICERS AND DIRECTORS ARE NOT EMPLOYED BY US AND MAY CAUSE CONFLICTS OF INTERESTS AS TO CORPORATE OPPORTUNITIES WHICH WE MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE IN.
In the future they may become, in their individual capacities, officers, directors, controlling shareholder and/or partners of other entities engaged in a variety of businesses. Thus, our officers and directors may have potential conflicts including their time and efforts involved in participation with other business entities. In some circumstances this conflict may arise between their fiduciary duties to us and their fiduciary duties to Redfield's business divisions. It is possible that in this situation their judgment maybe more consistent with their fiduciary duties to these ventures and may be detrimental to our interests.
Presently there is no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our business to disclose to us business opportunities which come to their attention. Excluded from this duty would be opportunities which the person learns about through his involvement as an officer and director of another company. We have no intention of merging with or acquiring business opportunity from any affiliate or officer or director.
We do not know of any reason other than outside business interests that would prevent them from devoting full-time to our Company when the business may demand such full-time participation.
WE MAY DEPEND UPON OUTSIDE ADVISORS, WHO MAY NOT BE AVAILABLE ON REASONABLE TERMS AND AS NEEDED.
9
To supplement the business experience of our officers and directors, we may be required to employ accountants, technical experts, appraisers, attorneys, or other consultants or advisors. Our Board, without any input from stockholders, will make the selection of any such advisors. Furthermore, we anticipate that such persons will be engaged on an "as needed" basis without a continuing fiduciary or other obligation to us. In the event we consider it necessary to hire outside advisors, we may elect to hire persons who are affiliates if they are able to provide the required services.
WE HAVE AGREED TO INDEMNIFICATION OF OFFICERS AND DIRECTORS AS IS PROVIDED BY DELAWARE STATUTE.
Delaware Statutes provide for the indemnification of our directors, officers, employees, and agents, under certain circumstances, against attorney's fees and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on our behalf. We will also bear the expenses of such litigation for any of our directors, officers, employees, or agents, upon such person's promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditures by us that we will be unable to recoup.
RISK FACTORS RELATED TO OUR STOCK
OUR STOCK IS THINLY TRADED AND, AS A RESULT, YOU MAY BE UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The shares of Free Flow common stock were approved for trading on the OTC Bulletin Board on April 3, 2013, the Company up-listed to QB in April 2021 and, as result, they are thinly-traded, meaning that the number of persons interested in purchasing the Company's common shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that the Company is a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if it came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven, early stage company such as Free Flow or purchase or recommend the purchase of any of the Company's Securities until such time as the Company became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in the Company's Securities is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on Securities price. We cannot give you any assurance that a broader or more active public trading market for the Company's common securities will develop or be sustained, or that any trading levels will be sustained. Due to these conditions, the Company can give investors no assurance that they will be able to sell their shares at or near ask prices or at all if they need money or otherwise desire to liquidate their securities of the Company.
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY DISCOURAGE THE TRADABILITY OF OUR SECURITIES.
We are a "penny stock" company. Our securities currently trade in the OTC QB market and are subject to a Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers who sell such securities to persons other than established customers or accredited investors. For purposes of the rule, the phrase “accredited investors” means, in general terms, institutions with assets more than $5,000,000, or individuals having a net worth more than $1,000,000 or having an annual income that exceeds $200,000 (or that, when combined with a spouse’s income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written agreement to the transaction prior to the sale. Effectively, this discourages broker-dealers from executing trades in penny stocks. Consequently, the rule will affect the ability of purchasers in this offering to sell their securities
10
in any market that might develop therefore because it imposes additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted several rules to regulate “penny stocks”. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange Act of 1934, as amended. Because our securities constitute “penny stocks” within the meaning of the rules, the rules would apply to us and to our securities. The rules will further affect the ability of owners of shares to sell our securities in any market that might develop for them because it imposes additional regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange Commission, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; (iv) excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be able to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. Inventory in penny stocks have limited remedies in the event of violations of penny stock rules. While the courts are always available to seek remedies for fraud against the Company, most, if not all, brokerages require their customers to sign mandatory arbitration agreements in conjunctions with opening trading accounts. Such arbitration may be through an independent arbiter. Investors may file a complaint with FINRA against the broker allegedly at fault, and FINRA may be the arbiter, under FINRA rules. Arbitration rules generally limit discovery and provide more expedient adjudication, but also provide limited remedies in damages usually only the actual economic loss in the account. Investors should understand that if a fraud case is filed against a company in the courts it may be vigorously defended and may take years and great legal expenses and costs to pursue, which may not be economically feasible for small investors.
The fact that we are a penny stock company will cause many brokers to refuse to handle transactions in the stocks, and may discourage trading activity and volume, or result in wide disparities between bid and ask prices. These may cause investors significant illiquidity of the stock at a price at which they may wish to sell or in the opportunity to complete a sale. Investors will have no effective legal remedies for these liquidity issues.
WE WILL PAY NO FORESEEABLE DIVIDENDS IN THE FUTURE.
We have not paid dividends on our common stock and do not ever anticipate paying such dividends in the foreseeable future. Investors whose investment criteria is dependent on dividends should not invest in our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
FACILITIES
The Company operates out of the facility owned by its subsidiary namely, Accurate Auto Parts, Inc., 6269 Caledon Road, King George, VA 22485.
11
During covid pandemic, the CEO had moved his personal office to his home and works from a finished basement. The Company make occasional contributions towards the internet and utility expenses.
Since November 2018 the central corporate office of the Company and all its subsidiaries is located at the facility addressed as 6269 Caledon Road, King George, VA 22485.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings nor do we have any knowledge of any threatened litigation.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
12
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
On April 3, 2013, the Company’s common stock was accepted for trading by FINRA on the OTCBB and the Over-the-Counter Markets OTCBB and was assigned the symbol is “FFLO”.
HOLDERS There are approximately 78 shareholders of record of our common stock as of December 31, 2022.
DIVIDEND POLICY
Holders of our common stock are entitled to receive such dividends as may be declared by our board of directors. We have not declared or paid any dividends on our common shares and it does not plan on declaring any dividends soon. The Company currently intends to use all available funds to finance the operation and expansion of its business.
SALES OF UNREGISTERED SECURITIES
On March 30, 2015, the Company issued 9,700 shares of Preferred Shares – Series A stock to Redfield Holdings, Ltd. for $1 each for a total of $58,000. On December 31, 2014 the Company had a Note outstanding in the principal amount of $330,000 plus interest payable to GS Pharmaceuticals, Inc. On March 30, 2015 by mutual consent this note, and accrued interest was converted to 330,000 preferred shares – Series “B”. On November 1, 2018 the Company designated 500,000 preferred shares – Series “C” as mezzanine capital for its wholly owned subsidiary namely Accurate Auto Parts, Inc. to be redeemed upon repayment of loan made by River Valley Bank to Accurate Auto Parts, Inc. for purchase of property and working capital. The loan from Redfield Holdings, Ltd., with consent of Redfield Holdings, Ltd. was transferred in the corporate books to show the transfer of the loan amount of $470,935 against issuance of 470,935 preferred shares – Series “C”. On April 2, 2019 the Company received a sum of $14,490 against issuance of 21,000 restricted common shares.
ISSUER PURCHASES OF EQUITY SECURITIES
The Company did not repurchase any shares of its common stock during the years ended December 31, 2022 and 2021.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
13
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT DISCUSSION AND ANALYSIS
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN.
THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS, SUCH AS STATEMENTS RELATING TO OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS, PLANS, OBJECTIVES, FUTURE PERFORMANCE AND BUSINESS OPERATIONS. THESE STATEMENTS RELATE TO EXPECTATIONS CONCERNING MATTERS THAT ARE NOT HISTORICAL FACTS. THESE FORWARD-LOOKING STATEMENTS REFLECT OUR CURRENT VIEWS AND EXPECTATIONS BASED LARGELY UPON THE INFORMATION CURRENTLY AVAILABLE TO US AND ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES. ALTHOUGH WE BELIEVE OUR EXPECTATIONS ARE BASED ON REASONABLE ASSUMPTIONS, THEY ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND THERE ARE A NUMBER OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. BY MAKING THESE FORWARD-LOOKING STATEMENTS, WE DO NOT UNDERTAKE TO UPDATE THEM IN ANY MANNER EXCEPT AS MAY BE REQUIRED BY OUR DISCLOSURE OBLIGATIONS IN FILINGS WE MAKE WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FEDERAL SECURITIES LAWS. OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM OUR FORWARD-LOOKING STATEMENTS.
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT ON THE COMPANY’S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2021, INCLUDES A “GOING CONCERN” EXPLANATORY PARAGRAPH THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.
PLAN OF OPERATIONS
Auto Parts Division:
The company decided to sell all its saleable auto parts inventory until it could raise the adequate capital to that is needed to stay in the used auto parts business. Thus, until such time the arrangements are matured there would be no building of auto parts inventory. The use of the sales portal, namely Hollander has also been suspended. See subsequent events below.
Motors & Metal, Inc. – Progress discussed as under:
Having received the letter of intent from a bonafide buyer the Company began sourcing scrap metal for export and after nearly six month of vigorous efforts concluded that none of the existing processors were prepared to offer the shredded steel. The Company was already processing scrap metal but in very limited quantities which were not enough for export trade.
The management began to work on expanding its own scrap metal processing capabilities and upon getting a reconfirmation of zoning from the County Office, Motors & Metals, Inc., in January of 2020 received its license to operate as “Scrap Metal Processor”. The management received several quotations from various equipment manufacturers and is in the process of negotiating purchase of machinery so that it is able to process the desired quantity of scrap metal for export.
14
Upon the news being made public, the Company has received from other qualified buyer abroad “expression of interest” to purchase scrap metal. The annual sales of scrap metal are expected to exceed Ten Million Dollars ($10,000,000). The Company still hopes that it will be able to complete its expansion plan within next 12 months. During the year 2022 there were eight (8) shipments comprising of 20 ft. containers the were shipped abroad. Due to political turmoil, since April of 2022, the business has been severely hampered. See subsequent events below.
RESULTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022, COMPARED TO THE YEAR ENDED DECEMBER 31, 2021
During the year ended December 31, 2022, the Company recognized revenue of $195,137 from sales. During the year ended December 31, 2021, the Company recognized revenue of $745,675 from its operational activities. Thus, having attained a decline of nearly 74% from the previous year.
During the year ended December 31, 2022, the Company incurred a total of operational expenses of $341,971 which included a depreciation allowance of $62,436. During the year ended December 31, 2021, the Company incurred operational expenses of $516,980 including a depreciation allowance of $52,434. The decrease of appx. $175,009 was primarily a result of a decrease in administrative expenses.
During the year ended December 31, 2022, the Company recognized a total loss of $ 2,418,950 on account of inventory liquidation including an operating loss of $342,962 as compared to a net book gain of $691,657 during the year ended December 31, 2021.
LIQUIDITY
At December 31, 2022, the Company has a total current assets of $190,446 consisting of $17,274 in cash, $172,284 in accounts receivable and $890 in inventories at cost. At December 31, 2022, total current liabilities were $21,683 consisting of $1,647 in accounts payable and $9,634 from related parties and notes payable $10,402.
At December 31, 2021, the Company had total current assets of $2,640,415 consisting of $10,212 in cash, $104,721 in accounts receivable and $2,525,484 in inventories and work in progress. At December 31, 2021, total current liabilities were $984,453 consisting of $958,755 in accounts payable, notes payable to related party of $1,989 and accrued interest of $0.
SHORT TERM
On a short-term basis, the Company did not generate revenues sufficient to cover operations. For long term needs the Company will be dependent on receipt, if any, from the growth in sales.
CAPITAL RESOURCES
The Company's capitalization is 100,000,000 common shares with a par value of $0.0001 per share and 20,000,000 preferred stock, with a par value of $ 0.0001 per share.
NEED FOR ADDITIONAL FINANCING
The Company does not have capital sufficient to meet its expansion Capital needs. The Company will have to seek loans or equity placements to cover such cash needs.
15
No commitments to provide additional funds have been made by the Company's management or other stockholders. Accordingly, there can be no assurance that any additional funds will be available to the Company to allow it to cover the Company's expansion budget.
The Company has completed of a Private Placement Memorandum (PPM) under rule 506 (c) of the SEC Act of 1933 for a sum of Nineteen Million Five Hundred Thousand Dollars $19,500,000 against issuance of convertible preferred shares to augment its needs for expansion and acquisitions of existing, profitable Auto Parts companies in USA and Canada as well as to pay-off all interest bearing borrowings to become a “Sharia Compliant” entity. The management is in discussion with a few Investment Bankers, results are expected in due course of time. The Company or its Management does not guarantee if this PPM will be result in attracting subscriptions and that it will be successful.
SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin Topic 13, REVENUE RECOGNITION and FASB ASC 605-15-25, REVENUE RECOGNITION. In all cases, revenue is recognized only when the price is fixed, or determinable, persuasive evidence of an arrangement exists, the merchandise is shipped and/or service is performed and collectability is reasonably assured. The Company reported $2,920,149 in revenues from inception to December 31, 2022.
EARNINGS PER SHARE
The Company has adopted ASC 260-10-50, EARNINGS PER SHARE, which provides for calculation of "basic" and "diluted" earnings per share. Basic earnings per share includes no dilution and is computed by dividing net income or loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of an entity. Basic and diluted losses/profits per share were the same at the reporting dates as there were no common stock equivalents outstanding at December 31, 2022 or December 31, 2021.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
16
|
| Yusufali & Associates, LLC Certified Public Accountants & IT Consultants AICPA, HITRUST, PCAOB, PCIDSS, & ISC2 Registered 55 Addison Drive,
|
Report of Independent Registered Public Accounting Firm
To the shareholders and the Board of Directors of Free Flow, Inc.
Opinion on the Financial Statements: We have audited the accompanying balance sheets of Free Flow, Inc. (the "Company") as of December 31, 2022, and 2021, the related statements of operations, stockholders' equity, and cash flows, for the period then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, except for the effects of the going concern considerations as described in note 7 of the financial statements, as described below, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
We were unable to obtain conclusive evidence as described in note 7 to support the Company's ability to increase additional sales through the future, the procurement of additional sales, the successful development of the Company's contemplated plan of operations, and its transition, to the attainment of profitable operations which are necessary for the Company to continue operations. The ability to successfully resolve these factors raises substantial doubt about the Company's ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
Basis for Opinion: These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
17
Critical Audit Matters: The management listed the critical audit matters in the notes on accounts. They relate to the current period audit of the financial statements, and (1) Disclosures related to Going Concern (2) relate to accounts or disclosures that are material to the financial statements and (3) involved our especially challenging, subjective, or complex judgments. These critical audit matters do not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by referring the critical audit matters, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
|
|
|
Yusufali Musaji Managing Partner
PCAOB registration # We have served as the company’s auditor since 2019 |
|
17th April 17, 2023 |
|
18
FREE FLOW, INC. & SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEETS | ||||
|
| (Audited) |
| (Audited) |
|
| As of |
| As of |
|
| December 31, |
| December 31, |
| 2022 |
| 2021 | |
ASSETS | ||||
Current Assets |
|
|
| |
| Cash and cash equivalents | $ |
| $ |
| Trade Receivables - current |
| ||
| Refund due from IRS - ERTC |
|
| |
| Rounding off the decimals - error | ( |
| ( |
| Inter-company |
| ||
| Inventories |
| ||
TOTAL CURRENT ASSETS |
| |||
|
|
|
|
|
Fixed Assets |
|
|
| |
| Land and Building, without depreciation |
| ||
| Less: Allowance for Depreciation | ( |
| ( |
TOTAL FIXED ASSETS |
| |||
|
|
|
|
|
Other Assets |
|
|
| |
| Delivery Trucks, before depreciation allowance |
| ||
| Allowance for Depreciation | ( |
| ( |
| Improvements in progress |
| ||
| Equipment and Delivery Trucks, before depreciation allowance |
| ||
| Allowance for Depreciation | ( |
| ( |
TOTAL OTHER ASSETS |
| |||
|
|
|
|
|
TOTAL ASSETS | $ |
| $ | |
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | ||||
|
|
|
|
|
Current Liabilities |
|
|
| |
| Accounts Payable | $ |
| $ |
| Notes Payable |
| $ | |
| Notes Payable - Related Parties |
| ||
TOTAL CURRENT LIABILITIES |
| |||
|
|
|
|
|
Long Term Liabilities |
|
|
| |
| Incredible Bank - Revolving Line of Credit - $350,000 |
| ||
| PPP1 |
| ||
| EIDL |
| ||
| PayPal Advance |
| ||
| Incredible Bank |
| ||
TOTAL LONG TERM LIABILITIES |
| |||
Total Liabilities |
| |||
|
|
|
|
|
Redeemable Preferred Stock |
|
|
| |
| Series B; |
| ||
| Series C; |
| ||
Stockholders' Equity (Deficit) |
|
|
| |
| Preferred Stock (($ |
| ||
| Additional Paid in capital |
|
|
|
| Common stock, ($ |
| ||
| Additional Paid in capital |
| ||
Subscription received - pending acceptance |
| |||
| Current year Profit (Loss) | ( |
| |
| (Accumulated Deficit) / Net worth, brought forward |
| ||
| (Accumulated Deficit) / Net worth |
|
|
|
TOTAL STOCKHOLDERS' EQUITY / (DEFICIT) | ( |
| ||
|
|
|
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) | $ |
| $ | |
|
|
|
| |
| The accompanying notes are an integral part of the Consolidated Financial Statements | |||
19
FREE FLOW, INC. & SUBSIDIARIES | |||||
Consolidated Statements of Operations | |||||
|
|
| Year |
| Year |
|
|
| Ended |
| Ended |
|
|
| December 31, |
| December 31, |
|
| 2022 |
| 2021 | |
REVENUES |
|
|
|
| |
| Sales |
| $ |
| $ |
TOTAL REVENUES |
|
| |||
|
|
|
|
|
|
COST OF GOODS SOLD |
|
| |||
GROSS PROFIT |
| ( |
| ||
|
|
|
|
|
|
Selling ,General & Administrative Expenses |
| ||||
|
|
|
|
|
|
Other Expenses |
|
|
|
| |
| Provision of write-off - Inventory |
| |||
|
|
|
|
|
|
Total Expenses |
|
| |||
|
|
|
|
|
|
Net Operating (Loss) |
| $( |
| $( | |
|
|
|
|
|
|
Other Income (Loss) |
| $( |
| $( | |
Increase in value of inventory | $ |
| $ | ||
|
|
|
|
|
|
Net Income |
| $( |
| $ | |
|
|
|
|
|
|
BASIS INCOME (LOSS) PER SHARE | $( |
| $ | ||
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING |
| ||||
|
|
|
|
|
|
| The accompanying notes are an integral part of the Consolidated Financial Statements | ||||
20
FREE FLOW, INC. & SUBSIDIARIES | |||||||||||||||
Consolidated Statements of Stockholders' Equity | |||||||||||||||
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ADDITIONAL |
|
|
|
|
| TOTAL |
| COMMON STOCK |
| PREFERRED STOCK |
| PAID-IN |
| SUBSCRIPTION |
| RETAINED |
| STOCKHOLDERS' | ||||
SHARES |
| AMOUNT |
| SHARES |
| AMOUNT |
| CAPITAL |
| RECEIVED |
| EARNINGS |
| EQUITY | |
|
|
|
|
| Series -A |
|
|
|
|
|
|
|
|
|
|
Balance as of January 1, 2021 |
| $ |
|
| $ |
| $ |
| $ |
| $ |
| $ | ||
Subscription Returned |
|
|
|
|
| ( |
|
| $( | ||||||
Net Income |
|
|
|
|
|
|
| $ | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2021 |
| $ |
|
| $ |
| $ |
| $ |
| $ |
| $ | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Cancelled | ( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional Paid in Capital Returned |
|
|
|
|
|
|
|
| $( |
|
|
|
|
| $( |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Net Loss |
|
|
|
|
|
|
|
|
|
|
|
| ( |
| ( |
Balance as of December 31, 2022 |
| $ |
|
| $ |
| $ |
| $ |
| $( |
| $( | ||
=============================================================================================================================================================================== | |||||||||||||||
21
FREE FLOW, INC. & SUBSIDIARIES | ||||||
Consolidated Statements of Cash Flows | ||||||
|
|
|
| Year |
| Year |
|
|
|
| Ended |
| Ended |
|
|
|
| December 31, |
| December 31, |
|
| 2022 |
| 2021 | ||
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
| |||
| Net (Loss) / Profit | $( |
| |||
| Adjustments to reconcile net income to net cash provided |
|
| |||
| Depreciation |
| ||||
| Loss on disposal of fixed assets |
| ||||
| Forgiveness of PPP 1 loan | ( |
| |||
| Adjustment of additional paid in capital | ( |
| |||
| Assets of IAP |
| ||||
| Inventory |
| ||||
| Notes payable IAP | ( |
| |||
| Changes in operating assets and liabilities: |
|
|
| ||
| (Decrease) / Increase in Trades Payable | ( |
| |||
| (Increase) / Decrease in Trade Receivables | ( |
| |||
| Increase in Inventory | ( |
| ( | ||
|
| NET CASH (USED IN) BYOPERATING ACTIVITIES | ( |
| ( | |
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
| |||
| Proceeds from disposal of fixed assets |
| ||||
| Payment against improvement in progress |
| ( | |||
|
| NET CASH PROVIDED/ (USED IN) INVESTING ACTIVITIES |
| ( | ||
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
| |||
| Proceeds from notes payable - related parties |
| ||||
| Repayment of subscription Money |
| ( | |||
| Proceeds from Notes payable |
| ||||
| Repayment of Notes Payable | ( |
| |||
| Repayment of Line of Credit | ( |
| ( | ||
| Repayment of Pay Pal Advance | ( |
| ( | ||
| Proceeds from PPP1 |
| ||||
| Proceeds from EIDL |
| ||||
| Repayment of Loan from Incredible Bank | ( |
| ( | ||
|
| NET CASH PROVIDED / (USED IN) BY FINANCING ACTIVITIES |
| ( | ||
|
|
|
|
|
|
|
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
| ( | ||||
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD |
| |||||
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD |
| |||||
|
|
|
|
|
|
|
| The accompanying notes are an integral part of the Consolidated Financial Statements |
| ||||
22
FREE FLOW, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2022
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Free Flow, Inc. (the "Company") was incorporated on October 28, 2011 under the laws of State of Delaware to enter the green energy industry. It began with the idea of developing swimming pool solar pump system. The solar energy business became very volatile due to constant decline in prices of solar panels. The Company could not conclude any business in the solar energy sector. In February 2016 the Company formed a subsidiary namely JK Sales, Corp. (name changed to “Accurate Auto Sales, Inc.”) and began the business of selling used auto parts.
Accurate Auto Sales, Inc., at a 19+ acre facility that it now owns, in King George, VA, buys end of life and wrecked automobiles from Insurance Auctions and disassembles the same to parts. After the dis-assembly these parts are labelled and stored at its warehouse, the inventory is uploaded and sold through a very sophisticated internet network. The primary customers are auto body and mechanic shops.
In December 2020 the Company acquired the Assets of Inside Auto Parts, Inc. incorporated in 1993, which is centrally located between Richmond, Charlottesville, and Fredericksburg, Virginia with easy access to main transport routs. The salvage dealership, specializing in used foreign car and truck parts has been acquired by Free Flow, Inc. subsidiary named “FFLO - Inside Auto Parts, Inc.” and has 21,953.9 square feet fully enclosed and another 17,392.35 square feet under roof enclosed on 3 sides, all located on 16 acres of land in Mineral, Virginia now owned by Free Flow, Inc.
Current management of Inside Auto Parts, Inc. will remain in place to manage FFLO – Inside Auto Parts, Inc.
Subsequent to receipt of an LOI from an overseas buyer the Company’s plan to set up a “Scrap Metal Processing” plant is in place and funding for equipment is being sought. Management forecasts that the scrap metal processing would add another $10 to $12 million in gross sales.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
The statements were prepared following generally accepted accounting principles of the United States of America (US GAAP) consistently applied and the rules and regulations of U.S. Securities and Exchange Commission (SEC).
USE OF ESTIMATES
Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, operating accounts and short-term, highly liquid investments with maturities of three months or less at the time of acquisition.
ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
Regarding the Aging of Trade Accounts Receivable and Trade Accounts Payable, the industry standard is very strange in this business. Often, the aging could go to 2 to 3 years and the receivables are good. The reason is that when the customer buys a part which is a firm sale, if they use the part which was purchased, they pay within 60
23
to 75 days. But if the part did not get used for whatever reason, and they failed to return the part within 30 days, then as a courtesy, the Sellers, does not demand payment so that new sales of other parts continue. Thus, no forceful demand is made if it is a running account and cash is coming in against new sales. The management learnt of this trait after the business was acquired. There were receivables as well as payables that went back to 2 years. Even in the new acquisition that the Company has recently done, while we did not assume any trade liabilities or receivables, the same fact has been observed in the Seller’s books of accounts. The management has not suffered any significant bad debts.
Trade Accounts Receivable: Balance is $
The company did not make any provision for such a long outstanding receivable because (a) these buyers are generally repair shops; (b) when used for the customers, these repair shops send the payment within 60 days; (c) when not used, they are still in possession of the parts until the next purchase as a possible way the truck mileage for the return. When the parts are not returned, our company policy is not to ship anything else, until the previous outstanding sales invoice is paid.
In the past 3 years, this company did not have significant bad debt for the domestic business. One invoice in the amount of $12,929.23 owed by SAM International, UAE had been written off due to failure to collect the same on account of the owner having gone out of business due to severe incapability to conduct business as a result of heath.
Trade Accounts Payable: Balance is $
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less of accumulated depreciation. Expenditures for major additions and improvements that extend the useful life of the related asset are capitalized. As property or equipment sold or retired, the applicable cost and accumulated depreciation are removed from the accounts and resulting gain or loss thereon is recognized. Work in progress consist primarily of building. Depreciation is calculated using straight-line method. The estimated useful lives of Equipment and fixtures are 5 years.
INTANGIBLE ASSETS
Initial Measurement
Intangible asset acquisitions in which the consideration given is cash are measured by the amount of cash paid, which generally includes the transaction costs of the asset acquisition. However, if the consideration given is not in the form of cash (that is, in the form of noncash assets, liabilities incurred, or equity interests issued), measurement is based on either the cost which shall be measured based on the fair value of the consideration given or the fair value of the assets (or net assets) acquired, whichever is more clearly evident and, thus, more reliably measurable.
Subsequent Measurement
The company accounts for its intangible assets under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification Subtopic ("ASC") 350-30-35 "Intangibles--Goodwill and Other--General Intangibles Other than Goodwill-Subsequent Measurement". Under this method the company is required to test an indefinite-lived intangible asset for impairment on at least an annual basis. This is done by comparing the asset's fair value with its carrying amount. If the carrying amount exceeds the asset's fair value, the difference in those amounts is recognized as an impairment loss.
24
INCOME TAXES
The Company accounts for its income taxes in accordance with FASB Accounting Standards Codification ("ASC") No. 740, "Income Taxes". Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax balances. Deferred tax assets and liabilities are measured using enacted or substantially enacted tax rates expected to apply to the taxable income in the years in which those differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment.
FINANCIAL INSTRUMENTS
Fair value measurements are determined based on the assumptions that market participants would use in pricing an asset or liability. ASC 820-10 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. FASB ASC 820 establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:
o Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and must be used to measure fair value whenever available.
o Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
o Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability. For example, level 3 inputs would relate to forecasts of future earnings and cash flows used in a discounted future cash flows method.
The carrying amounts reported in the balance sheet for cash, accounts payable and notes payable approximate their estimated fair market value based on the short-term maturity of this instrument. In addition, FASB ASC 825-10-25 "Fair Value Option" was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. NET LOSS PER SHARE Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive loss per share reflects the potential dilution of securities that could share in the losses of the Company. Because the Company does not have any potentially dilutive securities, the accompanying presentation is only of basic loss per share.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements that the Company has adopted or that will be required to adopt in the future are summarized below.
In May 2011, FASB issued Accounting Standards Update ("ASU") No. 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S.GAAP and IFRS" ("ASU No. 2011-04"). ASU No. 2011-04 provides guidance which is expected to result in common fair value measurement and disclosure requirements between U.S. GAAP and IFRS. It changes the
25
wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. It is not intended for this update to result in a change in the application of the requirements in Topic 820. The amendments in ASU No. 2011-04 are to be applied prospectively. ASU No. 2011-04 is effective for public companies for interim and annual periods beginning after December 15, 2011. Early application is not permitted. This update is not expected to have a material impact on the Company's financial statements.
In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income" ("ASU No. 2011-05"). In ASU No. 2011-05, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The amendments in ASU No. 2011-05 do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. They also do not change the presentation of related tax effects, before related tax effects, or the portrayal or calculation of earnings per share. The amendments in ASU No. 2011-05 should be applied retrospectively. The amendment is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted, because compliance with the amendments is already permitted. The amendments do not require any transition disclosures. This update is not expected to have a material impact on the Company's financial statements.
In September 2011, the FASB issued ASU No. 2011-08, "Intangibles -- Goodwill and Other (Topic 350)" ("ASU No. 2011-08"). In ASU No. 2011-08, an entity is permitted to make a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying amount before applying the two-step goodwill impairment test. If an entity concludes that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, it would not be required to perform the two-step impairment test for that reporting unit. The ASU's objective is to simplify how an entity tests goodwill for impairment. The amendments in ASU No. 2011-08 are effective for annual and interim goodwill and impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity's financial statements for the most recent annual or interim period have not yet been issued. The Company is evaluating the requirements of ASU.
No. 2011-08 and has not yet determined whether a revised approach to evaluation of goodwill impairment will be used in future assessments. The Company does not expect the adoption of ASU No. 2011-08 to have a material impact on its financial statements.
Other accounting standards that have been issued or proposed by the FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
26
NOTE 3 - PROVISION FOR INCOME TAXES
Realization of deferred tax assets is dependent upon sufficient future taxable income during the period that deductible temporary differences and carry-forwards are expected to be available to reduce taxable income. As the achievement of required future taxable income is uncertain, the Company recorded a valuation allowance. As of December 31, 2022 the Company had a net loss of $2,761,312. Net operating loss carry-forward, expires twenty years from the date the loss was incurred.
|
|
| December 31, |
|
| December 31, |
|
| 2022 |
|
| 2021 | |
|
|
|
|
|
|
|
Net operating profit (loss) Carry Forward |
| $ | ( |
| $ | |
|
|
|
|
|
|
|
Valuation allowance |
|
|
| $ |
The Company is subject to United States federal and state income taxes at an approximate rate of
Free Flow, Inc. | ||||||
Tax Calculations | ||||||
|
|
|
|
|
|
|
|
|
| December 31, |
|
| December 31, |
|
| 2022 |
|
| 2021 | |
|
|
|
|
|
|
|
Net profit (loss) before taxes per financial statement |
| $ | ( |
| $ | |
Income tax rate |
|
|
|
| ||
Income tax benefit |
|
|
|
|
| |
Valuation allowance change |
|
| ( |
|
| |
Provision for income tax |
|
|
|
| ||
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of deferred income tax assets and liabilities at December 31, 2022 and December 31, 2021 are as follows:
Net deferred income tax asset - The Company has recognized a valuation allowance for the deferred income tax asset since the Company cannot be assured that it is more likely than not that such benefit will be utilized in future years. The valuation allowance is reviewed annually. When circumstances change, and which cause a change in management's judgment about the realizability of deferred income tax assets, the impact of the change on the valuation allowance is generally reflected in current income.
27
NOTE 4- PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
|
|
| As of December 31, | |||
|
| 2022 |
|
| 2021 | |
|
|
|
|
|
|
|
Property, Land and Building at cost |
| $ | |
| $ | |
Trucks at cost |
|
| |
|
| |
Equipment at cost |
|
| |
|
| |
|
|
|
|
|
|
|
Total Fixed Assets |
| $ | |
| $ | |
Less: Accumulated Depreciation |
|
| ( |
|
| ( |
| $ | |
| $ | | |
Depreciation expenses for the periods ended December 31, 2022 and December 31, 2021 were $
NOTE 5 – INVENTORY
|
|
| As of December 31, | |||
|
| 2022 |
|
| 2021 | |
|
|
|
|
|
|
|
Auto Parts (used) |
| $ | |
| $ | |
|
|
|
|
|
|
|
| $ | |
| $ | | |
The decrease in the inventory was a result of sale of asset of subsidiary company namely FFLO – Inside Auto Parts, Inc.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is not presently involved in any litigation.
NOTE 7 - GOING CONCERN
Future issuances of the Company's equity or debt securities will be required for the Company to continue to finance its operations and continue as a going concern. The Company's present revenues are marginally sufficient to meet operating expenses. The financial statement of the Company has been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had incurred cumulative net losses of $
28
continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
NOTE 8 - RELATED PARTY TRANSACTIONS
Sabir Saleem, the officer and director of the Company, may in the future, become involved in other business opportunities as they become available, thus he may face a conflict in selecting between the Company and his other business opportunities. The Company has not formulated a policy for the resolution of such conflicts.
NOTE 9 - NOTES PAYABLE - RELATED PARTY
REDFIELD HOLDINGS, LTD, MAIN SHAREHOLDER
During the year 2018, the Company received additional loans totaling $
a) Each share to carry one vote.
b) Each share will be redeemable upon repayment of Loan(s) made by River Valley Bank to Accurate Auto Parts, Inc.
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 C" are bought by the subscriber.
e) Each share will carry a dividend right at par with the common shares.
The Company issued
NOTE 10 - CAPITAL STOCK
The Company's capitalization is
Of the 20,000,000 authorized Preferred Stock, the company has designated
On November 22, 2011, the Company issued a total of
On December 6, 2011, the Company issued a total of
On August 1, 2014, the Company issued
On March 30, 2015, the Company issued
29
On December 31, 2014 the Company had a Note outstanding in the principal amount of $
On December 31, 2018 the Company had a Note outstanding in the principal amount of $
On April 2, 2019 the Company received a sum of $
As of December 31, 2019, the Company had
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures (as defined in Rule 13(a) - 15(e)) are controls and procedures that are designed to ensure that information required to be disclosed by a public company in the reports that if 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. Disclosure controls and procedures include, without limitation, controls and procedures designed.
To ensure that information required to be disclosed by a public company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. As of December 31, 2018, the Chief Executive Officer/Principal Accounting Officer has founded such controls and procedures to be ineffective as discussed further below.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING.
Free Flow's management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed 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. The Company's internal control over financial reporting includes those policies and procedures that:
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company's assets;
(2) 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 being made only in accordance with authorizations of Free Flow's management and directors; and
30
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on Free Flow's financial statements.
Our Chief Executive Officer/Principal Accounting Officer, who is the same individual, has identified certain material weaknesses in internal control over financial reporting relating to a shortage of accounting and reporting personnel due to limited financial resources and the size of our Company, as detailed below:
(1) The Company currently does not have but is in the process of developing formally documented accounting policies and procedures, which includes establishing a well-defined process for financial reporting.
(2) Due to the limited size of our accounting department, we currently lack the resources to handle complex accounting transactions. We believe this deficiency could lead to errors in the presentation and disclosure of financial information in our annual, quarterly, and other filings.
(3) As is the case with many companies of similar size, we currently have a lack of segregation of duties in the accounting department. Until our operations expand and additional cash flow is generated from operations, a complete segregation of duties within our accounting function will not be possible.
Considering the nature and extent of our current operations and any risks or errors in financial reporting under current operations and the fact that we have been a small business with limited employees, such items caused a weakness in internal controls involving the areas disclosed above.
Our Chief Executive Office/Principal Accounting Officer has concluded that our internal controls over financial reporting were ineffective as of December 31, 2015, due to the existence of the material weaknesses noted above that we have yet to fully remediate.
This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to permanent rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.
There was no change in our internal control over financial reporting that occurred during the fiscal year ended December 31, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
NAME |
| AGE |
| POSITION |
| TERM |
|
|
|
|
|
|
|
Sabir Saleem |
| 74 |
| President, CEO, CFO and Director |
| Annual |
31
CURRENT OFFICERS AND DIRECTORS
SABIR SALEEM, PRESIDENT, CEO, CFO AND DIRECTOR, SECRETARY& TREASURER AGE 73.
Mr. Saleem was appointed President, CEO, CFO and a Director of Free Flow, Inc. on April 18, 2014. Mr. Saleem has been the CEO and 100% owner of Redfield Holdings, Ltd. since its formation in February, 2014. From 2003 until December 2007, he was President of United Medscan Corp; and after that Registrant was sold, he remained a consultant with United Medscan until October, 2009. Mr. Saleem was CEO of Total Medical Care, Inc., a not-for-profit corporation, from July 2006 until 2011. CEO of GS Pharmaceuticals, Inc., a pharmaceutical Registrant since February, 2012; From December 2010 until January 2012, Mr. Saleem was the CEO of Michelex Corporation (TS: MLXO), a pharmaceutical manufacturer. All of the foregoing, except MLXO, are privately- owned companies.
MR. SHAH WALI KHAN, DIRECTOR was appointed on November 25, 2020 to serve as a director of the Company. In addition to his management and oversight role on the Board of Directors, Mr. Khan will use his business management skills to assist with the planned global expansion of Free Flow’s subsidiary operations.
On September 18, 2020 the Company announced formation of Company’s Advisory Board and introduced its first member, JEFF K. RUSSELL, who will serve as the Advisory Board’s Director of Marketing Strategies.
FORMER OFFICERS AND DIRECTORS
DR. MELODY JACKSON, DIRECTOR was appointed on November 22, 2020. Dr. Jackson is a management expert, college faculty member, and a researcher with over 20 years of management and supervisory experience that includes an executive level of management for functions such as Strategic Management, Project Management, Human Resources Management, and Environmental management with over 7 years of service as a Management Professor. Dr. Jackson’s resignation was accepted on December 27, 2021.
FERNANDINO FERRARA, FORMER SECRETARY/TREASURER AND DIRECTOR, AGE 66
Mr. Fernandino Ferrara was appointed Secretary/Treasurer and Director of Free Flow, Inc. on April 18, 2014. Mr. Ferrara has been President and CEO of Lease-it-Capital d/b/a AccuLease(TM), located in Farmingdale, NY, for the past 15 years. Mr. Ferrara is also the Secretary-Treasurer of Adopt-A-Battalion, Inc., a charitable support organization for overseas and returning US servicemen and servicewomen; and he is the Vice-President of the Suffolk County Police Reserves Foundation a charitable support organization for Suffolk County, New York, police. Due to personal reasons Mr. Ferrara’s resignation as Secretary/Treasurer and Director was accepted effective May 1, 2018.
S. DOUGLAS HENDERSON, FORMER PRESIDENT, CFO, SECRETARY AND DIRECTOR
Mr. Henderson was President, CFO, Secretary and sole director of Free Flow from October 29, 2011 through April 18, 2014. From 1998 until 2008 he was Admissions Director, Senior Flight Instructor of San Diego Flight Training International, San Diego CA. Since July 2004, he has worked part time as an income tax preparer for H & R Block. Mr. Henderson is also part owner of J. Bright Henderson, Inc., a dealer in fine art.
Mr. Henderson was a director of Ads in Motion, Inc., a public company, from August 2007 until June 28, 2010 and was secretary of Ads in Motion from May 2007 until June 28, 2010.
Our officers are spending up to 5 hours per week on our business currently. When the Company is financially capable of paying salaries, it is anticipated that management will assume full- time roles in the Company's operations and be paid accordingly.
32
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities, officers, directors, controlling shareholders and/or partners of other entities engaged in a variety of businesses. Thus, there exist potential conflicts of interest including, among other things, time, efforts and opportunity, involved in participation with such other business entities. While each officer and director of our business is engaged in business activities outside of our business, the amount of time they devote to our business will be up to approximately 15 hours per week.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently, no requirement contained in our Articles of Incorporation, Bylaws, or minutes which requires officers and directors of our business to disclose to us business opportunities which come to their attention. We have no intention of merging with or acquiring an affiliate, associate person or business opportunity from any affiliate or any client of any such person.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company is managed under the direction of its board of directors.
The board of directors has no nominating, auditing committee or a compensation committee. Therefore, the selection of person or election to the board of directors was neither independently made nor negotiated at arm's length.
EXECUTIVE COMMITTEE
The members of the Board of Directors serve as its executive committee.
AUDIT COMMITTEE
The members of the Board of Directors serve as its audit committee.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the fact that officers received a cash salary during the last three fiscal years. The following table sets forth this information by the Company including salary, bonus and certain other compensation to the Company's Chief Executive Officer and named executive officers for the years ended December 31, 2021, 2020.
Mr. Saleem do not have employment agreements with the Company, he does receive compensation from the Company.
33
DIRECTOR COMPENSATION
The following table sets forth certain information concerning compensation paid to our directors for services as directors, but not including compensation for services as officers reported in the "Summary Executive Compensation Table" during the year ended December 31, 2022:
Summary Executive Compensation Table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sabir Saleem |
|
| Fernandino Ferrara | ||||||
|
|
| 2022 |
|
| 2021 |
|
| 2018 |
|
| 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary |
|
|
|
|
|
|
|
|
|
|
|
|
Bonus |
| $ | 48,716 |
| $ | 44,397 |
|
| 0 |
|
| 0 |
Stock Awards |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
Option Awards |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
Non-Equity Incentive Plan Compensation |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
Non-Qualified Deferred Compensation Earnings |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
All other Compensations |
|
| 0 |
|
| 0 |
|
| 0 |
|
| 0 |
Total |
| $ | 48,716 |
| $ | 44,397 |
| $ | - |
| $ | - |
All or our officers and/or directors will continue to be active in other companies. All officers and directors have retained the right to conduct their own independent business interests.
It is possible that situations may arise in the future where the personal interests of the officers and directors may conflict with our interests. Such conflicts could include determining what portion of their working time will be spent on our business and what portion on other business interest. Any transactions between us and entities affiliated with our officers and directors will be on terms which are fair and equitable to us. Our Board of Directors intends to continually review all corporate opportunities to further attempt to safeguard against conflicts of interest between their business interests and our interests.
We have no intention of merging with or acquiring an affiliate, associated person or business opportunity from any affiliate or any client of any such person.
Directors receive limited compensation for serving.
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
Free Flow does not have a stock option plan as of the date of this filing. There was no grant of stock options to the Chief Executive Officer and other named executive officers during the fiscal years ended December 31, 2020 and 2019.
LIMITATION ON LIABILITY AND INDEMNIFICATION
Free Flow, Inc. officers and directors are indemnified as provided by the Delaware Revised Statutes and the bylaws. Under the Delaware Revised Statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's Articles of Incorporation. Our Articles of Incorporation do not specifically limit the directors' immunity. Excepted from that immunity are:
34
(a) a willful failure to deal fairly with us or our shareholders in connection with a matter in which the director has a material conflict of interest; (b) a violation of criminal law, unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful; (c) a transaction from which the director derived an improper personal profit; and (d) willful misconduct.
Our bylaws provide that it will indemnify the directors to the fullest extent not prohibited by Delaware law; provided, however, that we may modify the extent of such indemnification by individual contracts with the directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding, or part thereof, initiated by such person unless such indemnification:
(a) is expressly required to be made by law, (b) the proceeding was authorized by the board of directors, (c) is provided by us, in sole discretion, pursuant to the powers vested under Delaware law or (d) is required to be made pursuant to the bylaws.
Our bylaws provide that it will advance to any person who was, or is a party, or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of us, or is or was serving at the request of us as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under the bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer except by reason of the fact that such officer is, or was, our director in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of us.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth information with respect to the beneficial ownership of Free Flow's outstanding common stock by:
o each person who is known by the Company to be the beneficial owner of five percent (5%) or more of the Company's common stock;
o Free Flow's Chief Executive Officer, its other executive officers, and each director as identified in the "Management -- Executive Compensation" section; and
o all of the Company's directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock and options, warrants and convertible securities that are currently exercisable or convertible within 60 days of the date of this document into shares of Free Flow's common stock are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage
35
ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
There are currently 100,000,000 common shares authorized of which 24,841,900 are outstanding at March 15, 2022.
The following sets forth information with respect to our common stock beneficially owned by each Officer and Director, and by all Directors and Officers as a group as of December 31, 2021.
TITLE OF CLASS | NAME AND ADDRESS OF BENEFICIAL OWNER (1) | AMOUNT AND NATURE OF BENEFICIAL OWNER | PERCENT OF CLASS |
Common shares | Sabir Saleem, President, CEO and Director (2) (3) | 17,990,000 | 68.66% |
Preferred Shares – Series “A” | Redfield Holdings, Ltd. | 10,000 | 100% |
Preferred Shares – Series “B” | Redfield Holdings, Ltd. | 330,000 | 100% |
Preferred Shares – Series “C” | Redfield Holdings, Ltd. | 470,935 | 100% |
|
|
|
|
All Directors and Executive Officers as a Group (1 Person) | Common Shares | 17,990,000 | 68.66% |
(1) Address is c/o Free Flow, Inc., 6269 Caledon Road, King George, VA 22485.
(2) Mr. Saleem is an officer, director and/or beneficial shareholder of Redfield Holdings, Ltd. Redfield Holdings, Ltd. holds 17,990,000 shares of common stock.
(3) Each share of Preferred Share - Series A stock carries voting rights equal to ten thousand (10,000) votes. Redfield Holdings, Ltd. holds 10,000 shares of Preferred Shares - Series A stock. Mr. Saleem is an officer, director and/or beneficial shareholder of Redfield Holdings, Ltd. As of December 31, 2018, 10,000 Preferred Shares - Series A stock was issued and outstanding.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Other than the transactions discussed below, we have not entered into any transaction nor are there any proposed transactions in which any of our founders, directors, executive officers, shareholders or any members of the immediate family of any of the foregoing had or is to have a direct or indirect material interest.
ITEM 13 A. SUBSEQUENT EVENTS
1.On February 15, 2023, the company received an offer from a buyer proposing to purchase the 19+ acre facility which is land, building and fixtures along with transfer of licenses. The negotiations began and finally, on March 6, 2023, a contract for purchase/sale was executed with certain contingencies including the feasibility and due diligence period. If all goes well then the closing shall occur on or before April 30, 2023. The negotiated gross sale price has been agreed at $2,100,000.00. All secured liabilities, which are approximately 1,175,000 would be paid off.
2.There is a tower site on the premises which is owned by the company and as per public records was leased to a wireless communication company. This leased site has not been included in the subject property sale/purchase contract. The terms of the lease agreement which the original owner signed with a wireless tower company have not yet been made available and the matter is being pursued through legal counsel.
36
3.In view of the above property sale/purchase contract, all employees have been laid off. The company is only focusing on trading of scrap metal. Supply orders for nearly $14,000,000 are in hand and are valid. Vigorous efforts are undertaken to have trade consummated as soon as possible.
4.A few merger and acquisition proposals are also being considered. Once any firm negotiation is arrived at then appropriate announcements shall be made public.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Yusufali & Associates, LLC (“Yusufali") is the Company's principal auditing accountant firm. The Company's Board of Directors has considered whether the provisions of audit services are compatible with maintaining Yusufali’s independence. The engagement of our independent registered Public Accounting firm was approved by us prior to the start of the audit of our consolidated financial statements for the years ended December 31, 2019 and has automatically renewed to cover the present period.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following is a complete list of exhibits filed as part of this Form 10K. Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of Regulation S-K.
|
|
|
EXHIBIT |
|
|
NUMBER | DESCRIPTION |
|
|
|
|
3.1 | * | |
3.2 | * | |
31.1 | Filed Herewith | |
32.1 | Filed Herewith | |
101.INS | XBRL Instance Document | Filed Herewith (1) |
101.SCH | XBRL Taxonomy Extension Schema Document | Filed Herewith (1) |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed Herewith (1) |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed Herewith (1) |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed Herewith (1) |
101.PRE | XBRL Taxonomy Extension presentation Linkbase Document | Filed Herewith (1) |
|
|
|
*Filed as Exhibits with the Company's S-1 Registration Statement filed with the Securities and Exchange Commission (www.sec.gov), dated March 6, 2012.
(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.
37
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ Sabir Saleem |
| March |
|
|
|
Sabir Saleem |
|
|
(Chief Executive Officer/Principal Executive Officer |
|
|
& Principal Accounting Officer) |
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the dates indicated.
/s/ Sabir Saleem |
| March |
|
|
|
Sabir Saleem, Director, CEO |
|
|
38