FFLO 10-Q Quarterly Report June 30, 2018 | Alphaminr

FFLO 10-Q Quarter ended June 30, 2018

FREE FLOW, INC.
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10-Q 1 g8607a.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2018

Commission file number 000-54868

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

Delaware
(State or other jurisdiction of incorporation or organization)
13800 Coppermine Road, First Floor
Herndon, VA 20171
(Address of Principal Executive Offices)

(703) 789-3344
(Registrant’s Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [X] NO [   ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [   ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]
Accelerated filer [  ]
Non-accelerated filer [  ]
Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES [  ] NO [X]
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 26,200,000 shares as of August 14, 2018.

TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
3
Condensed Balance Sheets - June 30, 2018 (Unaudited)
and December 31, 2017 (Audited)
3
Condensed Statements of Operations -
Six and three months ended June 30, 2018 and 2017 (Unaudited)
4
Condensed Statements of Cash Flows -
Six months ended June 30, 2018 and 2017 (Unaudited)
5
Notes to Financial Statements
6
Item 2. Management's Discussion and Analysis or Plan of Operations
8
Item 3. Quantitative and Qualitative  Disclosures About Market Risks
Not  Applicable
9
Item 4. Controls and Procedures
9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
10
Item 1A. Risk Factor
Not Applicable to Smaller Reporting Companies
10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
10
Item 3. Defaults Upon Senior Securities
None
10
Item 4. Mine Safety Disclosures
Note Applicable
10
Item 5. Other Information
None
10
Item 6. Exhibits
10
2

ITEM 1. FINANCIAL STATEMENTS
Free Flow, Inc.
Condensed Balance Sheets
As of
As of
June 30, 2018
December 31, 2017
(Unaudited)
(Audited)
ASSETS
CURRENT ASSETS
Cash in hand and bank
$
4,600
$
5,354
Advances for Inventory Purchases
170
1,906
Advance for purchase of Property
25,008
-
Deposit - Evolve Bank & Turst
10,000
-
Accounts Receivable - Trade
4,710
-
Inventory
242,834
177,871
TOTAL CURRENT ASSETS
287,322
185,131
OTHER ASSETS
Automobiles - Delivery Trusks
3500
3,500
TOTAL OTHER ASSETS
3,500
3,500
TOTAL ASSETS
$
290,822
$
188,631
LIABILITES & STOCKHOLDERS' EQUITY (DIFICIT)
Current Liabilities
Accounts Payable
$ -
$
21,140
Customer Deposits against Sales
17,700
-
Notes payable - related parties
260,348
176,417
TOTAL CURRENT LIABILITES
278,048
197,557
Total Liabilities
278,048
197,557
Redeemable Preferred Stock
Series B; 500,000 shares authorized, 330,000 ad 0 issued and outstanding
as of March 31, 2017 (Classified as Mezzanine equity)
330,000
330,000
Stockholders' (Deficit)
Preferred stock ($0.0001) par value, 20,000,000 shares authorized
10,000 shares part value $0.001 Class A issued on March 31, 2017 and December 31, 2016
1
1
Additional Paidin capital
Common Stock, ($0.0001 par value 100,000,000 shares authorized
26,200,000 shares issued and outstanding as of March 31, 2017 and December 31, 2016
2,620
2,620
Additional paid-in capital
114,545
114,545
Current Period - Profit
21,701
Accumulated Deficit
(456,092
)
(456,092
)
TOTAL  STOCKHOLDERS' EQUITY (DIFICIT)
(317,226
)
(338,926
)
TOTAL LIABILTIES & STOCKHOLDERS' DEFICIT
$
290,822
$
188,631
The accompanying notes are an integral part of these financial statements

3

Free Flow, Inc.
Condensed Statements of Operations
(Unaudited)
Six months ended June 30,
Three months ended June 30,
2018
2017
2018
2017
REVENUES
Revenues
$
79,600
$
236,714
$
39,795
$
39,795
TOTAL REVENUES
79,600
236,714
39,795
39,795
COST OF GOODS SOLD
27,277
66,772
14,521
14,521
GROSS PROFIT
52,323
169,943
25,274
25,274
GENERAL & ADMINISTRATIVE EXPENSES
Administrative expenses
13,631
122,238
8,440
64,850
Professional fees
6,658
6,457
3,145
2,397
Selling expenses
9,055
19,805
4,887
16,185
Financial Expenses
1,279
5,583
987
3,034
TOTAL GENERAL & ADMISINSTRATEVIE EXPENSES
30,623
154,082
17,459
86,466
PROFIT (LOSS) FROM OPERATION
21,701
15,860
7,815
(61,192
)
OTHER EXPENSE
Interest expense-related party
- -
-
-
NET INCOME (LOSS)
$
21,701
$
15,860
$
7,815
$
(61,192
)
BASIC EARNING PER SHARE
0.0008
0.0006
WEIGHTED AVERAGE NUMBERO OF COMMON SHARESS OUTSTANDING
26,200,000
26,200,000
The accompanying notes are an integral part of these financial statements

4

Free Flow, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six month ended June 30,
2018
2017
CASH FLOW FROM OPERATING ACTIVITIES
Net Profit  (Loss)
$
21,700
$
15,860
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities
(Increase) decrease in Inventory
(64,963
)
(42,622
)
(Increase) decrease in Prepaid expenses
(8,264
)
35,602
Increase (decrease) in Accounts payable
(21,140
)
(29,477
)
Increase (decrease) in Customer deposit
17,692
-
(Increase) decrease in Accounts receivable
(4,710
)
2,616
NET CASH USED IN OPERATING ACTIVITIES
(59,685
)
(18,021
)
CASH FLOW FROM FINANCING ACTIVITIES
Increase (decrease) in Proceeds from related party note
(83,931
)
(12,089
)
Increase (decrease) in Prepaid for Asset Purchase
25,000
Increase (decrease) in Proceeds from related party note
(6,700
)
Increase (decrease) in Proceeds from related party note
(10,600
)
NET CASH PROVIDED BY FINANCING ACTIVITIES
(58,931
)
(29,389
)
NET INCREASE IN CASH
(754
)
11,368
CASH AT BEGINNING OF PERIOD
5,354
3,718.00
CASH AT END OF PERIOD
$
4,600
$
15,086
The accompanying notes are an integral part of these financial statements

5

Free Flow, Inc.
Notes to Condensed Consolidated Financial Statements
June 30, 2018
(Unaudited)


NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of June 30, 2018 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2018 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on April 2, 2018.

NOTE 2 – GOING CONCERN

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

In order to continue as a going concern, the Company will need, among other things, Sales of its product lines. Management has obtained such sales through Internet sales and marketing companies who specialize in promotion of such businesses. Management is obtaining capital from management and significant shareholders sufficient to meet its minimal operating expense and is expecting that cash flow from sales will soon be available to augment the operating capital needs. However, management cannot provide an assurance that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually fulfill the secured  purchase orders to attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 – INCORPORATION OF SUBSIDIARY

In February 2015, the company incorporated a subsidiary, Promedaff, Inc. and purchased a skin care product line and formulations for $2,000,000 against a promissory note. An e commerce platform was set up for sales and marketing. The efforts did not bear any success and the entire inventory was sold through the Seller and the Promissory Note was cancelled and marked “VOID”. The name of this entity has been changed to Motors & Metals, Inc. and has remained inactive but is in good standing. Motors & Metals, Inc. operates as a separate entity to conduct business in refurbishing automotive engines and selling metals recovered from MMM Auto Parts facility, and have an independent profit center. The company has continued its research on the related subjects and expects to activate this line of business once it is adequately funded.

6

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

On April 17, 2018 the company incorporated in Virginia, another subsidiary named Accurate Investments, Inc. with the objectives of acquiring real estate property, discussed under subsequent events in note 6 below.

NOTE 4 – RELATED PARTY

As of December 31, 2017, the Company had a note payable in the amount of $176,417 to Redfield Holdings, Ltd. a related party. During the six months ended the Company borrowed an additional $83,931 thus owing a total sum of $260,348 as of June 30, 2018. The note is unsecured and does not bear any interest and has a maturity date of December 30, 201. During the six months ended the Company St. Gabriel Foundation a related party, deposited an addition sum of $500.00 thus the total amount to their credit amounts to $11,100.00. The company borrowed another a sum of $6,600 from Mr. Ahmad a related party against a note bearing zero interest and payable on December 30, 2018. The total liabilities owed to related parties as on June 30, 2018 amount to $278,048 against total liabilities of $197,557 as on December 31, 2017.

NOTE 5 – CAPITAL STOCK

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

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

a)
Each share to carry one vote.
b)
Each share will be redeemable with a 365 days written notice to the company.
c)
Each share will be junior to any debt incurred by the Company.
d)
The redemption value will be the par value at which such “preferred shares – series B” are bought by the subscriber.
e)
Each share will carry a dividend right at par with the common shares.

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

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

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

NOTE 6 – SUBSEQUENT EVENT S

None.

7

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

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

PLAN OF OPERATION

Accurate Auto Parts, Inc. the Company’s used auto parts subsidiary has made a sale of $79,600 of Automobile Parts and Services. The Company continues seeking additional sales both in the domestic and international markets.

RESULTS OF OPERATIONS

The Company did recognize revenue for a sum of $79,600 during the six months ended June 30, 2018 and $236,714 of revenues during the six month ended June 30, 2017. While the net revenues for the period ended June 30, 2018 were less by $ $157,115 than for the same period during 2017 but the Cost of Goods Sold was also less by $39,495 during the period ended June 30, 2018 as compared to the same period during 2017. The general and administrative expenses for the period ended June 30 2018 were $30,623 as compared to $154,082 for the same period during 2017.

During the six months ended June 30, 2018 the company recognized a net income of $21,701 as compared to $15,860 for the corresponding period in the year 2017, thus recognizing an increase of approximately 73 % as compared to the six months ended June 2017.

For confidentiality reasons and in the best interest of the company, the management was waiting for the right time to disclose the fact that the landlord had defaulted in servicing her loan to the lending bank, and subsequently filed protection under chapter 11 of the bankruptcy court which was converted to a chapter 7. While the company was had met its obligations under the lease and had made an advance payment for the lease of the premises, but the laws in the Commonwealth of Virginia are in favor of the mortgage-holder to get a vacant possession of the premises in the event of foreclosure. The company was constantly under fear that if the property was to foreclose, (which it did) and if the  lenders (now the new owners) would not accept our offer or if any our business competitor were to make a higher offer than ours, then the company would be facing multiple challenges which would include removing several hundred vehicles and auto parts at a short notice to another properly zoned location – which is hard to find due to environmental permits.

Keeping this sensitive subject in mind, the management began liquidating its inventory of “automobile shells” as metal scrap, which was a three to four months process. The company virtually discontinued purchasing new inventory which obviously effected the sales for the last quarter of 2017.

In mid-January 2018, preliminary negotiations began with the bank that had foreclosed on the landlord whom they had made a loan of over $1.3 million for the same assets that the company has now been able to negotiate for $700,000.00.
8

LIQUIDITY

THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT ON THE COMPANY’S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2016, AND FOR EACH OF THE PRECEDING YEARS THEN ENDED, INCLUDES A “GOING CONCERN” EXPLANATORY PARAGRAPH, THAT DESCRIBES SUBSTANTIALLY DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.

On June 30, 2017 the Company had total current assets of $290,130 consisting of $15,086 in cash and $5,139 in trade receivables, and $11,022 in Advances for Purchases and $242,682 in inventory and $12,200 in pre-paid rent.

NEED FOR LINE OF CREDIT

The Company does not have cash sufficient to meets its cash needs. The Company will have to seek loans or equity placements to cover such cash needs. The management is working to deploy a $1,000,000 offering to meet its cash needs.

REVENUE RECOGNITION

The Company recognizes revenues on arrangements in accordance with Securitas and Exchange Commission Staff Accounting Bulletin Topic 13, REVENUE RECOGNITION and FASB ASC 605-15-25, REVENUE RECONGNITION. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonable assured. The Company reported gross revenues of $551,182 for the year ending December 31, 2016.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABUT MARKET RISKS

Not Applicable.

ITEM 4. CONTROLS AND PROCEURES

Management's Report on Disclosure Controls and Procedures

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

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

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

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

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

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

There have been no changes in our internal controls over financial reporting that occurred during the period ended June 30, 2017, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
9

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTOR

Not Applicable to Smaller Reporting Companies.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

ITEM 5. OTHER INFORMATION
None.

ITEM 6. EXHIBITS

The following exhibits are included with this quarterly filing.  Those marked with an asterisk and required to be filed hereunder, are incorporated by reference and can be found in their entirety in our original Registration Statement on Form S-1, filed under SEC File Number 000-54868, at the SEC website at www.sec.gov:
Exhibit No.
Description
3.1
Articles of Incorporation*
3.2
Bylaws*
31.1
Sec. 302 Certification of Principal Executive Officer
31.2
Sec. 302 Certification of Principal Financial Officer
32.1
Sec. 906 Certification of Principal Executive Officer
32.2
Sec. 906 Certification of Principal Financial Officer
101
Interactive data files pursuant to Rule 405 of Regulation S-T

10

SIGNATURES

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

Free Flow Inc.
Registrant
Dated August 15, 2018
By: /s/ Sabir Saleem
Sabir Saleem, Chief Executive Officer,
Chief Financial and Accounting Officer

11
TABLE OF CONTENTS