FFLO 10-Q Quarterly Report March 31, 2022 | Alphaminr

FFLO 10-Q Quarter ended March 31, 2022

FREE FLOW, INC.
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Free Flow Inc. - Form 10-Q SEC filing
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022

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

Commission file number 000-54868

Picture

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

Delaware

45-3838831

(State or other jurisdiction

(IRS Employer

of incorporation)

Identification No.)

6269 Caledon Road ; King George , VA 22485

(Address of Principal Executive Offices)

( 703 ) 789-3344

(Registrant’s Telephone Number)

—————————————————-

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. Yes x NO ¨

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


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer, "accelerated filer," "non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company

If an emerging growth company, indicate by check mark if the registrant has elected transaction period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES N O x

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

N/A.

Applicable Only to Corporate Registrants

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

FFLO

OTC QB

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


ITEM 1.  FINANCIAL STATEMENTS

2

Notes to Condensed Consolidated Financial Statements

6

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

10

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

11

ITEM 4. CONTROLS AND PROCEDURES

12

PART II – OTHER INFORMATION

13

ITEM 1. LEGAL PROCEEDINGS

13

ITEM 1A. RISK FACTOR

13

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

13

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

13

ITEM 4. MINE SAFETY DISCLOSURE

13

ITEM 5. OTHER INFORMATION

13

PART II. OTHER INFORMATION

14

ITEM 6. EXHIBITS.

14

SIGNATURES

15


1


ITEM 1.  FINANCIAL STATEMENTS

FREE FLOW, INC. & SUBSIDIARIES

Unaudited Condensed Consolidated Balance Sheets

March 31,2022

December 31,2021

(Unaudited)

(Audited)

ASSETS

Current Assets

Cash and cash equivalents

$ 272,590

$ 10,212

Trade Receivables - current

81,598

104,721

Rounding off the decimals - error

( 2 )

( 2 )

Inter-company

-

-

Inventories

-

2,525,484

TOTAL CURRENT ASSETS

354,186

2,640,415

Fixed Assets

Land and Building, without depreciation

772,413

1,712,413

Less:Allowance for Depreciation

( 195,029 )

( 195,029 )

TOTAL FIXED ASSETS

577,384

1,517,384

Other Assets

Delivery Trucks, before depreciation allowance

3,500

3,500

Allowance for Depreciation

( 3,500 )

( 3,500 )

Improvements in progress

10,697

10,697

Equipment and Delivery Trucks, before depreciation allowance

35,000

35,000

Allowance for Depreciation

( 17,080 )

( 17,080 )

TOTAL OTHER ASSETS

28,617

28,617

TOTAL ASSETS

$ 960,186

$ 4,186,416

LIABILITES & STOCKHOLDERS' EQUITY (DIFICIT)

Current Liabilities

Accounts Payable

11,477

23,709

Notes Payable

23,939

958,755

Notes Payable - Related Parties

8,032

1,989

TOTAL CURRENT LIABILLITIES

43,447

984,453

Long Term Liabilities

Incredible Bank - Revolving Line of Credit - $350,000

335,801

335,801

PPP1

36,171

41,675

EIDL

472,881

146,300

PayPal Advance

44,225

48,236

Incredible Bank

860,559

860,559

TOTAL LONG TERM LIABILLITIES

1,749,636

1,432,571

Total Liabilities

1,793,084

2,417,024

Redeemable Preferred Stock

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

330,000

330,000

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

470,935

470,935

Stockholders' Equity (Deficit)

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

1

1

Additional Paid in capital

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

2,620

2,620

Additional Paid in capital

131,033

131,033

Subscription received - pending acceptance

-

Current year Profit (Loss)

( 2,602,289 )

543,898

(Accumulated Deficit) / Net worth, brought forward

834,803

290,905

(Accumulated Deficit)  / Net worth

TOTAL STOCKHOLDERS' EQUITY / (DEFICIT)

( 1,633,832 )

968,457

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

$ 960,186

$ 4,186,416

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements


2


FREE FLOW, INC. & SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Operations

Three Months Ended March 31,

2022

2021

REVENUES

Sales

$ 60,731

$ 216,440

TOTAL REVENUES

60,731

$ 216,440

COST OF GOODS SOLD

54,031

73,540

GROSS PROFIT

6,699

142,900

GENERAL AND ADMINISTRATIVE EXPENSES

Selling, General & Administrative Expenses

67,798

95,092

Depreciation Expenses

Net Operating Profit (Loss)

( 61,099 )

47,808

OTHER INCOME (EXPENSES)

( 2,541,190 )

901

Net Profit (Loss)

( 2,602,289 )

48,708

BASIS INCOME (LOSS) PER SHARE

( 0.099 )

0.002

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements


3


FREE FLOW, INC. & SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31,

2022

2021

CASH FLOW FROM OPERATING ACTIVITIES

Net (Loss) / Profit

( 2,602,289 )

$ 48,708

Adjustments to reconcile net income to net cash provided by operating activities:

Assets of IAP

940,000

-

Inventory

2,525,484

-

Notes payable IAP

( 937,666 )

-

Changes in operating assets and liabilities:

(Increase) in Other Assets

-

( 1,256 )

(Decrease) in Trades Payable

( 12,232 )

( 30,723 )

Decrease in Trade Receivables

23,123

3,097

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES

( 63,580 )

19,826

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from notes payable - related parties

6,043

-

Proceeds / (Repayment) from notes payable

2,850

-

Repayment to Pay Pal Advance

( 4,011 )

( 2,674 )

Proceeds form Loan from River Valley Bank

-

44,927

Proceeds from Subscription Money

-

( 25,000 )

Rounding off the decimals - error

( 1 )

( 1 )

Repayment to PPP1

( 5,504 )

-

Proceeds / (Repayment) from EIDL Loan

326,581

-

NET CASH PROVIDED BY FINANCING ACTIVITIES

325,958

$ 17,252

NET INCREASE /(DECREASE) IN CASH AND CASH EQUIVALENTS

262,378

( 23,193 )

CASH AND CASH EQUIVALENTS IN THE BEGINNING OF PERIOD

10,212

83,516

CASH AND CASH EQUIVALENTS AT THE END OF PERIOD

$ 272,590

$ 60,323

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements


4


FREE FLOW, INC. & SUBSIDIARIES

Unaudited Condensed 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, 2022

26,221,000

$ 2,620

10,000

$ 1

$ 131,033

$ -

$ 834,803

$ 968,457

Subscription Received

-

-

-

-

-

-

$ -

Net Income / (loss)

-

-

-

-

-

-

( 2,602,289 )

$ ( 2,602,289 )

Balance as of  March 31, 2022

26,221,000

$ 2,622

10,000

$ 1

$ 131,033

$ 25,500

$ 290,905

$ ( 1,633,832 )

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

26,221,000

$ 2,622

10,000

$ 1

$ 131,033

$ 25,500

$ 289,960

$ 449,116

Subscription Received / (Returned)

-

-

-

-

-

( 25,000 )

-

$ ( 25,000 )

Net Income / (loss)

-

-

-

-

-

48,708

$ 48,708

Balance as of  March 31, 2021

26,221,000

$ 2,622

10,000

$ 1

$ 131,033

$ 500

$ 290,905

$ 472,824

The accompanying notes are an integral part of the Unaudited Condensed Consolidated Financial Statements


5


Free Flow, Inc.

Notes to Condensed Consolidated Financial Statements

March 31, 2022

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of March 31, 2022 and the results of operations and cash flows for the periods presented. The results of operations for the three months ended March 31. 2022 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, 2021 filed with the SEC on April 15, 2022 .

NOTE 2 GOING CONCERN

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

In order to continue as a going concern, the Company will need, among other things, Sales of its product lines. Management has obtained such sales through Internet sales and marketing companies who specialize in promotion of such businesses. Management has obtained capital from commercial lines of credits and significant shareholders sufficient to meet its minimal operating expense and is continuing to expand its cash flow from sales and is able to augment the operating capital needs. However, management cannot provide an assurance that the Company will be successful in accomplishing any of its plans as, in most of the businesses, market circumstances could change. The impact of COVID19 has been quite significant. The prices of used automobiles, according to a statement made in US Senate, has gone up by 35% while for wrecked automobiles the prices at the Automobile Insurance Auctions has gone up by 100%.

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


6


NOTE 3 – INCORPORATION OF SUBSIDIARY

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

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

The Management is also in discussion with a few investment bankers to launch a private placement memorandum under SEC rule 506 c to raise $19.5 million to have the company classified as a Shariah Compliant entity.

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

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

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

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

On December 22, 2020 the company through another subsidiary named FFLO – Inside Auto Parts, Inc. acquired the assets and business of an auto recycling entity located on a 16 acre facility in Mineral, Virginia. The facility was sold back to the sellers and all liabilities thereagainst have been wiped off.


7


NOTE 4 – RELATED PARTY

As of December 31, 2019, the Company had a note payable in the amount of $ 10,343 to Redfield Holdings, Ltd. a related party. During the nine months ended the Company reduced the borrowing by $225 thus owing a total sum of $ 10,118 as of September 30, 2020. The note is unsecured and does not bear any interest and has a maturity date of December 30, 2020 Redfield Holdings Ltd. is 100% owned by the CEO, Mr. Sabir Saleem. St. Gabriel Foundation has also been incorporated by Mr. Sabir Saleem as a not-for-profit entity which has not yet constituted its functional board of directors/trustees. It is expected that St. Gabriel Foundation will soon define its mission and may become an arm to mobilize end of life automobiles to sell them to Accurate Auto Parts, Inc. and use the proceeds for charitable purposes.

NOTE 5 – CAPITAL STOCK

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

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

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

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

Series “A”: Number of shares allocated are Ten Thousand ( 10,000 ) – par value $ 0.0001 per share; one share of this class of Preferred Stock Series “A” will carry voting rights equal to Ten Thousand (10,000) shares of Common Shares; thus the voting rights attributed to all of these 10,000 shares would be equal to One Hundred Million common shares.

Series “B”: Number of shares allocated are Five Hundred Thousand ( 500,000 ) – par value $ 0.0001 per share; one share of this class of Preferred Stock Series “B” will carry voting rights equal to one share of Common Shares; and are redeemable with 365 days’ notice.

Series “C”: Number of shares allocated are Five Hundred Thousand ( 500,000 ) – par value $ 0.0001 per share; one share of this class of Preferred Stock Series “C” will carry voting rights equal to one share of Common Shares and could be used to assign corresponding capital in to any subsidiary of Free Flow, Inc. with a view to extend comfort to any lender. Such shares are redeemable upon such lender authorizing the redemption of capital in the respective subsidiary company.

Series “D”:  Number of shares allocated are Fifteen Million ( 15,000,000 ) – par value $ 0.0001 per share; one share of this class of Preferred Stock Series “D” will carry voting rights equal to one share of Common Shares This series of shares could be issued against subscription of any amount as the board of directors and/or majority of the shareholders approve. Series “D” shares could be converted in to common shares as approved by the majority shareholders.

Series “E”: Number of shares allocated are Three Million Nine Hundred Ninety Thousand ( 3,990,000 ) – par value $ 0.0001 per share; one share of this class of Preferred Stock Series “E” will carry voting rights equal to one share of Common Shares This series of shares could be issued against subscription in cash or kind including but not limited to subscription directly into capital account of any subsidiary for any amount as the board of directors and/or majority of the shareholders approve. Series “E” shareholders could be entitled to a specifically defined profit


8


sharing in a specific project or transaction(s). Series E shares could be redeemable and/or converted in to common shares as agreed between the subscriber(s) and approved by the majority shareholders and/or by the Board of Directors of the Company.

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

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

a) Each share to carry one vote.

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

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

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

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

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

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

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

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

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

NOTE 6 – SUBSEQUENT EVENT S

None that is reportable.


9


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

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

PLAN OF OPERATION

As of January 1, 2022, the management decided to change the operation model from used auto parts being its core business and scrap metal processing and sale business as secondary business to Scrap Metal being its core business and used auto parts become its secondary business.

The reason for such a decision is based on the fact that due to increase in prices of raw materials, i.e., wrecked automobiles prices have increased by 100% ,  the available working capital is not sufficient to operate successfully. While for scrap metal the need of capital is relatively less than what is needed to build and replace inventory of used auto parts.

The management thus decided to impair and/or sell all of its existing used auto parts inventory as scrap metal and wait until it can mobilize sufficient working capital to rebuild the inventory needed for used auto parts business.  The management estimates that it should have a financial backing of about $80,000 per month for a period of twelve (12) months to concentrate of the used auto parts business.

Efforts are being made at multiple levels to have access to such capital. However, there is no certainty as to when such arrangements will be concluded.

The Company through its subsidiaries, namely, Accurate Auto Parts, Inc. and Motor & Metals, Inc. has made a sale of $60,731 of Automobile Parts, Services and Processed Scrap. 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 $60,731 during the three months ended March 31, 2022 and $216,440 of revenues during the Three month ended March 31, 2021. The net revenues for the period ended March 31, 2022were less by $155,709 than for the same period during 2021 and the Cost of Goods Sold was low by $19,509 during the period ended March 31, 2022 as compared to the same period during 2021. The Gross Profit had a decrease, i.e. by $ 136,201during the period ended March 31, 2022 as compared to the same period during 2021.

During the Three months ended March 31, 2022, the Company incurred operational expenses of $67,798. This compares to $95,092 for the three months ended March 31, 2021. This decrease in operational expenses reflects the decrease in operation staff.


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During the three months ended March 31, 2022 the company recognized a net loss of $2,602,289 as compared to the profit of $48,709 for the corresponding period in the year 2021, thus recognizing a significant increase in loss as compared to a profit for the three months ended March 31, 2021. This is a result due to the fact that the inventory in hand has been impaired and/or salvaged. In the opinion of the management, it would have cost more in administrative and selling expenses than the anticipated revenues that could otherwise have been derived. The subject inventory would have complimented sale of new inventory, had new inventory been purchased. Accurate Auto Parts, Inc. during the entire year of 2021 hardly purchased adequate new inventory due to lack of funds to afford purchase at the inflated market prices of wrecked automobiles.

The books show an operating net loss of $2,602,289 the Company has impaired and/or disposed off its inventory by $2,525,484 thus showing a total inventory at NIL value as on March 31, 2022 compared to an inventory at cost for a sum of $2,525,484 as on December 31, 2021.

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

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

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

LIQUIDITY

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

On March 31, 2021 the Company had total current assets of $2,136,003 consisting of $60,324 in cash and $141,506 in trade receivables, and $0 in inventory.

NEED FOR ADDITONAL CAPITAL

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

REVENUE RECOGNITION

The Company recognizes revenues on arrangements in accordance with Securitas and Exchange Commission Staff Accounting Bulletin Topic 13, REVENUE RECOGNITION and FASB ASC 605-15-25, REVENUE RECONGNITION. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability is reasonable assured. The Company reported gross revenues of $745,675 for the year ending December 31, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABUT MARKET RISKS

Not Applicable.


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ITEM 4. CONTROLS AND PROCEURES

Management's Report on Disclosure Controls and Procedures

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

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

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

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

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

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

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the period ended March 31, 2022, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.


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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTOR

Not Applicable to Smaller Reporting Companies.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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

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

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not Applicable

ITEM 5. OTHER INFORMATION


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PART II. OTHER INFORMATION

ITEM 6.     EXHIBITS.

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

Exhibit No.

Description

3.1

Articles of Incorporation *

3.2

Bylaws *

31.1

Sec. 302 Certification of Principal Executive Officer

31.2

Sec. 302 Certification of Principal Financial Officer

32.1

Sec. 906 Certification of Principal Executive Officer

32.2

Sec. 906 Certification of Principal Financial Officer

101

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


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SIGNATURES

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

Free Flow Inc.

Registrant

Dated:  May 27, 2022

By:

/s/ Sabir Saleem

Sabir Saleem

Chief Executive Officer,

Chief Financial and Accounting Officer


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