Free Flow, Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - Free Flow, Inc.	ex32-1.htm
EX-32.2 - Free Flow, Inc.	ex32-2.htm
EX-31.2 - Free Flow, Inc.	ex31-2.htm
EX-31.1 - Free Flow, Inc.	ex31-1.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, 2016

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)

2301 Woodland Crossing Dr.

Suite 155, 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 8, 2015.

ITEM 1. FINANCIAL STATEMENTS

Free Flow, Inc.

Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2016			2015
	(Unaudited)			(Audited)
ASSETS

CURRENT ASSETS
Cash	$	11,914		$	674
Accounts Receivable - Trade		236		$	-
Advances to Vendor		53,415		$	-
Prepaid Expenses		205			7,435
Inventory		1,270			-
TOTAL CURRENT ASSETS		67,040			8,109

TOTAL ASSETS	$	67,040		$	8,109

LIABILITIES & STOCKHOLDER'S (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	19,268		$	16,852
Notes payable - related parties		84,029			51,622
TOTAL CURRENT LIABILITIES		103,297			68,474

Total liabilities		103,297			68,474

Redeemable Preferred Stock
Series B: 500,000 shares authorized: 330,000 and 0 issued and outstanding
as of June 30, 2016 and December 2015 respectively (Classified as Mezanine equity)		330,000			330,000

Stockholder's (Deficit)
Preferred stock ($0.0001) par value, 20,000,000 shares authorized
10,000 shares par value $0.0001 Class A, issued as of June 30, 2016		1			1
Common stock, ($0.0001) par value, 100,000,000 shares authorized:
26,200,000 shares issued and outstanding as of June 30, 2016 and December 31, 2015		2,620			2,620
Additional paid-in-capital		114,545			114,545
Accumulated Deficit		(483,423	)		(507,530	)
TOTAL STOCKHOLDER'S (DEFICIT)		(366,257	)		(390,364	)

TOTAL LIABILITIES & STOCKHOLDER'S (DEFICIT)	$	67,040		$	8,109

The accompanying notes are an integral part of these financial statements

Free Flow, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	Six months ended June 30					Three months ended June 30
	2016		2015			2016		2015

REVENUES	$	272,331	$	314		$	133,265	$	314

COST OF GOODS SOLD		179,735		40			97,096		40

GROSS PROFIT		92,597		274			36,170		274

General & Administrative Expenses		68,490		56,885			26,944		28,728
Total Expenses		68,490		56,885			26,944		28,728

Profit (Loss) before provision of income taxes		24,107		(56,611	)		9,226		(28,454	)

Income tax provision		-		-			-		-

NET INCOME (LOSS)	$	24,107	$	(56,611	)	$	9,226	$	(28,454	)

BASIS INCOME (LOSS) PER SHARE	$	0.00	$	(0.00	)	$	0.00	$	(0.00	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		26,200,000		26,200,000			26,200,000		26,200,000

The accompanying notes are an integral part of these financial statements

Free Flow, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six months ended June 30,
	2016			2015
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss)	$	24,107		$	(56,611	)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:					-
Changes in operating assets and liabilities
Inventory		6,165			(621	)
Prepaid expenses		(205	)		(40	)
Accounts payable		2,417			-
Accounts Receivable		(236	)		-
Advance to Supplier		(53,415	)		-
Accrued interest		-			(372	)
NET CASH USED IN OPERATING ACTIVITIES		(21,167	)		(57,644	)

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from related party notes		32,408			50,941
NET CASH PROVIDED BY FINANCING ACIVITIES		32,408			50,941

NET INCREASE/(DECREASE) IN CASH		11,240			(6,703	)

CASH AT BEGINNING OF PERIOD		674			7,187

CASH AT END OF PERIOD	$	11,914		$	484

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Assets acquired in acquisition for note payable	$	-		$	2,000,000
Conversion of note payable to preferred stock	$	-		$	330,000
Conversion of related party note to preferred stock	$	-		$	58,000

The accompanying notes are an integral part of these financial statements

Free Flow, Inc.

Notes to Condensed Consolidated Financial Statements

June 30, 2016

(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, 2016 and the results of operations and cash flows for the periods presented. The results of operations for the six months ended June 30, 2016 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, 2015 filed with the SEC on April 22, 2016.

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 not yet 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. The ability of the Company to continue as a going concern is 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’s plan is to obtain 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 secure sources for sales 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 - CORE BUSINESS:

As reported in the 10Q for first quarter, on February 4, 2016, the Company incorporated a subsidiary in the State of Virginia under the name JK Sales, Corp. Subsequently JK Sales, Corp. entered into an Agreement with Al-Mustafa Enterprise, Inc. in King George, VA as Managing and Sales Agent. Since JK Sales, Corp. began the operation, for the period ending June 30, 2016, the Company has achieved a Sales of approximately $270,000, with a net income of approximately $24,000 for the same period.

The second part of Managing and Sales Agent agreement which related to managing a Auto Body and Repair facility did not come into effectuation due to organizational and management issues the current owners faced with. The Company is thus fully focused on the used auto parts business.

NOTE 4 – RELATED PARTY - NOTE PAYABLE

As of March 31, 2015, the Company had a note payable in the amount of $61,129 to Redfield Holdings, Ltd. a related party. During the three months ending June 30, 2016 the Company borrowed an additional sum of $32,407, thus owing a total sum of $84,029. The note is unsecured and does not bear any interest and has a maturity of December 30, 2016. The amount owed as on December 31, 2015 was $51,622.

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”. The balance is still outstanding as on June 30, 2016 and has been classified as mezzanine equity.

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, 2016 total preferred shares issued and outstanding are 10,000 Series “A” and 330,000 Series “B”.

NOTE 6 – SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date which the financial statements were available to be issued. Based on the evaluation no material events have occurred that require recognition in or disclosure to the financial statements.

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

The Company continues to focus on building sales for the used auto parts and sourcing wrecked automobiles at best prices. The sales for the five month since the Company started this operation has been approximately $54,000 per month, with an average net profit of approximately $4,800 which equates to approximately 9% on sales.

RESULTS OF OPERATIONS

For the Six Months Ended June 30, 2016 compared to same period in 2015.

The Company recognized nominal revenue of $272,331 and cost of sales of $179,735 during the six months ended June 30, 2016.

During the six months ended June 30, 2016, the Company incurred operational expenses of $68,490 compared to $56,885 for the corresponding six months during 2015.

For the three months ending June 30, 2016 compared to the same period in 2015.

During the Three Month Ended June 30, 2016, the Company had $133,265 in revenues and Cost of Sales of $97,096 compared to $314 revenues in the three months ended June 30, 2015.

For the three months ending June 30, 2016 the Operational expenses incurred were to the tune to $26,944, while for the period ending June 30, 2015 the Operational expenses incurred were $28,728.

LIQUIDITY

THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S REPORT ON THE COMPANY’S FINANCIAL STATEMENTS AS OF DECEMBER 31, 2015, AND FOR EACH OF THE PRECEDING YEARS THEN ENDED, INCLUDES A “GOING CONCERN” EXPLANATORY PARAGRAPH, THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS A GOING CONCERN.

On June 30, 2016 the Company had total current assets of $67,040 consisting of $11,914 in cash, $1,270 in inventory , $205 in prepaid expenses, $53,415 in Vendor advances, and $236 in trade accounts receivable. Total current liabilities are $103,297 of which are $19,268 in trade payables and $84,029 are payable to Redfield Holdings, Ltd a related party.

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.

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 cased, 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 did not report any revenues during the first three months in 2015.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABUT MARKET RISKS

Not Applicable

ITEM 4. CONTROLS AND PROCEURES

Management's Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.

As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee, (2) lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (3) inadequate segregation of duties consistent with control objectives; and (4) management dominated by a single individual without adequate compensating controls. The aforementioned material weaknesses were identified by our Chief Executive and Financial Officer in connection with the review of our financial statements as of June 30, 2015.

Management believes that the material weaknesses set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

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, 2015, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTOR

Not Applicable to Smaller Reporting Companies.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the period of January 1, 2015 and June 30, 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

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


Date August 8, 2016	By: /s/ Sabir Saleem
	Sabir Saleem, Chief Executive Officer,
	Chief Financial and Accounting Officer

Free Flow, Inc. - FORM 10-Q - August 8, 2016

Attached files

Free Flow, Inc. Reports