Item 1.01 Entry into a Material Definitive Agreement.
On April 28, 2017, Free Flow, Inc’s (“FFLO” or the “Company”) wholly owned subsidiary, Motors & Metals, Inc., (“MMI”), entered into an Auto Parts Supply and Distribution Agreement (the “Agreement”) with SAM International (“SAM”) and M & O Commodities, (Pvt.) Ltd. (“M&O”).
SAM is a Free Zone Enterprise licensed in United Arab Emirates and is in the business of importation and exportation of new and used Original Equipment Manufacturer (“OEM”) automobile parts in Afghanistan, Pakistan, the Middle East, Central Asia and Africa (the “SAM Territories”). Prior to execution of the Agreement, SAM acted as the exclusive selling agent for M&O.
M&O is a company incorporated and existing in Pakistan and is the exclusive sales and indenting agent for several international used and new OEM auto parts trading companies located in Germany, Poland, Japan and the United States of America. As of the effective date of the Agreement, MMI replaced SAM as M&O’s exclusive selling agent.
Under the Agreement, MMI, either directly or by and through SAM, will receive overseas orders for recycled and new auto parts. Depending on the particulars of the purchase order, MMI will either fulfill the order with auto parts from M&O’s clients, or from inventory of FFLO’s other wholly-owned subsidiary, JK Sales Corp.
JK Sales Corp. (“JK”) owns and operates an automobile recycling facility in King George, Virginia. Under separate agreement, MMI has agreed to handle JK’s international sales and exportation of used OEM auto parts.
The Agreement provides that SAM shall assist MMI by taking international orders for recycled auto parts, taking delivery of shipments from JK to the SAM Territories, managing customs clearance of shipments, managing delivery of orders to end-purchasers, and collection of payments for orders on behalf of MMI. Under the Agreement, SAM may also receive auto parts from MMI on consignment for sale in the SAM Territories. SAM shall act exclusively for MMI for all sales of used auto parts within the SAM Territories.
The initial term of the Agreement is two years, with automatic successive one-year renewal terms unless terminated by either party on 6 months’ written notice. Under the Agreement, SAM is required to provide MMI with a rolling 12-month forecast, with the nearest rolling two-month period becoming firm and binding on SAM. As of the date of the Agreement, SAM estimates that it will receive $100,000 per month of orders for used auto parts after the initial startup period of 90-180 days.
On May 2, 2017, the Company issued a press release regarding the Agreement, a copy of which is attached as Exhibit 99.1 hereto.