The accompanying notes are an integral part of these financial statements
FREE FLOW, INC. & SUBSIDIARY ACCURATE AUTO PARTS, INC.
Statements of Cash Flow
|
|
Year Ended
|
|
|
Year Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
CASH FLOW FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Depreciation allowance
|
|
$
|
19,967
|
|
|
$
|
(84,673
|
)
|
(Increase) in Other Assets - Equipment
|
|
|
38,573
|
|
|
|
-
|
|
(Increase) in Other Assets - Delivery Trucks,2017 depreciation
|
|
|
(35,000
|
)
|
|
|
1,820
|
|
(Increase) Advance for Inventory Purchases
|
|
|
-
|
|
|
|
14,224
|
|
(Increase) Trade Receivables
|
|
|
(18,963
|
)
|
|
|
5,848
|
|
(Increase) Decrease in Inventory
|
|
|
(6,240
|
)
|
|
|
22,190
|
|
(Increase) Decrease in prepaid expenses
|
|
|
(393,389
|
)
|
|
|
48,600
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
|
|
(395,052
|
)
|
|
|
8,009
|
|
|
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Proceeds from notes payable - related parties
|
|
|
294,898
|
|
|
|
45,644
|
|
Proceeds form Loan from River Valley Bank
|
|
|
900,100
|
|
|
|
-
|
|
(Increase) in Fixed Assets - Land, Building
|
|
|
(772,513
|
)
|
|
|
-
|
|
Proceeds from Accounts Payable - trade (Decrease in Accounts Payable)
|
|
|
(13,672
|
)
|
|
|
(52,017
|
)
|
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
|
408,813
|
|
|
|
(6,373
|
)
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
13,761
|
|
|
|
1,636
|
|
|
|
|
|
|
|
|
|
|
CASH AT BEGINNING PERIOD
|
|
|
5,354
|
|
|
|
3718
|
|
|
|
|
|
|
|
|
|
|
CASH AT END PERIOD
|
|
$
|
19,115
|
|
|
$
|
5,354
|
|
The accompanying notes are an integral part of these financial statements
FREE FLOW, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2018
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.
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
The statements were prepared following generally accepted accounting principles of the United States of America
consistently applied. 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 equivalents include short-term, highly liquid investments with maturities of three months or less at the time of
acquisition.
PROPERTY AND EQUIPMENT
Property and equipment are stated net of depreciation. Equipment and fixtures are being depreciated using the
straight-line method over the estimated asset lives, 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. 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 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.
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, 2018 the Company had a net operating loss carry-forward of approximately $437,796. Net operating loss carry-forward, expires twenty years from the date the loss was incurred.
The Company is subject to United States federal and state income taxes at an approximate rate of 34%. The reconciliation
of the provision for income taxes at the United States federal statutory rate compared to the Company's income tax expense as reported is as follows:
Free Flow, Inc.
Tax Calculations
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Net (profit) loss before taxes per financial statement
|
|
$
|
19,967
|
|
|
$
|
81,183
|
|
Income tax rate
|
|
|
34
|
%
|
|
|
34
|
%
|
Income tax benefit
|
|
|
(6,789
|
)
|
|
|
(28,170
|
)
|
Valuation allowance change
|
|
|
(17,406
|
)
|
|
|
(28,170
|
)
|
Provision for income tax
|
|
$
|
0
|
|
|
$
|
0
|
|
The December 31, 2017 was reported as $82,853 and has been reduced to $81,183 as depreciation was not provided for in the
previous year which has now been provided by adjustment to the appropriate account.
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, 2018 and December 31, 2017 are as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Net operating loss carry forward
|
|
$
|
437,796
|
|
|
$
|
457,212
|
|
Valuation allowance
|
|
$
|
(437,796
|
)
|
|
$
|
(457,212
|
)
|
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.
NOTE 4- PROPERTY AND
EQUIPEMENT
Property and equipment consists of the following:
|
|
As of
December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Property - Land & Building, at cost
|
|
$
|
772,412
|
|
|
$
|
-
|
|
Delivery Trucks, at cost
|
|
|
3,500
|
|
|
|
3,500
|
|
Equipment - at cost
|
|
|
35,000
|
|
|
|
-
|
|
Total Fixed Assets
|
|
|
810,912
|
|
|
|
3,500
|
|
Less: Accumulted depreciation
|
|
|
(40,393
|
)
|
|
|
(1,120
|
)
|
|
|
$
|
770,519
|
|
|
$
|
2,380
|
|
Depreciation expenses for the periods ended December 31, 2017 and December 31, 2016 were $0 and $0 respectively
NOTE 5 - INVENTORY
|
|
As of
|
|
|
|
December
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
Auto Parts (used)
|
|
$
|
571,260
|
|
|
$
|
177,871
|
|
|
|
$
|
571,260
|
|
|
$
|
177,871
|
|
The increase in the inventory was a result of financing secured from River Valley Bank, and would significantly support
increase of sales.
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 insufficient 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 has incurred cumulative net losses of $437,796 since its inception and requires capital for its
contemplated operational and marketing activities to take place. The Company's ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the
Company's contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise 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.
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 $294,518.09 from Redfield Holdings, Ltd and the
Company paid $0 of the loan balance. and the total amount owed by the Company to Redfield Holdings, Ltd. Thus on December 31, 2018 was $470,935. By mutual consent, this loan amount was converted to preferred shares – Series –C and classified as
mezzanine capital for Accurate Auto Parts, Inc. The qualifications are as under:
|
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 9,700 shares to Redfield Holdings, Ltd. against a subscription for $58,000 which was accepted by the
Company and shares there against issued to Redfield Holdings, Ltd.
NOTE 10 - CAPITAL STOCK
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.
Of the 20,000,000 authorized Preferred Stock, the company has designated 10,000 shares as "Preferred Shares - Series A".
Each share of "Preferred Share - 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.
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 to Redfield Holdings Ltd. for $1 each for a total of
$300
On March 30, 2015, the Company issued 9,700 Preferred Shares – Series A to Redfield Holdings Ltd. for a total sum 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 31, 2015, by mutual consent this note and accrued interest was converted to 330,000 preferred shares - Series "B"
On December 31, 2018 the Company had a Note outstanding in the principal amount of $470,935; by mutual consent this note
and accrued interest was converted to 470,935 preferred shares - Series C".
As of December 31, 2018, the Company had 26,200,000 shares of common stock issued and outstanding and 10,000 shares of
preferred Shares – Series “A”, 330,000 Series “B” and 470,935 Series “C” issued and outstanding.
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
(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
|
|
70
|
|
President, CEO, CFO and Director
|
|
Annual
|
|
|
|
|
|
|
|
Fernandino Ferrara
|
|
64
|
|
Secretary/Treasurer and Director
|
|
Annual
|
CURRENT OFFICERS AND DIRECTORS
SABIR SALEEM, PRESIDENT, CEO, CFO AND DIRECTOR, SECRETARY & TREASURER AGE 70
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. .
FORMER OFFICERS AND DIRECTORS
FERNANDINO FERRARA, FORMER SECRETARY/TREASURER AND DIRECTOR, AGE 64
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 AcuLease(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.
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 5 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, 2018, 2017 and 2016.
Summary Executive Compensation Table
|
|
Sabir Saleem
|
|
|
Frenandino Ferrara
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
$
|
24,490
|
|
|
$
|
2,000
|
|
|
$
|
15,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Stock Awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Option Awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Non-Equity Incentive Plan Compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Non-Qualified Deferred Compensation Earnings
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
All other Compensations
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
24,490
|
|
|
$
|
2,000
|
|
|
$
|
15,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Mr. Saleem do not have employment agreements with the Company, he does receive compensation from the Company.
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, 2018:
|
|
Sabir Saleem
|
|
|
Frenandino Ferrara
|
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
|
2018
|
|
|
2017
|
|
|
2016
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus
|
|
$
|
24,490
|
|
|
$
|
2,000
|
|
|
$
|
15,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Stock Awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Option Awards
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Non-Equity Incentive Plan Compensation
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Non-Qualified Deferred Compensation Earnings
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
All other Compensations
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
$
|
24,490
|
|
|
$
|
2,000
|
|
|
$
|
15,000
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
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, 2018 and 2017
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:
(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 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 26,200,000 are outstanding at March 30, 2018
.
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, 2018.
|
|
|
|
|
AMOUNT AND
|
|
|
|
|
|
|
|
NAME AND ADDRESS OF
|
|
NATURE OF
|
|
|
PERCENT
|
|
TITLE OF CLASS
|
|
|
BENEFICIAL OWNER (1)
|
|
BENEFICIAL OWNER
|
|
|
OF CLASS
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
Sabir Saleem, President, CEO
|
|
|
19,990,000
|
|
|
|
68.66
|
%
|
|
|
|
and Directors (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
|
|
|
Fernandina Ferrara,
|
|
|
0
|
|
|
|
0
|
|
|
|
|
Director
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Shares - Series "A"
|
|
|
Redfield Holdings, Ltd
|
|
|
10,000
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Shares - Series "B"
|
|
|
Redfield Holdings, Ltd
|
|
|
470,935
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
All Directors and Executives
|
|
|
Common Shares
|
|
|
17,990,000
|
|
|
|
68.66
|
%
|
Officers as a Group (2 persons)
|
|
|
|
|
|
|
|
|
|
|
|
(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 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES
Yousafali & Associates, LLC (“Yousafali") 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 Yousafali’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, 2018.
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
|
|
Articles of Incorporation *
|
3.2
|
|
Bylaws *
|
31.1
|
|
Certification of Principal Executive and Accounting Officer Filed Herewith pursuant to
Section 302 of the Sarbanes-Oxley Act
|
32.1
|
|
Certification of Principal Executive and Accounting Officer Filed Herewith pursuant to
Section 906 of the Sarbanes-Oxley Act
|
101.INS
|
|
XBRL Instance DocumentFiled 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.
|
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
|
|
April 29, 2019
|
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 persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Sabir Saleem
|
|
April 29, 2019
|
Sabir Saleem, Director, CEO
|
|