Attached files
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 SEPTEMBER 30, 2012
Commission file number 000-54868
FreeFlow Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
9130 Edgewood Drive
La Mesa, CA 91941
(Address of principal executive offices, including zip code)
(619) 741-1006
(Telephone number, including area code)
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 [ ] 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 (ss.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 March 15,
2013
ITEM 1. FINANCIAL STATEMENTS
FreeFlow, Inc.
(A Development Stage Company)
Balance Sheets
--------------------------------------------------------------------------------
As of As of
September 30, December 31,
2012 2011
-------- --------
(Unaudited) (Audited)
CURRENT ASSETS
Cash $ 11,227 $ 13,765
-------- --------
TOTAL CURRENT ASSETS 11,227 13,765
-------- --------
FIXED ASSETS
Equipment, net 1,004 --
-------- --------
TOTAL FIXED ASSETS 1,004 --
-------- --------
OTHER ASSETS
Intangible Assets, net 592 4,342
-------- --------
TOTAL OTHER ASSETS 592 4,342
-------- --------
TOTAL ASSETS $ 12,823 $ 18,107
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 2,250 $ --
-------- --------
TOTAL CURRENT LIABILITIES 2,250 --
LONG-TERM LIABILITIES
Accrued interest payable 117 --
Notes payable 10,000 --
-------- --------
TOTAL LONG-TERM LIABILITIES 10,117 --
-------- --------
TOTAL LIABILITIES 12,367 --
STOCKHOLDERS' EQUITY
Preferred Stock ($0.0001 par value, 20,000,000 shares
authorized; zero shares issued and outstanding
as of September 30, 2012 and December 31, 2011 -- --
Common stock, ($0.0001 par value, 100,000,000 shares
authorized; 26,200,000 shares issued and outstanding
as of September 30, 2012 and December 31, 2011 2,620 2,620
Additional paid-in capital 18,380 18,380
Deficit accumulated during development stage (20,544) (2,893)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 456 18,107
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 12,823 $ 18,107
======== ========
The accompanying notes are an integral part of these financial statements
2
Freeflow, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
--------------------------------------------------------------------------------
October 28, 2011
Three Months Nine Months (inception)
Ended Ended through
September 30, September 30, September 30,
2012 2012 2012
------------ ------------ ------------
REVENUES
Revenues $ -- $ -- $ --
------------ ------------ ------------
TOTAL REVENUES -- -- --
GENERAL & Administrative Expenses
Administrative expenses 766 4,596 5,831
Professional fees 2,250 9,050 10,050
Depreciation Expense 57 138 138
Amortization Expense 1,250 3,750 4,408
------------ ------------ ------------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 4,323 17,534 20,427
------------ ------------ ------------
LOSS FROM OPERATION (4,323) (17,534) (20,427)
------------ ------------ ------------
OTHER EXPENSE
Interest expense 100 117 117
------------ ------------ ------------
TOTAL OTHER EXPENSES 100 117 117
------------ ------------ ------------
NET INCOME (LOSS) $ (4,423) $ (17,651) $ (20,544)
============ ============ ============
BASIC EARNINGS PER SHARE $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING $ 26,200,000 $ 26,200,000
============ ============
The accompanying notes are an integral part of these financial statements
3
FreeFlow, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
--------------------------------------------------------------------------------
October 28, 2011
Nine Months (inception)
Ended through
September 30, September 30,
2012 2012
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(17,651) $(20,544)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization expense 3,750 4,408
Depreciation expense 138 138
Changes in operating assets and liabilities:
Increase (Decrease) in accounts payable and accrued liabilities 2,250 2,250
Increase in accrued interest 117 117
-------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (11,396) (13,631)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Equipment (1,142) (1,142)
Acquisition of Intangible Assets -- (5,000)
-------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (1,142) (6,142)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in advance from officer --
Proceed from notes payable - related party 10,000 10,000
Issuance of common stock -- 21,000
-------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 10,000 31,000
-------- --------
NET INCREASE (DECREASE) IN CASH (2,538) 11,227
CASH AT BEGINNING OF PERIOD 13,765 --
-------- --------
CASH AT END OF PERIOD $ 11,227 $ 11,227
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ -- $ --
======== ========
Income Taxes $ -- $ --
======== ========
The accompanying notes are an integral part of these financial statements
4
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
FreeFlow, Inc. (the "Company") was incorporated on October 28, 2011 under the
laws of the State of Delaware to enter into the green energy industry. The
FreeFlow swimming pool solar pump system creates a blend of green energy
harvesting while maintaining your present system. Our proposed product
circulates the water in swimming pools using solar power thus saving on
electricity provided by the commercial grid. The Company's activities to date
have been limited to organization and capital. The Company has been in the
development stage since its formation and has not yet realized any revenues from
its planned operations. The Company's fiscal year end is December 31.
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 at cost. Equipment and fixtures are being
depreciated using the straight-line method over the estimated asset lives, 5
year.
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.
5
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 of 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:
6
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
* 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.
* 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.
* 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 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.
7
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
8
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 - INTANGIBLE ASSETS
The Company capitalized as intangible assets the purchase cost of the rights to
certain technologies acquired from Edward F Myers in November 13, 2011. The life
of the provisional patent is one year and will expire on November 13, 2012. The
patent will be amortized one hundred percent from November 14, 2011 to November
13, 2012. The value of the patent on September 30, 2012 is $592.
NOTE 4 - 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 September 30, 2012 the Company had a net operating
loss carry-forward of approximately $20,544. 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:
September 30, December 31,
2012 2011
-------- --------
Net loss before income taxes
per financial statements $ 20,544 $ 2,893
Income tax rate 34% 34%
Income tax recovery (6,985) (984)
Permanent differences -- --
Temporary differences -- --
Valuation allowance change 6,985 984
Provision for income taxes $ -- $ --
9
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
NOTE 4 - PROVISION FOR INCOME TAXES- CONTINUED
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
financials reporting and tax purposes. The significant components of deferred
income tax assets and liabilities at September 30, 2012 and December 31, 2011
are as follows:
September 30, December 31,
2012 2011
-------- --------
Net operating loss carryforward $ 6,985 $ 984
Valuation allowance (6,985) (984)
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 5 - PROPERTY AND EQUIPEMENT
Property and equipment consists of the following:
As of
September 30, December 31,
2012 2011
-------- --------
Equipment $ 1,141 $ 0
-------- --------
Total Fixed Assets 1,141 0
Less: Accumulated Depreciation (138) 0
-------- --------
Net Fixed Assets $ 1,003 $ 0
======== ========
Depreciation expenses for the periods ended September 30, 2012 and December 31,
2011 were $138 and $0
10
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
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 in
order 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 have 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
$20,544 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 aforementioned uncertainties.
NOTE 8 - RELATED PARTY TRANSACTIONS
S Douglas Henderson, the sole 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
Since inception the Company received cash totaling $10,000 from S Douglas
Henderson in the form of a promissory of $10,000. As of September 30, 2012 the
amount due to S Douglas Henderson was $10,000
On June 16, 2012, the Company received a $10,000 loan. This loan is at 4%
interest with principle and interest all due on June 16, 2014. As of September
30, 2012, accrued interest is $117.
11
FREEFLOW, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (Unaudited)
September 30, 2012
--------------------------------------------------------------------------------
NOTE 10 - STOCK TRANSACTIONS
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.
As of September 30, 2012 the Company had 26,200,000 shares of common stock
issued and outstanding.
NOTE 11 - STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of September 30, 2012:
Common stock, $ 0.0001 par value: 100,000,000 shares authorized; 26,200,000
shares issued and outstanding.
Preferred stock, $ 0.0001 par value: 20,000,000 shares authorized; no shares
issued and outstanding.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this quarterly report on Form 10-Q contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this report. Except for our
ongoing obligations to disclose material information under the Federal
securities laws, we undertake no obligation to release publicly any revisions to
any forward-looking statements, to report events or to report the occurrence of
unanticipated events. For any forward-looking statements contained in any
document, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
RESULTS OF OPERATIONS
We are a development stage company and have generated no revenues since
inception (October 28, 2011) and have incurred $20,544 in expenses through
September 30, 2012. For the three and nine month periods ended September 30,
2012 we incurred $766 and $4,596, respectively, in administrative expenses,
$2,250 and $9,050, respectively, in professional fees, $57 and $138 in
depreciation expense, respectively, $1,250 and $3,750, respectively, in
amortization expense and $100 and $117, respectively, in interest expense. As
the company was incorporated in October, 2011 there are no prior year periods
available for comparison.
The following table provides selected financial data about our company for the
period ended September 30, 2012.
Balance Sheet Data: 9/30/12
------------------- -------
Cash $11,227
Total assets $12,823
Total liabilities $12,367
Shareholders' equity $ 456
Cash provided by financing activities since inception through September 30, 2012
was $20,000 from the sale of 25,000,000 shares of common stock to our officer
and director in November 2011, $1,000 from the issuance of 1,200,000 shares of
common stock to Garden Bay International in December, 2011, and $10,000 from
issuance of long-term note payable to a related party.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at September 30, 2012 was $11,227, with $12,367 in outstanding
liabilities, consisting of $2,250 in accounts payable, $117 in accrued interest
payable and $10,000 in a long-term note payable to a related party. If we
experience a shortfall of cash our director has agreed to loan us additional
funds for operating expenses, however he has no legal obligation to do so. Total
expenditures over the next 12 months are expected to be approximately $20,000.
13
PLAN OF OPERATION
The Company has during 2012:
* Built and operated a model of its product successfully
* Opened a web site to display its product "Freeflowpools.com"
* Published a sales brochure
* Signed a contract with a large pool construction company to install
its product.
* In addition it has received additional funding in the form of a loan
from its president.
* Recruited a commission sales person within the pool industry.
We have signed an agreement with an independent commission sales person. He is
to receive 10% of the gross sales for which he is responsible. This person works
for a swimming pool maintenance company and visits properties of persons who are
potential customers for our product. When these persons are at home he gives
them a brochure and discusses the advantages of our product. He visits over 40
such properties each week as he does their pool maintenance.
The Company intends to recruit addition pool maintenance firms to market its
product. The Company feels that these firms have the best contact with
prospective buyers.
The Company has direct mailed its brochures to pool contractors in the Southern
California area and will continue to do so during the winter.
Winter is a cool season in Southern California and many persons use there pools
by using heaters or solar devices. The Company will continue to introduce its
system to pool contractors and directly to pool owners.
In the next 12 months, FreeFlow will pursue arrangements for the sale of its
product. Revenues are expected during the Summer of 2013, but no assurance can
be given.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
GOING CONCERN
Our auditor has issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated revenues and no revenues are anticipated until
sales are generated. There is no assurance we will ever reach that point.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management maintains "disclosure controls and procedures," as such term is
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act"), that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and
14
reported within the time periods specified in the Securities and Exchange
Commission rules and forms, and that such information is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure.
In connection with the preparation of this quarterly report on Form 10-Q, an
evaluation was carried out by management, with the participation of the Chief
Executive Officer and the Chief Financial Officer, of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act) as of September 30, 2012.
Based on that evaluation, management concluded, as of the end of the period
covered by this report, that our disclosure controls and procedures were
effective in recording, processing, summarizing, and reporting information
required to be disclosed, within the time periods specified in the Securities
and Exchange Commission's rules and forms.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
As of the end of the period covered by this report, there have been no changes
in the internal controls over financial reporting during the quarter ended
September 30, 2012, that materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting subsequent to
the date of management's last evaluation.
15
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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** To Be Filed By Amendment
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.
FreeFlow Inc.
Registrant
Date: March 15, 2013 By: /s/ S. Douglas Henderson
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S. Douglas Henderson,
Chief Executive Officer, Chief
Financial and Accounting Officer
and Sole Director
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