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
N.B. Market conditions may change, which my adversely affect the future
results.
Free Flow Inc. the Company's used auto parts subsidiaries has made a sale of
$616,806 of Automobile Parts and Services. The Company continues seeking
additional sales both in the domestic and international markets.
In May 2020 the company hired a marketing manager as independent contractor to
develop marketing strategy and thus improve sales. Thus far, the ground work was
completed and a data was complied, the plan could not take off due to the
Covid19 Pandemic. The Company is working again to effectuate this plan.
Regarding scrap metal processing: Motors & Metals, Inc., the subsidiary which is
licensed to operate as scrap metal processor completed its scope of equipment
and machinery and thereafter, on July 4, 2020 the company received a firm
quotation from an equipment manufacturer. The cost of the project is estimated
at $9,000,000 with a projected EBITDA of about 20% on an estimated annual
revenue of $10,000,000. Financing arrangements are currently being worked upon
and the Company expects to secure and firm up the plans as soon as possible. Due
to Covit19, the response from Investors and Lenders/Equipment Leasing companies
is rather slow.
The company is concurrently seeking equity financing for $12,000,000 to pay off
all debts and have the company become a debt free entity. The targeted
accredited investors are those that wish to invest in "Sharia Compliant"
entities. Discussions are under way, and it is hoped that the efforts will be
result in success.
the surveyors had completed the demarcation of the property, the area dedicated
to the scrap metal processing has been determined to be around 9 acres. Motors &
Metals, Inc. is beginning the clean-up process. Part of the sought financing
will be deployed to prepare the infrastructure for installation of the
equipment.
A firm contract with the machinery suppliers will be executed as soon as
financing is arranged.
City Autos, Corp. - the subsidiary of the Company has received the business
license to operate as used car dealership which encompasses the business of auto
leasing and renting. Application to the DMV in the Commonwealth of Virginia will
soon be filed to obtain the dealer license. City Autos plans to confine its
business to auto "Lease - Rent To Own" only. The model City Autos has chosen is
a weekly program to Lease - Rent To Own on affordable weekly payments. City
Autos plans to stay with a 50 cars fleet until such time that adequate staff is
hired and trained. City Autos is also in the process of negotiation with a used
car dealership that could be acquired by FFLO to jump start the business.
RESULTS OF OPERATIONS
The Company did recognize revenue for a sum of $616,806 during the nine months
ended September 30, 2021 and $360,236 of revenues during the nine months ended
September 30, 2020. While the net revenues for the period ended September 30,
2021 were higher by $256,570 than for the same period during 2020 and the Cost
of Goods Sold was also higher by $135,034 during the period ended September 30,
2021 as compared to the same period during 2020. This 85 % increase in cost of
goods sold was due to increase in number of costly automobiles being dismantled
while the overheads for dismantling increased. The general and administrative
expenses for the period ended September 30 2021were $158,113 as compared to
157,772 for the same period during 2020. During the period of 2021 the Company
was making purchases in excess to what it did during the same period in 2020,
excess purchases lead to excess administrative expenses. Also because the
company is now in a stabilized mode and costs are being controlled.
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During the nine months ended September 30, 2021 the company recognized a gross
profit of $322,971 as compared to $201,435 for the corresponding period in the
year 2020, this increase of $121,536 in Gross profit equates to approximately
60% as compared to the nine months ended September 30 2020.
During the nine month ended September 30, 2021 the company recognized a net
operating profit of $3,882 as compared to operating loss of $(34,350) for the
corresponding period in the year 2020, this increase in net operating profit by
$38,232 is due to the fact that the sales were higher by $256,570 and the fixed
administrative, professional and financial expenses were significantly high thus
yielding a low margin of profit. .
The Company began selling on eBay and continues to attain a rating of five star
(5/5). This excellent rating is based on review by the customers. Uploading the
inventory is a lengthy and slow process (to log on inventory with photographs
and price) on the eBay platform.
Management has opted to provide for the depreciation of equipment, trucks and
building at the end of the year instead of providing for it on quarterly basis.
LIQUIDITY
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