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 have made a sale of
$428,902 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 has
been completed and a data base has been complied. The Company is already seeing
an increase in sales compared to the same period last year.
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.
However, the surveyors have 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. Equipment is
being purchased and operators have been hired.
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.
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9
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RESULTS OF OPERATIONS
The Company did recognize revenue for a sum of $458,902during the six months
ended June 30, 2021 and $280,780 of revenues during the six month ended June 30,
2020. While the net revenues for the period ended June 30, 2021 were higher by
$148,122 than for the same period during 2020 and the Cost of Goods Sold was
higher by $134,040 during the period ended June 30, 2021 as compared to the same
period during 2020. This 147 % 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 June 30 2021were $105,118as compared to $29,117 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.
During the six months ended June 30, 2021 the company recognized a gross profit
of $203,446 as compared to $189,383for the corresponding period in the year
2020, this increase of $14,085 in Gross profit equates to approximately 7% as
compared to the six months ended June 2021.
During the six month ended June 30, 2021 the company recognized a net operating
profit of $3,905 as compared to operating profit of $105,072 for the
corresponding period in the year 2020, this decrease in net operating profit by
$101,167 is due to the fact that the sales were higher by $148,122 and the fixed
administrative, professional and financial expenses were significantly high thus
yielding a low margin of profit. Due to Covit19 pandemic, extra care was
exercised and additional man-hour resources had to be deployed to maintain
distance, this directly resulted in extra costs for delivery and transportation,
both for inward freight and outgoing delivery charges.
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
© Edgar Online, source Glimpses
FREE FLOW, INC. 
