10-Q: Free Flow USA Reports Q2 Loss, Zero Revenue
Quarterly Report
Free Flow USA Inc. reported a net loss of $26,844 for Q2 2025 with no revenue, raising substantial doubt about its ability to continue as a going concern.
Summary
- Reported a net loss of $26,844 for the six months ended June 30, 2025, a significant decline from a net income of $821,314 in the prior year period.
- Generated no revenue for the six months ended June 30, 2025, compared to $6,123 in the same period of 2024.
- Operating loss improved to $41,856 from $380,541 in the prior year, primarily due to a substantial decrease in general and administrative expenses.
- Cash and cash equivalents decreased to $60,765 as of June 30, 2025, from $91,349 at December 31, 2024.
- The company's independent auditors included a "Going Concern" explanatory paragraph, indicating substantial doubt about its ability to continue operations.
- The company is actively seeking new acquisition opportunities after a previous pharmaceutical acquisition failed due to due diligence issues.
- Current business activities include processing scrap metal through sub-contracting, with a contract expected soon.
- Total current assets were $429,726 and total liabilities were $817,130 as of June 30, 2025.
Sentiment
Score: 2
Explanation: The company reported zero revenue and a net loss, continues to face significant going concern issues, and relies on future, uncommitted capital raises and speculative contracts. While operating expenses decreased, this is overshadowed by the complete lack of sales and the prior year's profit being non-recurring from asset sales. The internal control deficiencies further add to the negative sentiment.
Positives
- General and administrative expenses significantly decreased to $41,856 for the six months ended June 30, 2025, from $382,879 in the prior year.
- Net cash used in operating activities decreased to $30,584 for the six months ended June 30, 2025, from $995,769 in the prior year.
- Current receivables exceed current payables, indicating no immediate fear in meeting current obligations.
Negatives
- Reported zero revenue for the six months ended June 30, 2025, a complete cessation of sales compared to $6,123 in the prior year.
- Swung from a net income of $821,314 in the prior year to a net loss of $26,844 for the six months ended June 30, 2025.
- Incurred cumulative net losses of $1,188,339 since inception.
- Cash and cash equivalents declined by approximately 33% from December 31, 2024, to June 30, 2025.
- The company's ability to increase additional sales in the future is unknown.
- The company does not have sufficient capital for expansion and will need to seek additional loans or equity placements.
- No commitments for additional funds have been secured from management or other stockholders.
Risks
- Substantial doubt about the company's ability to continue as a going concern due to insufficient revenues to meet operating expenses and cumulative net losses.
- Reliance on future issuances of equity or debt securities to finance operations.
- Uncertainty regarding the ability to increase additional sales in the future.
- Lack of sufficient capital for expansion needs, requiring external financing without current commitments.
- Internal control deficiencies, including no accounting staff, lack of well-written accounting policies and procedures, and potential errors in financial reporting.
- Cybersecurity risks, though managed, are an ongoing concern for data confidentiality and availability.
- The price of common shares issued has been arbitrarily fixed, which could imply valuation risks.
Future Outlook
The company is actively looking into several acquisition opportunities and expects to soon have a positive conclusion. It is also awaiting the conclusion of a contract for scrap metal processing through sub-contracting in the near future. The company plans to recruit accounting staff and develop written accounting policies and procedures shortly.
Management Comments
- The company is active in processing scrap metal through sub-contracting and is awaiting the conclusion of a contract in the near future.
- The company moved its corporate office to New Jersey, where it entered into a contract to acquire a pharmaceutical company. The entity being acquired failed the due diligence because their auditors could not provide a clean audited report. Since then, the company has looked into several acquisition opportunities and is expecting to soon have a positive conclusion.
- The company is in good standing as there are Notes Receivable and Payables, which, until these are redeemed, the company has to stay in existence.
- The Department of Motor Vehicles has been advised that the company will stay dormant until further notice.
- The company does not have sufficient capital to meet its expansion Capital needs. The Company will have to seek loans or Equity placements to cover such cash needs.
- The management asserts that the company does not have any accounting staff due to limited financial resources, though has plans to recruit gradually. Also, this company does not have a well written document on accounting policies and procedures, though has plans to have them shortly.
- Segregation of duties is an important factor in Internal Control. Though it is achieved to a certain extent, the management is committed to strengthen the internal controls effectively in the coming months.
Industry Context
Free Flow USA Inc. has undergone significant business model shifts, moving from green energy to used auto parts, and now focusing on scrap metal processing and seeking new acquisitions. This indicates a struggle to establish a stable, profitable core business. The company's current state of minimal operations and reliance on future acquisitions or contracts places it outside typical industry trends for established, revenue-generating companies. Its pivot to scrap metal processing suggests an attempt to leverage existing assets or relationships, but without a concluded contract, it remains speculative.
Comparison to Industry Standards
- NA. The company's current operational status (zero revenue, dormant subsidiaries, reliance on future contracts/acquisitions) makes direct comparison to established industry players or benchmarks difficult. Its financial performance is not comparable to typical operating companies in the auto parts or scrap metal industries.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Deficiencies Acknowledged | Management acknowledges the absence of accounting staff and well-written accounting policies and procedures due to limited financial resources, which could lead to errors in financial reporting. They plan to recruit staff and develop policies shortly. | N/A | Negative impact on financial reporting reliability and internal control effectiveness, but management is committed to strengthening controls. |
| SIC Code Update | The SIC Code of 1700 shown in Edgar is no longer valid as the company is now dealing with auto parts as OEM Recycled Auto Parts. | N/A | Clarifies the company's current business focus for regulatory purposes. |
Stakeholder Impact
- Shareholders: Significant negative impact due to zero revenue, net loss, going concern warning, and potential dilution from future capital raises. The arbitrary fixing of common share prices also raises concerns.
- Creditors: Potential risk due to the going concern warning and reliance on future financing to meet obligations, although current receivables exceed current payables.
- Employees: Uncertainty regarding job security given the dormant subsidiaries and reliance on future contracts and acquisitions.
Next Steps
- Conclude a contract for scrap metal processing through sub-contracting.
- Finalize a real estate property acquisition through Accurate Investments, Inc.
- Conclude positive negotiations on several new merger and acquisition proposals.
- Recruit accounting staff.
- Develop well-written accounting policies and procedures.
- Strengthen internal controls effectively in the coming months.
Key Dates
| Date | Description |
|---|---|
| 2011-10-28 | Company incorporated as Free Flow, Inc. |
| 2011-11-22 | Issued 25,000,000 common shares to one director for $20,000. |
| 2011-12-06 | Issued 1,200,000 common shares to Garden Bay International for $1,000. |
| 2014-08-01 | Issued 300 Preferred Shares-Series A to Redfield Holdings Ltd. for $300. |
| 2014-12-31 | Note outstanding of $330,000 plus interest payable to GS Pharmaceuticals, Inc. |
| 2015-02-01 | Incorporated subsidiary Promedaff, Inc. and purchased skin care product line. |
| 2015-03-30 | Issued 9,700 Preferred Shares-Series A to Redfield Holdings Ltd. for $58,000. |
| 2015-03-31 | Converted GS Pharmaceuticals, Inc. note and accrued interest to 330,000 preferred shares Series B. |
| 2016-02-04 | Incorporated subsidiary JK Sales, Corp. (later Accurate Auto Parts, Inc.). |
| 2017-01-04 | Incorporated subsidiary City Autos, Corp. |
| 2017-12-07 | JK Sales, Corp. name changed to Accurate Auto Parts, Inc. |
| 2018-04-17 | Incorporated subsidiary Accurate Investments, Inc. |
| 2018-11-01 | Designated 500,000 preferred shares Series C as mezzanine capital. |
| 2018-12-31 | Converted $470,935 note and accrued interest to 470,935 preferred shares Series C. |
| 2019-04-02 | Received $14,490 for issuance of 21,000 restricted common shares. |
| 2020-12-22 | Acquired assets and business of an auto recycling entity through FFLO Inside Auto Parts, Inc. |
| 2022-01-01 | Resold assets of FFLO Inside Auto Parts, Inc. to seller due to financing failure. |
| 2023-05-01 | Received $10,000 for issuance of 35,000 restricted common shares. |
| 2023-05-11 | Accepted $1,000 for issuance of 1,000,000 restricted Common shares in a private transaction. |
| 2023-12-30 | Accepted $10,000 for issuance of 50,000 restricted Common shares in a private transaction. |
| 2024-03-01 | Accurate Auto Parts, Inc. sold its assets. |
| 2024-05-28 | Company name changed to Free Flow USA, Inc. |
| 2024-07-29 | Accepted subscription agreement for 1,000,000 common shares for $200,000. |
| 2024-09-28 | Accepted subscription agreement for 3,073,100 restricted common shares for $307.00; Preferred shares transferred from Redfield Holdings Ltd. to Mr. Sabir Saleem. |
| 2025-06-30 | End of the quarterly period covered by this report. |
| 2025-08-11 | Date of filing of this 10-Q report; 31,000,000 common shares outstanding. |
Recommendation
strong sellThe company reported zero revenue and a net loss for the quarter, indicating a complete lack of operational sales. It carries a significant accumulated deficit and explicitly states substantial doubt about its ability to continue as a going concern, requiring future equity or debt issuances without current commitments. The business model is unstable, with past ventures failing and current activities reliant on unfinalized contracts and speculative acquisitions. Internal control deficiencies further compound the risk. Given the severe financial distress, lack of a stable revenue stream, and high operational uncertainty, the stock represents a high-risk investment with significant downside potential.
Keywords
Free Flow USA Inc., FFLO, 10-Q, Quarterly Report, Financial Results, Net Loss, Going Concern, Scrap Metal, Auto Parts, Acquisition Opportunities, SEC Filing, OTC PINK
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.