10-Q: Free Flow USA Reports Q3 Loss Amid Business Transition
Quarterly Report
Free Flow USA Inc. reported a net loss of $46,565 for the nine months ended September 30, 2025, as it navigates a significant business transition and faces going concern uncertainties.
Summary
- Reported a net loss of $46,565 for the nine months ended September 30, 2025, a significant decrease from the $731,156 net income in the prior year, primarily due to the absence of a large asset sale gain.
- Revenue increased to $30,000 for the nine months ended September 30, 2025, from $6,123 in the same period last year, driven by consulting services.
- Operating loss significantly reduced to $68,058 for the nine months ended September 30, 2025, from $426,603 in the prior year, mainly due to lower professional and financial expenses.
- Total liabilities increased substantially to $2,084,744 as of September 30, 2025, from $818,941 at December 31, 2024, largely due to $1,194,000 in new promissory notes.
- The company faces substantial doubt about its ability to continue as a going concern due to insufficient revenues to meet operating expenses and cumulative net losses of $1,401,124 since inception.
- Preferred Shares Series B and C, totaling $1,194,000, were converted into promissory notes on September 29, 2025, with redemption dates pending mutual consent.
- The company has exited the auto parts business and is actively seeking new acquisition and business opportunities, currently involved in scrap metal processing through sub-contracting.
Sentiment
Score: 2
Explanation: The company faces significant financial distress, including a going concern warning, substantial liabilities, and a net loss. While there's some revenue growth and reduced operating expenses, the overall financial health and strategic direction remain highly uncertain, indicating a very high-risk profile.
Positives
- Revenue increased to $30,000 for the nine months ended September 30, 2025, from $6,123 in the prior year.
- Operating loss significantly reduced to $68,058 for the nine months ended September 30, 2025, from $426,603 in the prior year, primarily due to lower general and administrative expenses.
- Paid off the entire outstanding debt to Incredible Bank for $205,000, eliminating commercial bank debt.
- Received $301,997.26 from a secured promissory note from Trusted Auto Parts, LLC.
- Current receivables are in excess of current payables, indicating no immediate fear in meeting current obligations.
Negatives
- Reported a net loss of $46,565 for the nine months ended September 30, 2025, compared to a net income of $731,156 in the prior year, primarily due to the absence of a one-time gain from asset sales.
- Total liabilities increased significantly to $2,084,744 as of September 30, 2025, from $818,941 at December 31, 2024, largely driven by $1,194,000 in new promissory notes.
- Cash and cash equivalents decreased to $24,398 as of September 30, 2025, from $91,349 at December 31, 2024.
- Accumulated deficit increased to $1,561,023 as of September 30, 2025.
- The company's present revenues are marginally insufficient to meet operating expenses.
- An attempted acquisition of a pharmaceutical company failed due to the target's auditors being unable to provide a clean audited report.
Risks
- Substantial doubt about the company's ability to continue as a going concern due to insufficient revenues and cumulative net losses.
- Inability to secure additional capital through loans or equity placements to fund expansion and ongoing operations.
- Potential for errors in financial reporting due to the lack of accounting staff and documented accounting policies and procedures.
- Cybersecurity threats, despite existing firewall and antivirus solutions, as the company plans to refine its strategy as it grows.
- Uncertainty regarding the conclusion of new business opportunities and contracts, including scrap metal processing and real estate acquisitions.
- Redemption dates for $1,194,000 in promissory notes are pending and subject to the company's ability to pay off the debt.
Future Outlook
The company is actively pursuing new acquisition and business opportunities after exiting the auto parts sector and a failed pharmaceutical acquisition. It is currently involved in scrap metal processing through sub-contracting and expects to conclude a contract soon. Management anticipates needing to seek additional loans or equity placements to fund future expansion capital needs.
Management Comments
- 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 and/or business opportunities and is expecting to soon have a positive conclusion.
- Since the sale of the operating assets, 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 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.
- 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. Consequently, this can result in possible errors in the presentation and disclosure of financial information in our annual, quarterly, and other filings.
- 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. is undergoing a significant pivot, having exited the used auto parts industry and failed to acquire a pharmaceutical company. Its current activities in scrap metal processing and consulting services suggest a diversified, opportunistic approach rather than a focused industry strategy. This lack of clear industry focus, combined with the "going concern" warning, places the company in a highly uncertain position, distinct from established players in any single sector.
Comparison to Industry Standards
- NA
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Internal Control Weakness | Management acknowledges the lack of accounting staff and documented accounting policies and procedures, which could lead to errors in financial reporting. | Increases risk of financial misstatement and reduces reliability of financial reporting. | |
| Internal Control Improvement Commitment | Management is committed to strengthening internal controls and improving segregation of duties in the coming months. | Potential for future improvement in financial reporting reliability and operational efficiency. | |
| Cybersecurity Oversight | The Board plays a pivotal role in the oversight of cybersecurity risk management processes. | Indicates a formal recognition of cybersecurity as a critical risk at the highest level of governance. |
Related Party Transactions
- On September 29, 2025, Series B and C preferred shares, originally issued to Redfield Holdings Ltd. (100% owned by CEO Sabir Saleem) and later transferred to Mr. Saleem, were converted into promissory notes totaling $1,194,000. These notes bear no interest, and redemption dates are pending mutual consent and the company's ability to pay.
Stakeholder Impact
- Shareholders face significant dilution risk from potential future equity raises and substantial uncertainty regarding the company's ability to continue as a going concern, potentially leading to loss of investment.
- Creditors, particularly the holder of the $1,194,000 in promissory notes (effectively the CEO), face uncertainty regarding repayment dates. Other creditors also face risks due to the company's going concern issues.
- Employees may face job insecurity and limited opportunities due to the company's transitional state and financial challenges, exacerbated by the stated lack of accounting staff.
- Customers and suppliers may experience impacts on relationships and future contracts due to the company's uncertain business operations and financial stability.
Next Steps
- Conclude a contract in the scrap metal processing business.
- Pursue and finalize new acquisition and/or business opportunities.
- Seek loans or equity placements to address capital needs for expansion.
- Recruit accounting staff and develop written accounting policies and procedures.
- Strengthen internal controls.
- Materialization of real estate acquisition plan by Accurate Investments, Inc.
Key Dates
| Date | Description |
|---|---|
| 2011-10-28 | Company incorporated as Free Flow, Inc. |
| 2011-11-22 | Issued 25,000,000 common shares to a 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. |
| 2015-03-30 | Issued 9,700 Preferred Shares – Series A to Redfield Holdings Ltd. for $58,000. |
| 2015-03-31 | Note and accrued interest to GS Pharmaceuticals, Inc. converted to 330,000 preferred shares Series "B". |
| 2016-02-04 | Incorporated subsidiary JK Sales, Corp. |
| 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 for Accurate Auto Parts, Inc. |
| 2018-12-31 | Note outstanding of $470,935 converted 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. |
| 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. |
| 2023-12-30 | Accepted $10,000 for issuance of 50,000 restricted Common shares. |
| 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 | Preferred shares transferred from Redfield Holdings Ltd. to Mr. Sabir Saleem. Accepted subscription agreement for 3,073,100 Restricted Common shares for $307.00. |
| 2025-04-14 | Annual Report on Form 10K for the year ended December 31, 2024, filed. |
| 2025-07-15 | Received $200,000 for issuance of 1,000,000 common shares. |
| 2025-09-29 | Converted Series B & C preferred shares into Promissory Notes totaling $1,194,000. |
| 2025-11-10 | Filing date of the 10-Q report; 31,000,000 shares outstanding. |
Recommendation
strong sellThe company explicitly states "substantial doubt about the Company's ability to continue as a going concern," has significant and increasing liabilities, and a history of failed business ventures and pivots. While revenue increased and operating loss decreased, the net loss is substantial, and cash is low. The conversion of preferred shares to promissory notes with pending redemption dates, effectively with the CEO, adds to the financial complexity and risk. The lack of proper accounting staff and procedures further highlights operational weaknesses. These factors collectively indicate a highly precarious financial position and significant investment risk.
Keywords
Free Flow USA, FFLO, 10-Q, Quarterly Report, Financial Results, Going Concern, Scrap Metal, Consulting Services, Liabilities, Promissory Notes, Capital Raise, SEC Filing, Business Transition, Corporate Governance, Internal Controls
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