0001165527-12-000181.txt : 20120306
0001165527-12-000181.hdr.sgml : 20120306
20120305191812
ACCESSION NUMBER: 0001165527-12-000181
CONFORMED SUBMISSION TYPE: S-1
PUBLIC DOCUMENT COUNT: 6
FILED AS OF DATE: 20120306
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Free Flow, Inc.
CENTRAL INDEX KEY: 0001543652
IRS NUMBER: 453838831
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: S-1
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-179909
FILM NUMBER: 12668332
BUSINESS ADDRESS:
STREET 1: 9130 EDGEWOOD DRIVE
CITY: LA MESA
STATE: CA
ZIP: 91941
BUSINESS PHONE: 619 741-1006
MAIL ADDRESS:
STREET 1: 9130 EDGEWOOD DRIVE
CITY: LA MESA
STATE: CA
ZIP: 91941
S-1
1
g5777.txt
FORM S-1 OF FREE FLOW, INC
As filed with the Securities and Exchange Commission on March 6, 2012
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
FreeFlow, Inc.
(Name of Small Business Issuer in its Charter)
Delaware 1711 45-3838831
(State or other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification No.)
FreeFlow, Inc.
9130 Edgewood Drive
La Mesa CA 91941
(619) 741-1006 Fax: (619)
421-2653
(Address of Principal Place of Business or
Intended Principal Place of Business)
"S" Douglas Henderson
FREEFLOW, INC.
9130 Edgewood Drive
La Mesa CA 91941
Phone (619) 619 741-1006 Fax (619) 421-2653
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies of Communications to:
Karen A.Batcher, Esq.
Synergen Law Group, APC
819 Anchorage Place, Suite 28
Chula Vista, CA 91914
Telephone 619 475 7882
Fax 866 352 4342
Approximate date of commencement of proposed sale to the public: As soon as
possible after this Registration Statement is effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
Accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
Title of Proposed Proposed
Securities Amount Maximum Maximum Amount of
to be to be Offering Price Aggregate Registration
Registered Registered Per Share Offering Price Fee
--------------------------------------------------------------------------------
Common Stock 1,200,000 $0.01 $12,000 $1.38 (1)
================================================================================
(1) Calculated pursuant to Rule 457(f).
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
FREEFLOW, INC.
1,200,000 SHARES of COMMON STOCK
All of the shares of FREEFLOW, INC. ("the Company") offered hereby are being
offered to the public by Garden Bay International, Ltd. through its selling
Shareholders who have received their shares as a dividend from Garden Bay
International, Ltd. These Shareholders are considered underwriters. Garden Bay
International, Ltd. owns 1,200,000 shares of the common stock of FreeFlow, Inc.,
a Delaware Corporation. Garden Bay International, Ltd. will distribute to its
shareholders 1,200,000 shares of its FreeFlow common stock (see "Distribution").
The Company is filing this registration statement to register the issuance of
the 1,200,000 shares by Garden Bay as a dividend to its shareholders. The
distribution will be made to holders of record of Garden Bay International, Ltd.
stock as of the close of business on January 31, 2012, on the basis of one share
of FreeFlow's common stock for each five share of Garden Bay International, Ltd.
common stock held. The 1,200,000 shares of the common stock distributed to
Garden Bay International, Ltd. shareholders will represent approximately 4.6% of
all the issued and outstanding shares of the common stock of the Company. Garden
Bay International, Ltd. acquired the 1,200,000 shares of the common stock of
FreeFlow on December 6, 2011 for $1,000. After the distribution, a shareholder
of FreeFlow, The Company president and sole Director, "S" Douglas Henderson,
will control approximately 95% of the outstanding common stock.
Neither FreeFlow nor Garden Bay will receive any proceeds since no consideration
will be paid to Garden Bay or FreeFlow in connection with the distribution or
sale of these shares. The selling stockholders named in this prospectus are
offering the 1,200,000 shares of common stock of FreeFlow, Inc. ("Company")
offered through this prospectus. FreeFlow has set an offering price for these
securities of $0.01 per share of its common stock offered through this
prospectus.
Proceeds to Selling
Stockholders Before
Offering Price Commissions Expenses and Commissions
-------------- ----------- ------------------------
Per Share $ 0.01 Not Applicable $ 0.01
Total $12,000 Not Applicable $12,000
FreeFlow is not selling any shares of its common stock in this Offering and
therefore will not receive any proceeds from this Offering. The Company's common
stock is presently not traded on any market or securities exchange. The sales
price to the public is fixed at $0.01 per share for the duration of this
offering. Although the Company intends to apply for trading of its common stock
on the OTC Bulletin Board, public trading of its common stock may never
materialize.
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or adequacy
of this Prospectus. Any representation to the contrary is a criminal offense.
FreeFlow, Inc. does not consider itself a blank check company and does not have
any intention to engage in a reverse merger with any entity in an unrelated
industry.
These securities involve a high degree of risk, and prospective purchasers
should be prepared to sustain a loss of their entire investment (see "Risk
Factors" on Page 4).
This Offering will terminate six months after this prospectus is declared
effective by the SEC. None of the proceeds from the sale of stock by the selling
stockholders will be placed in escrow, trust or similar account.
For purposes of qualifying pursuant to a Registration Statement filed on Form
S-1, the Company has placed an aggregate value on the 1,200,000 Shares of $1,000
or $0.0008 per share (see "Determination of Offering Price").
Garden Bay International, Ltd. and the selling Shareholder's are considered
underwriters.
The date of this Prospectus is ____________, 2012
FreeFlow is not currently subject to the periodic reporting requirements of the
Securities Exchange Act of 1934, but will be subject to such requirements after
the distribution. It is the intention of FreeFlow to send to each of its
shareholders an Annual Report containing certified financial statements
following the end of each fiscal year.
TABLE OF CONTENTS
PROSPECTUS SUMMARY ......................................................... 3
OUR COMPANY ................................................................ 3
THE OFFERING ............................................................... 3
SUMMARY FINANCIAL STATUS ................................................... 3
RISK FACTORS ............................................................... 4
THE DISTRIBUTION ........................................................... 7
LIABILITY .................................................................. 12
MANAGEMENT'S DISCUSSION AND ANALYSIS ....................................... 13
BUSINESS ................................................................... 15
MANAGEMENT ................................................................. 17
PRINCIPAL SHAREHOLDERS ..................................................... 20
CERTAIN TRANSACTIONS ....................................................... 20
DESCRIPTION OF SECURITIES .................................................. 21
PENNY STOCK RULES .......................................................... 21
LEGAL MATTERS .............................................................. 22
EXPERTS .................................................................... 23
FINANCIAL STATEMENTS ....................................................... F-1
2
PROSPECTUS SUMMARY
This entire Prospectus and our consolidated financial statements and related
notes should be read carefully. There is more detailed information in other
places of the Prospectus. Unless the context requires otherwise, 'we,' 'us,'
'our,' and similar terms refer to FreeFlow, Inc.
OUR COMPANY
FreeFlow was incorporated in Delaware on October 28, 2011. Our address and
telephone numbers are 9130 Edgewood Drive, La Mesa, CA, 91941; (619) 741-1006,
Fax (619) 421-2653. FreeFlow, Inc. does not consider itself a blank check
company and does not have any intention to engage in a reverse merger with any
entity in an unrelated industry.
FreeFlow's product is not yet commercially available.
THE OFFERING
Securities Offered (1) This prospectus covers the distribution as a dividend
of 1,200,000 shares of common stock of FreeFlow, Inc.
by Garden Bay International, Ltd., Inc., which
constitutes approximately 4.6% of the common stock
and the subsequent sale to the public through the
selling Shareholders who are considered underwriters.
The distribution will be made to holders of record of
Garden Bay International, Ltd., stock as of the close
of business on January 31, 2012, on the basis of one
share of FreeFlow's common stock for each five shares
of Garden Bay International, Ltd., common stock held.
Number of Shares of:
Common Stock
Outstanding: 26,200,000 shares
Risk Factors: The shares of the common stock involve a high degree
of risk. Holders should review carefully and consider
the factors described in "Risk Factors."
SUMMARY FINANCIAL INFORMATION
The following tables set forth for the periods indicated selected financial
information for FREEFLOW, INC.
SUMMARY BALANCE SHEET DATA:
Year End
December 31, 2011
-----------------
Current Assets $ 13,765
Total Assets $ 13,765
Total Liabilities $ 0
Shareholders Equity $ 13,765
SUMMARY STATEMENT OF OPERATIONS DATA:
Year End
December 31, 2011
-----------------
Total Income $ 0
Net Loss $ (2,893)
FreeFlow has been in the development stage since October 28, 2011 and has been
actively involved in the development of its services and studying marketing
potential.
3
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock, when and if we trade at
a later date, could decline due to any of these risks, and you may lose all or
part of your investment.
RISKS ASSOCIATED WITH OUR BUSINESS
WE ARE A DEVELOPMENT STAGE COMPANY AND HAVE NO OPERATING HISTORY OR GENERATED
ANY REVENUES. AN INVESTMENT IN THE SHARES OFFERED HEREIN IS HIGHLY RISKY AND
COULD RESULT IN A COMPLETE LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR
BUSINESS PLAN.
FreeFlow, Inc. was incorporated October 28, 2011 and we have not yet commenced
our business operations, and we have not realized any revenues. We have no
operating history, current operations or proposed products upon which an
evaluation of our future prospects can be made. Based upon current plans, we
expect to incur operating losses in future periods as we incur expenses
associated with the initial startup of our business. Further, we cannot
guarantee that we will be successful in realizing revenues or in achieving or
sustaining positive cash flow at any time in the future. Any such failure could
result in the possible closure of our business or force us to seek additional
capital through loans or additional sales of our equity securities to continue
business operations, which would dilute the value of any shares you purchase in
this offering.
WE HAVE ONLY A PROVISIONAL PATENT AT THE PRESENT TIME. THIS PROVISIONAL PATENT
DOES NOT PROVIDE THE CONTINUING PROTESTION OF A FULL PATENT.
FreeFlow, Inc. has the rights to a provisional patent not a full patent. A
provisional patent is only effective for twelve months from filing. The
provisional patent rights that the Company has expire on November 12, 2012.
Unless the Company files for a standard patent before that date, the Company
will lose all protection on its proposed product.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, AND/OR WE
INADVERTENTLY MAY BE INFRINGING ON THE INTELLECTUAL PROPERETY RIGHTS OF OTHERS,
WHICH COULD RESULT IN SIGNIFICANT EXPENSE AND LOSS OF INTELLECTUAL PROPERTY
RIGHTS.
If a court determines that we infringed on the rights of others, we may be
required to obtain licenses from such other parties and may be required to pay
significant sums as damages to such parties. The persons or ortganizations
holding the desired technology may not grant licenses to us or the terms of such
licenses may not be acceptable to us. In addition, we could be required to
expend significant resources to develop non infringing technology, or to defend
claims of infringement brought against us.
We rely on the registration of patents and trademarks, as well as on compliance
with trade secret laws and confidentiality agreements. We may need to expend
significant resources to protect and enforce our intellectual property rights.
BECAUSE OUR CURRENT OFFICER AND DIRECTOR HAS OTHER BUSINESS INTERESTS, HE MAY
NOT BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS
OPERATIONS, CAUSING OUR BUSINESS TO FAIL.
Mr. Henderson our sole officer and director, currently devotes approximately 2
hours per week providing management services to us. While he presently possesses
adequate time to attend to our interest, it is possible that the demands on him
from other obligations could increase, with the result that he would no longer
be able to devote sufficient time to the management of our business. This could
negatively impact our business development.
4
WE CANNOT PREDICT WHEN OR IF WE WILL PRODUCE REVENUES, WHICH COULD RESULT IN A
TOTAL LOSS OF YOUR INVESTMENT IF WE ARE UNSUCCESSFUL IN OUR BUSINESS PLANS.
We have not yet implemented our business plan or offered any services.
Therefore, we have not yet generated any revenues from operations. In order for
us to continue with our plans and open our business, we must raise our initial
capital to do so through this offering. The timing of the completion needed to
commence operations and generate revenues is contingent on the success of this
offering. There can be no assurance that we will generate revenues or that
revenues will be sufficient to maintain our business. As a result, you could
lose all of your investment if you decide to purchase shares in this offering
and we are not successful in our proposed business plans.
A FAILURE TO MEET CUSTOMER SPECIFICATIONS OR EXPECTATIONS COULD RESULT IN LOST
REVENUES, INCREASED EXPENSES, NEGATIVE PUBLICITY, CLAIMS FOR DAMAGES AND HARM TO
OUR REPUTATION AND CAUSE DEMAND FOR OUR PROPOSED PRODUCT TO DECLINE.
In addition, our customers may have additional expectations about our proposed
product. Any failure to meet customers' specifications or expectations could
result in:
* delayed or lost revenue;
* requirements to provide additional services to a customer at reduced
charges or no charge;
* negative publicity about us, which could adversely affect our ability
to attract or retain customers; and
* claims by customers for substantial damages against us, regardless of
our responsibility for such failure, which may not be covered by
insurance policies and which may not be limited by contractual terms.
OUR ABILITY TO SUCCESSFULLY MARKET OUR PROPOSED PRODUCT COULD BE SUBSTANTIALLY
IMPAIRED IF OUR PROPOSED PRODUCT AND ITS APPLICATIONS DO NOT PROVE TO BE
RELIABLE, EFFECTIVE AND COMPATIBLE.
We may experience difficulties that could delay or prevent the successful
development, introduction or marketing of our proposed product. If our proposed
product suffers from reliability, quality or compatibility problems, market
acceptance of our proposed product could be greatly hindered and our ability to
attract customers could be significantly reduced. We cannot assure you that our
proposed product will be free from any reliability, quality or compatibility
problems. If we incur increased costs or are unable, for technical or other
reasons, to install and manage our proposed product, our ability to successfully
market our proposed product could be substantially limited.
IF WE ARE UNABLE TO MAINTAIN EXISTING AND DEVELOP ADDITIONAL RELATIONSHIPS WITH
CONTRACTORS AND BUILDERS, THE SALES AND MARKETING OF OUR PROPOSED PRODUCT MAY BE
UNSUCCESSFUL. OUR DEPENDENCE ON THIRD PARTIES INCREASES THE RISK THAT WE WILL
NOT BE ABLE TO MEET OUR FUTURE CUSTOMERS' NEEDS ON A TIMELY OR COST-EFFECTIVE
BASIS, WHICH COULD RESULT IN THE LOSS OF CUSTOMERS.
Our services will rely on products and services of third-party contractors.
There can be no assurance that we will not experience operational problems. Our
proposed product and services will be provided through third-party contractors.
Currently the Company has no plans or agreements to manufacture, distribute,
market (other than our web site) or install our proposed product.
THE LOSS OF MR. HENDERSON COULD SEVERELY IMPACT OUR BUSINESS OPERATIONS AND
FUTURE DEVELOPMENT OF OUR PRODUCTS, WHICH COULD RESULT IN A LOSS OF REVENUES AND
YOUR ABILITY TO EVER SELL ANY SHARES YOU PURCHASE IN THIS OFFERING.
Our performance is substantially dependent upon the professional expertise of
our President, Dr. Myers. We are dependent on his ability to develop and market
our proposed product. If he were unable to perform his services, this loss could
have an adverse effect on our business operations, financial condition and
operating results if we are unable to replace him with another individual
qualified to develop and market our proposed product. The loss of his services
could result in a loss of revenues, which could result in a reduction of the
value of any shares you purchase in this offering.
5
RISKS ASSOCIATED WITH THIS OFFERING
THE TRADING IN OUR SHARES WILL BE REGULATED BY THE SECURITIES AND EXCHANGE
COMMISSION RULE 15G-9 WHICH ESTABLIHES THE DEFINITION OF A "PENNY STOCK."
The shares being offered are defined as a penny stock under the Securities and
Exchange Act of 1934, and rules of the Commission. The Exchange Act and such
penny stock rules generally impose additional sales practice and disclosure
requirements on broker-dealers who sell our securities to persons other than
certain accredited investors who are, generally, institutions with assets in
excess of $4,000,000 or individuals with net worth in excess of $1,000,000 or
annual income exceeding $200,000 ($300,000 jointly with spouse), or in
transactions not recommended by the broker-dealer. For transactions covered by
the penny stock rules, a broker dealer must make certain mandated disclosures in
penny stock transactions, including the actual sale or purchase price and actual
bid and offer quotations, the compensation to be received by the broker-dealer
and certain associated persons, and deliver certain disclosures required by the
Commission. Consequently, the penny stock rules may make it difficult for you to
resell any shares you may purchase, if at all.
DUE TO THE LACK OF A TRADING MARKET FOR OUR SECURITIES, YOU MAY HAVE DIFFICULTY
SELLING ANY SHARES YOU PURCHASE IN THIS OFFERING.
We are not registered on any public stock exchange. There is presently no demand
for our common stock and no public market exists for the shares being offered in
this prospectus. We plan to contact a market maker immediately following the
completion of the offering and apply to have the shares quoted on the
Over-The-Counter Electronic Bulletin Board (OTCBB). The OTCBB is a regulated
quotation service that displays real-time quotes, last sale prices and volume
information in over-the-counter (OTC) securities. The OTCBB is not an issuer
listing service, market or exchange. Although the OTCBB does not have any
listing requirements per se, to be eligible for quotation on the OTCBB, issuers
must remain current in their filing with the SEC or applicable regulatory
authority. Market makers are not permitted to begin quotation of a security
whose issuer does not meet his filing requirement. Securities already quoted on
the OTCBB that become delinquent in their required filings will be removed
following a 30 to 60 day grace period if they do not make their required filing
during that time. We cannot guarantee that our application will be accepted or
approved and our stock listed and quoted for sale. As of the date of this
filing, there have been no discussions or understandings between FreeFlow and
anyone acting on our behalf, with any market maker regarding participation in a
future trading market for our securities. If no market is ever developed for our
common stock, it will be difficult for you to sell any shares you purchase in
this offering. In such a case, you may find that you are unable to achieve any
benefit from your investment or liquidate your shares without considerable
delay, if at all. In addition, if we fail to have our common stock quoted on a
public trading market, your common stock will not have a quantifiable value and
it may be difficult, if not impossible, to ever resell your shares, resulting in
an inability to realize any value from your investment.
WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE.
WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT
FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
Our business plan allows for the payment of the estimated $5,000 cost of this
registration statement to be paid from existing cash on hand. If necessary, Mr.
Henderson, our director, has verbally agreed to loan the company funds to
complete the registration process. Such loans will be for a period of two years
at zero interest. We plan to contact a market maker immediately following the
close of the offering and apply to have the shares quoted on the OTC Electronic
Bulletin Board. To be eligible for quotation, issuers must remain current in
their filings with the SEC. In order for us to remain in compliance we will
require future revenues to cover the cost of these filings, which could comprise
a substantial portion of our available cash resources. If we are unable to
generate sufficient revenues to remain in compliance it may be difficult for you
to resell any shares you may purchase, if at all.
MR. HENDERSON, THE DIRECTOR OF THE COMPANY, BENEFICIALLY OWNS 95% OF THE
OUTSTANDING SHARES OF OUR COMMON STOCK. AFTER THE COMPLETION OF THIS OFFERING HE
WILL OWN 95% OF THE OUTSTANDING SHARES. IF HE CHOOSES TO SELL HIS SHARES IN THE
FUTURE, IT MIGHT HAVE AN ADVERSE EFFECT ON THE PRICE OF OUR STOCK.
6
Due to the amount of Mr. Henderson's share ownership in our company, if he
chooses to sell his shares in the public market, the market price of our stock
could decrease and all shareholders suffer a dilution of the value of their
stock. If he does sell any of his common stock, he will be subject to Rule 144
under the 1933 Securities Act which will restrict his ability to sell his
shares.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders
THE DIVIDEND DISTRIBUTION BY GARDEN BAY INTERNATIONAL, LTD.
GENERAL
Approximately 4.6% of the outstanding common stock of FreeFlow is presently
owned by Garden Bay International, Ltd. Garden Bay International, Ltd., is
primarily a business consulting firm. Garden Bay International, Ltd.,
shareholders will not be required to pay for shares of our common stock received
in the distribution or to exchange shares of Garden Bay International, Ltd., in
order to receive our common stock.
The major shareholders of Garden Bay are, by voting percentage:
Robert Berk (President and Director) 17.2%
Athena K. Brady 12.4%
Juan Solis 12.4%
Iann Perez 12.4%
Edward F. Myers III 12.4%
Hannah Reeves 12.4%
Betty N. Myers 12.4%
MANNER AND PLAN OF DISTRIBUTION
FreeFlow, Inc. is offering 1,200,000 shares to the public through the selling
shareholders. The Company is filing this registration statement to register the
distribution of the 1,200,000 shares by Garden Bay as a dividend to its
shareholders.
Pursuant to the plan of distribution, Garden Bay International, Ltd. will
distribute to its shareholders 1,200,000 shares of the common stock of FreeFlow.
One share of FreeFlow for each five shares of Garden Bay International, Ltd.,
common stock held of record as of January 31, 2012. Fractional shares will be
rounded up to the next full share. On January 31 2012, Garden Bay International,
Ltd., had issued and outstanding approximately 5,672,000 shares. On January 31,
2012, Garden Bay International, Ltd., had approximately 29 shareholders of
record. Shares of FreeFlow will be mailed to Garden Bay International, Ltd.
shareholders.
TAX CONSEQUENCES OF GARDEN BAY INTERNATIONAL, LTD., DISTRIBUTION
FreeFlow believes the following are the material federal income tax consequences
expected to result from the distribution under currently applicable law. The
following discussion is intended as general information only. It may not be
applicable to stockholders who are neither citizens nor residents of the United
States. It does not discuss the state, local, and foreign tax consequences of
the distributor. Stockholders should consult their own tax advisors regarding
the consequences of the distribution in their particular circumstances under
federal, state, local, and foreign tax laws.
7
Garden Bay International, Ltd., will recognize a gain or loss based upon the
fair market value of the Common stock at the date of the Distribution. This gain
or loss is measured by the difference between Travers' tax basis in the common
stock distributed in the distribution and the fair market value of that stock.
As a result of Garden Bay International, Ltd., having no current or accumulated
earnings and profits allocable to the distribution, no portion of the amount
distributed will constitute a dividend for federal income tax purposes.
Therefore, no portion of the amount received constitutes a dividend, and will
not be eligible for the dividends-received deduction for corporations. Each
Travers Inc., stockholder will have a tax basis in FreeFlow's common stock
distributed equally to the fair market value of the common stock distributed on
the distribution date. The distribution is not taxable as a dividend. The
distribution will be treated as a tax-free return of capital to the extent that
the fair market value of such portion of the amount received does not exceed the
stockholder's basis in the Garden Bay International, Ltd., common stock held,
and as a capital gain if and to the extent that the fair market value of such
portion is greater than such tax basis.
Any taxes payable by any recipient of shares of FreeFlow's common stock in the
distribution will be the responsibility of such recipient.
The foregoing is only a summary of certain federal income tax consequences of
the distribution under current law and is intended for general information only.
Each stockholder should consult his tax advisor as to the particular
consequences of the distribution to such stockholder, including the application
of state, local and foreign tax laws.
EACH GARDEN BAY INTERNATIONAL, LTD., SHAREHOLDER IS ADVISED TO SEEK PROFESSIONAL
TAX COUNSEL REGARDING ANY TAX LIABILITY THAT MAY ARISE FROM THIS DISTRIBUTION.
Above based on tax opinion provided by Karen A. Batcher, Esquire.
BLUE SKY LAWS
This Distribution is not being made in any jurisdictions of the United States in
which this distribution would not be in compliance with the securities or Blue
Sky laws of such jurisdiction. Only shareholders of Garden Bay residing in the
states set forth below may obtain the shares pursuant to the Distribution.
FreeFlow initially selected the jurisdictions in which shareholders may
participate in the distribution after determining from the shareholder records
of Garden Bay International, Ltd., and from record owners the states where
substantially all the known owners reside.
IF A BENEFICIAL OWNER RESIDES IN A STATE OF THE UNITED STATES OF AMERICA NOT SET
FORTH BELOW, SUCH OWNER MAY NOT PARTICIPATE IN THE DISTRIBUTION.
CALIFORNIA
This Prospectus will be delivered to those Shareholders of Garden Bay
International, Ltd., eligible to participate in this Distribution.
NON-US RESIDENTS
Those Garden Bay International, LTD. shareholders residing outside the United
States of America will be eligible to receive the distribution.
This Prospectus relates to the shares received in the distribution to the Garden
Bay International, Ltd., shareholders. The distribution of the Company's common
stock will be made to Garden Bay International, Ltd., shareholders without any
consideration being paid and without any exchange of shares by the shareholders
of Garden Bay International, Ltd. Neither Garden Bay International, Ltd., nor
the Company, will receive any proceeds from the distribution by Garden Bay
International, Ltd., of such shares of the Company's common stock, nor from the
sale of any such shares by any persons who may be deemed to be the underwriters.
8
A copy of this Prospectus is being mailed to each Garden Bay International,
Ltd., shareholder of record on January 31, 2012, together with the certificate
representing the number of the FreeFlow shares to which he is entitled. Persons
wishing to evaluate the FreeFlow shares being distributed to them should review
this Prospectus carefully.
REASON FOR THE DISTRIBUTION
The Board of Directors of Garden Bay International, Ltd. has decided that the
shares of FreeFlow in the hands of individual shareholders will provide more
value to the Garden Bay International, Ltd. shareholders than if corporately
owned. If at some future date the shares of FreeFlow are publicly traded, then
shareholders may determine for themselves on an individual basis whether they
wish to sell their shares and obtain personal liquidity or wish to retain the
shares for possible future potential. There can be no assurance that the shares
will be publicly traded, or if so, whether the market will provide any
particular return to the shareholder.
COSTS OF DISTRIBUTION
FreeFlow estimates that the total cost of the distribution will be approximately
$7,510. Garden Bay International, Ltd. has agreed to pay all such costs except
the audit.
THE OFFERING
The Issuer: FreeFlow, Inc.
Selling Security Holders: The selling shareholders will receive their
shares as a dividend from Garden Bay
International, Ltd. as described in this
prospectus. The Shareholders have not paid for
this stock
Securities Being Offered: Up to 1,200,000 shares of our common stock, par
value $0.0001 per share.
Offering Price: The offering price of the common stock is $0.01.
Duration of Offering: This offering will terminate six months after
this prospectus is declared effective by the
SEC.
Minimum Number of Shares
To Be Sold in This Offering: None.
Common Stock Outstanding
Before and After the Offering: 26,200,000 shares of our common stock are issued
and outstanding as of the date of this
prospectus. All of the common stock to be sold
under this prospectus will be sold by existing
stockholders.
Use of Proceeds: We will not receive any proceeds from the sale
of the common stock by the selling stockholders.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
There is not currently a public market for our common stock. After the
distribution is complete, we intend to request trading on the OTCBB (Over the
Counter Bulletin Board). We cannot assure you as to the price at which our
common stock might trade after the distribution date or whether or not FreeFlow
can qualify for listing. Listing requirements include being a reporting company
under the Securities Exchange Act of 1934 and having all required reports
9
current. Upon the distribution of the shares of this offering FreeFlow will be a
reporting company and may apply to the FENRA for listing. FreeFlow has not
discussed market making with any broker-dealer.
Prior to the distribution, there were two common shareholders. After the
distribution, there will be 31 shareholders of common equity.
There are no securities subject to outstanding warrants or options to purchase
common stock.
We have never distributed dividends; and, since we are a development company, we
do not foresee doing so in the future.
There are 25,000,000 common shares that could be sold under Rule 144. The
1,200,000 shares which are the subject of this offering are not available to be
sold under Rule 144.
In general, under Rule 144, a person (or persons whose shares are aggregated)
who has satisfied a one-year holding period may sell, within any three-month
period, a number of shares which does not exceed the greater of one percent of
the then outstanding shares of common stock or the average weekly trading volume
during the four calendar weeks prior to such sale. Rule 144 also permits the
sale of shares, without any quantity limitation, by a person who is not an
affiliate of the Company and who has beneficially owned the shares a minimum
period of two years. Hence, the possible sale of these restricted shares may, in
the future, dilute an investor's percentage of free-trading shares and may have
a depressive effect on the price of FreeFlow's common stock. No shares, other
than the 1,200,000 shares which are the subject of this registration may be sold
free of restriction.
DETERMINATION OF OFFERING PRICE FOR DIVIDEND DISTRIBUTION
Since the distribution is a dividend by a present stockholder, there is no
offering price and no dilution to existing stockholders of FreeFlow. For the
purpose of computing the instant registration fee, FreeFlow and Garden Bay have
set the price per share at $0.0005 per common share, which was the book value on
January 31, 2012. According to this calculation the total price for the
1,200,000 shares is $630. Such price has no relationship to FreeFlow's results
of operations and may not reflect the true value of such Common stock.
DETERMINATION OF OFFERING PRICE BY SHAREHOLDERS
The $0.01 per share offering price of our common stock was determined based on
our internal assessment of what the market would support. However, the selection
of this particular price was influenced by the last sales price from our most
recent private offering of 1,200,000 shares of our common stock which was
completed on December 6, 2012 at a price of $0.0008 per share. There is no
relationship whatsoever between this price and our assets, earnings, book value
or any other objective criteria of value.
DILUTION
The common stock to be sold by the selling stockholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing stockholders.
SELLING SECURITY HOLDERS
Garden Bay International, Ltd. is offering through the selling stockholders
named in this prospectus all of the 1,200,000 shares of common stock offered
through this prospectus. The selling stockholders acquired their shares of our
common stock offered through this prospectus as a dividend from Garden Bay
International, Ltd.
The following table provides as of January 31, 2012 information regarding the
beneficial ownership of our common stock held by each of the selling
stockholders, including:
1. the number of shares beneficially owned by each prior to this
Offering;
2. the total number of shares that are to be offered by each;
10
3. the total number of shares that will be beneficially owned by each
upon completion of the Offering;
4. the percentage owned by each upon completion of the Offering; and
5. the identity of the beneficial holder of any entity that owns the
shares.
Beneficial Ownership Beneficial Ownership
Before Offering (1) After Offering (1)
------------------------- Number of -----------------------
Name of Number of Shares Being Number of
Selling Stockholder (1) Shares Percent (2) Offered Shares Percent (2)
----------------------- ------ ----------- ------- ------ -----------
Chand Singh Brar 400 * 400 NIL *
Gurdev Brar 400 * 400 NIL *
Joginder Singh Brar 400 * 400 NIL *
Checkers Investements, Ltd 29,500 * 29,500 NIL *
Aminmohaned Dhalla 400 * 400 NIL *
Azim Dhalla 400 * 400 NIL *
Azmina Dhalia 400 * 400 NIL *
Jagsir Dhaliwal 400 * 400 NIL *
Nadira Dhalla 400 * 400 NIL *
Darrell Fauser 400 * 400 NIL *
Anil Fazel 400 * 400 NIL *
Shamila Fazal 400 * 400 NIL *
Clement Ferris 400 * 400 NIL *
Edith Ferris 400 * 400 NIL *
Gloria Froese 400 * 400 NIL *
Ursula Grauer 80,000 * 80,000 NIL *
Doan Husarik 400 * 400 NIL *
Icon Technologies 29,100 * 29,100 NIL *
Harjit Mand 600 * 600 NIL *
Ranvir Mand 400 * 400 NIL *
Reuben McDonald 20000 * 20000 NIL *
David McMurray 400 * 400 NIL *
Melanie McMurray 400 * 400 NIL *
Ashraf Mithani 400 * 400 NIL *
Noorisa Mithani 400 * 400 NIL *
Sameer Mithani 400 * 400 NIL *
Sareena Mithani 400 * 400 NIL *
Shairoz Mithani 400 * 400 NIL *
Anette Ouimet 400 * 400 NIL *
Claire Penner 400 * 400 NIL *
Jane Preslie 200 * 200 NIL *
Brian Rakos 400 * 400 NIL *
Jason Shriner 400 * 400 NIL *
Jeffery Sulima 400 * 400 NIL *
Elaine Sulima 400 * 400 NIL *
Leonard Sulima 400 * 400 NIL *
Tradewinds Investments Ltd. 6,000 * 6,000 NIL *
Turf Holding Ltd. 6,000 * 6,000 NIL *
David Walsh 200 * 200 NIL *
11
Tina Webber 400 * 400 NIL *
Paul Workentine 200 * 200 NIL *
Ruth Workentine 200 * 200 NIL *
Robert Berk 178,572 * 178,572 NIL *
Iann Perez 128,572 * 128,572 NIL *
Juan C. Solis 128,572 * 128,572 NIL *
Athena K. Brady 128,572 * 128,572 NIL *
Edward F. Myers III 128,572 * 128,572 NIL *
Hannah Reeves 128,572 * 128,572 NIL *
Betty N. Myers 128,572 * 128,572 NIL *
TOTAL 1,134,404 4.33% 1,134,404 NIL *
NOTES
* Represents less than 1%
(1) The named party beneficially owns and has sole voting and investment power
over all shares or rights to these shares, unless otherwise shown in the
table. The numbers in this table assume that none of the selling
stockholders sells shares of common stock not being offered in this
prospectus or purchases additional shares of common stock, and assumes that
all shares offered are sold.
(2) Applicable percentage of ownership is based on 26,200,000 common shares
outstanding as of January 31 2012 , plus any securities held by such
security holder exercisable for or convertible into common shares within
sixty (60) days after the date of this prospectus, in accordance with Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, as amended.
Except as disclosed above, none of the selling stockholders:
(i) has had a material relationship with us other than as a stockholder at
any time within the past three years; or
(ii) has ever been one of our officers or directors.
PLAN OF DISTRIBUTION BY SELLING SHAREHOLDERS
This prospectus is part of a registration statement that enables Garden Bay to
distribute their shareholders and the selling stockholders to sell their shares.
The selling stockholders may sell some or all of their common stock in one or
more transactions, including block transactions:
1. On such public markets as the common stock may from time to time be
trading;
2. In privately negotiated transactions;
3. Through the writing of options on the common stock;
4. In short sales; or
5. In any combination of these methods of distribution.
The sales price to the public is fixed at $0.01 per share for the duration of
this offering
12
The selling stockholders named in this prospectus may also sell their shares
directly to market makers acting as agents in unsolicited brokerage
transactions. Any broker or dealer participating in such transactions as agent
may receive a commission from the selling stockholders, or, if they act as agent
for the purchaser of such common stock, from such purchaser. The selling
stockholders will likely pay the usual and customary brokerage fees for such
services.
We can provide no assurance that all or any of the common stock offered will be
sold by the selling stockholders named in this prospectus. The estimated costs
of this offering are $7,500. We are bearing all costs relating to the
registration of the common stock. The selling stockholders, however, will pay
any commissions or other fees pay to brokers or dealers in connection with any
sale of the common stock.
The selling stockholders named in this prospectus must comply with the
requirements of the Securities Act and the Exchange Act in the offer and sale of
the common stock. The selling stockholders and any broker-dealers who execute
sales for the selling stockholders is deemed to be an "underwriter" within the
meaning of the Securities Act in connection with such sales. In particular,
during such times as the selling stockholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may among other things
1. Not engage in any stabilization activities in connection with our
common stock;
2. Furnish each broker or dealer through which common stock may be
offered, such copies of this prospectus, as amended from time to time,
as may be required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under
the Exchange Act.
If an underwriter is selected in connection with this offering, an amendment
will be filed to identify the underwriter, disclose the arrangements with the
underwriter, and we will file the underwriting agreement as an exhibit to this
prospectus.
The selling stockholders should be aware that the anti-manipulation provisions
of Regulation M under the Exchange Act will apply to purchases and sales of
shares of common stock by the selling stockholders, and that there are
restrictions on market-making activities by persons engaged in the distribution
of the shares. Under Regulation M, the selling stockholders or their agents may
not bid for, purchase, or attempt to induce any person to bid for or purchase,
shares of our common stock while such selling stockholder is distributing shares
covered by this prospectus. Accordingly, the selling stockholders are not
permitted to cover short sales by purchasing shares while the distribution is
taking place. The selling stockholders are advised that if a particular offer of
common stock is to be made on terms constituting a material change from the
information set forth above with respect to the Plan of Distribution, then, to
the extent required, a post-effective amendment to the accompanying registration
statement must be filed with the SEC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CERTAIN FORWARD-LOOKING INFORMATION
Information provided in this prospectus filed on Form S-1 may contain
forward-looking statements that are not historical facts and information. These
statements represent the Company's expectations or beliefs, including, but not
limited to, statements concerning future and operating results, statements
concerning industry performance, the Company's operations, economic performance,
financial conditions, margins and growth in sales of the Company's services,
capital expenditures, financing needs, as well as assumptions related to the
foregoing. For this purpose, any statements contained in the S-1 filing that are
not statements of historical fact may be deemed to be forward-looking
statements. These forward-looking statements are based on current expectations
and involve various risks and uncertainties that could cause actual results and
outcomes for future periods to differ materially from any forward-looking
statement or views expressed herein.
13
We have generated no revenue since inception and have incurred no expenses
through January 31, 2012.
The following table provides selected financial data about our company for the
period from the date of incorporation through January 31, 2012. For detailed
financial information, see the financial statements included in this prospectus.
Balance Sheet Data: 01/31/2012
------------------- ----------
Cash $13,765
Total assets $13,765
Total liabilities $ 0
Shareholders' equity $13,765
If we experience a shortfall in operating capital prior to funding from the
proceeds of this offering, our director has verbally agreed to advance the
company funds to complete the registration process.
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 we
begin removing and selling minerals. There is no assurance we will ever reach
that point.
Our cash balance at January 31, 2012 was $13,765. We believe our cash balance is
sufficient to fund our limited levels of operations until we receive funding. If
we experience a shortage of funds prior to funding we may utilize funds from our
director, who has informally agreed to advance funds to allow us to pay for
offering costs, filing fees, and professional fees, however he has no formal
commitment, arrangement or legal obligation to advance or loan funds to the
company. In order to achieve our business plan goals, we will need the funding
from this offering. We are a development stage company and have generated no
revenue to date. We have sold $21,000 in equity securities to pay for our
minimum level of operations.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us on which to base an
evaluation of our performance. We are a development stage company and have not
generated revenues from operations. We cannot guarantee we will be successful in
our business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources,
possible delays in implementing our business plan, and possible cost overruns
due to increases in the cost of services.
To become profitable and competitive, we must implement our business plan and
generate revenue.
LIQUIDITY AND CAPITAL RESOURCES
Our director has agreed to advance funds as needed. While he has agreed to
advance the funds, the agreement is verbal and is unenforceable as a matter of
law.
We received our initial funding of $20,000 through the sale of common stock to
"S" Douglas Henderson, our officer and director, who purchased 25,000,000 shares
of our common stock at $0.0008 per share on November1, 2011. From inception
until the date of this filing we have had no operating activities. Our financial
statements from inception (October 28, 2011) through the year ended January 31,
2011 report no revenues.
14
ADVERTISING AND MARKETING
There were no advertising and marketing expenses for the period ended January
31, 2012.
CORPORATE HISTORY
The Company was incorporated on October 28, 2011. FreeFlow has sufficient cash
resources to operate at the present level of expenditure for the next 12 months.
We estimate that we will need a minimum of $5,000 to keep the Company in
operation for an additional 12 months. As of January 31, 2012 the Company had a
cash balance of $13,765. FreeFlow may raise additional capital either through
debt or equity. No assurances can be given that such efforts will be successful.
The Company has no specific plans at present for raising additional capital.
The following are the projected future activities of the company in milestone
format. The specific timing of each milestone will depend on the ability of
FreeFlow to raise capital, therefore these dates are estimates which may not be
met.
MILESTONES:
JANUARY, FEBRUARY AND MARCH 2012
The company will develop its web site and continue with the beta testing.
APRIL, MAY AND JUNE 2012
The Company will develop brochures and do a cost study among vendors. The
Company will work with pool contractors to sell our system.
JULY, AUGUST AND SEPTEMBER 2012
This will be the Company's first summer season. The Company will hire personal
to visit pool owners and explain our system, We will also direct mail our
brochures to home pool owners.
OCTOBER, NOVEMBER AND DECEMBER 2012
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 late 2012, but no assurance can be given.
BUSINESS
PROPOSED PRODUCT OVERVIEW
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. How it works:
1. The FreeFlow pump system is powered by a solar panel. This panel
produces approximately 250 watts
2. The FreeFlow pump is connected around the normal pump powered off the
electric grid.
3. The FreeFlow computer control system checks the energy available from
the solar panel and determines when to turn off the electric grid pump
and circulate water with the solar powered pump. The computer system
also logs the amount of water circulated to insure the total daily
circulation meets the pool requirements.
15
COMPETITIVE STRENGTHS & STRATEGY
The principle advantage of the FreeFlow solar pump is the use of the sun to
power pool circulation instead of power from the commercial grid. For many
households the pool pump is the greatest consumer of electric energy in the
home.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATION, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business except for the purchase of a provisional patent. On November 13, 2011
the Company purchased the rights to a Provisional Patent for a solar pump
system, for the price of $5,000, from Edward F. Myers II.
COMPLIANCE WITH GOVERNMENT REGULATION
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the normal course of
business in the United States and the State of California.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR
CONTRACTS
On November 13, 2011 the inventor, Edward F. Myers, for the amount of $5,000
assigned all his rights in a Provisional patent EFS 113937725 titled "FreeFlow"
to FreeFlow, Inc. This Provisional patent is valid until November 12, 2012. It
is the Company's intention to file for a conventional patent on this invention.
A short description: The energy from solar panels is used to operate a pump
which is plumbed around the normal electric pump, providing circulation using
solar energy. A small computer controls the operation of the system to insure
the there is sufficient circulation. If this provisional patent expires before
the Company obtains a full patent it is the Company's intention to continue the
business since it sees being first with the idea gives it a competitive
advantage. It is the intent of the Company to file for a conventional patent as
soon after this offering as can be done.
NEED FOR GOVERNMENT APPROVAL FOR ITS PROPOSED PRODUCT
We are not required to apply for or have any government approval for our
proposed product.
RESEARCH AND DEVELOPMENT COSTS DURING THE LAST TWO YEARS
We have not expended funds for research and development costs since inception.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
Our only employee is our sole officer, Mr. Henderson who currently devotes 2
hours per week to company matters and after receiving funding he plans to devote
as much time as the board of directors determines is necessary to manage the
affairs of the company. There are no formal employment agreements between the
company and our current employee.
PROPERTIES
FreeFlow shares office with its President at no cost to the Company.
EMPLOYEES
All activities are carried out by the officers and directors. The Company
intends to hire independent contractors who will receive 10% of any contract
received.
16
LEGAL PROCEEDINGS
FreeFlow is not a party to any legal proceeding.
MANAGEMENT
The Executive Officers and Directors of the Company and their ages are as
follows:
Name Age Position Date Elected
---- --- -------- ------------
"S" Douglas Henderson 66 President,CFO October 29, 2011
Director, Secretary
"S" Douglas Henderson has been President,CFO, Secretary and sole director of
FreeFlow since October 29th 2011. From 1998 until 2008 he was Admissions
Director, Senior Flight Instructor of San Diego Flight Training International,
San Diego CA. Since July 2004, he has worked part time as an income tax preparer
for H & R Block. Mr. Henderson is also part owner of J. Bright Henderson, Inc.,
a dealer in fine art. From 2008 to 2010 he was a director of Ads in Motion, Inc.
a publicly traded company.
The Directors are elected to serve until the next annual meeting of shareholders
and until their successors have been elected. Executive officers serve at the
discretion of the Board of Directors.
Each of the foregoing persons may be deemed a "promoter" and "parent" of the
Company as that term is defined in the rules and regulations promulgated under
the Securities and Exchange Act of 1933.
SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company reports revenue and expenses using the accrual method of accounting,
for financial and tax reporting purposes.
USE OF ESTIMATES
Management uses estimates and assumptions in preparing these financial
statements in accordance with 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.
DEPRECIATION, AMORTIZATION AND CAPITALIZATION
The Company records depreciation and amortization, when appropriate, using both
straight-line method over the estimated useful lives of the assets (five to
seven years). Expenditures for maintenance and repairs are charged to expense as
incurred. Additions, major renewals and replacements that increase the
property's useful life are capitalized. Property sold or retired, together with
the related accumulated depreciation is removed from the appropriate accounts
and the resultant gain or loss is included in net income.
INCOME TAXES
The company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.
17
SFAS No. 109 requires the reduction of deferred tax assets by a valuation
allowance if, based on the weight of available evidence, it is more likely than
not that some of all of the deferred tax assets will not be realized.
The provision for income taxes differs from the amounts which would be provided
by applying the statutory federal income tax rate to net loss before provision
for income taxes for the following reasons:
As of
January 31, 2012
----------------
Income tax expense at statutory rate $ 0
Valuation allowance $ 0
--------
Income tax expense per books $ 0
========
FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial accounting Standards Statement No. 107, "Disclosures about Fair Value
of Financial Instruments", requires the Company to disclose, when reasonably
attainable, the fair market values of its assets and liabilities which are
deemed to be financial instruments. The Company's financial instruments consist
primarily of cash and certain investments.
INVESTMENTS
Investments that are purchased in other companies are valued at cost less any
impairment in the value that is other than temporary in nature.
PER SHARE INFORMATION
The Company computes per share information in accordance with SFAS No. 128,
"Earnings per Share" which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. Basic loss per
share is computed by dividing the net loss available to common shareholders by
the weighted average number of common shares outstanding during such period.
Diluted loss per share gives effect to all dilutive potential common shares
outstanding during the period. Dilutive loss per share excludes all potential
common shares if their effect is anti-dilutive. The Company has basic and
diluted loss per share of $0.00276.
EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
Currently, "S" Douglas Henderson, our officer and director receives no
compensation for his services during the development stage of our business
operations. He is reimbursed for any out-of-pocket expenses that he incurs on
our behalf. In the future, we may approve payment of salaries for officers and
directors, but currently, no such plans have been approved. We do not have any
employment agreements in place with our sole officer and director. We also do
not currently have any benefits, such as health or life insurance, available to
our employees.
18
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
"S" Douglas 2011 0 0 0 0 0 0 0 0
Henderson
President,
CEO, CFO and
Director
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
----------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
"S" 0 0 0 0 0 0 0 0 0
Douglas
Henderson
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
"S" Douglas 0 0 0 0 0 0 0
Henderson
There are no current employment agreements between the company and its officer
and director.
19
On January 12, 2012, a total of 26,200,000 shares of common stock were issued to
Mr. Henderson in exchange for cash in the amount of $20,000 or $0.0008 per
share.
Mr. Henderson currently devotes approximately 2 hours per week to manage the
affairs of the company. He has agreed to work with no remuneration until such
time as the company receives sufficient revenues necessary to provide management
salaries. At this time, we cannot accurately estimate when sufficient revenues
will occur to implement this compensation, or what the amount of the
compensation will be.
There are no annuity, pension or retirement benefits proposed to be paid to the
officer or director or employees in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.
OPTIONS
There are no options outstanding.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of January 31, 2012, the name, address, and
number of shares owned directly or beneficially by persons who own 5% or more of
the company's common stock and by each executive officer and director and owner
after the Distribution.
Shares/Percent as Shares/Percent after
Beneficial Owner of January 31, 2012 the Distribution
---------------- ------------------- ----------------
"S" Douglas Henderson 25,000,000 - 95.4% 25,000,000 - 95.4%
9130 Edgewood Dr.
La Mesa, CA 91941
Garden Bay International, Ltd. 1,200,000 - 4.6% 0 - 0%
4190 Bonita Road
Bonita Ca, 91902
All Executive Officers
and Directors as a Group
(2) persons) 25,000,000 - 95.4% 25,000,000 - 95.4%
----------
(1) Based on 26,200,000 shares outstanding on January 1, 2012
CERTAIN TRANSACTIONS
On December 7, 2011 FreeFlow sold 1,200,000 shares of its common stock to Garden
Bay International, Ltd. for $1000.
On November 1, 2011, FreeFlow sold 25,000,000 shares of common stock to "S".
Douglas Henderson, the Company's president, for a total of $20,000.
The above sales were exempt from registration under the Securities Act of 1933,
as amended, in reliance on Section 4(2) for sales not involving a public
offering.
20
DESCRIPTION OF SECURITIES
The authorized common stock of FreeFlow consists of 100,000,000 shares (par
value $0.0001 per share), of which 26,200,000 shares were outstanding on January
31, 2012. The holders of common stock are entitled to one vote per share on all
matters to be voted on by stockholders. Holders of common stock are entitled to
receive dividends when, as, and if declared by the Board of Directors. The
approval of proposals submitted to shareholders at a meeting requires a
favorable vote of the majority of shares voting. Holders of the common stock
have no preemptive, subscription, redemption, or conversion rights, and there
are no sinking fund provisions with respect to the common stock. All of the
outstanding shares of common stock are, and the shares to be transferred in the
Distribution will be, fully paid and non-assessable. As of January 31, 2012
FreeFlow had two common shareholders.
Penny Stocks must, among other things:
* Provide customers with a risk disclosure statement, setting forth
certain specified information prior to a purchase transaction;
* Disclose to the customer inside bid quotation and outside offer
quotation for this Penny Stock, or, in a principal transaction, the
broker-dealer's offer price for the Penny Stock;
* Disclose the aggregate amount of any compensation the broker-dealer
receives in the transaction;
* Disclose the aggregate amount of the cash compensation that any
associated person of the broker-dealer, who is a natural person, will
receive in connection with the transaction;
* Deliver to the customer after the transaction certain information
concerning determination of the price and market trading activity of
the Penny Stock.
Non-stock exchange and non-NASDAQ stocks would not be covered by the definition
of Penny Stock for:
(i) issuers who have $2,000,000 tangible assets ($5,000,000 if the issuer
has not been in continuous operation for 3 years);
(ii) transactions in which the customer is an institutional accredited
investor; and
(iii) transactions that are not recommended by the broker-dealer.
PENNY STOCK RULES
The Securities and Exchange Commission has adopted rule 15g-9, which established
the definition of a "penny stock" for the purposes relevant to FreeFlow as any
equity security that has a market price of less than $5.00 per share, or with an
exercise price of less than $5.00 per share, subject to certain exceptions. For
any transaction involving a penny stock, unless exempt, the rules require:
(1) that a broker or dealer approve a person's account for transactions in
penny stocks: and
(2) the broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the penny
stock to be purchased.
In order to approve a person's account for transactions in penny stocks, the
broker or dealer must:
(1) obtain financial information and investment experience objectives of
the person; and
(2) make a reasonable determination that the transactions in penny stocks
are suitable for that person, and the person has sufficient knowledge
and experience in financial matters to be capable of evaluating the
risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny
stock:
(1) a disclosure schedule prepared by the Commission relating to the penny
stock market, which, in highlight form,
(2) sets forth the basis on which the broker or dealer made the
suitability determination; and
(3) that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.
21
Disclosure also has to be made about the risks of investing in penny stocks in
both public offerings and in secondary trading and about:
(1) the commissions payable to both the broker-dealer and the registered
representative;
(2) current quotations for the securities;
(3) the rights and remedies available to an investor in cases of fraud in
penny stock transactions; and
(4) monthly statements have to be sent disclosing recent price information
for the penny stock held in the account and information on the limited
market in penny stocks.
PREFERRED STOCK
FreeFlow is also authorized to issue as many as 20,000,000 shares of the
preferred stock (par value $0.0001). The preferred stock may be issued in one or
more series with such preferences, conversion, and other rights, voting powers,
restrictions, limitations as to dividends and qualifications, and rights as the
Company's Board of Directors may determine.
As of January 31, 2012, there were no shares of preferred stock outstanding.
Preferred stock can thus be issued without the vote of the holders of common
stock. Rights could be granted in the future to the holders of preferred stock,
which could reduce the attractiveness of FreeFlow as a potential takeover
target, make the removal of management more difficult, or adversely impact the
rights of holders of common stock.
LIMITATION OF LIABILITY OF DIRECTORS AND INDEMNIFICATION OF DIRECTORS AND
OFFICERS
The Certificate of Incorporation of FreeFlow provides for indemnification of
directors and officers of FreeFlow as follows:
EIGHTH. No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding the foregoing sentence, a director shall
be liable to the extent provided by applicable law: (i) for breach of the
director's duty of loyalty to the Corporation or its stockholders; (ii) for acts
or omissions not in good faith or which involve intentional misconduct, or a
knowing violation of law; (iii) pursuant to Section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director derived an
improper personal benefit. No amendment to or repeal of this Article eighth
shall apply to or have any effect on the liability or alleged liability of any
director of the Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment."
DELAWARE GENERAL CORPORATION LAW
Delaware General Corporation Law Section 145 provides that FreeFlow may
indemnify any officer or director who was made a party to a suit because of the
Securities Act covering the common stock offered by this prospectus. This
position, including derivative suits, if he was acting in good faith and in a
manner he reasonably believed was in the best interest of FreeFlow, except, in
certain circumstances, for negligence or misconduct in the performance of his
duty to FreeFlow. If the director or officer is successful in his suit, he is
entitled to indemnification for expenses, including attorneys' fees.
LEGAL MATTERS
The legality of the Shares of Common stock to be registered hereby will be
passed upon for FreeFlow by Karen Batcher, Esquire. Tax opinion given by Karen
Batcher, Esquire.
22
EXPERTS
The financial statements of FreeFlow for the periods from October 28, 2011, to
December 31, 2011, and related notes which are included in this Prospectus have
been examined by Chang G. Park C.P.A., Independent Certified Public Accountants,
and have been so included in reliance upon the opinion of such accountant given
upon their authority as an expert in auditing and accounting.
ADDITIONAL INFORMATION
We have filed with the U.S. Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act covering the common stock offered
by this Prospectus, which constitutes a part of the registration statement,
omits some of the information described in the registration statement under the
rules and regulations of the Commission. For further information on FreeFlow and
the common stock offered by this prospectus, please refer to the registration
statement and the attached exhibits. Statements contained in this prospectus as
to the content of any contract or other document referred to are not necessarily
complete, and in each instance, reference is made to the copy filed as an
exhibit to the registration statement; each of these statements is qualified in
all respects by that reference. The registration statement and exhibits can be
inspected and copied at the public reference section at the Commission's
principal office, 450 5th Street, N.W. Judiciary Plaza, Washington, D.C. 20549
and through the Commission's Web site (http://www.sec.gov). Copies may be
obtained from the commission's principal office upon payment of the fees
prescribed by the Commission.
23
PLS CPA, A PROFESSIONAL CORP.
* 4725 MERCURY STREET #210 * SAN DIEGO * CALIFORNIA 92111 *
* TELEPHONE (858) 722-5953 * FAX (858) 761-0341 * FAX (858) 433-2979
* E-MAIL changgpark@gmail.com *
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
FreeFlow, Inc.
We have audited the accompanying balance sheet of FreeFlow, Inc. (A Development
Stage "Company") as of December 31, 2011 and the related statements of
operations, changes in shareholders' equity and cash flows for the period from
October 28, 2011 (inception) to December 31, 2011. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of FreeFlow, Inc. as of December
31, 2011, and the result of its operations and its cash flows for the period
from October 28, 2011 (inception) to December 31, 2011 in conformity with U.S.
generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 6 to the financial statements,
the Company's losses from operations raise substantial doubt about its ability
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/PLS CPA
--------------------
PLS CPA, A Professional Corp.
February 9, 2012
San Diego, CA. 92111
Registered with the Public Company Accounting Oversight Board
F-1
FreeFlow, Inc.
(A Development Stage Company)
Balance Sheet
--------------------------------------------------------------------------------
As of
December 31,
2011
--------
(Audited)
ASSETS
CURRENT ASSETS
Cash $ 13,765
--------
TOTAL CURRENT ASSETS 13,765
OTHER ASSETS
Intangible Assets, net 4,342
--------
TOTAL OTHER ASSETS 4,342
--------
TOTAL ASSETS $ 18,107
========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ --
--------
TOTAL CURRENT LIABILITIES --
LONG-TERM LIABILITIES --
--------
TOTAL LONG-TERM LIABILITIES --
TOTAL LIABILITIES --
STOCKHOLDERS' EQUITY
Preferred Stock ($0.0001 par value, 20,000,000 shares
authorized; zero shares issued and outstanding
as of December 31, 2011 --
Common stock, ($0.0001 par value, 100,000,000 shares
authorized; 26,200,000 shares issued and outstanding
as of December31, 2011 2,620
Additional paid-in capital 18,380
Deficit accumulated during development stage (2,893)
--------
TOTAL STOCKHOLDERS' EQUITY 18,107
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 18,107
========
The accompanying notes are an integral part of these financial statements
F-2
Freeflow, Inc.
(A Development Stage Company)
Statement of Operations
--------------------------------------------------------------------------------
October 28, 2011
(inception)
through
December 31,
2011
------------
REVENUES
Revenues $ --
------------
TOTAL REVENUES --
GENERAL & Administrative Expenses
Administrative expenses 1,235
Professional fees 1,000
Amortization Expense 658
------------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 2,893
------------
LOSS FROM OPERATION (2,893)
------------
OTHER EXPENSE
Interest expense --
------------
TOTAL OTHER EXPENSES --
------------
NET INCOME (LOSS) $ (2,893)
============
BASIC EARNINGS PER SHARE $ (0.00)
============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 21,396,926
============
The accompanying notes are an integral part of these financial statements
F-3
FreeFlow, Inc.
(A Development Stage Company)
Statement of changes in Shareholders' Equity (Deficit)
From October 28, 2011 (Inception) through December 31, 2011
--------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional During
--------------------- Paid-in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
Balance, October 28, 2011 (Inception) -- $ -- $ -- $ -- $ --
Common stock issued, November 22, 2011
at $0.0008 per share 25,000,000 2,500 17,500 -- 20,000
Common stock issued, December 6, 2011
at $0.000833 per share 1,200,000 120 880 -- 1,000
Loss for the period beginning
October 28, 2011 (inception) to
December 31, 2011 (2,893) (2,893)
----------- ------- -------- -------- --------
BALANCE, DECEMBER 31, 2011 26,200,000 $ 2,620 $ 18,380 $ (2,893) $ 18,107
=========== ======= ======== ======== ========
The accompanying notes are an integral part of these financial statements
F-4
FreeFlow, Inc.
(A Development Stage Company)
Statement of Cash Flows
--------------------------------------------------------------------------------
October 28, 2011
(inception)
through
December 31,
2011
--------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (2,893)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Amortization expense 658
Changes in operating assets and liabilities:
Increase (Decrease) in accounts payable and
accrued liabilities --
Increase in accrued interest --
--------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (2,235)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Intangible Assets (5,000)
--------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (5,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in advance from officer --
Increase in notes payable - related party --
Issuance of common stock 21,000
--------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 21,000
--------
NET INCREASE (DECREASE) IN CASH 13,765
CASH AT BEGINNING OF PERIOD --
--------
CASH AT END OF PERIOD 13,765
========
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
F-5
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
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.
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.
F-6
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
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 Measuremnet". 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:
* 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.
F-7
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
* 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.
F-8
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
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.
F-9
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
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
Freeflow, Inc. 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 December 31, 2011 is $4,342.
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 December 31, 2011 the Company had a net operating
loss carry-forward of approximately $2,893. 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:
December 31, 2011
-----------------
Net loss before income taxes per financial statements $ 2,893
Income tax rate 34%
Income tax recovery (984)
Permanent differences --
Temporary differences --
Valuation allowance change 984
-------
Provision for income taxes $ --
=======
F-10
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
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 December 31, 2011 are as follows:
December 31, 2011
-----------------
Net operating loss carryforward $ 984
Valuation allowance (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 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is not presently involved in any litigation.
NOTE 6 - 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
$2,893 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
F-11
FREEFLOW, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011
--------------------------------------------------------------------------------
NOTE 6 - GOING CONCERN (CONTINUED)
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 7 - 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 8 - 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 December 31, 2011 the Company had 26,200,000 shares of common stock issued
and outstanding.
NOTE 9 - STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of December 31, 2011:
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.
NOTE 10 - SUBSEQUENT EVENTS
In accordance with ASC 855, SUBSEQUENT EVENTS, the Company has evaluated
subsequent events through February 9, 2012, the date of available issuance of
these audited financial statements. During this period, the Company did not have
any material recognizable subsequent events.
F-12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemized statement of the estimated amounts of all expenses
in connection with the Distribution of the securities which are the subject of
this Registration Statement.
Securities and Exchange Commission Registration Fee $ 1
Printing $2,000
Legal Fees and Expenses $1,500
Accounting and Audit Fees $4,000
------
TOTAL $7,501
======
Gardem Bay International, LTD has agreed to pay all costs, except for Audit,
incurred in connection with the distribution of the shares which are the subject
of this Registration Statement.
ITEM 14. INDEMNIFICATION OF DIRECTOR AND OFFICERS.
Delaware General Corporation Law Section 145 provides that the Company may
indemnify any officer or director who was made a party to a suit because of his
position, including derivative suits, if he was acting in good faith and in a
manner he reasonably believed was in the best interest of the Company, except,
in certain circumstances, for negligence or misconduct in the performance of his
duty to the Company. If the director or officer is successful in his suit, he is
entitled to indemnification for expenses, including attorneys' fees. Article
Seventh of the Company's Certificate of Incorporation provides for
indemnification of the Company's officers and directors to the fullest extent
permitted by law. Indemnification agreements have been entered into with all
officers and directors of the Company.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On December 7, 2011 FreeFlow sold 1,200,000 shares of its common stock to Garden
Bay International, Ltd. for $1000.
On November 1, 2011, FreeFlow sold 25,000,000 shares of common stock to "S".
Douglas Henderson, the Company's president, for a total of $20,000.
The above sales of 26,200,000 common shares were exempt from registration under
the Securities Act of 1933 as amended in reliance on Section 4(2) for sales not
involving a public offering.
ITEM 16. EXHIBITS.
The following is a list of exhibits filed as part of the Registration Statement:
3.(i) Certificate of Incorporation
3.(ii) Bylaws
5.1 Legal Opinion and Tax Opinion of Karen Batcher, Esq.
23.1 Consent of Karen Batcher, Esq. (see Exhibit 5.1)
23.2 Consent of Chang G. Park C.P.A.
99.1 Patent Sales Agreement
II-1
ITEM 17. UNDERTAKINGS.
FreeFlow, Inc. will:
(1) File, during any period in which it offers or sells securities, a post
effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of Prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities, arising under the Securities Act of
1933 may be permitted to Directors, Officers, or persons controlling the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
informed that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer, or controlling person of the Company in the successful
defense of any action, suite or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Company will, unless, in the opinion of its counsel, the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question as to whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of San Diego, State of California, on the 6th day of
March, 2012.
FreeFlow, Inc.
By: "S" DOUGLAS HENDERSON
/s/ "S" Douglas Henderson
------------------------------------
"S" DOUGLAS HENDERSON
President and Director
Chief Executive Officer
/s/ "S" Douglas Henderson
------------------------------------
"S" DOUGLAS HENDERSON
Principal Financial Officer
Principal Accounting Officer
/s/ "S" Douglas Henderson
------------------------------------
"S" DOUGLAS HENDERSON
Director and Secretary
II-3
EX-3.1
2
ex3-1.txt
ARTICLES OF INCORPORATION
Exhibit 3.1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 02:23 PM 10/28/2011
111146427 - 5058430 FILE
CERTIFICATE OF INCORPORATION
OF
FREE FLOW INC.
FIRST: The name of the corporation is Free Flow, Inc.
SECOND: It's registered office in the State of Delaware is located at 16192
Coastal Highway, Lewes, Delaware, County of Sussex. The registered agent in
charge thereof is Harvard Business Services, Inc.
THIRD: The purpose of the corporation is to engage in any lawful activity for
which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The total number of authorized shares which this corporation is
authorized to issue is: 100,000,000 shares of common stock having a par value of
$0.0001 per share and 20,000,000 shares of preferred stock having a par value of
$0.0001 per share.
The number of authorized shares of preferred stock or of common stock may be
raised by the affirmative vote of the holders of a majority of the outstanding
shares of the corporation entitled to vote thereon.
All shares of common stock shall be identical and each share of common stock
shall be entitled to one vote on all matters.
The board of directors is authorized, subject to limitations prescribed by law
and the provisions of this Article Fourth, to provide by resolution or
resolutions for the issuance of the shares of preferred stock in one or more
series, and by filing a certificate pursuant to the applicable law of the State
of Delaware, to establish from time to time the number of shares included in any
such series, and to fix the designation, powers, preferences and rights of the
shares of any such series and the qualifications, limitations or restrictions
thereof.
FIFTH: The business and affairs of the corporation shall be managed by or under
the direction of the board of directors, and the directors need not be elected
by ballot unless required by the bylaws of the corporation.
SIXTH: This corporation shall be perpetual unless otherwise decided by a
majority of the Board of Directors.
SEVENTH: In furthurance and not in limitation of the powers conferred by the
laws of Delaware, The Board of Directors is authorized to amend or repeal the
By-laws.
EIGHTH: The corporation reserves the right to amend or repeal any provision in
this Certificate of Incorporation in the manner prescribed by the laws of
Delaware.
NINTH: The incorporator is Richard H. Bell in care of Harvard Business Services,
Inc., whose mailing address is 16192 Coastal Highway, Lewes, DE 19958.
TENTH: To the fullest extent permitted by Delaware General Corporation Law a
director of this corporation shall not be liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
I, Richard H. Bell, for the purpose of forming a corporation under the laws of
the State of Delaware do make and file this certificate, and do certify that the
facts herein stated are true; and have accordingly signed below, this 28th day
of October, 2011.
Signed and Attested to by: /s/ Richard H. Bell
--------------------------------
Harvard Business Services, Inc.
By Richard H. Bell, Incorporator
EX-3.2
3
ex3-2.txt
BYLAWS
Exhibit 3.2
BYLAWS
OF
FREEFLOW, INC.
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, or in the name of, the corporation by the
Chairperson or Vice-Chairperson of the Board of Directors, if any, or by the
President or a Vice-President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary of the corporation. Any or all the
signatures on any such certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued by the
corporation with the same effect as if such person were such officer, transfer
agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class
of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or such owner's legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the General
Corporation Law, the Board of Directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
the stock of the corporation shall be uncertificated shares. Within a reasonable
time after the issuance or transfer of any uncertificated shares, the
corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (3) issue scrip or warrants in registered form (either
represented by a certificate or uncertificated) or bearer form (represented by a
certificate) which shall entitle the holder to receive a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share or an uncertificated fractional share shall, but scrip or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause scrip or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing the
full shares or uncertificated full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the corporation and the proceeds thereof distributed to the holders
of scrip or warrants, or subject to any other conditions which the Board of
Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the corporation shall be made
only on the stock ledger of the corporation by the registered holder thereof, or
by the registered holder's attorney thereunto authorized by power of attorney
duly executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and, in the case of shares represented by
certificates, on surrender of the certificate or certificates for such shares of
stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which record
date shall not be more than sixty nor less than ten days before the date of such
meeting. If no record date is fixed by the Board of Directors, the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
2
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to an outstanding share or
shares of stock and to a holder or holders of record of outstanding shares of
stock when the corporation is authorized to issue only one class of shares of
stock, and said reference is also intended to include any outstanding share or
shares of stock and any holder or holders of record of outstanding shares of
stock of any class upon which or upon whom the certificate of incorporation
confers such rights where there are two or more classes or series of shares of
stock or upon which or upon whom the General Corporation Law confers such rights
notwithstanding that the certificate of incorporation may provide for more than
one class or series of shares of stock, one or more of which are limited or
denied such rights thereunder; provided, however, that no such right shall vest
in the event of an increase or a decrease in the authorized number of shares of
stock of any class or series which is otherwise denied voting rights under the
provisions of the certificate of incorporation, except as any provision of law
may otherwise require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time fixed,
from time to time, by the directors, provided, that the first annual meeting
shall be held on a date within thirteen months after the organization of the
corporation, and each successive annual meeting shall be held on a date within
thirteen months after the date of the preceding annual meeting. A special
meeting shall be held on the date and at the time fixed by the directors.
- PLACE. Annual meetings and special meetings shall be held at such place,
within or without the State of Delaware, as the directors may, from time to
3
time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the registered office of the corporation in the State of
Delaware.
- CALL. Annual meetings and special meetings may be called by the directors
or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information, or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, a copy of the notice of any meeting shall be given, personally
or by mail, not less than ten days nor more than sixty days before the date of
the meeting, unless the lapse of the prescribed period of time shall have been
waived, and directed to each stockholder at such stockholder's record address or
at such other address which such stockholder may have furnished by request in
writing to the Secretary of the corporation. Notice by mail shall be deemed to
be given when deposited, with postage thereon prepaid, in the United States
Mail. If a meeting is adjourned to another time, not more than thirty days
hence, and/or to another place, and if an announcement of the adjourned time
and/or place is made at the meeting, it shall not be necessary to give notice of
the adjourned meeting unless the directors, after adjournment, fix a new record
date for the adjourned meeting. Notice need not be given to any stockholder who
submits a written waiver of notice signed by such stockholder before or after
the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
4
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided over
by one of the following officers in the order of seniority and if present and
acting - the Chairperson of the Board, if any, the Vice-Chairperson of the
Board, if any, the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, by a chairperson to be chosen by the
stockholders. The Secretary of the corporation, or in such Secretary's absence,
an Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the chairperson of the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person or
persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by such
stockholder's attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and, if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need not,
appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of duties of inspector, shall take and
sign an oath faithfully to execute the duties of inspector at such meeting with
strict impartiality and according to the best of such inspector's ability. The
inspectors, if any, shall determine the number of shares of stock outstanding
and the voting power of each, the shares of stock represented at the meeting,
the existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots, or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots, or consents, determine the result, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors, if any, shall
make a report in writing of any challenge, question, or matter determined by
such inspector or inspectors and execute a certificate of any fact found by such
inspector or inspectors. Except as may otherwise be required by subsection (e)
of Section 231 of the General Corporation Law, the provisions of that Section
shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of stock
shall constitute a quorum at a meeting of stockholders for the transaction of
5
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these Bylaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Except as any provision of the
General Corporation Law may otherwise require, any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. Action taken pursuant to this paragraph shall be
subject to the provisions of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors of the
corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, a
citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of 1 person. Thereafter the number of
directors constituting the whole board shall be at least one. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the stockholders or of the
directors, or, if the number is not fixed, the number shall be 1 . The number of
directors may be increased or decreased by action of the stockholders or of the
directors.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the certificate of incorporation, shall be
elected by the incorporator or incorporators and shall hold office until the
6
first annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Any director may resign
at any time upon written notice to the corporation. Thereafter, directors who
are elected at an annual meeting of stockholders, and directors who are elected
in the interim to fill vacancies and newly created directorships, shall hold
office until the next annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal. Except
as the General Corporation Law may otherwise require, in the interim between
annual meetings of stockholders or of special meetings of stockholders called
for the election of directors and/or for the removal of one or more directors
and for the filling of any vacancy in that connection, newly created
directorships and any vacancies in the Board of Directors, including unfilled
vacancies resulting from the removal of directors for cause or without cause,
may be filled by the vote of a majority of the remaining directors then in
office, although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after its
election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the State
of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the time
and place have been fixed. Special meetings may be called by or at the direction
of the Chairperson of the Board, if any, the Vice-Chairperson of the Board, if
any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written, oral, or
any other mode of notice of the time and place shall be given for special
meetings in sufficient time for the convenient assembly of the directors
thereat. Notice need not be given to any director or to any member of a
committee of directors who submits a written waiver of notice signed by such
director or member before or after the time stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such meeting,
except when such person attends a meeting for the express purpose of objecting,
at the beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided, that
such majority shall constitute at least one-third of the whole Board. A majority
of the directors present, whether or not a quorum is present, may adjourn a
meeting to another time and place. Except as herein otherwise provided, and
7
except as otherwise provided by the General Corporation Law, the vote of the
majority of the directors present at a meeting at which a quorum is present
shall be the act of the Board. The quorum and voting provisions herein stated
shall not be construed as conflicting with any provisions of the General
Corporation Law and these Bylaws which govern a meeting of directors held to
fill vacancies and newly created directorships in the Board or action of
disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any such
committee, as the case may be, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
- CHAIRPERSON OF THE MEETING. The Chairperson of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the
Vice-Chairperson of the Board, if any and if present and acting, or the
President, if present and acting, or any other director chosen by the Board,
shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be removed,
with or without cause, by the holders of a majority of the shares then entitled
to vote at an election of directors.
6. COMMITTEES. The Board of Directors may designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation with
the exception of any power or authority the delegation of which is prohibited by
Section 141 of the General Corporation Law, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without
a meeting if all members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board or committee.
8
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board of
Directors, a Chairperson of the Board, a Vice-Chairperson of the Board, an
Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other officers
with such titles as the resolution of the Board of Directors choosing them shall
designate. Except as may otherwise be provided in the resolution of the Board of
Directors choosing such officer, no officer other than the Chairperson or
Vice-Chairperson of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing such officer, each
officer shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and until
such officer's successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform such
duties in the management and operation of the corporation as shall be prescribed
in the resolutions of the Board of Directors designating and choosing such
officers and prescribing their authority and duties, and shall have such
additional authority and duties as are incident to their office except to the
extent that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings of
all meetings and actions in writing of stockholders, directors, and committees
of directors, and shall exercise such additional authority and perform such
additional duties as the Board shall assign to such Secretary or Assistant
Secretary. Any officer may be removed, with or without cause, by the Board of
Directors. Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors shall
prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
9
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or repeal
these Bylaws and to adopt new Bylaws may be exercised by the Board of Directors
or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy of
the Bylaws of FreeFlow, Inc. a Delaware corporation, as in effect on the date
hereof.
Dated: November 2, 2011
/s/ "S" Douglas Henderson
----------------------------------
Secretary of
FreeFlow, Inc.
(SEAL)
10
EX-5.1
4
ex5-1.txt
OPINION & CONSENT OF COUNSEL
Exhibit 5.1
[LETTERHEAD OF SYNERGEN LAW GROUP]
March 6, 2012
Mr. S. Douglas Henderson, Director
FreeFlow, Inc.
9130 Edgewood Drive
La Mesa CA 91941
Re: Legal Opinion Pursuant to SEC Form S-1
Registration Statement - FreeFlow, Inc.
and Tax Opinion
Dear Mr. Henderson:
You have asked me to provide you with a legal opinion concerning the tradability
of certain shares that were issued by FreeFlow, Inc., (the "Company") to Garden
Bay International, Ltd., ("Garden Bay") which in turn will, upon effectiveness
of the Registration Statement filed concurrently herewith, distribute 1,200,000
of those shares ("Shares") to its shareholders ("Shareholders").
My opinion is based on review of the following:
1. The Company's Articles of Incorporation and Bylaws:
2. Form S-1, to be filed with the Securities and Exchange Commission
("SEC") concurrently herewith, together with exhibits;
3. Subscription Agreement and accompanying proof of payment for shares
purchased;
4. The Company's minutes and resolutions approving issuance of the
above-mentioned shares; and
5. Such other records, documents, statutes and decisions as we have
deemed relevant in rendering this opinion.
In our examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons signing or delivering any instrument, the
authenticity of all documents admitted to us as originals, the conformity to
original documents submitted to us as certificated or photo copies, the
authenticity of the originals of such latter documents and the date of
authorization and valid execution and delivery of all documents. As to any facts
material to this opinion, we have relied upon statements and representations of
officers and other representatives of the Company.
LEGAL OPINION RE: TRADABILITY OF SHARES
Based upon the foregoing and having regard for such legal considerations as we
deem relevant, we are of the opinion that the Shares have been duly and validly
authorized for issuance and are legally issued, fully paid and non-assessable.
Mr. S. Douglas Henderson
February 14, 2012
Page | 2
Upon effectiveness of the Registration Statement, the Shares issued to Garden
Bay shall be distributed to the Shareholders of Garden Bay. Since the Shares
will be registered prior to distribution to Garden Bay Shareholders, the shares
will be unrestricted.
TAX OPINION
As a result of Garden Bay having no current or accumulated earnings and profits
allocable to the distribution of the Company's shares to its shareholders (the
"Distribution") no portion of the amount distributed will constitute a dividend
for federal income tax purposes. Therefore, no portion of the amount received
constitutes a dividend, and will not be eligible for the dividends-received
deduction for corporations. Each Garden Bay stockholder will have a tax basis in
FreeFlow, Inc.'s common stock distributed equal to the fair market value of the
common stock distributed on the Distribution date. The Distribution is not
taxable as a dividend. The distribution will be treated as a tax-free return of
capital to the extent that the fair market value of such portion of the amount
received does not exceed the stockholder's basis in the Garden Bay, Ltd. common
stock held, and as a capital gain if and to the extent that the fair market
value of such portion is greater than such tax basis.
The foregoing opinion is limited to the federal laws of the United States of
America and the General Corporation Law of the State of Delaware, including all
statues, including the rules and regulations underlying those provisions,
applicable judicial and regulatory determinations, and provisions of the
Delaware Constitution that affect the interpretation of the General Corporation
Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, the use of our name under the caption "Legal Matters"
and to the reference to our firm under the caption "Experts" in the Registration
Statement. In so doing, we do not admit that we are in the category of persons
whose consent is required under Section 7 of the Act and the rules and
regulations of the Commission promulgated thereunder.
Regards,
SYNERGEN LAW GROUP
/s/ Karen A. Batcher, Esq.
-------------------------------------
Karen A. Batcher, Esq.
kbatcher@synergenlaw.com
EX-23.2
5
ex23-2.txt
CONSENT OF AUDITORS
Exhibit 23.2
PLS CPA, A PROFESSIONAL CORP.
* 4725 MERCURY STREET #210 * SAN DIEGO * CALIFORNIA 92111 *
* TELEPHONE (858) 722-5953 * FAX (858) 761-0341 * FAX (858) 433-2979
* E-MAIL changgpark@gmail.com *
March 6, 2012
To Whom It May Concern:
We hereby consent to the use in this Registration Statement on Form S-1 of our
report dated February 9, 2012, relating to the financial statements of FreeFlow,
Inc. as of December 31, 2011, which appears in such Registration Statement. We
also consent to the references to us under the headings "Experts" in such
Registration Statement.
Very truly yours,
/s/PLS CPA
----------------------------
PLS CPA, A Professional Corp.
San Diego, CA 92111
Registered with the Public Company Accounting Oversight Board
EX-99.1
6
ex99-1.txt
PATENT SALES AGREEMENT
Exhibit 99.1
PATENT SALE AGREEMENT
This Patent Sale Agreement ("AGREEMENT"), dated November 13, 2011 (the
"EFFECTIVE DATE"), is made by and between: Dr. Edward Myers ("SELLER"); and
FreeFlow, Inc. ("BUYER"). Seller and Buyer are sometimes individually referred
to as "Party" and collectively referred to as "Parties".
WHEREAS, Seller owns the patent(s) and patent application(s) identified
herein; and
WHEREAS, Seller desires to sell to Buyer its entire right, title and
interest in such patent(s) and patent application(s) identified herein.
NOW, THEREFORE, in consideration of the above premises and mutual covenants
contained herein and intending to be legally bound hereby, the Parties hereto
agree as follows:
SECTION 1 SALE AND PURCHASE
1.1 PATENT RIGHTS. As used herein "PATENT RIGHTS" means: (A) the Patents; (B)
all patents or patent applications: (i) to which any of the Patents directly or
indirectly claims priority, (ii) for which any of the Patents directly or
indirectly forms a basis for priority, and/or (iii) that were co-owned
applications that incorporate by reference, or are incorporated by reference
into, the Patents; (C) any reissues, reexaminations, extensions, continuations,
continuations-in-part, continuing prosecution applications, requests for
continuing examinations, divisions, and registrations of any item in any of the
foregoing categories (a) and (b); (D) all inventions, invention disclosures, and
discoveries described in any of the Patents that: (i) are included in any claim
in the Patents, (ii) are subject matter capable of being reduced to a patent
claim in a reissue or reexamination proceedings brought on any of the Patents,
and/or (iii) could have been included as a claim in any of the Patents; (E)
rights to apply in any or all countries of the world for patents, certificates
of invention, utility models, industrial design protections, design patent
protections, or other governmental grants or issuances of any type related to
any of the Patents and the inventions, invention disclosures, and discoveries
therein; (F) causes of action (whether known or unknown, or whether currently
pending, filed or otherwise) and other enforcement rights under, or on account
of, any of the Patents and/or the rights described in category (e) above,
including, without limitation, all causes of action and other enforcement rights
for: (i) damages, (ii) injunctive relief, and (iii) any other remedies of any
kind for past, current and future infringement; and (G) rights to collect
royalties or other payments under or on account of any of the Patents and/or any
of the foregoing.
1.2 SALE OF PATENT RIGHTS. Seller hereby sells, conveys, transfers, assigns and
delivers to Buyer on the Effective Date, and Buyer hereby purchases and acquires
from the Seller, all right, title, and interest in and to the Patent Rights,
including, without limitation: (a) all right, title and interest in and to the
patent(s) and patent application(s) listed in the table below (collectively, the
"PATENTS"); and (b) all right, title and interest to sue and collect for past
infringement of the Patents.
Patent/ Title and First
Application Number Country Filing Date Named Inventor
------------------ ------- ----------- --------------
EFS ID 11393772 United States of America Nov. 13, 2011 Edward Myers
1.3 PURCHASE PRICE AND PAYMENT. The total purchase price for the Patent Rights
is Five Thousand dollars [US$5,000] (the "PURCHASE PRICE").
1.4 DOCUMENTS. As used herein, "DOCUMENTS" means: (A) the recordable ASSIGNMENT
OF PATENT RIGHTS in the form attached hereto as EXHIBIT A, duly executed by
Seller; (B) original ribbon copy or certificate of invention for each issued
Patent issued by the United States Patent and Trademark Office or other
jurisdictional patent office; (C) all agreements assigning ownership of the
Patent Rights from the inventors and/or prior owners to Seller; (D) all inventor
notebooks and other conception and reduction to practice documents; (E) all
files, documents and tangible things constituting, comprising or relating to the
investigation, evaluation, preparation, prosecution, maintenance, defense,
filing, issuance, registration, assertion or enforcement of the Patents; and (F)
such additional documents as Buyer may reasonably request in order to ascertain
the accuracy of Seller's representations and warranties in this Agreement, or to
effect, perfect and evidence the transactions contemplated by this Agreement.
Any exchange of information by the Parties (or their respective legal counsel)
related to the Patent Rights will be pursuant to a common interest privilege, if
applicable.
1.5 CLOSING. Subject to the terms and conditions of this Agreement, Buyer and
Seller will use commercially reasonable efforts to complete the purchase and
sale of the Patent Rights contemplated herein by December 15, 2011 (the
"CLOSING"); provided, however, that prior to the Closing: (a) Seller shall
deliver to Buyer the Documents and notify Buyer of any action required with
respect to any Patent Rights within 60 days after the Closing Date and will
facilitate Buyer's taking such action; and (b) Buyer shall pay to Seller the
Purchase Price by certified check.
1.6 TERMINATION. In the event that the Closing has not occurred by December 15,
2011 either Party may terminate this Agreement by written notice to the other
Party; provided, however, that Seller may only terminate this Agreement pursuant
to this Section 1.6 if Seller has fully complied in all material respects with
all of its obligations hereunder. Upon termination, Buyer shall return all
Documents received from Seller hereunder. The provisions of Section 3.2-3.16 of
this Agreement shall survive the termination of this Agreement.
SECTION 2 REPRESENTATIONS AND WARRANTIES
2.1 SELLER'S REPRESENTATIONS AND WARRANTIES. Seller hereby represents and
warrants to Buyer as follows:
(a) AUTHORITY. If Seller is not an individual, Seller is a company duly
formed, validly existing, and in good standing under the laws of the
jurisdiction of its formation. Seller has the full power and authority
and has obtained all third party consents, approvals, and/or other
authorizations required to enter into this Agreement and to carry out
its obligations hereunder, including, without limitation, the
assignment of the Patent Rights to Buyer.
(b) TITLE AND CONTEST. Seller owns all right, title, and interest to the
Patent Rights, including, without limitation, all right, title, and
interest to sue and collect for past infringement of the Patents.
Seller has obtained and properly recorded previously executed
assignments for the Patents as necessary to fully perfect its rights
and title therein inaccordance with governing law and regulations in
each respective jurisdiction. The Patent Rights are free and clear of
all liens, claims, mortgages, security interests or other
encumbrances, and restrictions. There are no actions, suits,
2
investigations, claims, or proceedings threatened, pending, or in
progress relating in any way to the Patent Rights. There are no
existing contracts, agreements, options, commitments, proposals, bids,
offers, or rights with, to, or in any person to acquire any of the
Patent Rights.
(c) EXISTING LICENSES AND OBLIGATIONS. EXHIBIT B contains a complete and
accurate list of all licenses under the Patents that have been granted
or retained by Seller, any prior owner, or any inventor. Except for
the licenses listed in EXHIBIT B, none of Seller, any prior owner, or
any inventor will retain any rights or interest in the Patent Rights.
None of the licenses or rights in the Patents listed on EXHIBIT B is
an exclusive grant or right and, except as expressly noted on EXHIBIT
B, each such license is nontransferable and nonsublicensable.
(d) RESTRICTIONS ON RIGHTS. Buyer will not be subject to any covenant not
to sue or similar restrictions on its enforcement or enjoyment of the
Patent Rights as a result of any prior transaction related to the
Patent Rights. There is no obligation imposed by a standards-setting
organization to license any of the Patents on particular terms or
conditions.
(e) VALIDITY AND ENFORCEABILITY. None of the Patents has ever been found
invalid, unpatentable, orunenforceable for any reason in any
administrative, arbitration, judicial or other proceeding, and Seller
does not know of and has not received any notice or information of any
kind from any source suggesting that the Patents may be invalid,
unpatentable, or unenforceable. If any of the Patents is terminally
disclaimed to another patent or patent application, all patents and
patent applications subject to such terminal disclaimer are included
in the Patent Rights. To the extent "small entity" fees were paid to
the United States Patent and Trademark Office or Canadian Intellectual
Property Office for any Patent, such reduced fees were then
appropriate because the payor qualified to pay "small entity" fees at
the time of such payment and specifically had not licensed rights in
the any Patent to an entity that was not a "small entity."
(f) CONDUCT. None of Seller, any prior owner or their respective agents or
representatives have engaged in any conduct, or omitted to perform any
necessary act, the result of which would invalidate any of the Patents
or hinder their enforcement, including, without limitation,
misrepresenting the Patents to a standard-setting organization.
(g) ENFORCEMENT. Seller has not put a third party on notice of actual or
potential infringement of any of the Patents. Seller has not invited
any third party to enter into a license under any of the Patents.
Seller has not initiated any enforcement action with respect to any of
the Patents.
(h) PROCEEDINGS. None of the Patents has been or is currently involved in
any reexamination, reissue, interference, opposition or any similar
proceeding, and no such proceedings are pending or threatened.
3
(i) FEES. All maintenance, issue, annuities, extension and like fees due
or payable on the Patents have been timely paid. For the avoidance of
doubt, such timely payment includes payment of any maintenance fees
for which the fee is payable (E.G., the fee payment window opens) even
if the surcharge date or final deadline for payment of such fee would
be in the future.
(j) NO OTHER ASSETS. The Patents include all: (1) patents or patent
applications: (i) to which any of the Patents directly or indirectly
claims priority, (ii) for which any of the Patents directly or
indirectly forms a basis for priority, and (iii) that were co-owned
applications that incorporate by reference, or are incorporated by
reference into, the Patents; (2) reissues, reexaminations,
continuations, continuations-in-part, continuing prosecution
applications, requests for continuing examinations, divisions, and
registrations of any item in any of the foregoing subparagraph (1);
and (3) foreign patents, patent applications and counterparts claiming
priority to or from any of the foregoing subparagraphs (1) and (2),
including, without limitation, certificates of invention, utility
models, industrial design protection, design patent protection, and
other governmental grants or issuances.
(k) DOCUMENTS. All Documents supplied to Buyer are originals or true and
correct copies of the originals.
2.2 BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer hereby represents and warrants
to Seller that: If Buyer is not an individual, Buyer is a company duly formed,
validly existing, and in good standing under the laws of the jurisdiction of its
formation; and Buyer has the full power and authority and has obtained all third
party consents, approvals, and/or other authorizations required to enter into
this Agreement and to carry out its obligations hereunder, including, without
limitation, the purchase of the Patent Rights from Seller.
SECTION 3 GENERAL PROVISIONS
3.1 FURTHER COOPERATION. Seller will, at the reasonable request of Buyer and
without demanding any further consideration therefore, do all things necessary,
proper, or advisable, including without limitation, the execution,
acknowledgment, and recordation of specific assignments, oaths, declarations,
and other documents on a jurisdiction-byjurisdiction basis, to assist Buyer in
obtaining, perfecting, sustaining, and/or enforcing the Patent Rights; provided,
however, that any expenses incident to the execution of papers or providing
testimony shall be borne by Buyer, its successors and assigns.
3.2 LIMITATION OF LIABILITY. EXCEPT IN THE EVENT OF BREACH OF ANY OF THE
WARRANTIES IN SECTIONS 2.1(A)-(D),SELLER'S TOTAL LIABILITY UNDER THIS AGREEMENT
WILL NOT EXCEED THE PURCHASE PRICE. BUYER'S TOTAL LIABILITY UNDER THIS AGREEMENT
WILL NOT EXCEED THE PURCHASE PRICE. THE PARTIES ACKNOWLEDGE THAT THE LIMITATIONS
ON POTENTIAL LIABILITIES SET FORTH IN THIS SECTION 3.2 WERE AN ESSENTIAL ELEMENT
IN SETTING CONSIDERATION UNDER THIS AGREEMENT.
3.3 LIMITATION ON CONSEQUENTIAL DAMAGES. EXCEPT IN THE EVENT OF BREACH OF ANY OF
THE WARRANTIES IN SECTIONS 2.1(A)-(D),, NEITHER PARTY WILL HAVE ANY OBLIGATION
OR LIABILITY (WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE) OR
4
OTHERWISE, AND NOTWITHSTANDING ANY FAULT, NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR
IMPUTED), REPRESENTATION, STRICT LIABILITY OR PRODUCT LIABILITY), FOR COVER OR
FOR ANY INCIDENTAL, INDIRECT OR CONSEQUENTIAL, MULTIPLIED, PUNITIVE, SPECIAL, OR
EXEMPLARY DAMAGES OR LOSS OF REVENUE, PROFIT, SAVINGS OR BUSINESS ARISING FROM
OR OTHERWISE RELATED TO THE LETTER AGREEMENT, EVEN IF A PARTY OR ITS
REPRESENTATIVES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THE
PARTIES ACKNOWLEDGE THAT THESE EXCLUSIONS OF POTENTIAL DAMAGES WERE AN ESSENTIAL
ELEMENT IN SETTING CONSIDERATION UNDER THIS AGREEMENT.
3.4 COMPLIANCE WITH LAWS. Notwithstanding anything contained in this Agreement
to the contrary, the obligations of the Parties with respect to the consummation
of the transactions contemplated by this Agreement shall be subject to all laws,
present and future, of any government having jurisdiction over the Parties and
this transaction, and to orders, regulations, directions or requests of any such
government.
3.5 CONFIDENTIALITY OF TERMS. The Parties hereto will keep the terms of this
Agreement confidential and will not now or hereafter divulge any of this
information to any third party except: (A) with the prior written consent of the
other Party; (B) as otherwise may be required by law or legal process; (C)
during the course of litigation, so long as the disclosure of such terms and
conditions is restricted in the same manner as is the confidential information
of other litigating parties; (D) in confidence to its legal counsel,
accountants, banks, and financing sources and their advisors solely in
connection with complying with or administering its obligations with respect to
this Agreement; (E) by Buyer, to potential purchasers or licensees of the Patent
Rights; (F) in order to perfect Buyer's interest in the Patent Rights with any
governmental patent office; or (G) to enforce Buyer's right, title, and interest
in and to the Patent Rights; provided that, in (b) and (c) above: (i) to the
extent permitted by law, the disclosing Party will use all legitimate and legal
means available to minimize the disclosure to third parties, including, without
limitation, seeking a confidential treatment request or protective order
whenever appropriate or available, and (ii) the disclosing Party will provide
the other Party with at least ten days' prior written notice of such disclosure.
Both Parties acknowledge that the breach of this Section 3.5 will immediately
give rise to continuing irreparable injury to the non-disclosing Party
inadequately compensable in damages at law and without prejudice to any other
remedy available to the non-disclosing Party, and may entitle the non-disclosing
Party to obtain injunctive relief.
3.6 NOTICES. All notices given hereunder will be given in writing (in English or
with an English translation), and will be delivered to the address set forth on
the signature page to this Agreement by personal delivery or delivery postage
prepaid by an internationally-recognized express courier service. Notices are
deemed given on the date of receipt if delivered personally or by express
courier, or if delivery refused, the date of refusal. Notice given in any other
manner will be deemed to have been given only if and when received at the
address of the Party to be notified. Either Party may from time to time change
its address for notices under this Agreement by giving the other Party written
notice of such change in accordance with this Section 3.6.
3.7 RELATIONSHIP OF PARTIES. The Parties hereto are independent contractors.
Nothing in this Agreement will be construed to create a partnership, joint
venture, franchise, fiduciary, employment or agency relationship between the
Parties. Neither Party has any express or implied authority to assume or create
any obligations on behalf of the other or to bind the other to any contract,
agreement or undertaking with any third party.
5
3.8 SEVERABILITY. If any provision of this Agreement is found to be invalid or
unenforceable, then the remainder of this Agreement will have full force and
effect, and the invalid provision will be modified, or partially enforced, to
the maximum extent permitted to effectuate the original objective.
3.9 WAIVER. Failure by either Party to enforce any term of this Agreement will
not be deemed a waiver of future enforcement of that or any other term in this
Agreement or any other agreement that may be in place between the Parties.
3.10 GOVERNING LAW. This Agreement will be interpreted, construed, and enforced
in all respects in accordance with the laws of the State of California, without
reference to its choice of law principles. 3.11 ENTIRE AGREEMENT. The Agreement,
including its exhibits, constitutes the entire agreement between the Parties
with respect to the subject matter hereof, and merges and supersedes all prior
and contemporaneous agreements, understandings, negotiations, and discussions.
Neither of the Parties will be bound by any conditions, definitions, warranties,
understandings, or representations with respect to the subject matter hereof
other than as expressly provided herein. No oral explanation or oral information
by either Party hereto will alter the meaning or interpretation of this
Agreement. The terms and conditions of this Agreement will prevail
notwithstanding any different, conflicting or additional terms and conditions
that may appear on any letter, email or other communication or other writing not
expressly incorporated into this Agreement.
3.12 AMENDMENTS. No amendments or modifications will be effective unless in a
writing signed by authorized representatives of both Parties.
3.13 AGREEMENT IS CONTROLLING. The section headings contained in this Agreement
are for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
3.14 SEVERABILITY. Any of the provisions of this Agreement which are determined
to be invalid or unenforceable in any jurisdiction shall be ineffective to the
extent of such invalidity or unenforceability in such jurisdiction, without
rendering invalid or unenforceable the remaining provisions hereof or affecting
the validity or enforceability of any of the provisions of this Agreement in any
other jurisdiction.
3.15 NO RIGHTS IN THIRD PARTIES. The Agreement is not intended to confer any
right or benefit on any third party (including, but not limited to, any employee
or beneficiary of any Party), and no action may be commenced or prosecuted
against a Party by any third party claiming as a third-party beneficiary of this
Agreement or any of the transactions contemplated by this Agreement.
3.16 COUNTERPARTS. This Agreement shall become binding when any one or more
counterparts hereof, individually or taken together, shall bear the signatures
each of the Parties hereto. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original as against the Party
whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
6
IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the
Effective Date.
DR. EDWARD MYERS FREEFLOW, INC.
By: /s/ Edward Myers By: /s/ "S" Douglas Henderson
------------------------------ ------------------------------
Name: Edward Myers Name: "S" Douglas Henderson
Title: Title: President
Address: 505 Camino Elevado Address:
Bonita Ca 91902
Exhibits
A) Recordable Patent Assignment
B) Existing Licenses to Patents
EXHIBIT A
ASSIGNMENT OF PATENT RIGHTS
For good and valuable consideration, the receipt of which is hereby
acknowledged, Dr. Edward Myers, an individual, having an address at 505 Camino
Elevado, Bonita, CA 91902, ("ASSIGNOR"), does hereby sell, assign, transfer, and
convey unto FreeFlow, Inc., a Delaware corporation, having an address at having
an address at 505 Camino Elevado, Bonita, CA 91902 ("ASSIGNEE"), or its
designees, all right, title, and interest that exist today and may exist in the
future in and to any and all of the following:
(a) the patent(s) and patent application(s) listed in the table below (the
"PATENTS");
Patent/ Title and First
Application Number Country Filing Date Named Inventor
------------------ ------- ----------- --------------
EFS ID 11393772 United States of America Nov. 13, 2011 Edward Myers
(b) all patents and patent applications: (i) to which any of the Patents
directly or indirectly claims priority, (ii) for which any of the Patents
directly or indirectly forms a basis for priority, and/or (iii) that were
co-owned applications that incorporate by reference, or are incorporated by
reference into, the Patents;
(c) all reissues, reexaminations, extensions, continuations,
continuations-in-part, continuing prosecution applications, requests for
continuing examinations, divisions, registrations of any item in any of the
foregoing categories (a) and (b);
(d) all foreign patents, patent applications, and counterparts relating to any
item in any of the foregoing categories (a) through (c), including, without
limitation, certificates of invention, utility models, industrial design
protection, design patent protection, and other governmental grants or
issuances;
(e) all inventions, invention disclosures, and discoveries described in any of
the Patents that: (i) are included in any claim in the Patents, (ii) are subject
matter capable of being reduced to a patent claim in a reissue or reexamination
proceedings brought on any of the Patents, and/or (iii) could have been included
as a claim in any of the Patents;
(f) all rights to apply in any or all countries of the world for patents,
certificates of invention, utility models, industrial design protections, design
patent protections, or other governmental grants or issuances of any type
related to any item in any of the foregoing categories (a) through (e),
including, without limitation, under the Paris Convention for the Protection of
Industrial Property, the International Patent Cooperation Treaty, or any other
convention, treaty, agreement, or understanding;
(g) all causes of action (whether known or unknown or whether currently pending,
filed, or otherwise) and other enforcement rights under, or on account of, the
Patents and/or any item in any of the foregoing categories (b) through (f),
including, without limitation, all causes of action and other enforcement rights
for (i) damages, (ii) injunctive relief, and (iii) any other remedies of any
kind for past, current, and future infringement; and
(f) all rights to collect royalties and other payments under or on account of
the Patents and/or any item in any of the foregoing categories (a) through (g);
((a)-(f) collectively, the "PATENT RIGHTS").
Assignor hereby authorizes the respective patent office or governmental agency
in each jurisdiction to issue any and all patents, certificates of invention,
utility models or other governmental grants or issuances that may be granted
upon any of the Patent Rights in the name of Assignee, as the assignee to the
entire interest therein.
The terms and conditions of this Assignment of Patent Rights will inure to the
benefit of Assignee, its successors, assigns, and other legal representatives
and will be binding upon Assignor, its successors, assigns, and other legal
representatives.
IN WITNESS WHEREOF, this Assignment of Patent Rights is executed at ___________
on ___________
ASSIGNOR:
Dr. Edward Myers
By: /s/ Edward Myers
-------------------------------
Name: Edward Myers
Title:
STATE OF _____________ )
) ss.
COUNTY OF ____________ )
On __________________, before me, ________________________________, Notary
Public in and for said State, personally appeared _______________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity,
and that by his/her signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
Signature ______________________________ (Seal)
EXHIBIT B
EXISTING LICENSES
NONE