[X]
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2016
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[_]
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
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Illinois
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80-0961484
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Large accelerated filer [_]
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Accelerated filer [_]
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Non-accelerated filer [_]
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Smaller reporting company [X]
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Page
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
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PART I. FINANCIAL INFORMATION
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3
|
|
Item 1.
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Financial Statements
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3
|
|
Balance Sheets as of September 30, 2016 (Unaudited) and December 31, 2015
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3
|
|
Statements of Operations for the Three and Nine Months ended September 30, 2016 and 2015 (Unaudited)
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4
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Statements of Cash Flows for the Nine Months ended September 30, 2016 and 2015 (Unaudited)
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5
|
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Notes to the Condensed Financial Statements (Unaudited)
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6
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Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
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14
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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18
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Item 4.
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Controls and Procedures
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18
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|
|
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PART II. OTHER INFORMATION
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19
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Item 1.
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Legal Proceedings
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19
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Item 1A.
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Risk Factors
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19
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Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
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19
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Item 3.
|
Defaults Upon Senior Securities
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19
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Item 4.
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Mine Safety Disclosures
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19
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Item 5.
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Other Information
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19
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Item 6.
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Exhibits
|
20
|
|
|
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SIGNATURES
|
21
|
|
September 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Assets
|
(Unaudited)
|
|||||||
Current assets:
|
||||||||
Cash
|
$
|
–
|
$
|
112
|
||||
Total current assets
|
–
|
112
|
||||||
|
||||||||
Total assets
|
$
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–
|
$
|
112
|
||||
|
||||||||
Liabilities and Stockholders' Equity (Deficit)
|
||||||||
Current liabilities:
|
||||||||
Accounts payable – related party
|
$
|
34,827
|
$
|
34,856
|
||||
Interest payable – related party
|
28,125
|
–
|
||||||
Total current liabilities
|
62,952
|
34,856
|
||||||
Note payable – related party
|
250,000
|
250,000
|
||||||
Total liabilities
|
312,952
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284,856
|
||||||
|
||||||||
Stockholders' deficit:
|
||||||||
Convertible preferred stock, Series A, $0.0001 par value, 20,000,000 shares authorized, 20,000,000 shares issued and outstanding
|
2,000
|
2,000
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||||||
Convertible preferred stock, Series B, $0.0001 par value, 20,000,000 shares authorized, 20,000,000 shares issued and outstanding
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2,000
|
2,000
|
||||||
Common stock, Class A, $0.0001 par value, 1,000,000,000 shares authorized, 701,492 shares and 691,222 issued and outstanding, respectively
|
70
|
69
|
||||||
Common stock, Class B, $0.0001 par value, 60,000,000 shares authorized, 60,000,000 shares issued and outstanding
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6,000
|
6,000
|
||||||
Additional paid in capital
|
78,487
|
78,488
|
||||||
Accumulated deficit
|
(401,509
|
)
|
(373,301
|
)
|
||||
Total stockholders' deficit
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(312,952
|
)
|
(284,744
|
)
|
||||
|
||||||||
Total liabilities and stockholders' equity (deficit)
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$
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–
|
$
|
112
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For the Three Months Ended
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For the Nine Months Ended
|
|||||||||||||||
September 30,
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September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenue
|
$
|
–
|
$
|
–
|
$
|
–
|
$
|
–
|
||||||||
Expenses:
|
||||||||||||||||
General and administrative
|
24
|
45
|
83
|
3,758
|
||||||||||||
Salaries and wages
|
–
|
–
|
–
|
88,557
|
||||||||||||
Patent Related Expenses
|
–
|
–
|
–
|
780
|
||||||||||||
Total operating expenses
|
24
|
45
|
83
|
(93,140
|
)
|
|||||||||||
|
||||||||||||||||
Net operating loss
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(24
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)
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(45
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)
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(83
|
)
|
(93,140
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)
|
||||||||
|
||||||||||||||||
Interest expense
|
9,375
|
–
|
28,125
|
–
|
||||||||||||
|
||||||||||||||||
Net loss
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$
|
(9,399
|
)
|
$
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(45
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)
|
$
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(28,208
|
)
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$
|
(93,140
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)
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||||
|
||||||||||||||||
Weighted average number of common shares outstanding - basic and fully diluted
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700,822
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691,222
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694,445
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691,222
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||||||||||||
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||||||||||||||||
Net loss per share - basic and fully diluted
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$
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(0.01
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)
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$
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(0.00
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)
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$
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(0.04
|
)
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$
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(0.13
|
)
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For the Nine Months
|
||||||||
Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
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$
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(28,208
|
)
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$
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(93,140
|
)
|
||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
||||||||
Stock based compensation
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–
|
88,557
|
||||||
Increase (decrease) in liabilities:
|
||||||||
Accounts payable
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(29
|
)
|
4,740
|
|||||
Interest payable
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28,125
|
- | ||||||
Net cash (used in) provided by operating activities
|
(112
|
)
|
157
|
|||||
|
||||||||
Cash flows from investing activities
|
||||||||
Net cash used in investing activities
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–
|
–
|
||||||
|
||||||||
Cash flows from financing activities
|
||||||||
Net cash provided by financing activities
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–
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–
|
||||||
|
||||||||
Net increase (decrease) in cash
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(112
|
)
|
157
|
|||||
Cash – beginning
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112
|
20
|
||||||
Cash – ending
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$
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–
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$
|
177
|
||||
|
||||||||
Supplemental disclosures:
|
||||||||
Interest paid
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$
|
–
|
$
|
–
|
||||
Income taxes paid
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$
|
–
|
$
|
–
|
||||
Non cash investing and financing activities:
|
||||||||
Common stock, Class A issued for reverse split
|
$
|
1
|
$
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–
|
|
Fair Value Measurements at December 31, 2015
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|||||||||||
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Level 1
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Level 2
|
Level 3
|
|||||||||
Assets
|
||||||||||||
Cash
|
$
|
112
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$
|
–
|
$
|
–
|
||||||
Total assets
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112
|
–
|
–
|
|||||||||
Liabilities
|
||||||||||||
Accounts payable - related party
|
–
|
34,856
|
–
|
|||||||||
Long term note payable - related party
|
–
|
250,000
|
–
|
|||||||||
Total Liabilities
|
–
|
284,856
|
–
|
|||||||||
Total
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$
|
112
|
$
|
(284,856
|
)
|
$
|
–
|
|
Fair Value Measurements at September 30, 2016
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|||||||||||||||
|
Level 1
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Level 2
|
Level 3
|
|||||||||||||
Assets
|
||||||||||||||||
Cash
|
$
|
–
|
$
|
$$
|
–
|
$
|
–
|
|||||||||
Intercompany accounts receivable, related parties
|
–
|
–
|
–
|
|||||||||||||
Total assets
|
–
|
–
|
–
|
|||||||||||||
Liabilities
|
||||||||||||||||
Accounts payable – related party
|
–
|
34,827
|
–
|
|||||||||||||
Interest payable – related party
|
–
|
28,125
|
–
|
|||||||||||||
Long term note payable – related party
|
–
|
250,000
|
–
|
|||||||||||||
Total Liabilities
|
–
|
312,952
|
–
|
|||||||||||||
Total
|
$
|
–
|
$
|
(312,952
|
)
|
$
|
–
|
|
September 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Deferred tax assets:
|
||||||||
Net operating loss carry forwards
|
$
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(62,905
|
)
|
$
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(34,744
|
)
|
||
|
||||||||
Net deferred tax assets before valuation allowance
|
22,017
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$
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12,160
|
|||||
Less: Valuation allowance
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(22,017
|
)
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(12,160
|
)
|
||||
Net deferred tax assets
|
$
|
–
|
$
|
–
|
|
September 30,
|
|
December 31,
|
|
|||
|
2016
|
|
2015
|
|
|||
|
|
|
|
|
|||
Federal and state statutory rate
|
35
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%
|
|
|
35
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%
|
|
Change in valuation allowance on deferred tax assets
|
(35)
|
%
|
|
|
(35)
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%
|
|
For the Nine Months Ended
|
|||||||||||
|
September 30,
|
Increase /
|
||||||||||
|
2016
|
2015
|
(Decrease)
|
|||||||||
Revenues
|
$
|
–
|
$
|
–
|
$
|
–
|
||||||
|
||||||||||||
General and administrative
|
83
|
3,758
|
(3,675
|
)
|
||||||||
Salaries and wages
|
–
|
88,557
|
(88,557
|
)
|
||||||||
Patent related expenses
|
–
|
780
|
(780
|
)
|
||||||||
|
||||||||||||
Total operating expenses
|
83
|
93,140
|
(93,012
|
)
|
||||||||
|
||||||||||||
Net operating loss
|
(83
|
)
|
(93,140
|
)
|
93,012
|
|||||||
|
||||||||||||
Interest expense
|
28,125
|
–
|
28,125
|
|||||||||
|
||||||||||||
Net loss
|
$
|
(28,208
|
)
|
$
|
(93,140
|
)
|
$
|
64,932
|
|
For the Three Months Ended
September 30, |
Increase /
(Decrease)
|
||||||||||
Revenues
|
$
|
–
|
$
|
–
|
$
|
–
|
||||||
|
||||||||||||
General and administrative
|
24
|
45
|
(21
|
)
|
||||||||
Salaries and wages
|
–
|
–
|
–
|
|||||||||
Patent related expenses
|
–
|
–
|
–
|
|||||||||
|
||||||||||||
Total operating expenses
|
24
|
45
|
(21
|
)
|
||||||||
|
||||||||||||
Net operating loss
|
(24
|
)
|
(45
|
)
|
(21
|
)
|
||||||
|
||||||||||||
Interest expense
|
9,375
|
–
|
9,375
|
|||||||||
|
||||||||||||
Net loss
|
$
|
(9,399
|
)
|
$
|
(45
|
)
|
$
|
(9,357
|
)
|
|
September 30,
|
December 31,
|
||||||
|
2016
|
2015
|
||||||
Total Assets
|
$
|
-
|
$
|
112
|
||||
|
||||||||
Total Liabilities
|
$
|
312,952
|
$
|
284,856
|
||||
|
||||||||
Accumulated Deficit
|
$
|
(401,509
|
)
|
$
|
(373,301
|
)
|
||
|
||||||||
Stockholders' Deficit
|
$
|
(312,952
|
)
|
$
|
(284,744
|
)
|
||
|
||||||||
Working Capital
|
$
|
(62,952
|
)
|
$
|
(34,744
|
)
|
|
|
|
Incorporated by reference
|
|||
Exhibit
|
Exhibit Description
|
Filed herewith
|
Form
|
Period ending
|
Exhibit
|
Filing
date |
1.1
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Articles of Incorporation*
|
|
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1.2
|
Amendment of Articles*
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|
|
|
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1.3
|
Bylaws of FlexFridge, Inc.*
|
|
|
|
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23.1
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Consent*
|
|
|
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31.1
|
Certification by the Chief Executive/Chief Financial Officer
|
X
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32.1
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Certification by the Chief Executive/Chief Financial Office
|
X
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101.INS
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XBRL Instance Document
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X
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101.SCH
|
XBRL Schema Document
|
X
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101.CAL
|
XBRL Calculation Linkbase Document
|
X
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101.DEF
|
XBRL Definition Linkbase Document
|
X
|
|
|
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101.LAB
|
XBRL Labels Linkbase Document
|
X
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101.PRE
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XBRL Presentation Linkbase Document
|
X
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FLEXFRIDGE, INC.
|
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DATED: November 21, 2016
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By: /s/ See Kuy Tan
|
|
See Kuy Tan
|
|
Chief Executive Officer (Principal Executive Officer), President, Chief Financial Officer (Principal Accounting Officer), and Director
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 17, 2016 |
|
Document And Entity Information | ||
Entity Registrant Name | VW WIN CENTURY INC. | |
Entity Central Index Key | 0001630391 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 691,222 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2016 |
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Current assets: | ||
Cash | $ 128 | |
Total current assets | 128 | $ 112 |
Total assets | 128 | 112 |
Current liabilities: | ||
Accounts payable - related party | 53,681 | 34,856 |
Total current liabilities | 53,681 | 34,856 |
Note payable - related party | 250,000 | 250,000 |
Total liabilities | 303,681 | 284,856 |
Stockholders' deficit: | ||
Additional paid in capital | 43,996 | 43,996 |
Accumulated deficit | (392,110) | (373,301) |
Total stockholders' deficit | (303,553) | (284,744) |
Total liabilities and stockholders' equity (deficit) | 128 | 112 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Convertible preferred stock | 2,000 | 2,000 |
Series A Preferred Stock [Member] | ||
Stockholders' deficit: | ||
Convertible preferred stock | 2,000 | 2,000 |
Common Stock, Class A [Member] | ||
Stockholders' deficit: | ||
Common stock | 34,561 | 34,561 |
Common Class B [Member] | ||
Stockholders' deficit: | ||
Common stock | $ 6,000 | $ 6,000 |
Condensed Consolidated Statements of Cash Flows (Unaudited) |
Sep. 30, 2016
USD ($)
|
---|---|
Cash flows from financing activities: | |
Cash - beginning | $ 172 |
Cash - ending | $ 128 |
1. Basis of Presentation and Consolidation |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Consolidation |
Nature of Business and Organization FlexFridge, Inc. (FlexFridge or the Company), an Illinois corporation, was formed on March 3, 2013 as Cooling Technology Solutions, Inc. (CTS), a wholly-owned subsidiary of Epazz, Inc. (Epazz), an Illinois corporation. On September 19, 2013, the Company amended its Articles of Incorporation to change the name from Cooling Technology Solutions, Inc. to Z Fridge, Inc. and was renamed FlexFridge, Inc. on May 29, 2014. The Company was formed to develop its Project Flex product which involves the development of a dorm room sized refrigerator. The Company plans to file a non-provisional patent application and currently has limited activity.
On September 7, 2013, the sole Director, and majority shareholder, holding over two thirds of the voting power of the Corporations Class A and Class B Common Stock of Epazz, voted to approve the spin-off and stock dividend of Z Fridge, whereby each of Epazz shareholders of record on September 15, 2013 received 1 share of Z Fridge for each 10 shares of Epazz Class A Common Stock as distributed on November 21, 2013.
Basis of Accounting Our financial statements are prepared using the accrual method of accounting as generally accepted in the United States of America (U.S. GAAP) and the rules of the Securities and Exchange Commission (SEC). These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Reclassifications Certain amounts in the financial statements of the prior year have been reclassified to conform to the presentation of the current year for comparative purposes.
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents FlexFridge maintains cash balances in non-interest-bearing transaction accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents on hand at June 30, 2016 or December 31, 2015.
Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Companys financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments.
Patent Rights and Applications FlexFridge acquired a patent on the technology on December 22, 2015. The patent number is US 9,217,598 B2. On December 29, 2015, Epazz transferred ownership of this patent to FlexFridge for a promissory note of $250,000 for 10 years with a 15% interest rate. Since the transfer of the patent was a related party transaction the value of patent included in the balance sheet is at its historical cost of zero. As the fair value of the promissory note exceeded the value of the patent, the difference of $250,000 was recorded as a loss on patent acquisition during the year ended December 31, 2015.
Patent rights and applications costs include the acquisition costs and costs incurred for the filing of patents. Patent rights and applications are amortized on a straight-line basis over the legal life of the patent rights beginning at the time the patents are approved. Patent costs for unsuccessful patent applications are expensed when the application is terminated. We elected to expense our patent costs, which totaled $277,641 for the period from March 4, 2013 (Inception) through June 30, 2016.
Income Taxes The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Basic and Diluted Loss per Share The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the period presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure.
Stock-Based Compensation The Company adopted FASB guidance on stock based compensation upon inception on March 3, 2013. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, are to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. In January 2015, the company issued 20,000,000 shares of Series A Preferred Stock for $70,654, 20,000,000 shares of Series B Preferred Stock for $12,076 and 60,000,000 shares of Class B Common Stock for $5,827 for services rendered.
Uncertain Tax Positions Effective upon inception on March 3, 2013, the Company adopted new standards for accounting for uncertainty in income taxes. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Various taxing authorities periodically audit the Companys income tax returns. These audits include questions regarding the Companys tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
The assessment of the Companys tax position relies on the judgment of management to estimate the exposures associated with the Companys various filing positions. As of June 30, 2016 and December 31, 2015, the Company had no uncertain tax positions. |
2. Going Concern |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern |
As shown in the accompanying financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of $392,110, as of June 30, 2016. The Companys current liabilities exceeded its current assets by $53,553. These factors raise substantial doubt about the Companys ability to continue as a going concern.
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Companys ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern. |
3. Related Parties |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Parties |
Note Payable Related Parties On December 31, 2015, the Company incurred a $250,000 note payable to an affiliate, Epazz, Inc., for a patent licensing agreement. Interest expense is incurred at a 15% annual rate on principal. Interest expense for the six months ended June 30, 2016 was $18,750.
Accounts Payable Related Parties The Company occasionally borrows fund from an affiliate Epazz, Inc. to fund operating activities. These borrowings are reflected in Accounts payable related party. Accrued interest associated with the aforementioned $250,000 note payable to Epazz, Inc. is also included in Accounts payable related party.
Shares of Class A Common Stock Issued to Related Parties Pursuant to a Stock Distribution On November 21, 2013, Epazz, Inc. distributed 345,610,950 shares of the Class A common stock of the Company among Epazz, Inc.s shareholders pursuant to the spin-off of the Company from Epazz, Inc. Each shareholder of record on September 15, 2013 was issued one share of FlexFridge, Inc. Class A common stock for each share of Epazz, Inc. class A common stock owned by the shareholder. A total of 297,385,702 of these shares were issued to related parties representing approximately 86% of the total shares issued.
Shares of Class B Common Stock Issued to Related Parties Pursuant to a Services Rendered On January 13, 2015, the Company issued 60,000,000 shares of Class B Common Stock to Shaun Passley, the president of the company for product development services. The total fair value of the Class B Common Stock was $5,827 based on an independent valuation on the date of grant.
Shares of Series A Preferred Stock Issued to Related Parties Pursuant to a Services Rendered On January 13, 2015, the Company issued 20,000,000 shares of Series A Preferred Stock to Shaun Passley, the president of the company for management services. The total fair value of the Series A Preferred stock was $70,654 based on an independent valuation on the date of grant.
Shares of Series B Preferred Stock Issued to Related Parties Pursuant to a Services Rendered On January 13, 2015, the Company issued 16,000,000 shares of Series B Preferred Stock to Epazz, Inc. a corporation controlled by the president of the company for offices services. The total fair value of the Series B Preferred Stock was $9,661 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 1,998,000 shares of Series B Preferred Stock to GG Mars Capital Inc. a related party for financing services. The total fair value of the Series B Preferred Stock was $1,206 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 1,998,000 shares of Series B Preferred Stock to Star Financial Corporation a related party for financing services. The total fair value of the Series B Preferred Stock was $1,206 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 4,000 shares of Series B Preferred Stock to Craig Passley a related party for management services. The total fair value of the Series B Preferred Stock was $2 based on an independent valuation on the date of grant. |
4. Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company does not have any financial instruments that must be measured under the new fair value standard. The Companys financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets as of December 31, 2015 and June 30, 2016, respectively:
There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the period from December 31, 2015 through June 30, 2016.
Level 2 liabilities consist of intercompany debt arrangements. No fair value adjustment was necessary during the period from December 31, 2015 through June 30, 2016. |
5. Stockholders' Equity (Deficit) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity (Deficit) |
On November 14, 2013, the Board of Directors, consisting solely of Shaun Passley, the Companys majority shareholder, amended the Article of Incorporation to change the par value and number of authorized shares of each class of common and series of preferred stock, in addition to the modification of the attributes and dividends. The disclosures herein reflect these modifications and the changes to the par value have been retroactively reflected throughout.
Convertible Preferred Stock, Series A The Company has 20,000,000 authorized shares of $0.0001 par value Series A Convertible Preferred Stock (Series A Preferred Stock). The Series A Preferred Stock accrues dividends equal to 1.5% of the Companys revenues per quarter, beginning on January 1st of any calendar year in which the Company has generated revenue over $2 million, and an additional 24% of the Companys net income beginning on January 1st of any calendar year in which the Company has generated net income over $2 million. The dividends are payable at the discretion of the Company, provided that any unpaid dividends accrue until paid. The Series A Preferred Stock includes a liquidation preference equal to $0.0001 per share, plus any accrued and unpaid dividends. The Series A Preferred Stock is convertible, at the option of the holder into shares of the Companys Class A Common Stock, with five business days notice into 60% of the total number of then issued and outstanding shares of Class A Common Stock. The Series A Preferred Stock has limited voting rights, relating solely to matters which adversely affect the rights of the Series A Preferred Stock holders. The Company shall reserve and keep available out of its authorized but unissued shares of Class A Common Stock such number of shares sufficient to effect the conversions.
Convertible Preferred Stock, Series B The Company has 20,000,000 authorized shares of $0.0001 par value Series B Convertible Preferred Stock (Series B Preferred Stock). The Series B Preferred Stock accrues dividends equal to 1.5% of the Companys revenues per quarter, beginning on January 1st of any calendar year in which the Company has generated revenue over $1 million, and an additional 6% of the Companys net income beginning on January 1st of any calendar year in which the Company has generated net income over $2 million. The dividends are payable at the discretion of the Company, provided that any unpaid dividends accrue until paid. The Series B Preferred Stock includes a liquidation preference equal to $0.0001 per share, plus any accrued and unpaid dividends. The Series B Preferred Stock is convertible, at the option of the holder into shares of the Companys Class A Common Stock, with five business days notice into 10% of the total number of then issued and outstanding shares of Class A Common Stock, provided that no conversion will take place until all holders of the Series B Preferred Stock consent to such conversion. The Series B Preferred Stock has limited voting rights, relating solely to matters which adversely affect the rights of the Series B Preferred Stock holders. The Company shall reserve and keep available out of its authorized but unissued shares of Class A Common Stock such number of shares sufficient to effect the conversions.
Common Stock, Class A The Company has 1 billion authorized shares of $0.0001 par value Class A Common Stock.
Stock Distribution On November 21, 2013, Epazz, Inc. distributed 345,610,950 shares of the class A common stock of the Company among Epazz, Inc.s shareholders pursuant to the spin-off of the Company from Epazz, Inc. Each shareholder of record on September 15, 2013 was issued one share of Z Fridge, Inc. class A common stock for each share of Epazz, Inc. class A common stock owned by the shareholder. A total of 297,385,702 of these shares were issued to related parties representing approximately 86% of the total shares issued.
Convertible Common Stock, Class B The Company has 60,000,000 authorized shares of $0.0001 par value Convertible Class B Common Stock, convertible at the option of the holder into shares of the Companys Class A Common Stock on a 1:1 basis. The Convertible Class B Common Stock carries preferential voting rights of 2,000 votes to each Class A Common Stock vote (2,000:1). The Company shall reserve and keep available out of its authorized but unissued shares of Class A Common Stock such number of shares sufficient to effect the conversions. No shares of Class B Common Stock have been issued to date.
Share Issuance On January 13, 2015, the Company issued 20,000,000 shares of Series A Preferred Stock to Shaun Passley, the president of the company for management services. The total fair value of the Series A Preferred stock was $70,654 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 16,000,000 shares of Series B Preferred Stock to Epazz, Inc. a corporation controlled by the president of the company for offices services. The total fair value of the Series B Preferred Stock was $9,661 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 1,998,000 shares of Series B Preferred Stock to GG Mars Capital Inc. a related party for financing services. The total fair value of the Series B Preferred Stock was $1,206 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 1,998,000 shares of Series B Preferred Stock to Star Financial Corporation a related party for financing services. The total fair value of the Series B Preferred Stock was $1,206 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 4,000 shares of Series B Preferred Stock to Craig Passley a related party for management services. The total fair value of the Series B Preferred Stock was $2 based on an independent valuation on the date of grant.
On January 13, 2015, the Company issued 60,000,000 shares of Class B Common Stock to Shaun Passley, the president of the company for product development services. The total fair value of the Class B Common Stock was $5,827 based on an independent valuation on the date of grant. |
6. Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
For the period from March 3, 2013 (Inception) through June 30, 2016, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At June 30, 2016, the Company had approximately $53,506 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2034.
The components of the Companys deferred tax asset are as follows:
Based on the available objective evidence, including the Companys history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at June 30, 2016.
A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:
In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions. |
7. Subsequent Events |
9 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events |
On July 6, 2016, the stockholders of FlexFridge, Inc. ("FlexFridge" or the "Company") voted to approve an amendment (the "Amendment") to FlexFridge's Articles of Incorporation which authorized the Board of Directors to effect a one-to-five hundred reverse stock split of FlexFridge's class A common stock, par value $0.0001 per share ("Class A Common Stock"). Immediately thereafter, the Company filed a notice of corporate action with the Financial Industry Regulatory Authority ("FINRA"). The Amendment was approved by the holders of the Company's capital stock as follows: Class A Common Stock with 262,909,255 votes or 76% approving, Class B Common Stock 120,000,000,000 votes or 100% approving, Series A Convertible Preferred Stock 20,000,000 votes or 100% approving and Series B Convertible Preferred Stock 20,000,000 votes or 100% approving. Upon receiving approval from FINRA, FlexFridge intends to make such filings with the Secretary of State of Illinois as may be required. The proposed effective date of the reverse stock split is as of the close of business Eastern Standard Time, on July 18, 2016 or such time as FINRA may approve the aforementioned corporate action, for shareholders of record as of July 6, 2016. At the effective time, each five hundred shares of Class A Common Stock outstanding will be combined into a single share of Class A Common Stock with any resulting fractional shares rounded up to the next whole share and with odd lots being rounded up to 100 shares. The total number of shares of Common Stock authorized and the par value under FlexFridge's Amended Articles of Incorporation was not affected.
The shareholders and Board of Directors determined that the aforementioned reverse stock split would be in the best interests of the Company and its shareholders because it will provide the Company with an opportunity to "up list" its Class A Common Stock from a "fully reporting pink" status to "fully reporting QB" status in its primary market with OTC Markets. |
1. Basis of Presentation and Consolidation (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business and Organization |
Nature of Business and Organization FlexFridge, Inc. (FlexFridge or the Company), an Illinois corporation, was formed on March 3, 2013 as Cooling Technology Solutions, Inc. (CTS), a wholly-owned subsidiary of Epazz, Inc. (Epazz), an Illinois corporation. On September 19, 2013, the Company amended its Articles of Incorporation to change the name from Cooling Technology Solutions, Inc. to Z Fridge, Inc. and was renamed FlexFridge, Inc. on May 29, 2014. The Company was formed to develop its Project Flex product which involves the development of a dorm room sized refrigerator. The Company plans to file a non-provisional patent application and currently has limited activity.
On September 7, 2013, the sole Director, and majority shareholder, holding over two thirds of the voting power of the Corporations Class A and Class B Common Stock of Epazz, voted to approve the spin-off and stock dividend of Z Fridge, whereby each of Epazz shareholders of record on September 15, 2013 received 1 share of Z Fridge for each 10 shares of Epazz Class A Common Stock as distributed on November 21, 2013. |
Basis of Accounting |
Basis of Accounting Our financial statements are prepared using the accrual method of accounting as generally accepted in the United States of America (U.S. GAAP) and the rules of the Securities and Exchange Commission (SEC). These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein. |
Reclassifications |
Reclassifications Certain amounts in the financial statements of the prior year have been reclassified to conform to the presentation of the current year for comparative purposes. |
Use of Estimates |
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents |
Cash and Cash Equivalents FlexFridge maintains cash balances in non-interest-bearing transaction accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents on hand at June 30, 2016 or December 31, 2015. |
Fair Value of Financial Instruments |
Fair Value of Financial Instruments Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Companys financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments. |
Patent Rights and Applications |
Patent Rights and Applications FlexFridge acquired a patent on the technology on December 22, 2015. The patent number is US 9,217,598 B2. On December 29, 2015, Epazz transferred ownership of this patent to FlexFridge for a promissory note of $250,000 for 10 years with a 15% interest rate. Since the transfer of the patent was a related party transaction the value of patent included in the balance sheet is at its historical cost of zero. As the fair value of the promissory note exceeded the value of the patent, the difference of $250,000 was recorded as a loss on patent acquisition during the year ended December 31, 2015.
Patent rights and applications costs include the acquisition costs and costs incurred for the filing of patents. Patent rights and applications are amortized on a straight-line basis over the legal life of the patent rights beginning at the time the patents are approved. Patent costs for unsuccessful patent applications are expensed when the application is terminated. We elected to expense our patent costs, which totaled $277,641 for the period from March 4, 2013 (Inception) through June 30, 2016. |
Income Taxes |
Income Taxes The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not. |
Basic and Diluted Loss per Share |
Basic and Diluted Loss per Share The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an as if converted basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the period presented, there were no outstanding potential common stock equivalents and therefore basic and diluted earnings per share result in the same figure. |
Stock-Based Compensation |
Stock-Based Compensation The Company adopted FASB guidance on stock based compensation upon inception on March 3, 2013. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, are to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. In January 2015, the company issued 20,000,000 shares of Series A Preferred Stock for $70,654, 20,000,000 shares of Series B Preferred Stock for $12,076 and 60,000,000 shares of Class B Common Stock for $5,827 for services rendered. |
Uncertain Tax Positions |
Uncertain Tax Positions Effective upon inception on March 3, 2013, the Company adopted new standards for accounting for uncertainty in income taxes. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Various taxing authorities periodically audit the Companys income tax returns. These audits include questions regarding the Companys tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
The assessment of the Companys tax position relies on the judgment of management to estimate the exposures associated with the Companys various filing positions. As of June 30, 2016 and December 31, 2015, the Company had no uncertain tax positions. |
4. Fair Value of Financial Instruments (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value on non-recurring basis |
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6. Income Taxes (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred tax assets |
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Income tax rates |
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1. Basis of Presentation (Details Narrative) - USD ($) |
6 Months Ended | 12 Months Ended | 40 Months Ended | |
---|---|---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
Jun. 30, 2016 |
Sep. 30, 2016 |
|
Cash equivalents | $ 0 | $ 0 | ||
Note payable, related party | 250,000 | $ 250,000 | ||
Uncertain tax positions | 0 | |||
Epazz [Member] | ||||
Note payable, related party | $ 250,000 | 250,000 | $ 250,000 | |
Interest rate on related party note | 15.00% | |||
Patents [Member] | ||||
Patent acquisition valuation adjustment | 250,000 | |||
Patent costs | $ 277,641 | |||
Common Class B [Member] | ||||
Share based compensation | $ 5,827 | |||
Share based compensation, shares issued | 60,000,000 | |||
Series A Preferred Stock [Member] | ||||
Share based compensation | $ 70,654 | |||
Share based compensation, shares issued | 20,000,000 | |||
Series B Preferred Stock [Member] | ||||
Share based compensation | $ 12,076 | |||
Share based compensation, shares issued | 20,000,000 |
2. Going Concern (Details Narrative) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ (392,110) | $ (373,301) |
Working capital | $ (53,553) |
4. Fair Value of Financial Instruments (Details) - Fair Value, Measurements, Nonrecurring [Member] - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Fair Value, Inputs, Level 1 [Member] | ||
Fair value assets | ||
Cash fair value | $ 128 | $ 112 |
Assets fair value | 128 | 112 |
Fair value liabilities | ||
Accounts payable, related party | 0 | 0 |
Long Term Note Payable - Related Party | 0 | |
Liabilities fair value | 0 | 0 |
Fair value assets and liabilities | 128 | 112 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair value assets | ||
Cash fair value | 0 | 0 |
Assets fair value | 0 | 0 |
Fair value liabilities | ||
Accounts payable, related party | 53,381 | 34,876 |
Long Term Note Payable - Related Party | 250,000 | 250,000 |
Liabilities fair value | 303,681 | 284,856 |
Fair value assets and liabilities | (303,681) | (284,856) |
Fair Value, Inputs, Level 3 [Member] | ||
Fair value assets | ||
Cash fair value | 0 | 0 |
Assets fair value | 0 | 0 |
Fair value liabilities | ||
Accounts payable, related party | 0 | 0 |
Long Term Note Payable - Related Party | 0 | |
Liabilities fair value | 0 | 0 |
Fair value assets and liabilities | $ 0 | $ 0 |
6. Income Taxes (Details - Deferred taxes) - USD ($) |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards | $ (53,506) | $ (34,744) |
Net deferred tax assets before valuation allowance | 18,727 | 12,160 |
Less: Valuation allowance | (18,727) | (12,160) |
Net deferred tax assets | $ 0 | $ 0 |
6. Income Taxes (Details - tax rate) |
9 Months Ended | 12 Months Ended |
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Sep. 30, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | ||
Federal and state statutory rate | 35.00% | 35.00% |
Change in valuation allowance on deferred tax assets | (35.00%) | (35.00%) |
6. Income Taxes (Details Narrative) |
12 Months Ended |
---|---|
Dec. 31, 2015
USD ($)
| |
Income Tax Disclosure [Abstract] | |
Net operating loss carryforward | $ 53,506 |
Operating loss expiration date | Dec. 31, 2034 |
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