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.)
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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).
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
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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 |
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."
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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)
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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.
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.
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.
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.
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.
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.
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.
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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
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;
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 *
|
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
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.
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.
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.
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.
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.
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
========
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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.
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.
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.
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.
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.
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.
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
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
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
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
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
FREEFLOW, INC.
(A Development Stage Company)
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.
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.
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.
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.
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 $ --
=======
|
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
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.
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
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
|
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
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
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
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
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
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
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.
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.
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)
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 |
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
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,
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.
(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
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.
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.
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
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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
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(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 ____________ )
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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