UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-Q



(Mark
One)

|[X] | ANNUAL
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------



For
the quarter ended September 30, 2018



|[  ] | TRANSITION
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|---- | --------------------------------------------------------------------------------------------



For
the transition period from ____ to ____



Commission
File No. 333-107179 & 000-51210



FRéLII,
INC.

(Exact
name of registrant as specified in its charter)



|Nevada                                                                                 | 980380519                                                   
|-------------------------------------------------------------------------------------- | ------------------------------------------------------------
|(State
        or other jurisdiction of
        incorporation
        or organization) | (I.R.S.
        Employer
        Identification
        No.)



2600
W. Executive Pkwy., Suite 500

Lehi,
UT 84043

(Address
of principal executive offices, including Zip Code)



(833)
437-3544

(Registrant’s
telephone number, including area code)



Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [  ] No



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [  ]
Yes [X] No



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.



|Large
    accelerated filer [  ] | Accelerated
    filer [  ]       
|-------------------------------- | ---------------------------------
|Non-accelerated
    filer [  ]   | Smaller
    reporting company [X]



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). [  ] Yes [X] No



APPLICABLE
ONLY TO CORPORATE ISSUERS:



Indicate
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



|Class                                      |  | Outstanding
    as of November 19, 2018
|------------------------------------------ |  | ---------------------------------------
|Class
    B Common stock, $0.001 par value |  | 38,987,107                             
|Class
    A Common stock, $0.001 par value |  | -0-                                    


















FRéLII,
INC.



TABLE
OF CONTENTS



|           |                                                                                       |   
|---------- | ------------------------------------------------------------------------------------- | --
|PART I     |                                                                                      
|           |                                                                                       |   
|Item 1.    | Financial Statements                                                                  | 3 
|Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 11
|Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                            | 16
|Item 4.    | Controls and Procedures                                                               | 16
|           |                                                                                       |   
|PART II    |                                                                                      
|           |                                                                                       |   
|Item 1.    | Legal Proceedings                                                                     | 17
|Item 1A.   | Risk
Factors                                                                          | 17
|Item 2.    | Unregistered Sales of Equity Securities and Use of Proceeds                           | 17
|Item 3.    | Default upon Senior Securities                                                        | 17
|Item 4.    | Mine Safety Disclosures                                                               | 17
|Item 5.    | Other Information                                                                     | 17
|Item 6.    | Exhibits                                                                              | 17
|SIGNATURES | 18                                                                                   



2







PART
I



ITEM
1. FINANCIAL STATEMENTS



The
Financial Statements of the Company are prepared as of September 30, 2018.



FRÉLII,
INC.

BALANCE
SHEETS

(Expressed
in US dollars)



|                                                                                                                  |  | September 30, |             |   | December 31, |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------- | ----------- | - | ------------ | -
|                                                                                                                  |  | 2018          |             |   | 2017         |  
|                                                                                                                  |  |               | (unaudited) |   |              |  
|ASSETS                                                                                                            |  |               |             |   |              |  
|Current assets                                                                                                    |  |               |             |   |              |  
|Cash and cash equivalents                                                                                         |  | $             | 123,656     |   |              | $
|Inventory                                                                                                         |  |               | 14,070      |   |              |  
|Prepaid inventory                                                                                                 |  |               | 8,225       |   |              |  
|Note receivable                                                                                                   |  |               | 24,124      |   |              |  
|Interest receivable                                                                                               |  |               | 821         |   |              |  
|Total current assets                                                                                              |  |               | 170,896     |   |              |  
|Software, less accumulated amortization of $32,685 and $-0- respectively                                          |  |               | 201,690     |   |              |  
|Total assets                                                                                                      |  | $             | 372,586     |   |              | $
|LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)                                                                    |  |               |             |   |              |  
|Current liabilities                                                                                               |  |               |             |   |              |  
|Accounts payable and accrued liabilities                                                                          |  | $             | 28,757      |   |              | $
|Accrued salaries and related expenses                                                                             |  |               | 22,679      |   |              |  
|Settlement amount due from former related party                                                                   |  |               | 126,654     |   |              |  
|Advances from related parties                                                                                     |  |               | -           |   |              |  
|Total liabilities                                                                                                 |  |               | 178,090     |   |              |  
|Shareholders’ equity (deficit)                                                                                    |  |               |             |   |              |  
|Preferred Stock, $0.001 par value; 20,000,000 shares authorized:                                                  |  |               |             |   |              |  
|Series A Preferred Stock, $0.001 par value; 0 (December 31, 2016 - 100) shares issued and outstanding             |  |               | -           |   |              |  
|Common Stock, $0.001 par value; 2,000,000,000 shares authorized:                                                  |  |               |             |   |              |  
|Class B Common Stock, $0.001 par value; 38,871,107 (December 31, 2016 – 10,441,107) shares issued and outstanding |  |               | 38,871      |   |              |  
|Additional paid in capital                                                                                        |  |               | 8,590,669   |   |              |  
|Accumulated deficit                                                                                               |  |               | (8,435,044  | ) |              |  
|Total shareholders’ equity (deficit)                                                                              |  |               | 194,496     |   |              |  
|Total liabilities and shareholders’ equity (deficit)                                                              |  | $             | 372,586     |   |              | $



See
accompanying notes to the financial statements



3







FRÉLII,
INC.

STATEMENTS
OF OPERATIONS

(Expressed
in US dollars)



|                                                                                                    |  | Three Months         |            |   | Three Months         |   |           | Nine Months          |  |   | Nine Months          |  
|--------------------------------------------------------------------------------------------------- |  | -------------------- | ---------- | - | -------------------- | - | --------- | -------------------- |  | - | -------------------- | -
|                                                                                                    |  | Ended 
September 30, |            |   | Ended 
September 30, |   |           | Ended 
September 30, |  |   | Ended 
September 30, |  
|                                                                                                    |  | 2018                 |            |   | 2017                 |   |           | 2018                 |  |   | 2017                 |  
|                                                                                                    |  | (Unaudited)          |            |   | (Unaudited)          |   |           | (Unaudited)          |  |   | (Unaudited)          |  
|                                                                                                    |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Revenue                                                                                             |  | $                    | 13,375     |   |                      | $ | -         |                      |  | $ | 17,116               |  
|                                                                                                    |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Cost of goods sold                                                                                  |  |                      | 17,985     |   |                      |   | -         |                      |  |   | 17,985               |  
|                                                                                                    |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Gross profit (loss)                                                                                 |  |                      | (4,610     | ) |                      |   | -         |                      |  |   | (869                 | )
|                                                                                                    |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Operating expenses                                                                                  |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Compensation (including stock-based compensation of $1,489,063, $0, $3,239,063, and $0 respectively |  |                      | 1,013,604  |   |                      |   | -         |                      |  |   | 3,644,873            |  
|Settlement with former related party                                                                |  |                      | -          |   |                      |   |           |                      |  |   | 133,320              |  
|Marketing and advertising                                                                           |  |                      | 32,603     |   |                      |   | -         |                      |  |   | 175,699              |  
|Professional fees                                                                                   |  |                      | 14,335     |   |                      |   | -         |                      |  |   | 65,816               |  
|Amortization of software                                                                            |  |                      | 11,719     |   |                      |   | -         |                      |  |   | 32,685               |  
|Other                                                                                               |  |                      | 26,360     |   |                      |   | -         |                      |  |   | 100,236              |  
|                                                                                                    |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Total Operating Expenses                                                                            |  |                      | 1,098,621  |   |                      |   | -         |                      |  |   | 4,152,629            |  
|(Loss) from operations                                                                              |  |                      | (1,103,231 | ) |                      |   | -         |                      |  |   | (4,153,498           | )
|Other Income (expense)                                                                              |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Gain (loss) on settlement of debt                                                                   |  |                      | (1,158,780 | ) |                      |   | -         |                      |  |   | (1,158,780           | )
|Interest income                                                                                     |  |                      | 243        |   |                      |   | 5,041     |                      |  |   | 3,504                |  
|Interest expense                                                                                    |  |                      | (293       | ) |                      |   | (26,590   | )                    |  |   | (293                 | )
|Accretion expense                                                                                   |  |                      | -          |   |                      |   | (73,404   | )                    |  |   | -                    |  
|Change in fair value of embedded derivative                                                         |  |                      | -          |   |                      |   | 45,219    |                      |  |   | -                    |  
|Total other income (expense)                                                                        |  |                      | (1,158,830 | ) |                      |   | (49,734   | )                    |  |   | (1,155,569           | )
|                                                                                                    |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Income (loss) before taxes                                                                          |  |                      | (2,262,061 | ) |                      |   | (49,734   | )                    |  |   | (5,309,067           | )
|Income tax expense                                                                                  |  |                      | -          |   |                      |   | -         |                      |  |   | -                    |  
|Net income (loss) and comprehensive income (loss)                                                   |  | $                    | (2,262,061 | ) |                      | $ | (49,734   | )                    |  | $ | (5,309,067           | )
|Basic and Diluted (Loss) Per Share                                                                  |  | $                    | (0.06      | ) |                      | $ | (0.03     | )                    |  | $ | (0.15                | )
|Weighted average number of Common Shares Outstanding -                                              |  |                      |            |   |                      |   |           |                      |  |   |                      |  
|Basic and Diluted                                                                                   |  |                      | 38,009,585 |   |                      |   | 1,943,634 |                      |  |   | 34,272,865           |  



See
accompanying notes to financial statements



4







FRÉLII,
INC.

STATEMENTS
OF CASH FLOWS

(Expressed
in US dollars)



|                                                                                     |  | Nine Months          |            |   | Nine Months          |  
|------------------------------------------------------------------------------------ |  | -------------------- | ---------- | - | -------------------- | -
|                                                                                     |  | Ended 
September 30, |            |   | Ended
 September 30, |  
|                                                                                     |  | 2018                 |            |   | 2017                 |  
|                                                                                     |  | (Unaudited)          |            |   | (Unaudited)          |  
|                                                                                     |  |                      |            |   |                      |  
|Net (loss)                                                                           |  | $                    | (5,309,067 | ) |                      | $
|Adjustments to reconcile net income (loss) to net cash used by operating activities: |  |                      |            |   |                      |  
|Stock based compensation                                                             |  |                      | 3,239,063  |   |                      |  
|Loss (gain)on settlement of debt                                                     |  |                      | 1,158,780  |   |                      |  
|Amortization of software                                                             |  |                      | 32,685     |   |                      |  
|Change in fair value of embedded derivative                                          |  |                      | -          |   |                      |  
|Accretion expense - debt discount on note payable                                    |  |                      | -          |   |                      |  
|Changes in operating assets and liabilities:                                         |  |                      |            |   |                      |  
|Prepaid inventory                                                                    |  |                      | (8,225     | ) |                      |  
|Interest receivable                                                                  |  |                      | 13,645     |   |                      |  
|Accounts payable and accrued liabilities                                             |  |                      | 46,949     |   |                      |  
|Settlement amount due former related party                                           |  |                      | 126,654    |   |                      |  
|                                                                                     |  |                      |            |   |                      |  
|Net cash used in operating activities                                                |  |                      | (699,516   | ) |                      |  
|Cash Flows From Investing Activities:                                                |  |                      |            |   |                      |  
|Secured promissory note receivable                                                   |  |                      | -          |   |                      |  
|Collections of secured promissory note receivable                                    |  |                      | 316,516    |   |                      |  
|Net cash used in investing activities                                                |  |                      | 316,516    |   |                      |  
|Cash flows from financing activities:                                                |  |                      |            |   |                      |  
|Sale of Class B common stock                                                         |  |                      | 452,500    |   |                      |  
|Advances from former related parties                                                 |  |                      | 54,156     |   |                      |  
|Proceeds from convertible note                                                       |  |                      | -          |   |                      |  
|Net cash provided by financing activities                                            |  |                      | 506,656    |   |                      |  
|Increase in cash and and cash equivalents                                            |  |                      | 123,656    |   |                      |  
|Cash and cash equivalents, beginning of period                                       |  |                      | -          |   |                      |  
|Cash and cash equivalents, end of period                                             |  | $                    | 123,656    |   |                      | $
|Supplemental disclosures of cash flow information:                                   |  |                      |            |   |                      |  
|Cash payments for:                                                                   |  |                      |            |   |                      |  
|Interest paid                                                                        |  | $                    | 13,888     |   |                      | $
|Income taxes paid                                                                    |  | $                    | -          |   |                      | $
|Non-cash investing and financing activities:                                         |  |                      |            |   |                      |  
|Stock issued for settlement of debt                                                  |  | $                    | 1,250,000  |   |                      | $
|Stock issued for software                                                            |  | $                    | 234,375    |   |                      | $
|Stock issued for inventory ($32,055) less debt assumed ($19,244)                     |  | $                    | 12,811     |   |                      | $



See
accompanying notes to the financial statements



5







FRéLII,
INC.

NOTES
TO THE FINANCIAL STATEMENTS

THREE
AND NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

(Expressed
in US dollars)

(Unaudited)



NOTE
1 — NATURE OF OPERATIONS



The
Company incorporated in the State of Nevada on September 5, 2002, under the name “Bayview Corporation.” On April 7,
2005, the Company changed its name to Xpention Genetics, Inc. concurrent with a change in its business to researching and developing
cancer treatment drugs. On September 17, 2008, the Company changed its name to Cancer Detection Corporation. On August 13, 2009,
the Company again changed its name to Tremont Fair, Inc. From July 2009 until May 2011, the Company operated as a real estate
services firm, seeking to capitalize on the real estate opportunities resulting from the dislocation in the credit markets, and
by extension, the multifamily housing market, by acquiring, rehabilitating, stabilizing and selling distressed multifamily properties
in the southern United States, predominantly in Texas. On May 26, 2011, the Company changed its name to Vican Resources, Inc.,
and changed its business model when it sold the real estate services division and acquired all of the outstanding shares of Vican
Trading, Inc., a Montreal-based purchaser and seller of metals, ores, and other commodities (hereafter, “Vican Trading”).
Upon the acquisition of Vican Trading, there was an implied option for either party to rescind the original acquisition. During
2011, that rescission option was exercised and on December 20, 2011, the Company again changed its business when it unwound the
acquisition of Vican Trading and acquired all of the assets of Med Ex Direct, Inc., a Florida-based provider of management services
in respect of the distribution of diabetic supplies, principally to Hispanic patients (hereafter, “Med Ex Florida”).
On March 22, 2012, the Company again changed its business to become an oil & gas exploration, development, and distribution
company, unwound the purchase of the assets of Med Ex Florida, and acquired an interest in two oil & gas wells located in
Jefferson County, Mississippi.



In
April 2017, the Company underwent a change of control whereby our current Chief Executive Officer Ian Jenkins acquired a controlling
interest in the Company’s capital stock and was appointed our sole officer and director. On April 11, 2017, the Company
executed a Share Exchange Agreement with Unprescribed, LLC, later amended to include Cornerstone Medical Center LLC, whereby the
Company, among other terms, agreed to exchange shares with the ownership units of those two entities for 25,000,000 shares of
the Company’s Class B Common Stock (no shares of Class A Common Stock are issued or outstanding, so the Class B Common Stock
is hereinafter referred to as the “Class B Common Stock” or the “Common Stock”). The Share Exchange Agreement,
as amended, terminated by its own terms on December 31, 2017. Following the termination of the Share Exchange Agreement, the Company
modified its business plan to acquire certain intellectual property assets and to engage a new management team to effectuate the
new business plan.



Effective
March 9, 2018, the Company changed its name to Frélii, Inc. The new business plan is to launch a web-based subscription
service providing personalized nutrition and wellness plans. The Company launched its website, www.frelii.com, in March
2018 beta testing a limited number of free users.



NOTE
2 — BASIS OF PRESENTATION OF UNAUDITED CONDENSED FINANCIAL INFORMATION



The
unaudited condensed financial statements of the Company for the three and nine month periods ended September 30, 2018 and 2017
have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial
information and pursuant to the requirements for reporting on Form 10-Q and Regulation S-K. Accordingly, they do not include all
the information and footnotes required by accounting principles generally accepted in the United States of America for complete
financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments),
which are, in the opinion of management, necessary for the fair presentation of the financial position and the results of operations.
Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance
sheet information as of December 31, 2017 was derived from the audited financial statements included in the Company’s financial
statements as of and for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the “SEC”). These financial statements should be read in conjunction with
that report.



6







Recently
Issued Accounting Pronouncements



Between
May 2014 and December 2016, the FASB issued several ASU’s on Revenue from Contracts with Customers (Topic 606). These updates
supersede nearly all existing revenue recognition guidance under current U.S. generally accepted accounting principles (GAAP)
and became effective for annual periods beginning after December 15, 2017 and interim periods therein. The core principle is to
recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to
which an entity expects to be entitled for those goods or services.



Adoption
of these updates in 2018 has not had any impact on our financial statements.



NOTE
3 - GOING CONCERN UNCERTAINTY



The
accompanying financial statements have been prepared as if the Company will continue as a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of business. The Company has sustained net losses which
have resulted in an accumulated deficit at September 30, 2018, and negative cash flows from operations, all of which raise substantial
doubt regarding the Company’s ability to continue as a going concern.



The
Company believes these conditions have resulted from the inherent risks associated with small companies. Such risks include, but
are not limited to, the ability to (i) generate revenues and sales of its products and services at levels sufficient to cover
its costs and provide a return for investors, (ii) attract additional capital in order to finance growth, (iii) further develop
and successfully market commercial products and services, and (iv) successfully compete with other comparable companies having
financial, production and marketing resources significantly greater than those of the Company.



On
April 5, 2017 (see Note 1), there was a change in control of the Company. We expect to be dependent on additional debt and equity
financing to develop our new business but we cannot assure you that any such financings will be available or will otherwise be
made on terms acceptable to us, or that our present shareholders might suffer substantial dilution as a result.



The
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



These
financial statements have been prepared on the basis that the Company will continue as a going concern, which presumes that it
will be able to realize its assets and discharge its liabilities in the normal course of business as they come due. These financial
statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance
sheet classifications that would be necessary if the Company were unable to realize its assets and settle its liabilities as a
going concern in the normal course of operations. Such adjustments could be material.



NOTE
4 – PROMISSORY NOTE RECEIVABLE FROM RELATED PARTY



On
April 11, 2017, pursuant to a Security Agreement dated April 11, 2017, the Company paid $495,000 to Cornerstone Medical Center
LLC (“Cornerstone”). In exchange, the Company received a $500,000 Secured Promissory Note from Cornerstone (the “Promissory
Note”), dated April 11, 2017. The Promissory Note bears interest at 4% per annum, or 18% in the event of a default under
the Promissory Note. The principal and interest was due on December 31, 2017. The Promissory Note is secured by all the assets
of Cornerstone.



7









The
principal balance of the promissory note changed in the nine months ended September 30, 2018 as follows:



|Balance of Cornerstone Note at December 31, 2017                                 |  | $ | 340,640  |  
|-------------------------------------------------------------------------------- |  | - | -------- | -
|Cornerstone payments to service providers relating to Frélii, Inc. business plan |  |   | (56,910  | )
|Cash payments received by Frélii, Inc.                                           |  |   | (259,606 | )
|Balance at September 30, 2018                                                    |  | $ | 24,124   |  



Cornerstone
is owned by Gregory Mongeon, who served as a former officer and director of the Company from January 17, 2018 to May 15, 2018.



NOTE
5 – SOFTWARE



At
September 30, 2018, software, net, consisted of:



|Software and intellectual property acquired from Christopher Dean pursuant to Tech Assignment Agreement on January 18, 2018 in exchange for 7,500,000 shares of Class B Common Stock (see Note 7). |  | $ | 234,375 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ------- | -
|Accumulated amortization                                                                                                                                                                           |  |   | (32,685 | )
|Net                                                                                                                                                                                                |  | $ | 201,690 |  



On
January 23, 2018, the Company engaged Fish & Richardson LLP to handle intellectual property work such as patent and trademark
applications relating to the software.



The
acquired software is being amortized using the straight-line method over its estimated economic life of 5 years. Expected future
amortization expense for the acquired software as of September 30, 2018 follows:



|Year ending December 31, |  | Amount |        
|------------------------ |  | ------ | -------
|2018                     |  |        | 11,719 
|2019                     |  |        | 46,875 
|2020                     |  |        | 46,875 
|2021                     |  |        | 46,875 
|2022                     |  |        | 46,875 
|2023                     |  |        | 2,471  
|                         |  |        |        
|Total                    |  | $      | 201,690



NOTE
6 – SETTLEMENT AMOUNT DUE FORMER RELATED PARTY



On
June 1, 2017, the Company and Gregory Mongeon (see Note 4 above) executed a Separation and Release Agreement. The agreement provides
for the Company to make 20 monthly cash payments of $6,666 each to Mr. Mongeon from June 5, 2018 to January 5, 2020 (total of
$133,320). The agreement also provides for limits on future sales of 7,500,000 shares of Class B Common Stock owned by Mr. Mongeon.
At September 30, 2018, the remaining amount due Mr. Mongeon pursuant to the Separation and Release Agreement was $126,654. The
Company failed to make the required monthly payments due from July 2018 to September 2018.



NOTE
7 - ADVANCES FROM RELATED PARTIES



Advances
from related parties, which are all non-interest bearing and due on demand, consist of the following:



|                                                                              |  | September 30, 2018 |   |  | December 31, 2017 |  
|----------------------------------------------------------------------------- |  | ------------------ | - |  | ----------------- | -
|Kline Law Group P.C. and spouse of controlling person of Kline Law Group P.C. |  | $                  | - |  |                   | $
|Total                                                                         |  | $                  | - |  |                   | $



8







Kline
Law Group P.C. (“KLG”) was counsel to the Company at September 30, 2018, and is controlled by Scott Kline. Julia Kline,
wife of Scott Kline, served as the Company’s Chief Operating Officer from January 19, 2018 to July 13, 2018. (See Note 8)



On
July 6, 2018 (see Note 8), the liability to KLG and the spouse of the controlling person of KLG was satisfied.



NOTE
8 - COMMON STOCK AND PREFERRED STOCK TRANSACTIONS



On
January 18, 2018, the Company entered into a technology assignment agreement (the “Tech Assignment Agreement”) whereby
the Company acquired certain intellectual property consisting of advanced computer programming software, source code, proprietary
designs, plans, processes, test procedures, and other technical data and information (the “Technology”) from Christopher
Dean in exchange for 7,500,000 shares of Class B Common Stock of the Company. Christopher Dean was the Chief Technology Officer
and a director of the Company from January 17, 2018 to March 27, 2018.



The
$234,375 estimated fair value of the 7,500,000 shares of Class B Common Stock was capitalized as software. As the trading market
of the Company’s Class B Common Stock was inactive, the fair value of the Class B Common Stock was based on the $0.03125
per share price derived from the $250,000 purchase price of the Exchange Note, which was converted to 8,000,000 shares of Class
B Common Stock on December 14, 2017.



On
January 19, 2018, the Company entered into employment agreements with Ian Jenkins (Chief Executive Officer and Chief
Financial Officer), Christopher Dean (former Chief Technology Officer), Dr. Gregory Mongeon (former Chief Medical Officer),
Seth Jones (Chief Marketing Officer), and Julia Kline (former Chief Operating Officer). The agreements all have a term of
five years and provide for annual base salaries totalling, in the aggregate, $400,000. All of the agreements may be
terminated by the Company at any time without cause by giving written notice to the respective employee for which termination
is effective 30 days therefrom. On January 31, 2018, pursuant to the employment agreements, the Company issued a total of
17,450,000 shares of Class B Common Stock of the Company to these five officers.



The
$545,312 estimated fair value of the 17,450,000 shares of Class B Common Stock using the 0.03125 per share price described in
the second preceding paragraph was expensed as compensation in the three months ended March 31, 2018.



On
January 21, 2018 and January 26, 2018, the Company’s Chief Executive Officer returned 100 shares of Series A Preferred Stock
and 1,830,000 shares of Class B Common Stock to the Company’s treasury that were cancelled by the Company.



On
January 31, 2018, the Company issued a total of 1,800,000 shares of Class B Common Stock of the Company to 6 service providers
(including 800,000 shares issued to two relatives of the Company’s Chief Executive Officer and 600,000 shares issued to
two independent directors of the Company) for services rendered.



The
$56,250 estimated fair value of the 1,800,000 shares of Class B Common Stock (using the $0.03125 per share as described in the
fifth preceding paragraph) was expensed as compensation in the three months ended March 31, 2018.



On
March 23, 2018, the Company sold 150,000 shares of Class B Common Stock to an investor at a price of $1.25 per share for $187,500
cash proceeds.



On
May 8, 2018, the Company issued 600,000 shares of Class B Common Stock of the Company to Dr. Hans Jenkins in connection with an
employment agreement signed between Dr. Jenkins and the Company on the same date. The $750,000 estimated fair value of the 600,000
shares of Class B Common Stock (based on the $1.25 per share price of the March 23, 2018 sale of 150,000 shares of Class B Common
Stock) was expensed as compensation in the three months ended June 30, 2018.



On
May 15, 2018, the Company issued a total of 800,000 shares of Class B Common Stock of the Company to 6 employees and consultants
for services rendered pursuant to the Company’s 2018 Incentive Stock Option Plan. The $1,000,000 estimated fair value of
the 800,000 shares of Class B Common Stock (based on the $1.25 per share price of the March 23, 2018 sale of 150,000 of Class
B Common Stock) was expensed as compensation in the three months ended June 30, 2018.



9







On
July 6, 2018, the Company issued a total of 600,000 shares of Class B Common Stock to its two outside directors (300,000 shares
each) for services rendered. The $750,000 estimated fair value of the 600,000 shares of Class B Common Stock (based on the $1.25
per share price of the March 23, 2018 sale of 150,000 shares of Class B Common Stock) was expensed as compensation in the three
months ended September 30, 2018.



On
July 6, 2018, the Company settled an outstanding debt of $91,220 for professional fees incurred and operating expenses paid on
behalf of the Company owed to Kline Law Group, P.C. and its principal Scott Kline. Mr. Kline and Kline Law Group agreed to waive
all outstanding amounts due as of July 6, 2018, in exchange for 1,000,000 Class B Common Stock shares, and warrants to purchase
2,000,000 shares of common stock at $1.25 per share. The $1,158,780 excess of the $1,250,000 estimated fair value of the 1,000,000
shares of Class B Common Stock (using the $1.25 per share priced described in the preceding paragraph) over the $91,220 debt settled
was expensed as loss on settlement of debt in the three months ended September 30, 2018.



On
July 13, 2018, Julia Kline resigned all her positions with the Company. Ms. Kline was appointed as the Company’s Chief Operating
Officer on January 17, 2018 and as Secretary on March 27, 2018.



On
July 20, 2018, the Company sold 100,000 shares of Class B Common Stock and a three-year warrant to purchase up to 100,000 shares
of Class B Common Stock at $1.50 per share to an investor for $125,000 cash proceeds.



On
July 31, 2018, the Company entered into an Asset Purchase Agreement with Kingdom Life Sciences, LLC, a Utah limited liability
company (“KLS”), and its equity holders whereby the Company agreed to purchase certain inventory and related intellectual
property of KLS in exchange for assumption of a liability of KLS in the amount of $19,244 and 20,000 Class B Common Stock shares
of the Company. KLS is controlled by Ian Jenkins, Company Chief Executive Officer, and Gregory Mongeon and Christopher Dean, former
officers and directors of the Company. Pursuant to ASC 805-50 relating to transactions between entities under common control,
the inventory was recorded at KLS’s historical carrying amount of $32,055 and the increase in stockholders’ equity
was recorded at $12,811 (the $32,055 inventory acquired less the $19,244 liability assumed).



From
August 17, 2018 to August 31, 2018, the Company sold a total of 130,000 shares of Class B Common Stock (and three year
warrants to purchase up to a total of 200,000 shares of Class B Common Stock at $1.50 per share) at prices of $1.00 and $1.25
per share to four investors for total cash proceeds of $140,000.



On
August 31, 2018, the Company issued a total of 110,000 shares of Class B Common Stock to two consultants for services rendered.
The $137,500 estimated fair value of the 110,000 shares of Class B Common Stock (using the $1.25 per share price described in
the preceding paragraph) was expensed as compensation in the three months ended September 30, 2018.



NOTE
9 – SUBSEQUENT EVENTS



On
October 9, 2018 the Company sold 116,000 shares of Class B Common Stock (and three year warrents to purchase up to a total of
116,000 shares of Class B Common Stock at $1.50 per share) at a price of $1.25 per share to an entity investor for $145,000 cash
proceeds.



10







ITEM
2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Special
Note Regarding Forward Looking Statements



This
Quarterly Report on Form 10-Q, including the following “Management’s Discussion and Analysis of Financial Condition
and Results of Operations”, contains forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements include, among others,
those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations,
predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees
of future performance and that a number of risks and uncertainties could cause actual results of the Company to differ materially
from those anticipated, expressed or implied in the forward-looking statements. The words “believe”, “expect”,
“anticipate”, “project”, “targets”, “optimistic”, “intend”, “aim”,
“will” or similar expressions are intended to identify forward-looking statements. All statements other than statements
of historical fact are statements that could be deemed forward-looking statements. Risks and uncertainties that could cause actual
results to differ materially from those anticipated include risks related to our potential inability to raise additional capital;
changes in domestic and foreign laws, regulations and taxes; uncertainties related to China’s legal system and economic,
political and social events in China; Securities and Exchange Commission regulations which affect trading in the securities of
“penny stocks”; changes in economic conditions, including a general economic downturn or a downturn in the securities
markets; and any of the factors and risks mentioned in the “Risk Factors” sections of our Annual Report on Form 10-K
for fiscal year ended December 31, 2016 and subsequent SEC filings. The Company assumes no obligation and does not intend to update
any forward-looking statements, except as required by law.



Our
History



The
Company incorporated in Nevada September 5, 2002 as “Bayview Corporation.” Since 2002, the Company changed control
and its name and business plan numerous times. In April 2017, our current Chief Executive Officer acquired a controlling interest
in the Company, and in January 2018, the Company commenced its current operations, which consist of providing personalized health
and nutrition plans based on genetics and our artificial intelligence-driven computer algorithm. On March 9, 2018, the Company
changed its name to Frélii, Inc. and its ticker symbol to “FRLI” to coincide with its new business plan as
disclosed on Form 8-K filed the same date.



Overview
of Our Business and Strategy



The
Company’s original core business strategy is to provide direct to consumer affordable access to personalized health assessments
and nutrition plans based on genetic data, physiology, environmental and lifestyle factors, and lab diagnostics all on one convenient
web platform. The Company has expanded that model as a result of dramatic improvements in its technology. As a result, the Company’
licensing business model was born, and management expects that business to be the primary driver of revenues during the foreseeable
future. While the Company will maintain and expand its consumer web-based platform business line, the Company’s expanded
business model now includes the following technology licensing channels/opportunities: (i) Life and Health Insurance – underwriting
data/genetic analysis and , (ii) Hospital Systems – diagnostic, health risk identification and precision medicine, (iii)
Consumer Wellness – our personalized health and wellness DNA platform, both for personal and corporate wellness/rewards
purposes, and (iv) Medical Cannabis Use Analysis – data/genetic analysis for cannabis selection purposes.



Our
Technology



The
principals of Frelii began developing a computer learning-based algorithm in 2014. That algorithm, and the resulting AI (artificial
intelligence) based software called “Navii”, was developed with the primary goal of analyzing DNA information to generate
highly-personalized protocols based on such DNA information. In 2017, the Company created a web-based platform and subscription-based
model at www.frelii.com that provides users personalized, DNA-based diet and nutrition plans and identification of certain potential
health risks. We believe our technology can assist our health providers to identify and treat many different health concerns and
help people live their best life. Our easy-to-use web platform provides subscribers an individualized health analysis that identifies
a user’s most significant health risks and generates health programs based on their individual blood markers, genetics and
lifestyle. Subscribers who have previously received genetic health information from 23andMe can provide their login information,
and our site will upload that data to the algorithm, which will automatically adjust patient protocols. Our comprehensive wellness
plans feature nutrition and fitness plans, supplement recommendations, downloadable menus, recipes, and shopping lists, and virtual
personal training. Subscribers can enhance their customized plan by ordering additional lab diagnostic kits for more comprehensive
testing and analysis or by requesting a personal consultation with one of the licensed health providers in our affiliate network.
Subscribers can also order nutritional and vitamin supplements from our premium health marketplace. In fourth quarter 2018 the
company is releasing a custom DNA kit that offers full genome analysis at a comparable price to 23&me’s less extensive
genotyping kit. The Company’s personalized plans now feature meal plans, virtual personal training, supplement recommendations,
downloadable menus, recipes, and shopping lists.



11







The
Company has continued to develop its AI technology. Aided in part by the gift of base code and large data sets from an unnamed
global tech and information allie. Frelii’s predictive capacity of the precision medicine and health and wellness AI has
increased from 84% to 98.5%. Imputation Efficiency on incomplete data has increased to 95% efficiency. And our flagship high-efficiency
Genetic Sequencing and analysis using our proprietary technology has increased to greater than 99% and 99.999% accuracy on whole
genome and exome sequencing, respectively. For example, when the website and membership plan was originally offered to the public,
our technology could analyze approximately 400 thousand data points (originally from DNA result generated by third party genotyping)
and could generate approximately 384 outcomes, such as diet suggestions or identification of potential health risks. The Company’s
improved technology has dramatically increased the date points subject to analysis to over 60 million data points, which can generate
over 60 million outcomes. The Company has also created a proprietary computational efficiency algorithm which has improved our
A.I. analysis of whole genome DNA data by a factor of 8x. This profoundly more robust technological capability opens the doors
to far more specific and accurate DNA analysis and far broader applications.



Out
Expanded Business Model



With
that expanded capability in mind, the Company began negotiations with a number of health care providers, insurers, consumer-facing
lifestyle companies, professional grade supplement providers and other product providers for such companies to use its technology
in their business operations. As a result, the Company’ licensing business model was born, and management expects that business
to be the primary driver of revenues during the foreseeable future. While the Company will maintain and expand its consumer web-based
platform business line, the Company’s expanded business model now includes the following technology licensing channels/opportunities:



| | ● | Life
                                         and Health Insurance. Management has begun negotiations with a large US-based multi-national
                                         financial services and insurance conglomerate for the use of its technology to potentially
                                         aid in life and other insurance underwriting using Frelii’s DNA-based health risk
                                         capabilities. The Company believes that this application of its technology may provide
                                         far more accurate underwriting than simple blood tests and physical exams, the current
                                         method of information gathering for life insurance providers.                                                                                                                                                                                                                                                         
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Hospital
                                         Systems. Management is also in negotiations with the management group of a majority of
                                         US-based hospitals. The Company’s technology, and its application to diagnostic,
                                         health risk identification and precision medicine could improve health care and lower
                                         costs of health providers. Health providers seek to use the Company’s technology
                                         to identify risks before symptoms or complaints arise, when such health issues could
                                         be addressed more efficiently and potentially more cost-effectively. The Company is also
                                         in negotiations with Canada-based health care organizations for the same purpose.                                                                                                                   
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Consumer
                                         Wellness. Frelii Inc. has signed a limited partnership with DOT Inc. a company owned
                                         in part by Steve Wozniak. DOT Inc. will be intimately involved in the launch and promotion
                                         of Frelii’s personalized health and wellness DNA platform. In the near future,
                                         we plan to offer our subscribers the opportunity to enhance their personalized wellness
                                         plans by ordering lab diagnostic kits for more comprehensive blood testing and analysis.
                                         In addition, we are negotiating with other wellness and lifestyle web-based platform
                                         providers, such as corporate wellness companies and large supplement providers to license
                                         Frelii’s AI technology to aid in their product offerings.
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ● | Medical
                                         Cannabis Use Analysis. Where medical cannabis use is legal, such as in Canada, a newly
                                         created application of Company’s AI can be used to help cannabis users determine
                                         the best or most appropriate strain or type of cannabis to use based on an individual’s
                                         genetic information. The Company believes that this application could change the way
                                         that medical cannabis users buy, prepare and use cannabis for medicinal purposes.                                                                                                                                                                                                                                                                                                                                                                              



12







The
Company believes that these licensing and joint venture opportunities will provide the Company with access to the consumer and
user data necessary to unlock the full capabilities of its technology.



Our
Management Team



The
Company’s Board of Directors is comprised of experienced professionals in multiple areas of importance to the Company’s
business strategy:



| | ● | Alternative
                                         Health Care – Our Chief Executive Officer and Chairman Ian Jenkins has over 10
                                         years of experience as a senior executive in the health and supplement industry, and
                                         an extensive background in physiology, technology startups, and supplement product research
                                         and development; Our director James Spallino has over 35 years of experience in the integrative
                                         medical and dental industry as both an entrepreneur and consultant;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | Medical
                                         – Our director and Chief Medical Officer Dr. Hans Jenkins is a board-certified
                                         physician specializing in preventive health education, medical screenings, and lifestyle
                                         modifications to obtain optimal health;                                                                                                                                                                                                                                                                                                          
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | Digital
                                         Marketing – Our Chief Marketing Officer Seth Jones is a marketing strategist and
                                         digital media expert, produced and distributed digital content that generated more than
                                         4.5 million subscribers and over 915 million views on YouTube and over 3.2 million subscribers
                                         and over a billion views on Facebook for an extreme sports and adventure video production
                                         company;                                                             
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | ● | International
                                         Trade – Our director Tarek Mango has been involved in international trade and business
                                         development for over 20 years, and has successfully consulted for, built, and introduced
                                         U.S. health care-related brands into Middle Eastern, Asian, and European markets;                                                                                                                                                                                                                                                  



Our
Marketing Plans/Launch Schedule



We
have planned a comprehensive digital marketing campaign that includes Facebook and Twitter ads, a media affiliate program, and
other social media digital advertising.



Our
Future Development Plans



In
addition to the new licensing model described above, the Company is currently developing, either alone or in cooperation with
development partners, and will distribute a series of innovative and proprietary functional food and alternative healthcare/supplement/health
and beauty products. We believe that several of these products have the potential of being highly disruptive to existing product
offering currently in the market, or wholly revolutionary. We believe that these products are the natural and organic extension
of our plan to provide a full suite of personalized health assessments and action plans to our customers.



Our
Offices



Our
executive offices are located at 2600 W. Executive Pkwy., Ste. 500, Lehi, UT 84043. You can also contact our customer service
department by telephone at (833) 4FRELII.



Liquidity
and Capital Resources



As
of September 30, 2018, the Company’s primary source of liquidity consisted of $123,656 in cash and cash equivalents. Since
inception, the Company has financed its operations through a combination of short and long-term loans, and through the private
placement of its common stock.



The
Company has sustained significant net losses which have resulted in an accumulated deficit at September 30, 2018 of $8,435,044,
and is currently experiencing a shortfall in operating capital which raises doubt about the Company’s ability to continue
as a going concern.



13







We
are currently seeking to secure additional debt or equity capital to finance substantial business development initiatives, including
the next phase of our website product. However, there is presently no agreement in place with any source of financing for the
Company and there can be no assurance that the Company will be able to raise any additional funds, or that such funds will be
available on acceptable terms. Funds raised through future equity financing will likely be substantially dilutive to current shareholders.
Lack of additional funds will materially affect the Company and its business, and may cause the Company to cease operations. Consequently,
shareholders could incur a loss of their entire investment in the Company.



Results
of operations for the three months ended September 30, 2018 and 2017.



Revenues.
For the three months ended September 30, 2018 and 2017, revenues were $13,375 and $0 respectively.



Operating
expenses.Operating expenses for the three months ended September 30, 2018 was $1,103,231 compared to $0 for the three months
ended September 30, 2017. The increase in operating expenses was mainly due to $1,013,604 in compensation expenses, which includes
salaries paid to employees and consultants and stock based compensation.



Other
Income (Expenses).Other expense for the three months ended September 30, 2018, was a loss of $1,158,830 compared with other
income of $0 for the three months ended September 30, 2017, almost all of which loss was attributable to settlement of debts.



Net
loss for the three months ended September 30, 2018 was $2,262,061 compared to a net loss of $49,734 for the three months ended
September 30, 2017. The increase in net loss was a result of commencing actual business operations and the gain on settlement
of debt that was recorded during the three months ended September 30, 2017.



Results
of operations for the nine months ended September 30, 2018 and 2017.



Revenues.
For the nine months ended September 30, 2018 and 2017, subscription revenues were $17,116 and $0 respectively.



Operating
expenses.Operating expenses for the nine months ended September 30, 2018 was $4,152,629 compared to $0 for the nine months
ended September 30, 2017. The increase in operating expenses was mainly due to $3,644,873 in compensation expenses, which includes
salaries paid to employees and consultants and stock based compensation.



Other
Income (Expenses).Other expense for the nine months ended September 30, 2018, was $1,155,569 compared with other income of
$595,725 for the nine months ended September 30, 2017, the change was primarily attributable to the loss on settlement of debt.



Net
loss for the nine months ended September 30, 2018 was $5,309,067 compared to a net income of $595,725 for the nine months
ended September 30, 2017. The increase in net loss was a result of commencing actual business operations and the gain on settlement
of debt that was recorded during the nine months ended September 30, 2017.



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.



Personnel



Frélii
has nine full-time employees, but utilizes other contract personnel to carry out our business. We utilize contract personnel on
a continuous basis, primarily in connection with building our technology platform.



Liquidity
and Capital Resources



Operations
for the quarter ended September 30, 2018, were primarily funded through the sale of equity securities.



14







Subject
to the launch of the pipeline of revenue streams, there is no certainty that we will be successful in generating sufficient cash
flow from operations or achieving and maintaining profitable operations in the future to enable us to meet our obligations as
they come due and consequently continue as a going concern. The Company may require additional funds to further develop our expanded
business plan. The Company may require additional financing this year to fund our operations and is examining possible sources
of funding beyond the existing cash generated from operations. Sales of additional equity securities would result in the dilution
of the interests of existing stockholders. There can be no assurance that financing will be available when required. In the event
that the necessary additional financing is not obtained, the Company would reduce its discretionary overhead costs substantially,
or otherwise curtail operations.



The
Company expects the forgoing, or a combination thereof, to meet our anticipated cash requirements for the next 12 months; however,
these conditions raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements
do not include any adjustments to reflect the possible future effects on recoverability and reclassification of assets or the
amounts and classification of liabilities that may result from the outcome of this uncertainty.



Net
Cash Used in Operating Activities



During
the nine months ended September 30, 2018, the Company had net cash used in operations of $699,516 compared with $28,650 for the
nine months ended September 30, 2017. Net cash used in operations increased due to a settlement with a related party, loss on
settlement of debt, and increase in operating expenses including legal and accounting expenses, marketing and advertising, and
compensation.



Net
Cash Provided by Financing Activities



During
the nine months ended September 30, 2018, the Company had net cash provided by financing activities of $823,172 compared with
$530,225 for the nine months ended September 30, 2017. Net cash provided by financing activities was primarily the result of advances
from related parties and the sale of shares of the Company’s stock to private investors.



Off-Balance
Sheet Arrangements



The
Company does 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 are material to our investors.



Critical
Accounting Policies



Cash
and Cash Equivalents



Cash
Equivalents include short-term, highly liquid investments with maturities of three months or less at the time of acquisition.



Estimates



The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.



Derivative
financial instruments



The
Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks.



15







The
Company reviews the terms of equity instruments and other financing arrangements, if any, to determine whether there are embedded
derivative instruments, including embedded conversion options that are required to be bifurcated and accounted for separately
as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company may issue freestanding
options or warrants to employees and non-employees in connection with consulting or other services. These options or warrants
may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity.



Basic
and Diluted Net Income (Loss) Per Share



The
Company follows ASC Topic 260 to account for the earnings per share. Basic earnings (loss) per common share (“EPS”)
calculations are determined by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the year. Diluted earnings (loss) per common share calculations are determined by dividing net income (loss) by the weighted
average number of common shares and dilutive common share equivalents (if dilutive) outstanding.



Income
Taxes



The
Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities
are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against
deferred tax assets is recorded, when it is more likely than not that such tax benefits will not be realized.



ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Not
applicable to smaller reporting companies.



ITEM
4. CONTROLS AND PROCEDURES



The
Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a Company’s
controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the
time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports
that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management,
including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort
to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that
information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to
allow timely decisions regarding disclosure.



As
of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation
of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting
them to material information required to be included in the Company’s periodic SEC reports and of ensuring that such information
is recorded, processed, summarized and reported within the time periods specified. The Company’s Chief Executive officer
and chief financial officer also concluded that the disclosure controls and procedures were effective as of the end of the period
covered by this report to provide reasonable assurance of the achievement of these objectives.



16







Changes
in Internal Control over Financial Reporting



There
have been no significant changes in our internal controls over financial reporting that occurred during the quarter ended September
30, 2018 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.



PART
II- OTHER INFORMATION



ITEM
1. LEGAL PROCEEDINGS



From
time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business.
However, litigation is subject to inherent uncertainties, and an adverse result in these, or other matters, may arise from time
to time that may harm our business.



ITEM
1A. RISK FACTORS



Not
applicable to smaller reporting companies.



ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.



On
October 9, 2018 the Company sold 116,000 shares of Class B Common Stock (and three year warrants to purchase up to a total of
116,000 shares of Class B Common Stock at $1.50 per share) at a price of $1.25 per share to an entity investor for $145,000 cash
proceeds.



Exemption
from Registration Claimed



All
of the sales by the Company of its unregistered securities were made by the Company in reliance upon Section 4(2) of the Securities
Act of 1933, as amended (the “1933 Act”). All of the individuals and/or entities listed above that purchased the unregistered
securities were all known to the Company and its management, through pre-existing business relationships. All purchasers were
provided access to all material information, which they requested, and all information necessary to verify such information and
were afforded access to management of the Company in connection with their purchases. All purchasers of the unregistered securities
acquired such securities for investment and not with a view toward distribution, acknowledging such intent to the Company. All
certificates or agreements representing such securities that were issued contained restrictive legends, prohibiting further transfer
of the certificates or agreements representing such securities, without such securities either being first registered or otherwise
exempt from registration in any further resale or disposition.



ITEM
3. DEFAULTS UPON SENIOR SECURITIES.



Not
applicable.



ITEM
4. MINE SAFETY DISCLOSURES.



Not
applicable.



ITEM
5. OTHER INFORMATION.



None



Item
6. Exhibits.



The
following exhibits are filed with or incorporated by reference in this report:



|Item
    No. |  | Description                                                                             
|------------ |  | ----------------------------------------------------------------------------------------
|             |  |                                                                                         
|31.1*        |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Ian Jenkins.
|32.1*        |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Ian Jenkins.



*
filed herewith



17







SIGNATURES



In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized on November 19, 2018.



|                             | FRÉLII, INC.
|---------------------------- | ------------
|                             |             
|Dated:
    November 19, 2018 | By:         
|                             |             
|                             |             



18