friendly10q033108.htm
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
Quarterly
Report Under Section 13 or 15 (d) of
Securities
Exchange Act of 1934
For the
quarterly period ended March 31, 2008
Commission
File Number: 333-147560
FRIENDLY AUTO
DEALERS, INC.
(Exact
Name of Issuer as Specified in Its Charter)
|
Nevada
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|
7389
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33-1176182
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|
State
of Incorporation
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|
Primary
Standard Industrial Employer Classification Code Number #
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I.R.S.
Identification No.
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4132 South Rainbow Road, Suite 514,
Las Vegas, Nevada 89103
(Address
of principal executive offices, including zip code)
(702) 321-6876
(Registrant's
telephone number, including area code)
EastBiz.Com,
Inc.
5348
Vegas Drive
Las
Vegas, Nevada 89108
Telephone:
(702) 871-8678
(Name,
Address, and Telephone Number of Agent)
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. Yes x No
o
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 o
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Non-Accelerated
Filer o
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| |
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(Do
not check if a smaller reporting company)
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|
| |
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| |
Accelerated
Filer o
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Smaller
reporting company x
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|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES x NO
o
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check
whether the registrant filed all documents and reports required to be filed by
Section 12, 13, 15(d) of the Exchange Act after the distribution of the
securities under a plan confirmed by a
court. YES o NO
o
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate
the number of shares outstanding of each of the issuer's classes of common stock
at the latest practicable date. As of May 13, 2008, the registrant had 6,725,000
shares of common stock, $0.001 par value, issued and outstanding.
Transitional
Small Business Disclosure Format (Check one): YES o NO
x
CONTENTS
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PART
I - FINANCIAL INFORMATION - UNAUDITED
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|
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Item
1.
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BALANCE
SHEET
|
1
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STATEMENT
OF OPERATIONS
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2
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|
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STATEMENT
OF STOCKHOLDERS’ EQUITY
|
3
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STATEMENTS
OF CASH FLOWS
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4
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NOTES
TO FINANCIAL STATEMENTS
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5
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Item
2.
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Management's
Discussion and Analysis of Financial Condition and Plan of
Operations.
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11
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Item
3.
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Quantitative
and Qualitative Disclosures About Market Risk
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12
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Item
4.
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Controls
and Procedures
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13
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PART
II - OTHER INFORMATION
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Item
1.
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Legal
Proceedings
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14
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Item
2.
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Unregistered Sales
of Equity Securities and Use of Proceeds
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14
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Item
3.
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Defaults
Upon Senior Securities
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14
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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14
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Item
5.
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Other
Information
|
14
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Item
6.
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Exhibit
and Reports on Form 8-K
|
14
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PART I -
FINANCIAL INFORMATION
Item
1. Financial Statements (Unaudited- Prepared by
Management)
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
FINANCIAL
REPORTS
MARCH
31, 2008
(UNAUDITED)
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
CONTENTS
|
FINANCIAL
STATEMENTS
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|
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Balance
Sheets
|
1
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Statements
of Operations
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2
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Statements
of Stockholders' Equity
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3
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|
|
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Statements
of Cash Flows
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4
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|
|
|
|
Notes
to Financial Statements
|
5-10
|
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
BALANCE
SHEETS
(UNAUDITED)
|
|
|
March
31,
|
|
|
From Inception on August 6, 2007
to December 31,
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|
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2008
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|
2007
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ASSETS
|
|
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|
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CURRENT
ASSETS
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|
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Cash
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$ |
45,323 |
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|
$ |
53,799 |
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|
|
|
|
|
|
|
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Total
assets
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|
$ |
45,323 |
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|
$ |
53,799 |
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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CURRENT
LIABILITIES
|
|
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Accounts
payable and accrued liabilities
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|
$ |
5,010 |
|
|
$ |
5,010 |
|
|
|
|
|
|
|
|
|
|
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Total
current liabilities
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|
$ |
5,010 |
|
|
$ |
5,010 |
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|
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|
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STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
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Common
stock subscribed
|
|
$ |
0 |
|
|
$ |
65,750 |
|
|
Common
stock: $.001 par value;
|
|
|
|
|
|
|
|
|
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Authorized
70,000,000 shares; Issued and outstanding: 1,000,000 shares at
March 31, 2008
|
|
|
1,000 |
|
|
|
|
|
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Additional
paid-in capital
|
|
|
111,250 |
|
|
|
|
|
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Accumulated
deficit during development stage
|
|
|
(72,237 |
) |
|
|
(17,261 |
) |
|
|
|
|
|
|
|
|
|
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Total
stockholders’ equity
|
|
$ |
40,013 |
|
|
$ |
48,489 |
|
|
|
|
|
|
|
|
|
|
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Total
liabilities and stockholders’ equity
|
|
$ |
45,323 |
|
|
$ |
53,799 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
STATEMENTS
OF OPERATIONS
(UNAUDITED)
|
|
|
Three
months Ended March 31,
|
|
|
Aug.
6, 2007 (inception) to March 31,
|
|
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2008
|
|
|
2008
|
|
|
|
|
|
|
|
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REVENUES
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$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
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GENERAL,
SELLING, AND ADMINISTRATIVE EXPENSES
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|
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General,
selling and administrative expenses
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|
$ |
52,536 |
|
|
$ |
69,847 |
|
|
Office
expense
|
|
|
1,706 |
|
|
|
1,706 |
|
|
Travel
|
|
|
684 |
|
|
|
684 |
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|
Income/
(loss) before other expense
|
|
$ |
(54,976 |
) |
|
$ |
(72,237 |
) |
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income (expense)
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
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Net
income/ (loss)
|
|
$ |
(54,976 |
) |
|
$ |
(72,237 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Net
loss per share, basic and diluted
|
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
|
|
|
Average
number of shares of common stock outstanding
|
|
|
5,604,167 |
|
|
|
|
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
STATEMENT
OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
|
|
|
Common Stock
|
|
|
Common
Stock
|
|
|
Accumulated
Deficit During Development
|
|
|
|
|
|
|
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Shares
|
|
|
Amount
|
|
|
Subscribed
|
|
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Stage
|
|
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Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Common
stock subscribed at $.001 per share August 10, 2007
|
|
|
0 |
|
|
|
0 |
|
|
$ |
12,250 |
|
|
$ |
0 |
|
|
$ |
12,250 |
|
|
Common
stock subscribed December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
53,500 |
|
|
|
0 |
|
|
|
53,500 |
|
|
Net
loss, December 31, 2007
|
|
|
0 |
|
|
|
0 |
|
|
|
|
|
|
|
(17,261 |
) |
|
|
(17,261 |
) |
|
Balance,
December 31, 2007
|
|
|
0 |
|
|
|
0 |
|
|
$ |
65,750 |
|
|
$ |
(17,261 |
) |
|
$ |
48,489 |
|
|
|
|
Common Stock
|
|
|
Additional
Paid in
|
|
|
Accumulated
Deficit During Development
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued at $0.001 per share
|
|
|
5,000,000 |
|
|
|
5,000 |
|
|
|
|
|
|
|
|
|
5,000 |
|
|
Common
stock issued at $0.01 per Share
|
|
|
725,000 |
|
|
|
725 |
|
|
|
6,525 |
|
|
|
|
|
|
7,250 |
|
|
Common
stock issued at $0.10 per share per SB-2 Registration Statement effective
Dec. 10, 2007
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
99,000 |
|
|
|
- |
|
|
|
100,000 |
|
|
Accumulated
deficit, December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,261 |
) |
|
|
(17,261 |
) |
|
Net loss,
March 31, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(54,976 |
) |
|
|
(54,976 |
) |
|
Balance,
March 31, 2008
|
|
|
6,725,000 |
|
|
$ |
6,725 |
|
|
$ |
105,525 |
|
|
$ |
(72,237 |
) |
|
$ |
40,013 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
STATEMENTS
OF CASH FLOWS
(UNAUDITED)
|
|
|
Three
months Ended March 31,2008
|
|
|
Aug.
6, 2007 (inception) to March 31,2008
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows From Operating Activities
|
|
|
|
|
|
|
|
Net
(loss)
|
|
$ |
(54,976 |
) |
|
$ |
(72,237 |
) |
|
|
|
|
|
|
|
|
|
|
|
Changes
in assets and liabilities
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in accounts payable and accruals
|
|
|
- |
|
|
|
5,310 |
|
|
Net
cash used in operating activities
|
|
$ |
(54,796 |
) |
|
|
(66,927 |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows From Investing Activities
|
|
|
|
|
|
|
|
|
|
Net
cash provided used in investing activities
|
|
$ |
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows From Financing Activities
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
$ |
46,500 |
|
|
$ |
112,250 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
$ |
46,500 |
|
|
$ |
112,250 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash
|
|
|
(8,476 |
) |
|
$ |
45,323 |
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
53,799 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$ |
45,323 |
|
|
$ |
45,323 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
NOTES
TO THE FINANCIAL STATEMENTS
Note
1. Nature of Business and Significant Accounting Policies
Nature of
business:
Friendly
Auto Dealers, Inc. (“Company”) was organized August 6, 2007 under the laws of
the State of Nevada for the purpose of providing promotional items with
corporate logos to the automotive industry in China. The Company
currently has no operations or realized revenues from its planned principle
business purpose and, in accordance with Statement of Financial Accounting
Standard (SFAS) No. 7, “Accounting and Reporting by
Development Stage Enterprises,” is considered a Development Stage
Enterprise.
A summary of the Company’s
significant accounting policies is as follows:
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.
Cash
For the
Statements of Cash Flows, all highly liquid investments with maturity of three
months or less are considered to be cash equivalents. There were no
cash equivalents as of December 31, 2007.
Income
taxes
Income
taxes are provided for using the liability method of accounting in accordance
with SFAS No. 109 “Accounting
for Income Taxes,” and clarified by FIN 48, “Accounting for Uncertainty in
Income Taxes—an interpretation of FASB Statement
No. 109.” A deferred tax asset or liability is recorded
for all temporary differences between financial and tax
reporting. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax
basis. 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. Deferred tax
assets and liabilities are adjusted for the effect of changes in tax laws and
rates on the date of enactment.
Share Based
Expenses
The
Company follows Financial Accounting Standards Board (“FASB”)
SFAS No. 123R “Share
Based Payment.” This statement is a revision to SFAS 123 and
supersedes Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to
Employees,” and amends FASB Statement No. 95, “Statement of Cash Flows.”
This statement requires a public entity to expense the cost of employee services
received in exchange for an award of equity instruments. This statement also
provides guidance on valuing and expensing these awards, as well as disclosure
requirements of these equity arrangements. The Company adopted SFAS
No. 123R upon creation of the company and expenses share based costs in the
period incurred.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
NOTES
TO THE FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant
Accounting Policies (continued)
Going
concern
The
Company’s financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This
contemplates the realization of assets and the liquidation of liabilities in the
normal course of business. Currently, the Company does not have cash
nor material assets, nor does it have operations or a source of revenue
sufficient to cover its operation costs and allow it to continue as a going
concern. The Company will be dependent upon the raising of additional
capital through placement of our common stock in order to implement its business
plan, or merge with an operating company. There can be no assurance
that the Company will be successful in either situation in order to continue as
a going concern. The officers and directors have committed to
advancing certain operating costs of the Company.
Recent Accounting
Pronouncements
In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157). SFAS 157 provides guidance for using fair value to measure assets and
liabilities. SFAS 157 addresses the requests from investors for expanded
disclosure about the extent to which companies measure assets and liabilities at
fair value, the information used to measure fair value and the effect of fair
value measurements on earnings. SFAS 157 applies whenever other standards
require (or permit) assets or liabilities to be measured at fair value, and does
not expand the use of fair value in any new circumstances. SFAS 157 is effective
for financial statements issued for fiscal years beginning after November 15,
2007 and will be adopted by the Company in the first quarter of fiscal year
2008. We do not expect that the adoption of SFAS 157 will have a
material impact on our financial condition or results of
operations.
In
February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115” (hereinafter “SFAS No. 159”). This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This statement is expected to expand the use of fair
value measurement, which is consistent with the Board’s long-term measurement
objectives for accounting for financial instruments. This statement is effective
as of the beginning of an entity’s first fiscal year that begins after November
15, 2007, although earlier adoption is permitted. Management has not determined
the effect that adopting this statement would have on the Company’s financial
condition or results of operations.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
NOTES
TO THE FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant
Accounting Policies (continued)
In
December 2007, the FASB issued SFAS 141(R), “Business Combinations— a
replacement of FASB Statement No. 141.” This Statement replaces SFAS 141,
“Business Combinations,” and requires an acquirer to recognize the assets
acquired, the liabilities assumed, including those arising from contractual
contingencies, any contingent consideration, and any noncontrolling interest in
the acquiree at the acquisition date, measured at their fair values as of that
date, with limited exceptions specified in the statement. SFAS 141(R) also
requires the acquirer in a business combination achieved in stages (sometimes
referred to as a step acquisition) to recognize the identifiable assets and
liabilities, as well as the noncontrolling interest in the acquiree, at the full
amounts of their fair values (or other amounts determined in accordance with
SFAS 141(R)). In addition, SFAS 141(R)'s requirement to measure the
noncontrolling interest in the acquiree at fair value will result in recognizing
the goodwill attributable to the noncontrolling interest in addition to that
attributable to the acquirer. SFAS 141(R) amends SFAS No. 109, “Accounting for
Income Taxes,” to require the acquirer to recognize changes in the amount of its
deferred tax benefits that are recognizable because of a business combination
either in income from continuing operations in the period of the combination or
directly in contributed capital, depending on the circumstances. It also amends
SFAS 142, “Goodwill and Other Intangible Assets,” to, among other things,
provide guidance on the impairment testing of acquired research and development
intangible assets and assets that the acquirer intends not to use. SFAS 141(R)
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. We are currently assessing the potential impact that
the adoption of SFAS 141(R) could have on our financial statements.
In
December 2007, the FASB issued SFAS 160, “Noncontrolling Interests in
Consolidated Financial Statements.” SFAS 160 amends Accounting Research Bulletin
51, “Consolidated Financial Statements,” to establish accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements. SFAS
160 also changes the way the consolidated income statement is presented by
requiring consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest. It also
requires disclosure, on the face of the consolidated statement of income, of the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SFAS 160 requires that a parent recognize a gain or
loss in net income when a subsidiary is deconsolidated and requires expanded
disclosures in the consolidated financial statements that clearly identify and
distinguish between the interests of the parent owners and the interests of the
noncontrolling owners of a subsidiary. SFAS 160 is effective for fiscal periods,
and interim periods within those fiscal years, beginning on or after December
15, 2008. We are currently assessing the potential impact that the adoption of
SFAS 141(R) could have on our financial statements.
In
March 2008, the FASB issued SFAS No. 161, "Disclosures about
Derivative Instruments and Hedging Activities”, an amendment of SFAS
No. 133. SFAS 161 applies to all derivative instruments and nonderivative
instruments that are designated and qualify as hedging instruments pursuant to
paragraphs 37 and 42 of SFAS 133 and related hedged items accounted for under
SFAS 133. SFAS 161 requires entities to provide greater transparency through
additional disclosures about how and why an entity uses derivative instruments,
how derivative instruments and related hedged items are accounted for under SFAS
133 and its related interpretations, and how derivative instruments and related
hedged items affect an entity’s financial position, results of operations, and
cash flows. SFAS 161 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2008. We do not expect that the
adoption of SFAS 161 will have a material impact on our financial condition or
results of operation.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
NOTES
TO THE FINANCIAL STATEMENTS
Note 1. Stockholder’s
Equity
Common
stock
The
authorized common stock of the Company consists of 70,000,000 shares with par
value of $0.001. On August 7, 2007, the Company authorized the
issuance of 5,000,000 shares of its $.001 par value common stock at $0.001 per
share in consideration of $5,000 in cash. The Company also authorized the
issuance of 725,000 shares at $0.01 per share for $7,250 in legal and business
services. As of December 31, 2007, the shares were unissued and
considered subscribed.
On
November 11, 2007, the Company filed an SB-2 Registration Statement with the
Securities and Exchange Commission to register 1,000,000 shares of common stock
and offer the shares for sale to the public at $0.10 per share. On December 10,
2007, the Securities and Securities Commission declared the offering effective.
On December 31, 2007, the Company sold 107 investors 535,000 shares for $53,500.
As of December 31, 2007, the shares were unissued and considered
subscribed.
On
January 16, 2008, the Company sold 107 investors 535,000 shares for $53,500. As
of December 31, 2007, the shares were unissued and considered subscribed. As of
March 31, 2008, the Company has 6,275,000 shares of its $0.001 par value common
stock issued and outstanding to 190 shareholders.
The
authorized preferred stock of the Company consists of 5,000,000 shares with a
par value of $.001. The Company has no preferred stock issued or
outstanding.
Net loss per common
share
Net loss
per share is calculated in accordance with SFAS No. 128, “Earnings Per
Share.” The weighted-average number of common shares
outstanding during each period is used to compute basic loss per
share. Diluted loss per share is computed using the weighted averaged
number of shares and dilutive potential common shares
outstanding. Dilutive potential common shares are additional common
shares assumed to be exercised.
Basic net
loss per common share is based on the weighted average number of shares of
common stock outstanding during 2007 and since inception. As of
December 31, 2007 and since inception, the Company had no common shares
outstanding. As of December 31, 2007 and since inception, the Company
had no dilutive potential common shares.
Note 3. Income Taxes
We did
not provide any current or deferred U.S. federal income tax provision or benefit
for any of the periods presented because we have experienced operating losses
since inception. Per Statement of Accounting Standard No. 109 – Accounting for
Income Tax and FASB Interpretation No. 48 - Accounting for Uncertainty in Income
Taxes an interpretation of FASB Statement No.109, when it is more likely than
not that a tax asset cannot be realized through future income the Company must
allow for this future tax benefit. We provided a full valuation allowance
on the net deferred tax asset, consisting of net operating loss carryforwards,
because management has determined that it is more likely than not that we will
not earn income sufficient to realize the deferred tax assets during the
carryforward period.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
NOTES
TO THE FINANCIAL STATEMENTS
Note
3. Income
Taxes (continued)
The
components of the Company’s deferred tax asset as of December 31, 2007 and March
31, 2008 are as follows:
|
|
|
March
31, 2008
|
|
|
Net
operating loss carry-forward at 35%
|
|
$ |
72,237 |
|
|
Valuation
allowance
|
|
|
(72,237 |
) |
|
Net
deferred tax asset
|
|
$ |
0 |
|
A
reconciliation of income taxes computed at the statutory rate to the income tax
amount recorded is as follows:
|
|
|
Inception
August
6, 2007 to
December
31, 2007
|
|
|
March
31, 2008
|
|
|
Tax
at statutory rate (35%)
|
|
$ |
17,261 |
|
|
$ |
72,237 |
|
|
Increase
in valuation allowance
|
|
|
(17,261 |
) |
|
|
(72,237 |
) |
|
Net
deferred tax asset
|
|
$ |
0 |
|
|
$ |
0 |
|
The net
federal operating loss carry forward will expire in 2027. This carry
forward may be limited upon the consummation of a business combination under IRC
Section 381.
Note 4. Related Party
Transactions
The
Company neither owns nor leases any real or personal property. An
officer or resident agent of the corporation provides office services without
charge. Such costs are immaterial to the financial statements and
accordingly, have not been reflected therein. The officers and
directors for the Company are involved in other business activities and may, in
the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business
interest. The Company has not formulated a policy for the resolution
of such conflicts. The officer of the Company has advanced $300 for
organizational expenses as of December 31, 2007.
Note 5. Warrants and
Options
There are
no warrants or options outstanding to acquire any additional shares of common
stock of the Company.
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
NOTES
TO THE FINANCIAL STATEMENTS
Note 6. Commitments
On
December 15, 2007 the Company signed a contract with Heartland Managed Risk, LLC
(Heartland) for the purposes of provided the filing and compliance services
necessary to meet the Securities and Exchange Commission requirements for
reporting companies. The Company agreed to pay Heartland $20,000
annually for these services to be paid quarterly at the rate of $5,000 per
quarter.
THIS
REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES
SUCH AS THE DEPENDENCE OF THE COMPANY ON AND THE ADEQUACY OF CASH FLOWS. THESE
FORWARD-LOOKING STATEMENTS AND OTHER STATEMENTS MADE ELSEWHERE IN THIS REPORT
ARE MADE IN RELIANCE ON THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995.
Item 2. Management's Discussion and
Analysis of Financial Condition and Plan of Operations.
Description
Of Business
General
Friendly
Auto Dealers, Inc. ("Friendly Auto Dealers" or “The Company”) is a development
stage enterprise that was incorporated on August 6, 2007, under the laws of the
State of Nevada. The principal offices are located at 4132 South
Rainbow Boulevard, Suite 514, Las Vegas, Nevada. The telephone number is (702)
321-6876. The fax number is (702) 939-0655. Since becoming
incorporated, Friendly Auto Dealers has not made any significant purchases or
sale of assets, nor has it been involved in any mergers, acquisitions or
consolidations. Friendly Auto Dealers has never declared bankruptcy, it has
never been in receivership, and it has never been involved in any legal action
or proceedings. Our fiscal year end is December 31st.
Friendly
Auto Dealers, Inc. is looking to enter into the promotional branding industry
with the objective of adding value to a wide variety of products by endorsing
them with the corporate logos of the world’s automobile manufacture’s for use by
the company’s employees or as gifts or promotional items. The Company will
concentrate its efforts in the People’s Republic of China and its retail
automotive industry.
Friendly
Auto Dealers intends to establish itself as a specialized brand promotional
merchandising company. The Company will identify a range of casual apparel and
consumer products that can be manufactured and resold for high mark-ups with the
product endorsement of corporate logos.
Friendly
Auto Dealers intends to create brand name awareness amongst purchasing managers
or decision makers who are able to place its targeted products into its targeted
market. The targeted market is large to mid-size companies, who are using logo
bearing apparel, essential office products, and leisure products for their
employees as well as for gifts for customers.
Friendly
Auto Dealers plans to source its raw products (apparel and consumer products
with logos) in China. Once the Company has selected a range of apparel and
promotional products and negotiated pricing it will purchase a small inventory
in order to make promotional samples. The Company intends to hire
independent contractors within the Peoples Republic of China and the United
States for all graphic design. Embroidery, and screen printing work
necessary to place the prospective company logos on the products will be
performed in China. The Company will profile and market its product
line to the corporate marketplace through online merchandising and an e-catalog
on its website. The website will have online catalogs offering
apparel, office products and leisure products. The site will allow the consumer
to “upload” an electronic version of their company or corporate logo and order
products online through a fully functional e-commerce enabled
website.
Business
Development
As of
March 31, 2008, Friendly Auto Dealers raised $105,000 through the sale of common
stock. Including the sale of 5,000,000 shares sold to its Sole
Officer and Director. In addition, as of March 31, 2008, the Company had sold
1,000,000 shares of its common stock to approximately 185 shareholders for an
aggregate investment of $100,000. These shares were registered under a Form SB-2
filing under the Securities Act of 1933 which became effective on December 10,
2007. This was the maximum amount of common shares offered through
the Registration Statement by the Company; as such, the offering is fully
subscribed and closed as of the date of this report. The Company
intends to utilize these funds begin the initial development of its business and
cover administrative costs for the next six to nine months.
Liquidity
and Capital Resources
As of
March 31, 2008, we have $45,323 of cash available. We have current
liabilities of $5,010. From the date of inception (August 6, 2007) to
March 31, 2008 the Company has recorded a net loss of $72,237 of which were
expenses relating to the initial development of the Company, filing its
Registration Statement on Form SB-2, and expenses relating to
maintaining reporting company status with the Securities and Exchange
Commission. As of March 31, 2008, we had 6,275,000 shares issued and
outstanding. We will require additional capital investments or
borrowed funds to meet cash flow projections and carry forward our business
objectives. There can be no guarantee or assurance that we can raise adequate
capital from outside sources to fund the proposed business.
To date
there is no public market for the Company’s common stock. As of the
date of this report, the Company has filed a 15c-211 application, through a
broker dealer, with the Financial Industry Regulatory Authority
(FINRA). Management plans to continue focusing efforts on obtaining
quotation of the Company’s common stock on the Over-The-Counter Bulletin Board
(OTCBB). However, there can be no guarantee or assurance that they
will be successful in accomplishing this task; moreover, even if the common
stock is listed on the OTCBB there can be no guarantee that a market would
develop for the Company’s common stock. Failure to create a market for the
Company’s common stock would result in business failure and a complete loss of
any investment made into the Company.
Off-Balance
Sheet Arrangements
As of the
date of this Quarterly Report, the Company does not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on the Company's financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources that are material to investors. The term "off-balance sheet
arrangement" generally means any transaction, agreement or other contractual
arrangement to which an entity unconsolidated with the Company is a party, under
which the Company has (i) any obligation arising under a guarantee contract,
derivative instrument or variable interest; or (ii) a retained or contingent
interest in assets transferred to such entity or similar arrangement that serves
as credit, liquidity or market risk support for such assets.
Product
Research and Development
The
Company does not anticipate any costs or expenses to be incurred for product
research and development within the next twelve months.
Employees
There are
no employees of the Company, excluding the current President and Director, Tony
Lam, of the corporation.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
Not
Applicable.
Item
4. Controls and Procedures
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as required by
Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over
financial reporting is a process designed under the supervision of the Company's
Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of the Company's financial statements for external purposes in accordance with
U.S. generally accepted accounting principles.
As of
March 31, 2008 management assessed the effectiveness of the Company's internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in SEC guidance on conducting such
assessments. Based on that evaluation, they concluded that, during the period
covered by this report, such internal controls and procedures were not effective
to detect the inappropriate application of US GAAP rules as more fully described
below. This was due to deficiencies that existed in the design or operation of
our internal control over financial reporting that adversely affected our
internal controls and that may be considered to be material
weaknesses.
The
matters involving internal controls and procedures that the Company's management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee and
lack of a majority of outside directors on the Company's board of directors,
resulting in ineffective oversight in the establishment and monitoring of
required internal controls and procedures; (2) inadequate segregation of duties
consistent with control objectives; (3) insufficient written policies and
procedures for accounting and financial reporting with respect to the
requirements and application of US GAAP and SEC disclosure requirements; and (4)
ineffective controls over period end financial disclosure and reporting
processes. The aforementioned material weaknesses were identified by the
Company's Chief Financial Officer in connection with the review of our financial
statements as of March 31, 2008 and communicated the matters to our
management.
Management
believes that the material weaknesses set forth in items (2), (3) and (4) above
did not have an affect on the Company's financial results. However, management
believes that the lack of a functioning audit committee and lack of a majority
of outside directors on the Company's board of directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures can result in the Company's determination to its
financial statements for the future years.
We are
committed to improving our financial organization. As part of this commitment,
we will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to the Company: i)
Appointing one or more outside directors to our board of directors who shall be
appointed to the audit committee of the Company resulting in a fully functioning
audit committee who will undertake the oversight in the establishment and
monitoring of required internal controls and procedures; and ii) Preparing and
implementing sufficient written policies and checklists which will set forth
procedures for accounting and financial reporting with respect to the
requirements and application of US GAAP and SEC disclosure
requirements.
Management
believes that the appointment of one or more outside directors, who shall be
appointed to a fully functioning audit committee, will remedy the lack of a
functioning audit committee and a lack of a majority of outside directors on the
Company's Board. In addition, management believes that preparing and
implementing sufficient written policies and checklists will remedy the
following material weaknesses (i) insufficient written policies and procedures
for accounting and financial reporting with respect to the requirements and
application of US GAAP and SEC disclosure requirements; and (ii) ineffective
controls over period end financial close and reporting processes. Further,
management believes that the hiring of additional personnel who have the
technical expertise and knowledge will result proper segregation of duties and
provide more checks and balances within the department. Additional personnel
will also provide the cross training needed to support the Company if personnel
turn over issues within the department occur. This coupled with the appointment
of additional outside directors will greatly decrease any control and procedure
issues the company may encounter in the future.
We will
continue to monitor
and evaluate the effectiveness of
our internal controls and procedures and our internal controls over
financial reporting on an ongoing basis and
are committed to
taking further action and implementing
additional enhancements or improvements, as necessary and as funds
allow.
Changes
In Internal Controls.
There
were no significant changes in the Company's internal controls or, to the
Company's knowledge, in other factors that could significantly affect these
controls subsequent to the date of their evaluation.
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings
The
Company is not a party to any pending legal proceedings, and no such proceedings
are known to be contemplated.
No
director, officer, or affiliate of the Company and no owner of record or
beneficial owner of more than 5.0% of the securities of the Company, or any
associate of any such director, officer or security holder is a party adverse to
the Company or has a material interest adverse to the Company in reference to
pending litigation.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Submission of Matters to Vote of Security Holders
None.
Item
5. Other Information
None.
Item 6.
Exhibits
3.1 Articles
of Incorporation*
3.2 By-Laws*
31.1 Rule
13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer and Chief
Financial Officer
32.1
Section 1350 Certification of Chief Executive Officer and Chief Financial
Officer
*Filed
previously as an exhibit to the Company’s registration statement with the
Commission on November 21, 2007.
Signature
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
Friendly
Auto Dealers, Inc.
|
|
|
|
|
|
Dated:
May 14, 2008
|
/s/ Tony H.
Lam
|
|
|
Tony
H. Lam
|
|
|
Chief
Executive Officer and
|
|
|
Chief
Financial Officer
|
15