fadi10k123107.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
__________________
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007
Commission File
Number 333-147560
__________________
FRIENDLY
AUTO DEALERS, INC.
(Exact
name of registrant as specified in its charter)
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NEVADA
(State
or other jurisdiction of
incorporation
or organization)
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33-1176182
(I.R.S.
Employer
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)
Securities
registered pursuant to Section 12(b) of the Act:
Common
Stock, $0.001 par value per share
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Title
of class
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Name
of each exchange on which registered
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Common
Stock. $0.001 par value per share
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None
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Securities
registered pursuant to Section 12(g) of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
405 of the Securities Act. Yes o
No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange
Act. Yes x No o
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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. 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. (Check
one):
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated
filer o
(Do not check if smaller reporting company)
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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
As of
April 15, 2008, the Registrant had outstanding 6,725,000 shares of Common
Stock.
DOCUMENTS
INCORPORATED BY REFERENCE
The
following documents (or portions thereof) are incorporated herein by
reference: registration statement and exhibits thereto filed on Form
SB-2 November 21, 2007 are incorporated by reference within Part I and Part II
herein.
[THE
REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]
INDEX
FRIENDLY
AUTO DEALERS, INC.
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PAGE
NO
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PART
I
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ITEM
1.
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BUSINESS
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4
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ITEM
1A.
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RISK
FACTORS
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10
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ITEM
2.
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PROPERTIES
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15
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ITEM
3.
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LEGAL
PROCEEDINGS
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15
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ITEM
4.
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SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
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15
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PART
II
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ITEM
5.
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MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
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15
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ITEM
6.
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SELECTED
FINANCIAL DATA
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16
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ITEM
7.
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MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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17
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ITEM
7A.
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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19
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ITEM
8.
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FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
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19
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ITEM
9.
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CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
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19
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ITEM
9A.
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CONTROLS
AND PROCEDURES
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19
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ITEM
9B.
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OTHER
INFORMATION
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20
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PART
III
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ITEM
10.
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DIRECTORS
AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
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20
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ITEM
11.
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EXECUTIVE
COMPENSATION
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21
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ITEM
12.
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
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21
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ITEM
13.
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CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
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22
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ITEM
14.
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PRINCIPAL
ACCOUNTANT FEES AND SERVICES
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22
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PART
IV
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ITEM
15.
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EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
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22
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SIGNATURES
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23
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PART
I.
Cautionary
Note
This
Annual Report on Form 10-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934, which are subject to a number of risks
and uncertainties. All statements that are not historical facts are
forward-looking statements, including statements about our business strategy,
the timing of the introduction of our products, the effect of Generally Accepted
Accounting Principles ("GAAP") pronouncements, uncertainty regarding our future
operating results and our profitability, anticipated sources of funds and all
plans, objectives, expectations and intentions and the statements regarding
revenue, expected domestic revenue growth rates for fiscal 2008, gross margins
and our prospects for fiscal 2008. These statements appear in a number of places
and can be identified by the use of forward-looking terminology such as "may,"
"will," "should," "expect," "plan," "anticipate," "believe," "estimate,"
"predict," "future," "intend," or "certain" or the negative of these terms or
other variations or comparable terminology, or by discussions of
strategy.
Actual
results may vary materially from those in such forward-looking statements as a
result of various factors that are identified in "Item 7—Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Item 1A.—Risk Factors" and elsewhere in this document. No assurance can be
given that the risk factors described in this Annual Report on Form 10-K
are all of the factors that could cause actual results to vary materially from
the forward-looking statements. All forward-looking statements speak only as of
the date of this Annual Report on Form 10-K. Readers should not place undue
reliance on these forward-looking statements and are cautioned that any such
forward-looking statements are not guarantees of future performance. We assume
no obligation to update any forward-looking statements.
References
in this Annual Report on Form 10-K to (i) the "Company," the
"Registrant," "Friendly "we," "our," “FAD,” and "us" refer to Friendly Auto
Dealers, Inc. unless the context otherwise requires, and (ii)" agents"
refer to the Company's agents in their roles as limited agents of the Company in
recruiting job applicants, soliciting sales orders, filling orders and assisting
with collection matters upon request, but otherwise refer to the Company's
agents in their roles as independent contractors of the Company.
This
Annual Report on Form 10-K includes service marks of Friendly Auto
Dealers, Inc. Products or service names of other companies mentioned in
this Annual Report on Form 10-K may be trademarks or registered trademarks
of their respective owners. Investors and security holders may obtain a free
copy of the Annual Report on Form 10-K and other documents filed by FAD
with the Securities and Exchange Commission ("SEC") at the SEC's website at
http://www.sec.gov. Free copies of the Annual Report on Form 10-K and other
documents filed by Friendly with the SEC may also be obtained from Friendly Auto
Dealers, Inc. by directing a request to Friendly, Attention: Tony Lam, President
and Chief Executive Officer, 4132 South Rainbow Boulevard, Suite 514, Las Vegas,
Nevada 89103, (702) 321-6876.
General
Company
History
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 will 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 will 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.
As of
December 31, 2007, the date of company's last audited financial statements,
Friendly Auto Dealers raised $5,000 through the sale of common stock sold to its
Sole Officer and Director in exchange for 5,000,000 of restricted common stock.
In addition, on December 28, 2007, the Company sold 535,000 shares of its common
stock to 107 shareholders for an aggregate investment of $53,500. These shares
were registered under a Form SB-2 filing under the Securities Act of 1933 which
became effective on December 10, 2007.
Business
Development
Friendly
Auto Dealers Inc. was incorporated on August 6, 2007, in the state of Nevada.
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.
Since becoming incorporated, Friendly Auto Dealers has not made any significant
purchase or sale of assets, nor has it been involved in any mergers,
acquisitions or consolidations. Friendly Auto Dealers is not a blank check
registrant as that term is defined in Rule 419(a)(2) of Regulation C of the
Securities Act of 1933, since it has a specific business plan or
purpose.
Business
of Issuer
General
Friendly
Auto Dealers Inc. is a development stage enterprise and was organized to enter
into the promotional apparel and products industry. The Company intends to sell
products to the automotive dealers in China and other parts of Asia as well as
in the United States.
Friendly
Auto Dealers plans to source and then sell novel promotional products initially
to Chinese automobile dealers as well as other corporations and associations
that use promotional products as part of their overall advertising and marketing
strategies. The Company plans to hire contractors in China to emblaze,
embroider, or otherwise affix a customer’s corporate logo or message to the
products.
According
to a study of more than 15,000 promotional product distributors conducted by
researchers at Louisiana State University and Glenrich Business Studies, over
29% of all sales of promotional products are what the industry calls
“wearables”. This product category includes t-shirts, golf-shirts, aprons, caps,
headbands, neckwear and footwear. These are the same products that will be
offered to the Chinese market.
The
largest market category for promotional products is business gifts, accounting
for almost 18% of industry sales. Trade show giveaways account for over 12% of
industry sales.
Competition
The
promotional apparel and products industry is mature and has many levels of
competition. The industry in general is very fragmented - although
many large, well-capitalized companies exist on a national level, most of our
competition will come from companies focused within their local or regional
market. Most companies have two channels of
distribution: sales through corporate efforts or independent sales
agents; and sales through their internet website.
Examples
of large competitors include Allied Specialty Company, of
Davie, Florida, which has been operating for over fifty years and does business
throughout the United States while also exporting to Canada, Latin America and
Western Europe, as well as Bernco Specialty Advertising
of Bethpage, New York, in business since 1947. Many companies are
regionally focused firms in terms of distribution. Examples include
Elite Design, with
offices in Clinton Township, Michigan, and manufacturing facilities in
Mansfield, Ohio, and Promotional Concepts, Inc. in
Alameda, CA, who has operated successfully since 1992. Hundreds of
smaller competitors exist nationwide who thrive in their local markets
only. In Las Vegas, Nevada, Friendly Auto Dealers’, local market,
several well established companies exist doing business both locally and
regionally. However, an internet search was done by management of
Friendly Auto Dealers, and no direct competitor who used the internet as its
primary marketing method could be found in the Peoples Republic of
China.
There can
be no assurance that Friendly Auto Dealers will ever be able to compete with any
of the competitors described herein. In addition, there may be other
competitors the company is unaware of at this time that would also impede or
prevent the company’s success.
Please
see RISK FACTORS described herein.
Marketing
Once the
company has secured its initial promotional products and has purchased its
sample inventory, the company intends to embark on a two-pronged marketing
campaign. The company will, through direct marketing and telephone solicitation,
contact corporations that use promotional products as an integral part of their
overall marketing and brand awareness plan. Many of these organizations will
have giveaway promotional products at special corporate events (trade shows,
vendor meetings, employee meetings, etc.).
The types
of products used for giveaways include name badges, balls, cell phone holders,
drink containers, key rings, mouse pads, writing pens and stickers bearing the
sponsors logo.
The
company will develop a website to place pictures of the promotional products it
wishes to sell to its perspective customers. Customers will be able to visit the
web site and view products categorized by both type and price. The
website will allow a customer to “upload” an electronic version of the company
logo that they want embossed, embroidered or otherwise affixed to the product
they are purchasing.
The
second prong of the company's marketing efforts would commence once the company
has secured an agreement to use a known brand or logo on its line of promotional
products. The company will, through direct marketing efforts, begin to approach
large retailers who may be interested in the company's promotional product line
with known branding and logos. The company will also display the branded
products on its website for consumers to buy and will also use other electronic
marketing outlets like eBay and Yahoo auction sites serving mainland
China.
Products
and Services
The
company will travel to Asia to locate low cost, high margin products from
reputable manufacturers and subsequently offer these products to corporations
for promotional purposes. Even though the company intends to have a base line of
promotional products, it does intend to find specific products when requested to
do so from a prospective customer. The company intends to focus on products in
two price ranges: one line of products (approximately 40) will be under the two
dollar range to be marketed for corporate giveaways for special events and
tradeshows. Examples include key rings, writing pens, mouse pads,
letter openers, golf tees and tools, drink holders, luggage tags, and other
inexpensive items commonly used in both business and leisure environments. The
company also intends to seek out premium promotional products in the “wearable”
sector including t-shirts, polo shirts, denim shirts, aprons, hats, headbands,
outerwear, neckwear and footwear, all priced in the $10 - $50 price
range.
Product
Launch
Once the
company has chosen its product line, it will order its samples. The company
anticipates it will take an additional 60 days for the samples to arrive in
North America. Once the samples arrive, the company intends to begin the
development of its website and begin direct telephone marketing to corporations
who may be interested in purchasing its products or to corporations that have
recognized brands and logos that would be interested in licensing its brands and
logos for a royalty on product sales through traditional retail outlets. The
samples will be photographed and placed on its Chinese language
website.
Competitive
Advantages
There are
many competitors in the promotional products industry in North America. Current
statistics estimate that over 21,000 companies supply promotional products. The
company feels it will have a competitive advantage over most of its competitors
because the company intends to travel to China and purchase products directly
from the manufacturer resulting in a pricing advantage over its competitors as
well as marketing its products in the rapidly growing Chinese market. Products
will not be shipped first to North America and then reshipped to China. Instead,
all manufacturing and fulfillment will be done in China. Marketing only will
occur in the United States. Most promotional companies tend to attend trade
shows in North America to purchase their products from representatives based in
Hong Kong or America. Friendly Auto Dealers plans to attend trade
shows in China and other Asian countries to not only promote its products, but
gain access to the manufacturers of our raw products. Prices offered by such
representatives typically include a mark-up of 20% - 40% that can be eliminated
if purchasing directly from the manufacturers in China. In addition, by
maintaining inventory in China, shipping costs can also be eliminated and
therefore fulfillment can be achieved at costs consistent with maintaining a
competitive position. Many companies do not feel comfortable traveling and doing
business in China and feel they can source most of their products by attending
North American trade shows. The company's market research to date shows that it
can purchase products directly from China-based manufacturers at a significant
cost reduction to the pricing currently available from representatives in Hong
Kong or North America.
This
section of the 10-K Annual Report include a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by words
like: believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events. You should
not place undue certainty on these forward-looking statements, which apply only
as of the date of this annual report. These forward-looking states are subject
to certain risks and uncertainties that could cause actual results to differ
materially from historical results or our predictions.
We are a
start-up corporation attempting to enter into the promotional products industry.
We have not yet generated or realized any revenues from business
operations.
Our
auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we begin marketing our products to customers. Accordingly, we must raise cash
from sources other than revenues generated from the sale of our promotional
products.
We must
raise cash to implement our project. The minimum amount of funds that we feel
will allow us to implement our business strategy is $25,000. We feel if we can
raise $100,000, the company will be able to accelerate the implementation of
its business strategy by hiring more experienced marketing consultants and
by attending more customer-oriented trade shows. However, there can be no
guarantee or assurance that the company will be able to raise this
amount.
The line
of promotional products the company chooses to purchase and the appeal of those
products to both corporations and consumers will determine our success or
failure.
It is
essential to the company's success that it can demonstrate timely delivery of
the product orders it generates from its customers. The company anticipates in
the giveaway promotional market that orders will be time sensitive, as they will
be used at a specific event on a specific date.
The
company's success is also reliant on its ability to purchase products directly
from the manufacturer. We cannot state whether we will be successful in
negotiating competitive pricing from these manufacturers. The company will not
attempt to begin sourcing products until we have raised capital.
At
present, our officer is unwilling to make any commitment to loan us any money at
this time, but may reconsider if we source desirable promotional products at
reasonable pricing. At the present time, we have not made any
arrangements to raise additional cash, other than through our recent offering.
If we need additional cash and can't raise it, we will either have to suspend
marketing operations until we do raise the cash, or cease operations entirely.
If we raise the maximum amount of money from our offering, it is estimated that
it will satisfy expenditures for twelve to fourteen months. Other than as
described in this paragraph, we have no other financing plans.
If we are
unable to complete any phase of our promotional product sourcing or marketing
efforts because we don't have enough money, we will cease our sourcing and or
marketing operations until we raise more money. Attempting to raise additional
capital after failing in any phase of our promotional product-sourcing plan
would be difficult. As such, if we cannot secure additional proceeds we will
have to cease operations and investors would lose their entire
investment.
Management
does not plan to hire additional employees at this time. Our President will be
responsible for the initial promotional product sourcing. Once the company is
ready to build its Internet website, it will hire an independent consultant to
build the site. The company also intends to hire sales representatives initially
on a commission only basis to keep administrative overhead to a
minimum.
From
inception to December 31, 2007 the company's business operations have primarily
been focused on developing an executive marketing strategy, along with industry
market research and competitive analysis. The Company has also dedicated time to
the preparation of its registration statement, including accounting and
auditing.
Over the
next 12 months the company must raise additional capital and must begin the
process of sourcing its products in order to supply perspective customers with
product samples. The company must develop a web site in order to showcase its
products, hire commission only sales staff and begin a sales and marketing
campaign.
The
Company anticipates it will be able to begin sourcing products within 120 days
after raising sufficient capital via its registration statement. The
sourcing process would entail the company's management deciding which factories
in China it would like to visit to purchase product samples and negotiate
pricing and delivery of the products chosen. Once the company has identified its
potential product suppliers the company's President will travel to Asia and
visit the identified product manufacturers.
Once the
company has taken physical delivery of its initial product samples the company
will have to develop a website to showcase its product line to prospective
customers. The company anticipates that the cost to fully develop the web site
would be $15,000. The company anticipates that the web site could be functional
approximately 270 days after successfully raising proceeds via
its registration statement.
The
company will have to hire a commission sales person to begin its sales and
marketing efforts. The company anticipates it will hire a commission sales
person within approximately 270 days after successfully raising proceeds via
its registration statement. The company anticipates the costs of its
sales and marketing efforts to be approximately $40,000. The company anticipates
the sales cycle (the length of time between initial customer contact and sale
completion) to be a minimum of 90 days. The company anticipates it would
complete initial product sales 360 days after successfully raising proceeds via
its registration statement.
Limited
Operating History; Need for Additional Capital
There is
no historical financial information about us upon which to base an evaluation of
our performance. Friendly Auto Dealers was incorporated in the State of Nevada
on August 6, 2007; we are a development stage company attempting to enter into
the promotional products industry and have not generated any revenues from
operations. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources, and implementation
of our business strategies.(See "Risk Factors").
To become
profitable and competitive, we must first source desirable promotional products
overseas; negotiate favorable pricing and delivery, and purchase initial samples
to provide to prospective customers.
We are
seeking equity financing through the sale of our common stock to provide for the
capital required to source our initial promotional products. Equity financing
could result in additional dilution to existing shareholders. There is no
assurance we will receive the required financing to complete our initial
promotional product sourcing.
Even if
we are successful in raising proceeds from our offering we have
no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be
unable to continue, develop or expand our operations.
At the
present time, Friendly Auto Dealers has sufficient funds to address the
administrative costs only. This assumption is based on the fact that, as of
December 31, 2007, Friendly Auto Dealers had cash on hand of $53,799. However,
as explained in Note 1 of the December 31, 2007 financial statements, Friendly
Auto Dealers has no established source of revenue and has suffered an operating
loss in its initial periods of operations.
Friendly
Auto Dealers has no plans to undertake product research and development during
the first year. There are also no plans or expectations to purchase or sell any
plant and or significant equipment in the first year of operations. Management
also has no intention of hiring a significant number of employees during the
first year of operations.
Employees
Other
than Friendly Auto Dealers’ Director and Executive Officer who is currently
donating his time to the development of the Company, there are no employees of
the Company. Friendly Auto Dealers has no intention to hire employees until the
business has been successfully launched with sales revenues flowing into it.
Friendly Auto Dealers’ Officer and Director intends to do whatever work is
necessary to bring the Company to the point of earning revenues from the sale of
the products. Human resource planning will be part of an ongoing process that
will include constant evaluation of operations and revenue
realization.
Employment
Agreements
There are
no employment agreements.
Available
Information
Factors
Affecting Future Operating Results
This
Annual Report on Form 10-K contains forward-looking statements concerning
our future programs, products, expenses, revenue, liquidity and cash needs as
well as our plans and strategies. These forward-looking statements are based on
current expectations and we assume no obligation to update this information,
except as required by applicable laws and regulations. Numerous factors could
cause actual results to differ significantly from the results described in these
forward-looking statements, including the following risk factors.
Investing
in our securities involves a high degree of risk. The following risk factors,
issues and uncertainties should be considered when evaluating our future
prospects. In particular, please consider these risk factors when reading
"forward-looking" statements which appear throughout this report.
Forward-looking statements relate to our expectations for future events and time
periods. Generally, words such as "expect," "intend," "anticipate" and similar
expressions identify forward-looking statements. Each of these forward-looking
statements involves risks and uncertainties, and future events and circumstances
could differ significantly from those anticipated in the forward-looking
statements. Any one of the following risks could harm our operating results or
financial condition and could result in a significant decline in value of an
investment in us. Further, additional risks and uncertainties that have not yet
been identified or which we currently believe are immaterial may also harm our
operating results and financial condition.
We are subject to business risks
associated with international operations and fluctuating exchange
rates.
Friendly
has not realized any revenue during the Fiscal Year 2007. We presently
anticipate only having have operations in China, which will comprise 100% of our
expected revenue. Operations in foreign markets are inherently subject to
certain risks, including in particular:
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Differences
in cultures and business practices;
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•
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Overlapping
or differing tax laws and
regulations;
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•
|
Economic
and political uncertainties;
|
|
|
•
|
Differences
in accounting and reporting
requirements;
|
|
|
•
|
Changing,
complex or ambiguous foreign laws and regulations, particularly as they
relate to employment; and
|
All of
our sales outside of the United States will be denominated in local currencies
and, accordingly, we are subject to risks associated with fluctuations in
exchange rates, which could cause a reduction in our profits. There can be no
assurance that any of these factors will not have a material adverse effect on
our business, results of operations, cash flows or financial
condition.
The
compliance costs associated with Section 404 of the Sarbanes-Oxley Act
regarding internal control over financial reporting could be substantial, while
failure to achieve and maintain compliance could have an adverse effect on our
stock price.
Friendly Auto
Dealers’ Auditor has substantial doubts as to Friendly Auto Dealers’ ability to
continue as a going concern.
Our
auditor's report on our December 31, 2007 financial statements expressed an
opinion that substantial doubt exists as to whether we can continue as an
ongoing business. Because our officers may be unable or unwilling to loan or
advance any capital to Friendly Auto Dealers, we believe that if we do not raise
at least $25,000, in addition to the $53,500 already raised from our current
offering, we may be required to suspend or cease the implementation of our
business plans within 12 months. Since there is no minimum and no refunds on
sold shares, you may be investing in a company that will not have the funds
necessary to continue to deploy its business strategies. See “December 31, 2007 Audited
Financial Statements - Auditors Report."
Because
the Company has been issued an opinion by its auditors that substantial doubt
exists as to whether the company can continue as a going concern it may be more
difficult for the company to attract investors.
Friendly
Auto Dealers incurred an accumulative net loss of $17,261 for the period from
inception to December 31, 2007, and we have no revenue. Our future is dependent
upon our ability to obtain financing and upon future profitable operations from
the sale of our products. We plan to seek additional funds through private
placements of our common stock. Our financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that might be
necessary in the event we cannot continue in existence.
If
we complete a financing through the sale of additional shares of our common
stock in the future, then shareholders will experience dilution.
The most
likely source of future financing presently available to us is through the sale
of shares of our common stock. Any sale of common stock will result in dilution
of equity ownership to existing shareholders. This means that if we sell shares
of our common stock, more shares will be outstanding and each existing
shareholder will own a smaller percentage of the shares then outstanding. To
raise additional capital we may have to issue additional shares, which may
substantially dilute the interests of existing shareholders. Alternatively, we
may have to borrow large sums, and assume debt obligations that require us to
make substantial interest and capital payments.
Because
we lack an operating history, we face a high risk of business failure, which may
result in the loss of your investment.
Friendly
Auto Dealers is a development stage company and has not begun the initial stages
of product sourcing overseas. Thus, we have no way to evaluate the likelihood
that we will be able to operate the business successfully. We were incorporated
on December 6, 2007 and to date have been involved primarily in organizational
activities and market research. We have never been profitable and have never
generated any revenue. Based upon current plans, we expect to incur
operating losses in future periods. This will occur because there are expenses
associated with the sourcing of products, the purchasing of samples, and
marketing products to prospective business customers in order to enable the
company enter into the promotional products business.
We cannot
guarantee we will be successful in generating revenue in the future or be
successful in raising funds through the sale of shares to pay for the company's
business plan and expenditures.
As of the
date of this annual report, we have not earned any revenue. Failure to generate
revenue will cause us to go out of business, which will result in the complete
loss of your investment.
Friendly
Auto Dealers may be unable to complete its website, which is necessary to
promote and market its products.
The
Friendly Auto Dealers’ does not currently have a website as such the Company is
not yet operational. Friendly Auto Dealers intends to use the website as a
promotional and marketing tool for its customers to use. Friendly Auto Dealers
has allocated from $3,000 up to $15,000 to develop the website in the next
twelve months. Friendly Auto Dealers intends to use the website as an "on-line
catalogue" for its customers to be able to view the entire line of product and
services. If this website is not available, Friendly Auto Dealers would not be
able to adequately market its products and service its potential
customers.
Friendly
Auto Dealers will rely upon consultants for web-development, and the consultant
may not complete the work within the set framework and on time.
Friendly
Auto Dealers is also heavily dependent on the web consultant to develop the
website in a timely matter within budget. If the consultant does not fulfill his
duties, Friendly Auto Dealers may not be able to find another consultant with
specific expertise to develop it business plan.
Because
the Internet will be the Company’s main venue to conduct business, any
significant changes or interruptions to the Internet’s existing infrastructure
will affect our ability to sell products to prospective customers.
If the
Internet infrastructure becomes unreliable, access to the company's website may
be impaired and its business will be harmed. The Company's success depends on
its ability to use the Internet to show prospective customers the type of
products the company has available. The company's website will be the initial
tool used by the company in its sales process. Once a prospective customer has
seen a picture of a product that interests them they will be quoted a price and
then the company would send the prospective customer a physical sample of the
product. The company's ability to quickly send color pictures of product and
pricing to prospective customers via the Internet is paramount to the sales and
marketing strategies of the company. The company's website may also be subject
to malicious attacks by hackers and software viruses - such attacks or viruses
could render the company's website inoperable for a substantial amount of time.
There can be no assurance that the company will have the financial means or
technical know how to protect its website from such attacks or recover from such
an attack. Any long term interruption of Internet service or interference with
the company's website would have a negative impact on the company's ability to
fulfill its business model and the company could fail.
Friendly
Auto Dealers’ success is dependent on current management, who may be unable to
devote sufficient time to the development of Friendly Auto Dealers’ business
plan, which could cause the business to fail.
Friendly
Auto Dealers is heavily dependent on the extensive industry experience that our
sole Officer and Director, Tony H. Lam, brings to the company. If something were
to happen to him, it would greatly delay its daily operations until further
industry contacts could be established. Furthermore, there is no assurance that
suitable people could be found to replace Mr. Lam. In that instance, Friendly
Auto Dealers may be unable to further its business plan.
Additionally,
Mr. Lam is employed outside of Friendly Auto Dealers. Mr. Lam has
been and continues to expect to be able to commit approximately 10 hours per
week of his time, to the development of Friendly Auto Dealers’ business plan in
the next twelve months. If management is required to spend additional time with
his outside employment, he may not have sufficient time to devote to Friendly
Auto Dealers, and, Friendly Auto Dealers would be unable to develop its business
plan.
Because
one existing stockholder owns a majority of the outstanding common stock, future
corporate decisions will be controlled by this person, whose interests may
differ from the interests of other stockholders, and may be adverse to those
other shareholders' interests.
Currently,
our Officers and sole Director owns 79.87% of the outstanding shares of the
Company. If we are successful in selling all the shares in our
Offering, the sole Officer and Director will own approximately 74.34% of the
outstanding shares of common stock. Accordingly, they will have significant
influence in determining the outcome of all corporate transactions, including
mergers, consolidations and the sale of all or substantially all of our assets,
and also the power to prevent or cause a change in control. The interests of
this stockholder may differ from the interests of the other stockholders, and
they may make decisions, as a stockholder, with which the other stockholders may
not agree. Such decisions may be detrimental to Friendly Auto Dealers’ business
plan and/or operations and they may cause the business to fail.
There
is currently no market for Friendly Auto Dealers’ common stock, but if a market
for our common stock does develop, our stock price may be volatile.
There is
currently no market for Friendly Auto Dealers’ common stock and there is no
assurance that a market will develop. If a market develops, it is anticipated
that the market price of Friendly Auto Dealers’ common stock will be subject to
wide fluctuations in response to several factors including:
|
|
o
|
The
ability to complete the development of Friendly Auto Dealers in order to
provide those products to the
public;
|
|
|
o
|
The
ability to generate revenues from
sales;
|
|
|
o
|
The
ability to generate brand recognition of the Friendly Auto Dealers
products and services and acceptance by
consumers;
|
|
|
o
|
Increased
competition from competitors who offer competing services;
and
|
|
|
o
|
Friendly
Auto Dealers’ financial condition and results of
operations.
|
Our
stock is a Penny Stock. Trading of our stock may be restricted by the
SEC’s Penny Stock regulations and the NASD’s Sales Practices requirements, which
may limit a stockholder’s ability to buy and sell our stock.
The
Company’s common shares may be deemed to be “penny stock” as that term is
defined in Regulation Section “240.3a51 -1” of the Securities and Exchange
Commission (the “SEC”). Penny stocks are stocks: (a) with a price of less than
U.S. $5.00 per share; (b) that are not traded on a “recognized” national
exchange; (c) whose prices are not quoted on the NASDAQ automated quotation
system (NASDAQ - where listed stocks must still meet requirement (a) above); or
(d) in issuers with net tangible assets of less than U.S. $2,000,000 (if the
issuer has been in continuous operation for at least three years) or U.S.
$5,000,000 (if in continuous operation for less than three years), or with
average revenues of less than U.S. $6,000,000 for the last three
years.
Section
“15(g)” of the United States Securities Exchange Act of 1934, as amended, and
Regulation Section “240.15g(c)2” of the SEC require broker dealers dealing in
penny stocks to provide potential investors with a document disclosing the risks
of penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor’s
account. Potential investors in the Company’s common shares are urged to obtain
and read such disclosure carefully before purchasing any common shares that are
deemed to be “penny stock”. Moreover, Regulation Section “240.15g -9” of the SEC
requires broker dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker dealer to: (a) obtain from the investor
information concerning his or her financial situation,
investment experience and investment objectives; (b) reasonably determine, based
on that information, that transactions in penny stocks are suitable for the
investor and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (c)
provide the investor with a written statement setting forth the basis on which
the broker dealer made the determination in (ii) above; and (d) receive a signed
and dated copy of such statement from the investor confirming that it accurately
reflects the investor’s financial situation, investment experience and
investment objectives. Compliance with these requirements may make it more
difficult for investors in the Company’s common shares to resell their common
shares to third parties or to otherwise dispose of them. Stockholders should be
aware that, according to Securities and Exchange Commission Release No.
34-29093, dated April 17, 1991, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns
include:
(i)
control of the market for the security by one or a few broker-dealers that are
often related to the promoter or issuer
(ii)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases
(iii)
boiler room practices involving high-pressure sales tactics and unrealistic
price projections by inexperienced sales persons
(iv)
excessive and undisclosed bid-ask differential and markups by selling
broker-dealers
(v)
the wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor
losses
Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our
securities.
While
Friendly Auto Dealers expects to apply for listing on the OTC Bulletin Board
(OTCBB), we may not be approved, and even if approved, we may not be approved
for trading on the OTCBB; therefore shareholders may not have a market to sell
their shares, either in the near term or in the long term, or both.
We can
provide no assurance to investors that our common stock will be traded on any
exchange or electronic quotation service. While we expect to apply to the OTC
Bulletin Board, we may not be approved to trade on the OTCBB, and we may not
meet the requirements for listing on the OTCBB. If we do not meet the
requirements of the OTCBB, our are certain risks inherent in doing business
internationally, such as unexpected changes in regulatory stock may then
be traded on the "Pink Sheets," and the market for resale of our shares would
decrease dramatically, if not be eliminated.
Friendly Auto
Dealers plans to purchase products Overseas, and is therefore subject to risks
related to currency fluctuations and regulation that may adversely affect the
Company.
A
significant aspect of the company's strategy is to purchase its products
overseas, mostly in China. There requirements, export restrictions,
trade barriers, difficulties in controlling product supply from foreign
factories, longer than anticipated delivery cycles, fluctuations in currency
exchange rates and overall political instability.
There can
be no assurance that one or more of such factors will not have a material
adverse effect on the company's potential future operations and, consequently,
on the company's business, operating results and financial
condition.
The
company may purchase its products and services in currencies other than the
United States dollar, which would make the management of currency fluctuations
difficult and expose the company to risks in this regard. The company's results
of operations are subject to fluctuations in the value of various currencies
against the United States dollar. Although management will monitor the company's
exposure to currency fluctuations, there can be no assurance that exchange rate
fluctuations will not have a material adverse effect on the company's results of
operations or financial condition.
Furthermore
as a corporation based in the United States, Friendly Auto Dealers may face
difficulties in obtaining and/or enforcing local judgments it may obtain
overseas, particularly in China.
The
Company’s inability to source viable promotional products or apparel may result
in a loss of your investment.
There can
be no assurance that Friendly Auto Dealers will be able to source viable
promotional products or apparel that will be appealing to its target market.
Even if the company is capable of locating a viable line of promotional products
and apparel from China, it faces inherit risks in the ordering and delivery of
such products. The company would have little or no recourse against a Chinese
manufacturer that delivered substandard or faulty products and the company could
lose its entire investment in ordering such products
Friendly
Auto Dealers has no customers to date, and may not develop sufficient customers
to stay in business.
Friendly
Auto Dealers has not sold any products, and may be unable to do so in the
future. In addition, if Friendly Auto Dealers is unable to develop sufficient
customers for its products, it will not generate enough revenue to sustain its
business, and may have to adjust its business plan, or it may fail.
These
risk factors, individually or occurring together, would likely have a
substantially negative effect on Friendly Auto Dealers’ business and would
likely cause it to fail.
Friendly
Auto Dealers does not own any real property. Friendly Auto Dealers
does not have any investments or interests in any real estate.
|
ITEM
3.
|
LEGAL
PROCEEDINGS.
|
Friendly
Auto Dealers, Inc. is not currently a party to any legal proceedings. Friendly
Auto Dealers’ agent for service of process in Nevada is: EastBiz.Com, Inc.
5348 Vegas Drive Las Vegas, Nevada 89108 Telephone: (702) 871-8678.
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
None.
|
|
MARKET
FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.
|
Market
Information. Though Friendly Auto Dealers intends
to seek listing on the OTC bulletin Board for its Common Stock, as of the date
of this 10-K Annual Report, no such listing has been secured. Therefore,
investors in our Common Stock may experience difficulty in selling their
shares.
Please
see, “RISK FACTORS”
contained herein.
Sales of Unregistered
Securities. We have sold securities within the
past three years without registering the securities under the Securities Act of
1933 on five separate occasions.
On August
10, 2007 Friendly Auto Dealers subscribed 5,000,000 shares of common stock for
total consideration of $5000.00 to Tony H. Lam, current Chief Executive Officer
and director of the Company. The Company believes that this issuance was exempt
from registration pursuant to Section 4(2) of the Securities Act of 1933, as
amended, as a transaction by an issuer not involving any public
offering.
On August
10, 2007 Friendly Auto Dealers subscribed 100,000 shares of common stock to
Jameson Capital, LLC for services rendered to it. The Company believes that this
issuance was exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended, as a transaction by an issuer not involving any public
offering.
On August
10, 2007 Friendly Auto Dealers subscribed 250,000 shares of common stock to
Ramsgate Group, Inc. for services rendered to it. The Company believes that this
issuance was exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933, as amended, as a transaction by an issuer not involving any public
offering.
On August
10, 2007 Friendly Auto Dealers subscribed 250,000 shares of common stock to
Capital Assets Management, Inc. for services rendered to it. The Company
believes that this issuance was exempt from registration pursuant to Section
4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer
not involving any public offering.
On August
10, 2007 Friendly Auto Dealers subscribed 125,000 shares of common stock to
Heartland Management, LLC for services rendered to it. The Company believes that
this issuance was exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended, as a transaction by an issuer not involving
any public offering.
Sales of registered
Securities. On December 28, 2007, the Company sold an aggregate of
535,000 of its Common Stock which was registered by filing with the Securities
and Exchange Commission a SB-2 Registration Statement under the Securities Act
of 1933. These shares were sold at $0.10 per share to 106
investors.
Issuer Purchases of Equity
Securities. None during the Fiscal Year
2007.
Dividends. We
did not declare or pay dividends during the Fiscal Year 2007.
Summary of Financial
Data
|
|
|
As
of December 31, 2007
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Operating
Expenses
|
|
$ |
17,261 |
|
|
|
|
|
|
|
|
Earnings
(Loss)
|
|
$ |
(17,261 |
) |
|
|
|
|
|
|
|
Total
Assets
|
|
$ |
53,799 |
|
|
|
|
|
|
|
|
Working
Capital
|
|
$ |
48,489 |
|
|
|
|
|
|
|
|
Shareholder’s
Equity
|
|
$ |
48,489 |
|
|
ITEM
7.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
|
The
following discussion is intended to assist in the understanding and assessment
of significant changes and trends related to the results of operations and
financial condition of Friendly Auto Dealers, Inc. This discussion
and analysis should be read in conjunction with our financial statements and
notes thereto included elsewhere in this Annual Report on Form 10-K for the
fiscal year ended December 31, 2007.
Cautionary
Statement
This
notice is intended to take advantage of the "safe harbor" provided by the
Private Securities Litigation Reform Act of 1995 with respect to forward-looking
statements. Except for the historical information contained herein, the matters
discussed should be considered forward-looking statements and readers are
cautioned not to place undue reliance on those statements. The forward-looking
statements in this discussion are made based on information available as of the
date hereof and are subject to a number of risks and uncertainties that could
cause the Company's actual results and financial position to differ materially
from those expressed or implied in the forward-looking statements and to be
below the expectations of public market analysts and investors. These risks and
uncertainties include, but are not limited to, those discussed in
"Item 1A.—Risk Factors" under the heading "Factors Affecting Future
Operating Results". The Company undertakes no obligation to publicly release the
results of any revisions to these forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events, except as required by applicable laws and
regulations.
Critical
Accounting Policies
The
preparation of our consolidated financial statements and notes thereto requires
management to make estimates and assumptions that affect the amounts and
disclosures reported within those financial statements. On an ongoing basis,
management will evaluate its estimates, including those related to revenue
recognition, contingencies, litigation and income taxes. Management bases its
estimates and judgments on historical experiences and on various other factors
believed to be reasonable under the circumstances. Actual results under
circumstances and conditions different than those assumed could result in
differences from the estimated amounts in the financial statements.
There have
been no material changes to these policies during fiscal 2007.
Executive
Overview
Fiscal
2007 was a year of significant change which included the sale of 535,000 shares
of our Common Stock at $0.10 per share. These shares were registered for sale in
a SB-2 Registration Statement filed with the Securities and Exchange Commission
on November 21, 2007 and was declared effective on December 10, 2007. The
535,000 shares were sold on December 28, 2007 to 106 shareholders.
Shareholder
Transaction
During
the Fiscal year 2007, 5,000,000 shares of our Common Stock were purchased by our
Chief Executive Officer/Director, Tony H. Lam. Heartland Managed
Risk, LLC of which Ronald A. Davis is the sole Managing Member, purchases
125,000 shares on August 10, 2007, Jameson Capital, LLC purchased 100,000 shares
in lieu of services rendered on August 10, 2007, Ramsgate Group, Inc.
acquired 250,000 shares in lieu of services rendered on August10,
2007 and Capital Assets Management, Inc. was issued 250,000 shares in lieu of
services rendered on August 10, 2007.
|
|
·
|
The
size of the Company's Board of Directors was determined to be
one,
|
|
|
·
|
Mr.
Lam was elected as the sole member of the Board of
Directors,
|
|
|
·
|
Mr. Lam
was elected as President and Mr. Ronald A. Davis was elected
Treasurer,
|
|
|
·
|
Mr.
Davis resigned as a Treasurer (effective December 23,
2007),
|
Results
of Continuing Operations
The table
below sets forth, for the current fiscal year.
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
STATEMENT
OF OPERATIONS
|
|
|
Aug. 6, 2007 (inception) to December 31,
2007
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
0 |
|
|
|
|
|
|
|
|
Gross
profit
|
|
$ |
0 |
|
|
|
|
|
|
|
|
General,
selling and administrative expenses
|
|
|
17,261 |
|
|
Operating
loss
|
|
$ |
(17,261 |
) |
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
0 |
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(17,261 |
) |
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
Average
number of shares of common stock outstanding
|
|
|
0 |
|
Fiscal
2007
Revenue
Since
inception until the date of this Form 10K Annual Report, the Company has had
limited operations and no revenues.
Costs
of Services and Gross Profit
Because
the Company has had no meaningful operations and revenues, there has been no
expenses related to revenues.
Liquidity
and Capital Resources
We will
require significant amounts of working capital to operate our business and to
pay expenses relating to creating our distinctive products and the maintenance
of adequate inventories to service our client base. Our use of cash will for
financing of accounts receivable, particularly during periods of economic
upswings and growth and during periods where sales are seasonally high. Our
purchased inventory is paid at the time of order and we do not anticipate
receiving payment from customers until 30 to 60 days after
billing.
Off-Balance
Sheet Arrangements
None.
On
December 28, 2007, the Company signed a contract with Heartland Managed Risk,
LLC (Heartland) for the purposes of providing 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.
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
We are
exposed to certain market risks from transactions that are entered into during
the normal course of business. Our primary market risk will be exposure that
relates to currency conversion once operations commence between the Company and
its vendors in China.
For the
fiscal year ended December 31, 2007, we did not generate any revenues in
any foreign country. When we fully implement our business plan, we will be
exposed to foreign currency risk primarily due to our investments in foreign
inventories of finished goods. We do not currently hold any market risk
sensitive instruments entered into for hedging transaction risks related to
foreign currencies. In addition, we have not entered into any transactions with
derivative financial instruments for trading purposes.
|
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA.
|
Our
financial statements appear beginning on page F-1, immediatly following the
signature page of this report.
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
|
None
We
carried out an evaluation, under the supervision and with the participation of
management, including the Chief Executive Officer, Chief Financial Officer,
Chief Accounting Officer and Director of the effectiveness of the design and
operation of our "disclosure controls and procedures" (as defined under
Rules 13a - 15(e) and 15d -15(e) under the Securities Exchange
Act of 1934 as amended). Our
registration statement filed on Form SB-2 became effective on December 12, 2007;
as such, we are subject to the requirements under the Securities Exchange Act of
1934. This annual report does not include a management report or an attestation
report of our registered public accounting firm regarding internal control over
financial reporting pursuant to temporary rules of the Securities and Exchange
Commission that do not require us to provide the management's report or
attestation report in this annual report.
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of
December 31, 2007, the end of the period covered by this annual report, our
management concluded its evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. Disclosure controls and
procedures are controls and procedures designed to reasonably assure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, such as this annual report, is recorded, processed,
summarized and reported within the time periods prescribed by SEC rules and
regulations, and to reasonably assure that such information is accumulated and
communicated to our management, including our President, to allow timely
decisions regarding required disclosure.
Our
management, including our Chief Executive Officer, does not expect that our
disclosure controls and procedures will prevent all error and all fraud. A
control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the control system's objectives will be
met. Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have
been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty, and that breakdowns can occur because of
simple error or mistake. The design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions.
As of the
evaluation date, our Chief Executive Officer concluded that we maintain
disclosure controls and procedures that are effective in providing reasonable
assurance that information required to be disclosed in our reports under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods prescribed by SEC rules and regulations, and that such
information is accumulated and communicated to our management, including the
President, to allow timely decisions regarding required disclosure.
Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that, as of December 31, 2007 (the end of the period covered by this
report) the Company’s internal control over financial reporting is materially
weak due to the lack of segregation of duties. This is based
upon the fact that there is currently only one Officer and Director of the
Company disclosure controls and procedures are effective in timely alerting them
to material information required to be included in this report. If
and when the Company begins to grow and develop its business plan the Company
plans to add additional independence to its accounting methods and procedures,
although at this time management has no specific plan regarding this
matter.
None.
PART
III
|
|
DIRECTORS
AND EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
|
Directors:
Executive
Officers:
|
|
Name of
Officer
|
Age
|
Office
|
|
|
Tony
H. Lam
|
49
|
President,
Chief Financial Officer
|
The term
of office for each director is one year, or until the next annual meeting of the
shareholders.
Biographical
Information
Set forth
below is a brief description of the background and business experience of our
executive officer and director for the past five years
Tony H. Lam, President, Member of the
Board of Directors, age 49
Mr. Lam
has been in the casino industry in Las Vegas, Nevada for the past twelve years.
Currently, Mr. Lam works for the Stratosphere Hotel and Casino where he is the
Director of Asian Marketing. From 2002 through 2005, Mr. Lam worked at The Lady
Luck Hotel and Casino in the same capacity. Prior to working at the Stratosphere
and Lady luck, he worked at the Desert Inn with the title of International
Marketing Executive Far East Region. Mr. Lam earned a B.S. in Business
Administration from the University of Nevada, Las Vegas in 1985.
Mr. Lam
will be able to spend up to 10 hours per week on the development of Friendly
Auto Dealers, Inc. at no cost to the Company.
|
ITEM
11.
|
EXECUTIVE
COMPENSATION.
|
Summary Compensation
Table
|
Name
and
principal
position
|
|
Fiscal
Year
|
|
Salary
|
|
Bonus
|
|
Other
annual compensation
|
|
Restricted
stock
award(s)
|
|
Securities
underlying
options/
SARs
|
|
LTIP
payouts
|
|
All
other
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tony
H. Lam
Director,
President
|
|
2007
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
|
0
|
There has
been no cash payment paid to the executive officer for services rendered in all
capacities to us for the period ended December 31, 2007. There has been no
compensation awarded to, earned by, or paid to the executive officer by any
person for services rendered in all capacities to us for the fiscal period ended
December 31, 2007. No compensation is anticipated within the next six
months to any officer or director of the Company.
Stock Option
Grants
Friendly
Auto Dealers did not grant any stock options to the executive officer during the
most recent fiscal period ended December 31, 2007. Friendly Auto Dealers has
also not granted any stock options to the executive officer since incorporation,
August 6, 2007.
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
|
|
Title
of class
|
|
Name
and address
of
beneficial owner
|
|
Amount
of
beneficial
ownership
|
|
Percent
of
class
|
|
Common
Stock
|
|
Tony
H. Lam
4132
South Rainbow Bl.
Suite
514
Las
Vegas, Nevada 94513
|
|
5,000,000
shares
(subscribed)
|
|
79.87%
|
The
percent of class is based on 6,260,000 shares of common stock subscribed as of
December 31, 2007.
[The
remainder of this page is left blank intentionally.]
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
|
During
Fiscal Year 2007, there were no material transactions between the Company and
any Officer, Director or related party.
Any
future transactions between us and our Officers, Directors, and Affiliates will
be on terms no less favorable to us than can be obtained from unaffiliated third
parties. Such transactions with such persons will be subject to approval of our
Board of Directors.
|
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES.
|
Friendly
Auto Dealers, Inc paid its Auditors $2,200 for their services rendered during
2007 Fiscal Year.
PART
IV
|
ITEM
15.
|
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES.
|
(a)
The
following documents have been filed as a part of this Annual Report on
Form 10-K (See Item 8).
|
|
Page
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Balance
Sheets
|
F-3
|
|
Statements
of Operations
|
F-4
|
|
Statements
of Stockholders' Equity
|
F-5
|
|
Statements
of Cash Flows
|
F-6
|
|
Notes
to Financial Statements
|
F-7
|
2.
Financial Statement Schedules.
All
schedules are omitted because they are not applicable or not required or because
the required information is included in the Consolidated Financial Statements or
the Notes thereto.
3.
Exhibits.
The
following exhibits are filed as part of, or incorporated by reference into, this
Annual Report:
EXHIBIT
|
3.1
|
Articles
of Incorporation (Incorporated by reference from the Company’s
registration statement on form SB-2 filed with the Commission on November
21, 2007).
|
|
3.2
|
By-Laws
(Incorporated by reference from the Company’s registration statement on
form SB-2 filed with the Commission on November 21,
2007)
|
|
23.1
|
Consent
of Accountant
|
|
31.1
|
RULE
13a-14(a) Certification of Chief Executive Officer and Chief Financial
Officer
|
|
32.1
|
Certification
Pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code (Section
906 of Sarbanes-Oxley Act of
2002)
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
| |
FRIENDLY
AUTO DEALERS, INC.
|
|
|
|
|
|
|
By:
|
/s/ TONY
LAM
|
|
|
|
Tony
Lam
President
Chief
Executive Officer
Chief
Financial Officer
Chief
Accounting Officer
Secretary,
Director
Date:
April 15, 2008
|
FRIENDLY
AUTO DEALERS, INC.
(An
Exploration Stage Enterprise)
FINANCIAL REPORTS
DECEMBER 31, 2007
|
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
|
F-2
|
| |
|
|
BALANCE
SHEET
|
F-3
|
| |
|
|
STATEMENT OF
OPERATIONS
|
F-4
|
| |
|
|
STATEMENT OF STOCKHOLDERS’
EQUITY
|
F-5
|
| |
|
|
STATEMENT OF CASH
FLOWS
|
F-6
|
| |
|
|
NOTES TO FINANCIAL
STATEMENTS
|
F-7
|
Report of Independent
Registered Public Accounting Firm
To the
Board of Directors
Friendly
Auto Dealers, Inc.
Las
Vegas, Nevada
We have
audited the accompanying balance sheet of Friendly Auto Dealers, Inc. (A
Development Stage Enterprise) as of December 31, 2007 and the related statements
of operations, stockholders’ deficit, and cash flows for the period August 6,
2007 (inception) through December 31, 2007. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An
audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We believe
that our audit provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Friendly Auto Dealers, Inc. (A
Development Stage Enterprise) as of December 31, 2007 and the results of its
operations and cash flows for period August 6, 2007 (inception) through December
31, 2007, in conformity with U.S. generally accepted accounting
principles.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has limited operations and has no established source of
revenue. This raises substantial doubt about its ability to continue
as a going concern. Management’s plan in regard to these matters is also
described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Kyle L.
Tingle, CPA, LLC
April 13,
2008
Las
Vegas, Nevada
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
BALANCE
SHEET
|
|
|
December
31,
|
|
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash
|
|
$ |
53,799 |
|
|
|
|
|
|
|
|
Total
current assets
|
|
$ |
53,799 |
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
53,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
Accounts
payable
|
|
$ |
5,010 |
|
|
Officer
loan
|
|
|
300 |
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
$ |
5,310 |
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
Common
stock subscribed
|
|
$ |
65,750 |
|
|
Preferred
stock: $.001 par value;
|
|
|
|
|
|
authorized
5,000,000 shares; none issued
|
|
|
|
|
|
or
outstanding at December 31, 2007
|
|
|
0 |
|
|
Common
stock: $.001 par value;
|
|
|
|
|
|
authorized
70,000,000 shares; none
|
|
|
|
|
|
issued
or outstanding at December 31, 2007
|
|
|
0 |
|
|
Accumulated
deficit during development stage
|
|
|
(17,261 |
) |
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
$ |
48,489 |
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
|
$ |
53,799 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
STATEMENT
OF OPERATIONS
|
|
|
Aug.
6, 2007 (inception) to December 31, 2007
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
0 |
|
|
|
|
|
|
|
|
Gross
profit
|
|
$ |
0 |
|
| |
|
|
|
|
|
General,
selling and administrative expenses
|
|
|
17,261 |
|
|
Operating
loss
|
|
$ |
(17,261 |
) |
|
|
|
|
|
|
|
Nonoperating
income (expense)
|
|
|
0 |
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(17,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
Average
number of shares of common stock outstanding
|
|
|
0 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
STATEMENT
OF STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Common
|
|
|
During
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Stock
|
|
|
Development
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Subscribed
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
August
10, 2007, issue common stock subscribed
|
|
|
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
12,250 |
|
|
$ |
0 |
|
|
$ |
12,250 |
|
Stock
subscribed from sale of stock under SB-2 registration
statement
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
53,500 |
|
|
|
0 |
|
|
|
53,500 |
|
|
Net
loss, December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17,261 |
) |
|
|
(17,261 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
0 |
|
|
$ |
0 |
|
|
$ |
0 |
|
|
$ |
65,750 |
|
|
$ |
(17,261 |
) |
|
$ |
48,489 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
STATEMENT
OF CASH FLOWS
|
|
|
Aug. 6, 2007 (inception) to
December 31, 2007
|
|
|
|
|
|
|
Cash
Flows From Operating Activities
|
|
|
|
|
Net
loss
|
|
$ |
(17,261 |
) |
Adjustments
to reconcile net loss to cash used in operating
activities:
|
|
|
|
|
|
Stock
subscribed for services
|
|
|
7,250 |
|
|
Changes
in assets and liabilities
|
|
|
|
|
|
Increase
in accounts payable
|
|
|
5,010 |
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
$ |
(5,001 |
) |
|
|
|
|
|
|
|
Cash
Flows From Investing Activities
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Cash
Flows From Financing Activities
|
|
|
|
|
|
Common
stock scribed
|
|
$ |
58,500 |
|
|
Advances
from officer
|
|
|
300 |
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
$ |
58,800 |
|
|
|
|
|
|
|
|
Net
increase in cash
|
|
$ |
53,799 |
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Cash,
end of period
|
|
$ |
53,799 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Information and Non-monetary Transactions:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Taxes
paid
|
|
$ |
0 |
|
|
|
|
|
|
|
|
Stock
subscribed for services
|
|
$ |
7,250 |
|
See
Accompanying Notes to Financial Statements.
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
NOTES
TO 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.
(A
Development Stage Enterprise)
NOTES
TO 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.
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
FRIENDLY
AUTO DEALERS, INC.
(A
Development Stage Enterprise)
NOTES
TO FINANCIAL STATEMENTS
Note
1. Nature
of Business and Significant Accounting Policies (continued)
(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.
(A
Development Stage Enterprise)
NOTES
TO 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.
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.
(A
Development Stage Enterprise)
NOTES
TO FINANCIAL STATEMENTS
Note
3. Income
Taxes (continued)
The
components of the Company’s deferred tax asset as of December 31, 2007 are as
follows:
|
|
|
2007
|
|
|
Net
operating loss carryforward
|
|
$ |
6,041 |
|
|
Valuation
allowance
|
|
|
(6,041 |
) |
|
Net
deferred tax asset
|
|
$ |
0 |
|
A
reconciliation of income taxes computed at the statutory rate to the income tax
amount recorded is as follows:
|
|
|
2007
|
|
|
Since Inception
|
|
|
Tax
at statutory rate (35%)
|
|
$ |
6,041 |
|
|
$ |
6,041 |
|
|
Increase
in valuation allowance
|
|
|
(6,041 |
) |
|
|
(6,041 |
) |
|
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.
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.
F-10