SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Quarterly Report Under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2008
Commission File Number:  333-147560
FRIENDLY AUTO DEALERS, INC.
(Exact Name of Issuer as Specified in Its Charter)
Nevada
      
7389
      
33-1176182
      
      
State of Incorporation
      
Primary Standard Industrial Employer Classification Code Number 
      
I.R.S. Identification No.
      
      
      
      
 4132 South Rainbow Road, Suite 514, Las Vegas, Nevada 89103
(Address of principal executive offices, including zip code)
(702) 321-6876
(Registrant's telephone number, including area code)
EastBiz.Com, Inc.
5348 Vegas Drive
Las Vegas, Nevada 89108
Telephone: (702) 871-8678
(Name, Address, and Telephone Number of Agent)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x        No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer o
      
Non-Accelerated Filer o
      
      
(Do not check if a smaller reporting company)
      
      
Accelerated Filer o
      
Smaller reporting company x
      
      
      
      
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES x   NO o
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, 15(d) of the Exchange Act after the distribution of the securities under a plan confirmed by a court.      YES o    NO o
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of common stock at the latest practicable date. As of May 13, 2008, the registrant had 6,725,000 shares of common stock, $0.001 par value, issued and outstanding.
Transitional Small Business Disclosure Format (Check one):    YES o    NO x
CONTENTS
   PART I - FINANCIAL INFORMATION - UNAUDITED
      

      
Item 1.
      
   BALANCE SHEET
      
  1
      
      
   STATEMENT OF OPERATIONS
      
  2
      
      
   STATEMENTS OF CASH FLOWS
      
  3
      
      
   NOTES TO FINANCIAL STATEMENTS
      
  4
      
      
Item 2.
      
   Management's Discussion and Analysis of Financial Condition and Plan of Operations.
      
  9
      
      
Item 3.
      
   Quantitative and Qualitative Disclosures About Market Risk
      
  10
      
      
Item 4.
      
   Controls and Procedures
      
  10
      
      
   PART II - OTHER INFORMATION
      

      
Item 1.
      
   Legal Proceedings
      
  11
      
      
Item 2.
      
   Unregistered  Sales of Equity Securities and Use of Proceeds
      
  11
      
      
Item 3.
      
   Defaults Upon Senior Securities
      
  11
      
      
Item 4.
      
   Submission of Matters to a Vote of Security Holders
      
  11
      
      
Item 5.
      
   Other Information
      
  11
      
      
Item 6.
      
   Exhibit and Reports on Form 8-K
      
  11
      
      
      
      
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements (Unaudited- Prepared by Management)
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
CONTENTS
Balance Sheets
      
1 
      
      
Statements of Operations
      
2 
      
      
Statements of Cash Flows
      
3 
      
      
Notes to Unaudited Financial Statements
      
4-8 
      
      
      
      
FRIENDLY AUTO DEALERS, INC.
      

      
(A Development Stage Enterprise)
      

      
Balance Sheets
      

      
June 30, 2008
      
December 31, 2007
      

      
(unaudited)
      

      
ASSETS
      

      
Current assets
      

      
Cash
      
$
375
$
53,799

      
Prepaid expenses
      
10,000
-

      
Total current assets
      
10,375
53,799

      
Total assets
      
$
10,375
$
53,799

      
LIABILITIES AND STOCKHOLDERS' EQUITY
      

      
Current liabilities
      

      
Accounts payable
      
$
1,180
$
5,010

      
 Loan from shareholder
      
300
300

      
Total current liabilities
      
1,480
5,310

      
Stockholders' Equity
      

      
Common stock subscriptions
      
-
65,750

      
Preferred stock, $.001 par value; 5,000,000 shares authorized, no shares issued or outstanding
      
-
-

      
Common stock, $.001 par value; 70,000,000 shares authorized, 6,725,000 shares issued and outstanding
      
6,725
-

      
Additional paid in capital
      
105,525
-

      
Deficit accumulated during the development stage
      
(103,355
)
(17,261
)
      
Total stockholders' equity
      
8,895
48,489

      
Total liabilities and stockholders' equity
      
$
10,375
$
53,799

      
See accompanying notes to financial statements
      

      
      
      
1
      
      
FRIENDLY AUTO DEALERS, INC.
      

      
(A Development Stage Enterprise)
      

      
Statement of Operations (unaudited)
      

      
For the period from August 6, 2007 (inception) to June 30, 2008
      

      
Three months ended June 30, 2008
      
Six months ended June 30,2008
      

      
Revenue
      
$
-
$
-
$
-

      
Expenses
      

      
Office expenses
      
809
3,500
20,761

      
Travel
      
388
30,474
30,474

      
Professional fees
      
46,870
54,720
52,120

      
Total expenses
      
48,067
86,094
103,355

      
Net loss
      
$
(48,067
)
$
(86,094
)
$
(103,355
)
      
Basic and diluted loss per common share
      
$
(0.01
)
$
(0.01
)

      
Weighted average shares outstanding
      
6,725,000
6,684,038

      
See accompanying notes to financial statements
      

      
      
      
2
      
      
FRIENDLY AUTO DEALERS, INC.
      
      
(A Development Stage Enterprise)
      
      
Statements of Cash Flows (unaudited)
      
      
For the period of August 6, 2007 (inception) to June 30, 2008
      
      
Six months ended June 30, 2008
      
      
Cash flows from operating activities
      

      
Net loss
      
$
      
(86,094)
      
$
      
(103,355)
      
      
Adjustments to reconcile net loss to net cash used in operating activities
      
      
Common stock issued for services
      
-
      
7,250
      
      
Changes in operating assets and liabilities:
      

      
Prepaid expenses
      
(10,000)
      
(10,000)
      
      
Accounts payable
      
(3,830)
      
1,180
      
      
Net cash used in operating activities
      
(99,924)
      
(104,925)
      
      
Net cash used in investing activities
      
-
      
-
      
      
Cash flows from financing activities
      

      
Loan from shareholder
      
-
      
300
      
      
Proceeds from sale of stock
      
46,500
      
105,000
      
      
Net cash provided by financing activities
      
46,500
      
105,300
      
      
(Decrease) increase in cash
      
(53,424)
      
375
      
      
Cash at beginning of period
      
53,799
      
-
      
      
Cash at end of period
      
$
      
375
      
$
      
375
      
      
Supplemental disclosure of non-cash investing and financing activities:
      
      
Issuance of 725,000 shares of common stock for professional and consulting services
      
$
      
-
      
$
      
7,250
      
      
Supplemental Cash Flow Information:
      

      
Cash paid for interest
      
$
      
-
      
$
      
-
      
      
Cash paid for income taxes
      
$
      
-
      
$
      
-
      
      
See accompanying notes to financial statements
      
      
      
      
3
      
      
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Notes to the Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
Note 1 - 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.
Note 2 – Significant Accounting Policies
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 June 30, 2008 or 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.
4
      
      
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Notes to the Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
 Note 2 – 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 May 2008, FASB issued Financial Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance Contracts - an interpretation of FASB Statement No. 60.” Diversity exists in practice in accounting for financial guarantee insurance contracts by insurance enterprises under FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. That diversity results in inconsistencies in the recognition and measurement of claim liabilities because of differing views about when a loss has been incurred under FASB Statement No. 5, Accounting for Contingencies.
This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years.
In May 2008, FASB issued Financial Accounting Standards No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). This Statement is effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. This pronouncement has no effect on this Company’s financial reporting at this time.
5
      
      
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Notes to the Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
 Note 2 – Significant Accounting Policies (Continued)
Recent Accounting Pronouncements (Continued)
In March of 2008 the Financial Accounting Standards Board (FASB) issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133, “Accounting for Derivatives and Hedging Activities.”  SFAS No. 161 has the same scope as Statement No. 133 but requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.  SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged.  The statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption.  SFAS No. 161 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In December, 2007, the FASB issued SFAS No. 160, “Non-controlling interests in Consolidated Financial Statements, an amendment of ARB No. 51.”   SFAS No. 160 applies to “for-profit” entities that prepare consolidated financial statements where there is an outstanding non-controlling interest in a subsidiary.  The Statement requires that the non-controlling interest be reported in the equity section of the consolidated balance sheet but identified separately from the parent.  The amount of consolidated net income attributed to the non-controlling interest is required to be presented, clearly labeled for the parent and the non-controlling entity, on the face of the consolidated statement of income.  When a subsidiary is de-consolidated, any retained non-controlling interest is to be measured at fair value.  Gain or loss on de-consolidation is recognized rather than carried as the value of the retained investment.  The Statement is effective for fiscal years and interim periods beginning on or after December 15, 2008.  It cannot be adopted earlier but, once adopted, is to be applied retroactively.  This pronouncement has no effect on this Company’s financial reporting at this time.
In December 2007, the FASB issued SFAS No.141 (revised 2007), “Business Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“SFAS 160”). These standards aim to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. The provisions of SFAS 141 (R) and SFAS 160 are effective for the fiscal year beginning April 1, 2009.  The adoption of SFAS 141(R) and SFAS 160 has not impacted the Company’s financial statements.
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 and were subsequently issued in January 2008.
6
      
      
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Notes to the Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
 Note 2 – Significant Accounting Policies (Continued)
Common stock (Continued)
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 and were subsequently issued in January 2008.
On January 16, 2008, the Company sold investors 435,000 shares for $43,500. On February 1, 2008, the Company again issued 30,000 shares for an aggregate purchase price of $3,000. As of June 30, 2008, the Company has 6,725,000 shares of its $0.001 par value common stock issued and outstanding to 190 shareholders.
The authorized preferred stock of the Company consists of 5,000,000 shares with a par value of $.001. The Company has no preferred stock issued or outstanding.
Net loss per common share
Net loss per share is calculated in accordance with SFAS No. 128, “Earnings Per Share.”  The weighted-average number of common shares outstanding during each period is used to compute basic loss per share.  Diluted loss per share is computed using the weighted averaged number of shares and dilutive potential common shares outstanding.  Dilutive potential common shares are additional common shares assumed to be exercised.
Basic net loss per common share is based on the weighted average number of shares of common stock outstanding during 2008, 2007 and since inception.  As of December 31, 2007 and since inception, the Company had no common shares outstanding.  As of June 30, 2008, 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.
7
      
      
FRIENDLY AUTO DEALERS, INC.
(A Development Stage Enterprise)
Notes to the Unaudited Financial Statements
For the Three and Six Months Ended June 30, 2008 and the
Period of August 6, 2007 (Inception) to June 30, 2008
Note 3 -  Income Taxes (continued)
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 June 30, 2008.
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 - Prepaid Expenses
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 which were paid in full in February 2008. Accordingly, this amount has been reflected in the financial statements as a prepaid expense and will be recognized appropriately as services are rendered.  As of June 30, 2008, the Company had prepaid services of $10,000.
8
      
      
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES SUCH AS THE DEPENDENCE OF THE COMPANY ON AND THE ADEQUACY OF CASH FLOWS. THESE FORWARD-LOOKING STATEMENTS AND OTHER STATEMENTS MADE ELSEWHERE IN THIS REPORT ARE MADE IN RELIANCE ON THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations.
Description Of Business
General
Friendly Auto Dealers, Inc. ("Friendly Auto Dealers" or “The Company”) is a development stage enterprise that was incorporated on August 6, 2007, under the laws of the State of Nevada.  The principal offices are located at 4132 South Rainbow Boulevard, Suite 514, Las Vegas, Nevada. The telephone number is (702) 321-6876. The fax number is (702) 939-0655.  Since becoming incorporated, Friendly Auto Dealers has not made any significant purchases or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations. Friendly Auto Dealers has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings.  Our fiscal year end is December 31st.
Friendly Auto Dealers, Inc. is looking to enter into the promotional branding industry with the objective of adding value to a wide variety of products by endorsing them with the corporate logos of the world’s automobile manufacture’s for use by the company’s employees or as gifts or promotional items. The Company will concentrate its efforts in the People’s Republic of China and its retail automotive industry.
Friendly Auto Dealers intends to establish itself as a specialized brand promotional merchandising company. The Company will identify a range of casual apparel and consumer products that can be manufactured and resold for high mark-ups with the product endorsement of corporate logos.
Friendly Auto Dealers intends to create brand name awareness amongst purchasing managers or decision makers who are able to place its targeted products into its targeted market. The targeted market is large to mid-size companies, who are using logo bearing apparel, essential office products, and leisure products for their employees as well as for gifts for customers.
Friendly Auto Dealers plans to source its raw products (apparel and consumer products with logos) in China. Once the Company has selected a range of apparel and promotional products and negotiated pricing it will purchase a small inventory in order to make promotional samples.  The Company intends to hire independent contractors within the Peoples Republic of China and the United States for all graphic design.  Embroidery, and screen printing work necessary to place the prospective company logos on the products will be performed in China.  The Company will profile and market its product line to the corporate marketplace through online merchandising and an e-catalog on its website.  The website will have online catalogs offering apparel, office products and leisure products. The site will allow the consumer to “upload” an electronic version of their company or corporate logo and order products online through a fully functional e-commerce enabled website.
Business Development
As of June 30, 2008, Friendly Auto Dealers raised $105,000 through the sale of common stock.  Including the sale of 5,000,000 shares sold to its Sole Officer and Director. In addition, as of June 30, 2008, the Company had sold 1,000,000 shares of its common stock to approximately 185 shareholders for an aggregate investment of $100,000. These shares were registered under a Form SB-2 filing under the Securities Act of 1933 which became effective on December 10, 2007.  This was the maximum amount of common shares offered through the Registration Statement by the Company; as such, the offering is fully subscribed and closed as of the date of this report.  The Company intends to utilize these funds begin the initial development of its business and cover administrative costs for the next six to nine months. 
Liquidity and Capital Resources
As of June 30, 2008, we have $375 of cash available.  We have current liabilities of $1,480.  From the date of inception (August 6, 2007) to June 30, 2008 the Company has recorded a net loss of $103,355 of which were expenses relating to the initial development of the Company, filing its Registration Statement on Form SB-2,  and expenses relating to maintaining reporting company status with the Securities and Exchange Commission.  As of June 30, 2008, we had 6,725,000 shares issued and outstanding.  We will require additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business.
To date there is no public market for the Company’s common stock.  As of the date of this report, the Company has filed a 15c-211 application, through a broker dealer, with the Financial Industry Regulatory Authority (FINRA).  Management plans to continue focusing efforts on obtaining quotation of the Company’s common stock on the Over-The-Counter Bulletin Board (OTCBB).  However, there can be no guarantee or assurance that they will be successful in accomplishing this task; moreover, even if the common stock is listed on the OTCBB there can be no guarantee that a market would develop for the Company’s common stock. Failure to create a market for the Company’s common stock would result in business failure and a complete loss of any investment made into the Company.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Product Research and Development
The Company does not anticipate any costs or expenses to be incurred for product research and development within the next twelve months.
Employees
There are no employees of the Company, excluding the current President and Director, Tony Lam, of the corporation.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
9
      
      
Item 4. Controls and Procedures
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404 A. The Company's internal control over financial reporting is a process designed under the supervision of the Company's Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
As of June 30, 2008 management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by the Company's Chief Financial Officer in connection with the review of our financial statements as of June 30, 2008 and communicated the matters to our management.
Management believes that the material weaknesses set forth in items (2), (3) and (4) above did not have an affect on the Company's financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures can result in the Company's determination to its financial statements for the future years.
We are committed to improving our financial organization. As part of this commitment, we will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to the Company: i) Appointing one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; and ii) Preparing and implementing sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on the Company's Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support the Company if personnel turn over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues the company may encounter in the future.
We will continue to monitor and  evaluate  the  effectiveness  of our  internal controls and procedures and our internal controls over financial reporting on an ongoing  basis and are  committed  to taking  further  action  and  implementing additional enhancements or improvements, as necessary and as funds allow.
There were no significant changes in the Company's internal controls or, to the Company's knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
No director, officer, or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None.
Item 5. Other Information
None.
Item  6. Exhibits
3.1  Articles of Incorporation*
3.2  By-Laws*
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer and Chief Financial Officer
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
*Filed previously as an exhibit to the Company’s registration statement with the Commission on November 21, 2007.
Signature
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Friendly Auto Dealers, Inc.
      

      
Dated: November 21, 2008
      
/s/ Tony H. Lam
      
      
Tony H. Lam
      
      
Chief Executive Officer and
      
      
Chief Financial Officer
      
      
      
      
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