SECURITIES AND EXCHANGE COMMISSION

10QSB 1 reddi305qsb.htm MARCH 31, 2005 10-QSB SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

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

For the quarterly period ended March 31, 2005

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

For the transition period from ___ to ____

Commission File No. 0-19620

REDDI BRAKE SUPPLY CORPORATION

(Exact name of small business issuer as specified in its charter)

Nevada 84-1152135

(State or other jurisdiction of (IRS Employer Identification No.)

incorporation or organization)

1175 East 400 South, Suite 900, Salt Lake City, Utah 84111

(Address of principal executive offices)

(801) 269-8535

(Issuer's telephone number)

Not Applicable

(Former name, address and fiscal year, if changed since last report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [ X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares authorized of each of the issuer's classes of common equity: 100,000,000 shares, par value $.0001 per share

As of April 19, 2005 issuer had 279,400 shares of its $.0001 par value common stock outstanding and 2,000,000 shares of its $.0001 par value preferred stock.

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

Transitional Small Business Format: Yes [ ] No [ X ]

PART I

FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

REDDI BRAKE SUPPLY CORPORATION

(Development Stage Company)

BALANCE SHEETS

March 31, 2005 and June 30, 2004

Mar 31, 2005

Jun 30, 2004

ASSETS

CURRENT ASSETS

Cash

$ -

Total Current Assets

$ -

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES

Accounts payable - affiliate

$ 120,000

$ -

Accounts payable – related party

8,402

35,953

Accounts payable – legal

24,900

62,464

Total Current Liabilities

153,302

98,417

STOCKHOLDERS' DEFICIENCY

Preferred stock

2,500,000 shares authorized at $0.0001 par value;

2,000,000 shares issued and outstanding

200

Common stock

100,000,000 shares authorized at $0.0001 par value;

279,400 shares issued and outstanding on March 31;

129,400 shares issued and outstanding on June 30

Capital in excess of par value

37,401,680

37,286,631

Accumulated deficit - Note 1

(37,555,210)

(37,385,261)

Total Stockholders' Deficiency

(153,302)

(98,417)

$ -

The accompanying notes are an integral part of these financial statements.

REDDI BRAKE SUPPLY CORPORATION

(Development Stage Company)

STATEMENT OF OPERATIONS

For the Three and Nine Months Ended March 31, 2005 and 2004 and the period

July 1, 1997 (date of inception of development stage) to March 31, 2005

Three Months

Nine Months

July 1, 1997

Mar 31,

2005

2004

2005

2004

Mar 31, 2005

REVENUES

$ -

EXPENSES

Consultants

30,000

167,500

Administrative

970

2,449

903

431,067

NET LOSS

- before other gains and losses

(30,970)

(169,949)

(903)

(598,567)

OTHER GAINS AND LOSSES

Interest

(4,036,995)

Loss on liquidation

of assets and liabilities

(25,223,711)

Gain on settlement of debt

13,918

40,387

12,556,042

________

______

________

_____

___________

NET LOSS

$ (30,970)

$ 13,918

$ (169,949)

$ 39,484

$ (17,303,231)

LOSS PER COMMON

SHARE

Basic and diluted

$ (.11)

$ .12

$ (.69)

$ .35

AVERAGE OUTSTANDING SHARES

- stated in 1,000’s

Basic

279

119

246

114

Diluted

281

121

248

116

The accompanying notes are an integral part of these financial statements.

REDDI BRAKE SUPPLY CORPORATION

(Development Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

Period July 1, 1997 (date of inception of development stage) to March 31, 2005

Capital in

Preferred Stock

Common Stock

Excess of

Accumulated

Shares

Amount

Shares

Amount

Par Value

Deficit

Balance July 1, 1997

130,000

$13

67,261

$ 7

$ 37,098,683

$ (20,251,979)

Issuance of common stock for

retirement of preferred stock

(70,000)

(7)

10,772

Net loss for the year

ended June 30, 1998

(26,091,096)

Net loss for the year

ended June 30, 1999

(902,293)

Preferred stock dividends

82,856

(82,856)

Issuance of common stock for

settlement of legal action -

October 1999

1,340

4,200

Issuance of class C preferred stock for

for expenses - June 14, 2000 -

related parties

2,000,000

200

- 9,800

Preferred stock dividends

- 27,727

(27,727)

Net loss for the year

ended June 30, 2000

(991,576)

Preferred stock dividends

- 6,897

(6,897)

Issuance of common stock for

retirement of preferred

stock and accrued dividends -

September 2000

(60,000)

(6) 21,141

Net loss for the year

ended June 30, 2001

(1,111,703)

Issuance of common stock for

payment and settlement of

debt - October 2001

12,886

1 38,460

Net profit for the

year ended June 30, 2002

12,000,038

Net profit for the year

ended June 30, 2003

102,197

Issuance of common stock for

settlement of debt - March 4, 2004

16,000

2 17,998

Net loss for the year

ended June 30, 2004

- (21,369)

Issuance of common stock for payment

of debt

25,000

3 37,561

Issuance of common stock for services

at $.10

25,000

2 2,498

Issuance of common stock for services

at $.10

100,000

10 74,990

Net loss for the nine months

ended March 31, 2005

(169,949)

________

_____

_______

_____

_________

__________

Balance March 31, 2005

2,000,000

$ 200

279,400

$28 $ 37,401,680

$(37,555,210)

The accompanying notes are an integral part of these financial statements.

REDDI BRAKE SUPPLY CORPORATION

(Development Stage Company)

STATEMENT OF CASH FLOWS

For the Nine Months Ended March 31, 2005 and 2004 and the Period

July 1, 1997 (date of inception of development stage) to March 31, 2005

Nine Months

Mar 31,

July 1, 1997

2005

2004

to Mar 31, 2005

CASH FLOWS FROM

OPERATING ACTIVITIES

Net loss

$ (169,949)

$39,484

$(17,303,231)

Adjustments to reconcile net loss to

net cash provided by operating

activities

Change in available-for-sale- securities

2,034

Changes in accounts receivables

12,756

Changes in accounts payable

92,449

(25,566)

457,340

Loss of assets

25,223,711

Accrued interest - convertible debt

4,036,995

Issuance of common stock for settlement of legal action

18,000

22,200

Issuance of preferred stock for expenses

77,500

87,500

Issuance of common stock for payment and settlement of debt

(31,918)

(12,569,960)

_____

_________

Net Cash Used in Operations

(30,655)

CASH FLOWS FROM INVESTING

ACTIVITIES

CASH FLOWS FROM FINANCING

ACTIVITIES

Net Increase (Decrease) in Cash

(30,655)

Cash at Beginning of Period

30,655

Cash at End of Period

$ -

The accompanying notes are an integral part of these financial statements.

REDDI BRAKE SUPPLY CORPORATION

NOTES TO FINANCIAL STATEMENTS

March 31, 2005

ORGANIZATION

The Company was incorporated under the laws of the State of Nevada on July 12, 1990 with name AFranklin Capital, Inc@ with authorized common stock of 35,000,000 shares with a par value of $0.0001 and preferred stock of 2,500,000 shares with a par value of $0.0001. On October 24, 1996 the authorized common stock was increased to 75,000,000 shares and on January 12, 2001 to 100,000,000 shares with the same par value. The Company had several name changes and on April 21, 1994 changed its name to AReddi Brake Supply Corporation@.

The principal business activity of the corporation through its subsidiary, Reddi Brake Supply Company, Inc., has been the sale of auto parts, mainly to professional installers, through several warehouses located throughout the United States.

On March 17, 1997 an involuntary petition in bankruptcy was filed against the subsidiary, which resulted in the loss of the business, the warehouses, and the subsidiary, and as a result of the bankruptcy the Company sustained substantial losses. After July 1, 1997 the Company had no operations and is considered to be a development stage company since that date.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Dividend Policy

The Company has not adopted a policy regarding payment of dividends.

Income Taxes

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized. On March 31, 2005 the Company did not have a net operating loss available for carry forward.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short term maturities.

REDDI BRAKE SUPPLY CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common shares and common equivalent shares outstanding as if shares had been issued on the exercise of the preferred share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.

Concentration of Credit Risk

There are no financial instruments that potentially subject the Company to significant concentration of credit risks.

Revenue Recognition

Revenue will be recognized on the sale and delivery of a product or the completion of services provided.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.

Other Recent Accounting Pronouncements

The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.

3. CAPITAL STOCK

During March 2004 the Company issued 16,000 post split common shares as a settlement of a legal action. During the nine months ended March 31, 2005 the Company issued 150,000 post split common shares for payment of debt and for services.

On March 10, 2004 the Company completed a reverse common stock split of one share for 750 outstanding shares. This report has been prepared showing post split shares from inception.

REDDI BRAKE SUPPLY CORPORATION

NOTES TO FINANCIAL STATEMENTS (Continued)

March 31, 2005

4. PREFERRED STOCK

On June 14, 2000 the Company issued 2,000,000 class C preferred shares, to related parties, as reimbursement for expenses paid for the Company. The terms of the class C preferred shares carry voting rights of 50 votes for each share and after 90 days from the issuance, conversion rights of one share of preferred C for one share of common, at the option of the stockholder. On the date of this report the conversion rights had not been exercised.

5. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

Officers-directors and their controlled entities have acquired 2,000,000 shares of the Company=s outstanding convertible class C preferred stock with voting rights shown in note 4 and have made no interest, demand loans to the Company and have accrued consultants fees of $128,402.

6. GOING CONCERN

The Company does not have the necessary working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through settlement of its debt by the issuance of common stock, additional loans from related parties, and equity funding which will enable the Company to conduct operations for the coming year.

ITEM 2.

MANAGEMENT=S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

Nine Months Ended March 31, 2005

The Company had no revenue from continuing operations for the nine month period ending March 31, 2005.

General and administrative expenses for the nine month period ending March 31, 2005 were $169,949. General and administrative expenses for the nine month period ending March 31, 2004 were $903. These expenses are attributable to the administrative, legal, professional, and accounting costs associated with the duties of a publicly reporting company. There was no Interest expense for the period. The company realized a net loss of $169,949 for the nine month period ended March 31, 2005, as compared to a net gain of $39,484 for the same period in 2004. From inception to through March 31, 2005, the company recorded a net loss of $17,303,231.

Liquidity and Capital Resources

At March 31, 2005, the Company had a working capital deficit of $153,302, as compared to a working capital deficit of $37,564 at March 31, 2004.

The Company does not have sufficient cash to meet its operational needs for the next twelve months. Management, like in the past, will attempt to raise capital for its current operational needs through loans from its officers, debt financing, equity financing or a combination of financing options. However, there are no existing understandings, commitments or agreements for such an infusion; nor can there be assurances to that effect. Moreover, the Company's need for capital may change dramatically if and during that period, it acquires an interest in a business opportunity. Unless the Company can obtain additional financing, its ability to continue as a going concern is doubtful.

The Company’s chairman Michael J. Zwebner has agreed to and has financed the Company’s financial cash needs for all ongoing administration costs until such time as the Company raises alternate funding from third party sources.

The Company's current operating plan is to (i) handle the administrative and reporting requirements of a public company, and (ii) search for potential businesses, products, technologies and companies for acquisition. At present, the Company has no understandings, commitments or agreements with respect to the acquisition of any business venture, and there can be no assurance that the Company will identify a business venture suitable for acquisition in the future. Further, there can be no assurance that the Company would be successful in consummating any acquisition on favorable terms or that it will be able to profitably manage any business venture it acquires.

Forward-Looking Statement Notice When used in this report, the words "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify 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 regarding events, conditions, and financial trends that may affect the Company's future plans of operations, business strategy, operating results, and financial position. Persons reviewing this report are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those included within the forward-looking statements as a result of various factors.

ITEM 3: CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls Procedures.

Within the 90 days prior to the end of the period covered by this report, the Registrant carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-14(c) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). This evaluation was done under the supervision and with the participation of the Registrant's president and treasurer. Based upon that evaluation, they concluded that the Registrant's disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy the

Registrant's disclosure obligations under the Securities Exchange Act.

(b) Changes in Internal Controls.

In the quarter ended March 31, 2005, the Company did not make any significant changes in, nor take any corrective actions regarding, its internal controls or other factors that could significantly affect these controls.

PART II. OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

McCormick, et al., v. Reddi Brake Supply Corporation., et al.

On November 6, 1997, a class action lawsuit was filed in the Los Angeles Superior Court on behalf of all persons or entities who bought common stock of the defendant prior to March 23, 1996, and/or who bought or sold any shares thereafter until August 13, 1996, excluding defendants, their families, employees, agents or assigns. The complaint asserts causes of action for breach of fiduciary duty by officers and directors and conspiracy to manipulate the price of the common stock of the defendant.

On December 22, 2003 the Superior Court of the State of California for the County of Los Angeles entered a final order approving a settlement between the parties as fair, reasonable and adequate to absent class members and entered a final judgment. The settlement became effective on February 23, 2004 sixty days after the December 22, 2003 order, which allowed for an appeal of the courts final order and judgment. The terms of the settlement provides for payment of all settlement considerations by the Company’s insurance.

Sheerin, et al., v Reddi Brake Supply Corporation, Birin and McGorrian et al.

On March 3, 1998, Allen J. Sheerin filed a lawsuit in the Los Angeles County Superior Court against the Company and specifically against two former officers and directors of the Company. Mr. Sheerin alleges that these officers and directors misrepresented the financial status of the Company during the time that he was negotiating to buy shares in the Company, which resulted in a loss to him of $2,100,000.

In December 2003, the parties to the Sheerin, et al., v Reddi Brake Supply Corporation, Birin and McGorrian et al., lawsuit entered into a settlement agreement. Pursuant to this agreement the Company issued 12,000,000 Reddi Brake common shares on March 4, 2004 to the plaintiff. The plaintiff dismissed with prejudice all claims against the Company and other defendants.

In June 2004, the company filed suit in federal court in Utah against Corporate Stock Corporation, in the amount of $25,000. The claims relate to unfair and unrealistic cash demands made of the company in early April, upon the company notifying CST of its desire and intention to terminate its relationship with CST.

As of current, March 31, 2005, there has been no significant development in the case to report, other than parties await certain court rulings based on Legal Motions filed by both parties. In addition, the Company attorney has indicated that negotiations are now in hand for a possible settlement of the case.

ITEM 2.

CHANGES IN SECURITIES

During the nine months ended March 31, 2005 the Company issued 150,000 post split common shares for payment of debt and for services.

On March 10, 2004 the Company completed a reverse common stock split of one share for 750 outstanding shares.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

None

ITEM 5.

OTHER INFORMATION

Subsequent Events

The company continues to conduct negotiations with several alternate international entities for the purposes of enacting an acquisition. In the last quarterly filings, we reported that lengthy discussions have been held to negotiate the terms to acquire a high tech company featuring exclusive patented computer related technologies. Management now reports that this proposed transaction did not materialize, and all efforts in that regard have ceased.

Management is hopeful that a new alternate transaction / acquisition with a different set of parties and for a different business opportunity are in negotiations, and that it is hoped that a transaction will be concluded before the end of this financial year.

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

Reports on Form 8-K

None

Exhibits

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.

Exhibit No.

SEC Ref. No.

Title of Document

Location

(31.1)

Certification of the Principal Executive

Officer pursuant to Section 302

of the Sarbanes-Oxley Act of 2002

Attached

(31.2)

Certification of the Principal Financial

Officer pursuant to Section 302

of the Sarbanes-Oxley Act of 2002

Attached

(32.1)

Certification of the Principal Executive Officer

pursuant to U.S.C. Section 1350 as adopted

pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002

Attached

(32.2)

Certification of the Principal Financial Officer

pursuant to U.S.C. Section 1350 as adopted

pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002

Attached

SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

REDDI BRAKE SUPPLY CORPORATION

Date: April 22, 2005

By: /s/ Michael J. Zwebner

Michael J. Zwebner, President

Date: April 22, 2005

By: /s/ Ronald S. Friend

Ronald S. Friend, Treasurer