UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
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[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended May 31, 2002
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AUTO DATA NETWORK INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3944580
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State of Incorporation IRS Employer ID No.
The Forsythe Centre, Lamberts Road
Tunbridge Wells, Kent, UK
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Address of principal Executive Offices Zip Code
Registrant's Telephone Number 011 44 1892 511 566
Check here whether the issuer (1) has filed all reports required
to be filed by Sections 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_______
As of May 31, 2002, the following shares of the Registrant's
common stock were issued and outstanding:
Voting common stock 11,552,289
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . .3
CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .3
CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .4
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .5
Note 1. Nature of Business and Significant
Accounting Policies. . . . . . . . . . . . 7
Note 2. Use of Office Space. . . . . . . . . . . . .7
Note 3. Liquidity. . . . . . . . . . . . . . . . . .7
Note 4. Related Party Transaction. . . . . . . . . .8
Item 2. Management's Discussion And Analysis or Plan of
Operations. . . . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 14
Item 3. Defaults upon Senior Securities. . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 14
Item 5. Other information. . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 14
<Page>
PART I - FINANCIAL INFORMATION
Auto Data Network Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
<table>
As Of As Of
May 31, 2002 February 28, 2002
(Unaudited) (Audited)
---------------------------------
<s> <c> <c>
ASSETS
Current Assets
Cash $12,319 $14
Accounts Receivable 8,512 31,468
Other Current Assets 69,390 8,494
----------- ----------
Total Current Assets $90,221 $39,976
Tangible Assets 42,190 24,762
Intangible Assets 4,813,199 4,772,242
Other Assets 0 0
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TOTAL ASSETS $4,945,610 $4,836,980
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $941,705 $645,810
Accrued Expenses/other liabilities 330,288 224,822
Loan Payable 24,958 24,958
Short Term Bank Borrowings 65,164 0
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Total Current Liabilities 1,362,115 895,590
Long Term Liabilities 0 0
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Total Liabilities $1,362,115 $895,590
Stockholders' Equity
Common Stock, $.001 par value,
Authorized 25,000.000 Shares;
Issued and Outstanding
11,552,289 Shares 11,552 11,462
Additional Paid in Capital 5,120,518 5,120,518
Accumulated other
comprehensive income (14,326) 0
Deficit Accumulated During the
Development Stage (1,534,249) (1,158,731)
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Total Stockholders' Equity $3,583,495 $3,941,390
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $4,945,610 $4,836,980
</table>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<page>
Auto Data Network Inc.
(A Development Stage Company)
CONDENSED CONSOLIDATED INCOME STATEMENT
<table>
For the 3 Mos Ended For the 3 Mos Ended
May 31 July 31 February 28 April 30
2002 2001 2002 2001
------------------------------------------
<s> <c> <c> <c> <c>
TOTAL REVENUES: $128,482 0 40,171 0
COST OF REVENUES: 129,024 0 40,703 0
OPERATING EXPENSES:
Sales & Marketing 11,190 0 2,468 0
Research& Development 0 0 0 0
General &
Administration 207,083 0 287,596 0
Disposal 0 0 0 0
Amortization 0 0 0 0
Depreciation 5,835 0 4,345 0
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Total Operating 224,108 0 294,409 0
Other Start up Costs 0 13,795 0 (13,795)
-------------------------------------------
Operating Loss (224,650) (13,795) (294,941) (25,935)
Interest expense (3,059) 0 (6,603) 0
Loss before
income taxes (227,709) (13,795) (301,544) 0
-------------------------------------------
NET LOSS (227,709) (13,795) (301,544) (25,935)
NET LOSS PER SHARE (0.02047) (.002738) (0.027) (.005148)
Weighted Average
Number of Shares
Outstanding 11,462,078 5,038,000 11,112,122 5,038,000
</table>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<page>
Auto Data Network Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS (unaudited)
<table>
For the 3 mos For the 3 mos
Ended Ended
to to
May 31, 2002 May 31, 2001
---------------- ----------------
<s> <c> <c>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $(227,709) $(13,795)
Adjustments to Reconcile Net Loss
to Net Cash Used in operating
Activities:
Depreciation and amortization 5,835 0
Write off of Prototype Research
And Development costs 0 0
Other Non cash charges 0 0
Changes in Assets and Liabilities:
Accounts Receivable (7,292) 0
Other current assets (30,740) 0
Tangible Assets (23,248) 0
Accounts Payable 212,251 0
Accrued Expenses 217,307 17,610
Other Non current liabilities 0 0
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Net Cash Used in
Operating Activities 146,404 3,815
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Subsidiaries (143,313) 0
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Net cash used in investing
Activities 3,091 3,815
CASH FLOWS FROM FINANCING
ACTIVITIES:
New Share issue 0 0
Additional Paid-in Capital 0 0
Effect of exchange rates on cash 0 0
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Net Change in Cash 3,091 3,815
Cash at Beginning of Period (56,546) 3,455
Cash at End of Period (53,456) (360)
Supplemental disclosure of cash flow
Information
Interest paid $ 3,059 0
</table>
The accompanying notes and accountant's report are an integral
part of these financial statements.
<page>
AUTO DATA NETWORK INC.
(A Development Stage Company)
NOTE 1. BASIS OF PRESENTATION
The financial statements are prepared on the accrual basis of
accounting. Accordingly, revenue is recognized when earned and
expenses when incurred.
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financials statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the three and six
months ended May 31, 2002 are not necessarily indicative of
the results that may be expected for the year ending February
28, 2003. These Condensed Consolidated Financial Statements
should be read in conjunction with the Consolidated Financial
Statements and notes thereto contained in the Company's Form 10-K
for the year ended February 28, 2002.
NOTE 2. NET LOSS
Trading has been limited until such time as
investment funds and the planned Group structure materializes.
The loss of $227,709 for the quarter reflects the maintenance of
a basic administration and finance function within the Group.
NOTE 3. LIQUIDITY
The Company's viability as a going concern is dependent upon
Executing the company's current acquisition strategy which
includes raising additional capital.
As a result, the Company has from time of inception to May
31, 2002 derived revenue of $213,482 and a net loss from
operations of $1,086,719.
It is anticipated that the Company will be able to meet its
financial obligations through internal net revenue in the
foreseeable future providing that it executes its current
acquisition strategy. Therefore, if the Company does not execute
its current acquisition strategy future sources of liquidity will
be limited to the Company's ability to obtain additional debt
or equity funding.
NOTE 4. STOCK TRANSACTIONS
On September 28, 2001 the Company issued 8,333,333 shares of
common stock to Gala Consultancy in consideration for the
capitalization of all of their loans to the company.
On September 29, 2001 the Company conducted a 25 for 1 reverse
split of the Company's common stock to 534,871 shares which
became effective on 15th October 2001.
On October 16, 2001 the Company issued 9,500,000 shares of the
Company's common stock to the shareholders of Europortal Inc T/A
Auto Data Group in consideration for the acquisition of
Europortal Group T/A Auto Data Group and its subsidiaries.
On October 17, 2001 the Company issued 1,077,268 shares to
various parties in consideration for the capitalization of
$4,039,754 of loans at the closing price on that date of $3.75.
On April 26, 2002 the Company issued 90,211 shares to various
parties in consideration for the purchase of E-Com Multi Limited.
On March 12, 2002 the Company issued 350,000 shares of S8 stock
to consultants.
<Page>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
RESULTS OF OPERATIONS
ADN is engaged in the business of developing and marketing a
specialized suite of feature-rich, proprietary software
applications and services for the automotive industry. Our
products and services are designed for industry participants
interested in relevant, real-time data related to the purchase
and sale of motor vehicles and automotive parts and related
services in specific markets. We market our products to vehicle
and parts manufacturers, dealers, consumers and related industry
participants, including financial institutions, insurance
providers and fleet owners. Our core product offering revolves
around three functions: (1) our ability to link the often
incompatible systems and data structures of the various
participants in the industry into one unified information
platform, (2) our ability to assemble and provide relevant,
actionable data in real-time to our subscribers, and (3) our
breadth of services and product offering designed to facilitate
and increase efficiencies using the data we provide to facilitate
sales of new and used vehicles, parts and accessories, and
various services such as finance, insurance and vehicle
servicing. Our product suite includes applications we have
developed internally and applications developed by businesses
through acquisition. The platform propositions are integrated as
a communications channel that allows all automotive sector
participants to transact within a single environment, in which
transactional data is added and modified on the network. This
process creates a unique source of ``Intelligent
Information(TM)'' that can be accessed by subscribing companies
to analyze and react to changes in marketconditions.
ADN does not currently have a working capital line of credit with
any financial institution. Agreements regarding funding have
been reached, subject to the completion of satisfactory due
diligence, with vFinance Inc, where vFinance will arrange funding
for the company to complete on its current acquisition strategy.
Future sources of liquidity will be limited to the Company's
ability to close planned acquisitions and obtain additional debt
or equity funding.
The Company is currently engaged in raising equity finance in
order to complete its acquisition strategy and provide working
capital. There is no guarantee that the company's efforts will
be successful.
The Company is also undertaking additional acquisitions in order
to increase its liquidity and to provide the Company with
additional capital which is necessary to develop the Company's
operations. On April 26th 2002 the company acquired the entire
issued stock of E-Com Multi (UK)Ltd, previously the UK subsidiary
of E-Com Multi Ltd,, an Australian registered public company.
Consideration for the purchase was initially in A D N Inc stock
valued at $285,000. Other entities acquired will become subject
to the same reporting requirements as the Company upon
consummation of any such business combination. Thus, in the
event that the Company successfully completes an acquisition with
another operating business, the resulting combined business must
provide audited financial statements for at least the two most
recent fiscal years or, in the event that the combined operating
business has been in business less than two years, audited
financial statements will be required from the period of
inception of the target acquisition or merger candidate.
No representation is made, nor is any intended, that the Company
will be able to carry on future business activities successfully.
Further, there can be no assurance that the Company will develop
sustaining business opportunities or acquire businesses that will
be of material value to the Company.
In the opinion of management, inflation has not and will not have
a material effect on the operations of the Company until its
equity funding is completed. At that time, management will
evaluate the possible effects of inflation on the Company as it
relates to its business and operations following a successful
acquisition or merger.
In the event the Company consummates an acquisition transaction,
the Company believes that there will not be a change in control
in the Company.
In the event management wishes to actively negotiate or otherwise
consent to the purchase of any portion of their common stock as a
condition to or in connection with a proposed merger or
acquisition, this would need to be disclosed to the Board of
Directors and entered into the Company's minutes. The Company's
shareholders will be afforded an opportunity to approve or
consent to any particular stock buy-out transaction or merger.
The Company at this time has been in discussions with various
entities for the purpose of consummating a business transaction
or acquisition. The Company has in place, Letters of Intent
regarding the acquisition of the following companies:
MAM Software Ltd and Jarretts plc. The Company will continue to
conduct discussions with other interested parties for the purpose
of seeking to consummate a further business transaction or
acquisition.
<Page>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are currently no pending legal proceedings against the
company.
ITEM 2. CHANGES IN SECURITIES
The instruments defining the rights of the holders of any class
of registered securities have not been modified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has been no default in the payment of principal, interest,
sinking or purchase fund installment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On October 2, 2001, the Company acquired 9,500 shares of
common stock, $1.00 par value, of EUROPORTAL INC T/A AUTO DATA
GROUP, (hereinafter "Auto Data Group") a company incorporated
under the laws of the State of Delaware.
The acquisition was consummated by the execution of an
Acquisition Agreement dated October 2, 2001. The shares
acquired by the Company represented all of Auto Data Group's then
currently issued and outstanding common stock in a tax free
stock-for-stock acquisition. The aggregate purchase price paid
by the Company for the Auto Data Group common shares was
9,500,000 newly issued shares of post-reverse split shares of
voting common stock of the Company, $0.001 par value. These
shares were be issued to the sellers of the Auto Data Group
shares subsequent to a 1 for 25 reverse split of the voting
common stock by the Company of its voting common stock.
As a result of the foregoing transaction, there was a change in
control of the company to the shareholders of Auto Data Group.
The shareholders of Auto Data Group now hold approximately 95.0%
of the outstanding shares of common stock of the company.
ITEM 5. OTHER INFORMATION
There is no other information to report which is material to the
company's financial condition not previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company on October 17, 2001 filed a Form 8-K announcing its
acquisition with the Auto Data Group which is incorporated by
reference herein.
<Page>
SIGNATURES
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.
/s/ Auto Data Network Inc.
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Christopher Glover, President
Dated: July 18, 2002