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 August 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 August 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
PART I - FINANCIAL INFORMATION
Board of Directors
Auto Data Network, Inc.
The Forsythe Centre, Lamberts Road
Tunbridge Wells, Kent, UK
Dear Board of Directors:
I have reviewed the accompanying Balance Sheet of Auto Data
Network, Inc., as of August 31, 2002, related Income Statement and the
statement of Cash Flows for the period then ended. These Financial
Statements are the responsibility of the Corporation's Management.
I conducted my review in accordance with generally accepted review
standards. Those standards require that I perform the review to obtain
reasonable assurance about whether the Financial
Statements are free of material misstatement. A review includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the Financial Statements. A review also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall Financial Statement
presentation.
Very Truly Yours,
/s/ Frank E. Hanson
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Frank E. Hanson, C.P.A.
Auto Data Network Inc.
CONDENSED CONSOLIDATED BALANCE SHEET
As Of As Of
August 31, 2002 February 28, 2002
(Unaudited) (Audited)
---------------------------------
ASSETS
Current Assets
Cash $ 1,670 $14
Accounts Receivable 552,479 31,468
Other Current Assets 69,580 8,494
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Total Current Assets $623,729 $39,976
Tangible Assets 41,892 24,762
Intangible Assets 7,078,035 4,772,242
Other Assets 0 0
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TOTAL ASSETS $7,743,656 $4,836,980
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $539,105 $645,810
Accrued Expenses/other liabilities 571,450 224,822
Loan Payable 24,958 24,958
Short Term Bank Borrowings 132,738 0
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Total Current Liabilities 1,268,251 895,590
Long Term Liabilities 0 0
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Total Liabilities $1,268,251 $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 7,450,054 5,120,518
Accumulated other
comprehensive income 450,197 (31,859)
Deficit Accumulated (1,436,398) (1,158,731)
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Total Stockholders' Equity $6,475,405 $3,941,390
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $7,743,656 $4,836,980
The accompanying notes and accountant's report are an integral
part of these financial statements.
Auto Data Network Inc.
CONDENSED CONSOLIDATED INCOME STATEMENT
For the 3 Mos Ended For the 3 Mos Ended
August 31 October 31 May 31 July 31
2002 2001 2002 2001
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TOTAL REVENUES: $422,903 87 128,482 0
COST OF REVENUES: 30,760 74 129,024 0
OPERATING EXPENSES:
Sales & Marketing 8,839 0 11,190 0
Research& Development 0 0 0 0
General &
Administration 144,176 125,442 207,083 0
Disposal 0 648,960 0 0
Amortization 0 0 0 0
Depreciation 3,872 0 5,835 0
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Total Operating 156,887 774,402 224,108 0
Expenses
Other Start up Costs 0 0 0 13,795
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Operating Profit(Loss) 235,256 (774,402) (224,650) (13,795)
Interest expense (3,188) (290) (3,059) 0
Profit (Loss) before
income taxes 232,068 (774,679) (227,709) (13,795)
Taxation 104,577 0 0 0
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NET PROFIT (LOSS) 127,491 (774,679) (227,709) (13,795)
NET PROFIT (LOSS)
PER SHARE 0.01104 (0.07) (0.02047)(0.002738)
Weighted Average
Number of Shares
Outstanding 11,552,289 11,112,122 11,462,078 5,038,000
The accompanying notes and accountant's report are an integral
part of these financial statements.
Auto Data Network Inc.
STATEMENT OF CASH FLOWS (unaudited)
For the 3 mos For the 3 mos
Ended Ended
to to
August 31, 2002 October 31, 2001
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CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Profit (Loss) $127,491 $(774,679)
Adjustments to Reconcile Net Loss
to Net Cash Used in operating
Activities:
Depreciation and amortization 3,928 0
Write off of Prototype Research
And Development costs 0 651,580
Other Non cash charges 0 8
Changes in Assets and Liabilities:
Accounts Receivable (543,236) 5,279
Other current assets 5,780 15,033
Tangible Assets 0 3,370
Accounts Payable (284,978) (16,007)
Accrued Expenses 95,117 52,809
Other Non current liabilities 115,552 (13,181)
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Net Cash Used in
Operating Activities (480,402) (75,796)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of Subsidiaries (170,741) 7,154
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Net cash used in investing
Activities (170,741) 7,154
CASH FLOWS FROM FINANCING
ACTIVITIES:
New Share issue 0 0
Additional Paid-in Capital 674,453 0
Effect of exchange rates on cash (22,134) 65,681
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Net Change in Cash 1,176) (2,961)
Cash at Beginning of Period 494 3,455
Cash at End of Period 1,670 494
Supplemental disclosure of cash flow
Information
Interest paid $ 3,188 $ 290
The accompanying notes and accountant's report are an integral
part of these financial statement
Auto Data Network Inc.
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 financial 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
August 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 PROFIT
Trading has been limited until such time as investment funds and the
planned Group structure materializes. The profit of $127,491 for the
quarter reflects the maintenance of a basic administration and finance
function within the Group offset by the introduction to the Group of
County Services Ltd.
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 August 31, 2002
derived revenue of $636,385 and a net loss from operations of $959,228.
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 continues to execute 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
existing trading companies and it'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 March 12, 2002 the Company issued 350,000 shares of S8 stock to
consultants.
On April 26, 2002 the Company issued 90,211 shares to various parties in
consideration for the purchase of E-Com Multi Limited.
On August 02, 2002 the Company transferred 800,000 shares to the
shareholders of Hilsten Resources Limited T/a County Services & Products
Ltd to finalise the acquisition of that company.
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
market conditions.
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 SIB Inc,
where SIB 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
August 2nd 2002 the company acquired the entire issued stock of Hilsten
Resources Ltd T/a County Services & Products Ltd, a consultancy and
insurance services company. Consideration for the purchase was in A D N
Inc stock valued at $1,680,000. 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 will continue to conduct discussions with interested parties
for the purpose of seeking to consummate a further business transaction
or acquisition.
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.
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.
Christopher Glover, President
Dated: October 22, 2002