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 November 30, 2002
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Auto Data Network Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3944580
- ---------------------- ------------------
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 November 30, 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
January 24, 2003
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 November 30, 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.
CONSOLIDATED BALANCE SHEET
For the period ending August 31, 2002 and November 30, 2002
<table>
As Of As Of
November 30, 2002 August 31, 2002
(Unaudited) (Unaudited)
----------------------------------
<s> <c> <c>
ASSETS
Current Assets
Cash $13,227 $ 1,670
Accounts Receivable 940,265 622,059
----------- ----------
Total Current Assets $953,492 $623,729
Fixed and Other Assets $7,182,693 $7,119,927
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TOTAL ASSETS $8,136,185 $7,743,656
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable $673,468 $539,105
Accrued Payable 371,830 571,450
Short-Term Bank & Borrowings
Loans 188,154 157,696
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Total Current Liabilities $1,233,452 $1,268,251
Other Liabilities
Accrued Tax 352,647 0
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Total Liabilities $1,586,099 $1,268,251
Stockholders' Equity
Common Stock, $.001 par value,
Authorized 25,000.000 Shares;
Issued and Outstanding
11,552,289 Shares 11,552 11,552
Additional Paid in Capital 7,477,777 7,450,054
Accumulated Other Income 379,864 450,197
Accumulated Deficit (1,319,107) (1,436,398)
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Total Stockholders' Equity $6,550,086 $6,475,405
----------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $8,136,185 $7,743,656
=========== ==========
</table>
The accompanying notes and accountant's report are an integral
part of these financial statements.
AUTO DATA NETWORK INC.
INCOME STATEMENT
For the Three Months Ending November 30, 2002
<table>
Three months Ending Three months Ending
August 31, 2002 November 30, 2002
(Reviewed) (Reviewed)
------------------- -------------------
<s> <c> <c>
Revenue $422,903 $474,715
Cost of Revenue (30,760) (191,747)
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Gross Margin $392,143 $282,968
Operating Expenses
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Sales & Marketing $ 8,839 $ 15,271
General & Administrative 144,176 50,393
Depreciation 3,872 6,400
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Total Operating Expenses 156,887 72,104
Net Operating Profit $235,256 $210,864
Interest Expense (3,188) (6,021)
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NET PROFIT BEFORE TAX $232,068 $204,843
Taxation (104,577) ( 87,552)
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Net Profit Per Share 0.01104 0.01053
</table>
The accompanying notes an integral part of these financial
statements.
AUTO DATA NETWORK INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
November 30, 2002
<table>
For the 3 mos For the 3 mos
Ended Ended
November 30, 2002 August 31, 2002
(Unaudited) (Unaudited)
------------------- -----------------
<s> <c> <c>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income Profit $117,291 $127,491
Adjustments to Reconcile Net Loss
To Cash Used in Operating
Activities:
Depreciation and other non-cash
charges 6,440 3,872
Changes in Assets, Liabilities
and accrued expenses (112,174) (611,765)
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Total Adjustments $105,734 $(607,893)
Net Cash Provided/(Used in)
Operations 11,557 (480,402)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition 0 (170,741)
Investing Activities 0 0
CASH FLOWS FROM FINANCING
ACTIVITIES:
New Cash Provided 0 652,319
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Net Increase in Cash and
Equivalents 11,557 1,176
Cash and Cash Equivalents at
Beginning of Period 1,670 494
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Cash and Cash Equivalents at
End of Period $13,227 $1,670
========== =========
</table>
The accompanying notes are an integral part of these financial
statements
Auto Data Network Inc.
Notes to Financial Statements
November 30, 2002
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 November 30,
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 $117,291
for the quarter reflects the maintenance of a basic
administration and finance function within the Group, and
operating revenues generated.
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 and continued operating
revenues.
As a result, the Company has from time of inception to November
30, 2002 derived revenue of $1,111,100 and a net loss from
operations of $986,201.
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.
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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
FORWARD-LOOKING STATEMENTS
The information set forth in this Report on Form 10-QSB
including, without limitation, that contained in this Item 2,
Management's Discussion and Analysis and Plan of Operation,
contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Actual results
may differ materially from those projected in the forward-looking
statements as a result of certain risks and uncertainties set
forth in this report. Although management believes that the
assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance
that the underlying assumptions will, in fact, prove to be
correct or that actual future results will not be different from
the expectations expressed in this report.
Except for the historical information contained herein, certain
matters discussed in this report may be considered
"forward-looking statements" within the meaning of The Securities
Act of 1933 and The Securities Exchange Act of 1934, as amended
by The Private Securities Litigation Reform Act of 1995. Those
statements include statements regarding the intent, belief or
current expectations of the Company and members of its management
as well as the assumptions on which such statements are based.
Prospective investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve
risks and uncertainties and that actual results may differ
materially from those contemplated by such forward-looking
statements. Important factors currently known to management that
could cause actual results to differ materially from those in
forward-looking statements. These and additional important
factors to be considered are set forth in the Safe Harbor
compliance Statement for forward-looking statements. The Company
undertakes no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results.
The following discussion should be read in conjunction with the
information contained in the financial statements of the Company
and the notes thereto appearing elsewhere herein.
OVERVIEW OF AUTO DATA NETWORK
Auto Data Network ("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.
Our operations are conducted through our three (3) subsidiaries:
Allcars.com, an internet web site which provides consumers with
automobile related information and services and which draws
revenues through advertisers who market their products on the
Allcars.com website; County Services & Products Limited which
sells auto insurance products electronically and which includes
real-time, regionalized vehicle location and pricing; and, ECOM
Multi UK limited, also to be known as Orbit Auto Auctions, which
is a closed electronic auto auction of vehicles available only to
wholesalers.
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.
RESULTS OF OPERATIONS
Revenues for the three month period ending November 30, 2002 were
$474,715, compared to $422,903 for the previous quarter 2001.
The revenues were derived from our three (3) subsidiaries. We
expect that revenues will increase over the coming quarter with
additional acquisitions which we expect to undertake. There is
no assurance that any increase in revenues will cause Auto Data
Network to become more profitable since, with any increase in
revenues, we foresee an increase in operating expenses and costs.
Additionally, our prior history and revenues are not indicative
or reflective of future performance.
Cost of revenues for the three month period ending November 30,
2002 were $191,747 as compared to $40,703 for the corresponding
quarter for fiscal 2001. Our cost of revenues have increased as a
result of the increased activity of marketing and developing our
products. We expect that our cost of revenues will further
increase in the coming quarter which may have an impact on our
financial condition and ability to maintain a profit.
Operating expenses for the three month period ending November 30,
2002 were $72,104, compared to $156,887 for the corresponding
quarter for fiscal 2001. The decrease in our operating expenses
is attributable to our efforts to implement cost reduction
measures to increase profitability, including downsizing the
administrative personnel and introducing centralized buying for
our subsidiaries. We expect that our operating expenses will
increase significantly in the coming quarter with the additional
acquisitions which we expect to undertake. Any substantial
increase in operating expenses will affect our profitability and
therefore our prior history and operating expenses are not
indicative or reflective of future performance.
Accounts receivable for the three month period ending November
30, 2002 were $940,265 compared to $622,059 for the prior
quarter. The increase in accounts receivable is a result of the
growing demand for our products.
LIQUIDITY AND CAPITAL RESOURCES
We do not currently have a working capital line of credit with
any financial institution. Future sources of liquidity will be
limited to the Company's ability to close planned acquisitions
and obtain additional debt or equity funding. At the present, we
believe that our liquidity requirements will be met by the
revenues drawn through our operations. Our liquidity may be
negatively affected in the event we are not able to continue to
be profitable as a result of any sudden or unexpected increases
in expenses or sudden or unexpected decreases in revenues.
We also intend to attempt to raise additional capital from public
or private placements to investors of our common stock and/or
convertible debentures. However, there can be no assurance that
we will be able to obtain capital from a placement of our common
stock or whether the funds required by the Company will enable us
to further develop our operations. Additionally, there is no
guarantee that we will be able to raise capital on terms and
conditions which are acceptable to us. The inability to raise
additional capital may forestall our growth.
INFLATION
Inflation has not had a material effect on our operations.
Inflation may affect our ability to generate profit as increased
costs may be associated with development of our products and
services. In the opinion of management, inflation at this time
has not and will not have a material effect on the operations of
our company and our subsidiaries. Any increase in inflation or
jump in costs may result in an immediate increase in our prices
to our clients and subscribers. However, we will evaluate
the possible effects of inflation on our Company as it relates to
our business and operations and proceed accordingly.
ABILITY TO RAISE CAPITAL
Our ability to further develop our business and operations is
dependent on our ability to raise capital. We will seek to raise
capital through equity funding and private placement of our
common stock as well as securing lines of credit with credit
institutions. There is no guarantee that we will be able to
raise capital to further develop its business and operations.
Additionally, we may encounter significant costs or unfavorable
terms in its efforts to raise capital. Investors are further
alerted that any efforts to raise capital through a private
placement of our common stock will result in dilution to
shareholders of the company. We intend on utilizing any capital
raised to undertake additional acquisitions which shall
complement our existing products and contribute to further growth
of our company.
SUBSEQUENT EVENT
ACQUISITION OF AUTOMATRIX (UK) LIMITED
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On January 21, 2003, Auto Data Network acquired all of the
outstanding shares of stock of AutoMatrix UK Limited,
("Automatrix"), a registered in England and based in East
Yorkshire. The terms of the agreement are subject to a
confidentiality agreement which is reflected in the Share Sale
Agreement executed between the parties.
Established in 1999, Automatrix is an automotive retailer based
in northeastern England. AutoMatrix seeks to market itself as a
low cost, independent, flexible and portable vehicle retail
format which seeks to achieve a high level of customer
satisfaction. AutoMatrix seeks to blend technology with the
essential ingredients of the more traditional sales route, -
"clicks and mortar," to give its customers maximum choice and
value.
No physical stock of automobiles is maintained by AutoMatrix
which maximizes the extent of choices for consumers while keeping
overhead costs to a minimum. Customers are assured of getting
exactly the automobile they want through consultation with an
independent vehicle sales expert who is impartial and independent
of any one automobile maker or brand. Maximum value is assured
through the effective 'buy to order' policy substantially
reducing the costs of stocking and the subsequent premises and
people costs. All vehicles are fully inspected prior to purchase
and are fully warranted. AutoMatrix also offers a comprehensive
range of financial products and services together with part
exchange facilities.
ACQUISITION OF MAM SOFTWARE LTD.
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On January 18, 2003, a Share Sale Agreement was executed relating
to the acquisition by Auto Data Network of the entire Share
Capital of MAM Software Ltd, ("MAM") a company registered in
England and based in Sheffield, South Yorkshire. MAM are a
systems and software implementation and development company with
an annual revenue base in excess of $13,000,000 and with
employees of 150 over four locations in the British Isles and one
in California, USA. Under the terms of the agreement, Auto Data
Network shall provide consideration for the entire outstanding
shares of MAM of to the shareholders of MAM, valued at GBP
2,500,000 Sterling Pounds by way of an issuance of 2,000,000
restricted shares of common stock of Auto Data Network.
Completion of the transaction is scheduled to occur not later
than 28 days after the date of the Agreement. An additional
payment of GBP 2,500,000 Sterling Pounds shall be made to the
shareholders of MAM within six (6) months after the completion
date.
MAM Software is a supplier of computer software and systems
within the automotive aftermarket and marine trade. It provides a
complete range of products covering all aspects of sales, stock
and purchase control linked to a full range of accounting
systems. These systems apply to Motor/Marine Factors and
Distributers, Parts Retailers and Garages. MAM Software offers a
service that covers installation of new computer systems followed
by comprehensive support and maintenance. Its range of software
products are known as "Auto Part", a complete system for
whosesalers and retailers, "Auto Work", a computer system for
garages and workshops, "Auto cat", a stand alone electronic
catalogue, and "Autonet" a service for establishing and
maintaining a presence on the world wide web. MAM Software
currently maintains four sites in the United Kingdom and Republic
of Ireland. It is considered a preeminent system supplier to the
Automotive Parts Aftermarket.
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
There were no matters submitted to a vote of security holders
during the last quarter.
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
None.
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: January 29, 2003