As filed with the Securities and Exchange Commission on May 15, 2007
File No.___________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-1 (Alternative 2)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AUTO DIRECT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Nevada 7370 20-8614075
- ------------------------------ ------------------------ ------------------
(State or jurisdiction of (Primary Industrial I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.
46 Nelson Street, Oakville, Ontario, Canada L6L 3H6 (905) 338-5744
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(Address, including the ZIP code & telephone number, including area code of
Registrant's principal executive office)
46 Nelson Street, Oakville, Ontario, Canada L6L 3H6 (905) 338-5744
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(Address of principal place of business or intended principal place of business)
John Campbell
46 Nelson Street, Oakville, Ontario, Canada L6L 3H6 (905) 338-5744
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(Name, address, including zip code, and telephone number, including area code of
agent for service)
Copies to: Bradley D. Harrison
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Law Office of Bradley D. Harrison
8318 Trail Lake Dr,
Rowlett, Texas 75088
(972) 412-5041 Tel
(214) 607-1729 Fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
securities Act registration number of the earlier effective registration
statement for the same offering. |_|
-----------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the securities Act
registration number of the earlier effective registration statement for the same
offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the securities Act
registration number of the earlier effective registration statement for the same
offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |_|
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Title of Each Amount Proposed Minimum/Maximum Amount of
Class of Securities To be Offering Price Proposed Aggregate Registration
to be Registered Registered Per Share (1) Offering (1) Fee
- --------------------------------------------------------------------------------------------------
Common stock,
$0.001 par value
Minimum 150,000 $0.50 $ 75,000 $ 10
Maximum 1,000,000 $0.50 $ 500,000 $ 64
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Total maximum 1,000,000 $0.50 $ 500,000 $ 64
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the registration statement
shall hereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933. |X|
(1) Estimated solely for the purpose of calculating the registration fee.
INITIAL PUBLIC OFFERING
PROSPECTUS
AUTO DIRECT HOLDINGS, INC.
Minimum of 150,000 shares of common stock, and a
Maximum of 1,000,000 shares of common stock
$0.50 per share
We are making a best efforts offering to sell common stock in our
company. The common stock will be sold by our sole officer and director, John
Campbell after the effective date of this registration statement. The offering
price was determined arbitrarily and we will raise a minimum of $75,000 and a
maximum of $500,000. The money we raise in this offering before the minimum
amount, $75,000, is sold will be deposited in a separate non-interest bearing
bank account where the funds will be held for the benefit of those subscribing
for our shares, until the minimum amount is raised at which time we will deposit
them in our bank account and retain the transfer agent who will then issue the
shares. The offering will end on November 6, 2007 and if the minimum
subscription is not raised by the end of the offering period, all funds will be
refunded promptly to those who subscribed for our shares, without interest.
There is no minimum purchase requirement for subscribers.
The Offering:
150,000 shares 1,000,000 shares
Minimum offering Maximum offering
---------------- ----------------
Per Share Amount Per Share Amount
--------- ------ --------- -------
Public Offering Price $0.50 $ 75,000 $0.50 $500,000
Offering expenses are estimated to be $16,769 if the minimum number of shares
are sold, which equates to $0.08 per share, and $33,769 if the maximum number of
shares are sold, which equates to $0.04 per share.
There is currently no market for our shares. We intend to work with a market
maker who would then apply to have our securities quoted on the over-the-counter
bulletin Board or on an exchange as soon as practicable after our offering. We
will close our offering on November 6, 2007. However, it is possible that we do
not get trading on the over-the-counter bulletin Board, and if we do get quoted
on the bulletin board, we may not satisfy the listing requirements for an
exchange, which are greater than that of the bulletin board.
----------------------------
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY
IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-----------------------------
This Prospectus is dated __________________________
1
PROSPECTUS SUMMARY
OUR COMPANY
We were formed as a corporation on June 29, 2006 under the laws of the
State of Nevada in order to acquire 100% of the outstanding stock of Auto Direct
Automotive Supply, Inc. (ADAS). On June 30, 2006, the Company issued 4,500,000
of common stock in exchange for a 100% equity interest in ADAS. As a result of
the share exchange, ADAS became the wholly owned subsidiary of the Company and
the shareholders of ADAS owned 100% of the Company's voting common stock. The
Company accounted for the exchange as a transaction between entities under
common control, and recognized their carrying amounts at the date of transfer.
The financial statements and business have been described as if the Company had
always been the reporting entity. Our executive offices are located at 46 Nelson
Street, Oakville, Ontario, Canadad L6L 3H6. We provide online drivers test
preparation for persons preparing to take the Ontario drivers license test. The
funds raised in this offering will be used to further develop our business and
expand into other markets.
THE OFFERING
Our sole officer and director will be selling the offering.
Minimum Midpoint Maximum
--------- --------- ---------
Common shares offered 150,000 500,000 1,000,000
Common shares outstanding before this offering 5,000,000 5,000,000 5,000,000
--------- --------- ---------
Total shares outstanding after this offering 5,150,000 5,500,000 6,000,000
Officers, directors and their affiliates will not be able to purchase shares in
this offering.
SUMMARY FINANCIAL DATA
The following table sets forth certain of our summary financial
information. This information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this prospectus.
Audited
Balance Sheet: Dec 31, 2006
------- ------ ------------
Working Capital $ ( 55,605)
Total Assets $ 4,242
Total Liabilities $ 59,847
Stockholders' Equity $ ( 55,605)
Audited
Twelve months
Statement of Operations: Dec 31, 2006
--------- -- ----------- ------------
Revenue $ -0-
Operating Expense $( 14,450)
Other income (expense) $ 3,039
Net Income (loss) $( 11,411)
Income per share: Basic & diluted ($0.003)
No. Shares outstanding 4,500,000
2
RISK FACTORS
You should carefully consider the risks described below and all other
information contained in this prospectus before making an investment decision.
We have identified all material risks known to, and anticipated by, us as of the
filing of this registration statement.
WE HAVE A LIMITED OPERATING HISTORY, HAVING DEVELOPED OUR SOFTWARE AND WEBSITE,
WITH CUMULATIVE LOSSES SINCE INCEPTION THAT COULD CAUSE US TO RUN OUT OF MONEY
AND CLOSE OUR BUSINESS.
We have an accumulated deficit from operations. There is not sufficient gross
revenue and profit to finance our planned growth and, without additional
financing as outlined in this prospectus, we could continue to experience losses
in the future. We may incur significant expenses in promoting our business, and
as a result, will need to generate significant revenues over and above our
current revenue to achieve consistent profitability. If we are unable to achieve
that profitability, your investment in our common stock may decline or become
worthless.
WE RELY ON OUR SOLE OFFICER FOR DECISIONS AND HE MAY MAKE DECISIONS THAT ARE NOT
IN THE BEST INTEREST OF ALL STOCKHOLDERS.
We rely on our sole officer, John Campbell, to direct the affairs of the company
and rely upon him competently operate the business. We do not have key man
insurance on our sole officer and director and have no employment agreements
with him. Should something happen to our sole officer, this reliance on a single
person could have a material detrimental impact on our business and could cause
the business to lose its place in the market, or even fail. Such events could
cause the value of our stock to decline or become worthless.
OUR SOLE OFFICER WILL RETAIN SUBSTANTIAL CONTROL OVER OUR BUSINESS AFTER THE
OFFERING AND MAY MAKE DECISIONS THAT ARE NOT IN THE BEST INTEREST OF ALL
STOCKHOLDERS.
Upon completion of this offering, our sole officer, John Campbell, will, in the
aggregate, beneficially own approximately 87.10% (or 73.64% if maximum is sold)
of the outstanding common stock. As a result, our sole officer will have the
ability to control substantially all the matters submitted to our stockholders
for approval, including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of our assets. He will also
control our management and affairs. Accordingly, this concentration of ownership
may have the effect of delaying, deferring or preventing a change in control of
us, impeding a merger, consolidation, takeover or other business combination
involving us or discouraging a potential acquirer from making a tender offer or
otherwise attempting to take control of us, even if the transaction would be
beneficial to other stockholders. This in turn could cause the value of our
stock to decline or become worthless.
WE MAY HAVE TO RAISE ADDITIONAL CAPITAL WHICH MAY NOT BE AVAILABLE OR MAY BE TOO
COSTLY, WHICH, IF WE CANNOT OBTAIN, COULD CAUSE US TO HAVE TO CEASE OUR
OPERATIONS.
Our capital requirements could be more than our operating income. As of December
31, 2006, our cash balance was $4,124. We do not have sufficient cash to
indefinitely sustain operating losses, but believe we can continue for twelve
months without any additional funding, but upon raising the minimum amount in
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this offering, believe that will take us to the point that we will be able to
sustain operations for at least a year if we raise no other capital. Our
potential profitability depends on our ability to generate and sustain
substantially higher net sales with reasonable expense levels. We may not
operate on a profitable basis or that cash flow from operations will be
sufficient to pay our operating costs. We anticipate that the funds raised in
this offering will be sufficient to fund our planned growth for the year after
we close on the offering assuming we raise the minimum amount in this offering.
Thereafter, if we do not achieve profitability, we will need to raise additional
capital to finance our operations. We have no current or proposed financing
plans or arrangements other than this offering. We could seek additional
financing through debt or equity offerings. Additional financing may not be
available to us, or, if available, may be on terms unacceptable or unfavorable
to us. If we need and cannot raise additional funds, further development of our
business, upgrades in our technology, additions to our product lines may be
delayed or postponed indefinitely; if this happens, the value of your investment
could decline or become worthless.
NO PUBLIC MARKET FOR OUR COMMON STOCK CURRENTLY EXISTS AND AN ACTIVE TRADING
MARKET MAY NEVER MATERIALIZE, AND AN INVESTOR MAY NOT BE ABLE TO SELL THEIR
STOCK.
Prior to this offering, there has been no public market for our common stock. We
plan work with a market maker who would then apply to have our securities quoted
on the OTC Bulletin Board. In order to be quoted on the OTCBB, we must be
sponsored by a participating market maker who would make the application on our
behalf; at this time, we are not aware of a market maker who intends to sponsor
our securities and make a market in our stock. Assuming we become quoted, an
active trading market still may not develop and if an active market does not
develop, the market value could decline to a value below the offering price in
this prospectus. Additionally, if the market is not active or illiquid,
investors may not be able to sell their securities.
IF A PUBLIC TRADING MARKET FOR OUR COMMON STOCK MATERIALIZES, WE WILL BE
CLASSIFIED AS A `PENNY STOCK' WHICH HAS ADDITIONAL REQUIREMENTS IN TRADING THE
STOCK, WHICH COULD CAUSE YOU NOT TO BE ABLE TO SELL YOUR STOCK.
The U.S. Securities and Exchange Commission treats stocks of certain companies
as a `penny stock'. We are not aware of a market maker who intends to make a
market in our stock, but should we be cleared to trade, we would be classified
as a `penny stock' which makes it harder to trade even if it is traded on an
electronic exchange like the over-the-counter bulletin board. These requirements
include (i) broker-dealers who sell to customers must have the buyer fill out a
questionnaire, and (ii) broker-dealers may decide upon the information given by
a prospective buyer whether or not the broker-dealer determines the stock is
suitable for their financial position. These rules may adversely affect the
ability of both the selling broker-dealer and the buying broker-dealer to trade
your securities as well as the purchasers of your securities to sell them in the
secondary market. These requirements may cause potential buyers to be eliminated
and the market for the common stock you purchase in this offering could have no
effective market to sell into, thereby causing your investment to be worthless.
INVESTING IN A PENNY STOCK HAS INHERENT RISKS, AFFECTING BOTH BROKERS, BUYERS
AND SELLERS, WHICH COULD CAUSE THE MARKETABILITY OF YOUR STOCK TO BE LESSER THAN
IF THERE WERE NOT THOSE REQUIREMENTS.
4
When a seller of a `penny stock' desires to sell, they must execute that trade
through a broker. Many brokers do not deal in penny stocks, so a seller's
ability to market/sell their stock is reduced because of the number of brokers
who engage in trading such stocks. Additionally, if a broker does engage in
trading penny stocks, and the broker has a client who wishes to buy the stock,
they must have the client fill out a number of pages of paperwork before they
can execute the trade. These requirements cause a burden to some who may decide
not to buy because of the additional paperwork. Thus, the marketability of your
stock is less as a penny stock than as a stock listed on an exchange. This could
cause your investment to be worth less liquid and investors may not be able to
market their shares effectively.
SHAREHOLDERS PURCHASING SHARES IN THIS OFFERING WILL EXPERIENCE IMMEDIATE AND
SUBSTANTIAL DILUTION, CAUSING THEIR INVESTMENT TO immediaTELY BE WORTH LESS THAN
THEIR PURCHASE PRICE.
If you purchase common stock in this offering, you will experience an immediate
and substantial dilution in the projected book value of the common stock from
the price you pay in this initial offering. This means that if you buy stock in
this offering at $0.50 per share, you will pay substantially more than our
current shareholders. The following represents your dilution: (a) if the minimum
of 150,000 shares are sold, an immediate decrease in book value to our new
shareholders from $0.50 to $0.00 per share and an immediate dilution to the new
shareholders of $0.50 per common share; (b) if the midpoint of 500,000 shares
are sold, an immediate decrease in book value to our new shareholders from $0.50
to $0.03 per share and an immediate dilution to the new shareholders of $0.47
per common share. and (c) if the maximum of 1,000,000 shares are sold, an
immediate decrease in book value to our new shareholders from $0.50 to $0.07 per
share and an immediate dilution to the new shareholders of $0.43 per common
share.
INVESTORS ARE NOT ABLE TO CANCEL THEIR SUBSCRIPTION AGREEMENTS THEY SIGN,
THEREFORE LOSING ANY CHANCE TO CHANGE THEIR MINDS.
Once the Company receives an investors subscription, they will not be able to
cancel their subscription. The investor will therefore lose any right or
opportunity to change their mind after receipt by the Company.
OUR OFFERING PRICE OF $0.50 WAS DETERMINED ARBITRARILY BY OUR PRESIDENT. YOUR
INVESTMENT MAY NOT BE WORTH AS MUCH AS THE OFFERING PRICE BECAUSE OF THE METHOD
OF ITS DETERMINATION.
The President arbitrarily determined the price for the offering of $0.50 per
share. As the offering price is not based on a specific calculation or metric
the price has inherent risks and therefore your investment could be worth less
than the offering price.
FORWARD LOOKING STATEMENTS
This prospectus contains forward looking statements. These forward
looking statements are not historical facts but rather are based our current
expectations, estimates and projections about our industry, our beliefs and our
assumptions. Words such as "anticipates", "expects", "intends", "plans",
5
"believes", "seeks" and "estimates", and variations of these words and similar
expressions, are intended to identify forward looking statements. These
statements are not guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond our control, are
difficult to predict and could cause actual results to differ materially from
those expressed, implied or forecasted in the forward looking statements. In
addition, the forward looking events discussed in this prospectus might not
occur. These risks and uncertainties include, among others, those described in
"Risk Factors" and elsewhere in this prospectus. Readers are cautioned not to
place undue reliance on these forward looking statements, which reflect our
management's view only as of the date of this prospectus.
DILUTION
If you purchase common stock in this offering, you will experience an
immediate and substantial dilution in the projected book value of the common
stock from the price you pay in this initial offering.
The book value of our common stock as of December 31, 2006 was negative
$55,605 or ($0.01) per share. Projected book value per share is equal to our
total assets, less total liabilities, divided by the number of shares of common
stock outstanding.
After giving effect to the sale of common stock offered by us in this
offering, and the receipt and application of the estimated net proceeds (at an
initial public offering price of $0.50 per share, after deducting estimated
offering expenses), our projected book value as of December 31, 2006 would be:
$7,729 or $0.00 per share, if the minimum is sold, $175,229 or $0.03 per share,
if the midpoint amount is sold, and $415,729 or $0.07 per share, if the maximum
is sold.
This means that if you buy stock in this offering at $0.50 per share,
you will pay substantially more than our current shareholders. The following
represents your dilution:
if the minimum of 150,000 shares are sold, an immediate decrease in book value
to our new shareholders from $0.50 to $0.00 per share and an immediate dilution
to the new shareholders of $0.50 per common share.
if the midpoint amount of 500,000 shares are sold, an immediate decrease in book
value to our new shareholders from $0.50 to $0.03 per share and an immediate
dilution to the new shareholders of $0.47 per common share.
if the maximum of 1,000,000 shares are sold, an immediate decrease in book value
to our new shareholders from $0.50 to $0.07 per share and an immediate dilution
to the new shareholders of $0.43 per common share.
The remainder of this page intentionally left blank
6
The following table illustrates this per share dilution:
Minimum Midpoint Maximum
Assumed initial public offering price $ 0.50 $ 0.50 $ 0.50
Book value as of December 31, 2006 $(0.01) $(0.01) $(0.01)
Projected book value after this offering $ 0.00 $ 0.03 $ 0.07
Increase attributable to new stockholders: $ 0.01 $ 0.04 $ 0.08
Projected book value
as of December 31, 2006 after this offering $ 0.00 $ 0.03 $ 0.07
Decrease to new stockholders $(0.50) $(0.47) $(0.43)
Percentage dilution to new stockholders 100% 94% 86%
The following table summarizes and shows on a projected basis as of
December 31, 2006, the differences between the number of shares of common stock
purchased, the total consideration paid and the total average price per share
paid by the existing stockholders and the new investors purchasing shares of
common stock in this offering:
MINIMUM OFFERING
- ------- --------
Number Percent Average
of shares of shares Amount price per
owned owned paid share
----- ----- ---- -----
Current shareholders 4,500,000 96.77 $ 2 $ 0.00
New investors 150,000 2.23 $ 75,000 $ 0.50
===============================================================================================
Total 4,650,000 100.00 $ 75,002
MIDPOINT OFFERING
- -------- --------
Number Percent Average
of shares of shares Amount price per
owned owned paid share
----- ----- ---- -----
Current shareholders 4,500,000 90.00 $ 2 $ 0.00
------------------------------------------------------------
New investors 500,000 10.00 $250,000 $ 0.50
===============================================================================================
Total 5,000,000 100.00 $250,002
MAXIMUM OFFERING
- ------- --------
Number Percent Average
of shares of shares Amount price per
owned owned paid share
----- ----- ---- -----
Current shareholders 4,500,000 81.82 $ 2 $ 0.00
------------------------------------------------------------
New investors 1,000,000 18.18 $ 500,000 $ 0.50
===============================================================================================
Total 5,500,000 100.00 $ 500,002
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PLAN OF DISTRIBUTION
The common stock is being sold on our behalf by our sole officer and
director, who will receive no commission on such sales. All sales will be made
by personal contact by our sole officer and director, John Campbell. We will not
be mailing our prospectus to anyone or soliciting anyone who is not personally
known by Mr. Campbell, or introduced to Mr. Campbell and personally contacted by
him or referred to him. We have no agreements, understandings or commitments,
whether written or oral, to offer or sell the securities to any individual or
entity, or with any person, including our attorney, or group for referrals and
if there are any referrals, we will not pay finders fees.
Mr. Campbell will be selling the common stock in this offering relying
on the safe harbor from broker registration under the Rule 3a4-1(a) of the
Securities Exchange Act of 1934. Mr. Campbell qualifies under this safe harbor
because Mr. Campbell (a) is not subject to a statutory disqualification, (b)
will not be compensated in connection with his participation by the payment or
other remuneration based either directly or indirectly on transactions in the
securities, (c) is not an associated person of a broker dealer, and has not been
an associated person of a broker dealer within the preceding twelve months, and
(d) primarily performs, and will perform, after this offering, substantial
duties for the issuer other than in connection with the proposed sale of
securities in this offering, and he is not a broker dealer, or an associated
person of a broker dealer, within the preceding 12 months, and he has not
participated in selling securities for any issuer in the past 12 months and
shall not sell for another issuer in the twelve months following the last sale
in this offering.
Additionally, he will be contacting relatives, friends and business
associates to invest in this offering and provide them with a printed copy of
the prospectus and subscription agreement. No printed advertising materials will
be used for solicitation, no internet solicitation and no cold calling people to
solicit interest for investment. Officers, directors and affiliates may not
purchase shares in this offering.
The money we raise in this offering before the minimum amount is sold
will be deposited in a separate non-interest bearing bank account where the
funds will be held for the benefit of those subscribing for our shares, until
the minimum amount is raised at which time we will deposit the funds in our bank
account and retain the transfer agent who will then issue the shares. We do not
have an escrow agreement or any other agreement regarding the custody of the
funds we raise. The offering will end on November 6, 2007 and if the minimum
subscription is not raised by the end of the offering period, all funds will be
refunded promptly to those who subscribed for our shares, without interest. The
offering will close on November 6, 2007, if not terminated sooner.
The subscription agreement will provide investors the opportunity to
purchase shares at $0.50 per share by purchasing directly from the Company. The
agreement also provides that investors are not entitled to cancel, terminate or
revoke the agreement. In addition, if the minimum subscription is not raised by
November 6, 2007, the subscription agreement will be terminated and any funds
received will be promptly returned to the investors.
Certificates for shares of common stock sold in this offering will be
delivered to the purchasers by Signature Stock Transfer, Inc., the stock
transfer company chosen by the company as soon as the minimum subscription
amount is raised. The transfer agent will only be engaged in the event that we
obtain at least the minimum subscription amount in this offering.
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USE OF PROCEEDS
The total cost of the minimum offering is estimated to be $16,769, or
$33,769 if the maximum is sold consisting primarily of legal, accounting and
blue sky fees.
The following table sets forth how we anticipate using the proceeds
from selling common stock in this offering, reflecting the minimum and maximum
subscription amounts:
$75,000 $250,000 $500,000
Minimum Mid-Level Maximum
------- --------- --------
Legal, Accounting & Printing Expenses 7,000 13,000 21,000
Other Offering Expenses 9,736 7,736 9,736
Net Proceeds to Company 58,264 227,264 469,264
--------------------------------
TOTAL $ 75,000 $250,000 $500,000
The following describes each of the expense categories:
* legal, accounting and printing expense is the estimated costs associated with
this offering. As more shares are sold, we anticipate legal fees to increase due
to the liklihood of investors being from other states which could result in
state blue sky securities filings. Although our legal fees are not contingent on
the number of shares sold, it is likely that the legal fees will increase as our
attorney will charge us for these filings. Also, as more shares are sold, our
printing expenses will increase. * other offering expenses includes SEC
registration fee, blue sky fees and miscellaneous expenses with regards to this
offering.
The following table sets forth how we anticipate using the net proceeds to the
company:
$75,000 $250,000 $500,000
Minimum Mid-level Maximum
-------- --------- --------
Web site development $ 4,500 $ 12,000 $ 22,000
Marketing/Advertising 26,264 158,000 350,000
Salaries and wages 12,000 24,000 50,000
Professional fees 9,000 19,000 28,000
General corporate overhead (1) 6,500 14,264 19,264
-------- -------- --------
Proceeds to company $ 58,231 $227,264 $469,264
(1) General Corporate overhead includes office rents, office supplies,
utilities, taxes, and any other administrative expense incurred in the normal
course of business.
We do not plan to use any of the proceeds to pay off notes payable owed by the
Company. Additionally, all amounts allocated for salaries/commissions will be
for new hires and not for officers or directors of the company. For a more
detailed discussion of the use of proceeds, reader is referred to the discussion
of Use of Proceeds on page 15 of this offering.
DESCRIPTION OF BUSINESS
AutoDirect, Inc. is a Nevada corporation which was incorporated in
2006. In this report, we refer to Autodirect, Inc. as "we," "us" or "AD" unless
we specifically state otherwise or the context indicates otherwise. We are an
on-line web based driver test organization that currently markets to the Ontario
Canada province.
9
We are a web based driver education instructional web site offering a
comprehensive How-to-Get-Their-License program. We are based in Ontario Canada
and serve the Ontario province as our program is oriented to the Ontario
Government's Driver's Handbook.
ABOUT ONTARIO CANADA (SOURCE: HTTP://EN.WIKIPEDIA.ORG/WIKI/ONTARIOR).
Ontario is a province located in the east-central part of Canada, the largest by
population and second largest (after Quebec) in total land area. Ontario is
bordered by the provinces of Manitoba to the west, Quebec to the east, and the
United States to the south. The capital of Ontario is Toronto, the largest city
in Canada. Ottawa, the capital city of Canada, is also located in Ontario.
The 2006 Census indicated 12,160,282 residents lived in Ontario representing
38.5% of the national population of Canada. Canada's statistical measure of a
"metro area", the Census Metropolitan Area (CMA), roughly bundles together
population figures from the core municipality with those from "commuter"
municipalities. For the Toronto CMA, the estimated 2005 population totaled
5,304,100 residents.
To date, our marketing activities have primarily been concentrated in word of
mouth and customer referrals. We generate revenues through the offering of
on-line tests.
Our web site has a compilation of over 300 questions that prepare a driver for
the G1 test. These questions are random and all quizzes on our web site will not
duplicate. Questions include road signs and general knowledge rules with
photographs and live animations.
We offer three (3) Quiz Packs, Quiz Pack 1 includes two (2) quizzes just to get
a new driver started in becoming familiar with road rules and signs. Quiz Pack 2
includes four (4) quizzes which is comprehensive and provide all the basics a
new driver needs to know. Our third quiz Pack includes Six (6) quizzes and is
extremely comprehensive in its test of a potential driver's knowledge of road
safety, rules, and driving acumen. These quizzes vary in price, currently in a
range from $580.00 (CD) to $920.00 (CD).
The information on this web site, including the sample test questions and
answers, is provided for the purpose of assisting individuals in their
preparation for the written test required for each Provincial Driver's license
(the "Test"). The questions have been written in a style that is similar to
those contained in the Test and cover the same subject matter but are not the
same questions that will appear on the same. The questions are intended to
supplement the material provided within each provincial 'drivers guide' and not
to replace the same. Individuals intending to take the Test must make themselves
familiar with all of the material in the Guide. Drivers Web test do not make any
representations or warranties that any individual making use of the sample
questions and answers on this web site will be successful in obtaining a valid
Drivers license for Ontario.
The sample questions and answers are based upon the available Provincial
'Drivers Guide' as of November 1, 2003. In the event of any omission of
information from this web site or any contradiction or difference between
anything herein and the applicable statutes or regulations, the individual must
read and rely on the Acts or regulations or obtain independent legal advice. In
no event shall Drivers Web test be liable for any special, incidental or
consequential damages or any damages whatsoever, including but not limited to
injury, damage, loss of data, loss of revenues, loss of prospective economic
advantage arising out of the use or misuse of any information on this web site.
10
A portion of the proceeds of this offering will be used to further develop other
markets in Canada, specifically branching into the remaining provinces. Market
viability will be determined based on population. Consequently, market
development will initially be focused on the provinces of Quebec (population
7,651.5 million), British Columbia (population 4,310.5 million), Alberta
(population 3,375.8 million), and Manitoba (population 1,177.8 million)1.
THE AUTODIRECT PROGRAM:
THE HOW-TO-GET-THEIR-LICENSE TRIP IN ONTARIO: FROM ZERO TO FULLY-LICENSED
DRIVING.
Drivers will be required to pass all of the following tests to get their
learner's permit:
o Vision test
o Knowledge test including roads signs and rules of the road
HOW TO GET STARTED (EVEN BEFORE TURNING 16)
Obtain a copy of the Ontario Government's Driver's Handbook from a Motor Vehicle
License Office or bookstore. This can be done before turning 16 years old. We
advise students to study it thoroughly in order to be ready to pass the written
test at an Ontario Government Ministry of Transport driver test center. We also
advise students to obtain the address of the office nearest them from the Blue
Pages in the phone book.
Once turning 16, a student can write a test at a driver test center. They will
be asked questions based on the contents of the Driver's Handbook, including
traffic laws, the rules of the road, recognition and understanding of lights and
signs, safety rules, etc. They must obtain 80% on the test to pass. they must
also pass a vision test, show identification (a social insurance card, birth
certificate, student ID card), and pay a fee of $125.
ONCE ONE HAS THEIR LEARNER'S PERMIT
If a student successfully passes the written test and the vision test, they will
get their G1 Permit. It will be their driver's license for up to 5 years from
date of issue. The $125 fee paid will also cover their first behind-the-wheel
driving test, which they can take after 12 months if they don't take a
recognized driver training course. If they take a recognized course, they can
try their road test in only 8 months, instead of 12.
RESTRICTIONS WITH THE G1 PERMIT
Until they pass their G1 road test, they must not drive without a fully-licensed
driver in the passenger seat beside them, and observe other important
restrictions and rules, namely:
1. The accompanying co-driver must have been licensed at least 4 years, and hold
a full Class G License. She/he is the only passenger allowed in their front
seat.
2. They must wait a minimum of 12 months to attempt the G1 test. But if they
take an approved driver program, an approved course, they can try their first
road test in only 8 months.
3. They must have 0 blood alcohol, and their co-driver must have a blood alcohol
content below .06%.
4. They cannot drive on any "400" series freeway (such as 401, 400, 407, etc.),
except with a licensed driving instructor. And they cannot drive at night
between the hours of 12 a.m. and 5 a.m.
5. They have to limit the number of passengers in the rear seats to the number
of seatbelts. Only their co-driver is allowed in the front seat.
- ------------------------
1 Source: Statistics Canada, CANSIM, table 051-0001. Last Modified 10-26-06.
11
6. They can only drive G class vehicles. Driving school grads advance to Level
Two 4 months sooner! After 8 months of practice-driving , they may try their G1
Road Test if they have an I.D.A. certificate to prove they've taken an approved
driving school course.
Otherwise, they must wait 12 months to take the G1 Road Test.
THE G1 ROAD TEST What they'll be tested on:
Driving situations and rules of the road including starting, stopping, turning,
passing vehicles and land driving, driving through controlled and uncontrolled
intersections, parallel parking and backing up, anticipation of hazardous
conditions, other safe driving practices like driving the right speed and
steering techniques.
The road test will consist of about 20 minutes of actual driving/turning/parking
with a government examiner, either in a controlled off-road test area, or on
public streets and roads. They can expect to be tested on turning corners, lane
position, lane changes, left turns at signalized intersections, parallel
parking, blind spot checks, proper car control and observance of the law. Due to
the more stringent second test, most examiners are now marking considerably more
errors.
PASS THEIR G1 ROAD TEST, AND DRIVE ANYWHERE, ANYTIME!
Pass their test, and they enter Level Two. It lasts at least 12 months. They can
drive at any time, day or night, alone, or with passengers, on any road or
highway in Ontario.
BUT THREE LEGAL RESTRICTIONS STILL APPLY:
1. They must drive with 0% blood alcohol.
2. As a teen they have to limit the number of passengers to 1 from midnight to
5am. Initially G2 drivers19 or under can only carry 1 passenger 19 or under.
After the first 6 months, and until driver earns the full G license or turns 20,
they can carry only 3 passengers aged 19 or under. These restrictions do not
apply if accompanied by a full G licensed driver with 4 years of driving
experience, in the front seat, or if the passengers are immediate family
members.
3. They can drive only G class vehicles.
THE G2 ROAD TEST
They can attempt their G2 driving test a minimum of 12 months after their G1
road test. The G2 test, if they pass, gives they full driving privileges.
They'll be tested on their defensive driving skills with a government examiner
for 30 minutes behind-the-wheel.
THEY CAN EXPECT TO BE TESTED ON:
o proper lane use
o proper observation skills
o mirror use
o blind spot checks
o appropriate space management
12
o S-approach when left turning at large intersections
o road side stop
o freeway driving
o parallel parking
o proper lane change procedure
o defensive driving throughout the test on public streets, roads and
possibly highways.
The Autodirect drivers program prepares students to test for and pass the G1
drivers test. The G1 license provides drivers independent mobility in that they
can drive without supervision and with passengers on any road in Ontario.
BUSINESS OPERATIONS:
GOVERNMENT REGULATION:
At the present time there are no Canadian or US Federal government regulations
on driver test preparatory tutorials over the internet.
OUR QUALIFICATIONS
Our qualifications are our reputation and experience in the industry.
INDUSTRY & COMPETITION:
Unlike the American marketplace, the Canadian market for drivers licenses and
testing are under the authority and oversight of each province's Ministry of
Transportation. As such, the Ministry of Transportation for Ontario province
directs students and potential license seekers to Ministry-Approved Beginner
Driver Education Courses. Driving schools in Ontario are not regulated, and the
Ministry of Transportation Ontario does not approve or regulate individual
schools. According to their web site (www.mto.gov.on.ca) choosing a school is a
personal choice. As they advise, not all driving schools offer ministry-approved
beginner driving education course. They advise to look for schools that offer
"MTO-approved beginner driver education courses", or "ministry-approved beginner
driving education courses". By taking an MTO-approved Beginner Driver Education
Course at a driving school, G1 license holders may qualify for a four-month
reduction in the 12-month minimum G1-license period as well as a potential
reduction in insurance premiums.
However, the MTO web site does not provide test quizzes that test the students
knowledge of road signs and rules of the road. Autodirect does provide this
learning tool through their website (www.driverswebtest.com).
At present, if a student wants to test their road rules and sign knowledge they
take driver education courses which involve time and money. AutoDirect competes
directly against these schools with the competitive advantage of allowing
students to pick the best time for them in a secure environment and in the
comfort of their own home. To the best of our knowledge, there is no competitor
offering this same service in a web based environment.
13
OUR BUSINESS STRATEGY
We are a web based driver education instructional web site offering a
comprehensive How-to-Get-Your-License program. This testing educates and tests a
students knowledge of road signs and rules of the road. The tests are geared
toward the G1 and G2 license categories.
Management is primarily consisted of our President and CEO. As CEO, he is
responsible for coordinating and leading the entire organization to achieve
optimal results and goals. This includes maintaining and updating the web site,
managing income and expenses, and marketing programs. Additionally, our CEO is
responsible for strategic planning.
AutoDirect has three major financial objectives to reach its goal of increasing
usership of their Ontario based drivers test web site and its desired expansion
into other key Canadian provinces:
1. Maintain web site content
2. Better manage expenses
3. Develop marketing strategies to increase customer traffic
MANAGEMENTS DISCUSSION AND PLAN OF OPERATIONS
As of December 31, 2006 our cash balance was $4,124 (USD) and at
December 31, 2005 it was $578.
Revenues for fiscal year 2006 totaled $0. Likewise, our 2005 revenues
were $0. We are just completed our website and are ready to market it.
The company experienced a loss of $6,437 for fiscal year 2005 and a loss of
$11,411 for fiscal year 2006. The loss in both years was attributable to the
inability of the company to generate sufficient revenue to offset overhead and
other fixed expenses, specifically our web site development costs.
The plan of operations for the 12 months following the commencement of this
offering will include the continued web site and revenue growth plan. The
Company plans to implement this growth plan by further web site development and
selling advertising on the web site. If the maximum amount is raised, we expect
to spend $22,000 on web site development.
Marketing and advertising costs will be determined by the amount raised in the
initial offering. If the maximum amount of $500,000 is raised, these costs are
projected to total $158,000 in the first 12 months of operation. As previously
mentioned, advertising costs will include targeted mailings to 15 and 16 year
old residents of Ontario province. If the minimum amount is raised in this
offering, in the first 12 months of operation, $26,264 is budgeted to be spent
on advertising.
We will not use the proceeds of the offering to pay down notes payable.
Generating Sufficient Revenue:
- ------------------------------
Since inception, we have generated revenue through minimal advertising,
referrals and word of mouth. For the next twelve months we plan to continue
generating revenue by the same means, but with more of an emphasis on
advertising. Marketing activities will concentrate on direct mail pieces to 15
and 16 year old Ontario province residents.
14
The Company plans to generate sufficient revenue by further developing its web
site to facilitate increased web based advertising sales.
Financing Needs:
- ----------------
Our cash flows since inception have not been adequate to support on-going
operations. As noted above, the Company's financing needs for the next twelve
months can and will be met even if the minimum offering amount is raised. We
believe that by raising the minimum amount of funds in this offering we will
have sufficient funds to cash flow our growth plans for a minimum of twelve
months.
DESCRIPTION OF PROPERTY
Our corporate facilities are located in a 1,250 sf office at 46 Nelson
Street, Oakville, Ontario Canada L6L 3H6.
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The directors and officers of the company, their ages and principal
positions are as follows:
John Campbell 69 Director, President; Secretary and Director
Background of Directors and Executive Officers:
John Campbell.
Originally from Port Colborne, Ontario, John graduated from Ryerson University
in 1959 from what is now their Mechanical Engineering Dept. He spent the next
twelve years working for Norton Company, (the world's largest supplier of
Abrasive Products), in various positions in sales, product engineering and
marketing. He traveled throughout Canada and in the later years became involved
internationally with Norton; investigating and implementing initiatives in other
countries, which might be implemented in Canada. In 1971 he switched careers and
became owner and President of Davis Forwarding, an international freight
forwarding company, handling export freight and project management of the
logistic side of foreign projects.He eventually sold this company to Livingston
International. In the late seventies in partnership with Lester Shoalts, they
formed Petrolon Canada and developed the lubricant product line and brand Slick
50. This was a part of a large international group of companies all now owned by
Quaker State. During this period, until 1997, John worked with international
companies in Europe, UK and South Africa. In 1997 with partners, they founded
Transcourt Inc., of which John Campbell is President. This company is now the
leading leasing company in Canada providing liquid bulk tankers to trucking
companies. He has also had involvement in many companies and ventures as an
investor and director. Auto Direct is one of these companies.
REMUNERATION OF DIRECTORS AND OFFICERS
Our sole officer and director received the following compensation for
the years of 2006 and 2005. He has no employment contract with the company.
15
Name of Person Capacity in which he served Aggregate
Receiving compensation to receive remuneration remuneration
- ---------------------- -----------------------------------------------
John Campbell President, Secretary 2006 - $0
and Treasurer 2005 - $0
As of the date of this offering, our sole officer is our only employee.
We have no plans to pay remuneration to any other officer in or associated with
our company. When we have funds and/or revenue, our board of directors will
determine any other remuneration at that time.
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
In June 2006, we exchanged 4,500,000 shares of common stock for 100% of
the outstanding stock of Auto Direct Automotive Services, Inc. In this
transaction, the president of the company received 4,050,000 shares of common
stock in consideration for his 90% ownership in ADAS.
Our President and Sole Director, John Campbell, has advanced funds to
the company. As of December 31, 2006, the date of financials included with this
filing, the company owed Mr. Campbell $12,299 and owed $26,506 to Socopar, Inc.,
a company controlled by Mr. Campbell.
As of the date of this filing, there are no other agreements or
proposed transactions, whether direct or indirect, with anyone, but more
particularly with any of the following:
* a director or officer of the issuer;
* any principal security holder;
* any promoter of the issuer;
* any relative or spouse, or relative of such spouse, of the above
referenced persons.
PRINCIPAL SHAREHOLDERS
The following table lists the officers, directors and stockholders who,
at the date hereof, own of record or beneficially, directly or indirectly, more
than 5% of the outstanding common stock, and all officers and directors of the
company:
Amount Amount
Owned Owned
Title / relationship Before the After the
to Issuer Name of Owner offering Percent offering Percent
- ---------- ------------- ---------------------------------------------
President, Secretary
and Director John Campbell 4,050,000 90.00%
Minimum 4,050,000 87.10%
Maximum 4,050,000 73.64%
No options, warrants or rights have been issued by the Company.
16
SIGNIFICANT PARTIES
The following table lists the relationship of the significant parties
to the issuer:
Relationship Name and
to Issuer business address
Officer John Campbell
and Director 46 Nelson Street
Oakville, Ontario L6L 3H6 Canada
Record owners of John Campbell
5% (or more) owner 46 Nelson Street
of equity securities Oakville, Ontario L6L 3H6 Canada
Beneficial owner of John Campbell
5% (or more) owner 46 Nelson Street
of equity securities Oakville, Ontario L6L 3H6 Canada
Counsel to Issuer Bradley D. Harrison
8318 Trail Lake Dr.
Rowlett, Texas 75088
SECURITIES BEING OFFERED
We are offering for sale common stock in our company at a price of
$0.50 per share. We are offering a minimum of 150,000 shares and a maximum of
1,000,000 shares. The authorized capital in our company consists of 50,000,000
shares of common stock, $0.001 par value per share. As of December 31, 2006, we
had 4,500,000 shares of common stock issued and outstanding.
Every investor who purchases our common stock is entitled to one vote
at meetings of our shareholders and to participate equally and ratably in any
dividends declared by us and in any property or assets that may be distributed
by us to the holders of common stock in the event of a voluntary or involuntary
liquidation, dissolution or winding up of the company.
The existing stockholders and all who subscribe to common shares in
this offering do not have a preemptive right to purchase common stock offered
for sale by us, and no right to cumulative voting in the election of our
directors. These provisions apply to all holders of our common stock.
RELATIONSHIP WITH ISSUER OF EXPERTS NAMED IN REGISTRATION STATEMENT
The experts named in this registration statement were not hired on a
contingent basis and have no direct or indirect interest in our company.
17
LEGAL PROCEEDINGS
We are not involved in any legal proceedings at this time.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have retained the same accountant, SF Partnership, LLP as our
independent certified public accountant. We have had no disagreements with them
on accounting and disclosure issues.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our bylaws provide that the liability of our officers and directors for
monetary damages shall be eliminated to the fullest extent permissible under
Delaware Law, which includes elimination of liability for monetary damages for
defense of civil or criminal actions. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
The position of the U.S. Securities & Exchange Commission under the Securities
Act of 1933:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the small business issuer pursuant
to the foregoing provisions, or otherwise, the small business issuer
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
We have no underwriting agreement and therefore no provision for
indemnification of officers and directors is made in an underwriting by a broker
dealer.
LEGAL MATTERS
Our attorney has passed upon the legality of the common stock issued
before this offering and passed upon the common stock offered for sale in this
offering. Our attorney is Bradley D. Harrison, Law Office of Bradley Harrison,
8318 Trail Lake Dr., Rowlett, Texas 75088.
EXPERTS
The financial statements as of December 31, 2006 and 2005, and for the
twelve months ended December 31, 2006 and 2005 of the company included in this
prospectus have been audited by SF Partnership, LLP, independent chartered
accountants, as set forth in their report. The financial statements have been
included in reliance upon the authority of them as experts in accounting and
auditing.
18
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our common
stock. We do not intend to declare or pay any dividends on our common stock in
the foreseeable future, but rather to retain any earnings to finance the growth
of our business. Any future determination to pay dividends will be at the
discretion of our board of directors and will depend on our results of
operations, financial condition, contractual and legal restrictions and other
factors it deems relevant.
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 2006. Our
capitalization is presented on:
* an actual basis;
* a pro forma basis to give effect to net proceeds from the sale of the
minimum number of shares (150,000) we plan to sell in this offering; and
* a pro forma basis to give effect to net proceeds from the sale of the
midpoint number of shares (500,000) we plan to sell in this offering; and
* a pro forma basis to give effect to the net proceeds from the sale of
the maximum number of shares (1,000,000) we plan to sell in this offering.
Actual After After After
Audited Minimum Midpoint Maximum
Dec 31, 2006 Offering Offering Offering
------------- ---------- ---------- ----------
Stockholders' equity
Common Stock, $0.001 par value;
50,000,000 shares authorized; 4,500 4,650 5,000 5,500
Additional Paid In Capital ( 4,498) 53,583 220,733 460,733
Comprehensive loss ( 5,103) ( 5,103) ( 5,103) ( 5,103)
Retained earnings ( 50,504) ( 50,504) ( 50,504) ( 50,504)
Total Stockholders' Equity ( 55,605) 7,769 175,229 415,729
Total Capitalization ( 55,605) 7,769 175,229 415,729
Number of shares outstanding 4,500,000 4,650,000 5,000,000 5,500,000
The Company has only one class of stock outstanding. The common stock
sold in this offering will be fully paid and non assessable, having voting
rights of one vote per share, have no preemptive or conversion rights, and
liquidation rights as is common to a sole class of common stock. The company has
no sinking fund or redemption provisions on any of the currently outstanding
stock and will have none on the stock sold in this offering.
TRANSFER AGENT
We will serve as our own transfer agent and registrar for the common
stock until such time as this registration is effective and we sell the minimum
offering, then we intend to retain Signature Stock Transfer, Inc., 2301 Ohio
Drive, Suite 100, Plano, Texas 75093.
19
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
(EXPRESSED IN U.S. DOLLARS)
CONTENTS
Report of Independent Registered Public Accounting Firm 1
Consolidated Balance Sheets 2
Consolidated Statements of Operations and Comprehensive Loss 3
Consolidated Statements of Stockholders' Deficit 4 - 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7 - 13
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
We have audited the accompanying consolidated balance sheets of AUTO
DIRECT HOLDINGS INC. AND SUBSIDIARY (the "Company") as of December 31, 2006 and
2005, and the consolidated statements of operations and comprehensive loss,
stockholders' deficiency and cash flows for each of the years in the two year
period ended December 31, 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 2006 and 2005, and the consolidated statements of operations
and comprehensive loss, and cash flows for each of the years in the two year
period ended December 31, 2006 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in note
1 to the consolidated financial statements, the Company is in the development
stage, experienced operating losses and has a working capital deficiency and an
accumulated deficit during the development stage. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans regarding these matters are described in note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ SF PARTNERSHIP, LLP
-------------------
SF PARTNERSHIP, LLP
TORONTO, CANADA CHARTERED ACCOUNTANTS
March 21, 2007
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Consolidated Balance Sheets
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
2006 2005
ASSETS
CURRENT
Cash $ 4,124 $ 578
Prepaid and other assets 118 118
-------------------------------
TOTAL CURRENT ASSETS 4,242 696
-------------------------------
TOTAL ASSETS $ 4,242 $ 696
-------------------------------
LIABILITIES
CURRENT
Accounts payable $ 12,910 $ 6,004
Accrued liabilities 8,032 -
Advances from related parties (note 3) 38,905 38,886
-------------------------------
TOTAL CURRENT LIABILITIES 59,847 44,890
-------------------------------
TOTAL LIABILITIES 59,847 44,890
-------------------------------
STOCKHOLDERS' DEFICIT
COMMON STOCK
Common stock, $0.001 par value per share;
50,000,000 shares authorized; 4,500,000 (2005
- 100) issued and outstanding 4,500 -
ADDITIONAL PAID-IN CAPITAL (4,498) 2
ACCUMULATED COMPREHENSIVE LOSS (5,103) (4,130)
ACCUMULATED DEFICIT DURING THE DEVELOPMENT STAGE (50,504) (40,066)
-------------------------------
TOTAL STOCKHOLDERS' DEFICIT (55,605) (44,194)
-------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,242 $ 696
-------------------------------
(The accompanying notes are an integral part of these consolidated financial
statements.)
- 2 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Operations and Comprehensive Loss
Years Ended December 31, 2006 and 2005
(Expressed in U.S. Dollars)
Cumulative from
November 14,
1991
(Inception) to
December 31,
2006 2005 2006
REVENUE $ - $ - $ -
--------------------------------------------------
EXPENSES
Professional fees 8,843 4,955 16,109
Consulting fees 4,150 - 4,150
Office and general 1,457 97 1,614
Website development costs - - 32,643
--------------------------------------------------
TOTAL OPERATING EXPENSES 14,450 5,052 54,516
--------------------------------------------------
LOSS BEFORE THE UNDERNOTED (14,450) (5,052) (54,516)
Recovery of website development costs (note 5) 4,012 - 4,012
-------------------------------------------------
LOSS BEFORE INCOME TAXES (10,438) (5,052) (50,504)
Provision for income taxes (note 4) - - -
-------------------------------------------------
NET LOSS (10,438) (5,052) (50,504)
Foreign currency translation adjustment (973) (1,385) (5,103)
-------------------------------------------------
COMPREHENSIVE LOSS $ (11,411) $ (6,437) $ (55,607)
=================================================
LOSS PER WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING DURING
THE YEAR
Basic and diluted $ (0.003) $ (0.001)
=================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING DURING
THE YEAR
Basic and diluted 4,500,000 4,500,000
=================================================
(The accompanying notes are an integral part of these consolidated financial
statements.)
- 3 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Stockholders' Deficit
Years Ended December 31, 2006 and 2005
(Expressed in U.S. Dollars)
ACCUMULATED
DEFICIT
COMMON ADDITIONAL ACCUMULATED DURING THE TOTAL
STOCK PAID-IN COMPREHENSIVE DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE CAPITAL LOSS STAGE DEFICIT
--------------------------------------------------------------------------------------------
Opening Balance, November
14, 1991
Net earnings 100 $ - $ 2 $ - $ - $ 2
--------------------------------------------------------------------------------------------
Balance, December 31, 1991
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1992
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1993
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1994
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1995
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1996
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1997
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1998
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 1999
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 2000
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 2001
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31. 2002
Net earnings 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
Balance, December 31, 2003 100 $ - $ 2 $ - $ - $ 2
-------------------------------------------------------------------------------------------
(The accompanying notes are an integral part of these consolidated financial
statements.)
- 4 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Stockholders' Deficit (cont'd)
Years Ended December 31, 2006 and 2005
(Expressed in U.S. Dollars)
ACCUMULATED
DEFICIT
COMMON ADDITIONAL ACCUMULATED DURING THE TOTAL
STOCK PAID-IN COMPREHENSIVE DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE CAPITAL LOSS STAGE DEFICIT
-------------------------------------------------------------------------------------------
Balance, December 31, 2003 100 $ - $ 2 $ - $ - $ 2
Foreign currency
translation
adjustment - - - (2,745) - (2,745)
Net loss - - - - (35,014) (35,014)
-------------------------------------------------------------------------------------------
Balance, December
31, 2004 100 - 2 (2,745) (35,014) (37,757)
Foreign currency
translation
adjustment - - - (1,385) - (1,385)
Net loss - - - - (5,052) (5,052)
-------------------------------------------------------------------------------------------
Balance, December
31, 2005 100 - 2 (4,130) (40,066) (44,194)
Share exchange transaction
on June 30, 2006 - issuance
of 4,500,000 common
shares in exchange for 100
common shares of Auto
Direct 4,500,000 4,500 (4,500) - - -
Automotive Supply, Inc.
(note 1) (100) - - - - -
Foreign currency translation
adjustment - - - (973) - (973)
Net loss - - - - (10,438) (10,438)
-------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2006 4,500,000 $ 4,500 $ (4,498) $ (5,103) $ (50,504) $ (55,605)
===========================================================================================
(The accompanying notes are an integral part of these consolidated financial
statements.)
- 5 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Consolidated Statements of Cash Flows
Years Ended December 31, 2006 and 2005
(Expressed in U.S. Dollars)
Cumulative from
November 14,
1991
(Inception) to
December 31,
2006 2005 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (10,438) $ (5,052) $ (50,504)
Adjustments for non-cash items:
Translation adjustment (973) (1,385) (5,103)
---------------------------------------------
(11,411) (6,437) (55,607)
Changes in non-cash working capital:
Prepaid and other assets - (118) (118)
Accounts payable 6,906 (8,222) 12,910
Accrued liabilities 8,032 - 8,032
----------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 3,527 (14,777) (34,783)
---------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related parties 19 13,127 38,905
Proceeds of issuance of common stock - - 2
---------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 19 13,127 38,907
---------------------------------------------
NET INCREASE (DECREASE) IN CASH 3,546 (1,650) 4,124
CASH - BEGINNING OF PERIOD 578 2,228 -
---------------------------------------------
CASH - END OF PERIOD $ 4,124 $ 578 $ 4,124
=============================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest and income taxes $ - $ - $ -
=============================================
(The accompanying notes are an integral part of these consolidated financial
statements.)
- 6 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
1. NATURE OF ACTIVITIES
Auto Direct Holdings Inc. (the "Company") is the parent company of Auto
Direct Automotive Supply, Inc. ("ADAS"), an Ontario, Canada company. ADAS
was established in 1991 and has been developing software to penetrate the
online automotive learning market. It has developed software for the
education and training of persons interested in taking the driver's
license test in Canada and plans to develop similar software for education
and training people in the United States.
The Company, a private holding company incorporated on June 29, 2006 under
the laws of the State of Nevada, was formed by the stockholders of ADAS in
order to acquire 100% of the outstanding common stock of ADAS. On June 30,
2006, the Company issued 4,500,000 shares of common stock in exchange for
a 100% equity interest in ADAS. As a result of the share exchange, ADAS
became the wholly owned subsidiary of the Company and the stockholders of
ADAS owned 100% of the Company's voting stock. The Company accounted for
the exchange as a transaction between entities under common control, and
recognized the transfer at their carrying amounts at the date of transfer.
These consolidated financial statements have been prepared as if the
Company had always been the reporting company.
Going Concern
The accompanying consolidated financial statements have been prepared on a
going concern basis, in accordance with accounting principles generally
accepted in the United States of America.
The going concern basis of presentation assumes that the Company will
continue in operation for the foreseeable future and will be able to
realize its assets and discharge its liabilities and contingencies in the
normal course of business.
There is doubt about the Company's ability to continue as a going concern
as it has operating losses of $10,438 (2005 - $5,052) and a working
capital deficiency of $55,605 (2005 - $44,194). The Company's ability to
continue as a going concern is dependent upon the ability to raise
additional capital and have profitable operations. The outcome of these
matters cannot be predicted at this time.
The consolidated financial statements have been prepared on a going
concern basis and do not include adjustments to the amounts and
classifications of the assets and liabilities that would be necessary if
the going concern basis was not appropriate.
- 7 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are in accordance with accounting
principals generally accepted in the United States of America, and their
basis of application is consistent. Outlined below are those policies
considered particularly significant:
a) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Auto Direct Automotive
Supply, Inc. All significant inter-company balances and transactions
have been eliminated on consolidation.
b) Financial Instruments
Unless otherwise noted, it is management's opinion that the company
is not exposed to significant interest, currency or credit risks
arising from the financial instruments. The fair value of the
financial instruments approximates their carrying values, unless
otherwise noted.
Foreign Currency Risk
---------------------
ADAS's operations are located in Canada, as a result, its assets,
liabilities, revenues and expenses are exposed to risk from foreign
exchange fluctuations.
c) Foreign Currency Translation
The Company accounts for foreign currency translation pursuant to
the Statement of Financial Accounting Standards ("SFAS") No. 52,
"Foreign Currency Translation". The Company's foreign subsidiary's
functional currency is the Canadian dollar. All assets and
liabilities of the Company's foreign subsidiary are translated into
United States dollars using the rate of exchange in effect at the
end of the year. Revenues and expenses are translated at the average
rate of exchange prevailing throughout the year. Translation
adjustments are reflected as a separate component of stockholders'
deficit in accumulated comprehensive loss for the year.
d) Earnings or Loss Per Share
The Company accounts for earnings (loss) per share pursuant to SFAS
No. 128, "Earnings Per Share", which requires disclosure on the
consolidated financial statements of "basic" and "diluted" earnings
(loss) per share. Basic earnings (loss) per share is computed by
dividing net income (loss) by the weighted average number of common
shares outstanding for the year. Diluted earnings (loss) per share
is computed by dividing net income (loss) by the weighted average
number of common shares outstanding plus potentially dilutive
securities outstanding for each year. Potentially dilutive
securities include stock options and warrants and shares of common
stock issuable upon conversion of a company's convertible notes.
Basic and diluted losses are the same because no options, warrants
or convertible preferred stock have been issued.
- 8 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)
e) Use of Estimates
The preparation of consolidated financial statements, in conformity
with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. These estimates are reviewed
periodically, and, as adjustments become necessary, they are
reported in earnings in the year in which they become known.
f) Comprehensive Loss
The Company adopted SFAS No. 130, "Reporting Comprehensive Income".
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income (loss) and its components in a full set of
consolidated financial statements. Comprehensive income (loss) is
presented in the consolidated financial statements of operations,
and consists of unrealized gains (losses) on available for sale
marketable securities; foreign currency translation adjustments and
changes in market value of future contracts that qualify as a hedge;
and negative equity adjustments recognized in accordance with SFAS
No. 87, "Employers' Accounting for Pensions". SFAS No. 130, requires
only additional disclosures in the consolidated financial statements
and does not affect the Company's financial position or results of
operations.
g) Income Taxes
The Company accounts for income taxes pursuant to SFAS No. 109,
"Accounting for Income Taxes". Deferred taxes are provided on a
liability method whereby deferred tax assets are recognized for
deductible temporary differences, and deferred tax liabilities are
recognized for taxable temporary differences. 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 effects of
changes in tax laws and rates on the date of enactment.
- 9 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)
h) Recent Accounting Pronouncements
In February 2006, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 155, "Accounting for Certain Hybrid Financial
Instruments-an amendment of FASB Statements No. 133 and 140" ("SFAS
No. 155"). This statement permits fair value of remeasurement for
any hybrid financial instrument that contains an embedded derivative
that otherwise would require bifurcation; clarifies which interest
only strips and principal only strips are not subject to the
requirements of SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities"; establishes a requirement to evaluate
interests in securitized financial assets to identify interests that
are freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring
bifurcation; clarifies that concentrations of credit risk in the
form of subordination are not embedded derivatives; and amended SFAS
No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities", to eliminate the prohibition on
a qualifying special purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest other
than another derivative financial instrument. SFAS No. 155 is
effective for all financial instruments acquired, issued, or subject
to a remeasurement (new basis) event occurring after the beginning
of an entity's first fiscal year that begins after September 15,
2006. The Company is currently reviewing the effect, if any, the
proposed guidance will have on its financial position.
In March 2006, FASB issued SFAS No. 156, "Accounting for Servicing
of Financial Assets", which amends SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" ("SFAS No. 156"). In a significant change to current
guidance, SFAS No. 156 permits an entity to choose either of the
following subsequent measurement methods for each class of
separately recognized servicing assets and servicing liabilities:
(1) amortization method or (2) fair value measurement method. SFAS
No. 156 is effective as of the beginning of an entity's first fiscal
year that begins after September 15, 2006. The Company is currently
reviewing the effect, if any, the proposed guidance will have on its
financial position.
In June 2006, FASB issued Financial Accounting Standards
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 clarifies the accounting for uncertainty in
income taxes recognized in an enterprises' consolidated financial
statements in accordance with SFAS No. 109. FIN 48 prescribes a
recognition threshold and measurement attributable for the financial
statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance
on derecognition, classification, interest and penalties, accounting
in interim periods, disclosures and transitions. FIN 48 is effective
for fiscal years beginning after December 15, 2006. The Company is
currently reviewing the effect, if any, FIN 48 will have on its
financial position.
- 10 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd)
h) Recent Accounting Pronouncements (cont'd)
In September 2006, the FASB issued SFAS No. 157, "Fair Value
Measurements" ("SFAS No. 157"), which is effective for calendar year
companies on January 1, 2008. The statement defines fair value,
establishes a framework for measuring fair value in accordance with
generally accepted accounting principles, and expands disclosures
about fair value measurements. The statement codifies the definition
of fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The standard clarifies
the principle that fair value should be based on the assumptions
market participants would use when pricing the asset or liability
and establishes a fair value hierarchy that prioritizes the
information used to develop those assumptions. The Company is
currently assessing the potential impact of implementing this
standard.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value
Option for Financial Assets and Financial Liabilities" ("SFAS No.
159"), which permits entities to measure many financial instruments
and certain other items at fair value that are not currently
required to be measured at fair value. An entity would report
unrealized gains and losses on items for which the fair value option
has been elected in earnings at each subsequent reporting date. The
objective is to improve financial reporting by providing entities
with the opportunity to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. The
decision about whether to elect the fair value option is applied
instrument by instrument, with a few exceptions; the decision is
irrevocable; and it is applied only to entire instruments and not to
portions of instruments. SFAS No. 159 requires disclosures that
facilitate comparisons (a) between entities that choose different
measurement attributes for similar assets and liabilities and (b)
between assets and liabilities in the consolidated financial
statements of an entity that selects different measurement
attributes for similar assets and liabilities. SFAS No. 159 is
effective for consolidated financial statements issued for fiscal
years beginning after November 15, 2007. Early adoption is permitted
as of the beginning of a fiscal year provided the entity also elects
to apply the provisions of SFAS No. 157.
Upon implementation, an entity shall report the effect of the first
remeasurement to fair value as a cumulative-effect adjustment to the
opening balance of retained earnings. Since the provisions of SFAS
No. 159 are applied prospectively, any potential impact will depend
on the instruments selected for fair value measurement at the time
of implementation. The Company is currently evaluating the impact,
if any, adoption of SFAS No. 159 will have on its consolidated
financial statements.
- 11 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
3. ADVANCES FROM RELATED PARTIES
2006 2005
Socopar Inc., a company under common control $ 26,606 $ 26,593
Director 12,299 12,293
----------------------------
$ 38,905 $ 38,886
============================
These advances are unsecured, non-interest bearing, and are due on demand
with 180 days notice, in writing.
4. INCOME TAXES
The Company has adopted SFAS No. 109, which requires the use of the
liability method in the computation of income tax expense and the current
and deferred income taxes payable. Under SFAS No. 109, income tax expense
consists of taxes payable for the year and the changes during the year in
deferred assets and liabilities. Deferred income taxes are recognized for
the tax consequences in future years of differences between the tax basis
and financial reporting basis of assets and liabilities. Valuation
allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized.
The net deferred tax asset generated by the loss carry-forward has been
fully reserved. The cumulative net operating loss carry-forward is
approximately $22,438 at December 31, 2006, and will expire in the years
2024 through 2025.
The provision for refundable Federal income taxes consists of the
following:
2006 2005
Refundable Federal income tax attributable to:
Current operations $ 17,171 $ 3,549
Less: Change in valuation allowance (17,171) (3,549)
----------------------------
Net refundable amount $ - $ -
============================
- 12 -
AUTO DIRECT HOLDINGS INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
Notes to Consolidated Financial Statements
December 31, 2006 and 2005
(Expressed in U.S. Dollars)
4. INCOME TAXES (cont'd)
The cumulative tax effect at the maximum expected rate of 34% of
significant items comprising the Company's net deferred tax amounts are as
follows:
2006 2005
Deferred tax asset attributable to:
Net operating loss carryover $ 22,438 $ 5,267
Less: Valuation allowance (22,438) (5,267)
----------------------------
Net deferred tax asset $ - $ -
============================
The realization of deferred tax benefits is contingent upon future
earnings.
5. RELATED PARTY TRANSACTIONS
Included in the recovery of website development costs for the year ended
December 31, 2006 is a recovery of $4,012 (2005 - $nil) from Socopar Inc.,
a company under common control.
These transactions were in the normal course of business and recorded at
an exchange value established and agreed upon by the above related
parties.
- 13 -
No dealer, salesman or any other person has been authorized to give any
quotation or to make any representations in connection with the offering
described herein, other than those contained in this Prospectus. If given or
made, such other information or representation'; must not he relied upon as
having been authorized by the Company or by any Underwriter. This Prospectus
does not constitute an offer to sell, or a solicitation of an otter to buy any
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such an offer or solicitation in such jurisdiction.
TABLE OF CONTENTS
Prospectus Summary 2
Corporate Information 2
Summary Financial Data 2
Risk Factors 3
Forward Looking Statements 5
Dilution 6
Plan of Distribution 8
Use of Proceeds 9
Description of Business 9
Management's Discussion and Plan of Operations 14
Description of Property 15
Director's, Executive Officers and Significant Employees 15
Remuneration of Officers and Directors 15
Interest of Management and Others in Certain Transactions 16
Principal Shareholders 16
Significant Parties 17
Securities Being Offered 17
Relationship with Issuer of Experts Named in Registration Statement 17
Legal Proceedings 18
Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure 18
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities 18
Legal Matters 18
Experts 18
Dividend Policy 19
Capitalization 19
Transfer Agent 19
Financial Statements F-1
Until the 90th day after the later of (1) the effective date of the registration
statement or (2) the first date on which the securities are offered publicly),
all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 1. Indemnification of Directors and Officers
Our certificate of incorporation provides that the liability of our
officers and directors for monetary damages shall be eliminated to the fullest
extent permissible under Nevada Revised Statutues, which includes elimination of
liability for monetary damages for defense of civil or criminal actions. The
provision does not affect a director's responsibilities under any other laws,
such as the federal securities laws or state or federal environmental laws.
Article Thirteen of our Articles of Incorporation states:
A director of the corporation shall not be personally liable to the
corporation or its shareholders for monetary damages for any act or omission in
his capacity as a director, except to the extent otherwise expressly provided by
a statute of the State of Nevada. Any repeal or modification of this Article
shall be prospective only, and shall not adversely affect any limitation of the
personal liability of a director of the corporation existing at the time of the
repeal or modification.
Item 2. Other Expenses of Issuance and Distribution
All expenses, including all allocated general administrative and
overhead expenses, related to the offering or the organization of the Company
will be borne by the Company.
The following table sets forth a reasonable itemized statement of all
anticipated out-of-pocket and overhead expenses (subject to future
contingencies) to be incurred in connection with the distribution of the
securities being registered, reflecting the minimum and maximum subscription
amounts.
Minimum Maximum
------- -------
SEC Filing Fee $ 64 $ 64
Printing and Engraving Expenses 1,000 5,000
Legal Fees and Expenses 2,500 15,500
Edgar Fees 2,800 2,800
Accounting Fees and Expenses 3,000 3,000
Blue Sky Fees and Expenses 4,500 7,000
Miscellaneous 2,905 405
------- -------
TOTAL $16,769 $33,769
As more shares are sold, we anticipate legal fees to increase due to the
liklihood of investors being from other states which could result in state blue
sky securities filings. Although our legal fees are not contingent on the number
of shares sold, it is likely that the legal fees will increase as our attorney
will charge us for these filings. Also, as more shares are sold, our printing
expenses will increase.
21
Item 3. Undertakings
1(a) Rule 415 Offering. If the small business issuer is registering
securities under Rule 415 of the Securities Act (230.415 of this
chapter), that the small business issuer will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act; and
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
(230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned small business issuer
under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned small business issuer undertakes that in a primary
offering of securities of the undersigned small business issuer pursuant to his
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned small
business issuer will be a seller to the purchaser and will be considered to
offer or sell such securities to purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
small business issuer relating to the offering required to be
filed pursuant to Rule 424 (230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering prepared
by or on behalf of the undersigned small business issuer or
used or referred to by the undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to
the offering containing material information about the
undersigned small business issuer or its securities provided
by or on behalf of the undersigned small business issuer; and
(iv) Any other communication that is an offer in the offering made
by the undersigned small business issuer to the purchaser.
Registrant hereby undertakes to request acceleration of the effective
date of the registration statement under Rule 461 of the Securities Act:
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than payment by the small business issuer of expenses incurred or paid by
22
a director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter ahs been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed by the Securities Act and will be governed by
the final adjudication of such issue.
Item 4. Unregistered Securities Issued or Sold Within One Year
In June 2006, the Company issued 4,500,000 shares of common stock in
exchange for 100 % of the outstanding common stock of Auto Direct Automotive
Services, Inc. (ADAS). Of the 4,500,000 shares issued, the President received
4,050,000 shares and two other non related individuals received 225,000, each
receiving their stock for their respective ownership in ADAS. This stock was
issued under the exemption under the Securities Act of 1933, section 4(2); this
section states that transactions by an issuer not involving any public offering
is an exempted transaction. The company relied upon this exemption because in a
private transaction in June 2006, the shareholders of a private corporation
received their respective shares for their ownership of ADAS which they received
for equity in ADAS. The certificates evidencing the securities bear legends
stating that the shares may not be offered, sold or otherwise transferred other
than pursuant to an effective registration statement under the Securities Act,
or an exemption from such registration requirements.
23
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets the
requirements for filing on Form SB-1 and authorized this Registration Statement
to be signed on its behalf by the undersigned, in the City of Toronto, Province
of Ontario, on May 15, 2007.
Auto Direct Holdings, Inc.
By: /s/ John Campbell
----------------------------
John Campbell, President
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, in the
capacities and on the dates stated.
Signature Title Date
- ------------------------------- ------------------------ ------------
/s/ John Campbell President, Secretary, May 15, 2007
- ------------------------------- Treasurer, Director
John Campbell
/s/ John Campbell Chief Executive Officer May 15, 2007
- -------------------------------
John Campbell
/s/ John Campbell Chief Financial Officer May 15, 2007
- -------------------------------
John Campbell
/s/ John Campbell Chief Accounting Officer May 15, 2007
- -------------------------------
John Campbell
24
Item 5. Exhibits
The following Exhibits are filed as part of the Registration
Statement:
Exhibit No. Identification of Exhibit
2.1 - Articles of Incorporation
2.4 - By Laws
3.1 - Specimen Stock Certificate
4.1 - Form of Subscription Agreement
10.1 - Consent of SF Partnership, LLP
11.1 - Opinion and Consent of the Law Office of Bradley D. Harrison
* Filed previously
25