UNITED STATES
SECURITIES EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended November 30, 2002
AUTO DATA NETWORK INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3944580
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State of Incorporation IRS Employer ID No.
The Forsythe Centre, Lamberts Road
Tunbridge Wells, Kent, UK
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Address of principal Executive Offices Zip Code
REGISTRANT'S TELEPHONE NUMBER 011 44 1892 511 566
Check here whether the issuer (1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days.
YES [X] NO [ ]
As of November 30, 2002, the following shares of the Registrant's common stock
were issued and outstanding:
Voting common stock 11,552,289
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . . . . . . . . . .3
CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .3
CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .4
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .5
Note 1. Nature of Business and Significant
Accounting Policies. . . . . . . . . . . . .7
Note 2. Use of Office Space. . . . . . . . . . . . .7
Note 3. Liquidity. . . . . . . . . . . . . . . . . .7
Note 4. Related Party Transaction. . . . . . . . . .8
Item 2. Management's Discussion And Analysis or Plan of
Operations. . . . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 14
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 14
Item 3. Defaults upon Senior Securities. . . . . . . . . . . 14
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . . . . 14
Item 5. Other information. . . . . . . . . . . . . . . . . . 14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 14
PART I - FINANCIAL INFORMATION
January 24, 2003
Board of Directors
Auto Data Network, Inc.
The Forsythe Centre, Lamberts Road
Tunbridge Wells, Kent, UK
Dear Board of Directors:
I have reviewed the accompanying Balance Sheet of Auto Data Network, Inc., as of
November 30, 2002, related Income Statement and the statement of Cash Flows for
the period then ended. These Financial Statements are the responsibility of the
Corporation's Management.
I conducted my review in accordance with generally accepted review standards in
the United States of America. Those standards require that I perform the review
to obtain reasonable assurance about whether the Financial Statements are free
of material misstatement. A review includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Financial Statements. A review
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall Financial Statement
presentation.
Very Truly Yours,
/s/ Frank E. Hanson
-----------------------
Frank E. Hanson, C.P.A.
AUTO DATA NETWORK INC.
CONSOLIDATED BALANCE SHEET
For the periods ending February 28, 2002 and November 30, 2002
As Of As Of
November 30,2002 February 28,2002
(Unaudited)
----------- -----------
ASSETS
Current Assets
Cash $ 13,227 $ 14
Accounts Receivable 940,265 31,468
Prepaid expenses 36,983 8,494
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Total Current Assets $ 990,475 $ 39,976
Fixed Assets $ 33,660 $ 24,762
Accumulated development and
Acquisition costs 7,264,914 4,772,242
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TOTAL ASSETS $ 8,289,049 $ 4,836,980
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable 1,058,702 327,885
Bank Overdraft 137,803 55,425
Accrued Expenses 371,830 224,822
Short-Term Bank & Borrowings
Loans 50,350 24,958
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Total Current Liabilities $ 1,618,684 $ 633,090
Other Liabilities
Accrued Tax 352,647 0
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Total Liabilities $ 1,971,331 $ 633,090
Stockholders' Equity
Common Stock, $.001 par value,
Authorized 25,000.000 Shares;
Issued and Outstanding
11,552,289 Shares 11,552 11,462
Additional Paid in Capital 7,092,543 5,383,018
Accumulated Other Income 356,302 (30,838)
Accumulated Deficit (1,142,679) (1,159,752)
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Total Stockholders' Equity $ 6,317,718 $ 4,203,890
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 8,289,049 $ 4,836,980
=========== ===========
The accompanying notes and accountant's report are an integral part of these
financial statements.
AUTO DATA NETWORK INC.
INCOME STATEMENT
FOR THE THREE MONTHS ENDING NOVEMBER 30, 2002
Three months Ending Three months Ending
November 30, 2002 November 30, 2001
(Reviewed) (Reviewed)
----------- -----------
Revenue $ 474,715 $ 39,988
Cost of Revenue (191,747) (39,711)
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Gross Margin $ 282,968 $ 277
Operating Expenses
Sales & Marketing $ 15,271 $ 0
General & Administrative 50,393 7,910
Depreciation 6,400 3,945
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Total Operating Expenses 72,104 11,855
Net Operating Profit $ 210,864 $ (11,608)
Interest Expense (6,021) (887)
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NET PROFIT/LOSS FROM
TRADING 204,843 (12,495)
EXTRAORDINARY ITEM
Write down of Goodwill (1,123,306)
Net Profit/Loss before tax $ 204,843 $(1,135,801)
Taxation (87,552)
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Net Profit/Loss $ 117,291 (1,135,801)
Net Profit Per Share 0.01053 (0.099)
Shares used in computing basic
And diluted net loss per share 11,552,289
The accompanying notes an integral part of these financial statements.
AUTO DATA NETWORK INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
November 30, 2002
For the 3 mos For the 3 mos
Ended Ended
November 30, 2002 November 30, 2001
(Unaudited) (Unaudited)
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CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income Profit $ 117,291 $(1,135,801)
Adjustments to Reconcile Net Loss
To Cash Used in Operating
Activities:
Depreciation and other non-cash
charges 6,440 3,945
Write off of Goodwill 0 1,123,303
Changes in Assets, Liabilities
and accrued expenses (112,174) (9,803)
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Total Adjustments $ 105,734 $ 1,117,448
Net Cash Provided/(Used in)
Operations 11,557 (18,353)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition 0 0
Investing Activities 0 0
CASH FLOWS FROM FINANCING
ACTIVITIES:
New Cash Provided 0 0
----------- -----------
Net Increase in Cash and
Equivalents 11,557 (18,353)
Cash and Cash Equivalents at
Beginning of Period 1,670 0
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Cash and Cash Equivalents at
End of Period $ 13,227 $ (18,353)
=========== ===========
The accompanying notes are an integral part of these financial statements
Auto Data Network Inc.
Notes to Financial Statements
November 30, 2002
NOTE 1. BASIS OF PRESENTATION
The financial statements are prepared on the accrual basis of accounting.
Accordingly, revenue is recognized when earned and expenses when incurred.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three ended November 30, 2002 compared with the same
period in the previous year are not necessarily indicative of the results that
may be expected for the year ending February 28, 2003. These Condensed
Consolidated Financial Statements should be read in conjunction with the
Consolidated Financial Statements and notes thereto contained in the Company's
Form 10-K for the year ended February 28, 2002.
Recent Accounting Pronouncements
In June 2001, the FASB issued Statement No. 142, Goodwill and Other Intangible
Assets, effective for fiscal years beginning after December 15, 2001.Under the
new rules, goodwill and intangible assets with indefinite lives will no longer
be amortized, but will be subject to annual impairment tests in accordance with
Statement 142. Other intangible assets will continue to be amortized over their
useful lives. The Company recorded goodwill as a result of the Europortal Inc
reverse acquisition, but has not recorded any amortization in accordance with
SFAS No. 142. The Company is still in the process of evaluating the impact of
adopting this pronouncement on its consolidated financial statements,however, it
does not believe that the adoption of this pronouncement will have a material
impact on the consolidated financial statements.
In June 2001, the FASB issued SFAS No. 143 "Accounting for Asset Retirement
Obligations." SFAS No.143 addresses financial accounting and reporting for
obligations associated with the retirement of intangible long-lived assets and
associated asset retirement costs. SFAS No. 143 requires that the fair value of
a liability for an asset retirement obligation be recognized in the period in
which it has occurred. The asset retirement obligations will be capitalized as a
part of the carrying amount of the long-lived asset. SFAS No. 143 applies to
legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and normal operation of
long- lived assets. SFAS No. 143 is effective for years beginning after June 15,
2002, with earlier adoption permitted. Currently, the Company does not believe
this statement has any impact on the Company.
In August 2001, the FASB issued SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets". This statement is effective for fiscal years
beginning after December 31, 2001. This supercedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
while retaining many of the requirements of such statement. The Company does not
believe that this statement will have a material effect on the Company's
financial statements.
NOTE 2. NET PROFIT
Trading has been limited until such time as investment funds and the planned
Group structure materializes
NOTE 3. LIQUIDITY
The Company's viability as a going concern is dependent upon executing the
company's current acquisition strategy which includes raising additional capital
and continued operating revenues.
As a result, the Company has from time of inception to November 30, 2002 derived
revenue of $1,066,512 and a net loss from operations of $1,142,679
It is anticipated that the Company will be able to meet its financial
obligations through internal net revenue in the foreseeable future providing
that it continues to execute its current acquisition strategy.
NOTE 4. STOCK TRANSACTIONS
On September 28, 2001 the Company issued 8,333,333 shares of common stock to
Gala Consultancy in consideration for the capitalization of all of their loans
to the company.
On September 29, 2001 the Company conducted a 25 for 1 reverse split of the
Company's common stock to 534,871 shares which became effective on 15th October
2001.
On October 16, 2001 the Company issued 9,500,000 shares of the Company's common
stock to the shareholders of Europortal Inc T/A Auto Data Group in the reverse
acquisition by Europortal Inc.
On October 17, 2001 the Company issued 1,077,268 shares to various parties in
consideration for the capitalization of $4,039,754 of loans at the closing price
on that date of $3.75.
On February 15, 2002 the Company issued 350,000 S8 shares to consultants in lieu
of invoices for services provided to the value of $262,500.
On April 26, 2002 the Company issued 90,211 shares to various parties in
consideration of the purchase of E-Com Multi Limited, valuing the transaction at
$383,397 at the market price for the Company's common stock as of the completion
date ( $4.25 per share).
On August 3, 2002 the Company acquired all the issued share capital of Hilsten
Resources Limited, trading as County Services and Products and committed to
issue 800,000 of the Company's common stock to the former shareholders of
Hilsten Resources Limited . The transaction is valued at $3,400,000 at the
market price of the Company's shares as of the completion date. The
consideration is payable in two tranches, 300,000 shares at the end of fiscal
year 2003 and a further 500,000 shares at the end of fiscal year 2004.
NOTE 5. ISSUED SHARE CAPITAL
Shares Value
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Issued Common Stock, $0.001 par value, at fiscal year end February 28 2002 11,462,078 $ 11,462
Stock issued for the acquisition of E-com Multi Limited April 26 2002 90,211 90
Total Issued common stock as of November 30 2002 11,552,289 $ 11,552
NOTE 6. ADDITIONAL CONTRIBUTED CAPITAL
Additional contributed capital at fiscal year end February 28 2002 $ 5,383,018
Commitment to capitalise loans and accounts payable 44,167
Acquisition of E-Com Multi Limited 383,307
Acquisition of Hilsten Resources Limited * 1,274,700
Adjustments and Exchange differences 7,351
Total additional contributed capital as of November 30 $ 7,092,543
* this acquisition of Hilsten Resources ltd is completed in two tranches of
300,000 and 500,000 shares of Common Stock payable at the end of fiscal 2002 and
2003 respectively. The first payment $1,275,000 has been included in intangibles
and additional paid in capital of $1,274,700.
NOTE 7. CONSOLIDATION
The company owns 100% of the equity of all its subsidiaries and the Financial
Statements incorporate consolidation of all companies in the group.
NOTE 8. DEPRECIATION POLICY
The Company depreciates all its fixed assets over their useful lives on the
following basis :
Tangible Assets at the rate of 25% per annum on the remaining value of the
asset.
Intangible Assets at the rate of 3% per annum commencing one year after the
asset was acquired but also subject to review of impairment as required by SFAS
144
NOTE 9. REVENUE RECOGNITION
Non-refundable up-front payments received in connection with software licences
and support services are deferred and recognized on a usage basis over the
relevant periods of the service agreement typically 3 or 5 years. All other
services supplied are invoiced in arrears and are immediately collectible.
NOTE 10. FOREIGN CURRENCY
The company's foreign subsidiaries use the local currency as their functioning
currency. Accordingly Assets and liabilities are translated into US dollars at
period end exchange rates, and revenues and expenses are translated at the
average prevailing during the accounting period.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD-LOOKING STATEMENTS
The information set forth in this Report on Form 10-QSB including, without
limitation, that contained in this Item 2, Management's Discussion and Analysis
and Plan of Operation, contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results may differ
materially from those projected in the forward-looking statements as a result of
certain risks and uncertainties set forth in this report. Although management
believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual future
results will not be different from the expectations expressed in this report.
Except for the historical information contained herein, certain matters
discussed in this report may be considered "forward-looking statements" within
the meaning of The Securities Act of 1933 and The Securities Exchange Act of
1934, as amended by The Private Securities Litigation Reform Act of 1995. Those
statements include statements regarding the intent, belief or current
expectations of the Company and members of its management as well as the
assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties and that actual results may
differ materially from those contemplated by such forward-looking statements.
Important factors currently known to management that could cause actual results
to differ materially from those in forward-looking statements. These and
additional important factors to be considered are set forth in the Safe Harbor
compliance Statement for forward-looking statements. The Company undertakes no
obligation to update or revise forward-looking statements to reflect changed
assumptions, the occurrence of unanticipated events or changes to future
operating results.
The following discussion should be read in conjunction with the information
contained in the financial statements of the Company and the notes thereto
appearing elsewhere herein.
OVERVIEW OF AUTO DATA NETWORK
Auto Data Network ("ADN") is engaged in the business of developing and marketing
a specialized suite of feature-rich, proprietary software applications and
services for the automotive industry. Our products and services are designed for
industry participants interested in relevant, real-time data related to the
purchase and sale of motor vehicles and automotive parts and related services in
specific markets.
Our operations are conducted through our three (3) subsidiaries:
Allcars.com, an internet web site which provides consumers with automobile
related information and services and which draws revenues through advertisers
who market their products on the Allcars.com website; County Services & Products
Limited which sells auto insurance products electronically and which includes
real-time, regionalized vehicle location and pricing; and, ECOM Multi UK
limited, also to be known as Orbit Auto Auctions, which is a closed electronic
auto auction of vehicles available only to wholesalers.
We market our products to vehicle and parts manufacturers, dealers, consumers
and related industry participants, including financial institutions, insurance
providers and fleet owners. Our core product offering revolves around three
functions: (1) our ability to link the often incompatible systems and data
structures of the various participants in the industry into one unified
information platform, (2) our ability to assemble and provide relevant,
actionable data in real-time to our subscribers, and (3) our breadth of services
and product offering designed to facilitate and increase efficiencies using the
data we provide to facilitate sales of new and used vehicles, parts and
accessories, and various services such as finance, insurance and vehicle
servicing.
Our product suite includes applications we have developed internally and
applications developed by businesses through acquisition. The platform
propositions are integrated as a communications channel that allows all
automotive sector participants to transact within a single environment, in which
transactional data is added and modified on the network. This process creates a
unique source of "Intelligent Information(TM)" that can be accessed by
subscribing companies to analyze and react to changes in market conditions.
RESULTS OF OPERATIONS
Revenues for the three month period ending November 30, 2002 were $474,715,
compared to $39,988 for the comparable quarter in 2001. The revenues were
derived from our subsidiaries. We expect that revenues will increase over the
coming quarter with additional acquisitions which we expect to undertake. There
is no assurance that any increase in revenues will cause Auto Data Network to
become more profitable since, with any increase in revenues, we foresee an
increase in operating expenses and costs. Additionally, our prior history and
revenues are not indicative or reflective of future performance.
Cost of revenues for the three month period ending November 30, 2002 were
$191,747 as compared to $39,711 for the corresponding quarter for fiscal 2001.
Our cost of revenues have increased as a result of the increased activity of
marketing and developing our products. We expect that our cost of revenues will
further increase in the coming quarter which may have an impact on our financial
condition and ability to maintain a profit.
Operating expenses for the three month period ending November 30, 2002 were
$72,104, compared to $11,855 for the corresponding quarter for fiscal 2001.
Operating expenses have increased as a result of increased trading activity. We
expect that our operating expenses will increase significantly in the coming
quarter with the additional acquisitions which we expect to undertake. Any
substantial increase in operating expenses will affect our profitability and
therefore our prior history and operating expenses are not indicative or
reflective of future performance.
LIQUIDITY AND CAPITAL RESOURCES
We do not currently have a working capital line of credit with any financial
institution. Future sources of liquidity will be limited to the Company's
ability to close planned acquisitions and obtain additional debt or equity
funding. At the present, we believe that our liquidity requirements will be met
by the revenues drawn through our operations. Our liquidity may be negatively
affected in the event we are not able to continue to be profitable as a result
of any sudden or unexpected increases in expenses or sudden or unexpected
decreases in revenues.
We also intend to attempt to raise additional capital from public or private
placements to investors of our common stock and/or convertible debentures.
However, there can be no assurance that we will be able to obtain capital from a
placement of our common stock or whether the funds required by the Company will
enable us to further develop our operations. Additionally, there is no guarantee
that we will be able to raise capital on terms and conditions which are
acceptable to us. The inability to raise additional capital may forestall our
growth.
INFLATION
Inflation has not had a material effect on our operations. Inflation may affect
our ability to generate profit as increased costs may be associated with
development of our products and services. In the opinion of management,
inflation at this time has not and will not have a material effect on the
operations of our company and our subsidiaries. Any increase in inflation or
jump in costs may result in an immediate increase in our prices to our clients
and subscribers. However, we will evaluate the possible effects of inflation on
our Company as it relates to our business and operations and proceed
accordingly.
ABILITY TO RAISE CAPITAL
Our ability to further develop our business and operations is dependent on our
ability to raise capital. We will seek to raise capital through equity funding
and private placement of our common stock as well as securing lines of credit
with credit institutions. There is no guarantee that we will be able to raise
capital to further develop its business and operations. Additionally, we may
encounter significant costs or unfavorable terms in its efforts to raise
capital. Investors are further alerted that any efforts to raise capital through
a private placement of our common stock will result in dilution to shareholders
of the company. We intend on utilizing any capital raised to undertake
additional acquisitions which shall complement our existing products and
contribute to further growth of our company.
SUBSEQUENT EVENT
ACQUISITION OF AUTOMATRIX (UK) LIMITED
On January 21, 2003, Auto Data Network acquired all of the outstanding shares of
stock of AutoMatrix UK Limited, ("Automatrix"), a registered in England and
based in East Yorkshire. The terms of the agreement are subject to a
confidentiality agreement which is reflected in the Share Sale Agreement
executed between the parties.
Established in 1999, Automatrix is an automotive retailer based in northeastern
England. AutoMatrix seeks to market itself as a low cost, independent, flexible
and portable vehicle retail format which seeks to achieve a high level of
customer satisfaction. AutoMatrix seeks to blend technology with the essential
ingredients of the more traditional sales route, - "clicks and mortar," to give
its customers maximum choice and value.
No physical stock of automobiles is maintained by AutoMatrix which maximizes the
extent of choices for consumers while keeping overhead costs to a minimum.
Customers are assured of getting exactly the automobile they want through
consultation with an independent vehicle sales expert who is impartial and
independent of any one automobile maker or brand. Maximum value is assured
through the effective 'buy to order' policy substantially reducing the costs of
stocking and the subsequent premises and people costs. All vehicles are fully
inspected prior to purchase and are fully warranted. AutoMatrix also offers a
comprehensive range of financial products and services together with part
exchange facilities.
ACQUISITION OF MAM SOFTWARE LTD.
On January 18, 2003, a Share Sale Agreement was executed relating to the
acquisition by Auto Data Network of the entire Share Capital of MAM Software
Ltd, ("MAM") a company registered in England and based in Sheffield, South
Yorkshire. The agreement completed on April 23,2003. MAM are a systems and
software implementation and development company with an annual revenue base in
excess of $13,000,000 and with employees of 150 over four locations in the
British Isles and one in California, USA. Under the terms of the agreement, Auto
Data Network shall provide consideration for the entire outstanding shares of
MAM of to the shareholders of MAM, valued at GBP 2,500,000 Sterling Pounds by
way of an issuance of 2,000,000 restricted shares of common stock of Auto Data
Network. An additional payment of GBP 2,500,000 Sterling Pounds shall be made to
the shareholders of MAM within six (6) months after the completion date.
MAM Software is a supplier of computer software and systems within the
automotive aftermarket and marine trade. It provides a complete range of
products covering all aspects of sales, stock and purchase control linked to a
full range of accounting systems. These systems apply to Motor/Marine Factors
and Distributors, Parts Retailers and Garages. MAM Software offers a service
that covers installation of new computer systems followed by comprehensive
support and maintenance. Its range of software products are known as "Auto
Part", a complete system for wholesalers and retailers, "Auto Work", a computer
system for garages and workshops, "Auto cat", a stand alone electronic
catalogue, and "Autonet" a service for establishing and maintaining a presence
on the world wide web. MAM Software currently maintains four sites in the United
Kingdom and Republic of Ireland. It is considered a preeminent system supplier
to the Automotive Parts Aftermarket.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are currently no pending legal proceedings against the company.
ITEM 2. CHANGES IN SECURITIES
The instruments defining the rights of the holders of any class of registered
securities have not been modified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has been no default in the payment of principal, interest, sinking or
purchase fund installment.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the last
quarter.
ITEM 5. OTHER INFORMATION
There is no other information to report, which is material to the company's
financial condition not previously reported.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
/s/ Auto Data Network Inc.
Christopher Glover, President
Dated: January 29, 2003