##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                     to
 Commission File Number: 000-24684
 ADUDDELL INDUSTRIES, INC.
  Oklahoma
(State or other jurisdiction of 
incorporation or organization)
    
    73-1587867
(I.R.S. Employer
Identification No.)1601 N.W. Expressway 
Oklahoma City, Oklahoma
(Address of principal executive offices)
    
    73118
(Zip Code)
 
  þ o
  o o þ
  o þ




---



##### 



PagePart I  Financial Information
    
    
    1Item 1. Financial Statements
    
    
    1Consolidated Balance Sheets
    
    
    1Consolidated Statements of Operations
    
    
    3Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    26Item 4. Controls and Procedures
    
    
    26Part II  Other Information
    
    
    27Item 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults Upon Senior Securities
    
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    
    28Item 5. Other Information
    
    
    28Item 6. Exhibits
    
    
    28Certificate of IncorporationBylawsStock Purchase AgreementCertification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Section 1350 Certification of CEOSection 1350 Certification of CFO




---



##### Table of Contents



Cautionary Statement Regarding Forward Looking Information
  
    
    our ability to expand our markets and maintain or increase profit margins;
    
    actions of our competitors;statements regarding our anticipated revenues, expense levels, liquidity
and capital resources and projections of positive operating cash flow; and
    
    the matters described under Part II 
Item 1A  Risk Factors and in our 2006 Form 10K




---



##### Table of Contents



PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ADUDDELL INDUSTRIES, INC.
 
 CONSOLIDATED BALANCE SHEETS
 March 31,2007
    
    
    December 31,(Unaudited)
    
    
    2006AssetsCurrent AssetsCash
    
    $
    242,888
    
    
    $
    Accounts receivable, net of allowance
for doubtful accounts
    
    
    10,185,834
    
    
    
    13,662,030Costs and estimated earnings in excess of
billings on uncompleted contracts
    
    
    4,505,764
    
    
    
    2,298,191Inventory
    
    
    581,567
    
    
    
    472,588Income tax receivable
    
    
    2,254,469
    
    
    
    2,254,469Prepaid expenses
    
    
    436,008
    
    
    
    268,108Related party receivable
    
    
    61,210
    
    
    
    60,088Deposits
    
    
    306,203
    
    
    
    252,710Employee and other receivables, net of
allowance for doubtful accounts
    
    
    94,729
    
    
    
    31,48418,668,672
    
    
    
    19,299,668Property and EquipmentField and shop equipment
    
    
    4,370,620
    
    
    
    4,023,879Office furniture and equipment
    
    
    937,901
    
    
    
    1,263,131Transportation equipment
    
    
    3,983,157
    
    
    
    3,931,118Land
    
    
    64,265
    
    
    
    Leasehold improvements
    
    
    364,920
    
    
    
    203,8969,720,863
    
    
    
    9,422,024Less: accumulated depreciation
    
    
    (1,994,606
    )
    
    
    (1,584,170
    )7,726,257
    
    
    
    7,837,854OtherIntangible asset customer list, net
    
    
    5,956,782
    
    
    
    6,112,054Deferred tax asset
    
    
    567,149
    
    
    
    66,000Investments
    
    
    27,240
    
    
    
    25,1566,551,171
    
    
    
    6,203,210$
    32,946,100
    
    
    $
    33,340,732
  1




---



##### Table of Contents



ADUDDELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
 March 31,2007
    
    
    December 31,(Unaudited)
    
    
    2006Liabilities and Shareholders EquityCurrent portion of long term debt
    
    
    268,833
    
    
    
    214,343Current portion of acquisition payable
    
    
    816,667
    
    
    
    816,667Advances on line of credit
    
    
    10,352,539
    
    
    
    9,407,272Overdraft
    
    
    
    
    
    
    732,778Accounts and subcontract payables
    
    
    8,437,938
    
    
    
    7,122,863Accrued liabilities
    
    
    1,476,886
    
    
    
    773,275Insurance payable
    
    
    144,444
    
    
    
    39,504Income tax payable
    
    
    
    
    
    
    Billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    844,036
    
    
    
    1,058,16822,341,343
    
    
    
    20,164,870Long-Term Debt (Net of Current Portion)
    
    
    582,681
    
    
    
    539,975Long-Term Acquisition Payable (Net of Current Portion)
    
    
    978,833
    
    
    
    978,833Shareholders EquityPreferred stock ($0.001 par value, 20,000,000
shares authorized, no shares issued and
Outstanding)
    
    
    
    
    
    
    Common stock ($0.001 par value, 100,000,000
shares authorized, 53,965,854 and 52,799,191
shares issued and outstanding at March 31, 2007
and December 31, 2006)
    
    
    52,799
    
    
    
    52,799Paid-in capital
    
    
    4,699,230
    
    
    
    4,699,230Unrealized gain (loss) on available-for-sale securities
    
    
    2,785
    
    
    
    703Retained earnings
    
    
    4,288,429
    
    
    
    6,904,3229,043,243
    
    
    
    11,657,054$
    32,946,100
    
    
    $
    33,340,732
  2




---



##### Table of Contents



ADUDDELL INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended March 31,2007
    
    
    2006RevenuesContract revenue
    
    $
    9,810,343
    
    
    $
    3,734,577Other sales
    
    
    141,899
    
    
    
    9,952,242
    
    
    
    3,734,577Operating ExpensesCost of sales
    
    
    8,973,387
    
    
    
    2,847,996Selling, general and administrative
    
    
    4,101,399
    
    
    
    1,312,564Warranty expense
    
    
    24,212
    
    
    
    50,55613,098,998
    
    
    
    4,211,116Operating Income (Loss)
    
    
    (3,146,756
    )
    
    
    (476,539
    )Other IncomeInterest and dividend income
    
    
    1,121
    
    
    
    202,032Gain(loss) on sale of equipment
    
    
    215
    
    
    
    3,500Other income
    
    
    28,378
    
    
    
    8,08929,714
    
    
    
    213,621Net Income (Loss) from Operations
Before Income Taxes
    
    
    (3,117,042
    )
    
    
    (262,918
    )Provision for income taxes:Current
    
    
    (1,215,646
    )
    
    
    (40,000
    )Deferred
    
    
    714,497
    
    
    
    (80,000
    )(501,149
    )
    
    
    (120,000
    )Net Income (Loss)
    
    
    (2,615,893
    )
    
    
    (142,918
    )Other Comprehensive IncomeUnrealized holding gains (losses)
    
    
    2,082
    
    
    
    28,405Reclassification adjustment
    
    
    
    
    
    
    Comprehensive Income
    
    $
    (2,613,811
    )
    
    $
    (114,513
    )
  3




---



##### Table of Contents



Three Months Ended March 31,2007
    
    
    2006Basic Net Income (Loss) per
Common Share
    
    $
    (0.05
    )
    
    $
    Diluted Net Income (Loss) per
Common Share
    
    $
    
    
    
    $
    Weighted Average Common
Shares Basic
    
    
    53,965,854
    
    
    
    49,937,921Weighted Average Common
Shares Assuming Dilution
    
    
    N/A
    
    
    
    N/A
  4




---



##### Table of Contents



ADUDDELL INDUSTRIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMar 31,
    
    
    Mar 31,2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)Cash Flows from Operating ActivitiesNet income
    
    $
    (2,615,893
    )
    
    $
    (142,918
    )Reconciliation of net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    753,281
    
    
    
    86,788(Gain) on sale of property and equip
    
    
    (215
    )
    
    
    (3,500
    )(Increase) Decrease from changes in:Accounts receivable
    
    
    3,476,196
    
    
    
    895,563Costs and estimated earnings in excess of
Billings on uncompleted contracts
    
    
    (2,207,573
    )
    
    
    344,906Inventory
    
    
    (108,979
    )
    
    
    Income tax receivable
    
    
    (401,191
    )
    
    
    (199,895
    )Related party receivable
    
    
    (1,122
    )
    
    
    (24,135
    )Deposits
    
    
    (53,493
    )
    
    
    Deferred taxes
    
    
    (501,149
    )
    
    
    Prepaid expenses
    
    
    (167,900
    )
    
    
    15,634Employee and other receivables
    
    
    (63,245
    )
    
    
    (2,647
    )Increase (Decrease) from changes in:Accounts payable
    
    
    1,315,075
    
    
    
    (9,840,501
    )Overdraft
    
    
    (732,778
    )
    
    
    Insurance payable
    
    
    104,940
    
    
    
    (4,424
    )Accrued liabilities
    
    
    703,611
    
    
    
    87,172Income tax payable
    
    
    
    
    
    
    (5,349,105
    )Billings in excess of costs and estimated
earnings on uncompleted contracts
    
    
    (214,132
    )
    
    
    (9,222
    )Deferred taxes
    
    
    
    
    
    
    (80,000
    )Net adjustments to net income
    
    
    2,302,517
    
    
    
    (14,083,366
    )Net cash used by operating activities
    
    
    (313,376
    )
    
    
    (14,226,284
    )
  5




---



##### Table of Contents



ADUDDELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedMar 31,
    
    
    Mar 31,2007
    
    
    2006(Unaudited)
    
    
    (Unaudited)Cash Flows from Investing ActivitiesProceeds from sale of property and equipment
    
    
    215
    
    
    
    3,500Purchase of property and equipment
    
    
    (339,974
    )
    
    
    (390,483
    )Net cash used by investing activities
    
    
    (339,759
    )
    
    
    (386,983
    )Cash Flows from Financing ActivitiesNet change in line of credit
    
    
    945,267
    
    
    
    Retirement of long-term debt
    
    
    (49,244
    )
    
    
    (295,390
    )Proceeds from issuance of stock
    
    
    
    
    
    
    120,000Net cash provided by financing activities
    
    
    896,023
    
    
    
    (175,390
    )Net Increase (Decrease) in Cash
    
    
    242,888
    
    
    
    (14,788,657
    )Cash at Beginning of Period
    
    
    
    
    
    
    22,330,751Cash at End of Period
    
    $
    242,888
    
    
    $
    7,542,094Supplemental Disclosure of Cash Flow
InformationCash paid for:Interest
    
    $
    215,861
    
    
    $
    4,316Taxes
    
    
    
    
    
    
    5,509,000Supplemental Schedule of Non-Cash
Investing and Financing ActivitiesFixed asset additions
    
    $
    339,974
    
    
    $
    390,483Liabilities assumed or incurred
    
    $
    339,974
    
    
    $
    390,483Common stock issued for acquisition
    
    $
    
    
    
    $
    
  6




---



##### Table of Contents



ADUDDELL INDUSTRIES, INC.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2007
(UNAUDITED
 NOTE 1  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization and Nature of Business
      7




---



##### Table of Contents



Principles of Consolidation
  Revenue Recognition
   Cash and Cash Equivalents
  Inventory
  Investments
 Statement of Financial
Accounting Standards No. 115 Accounting for Certain Investments in Debt and Equity Securities
(SFAS No. 115).
 SFAS No. 115
 8




---



##### Table of Contents



Intangible Assets
 Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets SFAS No.
142 SFAS No. 142
 Fair Value of Financial Instruments
  Share-Based Compensation
  Depreciation
  Field and shop equipment
    
    5   7
    
    YearsOffice furniture and equipment
    
    5   10
    
    YearsTransportation equipment
    
    3   7
    
    YearsLeasehold improvements
    
    15  39
    
    Years
 Income Taxes
 Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes (SFAS No. 109) SFAS No. 109 SFAS No. 109
 9




---



##### Table of Contents



Net Income (Loss) Per Share
 SFAS No. 128 Earnings per
Share SEC Staff Accounting Bulletin No. 98 (SAB 98). SFAS No. 128 SAB 98,
 Use of Estimates
  NOTE 2  ACQUISITIONS
     10




---



##### Table of Contents



11




---



##### Table of Contents



th
 NOTE 3  CONTRACT RECEIVABLES
  March 31,
    
    
    December 31,2007
    
    
    2006Completed contracts
    
    $
    3,324,798
    
    
    $
    2,079,945Contracts in progress
    
    
    5,437,133
    
    
    
    9,139,408Retainage
    
    
    1,423,903
    
    
    
    2,05705810,185,834
    
    
    
    13,273,411Less allowance for doubtful amounts
    
    
    
    
    
    
    $
    10,185,834
    
    
    $
    13,273,411
 NOTE 4  UNCOMPLETED CONTRACTS
  March 31,
    
    
    December 31,2007
    
    
    2006Costs incurred on uncompleted contracts
    
    $
    33,033,206
    
    
    $
    29,126,527Estimated earnings
    
    
    2,154,321
    
    
    
    145,50835,187,527
    
    
    
    29,272,035Billings to date
    
    
    31,525,799
    
    
    
    28,032,012$
    3,661,728
    
    
    $
    1,240,023
  March 31,
    
    
    December 31,2007
    
    
    2006Costs and estimated
earnings in excess
of billings on
uncompleted
contracts
    
    $
    4,505,764
    
    
    $
    2,298,191Billings in excess
of costs and
estimated earnings
on uncompleted
contracts
    
    
    (844,036
    )
    
    
    (1,058,168
    )$
    3,661,728
    
    
    $
    1,240,168
 NOTE 5  LETTER OF CREDIT
  12




---



##### Table of Contents



NOTE 6  LINE OF CREDIT
  NOTE 7  LONG-TERM DEBT
  March 31
    
    
    December 31,2007
    
    
    20066.63% to 21% notes payable secured by
equipment, due in varying monthly
installments through May 2010
    
    
    61,672
    
    
    
    68,1246% to 8.25% notes payable secured by
transportation equipment, due in
varying monthly installments through
January 2012
    
    
    789,842
    
    
    
    686,194851,514
    
    
    
    754,318Less: current portion of long-term debt
    
    
    268,833
    
    
    
    214,343$
    582,681
    
    
    $
    539,975
  Year
    
    Amount2009
    
    $
    267,3402010
    
    
    232,2132011
    
    
    51,6422012
    
    
    31,486$
    582,681
  13




---



##### Table of Contents



NOTE 8  PENSION PLAN
 Internal Revenue Code
 NOTE
9  SHARE-BASED COMPENSATION PLANS
 Section 422 Internal Revenue Code of 1986
 Options Issued During the Quarter:
  Options Issued Previously:
        14




---



##### Table of Contents



NOTE 10  INCOME TAXES
  March 31,
    
    
    March 31,2007
    
    
    2006Current tax provision
    
    $
    (1,215,646
    )
    
    $
    (40,000
    )Deferred tax provision
    
    
    714,497
    
    
    
    (80,000
    )Total provision for income taxes
    
    $
    (501,149
    )
    
    $
    (120,000
    )
  March 31, 2007
    

March 31, 2006Statutory federal income tax rate
    
    
    34.0
    %
    
    
    34.0
    %State tax effective rate
    
    
    5.0
    
    
    
    5.0Permanent differences
    
    
    
    
    
    
    Benefit of graduated tax rates
    
    
    
    
    
    
    Prior year assessments finalized
    
    
    
    
    
    
    Increase in valuation allowance
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    39.0
    %
    
    
    39.0
    %
 15




---



##### Table of Contents



March 31,
    
    
    December 31,2007
    
    
    2006Deferred tax liability on depreciation
    
    $
    (753,000
    )
    
    $
    (150,000
    )Deferred tax asset for loss carry forward and
share-based compensation
    
    
    1,523,149
    
    
    
    419,000Deferred tax asset
    
    
    770,149
    
    
    
    269,000Less: valuation allowance
    
    
    203,000
    
    
    
    203,000Net deferred tax asset (liability)
    
    $
    567,149
    
    
    $
    66,000
 NOTE 11  RELATED PARTY TRANSACTIONS
    NOTE 12  BACKLOG
 16




---



##### Table of Contents



NOTE 13  STOCK OPTIONS
  Common Stock Options and Other Warrants
 Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseMarch 31, 2007
    
    
    Price
    
    
    March 31, 2006
    
    
    PriceOptions outstanding
beginning of
quarter
    
    
    32,353,818
    
    
    $
    .12
    
    
    
    35,600,000
    
    
    $
    .12Options issued
during the quarter
    
    
    
    
    
    
    
    
    
    
    450,000
    
    
    
    .57Options exercised
during the quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options cancelled
during the quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options expired
during the quarter
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options outstanding
end of quarter
    
    
    32,353,818
    
    
    $
    .12
    
    
    
    36,050,000
    
    
    $
    .12
   Options OutstandingWeighted-
    
    
    
    
    
    

Options ExercisableAverage
    
    
    Weighted-
    
    
    
    
    
    Weighted-Range of
    
    Number
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageExercise
    
    Outstanding
    
    
    Contractual
    
    
    Exercise
    
    
    Exercisable
    
    
    ExercisePrices
    
    at 3/31/07
    
    
    Life
    
    
    Price
    
    
    at 3/31/07
    
    
    Price.04
    
    
    28,528,818
    
    
    No term
    
    
    .04
    
    
    
    28,528,818
    
    
    
    .04.08  .10
    
    
    200,000
    
    
    No term
    
    
    .10
    
    
    
    200,000
    
    
    
    .10.70  1.38
    
    
    3,625,000
    
    
    10 year
    
    
    .78
    
    
    
    1,150,000
    
    
    
    .7832,353,818
    
    
    
    
    
    
    
    .12
    
    
    
    29,878,818
    
    
    
    .12
 17




---



##### Table of Contents



NOTE 14  EARNINGS PER SHARE
 March 31,
    
    
    March 31,2007
    
    
    2006Basic
earnings per share: (in thousands)Common shares outstanding
    
    
    53,965,854
    
    
    
    49,937,921Weighted average shares outstanding
    
    
    53,965,854
    
    
    
    49,937,921Earnings per share
    
    $
    (.05
    )
    
    $
    Fully diluted earnings per share:Common shares outstanding
    
    
    N/A
    
    
    
    N/AWeighted average shares outstanding
    
    
    N/A
    
    
    
    N/AEarnings per share
    
    $
    N/A
    
    
    $
    N/A
 NOTE
15  LEASES
    Year
    
    Amount2007
    
    $
    147,2362008
    
    
    147,1362009
    
    
    121,8362010
    
    
    5,428$
    421,636
  18




---



##### Table of Contents



NOTE 16  COMMITMENTS AND CONTINGENCIES
  Federal Deposit Insurance Corporation
  Lawsuit
     19




---



##### Table of Contents



NOTE 17  CONCENTRATIONS
    Supplementary Data
  2007
    
    
    2006March
    
    
    December
    
    
    September31
    
    
    31
    
    
    30
    
    
    June 30Revenues
    
    $
    9,952,242
    
    
    $
    7,713,589
    
    
    $
    11,574,763
    
    
    $
    8,637,728Cost of sales
    
    
    8,973,387
    
    
    
    9,785,528
    
    
    
    10,174,307
    
    
    
    7,902,525Gross margin
    
    
    978,855
    
    
    
    (2,071,939
    )
    
    
    1,400,456
    
    
    
    735,203S G & A and other
    
    
    4,095,897
    
    
    
    3,103,076
    
    
    
    1,326,113
    
    
    
    470,251Income (Loss) before income taxes
    
    
    (3,117,042
    )
    
    
    (5,175,015
    )
    
    
    74,343
    
    
    
    264,952Income tax expense (benefit)
    
    
    (501,149
    )
    
    
    (2,198,047
    )
    
    
    56,210
    
    
    
    77,970Net income (loss)
    
    $
    (2,613,811
    )
    
    $
    (2,976,968
    )
    
    $
    18,133
    
    
    $
    186,982Net income (loss) per common share  basic
    
    $
    (.05
    )
    
    $
    (.06
    )
    
    $
    
    
    
    $
    Net income (loss) per common share 
assuming dilution
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Introduction
   20




---



##### Table of Contents



21




---



##### Table of Contents



%1stQtr
    
    Increase
    

1stQtr2007
    
    (decrease)
    
    2006Roofing Revenue
    
    $
    6,656,546
    
    
    
    78.2
    %
    
    $
    3,734,577Restoration Revenue
    
    $
    3,185,471
    
    
    
    
    
    
    
    Other Revenue
    
    $
    110,225
    
    
    
    Emergency Services Revenue
    
    $
    0
    
    
    
    
    
    
    $
    Total Revenue
    
    $
    9,952,242
    
    
    
    166.5
    %
    
    $
    3,734,577Roofing Margin
    
    $
    284,035
    
    
    
    (53.8
    )%
    
    $
    615,204Restoration Margin
    
    $
    1,005,029
    
    
    
    
    
    
    
    Other Margin
    
    $
    (270,961
    )
    
    
    Emergency Services Margin
    
    $
    (39,248
    )
    
    
    
    
    
    $
    Total Margin
    
    $
    978,855
    
    
    
    59.1
    %
    
    $
    615,204Cash Flow from Operations
    
    $
    (313,376
    )
    
    
    1022.0
    %
    
    $
    (14,226,284
    )EBITDA
    
    $
    (2,365,097
    )
    
    
    (569.5
    )%
    
    $
    (353,257
    )Net Income
    
    $
    (2,615,893
    )
    
    
    (2,184.4
    )%
    
    $
    (114,513
    )Free Cash Flow
    
    $
    (653,350
    )
    
    
    955.3
    %
    
    $
    (14,616,767
    )
 2007
    
    2006Reconciliation of Free Cash Flow:Cash Flow from Operations
    
    $
    (313,376
    )
    
    $
    (14,226,284
    )Capital Expenditures
    
    $
    339,974
    
    
    $
    390,483Free Cash Flow
    
    $
    (653,350
    )
    
    $
    (14,616,767
    )Reconciliation of EBITDA:Net Income
    
    $
    (2,615,893
    )
    
    $
    (114,513
    )Interest (Income)
    
    $
    (1,121
    )
    
    $
    (202,032
    )(Gain) Loss on Sale of Equipment
    
    $
    (215
    )
    
    $
    (3,500
    )Provision (Benefit) for Income Taxes
    
    $
    (501,149
    )
    
    $
    (120,000
    )Investment Loss
    
    $
    
    
    
    $Depreciation
    
    $
    753,281
    
    
    $
    86,788EBITDA
    
    $
    (2,365,097
    )
    
    $
    (353,257
    )
    22




---



##### Table of Contents



Critical Accounting Policies and Estimates
 General
  Revenue Recognition
   Cash and Cash Equivalents
  Investments
  23




---



##### Table of Contents



Fair Value of Financial Instruments
  Income Taxes
  Net Income (Loss) Per Share
  Property and Equipment
  Changes from the Prior Period
  Corporate Governance Matters
  24




---



##### Table of Contents



Results of Operations
 Comparison of 1 st Quarter 2007 and 2006
 Revenues
 Operating Expenses
 Income(Loss) before Provision for Income Taxes
 Net Income.
 Off-Balance Sheet Arrangements
  Seasonality
   Commitments and Contingencies
   25




---



##### Table of Contents



Liquidity and Capital Resources
     Adequacy of Current Liquidity
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4. Controls and Procedures
  26




---



##### Table of Contents



PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
     
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  27




---



##### Table of Contents



Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibit No.
    
    Description of Exhibit3.1
    
    Certificate of Incorporation of
Aduddell Industries, Inc.3.2
    
    By laws of Aduddell Industries, Inc.10.3
    
    Stock Purchase Agreement dated
December 29, 2006 between the company and Greg Hayden.31.1
    
    Certification of Chief Executive Officer pursuant to
Section 302 of the Sarbanes Oxley Act of 200231.2
    
    Certification of Chief Financial Officer pursuant to
Section 302 of the Sarbanes Oxley Act of 200232.1
    
    Section 1350 Certification of Chief Executive Officer32.2
    
    Section 1350 Certification of Chief Financial Officer
 28




---



##### Table of Contents



ADUDDELL INDUSTRIES, INC.May 15, 2007
    
    By:
    
    /s/ Stan GenegaStan Genega, PresidentMay 15, 2007
    
    By:
    
    /s/ Reggie CookReggie Cook, ChiefFinancial Officer (Principal Accounting Officer)
 
  EXHIBITNO.
    
    DESCRIPTION
    
    METHOD OF FILING3.1
    
    Certificate of Incorporation of
Aduddell Industries, Inc.3.2
    
    By laws of Aduddell Industries, Inc.10.3
    
    Stock Purchase Agreement dated
December 29, 2006 between the company and Greg Hayden..31.1
    
    Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes
Oxley Act of 2002
    
    Filed herewith electronically31.2
    
    Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes
Oxley Act of 2002
    
    Filed herewith electronically32.1
    
    Section 1350 Certification of Chief
Financial Officer
    
    Filed herewith electronically32.2
    
    Section 1350 Certification of chief
Financial Officer
    
    Filed herewith electronically
 29