5
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _________________
Commission file number 0-28555
VOLT INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 86-0960464
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(State or other jurisdiction of incorporation or organization) (IRS
Employer Identification No.)
41667 Yosemite Pines Dr., Oakhurst CA 93644
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(Address of principal executive offices)
(559) 692-2474
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 3,919,422 Common Shares $0.001 par
value as of June 30, 2003
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
The information required by Item 310(b) of Regulation S-B is attached hereto as
Exhibit One.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The Company continues to diversify its operations for the benefit of the
shareholders. Growth through the subsidiaries in the mortgage, real estate,
construction and energy divisions has been achieved through acquisitions and
internal restructuring for the long term. The Company intends to change its name
from Volt Inc to Kore Holdings, Inc. to better reflect its broadening base of
business.
The Company generated $3,065,578 of revenue, $79,705 of net earnings from
continuing operations and $0.02 in earnings per fully diluted common share from
continuing operations for the nine months ended June 30, 2003.
The Company generated $1,302,578 of revenue, $19,974 of net earnings from
continuing operations and $0.01 in earnings per fully diluted common share from
continuing operations for the three months ended June 30, 2003.
For total operations, net income for the nine months ended June 30, 2003, was
$79,705 or $0.02 in earnings per fully diluted common share compared with net
income of $87,279 from continuing operations before extraordinary items $0.04 in
earnings per weighted-average common share before extraordinary items for the
nine months ended June 30, 2002.
For total operations, net income for the three months ended June 30, 2003, was
$19,974 or $0.01 in earnings per fully diluted common share compared with net
income of $66,981 or $0.02 in earnings per weighted-average common share for the
three months ended March 31, 2002.
RESULTS OF CONTINUING OPERATIONS
Nine Months Ended
March 31
2003 2002
----------- ----------
Revenue $3,065,355 $359,111
Cost 1,511,534 112,065
--------- -------
Gross profit 1,553,821 247,046
========= =======
Gross profit margin 51% 69%
Income from
continuing operations
before extraordinary item $ 79,705 $87,279
Earnings per share per
share of common stock $ 0.02 $ 0.04
Three Months Ended
June 30
2003 2002
-----------------------
Revenue $1,302,578 $317,711
Cost 529,198 112,065
----------- --------
Gross profit 773,380 205,646
=========== =======
Gross profit margin 59.% 65%
Income from
continuing operations $ 19,974 $ 66,981
Earnings per share per
share of common stock $ 0.01 $ 0.02
Revenue for the nine months ended June 30, 2003 increased $2,706,244 from the
same period last year. Revenue for the three months ended June 30, 2003
increased $984,867 from the same period last year. The reason for this increase
was that on May 17, 2002, the Company acquired all of the issued and outstanding
stock of First Washington Financial and thereby acquired control of all of the
assets of First Washington. First Washington is a mortgage loan originator in
the home mortgage loan industry and currently concentrates its business in
Washington, D.C., Maryland and Virginia. All of the increase in revenue is
attributable to revenues generated by First Washington.
Cost of revenue and operating expenses increased for these periods solely as a
result of the acquisition by the Company of First Washington.
Earnings per fully diluted common share was $0.02 for the nine months ended June
30, 2003 based upon fully diluted common shares outstanding of 3,919,422, and
earnings per common share was $0.04 before extraordinary items and $0.05 after
extraordinary items for the nine months ended June 30, 2002 based upon
weighted-average common shares outstanding of 2,219,422.
Earnings per fully diluted common share was $0.01 for the three months ended
June 30, 2003 based on fully diluted common shares outstanding of 3,919,422, and
earnings per common share was $0.02 for the three months ended June 30, 2002
based upon weighted-average common shares outstanding of 2,219,422.
In October 2002, the Company reached an agreement with Mortgage-Matic of
Greeenbelt, MD to acquire all of the issued and outstanding shares of stock of
Mortgage-Matic. Mortgage-Matic concentrates their business on FHA insured loans
in the $200,000 range. This accounts for approximately 70% of Mortgage-Matic's
business. The acquisition became effective as of January 1, 2003. The Company
acquired all of the issued and outstanding shares of Mortgage-Matic in exchange
for 75,000 shares of Series II Convertible Preferred Voting Stock. The Series II
Convertible Preferred Voting Stock is convertible into the common stock of the
Company on a one for one basis. Mortgage-Matic's net assets consisted of
restricted cash in the amount of $177,384 and other assets.
In April, 2003, the Company acquired Heritage Mortgage which does business in
Maryland and Virginia. Heritage Mortgage concentrates their business on FHA
insured loans in the $200,000 range. The Company acquired all of the issued and
outstanding shares of Heritage Mortgage in exchange for 50,000 shares of Series
II Convertible Preferred Voting Stock. The Series II Convertible Preferred
Voting Stock is convertible into the common stock of the Company on a one for
one basis. The acquisition was for the net assets of Heritage which consisted of
goodwill of $100,000.
The Company has moved its mortgage operations to California where its executive
office is located. The Company has reached an agreement to acquire Yosemite
Brokerage, Inc. in Oakhurst, California. Yosemite Brokerage currently averages
seventy closing a month mostly in the $200,000 range. Yosemite Brokerage had
revenue of $1,559,000 in July, 2003. The Company plans to expand Yosemite
Brokerage's business in California's central valley area which is growing at a
rate of 26% per year. The Company also plans to expand into the secondary paper
market.
SUBSEQUENT EVENTS
In July 2003, the Company purchased all the outstanding shares of Wolverine
Power Corporation for cash and preferred stock. The major assets included in the
Michigan utility are the hydro-electric turbines, the Federal Energy Regulatory
Commission license and the Power Purchase Agreement with Consumer's Energy which
runs through 2022.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
In September of 1999, the Deerbrook Publishing Group, Inc. ("Deerbrook") leased
a computer driven aspect image center (printer for film) used to make separation
for printing (the "aspect image center") and certain other computer equipment
from Copelco Capital, Inc. ("Copelco"). All of the equipment was delivered to
the Deerbrook's then printing operation in Phoenix, Arizona, and installed.
Shortly thereafter, Deerbrook ceased printing for itself and its customers. The
equipment was returned to Copelco. In August of 2000, Copelco brought suit in
the United States District Court for the District of Arizona, cause no. CIV
`00-1620 PHX ROS, to recover its alleged damages $155,398.02 for Deerbrook's
return of the leased equipment plus continuing interest at the rate of one and
one-third percent per month and attorneys fees and costs. The Company does not
believe that Copelco has mitigated its damages and further believes that Copelco
has either sold the equipment or otherwise disposed of the same in a manner
which was not commercially reasonable. The Copelco claims will be vigorously
defended against. Any possible loss from this litigation will be less than one
percent (1%) of the Company's net assets and will be immaterial.
Item 2. Changes in Securities.
Effective January 1, 2003, the Company issued 75,000 shares of Series II
Convertible Preferred Voting Stock (the "Convertible Preferred") in connection
with an acquisition of another company. Each share of the Convertible Preferred
is entitle to one vote on all matters which holders of the Company's common
stock are entitled to vote. The Convertible Preferred Stock is into convertible
the common stock of the Company on a one for one basis.
In April 2003, the Company issued 50,000 shares of Series II Convertible
Preferred Voting Stock (the "Convertible Preferred") in connection with an
acquisition of another company. Each share of the Convertible Preferred is
entitle to one vote on all matters which holders of the Company's common stock
are entitled to vote. The Convertible Preferred Stock is into convertible the
common stock of the Company on a one for one basis.
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information.
NONE
Item 6. Exhibits and Reports on Form 8-K.
INDEX TO EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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1 VOLT INC AND SUBSIDIARIES FINANCIAL STATEMENTS
No Forms 8-K were filed during the quarter for which this report is filed.
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.
VOLT INC.
(Registrant)
Date August 20, 2003 /s/Denis C. Tseklenis
Denis Costa Tseklenis
Chief Executive Officer
Chairman of the Board
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Denis C. Tseklenis, Chief Executive Officer certify that:
1. I have reviewed this annual report on Form 10QSB of Volt Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant's other certifying officers and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly
during the period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
(c) presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on my evaluation
as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: August 20, 2003
/s/Denis C. Tseklenis
Denis C. Tseklenis
Chief Executive Officer
I, Robert F. Rood, Treasurer and Chief Financial Officer certify that:
1. I have reviewed this annual report on Form 10QSB of Volt Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The Registrant's other certifying officers and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly
during the period in which this annual report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
(c) presented in this annual report my conclusions about the
effectiveness of the disclosure controls and procedures based on my evaluation
as of the Evaluation Date;
5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls; and
6. The Registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Dated: August 20, 2003
/s/ Robert F. Rood
Robert F. Rood
Treasurer
Chief Financial Officer
EXHIBIT ONE
VOLT, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED):
BALANCE SHEETS AS OF JUNE 30, 2003 (UNAUDITED)
AND SEPTEMBER 30, 2002 (AUDITED)
STATEMENTS OF INCOME FOR THE NINE AND THREE MONTHS
ENDED JUNE 30, 2003 AND 2002 (UNAUDITED)
STATEMENTS OF CASH FLOWS FOR NINE MONTHS
ENDED JUNE 30, 2003 AND 2002 (UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2003 (UNAUDITED) AND SEPTEMBER 30, 2002 (AUDITED)
ASSETS
(Unaudited) (Audited)
June 30, September 30,
2003 2002
------------ -------------
Current Assets:
Cash and cash equivalents $ 430,723 $172,521
Deposits 2,000 -
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Total Current Assets 423,723 172,521
Property and equipment,net 5,788,325 5,756,339
Other Assets:
Goodwill 3,100,000 3,000,000
Deferred financing fees, net - 5,000
Advances receivable 204,000 204,000
----------- -------------
Total Other Assets 3,304,000 3,209,000
----------- -------------
Total Assets $9,525,048 $9,138,460
=========== =============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
JUNE 30, 2003 (UNAUDITED) AND SEPTEMBER 30, 2002 (AUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited) (Audited)
June 30, September 30,
2003 2002
----------------------------------
Current Liabilities:
Accounts payable $ 41,448 $ 36,949
----------------------------------
Total Current Liabilities 41,448 36,949
Commitments and Contingencies
Stockholders' Equity (Deficit):
Preferred stock, $.001 par value,
10,000,000 shares authorized,
1,000,000 shares issued and outstanding
at June 30, 2003 and September 30,
2002, respectively 1,000 1,000
Preferred stock Class B, $.001 par value,
10,000,000 shares authorized, 125,000
shares issued and outstanding
at June 30, 2003 and September 30,
2002, respectively 125 -
Common Stock, $.001 par value, 25,000,000
shares authorized; 3,919,422 shares
issued and outstanding at June 30,
2003 and September 30, 2002,
respectively 3,919 3,919
Additional paid-in capital 13,080,878 12,778,619
Accumulated deficit (3,602,322) (3,682,027)
------------ -----------
Total stockholders' equity 9,483,600 9,101,511
------------ -----------
Total Liabilities and Stockholders' Equity $9,525,048 $9,138,640
============ ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2003 AND 2002
(UNAUDITED) (UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
2003 2002 2003 2002
---------- -------- -------- ----------
Revenues $ 3,065,355 $ 359,111 $1,302,578 $317,711
Cost of Revenue 1,511,534 112,065 539,198 112,065
----------- -------- ---------- -------
Gross Profit 1,553,821 247,046 773,380 205,646
Operating Expenses
General and administrative 1,474,116 159,767 753,406 138,665
----------- -------- --------- -------
Income (loss) from continuing
operations before income taxes 79,705 87,279 19,974 66,981
Income taxes - - - -
EXTRAORDINARY ITEM
Reversal of debt and payables - 18,000 - -
----------- -------- --------- ------
NET INCOME (LOSS) $ 79,705 $105,279 $ 19,974 $ 66,981
Dividends - - - -
----------- -------- --------- --------
NET INCOME (LOSS) AVAILABLE TO
COMMON STOCKHOLDERS $ 79,705 $105,279 $ 19,974 $ 66,981
=========== ======== ========= =======
BASIS AND DILUTED EARNINGS PER SHARE:
Income (loss) from continuing
operations available to common
stockholders $ 0.02 $ 0.04 $ 0.01 $ 0.02
Extraordinary item - 0.01 - -
----------- -------- --------- ---------
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS $ 0.02 $ 0.05 $ 0.01 $ 0.02
============ ======== ========= ========
WEIGHTED NUMBER OF COMMON SHARES
OUTSTANDING 3,919,422 2,219,422 3,919,422 2,919,422
============ ========= ========= ========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 2003 AND 2002
2003 2002
----------------------------------
CASH FLOWS FROM OPERAITNG ACTIVITIES
Net income $ 79,705 $ 105,279
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 19,114 6,293
Amortization of Mortgage-Matic 177,384 -
Changes in assets and liabilities
Deposits (2,000) -
Commissions receivable - (50,000)
Accounts payable 4,499 (16,851)
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Total adjustments 198,997 (60,558)
---------------------------------
Net cash provided by
operating activities 278,702 44,721
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (45,500) (30,441)
--------------------------------
Net cash used in investing activities (45,500) (30,441)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances receivable - other - (83,500)
Deferred financing fees - (10,000)
Contributions of equity 25,000 -
---------------------------------
Net cash provided by (used in)
financing activities 25,000 (93,500)
---------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 258,202 (79,220)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 172,521 85,792
----------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 430,723 $ 6,572
==================================
NON CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued for the acquisition
of First Washington $ - $ 3,000,000
============= ===========
Preferred stock issued for the acquisition
Heritage Mortgage $ 100,000 $ -
============= ===========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2003 AND 2002
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
The condensed consolidated unaudited interim financial
statements included herein have been prepared, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. The consolidated financial statements and
notes are presented as permitted on Form 10-QSB and do not
contain information included in the Company's annual
consolidated statements and notes. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed
or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make
the information presented not misleading. The results for the
nine and three months ended June 30, 2003 may not be
indicative of the results for the entire year.
These statements reflect all adjustments, consisting of normal
recurring adjustments which, in the opinion of management, are
necessary for fair presentation of the information contained
herein.
Volt, Inc., and Subsidiaries is a power provider and marketer
of alternative energy and financial services. The Company is
in the initial stages of implementing its business plan.
On April 25, 2001, Denis C. Tseklenis acquired 127,995 shares
of the Company's common stock, $.001 par value per share,
which constituted approximately 53% of the Company's issued
and outstanding common stock for $255,000.
On May 17, 2002, the Company acquired First Washington
Financial Corporation, a company which provides financial
services in Bethesda, Maryland ("First Washington"). First
Washington is a mortgage company whose emphasis lies in
residential mortgages in the greater Washington, D.C. service
area. First Washington was acquired for 2,000,000 shares of
the Company's common stock.
In October 2002, the Company reached an agreement with
Mortgage-Matic of Greenbelt, MD to merge the operations of
Mortgage-Matic with First Washington. Mortgage-Matic
concentrates their business on FHA insured loans in the
$200,000 range. This accounts for approximately 70% of its
business. The merger should facilitate a streamlining of the
processing and underwriting procedures of the companies. This
merger became effective as of January 1, 2003. The Company
acquired Mortgage-Matic for 75,000 shares of Preferred Stock
Class B. For those shares, the Company acquired the net assets
of Mortgage-Matic. The net assets consisted of restricted cash
in the amount of $177,384.
In April 2003, the Company acquired Heritage Mortgage
("Heritage") of South Carolina for 50,000 shares of the
Company's Class B Preferred Stock. The acquisition was for the
net assets of Heritage which consisted of goodwill of
$100,000.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company has two other power related wholly-owned
subsidiaries, Sun Volt, Inc. and Sun Electronics, Inc. besides
Arcadian Renewable Power, Inc. Arcadian Renewable Power, Inc.
is the corporation that holds the Altamont Wind Farm in the
Altamont Pass in Livermore, California.
Principles of Consolidation
The unaudited condensed consolidated balance sheet for June
30, 2003, unaudited condensed consolidated statements of
income for the nine and three months ended June 30, 2003 and
naudited statement of cash flows for the nine months ended
June 30, 2003 include Volt, Inc. and its wholly-owned
ubsidiaries, First Washington, Mortgage-Matic, Heritage
Mortgage, Opportunity Knocks, Sun Volt, Inc., Sun Electronics,
Inc. and Arcadian Renewable Power, Inc.
The unaudited condensed consolidated balance sheet for June
30, 2002, unaudited condensed consolidated statements of
income for the nine and three months ended June 30, 2002 and
unaudited statement of cash flows for the nine months ended
June 30, 2002 include Volt, Inc. and its wholly-owned
subsidiaries, First Washington, Sun Volt, Inc., Sun
Electronics, Inc. and Arcadian Renewable Power, Inc.
Intercompany transactions and balances have been eliminated in
consolidation.
Use of Estimates
The preparation of 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 disclosures 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.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and
other short-term investments with an initial maturity of three
months or less to be cash or cash equivalents.
The Company maintains cash and cash equivalent balances at
several financial institutions which are insured by the
Federal Deposit Insurance Corporation up to $100,000.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed primarily using the straight-line method over the
estimated useful life of the assets.
Office and Computer 5 years
Furniture and Fixtures 7 years
Wind Farm 40 years
Revenue Recognition
The Company sold merchandise and revenue was recorded under
the accrual method of accounting.
First Washington, Mortgage-Matic and Heritage Mortgage record
commission income upon the closing of their respective
transactions.
Advertising
Advertising costs are typically expensed as incurred.
Advertising and marketing expense was approximately $163,821
and $830 for the nine months ended June 30, 2003 and 2002,
respectively.
Income Taxes
The income tax benefit is computed based on the current tax
law. Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax
basis of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and
statutory tax rates.
Fair Value of Financial Instruments
The carrying amount reported in the consolidated balance
sheets for cash and cash equivalents, notes receivable, and
accounts payable approximate fair value because of the
immediate or short-term maturity of these financial
instruments.
Deferred Financing Fees
The Company paid a $10,000 financing fee in connection with a
line of credit in April 2002. This fee was written off over a
one-year period of time. As of June 30, 2003, the entire
balance has been amortized.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED
Goodwill
In June 2001, the FASB issued Statement No. 142 "Goodwill and
Other Intangible Assets". This Statement addresses financial
accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are
acquired individually or with a group of other assets (but not
those acquired in a business combination) should be accounted
for in financial statements upon their acquisition. This
Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially
recognized in the financial statements. This statement has
been considered when determining impairment of goodwill in
certain transactions. As of June 30, 2003, there are no
adjustments of goodwill due to impairment.
Earnings Per Share of Common Stock
Historical net income per common share is computed using the
weighted average number of common shares outstanding. Diluted
earnings per share (EPS) includes additional dilution from
common stock equivalents, such as stock issuable pursuant to
the exercise of stock options and warrants.
The following is a reconciliation of the computation for basic
and diluted EPS:
2003 2002
--------- --------
Net income $ 79,705 $ 136,731
Weighted-average common shares
outstanding (basic) 3,919,422 3,919,422
Weighted-average common stock
Equivalents
Stock options - -
Warrants - -
Weighted-average common shares
outstanding (diluted) #,919,422 3,919,422
Reclassifications
Certain amounts for the nine and three months ended June 30,
2002 have been reclassified to conform with the presentation
of the June 30, 2003 amounts. The reclassifications have no
effect on net income for the nine and three months ended June
30, 2003.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30,
2003:
Wind Farm $ 5,700,000
Furniture and fixtures 46,000
Computer and office equipment 69,917
-----------
$ 5,815,917
Less: accumulated depreciation (27,592)
-----------
Net book value $ 5,788,325
===========
NOTE 4- ADVANCES RECEIVABLE
As of June 30, 2003, notes receivable were $204,000. There was
no interest due the Company on these loans, and the amounts
due at June 30, 2003, are deemed by management to have no
specific repayment terms.
NOTE 5- DEPOSITS
During the quarter ended March 31, 2003, the Company's
subsidiary, Opportunity Knocks placed deposits down on four
homes in Virginia Beach, Virginia. Opportunity Knocks placed
$500 down per home for a total of $2,000. Opportunity Knocks
anticipates closing on these homes by the end of the fiscal
year.
NOTE 6- COMMITMENTS AND CONTINGENCIES
The Company entered into a lease agreement in April 2001 in
Pleasanton, California. The Company paid $2,800 per month for
rent. This lease was terminated by the Company in October
2001, and all operations now run through the Cathey's Valley,
California location. The security deposit was expensed as part
of a rent payment in 2002.
NOTE 7- STOCKHOLDERS' EQUITY
Common and Preferred Stock
The Company issued 1,000,000 shares of preferred stock to
Denis C. Tseklenis in consideration for the Wind Farm. This
preferred stock is convertible by the preferred stockholders
at their discretion and they will receive 5 shares of common
stock for each share of preferred stock.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 7- STOCKHOLDERS' EQUITY (CONTINUED)
Common and Preferred Stock (Continued)
On April 25, 2001, Denis C. Tseklenis acquired 127,995
original issue shares of the Company's common stock, $.001 par
value per share, which constituted approximately 53% of the
Company's issued and outstanding common stock. Mr. Tseklenis
paid the Company $255,000 for the common stock.
During the year ended September 30, 2001, in addition to the
initial acquisition by Denis C. Tseklenis, the Company had
issued 1,678,000 shares and cancelled 225,000 of common stock
for $366,711.
Prior to the initial acquisition by Denis C. Tseklenis, the
Company had issued 1,850,000 shares of common stock for
accrued payroll, accounts payable and services.
During the quarter ended December 31, 2001, 225,000 shares
were reissued that were cancelled from the prior year ended
September 30, 2001.
On May 17, 2002, the Company issued 2,000,000 shares of
restricted common stock to acquire First Washington and thus
it became a wholly-owned subsidiary. The shares were valued at
the time of the transaction at $1.50 per share, or $3,000,000.
On January 1, 2003, the Company issued a board resolution for
the authorization of a new class of preferred stock, Preferred
Stock, Class B. The Company authorized the issuance of
10,000,000 shares with a par value of $.001. Simultaneously
with this authorization, the Company issued 75,000 shares of
the Preferred Stock Class B, to acquire Mortgage-Matic. The
acquisition was for the net assets of Mortgage-Matic which
consisted of restricted cash in the amount of $177,384. There
was no goodwill in this transaction.
In April 2003, the Company issued 50,000 shares of the
Preferred Stock, Class B to acquire Heritage Mortgage
("Heritage"). The acquisition was for the net assets of
Heritage which consisted of goodwill of $100,000. There was no
impairment on this transaction.
NOTE 8- RELATED PARTY TRANSACTION
On January 1, 2003, the Company entered into a lease agreement
for the rental of office space for its home office. An officer
of the Company is a partner in the partnership that rents this
space to the Company. The lease is a five-year lease with a
five-year option, with rent of $2,750 per month. Rent expense
for the nine months ended June 30, 2003 is $16,500.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 9- LITIGATION
In September of 1999, the Deerbrook Publishing Group, Inc.
("Deerbrook"), a formerly wholly-owned subsidiary of the
Company, leased a computer driven aspect image center (printer
for film) used to make separation for printing (the "aspect
image center") and certain other computer equipment from
Copelco Capital, Inc. ("Copelco"). All of the equipment was
delivered to the Deerbrook's then printing operation in
Phoenix, Arizona, and installed. Shortly thereafter, Deerbrook
ceased printing for itself and its customers. The equipment
was returned to Copelco. In August of 2000, Copelco brought
suit in the United States District Court for the District of
Arizona, cause no. CIV'00-1620 PHX ROS, to recover its alleged
damages of $155,398 for Deerbrook's return of the leased
equipment plus continuing interest at the rate of one and
one-third percent per month and attorneys fees and costs. The
Company does not believe that Copelco has mitigated its
damages and further believes that Copelco has either sold the
equipment or otherwise disposed of the same in a manner which
was not commercially reasonable. The Copelco claims will be
vigorously defended against. Any possible loss from this
litigation will be less than one percent (1%) of the Company's
net assets and will be immaterial. Since the change in control
of the Company on April 6, 2001, there have been no legal
proceedings brought against Volt.
NOTE 10- PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability
method for the temporary differences between the financial
reporting basis and income tax basis of the Company's assets
and liabilities. Deferred income taxes are measured based on
the tax rates expected to be in effect when the temporary
differences are included in the Company's consolidated tax
return. Deferred tax assets and liabilities are recognized
based on anticipated future tax consequences attributable to
differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases.
At June 30, 2003 and 2002 deferred tax assets consist of the
following:
2003 2002
-------- ---------
Net operating loss carryforwards $ 166,851 $ 257,670
Less: valuation allowance (166,851) (257,670)
--------- ---------
$ - $ -
========= ==========
At June 30, 2003 and 2002, the Company had federal net
operating loss carryforwards in the approximate amounts of
$417,128 and $496,833, respectively, available to offset
future taxable income. The Company established valuation
allowances equal to the full amount of the deferred tax assets
due to the uncertainty of the utilization of the operating
losses in future periods.
VOLT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 2003 AND 2002
NOTE 11- NOTE PAYABLE - BANK
In November 2002, the Corporation closed on a line of credit
with a bank in the amount of $750,000. The loan proceeds were
used to acquire properties for Opportunity Knocks. As of June
30, 2003, the Company had no amounts outstanding.
NOTE 12- SUBSEQUENT EVENTS
In July 2003, the Company purchased all the outstanding shares
of Wolverine Power Corporation for cash and preferred stock.
The major assets included in the Michigan utility are the
hydro-electric turbines, the Federal Energy Regulatory
Commission license and the Power Purchase Agreement with
Consumer's Energy which runs through 2022.