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, 2004
[ ] 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.
-----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 86-0960464
---------------------------- ----------------------------
(State or other jurisdiction of incorporation (IRS
or organization) Employer Identification No.)
41667 Yosemite Pines Dr., Oakhurst CA 93644
-----------------------------------------------------------------------------
(Address of principal executive offices)
(559) 692-2474
-----------------------------------------------------------------------------
(Issuer's telephone number)
-----------------------------------------------------------------------------
(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: 4,919,422 Common Shares $0.001 par
value as of June 30, 2004
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 FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
CONDITIONS.
RESULTS OF CONTINUING OPERATIONS
Nine Months Ended
June 30
2004 2003
Revenue $ 2,140,293 $ 3,065,355
Cost of Revenue 1,209,224 1,511,534
--------- ---------
Gross profit 931,069 1,553,821
Operating Expenses 754,545 1,474,116
--------- ---------
Income from
continuing operations $ 176,544 $ 79,705
=========== ============
Gross profit argin 44% 51%
Earnings per share
of common stock $ 0.04 $ 0.02
Weighted average number of
common shares outstanding 4,752,755 3,919,422
For the nine months ended June 30, 2004, the Company generated $2,140,293 of
revenue, $931,069 of gross profit, $176,544 of net income, and $0.04 in earnings
per weighted average common share based upon a weighted average of 4,752,775
common shares outstanding. All of the Company's revenue for this period was from
its mortgage business.
For the nine months ended June 30, 2003, the Company generated $3,065,355 of
revenue, $1,511,534 of gross profit, $79,705 of net income, and $0.02 in
earnings per fully diluted common share based upon 3,919,422 fully diluted
common shares outstanding. All of the Company's revenue for this period was from
its mortgage business.
Revenue for the nine months ended June 30, 2004, decreased $925,062 from the
same period last year. Cost of revenue for the nine months ended June 30, 2004,
decreased $302,310 from the same period last year. Operating expenses for the
nine months ended June 30, 2004, decreased $719,591 from the same period last
year. Income from continuing operations for the nine months ended June 30, 2004,
increased $96,839 from the same period last year.
The Company attributes the decrease in revenue for the nine months ended June
30, 2004, to the closing of its mortgage business in the Washington, D. C. area.
The Company attributes the decrease in operating expenses and the corresponding
increase in income from continuing operations for the for the nine months ended
June 30, 2004, to the consolidation of the Company's mortgage business in the
Central Valley of California where the Company's senior management is now
located.
Three Months Ended
June 30
2004 2003
Revenue $ 928,077 $ 1,302,578
Cost of Revenue 538,632 529,198
------- ---------
Gross profit 389,445 773,380
Operating Expenses 385,465 753,406
------- -------
Income from
continuing operatios $ 3,980 $ 19,974
========= ===========
Gross profit margin 42% 59%
Earnings per share
of common stock $ 0.00 $ 0.01
Number of common shares
outstanding 4,919,422 3,919,422
For the three months ended June 30, 2004, the Company generated $928,077 of
revenue, $398,445 of gross profit, $3,980 of net income, and $0.00 in earnings
per fully diluted common share based upon 4,919,422 fully diluted common shares
outstanding. All of the Company's revenue for this period was from its mortgage
business.
For the three months ended June 30, 2003, the Company generated $1,302,578 of
revenue, $773,380 of gross profit, $19,974 of net income, and $0.01 in earnings
per fully diluted common share based upon 3,919,422 fully diluted common shares
outstanding. All of the Company's revenue for this period was from its mortgage
business.
Revenue for the three months ended June 30, 2004, decreased $374,501 from the
same period last year. Cost of revenue for the three months ended June 30, 2004,
increased $9,434 from the same period last year. Operating expenses for the
three months ended June 30, 2004, decreased $367,941 from the same period last
year. Income from continuing operations for the three months ended June 30,
2004, decreased $15,994 from the same period last year.
The Company attributes the decrease in revenue for the three months ended June
30, 2004, to the closing of its mortgage business in the Washington, D. C. area.
The Company attributes the increase in its cost of revenue and the corresponding
decrease in income from continuing operations for the three months ended June
30, 2004, to the fact that two periods of commissions were paid in the reported
period. In the future, the Company intends to pay commissions in the same period
as corresponding revenue is generated thereby eliminating fluctuations in income
from continuing operations
The Company's primary source of revenue is its mortgage business. In late summer
of 2003, the Company determined to discontinue its mortgage business operations
in the Washington D.C. metropolitan area due to increasing cost of revenue,
increasing operating expenses and decreasing revenues. The Company determined
that the increased costs and decreasing revenues were a direct consequence of
lack of senior management oversight. The Company determined to move its mortgage
business to California's Central Valley for two reasons; California's Central
Valley is the fastest growing housing market in California, and senior
management is located in central California. To facilitate the move to Central
California, the Company acquired Yosemite Mortgage Brokers, Inc.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
There are no pending or threatened legal proceedings against the Company or any
of its subsidiaries.
Item 2. Changes in Securities.
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information.
The Company is still in the due diligence phase of the purchase of the Franklin
Hydro facility located in Malone New York.
The Company's purchase of Tract #4 of the Fiatt Coal Mine in Fulton County,
Illinois is in escrow subject to the satisfaction of certain contingencies by
the seller. There can be no guarantee that the contingencies will be satisfied
or that the closing of the purchase will be finalized. The purchase of
additional coal tracts pursuant to existing options is contingent upon
satisfaction of the escrow by the seller to the satisfaction of the Company.
The company has devoted substantial time and resources to the energy side of the
business in the last few quarters and determined to pursue a path into the coal
sector as well as moving forward in the alternative energy markets. We are
currently in the final stages of negotiations with both the unions and holders
of additional large coal reserves to fulfill our obligations with our initial
coal order of 10 million tons of coal at $21 per ton f.o.b. over 84 months
totaling $210 million dollars. The company expects the coal side of the business
to provide a major source of revenue along with more coal orders currently being
pursued. In order to handle more efficiently the increased work load of the
company, we will be announcing the addition of both a new President and a Chief
Financial Officer/Treasurer. The two new officers will also serve on the Board
of Directors.
Item 6. Exhibits and Reports on Form 8-K.
INDEX TO EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
1 VOLT INC. AND SUBSIDIARIES FINANCIAL STATEMENTS
31.1 Section 302 Certifications
32.1 Section 906 Certifications
On April 1,2004, the Company filed a Form 8-K reflecting the resignation of a
director of the Company on March 27, 2004.
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 23, 2004 /s/Denis C. Tseklenis
Denis C. Tseklenis
Chief Executive Officer
Chairman of the Board
EXHIBIT 1 - Financial Statements
VOLT INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED):
BALANCE SHEETS AS OF JUNE 30, 2004 (UNAUDITED)
AND SEPTEMBER 30, 2003 (AUDITED)
STATEMENTS OF OPERATIONS THE NINE AND THREE MONTHS ENDED
JUNE 30, 2004 AND 2003 (UNAUDITED)
STATEMENTS OF CASH FLOWS FOR NINE MONTHS ENDED
JUNE 30, 2004 AND 2003 (UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2004 (UNAUDITED) AND SEPTEMBER 30, 2003 (AUDITED)
(UNAUDITED) (AUDITED)
JUNE 30, SEPTEMBER 30,
2004 2003
CURRENT ASSETS
Cash and cash equivalents $ 379,813 $ 249,993
Commissions receivable 290,684 30,022
Prepaid expenses and other assets 2,000 2,000
------------ ------------
Total current assets 672,497 282,015
PROPERTY AND EQUIPMENT - Net 5,785,080 5,806,927
OTHER ASSETS
Goodwill 2,859,412 2,859,412
------------ -------------
2,859,412 2,859,412
------------ ------------
TOTAL ASSETS $ 9,316,989 $ 8,948,354
============ =============
See accompanying notes to condensed consolidated financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2004 (UNAUDITED) AND SEPTEMBER 30, 2003 (AUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(UNAUDITED) (AUDITED)
JUNE 30, SEPTEMBER 30,
2004 2003
CURRENT LIABILITIES
Accounts payable and accrued expenses 185,154 51,663
----------- ------------
Total current liabilities 185,154 51,663
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Class A Preferred Stock, $.001 par
value, 10,000,000 shares
authorized at June 30, 2004 and
September 30, 2003, respectively,
and 1,000,000 issued and outstanding
at June 30, 2004 and September 30,
2003, respectively 1,000 1,000
Class B Preferred Stock , no par value,
125,000 shares authorized at June 30,
2004 and September 30, 2003,
respectively, and 0 shares issued and
outstanding at June 30, 2004 and
September 30, 2003 respectively - -
First Washington Class A Preferred Stock,
no par value, 500,000 shares authorized
at June 30, 2004 and September 30, 2003,
respectively, and 500,000 shares issued
and outstanding at June 30, 2004 and
September 30, 2003, respectively - -
Common stock, $.001 par value 25,000,000
shares authorized at June 30, 2004 and
September 30, 2003, respectively, and
4,919,422 and 3,919,422 shares issued
and outstanding at June 30, 2004 and
September 30, 2003, respecitvely 4,919 3,919
Additional paid-in capital 13,793,247 13,735,647
Accumulated deficit (4,667,331) (4,843,875)
---------- ----------
Total stockholders' equity (deficit) 9,131,835 8,896,691
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 9,316,989 $ 8,948,354
=========== ===========
See accompanying notes to condensed consolidated financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2004
(UNAUDITED) (UNAUDITED)
NINE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
2004 2003 2004 2003
REVENUE $ 2,140,293 $ 3,065,355 $ 928,077 $ 1,302,578
COST OF REVENUE 1,209,224 1,511,534 538,632 529,198
----------- ---------- --------- -----------
GROSS PROFIT 931,069 1,553,821 389,445 773,380
OPERATING EXPENSES
General and administrative 754,525 1,474,116 385,465 753,406
----------- ---------- --------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES 176,544 79,705 3,980 19,974
Income taxes - - - -
---------- ---------- --------- ----------
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $ 176,544 79,705 3,980 19,974
=========== ========== ========= ==========
BASIC AND DILUTED EARNINGS PER SHARE:
NET INCOME AVAILABLE TO
COMMON STOCKHOLDERS $ 0.04 $ 0.02 $ 0.00 $ 0.01
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,752,755 3,919,422 4,919,422 3,919,422
See accompanying notes to condensed consolidated financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED JUNE 30, 2004 AND 2003
NINE MONTHS ENDED
(UNAUDITED) (UNAUDITED)
JUNE 30, 2004 JUNE 30, 2003
------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 176,544 $ 79,705
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 21,847 19,114
Acquisition of Mortgage-Matic - 177,384
Changes in assets and liabilities:
Prepaid expenses and other current assets - (2,000)
Commissions receivable (260,662) -
Accounts payable 133,491 4,499
------------ ------------
Total adjustments (105,324) 198,997
------------ ------------
Net cash provided by operating activities 71,220 278,702
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment - (45,500)
------------ ------------
Net cash (used in) investing activities - (45,500)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions of equity 58,600 25,000
------------ ------------
Net cash provided by financing activities 58,600 25,000
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 129,820 258,202
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 249,993 172,521
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 379,813 $ 430,723
=========== ============
NON CASH INVESTING AND FINANCING ACTIVITIES
Preferred stock issued for the acquisition of
Heritage Mortgage $ - $ 100,000
============ ============
See accompanying notes to condensed consolidated financial statements.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2004 AND 2003
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 months ended June 30, 2004 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.
Deerbrook Publishing Group, Inc. was a distributor of fine
arts. Effective March 31, 2001, Deerbrook Publishing Group,
Inc. entered into an agreement to spin off its subsidiaries;
Inter Arts, Inc. and Cimmaron Studios, Inc. As of March 31,
2001, the Company ceased it's printing and publishing business
and the shares of stock of its former operating subsidiaries
were distributed to certain shareholders. The Company did not
spin off Deerbrook Publishing, Deerbrook Publishing changed
its name to Volt, Inc. when on April 6, 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 and there was a change in control.
At this time, the Company effected a 1 for 100 reverse stock
split for its $.001 par value common stock.
In May, 2001, Mr. Tseklenis sold shares of stock of Arcadian
Renewable Power which owns the wind farm to the Company in
exchange for 1,000,000 shares of Preferred Convertible Stock.
The wind farm had a historical value of $5,700,000.
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. The combination was treated as a purchase with First
Washington becoming a wholly owned subsidiary of Volt, Inc.
Volt, Inc. recognized an intangible asset (goodwill) which
represented the amount of value received over the net assets
acquired. The operations of First Washington are included in
the consolidated statements of income for the year ended
September 30, 2002 from the date of inception May 17, 2002 to
September 30, 2002. There was no predecessor entity of First
Washington. The fair value of the transaction was recorded
based on the number of shares issued to First Washington
(2,000,000) at the fair value of the stock of Volt on the date
of acquisition net of a discount since the stock issued in the
acquisition was restricted stock ($1.50).
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
The cost of the net assets purchased and liabilities assumed
approximated zero, however, the value of $3,000,000 was based
on the mortgage company's future earnings.
The Company acquired Opportunity Knocks, LLC. during the third
fiscal quarter of 2002 to rehab HUD homes and other properties
in Washington, D.C., Maryland and Virginia under the HUD Gift
Program. This acquisition was done simultaneously with the
acquisition of First Washington, and Opportunity Knocks is a
wholly owned subsidiary of the Company.
In fiscal 2003, the Company expanded its financial services
business, and brought in two businesses, that operationally
failed to meet the Company's business model. Subsequent to
these agreements being in force, the Company spun them out.
Additionally, the Washington Metropolitan Area market had not
met Company expectations, so the Company's subsidiary First
Washington acquired Yosemite Brokerage, Inc. in Oakhurst,
California, a few miles from the Company's headquarters. The
Company had issued Preferred Stock Class B, which has been
cancelled by the Company.
In July 2003 (effective August 1, 2003), First Washington
acquired Yosemite Brokerage, Inc. ("Yosemite"), a California
corporation for 500,000 shares of First Washington Class A
Preferred Stock. The acquisition was recorded for accounting
purposes as a purchase acquisition. The Company valued this
transaction at $200,000 ($.40 per share), which included the
recognition of $31,840 in goodwill.
The Company has three other power related wholly-owned
subsidiaries, Sun Volt, Inc., Sun Electronics, Inc. and
Arcadian Renewable Power, Inc. Arcadian Renewable Power, Inc.
is the corporation that holds the Altamont Wind Farm in the
Altamont Pass in Livermore, California.
As noted in Note 9, the Company has been addressing response
letters to the Securities and Exchange Commission's comment
letters dated February 4, 2003, May 30, 2003 and August 11,
2003. The Company has amended these condensed consolidated
financial statements for the balance sheet at September 30,
2003 (audited) to restate certain transactions that occurred
prior to the current fiscal year. These adjustments were to
reclassify $711,628 previously recorded as reversal of
payables, to reclassify a portion of its goodwill acquired in
the First Washington Corporation transaction as cash in the
amount of $172,428 and has reclassified $347,326 previously
classified as notes receivable to general and administrative
expenses. These transactions resulted in a decrease in the
accumulated deficit to ($4,843,875) at September 30, 2003. In
addition for the six months ended March 31, 2004, the Company
has reclassified $4,500 previously classified as notes
receivable to accrued expenses. This transaction resulted in
no change to its previously stated net income and accumulated
deficit for the nine-month period. The comparative statements
of income for the nine and three months ended June 30, 2004
and 2003, and comparative statements of cash flows have not
been restated since none of the amendments above relate to
those periods.
The Company is in process of amending all prior periods that
these restatements relate to.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed consolidated balance sheet for June 30, 2004 and
consolidated balance sheet for September 30, 2003 and
condensed consolidated statements of income and cash flows for
the nine months ended June 30, 2004 includes Volt Inc. and its
wholly-owned subsidiaries. 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 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.
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.
Furniture and fixtures 5-7 years
Office and computer equipment 3-5 years
Wind Farm 40 years
Revenue Recognition
For the Company's power division, sold merchandise and revenue
was recorded under the accrual method of accounting.
For the Company's financial services division, they record
commission income upon the closing of their respective
transactions.
Advertising
Advertising costs are typically expensed as incurred.
Advertising expense is included in general and administrative
expenses for the nine months ended June 30, 2004 and 2003,
respectively.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The income tax benefit is computed on the pretax loss 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 condensed consolidated
balance sheet for cash and cash equivalents, advances
receivable, commissions receivable, accounts payable and
accrued expenses approximate fair value because of the
immediate or short-term maturity of these financial
instruments.
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:
2004 2003
---- ----
Net income $176,544 $79,705
-------- -------
Weighted- average common shares
Outstanding (Basic) 4,752,755 3,919,422
Weighted-average common stock
Equivalents:
Stock options - -
Warrants - -
---------- ---------
Weighted-average common shares
Outstanding (Diluted) 4,752,755 3,919,422
========= =========
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. The unamortized balance at June 30,
2004 was $ -0-. Amortization of these fees were $-0- and
$5,000, respectively for the nine months ended June 30, 2004
and 2003.
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. During fiscal 2003, the Company
recognized $31,840 of goodwill acquired in the Yosemite
transaction. There was no recognition of impairment of
goodwill during the nine months ended June 30, 2004 and 2003.
Recent Accounting Pronouncement
On October 3, 2001, the FASB issued Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" ("SFAS 144"), that is
applicable to financial statements issued for fiscal years
beginning after December 15, 2001. The FASB's new rules on
asset impairment supersede SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," and portions of Accounting Principles Board
Opinion 30, "Reporting the Results of Operations." This
Standard provides a single accounting model for long-lived
assets to be disposed of and significantly changes the
criteria that would have to be met to classify an asset as
held-for-sale. Classification as held-for- sale is an
important distinction since such assets are not depreciated
and are stated at the lower of fair value and carrying amount.
This Standard also requires expected future operating losses
from discontinued operations to be displayed in the period (s)
in which the losses are incurred, rather than as of the
measurement date as presently required.
Reclassifications
Certain amounts for the nine months ended June 30, 2003 have
been reclassified to conform with the presentation of the June
30, 2004 amounts. The reclassifications have no effect on net
income for the nine months ended June 30, 2003.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30,
2004:
Wind Farm $5,700,000
Furniture and fixtures 16,000
Leasehold improvements 8,885
Computer and office equipment 116,293
----------
5,841,178
Less: accumulated depreciation 56,098
----------
Net book value $5,785,080
==========
Depreciation expense for the nine months ended June 30, 2004
and 2003 was $21,847 and $19,114, respectively. There is no
depreciation recognized on the Wind Farm as it is non
operational until placed in service. In the Company's
acquisition of Yosemite in their fourth quarter of 2003, they
acquired $55,261 office and computer equipment.
The Company upon acquisition of the Wind Farm, has classified
this asset under property and equipment. The Wind Farm
consists of hundreds of nonoperational turbines located in
California. The Company has received independent valuations on
the Wind Farm that have valued it in excess of $14,000,000.
The Company would need to spend in excess of $5,000,000 to
bring these assets into operational use, at which time the
Company would depreciate them over their estimated useful life
of 40 years. Consequently, there is no depreciation recognized
on the Wind Farm for the nine months ended June 30, 2004 and
2003. The Company did receive miscellaneous parts that have
not been valued for the condensed consolidated balance sheets,
that it sells from time to time, and the Company records the
income in their condensed consolidated statements of
operations when these sales occur.
NOTE 4- 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.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 5- STOCKHOLDERS' EQUITY
Common and Preferred Stock
Effective April 23, 2001, the Registrant effected a 1 for 100
reverse stock split for its common stock, $.001 par value per
share.
The Company issued 1,000,000 shares of Class A Preferred Stock
to Denis C. Tseklenis in consideration for the Wind Farm.
On April 6, 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 common
stock to acquire First Washington and thus it became a
wholly-owned subsidiary. The shares were valued at a fair
value at the time of the transaction ($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, Class B
Preferred Stock, no par value. The Company authorized the
issuance of 125,000 shares of Class B Preferred Stock.
On July 1, 2003, First Washington issued a board resolution
for the authorization of a new class of preferred stock, Class
A Preferred Stock, no par value. First Washington authorized
the issuance of 500,000 shares of Class A Preferred Stock.
During fiscal 2003, the Company had issued shares of Class B
Preferred Stock, only to cancel them later in that fiscal
year. As of September 30, 2003, there were no shares of Class
B Preferred Stock issued and outstanding.
In July 2003 (effective August 1, 2003), First Washington
issued 500,000 shares of the Class A Preferred Stock, to
acquire Yosemite Brokerage, Inc. ("Yosemite"). The acquisition
was recorded for accounting purposes as a purchase
acquisition. The transaction was valued at $200,000 ($.40 per
share), which included goodwill of $31,840.
In November 2003, the Company issued 1,000,000 shares of
common stock. The stock was an additional payment on the Wind
Farm. The Company charged additional paid-in capital.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 6- RELATED PARTY TRANSACTIONS
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.
Yosemite Brokerage, rents space from its officer. The lease
commenced February 1, 2000 and runs through January 31, 2005.
The monthly rents commenced at $5,600 per month and calls for
increase annually up to 3%. Rent expense for the nine months
ended June 30, 2004 was $50,400. No rent expense was incurred
for the nine months ended June 30, 2003.
The President of the Company owns a controlling percentage of
the common stock outstanding.
NOTE 7- PROVISION FOR INCOME TAXES
Deferred income taxes will be 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 will be 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, 2004, deferred tax assets consist of the
following:
Net operating loss carryforwards $410,000
Less: valuation allowance (410,000)
----------
$ -0-
At June 30, 2004, the Company had federal net operating loss
carryforwards in the approximate amounts of $1,545,000,
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.
NOTE 8- PENDING ACQUISITIONS
The Company in January 2004 reached an agreement to purchase
all of the outstanding shares of the Whittlesey hydro-electric
project on the Salmon River in Malone, New York from Franklin
Hydro for cash. The purchase will include the real estate,
turbines and power purchase agreement which runs approximately
seven more years at 8.25 cents per KWH produced.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2004 AND 2003
NOTE 8- PENDING ACQUISITIONS (CONTINUED)
The Company in August 2004, received a Sales and Purchase
Agreement for Coal Ore to be sold and delivered on a FOB basis
to buyer in the amount of ten million metric tons of coal for
84 months with options to renew at year five of the term. The
contract calls for a minimum of 55,000 tons per month +/- 5%
to be delivered at $21 per ton for a contract price of
$210,000,000. Revenue on a monthly basis for the order will be
between $1,000,000 and $3,000,000 dependent on site loading,
labor, work, shipping, permits and weather conditions.
Payments on delivery will be serviced from a letter of credit
posted by the buyer and drawn on a major bank. Sun Volt, a
wholly owned subsidiary of the Company will oversee the
day-to-day operations which will be managed by Lancaster
International Corporation. The contract calls for the delivery
of the coal to begin within 120 days and the Company expects
to meet the requirements and specifications of the order on a
timely basis.
NOTE 9- RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company has been addressing response letters to the
Securities and Exchange Commission's comment letters dated
February 4, 2003, May 30, 2003 and August 11, 2003. The
Company has amended these condensed consolidated financial
statements for the balance sheet at September 30, 2003
(audited) to restate certain transactions that occurred prior
to the current fiscal year. These adjustments were to
reclassify $711,628 previously recorded as reversal of
payables, to reclassify a portion of its goodwill acquired in
the First Washington Corporation transaction as cash in the
amount of $172,428 and has reclassified $347,326 previously
classified as notes receivable to general and administrative
expenses. These transactions resulted in a decrease in the
accumulated deficit to ($4,843,875) at September 30, 2003. In
addition for the six months ended March 31, 2004, the Company
has reclassified $4,500 previously classified as notes
receivable to accrued expenses. This transaction resulted in
no change to its previously stated net income and accumulated
deficit for the nine-month period. The comparative statements
of income for the nine and three months ended June 30, 2004
and 2003, and comparative statements of cash flows have not
been restated since none of the amendments above relate to
those periods.
The Company is in process of amending all prior periods that
these restatements relate to.