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 December 31, 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 (IRS Employer Identification No.)
incorporation or organization)
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: 4,919,422 Common Shares $0.001 par
value as of December 31, 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 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
The Company generated $612,172 of revenue, $35,233 of net earnings from
continuing operations and $0.01 in earnings per weighted-average common share
from continuing operations for the three months ended December 31, 2003.
For total operations, net income for the three months ended December 31, 2003,
was $35,233 or $0.01 in earnings per weighted-average common share compared with
net income of $82,110 or $0.02 in earnings per fully diluted common share for
the three months ended December 31, 2002.
Three Months Ended
December 31
--------------------------
2003 2002
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Revenue $612,172 $543,966
Cost 371,056 221,810
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Gross profit $241,116 $322,156
======== ========
Gross profit margin 39% 59%
Income from
continuing operations $ 35,233 $ 82,110
======== ========
Earnings per share per
share of common stock $ 0.01 $ 0.02
======== ========
Revenue for the three months ended December 31, 2003, increased $68,206 from the
same period last year. Cost of revenue for the three months ended December 31,
2003, increased $149,246 from the same period last year. Management attributes
the increase in cost of revenue for the current period to the discontinuation of
operations in the Washington D.C. area.
Earnings per weighted-average common share was $0.01 for the three months ended
December 31, 2003 based on weighted-average common shares outstanding of
4,419,422, and earnings per fully diluted common share was $0.02 for the three
months ended December 31, 2002 based upon fully diluted common shares
outstanding of 3,919,422.
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; the California 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. The Company
expects increases in revenue from its mortgage business in the year ending
September 30, 2004. The company also expects to expand the energy side of the
business.
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.
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 capitol.
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
1 VOLT INC AND SUBSIDIARIES FINANCIAL STATEMENTS
33.01 Section 302 Certification
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 February 23, 2004 /s/Denis C. Tseklenis
Denis Costa Tseklenis
Chief Executive Officer
Chairman of the Board
EXHIBIT 1
VOLT INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
BALANCE SHEETS AS OF DECEMBER 31, 2003 (UNAUDITED)
AND SEPTEMBER 30, 2003 (AUDITED)
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED
DECEMBER 31, 2003 AND 2002 (UNAUDITED)
STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED
DECEMBER 31, 2003 AND 2002 (UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2003 (UNAUDITED) AND SEPTEMBER 30, 2003 (AUDITED)
ASSETS
(Unaudited) (Audited)
December 31, September 30,
2003 2003
------------ -------------
Current Assets:
Cash and cash equivalents $ 243,947 $249,993
Commissions receivable 86,000 30,022
Prepaid expenses and other assets 2,000 2,000
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Total Current Assets 231,947 282,015
Property and equipment,net 5,799,645 5,806,927
Other Assets:
Goodwill 3,031,840 3,031,840
Advances receivable 342,826 347,326
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Total Other Assets 3,374,666 3,379,166
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Total Assets $9,506,258 $9,468,108
=========== ============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
DECEMBER 31, 2003 (UNAUDITED) AND SEPTEMBER 30, 2003 (AUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited) (Audited)
December 31, September 30,
2003 2003
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Current Liabilities:
Accounts payable $ 26,580 $ 51,663
-------------- ---------------
Total Current Liabilities 26,580 51,663
Commitments and Contingencies
Stockholders' Equity (Deficit):
Class A Preferred Stock, $.001 par value,
10,000,000 shares authorized at December
31,2003 and September 30, 2003, repectively,
and 1,000,000 issued and outstanding at
December 31, 2003 and September 30, 2003,
respectively 1,000 1,000
Class B Prefered Stock, no par value,
125,000 shares authorized at December 31,
2003 and September 30, 2003, respectively,
and 0 shares issued and outstanding at
December 31, 2003 and September 30, 2003,
respectively - -
First Washington Class A Preferred Stock,
no par value, 500,000 shares authorized at
December 31, 2003 and Sepember 30, 2003,
respectively, and 500,000 shares issued
and outstanding at December 31, 2003 and
September 30, 2003, respectively - -
Common Stock - $.001 par value; 25,000,000
shares authorized at December 31, 2003
and September 30, 2003, respectively and
4,919,422 and 3,919,422 shares issued and
outstanding at December 31, 2003 and
September 30, 2003, respectively 4,919 3,919
Additional paid-in capital 13,051,019 13,024,019
Accumulated deficit (3,577,260) (3,612,493)
------------ ------------------
Total stockholders' equity 9,479,678 9,416,445
------------ ------------------
Total Liabilities and Stockholders' Equity $9,506,258 $9,468,108
============ ==================
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002 (Unaudited)
2003 2002
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Revenues $ 612,172 $ 543,966
Cost of Revenue 371,056 221,810
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Gross Profit (Loss) 241,116 322,156
Operating Expenses
General and administrative costs 205,883 240,046
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Total operating expenses 205,883 240,046
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LOSS FROM CONTINUIING OPERATIONS
BEFORE INCOME TAXES 35,233 82,110
Income taxes - -
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NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS $35,233 $82,110
=========== ==============
BASIS AND DILUTED EARNINGS PER SHARE:
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS $ 0.01 $ 0.02
=========== ==============
WEIGHTED NUMBER OF COMMON SHARES
OUTSTANDING 4,419,422 3,919,422
=========== ==============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002 (UNAUDITED)
2003 2002
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 35,233 $ 82,110
Adjustments to reconcile net income to net
cash used by operating activities:
Depreciation and amortization 7,282 7,243
Changes in assets and liabilities
Prepaid expenses and other - -
Commissions receivable (55,978) -
Accounts payable (25,083) (22,000)
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Total adjustments (73,779) (14,757)
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Net cash provided by (used in)
operating activities (38,546) 67,353
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in advances receivable 4,500 -
---------------- --------------
Net cash provided by investing
activities 4,500 -
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from contributed capital 28,000 25,000
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Net cash provided by (used in)
financing activities 28,000 25,000
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 6,046 92,353
CASH AND CASH EQUIVALENTS - BEGINNING OF
YEAR 249,993 172,521
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CASH AND CASH EQUIVALENTS - END OF YEAR $ 243,947 $ 264,874
=============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 4,340 $ -
=============== ===============
The accompanying notes are an integral part of the condensed consolidated
financial statements.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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
three months ended December 31, 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.
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)
DECEMBER 31, 2003 AND 2002
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.
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation
The condensed consolidated balance sheet for December 31, 2003
and consolidated balance sheet for September 30, 2003 and
condensed consolidated statements of income and cash flows for
the three months ended December 31, 2003 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.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 was approximately $4,973 and $0 for the
three months ending December 31, 2003 and 2002, respectively.
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.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 $35,233 $82,110
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Weighted- average common shares
Outstanding (Basic) 4,419,422 3,919,422
Weighted-average common stock
Equivalents:
Stock options - -
Warrants - -
--------- -----------
Weighted-average common shares
Outstanding (Diluted) 4,419,422 3,919,422
========= =========
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 December
31, 2003 was $ -0-. Amortization of these fees were $-0- and
$2,500, respectively for the three months ended December 31,
2003 and 2002.
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 three months ended December 31, 2003 and
2002.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 three months ended December 31, 2002
have been reclassified to conform with the presentation of the
December 31, 2003 amounts. The reclassifications have no
effect on net income for the three months ended December 31,
2002.
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December
31, 2003:
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 41,533
-----------
Net book value $5,799,645
===========
Depreciation expense for the three months ended December 31,
2003 and 2002 was $7,252 and $4,743, 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.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE 4- ADVANCES RECEIVABLE
As of December 31, 2003, advances receivable were $342,826.
There was no interest due the Company on these loans, and the
amounts due at December 31, 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.
NOTE 6- 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.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE 6- STOCKHOLDERS' EQUITY (CONTINUED)
Common and Preferred Stock (Continued)
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.
NOTE 7- 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. Rent expense
for the year ended September 30, 2003 of $24,750 was forgiven
by the company at September 30, 2003. Rent expense for the
three months ended December 31, 2003 and 2002 was $8,250 and
$-0-, respectively.
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 three months
ended December 31, 2003 was $16,800. No rent expense was
incurred for the three months ended December 31, 2002.
The President of the Company owns a controlling percentage of
the common stock outstanding.
VOLT INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2003 AND 2002
NOTE 8- 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 December 31, 2003 and 2002, deferred tax assets consist of
the following:
2003 2002
---- -----
Net operating loss carryforwards $139,963 $165,889
Less: valuation allowance (139,963) (165,889)
--------- ---------
$ -0- $ -0-
========= =========
At December 31, 2003 and 2002, the Company had federal net
operating loss carryforwards in the approximate amounts of
$424,129 and $414,723, 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.
NOTE 9- SUBSEQUENT EVENT
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.