UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED SEPTEMBER 30, 2003
0-28555
(Commission file number)
VOLT INC.
(Name of small business issuer in its charter)
Nevada 86-0960464
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
41667 Yosemite Pines Drive, Oakhurst, CA 93644 93644
(Address of principal executive offices) (Zip Code)
Issuer's telephone number is: (559) 692-2474
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
$.001 Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this from, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10KSB
or any amendment to this Form 10KSB. [X]
Indicate by check mark whether the issuer is an accelerated filer (as defined in
Exchange Act Rule 12b-2).
Yes [ ] No [X]
The issuer's revenues for the most recent fiscal year were $2,041,991.
The aggregate value of the voting stock held by non-affiliates as of January 13,
2004, was $7,257,710.
The number of shares outstanding of the issuer's common equity as of January 13,
2004 was 4,919,422, $.001 Par Value.
Portions of the following documents are incorporated by reference into Part II,
Item 5 and Part III, Item 10 respectively of this Form 10KSB: Applicable
portions of the Company's Form 10SB12G filed with the Securities and Exchange
Commission on December 17, 1999 and applicable portions of the Company's Form
10KSB filed with the Securities and Exchange Commission on January 16, 2002.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
i
TABLE OF CONTENTS
PART I.......................................................................1
ITEM 1. DESCRIPTION OF BUSINESS..........................................1
History................................................................1
The Company............................................................2
The Alternative Energy Business........................................2
The Mortgage Business..................................................3
The Real Estate Business...............................................3
ITEM 2. DESCRIPTION OF PROPERTY..........................................3
Corporate Offices......................................................3
Energy Properties......................................................3
ITEM 3. LEGAL PROCEEDINGS................................................3
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...............3
PART II......................................................................4
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........4
Market Information.....................................................4
Capital Stock and Holders of Capital Stock.............................5
Dividends..............................................................5
Securities Authorized for Issuance Under Equity Compensation Plans.....5
Recent Sales of Unregistered Securities................................5
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........6
Results of Continuing Operations.......................................6
Management's Discussion................................................8
ITEM 7. FINANCIAL STATEMENTS.............................................9
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS....................9
PART III.....................................................................9
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS.................................9
ITEM 10. EXECUTIVE COMPENSATION.........................................10
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.10
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................11
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K...............................12
Index to Exhibits.....................................................12
Reports on Form 8-K:..................................................12
ITEM 14. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES...............12
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
The Company was incorporated in the state of Colorado on March 31, 1997, under
the name Biovid Corporation for the purpose of entering into the printing and
publishing business. The Company did not commence active business operations in
the publishing industry until August 1998, when began acquiring existing
printing and publishing businesses as subsidiaries. From August, 1998, until
December 31, 1999, the Company derived its revenue primarily from providing
printing and publishing services to artists and publishers. The Company
discontinued its printing and publishing operations effective December 31, 1999,
to concentrate its efforts on Internet-based publishing initiatives. In December
1999, the company effected a merger whereby it became a Nevada corporation and
changed its name to Deerbrook Publishing Group, Inc and continued as a holding
company looking for other business to acquire.
On April 1, 2001, the Company disposed of its printing and publishing
subsidiaries and ceased active business operations. On April 6, 2001, control of
the Company changed and the Company determined to explore new business
opportunities including but not limited to the acquisition of alternative energy
sources in the State of California and other states for resale to the public.
Also on April 6, 2001, the Company changed its name to Volt Inc.
On May 15, 2001, the Company acquired all of the stock of Arcadian Renewable
Power, Inc., a Delaware corporation ("Arcadian") and thereby acquired control of
all of the assets of Arcadian. Arcadian is in the business of alternative energy
production.
In May, 2001, the Company established Sun Volt, Inc., a Nevada corporation ("Sun
Volt"). Sun Volt is engaged in the business of construction and sale of energy
products and energy projects.
In May, 2001, the Company established Sun Electronics, Inc., a Nevada
corporation ("Sun Electronics"). Sun Electronics is engaged in the research and
development of alternative energy products.
On May 17, 2002, the Company acquired all of the stock of First Washington
Financial Corporation, a Nevada corporation ("First Washington"). First
Washington is a mortgage loan originator in the home mortgage loan industry
that, until August, 2003, concentrated its business in Washington, D.C.,
Maryland and Virginia. In August, 2003, First Washington moved its operations to
the Central Valley of California.
On May 17, 2002, the Company acquired Opportunity Knocks, LLC, a Maryland
limited liability company ("Opportunity Knocks"). Opportunity Knocks is in the
business of acquiring, refurbishing and selling real estate. Opportunity Knocks
specializes in HUD properties.
In October 2002, and April 3, 2003, the Company acquired Mortgage-Matic Brokers,
LLC and Heritage Mortgage Bankers, LLC respectively. Both Mortgage-Matic and
Heritage are mortgage loan originators in the home mortgage loan industry in
Washington, D.C., Maryland and Virginia. In July, 2003, the Company disposed of
both Mortgage-Matic and Heritage.
In July, 2003, the Company acquired Yosemite Brokerage, Inc., a California
corporation ("Yosemite"). Yosemite is a loan originator in the home mortgage
loan industry in California's Central Valley.
The Company
The Company is a holding company formed in the Sate of Nevada whose subsidiaries
include Arcadian, Sun Volt, Sun Electronics, First Washington, Opportunity
Knocks and Yosemite.
The Company is listed on the NASD-OTC Bulletin Board and its common stock trades
under the stock symbol "VOLT".
The Alternative Energy Business
Arcadian's major asset is the Altamont Wind Generation Facility, which is an
existing electricity generation facility located on approximately 4000 acres in
the Altamonte Pass, east of San Francisco, CA (the "Wind Farm"). The Wind Farm
has about 1300 wind turbines at present which were installed in the 1980's,
approximately 600 of which are still operable. The Wind Farm will be re-powered
with new 950 KW state-of-the-art turbines. The Wind Farm is zoned and permitted
for up to 114 megawatts, and the infrastructure includes the wind turbines, 300
miles of transmission lines, a 150 MW substation and an interconnection to the
PG&E grid. The ground leases extend to 2036 with options to renew. The Wind Farm
will be re-powered with a $150 million credit facility. Financing for the
initial 60 MW re-power is $68 million, with 20% equity supplied by the $14
million value of the existing plant. The cost to produce electricity is
approximately 4.5 cents per KWH, and is eligible for up to 3.5 cents of tax
credits. Sale price of the electricity should be in the range of 6.9 cents per
KWH with annual revenue in the $5 Million range without calculating green
tickets or tax credits and other incentives.
The Company is in the planning stages to re-power and activate its Wind Farm.
However, due to the uncertainty surrounding the Chapter 11 Reorganization
Proceeding of Pacific Gas and Electric Company pending in the United States
Bankruptcy Court in the Northern District of California, the Company is unsure
of when it will be able to activate the Wind farm.
Sun Electronics is conducting Photovoltaics research and development of a
patented paint on cellprocess licensed to the company and other solar and energy
related technologies.
Sun Volt is currently engaged in the sale and construction of alternative energy
products and power from generators and other sources of co-generation.
The Mortgage Business
First Washington and Yosemite earn fees on the origination of real estate
mortgage loans in the California's Central Valley. Yosemite leases office space
in Oakhurst, California. First Washington and Yosemite specialize in residential
mortgage loans. First Washington and Yosemite have 13 full time employees. First
Washington and Yosemite obtain customers through direct contact by telephone,
the internet and referrals from existing customers.
The Real Estate Business
Opportunity Knocks is in the business of acquiring, refurbishing and selling
real estate in the Washington D.C. area. Initially, Opportunity Knocks will
utilize the expertise and some of the employees of First Washington and Yosemite
to operate its business. Opportunity Knocks specializes in acquiring,
refurbishing and selling of HUD properties. Opportunity Knocks will utilize the
HUD gifting program to attract first time home buyers who might not otherwise be
able to qualify for a home mortgage. Opportunity Knocks shares office space with
First Washington and Yosemite. During the year ended September, 30, 2003,
Opportunity Knocks moved its business from the Washington D.C. metropolitan area
to the California's Central Valley.
ITEM 2. DESCRIPTION OF PROPERTY
Corporate Offices
The Company leases its corporate and executive offices at 41667 Yosemite Pines
Drive, Oakhurst, CA 93644. The Company considers its offices to be adequate.
Yosemite leases its corporate offices at 400500 Highway 41, Oakhurst, CA 93644.
The Company considers Yosemite's offices to be adequate.
Energy Properties
The Company's Wind Farms are all located on leased property in the Altamonte
Pass east of San Francisco, California.
ITEM 3. LEGAL PROCEEDINGS
There are no pending or threatened legal proceedings against the Company or any
of its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fiscal year
ended September 30, 2002.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The company's Common Stock trades under the stock symbol VOLT on the NASDAQ'S
OTC Bulletin Board. The following table sets forth the quarterly high and low
closing bid prices for the Company's common stock for the periods indicated:
For the year ended September 30, 2001:
High Low
Deerbrook:
Quarter ended December 31, 2000 $ 0.07 $ 0.005
Quarter ended March 31, 2001 0.08 0.01
VOLT:
Quarter ended June 30, 2001 10.25 0.015
Quarter ended September 30, 2001 9.00 2.50
For the year ended September 30, 2002:
High Low
Quarter ended December 31, 2001 $ 4.30 2.25
Quarter ended March 31, 2002 4.20 1.50
Quarter ended June 30, 2002 2.00 1.55
Quarter ended September 30, 2002 2.05 1.43
For the year ended September 30, 2003:
High Low
Quarter ended December 31, 2002 $ 3.30 3.30
Quarter ended March 31, 2003 3.05 3.00
Quarter ended June 30, 2003 2.05 1.70
Quarter ended September 30, 2003 1.75 1.75
The quotations reflect inter-dealer price, without mark-up, mark-down or
commission and may not represent actual transactions.
Capital Stock and Holders of Capital Stock
As of September 30, 2003, the Company had two classes of capital stock
outstanding; Common Stock, $.001 par value, and Series A Voting Convertible
Preferred Stock. As of September 30, 2003, there were approximately 650 holders
of record of the Company's Common Stock and one holder of record of the
Company's Series A Voting Convertible Preferred Stock. The Company's Series A
Voting Convertible Preferred Stock is convertible into the Company's common
stock at the ratio of five shares of the Company's Common Stock for each share
of the Company's Series A Voting Convertible Preferred Stock.
As of September 30, 2003, the Company's subsidiary, First Washington, has two
classes of capital stock outstanding; Common Stock, no par value and Series A 10
% Non-Cumulative Convertible Preferred Stock. The Company owns 10,000,000 shares
of First Washington's Common Stock, no par value. First Washington has issued
500,000 shares of Series A 10% Non-Cumulative Convertible Preferred Stock which
is convertible into First Washington's Common Stock at the ratio of four shares
of First Washington's Common Stock for each share of First Washington's Series A
10% Non-Cumulative Convertible Preferred Stock. There is one owner of First
Washington's Series A 10% Non-Cumulative Convertible Preferred Stock.
Dividends
The Company has not declared or paid any cash dividends on its common stock and
does not intend to declare or pay any cash dividends in the foreseeable future.
The payment of dividends, if any is within the discretion of the Board of
Directors and will depend on the Company's earnings, if any, its capital
requirements, and financial condition and other such factors as the Board of
Directors may consider.
First Washington has not declared or paid any cash dividends on its Series A 10%
Non-Cumulative Convertible Preferred Stock to date.
Securities Authorized for Issuance Under Equity Compensation Plans.
None.
Recent Sales of Unregistered Securities
Sales of securities by the Company and its subsidiaries within the past three
years without registration under the Securities Act were as follows:
With respect to such sales within the fiscal years ended September 30, 2003,
2002 and 2001, see Note 7 to the Company's Consolidated Financial Statements
contained herein. Each share of the Company's Series A Voting Convertible
Preferred Stock referred to in Note 7 is convertible into five shares of the
Company's common stock at the option of the holder(s) thereof. Each share of
First Washington's Series A 10% Non-Cumulative Convertible Preferred Stock
referred to in Note 7 is convertible into four shares of First Washington's
common stock at the option of the holder(s) thereof.
With respect to such sales within the fiscal year ended September 30, 2000,
refer to the applicable portions of the Company's Form 10SB12G filed with the
Securities and Exchange Commission December 17, 1999, which by this reference
are incorporated herein by reference for this specific purpose.
The Company claims exemption from registration for these securities under
Section 4(2) of the Securities Act in as much as all of the purchasers were
"accredited investors" as that term is defined in Regulation D as promulgated by
the Securities and Exchange Commission and all of the purchasers either alone or
with their purchaser representative(s) had such knowledge and experience in
financial and business matters that they were capable of evaluating the merits
and risks of the purchase of the Company's securities.
ITEM 6. 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 following table of selected financial information summarizes certain
selected consolidated financial data and is qualified in its entirety by the
more detailed Consolidated Financial Statements and Notes thereto appearing
elsewhere in this Report.
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
2003 2002
---------- --------
Revenue $ 2,041,991 $ 926,128
Cost of Revenue 1,122,381 302,878
----------- --------
Gross Profit 919,610 623,250
Operating Expenses
General and administrative costs 911,439 362,230
----------- --------
Total operating expenses 911,439 362,230
----------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 8,171 261,020
Gain from discontinued operations 97,723 -
Loss on disposal (36,360) -
---------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 69,534 261,020
Income taxes - -
----------- --------
NET INCOME $ 69,534 $261,020
=========== ========
BASIS AND DILUTED EARNINGS PER SHARE:
Earnings per share on continuing
operations $ 0.00 $ 0.10
=========== =========
Earnings per share on gain from
discontinued operations $ 0.02 $ -
=========== =========
Loss per share on disposal $ (0.01) $ -
=========== =========
Earnings per share on all operations $ 0.02 $ 0.10
=========== =========
Revenue for the year ended September 30, 2003, increased $1,115,863 from the
year ended September 30,2002. The Cost of Revenue for the year ended September
30, 2003, increased $819,503 from the year ended September 30,2002. Gross Profit
for the year ended September 30, 2003, increased 296,360 from the year ended
September 30, 2002. Operating Expenses for the year ended September 30, 2003
increased $549,209 from the year ended September 20, 2002. In the year ended
September 30, 2003, the Company experienced a net gain of $97,723 from
discontinued operations and a one time loss on the disposal of subsidiaries in
the amount of $(36,360). Net Income for the year ended September 30, 2003,
decreased $(191,486) from the year ended September 30, 2002. Earnings per share
on all operations for the year ended September 30, 2003 decreased $(0.08) from
the year ended September 30, 2002.
Management's Discussion
Because of delays in the redevelopment of the Company's Wind Farm business
caused by the Chapter 11 Reorganization proceedings of Pacific Gas and Electric
Company, the Company's energy business produced minimal revenue for the year
ended September 30, 2003. The Company is proceeding with redevelopment planning
for its Altamonte Pass Wind Farm. However, the redevelopment is not expected to
be completed in the near term due to the uncertainty of both the state of
California's energy problems and legislative solutions and the Chapter 11
Reorganization Proceeding of Pacific Gas and Electric Company pending in the
United States Bankruptcy Court in the Northern District of California. Since the
Company's Wind Farm business is primarily dependent on the purchase of power
from the Company by Pacific Gas and Electric and Pacific Gas and Electric is in
Chapter 11 Reorganization proceedings the Company cannot currently predict when
its Wind Farm business will begin to produce revenue. The Company is
aggressively pursuing acquisitions for its energy division in the hydroelectric,
distributed power and solar power segments of the energy market as it has strong
expertise in these fields.
During the year ended September 30, 2003, the Company closed in escrow on the
purchase of Wolverine Power Corporation, a Michigan hydroelectric facility.
However, the escrow conditions have not as yet been satisfied by Wolverine and
therefore the purchase of the facility is not as yet completed. When the
conditions to closing the escrow have been met, the purchase will be finalized.
There can be no assurance that the escrow conditions will be satisfied and that
the purchase will be finalized.
The Company's real estate business produced no revenue for the year ended
September 30, 2003. The Company has determined to move its real estate business
from the metropolitan Washington, D.C. area to the Central Valley area of
California for two reasons; the Company's executive offices are located in
central California, and California's Central Valley is the fastest growing
housing market in California. The Company has an existing loan commitment for
$750,000 to acquire and refurbish residential real estate. The Company
anticipates realizing revenue from its real estate business in its 2004 fiscal
year.
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 has acquired Yosemite Mortgage Brokers, Inc. The Company
expects substantial increases in revenue from its mortgage business in the year
ending September 30, 2004.
ITEM 7. FINANCIAL STATEMENTS
The financial statements of the Company are attached hereto.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with the Company's accountants on
any matter.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors, executive officers, and certain key employees:
Name Age Position With the Company
Denis C. Tseklenis 54 Chairman, President, Chief
Executive Officer and Secretary
Robert F. Rood.... 36 Director, Treasurer
James A. Sharon... 52 Director
Bruce Persson..... 62 Director
Denis C. Tseklenis Mr. Tseklenis has served as the chairman of the board of
directors, president, chief executive office and secretary of the Company since
April 6, 2001. Mr. Tseklenis has a Masters of Science Degree from Boston
University and an extensive background in marketing, finance and public
corporate development. Mr. Tseklenis has previously served as president and
chairman of other public companies in which revenues exceeded One Hundred
Million Dollars ($100,000,000) per year and which had rapid growth in multiple
locations. In the 1980's Mr. Tseklenis' companies sold and leased over 60,000
solar systems to home owners at a cost of approximately $4,000 per unit. Mr.
Tseklenis has extensive experience in real estate management and construction
having managed over 2, 500 apartment and condominium units.
Robert F. Rood....Mr. Rood has been a director and the treasurer of the Company
since March 17, 2002. Mr. Rood has been in the finance industry since 1991. Mr.
Rood has managed and consulted and has served as a financial consultant for
unions and REITS. In conjunction with Donaldson, Lufkin and Jeanerette, Mr. Rood
participated in the designing of secondary market products. In 1997, Mr. Rood
entered the mortgage lending industry at Wall Street Mortgage Corporation as
head of the sales force and was responsible for promoting custom-made mortgage
products and FHA lending. In 2000, Mr. Rood went to F&M Bank in Bethesda
Maryland to start and supervise the newly formed wholesale mortgage division.
When F&M Bank was acquired, Mr. Rood left to become manager of the Bethesda
office of Fidelity & Trust Mortgage, Inc. In 2000, Mr. Rood helped found First
Washington, now a wholly owned subsidiary of the Company.
James A. Sharon...Mr. Sharon has been a director of the Company since September
15, 2002. Mr. Sharon was an exchange student a City University in London in 1972
and holds a Bachelor of Science Degree in Civil Engineering with Honors from
Worcester Polytechnic Institute. Mr. Sharon is licensed by the State of Florida
as a Certified Building Contractor and a Certified Solar Energy Contractor. Mr.
Sharon has public company experience as a former president of a public company
and has experience in lease negotiations with major tenants such as Mobil Oil,
Cellular-One and Marriott Corp. Mr. Sharon has extensive experience in the
installation of large commercial renewable energy projects.
Bruce Persson....Mr.Persson has been a director of the Company since February
13, 2002. Mr. Persson has owned and operated California Paving, Inc., a
licensed paving contractor since 1993. Mr. Persson was a founder of the
Bank of Madera, Oakhurst, California, and was a director of the bank until
1999. Mr. Persson has extensive experience in business and real estate
development.
There are no family relationships among directors, or executive officers.
ITEM 10. EXECUTIVE COMPENSATION
With respect to executive compensation for the fiscal years ended September 30,
2001 and 2000, refer to the applicable portions of the Company's Form 10KSB
filed with the Securities and Exchange Commission January 16, 2002 which by this
reference are incorporated herein by reference for this specific purpose.
The Company paid no executive compensation for the fiscal year ended September
30, 2002.
In the fiscal year ended September 30, 2003, the Company paid Robert F. Rood,
the Company's Treasurer annual compensation of $140,401. The Company paid no
other executive compensation of any nature in the fiscal year ended September
30, 2003.
The Company has no employment contracts. The company does not have a bonus or
stock option plan at this time.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The following is a listing of security ownership of management and certain
beneficial owners of the Issuer's securities as of January 13, 2003. On that
date there were 4,919,422 shares of the Company's common stock issued and
outstanding and 1,000,000 shares of the Company's Series One Voting Convertible
Preferred Stock outstanding.
Title Name and Position Amount Percent
Of Class of Beneficial Owner and of Class
Nature of
Beneficial
Ownership(1)
-------- --------------------------- ---------- --------
Common Denis C. Tseklenis, Chairman,
President, CEO and Secretary 1,627,995 33%
Common .. Robert F. Rood, Director and
Treasurer 500,000 10%
---------- ---
Total Officers and
Directors as a Group 2,127,995 43%
========= ===
Series A
Preferred Denis C. Tseklenis, Chairman,
... President CEO and Secretary 1,000,000 100%
--------- ----
Total Officers and
Directors as a Group 1,000,000 100%
========= ====
(1) Subject to community property laws when applicable, the persons named in the
above table have sole voting and investing power with respect to all shares of
stock beneficially owned by them.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 15, 2001, the Company acquired all of the issued and outstanding shares
of stock of Arcadian Renewable Power Corporation, a Delaware corporation from
Denis C. Tseklenis, an office and director, for 1,000,000 shares of the
Company's restricted common stock and 1,000,000 shares of the Company's
restricted Series One Voting Preferred Convertible Stock.
On May 17, 2002, the Company acquired 500,000 shares of the stock of First
Washington Financial Corporation, a Nevada corporation from Denis C. Tseklenis,
an officer and director, for 500,000 shares of the Company's restricted common
stock.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Index to Exhibits
Exhibit No. Description of Document
2.1(1) Articles of Merger merging Artup.com Network, Inc., a Colorado
corporation, with and into the Registrant
3.1(1) Articles of Incorporation of the Registrant
3.2(1) Bylaws of the Registrant
4.1(1) Specimen of Common Stock Certificate
4.2(1) Specimen of Certificate for Common Stock Purchase Warrants
4.3(1) Common Stock Purchase Warrant dated January 3, 2000, issued to
Gene Bowlds
4.4(1) Non-Statutory Stock Option Certificate dated February 16, 2000,
issued to Michael Paloma
10.1(1) Master Consulting Services Agreement dated as of July 28, 1999
between the Registrant and Integrated Information Systems, Inc.
10.2(1) Equipment Lease dated September 15, 1999 between the Registrant
and Copelco Capital, Inc.
10.3(1) Employment Agreement between the Registrant and Mark L. Eaker
10.4(1) Employment Agreement between the Registrant and Keith M. Chesser
10.5(1) 1999 Incentive Stock Plan
16.1(1) Letter on change in certifying accountant from Alvin H. Bender,
C.P.A.
16.2(1) Letter on change in certifying accountant from Mark Shelley, CPA
16.3(1) Letter on change in certifying accountants from Semple and
Cooper, LLP
21.1(1) Subsidiaries of registrant
21.2(1) Subsidiaries of registrant
21.3(2) Subsidiaries of registrant
(1) Previously filed with the Securities and Exchange Commission.
(2) Attached hereto as Exhibit 21.2.
Reports on Form 8-K:
None
ITEM 14. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. The Company's principal
executive officer, after evaluating the effectiveness of the Company's
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the "Evaluation Date")
within 90 days before the filing date of this annual report, has concluded that
as of the Evaluation Date, the Company's disclosure controls and procedures were
adequate and designed to ensure that material information relating to the
Company and the Company's consolidated subsidiaries would be made known to him
by others within those entities.
Changes in internal controls. There were no significant changes in the Company's
internal controls or to the Company's knowledge, in other factors that could
significantly affect the Company's disclosure controls and procedures subsequent
to the Evaluation Date.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VOLT INC.
(Registrant)
/s/ Denis C. Tseklenis Chief Executive Officer January 15, 2004
Director
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated
/s/ Denis C. Tseklenis Director January 15, 2004
/s/ Robert F. Rood Director January 15, 2004
/s/ James A. Sharon Director January 15, 2004
/s/ Bruce Persson Director January 15, 2004
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 10KSB 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: January 15, 2004
/s/Denis C. Tseklenis
Denis C. Tseklenis
Chief Executive Officer
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Robert F. Rood, Treasurer and Chief Financial Officer certify that:
1. I have reviewed this annual report on Form 10KSB 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: January 15, 2004
/s/ Robert F. Rood
Robert F. Rood
Treasurer
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Volt Inc. (the "Company") on Form 10KSB
for the year ending September 30,2003, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Denis C. Tseklenis, Chairman,
President and Chief Executive Officer of the Company, certify, pursuant to 18
U.S.C. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:
1........The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
2........The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Company.
Dated: January 15, 2004
/s/Denis C. Tseklenis
Denis C. Tseklenis
Chief Executive Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Volt Inc. (the "Company") on Form 10KSB
for the year ending September 30,2003, as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Robert F. Rood, Treasurer and
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:
1........The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
2........The information contained in the Report fairly presents, in
all material respects, the financial condition and results of operations of the
Company.
Dated: January 15, 2004
/s/ Robert F. Rood
Robert F. Rood
Treasurer
Chief Financial Officer
VOLT INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
PAGE(S)
INDEPENDENT AUDITORS' REPORT F-1
CONSOLIDATED FINANCIAL STATEMENTS:
BALANCE SHEETS AS OF SEPTEMBER 30, 2003
AND 2002 F-2
STATEMENTS OF INCOME FOR THE YEARS ENDED
SEPTEMBER 30, 2003 AND 2002 F-4
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT) FOR THE YEARS ENDED SEPTEMBER 30, 2003
AND 2002 F-5
STATEMENTS OF CASH FLOWS FOR YEARS ENDED
SEPTEMBER 30, 2003 AND 2002 F-7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-9
INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Volt Inc. and Subsidiaries
Oakhurst, California
We have audited the accompanying consolidated balance sheets of Volt Inc. and
Subsidiaries (the "Company") as of September 30, 2003 and 2002 and the related
consolidated statements of income, changes in stockholders' equity (deficit),
and cash flows for the years then ended. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Volt
Inc. and Subsidiaries as of September 30, 2003 and 2002, and the consolidated
results of its statements of operations, changes in stockholders' equity
(deficit), and cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
BAGELL, JOSEPHS & COMPANY, L.L.C.
s/s BAGELL, JOSEPHS & COMPANY, L.L.C.
Gibbsboro, New Jersey
December 17, 2003
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2003 AND 2002
ASSETS
2003 2002
------------ -------------
Current Assets:
Cash and cash equivalents $ 249,993 $172,521
Commissions receivable 30,022 -
Deposits 2,000 -
------------ -------------
Total Current Assets 282,015 172,521
Property and equipment,net 5,806,927 5,756,339
Other Assets:
Goodwill 3,031,840 3,000,000
Deferred financing fees, net - 5,000
Advances receivable 347,326 204,000
----------- -------------
Total Other Assets 3,379,166 3,209,000
----------- -------------
Total Assets $9,468,108 $9,138,460
=========== =============
The accompanying notes are an integral part of the consolidated
financial statements.
F-2
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 2003 AND 2002
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
2003 2002
---------- -------------
Current Liabilities:
Accounts payable $ 51,663 $ 36,949
---------- -------------
Total Current Liabilities 41,448 36,949
Commitments and Contingencies
Stockholders' Equity (Deficit):
Class A Preferred Stock, $.001 par value,
10,000,000 shares authorized at September 30
2003 and 2002, respectively, and 1,000,000
issued and outstanding at September 30, 2003
and September 30, 2002, respectively 1,000 1,000
Class B Preferred Stock, no par value,
125,000 and 0 shares authorized at September
30, 2003 and 2002, respectively, and 0 and 0
issued and outstanding at September 30, 2003
and 2002, respectively - -
First Washington Class A Preferred Stock, no
par value, 500,000 and 0 authorized at
September 30, 2003 and 2002, respectively,
and 500,000 and 0 issued and outstanding
at September 30, 2003 and 2002, respectivley - -
Common Stock, $.001 par value, 25,000,000
shares authorized at September 30, 2003 and
2002, respectively, and 3,919,422 issued
and outstanding at September 30, 2003 and
2002, respectively 3,919 3,919
Additional paid-in capital 13,024,019 12,778,619
Accumulated deficit (3,612,493) (3,682,027)
------------ -----------
Total stockholders' equity 9,416,445 9,101,511
------------ -----------
Total Liabilities and Stockholders'
Equity (Deficit) $9,468,108 $9,138,460
============ ===========
The accompanying notes are an integral part of the consolidated
financial statements.
F-3
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
2003 2002
---------- --------
Revenue $ 2,041,991 $ 926,128
Cost of Revenue 1,122,381 302,878
----------- --------
Gross Profit 919,610 623,250
Operating Expenses
General and administrative costs 911,439 362,230
----------- --------
Total operating expenses 911,439 362,230
----------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 8,171 261,020
Gain from discontinued operations 97,723 -
Loss on disposal (36,360) -
---------- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 69,534 261,020
Income taxes - -
----------- --------
NET INCOME $ 69,534 $261,020
=========== ========
BASIS AND DILUTED EARNINGS PER SHARE:
Earnings per share on continuing
operations $ 0.00 $ 0.10
=========== =========
Earnings per share on gain from
discontinued operations $ 0.02 $ -
=========== =========
Loss per share on disposal $ (0.01) $ -
=========== =========
Earnings per share on all operations $ 0.02 $ 0.10
=========== =========
WEIGHTED AVERAGE SHARES OUTSTANDING 3,919,422 2,644,422
=========== =========
The accompanying notes are an integral part of the consolidated
financial statements.
F-4
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIR)
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
First Washington
Preferred Stock Preferred Stock
Preferred Stock Class B Class A
Shares Amount Shares Amount Shares Amount
--------------- -------------- ---------------
Balance, September 30,
2001 1,000,000 $ 1,000 - $ - - $ -
Common shares reissued
from canceled shares in
2001 put in wrong names
originally - - - - - -
Acquisition of First
Washington - - - - - -
Net income for the year - - - - - -
--------- ------ ------- ---- ----- ------
Balance, September 30,
2002 1,000,000 1,000 - - - -
Acquisition/disposal of
financial service
cmpanies - - - - 500,000 -
Contributed capital by
officer - - - - - -
Net income for the year - - - - - -
--------- ------ ------- ------ ------- ------
Balance, September 30,
2003 1,000,000 $ 1,000 - $ - 500,000 $ -
========= ======= ======= ====== ======= ======
The accompanying notes are an integral part of the consolidated
financial statements.
F-5
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIR) (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
----------------- ---------- ---------- ---------
Balance, September 30,
2001 1,694,422 $ 1,694 $ 9,780,844 $ (3,943,047) $ 5,840,491
Common shares reissued
from canceled shares in
2001 put in wrong names
originally 225,000 225 (225) - -
Acquisition of First
Washington 2,000,000 2,000 2,998,000 - 3,000,000
Net income for the year - - - 261,020 261,020
--------- ------ --------- --------- ---------
Balance, September 30,
2002 3,919,422 3,919 12,778,619 (3,682,027) 9,101,511
Acquisition/disposal of
financial service
cmpanies - - 200,000 - 200,000
Contributed capital by
officer - - 45,400 - 45,400
Net income for the year - - - 69,534 69,534
--------- ------- --------- ---------- ---------
Balance, September 30,
2003 3,919,422 $ 3,919 $13,024,019 $(3,612,493) $9,416,445
========= ======== ========== =========== ==========
The accompanying notes are an integral part of the consolidated
financial statements.
F-6
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
2003 2002
------------------------------
CASH FLOWS FROM OPERAITNG ACTIVITIES
Net income $ 69,534 $ 261,020
----------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 25,773 15,401
Net cash received in acquisition of
Yosemite Brokerage, Inc. 54,820 -
Changes in assets and liabilities
Prepaid expenses and other (2,000) 2,800
Commissions receivable 51,189 -
Accounts payable (8,418) (6,551)
--------------- ------------
Total adjustments 121,364 11,650
---------------------------------
Net cash provided by
operating activities 190,898 272,670
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in advances receivable (143,326) (133,000)
Purchases of property and equipment (15,500) (42,941)
--------------------------------
Net cash used in investing activities (158,826) (175,941)
The accompanying notes are an integral part of the consolidated
financial statements.
F-7
VOLT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 2003 AND 2002
2003 2002
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from contributed capital $ 45,400 -
Deferred financing fees - (10,000)
---------------------------------
Net cash provided by (used in)
financing activities 45,400 (10,000)
---------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 77,472 86,729
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 172,521 85,792
--------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 249,993 $ 172,521
================================
SUPPLEMNTAL ISCLOSURE OF CASH FLOW INFORMATION
Cash paid diring the year for interest $ - $ -
============= ===========
The accompanying notes are an integral part of the consolidated
financial statements.
F-8
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
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). The cost of the net
assets purchased and liabilities assumed approximated zero,
however, the value of $3,000,000 is based on the mortgage
company's future earnings.
The Company has 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.
F-9
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003 AND 2002
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
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 has reflected the operations from the financial
service companies as discontinued operations in the
consolidated statements of income for the year ended September
30, 2003. 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 consolidated balance sheets for September 30, 2003 and
2002 and consolidated statements of income and cash flows for
the years then ended 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.
F-10
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 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 $169,821 and $0 for the
years ending September 30, 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 consolidated balance
sheets 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.
F-11
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 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 $69,534 $261,020
------- --------
Weighted- average common shares
Outstanding (Basic) 3,919,422 2,644,422
Weighted-average common stock
Equivalents:
Stock options - -
Warrants - -
---------- -----------
Weighted-average common shares
Outstanding (Diluted) 3,919,422 2,644,422
========== ==========
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 September
30, 2003 and 2002 is $ -0- and $5,000, respectively.
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 September 30, 2003, the Company
recognized $31,840 of goodwill acquired in the Yosemite
transaction. There was no recognition of impairment of
goodwill during the years ended September 30, 2003 and 2002.
F-12
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 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 year ended September 30, 2002 have
been reclassified to conform with the presentation of the
September 30, 2003 amounts. The reclassifications have no
effect on net income for the year ended September 30, 2002.
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at September
30, 2003 and 2002:
2003 2002
---- ----
Wind Farm $5,700,000 $ 5,700,000
Furniture and fixtures 16,000 3,000
Leasehold improvements 8,885 -
Computer and office equipment 116,293 67,417
----------- -----------
5,841,178 5,770,417
Less: accumulated depreciation 34,251 13,478
----------- -----------
Net book value $ 5,806,927 $ 5,756,939
=========== ===========
Depreciation expense for the years ended September 30, 2003
and 2002 was $20,773 and $10,401, respectively. There is no
depreciation recognized on the Wind Farm in 2003 or 2002 as it
is non operational until placed in service. In the Company's
acquisition of Yosemite, they acquired $55,261 office and
computer equipment.
F-13
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003 AND 2002
NOTE 4- ADVANCES RECEIVABLE
As of September 30, 2003 and 2002, advances receivable were
$342,826 and $204,000, respectively . There was no interest
due the Company on these loans, and the amounts due at
September 30, 2003 and 2002, 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 beginning of fiscal
2004.
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 Oakhurst,
California location. The security deposit was expensed as part
of a rent payment in 2002.
NOTE 7- 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.
F-14
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003 AND 2002
NOTE 7- 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.
NOTE 8- 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.
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 2003 was $12,239.
The President of the Company owns a controlling percentage of
the common stock outstanding.
F-15
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003 AND 2002
NOTE 9- 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 September 30, 2003 and 2002, deferred tax assets consist of
the following:
2003 2002
---- -----
Net operating loss carryforwards $141,008 $ 168,923
Less: valuation allowance (141,008) (168,923)
---------- ---------
$ -0- $ -0-
=========== ==========
At September 30, 2003 and 2002, the Company had federal net
operating loss carryforwards in the approximate amounts of
$427,298 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.
NOTE 10- SUPPLEMENTAL DSCLOSURE OF NONCASH INFORMATION
First Washington during the year ended September 30, 2003
acquired Yosemite Brokerage, Inc. for 500,000 shares of
Preferred Stock Class A with a value of $200,000 ($.40 per
share).
The following is a summary of the acquisition:
2003 2002
---------- --------
Cash $ 54,820 $ -
Commissions receivable 81,211 -
Fixed assets 55,261 -
Goodwill 31,840 -
Liabilities (23,132) -
Additional paid-in capital (200,000) -
---------- ------
$ - $ -
========== ======
F-16
VOLT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2003 AND 2002
NOTE 10- SUPPLEMENTAL DSCLOSURE OF NONCASH INFORMATION (CONTINUED)
The Company's in fiscal 2002, acquired First Washington for
2,000,000 shares of common stock at a value of $3,000,000
($1.50 per share).
NOTE 11- SUBSEQUENT EVENT
The Company issued 1,000,000 shares of its common stock to a
company for the right of first refusal on certain power
contracts and operating projects for California Pacific Gas
and Electric territories and Hawaii. The stock was issued by
the Company in November 2003.
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.
F-17