NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
1. Financial statement presentation
Superlattice
Power, Inc. (the “Company” or “Superlattice Power”) (formerly Zingo, Inc.),
following the sale as of May 15, 2008, of its VoIP telecommunications business,
intends to concentrate its efforts on further development of the lithium
batteries technology licensed from Hybrid Technologies, Inc., the Company’s
former parent.
The
summary of significant accounting policies is presented to assist in the
understanding of the financial statements. The financial statements and notes
are the representations of management. These accounting policies conform to
accounting policies generally accepted in the United States of America and
have
been consistently applied in the preparation of the financial
statements.
History
and Nature of Business
Superlattice
Power was originally incorporated under the name Titan Web Solutions, Inc.
on
July 15, 2002 under the laws of the State of Nevada. The Company changed its
name to JavaKingCoffee, Inc. in August 2003.
Effective
August 8, 2005, the Company entered into an Agreement and Plan of
Reorganization, pursuant to which the Company agreed to acquire all of the
outstanding shares of WhistlerTel, Inc., a Nevada corporation, which was a
wholly owned subsidiary of Hybrid Technologies, Inc. (“Hybrid”). The transaction
was completed on August 19, 2005 by the issuance of 80,000,000 shares of the
Company's stock in exchange for all of the outstanding shares of WhistlerTel's
common stock.
WhistlerTel,
Inc. was organized in November, 2004. The Company offers telecommunication
services to businesses which provide voice communication via the Internet.
The
system requires high speed broadband internet access.
On
April
15, 2008, Hybrid Technologies, Inc. sold its controlling interest of the
Company’s outstanding common stock to Blue Diamond Investments, Inc. With the
sale of our VoIP telecommunications business, named Zingo Telecom, Inc., on
May
15, 2008 we intend to concentrate efforts on further development of the lithium
batteries technology licensed from Hybrid, the Company’s former parent.
Effective
April 15, 2008, the Company entered into a license agreement with Hybrid
providing for Hybrid’s license to the Company of their patent applications and
technologies for rechargeable lithium ion batteries for hybrid vehicles and
other applications (“licensed products”). Under the license agreement, Hybrid
has the right to purchase their requirements of lithium ion batteries from
the
Company, and their requirements of lithium ion batteries shall be supplied
by
the Company in preference to, and on a priority basis as compared with, supply
and delivery arrangements in effect for other customers of the Company. Hybrid’s
cost for lithium ion batteries shall be the Company’s actual manufacturing costs
for such batteries for the fiscal quarter of the Company in which Hybrid’s
purchase takes place.
The
Company has agreed to invest a minimum of $1,500,000 in each of the next two
years from the date of the license agreement to develop the technology for
the
licensed products. To date, investments have been made in the amount of $24,500.
If the Company does not make the required investments, it will be in default
under the license agreement, Hybrid would have the right to terminate the
license agreement.
Effective
April 16, 2008, the Company agreed to lease approximately 5,000 square feet
of
space in Hybrid’s North Carolina facility. The leased space will be suitable,
and utilized by the Company, for developmental and manufacturing operations
for
licensed products pursuant to the license agreement. The leased space is leased
on a month-to-month basis at a monthly rental of $2,500, the monthly rental
to
be escalated five (5%) percent annually. Also effective April 16, 2008, the
Company purchased certain equipment and supplies related to the license
agreement from Hybrid for the purchase price of $29,005.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
The
Company merged into its wholly-owned subsidiary, Superlattice Power, Inc.,
on
April 25, 2008. The subsidiary was created solely for this merger, the purpose
of which was to change the name of the Company from Zingo, Inc. to Superlattice
Power, Inc. The state of Nevada does not require stockholder approval of a
merger of a wholly-owned subsidiary into the parent, and in connection with
such
a merger the name of the parent is permitted to be changed. As a result of
the
merger, the assets and liabilities of the surviving corporation were unchanged.
The subsidiary Superlattice Power, Inc. had no assets or liabilities prior
to
the merger.
On
June
4, 2008, Holly Roseberry resigned as President of Superlattice Power, Inc.,
where she remains as a director. Ayaz Kassam is the new President and Chief
Executive Office (“Kassam”), and has been appointed as a director to fill a
vacancy on the Board.
Basis
of presentation
The
Company’s financial statements for the year ended July 31, 2008 have been
prepared on a going concern basis which contemplates the realization of assets
and settlement of liabilities and commitments in the normal course of business.
The Company had $645,632 revenue in 2008 and as of July 31, 2008, there was
a
working capital deficit of approximately $4.6 million. Management recognized
that the Company’s continued existence is dependent upon its ability to obtain
needed working capital through additional equity and/or debt financing and
revenue to cover expenses as the Company continues to incur losses.
The
Company’s business is subject to most of the risks inherent in the establishment
of a new business enterprise. The likelihood of success of the Company must
be
considered in light of the expenses, difficulties, delays and unanticipated
challenges encountered in connection with the formation of a new business,
raising operating and development capital, and the marketing of a new product.
There is no assurance the Company will ultimately achieve a profitable level
of
operations.
The
Company presently does not have sufficient liquid assets to finance its
anticipated funding needs and obligations. The Company’s continued existence is
dependent upon its ability to obtain needed working capital through additional
equity and/or debt financing and achieve a level of sales adequate to support
its cost structure. Management is actively seeking additional capital to ensure
the continuation of its current activities and complete its proposed activities.
However, there is no assurance that additional capital will be obtained. These
uncertainties raise substantial doubt about the ability of the Company to
continue as a going concern. The accompanying financial statements do not
include any adjustments that might result from the outcome of these
uncertainties should the Company be unable to continue as a going
concern.
SIGNIFICANT
ACCOUNTING POLICIES
Basis
of consolidation
The
financial statements include the accounts of the Company and its wholly owned
subsidiary, Zingo Telecom, Inc. and Zingo Telecom Canada, Inc. All intercompany
accounts and transactions have been eliminated in consolidation.
Estimates
The
preparation of financial statements prepared in accordance with the accounting
standards 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 disclosure of contingent assets and liabilities at the date
of
the financial statements. Actual results could differ from those
estimates.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Cash
and cash equivalents
Cash
and
cash equivalents consist of highly liquid investments, which are readily
convertible into cash with original maturities of three months or
less.
Financial
instruments
The
fair
value of accounts receivables, accounts payable and accrued expenses and
advances from related parties approximates fair value based on their short
maturities.
Accounts
receivable
The
Company provides credit to customers in the normal course of business. An
allowance for accounts receivable is estimated by management based in part
on
the aging of receivables and historical transactions. Periodically management
reviews accounts receivable for accounts that appear to be uncollectible and
writes off these uncollectible balances against the allowance accordingly.
Inventories
Inventories
are stated at the lower of cost or market. Cost is based on the specific
identification method.
Property
and equipment
Property
and equipment are recorded at cost. Depreciation of property and equipment
are
accounted for by accelerated methods over the following estimated useful
lives
|
|
Lives
|
|
Furniture
and fixtures
|
10
years
|
|
Software
|
3-5
years
|
|
Computers
|
5
years
|
Long-lived
assets
The
Company accounts for long-lived assets in accordance with Statement of Financial
Accounting Standard No. 144 (SFAS 144) "Accounting for Long-Lived Assets".
The
carrying value of long-lived assets is reviewed on a regular basis for the
existence of facts and circumstances that may suggest impairment. The Company
recognizes impairment when the sum of undiscounted future cash flows is less
than the carrying amount of the asset. The write down of the asset is charged
to
the period in which the impairment occurs.
Income
taxes
Income
taxes are accounted for under the asset and liability method. Deferred tax
assets and liabilities are recognized for amounts of existing assets and
liabilities and their respective tax bases and operating loss and tax credit
carry forwards. Deferred tax assets and credits are measured using enacted
tax
rates expected to be recovered or settled. The effect on deferred tax assets
and
liabilities of a change in tax rates is recognized in the consolidated financial
statements in the period that includes the enactment date.
Foreign
currency translation
The
functional currency for some foreign operations is the local currency. Assets
and liabilities of foreign operations are translated at balance sheet date
rates
of exchange and income, expense and cash flow items are translated at the
average exchange rate for the period. Translation adjustments in future periods
will be recorded in Cumulative Other Comprehensive Income. The translation
gains
or losses were not material for the years ended July 31, 2008 and
2007.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Comprehensive
income (loss)
The
Company reports comprehensive income (loss) in accordance with the requirements
of Statement of Financial Accounting Standards No.130. For the year ended July
31, 2008 and seven months ended July 31, 2007 the difference between net income
(loss) and comprehensive income (loss) is foreign currency translation.
Discontinued
Operations
In
May
2008, the Company completed the sale of its VoIP business. The results for
the
business were accounted for as discontinued operations in the consolidated
financial statements for the years presented herein. The divestiture resulted
in
a loss of $356,842 and $666,198, respectively, for the year ended July 31,
2008,
and seven months ended July 31, 2007.
Summarized
combined statement of loss for discontinued operations is as
follows:
|
|
|
YEAR
|
|
SEVEN
MONTHS
|
|
|
|
|
ENDED
|
|
ENDED
|
|
|
|
|
July
31, 2008
|
|
July
31, 2007
|
|
|
Net
sales
|
|
$
|
645,632
|
|
$
|
783,572
|
|
|
Loss
before income tax
|
|
|
(1,171,764
|
)
|
|
(1,449,770
|
)
|
|
Provision
for income taxes
|
|
|
-
|
|
|
-
|
|
|
Loss
from operations - net tax
|
|
|
(526,132
|
)
|
|
(666,198
|
)
|
|
Gain
on sale of discontinued operations
|
|
|
169,290
|
|
|
-
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
-
|
|
|
Loss
from discontinued operations - net of tax
|
|
$
|
(356,842
|
)
|
$
|
(666,198
|
)
|
Revenues
Revenues
are recognized at the time that service is completed or the related products
have been installed.
Advertising
Advertising
costs are generally expensed and are included in selling, general and
administrative expenses. Total advertising expenditures for the year ended
July
31, 2008 and seven months ended July 31, 2007 were approximately $108,000 and
$2,500 respectively.
Shipping
and handling
Shipping
and handling costs associated with shipping equipment to customers are generally
expensed and included in costs of sales.
Reclassification
Certain
reclassifications have been made to the prior year’s financial statements to
conform to the current year presentation. These reclassifications have had
no
impact on the net equity or income (loss) from operations.
The
reclassification consisted of other assets being reclassified as marketable
securities.
The
Company reclassified certain continuing operations to discontinued operations
for the seven months ended July 31, 2007 in the Company’s Consolidated
Statements of Operations.
Recently
issued pronouncements
In
December 2007, the FASB issued SFAS No. 141(R), “Business
Combinations.” This standard establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, any non-controlling interest in the
acquired and the goodwill acquired. This statement also establishes disclosure
requirements which will enable users to evaluate the nature and financial
effects of the business combination. SFAS No. 141(R) is effective for
us for acquisitions made after November 30, 2009. We are evaluating the
impact of this standard and do not expect the adoption of SFAS 141(R) to
have a material impact on its financial statements.
In
June
2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
No. 48, "Accounting for Uncertainty in Income Taxes – an interpretation of FASB
Statement No. 109" (FIN 48), which clarifies the accounting for uncertainty
in
tax positions. This Interpretation requires that we recognize in our financial
statements the benefit of a tax position if that position is more likely than
not of being sustained on audit, based on the technical merits of the position.
The provisions of FIN 48 become effective as of the beginning of our 2008 fiscal
year, with the cumulative effect of the change in accounting principle recorded
as an adjustment to opening retained earnings. We adopted FIN 48 as of January
1, 2007 and do not feel that FIN 48 will have an impact on our financial
statements.
In
September 2006, the FASB issued Statement No. 157, "Fair Value Measurements"
(FAS 157), which defines fair value, establishes a framework for measuring
fair
value, and expands disclosures about fair value measurements. The provisions
of
FAS 157 become effective as of the beginning of our 2009 fiscal year. We do
not
expect the adoption of SFAS No. 157 to have a material impact on it consolidated
financial position, results of operations or cash flows.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
In
September 2006, the FASB issued Statement No. 158, "Employer's Accounting for
Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106, and 132(R)" (FAS 158). FAS 158 requires that
employers recognize the funded status of their defined benefit pension and
other
postretirement plans on the balance sheet and recognize as a component of other
comprehensive income, net of tax, the plan-related gains or losses and prior
service costs or credits that arise during the period but are not recognized
as
components of net periodic benefit cost. We do not feel the implementation
of
this will have a significant impact on our financial statements.
In
February 2007, the FASB issued Statement No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities, including an amendment of FASB
Statement No. 115" (FAS 159). FAS 159 permits companies to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value and establishes presentation
and
disclosure requirements designed to facilitate comparisons between companies
that choose different measurement attributes for similar types of assets and
liabilities. The provisions of FAS 159 become effective as of the beginning
of
our 2009 fiscal year. We are currently evaluating the impact that FAS 159 will
have on our financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS No.
160”). SFAS No. 160 amends Accounting Research Bulletin (“ARB”) No. 51 to
establish accounting and reporting standards for the noncontrolling (minority)
interest in a subsidiary and for the deconsolidation of a subsidiary. It
clarifies that a noncontrolling interest in a subsidiary is an ownership
interest in the consolidated entity that should be reported as equity in the
Consolidated Financial Statements. SFAS No. 160 also requires consolidated
net
income to be reported at amounts that include the amounts attributable to both
the parent and the noncontrolling interest on the face of the consolidated
statement of income. Under SFAS No. 160, the accounting for changes in a
parent’s ownership interest in a subsidiary that do not result in
deconsolidation must be accounted for as equity transactions for the difference
between the parent’s carrying value and the cash exchanged in the transaction.
In addition, SFAS No. 160 also requires that a parent recognize a gain or loss
in net income when a subsidiary is deconsolidated (except in the case of a
spin-off), and requires expanded disclosure in the Consolidated Financial
Statements that clearly identify and distinguish between the interests of the
parent’s ownership interest and the interests of the noncontrolling owners of a
subsidiary. This Statement is effective for fiscal years, and interim periods
within those fiscal years, beginning on or after December 15, 2008. The Company
will adopt SFAS No. 160 on January 1, 2009, as required, and is currently
evaluating the impact of such adoption on its financial statements.
In
March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities”, an amendment of FASB Statement No. 133 (“SFAS No.
161”). The new standard is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity’s financial
position, financial performance and cash flows. It is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008. The Company does not believe that SFAS No. 161 will have a material
impact on its financial statements.
Note
2. Business combination
As
discussed in Note 1, JavaKing Coffee, Inc. (JavaKing) entered into an Agreement
and Plan of Reorganization, pursuant to which the Company agreed to acquire
all
of the outstanding shares of WhistlerTel, Inc., a Nevada corporation, and a
wholly owned subsidiary of Hybrid Technologies, Inc. (Hybrid). The transaction
was completed on August 19, 2005 by the issuance of 80,000,000 shares (69.56%)
of the Company's stock in exchange for all of the outstanding shares of
WhislerTel's common stock. The transaction has been accounted for as reverse
acquisition, because Hybrid has replaced the JavaKing shareholders as the party
in control. In a reverse acquisition the capital structure remains that of
the
legally surviving entity (JavaKing) but the historical operations is that of
the
surviving control group (WhistlerTel). On April 28, 2008, Zingo, Inc. merged
with Superlattice Power, Inc. These financials reflect the business of Zingo
Telecom up to the date it was sold, May 15, 2008, and the financials of Zingo,
Inc. and Superlattice Power, Inc.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
3. Other current assets
|
|
|
July 31,
|
|
July 31,
|
|
|
|
|
2008
|
|
2007
|
|
|
Prepaid
expenses
|
|
$
|
-
|
|
$
|
16,637
|
|
|
Amounts
on deposit with venders
|
|
|
-
|
|
|
31,633
|
|
|
|
|
$
|
-
|
|
$
|
48,300
|
|
Note
4. Property and equipment
Property
and equipment at consists of:
|
|
|
July 31,
|
|
July 31,
|
|
|
|
|
2008
|
|
2007
|
|
|
Office
and computer equipment
|
|
$
|
28,430
|
|
$
|
114,825
|
|
|
Leasehold
improvements
|
|
|
9,345
|
|
|
-
|
|
|
Software
|
|
|
-
|
|
|
19,993
|
|
|
Autos
and truck
|
|
|
-
|
|
|
12,224
|
|
|
Furniture
|
|
|
-
|
|
|
6,806
|
|
|
|
|
|
37,775
|
|
|
153,848
|
|
|
Less
accumulated depreciation
|
|
|
(4,172
|
)
|
|
(64,195
|
)
|
|
|
|
$
|
33,603
|
|
$
|
89,653
|
|
Depreciation
expense for the year ended July 31, 2008 and seven months ended July 31, 2007,
was $34,363 and $23,570, respectively.
Note
5. Capital stock
As
discussed in Note 1 and Note 3, the Company entered into an agreement on August
19, 2005, whereby the Company issued 80,000,000 shares of its common stock
to
the shareholder of Whistler Tel, Inc. in exchange for all of the shares of
WhistlerTel. On April 15, 2008 the 80,000,000 shares were sold to Blue Diamond
Investments. On May 15, 2008, the subsidiary, Zingo Telecom, was sold to a
private investor.
During
the year ended July 31, 2007, Hybrid provided additional paid in capital in
the
amount of $5,098 to help start M/S Zingo Bpo Services Pvt. Ltd. This money
was
considered a gift and not to be repaid.
During
the year ended December 31, 2005, the Company announced a ten for one stock
split. All information related to the number of shares or per share information
has been adjusted to reflect this stock split.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
Note
6. Related party transactions
As
discussed in Note 2, the Company's principal financing source has been from
its
former parent, Hybrid Technologies, Inc. The Company has also received advances
during 2008 from its chief
executive
and principal financial
officer
Ayaz Kassam. On April 15, 2008, Blue Diamond assumed Hybrid’s debt due from
Superlattice. At July 31, 2008 and July 31, 2007 the Company owed Hybrid $0
and
$3,694,403, Blue Diamond $4,321,358 and $0, and Kassam $137,410 and $0,
respectfully. During the year ended July 31, 2008 and seven months ended July
31, 2007 the Company had advances totaling $1,402,038 and $1,321,278,
respectively; and payments amounted to approximately $637,673 and $561,923,
respectively. Without such funding, the Company could not stay in
business.
The
advances from the parent company will accrue interest at a rate of 10% annually
until the obligation has been paid in full. No term has been set for repayment
and no payment is expected until the Company has begun to produce battery cells
and has become a profitable venture. The balance of the related party
transactions is due within two weeks of the parties request but does not bear
interest. Interest for the years ended July 31, 2008 and for the seven months
ended July 31, 2007 is $127,077 and $0, respectively. The related party
transaction amounts are reported as current due to the
relationship.
Note
7. Income taxes
At
July
31, 2008 and July 31, 2007, the Company has deferred tax assets as a result
of
the net operating losses incurred from inception. The resulting deferred tax
assets are reduced by a valuation allowance as discussed in Note 1, equal to
the
deferred tax asset as it is unlikely, based on current circumstances, that
the
Company will ever realize a tax benefit. Deferred tax assets and the
corresponding valuation allowances amounted to approximately $1,612,000 and
$1,309,000 at July 31, 2008 and July 31, 2007 respectively. The statutory tax
rate is 35% and the effective tax rate is zero.
Under
current tax laws, the cumulative operating losses incurred amounting to
approximately $4,605,000 and $3,739,000 at July 31, 2008 and July 31, 2007
respectively, will begin to expire in 2027.
Note
8. (Loss) per share
Loss
per
share is computed based on the weighted average number of shares outstanding
during the year. Diluted loss per common share is computed by dividing net
loss
by the weighted average number of common shares and potential common shares
during the specified periods. The Company has no outstanding options, warrants
or other convertible instruments that could affect the calculated number of
shares.
Note
9. Segment information
FASB
Statement No. 131,
Disclosures about Segments of an Enterprise and Related
Information
,
establishes standards for reporting information about operating segments.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by
management. We are organized by geographical area.
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
The
following is financial information relating to the Company’s business
segments:
|
|
|
YEAR
|
|
SEVEN MONTHS
|
|
|
|
|
ENDED
|
|
ENDED
|
|
|
|
|
July
31, 2008
|
|
July
31, 2007
|
|
|
Revenue from external customers:
|
|
|
|
|
|
|
United
States
|
|
$
|
645,632
|
|
$
|
783,572
|
|
|
India
|
|
|
-
|
|
|
-
|
|
|
Canada
|
|
|
-
|
|
|
-
|
|
|
Total
revenues
|
|
$
|
645,632
|
|
$
|
783,572
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)
from operations:
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
(516,883
|
)
|
$
|
(564,788
|
)
|
|
India
|
|
|
(352,078
|
)
|
|
(159,780
|
)
|
|
Canada
|
|
|
(18,420
|
)
|
|
(28,870
|
)
|
|
Total
loss from operations
|
|
$
|
(887,381
|
)
|
$
|
(753,438
|
)
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
|
Telecommunication
services
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
37,775
|
|
$
|
1,555
|
|
|
India
|
|
|
14,288
|
|
|
26,924
|
|
|
Canada
|
|
|
-
|
|
|
-
|
|
|
Total
capital expenditures
|
|
$
|
52,063
|
|
$
|
28,479
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization:
|
|
|
|
|
|
|
|
|
Telecommunication
services
|
|
|
|
|
|
|
|
|
United
States
|
|
$
|
23,470
|
|
$
|
20,130
|
|
|
India
|
|
|
10,893
|
|
|
3,440
|
|
|
Canada
|
|
|
-
|
|
|
-
|
|
|
Total
depreciation and amortization
|
|
$
|
34,363
|
|
$
|
23,570
|
|
Note
10. Change of year-end
The
Company changed its year-end from December 31 to July 31 beginning with the
annual reporting period ended July 31, 2007. It is not practical or
cost-justified to furnish the quarterly financial statements for the
corresponding periods of the prior year. As a result of the year-end change
and
given the lack of materiality of the prior periods compared to the current
operations, and the lack of seasonality of the Company’s business, the quarters
of the current year have been presented in comparison to the most nearly
comparable period from the originally reported quarters of the prior year as
follows with the Consolidated Statements of Operations for the seven months
ended:
Superlattice
Power, Inc.
(formerly
Zingo, Inc.)
NOTES
TO
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
For the period ending
|
|
Comparative period
|
|
Q1
|
|
October
31, 2007
|
|
September
30, 2006
|
|
Q2
|
|
January
31, 2008
|
|
December
31, 2006
|
|
Q3
|
|
April
30, 2008
|
|
March
31, 2007
|
|
Q4
|
|
July
31, 2008
|
|
July
31, 2007
|
Note
11. Sale of subsidiaries
At
a
closing held on May 15, 2008, the Company sold for $215,000 the 75,000
outstanding shares of common stock, constituting 100% of the outstanding stock,
of the Company’s subsidiary Zingo Telecom, Inc. and M/S Zingo Bpo Services Pvt.
Ltd., the Company’s subsidiary incorporated in India.
The
sale
of subsidiaries was derived by recording the deposit for the sale and writing
off the following for the subsidiaries sold: assets and liabilities,
intercompany accounts, the loss in investment of the subsidiaries sold. The
gain
of $169,289 is shown on the Consolidated Statements of Operations.
Note
12. Commitments and contingencies
Superlattice
Power, Inc entered into a month to month lease agreement with Hybrid
Technologies, Inc. for 5,000 square feet within Hybrid’s Mooresville facility on
April 16, 2008 at the rate of $2,500. Approximately
80
%
of this
space has been converted into offices, and battery development workshop
including a dry room.
Total
rent expense for the year ended July 31, 2008 and seven months ended July 31,
2007 amounted to approximately $6,500 and $52,000, respectively.
In
addition, the Company has provided, as collateral to certain suppliers a letter
of credit supplied by a certain financial institution. This arrangement requires
that restricted cash be held on deposit with the financial institution and
pledged as collateral for a letter of credit provided by the financial
institution to suppliers. This restricted cash is recorded as marketable
securities - restricted and amounted to approximately $0 for July 31, 2008
and
$41,000 for July 31, 2007. As of May 15, 2008, we no longer have this letter
of
credit.
The
Company is a defendant in a case filed on June 2, 2008, in the Federal Court
for
the District of Arizona (Peter Strojnik, P.C. v. The Energy Bull et al.). The
amended complaint in this case seeks damages against The Energy Bull, the
Company and other defendants based on transmission of unsolicited facsimiles
illegally promoting the stock of the Company to the plaintiff and members of
the
class that the plaintiff purports to represent. The lawsuit seeks damages
estimated in the complaint to be between $333 million and $3 billion, as well
as
injunctive relief for the alleged sending of unsolicited faxes. The Company
denies these allegations and has filed a motion to dismiss to exclude the
Company from the lawsuit.
Under
certain circumstances, the Company could possibly be exposed to potential
liability for fines and penalties under the rules and regulations of the Federal
Communications Commission for regulatory compliance issues involving the
Company's former subsidiary Zingo Telecom, Inc., which was sold on May 15,
2008.
The Company would vigorously contest any assertion against it of liabilities
deriving from regulatory compliance issues involving this former
subsidiary.
