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 EV Innovations, Inc. (“EVI”), the Company’s
former parent (Hybrid Technologies, Inc.). Our auditors have
expressed substantial doubt concerning our ability to continue as a going
concern.
As of
August 1, 2008, the Company is considered a development stage enterprise as
defined in Statement of Financial Accounting Standards ("SFAS") No. 7,
"Accounting and Reporting for Development Stage Companies", issued by the
Financial Accounting Standards Board (the "FASB"). The Company has
limited revenue to date, continues to raise capital and there is no assurance
that ultimately the Company will achieve a profitable level of
operations.
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 EV Innovations, Inc. (“EVI”). The
transaction was completed on August 19, 2005 by the issuance of 240,000,000
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, EV Innovations, 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 EVI, the Company’s former parent.
Effective
April 15, 2008, the Company entered into a license agreement with EVI providing
for EVI’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, EVI
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. EVI’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 EVI’s purchase
takes place.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Under
Section 2.2 of the license agreement, the Company has agreed to invest a minimum
of $1,500,000 in each of the first two years of the term of the license
agreement in development of the technology for the licensed products. In the
initial year under the license agreement, the Company invested approximately
$264,043 in the development of technology, and therefore is not in compliance
with its obligations under this covenant of the license agreement. EV
Innovations has advised the Company in a letter dated October 1, 2009, that it
will not give notice of default against the Company for our failure to comply
with this covenant in the first year of the term of the license
agreement.
Effective
April 16, 2008, the Company agreed to lease approximately 5,000 square feet of
space in EVI’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 $2,625, 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 EVI for the purchase price of
$29,005.
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 Officer, 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, 2009 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 $0 revenue in 2009 and as of July 31, 2009, there was a working
capital deficit of approximately $5.5 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.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On
September 17, 2009 the Company’s Board of Directors declared a three-for-one
forward stock split that was effected in the form of a stock dividend. All share
and per share amounts have been restated to reflect the three-for-one forward
stock split except for stockholders’ deficiency. See Note 4, “Common stock,” for
further discussion.
Net loss
per common share for the year ended July 31, 2008 has been revised. See Note 5,
“Net loss per common share,” for further discussion.
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. for the year
ended July 31, 2008. All intercompany accounts and transactions have been
eliminated in consolidation. The subsidiaries were sold in May 2008 and
therefore there is no consolidation of these subsidiaries for the year ended
July 31, 2009.
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.
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.
Fair
value of 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.
In
September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS
No. 157"), which defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. SFAS No.
157 is effective as of the beginning of the Company's 2009 fiscal
year. In February 2008, the FASB deferred the effective date of SFAS
No. 157 for non-financial assets and liabilities that are recognized or
disclosed at fair value on a nonrecurring basis until the beginning of fiscal
year 2010. The Company adopted SFAS No. 157 with respect to financial
assets and liabilities on August 1, 2008. There was no material
effect on the financial statements upon adoption of this new accounting
pronouncement. The impact on the financial statements from adoption
of SFAS No. 157 as it pertains to non-financial assets and liabilities has not
yet been determined.
SFAS No.
157 discusses valuation techniques, such as the market approach (comparable
market prices), the income approach (present value of future income or cash
flow), and the cost approach (cost to replace the service capacity of an asset
or replacement cost). The statement utilizes a fair value hierarchy
that prioritizes the inputs to valuation techniques used to measure fair value
into three broad levels:
Level 1:
Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical, unrestricted assets or
liabilities.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Level 2:
Inputs, other than quoted prices that are observable for the asset or liability,
either directly or indirectly. These include quoted prices for
similar assets or liabilities in active markets and quoted prices for identical
or similar assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs that reflect the reporting entity's own
assumptions.
The
assets measured at fair value on a recurring basis as of July 31, 2009 are as
follows:
|
Assets:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
July 31, 2009
|
|
|
Cash
and cash equivalents
|
|
$
|
191
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
191
|
|
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
|
|
Equipment
and fixtures
|
3-7 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.
Net
loss per common share
Basic
loss per common share is computed based on the weighted average number of shares
outstanding during the year. Diluted earnings per common share is computed by
dividing net earnings (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.
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 $0 and $356,843, respectively, for the years ended July
31, 2009 and 2008.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Summarized
combined statement of loss for discontinued operations is as
follows:
|
|
|
YEARS
ENDED
|
|
|
|
|
July
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Net
sales
|
|
$
|
-
|
|
|
$
|
645,632
|
|
|
Loss
before income tax
|
|
|
-
|
|
|
|
(1,171,764
|
)
|
|
Provision
for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
Loss
from operations - net tax
|
|
|
-
|
|
|
|
(526,132
|
)
|
|
Gain
on sale of discontinued operations
|
|
|
-
|
|
|
|
169,289
|
|
|
Provision
for income taxes
|
|
|
-
|
|
|
|
-
|
|
|
Loss
from discontinued operations - net of tax
|
|
$
|
-
|
|
|
$
|
(356,843
|
)
|
Advertising
Advertising
costs are generally expensed and are included in selling, general and
administrative expenses. Total advertising expenditures for the years
ended July 31, 2009 and 2008 were approximately $50,000 and $108,000,
respectively.
Research
and development
The
Company is currently a research and development (“R&D”) stage company and
therefore the Board of Directors has not set a budget for R&D. However, all
projects and purchases must be approved before being started or
purchased. As of July 31, 2009, there have been expenses allocated to
research and development. For the year ending July 31, 2009, salaries, payroll
taxes, and benefits amounted to approximately $230,000 in R&D, parts and
supplies were approximately $4,000, and other R&D expenses were
approximately $2,000.
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 year ended July 31, 2008 in the Company’s Consolidated Statements of
Operations.
Recently
issued pronouncements
In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including and Amendment of FASB
Statement No. 115." SFAS No. 159 provides entities with an
irrevocable option to report selected financial assets and financial liabilities
at fair value. It also establishes presentation and disclosure
requirements that are designed to facilitate comparisons between entities that
choose different measurement attributes for similar types of assets and
liabilities. The Company adopted SFAS No. 159 on August 1, 2008 and
chose not to elect the fair value option for its financial assets and
liabilities that had not been previously carried at fair
value. Therefore, material financial assets and liabilities not
carried at fair value, such as other assets, accounts payable and other
liabilities are reported at their carrying values.
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 which the acquisition date is or after an entities fiscal year end
that begins after December 15, 2008. The provisions of SFAS 141(R)
are effective for the Company for the fiscal year ending July 31, 2010. 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.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
December 2007, the FASB issued Statement of Financial Accounting Standards
(“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
August 1, 2009, as required, and does not believe they will have a significant
impact on its financial statements.
In
February 2008, the FASB issued FASB Staff Position SFAS 157-1, “Application
of SFAS No. 157 to SFAS No. 13 and Its Related Interpretative Accounting
Pronouncements that Address Leasing Transactions” (“FSP SFAS 157-1”) and FASB
Staff Position SFAS 157-2, “Effective Date of SFAS No. 157” (“FSP SFAS
157-2”). FSP SFAS 157-1 excludes SFAS No. 13 and its related interpretive
accounting pronouncements that address leasing transactions from the
requirements of SFAS No. 157, with the exception of fair value measurements of
assets and liabilities recorded as a result of a lease transaction but measured
pursuant to other pronouncements within the scope of SFAS No. 157. FSP SFAS
157-2 delays the effective date of SFAS No. 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed at fair
value in the financial statements on a recurring basis (at least annually). FSP
SFAS 157-1 and FSP SFAS 157-2 became effective for the Company upon adoption of
SFAS No. 157 on August 1, 2008. The Company will provide the additional
disclosures required relating to the fair value measurement of nonfinancial
assets and nonfinancial liabilities. The Company completed its implementation of
SFAS No. 157 effective August 1, 2008 and it did not have a material impact 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.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In April
2009, the FASB issued FASB Staff Positions ("FSP") FAS 115-2 and FAS 124-2,
"Recognition and Presentation of Other-Than-Temporary
Impairments". These FSPs amend rules for other-than-temporary
impairments, provide for guidance on calculating fair values in inactive and
distressed markets and require quarterly fair value
disclosures. These FSPs are effective for interim and annual
reporting periods ending after June 15, 2009, with early adoptions permitted for
periods ending after March 15, 2009. The adoption of these FSPs did
not have a material impact on the Company's financial statements.
In May
2009, the FASB issued SFAS No. 165, "Subsequent Events." SFAS No. 165
defines subsequent events as events or transactions that occur after the balance
sheet date, but before the financial statements are issued. It
defines two types of subsequent events: recognized subsequent events, which
provide additional evidence about conditions that existed at the balance sheet
date, and non-recognized subsequent events, which provide evidence about
conditions that did not exist at the balance sheet date, but arose before the
financial statements were issued. Recognized subsequent events are
required to be recognized in the financial statements, and non-recognized
subsequent events are required to be disclosed. SFAS No. 165 requires
entities to disclose the date through which subsequent events have been
evaluated, and the basis for that date. SFAS 165 is consistent with
current practice and did not have any impact on the Company's consolidated
financial statements. Subsequent events were evaluated through
October 13, 2009.
In June
2009, the FASB issued SFAS No. 168, the "FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles". SFAS
No. 168 replaces SFAS No. 162, "The Hierarchy of Generally Accepted Accounting
Principles" (SFAS No. 168), and establishes the FASB Accounting Standards
Codification (Codification) as the source of authoritative GAAP in the U.S.
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements. SFAS No. 168 is effective for
financial statements issued for interim periods and annual periods ending after
September 15, 2009.
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 EV Innovations, Inc. (EVI). The
transaction was completed on August 19, 2005 by the issuance of 240,000,000
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 EVI 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, the Company merged with Superlattice Power, Inc., a wholly-owned
subsidiary, the sole purpose of the merger being to change the name of the
Company to 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. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
3. Property and equipment
Property
and equipment at consists of:
|
|
|
July
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Equipment
|
|
$
|
44,255
|
|
|
$
|
28,430
|
|
|
Idle
equipment
|
|
|
87,200
|
|
|
|
-
|
|
|
Leasehold
improvements
|
|
|
26,360
|
|
|
|
9,345
|
|
|
|
|
|
157,815
|
|
|
|
37,775
|
|
|
Less
accumulated depreciation
|
|
|
(16,554
|
)
|
|
|
(4,172
|
)
|
|
|
|
$
|
141,261
|
|
|
$
|
33,603
|
|
Depreciation
expense for the years ended July 31, 2009 and 2008 was $12,382 and $34,363,
respectively.
Idle
equipment is equipment that can only be used in a Dry Room due to the moisture
sensitive materials being used to produce batteries. The Dry Room, 2% to 3%
relative humidity, is still in the process of being built and until it is done
the idle equipment will not be used.
In
January 2009, a private company provided the Company with equipment in exchange
for Superlattice’s battery prototypes for testing and possibly for purchase of
batteries from the Company. The equipment was received in the manufacturing
facility, and was recorded at appraised value of $103,025.
Note
4. Capital stock
As
discussed in Note 1 and Note 3, the Company entered into an agreement on August
19, 2005, whereby the Company issued 240,000,000 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 240,000,000 shares were sold to Blue Diamond
Investments. On May 15, 2008, the subsidiary, Zingo Telecom, was sold to a
private investor.
On
September 17, 2009, the Company’s Board of Directors declared a three-for-one
forward stock split of the Company’s common stock that was effected in the form
of a stock dividend. A three-for-one forward split in our common stock was
effective October 19, 2009. The Certificate of Change filed with the Nevada
Secretary of State on September 18, 2009, providing for the forward split
changed the number of shares of our outstanding common stock from 115,000,000 to
345,000,000, and the number of shares of our authorized common stock in the same
ratio, from 250,000,000 to 750,000,000. All share and per share amounts have
been restated to reflect the three-for-one forward stock split except for
stockholders’ deficiency.
See Note
5 “Net loss per common share,” for the impact on the Company’s earnings per
share amounts as a result of the stock split. This stock split resulted in the
issuance of 230 million additional shares of common stock and was accounted for
by the transfer of $230,000 from additional paid-in capital to common stock,
which is the amount equal to the par value of the additional shares issued to
affect the stock split.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
5. Net loss per common share
The
following table sets forth the reconciliation of the basic and diluted net loss
per common share computations for the years ended July 31, 2009 and
2008.
|
|
|
YEARS
ENDED
|
|
|
|
|
July
31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Continuing
operations:
|
|
|
|
|
|
|
|
Basic
and diluted EPS:
|
|
|
|
|
|
|
|
Net
loss ascribed to common shareholders - basic and diluted
|
|
$
|
(898,447
|
)
|
|
$
|
(865,290
|
)
|
|
Weighted
shares outstanding - basic and diluted
|
|
|
345,000,000
|
|
|
|
345,000,000
|
|
|
Basic
and diluted net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
Basic
and diluted EPS - discontinued operations:
|
|
|
|
|
|
|
|
|
|
Net
loss ascribed to common shareholders - basic and diluted
|
|
$
|
-
|
|
|
$
|
(356,843
|
)
|
|
Weighted
shares outstanding - basic and diluted
|
|
|
345,000,000
|
|
|
|
345,000,000
|
|
|
Basic
and diluted net loss per common share
|
|
$
|
0.00
|
|
|
$
|
(0.00
|
)
|
Net loss
per common share for the year ended July 31, 2008 has been
revised. This revision was immaterial to the Company’s consolidated
results of operations and financial position. See below for further discussion.
All share and per share amounts have been restated to reflect the three-for-one
forward stock split as discussed in Note 4.
The
amounts previously reported, as revised to reflect the three-for-one forward
stock split in 2008, were as follows:
|
|
|
YEAR ENDED
|
|
|
|
|
July
31,
|
|
|
|
|
2008
|
|
|
Continuing
operations:
|
|
|
|
|
Basic
and diluted loss per common share
|
|
$
|
(0.01
|
)
|
|
Discontinued
operations:
|
|
|
|
|
|
Basic
and diluted loss per common share
|
|
$
|
(0.00
|
)
|
Note
6. Related party transactions
The
Company's principal financing source has been from its former parent, EV
Innovations, Inc. The Company has also received advances during 2008 from its
chief executive and principal financial officer Ayaz Kassam (“Kassam”). On April
15, 2008, Blue Diamond assumed EV Innovations debt due from
Superlattice. At July 31, 2009 and 2008 the Company owed Blue Diamond
$4,321,358, and $4,321,358, and Kassam $537,750 and $137,410, respectfully.
During the year ended July 31, 2009 and 2008 the Company had advances
totaling $443,740 and $1,402,038, respectively; and payments amounted to
approximately $43,400 and $637,673, respectively. Without such funding, the
Company could not continue in business because it does not have any
revenue. Subsequent to the balance sheet date, the Company had
received advances from related parties in the amount of $155,578. In addition,
the Company repaid $60,000 to Kassam.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
advances from the parent company 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, 2009 and 2008 is $453,500 and $127,077,
respectively. The related party transaction amounts are reported as a current
liability in the consolidated balance sheet based on the terms of the
agreement.
Note
7. Income taxes
At July
31, 2009 and July 31, 2008, 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, in an amount 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 $1,926,000 and $1,612,000 at July 31, 2009 and July 31, 2008
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 $5,503,000 and $4,605,000 at July 31, 2009 and July 31, 2008
respectively, will begin to expire in 2028.
Note
8. 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 accounted for 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
9. Commitments and contingencies
Superlattice
Power, Inc. entered into a month to month lease agreement with EV Innovations,
Inc. for 5,000 square feet within EVI’s Mooresville facility on April
16, 2008 at the rate of $2,625. Approximately 80% of this space has been
converted into offices, and battery development workshop, including a dry room.
They also entered into a month to month lease agreement for $750 with EVI for
renting offices in EVI’s Las Vegas corporate office.
Total
rent expense for the years ended July 31, 2009 and 2008 amounted to
approximately $39,000 and $6,500, respectively.
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.
SUPERLATTICE
POWER, INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
10. Going concern
The
Company's financial statements are prepared based on the going concern
principle. That principle anticipates the realization of assets and
payments of liabilities through the ordinary course of business. No
adjustments have been made to reduce the value of any assets or record
additional liabilities, if any, if the Company were to cease to
exist. The Company has incurred significant operating losses since
inception. These operating losses have been funded by the issuance of
capital and advances from related parties (the Company's former parent, EV
Innovations, Inc.). There are no guarantees that the Company will
continue to be able to raise the funds necessary. Additionally, the
lack of capital may limit the Company's ability to establish and maintain
existing business and establish future viable business.
