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FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 2, 2003

Commission file number 0-12611


AULT INCORPORATED


MINNESOTA 41-0842932
-------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)


7105 Northland Terrace
Minneapolis, Minnesota 55428-1028
----------------------------------------
(Address of principal executive offices)


Registrant's telephone number: (763) 592-1900
----------------


Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

YES __X___ NO _______

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Outstanding at
Class of Common Stock March 25, 2003
--------------------- --------------
No par value 4,627,806 shares


Total pages 22
Exhibits Index on Page 18





PART 1. FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

AULT INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Amounts Per Share)




(Unaudited)
---------------------------------------------------------
Third Quarter Ended Nine Months Ended
------------------------- -------------------------
March 2 March 3 March 2 March 3
2003 2002 2003 2002
--------- --------- --------- ---------

Net Sales $9,940 $9,484 $31,311 $29,738

Cost of Goods Sold 8,078 7,527 24,448 24,006
--------- --------- --------- ---------
Gross Profit 1,862 1,957 6,863 5,732

Operating Expenses:
Marketing 1,185 865 3,485 2,829
Design Engineering 1,154 611 3,062 1,902
General and Administrative 1,320 1,126 4,010 4,794
--------- --------- --------- ---------
3,659 2,602 10,557 9,525
--------- --------- --------- ---------
Operating Loss (1,797) (645) (3,694) (3,793)

Other Income (Expense):
Interest Expense (94) (124) (329) (409)
Interest Income 6 31 29 92
Other 62 47 (62) (205)
--------- --------- --------- ---------
(26) (46) (362) (522)
--------- --------- --------- ---------

Loss Before Income Taxes (1,823) (691) (4,056) (4,315)

Income Tax Benefit (30) (81) (302) (999)
--------- --------- --------- ---------

Net Loss (1,793) (610) (3,754) (3,316)

Preferred Stock Dividends (36) (91)
--------- --------- --------- ---------

Net Loss Applicable to Common Stock $(1,829) $(610) $(3,845) $(3,316)
========= ========= ========= =========

Loss Per Share
Basic: $(0.40) $(0.13) $(0.84) $(0.73)
Diluted: $(0.40) $(0.13) $(0.84) $(0.73)

Common and Equivalent Shares Outstanding:
Basic 4,597,283 4,538,489 4,583,374 4,537,187
Diluted 4,597,283 4,538,489 4,583,374 4,537,187



SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Page 2



AULT INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)




(Unaudited)
March 2, June 2,
2003 2002
------- -------

Assets:
Current Assets
Cash and Cash Equivalents $1,204 $4,775
Trade Receivables, Less Allowance for Doubtful Accounts of $585,000
at March 2, 2003; $320,000 at June 2, 2002 7,599 7,012
Inventories (Note 2) 9,851 8,502
Prepaid and Other Expenses 1,756 2,551
------- -------
Total Current Assets 20,410 22,840

Other Assets:
Goodwill 1,153 1,153
Other 333 262
------- -------
1,486 1,415

Property Equipment and Leasehold Improvements:
Land 1,704 1,704
Building and Leasehold Improvements 7,780 7,780
Machinery and Equipment 9,145 7,586
Office Furniture 1,824 1,480
E.D.P. Equipment 2,207 2,234
------- -------
22,660 20,784

Less Accumulated Depreciation 9,110 8,342
------- -------

13,550 12,442
------- -------

$35,446 $36,697
======= =======



SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Page 3




AULT INCORPORATED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)



(Unaudited)
March 2, June 2,
2003 2002
-------- --------

Liabilities and Stockholders' Equity:
Current Liabilities
Note Payable to Bank $3,507 $2,890
Current Maturities of Long-Term Debt (Note 3) 290 281
Accounts Payable 3,711 4,717
Accrued Compensation 620 435
Accrued Commissions 254 286
Other 733 148
-------- --------
Total Current Liabilities 9,115 8,757

Long-Term Debt, Less Current Maturities (Note 3) 2,537 2,754
Deferred Tax Liability 276 273
Retirement and Severance Benefits 269 160

Redeemable Convertible Preferred Stock, No Par Value, 2,074
Shares Issued and Outstanding 2,074

Stockholders' Equity:
Preferred Stock, No Par Value, Authorized,
1,000,000 Shares; None Issued
Common Shares, No Par Value, Authorized
10,000,000 Shares; Issued and Outstanding 4,604,594 on
March 2, 2003; and 4,563,610 on June 2, 2002; 20,955 20,858
Notes Receivable arising from the sale of common stock (100) (100)
Accumulated Other Comprehensive Loss (752) (922)
Retained Earnings 1,072 4,917
-------- --------
21,175 24,753
-------- --------

$35,446 $36,697
======== ========



SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Page 4



AULT INCORPORATED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)




(Unaudited)
Nine Months Ended
March 2, March 3,
2003 2002
------- -------

Cash Flows From Operating Activities:
Net Loss $(3,754) $(3,316)
Adjustments to Reconcile Net Income to Net Cash
Used in Operating Activities:
Depreciation 769 662
Amortization 75
Provision for Bad Debt 205 1,415
Changes in Assets and Liabilities:
(Increase) Decrease In:
Trade Receivables (50) 4,954
Inventories 145 3,348
Prepaid and Other Expenses (497) 142
Increase (Decrease) in:
Accounts Payable (1,159) (1,910)
Accrued Expenses 648 (707)
Income Tax Payable\Receivable 619 (1,168)
------- -------
Net Cash (Used in) Provided by Operating Activities (3,074) 3,495
------- -------

Cash Flows From Investing Activities:
Purchase of Equipment and Leasehold Improvements (279) (810)
Power General Acquisition, net of cash acquired (366)
------- -------
Net Cash Used in Investment Activities (645) (810)
------- -------

Cash Flows From Financing Activities:
Net Proceeds (Payments) on Revolving Credit Agreements 299 (1,218)
Proceeds from Issuance of Common Stock 24 29
Principal Payments on Long-Term Borrowings (208) (557)
------- -------
Net Cash Provided by (Used in) Financing Activities 115 (1,746)
------- -------

Effect of Foreign Currency Exchange Rate Changes
on Cash 33 3
------- -------

Increase (Decrease) in Cash and Cash Equivalents (3,571) 942

Cash and Cash Equivalents at Beginning of Period 4,775 3,723
------- -------

Cash and Cash Equivalents at End of Period $1,204 $4,665
======= =======

Non-Cash Transaction:
Issuance of Redeemable Convertible Preferred Stock to Acquire
Power General $2,074
Issuance of Common Stock to Pay Preferred Stock Dividends 73




Page 5



AULT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRD QUARTER ENDED MARCH 2, 2003

1. Summary of Consolidation Principles
The accompanying consolidated financial statements include the accounts of Ault
Incorporated, its wholly owned subsidiaries, Ault Shanghai, Ault Korea
Corporation, and Ault Xianghe Co. Ltd. All significant intercompany transactions
have been eliminated. The foreign currency translation adjustment in footnote 4
represents the translation into United States dollars of the Company's
investment in the net assets of its foreign subsidiaries in accordance with the
provisions of FASB Statement No. 52.

The consolidated balance sheet of the Company as of March 2, 2003, the related
consolidated statements of operations for the three and nine months ended March
2, 2003 and March 3, 2002, and the consolidated statements of cash flows for the
nine months ended March 2, 2003 and March 3, 2002 have been prepared without
being audited. In the opinion of the management, these statements reflect all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the position of Ault Incorporated and subsidiaries as of March 2,
2003 and March 3, 2002, and the results of operations and cash flows for all
periods presented.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. Therefore, these
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's June 2, 2002 Form 10-K.

The results of operations for the interim periods are not necessarily indicative
of results that will be realized for the full fiscal year.

2. Inventories
The components of inventory (in thousands) at March 2, 2003 and June 2, 2002 are
as follows:

March 2, June 2,
2003 2002
------ ------
Raw Materials $5,623 $4,609
Work-in-process 937 789
Finished Goods 3,291 3,104
------ ------
$9,851 $8,502
====== ======

3. Financing Arrangements and Long-term Debt
Long-term debt (in thousands) including current maturities contain the
following:



March 2, June 2,
2003 2002
------ ------

Term loan, 7.2% interest, due in monthly installments through
December 2003, secured by equipment $84 $149
Term loan, 7.94% interest, due in monthly installments through
September 2005, secured by furniture 104 151
Term loan, 8.05% interest, due in monthly installments through
February 2015, secured by Company's headquarters building 2,639 2,735
------ ------
Total $2,827 $3,035
Less current maturities 290 281
------ ------
$2,537 $2,754
====== ======




Page 6





AULT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRD QUARTER ENDED MARCH 2, 2003

The Company currently has two credit facilities. It has a credit facility
supporting the South Korean subsidiary of approximately $4,100,000 of which
$3,200,000 is outstanding. The other facility is for $299,000, all of which is
outstanding, and supports the Xianghe subsidiary. The US operations currently
are without a credit facility. The Company is in negotiations to secure a credit
facility during the fourth quarter. The Company anticipates that it has
sufficient cash on hand and availability on its South Korean facility to fund
the operations.

4. Stockholders' Equity

Nine Months Ended
March 2, 2003
---------------------
($000)
Total Stockholders' Equity - June 2, 2002 $24,753
Net Loss $(3,754)
Net change in Foreign currency translation
adjustment 170
-------
Comprehensive Income (Loss) (3,584)
Preferred Stock Dividends Declared (91)
Preferred Stock Dividends Paid with Common
Stock 73
Issue 9,500 shares of common stock in
accordance with stock option plan 24
-------
Total Stockholders' Equity $21,175
=======

5. Net Loss Per Common Share

Basic and diluted earnings per share are presented in accordance with Statement
of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE. The
Redeemable Convertible Preferred Stock and stock options had no effect on
diluted weighted average shares outstanding, as they were anti-dilutive.



Third Quarter Ended Nine Months Ended
------------------- -----------------
March 2, March 3, March 2, March 3,
--------- --------- --------- ---------
2003 2002 2003 2002
--------- --------- --------- ---------

Loss Applicable to Common Shareholders (in
thousands) $(1,829) $(610) $(3,845) $(3,316)
Basic - Weighted Average Shares Outstanding 4,597,283 4,538,489 4,583,374 4,537,187
Diluted - Weighted Average Shares Outstanding 4,597,283 4,538,489 4,583,374 4,537,187
Basic Loss per Share $(0.40) $(0.13) $(0.84) $(0.73)
========= ========= ========= =========
Diluted Loss per Share $(0.40) $(0.13) $(0.84) $(0.73)
========= ========= ========= =========


6. Acquisition

On July 16, 2002, the Company purchased a portion of the operating assets of the
Power General division of Nidec America Corporation. The Power General division
developed, manufactured, and sold high efficiency DC/DC converters and custom
power supplies at various power levels up to 1200 watts under the Power General
brand name. Pursuant to the Purchase Agreement, the Company paid the Seller
$366,000 in cash and issued $2,074,000 face amount of the Company's
newly-created Series B 7% Convertible Preferred Stock, no par value (the
"Preferred Stock"). The Preferred Stock issued to Seller is convertible into
488,000 shares of the Company's Common Stock. The Company has filed a
registration statement covering the shares of Common Stock issuable upon
conversion of the Preferred Stock with the Securities and Exchange Commission.
The Company has maintained Power General's engineering group in Massachusetts
and has moved Power General's manufacturing operations and related functions to
Ault's other facilities in North America and Asia.



Page 7




AULT INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THIRD QUARTER ENDED MARCH 2, 2003

The addition of Power General will benefit Ault in a number of ways. First, the
additional engineering capabilities will enhance product development. Second,
the acquisition brings greater product breadth to Ault through the addition of
AC/DC power supplies and DC/DC converter products. This broader offering affords
Ault new business opportunities.

Ault filed a Form 8-K with the Securities and Exchange Commission on July 31,
2002 to announce the acquisition, filed a Form 8-K/A on September 30, 2002 which
included audited financial statement and pro forma financials and filed a Form
8-K/A Amendment 2 on October 18, 2002 which included the consent of the
auditors.

The total cost of the acquisition, which closed on July 16, 2002, was $2,559,278
and was accounted for under the purchase method of accounting. Accordingly, the
acquired assets and liabilities assumed have been recorded at their respective
fair values as of the date of acquisition. The results of operations of the
acquired business is included in the financial statements since the date of the
acquisition. The following table summarizes the estimated fair values of the
assets acquired and liabilities assumed from Nidec on the date of the
acquisition:

Inventories $ 1,048,675
Property and equipment 1,634,971
------------

Total assets acquired 2,683,646
------------

Current liabilities 124,368
------------

Net assets acquired $ 2,559,278
------------

Pro-forma results of the Company, assuming the acquisition had been made at the
beginning of each period presented, are:

Amounts in thousands, except per share amounts



Third Quarter Ended Nine Months Ended
--------------------- ---------------------
March 2, March 3, March 2, March 3,
2003 2002 2003 2002
-------- -------- -------- --------

Revenue $ 9,940 $ 10,831 $ 31,680 $ 33,780

Net Loss (1,793) (1,700) (4,088) (6,586)

Preferred Stock Dividends 36 37 110 111
-------- -------- -------- --------

Net Loss Applicable to Common Stock $ (1,829) $ (1,737) $ (4,198) $ (6,697)
-------- -------- -------- --------

Basic/Diluted Loss Per Share $ (0.40) $ (0.38) $ (0.92) $ (1.48)

Common and equivalent shares outstanding: 4,597 4,538 4,583 4,537



Included in the nine months ended March 2, 2003 are approximately $522,000 of
nonrecurring expenses for transition services relating to the transfer of Power
General operations out of the Nidec facility and into an Ault facility.



Page 8




7. Goodwill

The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
142, Goodwill and Other Intangible Assets, effective June 3, 2002. Under SFAS
No. 142, goodwill is no longer amortized but reviewed for impairment annually,
or more frequently if certain indicators arise. Based on the initial impairment
test, it was determined that none of the goodwill recorded was impaired.
Impairment adjustments recognized after adoption, if any, generally are required
to be recognized as operating expenses. Had the Company been accounting for its
goodwill under SFAS No. 142 for all periods presented, the Company's net loss
and loss per share would have been as follows:

Amounts in thousands, except per share amounts



Third Quarter Ended Nine Months Ended
------------------- -------------------
March 2, March 3, March 2, March 3,
2003 2002 2003 2002
------- ------- ------- -------

Reported net loss $(1,829) $ (610) $(3,845) $(3,316)

Add back goodwill amortization, net of tax -- 25 -- 75
------- ------- ------- -------
Pro forma adjusted net loss (1,829) (585) (3,845) (3,241)
======= ======= ======= =======

Basic and diluted net loss per share:
Reported net loss $ (0.40) (0.13) $ (0.84) $ (0.73)
Goodwill amortization, net of tax -- 0.01 -- 0.02
------- ------- ------- -------
Pro forma adjusted basic and diluted net loss
per share $ (0.40) $ (0.12) $ (0.84) $ (0.71)
======= ======= ======= =======

Common and equivalent shares outstanding: 4,597 4,538 4,583 4,537


8. Redeemable Convertible Preferred Stock

During the first quarter, in connection with the purchase of certain assets and
liabilities of Power General, the Company issued 2,074 shares of redeemable 7%
convertible preferred stock at $1,000 face value. The preferred stock shares are
convertible into common stock at the holders' option at a conversion price of
$4.25 per share and has a mandatory redemption of one-third of the outstanding
shares of unconverted preferred stock on July 16, 2006, one-half of the
remaining outstanding on July 16, 2007, and the rest on July 16, 2008. The
dividends on the preferred stock are cumulative and payable quarterly beginning
October 15, 2002, and can be paid in cash; however, during the first three years
the Company can pay dividends in shares of common stock in lieu of cash. The
Company has declared dividends of $91,000 of which $72,000 have been paid with
common stock.

9. Warranty

The Company offers its customers a three-year warranty on products. Warranty
expense is determined by calculating the historical relationship between sales
and warranty costs and applying the calculation to the current period's sales.
Based on warranty repair costs and the rate of return, the Company periodically
reviews and adjusts its warranty accrual. Actual repair costs are offset against
the reserve. The following table shows the fiscal 2003 year-to-date activity for
the Company's warranty accrual (in thousands):

Beginning Balance $113

Charges and Costs Accrued 62

Less Repair Costs Incurred (82)
-----

Ending Balance $93



Page 9



10. Accounting Pronouncements

In August 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR
DISPOSAL OF LONG-LIVED ASSETS. SFAS 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and supercedes
SFAS 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND ASSETS TO BE
DISPOSED OF, and the accounting and reporting provisions of Accounting
Principles Board Opinion No. 30, REPORTING THE RESULTS OF OPERATIONS--REPORTING
THE EFFECTS OF DISPOSAL OF A SEGMENT OF A BUSINESS AND EXTRAORDINARY, UNUSUAL
AND INFREQUENTLY OCCURRING TRANSACTIONS. SFAS 144 requires that long-lived
assets to be disposed of be measured at the lower of carrying amount or fair
value less cost to sell. The Company adopted SFAS 144 on June 3, 2002 and it did
not have an effect on its financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION - TRANSITION AND DISCLOSURE, which amends SFAS 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION. SFAS No. 148 provides alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require more prominent and more
frequent disclosures in financial statements of the effects of stock-based
compensation. The transition guidance and annual disclosure provisions of SFAS
No. 148 are effective for fiscal years ending after December 15, 2002. The
interim disclosure provisions are effective for financial reports containing
condensed financial statements for interim periods beginning after December 15,
2002. The adoption of SFAS No. 148 is not expected to have a material impact on
the Company's consolidated balance sheet or results of operations.

In November 2002, the FASB issued FASB Interpretation No. (FIN) 45, GUARANTOR'S
ACCOUNTING AND DISCLOSURE REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT
GUARANTEES OF INDEBTEDNESS OF OTHERS. FIN 45 elaborates on the disclosures to be
made by a guarantor about its obligations under certain guarantees that it has
issued. It also clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The recognition and measurement provisions
of this Interpretation are effective for all guarantees issued or modified after
December 31, 2002. The disclosure requirements of FIN 45 are effective for
financial statements of interim or annual periods ending after December 15,
2002. The Company has made the additional required disclosures in this quarterly
report; see Note 9 regarding product warranty liability. The Company has no
guarantees of others, which require disclosure.



Page 10






ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of the financial condition and results of operations
are based on the consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amount of assets and
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities at the date of our financial statements. Actual results may
differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those involving significant
judgments and uncertainties which could potentially result in materially
different results under different assumptions and conditions. Application of
these policies is particularly important to the portrayal of the financial
condition and results of operations. The Company believes the accounting
policies described below meet these characteristics. All significant accounting
policies are more fully described in the notes to the consolidated financial
statements included in the Company's annual report on Form 10-K.

INVENTORY VALUATION - Inventory is written down for estimated surplus and
discontinued inventory items. The amount of the write-down is determined by
analyzing historical and projected sales information, plans for discontinued
products and other factors. Changes in sales volumes due to unexpected economic
or competitive conditions are among the factors that may result in materially
different amounts for this item.

ALLOWANCE FOR DOUBTFUL ACCOUNTS - An allowance is established for estimated
uncollectible accounts receivable. The required allowance is determined by
reviewing customer accounts and making estimates of amounts that may be
uncollectible. Factors considered in determining the amount of the reserve
include the age of the receivable, the financial condition of the customer,
general business, economic and political conditions, and other relevant facts
and circumstances. Unexpected changes in the aforementioned factors may result
in materially different amounts for this item.

DEFERRED TAXES - The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes," which requires that deferred tax assets
and liabilities be recognized using enacted tax rates for the effect of
temporary differences between book and tax basis of recorded assets and
liabilities. SFAS 109 also requires that deferred tax assets be reduced by a
valuation allowance if it is likely that some portion or the entire deferred tax
asset will not be realized. Based upon prior taxable income and estimates of
future taxable income, the Company has determined that it is likely that a
portion of the net deferred tax asset will not be fully realized in the future.
Thus a valuation allowance has been established. If actual taxable income varies
from these estimates, the Company may be required to change the valuation
allowance against the deferred tax assets resulting in a change in income tax
expense (benefit), which will be recorded in the consolidated statement of
operations.

RESULTS OF OPERATIONS
Third Quarter Ended March 2, 2003

($000) Favorable / (Unfavorable)
Fiscal Fiscal --------------------------
2003 2002 Amount Percent
-----------------------------------------------------
Net Sales $9,940 $9,484 $456 5%
Operating Loss (1,797) (645) (1,152) (179%)


Net sales were $9,940,000 for the third quarter of fiscal 2003 up 5% from
$9,484,000 for the third quarter of fiscal 2002. The increase is due to sales
resulting from the acquisition of certain assets and certain liabilities of
Power General of $450,000, an increase in sales into the Asia Pacific area of
$1,994,000, offset tax decrease in sales to North America and Europe of
$1,988,000. The Company is anticipating a continuation of the increases in the
Asia Pacific region and a stabilization of the sales in North America and
Europe.



Page 11



Gross margin for the third quarter was 18.7 percent as a percent of sales,
compared with 20.6 percent for the same period last year. Current year margins
were down due to the lower revenue numbers for the North American and European
markets. These markets tend to have higher margin and lower volumes. Future
margins will depend on the strength of the North American and European markets.

Operating expenses increased in the third quarter of fiscal 2003 to $3,659,000
from $2,602,000 in the third quarter of fiscal 2002. The increase of expenses in
the third quarter of fiscal 2003 is primarily related to the July 2002
acquisition of certain assets and certain liabilities of Power General. This
acquisition added costs of $978,000 relating to the engineering and sales staff
hired as a result of the acquisition. These costs will continue in the future.

Nonoperating expense is $26,000 for the third quarter of fiscal 2003 compared to
$46,000 for the same period in fiscal 2002. The Company had interest income of
$6,000 in the three months ended March 2, 2003 and $31,000 for the same period
in fiscal 2002. Other income is $62,000 for the third quarter of fiscal 2003 and
$47,000 for the same period in fiscal 2002. Both amounts are primarily related
to the currency exchange rate gain in Korea. The Company incurred interest
expenses of $94,000 in the third quarter of fiscal 2003 and $124,000 in the same
period of fiscal 2002, paid on bank credit facilities and long-term borrowings.

The Company had a pre-tax loss of $1,823,000 for the three-month period ended
March 2, 2003 on which it accrued a consolidated income tax benefit of $30,000.
For the same three-month period in fiscal 2002 the Company had a pre-tax loss of
$691,000 on which a tax benefit of $81,000 was accrued. The effective tax rate
is a benefit of 2% for the third quarter of 2003, and a benefit of 12% for the
same period in fiscal 2002. In the third quarter of fiscal 2003 the Company had
a higher pre-tax loss than previously anticipated. This loss taken with the
anticipated results for the fourth quarter decreased the effective tax benefit
for the year. The adjustment in that rate resulted in a lower tax benefit for
the third quarter.

Nine Months Ended March 2, 2003

($000) Favorable / (Unfavorable)
Fiscal Fiscal --------------------------
2003 2002 Amount Percent
-----------------------------------------------------
Net Sales $31,311 $29,738 $1,573 5%
Operating Loss (3,694) (3,793) 99 3%


Net sales were $31,311,000 for the first nine months of fiscal 2003 up 5% from
$29,738,000 for the first nine months of fiscal 2002. The increase is due to
sales resulting from the acquisition of certain assets and certain liabilities
of Power General of $1,511,000, an increase in sales into the Asia Pacific area
of $4,159,000, offset by a decrease in sales to North America and Europe of
$4,097,000.

Operating loss totaled $3,694,000 for the first nine months of fiscal 2003
compared a loss of $3,793,000 for the same period in fiscal 2002. Margins for
the first three quarters of fiscal 2003 is 21.9% of sales compared to 19.3% of
sales for the same period in fiscal 2002. The increase in margin is primarily
due to 1) a $780,000 inventory write down in the second quarter of fiscal 2002.
2) The increase in the value of orders that were manufactured by the Company's
subsidiaries as opposed to the Company's subcontractors. This contributed
$47,000 of higher margins. 3) The volume of orders at the China facility
exceeded the fixed cost mark in the first nine months of fiscal 2003 compared to
the first nine months of fiscal 2002. This increased margins by $518,000. 4) The
higher cost of the transition of Power General production into an Ault facility
resulted in higher costs of $288,000 and decreased margins. As of the end of the
second quarter the transition has been complete. 5) Lower revenue in North
America and Europe decreased margin by $230,000.

Operating expenses increased in the first nine months of fiscal 2003 to
$10,557,000 from $9,525,000 in the first nine months of fiscal 2002. The
increase in expenses is primarily related to 1) a decrease in the bad debt
expense for fiscal 2003. The Company recognized $1,300,000 of additional bad
debt expense for accounts that were uncollectible in fiscal 2002. 2) The July
2002 acquisition of certain assets and certain liabilities of Power General
increased costs from fiscal 2002 by $1,977,000. These additional costs are
related to the engineering and sales staff hired as a result of the acquisition.
These costs will continue in the future. 3) Transition costs of $404,000 for
temporary operations in the current Power General location. The transition for
the manufacturing of these products is complete and these costs will not
continue.



Page 12



ORDER BACKLOG: The Company's order backlog at March 2, 2003 totaled $8,881,000
compared to $8,365,000 at June 2, 2002. The order backlog represents sales for
approximately ten weeks.

NON-OPERATING INCOME AND EXPENSES: Nonoperating expense is $362,000 for the
first nine months of fiscal 2003 compared to $522,000 for the same period in
fiscal 2002. The Company had interest income of $29,000 in the first three
quarters of fiscal 2003 and $92,000 for the same period in fiscal 2002. Other
expense is $62,000 for the first nine months of fiscal 2003 and $205,000 in the
first nine months of fiscal 2002. Both amounts are primarily related to the
currency exchange rate loss in Korea. The Company incurred interest expenses of
$329,000 in the first nine months of fiscal 2003 and $409,000 in the same period
of fiscal 2002, paid on bank credit facilities and long-term borrowings.

INCOME TAX: The Company had a pre-tax loss of $4,056,000 for the nine-month
period in fiscal 2003 on which it accrued a consolidated income tax benefit of
$302,000. For the nine-month period in fiscal 2002 the Company had a pre-tax
loss of $4,315,000 on which a tax benefit of $999,000 was accrued. The effective
tax rate is a benefit of 7% for the first three quarters of 2003, and a benefit
of 23% for the same period in fiscal 2002. In the first three quarters of fiscal
2003 the Company did not take a benefit from either foreign or U.S. loss
carryforwards generated because it was likely the Company will be unable to use
such losses to offset future taxable income. The Company has recognized the
benefit that will be realized from the loss carrybacks. In the first three
quarters of fiscal 2002 the Company did not take a benefit from the foreign loss
carryforwards the loss generated because management believes it was likely the
Company will be unable to use such losses.

NET LOSS: The Company reported a basic and diluted per share loss of $0.84 for
the first nine months of fiscal 2003, based on 4,583,000 outstanding weighted
average shares, compared to basic and diluted per share loss of $0.73 for the
same period of fiscal 2002, based on 4,537,000 outstanding weighted average
shares.

LIQUIDITY AND CAPITAL RESOURCES

The following table describes the Company's liquidity and financial position on
March 2, 2003, and on June 2, 2002:

March 2, June 2,
2003 2002
------- -------
($000) ($000)
Working capital $11,295 $14,083
Cash and cash equivalents 1,204 4,775
Unutilized bank credit facilities 900 4,975

CURRENT WORKING CAPITAL POSITION

As of March 2, 2003, the Company had current assets of $20,410,000 and current
liabilities of $9,115,000, which amounted to working capital of $11,295,000 and
a current ratio of 2.2 to 1.0. This represents a decrease from its working
capital of $14,083,000 as of June 2, 2002. The Company relies on its credit
facilities and cash flows from operations as sources of working capital to
support normal growth in revenue, capital expenditures and attainment of profit
goals. The Company has not committed any funds to capital expenditures as of
March 2, 2003.

CASH AND INVESTMENTS: As of March 2, 2003, the Company had cash totaling
$1,204,000, compared to $4,775,000 as of June 2, 2002. This decrease was
primarily due to payments for the acquisition of Power General of $366,000, and
payments to fund operations including the operations of Power General after the
acquisition of $3,205,000.

CREDIT FACILITIES: The Company currently has two credit facilities. It has a
credit facility supporting the South Korean subsidiary of approximately
$4,100,000 of which $3,200,000 is outstanding. The other facility is supporting
the Xianghe subsidiary of $299,000 of which $299,000 is outstanding. The US
operations currently are without a credit facility. The Company is in
negotiations to secure a credit facility during the fourth quarter. The Company
anticipates that it has sufficient cash on hand and availability on its South
Korean facility to fund the operations.



Page 13




CASH FLOWS FOR FISCAL 2003

OPERATIONS: Operations used $3,074,000 of cash during the first nine months of
fiscal 2003 due principally to the loss net of depreciation.

INVESTING ACTIVITIES: Investing activities used net cash of $645,000 relating to
the acquisition of Power General ($366,000) and purchase of new equipment
($279,000).

FINANCING ACTIVITIES: Financing activities provided net cash of $115,000,
comprised of $208,000 payment on debt, $24,000 from proceeds from the issuance
of common stock and proceeds from the revolving credit line of $299,000.

EFFECT OF FOREIGN CURRENCY EXCHANGE RATE FLUCTUATIONS: The effect of translating
the Korean financial statements, which were prepared in Won to US dollars, had
an increase effect on cash of approximately $33,000 during the first nine months
of the year. The effect of translating the Chinese financial statements, which
were prepared in Yuan to US dollars, had minimal effect on cash for the first
six months of the fiscal year.

SUMMARY: The Company's cash and working capital positions are sound and together
with its credit facilities, are adequate to support the Company's strategies for
the remainder of fiscal 2003.

INFORMATION ABOUT PRODUCTS AND SERVICES: The Company's business operations are
comprised of one activity--the design, manufacture and sale of equipment for
converting electric power to a level used by OEMs in data
communications/telecommunications and medical markets to charge batteries,
and/or power equipment. The Company supports these power requirements by making
available to the OEMs products that have various technical features. These
products are managed as one product segment under the Company's internal
organizational structure and the Company does not consider any financial
distinctive measures, including net profitability and segmentation of assets to
be meaningful to performance assessment.

INFORMATION ABOUT REVENUE BY GEOGRAPHY

Distribution of revenue from the US, from each foreign country that is the
source of significant revenue and from all other foreign countries as a group
are as follows:

Nine Months Ended
March 2, March 3,
2003 2002
------- -------
($000) ($000)

US $18,844 $20,577
China 4,437 1,693
Korea 3,822 3,304
UK 1,970 1,820
Canada 493 684
Belgium 408 305
Other Foreign 1,337 1,355
------- -------
Total $31,311 $29,738
======= =======

The Company considers a country to be the geographic source of revenue if it has
contractual obligations, including obligation to pay for trade receivable
invoices.

IMPACT OF FOREIGN OPERATIONS AND CURRENCY CHANGES:

The Company will experience normal valuation changes as the Korean and Chinese
currency fluctuates. The effect of translating the Korean and Chinese financial
statements resulted in a net asset increase of $170,000 during the first nine
months of fiscal 2003.



Page 14




FORWARD LOOKING STATEMENTS

From time to time, in reports filed with the Securities and Exchange Commission,
in press releases, and in other communications to shareholders or the investing
public, the Company may make forward-looking statements concerning possible or
anticipated future results of operations or business developments which are
typically preceded by the words "believes", "expects", "anticipates", "intends"
or similar expressions. For such forward-looking statements, the Company claims
the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. Shareholders and the
investing public should understand that such forward-looking statements are
subject to risks and uncertainties that could cause results or developments to
differ significantly from those indicated in the forward-looking statements.
Such risks and uncertainties include, but are not limited to, the overall level
of sales by original equipment manufacturers (OEMs) in the telecommunications,
data communications, computer peripherals and the medical markets; buying
patterns of the Company's existing and prospective customers; the impact of new
products introduced by competitors; delays in new product introductions; higher
than expected expense related to sales and new marketing initiatives;
availability of adequate supplies of raw materials and components; fuel prices;
and other risks affecting the Company's target markets.





Page 15




ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company experiences foreign currency gains and losses, which are reflected
in the financial statements, due to the strengthening and weakening of the U.S.
dollar against currencies of the Company's foreign subsidiaries. The Company
anticipates that it will continue to have exchange gains or losses in the
future.

As of March 2, 2003, the Company had only fixed rate debt outstanding. Thus,
interest rate fluctuations would not impact interest expense or cash flows. If
the Company were to undertake additional debt, interest rate changes could
impact earnings and cash flows.

ITEM 4 - CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures.

The Company's Chief Executive Officer, Frederick M. Green, and Chief Financial
Officer, Donald L. Henry, have reviewed the Company's disclosure controls and
procedures within 90 days prior to the filing of this report. Based upon this
review, these officers believe that the Company's disclosure controls and
procedures are effective in ensuring that material information related to the
Company is made known to them by others within the Company.

(b) Changes in Internal Controls.

There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls during the quarter
covered by this report or from the date of the review to the date of this Form
10-Q.



Page 16




PART II

ITEM 1 LEGAL PROCEEDINGS:

Not Applicable

ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS

(c) Recent Sales of Unregistered Securities

As previously disclosed, on July 16, 2002, the Company purchased a portion of
the operating assets of the Power General division of Nidec America Corporation
(the "Seller") pursuant to an Asset Purchase Agreement between the Company and
the Seller dated July 16, 2002 (the "Purchase Agreement"). Pursuant to the
Purchase Agreement, the Company paid Seller $366,000 in cash and issued
$2,074,000 in face amount of the Company's newly-created Series B 7% Redeemable
Convertible Preferred Stock, no par value (the "Preferred Stock"). The cash
portion of the purchase price was paid from the Company's working capital. At
the current conversion price of $4.25 per share, the Preferred Stock issued to
Seller is convertible into 488,000 shares of the Company's Common Stock and the
Company agreed to file a registration statement covering the shares of Common
Stock issuable upon conversion of the Preferred Stock with the Securities and
Exchange Commission ("SEC"). The Company filed a Form S-3 Registration Statement
with SEC on October 8, 2002.

The Company believes that the issuance of the Preferred Stock was exempt
pursuant to Section 4(2) of the Securities Act of 1993. Under the terms of the
Purchase Agreement, the Seller agreed that it was acquiring the Preferred Stock
for its own account and not with a present view to public resale.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

Not Applicable

ITEM 4 Submission of Matters to a Vote of Security Holders

Not Applicable

ITEM 5 OTHER INFORMATION

Not Applicable



Page 17




ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K

(a) The following exhibits are included herein:
99.1 Certificate pursuant to 18 U.S.C. ss.1350
(b) Reports on form 8-K

On July 31, 2002, Ault filed a Form 8-K dated July 16, 2002 to report an event
under Item 2, Acquisition or Disposition of Assets. On September 30, 2002, Ault
filed Amendment No. 1 to Form 8-K on Form 8-K/A to provide under Item 7,
Financial Statements and Exhibits, the required financial statements and pro
forma financial information. On October 18, 2002, Ault filed Amendment No. 2 to
Form 8-K on Form 8-K/A to provide under Item 7, Financial Statements and
Exhibits, the required consent of the auditors.



Page 18




SIGNATURES



Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



AULT INCORPORATED
(REGISTRANT)



DATED: April 10, 2003 / s / Frederick M. Green
--------------------- -----------------------------------
Frederick M. Green, President
Chief Executive Officer and
Chairman




DATED: April 10, 2003 / s / Donald L. Henry
--------------------- -----------------------------------
Donald L. Henry
Chief Financial Officer



Page 19




CERTIFICATION
-------------

I, Frederick M. Green, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ault Incorporated;

2. Based on my knowledge, this quarterly 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us by others within those entities, particularly during the
period in which this quarterly 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
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer 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 officer and I have indicated in this
quarterly 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.

Date: April 10, 2003 / s / Frederick M. Green
-------------------- --------------------------
President and
Chief Executive Officer



Page 20



CERTIFICATION
-------------

I, Donald L. Henry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Ault Incorporated;

2. Based on my knowledge, this quarterly 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 officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we 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 us by others within those entities, particularly during the
period in which this quarterly 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
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer 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 officer and I have indicated in this
quarterly 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.


Date: April 10, 2003 / s / Donald L. Henry
-------------------- -------------------------
Chief Financial Officer



Page 21