UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _________________
Commission file number 0-28555
KORE HOLDINGS, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 86-0960464
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
41667 Yosemite Pines Dr., Oakhurst CA 93644
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(Address of principal executive offices)
(559) 692-2474
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(Issuer's telephone number)
VOLT INC.
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(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 4,919,422 Common Shares $0.001 par
value as of December 31, 2004
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
The information required by Item 310(b) of Regulation S-B is attached hereto as
Exhibit One.
Item 2. Management's Discussion and Analysis or Plan of Operation.
THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND
NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES, AND THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING, BUT NOT LIMITED TO COMPETITION AND OVERALL MARKET AND ECONOMIC
CONDITIONS.
RESULTS OF CONTINUING OPERATIONS
Restatement
The Company has amended its previously issued condensed consolidated financial
statements for the three months ended December 31, 2003. The Company has amended
these condensed consolidated financial statements to reclassify $711,628
previously recorded as reversal of payables, to reclassify a portion of its
goodwill acquired in the First Washington Corporation transaction as restricted
cash in the amount of $172,428 and has reclassified $347,326 previously
classified as notes receivable to general and administrative expenses. These
transactions resulted in a decrease in the accumulated deficit to ($4,843,875)
at September 30, 2003. In addition for the three months ended December 31, 2004,
the Company has reclassified $4,500 previously classified as notes receivable to
accrued expenses. This transaction resulted in no change to its previously
stated net income and accumulated deficit for the three-month period.
Management Discussion Snapshot
The following table sets forth certain of the Company's summary selected
operating and financial data. The following table should be read in conjunction
with all other financial information and analysis presented herein including the
Condensed Consolidated Financial Statements for the three months ended December
31, 2004 and December 31, 2003.
Summary Selected Statements Operating and Other Financial Data
Three Months Ended
December 31
2004 2003
Revenue $ 835,851 $ 612,172
Cost of revenue 375,740 371,056
---------------- ------------
Gross profit 260,111 241,116
Gross profit margin 31% 39%
Operating Expenses 274,378 205,883
---------------- -----------
Income from
continuing operations $ (14,267) $ 35,233
================ ============
Earnings per share per
share of common stock $ (-) $ 0.01
================ ===========
Weighted common shares
Outstanding 4,919,422 4,419,422
================ ===========
Current assets $ 336,725 $ 306,568
Property and Equipment 5,780,569 5,789,769
Other assets 17,522,065 3,501,986
---------------- ------------
Total assets $ 23,638,785 $ 9,598,323
================ ============
Revenue and Expenses
For the three months ended December 31, 2004, the Company had revenue of
$835,851, a net loss from continuing operations of $(14,267) and net loss per
common share from continuing operations of $(0.00) based on a weighted average
of 4,919,422 common shares outstanding. All of the Company's revenue was
generated from its mortgage business. The Company's revenue is not dependent on
any key customers.
For the three months ended December 31, 2003, the Company had revenue of
$612,172, a net profit from continuing operations of $35,233 and a net profit
per common share from continuing operations of $0.01 based on a weighted average
of 4,419,442 common shares outstanding. All of the Company's revenue was
generated from its mortgage business. The Company's revenue is not dependent on
any key customers.
Revenue in the three months ended December 31, 2004 was $835,851 compared to
$612,172 in the quarter ended December 31, 2003. This is an increase of $223,679
from period to period. This increase in revenue is primarily attributable to
increased sales.
Net loss from continuing operations for the three months ended December 31,
2004, was $(14,267) or $(0.00) in loss per common share based on a weighted
average of 4,919,422 common shares outstanding compared with net income from
continuing operations of $35,233 or $0.01 in earnings per common share based on
a weighted average of 4,419,442 common shares outstanding. for the three months
ended December 31, 2003. This is an increase in net loss of $0.01 per common
share from period to period. This increase in loss is primarily attributable to
increases in operating expenses.
Assets and Liabilities
Total other assets for the three months ended December 31, 2004, was $17,522,065
compared to total other assets for the three months ended December 31, 2003, of
$3,501,986. This is an increase in total other assets of $14,020,079 from period
to period. This increase in total other assets is the result of the acquisition
of coal tract #4 of the Fiatt coal mine in Fulton County, Illinois. The tract
consists of approximately 100 acres of land and surface area with a tonnage of
4,356,000 tons of coal fines having a thickness of a 50 foot average using 200
pounds/sht tn and which are certified and appraised at $69,696,020. The Company
issued 13,635,999 shares of its Class B convertible preferred stock valued at
$14,045,079 to acquire the land and coal.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
There are no pending or threatened legal proceedings against the Company or any
of its subsidiaries.
Item 2. Changes in Securities.
The Company issued 13,635,999 shares of its Class B convertible preferred stock
valued at $14,045,079 to acquire the land and coal described above.
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information.
NONE
Item 6. Exhibits and Reports on Form 8-K.
On May 30, 2002, the Company filed a Form 8-K to report the acquisition of First
Washington Financial Corporation.
On January 18, 2005, the Company filled an Amended Form 8-K amending its Form
8-K filed on May 30, 2002, to report the acquisition of First Washington
Financial Corporation.
INDEX TO EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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1 KORE HOLDINGS, INC AND SUBSIDIARIES FINANCIAL STATEMENTS
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KORE HOLDINGS, INC.
(Registrant)
Date February 24, 2005 /s/Denis C. Tseklenis
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Denis Costa Tseklenis
Chief Executive Officer
Chairman of the Board
EXHIBIT 1
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED):
BALANCE SHEETS AS OF DECEMBER 31, 2004 (UNAUDITED)
AND SEPTEMBER 30, 2004 (AUDITED)
STATEMENTS OF OPERATION FOR THE THREE MONTHS ENDED
DECEMBER 31, 2004 AND 2003 (UNAUDITED)
STATEMENTS OF CASH FLOW FOR THREE MONTHS ENDED
DECEMBER 31, 2004 AND 2003 (UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
KORE HOLDINGS, INC.
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 (UNAUDITED)AND SEPTEMBER 30, 2004 (AUDITED)
ASSETS
(Unaudited) (Audited)
December 31, September 30,
2004 2004
------------ -------------
Current Assets:
Cash and cash equivalents $, 2,426 $ 272,843
Commissions receivable 333,725 33,725
------------ -------------
Total Current Assets 336,151 306,568
Property and equipment, net 5,780,569 5,789,769
Other Assets:
Land and Coal Reserves 14,045,079 -
Restricted Cash 234,240 234,240
Goodwill 2,859,412 2,859,412
Intangible Asset - Net 383,334 408,334
----------- -------------
Total Other Assets 17,552,065 3,501,986
----------- -------------
Total Assets $23,638,785 $9,598,323
=========== =============
The accompanying notes are an integral part of the
consolidated financial statements.
KORE HOLDINGS, INC.
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 (UNAUDITED)AND SEPTEMBER 30, 2004 (AUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
(Unaudited) (Audited)
December 31, September 30,
2004 2004
---------- -------------
Current Liabilities:
Accounts payable $ 61,838 $ 61,838
---------- -------------
Total Current Liabilities 61,838 61,838
Commitments and Contingencies
Stockholders' Equity (Deficit):
Class A Preferred Stock, $.001 par value,
10,000,000 shares authorized at December 31,
2004 and September 30, 2004, respectively,
and 1,000,000 issued and outstanding at December
31, 2004 and September 30, 2004 respectively 1,000 1,000
Class B Preferred Stock, no par value,
90,000,000 and 125,000 shares authorized at
December 31, 2004 and September 30, 2004,
respectively, and 13,635,999 shares issued
and outstanding at December 31, 2004 and
September 30, 2004, respectively - -
First Washington Class A Preferred Stock,
no par value, 500,000 shares authorized at
December 31, 2004 and September 30, 2004,
respectively, and 500,000 shares issued and
outstanding at December 31, 2004 and September
30, 2004, respectively - -
Common Stock, $.001 par value, 400,000,000
shares authorized at December 31, 2004 and
September 30, 2004, respectively, and
4,919,422 shares issued and outstanding at
December 31, 2004 and September 30, 2004,
respectively 4,919 4,919
Additional paid-in capital 28,347,976 14,293,247
Accumulated deficit (4,776,948) (4,762,681)
------------ -----------
Total stockholders' equity 23,576,947 9,536,485
------------ -----------
Total Liabilities and Stockholders'
Equity (Deficit) $ 23,638,785 $9,598,323
============ ===========
The accompanying notes are an integral part of the
consolidated financial statements.
KORE HOLDINGS, INC.
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003
(Restated)
2004 2003
---------- --------
Revenue $ 835,851 $ 612,172
Cost of Revenue 575,740 371,056
----------- --------
Gross Profit 260,111 241,116
Operating Expenses
General and administrative costs 274,378 205,883
----------- --------
Total operating expenses 274,378 205,883
----------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES ( 14,267) 35,233
Income taxes - -
----------- --------
NET INCOME (LOSS) $ (14,267) $ 35,233
=========== ========
BASIS AND DILUTED EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share $ ( -) $ 0.01
=========== =========
WEIGHTED AVERAGE SHARES OUTSTANDING 4,919,422 4,919,422
=========== =========
The accompanying notes are an integral part of the
consolidated financial statements.
KORE HOLDINGS, INC.
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2004 AND 2003 (UNAUDITED)
(Restated)
2004 2003
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (14,267) $ 35,233
----------- ----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 34,200 7,282
Changes in assets and liabilities
Advances receivable - 4,500
Commissions receivable (300,000) (55,978)
Accounts payable - (25,083)
--------------- ------------
Total adjustments (265,800) (69,279)
---------------------------------
Net cash (used in)
operating activities (280,067) (34,046)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from contributed capital 9,650 28,000
---------------------------------
Net cash provided by (used in)
financing activities 9,650 28,000
---------------------------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (270,417) (6,046)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 272,843 15,753
--------------------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 2,426 $ 9,707
================================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ - $ 4,340
============= ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
Preferred stock issued for land and coal
reserves $14,045,079 $ -
============= ===========
The accompanying notes are an integral part of the
consolidated financial statements.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004 AND 2003
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
The condensed consolidated unaudited interim financial
statements included herein have been prepared, without audit,
pursuant to the rules and regulations of the Securities and
Exchange Commission. The consolidated financial statements and
notes are presented as permitted on Form 10-QSB and do not
contain information included in the Company's annual
consolidated statements and notes. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed
or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make
the information presented not misleading. The results for the
three months ended December 31, 2004 may not be indicative of
the results for the entire year.
The Company on October 16, 2004, changed its name to Kore
Holdings, Inc. The Company, at that time, increased its
authorized common stock shares to 400,000,000 and its
preferred stock to 100,000,000.
These statements reflect all adjustments, consisting of normal
recurring adjustments which, in the opinion of management, are
necessary for fair presentation of the information contained
herein.
Kore Holdings, Inc. and Subsidiaries is a power provider and
marketer of alternative energy and financial services. The
Company is in the initial stages of implementing its business
plan.
On May 17, 2002, the Company acquired First Washington
Financial Corporation, a company which provides financial
services in Bethesda, Maryland ("First Washington"). First
Washington, is a mortgage company whose emphasis lies in
residential mortgages in the greater Washington D.C. service
area. The combination was treated as a purchase with First
Washington becoming a wholly owned subsidiary of Volt, Inc.
Volt, Inc. recognized an intangible asset (goodwill) which
represented the amount of value received over the net assets
acquired. The operations of First Washington are included in
the consolidated statements of income for the year ended
September 30, 2002 from the date of inception May 17, 2002 to
September 30, 2002. There was no predecessor entity of First
Washington. The fair value of the transaction was recorded
based on the number of shares issued to First Washington
(2,000,000) at the fair value of the stock of Volt on the date
of acquisition net of a discount since the stock issued in the
acquisition was restricted stock ($1.50).
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
The cost of the net assets purchased and liabilities assumed
approximated zero. However, the value of $3,000,000 was based
on the mortgage company's future earnings.
The Company acquired Opportunity Knocks, LLC during the third
fiscal quarter of 2002 to rehabilitate HUD homes and other
properties in Washington, D.C., Maryland and Virginia under
the HUD Gift Program. This acquisition was done simultaneously
with the acquisition of First Washington, and Opportunity
Knocks is a wholly owned subsidiary of the Company.
In fiscal 2003, the Company expanded its financial services
business, and brought in two businesses, that operationally
failed to meet the Company's business model. Subsequent to
these agreements being in force, the Company disposed of them.
Additionally, the Washington Metropolitan Area market had not
met Company expectations, so the Company's subsidiary First
Washington acquired Yosemite Brokerage, Inc. in Oakhurst,
California, a few miles from the Company's headquarters. The
Company had issued Preferred Stock Class B, which has been
cancelled by the Company.
In July 2003 (effective August 1, 2003), First Washington
acquired Yosemite Brokerage, Inc. ("Yosemite"), a California
corporation for 500,000 shares of First Washington Class A
Preferred Stock. The acquisition was recorded for accounting
purposes as a purchase acquisition. The Company valued this
transaction at $200,000 ($.40 per share), which included the
recognition of $31,840 in goodwill.
The Company has three other power related wholly-owned
subsidiaries, Sun Volt, Inc., Sun Electronics, Inc. and
Arcadian Renewable Power, Inc. Arcadian Renewable Power,
Inc. is the corporation that holds the Altamont Wind Farm in
the Altamont Pass in Livermore, California.
As noted in Note 9, the Company has amended its previously
issued condensed consolidated financial statements for the
three months ended December 31, 2003 in response to the
Securities and Exchange Commission's comment letters dated
February 4, 2003, May 30, 2003 and August 11, 2003. The
Company has amended these condensed consolidated financial
statements to reclassify $711,628 previously recorded as
reversal of payables, to reclassify a portion of its goodwill
acquired in the First Washington Corporation transaction as
restricted cash in the amount of $172,428 and has reclassified
$347,326 previously classified as notes receivable to general
and administrative expenses. These transactions resulted in a
decrease in the accumulated deficit to ($4,843,875) at
September 30, 2003. In addition for the three months ended
December 31, 2003, the Company has reclassified $4,500
previously classified as notes receivable to accrued expenses.
This transaction resulted in no change to its previously
stated net income and accumulated deficit for the three-month
period.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles of Consolidation
The condensed consolidated balance sheet for December 31, 2004
and consolidated balance sheet for September 30, 2004 and
condensed consolidated statements of income and cash flows for
the three months ended December 31, 2004 includes Kore
Holdings, Inc. and its wholly-owned subsidiaries. Intercompany
transactions and balances have been eliminated in
consolidation.
Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
of America, requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and
other short-term investments with an initial maturity of three
months or less to be cash or cash equivalents.
The Company maintains cash and cash equivalent balances at
several financial institutions which are insured by the
Federal Deposit Insurance Corporation up to $100,000.
The Company has $234,240 in restricted cash that is expected
to be received in the next two years.
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed primarily using the straight-line method over the
estimated useful life of the assets.
Furniture and fixtures 5-7 years
Office and computer equipment 3-5 years
Wind Farm 40 years
Revenue Recognition
For the Company's power division, sold merchandise and
revenues were recorded under the accrual method of accounting.
For the Company's financial services division, commission
income is recorded upon the closing of their respective
transactions.
Advertising
Advertising costs are typically expensed as incurred.
Advertising expense was approximately $5,000 and $4,973 for
the three months ending December 31, 2004 and 2003,
respectively.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The income tax benefit is computed on the pretax loss based on
the current tax law. Deferred income taxes are recognized for
the tax consequences in future years of differences between
the tax basis of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws
and statutory tax rates.
Fair Value of Financial Instruments
The carrying amount reported in the condensed consolidated
balance sheet for cash and cash equivalents, advances
receivable, commissions receivable, accounts payable and
accrued expenses approximate fair value because of the
immediate or short-term maturity of these financial
instruments.
Earnings (Loss) Per Share of Common Stock
Historical net income (loss) per common share is computed
using the weighted average number of common shares
outstanding. Diluted earnings per share (EPS) includes
additional dilution from common stock equivalents, such as
stock issuable pursuant to the exercise of stock options and
warrants.
The following is a reconciliation of the computation for basic
and diluted EPS:
2004 2003
---- ----
Net income (loss) $(14,267) $35,233
--------- -------
Weighted- average common shares
Outstanding (Basic) 4,919,422 4,419,422
Weighted-average common stock Equivalents:
Stock options - -
Warrants - -
--------- ----------
Weighted-average common shares
Outstanding (Diluted) 4,919,422 4,419,422
========= =========
The Company did not have any outstanding stock options or
warrants at December 31, 2004 and 2003, respectively.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Goodwill
In June 2001, the FASB issued Statement No. 142 "Goodwill and
Other Intangible Assets". This Statement addresses financial
accounting and reporting for acquired goodwill and other
intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are
acquired individually or with a group of other assets (but not
those acquired in a business combination) should be accounted
for in financial statements upon their acquisition. This
Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially
recognized in the financial statements. This statement has
been considered when determining impairment of goodwill in
certain transactions. During fiscal 2003, the Company
recognized $31,840 of goodwill acquired in the Yosemite
transaction. There was no recognition of impairment of
goodwill during the three months ended December 31, 2004 and
2003.
Recent Accounting Pronouncement
On October 3, 2001, the FASB issued Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets" ("SFAS 144"), that is
applicable to financial statements issued for fiscal years
beginning after December 15, 2001. The FASB's new rules on
asset impairment supersede SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," and portions of Accounting Principles Board
Opinion 30, "Reporting the Results of Operations." This
Standard provides a single accounting model for long-lived
assets to be disposed of and significantly changes the
criteria that would have to be met to classify an asset as
held-for-sale. Classification as held-for- sale is an
important distinction since such assets are not depreciated
and are stated at the lower of fair value and carrying amount.
This Standard also requires expected future operating losses
from discontinued operations to be displayed in the period (s)
in which the losses are incurred, rather than as of the
measurement date as presently required.
Reclassifications
Certain amounts for the three months ended December 31, 2003
have been reclassified to conform with the presentation of the
December 31, 2004 amounts. The reclassifications have no
effect on net income for the three months ended December 31,
2003.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December
31, 2004:
2004 2003
---- ----
Wind Farm $5,700,000 $5,700,000
Furniture and fixtures 16,000 16,000
Leasehold improvements 8,885 8,885
Computer and office equipment 119,425 116,293
----------- ------------
5,844,310 5,841,178
Less: accumulated depreciation (63,741) (41,533)
--------- -----------
Net book value $5,780,569 $5,799,445
========== ===========
Depreciation expense for the three months ended December 31,
2004 and 2003 was $9,200 and $7,252, respectively. There is no
depreciation recognized on the Wind Farm as it is non
operational until placed in service. In the Company's
acquisition of Yosemite in their fourth quarter of 2003, they
acquired $55,261 office and computer equipment.
The Company upon acquisition of the Wind Farm, has classified
this asset under property and equipment. The Wind Farm
consists of hundreds of nonoperational turbines located in
California. The Company has received independent valuations on
the Wind Farm that have valued it in excess of $14,000,000.
The Company would need to spend in excess of $5,000,000 to
bring these assets into operational use, at which time the
Company would depreciate them over their estimated useful life
of 40 years. Consequently, there is no depreciation recognized
on the Wind Farm for the three months ended December 31, 2004
and 2003. The Company did receive miscellaneous parts that
have not been valued for the condensed consolidated balance
sheets, that it sells from time to time, and the Company
records the income in their condensed consolidated statements
of operations when these sales occur.
NOTE 4- INTANGIBLE ASSET
The Company in November 2003 issued 1000 shares of its common
stock valued at $500,000 for exclusive right to distribute
power generators in northern California and Hawaii and other
agreed territories. Additionally, the Company received the
non-exclusive right to acquire the generators at prevailing
wholesale prices for distribution and the non-exclusive
license to use the name, trademark and trade names of the
manufacturer or distributor of the power generators. The
license agreements are being amortized over the five year
life. Amortization charged to expense for the three months
ended December 31, 2004 was $25,000.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 5- LAND AND COAL RESERVES
The Company acquired coal tract #4 of the Fiatt coal mine in
Fulton County, Illinois. The tract consists of approximately
100 acres of land and surface area with a tonnage of 4,356,000
tons of coal fines having a thickness of a 50 foot average
using 200 pounds/sht tn and which are certified and appraised
at $69,696,020. The Company issued 13,635,999 shares of its
Class B convertible preferred stock valued at $14,045,079.
NOTE 6- STOCKHOLDERS' EQUITY
Common and Preferred Stock
On January 1, 2003, the Company issued a board resolution for
the authorization of a new class of preferred stock, Class B
Preferred Stock, no par value. The Company authorized the
issuance of 125,000 shares of Class B Preferred Stock.
On July 1, 2003, First Washington issued a board resolution
for the authorization of a new class of preferred stock, Class
A Preferred Stock, no par value. First Washington authorized
the issuance of 500,000 shares of Class A Preferred Stock.
During fiscal 2003, the Company had issued shares of Class B
Preferred Stock, only to cancel them later in that fiscal
year. As of September 30, 2003, there were no shares of Class
B Preferred Stock issued and outstanding.
In July 2003 (effective August 1, 2003), First Washington
issued 500,000 shares of the Class A Preferred Stock, to
acquire Yosemite Brokerage, Inc. ("Yosemite"). The acquisition
was recorded for accounting purposes as a purchase
acquisition. The transaction was valued at $200,000 ($.40 per
share), which included goodwill of $31,840.
The Company in November 2003 issued 1,000,000 shares of its
common stock for an intangible asset (see Note 4). The value
for the asset was $500,000.
The Company issued 13,635,999 shares of its Class B
convertible preferred stock valued at $14,045,079.
NOTE 7- RELATED PARTY TRANSACTIONS
On January 1, 2003, the Company entered into a lease agreement
for the rental of office space for its home office. An officer
of the Company is a partner in the partnership that rents this
space to the Company. The lease is a five-year lease with a
five-year option, with rent of $2,750 per month. Rent expense
for the year ended September 30, 2003 of $24,750 was forgiven
by the company at September 30, 2003. Rent expense for the
three months ended December 31, 2003 and 2002 was $8,250 and
$-0-, respectively.
Yosemite Brokerage, rents space from its officer. The lease
commenced February 1, 2000 and runs through January 31, 2005.
The monthly rents commenced at $5,600 per month and calls for
increase annually up to 3%. Rent expense for the three months
ended December 31, 2003 was $16,800. No rent expense was
incurred for the three months ended December 31, 2002.
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2004 AND 2003
NOTE 8- PROVISION FOR INCOME TAXES
Deferred income taxes will be determined using the liability
method for the temporary differences between the financial
reporting basis and income tax basis of the Company's assets
and liabilities. Deferred income taxes will be measured based
on the tax rates expected to be in effect when the temporary
differences are included in the Company's consolidated tax
return. Deferred tax assets and liabilities are recognized
based on anticipated future tax consequences attributable to
differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases.
At December 31, 2004, deferred tax assets consist of the
following:
2004
Net operating loss carryforwards $343,000
Less: valuation allowance (343,000)
----------
$ -0-
At December 31, 2004, the Company had federal net operating
loss carryforwards in the approximate amounts of $1,600,000,
available to offset future taxable income. The Company
established valuation allowances equal to the full amount of
the deferred tax assets due to the uncertainty of the
utilization of the operating losses in future periods.
NOTE 9- RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company has amended its previously issued condensed
consolidated financial statements for the three months ended
December 31, 2004. The Company has amended these condensed
consolidated financial statements to reclassify $711,628
previously recorded as reversal of payables, to reclassify a
portion of its goodwill acquired in the First Washington
Corporation transaction as restricted cash in the amount of
$172,428 and has reclassified $347,326 previously classified
as notes receivable to general and administrative expenses.
These transactions resulted in a decrease in the accumulated
deficit to ($4,843,875) at September 30, 2003. In addition for
the three months ended December 31, 2004, the Company has
reclassified $4,500 previously classified as notes receivable
to accrued expenses. This transaction resulted in no change to
its previously stated net income and accumulated deficit for
the three-month period.
NOTE 10- SUBSEQUENT EVENT
After the first quarter of 2004, the Company closed the
Yosemite Brokerage, Inc. office.