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 June 30, 2005
[ ] 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 (IRS Employer Identification No.)
of 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)
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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 June 30, 2005
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
Nine Months Ended
June 30
2005 2004
Revenue $ 339,267 $ 2,140,293
Cost of operations - 1,209,224
------------ -----------
Gross profit 339,267 931,069
Operating Expenses 411,242 754,545
------------ -----------
Income (loss) from
continuing operations (71,975) 176,544
Income from discontinued
operations 32,318 -
------------ -----------
Net income (loss) $ (39,657) $ 176,544
============ ===========
Gross profit margin 100% 44%
Basic income (loss) per share of
from continuing operations $ (0.01) $ 0.04
============ ===========
Diluted income (loss) per share
from continuing operations $ (0.01) $ 0.04
============ ===========
Basic income (loss) per share from
discontinued operations $ 0.01 $ -
============ ===========
Diluted income (loss) per share
from discontinued operations $ 0.01 $ -
============ ===========
Weighted average number of
common shares outstanding 4,919,422 4,752,755
For the nine months ended June 30, 2005, the Company generated $339,267 of
revenue, $339,267 of gross profit, $(71,975) of net loss from continuing
operations, $32,318 in income from discontinued operations, a net loss of
$(39,657) and $(0.01) in basic loss per common share from continuing operations
based upon a weighted average of basic common shares of 4,919,422 outstanding.
All of the Company's revenue for this period was from its mortgage business.
For the nine months ended June 30, 2004, the Company generated $2,140,293 of
revenue, $931,069 of gross profit, $176,544 of net income, and $0.04 in basic
income per common share from continuing operations based upon a weighted average
of basic common shares of 4,752,775 outstanding. All of the Company's revenue
for this period was from its mortgage business.
Revenue for the nine months ended June 30, 2005, decreased $1,801,026 from the
same period last year. Cost of operations for the nine months ended June 30,
2005, decreased $1,209,224 from the same period last year. This decrease is a
result of reporting revenue net of commissions. Operating expenses for the nine
months ended June 30, 2005, decreased $434,242 from the same period last year.
Income (loss) from continuing operations for the nine months ended June 30,
2005, decreased $248,519 from the same period last year. In the nine months
ended June 20,2005 the Company had a one time gain from continuing operations of
$32,318 resulting form the closing of its mortgage business in the Central
Valley of California.
The Company attributes the decrease in revenue and operating expenses for the
nine months ended June 30, 2005, to the closing of its mortgage business in the
Central Valley in California and intends to reopen.
Three Months Ended
June 30
2005 2004
Revenue $ 137,528 $ 928,077
Cost of operations - 538,632
------------ ------------
Gross profit 137,528 389,445
Operating Expenses 168,445 385,465
------------- ------------
Income (loss) from
continuing operations (30, 917) 3,980
Income from discontinued
operations - -
------------ -------------
Net income (loss) $ (30, 917) $ 3,980
============ =============
Gross profit margin 100% 44%
Basic income (loss) per share of
from continuing operations $ (0.01) $ 0.00
============ =============
Diluted income (loss) per share
from continuing operations $ (0.01) $ 0.00
============ =============
Basic income (loss) per share from
discontinued operations $ - $ -
============ =============
Diluted income (loss) per share
from discontinued operations $ - $ -
============ =============
Weighted average number of
common shares outstanding 4,919,422 4,752,755
For the three months ended June 30, 2005, the Company generated $137,528 of
revenue, $137,528 of gross profit, $(30,917) of net loss from continuing
operations and $(0.01) in basic loss per common share from continuing operations
based upon a weighted average of basic common shares of 4,919,422 outstanding.
All of the Company's revenue for this period was from its mortgage business.
For the three months ended June 30, 2004, the Company generated $928,077 of
revenue, $398,445 of gross profit, $3,980 of net income, and $0.00 in basic loss
per common share from continuing operations based upon a weighted average of
basic common shares of 4,919,422 outstanding. All of the Company's revenue for
this period was from its mortgage business.
Revenue for the three months ended June 30, 2005, decreased $790,549 from the
same period last year. Cost of operations for the three months ended June 30,
2005, decreased $538,632 from the same period last year. This decrease is a
result of reporting revenue net of commissions. Operating expenses for the three
months ended June 30, 2005, decreased $217,025 from the same period last year.
Income (loss) from continuing operations for the three months ended June 30,
2005, decreased $34,897 from the same period last year.
The Company attributes the decrease in revenue and operating expenses for the
three months ended June 30, 2005, to the closing of its mortgage business in the
Central Valley in California and intends to reopen.
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.
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information.
Pending branch offices and acquisitions are under legal and accounting review .
Item 6. Exhibits and Reports on Form 8-K.
INDEX TO EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
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1 Kore Holdings Inc AND SUBSIDIARIES FINANCIAL STATEMENTS
On January 19, 2005, the Company filed a Form 8-K/A with the Securities and
Exchange Commission. In a Form 8-K dated May 30, 2002, filed with the Securities
and Exchange Commission on May 30, 2002, the Company reported the acquisition of
First Washington Financial Corporation, a Nevada corporation. The purpose of the
Form 8-K/A filed January 19, 2005 was to file financial statements relating to
the event reported May 30, 2002.
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 August 26, 2005 /s/Denis C. Tseklenis
Denis C. Tseklenis
Chief Executive Officer
Chairman of the Board
EXHIBIT ONE
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JUNE 30, 2005 AND 2004
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
BALANCE SHEET AS OF JUNE 30, 2005 (UNAUDITED)
STATEMENTS OF OPERATIONS FOR THE NINE AND THREE MONTHS ENDED JUNE 30, 2005 AND
2004 (UNAUDITED)
STATEMENTS OF CASH FLOWS FOR NINE MONTHS ENDED
JUNE 30, 2005 AND 2004 (UNAUDITED)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BALANCE SHEET (UNAUDITED)
KORE HOLDINGS, INC.
ASSETS
(UNAUDITED)
JUNE 30,
2005
------------
CURRENT ASSETS
Cash and cash equivalents $ 39,959
Prepaid expenses and other assets 1,875
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Total current assets 41,834
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PROPERTY AND EQUIPMENT - Net 5,737,457
OTHER ASSETS
Land and coal reserves 14,045,079
Restricted cash 234,240
Goodwill 2,827,572
Licenses, net of amortization 333,334
-------------
Total other assets 17,440,225
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TOTAL ASSETS $ 23,219,516
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
(UNAUDITED)
JUNE 30,
2005
-------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 27,967
Due to officer 24,400
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Total current liabilities 52,367
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Class A Preferred Stock, $.001 par value,
10,000,000 shares authorized at
March 31, 2005 and 1,000,000 issued and
outstanding at March 31, 2005 1,000
Class B Preferred Stock , no par value,
90,000,000 shares authorized at March
31, 2005, and 13,635,999
shares issued and outstanding at March 31, 2005 -
First Washington Class A Preferred Stock,
no par value, 500,000 shares authorized at
March 31, 2005 and 500,000 shares issued
and outstanding at March 31, 2005 -
Common stock, $.001 par value 400,000,000
shares authorized at March 31, 2005
and 4,919,422 shares
issued and outstanding at March 31, 2005 4,919
Additional paid-in capital 28,142,066
Accumulated deficit (4,980,836)
-------------
Total stockholders' equity 23,167,149
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 23,219,516
=============
See accompanying notes to condensed consolidated financial statements.
STATEMENTS OF OPERATIONS (UNAUDITED)
KORE HOLDINGS, INC.
NINE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
2005 2004 2005 2004
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OPERATING REVENUE $ 339,267 $ 2,140,293 $ 137,528 $ 928,077
COST OF OPERATIONS - 1,209,224 - 538,632
---------- ------------- ---------- ----------
GROSS PROFIT 339,267 931,069 137,528 389,445
OPERATING EXPENSES
General and
administrative 325,375 732,678 140,774 366,351
Depreciation and
Amortization 85,867 21,847 27,671 19,114
---------- ------------- --------- ----------
Total operating expenses 411,242 754,525 168,445 385,465
---------- ------------- --------- ----------
INCOME (LOSS) BEFORE
INCOME TAXES (71,975) 176,544 (30,917) 3,980
Provision for income taxes - - - -
---------- ------------- --------- ----------
INCOME (LOSS) FROM
CONTINUING OPERATIONS (71,975) 176,544 (30,917) 3,980
Income from discontinued
operations (net of
income taxes) 32,318 - - -
---------- ------------- --------- ----------
NET INCOME (LOSS) $ (39,657) $ 176,544 $ (30,917) $ 3,980
========== ============= ========= ==========
BASIC AND DILUTED INCOME
(LOSS) PER SHARE
Basic from continuing
operations $ (0.01) $ 0.04 $ (0.01) $ 0.00
========== ============= ========= ==========
Diluted from continuing
operations $ (0.01) $ 0.04 $ (0.01) $ 0.00
========== ============= ========= ==========
Basic from discontinued
operations $ 0.01 $ - $ - $ -
========== ============= ========= ==========
Diluted from discontinued
operations $ 0.01 $ - $ - $ -
========== ============= ========= ==========
WEIGHTED AVERAGE NUMBER OF
BASIC COMMON SHARES
OUTSTANDING 4,919,422 4,752,755 4,919,422 4,919,422
========== ============= ========= ==========
WEIGHTED AVERAGE NUMBER OF
DILUTED COMMON SHARES
OUTSTANDING 4,919,422 4,752,755 4,919,422 4,919,422
========== ============= ========= ==========
See accompanying notes to condensed consolidated financial statements.
STATEMENT OF CASH FLOW (UNAUDITED)
KORE HOLDINGS, INC.
2005 2004
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CASH FLOW FROM OPERATING ACTIVITIES
Continuing Operations:
Net income (loss) $ (71,975) $ 176,544
-------------- -------------
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 85,867 21,847
Changes in assets and liabilities
(Increase) decrease in commissions
and accounts receivable 47,874 (260,662)
(Increase) in prepaid assets (1,875) -
Increase (Decrease) in accounts
payable and accrued liabilities (31,871) 133,491
-------------- -------------
Total adjustments 99,995 (105,324)
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Net cash provided by operating
activities - continuing
operations 28,020 71,220
-------------- -------------
Discontinued Operations:
Income from discontinued operations 32,318 -
Impairment of goodwill 31,840 -
------------- -------------
Net cash provided by operating
activities - discontinued operations 64,158 -
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (net) (6,544) -
------------- -------------
Net cash used in investing activities (6,544) -
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions of equity 3,740 58,600
Dividends distribution, net (346,658) -
Due to officer 24,400 -
------------- -------------
Net cash provided by (used in)
financing activities (318,518) 58,600
------------- -------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (232,884) 129,820
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 272,843 249,993
------------- -------------
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 39,959 $ 379,813
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest paid $ 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
condensed financial statements.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2005 AND 2004
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
nine months ended June 30, 2005 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.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
The operations of First Washington were included in the
consolidated statements of income for the year ended September
30, 2002 from the date of inception May 17, 2002 to September
30, 2002. There was no predecessor entity of First Washington.
The fair value of the transaction was recorded based on the
number of shares issued to First Washington (2,000,000) at the
fair value of the stock of Volt on the date of acquisition net
of a discount since the stock issued in the acquisition was
restricted stock ($1.50). The cost of the net assets purchased
and liabilities assumed approximated zero, however, the value
of $3,000,000 was based on the mortgage company's future
earnings. The Company acquired Opportunity Knocks, LLC. during
the third fiscal quarter of 2002 to rehab HUD homes and other
properties in Washington, D.C., Maryland and Virginia under
the HUD Gift Program. This acquisition was done simultaneously
with the acquisition of First Washington, and Opportunity
Knocks is a wholly owned subsidiary of the Company.
In fiscal 2003, the Company expanded its financial services
business, and brought in two businesses, that operationally
failed to meet the Company's business model. Subsequent to
these agreements being in force, the Company spun them out.
Additionally, the Washington Metropolitan Area market had not
met Company expectations, so the Company's subsidiary First
Washington acquired Yosemite Brokerage, Inc. in Oakhurst,
California, a few miles from the Company's headquarters. The
Company 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. Yosemite was disposed of
in the second quarter ended March 31, 2005
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.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The condensed consolidated balance sheet for June 30, 2005 and
condensed consolidated statements of income and cash flows for
the nine months ended June 30, 2005 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.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
Property and equipment are stated at cost. Depreciation is
computed primarily using the straight-line method over the
estimated useful life of the assets.
Furniture and fixtures 5-7 years
Office and computer equipment 3-5 years
Wind Farm 40 years
Revenue Recognition
For the Company's power division, sold merchandise and revenue
was recorded under the accrual method of accounting.
For the Company's financial services division, they record
commission income upon the closing of their respective
transactions.
Advertising
Advertising costs are typically expensed as incurred.
Advertising expense was approximately $194 and $444 for the
nine months ending June 30, 2005 and 2004, respectively.
Income Taxes
The income tax benefit is computed on the pretax loss based on
the current tax law. Deferred income taxes are recognized for
the tax consequences in future years of differences between
the tax basis of assets and liabilities and their financial
reporting amounts at each year-end based on enacted tax laws
and statutory tax rates.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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:
2005 2004
---------- --------
Net income (loss) $ (39,657) $ 176,544
Weighted-average common shares
Outstanding (Basic) 4,919,422 4,919,422
Weighted-averge common stock
Equivalents
Stock options - -
Warrants - -
------------ ---------
Weighted-average common shares
Outatanding (Diluted) 4,919,422 4,919,422
============ =========
The Company has no potentially dilutive securities, such as
options or warrants currently issued and outstanding.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
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 2004, the Company
recognized $31,840 of goodwill acquired in the Yosemite
transaction. There was an impairment of goodwill during the
nine months ended June 30, 2005 of $31,840 upon the
disposition.
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.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
On December 16, 2004, the Financial Accounting Standards Board
("FASB") published Statement of Financial Accounting Standards
No. 123 (Revised 2004), Share-Based Payment ("SFAS 123R").
SFAS 123R requires that compensation cost related to
share-based payment transactions be recognized in the
financial statements. Share-based payment transactions within
the scope of SFAS 123R include stock options, restricted stock
plans, performance-based awards, stock appreciation rights,
and employee share purchase plans. The provisions of SFAS 123R
are effective for small business issuers as of the first
interim period that begins after December 15, 2005.
Accordingly, the Company will implement the revised standard
in the fourth quarter of fiscal year 2005. Currently, the
Company accounts for its share-based payment transactions
under the provisions of APB 25, which does not necessarily
require the recognition of compensation cost in the financial
statements. Management is assessing the implications of this
revised standard, which may materially impact the Company's
results of operations in the fourth quarter of fiscal year
2005 and thereafter.
Reclassifications
Certain amounts for the nine months ended June 30, 2004 have
been reclassified to conform with the presentation of the June
30, 2005 amounts. The reclassifications have no effect on net
income for the nine months ended June 30, 2004.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at June 30,
2005:
Wind Farm $5,700,000
Furniture and fixtures 8,001
Computer and office equipment 84,459
----------
Less: accumulated depreciation (55,003)
----------
Net book value $5,737,457
==========
Depreciation expense for the nine months ended June 30, 2005
and 2004 was $10,867 and $21,847, respectively. There is no
depreciation recognized on the Wind Farm as it is non
operational until placed in service.
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 nine months ended June 30, 2005 and
2004.
NOTE 4- INTANGIBLE ASSET
The Company in November 2003 issued 1,000 shares of its common
stock valued at $500,000 for exclusive rights to distribute
generators in northern California, Hawaii and other agreed
territories. Additionally, the Company received the
non-exclusive rights 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 nine months
ended June 30, 2005 was $75,000.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
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
December 1, 2004 the Company authorized an additional
89,875,000 shares of its 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.
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. As of January 1,
2005, the companies mutually agreed to rescind the agreement.
All assets and liabilities were distributed to the owner and
the shares were cancelled.
In November 2003, the Company issued 1,000,000 shares of
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.
KORE HOLDINGS INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
JUNE 30, 2005 AND 2004
NOTE 7- RELATED PARTY TRANSACTIONS
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 nine months
ended June 30, 2005 and 2004 was $16,800 and $50,400,
respectively. This agreement terminated January 1, 2005.
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 June 30, 2005 deferred tax assets consist of the following:
2005
Net tax deferred assets $ 316,000
Less: valuation allowance (316,000)
----------
$ -0-
At June 30, 2005 the Company had federal net operating loss
carryforwards in the approximate amounts of $790,000 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.