UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED SEPTEMBER 30, 2002
0-28555
(Commission file number)
KORE HOLDINGS, INC.
(Name of small business issuer in its charter)
Nevada 86-0960464
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
41667 Yosemite Pines Drive, Oakhurst, CA 93644 93644
(Address of principal executive offices) (Zip Code)
Issuer's telephone number is: (559) 692-2474
VOLT INC.
(Former name or former address, if changed since last report)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
$.001 Par Value Common Stock
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this from, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10KSB
or any amendment to this Form 10KSB. [X]
Indicate by check mark whether the issuer is an accelerated filer (as defined in
Exchange Act Rule 12b-2). Yes [ ] No [X]
The issuer's revenues for the most recent fiscal year were $753,700.
The aggregate value of the voting stock held by non-affiliates as of January 10,
2003, was $5,842,651.
The number of shares outstanding of the issuer's common equity as of January 10,
2003 was 3,919,422, $.001 Par Value.
Portions of the following documents are incorporated by reference into Part II,
Item 5 and Part III, Items 10 respectively of this Form 10KSB: Applicable
portions of the Company's Form 10KSB for the year ended September 30, 2000 filed
with the Securities and Exchange Commission on January 12, 2001 and applicable
portions of the Company's Form 10KSB for the year ended September 30, 2001 filed
with the Securities and Exchange Commission on January 16, 2002. Portions of the
following documents are incorporated by reference into Part III, Item 13:
Applicable portions of the Company's Form 10SB/A (Amendment No. 4) filed with
the Securities and Exchange Commission on September 15, 2000, applicable
portions of the Company's Form 8K/A (Amendment No. 1) filed with the Securities
and Exchange Commission on September 26, 2001 and applicable portions of the
Company's Form 10KSB for the year ended September 30, 2002 filed with the
Securities and Exchange Commission on January 15, 2003.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I
ITEM 1. DESCRIPTION OF BUSINESS
History
The Company was incorporated in the state of Colorado on March 31, 1997, under
the name Biovid Corporation for the purpose of entering into the printing and
publishing business. The Company did not commence active business operations in
the publishing industry until August 1998, when began acquiring existing
printing and publishing businesses as subsidiaries. From August, 1998, until
December 31, 1999, the Company derived its revenue primarily from providing
printing and publishing services to artists and publishers. The Company
discontinued its printing and publishing operations effective December 31, 1999,
to concentrate its efforts on Internet-based publishing initiatives. In December
1999, the company effected a merger whereby it became a Nevada corporation and
changed its name to Deerbrook Publishing Group, Inc. and continued as a holding
company looking for other business to acquire.
On April 1, 2001, the Company disposed of its printing and publishing
subsidiaries and ceased active business operations. On April 6, 2001, control of
the Company changed and the Company determined to explore new business
opportunities including but not limited to the acquisition of alternative energy
sources in the State of California and other states for resale to the public.
Also on April 6, 2001, the Company changed its name to Volt Inc.
On May 15, 2001, the Company acquired all of the stock of Arcadian Renewable
Power, Inc., a Delaware corporation ("Arcadian") and thereby acquired control of
all of the assets of Arcadian. Arcadian is in the business of alternative energy
production.
In May, 2001, the Company established Sun Volt, Inc., a Nevada corporation ("Sun
Volt") to engage in the business of construction and sale of energy products and
energy projects.
In May, 2001, the Company established Sun Electronics, Inc., a Nevada
corporation ("Sun Electronics") to engage in the research and development of
alternative energy products.
On May 17, 2002, the Company acquired all of the stock of First Washington
Financial Corporation, a Nevada corporation ("First Washington"). First
Washington is a mortgage loan originator in the home mortgage loan industry
concentrated primarily in Washington, D.C., Maryland and Virginia. The
acquisition of First Washington is deemed an acquisition of a significant
subsidiary because it met a condition under Section 210.3-05 of Regulation SX.
On May 17, 2002, the Company acquired Opportunity Knocks, LLC, a Maryland
limited liability company ("Opportunity Knocks"). Opportunity Knocks is in the
business of acquiring, refurbishing and selling real estate. Opportunity Knocks
specializes in HUD properties. The acquisition of Opportunity Knocks is not
deemed an acquisition of a significant subsidiary because it did not meet a
condition under Section 210.3-05 of Regulation SX.
Subsequent to September 30, 2002, the Company acquired other businesses. In
October 2002, and April 3, 2003, the Company acquired Mortgage-Matic Brokers,
LLC and Heritage Mortgage Bankers, LLC respectively. Both Mortgage-Matic and
Heritage are mortgage loan originators in the home mortgage loan industry in
Washington, D.C., Maryland and Virginia. In July, 2003, the Company disposed of
both Mortgage-Matic and Heritage. The acquisitions of these companies is not
deemed an acquisition of a significant subsidiary because the acquisitions did
not meet a condition under Section 210.3-05 of Regulation SX.
Subsequent to September 30, 2002, in August, 2003, First Washington acquired a
branch office in the Central Valley of California doing business as Yosemite
Mortgage. This branch office was subsequently closed effective December 31,
2004.
Subsequent to September 30, 2002, and on October 16, 2004, the Company amended
its Articles of Incorporation to change its name to Kore Holdings, Inc. and to
increase its authorized common stock to 400,000,000 common shares, $.001 par
value and to increase its authorized preferred stock to 100,000,000 preferred
shares, $.001 par value.
The Company
The Company is a holding company formed in the State of Nevada whose
subsidiaries include Arcadian, Sun Volt, Sun Electronics, First Washington, and
Opportunity Knocks.
The Company is listed on the OTC Bulletin Board and its common stock traded
under the stock symbol "VOLT" until October, 2004 when its symbol changed to
"KORH".
The Alternative Energy Business
Arcadian's major asset is the Altamont Wind Generation Facility, which is an
existing electricity generation facility located on approximately 4000 acres in
the Altamonte Pass, east of San Francisco, CA (the "Wind Farm"). The Wind Farm
has approximately 1300 wind turbines at present which were installed in the
1980's, approximately 600 of which are still operable. The Wind Farm will have
to be re-powered in order to make its operation economically feasible. The
Company plans to re-power the Wind Farm with new 950 KW state-of-the-art
turbines. The Wind Farm is zoned and permitted for up to 114 megawatts, and the
infrastructure includes the wind turbines, 300 miles of transmission lines, a
150 MW substation and an interconnection to the PG&E grid. The ground leases
extend to 2036 with options to renew. The cost to produce electricity is
approximately 4.5 cents per KWH, and is eligible for up to 3.5 cents of tax
credits. Sale price of the electricity should be in the range of 6.9 cents per
KWH with annual revenue in the $5 Million range without calculating green
tickets or tax credits and other incentives.
The Company is in the planning stages to re-power and activate its Wind Farm.
However, due to the uncertainty surrounding the Chapter 11 Reorganization
Proceeding of Pacific Gas and Electric Company which was pending in the United
States Bankruptcy Court in the Northern District of California until 2004, the
Company is unsure of when it will be able to activate the Wind farm. Because of
the bankruptcy, new power production contracts have to be negotiated.
Sun Electronics is conducting Photovoltaics research and development of a
patented paint on cellprocess licensed to the company and other solar and energy
related technologies.
Sun Volt is currently engaged in the sale and construction of alternative energy
products and power from generators and other sources of co-generation.
The Mortgage Business
First Washington earns fees on the origination of real estate mortgage loans in
the Washington D. C. area and, until December 31, 2004, in California's Central
Valley. First Washington specializes in residential mortgage loans. First
Washington has seven full time employees. First Washington obtains customers
through direct contact by telephone, the internet and referrals from existing
customers.
The Real Estate Business
Opportunity Knocks is in the business of acquiring, refurbishing and selling
real estate. Initially, Opportunity Knocks will utilize the expertise and some
of the employees of First Washington to operate its business. Opportunity Knocks
specializes in acquiring, refurbishing and selling of HUD properties.
Opportunity Knocks will utilize the HUD gifting program to attract first time
home buyers who might not otherwise be able to qualify for a home mortgage.
Opportunity Knocks shares office space with First Washington.
ITEM 2. DESCRIPTION OF PROPERTY
Corporate Offices
The Company leases its corporate and executive offices at 41667 Yosemite Pines
Drive, Oakhurst, CA 93644. The Company considers its offices to be adequate.
First Washington leases its corporate offices at 8905 Fairview Road, Silver
Springs, MD 20910. The Company considers First Washington's offices to be
adequate.
Energy Properties
The Company's Wind Farms are all located on leased property in the Altamonte
Pass east of San Francisco, California.
ITEM 3. LEGAL PROCEEDINGS
In September of 1999, the Deerbrook Publishing Group, Inc. ("Deerbrook") leased
a computer driven aspect image center (printer for film) used to make separation
for printing (the "aspect image center") and certain other computer equipment
from Copelco Capital, Inc. ("Copelco"). All of the equipment was delivered to
the Deerbrook's then printing operation in Phoenix, Arizona, and installed.
Shortly thereafter, Deerbrook ceased printing for itself and its customers. The
equipment was returned to Copelco. In August of 2000, Copelco brought suit in
the United States District Court for the District of Arizona, cause no. CIV
`00-1620 PHX ROS, to recover its alleged damages $155,398.02 for Deerbrook's
return of the leased equipment plus continuing interest at the rate of one and
one-third percent per month and attorneys fees and costs. The Company does not
believe that Copelco has mitigated its damages and further believes that Copelco
has either sold the equipment or otherwise disposed of the same in a manner
which was not commercially reasonable. The Copelco claims will be vigorously
defended against. Any possible loss from this litigation will be less than one
percent (1%) of the Company's net assets and will be immaterial.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fiscal year
ended September 30, 2002.
Subsequent to September 30, 2002, on October 16, 2004, the Company amended its
Articles of Incorporation to change its name to Kore Holdings, Inc. and to
increase its authorized common stock to 400,000,000 common shares, $.001 par
value and to increase its authorized preferred stock to 100,000,000 preferred
shares, $.001 par value.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The company's Common Stock traded on the OTC Bulletin Board under the stock
symbol "VOLT" until October, 2004, when its symbol changed to KORH. The
following table sets forth the quarterly high and low closing bid prices for the
Company's common stock for the periods indicated:
For the year ended September 30, 2001:
High Low
DEERBROOK:
Quarter ended December 31, 2000 $ 0.07 $ 0.005
Quarter ended March 31, 2001 0.08 0.01
VOLT now KORH :
Quarter ended June 30, 2001 10.25 0.015
Quarter ended September 30, 2001 9.00 2.50
For the year ended September 30, 2002:
VOLT, now KORH:
High Low
Quarter ended December 31, 2001 $ 4.30 2.25
Quarter ended March 31, 2002 4.20 1.50
Quarter ended June 30, 2002 2.00 1.55
Quarter ended September 30, 2002 2.05 1.43
The quotations reflect inter-dealer prices, without mark-up, mark-down or
commission and may not represent actual transactions.
Capital Stock and Holders of Capital Stock
As of September 30, 2002, the Company had two classes of capital stock
outstanding; Common Stock, $.001 par value, and Series A Voting Convertible
Preferred Stock. As of September 30, 2002, there were approximately 553 holders
of record of the Company's Common Stock and one holder of record of the
Company's Series A Voting Convertible Preferred Stock. The Company's Series A
Voting Convertible Preferred Stock is convertible into the Company's common
stock at the ratio of five shares of the Company's Common Stock for each share
of the Company's Series A Voting Convertible Preferred Stock.
Dividends
The Company has not declared or paid any cash dividends on its common stock and
does not intend to declare or pay any cash dividends in the foreseeable future.
The payment of dividends, if any is within the discretion of the Board of
Directors and will depend on the Company's earnings, if any, its capital
requirements and financial condition and other such factors as the Board of
Directors may consider.
Securities Authorized for Issuance Under Equity Compensation Plans.
None.
Recent Sales of Unregistered Securities
Sales of securities by the Company and its subsidiaries within the past three
years without registration under the Securities Act were as follows:
With respect to such sales within the fiscal years ended September 30, 2002, and
2001, see Note 6 to the Company's Consolidated Financial Statements contained
herein. Each share of the Company's Series A Voting Convertible Preferred Stock
referred to in Note 6 is convertible into five shares of the Company's common
stock at the option of the holder(s) thereof.
With respect to such sales within the fiscal year ended September 30, 2000,
refer to the applicable portions of the Company's Form 10KSB filed with the
Securities and Exchange Commission January 12, 2001, which by this reference are
incorporated herein by reference for this specific purpose.
The Company claims exemption from registration for these securities under
Section 4(2) of the Securities Act in as much as all of the purchasers were
"accredited investors" as that term is defined in Regulation D as promulgated by
the Securities and Exchange Commission and all of the purchasers either alone or
with their purchaser representative(s) had such knowledge and experience in
financial and business matters that they were capable of evaluating the merits
and risks of the purchase of the Company's securities.
ITEM 6. 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.
Restatement
As discussed in Note 10 to the consolidated financial statements contained
elsewhere in this report, the Company has restated its audited consolidated
financial statements for the years ended September 30, 2002 and 2001. For the
year ended September 30, 2001, the Company reclassified $711,628 previously
recorded as a reversal of payables (expenses) in the consolidated statements of
operations to additional paid in capital. Additionally,
for the year ended September 30, 2001, the Company reclassified $71,000
previously recorded as notes receivable to an expense. These transactions had
the net effect of reducing the net income for the year ended September 30, 2001
from $521,898 to a net loss of $260,730 and increasing the accumulated deficit
from $3,943,047 to $4,725,675.
The Company has restated its consolidated financial statements for September 30,
2002 to reclassify a portion of its goodwill acquired in the First Washington
Financial Corporation transaction as cash in the amount of $172,428 and has
reclassified $133,000 previously classified as notes receivable to an expense.
These transactions resulted in a decrease in net income of $305,428 to a net
loss of $44,408 and increased accumulated deficit to $4,770,083 for the year
ended September 30, 2002.
The Company has restated its consolidated financial statements for September 30,
2002 to reclassify $172,428 of cash and cash equivalents, a current asset, as
restricted cash, which is not a current asset. This reclassification had no
effect on total assets or total liabilities and stockholders' equity.
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
Audited Financial Statements for the Years Ended September 30, 2002 and
September 30, 2001
Summary Selected Statements Operating and Other Financial Data
(Restated) (Restated)
2002 2001
------------- --------------
Revenue $ 753,700 $ -
Cost of Revenue $ 302,878 $ -
Gross Profit $ 450,822 $ -
Operating Expenses $ 495,230 $ 260,730
Loss From Continuing Operations
Before Income Taxes $ (44,408) $ (260,730)
Provision For Income Taxes $ - -
Net Loss Available to Stockholders $ (44,408) $ (260,730)
Net Loss Per Common Share $ (0.02) $ (0.29)
Weighted Average Shares Outstanding $ 2,644,442 $ 897,704
Current Assets $ 93 $ 88,592
Property And Equipment $ 5,756,939 $ 5,724,399
Other Assets $ 3,005,000 $ -
Total Assets $ 8,762,032 $ 5,812,991
Total Liabilities $ 36,949 $ 43,500
Total Stockholders' Equity $ 8,725,083 $ 5,769,491
Total Liabilities and Stockholders' Equity $ 8,762,032 $ 5,812,991
=========== ==========
Results of Operations
Revenue and Expenses
For the year ended September 30, 2002, the Company had revenue of $753,700, a
net loss of $(44,408) and a net loss per common share of $(0.02) based on a
weighted average of 2,644,442 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.
For the year ended September 30, 2001, the Company had no revenue, a net loss of
$(260,730) and a net loss per common share of $(0.29) based on a weighted
average of 897,704 common shares outstanding.
Revenue in the year ended September 30, 2002 was $753,700 compared to no revenue
in the year ended September 30, 2001. This is an increase of $753,700 from
period to period. This increase in revenue is attributable to the change in
control and change in management during the year ended September 30, 2001. Prior
to the change in control and change in management, prior management discontinued
the Company's previous business. During the year ended September 30, 2002, the
Company acquired First Washington which immediately began to generate revenue.
Cost of revenue in the year ended September 30, 2002 was $302,878 compared to no
cost of revenue in the year ended September 30, 2001. This is an increase of
$302,878 from period to period. This increase in cost of revenue is attributable
to the change in control and change in management during the year ended
September 30, 2001. Prior to the change in control and change in management,
prior management discontinued the Company's previous business. During the year
ended September 30, 2002, the Company acquired First Washington which
immediately began to generate revenue and cost of revenue.
Gross profit in the year ended September 30, 2002 was $450,822 compared to no
gross profit in the year ended September 30, 2001. This is an increase of
$450,822 from period to period. This increase in gross profit is attributable to
the change in control and change in management during the year ended September
30, 2001. Prior to the change in control and change in management, prior
management discontinued the Company's previous business. During the year ended
September 30, 2002, the Company acquired First Washington which immediately
began to generate revenue and gross profit.
Operating expenses in the year ended September 30, 2002 were $495,230 compared
to operating expenses of $260,730 in the year ended September 30, 2001. This is
an increase of $234,500 from period to period. This increase in operating
expenses is attributable to the change in control and change in management
during the year ended September 30, 2001. Prior to the change in control and
change in management, prior management discontinued the Company's previous
business. Operating expenses in the year ended September 30, 2002 consisted
primarily of expenses associated with the operation of the Company's newly
acquired mortgage business. Operating expenses in the year ended September 30,
2001 consisted primarily of expenses from the Company's discontinued prior
business before change in control and management.
Loss from continuing operations before income taxes in the year ended September
30, 2002, was $(44,408) compared to a loss from continuing operations before
income taxes of $(260,730) in the year ended September 30, 2001. This is a
decrease of $216,322 from period to period. This decrease in loss from
continuing operations is attributable to the change in control and change in
management during the year ended September 30, 2001. Prior to the change in
control and change in management, prior management discontinued the Company's
previous business. During the year ended September 30, 2002, the Company
acquired First Washington which immediately began to generate revenue and income
from continuing operations.
Net loss per common share for the year ended September 30, 2002 was $(0.02)
compared to net loss per common share of $(0.29) for the year ended September
30, 2001. This is a decrease of $.27 from period to period. This decrease in
loss net loss per common share is attributable to the change in control and
change in management during the year ended September 30, 2001. Prior to the
change in control and change in management, prior management discontinued the
Company's previous business. During the year ended September 30, 2002, the
Company acquired First Washington which immediately began to generate revenue
and income from continuing operations.
Assets and Stockholders' Equity
Current Assets in the year ended September 30, 2002 were $93 compared to $85,792
in the year ended September 30, 2001. This is an decrease of $85,699 from period
to period. This decrease is attributable primarily to the reclassification of
$172,428 of cash and cash equivalents, a current asset, to restricted cash,
which is not a current asset. This reclassification had no effect on total
assets or total liabilities and stockholders' equity.
Other assets in the year ended September 30, 2002 were $3,005,000 compared to no
other assets in the year ended September 30, 2001. This is an increase of
$3,005,000 from period to period. This increase in attributable to $2,827,572 of
goodwill associated with the acquisition of First Washington and to the
reclassification of $172,428 of cash and cash equivalents, a current asset, to
restricted cash, which is not a current asset.
Total assets in the year ended September 30, 2002 were $8,762,032 compared to
$5,812,991 in the year ended September 30, 2001. This is an increase of
$2,949,041 from period to period. This increase is attributable primarily to the
increases in current assets and other assets discussed above.
Stockholders' equity in the year ended September 30, 2002 was $8,725,083
compared to $5,769,491 in the year ended September 30, 2001. This is an increase
of $2,955,592 from period to period. This increase is primarily attributable to
the increases in current assets and other assets discussed above.
Working Capital
The following table sets forth a summary of the Company's working capital.
AT SEPTEMBER 30: 2002 2001
------------------------------------------------- -------------- --------------
Current assets $ 93 $ 88,592
Current liabilities 36,949 43,500
-------------- --------------
Working capital $ (36,856) $ 45,092
============== ==============
Current ratio .0025 2.0
Working capital in the year ended September 30, 2002 was $(36,856) compared to
$43,500 in the year ended September 30, 2001. This is a decrease of $81,948 from
period to period. This decrease is primarily attributable to the
reclassification of $172,428 of cash and cash equivalents, a current asset, to
restricted cash, which is not a current asset. This reclassification had no
effect on total assets or total liabilities and stockholders' equity.
Cash Flow.
The Company's cash flow from operating, investing and financing activities, as
reflected in the Consolidated Statement of Cash Flows are summarized in the
table below.
FOR THE YEARS ENDED SEPTEMBER 3O: 2002 2001
--------------------------------------------------- -------------- -------------
Net cash provided by/(used in):
Operating activities $ (32,758) $ (424,612)
Investing activities (42,941) (27,476)
Financing activities (10,000) 537,284
------------ -----------
Net change in cash and cash equivalents $ (85,699) $ 85,196
============== =============
Net cash (used in) operating activities in the year ended September 30, 2002 was
$(32,758) compared to $(424,612) in the year ended September 30, 2002. This is
an decrease of $391,854 from period to period. This decrease is primarily due to
assets acquired on the acquisition of Washington and revenue generated by First
Washington after its acquisition in the year ended September 30, 2002 and to the
reclassification of $172,428 of cash and cash equivalents, a current asset, to
restricted cash, which is not a current asset. This reclassification had no
effect on total assets or total liabilities and stockholders' equity.
Net cash used in investing activities in the year ended September 30, 2002 was
$(42,941) compared to $(27,476) in the year ended September 30, 2001. This is an
increase of net cash used in investing activities of $15,465 from period to
period. This increase is due primarily to the acquisition of additional property
and equipment utilized by First Washington in its mortgage business.
Net cash provided by (used in) financing activities in the year ended September
30, 2002, was $(10,000) compared to $537,284 in the year ended September 30,
2001. This is a decrease of $547,284 from period to period. The decrease is
primarily due to the Company receiving proceeds from the issuance of common
stock and warrants in the year ended September 20, 2002, authorized by prior
management in the year ended September 30, 2001.
Off Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements as defined
by SEC Final Rule 67 (FR-67) "Disclosure in Management's Discussion and Analysis
about Off-Balance Sheet Arrangements and Aggregate Contractual Obligations."
Liquidity and Capital Resources
Subsequent to the discontinuation of the Company's previous printing business
and the change in management and control, the Company's net cash provided from
operating activities has been sufficient to satisfy the Company's firm
contractual commitments and budgeted expenses. The Company believes that its net
cash provided from operating activities will in the foreseeable future continue
to be sufficient to satisfy the Company's firm contractual commitments and
budgeted expenses.
Looking Forward
The Company is actively seeking to expand its energy business by continuing
plans to re-power its existing wind farm and by acquiring additional energy
businesses.
The Company is also seeking to acquire additional mortgage entities.
ITEM7. FINANCIAL STATEMENTS
The Company's consolidated financial statements for the years ended September
30, 2002 and 2001 are attached hereto.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
There have been no changes in or disagreements with the Company's accountants on
any matter.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the Company's
directors, executive officers, and certain key employees:
Name Age Position With the Company
Denis C. Tseklenis 55 Chairman, President, Chief
Executive Officer and Secretary
Robert F. Rood(1) 37 Director, Treasurer
James A. Sharon 53 Director
Denis C. Tseklenis Mr. Tseklenis has served as a the chairman of the board of
directors, president, chief executive office and secretary of the Company since
April 6, 2001. Mr. Tseklenis has a Masters of Science Degree from Boston
University and an extensive background in marketing, finance and public
corporate development. Mr. Tseklenis has previously served as president and
chairman of other public companies in which revenues exceeded One Hundred
Million Dollars ($100,000,000) per year and which had rapid growth in multiple
locations. In the 1980's Mr. Tseklenis' companies sold and leased over 60,000
solar systems to home owners at a cost of approximately $4,000 per unit. Mr.
Tseklenis has extensive experience in real estate management and construction
having managed over 2, 500 apartment and condominium units.
Robert F. Rood(1) Mr. Rood has been a director and the treasurer of the Company
since March 17, 2002. Mr. Rood has been in the finance industry since 1991. Mr.
Rood has managed and consulted and has served as a financial consultant for
unions and REITS. In conjunction with Donaldson, Lufkin and Jeanerette, Mr. Rood
participated in the designing of secondary market products. In 1997, Mr. Rood
entered the mortgage lending industry at Wall Street Mortgage Corporation as
head of the sales force and was responsible for promoting custom-made mortgage
products and FHA lending. In 2000, Mr. Rood went to F&M Bank in Bethesda
Maryland to start and supervise the newly formed wholesale mortgage division.
When F&M Bank was acquired, Mr. Rood left to become manager of the Bethesda
office of Fidelity & Trust Mortgage, Inc. In 2000, Mr. Rood helped found First
Washington, now a wholly owned subsidiary of the Company.
James A. Sharon Mr. Sharon has been a director of the Company since September
15, 2002. Mr. Sharon was an exchange student a City University in London in 1972
and holds a Bachelor of Science Degree in Civil Engineering with Honors from
Worcester Polytechnic Institute. Mr. Sharon is licensed by the State of Florida
as a Certified Building Contractor and a Certified Solar Energy Contractor. Mr.
Sharon has public company experience as a former president of a public company
and has experience in lease negotiations with major tenants such as Mobil Oil,
Cellular-One and Marriott Corp. Mr. Sharon has extensive experience in the
installation of large commercial renewable energy projects.
(1) On March 27, 2004 Mr. Rood resigned as an officer and a director.
There are no family relationships among directors, or executive officers.
ITEM 10. EXECUTIVE COMPENSATION
With respect to executive compensation for within the fiscal years ended
September 30, 2001 and 2000, refer to the applicable portions of the Company's
Form 10KSB for the year ended September 30, 2001 filed with the Securities and
Exchange Commission January 16, 2002 and to the applicable portions of the
Company's Form 10KSB for the year ended September 30, 2000 filed with the
Securities and Exchange Commission on January 12, 2001 which by this reference
are incorporated herein by reference for this specific purpose.
The Company paid no executive compensation for the fiscal year ended September
30, 2002. The Company has no employment contracts. The company does not have a
bonus or stock option plan at this time.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The following is a listing of security ownership of management and certain
beneficial owners of the Issuer's securities as of January 14, 2003. On that
date there were 3,919,422 shares of the Company's common stock issued and
outstanding and 1,000,000 shares of the Company's Series One Voting Convertible
Preferred Stock outstanding.
Amount and Nature of
Title of Name and Position Beneficial Percent
Class of Beneficial Owner Ownership of Class
--------- --------------------- ---------------- ------------------
Denis C. Tseklenis
Common President, CEO and Secretary 1,627,995 42%
Robert F. Rood Director and
Common Treasurer(2) 500,000 13%
--------------- -----------
Total Officers and
Directors as a Group 2,127,995 55%
=============== ===========
Series A Denis C. Tseklenis
Preferred President, CEO and
Secretary 1,000,000 100%
--------------- -----------
Total Officers and
Directors as a Group 1,000,000 100%
================ ===========
(1) Subject to community property laws when applicable, the persons named in the
above table have sole voting and investing power with respect to all shares of
stock beneficially owned by them.
(2) On March 27, 2004 Robert F. Rood resigned as an officer and a director.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1999, the Company executed a letter of intent with Mark Eaker, then
an officer and director of the Company to acquire 80% of the outstanding stock
of Gregory Editions, Inc., a publisher and distributor of fine art
reproductions. The letter of intent provided for a total purchase price of
$3,300,000, consisting of $2,700,000 cash and 400,000 shares of the Company's
common stock. The Company paid Mr. Eaker a non-refundable deposit of $225,000 in
cash and 266,000 shares of common stock in connection with the letter of intent.
Because the Company was unable to fulfill its obligations in order to consummate
the transaction, the letter of intent expired and Mr. Eaker retained the
non-refundable deposit. In addition, as of September 30, 2000, Mr. Eaker had
paid expenses totaling approximately $50,000 on behalf of the Company and
deferred payment of his salary and other benefits. Beginning January 1, 2000,
Mr. Eaker provided office space, staff, and other operating expenses for the
Company's corporate headquarters at the headquarters of Gregory Editions, Inc.,
which is owned and operated by Mr. Eaker. Mr. Eaker's employment contract with
the Company was terminated on April 6, 2001. The Company no longer utilizes
office space provided by Mr. Eaker. Mr.Eaker is no longer an officer or director
of the Company.
Through December 31, 1999, the Company leased printing equipment from Michael
Raburn, a former officer and director of the Company, pursuant to an oral
agreement under which it paid $10,000 per month. The Company incurred expenses
of $50,000 in fiscal 1999 and $0 in fiscal 2000 under this agreement. Through
December 31, 1999, the Company also conducted its operations in a building
leased by Michael Raburn. The Company paid a total of approximately $27,200 of
lease obligations for this building, although it was not a party to the lease
and occupied the building at the pleasure of Mr. Raburn. Effective December 31,
1999, the Company discontinued its printing and publishing operations and moved
its remaining Internet-based operations out of the building leased by Mr.
Raburn. Michael. Raburn is no longer an officer or director of the Company.
In November 1999, Keith Chesser, Mike Santellanes, and Michael Raburn returned
an aggregate of 2,345,000 shares of common stock to the Company. The Company did
not pay Messrs. Chesser, Santellanes, and Raburn any consideration for these
shares. Keith Chesser, Mike Santellanes, and Michael Raburn are no longer
officers or directors of the Company.
In January 2000, the Company issued 1,000,000 shares of common stock to Mark
Eaker pursuant to his employment agreement. The Company also issued 250,000
shares of common stock to Joseph Patterson in January 2000 for his services as a
director of the Company. Mark Eaker is no longer an officer or director of the
Company. Joseph Patterson is no longer an office or director of the Company
On May 15, 2001, the Company acquired all of the issued and outstanding shares
of stock of Arcadian Renewable Power Corporation, a Delaware corporation from
Denis C. Tseklenis, an office and director, for 1,000,000 shares of the
Company's restricted common stock and 1,000,000 shares of the Company's
restricted Series One Voting Preferred Convertible Stock.
On May 17, 2002, the Company acquired 500,000 shares of the stock of First
Washington Financial Corporation, a Nevada corporation from Denis C. Tseklenis,
an officer and director, for 500,000 shares of the Company's restricted common
stock.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
Index to Exhibits
Exhibit No. Description of Document
2.1(1) Articles of Merger merging Artup.com Network, Inc., a Colorado
corporation, with and into the Registrant
3.1(1) Articles of Incorporation of the Registrant
3.2(1) Bylaws of the Registrant
4.1(1) Specimen of Common Stock Certificate
4.2(1) Specimen of Certificate for Common Stock Purchase Warrants
4.3(1) Common Stock Purchase Warrant dated January 3, 2000, issued to
Gene Bowlds
4.4(1) Non-Statutory Stock Option Certificate dated February 16, 2000,
issued to Michael Paloma
10.1(1) Master Consulting Services Agreement dated as of July 28, 1999
between the Registrant and Integrated Information Systems, Inc.
10.2(1) Equipment Lease dated September 15, 1999 between the Registrant
and Copelco Capital, Inc.
10.3(1) Employment Agreement between the Registrant and Mark L. Eaker
10.4(1) Employment Agreement between the Registrant and Keith M. Chesser
10.5(1) 1999 Incentive Stock Plan
16.1(1) Letter on change in certifying accountant from Alvin H. Bender,
C.P.A.
16.2(1) Letter on change in certifying accountant from Mark Shelley, CPA
16.3(2) Letter on change in certifying accountants from Semple and Cooper,
LLP
21.2(3) Subsidiaries of registrant
(1) Previously filed with the Securities and Exchange Commission and
incorporated herein by reference from the Company's Form 10-SB/A (Forth
Amendment) filed September 15, 2000.
(2) Previously filed with the Securities and Exchange Commission and
incorporated herein by reference from the Company's Form 8-K/A (First Amendment)
filed October 26, 2001.
(3) Previously filed with the Securities and Exchange Commission and
incorporated herein by reference from the Company's Form 10K-SB for the year
ended September 30, 2002 filed January 15, 2003.
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.
ITEM 14. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. The Company's principal
executive officer, after evaluating the effectiveness of the Company's
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934 Rules 13a-14(c) and 15-d-14(c)) as of a date (the "Evaluation Date")
within 90 days before the filing date of this annual report, has concluded that
as of the Evaluation Date, the Company's disclosure controls and procedures were
adequate and designed to ensure that material information relating to the
Company and the Company's consolidated subsidiaries would be made known to him
by others within those entities.
Changes in internal controls. There were no significant changes in the Company's
internal controls or to the Company's knowledge, in other factors that could
significantly affect the Company's disclosure controls and procedures subsequent
to the Evaluation Date.
ITEM 15. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Approximate aggregate fees rendered by our independent auditors, Bagall Josephs
& Company, LLC, for the years ended September 30, 2002 and 2001 are as follows:
2002 2001
--------------------------- --------------------
Audit Fees $ 20,751 $ 18,500
Audit Related Fees -0- -0-
Tax Fees 5,197 1,700
All Other Fees -0- -0-
--------------------------- --------------------
TOTAL $ 25,948 $ 19,500
=========================== ====================
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
CONSOLIDATED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2002 AND 2001
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001
PAGE(S)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT F-1
CONSOLIDATED FINANCIAL STATEMENTS:
BALANCE SHEETS AS OF SEPTEMBER 30, 2002
AND 2001 F-2-3
STATEMENTS OF INCOME FOR THE YEARS ENDED
SEPTEMBER 30, 2002 AND 2001 F-4
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DEFICIT) FOR THE YEARS ENDED SEPTEMBER 30, 2002
AND 2001 F-5-6
STATEMENTS OF CASH FLOWS FOR YEARS ENDED
SEPTEMBER 30, 2002 AND 2001 F-7-8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-9-16
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders of
Kore Holdings, Inc. and Subsidiaries
(Formerly Volt Inc. and Subsidiaries)
Oakhurst, California
We have audited the accompanying consolidated balance sheets of Kore Holdings,
Inc. and Subsidiaries (formerly Volt Inc. and Subsidiaries) (the "Company") as
of September 30, 2002 and 2001 and the related consolidated statements of
income, changes in stockholders' equity (deficit), and cash flows for the years
then ended. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Kore
Holdings, Inc. and Subsidiaries (formerly Volt Inc. and Subsidiaries) as of
September 30, 2002 and 2001, and the consolidated results of its statements of
operations, changes in stockholders' equity (deficit), and cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.
As noted in Note 10, the Company has restated its previously issued consolidated
financial statements for the year ended September 30, 2001 on its report dated
January 14,. The Company has amended these consolidated financial statements to
reclassify $711,628 previously recorded as reversal of payables in the
consolidated statements of operations, to additional paid in capital.
Additionally, the Company has reclassified $71,000 previously recorded as notes
receivables, as general and administrative expenses in 2001. These transactions
had the net effect of reducing net income from $521,898 to a net loss of
($260,730), and increasing the accumulated deficit from ($3,943,047) to
($4,725,675). In addition, the Company has restated its consolidated financial
statements for September 30, 2002, 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 $133,000 previously classified as
notes receivable to general and administrative expenses. These transactions
resulted in a decrease in net income of $305,428 to a net loss of $44,408 and
increased the accumulated deficit to ($4,770,083).
BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Gibbsboro, New Jersey
December 9, 2002, except Note 10, dated October 16, 2004
F-1
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2002 AND 2001
ASSETS
(Restated) (Restated)
2002 2001
---- ----
CURRENT ASSETS
Cash and cash equivalents $ 93 $ 85,792
Prepaid expenses and other assets - 2,800
----- ------
Total Current Assets 93 88,592
PROPERTY AND EQUIPMENT - Net 5,756,939 5,724,399
OTHER ASSETS
Restricted Cash 172,428 -
Goodwill 2,827,572 -
Deferred Fees, Net 5,000 -
--------- ---------
Total Other Assets 3,005,000 -
--------- ---------
TOTAL ASSETS $8,762,032 $5,812,991
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
(Restated) (Restated)
2002 2001
---- ----
CURRENT LIABILITIES
Accounts payable $ 36,949 $ 43,500
----- ------
Total Current Liabilities 36,949 43,500
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Series One voting Convertible Preferred Stock.
$.001 par value, 10,000,000 shares authorized,
at September 30, 2002 and 2001 1,000,000
shares and 1,000,000 shares issued and
outstanding at September 30, 2002 and
September 30, 2001, respectively 1,000 1,000
Common stock, $.001 par value 25,000,000
shares authorized at September 30, 2002
and 2001, respectively; and 3,919,422 and
1,694,422 issued and outstanding at
September 30,2002 and September 30, 2001,
respectively 3,919 1,694
Additional paid-in capital 13,490,247 10,492,472
Accumulated deficit (4,770,083) (4,725,675)
---------- ----------
Total stockholders' equity (deficit) 8,725,083 5,769,491
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $8,762,032 $5,812,991
========== ========
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001
(Restated) (Restated)
2002 2001
---- ----
REVENUE $ 753,700 $ -
COST OF REVENUE 302,878 -
------- --------
GROSS PROFIT 450,822 -
OPERATING EXPENSES
General and administrative 495,230 260,730
------- ---------
OTHER INCOME - Reversal of debt and payables - -
------- ----------
LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES ( 44,408) (260,730)
Income taxes - -
------- --------
NET LOSS AVAILABLE TO
COMMON STOCKHOLDERS $ (44,408) $ (260,730)
========= ==========
BASIC AND DILUTED EARNINGS PER SHARE:
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (0.02) $ (0.29)
========= ==========
WEIGHTED NUMBER OF COMMON SHARES OUTSTANDING 2,644,422 897,704
========= ==========
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001 (Restated)
Additional
Preferred Stock Common Stock Paid-In
Shares Amount Shares Amount Capital
------ ------ ------ ------ -------
Balance, September 30,
2000 (Unaudited) - - 9,490,548 9,490 2,878,337
Issuance of common stock
for accrued payroll - - 1,350,000 1,350 243,650
Issuance of common stock
for accounts payable and
services - - 500,000 500 32,500
Reverse stock split - - (11,227,121) (11,227) 11,227
Cancellation of warrants
and subscriptions * - - - -
Issuance of preferred
stock for Wind Farm 1,000,000 1,000 - - 5,699,000
Issuance of common stock
for acquisition - - 127,995 128 254,872
Issuance of common stock - - 1,678,000 1,678 661,258
Cancelled shares - - (225,000) (225) -
Dividends paid` - - - - -
Contributed capital for
reversal of payables - - - - 771,628
Net Income - as previously
reported - - - - -
Prior period adjustment -
see Note 10 - - - - -
-------- --------- --------- ------- ---------
Balance, September 30,
2001 1,000,000 1,000 1,694,422 1,694 10,492,472
Common shares issued
from cancelled shares in
2001 put in wrong names
originally - - - 225,000 225 (225)
Acquisition of First
Washington Financial - - 2,000,000 2,000 2,998,000
Net Income - as previously
reported - - - - -
Prior period adjustment -
see Note 10 - - - - -
-------- --------- --------- ------- ---------
Balance, September 30,
2002 1,000,000 1,000 3,919,422 3,919 13,490,247
========= ======= ========= ====== ===========
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - Continued
FOR THE YEARS ENDED SEPTEMBER 30, 2002 AND 2001 (Restated)
Common
Stock Accumulated
Warrants Subscribed Deficit Total
------ ------ ------ -------
Balance, September 30,
2000 451,000 100,000 (4,297,510) ( 858,683)
Issuance of common stock
for accrued payroll - - - 245,000
Issuance of common stock
for accounts payable and
services - - - 33,000
Reverse stock split - - - -
Cancellation of warrants
and subscriptions (451,000) (100,000) - (551,000)
Issuance of preferred
stock for Wind Farm - - - 5,700,000
Issuance of common stock
for acquisition - - - 255,000
Issuance of common stock - - - 662,936
Cancelled shares - - - (225)
Dividends paid` - - (167,435) (167,435)
Net Income - as previously
reported - - 521,898 521,898
Prior period adjustment -
see Note 10 - - (782,628) (782,628)
-------- --------- --------- --------
Balance, September 30,
2001 - - (4,725,675) 5,769,491
======== ========= =========== =========
Common shares issued
from cancelled shares in
2001 put in wrong names
originally - - - -
Acquisition of First
Washington Financial - - - 3,000,000
Net Income as previously
reported - - 261,020 261,020
Prior period adjustment -
see Note 10 - - (305,428) (305,428)
-------- --------- --------- --------
Balance, September 30,
2002 $ - $ - $(4,770,083) 8,725,083
======== ========= =========== =========
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2002 AND 2001
(Restated) (Restated)
2002 2001
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss) $ (44,408) $(260,730)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 15,401 3,077
Loss on disposal of assets - 22,121
Impairment of long-term assets - -
Common stock issued for inventory,
acquisition costs, services, payables
and accrued payroll - 278,000
Discontinued operations - 44,880
Changes in assets and liabilities:
Prepaid expenses and other 2,800 46,600
Accounts payable ( 6,551) (206,123)
Accrued payroll - (245,000)
Other liabilities - (107,437)
-------- ------
Total adjustments 11,650 (163,882)
-------- ---------
Net cash used in operating activities ( 32,758) (424,612)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (42,941) (27,476)
Deposit - -
--------- --------
Net cash used in investing activities (42,941) ( 27,476)
The accompanying notes are an integral part of the consolidated financial
statements.
F-7
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 2002 AND 2001
(Restated) (Restated)
2002 2001
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable $ - $ 225,762
Deferred financing fees ( 10,000) -
Proceeds from issuance of common stock
and warrants - 366,711
Dividends paid - ( 55,189)
--------- -------
Net cash provided from financing activities ( 10,000) 537,284
------- -------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS ( 85,699) 85,196
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 85,792 596
-------- ------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 93 $85,792
======== =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for interest $ - $ -
======= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH
INFORMATION
Common stock issued for acquisition
costs and services $3,000,000 $278,000
======== ========
Inventory distributed as a dividend $ - $112,246
========= ========
Capital contribution of Wind Farm $ - $5,700,000
======== ==========
Write off of common stock and warrants $ - $ 551,000
========= ==========
Conversion of payables to additional
paid in capital $ - $ 711,628
========== ==========
Net cash acquired in First Washington
Corporation acquisition $ 172,428 $ -
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements.
F-8
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2002 AND 2001
NOTE 1- ORGANIZATION AND BASIS OF PRESENTATION
Volt 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 October 16, 2004, the Company amended the articles of
incorporation to change its name to Kore Holdings, Inc. and
Subsidiaries.
Deerbrook Publishing Group, Inc. was a distributor of fine
arts. Effective March 31, 2001, Deerbrook Publishing Group,
Inc. entered into an agreement to spin off its subsidiaries;
Inter Arts, Inc. and Cimmaron Studios, Inc. In December,
1999, Deerbrook Publishing Group, Inc. closed its printing
and publishing operation. On April 23, 2001, the Company
effected a 1 for 100 reverse stock split for its $.001 par
value common stock. Upon this spin off, the name was
officially changed to Volt Inc. when on April 25, 2001,
Denis C. Tseklenis acquired 127,995 shares of the company's
common stock, $.001 par value per share, which constituted
approximately 53% of the company's issued and outstanding
common stock for $255,000.
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. First Washington was acquired for 2,000,000 shares of
the Company's common stock.
The Company has completed the formation of Opportunity Knocks,
Inc. 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 formation was
done simultaneously with the acquisition of First Washington.
The Company has two other power related wholly-owned
subsidiaries, Sun Volt, Inc. and Sun Electronics, Inc.
besides 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 10, the Company has amended its previously
issued consolidated financial statements for the year ended
September 30, 2001 on its report dated January 14, 2002. The
Company has amended these consolidated financial statements to
reclassify $711,628 previously recorded as reversal of
payables in the consolidated statements of operations, to
additional paid in capital. Additionally, the Company has
reclassified $71,000 previously recorded as notes receivables,
as general and administrative expenses in 2001. These
transactions had the net effect of reducing net income from
$521,898 to a net loss of ($260,730), and increased the
accumulated deficit from ($3,943,047) to ($4,725,675). In
addition, the Company has restated its consolidated financial
statements for September 30, 2002, to reclassify a portion of
its goodwill acquired in the First Washington Corporation
transaction as cash in the amount of $172,428 and has
reclassified $133,000 previously classified as notes
receivable to general and administrative expenses. These
transactions resulted in a decrease in net income of $305,428
to a net loss of $44,408 and increase in the accumulated
deficit to ($4,770,083).
F-9-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated balance sheets for September 30, 2002 and
2001 and consolidated statements of operations, changes
in stockholders' equity and cash flows for the years
then ended includes Volt Inc. and its wholly-owned
subsidiaries, Sun Volt, Inc., Sun Electronics, Inc., Arcadian
Renewable Power, Inc. and First Washington.
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.
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 7 years
Office and computer equipment 3-5 years
Wind Farm 40 years
F-10-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition
The Company sold merchandise and revenue was recorded under
the accrual method of accounting.
First Washington records commission income upon the closing of
their respective transactions.
Advertising
Advertising costs are typically expensed as incurred.
Advertising expense was approximately $-0- and $830 for the
years ending September 30, 2002 and 2001, 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.
Fair Value of Financial Instruments
The carrying amount reported in the consolidated balance
sheets for cash and cash equivalents, notes 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 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.
F-11-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings (Loss) Per Share of Common Stock (Continued)
The following is a reconciliation of the computation for basic
and diluted EPS:
Restated Restated
2002 2001
---- ----
Net (loss) ($44,408) ($260,730)
--------- ---------
Weighted- average common shares
Outstanding (Basic) 2,644,422 897,704
Weighted-average common stock
Equivalents:
Stock options - -
Warrants - -
--------- --------
Weighted-average common shares
Outstanding (Diluted) 2,644,422 897,704
Options and warrants outstanding to purchase stock were not
included in the computation of diluted EPS for September 30,
2002 and 2001 because inclusion would have been antidilutive.
Deferred Financing Fees
The Company paid a $10,000 financing fee in connection with a
line of credit in April 2002. This fee will be written off
over a one-year period of time. The unamortized balance at
September 30, 2002 is $5,000.
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. As of September 30, 2002, there are no
adjustments of goodwill due to impairment.
F-12-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reclassifications
Certain amounts for the year ended September 30, 2001 have
been reclassified to conform with the presentation of the
September 30, 2002 amounts. The reclassifications have no
effect on net income for the year ended September 30, 2001.
NOTE 3- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at September
30, 2002 and 2001:
2002 2001
---- ----
Wind Farm $5,700,000 $ 5,700,000
Furniture and fixtures 3,000 3,000
Computer and office equipment 67,417 24,476
--------- -----------
5,770,417 5,727,476
Less: accumulated depreciation 13,478 3,077
--------- -----------
Net book value $5,756,939 $ 5,724,399
========== ===========
The $22,121 of property and equipment at September 30, 2000
was disposed of in 2001. Depreciation expense for the years
ended September 30, 2002 and 2001 was $10,401 and $3,077,
respectively.
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 in 2002 and 2001. The Company did receive
miscellaneous scrap parts that have not been valued (salvage)
for the consolidated balance sheets, that it sells from time
to time, and the Company records the income in their
consolidated statements of operations when these sales occur.
NOTE 4- COMMITMENTS AND CONTINGENCIES
The Company entered into a lease agreement in April 2001 in
Pleasanton, California. The Company paid $2,800 per month for
rent. This lease was terminated by the Company in October
2001, and all operations now run through the Cathey's Valley,
California location. The security deposit was expensed as part
of a rent payment in 2002.
F-13-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 5- REVERSAL OF DEBT AND PAYABLES
The Company has recognized $711,628 of reversals of debt and
payables. This amount is reflected as additional paid in
capital in the consolidated statements of changes in
stockholders' equity and in the consolidated balance sheet for
September 30, 2001.
NOTE 6- STOCKHOLDERS' EQUITY
Common and Preferred Stock
Effective April 23, 2001, the Registrant effected a 1 for 100
reverse stock split for its common stock, $.001 par value per
share.
The Company issued 1,000,000 shares of preferred stock to
Denis C. Tseklenis in consideration for the Wind Farm.
On April 25, 2001, Denis C. Tseklenis acquired 127,995
original issue shares of the Company's common stock, $.001 par
value per share, which constituted approximately 53% of the
Company's issued and outstanding common stock. Mr. Tseklenis
paid the Company $255,000 for the common stock.
During the year ended September 30, 2001, in addition to the
initial acquisition by Denis C. Tseklenis, the Company had
issued 1,678,000 shares and cancelled 225,000 of common stock
for $366,711.
Prior to the initial acquisition by Denis C. Tseklenis, the
Company had issued 1,850,000 shares of common stock for
accrued payroll, accounts payable and services.
During the quarter ended December 31, 2001, 225,000 shares
were reissued that were cancelled from the prior year ended
September 30, 2001.
On May 17, 2002, the Company issued 2,000,000 shares of common
stock to acquire First Washington and thus it became a
wholly-owned subsidiary. The shares were valued at a fair
value at the time of the transaction ($1.50 per share) or
$3,000,000. Of this amount, the Company acquired $172,428, in
cash and the remaining $2,827,572, was recorded as goodwill,
and the Company has determined that there is no impairment of
this goodwill based on their tests in accordance with the
provisions of FASB 142.
F-14-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 7- LITIGATION
In September of 1999, the Deerbrook Publishing Group, Inc.
("Deerbrook") leased a computer driven aspect image center
(printer for film) used to make separation for printing (the
"aspect image center") and certain other computer equipment
from Copelco Capital, Inc. ("Copelco"). All of the equipment
was delivered to the Deerbrook's then printing operation in
Phoenix, Arizona, and installed. Shortly thereafter, Deerbrook
ceased printing for itself and its customers. The equipment
was returned to Copelco. In August of 2000, Copelco brought
suit in the United States District Court for the District of
Arizona, cause no. CIV '00-1620 PHX ROS, to recover its
alleged damages $155,398 for Deerbrook's return of the leased
equipment plus continuing interest at the rate of one and
one-third percent per month and attorneys fees and costs. The
Company does not believe that Copelco has mitigated its
damages and further believes that Copelco has either sold the
equipment or otherwise disposed of same in a manner which was
not commercially reasonable. The Copelco claims will be
vigorously defended against. Any possible loss from this
litigation will be less than one percent (1%) of the Company's
net assets and will be immaterial. Since the change in control
of the Company on April 6, 2001, there have been no legal
proceedings brought against Volt.
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 September 30, 2002 and 2001, deferred tax assets consist of
the following:
2002 2001
---- -----
Net operating loss carryforwards $400,000 $ 420,000
Less: valuation allowance (400,000) (420,000)
--------- -----------
$ -0- $ -0-
========= ============
At September 30, 2002 and 2001, the Company had federal net
operating loss carryforwards in the approximate amounts of
$1,600,833 and $1,500,000, respectively, 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.
F-15-
KORE HOLDINGS, INC. AND SUBSIDIARIES
(FORMERLY VOLT INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 2002 AND 2001
NOTE 9- SUBSEQUENT EVENT
In October 2002, the Company reached an agreement with
Mortgage-Matic of Greenbelt, MD to merge the operations of
Mortgage-Matic with First Washington. Mortgage-Matic
concentrates their business on FHA insured loans in the
$200,000 range. This accounts for approximately 70% of its
business. The merger should facilitate a streamlining of the
processing and underwriting procedures of the companies.
In November 2002, the Corporation closed on a line of credit
with a bank in the amount of $750,000. The loan proceeds will
be used to commence the operations of Opportunity Knocks.
NOTE 10- RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company has amended its previously issued consolidated
financial statements for the year ended September 30, 2001 on
its report dated January 14, 2002. The Company has amended
these consolidated financial statements to reclassify $711,628
previously recorded as reversal of payables in the
consolidated statements of operations, to additional paid in
capital. Additionally, the Company has reclassified $71,000
previously recorded as notes receivables, as general and
administrative expenses in 2001. These transactions had the
net effect of reducing net income from $521,898 to a net loss
of ($260,730), and increasing the accumulated deficit from
($3,943,047) to ($4,725,675).
In addition, the Company has restated its consolidated
financial statements for September 30, 2002, to reclassify a
portion of its goodwill acquired in the First Washington
Corporation transaction as cash in the amount of $172,428 and
has reclassified $133,000 previously classified as notes
receivable to general and administrative expenses. These
transactions resulted in a decrease in net income of $305,428
to a net loss of $44,408 and an increase in the accumulated
deficit to ($4,770,083).
F-16-
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VOLT INC.
(Registrant)
/s/ Denis C. Tseklenis
Chief Executive Officer
Director
February 14, 2005
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated
/s/ Denis C. Tseklenis
Director
February 14, 2005
/s/ James A. Sharon
Director
February 14, 2005
/s/ Bruce Persson
Director
February 14, 2005