Jore Corp · 10-Q · For 9/30/99

Filed On 11/16/99   ·   SEC File 0-26889   ·   Accession Number 912057-99-6290

Quarterly Report   ·   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      31    150K 
 2: EX-27.1     Financial Data Schedule                                2      8K 

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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-Q

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

 For the quarterly period ended September 30, 1999

OR

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

 For the transition period from ______ to ______

 Commission File Number: 000-26889

JORE CORPORATION
(Exact Name as Registrant as Specified in Its Order)

Montana                                    81-0465233       
(State or other jurisdiction of                   (I.R.S. Employer              
incorporation or organization)                  Identification No.)           

45000 Highway 93 South
Ronan, Montana 59864
 (Address of principal executive offices and zip code)

 Registrant's telephone number: (406) 676-4900

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (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      No X   
 ---     ---

As of October 31, 1999, 13,622,800 shares of the Registrant's Common Stock,     
without par value, were outstanding.                                            

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JORE CORPORATION

 FORM 10-Q

 INDEX
 -----

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------------------------------------------------------- -----------------------
                                                        PAGE NUMBER            
------------------------------------------------------- -----------------------
                                                                               
Part I:  Financial Information                                                 
Item 1 Financial Statements                                                    
------------------------------------------------------- -----------------------
        Consolidated Balance                                                   
        Sheet as of December 31, 1998 and                                      
        September 30, 1999                                            2        
        ------------------------------------------------------- ---------------
        Consolidated Statements                                                
        of Operations for the Three and                                        
        Nine Months Ended September 30,                                        
        1999 and 1998                                                 3        
        ------------------------------------------------------- ---------------
        Consolidated Statements                                                
        of Cash Flows for the                                                  
        Nine Months Ended September                                            
        30, 1999 and 1998                                             4        
        ------------------------------------------------------- ---------------
        Notes to Consolidated                                                  
        Financial Statements                                          6        
---------------------------------------------------------------- --------------
Item 2    Management's Discussion and                                          
Analysis of Financial Condition and                                            
Results of Operations                                                 9        
---------------------------------------------------------------- --------------
Item 3    Qualitative And Quantitative                                         
Disclosures About Market Risk                                         27       
---------------------------------------------------------------- --------------
PART II.  OTHER INFORMATION                                                    
---------------------------------------------------------------- --------------
Item 1    Legal Proceedings                                           27       
---------------------------------------------------------------- --------------
Item 2    Changes in Securities                                       29       
---------------------------------------------------------------- --------------
Item 4    Submission of Matters to a Vote                                      
of Security Holders                                                   30       
---------------------------------------------------------------- --------------
Item 6    Exhibits and Reports on Form 8-K                            31       
---------------------------------------------------------------- --------------
Signatures                                                            31       
---------------------------------------------------------------- --------------

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2 

 PART I. FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS

JORE CORPORATION

 CONSOLIDATED BALANCE SHEETS

                                                        · Enlarge/Download Table


                                                                                September 30,          December 31,    
                                                                                     1999                  1998        
                                                                           --------------------------------------------
                                                                                                                       
                                                                                 (unaudited)                           
                                     ASSETS                                                                            
Current assets:                                                                                                        
Cash and cash equivalents                                                              $ 10,143,260           $ 34,736 
Securities                                                                                1,500,545                  - 
Accounts receivable net allowance for doubtful accounts of $15,845 and $0                12,855,561         14,672,275 
Allowances                                                                                        -                  - 
Notes receivable                                                                             25,000             53,576 
Shareholder notes receivable                                                              2,876,128          1,350,788 
Notes receivable from affiliates                                                                  -             83,917 
Other receivables                                                                            72,807             38,461 
Inventory                                                                                22,148,025          8,182,542 
Deferred tax asset                                                                          271,274                    
Prepaid expense and other current assets                                                    567,196            695,076 
                                                                           --------------------------------------------
Current assets                                                                           50,459,796         25,111,371 

Property, plant and equipment, net                                                       42,706,472         19,815,544 
Intangibles & other long-term assets, net                                                 1,457,889          1,035,667 

                                                                           --------------------------------------------
Total Assets                                                                            $94,624,157        $45,962,582 
                                                                           --------------------------------------------
                                                                           --------------------------------------------
                      LIABILITIES AND SHAREHOLDERS' EQUITY                                                             
Current liabilities:                                                                                                   
  Accounts payable                                                                     $ 15,286,216        $ 7,106,060 
  Accrued expenses                                                                        7,269,914          2,073,702 
  Operating line of credit                                                               11,733,392         13,524,805 
  Notes payable                                                                           1,252,745                  - 
  Other current liabilities                                                                 401,946            125,026 
  Shareholder note payable                                                                  119,052            256,061 
  Income taxes payable                                                                        9,742                    
  Current portion of long-term debt                                                       2,645,553          1,998,192 
                                                                           --------------------------------------------
     Total current liabilities                                                           38,718,560         25,083,846 

Long-term debt, net of current portion                                                   16,791,607         14,589,346 
Deferred income tax liabilities                                                           1,853,162                  - 
                                                                           --------------------------------------------
  Total liabilities                                                                      57,363,329         39,673,192 
Shareholders' equity:                                                                                                  
Preferred stock, no par value                                                                                          
  Authorized, 30,000,000 shares; issued and                                                                            
  outstanding, 0 shares                                                                           -                    
Common stock, no par value                                                                                             
  Authorized, 100,000,000 shares; issued and                                                                           
  outstanding, 13,222,800 and 9,508,544 respectively                                     35,147,714          1,694,931 
Deferred compensation -stock options                                                         (3,893)            (4,868)
Retained earings                                                                          2,117,007          4,599,327 
                                                                           --------------------------------------------
     Total shareholders' equity                                                          37,260,828          6,289,390 

                                                                           --------------------------------------------
Total                                                                                   $94,624,157        $45,962,582 
                                                                           --------------------------------------------
                                                                           --------------------------------------------
                                                                                                  -                  - 

 See notes to consolidated financial statements.

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JORE CORPORATION

 CONSOLIDATED STATEMENTS OF OPERATIONS

                                                        · Enlarge/Download Table


                                                           Three Months Ended September 30,    Nine Months Ended September 30,
                                                                 1999            1998             1999                1998    
                                                          --------------------------------------------------------------------
                                                                                                                              
                                                          (unaudited)          (unaudited)      (unaudited)        (unaudited)

Net revenues                                              $ 14,378,247         $ 10,548,442     $ 32,435,432      $ 25,429,898
Cost of goods sold                                           9,281,937            7,410,950       22,026,458        17,231,384
                                                          --------------------------------------------------------------------
  Gross profit                                               5,096,310            3,137,492       10,408,974         8,198,514

Operating expenses:                                                                                                           
  Product development                                          267,688              102,368          492,955           206,568
  Sales & marketing                                            821,839              596,639        1,580,662         1,307,388
  General & administrative                                   1,618,305              630,035        3,935,340         1,774,496
                                                          --------------------------------------------------------------------
     Total operating expenses                                2,707,832            1,329,042        6,008,957         3,288,452
                                                          --------------------------------------------------------------------

Other expense:                                                                                                                
  Interest Expense                                           1,087,917              367,535        2,135,422           887,130
  Other Expense                                                (18,646)              19,911          (11,236)          117,531
                                                          --------------------------------------------------------------------
     Net Other Expenses                                      1,069,271              387,446        2,124,186         1,004,661
                                                          --------------------------------------------------------------------

Income before extraordinary item and income taxes            1,319,207            1,421,004        2,275,831         3,905,401

Extraordinary item:                                                                                                           
  Loss related to early retirement of debt, net of taxes     1,017,026                 --          1,010,319                --
                                                          --------------------------------------------------------------------
  Income before taxes                                          302,181            1,421,004        1,265,512         3,905,401

Provision for income taxes                                      25,239                   --           31,947                --
                                                          --------------------------------------------------------------------
  Net income (loss)                                       $    276,942         $  1,421,004     $  1,233,565      $  3,905,401
                                                          --------------------------------------------------------------------
                                                          --------------------------------------------------------------------

Income before extraordinary item and income taxes                                                                             
  per common share:                                                                                                           
     Basic                                                $       0.13         $       0.15     $       0.24      $       0.42
     Diluted                                              $       0.13         $       0.15     $       0.23      $       0.42
Net income (loss) per common share:                                                                                           
     Basic                                                $       0.03         $       0.15     $       0.13      $       0.42
     Diluted                                              $       0.03         $       0.15     $       0.13      $       0.42
Shares used in calculation of net income per share                                                                            
     Basic                                                   9,844,539            9,398,087        9,631,173         9,394,240
     Diluted                                                10,130,204            9,398,087        9,817,036         9,394,240

Pro forma data (unaudited):                                                                                                   
  Net income (loss)                                       $    302,181         $  1,421,004     $  1,265,512      $  3,905,401
  Proforma provision (benefit) for income taxes                120,562              533,480          493,400         1,466,605
Pro forma net income (loss)                               $    181,619         $    887,524     $    772,112      $  2,438,796

Pro forma net income per common share:                                                                                        
  Basic                                                   $       0.02         $       0.09     $       0.08      $       0.26
  Diluted                                                 $       0.02         $       0.09     $       0.08      $       0.26

See notes to consolidated financial statements.                       

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JORE CORPORATION

         CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        · Enlarge/Download Table

                                                                 Nine months Ended September 30,        
                                                                1999                           1998     
                                                            ------------                   ------------ 
                                                            (unaudited)                    (unaudited)  
                                                                                                        
Operating activities:                                                                                   
Net income/(loss)                                              1,233,565                      3,905,401 
Adjustments to reconcile net income (loss) to net                                                       
  cash used by operating activites:                                                                     
  Depreciation                                                 1,651,833                        610,850 
  Amortization                                                   216,120                        155,485 
  Compensation expense - Stock options                               975                           --   
  Bad debt expense                                                15,845                           --   
  Provision for inventory obsolescence                              --                           24,552 
 (Gain) loss on disposal of fixed assets                         (13,359)                         1,244 
  Cash provided (used) by changes in operating                                                          
    assets and liabilities:                                                                             
     Accounts receivable                                       1,800,869                     (1,839,574)
     Other receivables                                           (34,346)                       103,434 
     Inventory                                               (13,965,483)                    (5,152,118)
     Prepaid expenses and other current assets                   127,880                       (188,740)
     Deferred income taxes                                        12,144                           --   
     Intangibles and other long-term assets                     (907,234)                    (1,871,438)
     Accounts payable                                          8,180,156                      1,609,988 
     Accrued expenses                                          5,196,212                      1,012,209 
     Other current liabilities                                      --                          126,252 
     Income taxes payable                                          9,742                           --   
                                                            ------------                   ------------ 
Net cash provided (used) by operating activities               3,524,919                     (1,502,455)

Investing Activities:                                                                                   
   Advances on notes receivable                               (1,412,847)                    (1,133,859)
   Payments on notes receivable                                     --                          305,305 
   Payment of patent costs                                          --                          (24,941)
   Purchase of investments                                    (1,500,545)                          --   
   Purchase of property and equipment                        (24,478,600)                    (8,448,799)
   Proceeds from sale of fixed assets                             31,500                        701,729 
                                                            ------------                   ------------ 
Net cash provided/(used) by investing activities             (27,360,492)                    (8,600,565)

Financing Activities:                                                                                   
  Distributions paid to shareholders                          (2,146,141)                    (2,601,513)
  Proceeds from IPO (net)                                     33,058,852                           --   
  Capital contributions                                             --                          315,000 
  Proceeds from long-term debt                                11,386,199                     12,174,352 
  Payments on long-term debt                                  (8,536,577)                    (5,061,255)
  Proceeds from short-term debt                               14,885,628                        229,999 
  Payments on short-term debt                                (13,181,344)                          --   
  Proceeds/(payments) from operating line (net)               (2,542,900)                     5,095,605 
  Extraordinary item, early retirement of debt, before tax     1,020,380                           --   
                                                            ------------                   ------------ 
Net cash provided/(used) by financing activities              33,944,097                     10,152,188 
                                                            ------------                   ------------ 

Net increase (decrease ) in cash                              10,108,524                         49,168 

Cash and cash equivalents:                                                                              
    Beginning of period                                           34,736                        113,471 
                                                            ------------                   ------------ 
    End of period                                           $ 10,143,260                   $    162,639 
                                                            ------------                   ------------ 
                                                            ------------                   ------------ 
Supplemental disclosures:                                                                               
Cash paid:                                                                                              
  Interest paid                                             $  2,135,422                   $    887,130 
Noncash financing and investing activities:                                                             
Warrants issued with debt                                   $    311,629                   $       --   
Common stock issued for land                                $     82,302                   $       --   

 See notes to consolidated financial statements.

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JORE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)

(1)      Basis of Presentation                                                  

          The consolidated balance sheet of Jore Corporation as of September
30, 1999, the related consolidated statements of operations for the three and   
nine month periods ended September, 30, 1999 and 1998, and the consolidated     
statements of cash flows for the nine months ended September 30, 1999 and 1998  
are unaudited. In the opinion of management, these unaudited financial          
statements include all adjustments, consisting only of normal recurring items,  
that are necessary for a fair presentation of the financial information set     
forth therein. Interim results are not necessarily indicative of results for a  
full year.                                                                      

        The consolidated financial statements and notes are presented as
required by the rules and regulations of the Securities and Exchange Commission 
and do not contain certain information included in our annual financial         
statements and notes. You should read these financial statements in conjunction 
with our audited financial statements and the notes thereto for the year ended  
December 31, 1998 included in our Form S-1, Registration No. 333-78357, filed   
with the Securities and Exchange Commission.                                    

(2)      Public Offering                                                        

         On September 23, 1999, we completed an initial public offering in
which we raised net proceeds of $33.1 million. A portion of the net proceeds was
used to repay debt, fund a distribution to our shareholders representing our    
previously taxed but undistributed S corporation earnings (see note 6), acquire 
capital equipment and invest in short-term assets.                              

(3)      Cash, Cash Equivalents and Short-Term Investments                      

          Cash equivalents include high quality money market instruments. We
consider all highly liquid investments with an original maturity of three months
or less when purchased to be cash equivalents. Uncleared                        

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checks of $1,180,162 and $8,930,561 are included in accounts payable at December
31, 1998 and September 30, 1999, respectively.                                  

            Our short-term investments consist of FNMA Notes and Certificates of
Deposit, which mature in one year or less, and are classified as                
held-to-maturity. In accordance with SFAS 115, "Accounting for Certain          
Investments in Debt and Equity Securities", investments classified as           
held-to-maturity are reported at amortized cost. The short-term investment      
balance at September 30, 1999 was $1,500,545.                                   

(4)      Significant customers:                                                 

        Our sales are concentrated among a few major customers. Sales to
customers who individually accounted for 10% of total sales for the nine months 
ended September 30, 1998 and 1999, and receivables from customers who           
individually accounted for 10% of total receivables at September 30, are as     
follows:                                                                        

                                                                · Download Table


                                    Nine months ended         Nine months ended 
                                    September 30, 1998        September 30, 1999
                                                                                
Sales to:                                                                       
            Customer A                       52.0%            46.9%             
            Customer B                       24.8%            26.6%             
            Customer C                       20.8%            13.2%             
All other customers                           2.4%            13.3%             
                                              100%             100%             

Receivables from:                                                               
            Customer A                       66.6%            60.3%             
            Customer B                       18.6%            13.1%             
            Customer C                        9.8%            10.9%             
All other customers                           5.0%            15.7%             
                                              100%             100%             

(5)     Balance Sheet Components                                                

                                                                · Download Table

                                             Dec  31          Sept 30     
                                             1998             1999        
                                                                          
Inventory                                                                 

  Component parts/raw materials              $  5,770,617     $ 11,174,534
  Work in progress*                          $  1,257,704     $  8,227,327
  Finished goods                             $  1,043,179     $  2,023,324
  Supplies inventory                         $    111,042     $    722,840

  Totals                                     $  8,182,542     $ 22,148,025
                                             ------------     ------------

*Work in progress includes finished sub-assemblies, which can be sold in bulk or
added to a packaged set                                                         

                                                                · Download Table
                                                                           
Property, Plant and Equipment                                              

  Buildings and leasehold improvements       $ 4,438,668      $  5,541,846 
  Land and land improvements                 $    595,329     $    928,901 
  Plant, tooling, packaging equipment        $ 10,140,083     $ 17,241,853 
  Office equipment and furniture             $  1,340,603     $  2,133,277 

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  Accumulated depreciation                   $ (2,349,407)    $ (3,967,917)
  Construction in progress                   $          0     $  4,901,170 
  Machinery in progress                      $  5,650,268     $ 15,927,342 

  Totals                                     $ 19,815,544     $ 42,706,472 
                                             ------------     ------------ 

(6)   S CORPORATION DIVIDEND                                                    

         The Board of Directors declared a dividend to shareholders of record on
September 22, 1999 equal to the amount of accumulated but undistributed S       
corporation earnings. The amount to be distributed to such shareholders cannot  
be determined until December 31, 1999 because it will be based upon our net     
profit for the entire year. We currently estimate that our net profit will allow
for aggregate dividends for fiscal year 1999 of approximately $4.0 million to   
shareholders of record on September 22, 1999. These dividends will be           
distributed to such shareholders on a pro rata basis depending on the number of 
days in 1999 that each of them held shares of our common stock. The amount      
recorded as a distribution on September 30, 1999 was based on the amount of     
accumulated but undistributed S corporation earnings as of September 30, 1999.  
We also paid such shareholders the amount that we estimated that they would be  
entitled to receive as of December 31, 1999.                                    

(7)   PRO FORMA INCOME TAXES                                                    

        In connection with the completion of our public offering (see Note 2),
our S corporation status terminated and we became subject to federal and state  
income taxes applicable to corporations subject to income taxes under Subchapter
C of the Internal Revenue Code. The accompanying consolidated statements of     
operations reflect a pro forma provision (benefit) for all periods for federal  
and state taxes (as if the consolidated group had been subject to tax as a C    
corporation) at effective tax rates of 35.70%, 35.43%, and 37.56% for 1996,     
1997, and 1998, respectively.                                                   

In conjunction with the conversion to a C corporation as of   
September 30, 1999 we recorded net deferred tax assets and liabilities at C     
corporation rates as follows:                                                   

                                                                · Download Table
                                                                       
Deferred tax liabilities:                                              

Basis differential in property, plant and equipment ...... $(1,853,162)
Total deferred tax liabilities ............ .............. $(1,853,162)

Deferred tax assets:                                                   

Inventory obsolescence reserve                            $167,415     
Accrued vacation and wages                                  73,949     
Deferred compensation                                       13,167     

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  Allowance for bad debt                                     8,409     
  Tax Credit carry forward                                   2,307     
  Net operating loss                                         6,027     
                                                           -------     

  Total deferred tax assets                               $271,274     

(8)      Subsequent Events                                                      

            On October 5, 1999 we purchased 275 acres of land across the highway
from our facility that we may develop in the future. The total purchase price is
$1,405,000. The payments include a deposit of $50,000, two principal payments of
$475,000 and accrued interest at 8% due in October and December of 1999, and one
final principal payment of $405,000 and accrued interest due June 1, 2000.      

 3

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS                                                                   

         You should read the following discussion in conjunction with Jore
Corporation's unaudited consolidated financial statements and notes thereto     
included elsewhere in this Quarterly Report on Form 10-Q. Certain statements    
contained in this Report, including, without limitation, statements             
containing the words "believes", "anticipates", "estimates", "expects", and     
words of similar import, constitute "forward-looking statements" within the     
meaning of Section 21E of the Securities Exchange Act of 1934, as amended.      
You should not place undue reliance on these forward-looking statements. Our    
actual results could differ materially from those anticipated in these          
forward-looking statements for many reasons, including the risks faced by us    
described below and elsewhere in this Quarterly Report, and in other            
documents we file with the SEC.                                                 

OVERVIEW

          Jore Corporation was founded to develop and produce innovative power
tool accessories to meet the increasing demand resulting from the growth in the 
cordless power tool market. Our revenues have grown substantially through the   
addition of new customers, increased sales to established customers and expanded
product offerings. Our business commenced in 1987, when we began selling a      
limited number of drilling and driving accessories to independent local and     
regional hardware stores and building supply centers. In 1990, Makita became our
first national customer and we devoted significant resources to servicing its   
demand for our products. By 1996, we had expanded our product portfolio to      
include our reversible drill and drivers and contractor versions of our         
products. We also began to diversify our customer base by selling products to   
Black & Decker/DeWalt, as well as to retail customers. In 1997 and 1998 we      
continued to expand our customer base by selling to Sears, Home Depot, Canadian 
Tire and TruServ and further expanded our product line by introducing our quick 
change system and new drilling and driving accessories such as wood boring and  
masonry bits. We expect to increase our revenues and margins by pursuing direct 
relationships with major retailers through sales of private                     

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label and STANLEY-Registered Trademark- branded products, increasing sales to   
existing customers, and augmenting our existing product portfolio.              

In 1999, we have incurred several significant non-recurring costs in order to   
position us for future growth. These include the direct and indirect costs to:  

   -  Construct and reorganize our manufacturing, engineering and administrative
facilities;                                                         
-  Purchase, install and test our new drill bit manufacturing equipment;  
 -  Install our new management information system and train our personnel to
use it;                                                             
-  Assess our Year 2000 readiness and implement our compliance program;   
  -  Perform a comprehensive three-year audit of our financial statements; and
  -  Consolidate and combine our operations, incurring additional professional
fees.                                                               

Direct costs included the tangible, out-of-pocket costs incurred by us that     
related to each activity. Indirect costs resulted from the diversion of time and
resources away from our normal operations while we administered these           
activities.                                                                     

In addition, we have undertaken several initiatives to increase production. In  
the third and fourth quarters of 1998, for example, we more than doubled our    
work force from 410 to 839 people. Although necessary at the time to meet       
production schedules, this rapid increase in personnel resulted in significant  
inefficiencies as we trained and integrated these employees into our operations.
We retained a significant number of employees from the year ended December 31,  
1998, to assist us in maintaining quality personnel and to increase our         
productivity during the second half of the year when the majority of our sales  
occur. Furthermore, to ensure an adequate supply of drill bits while we began   
our internal production, we purchased an excess amount of drill bit inventory   
from our existing supplier.                                                     

Revenues are recognized at the time of shipment and sales terms are typically   
net 60 or 90 days. Historically, we have experienced negligible write-offs. Cost
of goods sold consists primarily of raw materials, labor, shipping and other    
manufacturing expenses associated with the production and packaging of products.

Our operating expenses include product development costs, sales and marketing   
expenses and general and administrative expenses. Product development expenses  
consist principally of personnel costs and material associated with the         
development of new products and changes to existing products, which are charged 
to operations as incurred.                                                      

Sales and marketing expenses consist of salaries and employee benefits for      
internal sales personnel, selling commissions paid to Manufacturers' Sales      
Associates, our sales representative, and costs of promotional events. General  
and administrative expenses consist primarily of salaries and employee benefits 
for executive, managerial                                                       

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and administrative personnel, license fees, facility leases, a portion of       
depreciation and amortization of fixed asset costs, travel and business         
development costs.                                                              

Other expense consists primarily of interest expense associated with our        
borrowings and interest income on cash and cash equivalents.                    

 RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO NINE MONTHS ENDED              
SEPTEMBER 30, 1998                                                              

NET REVENUES. Net revenues increased from $25.4 million for the nine months     
ended September 30, 1998 to $32.4 million for the nine months ended September   
30, 1999, representing a 27.5% increase. Most of the $7.0 million increase      
resulted from additional sales to Black & Decker, Sears, and Techtronics. We    
added several smaller customers which individually do not account for a         
significant portion of sales, but collectively accounted for $1.3 million in    
additional sales.                                                               

COST OF GOODS SOLD. Cost of goods sold increased from $17.2 million for the nine
months ended September 30, 1998 to $22.0 million for the nine months ended      
September 30, 1999, representing a 27.8% increase. Cost of goods sold as a      
percentage of revenues increased slightly from 67.8% for the nine months ended  
September 30, 1998 to 67.9% for the nine months ended September 30, 1999. We    
have achieved significant cost savings from our internal manufacturing          
capabilities. However, this savings has been offset by sales of a low margin set
to Sears. Sears has featured this set as a promotional item and sales have been 
greater than forecasted. This relatively lower margin set accounted for 12.4% of
our total sales through September 30, 1999, and while we have begun to identify 
ways to reduce the costs of several components of the set, we expect it to      
account for approximately 35% of total sales in the fourth quarter. Sales of    
this set will continue to have a negative impact on gross margin through the    
fourth quarter.                                                                 

PRODUCT DEVELOPMENT EXPENSES. Product development expenses increased from       
$207,000 for the nine months ended September 30, 1998 to $493,000 for the nine  
months ended September 30, 1999, representing a 138.2% increase. One development
project relating to a licensing agreement with a third party accounted for      
$100,000 of the increase. Professional and technical labor accounted for the    
remaining increase as we hired additional engineers and machinists to develop   
our proprietary products and corresponding manufacturing processes. In          
addition to the labor expensed for the nine months ended September 30, 1998     
and for the nine months ended September 30, 1999, we capitalized $136,000 and   
$965,000, respectively, of labor related to equipment constructed in-house.     
These amounts are included in property, plant and equipment on the balance      
sheet and depreciated over the life of the equipment.                           

SALES AND MARKETING EXPENSES. Sales and marketing expenses increased from $1.3  
million for the nine months ended September 30, 1998 to $1.6 million for the    
nine months ended September 30, 1999, representing a 20.9% increase. Advertising
and promotion expenses increased by $403,000 due to increased retail            
advertising, but this increase was partially offset by a decrease in the sales  
commission percentage paid to our sales representative. Trade show expenses     
increased in the nine                                                           

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months ended September 30, 1999, over the comparable period in 1998 as we       
launched our Stanley-Registered Trademark- -branded products at the             
National Hardware Show in August. In addition, we have continued to increase our
internal marketing and graphics staff to accommodate increased sales and        
customer support activities as our customer diversification efforts required us 
to produce more packaging and merchandising materials.                          

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses        
increased from $1.8 million for the nine months ended September 30, 1998 to $3.9
million for the nine months ended September 30, 1999, representing a 121.8%     
increase. The increase was a result of our initiatives to expand our operating  
capacity and administrative infrastructure. Several non-recurring expenses were 
incurred such as professional fees related to the three year audit of our       
financial statements and the consolidation and combination of our operations,   
training and bonuses related to the implementation of our new software system,  
and travel expenses related to the introduction of our Stanley-Registered       
Trademark- branded products. Further, salary expense increased due to the       
addition of administrative personnel that we have added to manage our growth. We
increased our finance and administrative staff from 54 at September 30, 1998 to 
119 at September 30, 1999.                                                      

OTHER EXPENSE. Other expense increased from $1.0 million for the nine months    
ended September 30, 1998 to $2.1 million for the nine months ended September 30,
1999 as a result of greater borrowings and a corresponding increase in interest 
expense. Also included in other expense in 1999 was additional cost of $615,000 
for interest, warrants, and financing costs related to our bridge financing.    

EXTRAORDINARY ITEM. We incurred an extraordinary expense of $1.0 million in the 
nine months ended September 30, 1999 related to the termination of our operating
line of credit. We expensed the prepayment penalty and the unamortized financing
costs associated with the credit line. A new credit line is in place which      
provides lower fees and greater flexibility and collateral for our inventory.   

NET INCOME. As a result of all these factors, our net income decreased from $3.9
million for the nine months ended September 30, 1998 to $1.2 million for the    
nine months ended September 30, 1999. There was no provision for income tax in  
1998 as we retained our status as an S corporation. Through September 30, 1999, 
because we were a C corporation for only eight days, the income tax provision   
was minimal.                                                                    

THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THREE MONTHS ENDED SEPTEMBER  
30, 1998                                                                        

NET REVENUES. Net revenues increased from $10.5 million for the three months    
ended September 30, 1998 to $14.4 million for the three months ended September  
30, 1999, representing a 36.3% increase. Most of the $3.8 million increase      
resulted from additional sales to Sears, Makita, and the introduction of        
products under the STANLEY-Registered Trademark- JORETECH-TM- brand.            

COST OF GOODS SOLD. Cost of goods sold increased from $7.4 million for the three
months ended September 30, 1998 to $9.3 million for the three months ended      
September 30, 1999, representing a 25.2% increase. Cost                         

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of goods sold as a percentage of revenues decreased from 70.3% for the three    
months ended September 30, 1998 to 64.6% for the three months ended September   
30, 1999. This decrease is primarily attributable to volume-related             
manufacturing efficiencies, vertical integration and a greater mix of           
direct-to-retail sales under the STANLEY-Registered Trademark- JORETECH-TM-     
brand on which we receive a higher gross margin.                                

PRODUCT DEVELOPMENT EXPENSES. Product development expenses increased from       
$102,000 for the three months ended September 30, 1998 to $268,000 the three    
months ended September 30, 1999, representing a 162.7% increase. One development
project with a third party accounted for $100,000 of the increase. Professional 
and technical labor accounted for the remaining increase as we hired additional 
engineers and machinists to develop our proprietary products and corresponding  
processes. In addition to the labor expensed for the three months ended         
September 30, 1998 and for the three months ended September 30, 1999, we        
capitalized $69,768 and $318,621, respectively, of labor related to equipment   
constructed in-house. These amounts are included in property, plant and         
equipment on the balance sheet and depreciated over the life of the equipment.  

SALES AND MARKETING EXPENSES. Sales and marketing expenses increased from       
$597,000 for the three months ended September 30, 1998 to $822,000 for the three
months ended September 30, 1999, representing a 37.7% increase. Advertising and 
promotion expenses increased by $126,000 due to increased retail advertising,   
but this increase was partially offset by a decrease in the sales commission    
percentage paid to our sales representative. Trade show expenses increased in   
the three months ended September 30, 1999, over the comparable period in 1998 as
we had a major launch of our Stanley-Registered Trademark- -branded products at 
the National Hardware Show in August. In addition, we have continued to increase
our internal marketing and graphics staff to accommodate increased sales and    
customer support activities as our customer diversification efforts required us 
to produce more packaging and merchandising materials.                          

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses        
increased from $630,000 for the three months ended September 30, 1998 to $1.6   
million for the three months ended September 30, 1999, representing a 156.8%    
increase. The increase is primarily a result of preparation for our initial     
public offering, including hiring key senior management, implementation of a    
comprehensive enterprise resource planning information system, and increased    
travel costs related to trade show participation and roll-out of new products.  
The increase was also a result of our initiatives to expand our operating       
capacity and administrative infrastructure, as well as an increase in           
professional fees related to being a publicly held company. Further, we         
increased our finance and administrative staff from 54 at September 30, 1998    
to 119 at September 30, 1999.                                                   

OTHER EXPENSE. Other expense increased from $387,000 for the three months ended 
September 30, 1998 to $1.1 million for the three months ended September 30,     
1999. This increase in other expense is primarily attributable to greater of    
borrowings and a corresponding increase in interest expense. Also included in   
other expense in the three months                                               

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ended September 30, 1999 were additional costs of interest, warrants, and       
financing costs related to our bridge financing.                                

EXTRAORDINARY ITEM. We incurred an extraordinary expense of $1.0 million in the 
three months ended September 30, 1999 related to the termination of our         
operating line of credit. We expensed the prepayment penalty and the unamortized
financing costs associated with the credit line. A new credit line is in place  
which provides lower fees and greater flexibility and collateral for our        
inventory.                                                                      

NET INCOME. As a result of all these factors, our net income decreased from $1.4
million for the three months ended September 30, 1998 to $277,000 for the three 
months ended September 30, 1999, representing a 80.5% decrease. There was no    
provision for income tax in 1998 as we retained our status as an S corporation  
status. Through September 30, 1999, because we were a C corporation for only    
eight days, the income tax provision was minimal.                               

PRO FORMA PROVISION FOR INCOME TAXES. Prior to the closing of our initial public
offering in September 1999 we were treated as an S corporation for tax purposes.
As an S corporation, we were not subject to federal and certain state income    
taxes. Upon the closing of our initial public offering on September 23, 1999,   
our status as an S corporation was terminated and we became subject to taxes as 
a C corporation. The pro forma provision for income taxes reflects the estimated
tax expense that we would have incurred had we been subject to federal and state
income taxes as a C corporation during the period. The pro forma provision      
reflects a pro forma tax rate of 38%, which differs from the federal statutory  
rate due primarily to the effects of state and foreign taxes and certain tax    
credits.                                                                        

LIQUIDITY AND CAPITAL RESOURCES                                                 

Historically, we have funded operations with short-term lines of credit and term
loans for equipment purchases and, to a lesser extent, net income from          
operations. On September 23, 1999, we sold 3.7 million shares of our common     
stock to the public for approximately $33.1 million, net of expenses. The       
initial public offering resulted in gross proceeds of $37 million, $2.6 million 
of which was applied toward the underwriting discount. Expenses related to the  
offering totaled approximately $1.3 million, paid to unaffiliated parties. On   
September 23, we estimated distributions would be $4.0 million for our          
undistributed S corporation earnings. Our estimated undistributed earnings at   
September 30, 1999 were approximately $2.1 million. This amount we showed as    
distributions and we recorded the balance of $1.9 million as shareholder        
advances.                                                                       

Operations provided net cash of $3.5 million for the nine months ended September
30, 1999. The net cash provided consisted primarily of increases in accounts    
payable, accrued expenses and a decrease in accounts receivable which were      
partially offset by increased inventory.                                        

Net cash used by investing activities for the nine month period was $27.3       
million. Cash used in investing activities consists primarily of property and   
equipment purchases.                                                            

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Net cash provided by financing activities was $33.9 million for the nine month  
period. Cash provided from financing activities was primarily from the net      
proceeds of the public offering and from term debt and net borrowings on the    
line of credit. This was offset by the repayment of private placement debt and  
payments on the operating line.                                                 

In August 1999 we obtained a revolving line of credit with First Security       
Bank, N.A., with a maximum borrowing limit of $25.0 million. Advances on the    
line are limited to 85% of eligible accounts receivable and 65% of eligible     
inventory. Trade accounts receivable and inventory are assigned as              
collateral. The revolving line of credit provides that we must repay these      
advances within 180 days. Interest on the revolving credit line is at the       
prime rate plus 1% or, at our option, LIBOR plus 3%. The applicable interest    
rate was reduced by one-half percent with the closing of the public offering.   
The term of the agreement is through August 2001. This line is secured by       
receivables, inventory, real estate, equipment and general intangibles.         

Capital expenditures and financing associated with those expenditures have been 
primary factors affecting our financial condition over the last three years.    
Total capital expenditures net of dispositions were $24.5 million in the nine   
months ended September 30, 1999 which includes capitalized interest of $750,000,
compared to capital expenditures of $14.5 million in year ended December 31,    
1998. Significant portions of these expenditures have been related to the       
acquisition of manufacturing equipment to increase production. We anticipate    
1999 capital expenditures of approximately $31.0 million. A significant portion 
of our 1999 capital expenditures has been and will continue to be for additional
investment in manufacturing equipment for anticipated increases in production   
levels. We anticipate spending approximately $7.8 million in 1999 to purchase   
specialized drill bit production equipment. In order to maintain an exclusive   
relationship with the manufacturer of this equipment we must continue to        
purchase approximately $5.3 million of equipment per year over the next five    
years.                                                                          

We believe that existing cash balances, new borrowings and cash generated from  
operations, together with the remaining proceeds from our public offering, will 
be sufficient to meet our anticipated cash needs for working capital and capital
expenditures for approximately the next 12 months. There can be no assurance    
that the underlying assumed levels of revenues and expenses will prove to be    
accurate. We may seek additional funding through public or private financings or
other arrangements prior to such time. Adequate funds may not be available when 
needed or may not be available on terms favorable to us. If additional funds are
raised by issuing equity securities, dilution to existing shareholders will     
result. If funding is insufficient at any time in the future, we may be unable  
to develop or enhance our products, take advantage of business opportunities or 
respond to competitive pressures, any of which could have a material adverse    
effect on our business, financial condition and results of operations.          

IMPACT OF THE YEAR 2000 COMPUTER PROBLEM                                        

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In the beginning of July 1999, we completed the installation of new billing,    
accounting and administrative information systems that are fully operational and
that have been represented to be fully Year 2000 compliant. Failures of our     
internal systems could temporarily prevent us from processing orders, issuing   
invoices, manufacturing and developing products and could require us to devote  
significant resources to correcting such problems. We have tested all of our PCs
and laptop computers for Year 2000 compliance with Year 2000 compliance testing 
software. All of our PCs and laptop units are Year 2000 compliant. Because of   
our inability to undertake testing of certain of our third party equipment, we  
addressed processors embedded in our manufacturing systems on a prioritized     
piece-by-piece basis. We have received written assurances from the manufacturers
of the PCs and embedded processors used in our manufacturing facility that all  
are Year 2000 compliant. In order to determine Year 2000 compliance of our      
vendors, we ranked our vendors according to the lead times that we believed they
needed to correct Year 2000 problems and contacted them to request their Year   
2000 compliance status. All of the vendors that we have identified as critical  
vendors have informed us that they are Year 2000 compliant and that they have   
contingency plans in place. We have also received Year 2000 compliance          
statements from all of our major suppliers.                                     

Approximately 95% of our customer base has provided us with statements of       
compliance, and all of our customers have stated they will be or plan to be     
compliant by the end of December 1999. If our customers are not Year 2000       
compliant, they may experience material costs to remedy problems, may face      
litigation costs and may delay purchases of our products. As a result, our      
business, financial condition and results of operations could be seriously      
harmed.                                                                         

We have funded our Year 2000 plan from cash balances. As of September 30, 1999, 
we have spent approximately $363,900 to address the Year 2000 problem and expect
to spend approximately $5,800 more toward that objective. We will incur         
additional costs related to the Year 2000 plan for administrative personnel to  
manage the project, outside contractor assistance and software. In addition, we 
may experience material problems and costs with Year 2000 compliance that could 
seriously harm our business, financial condition and results of operations.     
Finally, we are also subject to external forces that might generally affect     
industry and commerce, interruptions caused by Year 2000 compliance failures.   

We have completed a Year 2000 contingency plan. It designates employees from    
five information systems divisions to respond to any unexpected failure of any  
of our systems due to a Year 2000 compliance problem. The five divisions are    
hardware, software, production equipment, utilities and financials. We have     
identified each of these five divisions as critical to our continued production 
and operations. In the event of any Year 2000 compliance problem, one of our    
designated employees will contact the responsible vendor and work with that     
vendor towards a solution. We will also identify alternate vendors and make     
appropriate scheduling changes to assure uninterrupted production in the event  
that the designated employee and responsible vendor cannot reach a solution.    

RECENT ACCOUNTING PRONOUNCEMENTS                                                

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Effective January 1, 1998, we adopted the provision of SFAS No. 130, REPORTING  
COMPREHENSIVE INCOME. SFAS No. 130 establishes the standards for reporting      
comprehensive income and its components in financial statements. Comprehensive  
income as defined includes all changes in equity (net assets) during a period   
from non-owner sources. Examples of items to be included in comprehensive       
income, which are excluded from income, include foreign currency translation    
adjustments and unrealized gains/losses on available-for-sale securities.       
Reclassification of financial statements for earlier periods provided for       
comparative purposes is required upon adoption. SFAS No. 130 does not address   
issues of recognition or measurement for comprehensive income and its           
components, and therefore, it had no impact on our financial condition or       
results of operation upon adoption. Currently, there are no transactions that   
would give rise to reporting or disclosure differences between reported income  
and comprehensive income.                                                       

Effective January 1, 1998, we adopted the provisions of SFAS No. 131,           
DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. The        
statement requires, among other things, that we provide financial and           
descriptive information about our reportable operating segments. Operating      
segments are defined as components of an enterprise about which separate        
financial information is available and is regularly evaluated by the            
enterprise's chief operating decision-maker in deciding how to allocate         
resources and in assessing performance. Currently, we believe that we operate in
only one reportable segment.                                                    

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,     
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES. SFAS No. 133      
requires companies to recognize all derivative contracts as either assets or    
liabilities in the balance sheet and to measure them at fair value. If certain  
conditions are met, a derivative may be used specifically as a hedge, the       
objective of which is to match the timing of gain or loss recognition on the    
hedging derivative with the recognition of the changes in the fair value of the 
hedged asset or liability that are attributable to the hedged risk, or the      
earnings effect of the hedged forecasted transaction. For a derivative not      
designated as a hedging instrument, the gain or loss is recognized in income in 
the period of change. SFAS No. 133 is effective for all fiscal quarters of      
fiscal years beginning after July 1, 2000. Historically, we have not entered    
into derivative contracts either to hedge existing risks or for speculative     
purposes.                                                                       

INFLATION AND INTEREST RATE RISK                                                

Our operating results may be affected by changes in rates of inflation and      
market interest rates. In particular, increases in market interest rates will   
adversely affect our net income, as most of our indebtedness bears interest at  
floating rates tied to the prime rate or other interest rate benchmarks.        
Inflation does not currently affect our operating results materially, and we do 
not expect inflation to materially affect our operations in the foreseeable     
future.                                                                         

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RISK FACTORS                                                                    

THE FOLLOWING FACTORS SHOULD BE CONSIDERED IN EVALUATING OUR BUSINESS,          
OPERATIONS AND PROSPECTS AND MAY AFFECT OUR FUTURE RESULTS AND FINANCIAL        
CONDITION.                                                                      

OUR RAPID GROWTH MAY MAKE IT DIFFICULT TO EFFECTIVELY ALLOCATE OUR RESOURCES AND
MANAGE OUR BUSINESS:                                                            

We are experiencing significant growth in the sales of our products, the number 
of employees and the amount of our production and cannot assure that we will be 
able to manage any future growth effectively. We recently expanded our          
operations by hiring additional personnel, increasing production capacity and   
upgrading our information systems. Continued growth could strain our management,
production, engineering, financial and other resources. To manage our growth    
effectively, we must add manufacturing capacity while maintaining high levels of
quality, manufacturing efficiency and customer service. We also must continue to
enhance our operational, financial and management systems and successfully      
attract, train, retain and manage our employees. Any failure to manage our      
growth effectively could have a material adverse effect on our business,        
financial condition and results of operations, such as declines in revenues and 
profit margins.                                                                 

THE LOSS OF A LARGE CUSTOMER COULD RESULT IN A SUBSTANTIAL DECREASE IN REVENUES:

Historically, most of our sales have been derived from a small number of        
customers and, due to the continuing consolidation of the industry's            
distribution channels, we expect a significant portion of our future sales to   
remain concentrated among a limited number of customers. In 1997, sales to      
Sears, Black & Decker/DeWalt, Makita and Home Depot accounted for 31.9%, 21.5%, 
25.6% and 17.0%, respectively, of our net revenues. In 1998, sales to Sears,    
Black & Decker/DeWalt and Makita accounted for 60.2%, 17.2% and 14.5%,          
respectively, of our net revenues. For the nine months ended September 30, 1999,
Sears, Black & Decker/DeWalt and Makita accounted for 46.9%, 26.6% and 13.2%    
respectively, of our net revenues. A significant decrease in sales to, or the   
loss of, any of our major customers would have a material adverse effect on our 
business, prospects, operating results and financial condition, such as a       
substantial decline in revenues.                                                

THE MARKETING OF OUR PRODUCTS UNDER THE STANLEY-Registered Trademark- BRAND MAY 
BE UNSUCCESSFUL AND MAY ADVERSELY AFFECT Our RELATIONSHIPS WITH EXISTING        
CUSTOMERS:                                                                      

In April 1999, we signed an agreement with The Stanley Works that grants us the 
exclusive license to sell power tool accessories under the STANLEY-Registered   
Trademark- brand and indemnifies us for damages and costs incurred in connection
with any infringement claims arising out of our use of Stanley-Registered       
Trademark- trademarks and trade dress. Some of our existing customers may view  
our license arrangement with Stanley unfavorably, and therefore reduce or stop  
purchases of our products. For example, in June 1999, Black & Decker advised us 
that our proposed introduction of STANLEY-Registered Trademark- branded power   
tool accessories in yellow and black packaging would violate Black & Decker's   
trademark rights under its DEWALTs brand. In response to Black & Decker's       
assertions, Stanley filed a lawsuit, which we joined as a co-plaintiff, seeking 
a judgment that,                                                                

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among other things, the use of the colors yellow and black with the             
STANLEY-Registered Trademark- name or trademark on power tool accessories does  
not infringe or dilute Black & Decker's trademark rights. On July 7, Black &    
Decker asserted counterclaims against Stanley and Jore for unfair competition   
and trademark and trade dress infringement. This lawsuit poses the risks that we
may be required to modify the colors of the packaging and promotional materials 
for our STANLEY-Registered Trademark- branded products which could diminish the 
value of, and limit our sales and growth prospects associated with, the         
STANLEY-Registered Trademark- brand. We could incur significant expenses and be 
required to pay damages if Stanley fails to fulfill its indemnification         
obligations to us; and Black & Decker could limit or terminate its business     
relationship with us. The occurrence of any of these events could have a        
material adverse effect on our business, operating results and financial        
condition by increasing our costs, reducing our sales and diverting management  
resources.                                                                      

In addition, retailers may choose not to offer our products under the           
STANLEY-Registered Trademark- brand. We cannot be certain that the time and     
resources we will spend marketing our products under the STANLEY-Registered     
Trademark- brand will lead to increased sales and profitability. Other potential
risks in connection with this licensing agreement include:                      

  -  The failure by Stanley to maintain the integrity and quality of its brand
image in the minds of its consumers; and,                           
-  Our inability to meet the performance requirements of the licensing    
agreement may cause Stanley to terminate our agreement.             

OUR FAILURE TO DEVELOP NEW DISTRIBUTION CHANNELS COULD DIMINISH OUR REVENUE     
GROWTH:                                                                         

We cannot assure that we will be able to develop new distribution channels or   
penetrate the industrial market or that this growth strategy can be implemented 
profitably. Our growth depends, in part, on our ability to develop new          
distribution channels, including penetration of the industrial market for our   
products. Challenges that we face in developing new distribution channels       
include:                                                                        

-  Obtaining customer acceptance of our products;                         
-  Managing existing customer relationships;                              
-  Establishing relationships with new customers;                         
-  Displacing incumbent vendor relationships; and                         
-  Successfully introducing new products under the STANLEY-Registered     
Trademark- brand.                                                   

Our failure to develop new distribution channels could have a material adverse  
effect on our business, operating results, and financial condition, particularly
future revenue levels.                                                          

THE LOSS OF ANY OF OUR KEY PERSONNEL COULD ADVERSELY AFFECT OUR ABILITY TO      
MANAGE OUR BUSINESS:                                                            

Our performance and future success depends to a significant extent on our senior
management and technical personnel, and in particular on the skills, experience,
and continued efforts of Matthew Jore, Jore Corporation's founder, President and
Chief Executive Officer. The loss of Matthew Jore or any of our other key       
personnel could have a material                                                 

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adverse effect on our business and prospects. We have an employment agreement   
with Matthew Jore and one of our vice presidents, but do not have employment    
agreements with any of our other employees.                                     

OUR PRODUCTION PROCESSES COULD BE DISRUPTED AND OUR COST OF PRODUCTION COULD    
INCREASE SIGNIFICANTLY IF OUR MANUFACTURING EQUIPMENT DOES NOT MEET PERFORMANCE 
EXPECTATIONS OR IS NOT AVAILABLE FOR FUTURE PURCHASE:                           

The failure of our manufacturing equipment to perform reliably and as designed, 
our inability to source such equipment from present suppliers, or the           
obsolescence of our equipment could disrupt our production processes, reduce our
sales and increase production costs. Our business is dependent on the successful
implementation and operation of advanced manufacturing technologies. Our        
manufacturing equipment may fail to meet our performance requirements or        
continue to operate reliably because of unexpected design flaws or manufacturing
defects. Moreover, we may be unable to continue to obtain equipment and supplies
from our present suppliers if they cease producing or selling such equipment or 
supplies or opt not to sell to us. In addition, we cannot be certain that our   
manufacturing processes will remain competitive with new and evolving           
technologies.                                                                   

OUR INABILITY TO INTRODUCE NEW PRODUCTS THAT ARE ACCEPTED BY THE MARKET COULD   
ADVERSELY AFFECT OUR SALES, OUR REPUTATION AS AN INNOVATIVE MANUFACTURER AND OUR
ABILITY TO OBTAIN NEW CUSTOMERS:                                                

Our future success will depend in part on our continuous and timely development 
and introduction of new products that address evolving market requirements. We  
cannot assure that our new products will be introduced on a timely basis or will
achieve market acceptance. We may be unable to successfully develop and produce 
new products because of a lack of market demand, production capacity constraints
or the lack of relevant technical and engineering expertise. Factors affecting  
the market acceptance of our new products include:                              

-  Functionality, quality and pricing;                                    
-  Demand from end-users;                                                 
-  Favorable reviews in trade publications;                               
-  Adequate marketing support;                                            
-  The introduction of competitive products; and                          
-  General trends in the power and hand tool industries and the home      
improvement market.                                                 

OUR GROWTH STRATEGY DEPENDS IN PART ON OUR EXPANSION INTO FOREIGN MARKETS, WHICH
MAY BE DIFFICULT OR UNPROFITABLE:                                               

We intend to expand distribution of our products in foreign markets. Because of 
the size and continued growth of the power tools accessories market outside     
North America, the failure to successfully enter foreign markets could limit our
growth prospects. In our attempt to enter foreign markets, we may expend        
financial and human resources without a corresponding increase in revenues and  
profitability. We cannot assure that we will be able to penetrate foreign       
markets or that this growth strategy can be implemented profitably. Penetrating 
and conducting business in foreign markets involves challenges, including:      

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-  Local acceptance of our products;                                      
-  Currency controls and fluctuations in foreign exchange rates;          
-  Regulatory requirements such as tariffs and trade barriers;            
-  Longer payment cycles and increased difficulty in collecting accounts  
receivable;                                                         
-  Unfavorable tax consequences; and                                      
-  Transportation and logistics.                                          

WE FACE COMPETITION IN THE POWER TOOL ACCESSORIES AND HAND TOOLS MARKETS:       

The power tool accessories and hand tools markets are mature and highly         
competitive. We cannot assure that we will be able to compete in our target     
markets. In the power tool accessory market competitors include Vermont American
Corporation, Black & Decker Corporation, Greenfield Industries, Inc., a         
wholly-owned subsidiary of Kennametal Inc., American Tool Companies, Inc.,      
Snap-On Incorporated and others, as well as a number of other companies that    
supply products under private labels to OEM and retail customers. Some of these 
competitors offer products similar to ours or different products with similar   
functionalities. In particular, Black & Decker has developed a product line with
similar characteristics to our quick-change system. In the hand tool market,    
competitors include American Tool Companies, Inc., Cooper Industries, Inc., The 
Stanley Works and others, including foreign manufacturers such as Sandvik AB.   

Many of our competitors are established companies that have significantly       
greater financial, technical, manufacturing, sales and marketing, and support   
resources than Jore Corporation. In addition, many of our competitors own       
well-known brands, enjoy large end-user bases, and benefit from long-standing   
customer relationships. We believe that consumers in our markets generally are  
loyal to a particular brand. Therefore, it may be difficult to generate sales to
consumers who have purchased products from competitors. Our failure to compete  
successfully against current or future competitors would have material adverse  
effects on our business, operating results, and financial condition including   
loss of customers, declining revenues and loss of market share.                 

OUR DEPENDENCE ON CUSTOMER FORECASTS TO MANAGE OUR BUSINESS MAY CAUSE US TO     
MISALLOCATE OUR PRODUCTION, INVENTORY OR OTHER RESOURCES:                       

Significant or numerous cancellations, reductions or delays in orders by a      
principal customer or a group of customers could have a material adverse effect 
on our revenues, inventory levels and profit margins. We rely on our customers' 
forecasts to anticipate their future volume of orders, which typically do not   
become contractual obligations until approximately 30 days prior to shipment. We
rely on these forecasts when making commitments regarding the level of business 
that we will seek and accept, the mix of products that we intend to manufacture,
the timing of production schedules, and our use of equipment and personnel. The 
size and timing of orders placed by our customers varies due to a number of     
factors, including consumer demand, inventory management by customers, our      
customers' manufacturing or marketing strategies, and fluctuations in demand for
competing and complementary products. In addition, a variety of economic        
conditions, both specific to individual                                         

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customers and generally affecting the markets for our products, may cause       
customers to cancel, reduce or delay orders that were previously made or        
anticipated.                                                                    

OUR BUSINESS IS SEASONAL AND OUR OPERATING RESULTS ARE SUBJECT TO QUARTERLY     
FLUCTUATIONS:                                                                   

Seasonality and unanticipated changes in customer demand could cause our        
revenue, expenses, inventory levels and operating results to fluctuate.         
Currently, the majority of our sales occur during the third and fourth fiscal   
quarters and our operating results depend significantly on the holiday selling  
season. In 1997 and 1998, approximately 69% and 67%, respectively, of our net   
revenues were generated during the third and fourth quarters. To support this   
sales peak, we anticipate demand and build inventories of finished goods        
throughout the first two fiscal quarters. In addition, our customers may reduce 
or delay their orders during the first two fiscal quarters to balance their     
inventory between the holiday selling seasons. As a result, our levels of raw   
materials and finished goods inventories tend to be at their highest, relative  
to sales, during the first half of the year. These factors can cause variations 
in our quarterly operating results and potentially expose us to greater adverse 
effects of changes in economic and industry trends.                             

In addition, a substantial portion of our sales depends upon receiving purchase 
orders for products to be manufactured and shipped in the same quarter in which 
these orders are received. While we monitor our customers' needs, we typically  
have a small backlog relative to net revenues, and a significant portion of our 
orders are placed for production and delivery within a few weeks from receipt of
the order. As a result, the timing of revenue may be affected by changes in     
production volume in response to fluctuations in customer and end-user demand,  
introduction of new products by customers, and balancing of customers' inventory
to their sales estimates.                                                       

UNSATISFACTORY PERFORMANCE OF OUR NEW INFORMATION TECHNOLOGY SYSTEM COULD SLOW  
OUR GROWTH:                                                                     

The satisfactory performance and reliability of our information systems are     
essential to our operations and continued growth. We have implemented a new     
information technology system that became operational during July of 1999. If   
the system fails to perform reliably or otherwise does not meet our             
expectations, we could experience design, manufacturing, and shipping delays    
which, in turn, could increase our costs and result in deferred or lost sales.  
Failure to maintain our new information system, or unsatisfactory performance of
the system, could disrupt manufacturing operations and reporting systems, cause 
delays in production and shipping of product, and adversely affect our          
responsiveness to customers.                                                    

THE LOSS OR NON-PERFORMANCE OF OUR SALES REPRESENTATIVE COULD DISRUPT OUR SALES 
EFFORTS:                                                                        

We coordinate our sales and marketing activities with a sales representative,   
Manufacturers' Sales Associates, LLC. In 1998, Manufacturers' Sales Associates  
and its affiliate received a commission on all of our sales. The failure or     
inability of Manufacturers' Sales                                               

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Associates to represent us effectively, maintain relationships with our         
customers, attract new customers, or satisfactorily perform marketing activities
could adversely affect our business, customer relationships, reputation and     
prospects for growth. Moreover, Manufacturers' Sales Associates can terminate   
its relationship with us at any time without penalty. Termination of this       
relationship would require us either to conduct all of our sales and marketing  
activities internally or retain another sales and marketing representative. Any 
such change could disrupt our sales efforts and damage our customer             
relationships.                                                                  

EXISTING AND POTENTIAL LITIGATION MAY DIVERT MANAGEMENT RESOURCES AND COULD     
ADVERSELY AFFECT OUR OPERATING RESULTS:                                         

From time to time we have been, and expect to continue to be, subject to legal  
proceedings and claims in the ordinary course of our business. Such claims, even
if not meritorious, could require the expenditure of significant financial and  
managerial resources. On August 16, 1999, Pete K. Block and Paul K. Block       
instituted separate actions in Montana District Court against us, Matthew Jore  
individually and d.b.a. Jore Enterprises, Michael Jore and Merle Jore. In their 
complaints, the Blocks alleged, among other things, that they are collectively  
entitled to a 25% interest in the capital stock of Jore Enterprises and any     
successor corporation. Their lawsuits are based in part upon an agreement, dated
October 10, 1989, between the Blocks and Matthew, Michael and Merle Jore. The   
Blocks seek as remedies dissolution of Jore Corporation and a preliminary       
injunction preventing us from proceeding with an offering. In addition, the     
Blocks have alleged that they have suffered damages of not less than $10 million
and are seeking compensatory and punitive damages, attorneys' fees and costs,   
and injunctive relief preventing any reorganization or sale that would cause    
them to collectively own less than 25% of the equity of Jore Enterprises and any
successor corporation.                                                          

Litigation is inherently uncertain, and we cannot assure that we and/or the     
Jores will prevail in the suit. To the extent that the Blocks become entitled to
shares of our common stock as a result of the suit, we may be required to       
recognize an expense equal to the number of shares issued multiplied by the fair
value of the common stock on the date of issuance. Satisfaction of such         
liabilities through the issuance of shares could result in the recognition of   
future expenses, which could have a material adverse effect on our results of   
operations.                                                                     

WE SUBSTANTIALLY RELY ON CONTRACTS WITH AFFILIATES WHOSE INTERESTS MAY NOT      
ALWAYS COINCIDE WITH THOSE OF OUR PUBLIC SHAREHOLDERS:                          

The existence of, or potential for, conflicts-of-interest between two of our    
directors and us could adversely influence decisions relating to sales and      
marketing and printing and packaging of our products. We rely substantially on  
our sales representative, Manufacturers' Sales Associates, for sales and        
marketing assistance and on Printing Press Incorporated for printing and        
packaging materials. Our director William M. Steele is the managing member and  
owns 50% of Manufacturers' Sales Associates, and our director Bruce Romfo owns  
30% of Printing Press Incorporated. In 1998, Manufacturers' Sales Associates and
its affiliate earned an aggregate of $1.8 million in sales commissions and we   
purchased $2.0 million printing and packaging materials from                    

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Printing Press. Because of their significant ownership stakes in these two      
entities, the interests of Messrs. Steele and Romfo may diverge from those of   
Jore Corporation and its public shareholders.                                   

UNFAVORABLE CHANGES IN COSTS AND AVAILABILITY OF RAW MATERIALS MAY ADVERSELY    
AFFECT OUR MANUFACTURING OPERATIONS AND ABILITY TO SATISFY OUR CUSTOMERS'       
ORDERS:                                                                         

We purchase raw materials, key components and certain products from third party 
vendors. Although there are alternative sources for these raw materials,        
components, and products, we could experience manufacturing and shipping delays 
if it became necessary to change or replace current suppliers, or to produce    
certain components or products internally. In addition, the prices of raw       
materials supplied by certain vendors are influenced by a number of factors,    
including general economic conditions, competition, labor costs, and general    
supply levels. Our inability to obtain reliable and timely supplies of          
out-sourced products and components and raw materials on a cost effective basis,
or any unanticipated change in suppliers, could have a material adverse effect  
on our manufacturing operations, revenues and profitability.                    

WE DEPEND ON PATENT, TRADEMARK AND TRADE SECRET PROTECTION TO MAINTAIN OUR      
MARKET POSITION:                                                                

Our success depends in part on our ability to obtain patent protection for our  
products, maintain trade secret protection for our proprietary processes, and   
operate without infringing on the proprietary rights of others. Our existing    
U.S. and foreign patents expire between 2002 and 2012. We have filed, and intend
to file, applications for additional patents covering our products. We cannot be
certain that any of these patent applications will be granted, that any future  
inventions that we develop will be patentable or will not infringe the patents  
of others, or that any patents issued to or licensed by us will provide us with 
a competitive advantage or adequate protection for our technology. In addition, 
we cannot assure that any patents issued to or licensed by us will not be       
challenged, invalidated or circumvented by others.                              

We believe that trademarks owned or licensed by us enhance our position in the  
marketplace and are important to our business. Our inability to use any of our  
trademarks could adversely affect our customer relationships and revenues. We   
cannot be certain that we will retain full rights to use our trademarks in the  
future.                                                                         

THE COST OF PROTECTING AND DEFENDING OUR PATENTS, TRADEMARKS AND TRADE SECRETS  
MAY BE SIGNIFICANT:                                                             

The defense and prosecution of patent claims, and litigation involving          
intellectual property rights generally, is both costly and time consuming. If   
any of our products are found to have infringed any patent or other third party 
proprietary right, we may be unable to obtain licenses to continue to           
manufacture and sell such products or may have to pay damages as a result of    
such infringement. We endeavor to protect our trade secrets by entering into    
confidentiality agreements with third parties, employees and consultants and    
generally control access to our facilities and distribution of our proprietary  
documentation and other materials. Confidentiality and non-disclosure           

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obligations are difficult to enforce, however, and we may lack an adequate      
remedy for breach of a confidentiality agreement. Moreover, a third party could 
gain access to our trade secrets through means other than by breach of a        
confidentiality agreement, or could develop independently a process             
substantially similar to our trade secrets. In addition, the laws of other      
countries in which we market or may market our products may afford little or no 
effective protection of our intellectual property.                              

WE COULD BECOME SUBJECT TO PRODUCT LIABILITY LAWSUITS:                          

We face a potential risk of product liability claims because our products may be
used in activities where injury may occur such as the building and construction 
industries. Although we have product liability insurance coverage, we cannot be 
certain that this insurance will adequately protect us against product liability
claims or that we will be able to maintain this insurance at reasonable cost and
on reasonable terms. To the extent that we are found liable for damages with    
respect to a product liability claim and lack adequate insurance coverage to    
satisfy such claim, our business, operating results, and financial condition    
could be materially and adversely affected.                                     

THE JORE FAMILY CONTROLS ALL MATTERS REQUIRING SHAREHOLDER APPROVAL POSSIBLY IN 
CONFLICT WITH YOUR INTERESTS:                                                   

Matthew Jore, acting alone, or the Jore family, acting together, are able to    
control all matters requiring shareholder approval. Matthew Jore, President and 
Chief Executive Officer, his brother Michael Jore, Executive Vice President,    
trusts controlled by Matthew and Michael Jore, and other members of the Jore    
family beneficially own approximately 64.3% of our outstanding common stock. Our
Articles of Incorporation and Bylaws do not provide for cumulative voting;      
therefore, the Jore family has the ability to elect all of our directors. The   
Jore family also has the ability to approve or disapprove significant corporate 
transactions without further vote by the investors who purchase common stock in 
this offering. This ability to exercise control over all matters requiring      
shareholder approval could prevent or significantly delay another company or    
person from acquiring or merging with us.                                       

WE MAY NEED ADDITIONAL CAPITAL WHICH COULD DILUTE YOUR INTEREST IN THE COMPANY  
AND WHICH MAY NOT BE AVAILABLE WHEN NEEDED:                                     

We believe that our cash resources, including borrowings under our credit       
facilities and cash from operations, and the net proceeds from our public       
offering will be sufficient to finance our anticipated growth for approximately 
the next 12 months. However, we may be required to raise additional equity or   
debt capital to continue our current levels of operations and to enhance our    
financial position for future operations. Financings may be unavailable to us   
when needed or, if available, may be on unfavorable terms or may be dilutive to 
our shareholders. If financing is unavailable to us or is available only on a   
limited basis, we may be unable to develop or enhance our products, take        
advantage of business opportunities or respond to competitive pressures, any of 
which could have a material adverse effect on our business, operating results,  
and financial condition.                                                        

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WE USE DEBT, WHICH CREATES FINANCIAL AND OPERATING RISK:                        

We have relied on debt and may seek additional debt funding in the future. As of
September 30, 1999, we had approximately $16.8 million of outstanding long-term 
debt, net of current portion, which accounted for 31.2% of our total            
capitalization. Our leverage poses the risks that:                              

-  We may be unable to repay our debt due to a decline in revenues or     
disruption in cash flow;                                            
-  We may be unable to obtain additional financing;                       
   -  We must dedicate a substantial portion of our cash flow from operations to
servicing the interest and principal payments on our debt, and any  
 remaining cash flow may be inadequate to fund our planned operations;
   -  We have pledged substantially all of our inventory and accounts receivable
as collateral; and                                                  
-  We may be more vulnerable during economic downturns, less able to      
withstand competitive pressures and less flexible in responding to  
changing business and economic conditions.                          

ANY FAILURE OF OUR INFORMATION TECHNOLOGY AND COMPUTER CONTROLLED SYSTEMS TO BE 
YEAR 2000 COMPLIANT COULD SUBJECT US TO UNFORESEEN EXPENSES:                    

We may not accurately identify all potential Year 2000 problems within our      
business, and the corrective measures that we implement may be ineffective or   
incomplete. Any such problems could interrupt our ability to manufacture our    
products, process orders, accurately report operating and financial data or     
service our customers. Similar problems and consequences could result if any of 
our key suppliers or customers experience Year 2000 problems. Our failure or the
failure of our significant suppliers and customers to adequately address the    
Year 2000 issue could adversely affect our business, operating results and      
financial condition.                                                            

OUR LOCATION ON PRIVATE PROPERTY WITHIN A NATIVE AMERICAN RESERVATION COULD     
SUBJECT US TO UNFORESEEN REGULATION:                                            

Our corporate offices and manufacturing facilities are located on private       
property within the Flathead Indian Reservation. We may be or become subject to 
the jurisdiction of the tribal government or court in any disputes involving any
of the three tribes located on the reservation or their members. In particular, 
the tribal government may seek to assert civil regulatory authority over the    
conduct of our business under federal laws and treaties under which any of the  
tribes, their members, or non-member successors to ownership of land formerly   
owned by members of any of the tribes have senior priority. In addition, the    
tribal government may have the ability to regulate certain of our activities if 
those activities are shown to directly affect any of the tribes, if we enter    
into contracts with a tribe or its members, or if a tribe implements laws       
governing our business conduct. Currently, the tribal government does not       
regulate any of our business activities, however, any regulations that it may   
seek to impose could have a material adverse effect on our business, operating  
results and financial condition.                                                

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FUTURE SALES OF CURRENTLY OUTSTANDING SHARES COULD NEGATIVELY AFFECT OUR STOCK  
PRICE:                                                                          

The market price of our common stock could decrease as a result of sales of a   
large number of shares in the market or in response to the perception that such 
sales could occur. Approximately 9.0 million of our shares are subject to       
lock-up agreements that prohibit the sale of these shares until March 23, 2000. 
After expiration of the lock-up period, these shares will be eligible for       
immediate sale, in certain instances subject to the volume limitations of Rule  
144. D.A. Davidson & Co. can release shares from one or more of the lock-up     
agreements without our approval.                                                

CERTAIN PROVISIONS UNDER STATE CORPORATE LAW AND OUR CORPORATE CHARTER COULD    
HAVE AN ADVERSE EFFECT ON OUR STOCK PRICE:                                      

Certain provisions of our Articles of Incorporation, Bylaws and Montana         
corporate law could be used by our incumbent management to make it substantially
more difficult for a third party to acquire control of Jore Corporation. These  
provisions could discourage potential takeover attempts and could adversely     
affect the market price of our common stock.                                    

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Substantially all of our cash equivalents and marketable securities are at fixed
interest rates, and, as such, the fair value of these instruments is affected by
changes in market interest rates. However, all of our cash equivalents and      
marketable securities mature within one year. As a result, we believe that the  
market risk arising from our holding of these financial instruments is minimal. 
In addition, all of our current customers pay in U.S. dollars and, consequently,
our foreign currency exchange rate risk is immaterial. We do not have any       
derivative instruments and do not engage in hedging transactions.               

 PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS                                                    

From time to time we have been, and expect to continue to be, subject to legal  
proceedings and claims in the ordinary course of our business, including claims 
of alleged infringement of third-party trademarks and other intellectual        
property rights. Such claims, even if not meritorious, could require the        
expenditure of significant financial and managerial resources.                  

BLACK & DECKER LITIGATION. On June 9, 1999, Stanley filed a lawsuit against     
Black & Decker in the United States District Court for the District of          
Connecticut. The lawsuit arises out of claims made by Black & Decker that our   
proposed introduction of STANLEY-Registered Trademark- branded power tool       
accessories in yellow and black packaging would violate Black & Decker's        
trademark rights associated with its DEWALT brand.                              

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Stanley is seeking a declaratory judgment that the use or license by Stanley or 
Jore of yellow and black on power tools or their accessories does not infringe  
or dilute any of Black & Decker's federal or state trademark rights, or         
constitute an unfair trade practice under federal or state law. We have joined  
Stanley as a co-plaintiff in this suit. Stanley has advised us that:            

-  It has used yellow and black on its products since at least 1899;      
-  It has marketed products under its "Stanley in a notched rectangle"    
trademark since at least 1902;                                      
-  It has sold power tool accessories since at least 1939;                
-  It has packaged its power tool accessories utilizing yellow and black  
trade dress since at least 1957.                                    

In contrast, we believe that Black & Decker first introduced the DeWalt line of 
power tools dressed in yellow and black in 1992. Jore began shipping product    
under the Stanley-Registered Trademark- brand on June 14, 1999. On July 7, 1999 
Black & Decker filed an Amended Answer, Affirmative Defenses, and Counterclaims 
to Amended Complaint, in which Black & Decker denied most of the allegations    
asserted against it and raised counterclaims against Stanley and Jore alleging, 
among other things, unfair competition and trademark and trade dress            
infringement. In its filing Black & Decker seeks:                               

-  Dismissal of Stanley's action;                                         
 -  An injunction against Stanley and Jore that would prevent Stanley and us
from using the yellow and black color combination for marketing and 
selling power tools and power tool accessories; and,                
-  Damages for our use of the yellow and black color combinations; and    
attorneys' fees and costs.                                          

Under the license agreement, Stanley has agreed to indemnify and hold us        
harmless with respect to any alleged copyright or trademark infringement action 
arising out of the approved use of Stanley's trademarks, and has the sole       
responsibility for undertaking and conducting the defense of any such action.   
Discovery in this case is ongoing.                                              

BLOCK BROTHERS LITIGATION. On August 16, 1999, Pete K. Block and Paul K. Block  
instituted separate actions in the Montana Fourth Judicial District Court of    
Missoula County, Montana against us, Matthew Jore individually and d.b.a. Jore  
Enterprises, Michael Jore, individually, and Merle Jore, individually. In their 
complaints, the Blocks alleged, among other things, that they are collectively  
entitled to a 25% interest in the capital stock of Jore Enterprises and any     
successor corporation. Their lawsuits are based in part upon an agreement, dated
October 10, 1989, between the Blocks and Matthew, Michael and Merle Jore        
pursuant to which the Blocks contend that Matthew, Michael and Merle Jore agreed
to issue them shares of stock of Jore Enterprises and any successor corporation 
and to grant them a collective 25% interest in all patent rights, profits and   
real and personal property. The Blocks seek as remedies dissolution of Jore     
Corporation and a preliminary injunction preventing Jore Corporation from       
proceeding with this offering. In addition, the Blocks have alleged that they   
have                                                                            

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suffered damages of not less than $10 million and are seeking compensatory      
damages, plus interest, punitive damages, attorneys' fees and costs and         
injunctive relief preventing any capital reorganization or sale that would cause
them to collectively own less than 25% of the equity of Jore Enterprises and any
successor corporation.                                                          

We answered the complaint on October 20, 1999, and asserted various affirmative 
defenses. While we believe that we have meritorious defenses to the Blocks'     
claims, litigation is inherently uncertain, and we cannot assure that we and/or 
the Jores will prevail in the suit. To the extent that the Blocks become        
entitled to shares of our common stock as a result of the suit, we may be       
required to recognize an expense equal to the number of shares issued multiplied
by the fair value of the common stock on the date of issuance. This could have a
material adverse effect on our results of operations. Discovery in this case is 
ongoing.                                                                        

In order to protect Jore Corporation and its shareholders from any adverse      
outcome in this or any future proceeding involving the Blocks, Matthew, Michael 
and Merle Jore have entered into an indemnification agreement with Jore         
Corporation pursuant to which they will indemnify and hold Jore Corporation     
harmless against these and any other future claims, including any damages and   
costs resulting therefrom, that the Blocks may assert against us. In addition,  
the agreement provides that if the Blocks become entitled to any shares of our  
common stock pursuant to a definitive judicial or arbitral determination or a   
settlement agreement with us, then the Jores will deliver to us such shares from
their own shareholdings for re-issuance by Jore Corporation to the Blocks. We   
cannot be certain, however, that the Jores will be able to perform their        
indemnification obligations or that such performance will not adversely affect  
the market for our stock. Satisfaction of such liabilities through the issuance 
of shares could result in the recognition of future expenses, which could have a
material adverse effect on our results of operations.                           

ITEM 2.  CHANGES IN SECURITIES                                                  

During the three months ended September 30, 1999, we granted stock options to   
purchase 181,081 shares of common stock at exercise prices ranging from $9.10 to
$11.625 per share to employees, directors and consultants pursuant to our 1997  
Stock Plan. We believe that the issuance of the options were exempt from        
registration under the Securities Act by virtue of Rule 701.                    

In July and August 1999, we issued to 19 accredited investors approximately $7.4
million aggregate principal amount of subordinate debt bearing interest at 6.5% 
to 7% per annum. In connection with the issuance of these notes, we also issued 
warrants to purchase, on a pro-rata basis, an aggregate of 325,600 shares of    
common stock at exercise prices of $9.10 and $10.00 per share. We believe the   
issuance of the notes and warrants was exempt from registration under Section   
4(2) of the Securities Act and under Rule 506 of Regulation D promulgated       
thereunder.                                                                     

On September 22, 1999, our Registration Statement on Form S-1, Registration No. 
333-78357, pursuant to which we registered the offer and sale of 4,300,000      
shares of our common stock by us and an                                         

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additional 300,000 shares by one of our shareholders, was declared effective by 
the SEC. On September 23, 1999, we commenced our initial public offering of     
3,700,000 shares of common stock, and one of our shareholders commenced his     
offering of an additional 300,000 shares, at a public offering price of $10.00  
per share. We completed the sale of these shares on September 28, 1999. The     
managing underwriters of the offering were D.A. Davidson & Co., Janney          
Montgomery Scott LLC and First Security Van Kasper (the "Underwriters"). On     
October 19, 1999, the Underwriters exercised their option to purchase an        
additional 600,000 shares of common stock from us to cover over-allotments. We  
completed this sale on October 21, 1999, as of which date our offering          
terminated.                                                                     

We received gross proceeds of $43.0 million, and the selling shareholder        
received gross proceeds of $3.0 million, upon completion of the offering.       
Expenses incurred by us in connection with the offering totaled approximately   
$1.3 million, excluding the underwriting discount of approximately $3.0 million.
Consequently, the net proceeds to us from the offering were approximately       
$38.7 million. As of September 30, 1999, we had realized and used the net       
proceeds of the offering (excluding the net proceeds from the exercise of the   
over-allotment option) as follows:                                              

                                                                · Download Table
                                                                                
------------------------------------------------------- ------------------------
Net  Proceeds  from  sale  by  Jore   Corporation   of  $33.1 million           
3,700,000 shares                                                                
------------------------------------------------------- ------------------------
USE OF PROCEEDS                                                                 
------------------------------------------------------- ------------------------
Repayment of indebtedness and related interest          $12.9 million           
------------------------------------------------------- ------------------------
S Corporation dividend and shareholder advances         $4.0 million            
------------------------------------------------------- ------------------------
Capital expenditures and working capital                $8.3 million            
------------------------------------------------------- ------------------------
Investments and liquid marketable securities          $7.9 million              
------------------------------------------------------- ------------------------
Total                                                   $33.1 million           
------------------------------------------------------- ------------------------

Of the $4.0 million in distributions and shareholder advances, the following    
amounts were paid to officers, directors and 10% shareholders:                  

                                                                · Download Table
                                                       
Matt Jore and Family Trust                  $ 2,080,890
Mike Jore and Family Trust                  $ 1,040,310
David H. Bjornson                           $       447
Dan Gabig                                   $       248
Kelly Grove                                 $       248
Bruce Romfo                                 $     7,462

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                   

At a special meeting held on July 2, 1999, the shareholders agreed to increase  
the number of shares reserved for issuance under the Amended and Restated 1997  
Stock Plan to 1,300,000. The number of shares voted in favor of the amendment   
was 8,812,500, with no votes against and no abstentions.                        

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ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                       

The following exhibits are filed as part of this Form 10-Q:                     

(a)      Exhibit 27.1     Financial Data Schedule                               

(b)      Reports on  Form 8-K - None                                            

Items 3 and 5 of Part II have been omitted from this Report as not applicable.  

- ------------------------------------------------------------------------------
SIGNATURES                                                                      
- ------------------------------------------------------------------------------

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

                      JORE CORPORATION

                           /s/ David H. Bjornson
                                           -------------------------------------
                            By:  David H. Bjornson
                                         Title:      Chief Financial Officer
                              (Principal Financial and
                                                 Accounting Officer)

Date: November 15, 1999                                                         

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-Q Filing		Date		First		Last			Other Filings
		1/1/98		17
		9/30/98		2		14
		12/31/98		2		15
		6/9/99		27
		6/14/99		28
		7/2/99		30
		7/7/99		28
		8/16/99		23		28
		9/22/99		8		29			3, SC 13D
		9/23/99		6		30			424B3
		9/28/99		30
For The Period Ended		9/30/99		1		30			4
		10/5/99		9
		10/19/99		30
		10/20/99		29
		10/21/99		30
		10/31/99		1
Filed As Of		11/15/99		31
Filed On		11/16/99
		12/31/99		8					10-K, 10-K/A, 4/A
		3/23/0		27
		6/1/0		9
		7/1/0		17
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