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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kingfish Holding Corporation (CE) | USOTC:KSSH | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
x
|
ANNUAL
REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES ACT
OF
1934
|
o | TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware
|
20-4838580
|
|
(State
or other jurisdiction of incorporation)
|
(I.R.S
Employer Identification Number)
|
|
6710
Professional Parkway West, Suite 301
Sarasota,
Florida
|
34240
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Issuer’s
telephone number
|
(941)
953-5774
|
PART
OR ITEM
|
DESCRIPTION
OF ITEM
|
PART
I
|
|
ITEM
1.
|
Description
of Business.
|
ITEM
1A.
|
Risk
Factors.
|
ITEM
2.
|
Description
of Property.
|
ITEM
3.
|
Legal
Proceedings.
|
ITEM
4.
|
Submission
of Maters to a Vote of Security Holders.
|
PART
II
|
|
ITEM
5.
|
Market
for Common Equity and Related Stockholder Matters.
|
ITEM
6.
|
Management’s
Discussion and Analysis or Plan of Operation.
|
ITEM
7.
|
Financial
Statements.
|
ITEM
8.
|
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
|
ITEM
8A.
|
Controls
and Procedures.
|
ITEM
8B.
|
Other
Information.
|
PART
III
|
|
ITEM
9.
|
Directors
and Executive Officers of the Registrant.
|
ITEM
10.
|
Executive
Compensation
|
ITEM
11.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related
Stockholder Matters.
|
ITEM
12.
|
Certain
Relationships and Related Transactions.
|
ITEM
13.
|
Exhibit
Index.
|
ITEM
14.
|
Principal
Accountant Fees and Services.
|
·
|
1,000,000
shares of Series A Preferred Stock (the “Series A
Preferred”);
|
·
|
Series
A Common Stock Purchase Warrants to purchase 3,091,959 shares
of common
stock at $.49 per share for a period of five years (“Series A
Warrants”);
|
·
|
Series
B Common Stock Purchase Warrants to purchase 3,091,959 shares
of common
stock at $.54 per share for a period of five years (“Series B Warrants”);
and,
|
·
|
Series
J Common Stock Purchase Warrants to purchase 3,091,959 shares
of common
stock at $.54 per share for a period of one year from the
effective date
of the registration statement (“Series J
Warrants”).
|
●
|
The
state of the economy in general; and,
|
|
● | the financial condition of associations, commercial building owners or businesses looking Services to retain our services. |
·
|
that
a broker or dealer approve a person's account for transactions
in penny
stocks; and,
|
·
|
the
broker or dealer receive from the investor a written agreement
to the
transaction, setting forth the identity and quantity of the
penny stock to
be purchased.
|
·
|
obtain
financial information and investment experience objectives
of the person;
and
|
·
|
make
a reasonable determination that the transactions in penny
stocks are
suitable for that person and the person has sufficient knowledge
and
experience in financial matters to be capable of evaluating
the risks of
transactions in penny stocks
|
·
|
sets
forth the basis on which the broker or dealer made the suitability
determination; and,
|
·
|
that
the broker or dealer received a signed, written agreement
from the
investor prior to the transaction.
|
·
|
Sarasota
Facility: We lease our Sarasota, Florida Facility (5,964
square feet)
under a non-cancelable operating lease with a remaining term
of
approximately five years. Our annual lease obligations under
this lease
are $156,878, $163,260, $169,109, $176,022 and $166,712 for
each year in
the five-year period ending September 30,
2012.
|
·
|
Bradenton
Facility: We lease our Bradenton, Florida facility (2,030
square feet) on
a month-to-month basis with a monthly rent payment of
$3,940.
|
Address
|
Date
Purchased
|
Square
Feet
|
Purchase
Price
|
Est.
Market Value
|
602
W. Valley Mall Blvd. (1)
|
May
1987
|
21,600
|
$468,000
|
$950,000
|
604
W. Valley Mall Blvd. (1)
|
March
1988
|
7,500
|
$220,000
|
$550,000
|
3711
S. 1
st
Street
|
July
1976
|
6,822
|
$82,000
|
$172,000
|
506
W. Valley Mall Blvd. (2)
|
July
2007
|
7,200
|
$389,257
|
$389,257
|
(1)
|
On
March 2, 2007, we entered into a face value, $1,255,500,
ten-year,
adjustable rate mortgage note payable which is secured by
the 602 and 604
W. Valley Mall Blvd properties.
|
(2)
|
The
506 W. Valley manufacturing facility secures a ten-year mortgage
with a
face value of $308,000.
|
Quarterly
period ended:
|
High
|
Low
|
||
September
30, 2007
|
$1.00
|
$0.26
|
||
June
30, 2007
|
$0.23
|
$0.12
|
||
March
31, 2007
|
NA
|
NA
|
||
December
31, 2006
|
NA
|
NA
|
Category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for issuance under equity compensation
plan
|
|||||||||||
Security
Holder Approved
|
-
|
-
|
-
|
|||||||||||
Security
Holder Not Approved
|
10,537,871
|
.52
|
2,092,498
|
·
|
Contract
revenue: Our revenue recognition policies require us to estimate
our total
contract costs and revise those estimates for changes in the facts
and
circumstances. These estimates consider all available information
including pricing quotes provided by our vendors for materials,
projections of our direct labor costs and our past experience in
providing
contract services. Estimates, by their nature are subjective. Actual
results could differ.
|
·
|
Intangible
assets: Our intangible assets require us to make subjective estimates
about our future operations and cash flows so that we can evaluate
the
recoverability of such assets. These estimates consider available
information and market indicators including our operational history,
our
expected contract performance, and changes in the industries that
we
serve.
|
·
|
Share-based
payment arrangements: The Black-Scholes-Merton valuation model that
we use
to value share-indexed contracts, such as warrants and options, requires
that certain assumptions be made when calculating the compensation
expense
related to stock options. Of these assumptions, a volatility factor
is
required as part of the calculation. Due to the lack of significant
stock
history, the volatility of comparable companies (“peers”) was analyzed to
determine the appropriate rate to be used in the
calculation.
|
·
|
Common
stock valuation: Estimating the fair value of our common stock is
necessary in the preparation of computations related to share-based
payments and financing transactions. We believe that the most appropriate
and reliable basis for common stock value is trading market prices
in an
active market. Prior to May 31, 2007, we utilized the income approach
to
enterprise valuation coupled with our common shares outstanding to
estimate the fair value of our common stock per share. The income
approach
requires us to develop subjective estimates about our future operating
performance and cash flows. It also requires us to develop estimates
related to the discount rate necessary to discount future cash flows.
As
with any estimates, actual results could be different. On May 31,
2007,
some of our common stock became publicly traded under our newly acquired
trading symbol. We continue to review and evaluate trading activity
to
determine whether such activity provides a reliable basis upon which
to
value our common stock. Commencing with our quarterly financial statements
after May 31, 2007, we began using trading market information in
the fair
value of our per share common stock
price.
|
2007
|
2006
|
|||||||
Homebuilding
|
$ |
3,043,034
|
$ |
3,824,713
|
||||
Restoration
|
2,068,971
|
1,767,582
|
||||||
$ |
5,112,005
|
$ |
5,592,295
|
2007
|
2006
|
|||||||
Homebuilding
|
$ |
2,664,626
|
$ |
3,588,578
|
||||
Restoration
|
1,364,985
|
902,685
|
||||||
$ |
4,029,611
|
$ |
4,491,263
|
Indexed
Shares
|
||||
Series
A Preferred Stock
|
3,091,966
|
|||
Warrants
|
10,291,671
|
|||
Stock
Options
|
240,200
|
|||
Total
share indexed to financial instruments
|
13,629,837
|
·
|
1,000,000
shares of Series A Preferred Stock (the “Series A
Preferred”);
|
·
|
Series
A Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $.49 per share for a period of five years (“Series A
Warrants”);
|
·
|
Series
B Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $.54 per share for a period of five years (“Series B Warrants”);
and,
|
·
|
Series
J Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $.54 per share for a period of one year from the effective
date
of the registration statement (“Series J
Warrants”).
|
·
|
1,000,000
shares of Series A Preferred Stock (the “Series A
Preferred”);
|
·
|
Series
A Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $0.49 per share for a period of five years (“Series A
Warrants”);
|
·
|
Series
B Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $0.54 per share for a period of five years (“Series B Warrants”);
and,
|
·
|
Series
J Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $0.54 per share for a period of one year from the effective
date
of the registration statement (“Series J
Warrants”)
|
KESSELRING
HOLDING CORPORATION
(ISSUER
FINANCIALS)
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Balance Sheets at September 30, 2007 and 2006
|
F-2
|
Consolidated
Statements of Operations for the Years Ended September 30, 2007
and
2006
|
F-3
|
Consolidated
Statements of Stockholders’ Equity for the Years Ended September 30, 2007
and
2006
|
F-4
-
F-5
|
Consolidated
Statements of Cash Flows for the Years Ended September 30, 2007
and
2006
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7-
F-34
|
KING
COMPANIES
(ACQUIRED
COMPANY FINANCIALS)
|
|
Report
of Independent Certified Public Accountants
|
F-35
|
Combined
Statements of Operations for the Nine-Months Ended June 30, 2006
and
Year
Ended
September 30, 2005
|
F-36
|
Combined
Statements of Cash Flows for the Nine-Months Ended June 30, 2006
and
Year
Ended
September 30, 2005
|
F-37
|
Notes
to Combined Financial Statements
|
F-38
- F-43
|
2007
|
2006
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
159,744
|
$ |
550,482
|
||||
Accounts
receivable, net allowances
|
1,311,833
|
1,763,501
|
||||||
Inventories
|
580,203
|
479,560
|
||||||
Costs
and estimated earnings in excess of billings
|
||||||||
on
uncompleted contracts
|
132,435
|
129,465
|
||||||
Other
current assets
|
141,669
|
93,619
|
||||||
Total
current assets
|
2,325,884
|
3,016,627
|
||||||
Property
and equipment, net
|
2,643,835
|
2,167,851
|
||||||
Intangible
assets, net
|
24,499
|
81,780
|
||||||
Other
assets
|
55,095
|
-
|
||||||
Total
assets
|
$ |
5,049,313
|
$ |
5,266,258
|
||||
Liabilities
and stockholders' equity
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
$ |
1,488,155
|
$ |
1,189,650
|
||||
Billings
in excess of costs and estimated earnings on
|
||||||||
uncompleted
contracts
|
192,932
|
319,384
|
||||||
Current
maturities of notes payable
|
31,246
|
199,511
|
||||||
Current
maturities of notes payable-related parties
|
-
|
929,524
|
||||||
Deferred
income taxes
|
-
|
254,829
|
||||||
1,712,333
|
2,892,898
|
|||||||
Notes
payable
|
1,543,435
|
20,859
|
||||||
3,255,768
|
2,913,757
|
|||||||
Commitments
(Note 13)
|
-
|
-
|
||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.0001 par value, 20,000,000 shares
|
||||||||
authorized;
1,000,000 shares designated Series A
|
||||||||
Preferred;
1,000,000 issued and outstanding
|
1,500,000
|
-
|
||||||
Common
stock, $0.0001 par value, 200,000,000 shares
|
||||||||
authorized;
35,507,665 and 25,329,800 shares issued
|
||||||||
and
outstanding, respectively
|
3,551
|
2,533
|
||||||
Additional
paid-in capital
|
3,984,152
|
2,937,505
|
||||||
Accumulated
deficit
|
(3,694,158 | ) | (587,537 | ) | ||||
Total
stockholders' equity
|
1,793,545
|
2,352,501
|
||||||
Total
liabilities and stockholders' equtiy
|
$ |
5,049,313
|
$ |
5,266,258
|
||||
2007
|
2006
|
|||||||
Revenues:
|
||||||||
Product
sales
|
$ |
7,063,190
|
$ |
1,737,560
|
||||
Construction
services
|
5,112,005
|
5,592,295
|
||||||
12,175,195
|
7,329,855
|
|||||||
Cost
of revenues:
|
||||||||
Product
sales
|
5,764,472
|
1,335,006
|
||||||
Construction
services
|
4,029,611
|
4,491,263
|
||||||
9,794,083
|
5,826,269
|
|||||||
Gross
profit
|
2,381,112
|
1,503,586
|
||||||
Operating
expenses:
|
||||||||
Salaries
and benefits
|
1,926,983
|
980,326
|
||||||
Professional
fees
|
1,737,795
|
217,710
|
||||||
Consulting
fees, related parties
|
429,189
|
568,985
|
||||||
Rent
and occupancy costs
|
229,197
|
63,426
|
||||||
Repairs
and maintenance
|
200,270
|
39,463
|
||||||
Depreciation
and amortization
|
167,182
|
132,327
|
||||||
Transportation
costs
|
155,602
|
49,993
|
||||||
Other
operating expenses
|
803,670
|
57,393
|
||||||
5,649,888
|
2,109,623
|
|||||||
Loss
from operations
|
(3,268,776 | ) | (606,037 | ) | ||||
Other
income (expense):
|
||||||||
Interest
expense
|
(107,715 | ) | (33,239 | ) | ||||
Other
income (expense), net
|
9,242
|
(3,615 | ) | |||||
Interest
income
|
5,799
|
1,265
|
||||||
(92,674 | ) | (35,589 | ) | |||||
Loss
before income taxes
|
(3,361,450 | ) | (641,626 | ) | ||||
Income
tax benefit
|
254,829
|
221,728
|
||||||
Net
loss
|
$ | (3,106,621 | ) | $ | (419,898 | ) | ||
Loss
applicable to common stockholders:
|
||||||||
Net
loss
|
$ | (3,106,621 | ) | $ | (419,898 | ) | ||
Preferred
stock dividends and accretions
|
(1,479,104 | ) |
-
|
|||||
Loss
applicable to common stockholders
|
$ | (4,585,725 | ) | $ | (419,898 | ) | ||
Loss
per common share, basic and diluted
|
$ | (0.14 | ) | $ | (0.02 | ) | ||
Weighted
average common shares, basic and diluted
|
33,477,552
|
23,321,954
|
||||||
Preferred
|
Stock
|
Common
|
Stock
|
Paid-in
|
Accumulated
|
|||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||
Balances
at October 1, 2006
|
-
|
$ |
-
|
25,329,800
|
$ |
254
|
$ |
2,939,784
|
$ | (587,537 | ) | $ |
2,352,501
|
|||||||||||||||
Sale
of common stock
|
1,400,000
|
14
|
489,986
|
-
|
490,000
|
|||||||||||||||||||||||
Common
stock issued to consultants for services
|
44,000
|
0
|
22,000
|
-
|
22,000
|
|||||||||||||||||||||||
26,773,800
|
268
|
3,451,770
|
(587,537 | ) |
2,864,501
|
|||||||||||||||||||||||
Recapitalization:
|
||||||||||||||||||||||||||||
Cancellation
of accounting acquirer shares
|
(26,773,800 | ) | (268 | ) | (3,445,170 | ) |
-
|
(3,445,438 | ) | |||||||||||||||||||
Issuance
of shares to accounting acquirer
|
1,374,163
|
137
|
3,445,300
|
-
|
3,445,437
|
|||||||||||||||||||||||
Common
shares of legal acquirer outstanding
|
337,480
|
34
|
(34 | ) |
-
|
-
|
||||||||||||||||||||||
Reverse
stock split
|
31,823,739
|
3,182
|
(3,182 | ) |
-
|
-
|
||||||||||||||||||||||
Recapitalized
stockholders' equity
|
33,535,382
|
3,354
|
3,448,684
|
(587,537 | ) |
2,864,500
|
||||||||||||||||||||||
Post-recapitalization
transactions:
|
||||||||||||||||||||||||||||
Sale
of Series A Preferred Stock and warrants:
|
||||||||||||||||||||||||||||
Allocation
of proceeds to Series A Preferred and warrants
|
1,000,000
|
584,270
|
-
|
-
|
605,730
|
-
|
1,190,000
|
|||||||||||||||||||||
Beneficial
conversion feature in Series A Preferred
|
-
|
(513,374 | ) |
-
|
-
|
513,374
|
-
|
-
|
||||||||||||||||||||
Deemed
dividend accretes Series A Preferred
|
-
|
1,429,104
|
-
|
-
|
(1,429,104 | ) |
-
|
-
|
||||||||||||||||||||
-
|
||||||||||||||||||||||||||||
Share-based
payment arrangements (at fair values):
|
-
|
|||||||||||||||||||||||||||
Common
stock issued to employees
|
-
|
-
|
930,000
|
93
|
286,407
|
-
|
286,500
|
|||||||||||||||||||||
Common
stock issued to consultants
|
-
|
-
|
233,558
|
23
|
130,120
|
-
|
130,143
|
|||||||||||||||||||||
Common
stock issued to Board Members
|
-
|
-
|
75,000
|
8
|
22,493
|
-
|
22,501
|
|||||||||||||||||||||
Issuance
of employee stock options (240,200 indexed shares)
|
-
|
-
|
54,334
|
-
|
54,334
|
|||||||||||||||||||||||
-
|
||||||||||||||||||||||||||||
Conversion
of convertible debt for common stock
|
||||||||||||||||||||||||||||
at
a rate implicit in the contract
|
-
|
-
|
733,725
|
73
|
352,114
|
-
|
352,187
|
|||||||||||||||||||||
-
|
||||||||||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(3,106,621 | ) | (3,106,621 | ) | |||||||||||||||||||
Balances
at September 30, 2007
|
1,000,000
|
$ |
1,500,000
|
35,507,665
|
$ |
3,551
|
$ |
3,984,152
|
$ | (3,694,158 | ) | $ |
1,793,545
|
|||||||||||||||
Common
|
Stock
|
Paid-in
|
Accumulated
|
Deferred
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Compensation
|
Total
|
||||||||||||||||||||
Balances
at October 1, 2006
|
14,100,000
|
$ |
141
|
$ |
131,915
|
$ | (167,639 | ) | $ | (153,465 | ) | $ | (189,048 | ) | |||||||||||
Sale
of common stock
|
860,000
|
9
|
300,991
|
-
|
-
|
301,000
|
|||||||||||||||||||
Share-based
payment arrangements:
|
|||||||||||||||||||||||||
Common
stock issued for business acquisitions
|
7,440,000
|
74
|
1,680,649
|
-
|
-
|
1,680,723
|
|||||||||||||||||||
Common
stock issued to related parties for services
|
2,229,800
|
23
|
568,784
|
-
|
-
|
568,807
|
|||||||||||||||||||
Common
stock issued to employees
|
700,000
|
7
|
196,865
|
-
|
-
|
196,872
|
|||||||||||||||||||
Termination
and reclassification of redemption feature
|
-
|
-
|
100,000
|
-
|
-
|
100,000
|
|||||||||||||||||||
Remeasurement
upon award modification
|
-
|
-
|
10,038
|
-
|
(10,038 | ) |
-
|
||||||||||||||||||
Amortization
of deferred compensation
|
-
|
-
|
-
|
-
|
163,503
|
163,503
|
|||||||||||||||||||
Reorganization
distribution
|
-
|
-
|
(49,458 | ) |
-
|
-
|
(49,458 | ) | |||||||||||||||||
Net
loss
|
-
|
-
|
-
|
(419,898 | ) |
-
|
(419,898 | ) | |||||||||||||||||
25,329,800
|
$ |
254
|
$ |
2,939,784
|
$ | (587,537 | ) | $ |
-
|
$ |
2,352,501
|
||||||||||||||
2007
|
2006
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (3,106,621 | ) | $ | (419,898 | ) | ||
Adjustments
to reconcile net loss to net cash from
|
||||||||
operating
activities:
|
||||||||
Share-based
payments:
|
||||||||
Employees
|
340,834
|
360,368
|
||||||
Consultants
(goods and services)
|
152,144
|
99,240
|
||||||
Directors
|
22,500
|
-
|
||||||
Other
related parties
|
-
|
469,567
|
||||||
Deferred
income taxes
|
(254,829 | ) | (221,728 | ) | ||||
Depreciation
and amortization of long-lived assets
|
262,621
|
170,790
|
||||||
Bad
debts
|
101,227
|
-
|
||||||
Amortization
of deferred finance costs
|
-
|
-
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
350,441
|
(475,067 | ) | |||||
Inventories
|
(100,643 | ) | (42,008 | ) | ||||
Contract
assets and liabilities
|
(129,423 | ) | (3,065 | ) | ||||
Other
current assets
|
(48,050 | ) | (64,682 | ) | ||||
Other
assets
|
(58,508 | ) |
7
|
|||||
Accounts
payable and accrued expenses
|
300,693
|
417,274
|
||||||
Net
cash flows from operating activities
|
(2,167,614 | ) |
290,798
|
|||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(682,911 | ) | (143,991 | ) | ||||
Net
cash acquired in a business acquisition
|
-
|
126,857
|
||||||
Reorganization
distribution (Note 2)
|
-
|
(49,458 | ) | |||||
Net
cash flows from investing activities
|
(682,911 | ) | (66,592 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from mortgage notes payable
|
2,431,200
|
268,047
|
||||||
Proceeds
from sale of preferred stock and warrants
|
1,190,000
|
-
|
||||||
Payment
of notes payable to related parties
|
(924,524 | ) | (4,000 | ) | ||||
Payment
of notes payable
|
(726,889 | ) | (366,515 | ) | ||||
Proceeds
from sales of common stock
|
490,000
|
301,000
|
||||||
Net
cash flows from financing activities
|
2,459,787
|
198,532
|
||||||
Net
change in cash
|
(390,738 | ) |
422,738
|
|||||
Cash
at the beginning of the year
|
550,482
|
127,744
|
||||||
Cash
at the end of the year
|
$ |
159,744
|
$ |
550,482
|
||||
2007
|
2006
|
|||||||
Supplemental
Cash Flow Information:
|
||||||||
Cash
paid for:
|
||||||||
Interest
|
$ |
98,261
|
$ |
10,664
|
||||
Income
taxes
|
$ |
-
|
$ |
-
|
||||
Cash
received in a business combination
|
$ |
126,857
|
||||||
Non-cash
investing and financing activities:
|
||||||||
Conversion
of face value $350,000 convertible debt
|
||||||||
and
$2,187 accrued interest for common stock
|
$ |
352,187
|
||||||
Fair
value of common stock issued in purchase
|
||||||||
business
combination
|
$ |
1,680,723
|
||||||
Issuance
of notes payable to sellers in purchase
|
||||||||
business
combination
|
$ |
850,000
|
||||||
Property
and equipment acquired with debt issued
|
||||||||
to
the seller
|
$ |
27,147
|
||||||
1.
|
Business,
basis of presentation and significant accounting
policies:
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
1.
|
Business,
basis of presentation and significant accounting policies
(continued):
|
2.
|
Purchases
of business:
|
As
Allocated
|
Fair
Value
|
|||||||
Cash
|
$ |
126,857
|
$ |
126,857
|
||||
Accounts
receivable
|
1,038,224
|
1,038,224
|
||||||
Inventories
|
437,552
|
437,552
|
||||||
Other
assets
|
14,420
|
14,420
|
||||||
Property
and equipment
|
1,873,317
|
1,873,317
|
||||||
Intangible
assets
|
42,000
|
42,000
|
||||||
Total
assets
|
3,532,370
|
3,532,370
|
||||||
Accounts
payable and accrued expenses
|
(433,754 | ) | (433,754 | ) | ||||
Deferred
income taxes
|
(476,557 | ) |
--
|
|||||
Note
payable
|
(91,336 | ) | (91,336 | ) | ||||
Total
liabilities
|
(1,001,647 | ) | (525,090 | ) | ||||
Purchase
price
|
$ |
2,530,723
|
$ |
3,007,280
|
2.
|
Purchases
of business (continued):
|
Year
ended
September
30, 2006
|
||||
Revenues
|
$ |
12,418,797
|
||
Net
loss
|
(118,025 | ) | ||
Loss
per common share
|
(0.01 | ) |
3.
|
Accounts
receivable:
|
September
30, 2007
|
Construction
Services
|
Manufactured
Product
|
Total
|
|||||||||
Completed
contracts and product
Deliveries
|
$ |
100,578
|
$ |
920,527
|
$ |
1,021,105
|
||||||
Uncompleted
contracts
|
290,728
|
-
|
290,728
|
|||||||||
$ |
391,306
|
$ |
920,527
|
$ |
1,311,833
|
September
30, 2006
|
Construction
Services
|
Manufactured
Product
|
Total
|
|||||||||
Completed
contracts and product
Deliveries
|
$ |
191,217
|
$ |
1,178,211
|
$ |
1,369,428
|
||||||
Uncompleted
contracts
|
394,073
|
-
|
394,073
|
|||||||||
$ |
585,290
|
$ |
1,178,211
|
$ |
1,763,501
|
4.
|
Inventories:
|
2007
|
2006
|
|||||||
Raw
materials
|
$ |
126,253
|
$ |
226,860
|
||||
Work-in-process
|
323,555
|
145,578
|
||||||
Finished
goods
|
130,394
|
107,122
|
||||||
$ |
580,203
|
$ |
479,560
|
5.
|
Uncompleted
contracts:
|
2007
|
2006
|
|||||||
Contract
costs
|
$ |
7,554,740
|
$ |
4,898,020
|
||||
Estimated
earnings
|
1,578,622
|
881,890
|
||||||
Billings
|
(9,193,859 | ) | (5,969,829 | ) | ||||
$ | (60,497 | ) | $ | (189,919 | ) |
5.
|
Uncompleted
contracts (continued):
|
2007
|
2006
|
|||||||
Costs
and estimated earnings in excess of
billings
on uncompleted contracts
|
$ |
132,435
|
$ |
129,465
|
||||
Billings
in excess of costs and estimated
earnings
on uncompleted contracts
|
(192,932 | ) | (319,384 | ) | ||||
$ | (60,497 | ) | $ | (189,919 | ) |
6.
|
Property
and equipment:
|
2007
|
2006
|
|||||||
Land
|
$ |
532,291
|
$ |
450,547
|
||||
Buildings
|
1,496,873
|
1,186,861
|
||||||
Building
improvements
|
30,724
|
21,592
|
||||||
Vehicles
|
334,118
|
307,438
|
||||||
Office
equipment
|
247,307
|
81,469
|
||||||
Production
equipment
|
286,503
|
201,703
|
||||||
2,927,816
|
2,249,640
|
|||||||
Less
accumulated depreciation
|
(283,981 | ) | (81,789 | ) | ||||
$ |
2,643,835
|
$ |
2,167,851
|
2007
|
2006
|
|||||||
Cost
of sales
|
$ |
95,439
|
$ |
38,463
|
||||
Operating
expenses
|
109,900
|
26,178
|
||||||
$ |
205,339
|
$ |
61,641
|
7.
|
Intangible
assets:
|
2007
|
2006
|
|||||||
Employment
contracts
|
$ |
206,017
|
$ |
206,017
|
||||
Customer
lists
|
42,000
|
42,000
|
||||||
248,017
|
248,017
|
|||||||
Accumulated
amortization
|
(223,518 | ) | (166,237 | ) | ||||
$ |
24,499
|
$ |
81,780
|
8.
|
Accounts
payable and accrued
expenses:
|
2007
|
2006
|
|||||||
Accounts
payable
|
$ |
1,031,898
|
$ |
821,456
|
||||
Accrued
expenses
|
407,964
|
235,955
|
||||||
Accrued
losses on contracts
|
1,465
|
98,914
|
||||||
Accrued
warranty costs
|
46,828
|
33,325
|
||||||
$ |
1,488,155
|
$ |
1,189,650
|
9.
|
Notes
payable and convertible promissory
note:
|
2007
|
2006
|
|||||||
Variable
rate mortgage note payable, due January 2017 (a)
|
$ |
1,247,261
|
$ |
--
|
||||
8.0%
Note payable, due July 2017 (b)
|
306,562
|
--
|
||||||
4.9%
Note payable, due August 2010
|
20,858
|
27,872
|
||||||
7.0%
Stockholder notes, due December 2006 (c)
|
--
|
850,000
|
||||||
Prime
plus 1%, $250,000 bank credit facility (d)
|
--
|
191,675
|
||||||
7.75%
Stockholder notes, due on demand
|
--
|
79,524
|
||||||
Other
bank debt
|
--
|
873
|
||||||
1,574,681
|
1,149,894
|
|||||||
Current
maturities
|
(31,246 | ) | (1,129,035 | ) | ||||
Long-term
debt
|
$ |
1,543,435
|
$ |
20,859
|
(a)
|
In
March, 2007, we borrowed $1,255,500 under a ten-year, adjustable
rate
mortgage note. The coupon rate is based on the five-year Treasury
Rate for
Zero-Coupon Government Securities, plus 280 basis points (7.73%
at
September 30, 2007). The mortgage note is secured by commercial
real
estate owned in Washington State.
|
(b)
|
In
August, 2007, we incurred mortgage debt of $308,000 as the partial
purchase price for real estate in the State of Washington (with
a cost of
$389,257). This note has a ten-year term and an adjustable coupon
rate
based on the five-year Treasury Rate for Zero-Coupon Government
Securities, plus 310 basis points (8.03% at September 30, 2007).
This debt
is secured by the real estate
acquired.
|
(c)
|
The
7.0% stockholder notes arose in connection with our purchase of
the King
Group of Companies on July 1, 2006. See Note 2 for additional information
about this arrangement.
|
(d)
|
In
June, 2007, our $250,000 bank line of credit was paid in full and
cancelled.
|
(e)
|
In
March, 2007, we amended our remaining bank line of credit from
a maximum
borrowing amount of $370,000 to a maximum borrowing amount of $200,000.
The line expired on October 31, 2007. This line had a variable
Coupon rate
equal to the Prime Rate (8.25% at September 30, 2007). Borrowings
during
the periods presented were minimal.
|
9.
|
Notes
payable and convertible promissory note
(continued):
|
10.
|
Related
party transactions:
|
11.
|
Stockholders’
equity:
|
11.
|
Stockholders’
equity (continued):
|
·
|
1,000,000
shares of Series A Preferred Stock (the “Series A
Preferred”);
|
·
|
Series
A Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $0.49 per share for a period of five years (“Series A
Warrants”);
|
·
|
Series
B Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $0.54 per share for a period of five years (“Series B Warrants”);
and,
|
·
|
Series
J Common Stock Purchase Warrants to purchase 3,091,959 shares of
common
stock at $0.54 per share for a period of one year from the effective date
of the registration statement (“Series J
Warrants”)
|
11.
|
Stockholders’
equity (continued):
|
11.
|
Stockholders’
equity (continued):
|
11.
|
Stockholders’
equity (continued):
|
11.
|
Stockholders’
equity (continued):
|
Options
Outstanding
|
Weighted-Average
Exercise
Prices
|
|||||||
Balances
at October 1, 2006
|
--
|
--
|
||||||
Awards
|
240,200
|
$ |
0.39
|
|||||
Exercised
|
--
|
--
|
||||||
Cancelled,
expired or forfeited
|
--
|
--
|
||||||
Balances
at September 30, 2007
|
240,200
|
$ |
0.39
|
|||||
Options
exercisable
|
240,200
|
$ |
0.39
|
11.
|
Stockholders’
equity (continued):
|
Warrants
Outstanding
|
Weighted-Average
Exercise
Prices
|
|||||||
Balances
at October 1, 2006
|
--
|
--
|
||||||
Issued
|
10,297,671
|
$ |
0.52
|
|||||
Exercised
|
--
|
--
|
||||||
Expired
|
--
|
--
|
||||||
Balances
at September 30, 2007
|
10,297,671
|
$ |
0.52
|
11.
|
Stockholders’
equity (continued):
|
12.
|
Income
taxes:
|
2007
|
2006
|
|||||||
Current:
|
||||||||
Federal
|
$ |
-
|
$ |
-
|
||||
State
|
-
|
-
|
||||||
Deferred
income taxes
|
(254,829 | ) | (221,728 | ) | ||||
$ | (254,829 | ) | $ | (221,728 | ) |
12.
|
Income
taxes (continued):
|
2007
|
2006
|
|||||||
Property
and fixed assets
|
$ | (544,514 | ) | $ | (492,129 | ) | ||
Intangible
assets
|
(16,298 | ) | (60,975 | ) | ||||
Other
liabilities
|
-
|
(22,139 | ) | |||||
Net
operating loss carry forwards
|
1,525,245
|
307,874
|
||||||
Reserves
and accruals
|
58,031
|
12,540
|
||||||
Net
deferred tax assets (liabilities)
|
1,022,464
|
(254,829 | ) | |||||
Valuation
allowances
|
(1,022,464 | ) |
-
|
|||||
Net
deferred taxes, after valuation allowances
|
$ |
-
|
$ | (254,829 | ) |
2007
|
2006
|
|||||||
Federal
income at the statutory rate
|
(34.00 | %) | (34.00 | %) | ||||
Composite
state rate, net of Federal benefit (a)
|
(3.63 | %) | (2.21 | %) | ||||
Non-taxable
income items
|
-
|
-
|
||||||
Non-deductible
expense items
|
0.20 | % | 5.52 | % | ||||
Change
in the valuation allowance
|
37.43 | % | (0.50 | %) | ||||
Effective
income tax rate
|
-
|
(31.19 | %) |
13.
|
Commitments
and contingencies:
|
13.
|
Commitments
and contingencies
(continued):
|
|
Year
ended September 30, 2007
|
Year
ended September 30, 2006
|
||||||
Balance
at beginning of period
|
$ |
33,325
|
$ |
8,513
|
||||
Warranty
charges
|
25,723
|
29,172
|
||||||
Warranty
payments
|
(12,220 | ) | (4,360 | ) | ||||
Balance
at end of period
|
$ |
46,828
|
$ |
33,325
|
13.
|
Commitments
and contingencies
(continued):
|
14.
|
Segment
information:
|
2007
|
Construction
Services
|
Manufactured
Product
|
Corporate
|
Total
|
||||||||||||
Revenues
|
$ |
5,112,004
|
$ |
7,063,190
|
$ |
--
|
$ |
12,175,194
|
||||||||
Operating
Income/(Loss)
|
(735,146 | ) | (552,611 | ) | (1,818,864 | ) | (3,106,621 | ) | ||||||||
Depreciation
and amortization
|
104,408
|
118,640
|
2,720
|
225,768
|
||||||||||||
Identifiable
assets
|
819,321
|
4,014,093
|
215,898
|
5,049,312
|
2006
|
Construction
Services
|
Manufactured
Product
|
Corporate
|
Total
|
||||||||||||
Revenues
|
$ |
5,592,295
|
$ |
1,737,560
|
$ |
--
|
$ |
7,329,855
|
||||||||
Operating
Income/(Loss)
|
(133,659 | ) |
125,847
|
(598,225 | ) | (606,037 | ) | |||||||||
Depreciation
and amortization
|
148,898
|
21,892
|
--
|
170,790
|
||||||||||||
Identifiable
assets
|
1,440,394
|
3,825,864
|
--
|
5,266,258
|
15.
|
Subsequent
events:
|
·
|
Base
annual salary of $250,000;
|
·
|
The
award of options to purchase 2,500,000 shares of common stock of
which
625,000 vest on November 15, 2007, 625,000 shall vest on February
15,
2008, 625,000 shall vest on May 15, 2008 and 625,000 shall vest
on August
15, 2008 at an exercise price of $0.30 per share on a cash or cashless
basis;
|
·
|
Participation
in the employee stock incentive
plan;
|
·
|
$35,000
advance against future bonuses to be paid on execution of
contract;
|
·
|
Operating
Income bonus, accrued and paid (subject to cash availability) quarterly,
equal to the greater of $35,000 or 3.0% of that fiscal year’s operating
income to paid no later than 75 days following the end of the quarter
in
which the bonus payment accrued;
|
·
|
Acquisition
bonus equal to ½ of 1% (50 basis points) of the Gross Revenue of the
acquired company, accrued and paid (subject to cash availability)
in two
equal parts: at closing and after the successful integration of
the
acquired company;
|
·
|
Automobile
allowance of $350 per month;
|
·
|
Reimbursement
of membership fees up to a maximum of $2,500 to the Founder’s
Club;
|
·
|
Company
paid health benefits for the executive and his
family;
|
·
|
Participation
in all employee benefit plans and programs;
and,
|
·
|
Reimbursement
of reasonable expenses.
|
Nine-Months
Ended
June
30, 2006
|
Year
Ended
September
30, 2005
|
|||||||
Product
sales
|
$ |
4,993,020
|
$ |
5,956,000
|
||||
Cost
of sales
|
4,020,885
|
4,800,454
|
||||||
Gross
profit
|
972,135
|
1,155,546
|
||||||
Operating
expenses:
|
||||||||
Salaries
and related
|
334,033
|
338,862
|
||||||
Utilities
and occupancy costs
|
35,317
|
45,655
|
||||||
Depreciation
|
2,604
|
4,583
|
||||||
Other
operating expenses
|
55,425
|
75,237
|
||||||
Total
operating expenses
|
427,379
|
464,337
|
||||||
Income
from operations
|
544,756
|
691,209
|
||||||
Other
income (expense):
|
||||||||
Interest
income
|
1,638
|
5,121
|
||||||
Interest
income, related party
|
3,912
|
-
|
||||||
Interest
expense
|
(12,586 | ) | (15,868 | ) | ||||
Other
income
|
1,647
|
10,126
|
||||||
Total
other income (expense), net
|
(5,389 | ) | (621 | ) | ||||
Net
income
|
$ |
539,367
|
$ |
690,588
|
||||
Two-class
basic and diluted income per share (Note 4):
|
||||||||
King
Door & Hardware, Inc.
|
$ |
126.91
|
$ |
157.16
|
||||
King
Brothers Woodworking, Inc.
|
$ |
46.03
|
$ |
62.63
|
||||
Unaudited
pro forma operating information:
|
||||||||
Net
income, as reported
|
$ |
539,367
|
$ |
690,588
|
||||
Pro
forma provision for income taxes
|
(183,385 | ) | (234,800 | ) | ||||
Pro
forma net income
|
$ |
355,982
|
$ |
455,788
|
Nine
Months
Ended
June
30, 2006
|
Year
Ended
September
30, 2005
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ |
539,367
|
$ |
690,588
|
||||
Adjustments
to reconcile net income to net cash from operating
activities:
|
||||||||
Depreciation
|
65,258
|
86,682
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(226,867 | ) | (154,872 | ) | ||||
Prepaids
and other current assets
|
8,857
|
(17,312 | ) | |||||
Inventories
|
(56,803 | ) | (55,883 | ) | ||||
Accounts
payable and accrued expenses
|
88,548
|
(318,072 | ) | |||||
Net
cash flows from operating activities
|
418,360
|
231,131
|
||||||
Cash
flows from investing activities:
|
||||||||
Purchases
of property and equipment
|
(35,042 | ) | (76,373 | ) | ||||
Proceeds
from sale of property and equipment
|
490
|
2,896
|
||||||
Proceeds
from notes payable, related party
|
-
|
118,466
|
||||||
Repayment
of notes payable, related party
|
(27,130 | ) |
-
|
|||||
Net
cash flows from investing activities
|
(61,682 | ) |
44,989
|
|||||
Cash
flows from financing activities:
|
||||||||
Distributions
to shareholders
|
(269,896 | ) | (294,140 | ) | ||||
Net
cash flows from financing activities
|
(269,896 | ) | (294,140 | ) | ||||
Net
change in cash
|
86,782
|
(18,020 | ) | |||||
Cash
at beginning of period
|
21,807
|
39,827
|
||||||
Cash
at end of period
|
$ |
108,589
|
$ |
21,807
|
||||
Cash
paid for interest
|
$ |
12,586
|
$ |
15,868
|
1.
|
Organization
and significant accounting
policies:
|
1.
|
Organization
and significant accounting policies
(continued):
|
1.
|
Organization
and significant accounting policies
(continued):
|
2.
|
Related
party transactions
|
3.
|
Unaudited
pro forma income
taxes:
|
3.
|
Unaudited
pro forma income taxes
(continued):
|
Nine
months
ended
June 30,
2006
|
Year
Ended
September
30,
2005
|
|||||||
Current
tax expense:
|
||||||||
Federal
|
$ |
221,078
|
$ |
178,709
|
||||
State
|
-
|
-
|
||||||
Deferred
tax exp (benefit)
|
(37,693 | ) |
56,091
|
|||||
Total
provision (benefit) for income taxes
|
$ |
183,385
|
$ |
234,800
|
4.
|
Combined
equity and net income per
share:
|
|
|
|||||||||||||||||||
Common
Stock
|
Paid-in
|
Retained
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
|
Total
|
||||||||||||||||
Balance
at September 30, 2005
|
6,800
|
$ |
32,000
|
$ |
253,248
|
$ |
1,185,668
|
$ |
1,470,916
|
|||||||||||
Net
income
|
-
|
-
|
-
|
539,367
|
539,367
|
|||||||||||||||
Distributions
|
-
|
-
|
-
|
(269,896 | ) | (269,896 | ) | |||||||||||||
Balance
at June 30, 2006
|
6,800
|
$ |
32,000
|
$ |
253,248
|
$ |
1,455,139
|
$ |
1,740,387
|
|||||||||||
King
Brothers Woodworking
|
2,800
|
$ |
28,000
|
$ |
-
|
$ |
861,408
|
$ |
889,408
|
|||||||||||
King
Door and Hardware
|
4,000
|
4,000
|
253,248
|
157,444
|
414,692
|
|||||||||||||||
King
Partnership
|
-
|
-
|
-
|
436,287
|
436,287
|
|||||||||||||||
6,800
|
$ |
32,000
|
$ |
253,248
|
$ |
1,455,139
|
$ |
1,740,387
|
||||||||||||
Balance
at September 30, 2004
|
6,800
|
$ |
32,000
|
$ |
253,248
|
$ |
789,220
|
$ |
1,074,468
|
|||||||||||
Net
income
|
-
|
-
|
-
|
690,588
|
690,588
|
|||||||||||||||
Distributions
|
-
|
-
|
-
|
(294,140 | ) | (294,140 | ) | |||||||||||||
Balance
at September 30, 2005
|
6,800
|
$ |
32,000
|
$ |
253,248
|
$ |
1,185,668
|
$ |
1,470,916
|
|||||||||||
King
Brothers Woodworking
|
2,800
|
$ |
28,000
|
$ | - | $ | 584,938 | |||||||||||||
King
Door and Hardware
|
4,000
|
4,000
|
253,248
|
144,000
|
401,248
|
|||||||||||||||
King
Partnership
|
-
|
-
|
-
|
456,730
|
456,730
|
|||||||||||||||
6,800
|
$ |
32,000
|
$ |
253,248
|
$ |
1,185,668
|
$ |
1,470,916
|
4.
|
Combined
equity and net income per share
(continued):
|
Nine-months
ended June 30, 2006:
|
KBW
|
KDH
|
||||||
Net
income
|
$ |
355,338
|
$ |
184,129
|
||||
Basic
and diluted income per share
|
$ |
126.91
|
$ |
46.03
|
||||
Weighted
average common shares
|
2,800
|
4,000
|
Year
ended September 30, 2005:
|
KBW
|
KDH
|
||||||
Net
income
|
$ |
440,054
|
$ |
250,534
|
||||
Basic
and diluted income per share
|
$ |
157.16
|
$ |
62.63
|
||||
Weighted
average common shares
|
2,800
|
4,000
|
5.
|
Commitments
and Contingencies:
|
6.
|
Subsequent
event:
|
·
|
the
application of accounting principles to any specified transaction,
either
completed or proposed, or the type of audit opinion that might be
rendered
on the Company’s financial statements, and neither a written report was
provided to the Company nor oral advice was provided that the New
Auditor
concluded was an important factor considered by the Company in reaching
a
decision as to the accounting, auditing or financial reporting issue;
or
|
·
|
any
matter that was either subject of disagreement or event, as defined
in
Item 304(a)(1)(iv)(A) of Regulation S-B and the related instruction
to
Item 304 of Regulation S-B, or a reportable event, as that term is
explained in Item 304(a)(1)(iv)(A) of Regulation
S-B.
|
Name
|
Age
|
Position
|
Douglas
P. Badertscher
|
53
|
Chief
Executive Officer and Director
|
Clifford
H. Wildes
|
57
|
Chairman
of the Board
|
Virgil
Lee "Brother" Sandifer, Jr.
|
52
|
Interim
Chief Financial Officer and Director
|
Gary
King
|
67
|
Director
and President of King Brothers
|
Kenneth
Craig
|
53
|
Director
|
James
K. Toomey
|
42
|
Director
|
Ben
Bond
|
66
|
Director
|
Name |
Year
ended
|
Salary |
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan
Compensation
|
Change
in
Pension
Value
and
Non-
Qualified
Deferred
Compensation
Earnings
|
All
Other
Comp
|
Total | |
Douglas
P. Badertscher (1)
|
9/30/2007
|
31,251
|
- |
-
|
-
|
-
|
-
|
-
|
31,251
|
|
CEO
|
9/30/2006
|
-
|
- |
-
|
-
|
-
|
-
|
-
|
-
|
|
V.L.
Sandifer Jr. (2)
|
9/30/2007
|
-
|
- |
7,500
|
-
|
-
|
-
|
103,796
|
(6)
|
111,296
|
Interim
CFO
|
9/30/2006
|
-
|
- |
90,636
|
-
|
-
|
-
|
26,642
|
(6)
|
117,278
|
Clifford
H. Wildes (3)
|
9/30/2007
|
109,154
|
- |
60,000
|
-
|
-
|
-
|
31,920
|
(7)
|
201,064
|
Chairman
|
9/30/2006
|
-
|
- |
101,966
|
-
|
-
|
-
|
11,250
|
(7)
|
113,216
|
Kenneth
Craig (4)
|
9/30/2007
|
109,154
|
- |
60,000
|
-
|
-
|
-
|
43,500
|
(5)
|
212,654
|
Director
|
9/30/2006
|
-
|
- |
101,966
|
-
|
-
|
-
|
41,250
|
(5)
|
143,216
|
Laura
Camisa (8)
|
9/30/2007
|
96,615
|
- |
99,000
|
46,000
|
-
|
-
|
-
|
241,615
|
|
Former
CFO
|
9/30/2006
|
-
|
- |
-
|
-
|
-
|
-
|
-
|
(2)
|
Mr.
Sandifer served as our Interim Chief Financial Officer from June
1, 2006
until December 31, 2006 when he resigned from his position with the
Company. Mr. Sandifer did not receive any base salary or bonus in
fiscal
year 2006 for his services as our Chief Financial Officer. Mr. Sandifer’s
firm performs tax work for the
Company.
|
(3)
|
Mr.
Wildes served as our acting Chief Operating Officer from May 1, 2006
until
December 31, 2006 when he was appointed as our Chief Operating Officer.
Mr. Wildes did not receive any base salary or bonus in fiscal year
2006
for his services as our Chief Operating Officer. Mr. Wildes resigned
from
the position of Chief Operating Officer effective August 15,
2007.
|
(4)
|
Mr.
Craig served as our acting Chief Executive Officer from May 1, 2006
until
December 31, 2006 when he was appointed as our Chief Executive Officer.
Mr. Craig did not receive any base salary or bonus in fiscal year
2006 for
his services as our Chief Executive Officer. Mr. Craig resigned from
the
position of Chief Executive Officer effective August 15,
2007.
|
(5)
|
Represents
payments made for consulting services while Mr. Craig was our acting
Chief
Executive Officer.
|
(6)
|
Represents
payments made for consulting services while Mr. Sandifer was our
Interim
Chief Financial Officer in fiscal 2007 in addition to tax services
performed.
|
(7)
|
Represents
payments made for consulting services while Mr. Wildes was our acting
Chief Operating Officer.
|
(8)
|
Ms.
Camisa resigned as Chief Financial Officer on the October 5, 2007.
In
January, 2007, we granted options to purchase 200,167 shares of our
common
stock to Ms. Camisa as part of an employment agreement. These options
vested immediately and must be excercised by 1/4/08. The fair
value of the option award was estimated on the date of grant as $46,000
using the BlackScholes-Merton valuation
model.
|
Option
Awards
|
Stock
Awards
|
|||||||
|
|
|
|
|
|
Equity
|
||
|
|
Equity
|
|
|
Incentive
|
|||
|
|
Incentive
|
|
|
Plan
Awards:
|
|||
|
|
Plan
|
|
Market
|
Number
|
|||
|
|
Awards:
|
Value
of
|
of
|
||||
Number
|
Number
|
Number
|
Number
|
Shares
or
|
Unearned
|
|||
of
|
of
|
of
|
of
Shares
|
Units
of
|
Shares,
|
|||
Securities
|
Securities
|
Securities
|
or
Units
|
Stock
|
Units
or
|
|||
Underlying
|
Underlying
|
Underlying
|
of
Stock
|
That
|
Other
Rights
|
|||
Unexercised
|
Unexercised
|
Unexercised
|
Option
|
That
Have
|
Have
|
That
Have
|
||
Options
|
Options
|
Unearned
|
Exercise
|
Option
|
Not
|
Not
|
Not
|
|
(#)
|
(#)
|
Options
|
Price
|
Expiration
|
Vested
|
Vested
|
Vested
|
|
Name
|
Exercisable
|
Unexercisable
|
(#)
|
($)
|
Date
|
(#)
|
($)
|
(#)
|
Laura
|
||||||||
Camisa
|
200,167
|
0
|
0
|
$0.23
|
01-04-08
|
0
|
$0.00
|
0
|
Name
|
Number
of
Securities
Underlying Unexercised Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive Plan
Awards:
Number
of
Securities
Underlying
Unexercised Unearned Options (#)
|
Option
Exercise Price
($)
|
Option
Expiration
Date
|
Number
of Shares or Units of Stock That Have Not
Vested
(#)
|
Market
Value of Shares or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive Plan Awards: Number of
Unearned
Shares, Units or Other Rights That Have Not
Vested
(#)
|
None
|
||||||||
Name
|
Fees
Earned or Paid in Cash
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive
Plan Compensation
|
Change
in Pension Value and
Nonqualified
Deferred
Compensation Earnings
|
All
Other Compensation
|
Total
|
Ben Bond |
$0
|
$7,500
|
$0
|
$0
|
$0
|
$0
|
$7,500
|
James K. Toomey |
$0
|
$7,500
|
$0
|
$0
|
$0
|
$0
|
$7,500
|
· | Base annual salary of $250,000; |
·
|
The
award of options to purchase 2,500,000 shares of common stock of
which
625,000 vest on November 15, 2007, 625,000 shall vest on February
15,
2008, 625,000 shall vest on May 15, 2008 and 625,000 shall vest on
August
15, 2008 at an exercise price of $0.30 per share on a cash or cashless
basis;
|
·
|
Participation
in the employee stock incentive
plan;
|
·
|
$35,000
advance against future bonuses to be paid on execution of
agreement;
|
·
|
Operating
Income bonus, accrued and paid (subject to cash availability) quarterly,
equal to the greater of $35,000 or 3.0% of that fiscal year’s operating
income to paid no later than 75 days following the end of the quarter
in
which the bonus payment accrued;
|
·
|
Acquisition
bonus equal to 1/2 of 1% (50 basis points) of the Gross Revenue of
the
acquired company, accrued and paid (subject to cash availability)
in two
equal parts: at closing and after the successful integration of the
acquired company;
|
·
|
Automobile
allowance of $350 per month;
|
·
|
Reimbursement
of membership fees up to a maximum of $2,500 to the Founder’s
Club;
|
·
|
Company
paid health benefits for the executive and his
family;
|
·
|
Participation
in all employee benefit plans and programs;
and,
|
·
|
Reimbursement
of reasonable expenses.
|
Name
of Beneficial Owner (1)
|
Common
Stock
Beneficially
Owned
|
Percentage
of
Common
Stock (2)
|
|
Douglas
Badertscher, CEO*
|
1,250,000
|
(8) |
3.40%
|
V.
L. Sandifer, CFO*
|
445,342
|
1.25%
|
|
Kenneth
Craig*
|
2,902,739
|
(3) |
8.17%
|
Clifford
H. Wildes*
|
2,852,703
|
(4) |
8.03%
|
Gary
and Margaret King*
|
5,720,500
|
(3) |
16.11%
|
Nicole
O’Sullivan
|
2,255,500
|
(5) |
6.95%
|
Daniel
Ezelle
|
2,185,500
|
6.16%
|
|
Teresita
Craig
|
2,757,788
|
(6) |
7.77%
|
James
K. Toomey *
|
765,630
|
(7) |
2.16%
|
Ben
Bond *
|
25,000
|
.007%
|
|
Curtis
and Lois King
|
2,965,000
|
8.35%
|
|
All
officers and directors as a group (7) persons
|
13,986,914
|
38.05%
|
|
*Executive
officer and/or director of our company.
|
|
(1)
|
Except
as otherwise indicated, the address of each beneficial owner is c/o
Kesselring Holding Corporation, 6710 Professional Parkway, Suite
301,
Sarasota, FL 34240.
|
(2)
|
Applicable
percentage ownership is based on 35,507,665 shares of common stock
outstanding as of December 26, 2007, together with securities exercisable
or convertible into shares of common stock within 60 days of December
26,
2007 for each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission
and
generally includes voting or investment power with respect to securities.
Shares of common stock that are currently exercisable or exercisable
within 60 days of December 26, 2007 are deemed to be beneficially
owned by
the person holding such securities for the purpose of computing the
percentage of ownership of such person, but are not treated at outstanding
for the purpose of computing the percentage ownership of any other
person.
|
(3)
|
Includes
an aggregate of 1,501,227 shares of common stock held by Mr. Craig’s wife
and children.
|
(4)
|
Includes
1,501,247 shares of common stock held by Mr. Wildes’
wife.
|
(5)
|
Represents
shares of common stock held by the Nicole O’Sullivan
Trust.
|
(6)
|
Includes
710,600 shares of common stock beneficially owned by Tectonics,
Inc.
|
(7)
|
Includes
an aggregate of 500,409 shares of common stock held by Mrs. Craig’s
husband.
|
(8)
|
Includes
625,000 shares of common stock issuable upon exercise of options
that have
vested and 625,000 shares of common stock issuable upon exercise
of
options that will vest within 60 days of December 26,
2007.
|
Exhibit
Number
|
Description | |
3.1 | Certificate of Incorporation (3) | |
3.2 | Certificate of Designation for Series A Preferred Stock (1) | |
3.3 | Certificate of Ownership (4) | |
3.4 | Bylaws (3) | |
4.1 | Securities Purchase Agreement entered with Vision Master Opportunity Fund Ltd. (1) | |
4.2 | Series A Warrant issued to Vision Opportunity Master Fund Ltd. (1) | |
4.3 | Series B Warrant issued to Vision Opportunity Master Fund Ltd. (1) | |
4.4 | Series J Warrant issued to Vision Opportunity Master Fund Ltd. (1) | |
4.5 | Registration Rights Agreement entered with Vision Master Opportunity Fund Ltd. (1) | |
4.6 | Warrant issued to Cypress Advisors LLC(1) | |
10.1 | Share Purchase Agreement by and among Offline Consulting, Inc., Kesselring Corporation shareholders of Kesselring Corporation(1) | |
10.2 | Settlement Agreement by and between Offline Consulting Inc. and Marcello Trebitsch(1) | |
10.3 | Agreement and Release of Claims by and between Kesselring Corporation and Laura A. Camisa (6) | |
10.4 |
Amended
and Restated Employment Agreement by and between Kesselring Holding
Corporation and
Douglas
P. Badertscher (7)
|
|
10.5 | Employee Nonstatutory Stock Option Agreement issued to Douglas P. Badertscher (7) | |
14.1 | Code of Ethics | |
16.1 | Letter from Morgenstern, Svboda & Baer, CPA’s, P.C(5). | |
31.1 |
Certification
of the
Chief
Executive Officer and the Principal Accounting/Financial Officerpursuant
to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1 |
Certification of
the Chief Executive Officer and the Principal
Accounting/Financial
Officer pursuant to 18 U.S.C. Section 1350, AsAdopted Pursuant to
Section
906 of the Sarbanes-Oxley Act of
2002.
|
(1)
|
Incorporated
by reference to the Form 8-K Current Report filed with the Securities
and
Exchange Commission on May 21, 2
|
(2)
|
Incorporated
by reference to the Form 8-K/A filed with the Securities and Exchange
Commission on June 20, 2007.
|
(3)
|
Incorporated
by reference to the Form SB-2 Registration Statement filed with the
Securities and Exchange Commission on D 7,
2006.
|
(4)
|
Incorporated
by reference to the Form 8-K Current Report filed with the Securities
and
Exchange Commission on June 13, 20
|
(5)
|
Incorporated
by reference to the Form 8-K/A Current Report filed with the Securities
and Exchange Commission on June 20,
|
(6)
|
Incorporated
by reference to the Form 8-K Current Report filed with the Securities
and
Exchange Commission on October 5,
|
(7)
|
Incorporated
by reference to the Form 8-K Current Report filed with the Securities
and
Exchange Commission on December
2007.
|
KESSELRING
HOLDING CORPORATION
|
||
(Issuer)
|
||
By:
|
/s/
Douglas P. Badertscher
|
|
Douglas
P. Badertscher, President and Chief Executive Officer, December
28, 2007
(Principle Executive Officer)
|
By:
|
/s/Virgil
L. Sandifer, Jr.
|
|
Virgil
L. Sandifer, Jr., Interim Chief Financial Officer and Director,
December
28, 2007
(Principle
Accounting Officer)
|
/s/
Douglas P. Badertscher
|
/s/
Clifford H. Wildes
|
|
Douglas
P. Badertscher, President and Chief Executive Officer, December
28, 2007
(Principle Executive Officer)
|
Clifford
H. Wildes, Chairman of the Board of Directors, December 28,
2007
|
|
/s/
Virgil L. Sandifer, Jr.
|
/s/
Gary E. King
|
|
Virgil
L. Sandifer, Jr., Interim Chief Financial Officer and Director,
December
28, 2007
(Principle
Accounting Officer)
|
Gary
E. King, Director, December 28, 2007
|
|
/s/
Kenneth Craig
|
/s/
Ben Bond
|
|
Kenneth
Craig, Director, December 28, 2007
|
Ben
Bond, Director, December 28, 2007
|
|
James
K. Toomey, Director, December 28, 2007
|
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