SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 16, 2009
KESSELRING HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 000-52375 20-4838580
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
602 West Valley Mall Blvd., Union Gap, WA 98901
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (509) 453-4683
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2., below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communication pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communication pursuant to Rule 13c-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
As previously reported in the Company's Current Report on Form 8-K filed
with the Securities and Exchange Commission on November 20, 2009, the Company
issued 2,000,000 shares of common stock to Southtech Solutions, Inc., an alleged
creditor of the Company, in an effort to convert $20,000 in alleged debt to
common stock. This stock was issued for the sole purpose of thwarting certain of
the Company's shareholders from removing the sole director and Chief Executive
Officer from those offices and to seize control of cash and other assets of King
Brothers Woodworking, Inc. The issuance of such shares was alleged by the
Company to have been issued in reliance upon exemptions from registration
pursuant to Section 4(2) under the Securities Act of 1933 and/or Rule 506
promulgated under Regulation D thereunder based on the alleged fact that
Southtech Solutions, Inc. was an accredited investor as defined in Rule 501 of
Regulation D.
On December 16, 2009, a Federal Judge ruled that such stock issuance was
invalid. See the discussion under "Pending Litigation," below. We are in the
process of obtaining the unlawfully issued stock certificate and returning it to
our transfer agent for cancellation.
ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT
On November 16, 2009, certain shareholders of the Kesselring Holding
Corporation owning a majority or plurality of our outstanding common stock
("Majority Shareholders") and acting pursuant to a written consent (i) removed
Virgil Sandifer from his position of director on our board of directors and (ii)
elected Greg N. Aff, Teddy B. Sparling and Gary E. King as directors on our
board of directors. Therefore, Messrs. Aff, Sparling and King presently
constitute our entire board of directors. Immediately following the execution of
the written consent of shareholders by the Majority Shareholders, the newly
elected members of our board of directors (i) terminated Joseph Silva and (ii)
elected Gary E. King to the offices of President and Chief Executive Officer of
Holding.
By virtue, of the above shareholder actions, a change in control of
Kesserling Holding Corporation occurred. The persons who acquired such control
were the following shareholders who own the number of shares set forth opposite
their respective names:
Don Craig 500,409 shares
Teresita Craig 2,102,379 shares
Kenneth & Rose Marie Craig 2,451,521 shares
Erin Craig 700,409 shares
Gary E. King 5,725,278 shares
Curtis P. & Lois A. King 2,965,000 shares
Nicola A. O'Sullivan, Trustee of The
Nicola A. O'Sullivan Trust 2,257,379 shares
Teddy B. and Lisa Sparling 1,719,668 shares
Greg & Deena Aff 40,000 shares
John & Candace Broadfoot 10,000 shares
Justin Craig 700,409 shares
Lawrence D. & Arlene Wilder 197,333 shares
------------------
Total Shares 19,369,785 shares*
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* Represents over 53% of Kesselring Holding Corporation's issued and
outstanding common stock. By virtue of their agreement to vote together for
the change of control, each of the above named shareholders may be deemed
to be the beneficial owner of 19,369,785 shares.
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ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENT OF
CERTAIN OFFICERS
On November 16, 2009, certain shareholders of the Kesselring Holding
Corporation ("Company") owning a majority or plurality of our outstanding common
stock ("Majority Shareholders") and acting pursuant to a written consent (i)
removed Virgil Sandifer from his position of director on our board of directors
and (ii) elected Greg N. Aff, Teddy B. Sparling and Gary E. King as directors on
our board of directors. Therefore, Messrs. Aff, Sparling and King presently
constitute our entire board of directors. Immediately following the execution of
the written consent of shareholders by the Majority Shareholders, the newly
elected members of our board of directors (i) terminated Joseph Silva and (ii)
elected Gary E. King to the offices of President and Chief Executive Officer of
Holding.
For some time prior to November 16, 2009, the Majority Shareholders were
very concerned with the direction in which the Company's management ("Old
Management") was taking the Company. For example, the Old Management had been
requiring King Brothers Woodworking, Inc. ("King Bros.") to transfer hundreds of
thousands of dollars from King Bros. bank accounts to the Company's bank
accounts when, in fact, the Company had only two employees, Messrs. Sandifer and
Silva. Finally, around the end of October 2009, the management of King Bros.
told Messrs. Sandifer and Silva that they were not sending any more money to the
Company.
On November 13, 2009, Mr. Silva showed up at King Bros.' bank, Banner Bank
in the State of Washington, and attempted to change the signatory authority on
the King Bros. bank accounts and take control of the King Bros. money. On
November 16, 2009, Mr. Silva then tried to terminate various employees and
management personnel of King Bros. As a result of the activities of Messrs.
Sandifer and Silva, the Majority Shareholders removed them from office in an
effort to protect the assets of King Bros., which was the only operating entity
under the Company's control.
At the time of his removal from the board of directors, Mr. Sandifer did
not serve on any committee of the board of directors. Mr. Sandifer has not
furnished the Company with any written correspondence concerning the
circumstances surrounding his removal from the board of directors.
LEGAL AUTHORITY FOR ABOVE ACTIONS:
The Company is a corporation organized under the laws of the State of
Delaware. Section 141(k) of the Delaware General Corporation Law ("DGCL") states
that:
"Any director or the entire board of directors may be removed, with or without
cause, by the holders of a majority of the shares then entitled to vote at an
election of directors...."
Section 228 of the DGCL permits shareholders to take action by their
written consents and states as follows:
"Unless otherwise provided in the certificate of incorporation, any action
required to be taken by this chapter to be taken at any annual or special
meeting of stockholders of a corporation or any action which may be taken at any
annual or special meeting of such stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
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stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the corporation by
delivery to its registered office in this State, its principal place of business
or an officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested."
Our Certificate of Incorporation and amendments thereto do not mention or
restrict written consents of shareholders. Article 8 of our Bylaws specifically
authorizes written consents of shareholders and states as follows:
"Except as any provision of the General Corporation law may otherwise require,
any action required by the General Corporation law to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting of stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting ...."
Article 7 of our Bylaws states in pertinent part as follows:
"Each share of stock shall entitle the holder thereof to one vote. Directors
shall be elected by a plurality of the votes of the shares present or
represented by proxy at the meeting and entitled to vote on the election of
directors."
CONCLUSION
Based on the facts that our shareholders were legally authorized to take
action by their written consent, that such shareholders owned at least a
plurality of the votes that could have been cast at any annual or special
meeting of our shareholders, the shareholders lawfully removed Virgil Sandifer
from our board of directors and elected Messrs. Greg N. Aff, Gary E. king and
Teddy B. Sparling to our board of directors. The newly elected members of our
board of directors then lawfully terminated Joseph Silva from the offices of
Chief Executive Officer and Chief Financial Officer of the Company and appointed
Gary E. King as our President and Chief Executive Officer. Furthermore, on
December 16, 2009, Edward F. Shea, United States District Judge for the United
States District Court, Eastern District of Washington entered an Order ruling
that the removal of Messrs. Sandifer and Silva from their offices with the
Company were proper. See the discussion under "Pending Litigation," below, for
more information.
PENDING LITIGATION
On November 16, 2009, the Majority Shareholders and some additional
shareholders filed a Stockholders' Derivative Complaint (Including Request for
Temporary Restraining Order) against Kesserling Holding Corporation, Kesserling
Corp., Inc., Virgil Lee Sandifer, Jr., Joseph A Silva and Any Unknown Directors
seeking damages (without designating an amount of damages) and requesting a
temporary restraining order and thereafter a preliminary injunction to
judicially restrain the defendants from (a) issuing additional stock; (b) hiring
or terminating any board members and/or officers: (c) changing any banking
arrangements involving King Brothers Woodworking, Inc.; (d) seizing or exerting
control over any payments receiving or to be received by King Brothers; (f)
issuing any payment to Searchlight; (g) declaring or issuing any dividends;
and/or (h) engaging in any other drastic or material change that would affect
the operation of Kesserling Holding Corporation, Kesserling Crop., Inc. or King
Brothers Woodworking, Inc.
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This case was filed in the United States District Court, Eastern District
of Washington. The case number is CV-09-3110-EFS. On November 24, 2009, the
Court entered an order temporarily restraining the defendants from taking the
types of actions described above. On December 16, 2009, the Court entered an
order granting a preliminary injunction in favor of the plaintiffs and further
ruled that the issuance of 2,000,000 shares to Southtech Solutions, Inc. was
unlawful. See Item 3.02, above. A copy of the Court's December 16, 2009 Order is
attached hereto as Exhibit 99.1 and incorporated herein by reference.
We fully intend to prosecute this case against the Old Management and other
defendants who may be joined in the case later to recover the substantial
damages they have caused the Company.
The following information relates to our current directors and executive
officers:
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers are elected by the board of directors and serve at
the discretion of the board. All of the current directors serve until the next
annual shareholders' meeting or until their successors have been duly elected
and qualified. The following table sets forth certain information regarding our
current directors and executive officers:
Name Age Position Director Since
---- --- -------- --------------
Gary E. King 69 President, Chief Executive November 16, 2009
Officer, and Director
Greg N. Aff 44 Director November 16, 2009
Teddy B. Sparling 46 Director November 16, 2009
Certain biographical information of our directors and officers is set forth
below.
GARY E. KING. Mr. King was elected to the offices of President, Chief
Executive Officer and Director of the Company on November 16, 2009. From 2007
until the present day, Mr. King has served as the President and a Director of
King Brothers Woodworking, Inc. ("King Bros."). From 1977 to 2007, Mr. King
co-managed King Bros. where he handled financial and operational control of King
Bros. From 1997 until 2007, Mr. King co-managed King Door and Hardware, Inc., a
company founded by Mr. King and his brother, Curtis P. King. From 2007 until the
present day, Mr. King has served as the President of King Door and Hardware,
Inc. King Door and Hardware is a Division of King Bros. and King Bros. is a
wholly owned subsidiary of Kesselring Corporation, Inc. Kesselring Corporation,
Inc. is a wholly owned subsidiary of Kesselring Holding Co. Mr. King holds both
a BS degree in Physics and an MBA degree from the University of Washington in
Seattle, Washington. He currently serves as Treasurer on the Governing Board of
Northwest University in Kirkland, Washington, which he joined in 1985.
GREG N. AFF. Mr. Aff was elected as a Director of the Company on November
16, 2009. From May 2007 until the present day, Mr. Aff has held the position of
General Manager of King Door and Hardware, a Division of King Bros. Mr. Aff is
also the Chairman of the Management Advisory Committee of King Bros. From 1990
until May 2007, Mr. Aff held the position of Senior Contract Sales
Representative for JDS Incorporated. He has written specifications for
architects and has provided commercial building products for schools, hospitals,
universities and office buildings.
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TEDDY B. SPARLING. Mr. Sparling was elected as a Director of the Company on
November 16, 2009. Mr. Sparling was the owner and President of TBS Constructors,
Inc. from 1989 until March 2005, when TBS Constructors was acquired by
Kesselring Corporation. From March 2005 until October 2007, Mr. Sparling worked
for Kesselring Corporation. Since he left Kesselring Corporation, he has served
as President of Gulf & Bay Constructors, Inc. and since November 2008, he has
served as President of Florida Fuel Solutions, LLC (a company focused on
renewable fuels). Mr. Sparling has been a Licensed Florida Building Contractor
since 1989.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years, no present director, executive officer or
person nominated to become a director or an executive officer of the Company:
(1) had a petition under the federal bankruptcy laws or any state
insolvency law filed by or against, or a receiver, fiscal agent or
similar officer appointed by a court for the business or property of
such person, or any partnership in which he was a general partner at
or within two years before the time of such filing, or any corporation
or business association of which he was an executive officer at or
within two years before the time of such filing;
(2) was convicted in a criminal proceeding or subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining him from or
otherwise limiting his involvement in any of the following activities:
(i) acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of
any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person,
director or employee of any investment company, bank, savings and
loan association or insurance company, or engaging in or
continuing any conduct or practice in connection with such
activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the purchase or sale
of any security or commodity or in connection with any violation
of federal or state securities laws or federal commodities laws;
or
(4) was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of an federal or state authority
barring, suspending or otherwise limiting for more than 60 days the
right of such person to engage in any activity described in paragraph
(3) (i), above, or to be associated with persons engaged in any such
activity; or
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(5) was found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and for which the judgment has not been reversed,
suspended or vacated.
DIRECTORSHIPS
No Director of the Company or person nominated or chosen to become a
Director holds any other directorship in any company with a class of securities
registered pursuant to Section 12 of the 1934 Act or subject to the requirements
of Section 15(d) of such Act or any other company registered as an investment
company under the Investment Company Act of 1940.
ADDITIONAL MANAGEMENT CHANGES
Our board of directors intends to appoint additional officers and possibly
add additional board members in the future. However, no such persons have been
identified and no formal plans have been developed to recruit and appoint such
additional officers and directors at this time.
COMMITTEES OF THE BOARD OF DIRECTORS
We do not currently have an audit or compensation committee. However, our
board of directors intends to attempt to recruit additional persons to serve on
our board of directors and, if enough independent directors join our board, then
we will constitute audit and compensation committees at such time.
EMPLOYMENT AGREEMENTS AND OTHER COMPENSATION PLANS
We do not have any employment agreements. For the fiscal year ended
September 30, 2009, Gary E. King received total compensation of $132,772 in his
capacity as President of King Brothers Woodworking, Inc. and Greg Aff received
total compensation of $85,297 in his capacity as Manager of King Door and
Hardware, a division of King Brothers Woodworking, Inc.
OTHER
There are no arrangements or understandings between any of our directors
and any other persons pursuant to which any of our directors was selected as a
director. None of our newly elected directors currently serves on any committee
of our board of directors or is expected to serve on any such committee in the
near future. However, if and when committees are constituted, one or more of our
directors may serve on one or more such committees.
ITEM 9.01 EXHIBITS
(d) Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
99.1 Court Order dated December 16, 2009
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
DATED: December 21, 2009 KESSELRING HOLDING CORPORATION
By: /s/ Gary E. King
-------------------------------------
Gary E. King
President and Chief Executive Officer
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- ----------------------
99.1 Court Order dated December 16, 2009