Item 6 (“Management’s
Discussion and Analysis of Financial Condition and Results of Operations”) of
this Annual Report, as well as factors noted in the balance of this Item 1
(“Description of Business”). Actual results may differ materially
from those projected. These forward-looking statements represent the
Company’s judgment as of the date of the filing of this Annual
Report. The Company disclaims, however, any intent or obligation to
update these forward-looking statements.
Background
Kent
International Holdings, Inc. (“Kent International” or “Company”), previously
known as Cortech, Inc. (“Cortech”), was a biopharmaceutical company whose
primary focus had been the discovery and development of novel therapeutics for
the treatment of inflammatory disorders. Cortech was incorporated in
1982 in Colorado and reincorporated in Delaware in
1991. Specifically, Cortech had directed its research and development
efforts principally toward protease inhibitors and bradykinin
antagonists. Although these efforts produced certain intellectual
property rights, these rights are currently recorded at nil value as the Company
is not currently marketing them.
In
response to disappointing test results and its loss of collaborative partner
support, Cortech implemented a series of workforce reductions which resulted in
the Company having no compensated employees from 1999 until November 2005, and
effectively discontinued all internal research and development
activities. In addition, in 1998 Cortech decommissioned its
laboratories and sold all of its remaining scientific, technical and office
equipment. As a result of these actions, Cortech no longer had the
staff or operative facilities required to conduct internal research and
development activities.
On May
25, 2006, Cortech was reincorporated in Nevada by a merger with its wholly owned
subsidiary, Kent International Holdings, Inc. The reincorporation
effected a change in Cortech’s legal domicile from Delaware to Nevada and a
change in the name from Cortech, Inc. to Kent International Holdings,
Inc.
Business
Development Activities
Our
current business plan is to serve as a vehicle for the acquisition of or merger
or consolidation with another company (a ‘‘target business’’). The
Company may use its available working capital, capital stock, debt or a
combination of these to start a business or to effect a business combination
with a company seeking to establish a public trading market for its securities
while avoiding the time delays, significant expense, loss of voting control and
other burdens including significant professional fees of an initial public
offering. A business combination may be with a financially stable,
mature company or a company that is in its early stages of development or
growth, which could include companies seeking to obtain capital and to improve
their financial stability.
The
Company will not restrict its search to any particular industry; rather, it may
investigate businesses of essentially any kind or nature and participate in any
type of business that may, in management's opinion, meet the business objectives
as described in this report. The Company emphasizes that the
description in this report of the business objective of seeking an operating
business is extremely general and is not meant to restrict management discretion
to seek and enter into potential business opportunities.
The
Company has not identified the particular business in which it will seek to
engage, nor has it conducted any market studies with respect to any business or
industry to evaluate the possible merits or risks of the target business or
industry in which the Company ultimately may operate. To the extent
the Company enters into a business combination with a financially unstable
company or an entity in its early stage of development or growth, including
entities without established records of revenues or earnings, or starts its own
new business, the Company will become subject to numerous risks inherent in the
business and operations of financially unstable and early stage or developing
companies. In addition, to the extent that the Company effects a
business combination with an entity in an industry characterized by a high level
of risk or starts its own new business in such an industry, the Company will
become subject to the currently unascertainable risks of that
industry. An extremely high level of risk frequently characterizes
certain industries that experience rapid growth. In addition,
although the Company will endeavor to evaluate the risks inherent in a
particular industry or target business, the Company cannot assure you that it
will properly ascertain or assess all significant risk factors.
Sources
of target businesses
Kent
International anticipates that target business candidates may be brought to the
Company’s attention from various unaffiliated sources, including securities
broker-dealers, investment bankers, private equity groups, venture capitalists,
bankers and other members of the financial community, who may present solicited
or unsolicited proposals. The Company’s officers and directors and
their affiliates may also bring to the Company’s attention target business
candidates. The Company has entered into non-exclusive agreements
with several finders and investment bankers and may engage such firms in the
future for which the Company may pay a finder's fee or other compensation if a
transaction is completed.
Selection
of a target business and structuring of a business combination
The
Company’s management will have significant flexibility in identifying and
selecting a prospective target business. In evaluating a prospective target
business, management may consider, among other factors, the
following:
|
|
·
|
the
financial condition and results of operation of the
target;
|
|
|
·
|
the
growth potential of the target and that of the industry in which the
target operates;
|
|
|
·
|
the
experience and skill of the target's management and availability of
additional personnel;
|
|
|
·
|
the
capital requirements of the target;
|
|
|
·
|
the
competitive position of the target;
|
|
|
·
|
the
stage of development of the target's products, processes or
services;
|
|
|
·
|
the
degree of current or potential market acceptance of the target's products,
processes or services;
|
|
|
·
|
proprietary
features and the extent and quality of the intellectual property or other
protection of the target's products, processes or
services;
|
|
|
·
|
the
regulatory environment of the industry in which the target
operates;
|
|
|
·
|
the
prospective equity interest in, and opportunity for control of, the
target; and
|
|
|
·
|
the
costs associated with effecting a business
combination.
|
These
criteria are not intended to be exhaustive. Any evaluation relating
to the merits of a particular business combination will be based, to the extent
relevant, on the above factors as well as other considerations deemed relevant
by the Company’s management in connection with effecting a business combination
consistent with the Company’s business objective. In connection with
the evaluation of a prospective target business, the Company anticipates that it
will conduct an extensive due diligence review that will encompass, among other
things, meetings with incumbent management and inspection of facilities, as well
as a review of financial or other information that will be made available to
us.
Social
Networking Website
Kent
International has developed a niche social networking website, www.chinauspals.com,
designed to promote cultural exchange between the citizens of the United States
and those of the People’s Republic of China. Membership to the site
is free, thus, any potential revenues will be derived from advertisements placed
on the site by third parties. The site provides users with access to
other users’ personal profiles and enables the user to send private messages to
other registered users of similar interests in order to develop lasting
friendships or simply attain a pen pal. Chinauspals.com also features
user generated discussion forums and blogs as well as user submitted videos and
pictures.
Risk
Factors
Our
business development activities and website produce losses
The
Company has had net losses of $301,000 and $212,000 in 2007 and 2006,
respectively. At December 31, 2007, the accumulated deficit was
$88,808,000. The Company does not expect that its business
development activity or social networking website will generate any significant
revenues for an indefinite period as these efforts are in their early
stages. As a result, these activities will produce losses until such
time as meaningful revenues are achieved.
Our
social networking website might not be viewable in China and will continue to
produce losses for an indefinite period.
We face
the risk that our website will not be viewable in China or will be deliberately
blocked by the government of the People’s Republic of China. Internet
usage and content are heavily regulated in China and compliance with these laws
and regulations may cause us to change or limit our business practices in a
manner adverse to our business.
The
expenses related to identifying a target business and to complete a business
combination will increase the losses of the Company.
Until
presented with a specific opportunity for a business combination, the Company is
unable to ascertain with any degree of certainty the time and costs required to
select and evaluate a target business and to structure and complete the business
combination. Any costs incurred in connection with the identification
and evaluation of a prospective target business with which a business
combination is not ultimately completed will result in a loss to the Company and
reduce the amount of capital otherwise available to complete a business
combination and thereafter operate the acquired business. Kent
International cannot assure you that it will be successful in identifying a
target business and completing a business combination on terms favorable to its
stockholders, if at all.
The
tax treatment of a potential business combination is not clear.
The
Company will endeavor to structure a business combination so as to achieve the
most favorable tax treatment to it and to the target business and the
stockholders of both companies. Kent International cannot assure you,
however, that the Internal Revenue Service or appropriate state tax authorities
will agree with the Company’s tax treatment of the business
combination.
We
have limited ability to evaluate the target business' management; we cannot
anticipate what role, if any, the Company’s management will play in a combined
business and whether our management has the necessary experience to manage the
combined business; we do not know if we will be able to recruit more management
if necessary.
Although the Company intends to carefully scrutinize the management of a prospective target business before effecting a business combination, it cannot assure you that its assessment of the target's management will prove to be correct. In addition, the Company cannot assure you that the target's future management will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of the Company’s officers and directors, if any, in the target business cannot presently be stated with any certainty. While it is possible that one or more of the Company’s officers and directors will remain associated in some capacity following a business combination, it is uncertain whether all of them will devote their full efforts to the Company’s affairs after a business combination. Moreover, the Company cannot assure you that its officers and directors will have significant experience or knowledge relating to the operations of the particular target business.
The
Company may seek to recruit additional management personnel to supplement the
incumbent management of the target business. The Company cannot
assure you, however, that it will be able to recruit additional managers who
have the requisite skills, knowledge or experience necessary to enhance the
incumbent management and successfully operate the target business.
In
our search for an appropriate combination partner, we will have to compete with
other entities with more experience and greater resources; after a successful
business combination we will have to face the competitors of the operating
company we combine with.
The
Company may encounter intense competition from other entities seeking to combine
with a privately held operating company. Many of these entities,
including financial consulting companies and venture capital firms, have longer
operating histories and have extensive experience in identifying and effecting
business combinations. Many of these competitors also possess
significantly greater financial, technical and other resources than does the
Company. Kent International cannot assure you that it will be able to
effectively compete with these entities. Consequently, Kent International may
acquire a company with less favorable prospects then it would otherwise prefer,
thus making its long-term prospects for success less likely.
If the
Company effects a business combination, it will become subject to competition
from the competitors of the acquired business. In particular,
industries that experience rapid growth frequently attract larger numbers of
competitors, including competitors with greater financial, marketing, technical
and other resources than the Company. The Company cannot ascertain
the level of competition it will face if it effects a business combination, and
it cannot assure you that it will be able to compete successfully with these
competitors.
The
Pink Sheets are characterized by high volatility which may negatively affect our
stock price.
Our
common stock is quoted on the Pink Sheets under the symbol
“KNTH”. The Pink Sheets and the price of our common stock are
characterized by high volatility. The Company cannot guarantee any
market for its shares of common stock, and cannot guarantee that any stable
market for its shares of common stock will develop or be
sustained. The Company cannot predict the effect, if any, that our
business activities or a business combination might have on the market
price.
Employees
As of
December 31, 2007, the company did not have any compensated
employees.
|
ITEM
2. -
|
DESCRIPTION OF
PROPERTY
|
None
|
ITEM
3. -
|
LEGAL
PROCEEDINGS
|
None
|
ITEM
4. -
|
SUBMISSION OF MATTERS
TO A VOTE OF SECURITY
HOLDERS
|
None
PART II
|
ITEM
5. -
|
MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER
MATTERS
|
Shareholders
of Record
At
February 29, 2008, the Company had approximately 400 stockholders of
record.
Market
Information
Since
August 2, 2005, the Company’s common stock has been quoted on The Pink Sheets,
first under the symbol “CRTQ” and then, effective June 8, 2006, under the symbol
“KNTH”. The table below lists the high and low bid prices for the
common stock as reported in The Pink Sheets for the periods indicated. These
prices represent inter-dealer quotations without retail markups, markdowns or
commissions, and may not represent actual transactions.
|
Calendar
Quarter Ended:
|
High
|
Low
|
|||||||
|
March
31
|
$ | 2.83 | $ | 2.61 | |||||
|
June
30
|
2.90 | 2.80 | |||||||
|
September
30
|
3.10 | 2.57 | |||||||
|
December
31
|
2.66 | 2.51 | |||||||
|
March
31
|
$ | 2.72 | $ | 1.50 | |||||
|
June
30
|
2.71 | 1.50 | |||||||
|
September
30
|
2.67 | 2.25 | |||||||
|
December
31
|
2.65 | 2.45 | |||||||
Dividends
The
Company has not paid any cash dividends on its common stock since its inception
and does not anticipate paying any cash dividends in the foreseeable
future.
Repurchase
Plans
In
October 2000, the Board of Directors approved a stock repurchase program
authorizing the Company to repurchase up to 320,000 shares of its Common Stock
at prices deemed favorable from time to time in the open market or in privately
negotiated transactions subject to market conditions, the Company’s financial
position and other considerations. This program has no expiration
date. Although no shares were repurchased during the quarter ended
December 31, 2007, between October 2000 and December 31, 2007 a total of 186,464
shares of Common Stock were repurchased for approximately $632,671, resulting in
133,536 shares remaining authorized for repurchase under the
program. All shares repurchased were returned to the status of
authorized but unissued shares.
Equity
Compensation Plan Information
The
following table sets forth information about the shares of the Company’s common
stock that may be issued upon the exercise of options granted to employees under
the Company’s 1986 Stock Option Plan and the Company’s 1993 Equity Incentive
Option Plan:
|
Plan
Category
|
(a)
Number of
Securities
to be
Issued
Upon
Exercise
of
Outstanding
Options,
Warrants
and
Rights
|
(b)
Weighted-
Average
Exercise
Price
of
Outstanding
Options,
Warrants
and
Rights
|
(c)
Number of
Securities
Remaining
Available
for
Future
Issuance
Under
Equity
Compensation
Plans
Excluding
Securities
Reflected
in
Column
(a)
|
|||||||||
|
Equity
Compensation Plans Approved by Security Holders
|
||||||||||||
|
1986
Stock Option Plan
|
100,000 | $ | 3.50 | 200,000 | ||||||||
|
1993
Equity Incentive Plan
|
20,000 | 3.50 | ||||||||||
|
Total
|
120,000 | $ | 3.50 | 200,000 | ||||||||
The
Company’s 1986 Stock Option Plan (“1986 Plan”) authorizes the grant of stock
options to officers and employees of the Company to purchase an aggregate of
300,000 shares of common stock. No options were granted in 2007 or
2006.
The
Company’s 1993 Equity Incentive Plan (“1993 Plan”), approved by the stockholders
on May 10, 1994, authorizes the issuance of 340,000 shares through the grant of
options to purchase common stock, stock bonuses, and rights to purchase
restricted stock. The 1993 Plan was terminated on December 9, 2003
and no further options may be awarded under this plan.
The stock
options granted under either plan may be incentive stock options (“ISO”) or
nonstatutory stock options (“NSO”). The Board of Directors may set
the rate at which the options expire, subject to limitations discussed
below. However, no options shall be exercisable after the tenth
anniversary of the date of grant or, in the case of ISOs, three months following
termination of employment, except in cases of death or disability, for which the
time or exercisability is extended. In the event of dissolution,
liquidation or other corporate reorganization, all stock options outstanding
under the 1986 Plan and the 1993 Plan would become exercisable in
full.
ISOs may
not be granted at an exercise price of less than the fair market value of the
common stock at the date of grant. If an ISO is granted to an
employee who owns more than 10% of the Company’s total voting stock, such
exercise price shall be at least 110% of fair market value of the common stock,
and the ISO shall not be exercisable until after five years from the date of
grant. The exercise price of each NSO may not be less than 85% of the
fair market value of the common stock at the date of grant.
Each of
these plans also provides for stock appreciation rights, which may be granted
with respect to any stock option. No stock appreciation rights have
been granted through December 31, 2007.
|
ITEM
6. -
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS
|
The
following discussion and analysis should be read in conjunction with the
Company’s Financial Statements and Notes thereto included elsewhere in this Form
10-KSB. Statements in this report relating to future plans,
projections, events or conditions are forward-looking
statements. Such statements are subject to risks and uncertainties
that could cause actual results to differ materially from those projected and
include, but are not limited to, the risks discussed below, the risks discussed
in the section of this Form 10-KSB entitled “Description of Business” and risks
discussed elsewhere in this Form 10-KSB. The Company expressly
disclaims any obligation or undertaking to update these statements in the
future.
Organization
The
Company, previously known as Cortech, Inc., was a biopharmaceutical company
whose primary focus had been the discovery and development of novel therapeutics
for the treatment of inflammatory disorders. Specifically, Cortech
had directed its research and development efforts principally toward protease
inhibitors and bradykinin antagonists. Although these efforts
produced certain intellectual property rights, these rights are currently
recorded at nil value as the Company is not currently marketing
them.
In
response to disappointing test results and its loss of collaborative partner
support, Cortech implemented a series of workforce reductions which resulted in
the Company having no compensated employees from 1999 until November 2005, and
effectively discontinued all internal research and development
activities. In addition, in 1998 Cortech decommissioned its
laboratories and sold all of its remaining scientific, technical and office
equipment. As a result of these actions, Cortech no longer had the
staff or operative facilities required to conduct internal research and
development activities.
On May
25, 2006, Cortech was reincorporated in Nevada by a merger with its wholly owned
subsidiary, Kent International Holdings, Inc. The reincorporation
effected a change in Cortech’s legal domicile from Delaware to Nevada and a
change in the name from Cortech, Inc. to Kent International Holdings,
Inc.
Business
Activities
Our
current business plan is to serve as a vehicle for the acquisition of or merger
or consolidation with another company (a ‘‘target business’’). We
intend to use our available working capital, capital stock, debt or a
combination of these to effect a business combination with a target business
which we believe has significant growth potential. The business
combination may be with a financially stable, mature company or a company that
is in its early stages of development or growth, which could include companies
seeking to obtain capital and to improve their financial
stability. We will not restrict our search to any particular
industry. Rather, we may investigate businesses of essentially any
kind or nature and participate in any type of business that may, in our
management’s opinion, meet our business objectives as described in this
report. We emphasize that the description in this report of our
business objectives is extremely general and is not meant to restrict the
discretion of our management to search for and enter into potential business
opportunities. We have not chosen the particular business in which we
will engage and have not conducted any market studies with respect to any
business or industry for you to evaluate the possible merits or risks of the
target business or the particular industry in which we may ultimately
operate. To the extent we enter into a business combination with a
financially unstable company or an entity in its early stage of development or
growth, including entities without established records of sales or earnings, we
will become subject to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth
companies. In addition, to the extent that we effect a business
combination with an entity in an industry characterized by a high level of risk,
we will become subject to the currently unascertainable risks of that
industry. An extremely high level of risk frequently characterizes
certain industries that experience rapid growth. In addition,
although we will endeavor to evaluate the risks inherent in a particular
industry or target business, we cannot assure you that we will properly
ascertain or assess all significant risk factors.
Additionally,
Kent International has developed a niche social networking website, www.chinauspals.com,
designed to promote cultural exchange between the citizens of the United States
and those of the People’s Republic of China. Membership to the site
is free, thus, any potential revenues will be derived from advertisements placed
on the site by third parties. The site provides users with access to
other users’ personal profiles and enables the user to send private messages to
other registered users of similar interests in order to develop lasting
friendships or simply attain a pen pal. Chinauspals.com also features
user generated discussion forums and blogs as well as user submitted videos and
pictures.
We face
the risk that our website will not be viewable in China or will be deliberately
blocked by the government of the People’s Republic of China. Internet
usage and content are heavily regulated in China and compliance with these laws
and regulations may cause us to change or limit our business practices in a
manner adverse to our business.
The
Company does not expect that these activities will generate any significant
revenues for an indefinite period as these efforts are in their early
stages. As a result, these programs may produce significant losses
until such time as meaningful revenues are achieved.
Results
of Operations
Kent
International had a net loss of approximately $301,000, or $0.08 basic and fully
diluted loss per share, for the year ended December 31, 2007 compared to a net
loss of $212,000, or $0.06 basic and fully diluted income per share, for the
year ended December 31, 2006. The increase in the net loss was
principally due to costs related to the separation agreement with Dr. Qun Yi
Zheng, our former President.
Revenues
Revenues
were approximately $533,000 and $564,000 for the years ended December 31, 2007
and 2006, respectively. Interest income increased to $518,000 in 2007
from $512,000 in 2006 due to higher yields on invested balances. The Company
recorded $15,000 in other income for 2007 in connection with a patent licensing
agreement and $52,000 in other income in 2006, of which $50,000 was related to
the one time sale of certain of the Company’s pharmaceutical patent rights to
Accuthera, Inc., a Colorado corporation, in September 2006. These
patents are recorded on the Company’s books at a zero carrying value and the
Company does not anticipate significant earnings in the future in connection
with either agreement.
Expenses
General
and administrative expenses were $795,000 in 2007 compared to $775,000 in
2006. The increase of $20,000 was primarily attributed to costs
associated with the separation agreement with Dr. Qun Yi Zheng of approximately
$136,000 and an approximately $29,000 increase in expenses associated with
operating www.chinauspals.com
including salary and benefits for a Marketing Director, depreciation, hosting
fees and marketing materials. These increases were partially offset
by a decrease of approximately $31,000 in international travel and entertainment
expenses related to our business development activities, a decrease of
approximately $7,000 in legal fees related to our reincorporation in Nevada in
2006, and a decrease in other administrative expenses of approximately
$57,000. The $136,000 in expenses associated with Dr. Zheng’s
separation agreement were also partially offset by the $50,000 in salary that
the Company would have been obligated to pay Dr. Zheng had he continued his
employment after August 31, 2007.
The
Company recorded a charge of approximately $38,000 in June 2007 to write off
certain website development costs related to our social networking website,
ChinaUSPals.com. These costs were associated with a beta version of
the website that the Company is no longer utilizing.
Liquidity
and Capital Resources
At
December 31, 2007, the Company had cash and cash equivalents of approximately
$28,000. Cash and cash equivalents consist of cash held in banks and
brokerage firms. The Company had short-term investments, consisting
of U.S. treasury bills with original maturities of six months, of $10.55 million
at December 31, 2007. Working capital at December 31, 2007 was
approximately $10.556 million. Management believes its cash and cash
equivalents are sufficient for its business activities for the at least the next
12 months and for the costs of seeking an acquisition of an operating
business.
Net cash
of $283,000 was used in operations during 2007, a decrease of $7,000 over the
$290,000 used in operations during 2006. This decrease resulted
primarily from the decrease in expenses as previously described in the Expenses
section of the Management’s Discussion and Analysis.
Net cash
of $290,000 was provided by investing activities in 2007, primarily by the
amount that the sales and maturities exceeded the purchases of short-term
investments. Net cash of $41,000 was used for investing activities in
2006 principally for development of the social networking website.
The
Company used $5,000 for financing activities for the year ended December 31,
2007 to repurchase 2,000 shares of common stock compared to $68,000 to
repurchase 24,984 shares during 2006.
Factors
Which May Affect Future Results
Future
earnings of the Company are dependent on interest rates earned on the Company’s
invested balances and expenses incurred. The Company expects to incur
significant expenses in connection with its objective of redeploying its assets
into an operating business.
Other
Disclosures – Related Party Transactions
A monthly
management fee of $21,000 is paid to Kent Financial Services, Inc. (“Kent”), a
Nevada corporation, for management services. These services include,
among other things, periodic and other filings with the Securities and Exchange
Commission, evaluating merger and acquisition proposals, internal accounting and
shareholder relations. This arrangement may be terminated at will by
either party. Kent was the beneficial owner of approximately 53.25%
of the Company’s outstanding common stock at December 31, 2007. Paul
O. Koether, Chairman of the Company is also the Chairman of Kent and the
beneficial owner of approximately 56.17% of Kent’s outstanding common
stock. Bryan P. Healey, Chief Financial Officer of the Company is
also the Chief Financial Officer of Kent and the son-in-law of Paul O.
Koether.
Off-Balance
Sheet Arrangements
The
Company has no off-balance sheet arrangements.
Contractual
Commitments
The
Company has no contractual commitments.
Other
Matters
As of
December 31, 2007, Kent International had approximately $77.6 million of net
operating loss carryforwards (“NOL”) for income tax purposes. In
addition, Kent International has approximately $1.85 million of research and
development and foreign tax credit carryforwards available to offset future
federal income tax, subject to limitations for alternative minimum
tax. The NOLs and tax credit carryforwards expire in various years
from 2008 through 2026. Kent International’s use of operating loss
carryforwards and tax credit carryforwards is subject to limitations imposed by
the Internal Revenue Code. Management believes that the deferred tax
assets as of December 31, 2007 do not satisfy the realization criteria set forth
in SFAS No. 109 and has recorded a valuation allowance for the entire net tax
asset. By recording a valuation allowance for the entire amount of
future tax benefits, the Company has not recognized a deferred tax benefit for
income taxes in its statements of operations.
|
ITEM
7. -
|
FINANCIAL
STATEMENTS
|
The financial statements filed with
this item are listed below:
Report of Independent Registered Public
Accounting Firm
Financial Statements:
Balance Sheet as of December 31,
2007
Statements of Operations for the Years
ended December 31, 2007 and 2006
Statements of Cash Flows for the Years
ended December 31, 2007 and 2006
Statements of Stockholders’ Equity for
the Years ended
December 31, 2007 and 2006
Notes to Financial
Statements
Report
of Independent Registered Public Accounting Firm
To the
Stockholders’ and Board of Directors of Kent International Holdings,
Inc.
We have
audited the accompanying balance sheet of Kent International Holdings, Inc. as
of December 31, 2007 and the related statements of operations, stockholders’
equity, and cash flows for the years ended December 31, 2007 and
2006. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Kent International Holdings, Inc.
as of December 31, 2007, and the results of operations and cash flows for each
of the two years in the period ended December 31, 2007, in conformity with U.S.
generally accepted accounting principles.
/s/
Paritz & Company, P.A.
March 3,
2008
Hackensack,
New Jersey