Natives of Kodiak
2014 Annual Meeting
“Investing in Our Future”
• Overview
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Welcome and Introduction
Board of Directors and Organizational Structure
NOK Shareholder Permanent Fund Trust Update
Brief FY 2013 Financial Review
Parent Company Initiatives in Kodiak
Subsidiary Operations/Business Development
Strategic Plan Progress Report
Question and Answer Session
Natives of Kodiak, Inc. Board of Directors
- Seated from left Laurence Anderson, Secretary
Margaret L. Roberts, Director
Jeannine (“JJ”) Marsh, Director
- Standing from left Carla Schauff, Treasurer
Donene Tweten, Chairperson
Alexis (“Sonny”) Chichenoff, Vice Chairperson
Anthony (“Tony”) Cange, Director
Leonard (“Pat”) Heitman, Director
David Anderson, Director
Updated: 6/26/2014
Natives of Kodiak, Inc.
Alaska Native Urban Corporation
KOMAN
Holdings, LLC. (KH)
KOMAN, Inc.
VXM, Inc.
100% NOK
Shareholders
100% NOK
100% NOK
100% NOK
Trust Management
Holding Company
Construction,
Support Services
Timber Holding
KOMAN Diversified
Services, LLC (KDS)
Kodiak Support
Services, J.V. (KSS)
Koncor Forest
Products Company,
J.V.
100% KH, LLC
8(a) Corporation
51% Inuit Services
49% KOMAN, Inc.
Construction, Apparel,
Environ. , Security
USCG BOSS
ISC Kodiak
NOK / KANA
Commercial
Condominium, Inc.
NOK Shareholder
Permanent
Fund Trust
50% NOK
50% KANA
Condo Management
KDS Propper JV of
Puerto Rico
51% KDS
49% Propper
Military Uniforms
Specialty Apparel
35.04% VXM
64.96% ONC
Forest Management
NOK and Subsidiaries – Functional Organizational Chart
NOK President / CEO
Michael Kelly
CFO
Michael Kelly
NOK Vice President
David Anderson
KOMAN Holdings
Michael Kelly
NOK
KOMAN
INVESTMENTS
LANDS
Accounting, HR & IT
Audrey Duncan-Fearnside
KOMAN
Diversified
Services, LLC
Office Mgr.
Irene Lind
KOMAN
Government
Solutions, LLC
(New 8a Company)
A/P, A/R and Payroll
Kathy Giordano
Receptionist
Gloria Bishop
Construction
Jack Hively
Apparel Mfg.
Mike Zavosky
KSS Contract
David Anderson
Environmental
Bruce Beck
Fusion Centers
Eddie Ortiz
SCIF Projects
John Williams
Updated: 9/18/2014
NOK SHAREHOLDER
PERMANENT FUND TRUST
UPDATE
• Results of recent initiative to amend Trust Agreement
provisions
• Discussion of Trust Fund fractional shares
• Shareholder survey on preference between receiving
one annual lump-sum or quarterly distributions
• Inflation-Proofing Requirements and Related Actions
FY 2013 FINANCIAL REVIEW
NOK AND SHAREHOLDERS PERMANENT FUND TRUST COMBINED
COMPREHENSIVE INCOME HISTORY
$6,000,000
$5,000,000
$1,903,000
$4,000,000
$3,000,000
TRUST
$2,384,559
$2,000,000
$1,000,000
$645,884
$1,543,811
$1,187,000
$1,325,334
$0
$1,327,000
$3,559,000
$1,179,000
$(395,000)
-$1,000,000
2009
2010
2011
2012
2013
NOK
Summary of Revenue and Investment Income
Natives of Kodiak, Inc : $596,823
VXM, Inc : $3,590,417
KOMAN, Inc:
$219,580
KOMAN Holdings: $13,910,321
Less: Eliminations:
($116,736)
Consolidated Total: $18,200,405
Summary of Net Income
(Excluding Unrealized Gains]
Natives of Kodiak, Inc :
VXM, Inc :
KOMAN, Inc:
KOMAN Holdings:
Less: Eliminations:
Total:
$2,645,805
$3,273,800
$917,331
($967,015)
($3,224,116)
$2,645,805
Summary of Net Comprehensive Income
Natives of Kodiak, Inc :
VXM, Inc :
KOMAN, Inc:
KOMAN Holdings:
Less: Eliminations:
Total Operating Income:
Add: Unrealized Gains:
$2,645,805
$3,273,800
$917,331
($967,015)
($3,224,116)
$2,645,805
912,990
Comprehensive Income: $3,558,795
UPDATE ON PARENT COMPANY
INITIATIVES ON KODIAK ISLAND
• Purchase and Marketing of Alaska Russian Orthodox Church
Art Collection:
– Background:
• On May 21, 2013, the individual responsible for creating this very unique art
collection, Roger Pike, gave a very informative and heartfelt presentation
to the NOK Board of Directors.
• Roger shared his personal story of how he became dedicated to creating
this project and seeing it through to a successful completion.
• The collection will ultimately be composed of all 106 Russian Orthodox
Churches in the State of Alaska and include four more religious icon
paintings of important Russian Orthodox saints.
– NOK Art Collection Background (cont.):
• Roger explained that only 80 of the 110 paintings had been completed at
this time and the 30 remaining paintings were scheduled to be completed
within the next six to eight months .
• After viewing a significant number of the professional-quality original oil
paintings, the NOK Board of Directors readily recognized and appreciated
their deep cultural, historical and religious value.
• The Board also believed there is significant commercial value in acquiring
the collection.
• Based on the above considerations, the Board authorized the purchase of
the entire collection for $242,000.
– NOK Art Collection Background (cont.):
• The Board of Directors also authorized the following items to purchased to
support the proper framing, safe storage and marketing of the collection.
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Frames ($300 each): $33,000 (Actual cost was less than half of this amount.)
Legal Fees: $5,000
Laser Printer: $5,500
Graphics Software: $2,500
Printing Supplies (Ink, Canvas, Paper): $7,500
Digital Camera Proofs: $6,000
Initial Marketing and Advertising Costs: $15,000
– Total Preliminary Estimated Costs: $316,500
– NOK Art Collection Background (cont.):
• Types of Items/Products That Can Be Created and Sold Using these
Russian Orthodox Church Painting Images
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Canvas Prints
Digital Paper Prints
Calendars
Post Cards
Coffee mugs and glasses
Computer Mouse Pads
Jigsaw Puzzles
Vinyl Placemats
Christmas Cards
Christmas Ornaments
– NOK Art Collection Background (cont.):
• NOK retained Solstice Advertising, LLC in Anchorage to develop the name,
logo and branding for the art collection.
• After being provided with several different potential choices, the NOK
Board of Directors selected “Kupol Collection”
– “Kupol” is the Russian word for dome and ties together Russian culture and
the iconic dome of Russian Orthodox churches. Adding the word “collection”
to the name reflects the names of classic art collections and makes it clear
that this is a group of works.
– The Board-approved logo for the “Kupol Collection” appears on the next slide.
• A sample of the Kupol Collection is provided below and on the next slide:
– Kupol Collection “Next Steps”
• David Anderson and Mike Kelly will continue to work closely with Solstice
Advertising, LLC personnel to develop the Kupol Collection website, ecommerce payment processes and inventory management procedures.
• Methods to increase awareness of the collection and to generate demand
for personal prints and other resale items
– Establish a small art gallery and resale kiosk in the NOK Corporate Offices
– Advertise in various marketing publications
– Advertise on the NOK Website
– Explore an art loan program with museums and Alaska Native organizations
Are there any shareholder questions or comments
on the Natives of Kodiak, Inc. “Kupol Collection”?
• Current Real Estate Development Activities on Kodiak
– Ongoing sustained efforts to get NOK properly compensated for the
contaminated property it received under ANCSA
• Meetings with Alaska Congressional Delegation and other elected officials
– Recent trip by David Anderson to Washington, D.C. (September 15-18, 2014)
– Meetings between NOK Directors and incumbents/candidates seeking office
• Active Participation in Alaska Native Village CEO Association (ANVCA)
– Creation of one-page, high impact document to bring attention to NOK’s land
contamination issue
• Current Kodiak Real Estate Development Activities
– Close cooperation and interaction with Kodiak Island Borough (KIB)
and City of Kodiak officials to fund a study of a fresh water line to NOK
property located south of the City of Kodiak
• This item is currently on the list of approved Capital Improvement Projects, but is
awaiting availability of funding
NOK Property on Kodiak Island
Initial Master Development Plan
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Aerial View of Tract “A”
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Conceptual Drawing of
Potential Large Retail Store
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• Current Real Estate Development Activities (cont.)
– Recent Unanimous Consent Resolution approved by the NOK Board to
take the following immediate actions to pursue development of Tract
“A” in order to avoid a one-year delay in developing this property for
the financial benefit of our shareholders
• Begin required Environmental and Wetlands Assessment processes before winter ($20,000)
• Determine if a satisfactory source of potable water is available on the property ($21,200)
• Perform comprehensive assessment of Kodiak commercial market/opportunities ($15,000)
• Miscellaneous Items and Contingencies: $3,800
• Total Expenditures Authorized: $60,000
UPDATE ON CURRENT
SUBSIDIARY OPERATIONS
Offices
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Kodiak, AK
Anchorage, AK
Severn, MD
Chantilly, VA
Raleigh, NC
Operations
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PR
Alaska
Washington, D.C
Continental US (DHS)
Puerto Rico
Current and Previous Customers
KOMAN, Inc.
• Background Information:
– KOMAN, Inc. reached the 9-year maximum time limit allowed by the SBA and
exited the 8(a) Program in 2011
– Previously focused on Construction, Apparel Manufacturing and Support
Services
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Current focus is on Base Operations Support Services (Kodiak U.S. Coast Guard
Contract)
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Company will remain in operation at least until the end of the KSS Joint Venture
Kodiak Support Services – JV
Contract Started on October 1, 2006
Joint Venture with the Bering Straits Native
Corporation Subsidiary (Inuit Services)
10-Year Contract
Contract Value: $13,750,000 Annually
Infrastructure Management and Support Services
to Kodiak Coast Guard Station
110 Full-Time Jobs
Highly Visible Contract – Largest USCG Base in the
World
Coast Guard remains very pleased with KSS
Management Staff and Operations
As indicated on the next slide, profitability on this
contract has significantly improved in recent years
Update on KOMAN, Inc.
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Kodiak U.S. Coast Guard Base Operations Support Services (BOSS) contract has become
significantly more profitable over the past four years
– Active involvement by NOK Board of Directors and Executive Team continues to contribute to
improved safety, operations and profitability
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Annual Net Income to KOMAN, Inc. from this contract follows:
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2014: $601,760 [Year-to-Date: Through July 31, 2014]
2013: $1,083,149
2012:
$64,822 (Affected by Wage Determination Increase in Fourth Quarter)
2011: $344,442
2010:
$4,980
2009: ($51,947)
2008:
($8,754)
2007: ($34,258)
2006: ($116,205)
KOMAN Diversified Services, LLC
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100% Owned by Natives of Kodiak, Inc.
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Business Originally Formed in September 2003
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Certified by the SBA as an 8(a) Company in March 2008
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Current focus is on the following business lines:
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Construction Management
Apparel Manufacturing
Federal Alarm Systems Maintenance and Monitoring Services (DHS Fusion Centers)
Environmental Services
Pursuing other profitable business activities
KOMAN Diversified Services, LLC
• Construction Management
• The following conditions continued to significantly and negatively impact
our Construction Management business line during FY 2013 and FY 2014
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U.S. National Debt of $16,738,492,645,235 ($16.7 Trillion) as of 09/18/2013
U.S. National Debt of $17,764,283,324,567 ($17.7 Trillion) as of 09/17/2014
Recurring annual Federal Budget Deficits of roughly $1 Billion
Federal Agency budget reductions
Justification and Approval (J&A) requirements for sole-source awards over $20 million
• Result: Fewer construction contract awards, smaller dollar values and
more competition with lower margins.
KOMAN Diversified Services, LLC
• Construction Management
• During the last few months, we have seen an increase in the number of
Task Orders being awarded to KDS from:
• Alaska National Guard
• U.S. Fish and Wildlife Service
• We will continue to aggressively pursue construction projects that we
can perform safely, professionally and profitably.
• Background Information on Apparel Manufacturing:
• Three years ago, KDS and Propper International, Inc. created a new Joint
Venture to manufacture military uniforms and related items (KOMANPropper, LLC )
• This initial Joint Venture has reached the end of allowable life under SBA
rules and has been replaced by a follow-on Joint Venture called KOMAN–
Propper Government Apparel (KPGA)
• Fortunately, K-P, LLC did finally receive several long-awaited apparel
manufacturing subcontracts (as shown on the next slide).
• KPGA has already been awarded two new apparel contracts
– Contract details are shown on several subsequent slides.
• K-P, LLC:
• Military budget shortfalls and manpower reductions had a highly negative
affect on the military apparel business line during 2013.
• However, K-P, LLC did recently receive two long-delayed subcontract awards. Both
of these subcontracts were bid far in advance of K-P LLC’s “sunset”, but were not
awarded until after K-P LLC had “graduated” from its SBA Mentor-Protégé 8(a)
eligibility.
– Bronze Star subcontract is valued at $3,900,000(+) and scheduled to be finished by June
30, 2015. It is for the manufacture of Navy Working Uniform (NWU) Blouses.
– The M&M subcontract is also for Navy Working Uniform Blouses, but has a total contract
value of $10 million to $12 million and a term of 3 years.
• Navy Working Uniform (NWU) Trouser Award:
• Approved by the SBA and awarded to KPGA in June 2014
• Total Contract Value of $15,135,452 (based on the maximum amount that
the Federal Government is authorized to purchase).
– However, we believe the Government is likely to buy $12 million to $13 million.
• Due to material lead times and production “ramp-up” times, we anticipate
this contract will generate no more than $40,000 in profits during 2014.
• Admin Recovery and Profit forecast at 5.58%, or approximately $697,500
net return to KDS over the 3-year life of the contract.
• Jacket, Soft-Shell, Generation III, Level 5
• KPGA was awarded this contract in August of 2014
• Total Contract Value is approximately $5.4 million
– We expect the Government to buy most or all of maximum authorized quantity.
• Again, due to material lead times and production “ramp-up” requirements,
we anticipate that no more than $30,000 in profits will be generated for
KDS in Calendar Year 2014.
• G & A Cost Recovery and Profit proposed on this contract is 6%; roughly
$324,000 in total return to KDS over the 3-year contract life.
• Summary:
• We are finally beginning to see notable improvement in our military
apparel business line.
• Background Information on DHS Fusion Centers:
– DHS awarded KDS a one-year 8(a) sole source contract last September
to provide the following support to their Fusion Centers.
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Site Survey Assessments
Digital Subscriber Lines
Alarm System Maintenance and Monitoring
Security Equipment Support
• Fusion Centers are joint Federal/State/Local/Tribal intelligencesharing facilities in each of the 50 states and four US territories.
• The contract is valued at slightly over $500,000 per year.
• It is our understanding that DHS intends to award a follow-on contract
to KDS for Federal Fiscal Year 2015.
Background Information on Environmental Services:
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Approved by the NOK Board of Directors in July 2013.
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Bruce Beck hired as KDS Regional Manager for U.S. East Coast.
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We have been aggressively developing important strategic relationships
and Teaming Agreements with large, reputable and capable companies:
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STANTEC (formerly USKH).
Engineering Consulting Services (ECS)
Power Secure
We are also utilizing Bruce’s Environmental Science background to expedite
the completion of the wetlands assessment and permitting process for our
Tract “A” property, as well as to limit the amount of fees to be paid to STANTEC.
• We are also actively pursuing various opportunities in
the Energy Services sector, to include:
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Privatization of Government utility systems (water, sewer, electricity,
steam heating, etc.)
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Power Secure is currently waiting on a decision by the Department of
Energy (DOE) for their firm to be listed as an “approved” Energy Services
Company or ESCO.
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Renewable Energy/Retrofit Projects.
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Strategic partnering in the federal-sector to pursue joint
programs/projects in renewable energy and Energy Efficiency
Improvements (EEI).
• Summary:
• We have continued to demonstrate our commitment to market our capabilities as
aggressively as possible to improve our overall growth and profitability.
• We are working diligently on a daily basis to strengthen our relationships with key
business partners, as well as to grow new strategic business partnerships.
• We have identified and are actively pursuing new business lines to generate longterm revenue streams and profits for our shareholders, including:
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Selectively bidding on profitable and risk-acceptable construction projects
Expanding into Multi-Year Alarm System Monitoring and Maintenance Services
Expanding our capabilities within the U.S. Intelligence Community
Growing our new Environmental Services and Energy Services business lines
NATIVES OF KODIAK, INC.
STRATEGIC PLAN PROGRESS
REPORT
Update on List of Current Action Items Resulting
from Recent NOK Follow-on Strategic Planning Retreat
Held in Kodiak on June 27-28, 2014
• Summary of Strategic Planning Follow-up Actions:
• A comprehensive Excel spreadsheet has been created to identify,
monitor and follow-up on open items. Each “Action Item” is:
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Based on actions identified and agreed to at the Strategic Planning Meeting
Assigned a Unique Item Tracking Number
Fully Described, to Include Desired Outcome, where appropriate
Assigned a Due Date
Responsible Person(s) are Assigned
An Updated Status is Provided at Each Regular NOK Board Meeting.
• This formalized follow-up process will help ensure accountability,
responsiveness and effectiveness in meeting our responsibilities
to all NOK shareholders and stakeholders.
• Sample of Action Items completed and in progress since
NOK Strategic Planning Session was held in June of this
year:
• All 110 Kupol Collection paintings have been professionally stretched and
framed, safely transported to Kodiak, stored in a secure area, and insured.
– Logo for the collection has been selected and website development is in progress.
• Development of Tract “A” property is being aggressively pursued
– Contract has been issued to STANTEC/USKH for environmental and marketing studies.
– Contract has been issued to drill a water well on the property and it is in progress.
– Environmental permitting process has started.
• Sample of Action Items completed and in progress since
NOK Strategic Planning Session was held in June of this
year (continued) :
• Due diligence on potential business acquisitions is in progress.
• NOK Shareholder Picnic was scheduled and held in Kodiak on July 19, 2014.
• Review of existing business lines and investment portfolios is underway.
• Draft Real Estate investment policy has been developed by Tony Cange.
Conclusion
Although the current U.S. business climate remains
extremely challenging, we will continue to carefully
exercise our stewardship responsibilities over our
shareholders’ wealth and pursue only responsible
growth and related profitability for your long-term
benefit.
Questions?