SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities exchange Act of 1934
For Quarter Ending March 31, 1996
Commission File Number #33-38119-C
THE KENSINGTON COMPANY, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1610632
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation)
Suite 1950 Interchange Tower, 600 S. Hy. 169, Minneapolis, Minnesota 55426
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (612) 546-2075
Indicate by Check mark whether the registration (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or of such shorter period that the
registrant was required to file such reports), and 92) has been subject to such
filing requirements for the past 90 days.
Yes __*__ No _____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Weighted Number of Shares are 2,945,894 of common
stock no par value.
Part I. Financial Information
Quarter Ended March 31, 1996
GENERAL
The following financial information is submitted in response to the
requirements of Form 10-QSB and does not purport to be financial statements
prepared in accordance with generally accepted accounting principles. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted, although the Company believes the disclosures that are
made are adequate to make the information presented not misleading. Further, in
the opinion of the management, the interim financial statements reflect fairly
the financial position and results of operations for the period indicated.
The results of operations for the quarter ended as stated above are not
necessarily indicative of results to be expected for the entire fiscal year
ending December 31st.
Item 1. Financial Statements
The balance sheet of The Kensington Company, Inc. (the "Company") as of
the Quarter stated above, and the related statement of income and changes in
financial position and note thereto are incorporated herein by reference to the
Company's quarterly report.
<TABLE>
<CAPTION>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
MARCH 31, 1996 AND 1995
(UNAUDITED)
1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 9,421 $ 57,972
Accounts receivable 290,368 161,532
Inventories 130,613 88,591
Other current assets 38,603 23,511
----------- -----------
Total current assets 469,005 331,606
----------- -----------
OTHER ASSETS:
Investment in oil and gas properties, net 1,206,278 1,290,278
Investment in oil and gas partnerships 47,981 139,000
Property and equipment, net 351,791 363,541
Notes receivable - related parties 32,125 188,279
----------- -----------
Total other assets 1,638,175 1,981,098
----------- -----------
$ 2,107,180 $ 2,312,704
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable - $ 50,098 $ 13,500
Note payable - related parties 345,956 264,891
Current portion of long-term debt 87,793 54,791
Current portion of obligations under capital leases 23,543 23,543
Accounts payable 273,167 350,532
Accrued payroll & related taxes 97,094 76,519
Accrued interest 29,397 30,948
Accrued Expenses 54,897 56,950
----------- -----------
Total current liabilities 961,945 871,674
LONG-TERM DEBT, NET OF CURRENT PORTION 606,146 655,745
OBLIGATIONS UNDER CAPITAL LEASES, NET OF CURRENT PORTION 55,017 81,564
----------- -----------
Total liabilities 1,623,108 1,608,983
----------- -----------
Minority interest in consolidated Subsidiaries 13,332 0
STOCKHOLDERS' EQUITY
Common stock 3,647,670 3,863,008
Additional paid-in capital 0 0
Accumulated deficit (2,879,598) (2,804,818)
Stock subscriptions receivable (297,332) (354,469)
----------- -----------
Total stockholders' equity 470,740 703,721
----------- -----------
$ 2,107,180 $ 2,312,704
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
1996 1995
<S> <C> <C>
REVENUES:
Product sales $ 651,581 $ 591,391
Distributions from oil and gas partnerships 3,067 10,100
Oil and gas sales 0 4,500
----------- -----------
Total revenues 654,648 605,991
----------- -----------
COST OF SALES:
Cost of products sold 408,837 398,013
Oil and gas costs 200 1,555
----------- -----------
Total cost of sales 409,037 399,568
----------- -----------
Gross profit 245,611 206,423
----------- -----------
OPERATING EXPENSES 180,267 280,330
----------- -----------
INCOME (LOSS) FROM OPERATIONS 65,344 (73,907)
----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (45,799) (33,503)
Litigation settlement 0 0
Minority Interest in Earnings of Consolidated Oil & Gas Ptsp (322)
Miscellaneous income 0 0
Total other income (expense) (46,121) (33,503)
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM 19,223 (107,410)
Provision for income taxes (benefit) 0 0
----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 19,223 (107,410)
Extinguishment of debt, net of income taxes of $0 0 0
----------- -----------
NET INCOME (LOSS) 19,223 (107,410)
ACCUMULATED DEFICIT, BEGINNING (2,898,821) (2,697,408)
----------- -----------
ACCUMULATED DEFICIT, ENDING ($2,879,598) ($2,804,818)
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1996 & 1995
(UNAUDITED)
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 19,223 ($107,410)
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation, depletion and amortization 10,829 7,850
Expenses paid by issuance of debt 0 0
Interest income on stock subscriptions 0 0
Extinguishment of debt 0 (1,500)
Changes in operating assets and liabilities:
Accounts receivable (88,150) (44,862)
Inventories 5,499 22,442
Other current assets (25,527) 246
Other assets 0 0
Accounts payable 50,351 (11,290)
Other current liabilities (4,033) (3,407)
--------- ---------
Cash flows from operating activities (31,808) (137,931)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from Unconsolidated Gas & Oil Partnerships 1,491 0
Decrease in notes receivable - related parties 1,000 0
Purchase of property and equipment (1,371) 0
--------- ---------
Cash flows from investing activities 1,120 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable - related parties 1,860 2,948
Proceeds short, long-term debt 18,990 100,000
Payments on long-term debt (11,968) (15,400)
Payments on obligations under capital leases (3,005) (5,380)
--------- ---------
Cash flows from financing activities $ 5,877 $ 82,168
--------- ---------
INCREASE (DECREASE) IN CASH ($ 24,811) ($ 55,763)
CASH, BEGINNING 34,232 113,735
--------- ---------
CASH, ENDING $ 9,421 $ 57,972
========= =========
</TABLE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Revenues for the first quarter totaled $655k as compared to revenues for the
first quarter of 1995 of $606k, an increase of 8%. Total Cost of Sales as a
percentage of revenue was reduced from 66% in 1995 to 62.5% in 1996. This
reduction is attributable to lower vehicle related and installation expense in
1996. Operating expenses were reduced from $280k in 1995 to $180k in 1996 which
led to a net income for the quarter in 1996 of $19k as compared to a loss for
the first quarter of 1995 of ($107k). The reduction of operating expenses is
attributable to the termination of funding for the housing related business as
well as a overall effort to reduce expenses, an action that was taken in the
second quarter of 1995.
Current Assets in 1996 were approximately $138k higher than in 1995.
This increase is primarily due to an increase in receivables, which reflects the
increase in sales, and an increase in inventory. The increase in inventory is
due to having more work in progress and finished goods available than in the
previous year. Other assets are down from 1995 by approximately $340k. This
decrease is due to the establishment of reserves against notes receivable and
the adjustment to Investment in Oil & Gas properties made at the end of 1995. (
See 1995 form 10-KSB for more information on these adjustments)
Liquidity and Capital Resources
The Company has a asset based line of credit for its manufacturing
facility of $150k. As of March 31, 1996 approximately $41k was outstanding.
During the period stated the Registrant did not sell to directors,
management and others, any common stock.
Inflation
The rate of inflation has not has a material effect on the 1st quarter
operations.
Part II. Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - At a
Stockholder's meeting held on Jan.27 1996 six items were voted on and
all passed. A copy of the proxy statement is attached.
Item 5. Other Information - None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE KENSINGTON COMPANY, INC.
/s/ Mark Haggerty
--------------------------------------
Mark Haggerty
Chief Executive Officer
/s/ Jeff Etten
--------------------------------------
Jeff Etten, C.F.O.
Dated: May 11, 1996
Minneapolis, Minnesota
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 9,421
<SECURITIES> 0
<RECEIVABLES> 290,368
<ALLOWANCES> 0
<INVENTORY> 130,613
<CURRENT-ASSETS> 469,005
<PP&E> 628,295
<DEPRECIATION> 276,504
<TOTAL-ASSETS> 2,107,180
<CURRENT-LIABILITIES> 961,945
<BONDS> 661,163
0
0
<COMMON> 3,647,670
<OTHER-SE> (3,176,930)
<TOTAL-LIABILITY-AND-EQUITY> 2,033,071
<SALES> 654,648
<TOTAL-REVENUES> 654,648
<CGS> 409,037
<TOTAL-COSTS> 635,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,799
<INCOME-PRETAX> 19,233
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,233
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
