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 June 30, 1997
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 1150 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 3,021,450
Part I. Financial Information
Quarter Ended June 30, 1997
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.
<PAGE>
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.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
For the quarter being reported on, the company had revenues of $771k as
compared to $410k for the same period in 1996. Operating profits for the
period were $266k as compared to $93k for 1996. For the year, revenues are up
over 53% over those of 1996.
This increase is due to the fact that in 1996 the company's largest
customer had a change in management structure, which resulted in a lag in
receiving orders. The backlog of orders continues to be strong indicating the
3rd and 4th quarters should be consistent with the first half of the year. As
was stated at the end of 1996, the company has written off virtually all its
oil & gas operations, thus the large discrepancy in total assets. Overall the
company reported a net income of $57k for the quarter. This was due to the
continued strong sales and reduced expenses in all entities.
Liquidity and Capital Resources
For the quarter, the Company had a net income from operations of $76k.
Management of the Company is of the opinion that the Company will continue to
show an operating profit through the foreseeable future. However, the company
still has not been able to find alternative financing for debt which will
reach maturity this year. This will result in a serious cash flow problem .
Management is currently negotiating with the debtors to roll over their debt
and also is in discussions with Mortgage bankers to provide alternative
financing.
During the period stated the Registrant did not sell to directors,
management and others, any common stock.
Inflation
The rate of inflation has had a great impact on the Company's results of
operations and is expected to have a continued impact on continuing operations
due to the increase in wood product costs and the fact that we have to bid
most of our projects and we can not pass all of the cost increases to our
customers.
<PAGE>
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 -
None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K and the October 18, 1995
S-8 filing as described in Item 2 herein.
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.
Mark Haggerty
Mark Haggerty
Chief Executive Officer
Jeff Etten
Jeff Etten, C.F.O.
Dated: February 17, 1998
Minneapolis, Minnesota
<PAGE>
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
JUNE 30, 1997 AND 1996 (UNAUDITED)
1997 1996
ASSETS
Current assets:
Cash $20,261 $12,419
Accounts receivable 185,925 107,773
Inventories 181,141 140,613
Other current assets 2,527 7,415
Total current assets 389,854 268,220
Other assets:
Investment in oil and gas properties, net 87,854 1,206,278
Investment in oil and gas partnerships 44,832 47,981
Investment in Ives 0
Investment in KEC partnerships 0
Property and equipment, net 308,354 337,754
Notes receivable - related parties 24,786 30,625
Total other assets 465,826 1,622,638
$855,680 $1,890,858
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - $16,548 $9,200
Note payable - related parties 278,556 334,333
Current portion of long-term debt 495,711 93,310
Current portion of obligations under
capital leases 17,341 26,548
Accounts payable 281,088 249,177
Accrued payroll & related taxes 102,425 84,102
Accrued interest 32,747 29,397
Accrued Expenses 21,094 75,148
Intercompany 0 0
Total current liabilities 1,245,510 901,215
Long-term debt, net of current portion 130,110 578,619
Obligations under capital leases,
net of current portion 10,000 55,017
Minority interest in consolidated
Subsidiaries 11,239 13,332
Total liabilities 1,396,859 1,548,183
STOCKHOLDERS' EQUITY
Common stock 3,671,816 3,660,377
Additional paid-in capital 0 0
Accumulated deficit (3,915,663) (3,020,370)
Stock subscriptions receivable (297,332) (297,332)
Total stockholders' equity (541,179) 342,675
$855,680 $1,890,858
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 1997 AND 1996
(UNAUDITED)
1997 1996
Revenues:
Product sales $770,626 $404,238
Distributions from oil and gas partnerships 0 4,875
Oil and gas sales 0 445
Total revenues 770,626 409,558
Cost of sales:
Cost of products sold 504614 316569
Oil and gas costs 0 0
Total cost of sales 504614 316569
Gross profit 266012 92989
Operating expenses 190131 175970
Income (loss) from operations -37103 75881 (82981)
Other income (expense):
Interest expense (19373) (58858)
Litigation settlement 0 0
Minority Interest in Earnings of
Consolidated Oil & Gas Ptsp 0 (332)
Miscellaneous income 0 0
Total other income (expense) (19373) (59180)
Income (loss) before income taxes and
extraordinary item 56508 (142161)
Provision for income taxes (benefit) 0 0
Income before extraordinary item 56508 (142161)
Extinguishment of debt, net of income taxes of $0 0 0
Net income (loss) 56508 (142161)
Accumulated deficit, beginning (3978135) (2879598)
Accumulated deficit, ending (3921627) (3021759)
Earnings Per Share 0.018702278707243 (0.046109460546459)
WEIGHTED NUMBER OF SHARES OUTSTANDING 3021450 2945894
<PAGE>
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED JUNE 30, 1997 & 1996
(UNAUDITED)
1997 1996
Cash flows from operating activities:
Net income (loss) 56508 (141839)
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation, depletion and amortization 9060 16085
Extinguishment of debt 0
Changes in operating assets and liabilities:
Accounts receivable 123349 182595
Inventories (21300) 22768
Other current assets 30525 31188
Other assets 0 0
Accounts payable (27169) (23990)
Other current liabilities (54612) 7259
Cash flows from operating activities 116361 61298
Cash flows from investing activities:
Distributions from Unconsolidated Gas &
Oil Partnerships 0 4875
Decrease in notes receivable - related parties 0 1500
Purchase of property and equipment 4660 (1364)
Sale of Stock 0 11215
Cash flows from investing activities 4660 16226
Cash flows from financing activities:
Increase (decrease) in notes payable -
related parties 1725 (11623)
Proceeds short, long-term debt (95993) (37598)
Payments on long-term debt (14816) (22305)
Payments on obligations under capital leases (5999) (3000)
Cash flows from financing activities (115083) (74526)
Increase (decrease) in cash (3382) 2998
Cash, beginning 23643 9421
Cash, ending 20261 12419
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