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 September 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 654 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 of common stock no par value.
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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.
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 $604k as
compared to $457k for the same period in 1996. During the quarter the company
incurred an operating loss of $28k as compared to a profit of $6k for 1996.
The loss for the quarter stems from higher than normal operating expenses to
cover the annual audit fees and the costs of obtaining a new mortgage.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. A strong backlog of
orders still remains and management is confident of a return to overall
profitabilty for the 4th quarter and for 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. As stated above the company was able to
complete a mortgage financing program to pay off a portion of the debt coming
due. Management has also convinced some of the largest debt holders to extend
the amounts due them for a three year period. There still exists a significant
amount of debentures which mature in the next twelve months, which could cause
a severe cashflow problem. Management is continuing to work with these holders
to achieve extensions to the due dates.
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Liquidity and Capital Resources
For the quarter, the Company had a net loss from operations of $28k.
Management of the Company is of the opinion that the Company will achieve an
operating profit for the 4th quarter. 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.
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
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<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
ASSETS
Current assets:
Cash $106,683 $12,241
Accounts receivable 214,159 176,379
Inventories 208,370 173,798
Other current assets 86,418 44,915
Total current assets 615,630 407,333
Other assets:
Investment in oil and gas properties, net 85,043 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 299,516 329,822
Notes receivable - related parties 24,125 74,536
Total other assets 453,516 1,658,617
$1,069,146 $2,065,950
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - $53,857 $49,247
Note payable - related parties 299,041 334,333
Current portion of long-term debt 375,633 93,310
Current portion of obligations under
capital leases 13,341 26,548
Accounts payable 264,490 397,158
Accrued payroll & related taxes 125,360 79,274
Accrued interest 29,412 25,830
Accrued Expenses 20,255 91,085
Intercompany 0 0
Total current liabilities 1,181,389 1,096,785
Long-term debt, net of current portion 442,849 543,450
Obligations under capital leases, net
of current portion 10,000 45,017
Minority interest in consolidated Subsidiaries 11,239 13,332
Total liabilities 1,645,477 1,698,584
STOCKHOLDERS' EQUITY
Common stock 3,692,923 3,660,377
Additional paid-in capital 0 0
Accumulated deficit (3,971,922) (3,040,591)
Stock subscriptions receivable (297,332) (252,420)
Total stockholders' equity (576,331) 367,366
$1,069,146 $2,065,950
<PAGE>
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
1997 1996
Revenues:
Product sales $604,618 $457,149
Distributions from oil and
gas partnerships 0 0
Oil and gas sales 513 513
Total revenues 605,131 457,662
Cost of sales:
Cost of products sold 400991 294136
Oil and gas costs 0 0
Total cost of sales 400991 294136
Gross profit 204140 163526
Operating expenses 232140 157397
Income (loss) from operations (28000) 6129
Other income (expense):
Interest expense (38693) (26350)
Litigation settlement 0 0
Minority Interest in Earnings of Consolidated
Oil & Gas Ptsp 32446 32446
Miscellaneous income 0 0
Total other income (expense) (39015) (26672)
Income (loss) before income taxes and
extraordinary item (67015) (20221)
Provision for income taxes (benefit) 0 0
Income before extraordinary item (67015) (20221)
Extinguishment of debt, net of
income taxes of $0 0 0
Net income (loss) (67015) (20221)
Accumulated deficit, beginning (2879598) (2879598)
Accumulated deficit, ending (2946613) (2899819)
Earnings Per Share (0.022123302210283) (0.0065586159474818 )
WEIGHTED NUMBER OF SHARES OUTSTANDING 3021450 2945894
<PAGE>
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THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997 & 1996
(UNAUDITED)
1997 1996
Cash flows from operating activities:
Net income (loss) (67015) (20221)
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation, depletion and amortization 12286 10467
Extinguishment of debt 0
Changes in operating assets and liabilities:
Accounts receivable (28234) (68606)
Inventories (27229) (33185)
Other current assets (83991) (37500)
Other assets 3472 0
Accounts payable (16598) (147981)
Other current liabilities 18761 7542
Cash flows from operating activities (188548) 6478
Cash flows from investing activities:
Distributions from Unconsolidated Gas &
Oil Partnerships 0 0
Decrease in notes receivable - related parties 661 0
Purchase of property and equipment 667 2535
Sale of Stock 0
Cash flows from investing activities (6) 2535
Cash flows from financing activities:
Increase (decrease) in notes
payable - related parties 20485 0
Proceeds short, long-term debt 365000 40047
Payments on long-term debt (106921) (40568)
Payments on obligations under capital leases (3600) (3600)
Cash flows from financing activities 274964 (4121)
Increase (decrease) in cash 86422 (178)
Cash, beginning 20261 12419
Cash, ending 106683 12241
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