[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] JUN-30-1998
[CASH] 124,095
[SECURITIES] 0
[RECEIVABLES] 316,329
[ALLOWANCES] 0
[INVENTORY] 202,366
[CURRENT-ASSETS] 659,734
[PP&E] 396,351
[DEPRECIATION] 26,102
[TOTAL-ASSETS] 1,134,357
[CURRENT-LIABILITIES] 794,306
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 3,671,883
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 1,134,357
[SALES] 933,764
[TOTAL-REVENUES] 933,764
[CGS] 621,740
[TOTAL-COSTS] 621,740
[OTHER-EXPENSES] 253,604
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] (17,402)
[INCOME-PRETAX] 41,402
[INCOME-TAX] 41,402
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 41,018
[EPS-PRIMARY] 0.01
[EPS-DILUTED] 0.01
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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, 1998
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 3,163,340 of
common stock no par value.
Page 1
Part I. Financial Information
Quarter Ended June 30, 1998
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 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, revenues rose to $934k. This represents a 21% increase over
revenue for the same period for 1997. Gross profits totaled $312k as compared
to $266k for the previous year. Net income for the quarter totaled $41k, as
compared to $57k for the same period in 1997. Year to date revenues were 12%
higher than those for the first six months of 1997. Net income rose 7% over
1997 levels to $71k.The significant revenue growth is due to continued strong
sales to existing customers as well as expanded sales to new customers. The
backlog of customer PO's continues to be strong and we expect the third
quarter to exceed 1997 levels.
Liquidity and Capital Resources
For the quarter, the Company had a net income from operations of $58k.
During the quarter the company was able to meet its debt obligations and was
able to extend a portion of those debentures which had come due. Management is
continuing to negotiate with
PAGE 2
those debtors who hold currently maturing debt to extend the repayment
period.
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: July 29, 1998
Minneapolis, Minnesota
PAGE 3
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
JUNE 30, 1997 AND 1998
(UNAUDITED)
1997 1998
ASSETS
Current assets:
Cash $20,261 $124,095
Accounts receivable 185,925 316,329
Inventories 181,141 202,366
Other current assets 2,527 16,944
Total current assets 389,854 659,734
Other assets:
Investment in oil and gas properties,
net 87,854 0
Investment in oil and gas partnerships 44,832 29,175
Investment in Ives 0
Investment in KEC partnerships 0
Property and equipment, net 308,354 396,351
Loan Fees, Net 28,472
Notes receivable - related parties 24,786 20,625
Total other assets 465,826 474,623
$855,680 $1,134,357
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of Credit $16,548 $0
Note payable - related parties 278,556 207,655
Current portion of long-term debt 495,711 35,581
Current portion of obligations under
capital leases 17,341 25,340
Accounts payable 281,088 268,032
Accrued payroll & related taxes 102,425 155,725
Accrued interest 32,747 37,852
Accrued Expenses 21,094 64,121
Intercompany 0 0
Total current liabilities 1,245,510 794,306
Long-term debt, net of current portion 130,110 762,968
Obligations under capital leases,
net of current portion 10,000 10,000
Minority interest in consolidated
Subsidiaries 11,239 0
Total liabilities 1,396,859 1,567,274
STOCKHOLDERS' EQUITY
Common stock 3,671,816 3,671,883
Additional paid-in capital 0 0
Accumulated deficit (3,915,663) (3,856,248)
Stock subscriptions receivable (297,332) (248,552)
Total stockholders' equity (541,179) (432,917)
$855,680 $1,134,357
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED JUNE 30, 1997 AND 1998
(UNAUDITED)
1997 1998
Revenues:
Product sales $770,626 $933,764
Oil and gas sales 0 0
Total revenues 770,626 933,764
Cost of sales:
Cost of products sold 504,614 621,740
Oil and gas costs 0 0
Total cost of sales 504,614 621,740
Gross profit 266,012 312,024
Operating expenses 190,131 253,604
Income (loss) from operations 75,881 58,420
Other income (expense):
Interest expense (19,373) (17,402)
Miscellaneous income 0 0
Total other income (expense) (19,373) (17,402)
Income (loss) before income taxes and
extraordinary item 56,508 41,018
Provision for income taxes (benefit) 0 0
Income before extraordinary item 56,508 41,018
Extinguishment of debt, net of
income taxes of $0 0 0
Net income (loss) 56,508 41,018
Accumulated deficit, beginning (3,978,135) (3,907,801)
Accumulated deficit, ending ($3,921,627) ($3,866,783)
Earnings Per Share $0.02 $0.01
WEIGHTED NUMBER OF SHARES OUTSTANDING 3,021,450 3,163,340
THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED JUNE 30, 1997 & 1998
(UNAUDITED)
1997 1998
Cash flows from operating
activities:
Net income (loss) $56,508 $41,018
Adjustments to reconcile net income
(loss)to cash flows from operating
activities:
Depreciation, depletion and amortization 9,060 26,102
Extinguishment of debt 0
Changes in operating assets and
liabilities:
Accounts receivable 123,349 325,945
Inventories (21,300) (10,000)
Other current assets 30,525 1,813
Other assets 0 9,913
Accounts payable (27,169) (59,053)
Other current liabilities (54,612) (11,182)
Cash flows from operating activities 116,361 324,556
Cash flows from investing
activities:
Decrease in notes receivable -
related parties 0 500
Purchase of property and equipment 4,660 24,848
Sale of Stock 0 7,500
Cash flows from investing activities 4,660 (16,848)
Cash flows from financing
activities:
Increase (decrease) in Line of Credit 0 (177,000)
Increase (decrease) in notes payable -
related parties 1,725 (30,562)
Proceeds short, long-term debt (95,993) 38,891
Payments on long-term debt (14,816) 19,224
Payments on obligations under capital
leases (5,999) 12,526
Cash flows from financing activities ($115,083) ($200,421)
Increase (decrease) in cash ($3,382) $107,287
Cash, beginning 23,643 16,808
Cash, ending $20,261 $124,095
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