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, 1999
Commission File Number #33-38119-C
KENSINGTON INTERNATIONAL HOLDING CORPORATION
(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 3,234,084 of common stock no par value.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this discussion which are not historical facts may be considered
"forward looking statements" within the meaning of Section 21E of the
Securities Act of 1934, as amended, including projected sales based upon
orders, estimated cost savings and savings that may be generated from
restructuring. The words "believe", "expect", "anticipate", "estimate", and
similar expressions identify forward looking statements. Any forward looking
statement involves risks and uncertainties that could cause actual events or
results to differ, perhaps materially, from the events described in the
forward looking statements. Readers are cautioned not to place undue reliance
on these forward looking statements. The Company undertakes no obligation to
publicly update or revise any forward looking statement, whether as a result
of new information, future events or otherwise. The risks associated with the
Company's forward looking statements include, but are not limited to, risks
associated with the Company's history of losses and uncertain profitability,
reliance on a large customer, risks associated with competition, general
economic conditions, reliance on key management and production people, future
capital needs, dilution, effects of outstanding notes and convertible
debentures, limited public market, low stock price, and lack of liquidity.
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements, related notes and other information
included in this quarterly report on Form 10-QSB.
Part I. Financial Information
Quarter Ended MArch 31, 1999
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 totaled $862k. This represents a slight decrease
from revenue for the same period for 1998. Gross profits totaled $303k as
compared to $310k for the previous year. Net income for the quarter totaled
$15k, as compared to a $30k for the same period in 1998. Increased labor
costs, due in part to a shortage of skilled workers and the low unemployment
rate, were the main contributors to a decline in overall profits. The company
has also reached its limit on output, with a single shift, at its plant. Due
to the problem in recruiting new people, it is anticipated that revenues will
be flat during the rest of 1999.
The current backlog of customer PO's as of the end of the quarter continues to
be strong, totaling approximately $675k. In order to have the ability to
increase revenues, the company is exploring options such as forming strategic
alliances with other manufacturers or acquisition of companies offering
similar or complimentary products. As of today no specific companies have been
identified.
Liquidity and Capital Resources
For the quarter, the Company had a net income from operations of $64k.
This positive net income has allowed the company to meet its debt obligations.
The company also has access to a $200k line of credit. At this time there are
no borrowings against the line.
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: April 26, 1999
Minneapolis, Minnesota
KENSINGTON INTERNATIONAL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
ASSETS
Current assets:
Cash $48,430 $16,808
Accounts receivable 484,099 642,274
Inventories 233,446 192,366
Other current assets 31,369 18,757
Total current assets 797,344 870,205
Other assets:
Investment in oil and gas
properties, net 67,927 81,451
Investment in oil and gas
partnerships 29,641
Investment in Ives 0
Investment in unconsolidated
partnerships 10,000
Property and equipment, net 283,221 307,051
Loan Fees, Net 31,260 38,385
Notes receivable - related parties 14,625 21,165
Total other assets 407,033 477,693
$1,204,377 $1,347,898
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Line of Credit $0 $177,000
Note payable - related parties 124,715 238,217
Current portion of long-term debt 30,652 56,392
Current portion of obligations under
capital leases 16,022 22,835
Accounts payable 271,866 327,085
Accrued Expenses 233,593 268,880
Intercompany 0 0
Total current liabilities 676,848 1,090,409
Long-term debt, net of current
portion 815,615 722,933
Obligations under capital leases,
net of current portion 5,912 22,526
Total liabilities 1,498,375 1,835,868
STOCKHOLDERS'
EQUITY
Common stock 3,596,883 3,664,383
Additional paid-in capital 0 0
Accumulated deficit (3,721,329) (3,907,801)
Stock subscriptions receivable (169,552) (244,552)
Total stockholders' equity (293,998) (487,970)
$1,204,377 $1,347,898
KENSINGTON INTERNATIONAL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
1999 1998
Revenues:
Product sales $861,893 $897,059
Oil and gas sales 0 186
Total revenues 861,893 897,245
Cost of sales:
Cost of products sold 559,198 587,233
Oil and gas costs 0 0
Total cost of sales 559,198 587,233
Gross profit 302,695 310,012
Operating expenses 238,776 229,634
Income (loss) from operations 63,919 80,378
Other income (expense):
Interest expense (48,517) (50,430)
Miscellaneous income 0 0
Total other income (expense) (48,517) (50,430)
Income (loss) before income taxes
and extraordinary item 15,402 29,948
Provision for income taxes (benefit) 0 0
Income before extraordinary item 15,402 29,948
Extinguishment of debt, net of income
taxes of $0 0 0
Net income (loss) 15,402 29,948
Accumulated deficit, beginning (3,736,721) (3,937,749)
Accumulated deficit, ending ($3,721,319) ($3,907,801)
Earnings Per Share $0.00 $0.01
WEIGHTED NUMBER OF SHARES OUTSTANDING 3,234,084 3,138,340
KENSINGTON INTERNATIONAL HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1999 & 1998
(UNAUDITED)
1999 1998
Cash Flows from operating activities:
Net income (loss) $15,402 $29,948
Adjustments to reconcile net
income (loss)to cash flows from
operating activities:
Depreciation, depletion and
amortization 15,423 15,028
Extinguishment of debt 0
Changes in operating assets
and liabilities:
Accounts receivable 79,724 (167,494)
Inventories (37,603) (2,440)
Other current assets (9,161) 25,877
Other assets 0 0
Accounts payable (11,499) 16,103
Other current liabilities (40,296) 79,573
Cash flows from operating
activities 11,990 (3,405)
Cash flows from investing
activities:
Decrease in notes receivable -
related parties 2,000 0
Purchase of property and equipment 1,588 3,646
Sale of Stock 0
Cash flows from investing activities 412 3,646
Cash flows from financing activities:
Increase (decrease) in Line of
Credit (35,000) 28,901
Increase (decrease) in notes
payable - related parties 0 0
Proceeds short, long-term debt 0 0
Payments on long-term debt (600) 15,227
Payments on obligations under
capital leases (592) 0
Cash flows from financing
activities ($36,192) $13,674
Increase (decrease) in cash ($23,790) $6,623
Cash, beginning 72,220 10,185
Cash, ending $48,430 $16,808
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