SEC Filing - Kingstone Companies, Inc.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-1665 EXTECH CORPORATION (Exact name of small business issuer as specified in its charter) Delaware 36-2476480 (State or other jurisdiction (I.R.S Employer of incorporation or organization) Identification No.) 90 Merrick Avenue, East Meadow, New York 11554 (Address of principal executive offices) (Zip Code) (516) 794-6300 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (X) Yes ( ) No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ( ) Yes ( ) No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 2,391,367 shares as of October 17, 1995 This document consists of 11 sequentially numbered pages.

INDEX EXTECH CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheet - September 30, 1995 (Unaudited) Condensed Consolidated Statements of Operations - Nine months and quarter ended September 30, 1995 and 1994 (Unaudited) Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 1995 and 1994 (Unaudited) Notes to Condensed Consolidated Financial Statements - Nine months ended September 30, 1995 and 1994 (Unaudited) Item 2. Management's Discussion and Analysis or Plan of Operation PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) Sept. 30, 1995 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 560,145 Accounts receivable 65,502 Note receivable - net 51,847 Inventories 8,784 Prepaid expenses 15,930 __________ Total current assets 702,208 __________ PROPERTY AND EQUIPMENT, net 213,193 __________ OTHER ASSETS: Operating equipment, net 14,940 __________ $ 930,341 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,295 Accrued expenses 114,195 Debentures payable 154,200 Accrued taxes payable 11,072 __________ 283,762 __________ MINORITY INTEREST 560 __________ STOCKHOLDERS' EQUITY: Common Stock, $.01 par value; authorized 10,000,000 shares; 2,391,367 shares 23,914 Capital in excess of par 4,496,950 Deficit (3,874,845) __________ 646,019 $ 930,341 See notes to condensed consolidated financial statements. EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Nine months ended Sept. 30, 1995 1994 _______________________ Revenues: Rooms $ 697,069 $ 661,194 Other 51,617 74,426 Interest 13,855 6,977 ________ ________ Total revenues 762,541 742,597 ________ ________ Costs and expenses: General, administrative and sundry 274,944 256,153 Departmental 229,428 222,481 Depreciation and amortization 38,312 39,254 Energy costs 14,303 12,963 Lease rentals 141,278 195,961 Marketing 18,815 15,880 Property operation and maintenance 11,583 17,493 Provision for bad debt 3,840 (285,500) ________ ________ 732,503 474,685 ________ ________ Net income $ 30,038 $ 267,912 ========= ========= Income per common share: Net income $ .01 $ .11 ========= ========= Weighted average number of common shares outstanding 2,391,367 2,391,367 ========= ========= See notes to condensed consolidated financial statements.

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended Sept. 30, 1995 1994 ______________________ Revenues: Rooms $ 244,398 $ 182,185 Other 25,985 53,600 Interest 5,703 2,759 _________ _________ Total revenues 276,086 238,544 _________ _________ Costs and expenses: General, administrative and sundry 94,123 80,512 Departmental 80,728 73,314 Depreciation and amortization 12,770 13,146 Energy costs 4,731 3,814 Lease rentals 48,502 53,559 Marketing 6,738 4,682 Property operation and maintenance 2,851 6,925 Provision for bad debt 1,740 (288,500) _________ _________ 252,183 (52,548) _________ _________ Net income $ 23,903 $ 291,092 ========= ========= Income per common share: Net income $ .01 $ .12 ========= ========= Weighted average number of common shares outstanding 2,391,367 2,391,367 ========= ========= See notes to condensed consolidated financial statements.

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months ended Sept. 30, 1995 1994 ________________________ Cash flows from operating activities: Net income $ 30,038 $267,912 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 38,312 39,254 Provision for bad debts 3,840 (285,500) Decrease (increase) in assets: Accounts Receivable (12,774) 9,311 Inventories 2,920 3,631 Prepaid Expenses 27,501 (14,990) Notes Receivable 4,168 (21,714) Other assets (3,961) (276) Increase (decrease) in liabilities: Accounts payable 107 (1,963) Accrued expenses (22,822) (79,055) Accrued taxes payable 11,072 9,207 __________ _________ Net cash provided by (used in) operating activities 78,401 (74,183) __________ _________ Net cash (used in) investing activities: Purchases of property and equipment (615) (2,048) __________ _________ Net cash (used in) investing activities: (615) (2,048) __________ _________ Net increase in cash and cash equivalents 77,786 (76,231) Cash, beginning of period 482,359 493,392 __________ _________ Cash, end of period $ 560,145 $417,161 ========== ========= See notes to condensed consolidated financial statements.

EXTECH CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED) 1. The Condensed Consolidated Balance Sheet as of September 30, 1995, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 1995 and 1994 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 have been prepared by the Company without audit. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly its financial position as of September 30, 1995, results of operations for the three and nine months ended September 30, 1995 and 1994 and cash flows for the nine months ended September 30, 1995 and 1994. This report should be read in conjunction with the Company's annual report on Form 10-KSB for the year ended December 31, 1994. 2. The results of operations and cash flows for the nine months ended September 30, 1995 are not necessarily indicative of the results to be expected for the full year.

EXTECH CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 Results of operations: Nine months ended September 30, 1995 compared to 1994: The Company's net income for the nine months ended September 30, 1995 was $30,038 as compared to a net income of $267,912 for the nine months ended September 30, 1994. The decrease in net income was primarily due to a $285,500 reversal in the allowance for bad debts in the 1994 period. Excluding such reversal, the Company would have experienced a loss of $17,588 for the nine months ended September 30, 1994. The Company's operations were profitable for the nine months ended September 30, 1995, as compared to the 1994 period, primarily due to a retroactive adjustment in the calculation of the annual rental obligation for the International Airport Hotel (the "Hotel") effective January 1, 1994 (such adjustment not being reflected in the Company's financial statements until the fourth quarter of 1994). Prior to such adjustment, the rent expense was equal to the greater of approximately $154,000 or 30% of annual gross revenues, as defined. In 1994, the annual rental was retroactively adjusted to equal the greater of approximately $169,000 or 20% of annual gross rentals, as defined. As a result, rent expense for the Hotel was $141,278 for the nine months ended September 30, 1995 as compared to $195,961 for the nine months ended September 30, 1994 (unadjusted for the retroactive reduction). Three months ended September 30, 1995 compared to 1994: Revenues from the Hotel increased by $62,213 during the three months ended September 30, 1995 as compared to 1994. The Company believes that such increase was primarily the result of a general increase in travel. Other Revenues decreased by $27,615 during the three months ended September 30, 1995 as compared to the 1994 period due to higher royalties on the Company's specialized clamping device in the earlier period. Costs and expenses increased by $304,731 during the third quarter of 1995 as compared to the 1994 period generally due to the reversal in the bad debt allowance as described above with respect to the nine months ended September 30, 1994.

Liquidity and Capital Resources: As of September 30, 1995, the Company had $560,145 in cash and cash equivalents. As of such date, the Company had a working capital surplus of $418,446. The Company did not have any material commitments for capital expenditures as of September 30, 1995. Reference is made to Item 5 of Part II of this Form 10-QSB for a discussion of the status of the obligations owed by Robeson Industries Corp. ("Robeson") to the Company.

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 In February 1993, the Company entered into a Subscription and Stock Purchase Agreement (the "Subscription Agreement") with Robeson pursuant to which the Company agreed to purchase from Robeson, subject to the conditions set forth therein, (i) approximately 15% of the issued and outstanding shares of capital stock of Robeson and (ii) all of the outstanding shares of capital stock of Robeson's wholly-owned Hong Kong subsidiary, Robeson Industries Hong Kong Ltd. ("Hong Kong") (the "Hong Kong Shares"). In May 1993, the Company advised Robeson that it was terminating the Subscription Agreement due to the nonfulfillment of certain of the conditions to the obligation of the Company to consummate the transactions contemplated thereby. The Company also made demand upon Robeson for repayment of the principal amount of $320,000 loaned by the Company during 1992 and 1993, together with interest thereon, as well as reimbursement of expenses incurred by the Company in connection with the Subscription Agreement. Subsequently, in May 1993, Robeson filed a petition for bankruptcy under Chapter 11 of the Bankruptcy Act with the United States Bankruptcy Court for the District of New Jersey (the "Court"). In September 1993, the Company filed a proof of claim in such proceeding as a secured creditor to recover the approximate amount of $534,000. Pursuant to a Plan of Reorganization of Robeson (the "Plan") approved by the Court, in September 1994, in consideration of the $320,000 in loans made by the Company to Robeson and other recoverable expenses, the reorganized Robeson issued to the Company a promissory note (the "Note") in the principal amount of $385,000. The Note provided for the payment of interest at the rate of 8% per annum and the repayment of principal in 48 consecutive monthly installments. Such installments covered an aggregate of 5% of the principal amount of the Note during the initial six months, an additional 7.5% thereof during the following six months, an additional 37.5% thereof during the following 12 months, an additional 25% thereof during the following 12 months and the final 25% thereof during the last 12 months of the Note. Pursuant to the Plan, payment of the Note was secured by a pledge of all the outstanding shares of capital stock of Hong Kong (the "Hong Kong Stock"). In addition, pursuant to the Plan, the Company received a nominal minority equity interest in Robeson. The first three payments under the Note were received by the Company in October, November and December 1994. Effective January 1995, Robeson ceased making payments under the Note. In March 1995, the Company demanded full payment of the Note, foreclosed its security interest with respect to the Hong Kong Stock and purchased such shares at an auction sale. In September 1995, the Company agreed to cancel the Note in consideration for the issuance by Robeson of a new promissory note in the principal amount of $125,000 (the "New Note"). The New Note provides for interest at the rate of 8% per annum and is payable in 27 consecutive monthly installments of $5,000. The Company has received the initial two installments due under the New Note. Item 6. EXHIBITS AND REPORTS ON FORM 8-K None

SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EXTECH CORPORATION Dated: November 10, 1995 By: /s/ Morton L. Certilman MORTON L. CERTILMAN President (Chief Operating Officer and Principal Financial Officer)

5 1 9-MOS 3-MOS DEC-31-1995 DEC-31-1995 SEP-30-1995 SEP-30-1995 560,145 560,145 0 0 117,349 117,349 0 0 8,784 8,784 702,208 702,208 213,193 213,193 0 0 930,341 930,341 283,762 283,762 0 0 23,914 23,914 0 0 0 0 622,105 622,105 930,341 930,341 697,069 244,398 762,541 276,086 0 0 732,503 252,183 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 30,038 23,903 .01 .01 0 0