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 June 30, 1996 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. 5,591,367 shares as of July 22, 1996 This document consists of 10 sequentially numbered pages.

INDEX EXTECH CORPORATION AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheet - June 30, 1996 (Unaudited) Condensed Consolidated Statements of Operations - Six months ended June 30, 1996 and 1995 (Unaudited) Condensed Consolidated Statements of Operations - Three months ended June 30, 1996 and 1995 (Unaudited) Condensed Consolidated Statements of Cash Flows - Six months ended June 30, 1996 and 1995 (Unaudited) Notes to Condensed Consolidated Financial Statements Six months ended June 30, 1996 and 1995 (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 2

PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) June 30, 1996 ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,453,818 Accounts receivable 29,682 Notes and other receivables 69,828 Inventories 6,185 Prepaid expenses 15,076 ----------- Total current assets 1,574,589 ----------- PROPERTY AND EQUIPMENT, net 180,334 ----------- OTHER ASSETS: Operating equipment, net 10,959 Deposits 10,000 ----------- Total other assets 20,959 ----------- $ 1,775,882 =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 2,630 Accrued expenses 123,647 Debentures payable 154,200 Accrued taxes payable 12,335 ----------- 292,812 ----------- MINORITY INTEREST 560 ----------- STOCKHOLDERS' EQUITY: Common Stock, $.01 par value; authorized, 10,000,000 shares; issued and outstanding, 5,591,367 shares 55,914 Capital in excess of par 5,264,950 Deficit (3,838,354) ----------- 1,482,510 ----------- $ 1,775,882 =========== See notes to condensed consolidated financial statements. 3

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Six months ended June 30, 1996 1995 ---------- ---------- Revenues: Rooms $ 506,162 $ 452,671 Other 12,391 25,632 Interest 15,041 8,152 ---------- ---------- Total revenues 533,594 486,455 ---------- ---------- Costs and expenses: General, administrative and sundry 207,687 180,821 Departmental 151,507 148,700 Depreciation and amortization 25,832 25,542 Energy costs 7,311 9,572 Lease rentals 101,231 92,776 Marketing 13,200 12,077 Property operation and maintenance 10,426 8,732 Provision for bad debt 1,200 2,100 ---------- ---------- 518,394 480,320 ---------- ---------- Net income $ 15,200 $ 6,135 ========== ========== Income per common share: Net income $ .01 $ .01 ========== ========== Weighted average number of common shares outstanding 2,866,092 2,391,367 ========== ========== See notes to condensed consolidated financial statements. 4

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended June 30, 1996 1995 ---------- ---------- Revenues: Rooms $ 204,551 $ 171,661 Other 5,728 18,948 Interest 8,854 4,768 ----------- ----------- Total revenues 219,133 195,377 ----------- ----------- Costs and expenses: General, administrative and sundry 106,618 83,989 Departmental 70,725 63,870 Depreciation and amortization 12,845 12,771 Energy costs 2,676 4,920 Lease rentals 39,046 37,820 Marketing 5,409 5,633 Property operation and maintenance 5,861 3,986 Provision for bad debt 600 900 ----------- ----------- 243,780 213,889 ----------- ----------- Net loss $ (24,647) $ (18,512) =========== =========== Income per common share: Net loss $ (.01) $ (.01) =========== =========== Weighted average number of common shares outstanding 3,340,818 2,391,367 =========== =========== See notes to condensed consolidated financial statements. 5

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Six months ended June 30, 1996 1995 ----------- ----------- Cash flows from operating activities: Net income $ 15,200 $ 6,135 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 25,832 25,542 Provision for bad debts 1,200 2,100 Decrease (increase) in assets: Accounts receivable 21,539 24,708 Inventories 1,005 3,071 Prepaid expenses (8,189) 28,506 Notes receivable (30,648) -0- Other assets 1,844 (1,578) Deposits (10,000) -0- Increase (decrease) in liabilities: Accounts payable (926) 1,427 Accrued expenses (15,854) (41,238) Accrued taxes payable 12,335 10,269 ----------- ----------- Net cash provided by operating activities 13,338 58,942 ----------- ----------- Net cash (used in) investing activities: Purchases of property and equipment (4,476) (516) ----------- ----------- Net cash (used in) investing activities: (4,476) (516) ----------- ----------- Net cash from financing activities: Proceeds from issuance of stock 800,000 -0- ----------- ----------- Net cash provided by financing activities 800,000 -0- ----------- ----------- Net increase in cash and cash equivalents 808,862 58,426 Cash, beginning of period 644,956 482,359 ----------- ----------- Cash, end of period $ 1,453,818 $ 540,785 =========== =========== See notes to condensed consolidated financial statements. 6

EXTECH CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) 1. The Condensed Consolidated Balance Sheet as of June 30, 1996, the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 1996 and 1995 and the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995 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 June 30, 1996, results of operations for the three and six months ended June 30, 1996 and 1995 and cash flows for the six months ended June 30, 1996 and 1995. This report should be read in conjunction with the Company's Annual Report on Form 10-KSB for the year ended December 31, 1995. 2. The results of operations and cash flows for the six months ended June 30, 1996 are not necessarily indicative of the results to be expected for the full year. 7

EXTECH CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION SIX MONTHS ENDED JUNE 30, 1996 AND 1995 Results of operations: The Company's net income for the six months ended June 30, 1996 was $15,200 as compared to a net income of $6,135 for the six months ended June 30, 1995. Such increased net income was primarily the result of increased room revenues of $53,491, offset by increased general, administrative and sundry expenses of $26,866 (primarily due to a one-time $10,000 appraisal fee incurred in connection with the equity financing discussed under "Liquidity and Capital Resources" below) and decreased other revenues of $13,241 (primarily due to the receipt during the 1995 period of $13,468 as a final distribution of proceeds from the sale of the Chicago Executive House Hotel). Liquidity and Capital Resources: As of June 30, 1996, the Company had $1,453,818 in cash and cash equivalents and a working capital surplus of $1,281,777. As of December 31, 1995, the Company had $644,956 in cash and cash equivalents and a working capital surplus of $453,377. The increase in cash and cash equivalents and working capital surplus was primarily the result of an $800,000 equity investment made in June 1996 by the President and Chairman of the Board of the Company and another investor. The Company did not have any material commitments for capital expenditures as of June 30, 1996 (see, however, "Prospects" below). Prospects: On July 19, 1996, the Company entered into an agreement for the purchase of a professional sports team for a purchase price of $850,000. The consummation of the purchase, which is scheduled for September, 1996, is subject to, among other conditions, league approval of both the transaction and the relocation of the team to Long Island. Upon execution of the agreement, the Company paid to the seller, as a deposit, the sum of $250,000, which amount is repayable in the event the transaction is not consummated (other than as a result of a material default by the Company). The repayment of the deposit is secured by the grant of a security interest in all of the seller's assets. The $600,000 balance of the purchase price is payble at the closing. No assurances can be given that the transaction will be consummated. The Company is also exploring a number of other business opportunities in connection with the acquisition and/or operation of sports franchises. Although negotiations are occurring, no definitive arrangements are currently in place, and no assurances 8

can be given that any such transactions will be consummated. 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 (a) Exhibits 3(a) Certificate of Incorporation, as amended (1) 3(b) By-laws, as amended (2) 27 Financial Data Schedule (b) Reports on Form 8-K One Report on Form 8-K was filed during the quarter ended June 30, 1996 as set forth below: Date of Event: June 3, 1996 Items Reported: 1 and 7 - -------- 1 Denotes document filed as an exhibit to the Company's Annual Report on Form 10-KSB for the year ended December 31, 1993 and incorporated herein by reference. 2 Denotes document filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference. 9

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: August 14, 1996 By: /s/ Morton L. Certilman ----------------------- MORTON L. CERTILMAN President (Chief Operating Officer and Principal Financial Officer) 10

5 6-MOS Dec-31-1996 Jan-01-1996 Jun-30-1996 1,453,818 0 99,510 0 6,185 1,574,589 180,334 0 1,775,882 292,812 0 0 0 55,914 1,426,596 1,775,882 0 533,594 0 518,394 0 0 0 15,200 0 15,200 0 0 0 15,200 .01 .01