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, 1997 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 October 31, 1997 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 - September 30, 1997 (Unaudited) Condensed Consolidated Statements of Operations - Nine months ended September 30, 1997 and 1996 (Unaudited) Condensed Consolidated Statements of Operations - Three months ended September 30, 1997 and 1996 (Unaudited) Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 1997 and 1996 (Unaudited) Notes to Condensed Consolidated Financial Statements Nine months ended September 30, 1997 and 1996 (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) September 30, 1997 ------------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $1,416,996 Accounts receivable 36,472 Notes and other receivables 27,058 Inventories 3,561 Prepaid expenses and other current assets 14,018 ---------- Total current assets 1,498,105 ---------- PROPERTY AND EQUIPMENT, net 132,220 ========== OTHER ASSETS: Operating equipment, net 10,053 Deposits 5,000 ---------- Total other assets 15,053 ---------- $1,645,378 ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 6,272 Accrued expenses 36,991 Debentures payable 154,200 Accrued taxes payable 12,049 ---------- Total current liabilities 209,512 ---------- MINORITY INTEREST 560 ---------- LONG TERM LIABILITIES: 59,883 ---------- 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 (3,945,441) ---------- 1,375,423 ---------- $1,645,378 ========== See notes to condensed consolidated financial statements. 3

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Nine months ended September 30, 1997 1996 Revenues: Rooms $ 697,702 $ 735,275 Other 16,237 17,366 Interest 47,580 27,543 ---------- ---------- Total revenues 761,519 780,184 ---------- ---------- Costs and expenses: General, administrative and sundry 379,824 382,863 Departmental 222,286 234,336 Depreciation and amortization 39,209 38,676 Energy costs 18,142 12,157 Lease rentals 139,986 146,168 Marketing 15,765 18,582 Property operation and maintenance 19,973 17,872 Provision for bad debt 13,122 1,800 ---------- ---------- 848,307 852,454 Net (loss) $ (86,788) $ (72,270) ========== ========== Income per common share: Net (loss) $ (.02) $ (.02) ========== ========== Weighted average number of common shares outstanding 5,591,367 3,781,148 ========== ========== See notes to condensed consolidated financial statements. 4

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three months ended September 30, 1997 1996 Revenues: Rooms $ 185,067 $ 229,113 Other 6,964 4,975 Interest 17,380 12,502 ---------- ---------- Total revenues 209,411 246,590 ---------- ---------- Costs and expenses: General, administrative and sundry 120,212 175,176 Departmental 73,030 82,829 Depreciation and amortization 13,283 12,844 Energy costs 6,776 4,846 Lease rentals 39,291 44,937 Marketing 4,155 5,382 Property operation and maintenance 7,490 7,446 Provision for bad debt 12,522 600 ---------- ---------- 276,759 334,060 ---------- ---------- Net (loss) $ (67,348) $ (87,470) ========== ========== Income per common share: Net (loss) $ (.01) $ (.02) ========== ========== Weighted average number of common shares outstanding 5,591,367 5,591,367 ========== ========== See notes to condensed consolidated financial statements. 5

EXTECH CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine months ended September 30, 1997 1996 Cash flows from operating activities: Net (loss) $ (86,788) $ (72,270) Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 39,209 38,676 Provision for bad debts 13,122 1,800 Decrease (increase) in assets: Accounts receivable 997 (7,761) Inventories 2,839 2,462 Prepaid expenses and other current assets 108,461 (6,773) Notes receivable 54,798 (28,526) Other assets (524) (1,407) Deposits (5,000) (260,000) Increase (decrease) in liabilities: Accounts payable 4,298 3,137 Accrued expenses (26,752) (35,795) Accrued taxes payable 12,049 10,711 ---------- ---------- Net cash provided by (used in) operating activities 116,709 (355,746) ---------- ---------- Cash flows from investing activities: Purchases of property and equipment (17,834) (4,676) ---------- ---------- Net cash (used in) investing activities: (17,834) (4,476) ---------- ---------- Cash flows from financing activities: Proceeds from issuance of stock - 0 - 800,000 ---------- ---------- Net cash provided by financing activities - 0 - 800,000 ---------- ---------- Net increase in cash and cash equivalents 98,875 439,578 Cash, beginning of period 1,318,121 644,956 ---------- ---------- Cash, end of period $1,416,996 $1,084,534 ========== ========== See notes to condensed consolidated financial statements. 6

EXTECH CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) 1. The Condensed Consolidated Balance Sheet as of September 30, 1997, the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 1997 and 1996 and the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 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, 1997, results of operations for the three and nine months ended September 30, 1997 and 1996 and cash flows for the nine months ended September 30, 1997 and 1996. This report should be read in conjunction with the Company's Annual Report on Form 10-KSB for the year ended December 31, 1996. 2. The results of operations and cash flows for the nine months ended September 30, 1997 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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 Results of Operations: The Company's net loss for the nine months ended September 30, 1997 was $86,788 as compared to a net loss of $72,270 for the nine months ended September 30, 1996. The total revenues for the nine months ended September 30, 1997 was $18,665 lower than the total revenues for the nine months ended September 30, 1996. The increased loss for 1997 as compared to 1996 was primarily the result of the lower revenues for the current year as well as the Company's write off of its loan receivable from Transcends Telecom Corporation. Liquidity and Capital Resources: As of September 30, 1997, the Company had $1,416,996 in cash and cash equivalents and a working capital surplus of $1,288,593. As of December 31, 1996, the Company had $1,318,121 in cash and cash equivalents and a working capital surplus of $1,263,038. The increase in cash and cash equivalents was primarily the result of cash generated from operating activities for 1997, including the receipt of $77,652 in royalty payments during the first quarter of 1997 (which royalty payments were recognized as revenue in 1996), and the receipt of $33,308 in payments from Robeson Industries Corp. pursuant to a certain promissory note. The increase in working capital was primarily the result of the increase in cash and cash equivalents and the reclassification of $59,883 of certain disputed rental obligations of the Company's wholly-owned subsidiary, IAH, Inc., as long term liabilities, rather than as accrued expenses. The Company did not have any material commitments for capital expenditures as of September 30, 1997; however, the Company is continuing to explore various business opportunities. No definitive arrangements are currently in place and no assurances can be given that any such transaction will be entered into. 8

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 amended1 3(b) By-laws, as amended2 27 Financial Data Schedule (b) Reports on Form 8-K None - -------- 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 Quarterly Report on Form 10-QSB for the quarter ended June 30, 1997 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: November 12, 1997 By:/s/ Morton L. Certilman ----------------------- MORTON L. CERTILMAN President (Chief Operating Officer and Principal Financial Officer) 10

5 I The schedule contains summary financial information extracted from the financial Statements and is qualified in its entirety by reference to such financial statements. 1 1 9-MOS Dec-31-1997 Jan-01-1997 Sep-30-1997 1 1,416,996 0 63,530 0 3,561 1,498,105 132,220 39,209 1,645,378 209,512 0 0 0 55,914 5,264,950 1,645,378 0 761,519 0 848,307 0 0 0 (86,788) 0 (86,788) 0 0 0 (86,788) (.02) (.02)