SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

Annual Report Filed pursuant to Section 13 or 15(d) of

THE SECURITIES EXCHANGE ACT OF 1934

for the fiscal year ended December 31, 1997, file # 33-38119-C

KENSINGTON INTERNATIONAL HOLDING CORPORATION
formerly known as 
THE KENSINGTON COMPANY , INC.
      (Exact name of registrant as specified in charter)

Minnesota                           41-1619632
(State or other jurisdiction    (IRS Employer ID Number)
of organization)

Interchange Tower, Suite 654, 600 S. Hwy 169, Minneapolis, MN 55426
(address of principal executive offices)

Registrant's telephone number is (612) 546-2075

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act: 

                        Common Stock, No par value
-------------------------------------------------------------------
(Title of Class)

     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 and Exchange Act 
of 1934 during the preceding 12 months, and (2) has registrant been subject to 
such filing requirements for the past 90 days.

Yes xNo__

The number of shares outstanding of each class of the registrant's common 
stock as of December 31, 1997 was 3,187,450 shares.

The estimated market value on December 31, 1997 of the voting stock held by 
non-affiliates of the registrant was $796,615 based upon recent private 
transactions at $.25 per share. Currently there is a public market on the 
Bulletin Board on the Minneapolis Local over the Counter Market with a call 
sign of "KNSC".
     

Exhibit Index on the Sequential page 15 
DOCUMENTS INCORPORATED BY REFERENCE: SEE EXHIBIT INDEX     
<PAGE>Description of Business

THE KENSINGTON COMPANY, INC. was formed in 1988, initially for the purpose of 
developing oil and gas properties in Kentucky.  It is a reporting public 
corporation quoted on the "pink and white sheets" as well as the bulletin 
board, and its call sign is "KNSC". At present the Company has approximately 
300 shareholders. Kensington owns 100% of two operating companies, namely, 
Ives Design, Inc., a Minnesota corporation, and American Gas Corporation, a 
Nevada corporation. Kensington also owns three non-operating "shell" 
corporations, namely, I-Med Software,Inc., Interchange Medical ,Inc. both 
Minnesota corporations and Kensington American Gas Drilling #1, a Minnesota 
LLC. Additionally, the Company owns a minority limited interest in an oil and 
gas partnership. During 1995, the Minnesota Secretary of State requested that 
the Company charge its name because it was too similar to another company's 
name. The name change was approved by Kensingtons' shareholders during 1996 
and the name was changed to "Kensington International Holding Corporation" 
during 1997. 

The Kensington Company, as stated above, is comprised of:

A. IVES DESIGN, INC.

In April 1992, the Company acquired 100% of IVES DESIGN, INC. ("Ives"), a 
manufacturer of store display fixtures. The primary components of such 
fixtures are wood and laminate but many fixtures incorporate acrylic, glass 
and or metal. The company provides a broad spectrum of services to its 
customers including design, manufacturing, delivery and installation. Fixtures 
are sold to a wide variety of customers ranging from retail and grocery stores 
to private companies and churches. Several customers are members of the 
Fortune 1000. Sales are obtained through direct sales contact as well as 
referrals. The raw material used in production is widely available and 
procured from a number of sources depending on pricing and vendor stock. As of 
December 31, 1997 Ives employed 24 full time employees.  


Significant markets, customers and suppliers

Ives
     While the loss of the largest customer would have an adverse effect on 
the Company such an event is unlikely since they have continued to utilize the 
Company more and more. Through expanded sales efforts the Company has reduced 
the sales to its largest customer as a percent of total sales to 84% in 1997. 
The Company presently has no contractual commitments with any customers but 
works against purchase orders for its sales. 

Page 1

      The Company believes that the number of potential suppliers of the 
materials utilized by Ives in fashioning its products are sufficient that the 
loss by Ives of any one or a number of its present suppliers would not have a 
material adverse effect on Ives' business.     
     Ives' products are not seasonal products and are sold throughout the 
year.



Regulation of the store fixture industry
     There are federal and state regulations governing the Ives operation to 
the extent of Environmental Protection Agency and OSHA rules that apply to 
disposal of waste from painting and sealing of product. Ives has a program in 
effect for both situations.
Competition within the store fixture industry
       Ives does have a number of competitors and bids most of its projects. 
Notwithstanding, sales have continued to increase and management believes that 
the Company is competitive with respect to both price and quality of its 
products.

B. AMERICAN GAS CORPORATION and other gas operations
     In 1992 the Company purchased limited and general partnership interests 
in gas wells in Texas, Arkansas and Oklahoma as well as 100% ownership of 
American Gas Corporation's gas wells and pipelines in Kentucky. 

    During 1994 and 1995 most of American Gas' operations were shut down 
because the Company could not find good operators. Subsequent testing by 
Tauren Exploration concluded it was not feasible to extract the gas in the 
eastern Kentucky fields. Therefore Kensington has written off virtually all 
the assets associated with its eastern Kentucky fields as of December 31, 
1996. The Company continues to receive revenues on a regular schedule from its 
interests in Texas, Arkansas and Oklahoma oil & gas wells.

Regulation of oil and gas
     As regards American Gas, the oil and gas industry is extensively 
regulated by federal, state and local authorities but these regulations should 
not impact the company since the company has ceased its direct operations.

Competition within the Oil and Gas industry
     Competition in the oil and gas business is intense but this should not 
affect the company due to its operational shutdown.

Company Direction:
     Ives Design Inc.
      It is management's intention to continue to expand Ives  through sales 
to new customers, expanding sales to existing customers by providing high 
levels of service and quality and through acquisitions.

Page 2

     American Gas Corporation
      With the analysis performed by Tauren Exploration it has become evident 
that the assets of American Gas have become seriously impaired. The Company 
therefore, has substantially reduced the carrying value of such assets and 
will seek to dispose of them. A limited value is expected to be received for 
these assets.
      I-Med Software & Interchange Medical
     Management has been attempting to activate these companies in the energy, 
medical and communications fields.


 Kensington American Gas Drilling #1
This is an inactive entity.

New Opportunities
     It is also management's intention to continue to obtain equity interests 
in other corporations in return for the Company's management expertise. 
Management is of the opinion that it can obtain a 1% to 10% equity interest in 
these new companies with little or no capital investment as was concluded in 
the past.
The company also has an equity interest in Netgates which owns a portion of 
the Ocean Manor Resort in Ft. Lauderdale, Florida. The companyalso has an 
interest in Maxwell Rand Holdings and Netcast Radio Networks, Inc.    

Item 2.  Description of Property
     At present, the Company's principal office is located at 600 S. Highway 
169, Suite 654, Interchange Tower, Minneapolis, Minnesota, 55426, occupying 
approximately 700 square feet and utilized entirely for executive offices. The 
lease was entered into in March 1997. The space is rented under a written 
lease which provides for payment of rent at a monthly rate of $1,324 and runs 
through March 2000. 

     As a result of its acquisition of Ives, the Company owns two buildings. 
One building has 25,500 square feet, located at 1333 Constance Boulevard, Ham 
Lake, Minnesota. Approximately 2,500 square feet are utilized for offices and 
23,000 square feet for manufacturing. There is also a 7,200 square foot 
storage building.   

Item 3:  Legal Proceedings
There are no legal proceedings that the management is aware of at this time.

Item 4:  Submission of matters to a vote of Security Holders

    None 

PART II
Market for Registrant's Common Equity and Related Stock-holder matters.

Page 3

Item 5:   Market for the Common Equity and Related Stockholder Matters
    During 1997 the stock was quoted at a low of $.03 to a high of $.43. On 
December 31, 1997 the stock was quoted at a bid of $.062 with an asking price 
of $.25. Since the Company is not NASDAQ qualified, these prices are inter 
dealer prices and may not reflect actual value or transactions. 
(a) Market Information

The Registrant's securities are traded on the Bulletin Board as "KNSC".

(b) Holders
At December 31, 1997 there were approximately 300 shareholders of record 
including people who held stock in "street name".
(c) Dividends
The registrant has not paid dividends on its common stock and does not expect 
to in the foreseeable future. 


Item 6:  Management's Discussion and Analysis of Operations
Selected Financial Information:
                             1997              1996          
Total Revenue               $3,151,241      $2,591,259     
Cost of Sales                2,008,436      1,699,218     
Gross Profit                $1,142,805      $892,041     
Operating Expense            951,316         814,848      
Inc (Loss) from Operations  $191,489        $77,193   

Other Income (Expense)     (155,103)       ( 130,591)      
Provision for Income Tax                                  
Extraordinary Item                        (1,025,916)  

Net Income (Loss)           $  40,386      $(1,079,314)      

As noted above, the Company produced a net income from Operations of $191k in 
1997 as compared to $77k in 1996. The increase in gross profit is explained 
further under the Ives Design discussion. 1997's net income of $40k compares 
favorably to 1996's loss of $1,079k, which included a one time writeoff for 
the impairment of the gas assets of $1.02k. The company was able to obtain a 
mortgage for its Ives Design property toward the end of 1997. These proceeds 
were used to pay off a portion of the long term debt due from Kensington. This 
accounts for the decrease in current debt from 1996 to 1997. Still of concern 
is a significant portion of long term debt which becomes due in the first part 
of 1998. The company is continuing to negotiate an extension to this debt, but 
there are no guarantees this effort will be successful.  

Ives Design Inc.
1997 was a year of continued growth for the company. Sales grew approximately 
22% from 1996 to 1997. With the addition to the sales

Page 4

force Ives was able to reduce the percent of sales made to its largest 
customer by approximately 2%. Sales were constant throughout 1997 as compared 
to 1996 which had a much lower second quarter sales total. This slow down was 
due to a change at the company's largest customer regarding how purchase 
orders were released. The change caused PO's to be held which impacted 
production. The addition of the mortgage in 1997 caused an increase in 
interest expense for the year. Overall net income as a percent of sales increase
d from 10% to 11.1% in 1997. This increase was due mainly to revenues being 
more consistent which allowed the company to control overtime.
  
American Gas Corporation
As was mentioned earlier, the company took a $1.02M writedown on the assets of 
American Gas in 1996. This writedown was a direct result of Tauren 
Explorations' additional testing and analysis on the Rosewood field which 
concluded it was not economically feasible to extract the gas reserves in that 
field. 

Item 7:  Financial Statements 
    The Consolidated financial statements of the Company are included herin 
following the signatures, beginning at page F-1.

Item 8:  Changes and Disagreements with Accountants on Accounting 
         and Financial Disclosures
     None
Part III
Item 9.  Directors, Executive Officers, Promoters and Control Persons
MANAGEMENT
          The executive officers and Directors of the Company are as follows:
Name                              Age               Position

Keith A. Witter                   50               Director

Mark Haggerty                     50               Chief Executive
                                                   Officer & Director
Keith Bernhardt                   76               Director

Dr. Graeme Wallace                56               Director

Holly Callen Hamilton             49               V. P. & Secretary

Mike Nakonechny                   70               Chairman

Jeff Etten                        41               Chief Financial
                                                   Officer

Directors are elected for an indefinite term not to exceed five years, 
expiring at the annual shareholders' meeting next held after 

Page 5

their election and until their successors are elected and qualified.  Officers 
are appointed by the Board of Directors and serve at its discretion.

Keith A. Witter has been a Director of the Company since May 1, 1993.  From 
January 1992 to April 1993, Mr. Witter served as President and Chief Operating 
Officer of the Company.  He received a B.A. in business administration and 
economics in 1969 from Gustavus Adolphus College, and in 1973 obtained a JD 
degree from the University of Minnesota Law School.  Since 1984, Mr. Witter 
has served as President and owner of Askar Corporation, a securities 
broker-dealer with 85 representatives in five states.  He also is the 
President of F.F.P. Investment Advisors, Inc., a financial planning firm, a 
position he has held since 1984. Mr. Witter has been involved in the oil and 
gas business having served as President of Kensington Energy Corporation from 
June 1992 until December 31, 1992.  

Mike Nakonechny lives in Pennsylvania and is an Electrical Engineer. He has 
been a Director since October 15, 1994. Mr. Nakonechny is on the Boards of 
Mentor Corporation of Minneapolis and Silicon Technology Corporation and his 
own company, NAK Associates Corp. He founded and was Chairman of Tranducer 
Systems, Inc. a public company in Pennsylvania.

Mark Haggerty became an employee of Kensington on May 1, 1993 and became 
C.E.O.-C.O.O on September 9, 1993. Mr. Haggerty is a graduate of the 
University of Minnesota Law School and is a practicing attorney.  From 1974 to 
1985 he served as a prosecutor in Anoka County, Minnesota.  From 1971 to 1985 
Mr. Haggerty was employed as an attorney with the Minneapolis law firm of 
Smith, Juster, Feikema, Malmon and Haskvitz and was its youngest shareholder, 
officer and director.  In 1985 Mr. Haggerty was employed as a Senior Vice 
President at Miller and Schroeder Financial, Inc., Minneapolis, where he 
remained until 1987 when he formed Haggerty & Associates, Inc.  During the 
past eighteen years Mr. Haggerty has structured and closed more than 150 
taxable and non-taxable financing and marketing programs both in the United 
States and Europe.  Mr. Haggerty is also a Registered Securities 
Representative. He serves on the Board of Directors of Maxwell Rand Holdings, 
Ives Design, Inc., American Gas Corp and Haggerty and Associates, Inc. 
Haggerty has been a Director since October 15, 1994. Mr. Haggerty is also a 
Commissioner with the Hennepin County Parks.

Keith Bernhardt has served as a Director since September 1992.  From 1983 to 
present Mr. Bernhardt has been semi-retired but engaged in the sale of 
machinery used to change hot-rolled steel into cold-rolled steel for use in 
the automobile industry.  Mr. Bernhardt was one of the founders of American 
Gas. Mr. Bernhardt graduated from Purdue University in 1942 with a degree in
mechanical engineering.  He is a certified Retired Professional Engineer,
licensed with the State of Connecticut.

Page 6

Dr. Graeme Wallace has been a Director of the Company since April 1992.  
Commencing in 1985 he was the Co-Founder and Managing Partner of Wallace Bond 
& Partners Inc., a Canadian based firm in Toronto offering human resource 
consulting services.  In April 1993 Dr. Wallace sold his interests in Wallace 
Bond & Partners, Inc. and founded Wallace and Partners, Inc, also located in 
Toronto.  Dr. Wallace earned both his B.A. and M.Sc. degrees from Monash 
University, Melbourne, Australia, in 1967 and 1970 respectively.  He obtained 
a Ph.D. in psychology from McGill University, Montreal, Canada in 1972.

Holly Callen Hamilton is Director of Development for Women's  Athletics at the 
University of Minnesota. Ms. Callen has been President of Callen & Associates. 
Inc. for a number of years.

Jeff Etten is a C.P.A. and a member of the Minnesota Society of Certified 
Public Accountants. Mr. Etten was formerly the C.F.O. of Heritage Computer. 
Mr. Etten received his BS degree in Accounting from the University of 
Wisconsin-Eau Claire.

Key Personnel
Dennis Krause is the President and a Director of Ives Design, Inc. and is in 
charge of production. 

Item 11:  Executive Compensation
          (a)  Remuneration
Compensation Pursuant to Agreements

     In May 1993 the Company entered into an employment agreement with Mark 
Haggerty to serve as Senior Vice-President. Mr. Haggerty has been and will 
continue to act as corporate counsel. Mr. Haggerty's salary is $65,000 per 
year and his law firm, Haggerty & Associates, Inc. is retained at an 
additional $12,000 per year.  The agreement with Mr. Haggerty allows him to 
retain a limited number of clients while employed with the Company since his 
contract only requires him to work 80% of his time for the Company.  Mr. 
Haggerty also receives an automobile allowance; is reimbursed expenses 
incurred on company business; receives four weeks paid vacation per year as 
well as medical insurance and life insurance through Ives Design, Inc. On 
September 9, 1993 the Board of Directors requested that Mr. Haggerty become 
the C.E.O.- C.O.O of Kensington and the Chairman and C.E.O. of Ives Design, 
Inc. Mr. Haggerty has waived a number of his benefits and a significant 
portion of his salary and benefits continue to accrue. 

Mr. Etten receives salary of $50,000 a year for acting as C.F.O. Mr. Etten 
also receives vacation and expenses reimbursement. A portion of Mr. Etten's 
salary has been accrued.

The directors receive no pay and only get reimbursed for expenses. All of the 
directors have deferred reimbursement of expenses in order to make sure that 
production workers are paid first.

Page 7

Compensation Pursuant to Plans
Stock Options

The Company has adopted an incentive stock option plan which authorizes a 
maximum of 750,000 shares that may be issued pursuant to the Plan. The Board 
of Directors may grant options to key individuals at their discretion. The 
exercise price for options issued pursuant to the Plan may not be less than 
85% of the fair market value of the Company's common stock on the date of 
grant of option. Any option granted must be exercised within ten years of its 
grant. The shares issued upon exercise of the options granted pursuant to the 
Plan have no registration rights unless specifically authorized by the Board 
of Directors. On May 1, 1993 the Board of Directors authorized issuance of 
211,000 options to purchase a like amount of shares at a price of $2.625 per 
share, for a period of three years from the date of issuance, to certain 
directors, officers, employees, and former employees of the Company and this 
grant was extended to January 1, 1997. On March 17, 1995 the Company's board 
authorized the issuance of options at $.32 for a period of five years. The bid 
on March 17 was $.125 and the asking price was $.375. The 10,000 options 
authorized to the employees of Ives Design, Inc. on May 1, 1993 was withdrawn 
and the Board on March 17, 1995 authorized 50,000 options to the 20 employees 
of Ives Design, Inc. at $.32 for five years bringing the total of authorized 
options to 251,000. In addition each director, the CFO and the corporate 
secretary were authorized to receive 50,000 options each at $.32 for five 
years provided Mark Haggerty surrendered 75,000 of his warrants, and each of 
the other four directors, the CFO and the Secretary agreed to surrender 50,000 
warrants issued on February 14, 1995 which they agreed to do. This brought the 
number of authorized options up to 601,000. The Board authorized the exchange 
of 29,700 options in return for 29,700 warrants bringing the total number of 
authorized options outstanding to 581,872 out of 750,000.

With the exchange of options for warrants detailed above the reduction in 
warrants was 304,700. The authorization of options and reduction in warrants 
were stated in the S-8 filed in October 1995 and again in the PROXY STATEMENT 
mailed to all of the shareholders by the Transfer Agent on December 20, 
1995.  

Item 12. Security Ownership of Certain Beneficial  Owners and               
Management 

PRINCIPAL SHAREHOLDERS
     The following table sets forth information as of December 31, 1995 
regarding ownership of the Company's common stock by (i) the only persons 
known by the Company to own beneficially more than five percent (5%) thereof; 
(ii) the directors individually, and (iii) all officers and directors as a 
group.  All persons listed have sole voting and investment power with respect 
to their shares unless otherwise indicated.

Page 8

     NAME               Shares     Percentage

Dennis Krause          226,722          7%          
7733 Quincy St.
Spring Lake Park,
Minnesota  55432

Keith Bernhardt       161,104           5%
107 Cliffmore Rd
W. Hartford, CT 
06107

Bernard M.S. Kegan     170,525          6%          
1805 Eagle Ridge Dr.
#10 West Court
Mendota Heights,
Minnesota  55118

G. Wallace            162,500           5%
151 Yonge St.
Toronto, Canada

<PAGE>All Officers, key     650,420         21%          
persons & directors as a 
Group, eight persons (1) (2)

(1)  Includes shares issued to the Joan Witter Trust and the Witter Family 
Trust wherein Keith A. Witter, the Company's Chairman, surrendered his control 
and right to vote.
(2) Does not include Bernard M.S. Kegan. 

Item 13. Certain Relationships and Related Transactions.

CERTAIN TRANSACTIONS
     In connection with the Company's 1992 acquisition of American Gas, the 
Company assumed certain obligations of American Gas.  Among these obligations 
was the issuance of the Company's securities (as described more fully below) 
to creditors and investors who participated in a series of oil and gas 
drilling partnerships promoted by Liberty National Corporation ("Liberty"), a 
defunct corporation whose assets American Gas acquired in a sale approved by 
the Superior Court of the State of California, Orange County. These conditions 
were changed by Court Order of May 3, 1994 where the 634 Liberty National 
investors are to receive 125,000 shares and 1,000,000 Class A Liberty Warrants 
as described herein. These Class A Liberty Warrants are subject to redemption 
at the sole option of the Company at any time commencing three months after 
their issuance, at a redemption price of $.001 per Class A Liberty Warrant. 
The Company shall give thirty days' written notice to all holders of the 
Liberty Warrants of such redemption, during which time the holder shall have 
the right to exercise such Warrant. Upon notice of redemption to the warrant 
holders and the warrant holders failure to exercise their right of conversion, 
the 

Page 9

Company shall, upon surrender and delivery of the warrant certificates to the 
Company or its transfer agent, pay the warrant holder a sum equal to the $.001 
redemption price per warrant times the number of warrants surrendered. At the 
date of drafting this 10-KSB, no Liberty Warrants have been either issued or 
exercised. In connection with the conversion of certain debts and obligations, 
the Company issued Class B Investor Warrants to  purchase an aggregate of 
538,933 shares of common stock. These Class B Investor Warrants are 
exercisable at any time through January 1, 1997 (extended by Board action from 
November 1995). Approximately 7% (39,424 warrants) were issued for services 
rendered: and 93% ( 499,509 warrants) were issued in connection with the 
private placement of the Company's securities. As of the date of this 10-KSB,
no Class B Investor Warrants have been exercised pending an order by both the 
California and Kentucky courts authorizing Kensington to do so. 

DESCRIPTION OF SECURITIES

Common Stock
     The Company has authorized 50,000,000 shares of stock, no par value. 
40,000,000 shares have been designated as common stock and 10,000,000 as 
unclassified. Each holder of common stock has one vote per share on all 
matters voted upon by the shareholders. Such voting rights are non-cumulative 
so that the shareholders holding more than 50% of the outstanding shares of 
common stock are able to elect all members of the Board of Directors. There 
are pre-emptive rights or other rights of subscription.     Each share of 
common stock is entitled to participate equally in dividends if and when 
declared by the Board of Directors of the Company out of the funds legally 
available and is entitled to participate equally in the distribution of assets 
in the event of liquidation. All shares, when issued and fully paid, are 
non-assessable and are not subject to redemption or conversion and have no 
conversion rights.
     The value of a share has been arbitrarily determined. The offering price 
bears no relationship to assets, earnings, book value or any other commonly 
used criteria for valuation.

Warrants
     Between March 1994 and December 31, 1995 the Company issued a total of 
651,950 Class A Warrants to individuals for services rendered. These warrants 
allow the individual to purchase one share of common stock at a price of 
between $.50 and $3.00 per share. These warrants have various expiration dates 
between February 1999 and September 2000.

     During the year ended December 31, 1992 and the period ended June 30, 
1993, the Company authorized the issuance of warrants (the "Class B Investor 
Warrants") to purchase an aggregate of 538,933 shares of common stock to 
certain investors in consideration for the conversion of debt and obligations, 
for services rendered and in private transactions. The Class B Investor 
Warrants were issued, subject to the terms and conditions of certain Warrant 
Agreements. 

Page 10

The following description of the Class B Investor Warrants is not complete and 
is qualified in all respects by the Warrant Agreement which is filed as an 
exhibit to the Registration Statement of which this Prospectus is a part.

     Each Class B Investor Warrant entitles the holder thereof to purchase one 
share of common stock at any time on or before January 1, 1997 for $3.00. Each 
Class B Investor Warrant contains anti-dilution provisions upon certain 
events, and is not subject to redemption. All Class B Investor Warrants not 
exercised will expire at 5:00 P.M. Mid-West time on January 1, 1997.  Holders 
of Class B Investor Warrants will not, as such, have any of the rights of
shareholders of the Company.
     On September 11, 1992, the Company authorized the issuance of an 
aggregate of 800,000 warrants to the creditors/investors of Liberty (the 
"Class A Liberty Warrants"). The Class A Liberty Warrants were issued in 
connection with the sale of certain of Liberty's assets to the Company through 
and by virtue of the Company's acquisition of American Gas. These Liberty 
Warrants are issued subject to the terms and conditions of certain Warrant 
Agreements. The foregoing description of the Liberty Warrants is not complete 
and is qualified in all respects by the Liberty Warrant Agreement which is 
filed as an exhibit to the Registration Statement of which this Prospectus is 
a part.
     Each Class A Liberty Warrant entitles the holder thereof to purchase one 
share of the Company's common stock and one Class C Liberty Warrant at any 
time on or before six months from the date this Registration Statement is 
declared effective, for $2.50. Each Liberty Warrant contains anti-dilution 
provisions. At any time commencing three months from their issuance upon 30 
days' written notice, the Company may redeem all, but not less than all, 
unexercised Class A Liberty Warrants for $.001 per warrant.  Holders of Class 
A Liberty Warrants will not, as such, have any of the rights of shareholders 
of the Company. These Class A warrants were increased by California Court 
Order on May 3, 1994 from 800,000 to 1,000,000. All of the other terms and 
conditions remain the same.
     The Class C Liberty Warrants are issuable upon conversion of the Class A 
Liberty Warrants, and entitle the holder thereof to purchase one share of the 
Company's common stock for $7.00 per share, at any time on or before three 
years from issuance thereof.  The Class C Liberty Warrants contain 
anti-dilution provisions, are not subject to redemption by the company. and do 
not, as such, confer upon the holder thereof any of the rights of shareholders 
of the company.
     Pursuant to the terms of the Class B Investor Warrant Agreement, the 
Class A Liberty Warrant Agreement, and the Class C Liberty Warrant Agreement 
(collectively, the "Warrants"), the Company is obligated to undertake, on a 
good faith basis, to register under the Act and the applicable state 
securities acts, the shares of common stock underlying the Warrants and to 
keep such Warrants, at the Company's expense. In certain cases, the sale of 

Page 11

securities by the Company upon the exercise of the Warrants could violate the 
securities laws of the United States, certain states, or other jurisdictions. 
The Company will not be required to honor the exercise of any of the Warrants 
if, in the opinion of counsel to the Company, the sale of securities upon such 
exercise would be unlawful.
     On August 15, 1994 the company issued 75,000 Class E Warrants to certain 
individual investors. These warrants allow the person to purchase one share on 
the company's common stock at a price of $1.00 per share. These warrants 
expire on August 15, 1998.


Convertible Debentures:
As of December 31, 1997 the company had $431k of convertible debentures 
outstanding. Of this total, $176k is secured by real estate of Ives Design 
Inc.  

Item 14. Exhibits and Reports on Form 8-K


     (A) Exhibits     See "Exhibit Index" on the page
                              following the Financial Statements.

     (B) Reports on Form 8-K   None.

Page 12

 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty
Mark Haggerty, C.E.O.- C.O.O. & Director

Dated: June 1, 1998



Mike Nakonechny              Chairman
By: Mike Nakonechny
Dated: 7 July, 1998

Page 13

 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty
Mark Haggerty, C.E.O.- C.O.O. & Director


Keith Bernhardt                Director
By: Keith Bernhardt
Dated: 6/20, 1998

Page 14

 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty
Mark Haggerty, C.E.O.- C.O.O. & Director

Graeme WallaceDirector
By: Graeme Wallace
Dated: July 27, 1998

Page 15

 SIGNATURES

   Pursuant to the requirements od Section 13 or 15(d) of the Securities and 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned officers and/or Directors, there unto duly 
authorized.


THE KENSINGTON COMPANY, INC.

By: Mark Haggerty
Mark Haggerty, C.E.O.- C.O.O. & Director

Keith WitterDirector
By: Keith Witter
Dated: 6-21, 1998

Page 16

THE KENSINGTON COMPANY, INC.
FORM 10-KSB
YEAR ENDED DECEMBER 31, 1997

INDEX

ITEMPAGE


PART I

1. Description of Business.................................... 1
2. Description of Property.....................................3
3. Legal Proceedings...........................................3
4. Submission of matters to vote of shareholders...............4
 
PART II

5. Market for Common equity & related stockholder matters..... 4
6. Management's discussion & analysis of Operations............4
7. Financial statements .......................................F-1
8. Changes in and disagreements with Accountants on Accounting 
   and Financial Disclosure....................................5


PART III

9. Directors, Executive Officers, Promoters and Control Persons
   of the Company...............................................5
10 & 11 Executive compensation..................................7
12. Security ownership of certain beneficial owners and 
    management...............................................   8
13. Certain relationships & related transactions................9
14. Descriptions of securities.................................10
15. Exhibits and reports on Form 8-K...........................12
16. Signatures.................................................13

    Financial  Statements......................................F-1


                              Exhibit Index

          Exhibit     Description
            #
           #3    Certificate of Incorporation       *
           #3.3  By-Laws of Company                 *
           #10   Promissory notes payable           ***
           #10.1 Acquisition of Ives & American Gas **
           #10.4 Employment agreements              ***
           #21.1 Form of Common Stock               ***
           #21.2 Form of Warrants & Debentures      *** 

*Filed as exhibits to Company's registration 33-38119-C to the SEC

**Filed as part of Form 8-K to SEC on 2-12-93

***Filed as an exhibit to Form 10-K filed on June 1993.

All 10-Qs, 8-ks and amendments, S-8s and 10-Ks and 10-KSBs filed since 1989 
are incorporated herein by reference.



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 SIX MONTHS ENDED JUNE 30, 1997 AND 1998
(UNAUDITED)                                                  
                                                  
                                            1997          1998
                                                  
Revenues:                                                  
Product sales                             $1,633,884     $1,830,823
Oil and gas sales                                  0          186
Total revenues                             1,633,884     1,831,009
                                                  
Cost of sales:                                                  
Cost of products sold                      1,075,539     1,208,973
Oil and gas costs                                  0          0
Total cost of sales                        1,075,539     1,208,973
                                                  
Gross profit                                 558,345     622,036
                                                  
Operating expenses                           418,650     483,238
                                                  
Income (loss) from operations                139,695     138,798
                                                  
Other income (expense):                                                  
Interest expense                             (73,391)     (67,832)
Miscellaneous income                                0     0
Total other income (expense)                 (73,391)     (67,832)
                                                  
Income (loss) before income taxes and 
extraordinary item                             66,304     70,966
Provision for income taxes (benefit)                0     0
                                                  
Income before extraordinary item               66,304     70,966
Extinguishment of debt, net of income 
taxes of $0                                         0     0
                                                  
Net income (loss)                              66,304     70,966
                                                  
Earnings Per Share                              $0.02     $0.02
WEIGHTED NUMBER OF SHARES OUTSTANDING       3,021,450     3,163,340
                                                  

THE KENSINGTON COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 & 1998
(UNAUDITED)                                                  
                                                  
                                                 1997        1998
                                                  
Cash flows from operating activities:
Net income (loss)                                $9,794     $70,966
Adjustments to reconcile net income (loss)
to cash flows from operating activities:
Depreciation, depletion and amortization         13,792     41,130
Changes in operating assets and liabilities:                         
Accounts receivable                            (86,889)     158,451
Inventories                                      33,385     (12,440)
Other current assets                           (26,514)     27,690
Other assets                                          0     9,913
Accounts payable                                  1,256     (42,950)
Other current liabilities                       103,448     68,391
Cash flows from operating activities             48,272     321,151
Cash flows from investing activities:                              
Decrease in notes receivable - related parties        0     500
Purchase of property and equipment                5,304     28,494
Sale of Stock                                         0     7,500
Cash flows from investing activities              5,304     (20,494)
Cash flows from financing activities:                              
Increase (decrease) in Line of Credit                 0     (148,099)
Increase (decrease) in notes payable - related 
parties                                         (4,126)     (30,562)
Proceeds short, long-term debt                        0     38,891
Payments on long-term debt                      (9,708)     34,451
Payments on obligations under capital leases    (21,677)     12,526
Cash flows from financing activities           ($35,511)     ($186,747)
Increase (decrease) in cash                      $7,457     $113,910
                                                  
Cash, beginning                                  16,186     10,185
                                                  
Cash, ending                                    $23,643     $124,095