<PAGE>

                       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, 1999, FILE # 33-38119-C

                  KENSINGTON INTERNATIONAL HOLDING CORPORATION
               (Exact name of registrant as specified in charter)

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

        Interchange Tower, # 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  X                        No
                      ---                          ---

The number of shares outstanding of each class of the registrant's common stock
as of December 31, 1999 was 5,239,150 shares.

The estimated market value on December 31, 1999, of the voting stock held by
non-affiliates of the registrant was $13,752,768.75 based upon $2.625 per share
where in private transactions shares were sold. 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 18
             DOCUMENTS INCORPORATED BY REFERENCE: SEE EXHIBIT INDEX


                                                                             1
<PAGE>

                   KENSINGTON INTERNATIONAL HOLDING CORPORATION
                                   FORM 10-KSB

                          YEAR ENDED DECEMBER 31, 1999

                                      INDEX
<TABLE>
<CAPTION>
ITEM                                                         PAGE
----                                                         ----
<S>                                                          <C>
                                     PART I

1. Description of business.................................... 3
2. Description of property.....................................7
3. Legal proceedings...........................................7
4. Submission of matters to vote of shareholders...............7

                                     PART II

5. Market for common equity & related stockholder matters..... 8
6. Management's discussion & analysis of Operations............8
7. Consolidated Financial statements ..........................9
8. Changes in and disagreements with Accountants on
   Accounting and Financial Disclosure.........................9

                                    PART III

9. Directors, Executive Officers, Promoters and Control
   Persons of the Company......................................9

10. Executive compensation.....................................11
11. Security ownership of certain beneficial owners and
    management.................................................12
12. Certain relationships & related transactions...............13
13. Descriptions of securities.................................14

14. Exhibits and reports on Form 8-K...........................15
15. Signatures.................................................16

    Consolidated Financial  Statements........................F-1
</TABLE>


                                                                             2
<PAGE>

    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 annual report on Form 10-KSB.

DESCRIPTION OF BUSINESS

Kensington International Holding Corporation, formerly known as THE
KENSINGTON COMPANY, INC., (referred to herein as "Kensington" or the
"company") 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". Kensington was listed on and started trading on the Hamburg
Stock Exchange (High Risk Market) on March 10, 2000 under the code number
(Wertpapierkennumer) "929412".

On December 31, 1999, the Company had approximately 850 shareholders. On
December 31, 1999, Kensington owned 100% of one operating company, Ives
Design, Inc., a Minnesota corporation, and 51.24% of Mail Call, Inc., a
Florida corporation. Kensington owns 80% or more of the following
non-operating companies; Bluegrass Management and Operating Company, a
Kentucky corporation; I-Med Software, Inc.; Interchange Medical, Inc. (both
Minnesota corporations); Kensington American Gas Drilling #1,LLC, a Minnesota
limited liability company. Kensington also owns different percentage
interests in 28 operating oil and gas wells in Oklahoma, Texas, and Arkansas.
Kensington also owns less than 10% of a number

                                                                             3

<PAGE>

of companies under its Equity Acquisition Program as described on page 6.
During March 2000, Kensington formed a German subsidiary, "Kensington
International Europe GmbH". In the past, Kensington has focused on designing,
manufacturing, and installing commercial store fixtures. During 1999, Kensington
mapped out a new strategy to reposition the Company to grow in the
business-to-business Internet and communications environment by emphasizing
advanced Internet-related communications services and products. It is due to
this new focus that Kensington acquired interests in Mail Call, Inc. and in
MicroTalk Technologies, Inc. Kensington, as stated above, is comprised of:

A.   MAIL CALL, INC.

Mail Call, Inc., a Florida corporation founded in June 1997, is the creator of a
convenient and easy to use method of accessing and managing e-mail from any
telephone in the world. Mail Call's elegant and sophisticated e-mail retrieval
system provides simple telephone access to the messages, documents, and
information we are expecting but can't always get to a computer to retrieve.
Mail Call's customers dial a toll free number, connect to Mail Call's automated
system, and, hear their e-mail as Mail Call reads their messages to them.
Without keyboard or computer, the customer may respond verbally (leaving a voice
response as though sending a voice mail) to the e-mail. Mail Call delivers the
"voice" e-mail as a return message to the sender. Mail Call has a Web Site at
www.mailcall.net.

Between August and November 1999, Kensington acquired 51.24% of Mail Call,
Inc.'s common stock. On February 18, 2000, Kensington acquired 100% of Mail
Call's inventors ownership interest giving Kensington approximately 85%
ownership of Mail Call. This allows Kensington to now focus its energies on the
successful commercialization of Mail Call's technology.

SIGNIFICANT MARKETS, CUSTOMERS AND SUPPLIERS

Nielson Media Research and CommerceNet in June of 1998 stated that there were 79
million e-mail users over the age of 16 in the United States alone. On November
1, 1999, CNBC announced that the number of adult users of e-mail in the United
States had just exceeded 100 million people. Mail Call has contracts with about
twelve different Internet Service Providers across the United States. One of
Mail Call's contract customers had over $25 billion in revenues in 1998.

Currently, Mail Call's services utilize a proprietary text to speech software
technology licensed from Lernout & Haauspie Speech Product N.V. The license
provides that it is worldwide, non-exclusive and non-transferable. Mail Call
also has developed its own proprietary source codes and software.

REGULATION OF THE COMMUNICATIONS INDUSTRY AND OF THE INTERNET
                                                                             4

<PAGE>

There are federal and state regulations governing the industry that Mail Call
provides a service to. Mail Call meets all of these regulations at this time.

COMPETITION WITHIN THE E-MAIL RETRIEVAL INDUSTRY

Mail Call does have competitors such as e-Now, Planetary Motion, CrossMedia,
Transcommunications, and Image-it, Inc. to mention a few. Mail Call believes
that there is no clear market leader since e-mail by phone is a relatively new
service. In addition, Mail Call believes that it is one of the few e-mail
retrieval companies that allows a user to keep his or her existing e-mail
address and that allows a user to initiate an e-mail from an address book by
phone. Therefore, Mail Call is of the opinion that it can capture a significant
market share.

B. IVES DESIGN, INC.

In April 1992, the Company acquired 100% of ves Design, Inc. ("Ives"), a
manufacturer of store display fixtures. The primary components of such fixtures
are wood and laminate but many fixtures will incorporate acrylic, glass and or
metal. Ives 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, 1999, Ives employed 26
full time employees.

SIGNIFICANT MARKETS, CUSTOMERS AND SUPPLIERS

While the loss of Ives' largest customer would have an adverse effect on the
Company such an event is unlikely since they have recently advised Ives of their
plan to place more substantial orders. Ives presently has no contractual
commitments with any customers but works against purchase orders for its sales.

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

                                                                             5

<PAGE>

operations 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. Management
believes sales can continue to increase and that Ives is competitive with
respect to both price and quality of its products.

C. COMPANY DIRECTION:

During 1999, Kensington mapped out a new strategy to reposition the Company to
grow in the business-to-business Internet and communications environment by
emphasizing advanced Internet-related communications services and products. It
is due to this new focus that Kensington acquired interests in Mail Call, Inc.
and in Micro Talk Technologies, Inc. As a secondary focus, Kensington will
continue to expand its more traditional revenue generating businesses, such as
Ives Design, Inc. Both of these directions will be through sales to new
customers by forming strategic alliances, expanding sales to existing customers,
and through acquisitions.

EQUITY ACQUISITION PROGRAM (EAP)

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. The primary focus for the EAP
program will be companies in the Internet and communications sector. The
secondary focus will be on more traditional businesses that have good cash flow
like Ives Design, Inc.

Under the EAP program, Kensington acquired a small equity interest MICROTALK
TECHNOLOGIES, INC. of Minnetonka, Minnesota. MicroTalk's Pesident, Barry Voroba,
PhD. has been awarded five patents for wearable wireless technology for Internet
and telephone communications. The Web phone is worn as a convenient and
ergonomically designed wrist device. The user can use voice commands for
computer control and can send and receive spoken e-mail messages, news and
weather reports, or any other Internet Web page information without sitting at
the computer. The Web phone also functions as a full-featured cordless
telephone.

During March 2000, Kensington was granted the exclusive agreement to purchase
all rights, including patents and the molds, to a new wireless phone technology
from Dr. Voroba and MicroTalk Technologies, Inc. The new devise will allow an
automobile driver to drive their cars and use their cell phones "hands free"
with


                                                                             6

<PAGE>

no wires. Kensington has started to fund the development of the new wireless
devise and once patents have been filed, Kensington will provide more
information on the unique features of this new technology. Dr. Voroba is the
former President of the Bausch & Lomb Hearing Systems Division and filed the
first patent on the soft shell hearing aid.

The status of the other EAP program companies remain the same as stated in the
1998 10-KSB except for the following. The merger between Maxwell Rand Holdings
and FutureTrak International, Inc. did not go through and Maxwell Rand is not
operational.

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 includes the use of two conference rooms, some furniture and phones. The
lease was entered into on March 31, 1997 and expires in 2000. The space is
rented under a written lease which provides for payment of rent at an annual
rate of approximately $24 a foot. Management believes that comparable office
space is readily available if the Company were to lose its lease.

As a result of its acquisition of Ives, the Company owns two buildings. One
building has 18,500 square feet, located at 1333 Constance Boulevard, Ham Lake,
Minnesota. Approximately 2,500 square feet are utilized for offices and 16,000
square feet for manufacturing. There is also a 7,200 SF storage building.

As a result of its acquisition of Mail Call, Inc., Kensington has a lease on 700
square feet in Mirimar, Florida which expires in November 2000 at approximately
$14 a square foot.

On January 17, 2000, Kensington opened a new office in New York City on a
month-to-month lease with monthly payments of approximately $1,000 a month.

During March 2000, Kensington opened an office in Waltrop, Germany on a
month-to-month lease with monthly payments of approximately $1,500 a month.

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

A stockholder's meeting was held on October 9, 1999. At that

                                                                             7

<PAGE>

meeting a new Board was approved, the Articles were amended to add more
protection for directors, and the board of directors were given the right to
change the name of Kensington.

                                     PART II

     MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK- HOLDER MATTERS.

ITEM 5:   MARKET FOR THE COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    During 1999 the stock was quoted at a low of $.06 to a high of $4.25. On
December 31, 1999 the stock was quoted at a bid of $2.125 with an asking price
of $2.625. 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, 1999 there were approximately 850 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:

<TABLE>
<CAPTION>
                                    1999                    1998
<S>                             <C>                    <C>
Total Revenue                   $3,621,533             $3,934,579
Cost of Sales                    2,388,232              2,652,620
                                 ---------              ---------
Gross Profit                    $1,233,301             $1,281,959
Operating Expense                1,081,357                994,358
                                 ---------                -------
Income from Operations          $  151,944             $  287,601
Other Income (Expense)             (49,002)               (86,573)

Net Income                      $  102,942             $  201,028
Diluted earnings per share      $     0.02             $     0.06
</TABLE>

As noted above, the Company produced net income of $102,942 in 1999. The
decrease in net income from 1998, is due to increased operating costs, legal and
accounting fees incurred for the acquisition of Mail Call. In addition, Ives
Design's largest customer delayed orders into the year 2000, due to Y2K fears.
This


                                                                             8

<PAGE>

produced the largest revenue month in the history of the company in January
2000.

ITEM 7:  CONSOLIDATED FINANCIAL STATEMENTS

    The consolidated financial statements of the Company are included herein
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:

<TABLE>
<CAPTION>
Name                                    Age               Position
----                                    ---               --------
<S>                                     <C>          <C>
Keith A. Witter                          52          Director

Mark Haggerty                            52          Chief Executive Officer
                                                     & Director

Keith Bernhardt                          78          Director

Dr. Graeme Wallace                       58          Director

Holly Callen Hamilton                    51          V. P. & Secretary

Mike Nakonechny                          71          Chairman

Jeff Etten                               43          Chief Financial Officer
</TABLE>

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


                                                                             9

<PAGE>

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

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.

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 twenty 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 as the
elected Vice Chairman of the Hennepin County Parks, and on the Boards for all of
the Kensington companies. Haggerty has been a Director since October 15, 1994.

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.

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 Ms. Callen is a Graduate of Indiana University with a BS
Degree and received a MS Degree from the University of Illinois. She formed
Callen & Associates. Inc. in 1983 and has served as its President ever since.
Ms. Callen will serve as District Governor of Rotary International District
#5950


                                                                            10

<PAGE>

for the years 2001-2002. District #5950 covers all of Minneapolis and
southwestern Minnesota.

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.

RON SCHNELL is Vice President and Chief Technology Officer and Chief Software
Architect. Mr. Schnell has over 20 years of programming and networking
experience, and has been writing software for the Internet (Arpanet) since 1978.
By the age of 14, Mr. Schnell was lecturing in computer science at the
university level. At 18, Syracuse University accelerated Mr. Schnell into the
masters' program in computer science because of his advanced knowledge of the
subject. He left Syracuse for a position in OS development at Bell Laboratories,
followed by a stint at IBM in kernel development. Mr. Schnell then went on to
found Secure Online Systems providing UNIX systems management software, raising
over $1.0 M to finance the operation. His next venture was as founder and
president of Driver Aces, Inc., a consulting firm which designs and writes
device drivers for the UNIX operating system. The company's customers include
several Fortune 500 clients, including Sun Microsystems, Digital Equipment
Corporation, and Lucent. Mr. Schnell has additionally had technical and
managerial positions at Sun Microsystems, AT&T Network Systems, NCR, and the
Massachusetts Institute of Technology.

ITEM 10:  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 and
receives four weeks paid


                                                                            11

<PAGE>

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.
Mr. Haggerty's contract was extended through May 1, 2001.

Mr. Ron Schnell has a two year employment agreement to receive $160,000 during
the first year plus benefits and $200,000 the second year. Mr. Schnell has also
signed a non compete agreement and has assigned to Kensington all rights to his
170,000 lines of proprietary source codes.

Mr. Etten receives a combined consulting and employee package of $57,990 a year
for acting as C.F.O. Mr. Etten also receives a car allowance, vacation and
expense reimbursement.

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

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
March 17, 1995 the Company's board authorized the issuance of options at $.32
for a period of five years. The stock price on March 17, 1995 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
26 employees of Ives Design, Inc. at $.32 for five years. In addition each
director, the CFO and the corporate secretary were authorized to receive 50,000
options each at $.32 for five years. On April 15, 1999, when the price of
Kensington stock was $.125, the directors authorized more options and warrants
for employees, directors, and the corporate secretary at $.11 for five years.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                             PRINCIPAL SHAREHOLDERS


                                                                            12

<PAGE>

     The following table sets forth information as of December 31, 1999
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, either directly or through corporations or family
members, and (iii) all officers and directors as a group. All persons listed
have either direct or indirect voting and investment power with respect to their
shares unless otherwise indicated.

<TABLE>
<CAPTION>
     NAME                  Shares     Percentage
     ----                  ------     ----------
<S>                     <C>        <C>
Dennis Krause              226,722       3.6%
7733 Quincy St.
Spring Lake Park,
Minnesota  55432

Keith Bernhardt            376,104        6%
107 Cliffmore Rd
W. Hartford, CT
06107

G. Wallace                 162,500       2.6%
151 Yonge St.
Toronto, Canada

Mike Nakonechny            206,250       3.3%
114 S. Pine Street
Elverson, PA 19520

Mark Haggerty              281,188       4.5%
8325 Northwood Pkwy
New Hope, MN 55427

Keith Witter               160,275       2.6%
606 23rd Street NE
Rochester, MN 55906

Other Officers              16,600      nominal

Total (1)                1,429,639      27.3%

All officers & key
persons & directors as a
Group, nine persons (1)
</TABLE>

(1)  On December 31, 1999 there were 5,239,150 shares issued and outstanding. On
     February 18, 2000 Kensington acquired all of Ron Schnell's shares in Mail
     Call, Inc. for 1,000,000 restricted shares.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.


                                                                            13

<PAGE>

                              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 on May 3, 1994. In
consideration for the purchase of such assets, the Company agreed to issue to
the approximately 634 Liberty creditors/investors 125,000 shares of common stock
(the "Liberty Shares") and 1,000,000 warrants (the "Class A Liberty Warrants").
Each Class A Liberty Warrant is exercisable for six months from issuance to
purchase one share of common stock at $2.50 per share and one Class C Liberty
Warrant which is exercisable at $7.00 per share for three years. 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 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.

ITEM 13.             DESCRIPTION OF SECURITIES

COMMON STOCK

     The Company has authorized 50,000,000 shares of stock, no par value. Of the
50,000,000 shares, 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 preemptive 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 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.


                                                                            14

<PAGE>

     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

         On September 11, 1992, the Company authorized the issuance of an
aggregate of 1,000,000 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.

From September 1999 through February 2000 Kensington raised $1,250,000 in a
Regulation D 506 Private Placement. Each investor received a five year warrant
with an exercise price of $2.50 per share. Neither the warrants nor the stock
had "piggyback" registration rights.

CONVERTIBLE DEBENTURES

There are 22 debenture holders who have the right to convert their 369,400
debentures to stock at an exercise price of $1.00 through April 2001.
Approximatly $170,000 of the debentures are secured and the others are
unsecured. Kensington is paying 12% APR interest on these debentures.

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

         (A) EXHIBITS.             See Table of Content.

         (B) REPORTS ON FORM 8-K Filed in December 1999 and in February 2000.



                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
                 EXHIBIT      DESCRIPTION
                    #
                 <S>    <C>                                       <C>
                  #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                            ***

                                                                            15

<PAGE>

                  #21.2 Form of Warrants & Debentures                   ***
                  #10.2 Acquisition of Mail Call                       ****
                  #27   Financial Data Schedule
</TABLE>
                  *        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.

                  ****     Filed as an exhibit to Form 8-K filed in December
                           1999 and amended in February 2000.

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

                                   SIGNATURES

   Pursuant to the requirements of 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.

                  KENSINGTON INTERNATIONAL HOLDING CORPORATION

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

                             Dated: March 24, 2000

 /s/ Mike Nakonechny              Chairman
----------------------------
By: Mike Nakonechny
Dated: March 24, 2000


                                                                            16

<PAGE>













Director Keith Bernhardt is on page 20 and Director Dr. Graeme Wallace is on
page 21 and Director Keith Witter is on page 22.














                                   SIGNATURES

   Pursuant to the requirements of 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.

                  KENSINGTON INTERNATIONAL HOLDING CORPORATION

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


                                                                            17

<PAGE>

/s/ Keith Bernhardt           Director
-------------------------
By: Keith Bernhardt

Dated: March 24, 2000














                                   SIGNATURES

   Pursuant to the requirements of 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.

                  KENSINGTON INTERNATIONAL HOLDING CORPORATION

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


                                                                            18

<PAGE>

/s/ Graeme Wallace               Director
-------------------------
By: Graeme Wallace
Dated: March 24, 2000














                                   SIGNATURES

   Pursuant to the requirements of 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.

                  KENSINGTON INTERNATIONAL HOLDING CORPORATION

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

                                                                            19

<PAGE>



/s/ Keith Witter                    Director
---------------------------
By: Keith Witter

Dated: March 24, 2000

















                                                                            20

<PAGE>






                        KENSINGTON INTERNATIONAL HOLDING
                          CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998



<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                  PAGE
                                                                  ----
<S>                                                         <C>
Report of Independent Public Accountants                           F-2

Consolidated Financial Statements:
  Balance Sheets                                                   F-3

  Statements of Operations                                         F-4

  Statements of Stockholders' Equity (Deficit)                     F-5

  Statements of Cash Flows                                         F-6

Notes to Consolidated Financial Statements                  F-7 - F-18
</TABLE>


                                     F-1

<PAGE>


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Kensington International Holding Corporation:

We have audited the accompanying consolidated balance sheets of Kensington
International Holding Corporation and subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Kensington
International Holding Corporation and subsidiaries as of December 31, 1999 and
1998, and the results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.

Minneapolis, Minnesota
February 3, 2000


                                     F-2

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                          1999                  1998
                                                                                  --------------------- --------------------
<S>                                                                               <C>                    <C>
                                                 ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                                       $          1,026,036   $            72,220
  Accounts receivable                                                                          491,631               563,823
  Inventories                                                                                  286,831               195,843
  Other current assets                                                                          18,215                22,208
                                                                                  ---------------------  --------------------
    Total current assets                                                                     1,822,713               854,094
                                                                                  ---------------------  --------------------

OTHER ASSETS:
  Property and equipment, net                                                                  275,803               295,659
  Investment in oil and gas properties, net                                                     65,181                67,927
  Investments in unconsolidated corporations                                                    40,000                     0
  Investment in unconsolidated oil and gas partnership                                               0                10,000
  Notes receivable - related parties, net                                                       11,125                16,625
  Loan costs, net                                                                               27,403                32,667
  Intangible, net                                                                                4,968                     0
                                                                                  ---------------------  --------------------
    Total other assets                                                                         424,480               422,878
                                                                                  ---------------------  --------------------
                                                                                  $          2,247,193   $         1,276,972
                                                                                  =====================  ====================

                             LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Line of credit - bank                                                           $                  0   $            35,000
  Notes payable - related parties                                                               82,965               124,715
  Current portion of long-term debt                                                            354,058                31,252
  Current portion of capital lease obligations                                                   5,913                16,614
  Accounts payable                                                                             278,706               283,365
  Accrued expenses                                                                             151,566               273,889
                                                                                  ---------------------  --------------------
    Total current liabilities                                                                  873,208               764,835

LONG-TERM DEBT, NET OF CURRENT PORTION                                                         448,368               815,615
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION                                                    0                 5,912
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY                                                   466,567                     0
                                                                                  ---------------------  --------------------
    Total liabilities                                                                        1,788,143             1,586,362
                                                                                  ---------------------  --------------------

STOCKHOLDERS' EQUITY (DEFICIT):
 Common stock, no par value, 50,000,000 shares authorized,
   5,239,150 and 3,238,750 shares issued and outstanding                                     4,796,893             3,596,883
 Stock subscriptions receivable                                                               (62,797)             (169,552)
 Accumulated deficit                                                                       (4,275,046)           (3,736,721)
                                                                                  ---------------------  --------------------
    Total stockholders' equity (deficit)                                                       459,050              (309,390)
                                                                                  ---------------------  --------------------
                                                                                  $          2,247,193   $         1,276,972
                                                                                  =====================  ====================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     F-3

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998


<TABLE>
<CAPTION>
                                                                 1999                                  1998
                                                 ------------------------------------  ------------------------------------
                                                       Amount            Percent             Amount             Percent
                                                 -------------------  ---------------  --------------------  --------------
<S>                                              <C>                   <C>             <C>                    <C>
Revenues                                         $        3,621,533            100.0   $         3,934,579           100.0

Cost of sales                                             2,388,232             66.0             2,652,620            67.4
                                                 -------------------  ---------------  --------------------  --------------

Gross profit                                              1,233,301             34.0             1,281,959            32.6

Operating expenses                                        1,081,357             29.8               975,204            24.8

Loss on impairment of oil and gas
  investment                                                      0              0.0                19,154             0.5
                                                 -------------------  ---------------  --------------------  --------------

Income from operations                                      151,944              4.2               287,601             7.3

Other income (expense)                                      (49,002)            (1.4)              (86,573)           (2.2)
                                                 -------------------  ---------------  --------------------  --------------

INCOME BEFORE INCOME TAXES                                  102,942              2.8               201,028             5.1

Provision for income taxes                                        0              0.0                     0             0.0
                                                 -------------------  ---------------  --------------------  --------------

Net income                                       $          102,942              2.8   $           201,028             5.1
                                                 ===================  ===============  ====================  ==============


BASIC EARNINGS PER COMMON SHARE                  $             0.03                    $              0.06
                                                 ===================                   ====================

SHARES USED IN COMPUTING BASIC
  EARNINGS PER COMMON SHARE                               3,993,486                              3,234,084
                                                 ===================                   ====================

DILUTED EARNINGS PER COMMON SHARE                $             0.02                    $              0.06
                                                 ===================                   ====================

SHARES USED IN COMPUTING DILUTED
  EARNINGS PER COMMON SHARE                               4,866,567                              3,234,084
                                                 ===================                   ====================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     F-4

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                              Common Stock                 Stock
                                        ---------------------------     Subscriptions    Accumulated
                                           Shares         Amount         Receivable         Deficit          Total
                                        -----------     -----------     -----------      -----------      -----------
<S>                                     <C>             <C>             <C>              <C>              <C>
BALANCE - DECEMBER 31, 1997               3,208,750     $ 3,589,383     $  (169,552)     $(3,937,749)     $  (517,918)

  Issuance of common stock, net
    of related costs                         30,000           7,500              --               --            7,500

  Net income                                     --              --              --          201,028          201,028
                                        -----------     -----------     -----------      -----------      -----------

BALANCE - DECEMBER 31, 1998               3,238,750       3,596,883        (169,552)      (3,736,721)        (309,390)

  Issuance of common stock, net
    of issuance costs                     1,255,250       1,114,737              --               --        1,114,737

  Conversion of debt and accrued
    expenses to common stock                629,700          73,954              --               --           73,954

  Issuance of common stock for
    services rendered                       100,000           3,120              --               --            3,120

  Issuance of common stock from
    exercise of stock options                15,450           8,199              --               --            8,199

  Collection of stock subscriptions
    receivable                                   --              --         106,755               --          106,755

  Adjustment for minority interest
    in consolidated subsidiary                   --              --              --         (641,267)        (641,267)

  Net income                                     --              --              --          102,942          102,942
                                        -----------     -----------     -----------      -----------      -----------

BALANCE - DECEMBER 31, 1999               5,239,150     $ 4,796,893     $   (62,797)     $(4,275,046)     $   459,050
                                        ===========     ===========     ===========      ===========      ===========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     F-5

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                          1999                  1998
                                                                                   --------------------  --------------------
<S>                                                                                <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                       $           102,942   $           201,028
  Adjustments to reconcile net income to
  cash flows from operating activities:
   Depreciation, depletion and amortization                                                     57,333                74,325
   Loss or impairment on oil and gas investment                                                  6,153                19,154
   Common stock issued for services rendered                                                     3,120                     0
   Equity in (earnings) loss of unconsolidated oil and gas partnerships                           (347)                  487
   Equity in loss of unconsolidated corporation                                                 12,441                     0
   Minority interests in loss of consolidated subsidiary                                       (21,930)                    0
   Changes in operating assets and liabilities:
     Accounts receivable                                                                        72,192               (89,043)
     Inventories                                                                               (90,988)               (5,917)
     Other current assets                                                                        5,915                22,426
     Accounts payable                                                                          (14,690)              (27,617)
     Accrued expenses                                                                          (89,309)               84,582
                                                                                   --------------------  --------------------
      Cash flows from operating activities                                                      42,832               279,425
                                                                                   --------------------  --------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Distributions from unconsolidated oil and gas partnerships                                     4,194                     0
  Purchases of property and equipment                                                          (12,488)              (31,769)
  Investment in and advances to unconsolidated subsidiary prior to consolidation              (179,049)                    0
  Investment in unconsolidated corporations                                                    (40,000)                    0
  Collections on notes receivable - related parties                                              5,500                 6,000
                                                                                   --------------------  --------------------
      Cash flows from investing activities                                                    (221,843)              (25,769)
                                                                                   --------------------  --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net decrease in line of credit - bank                                                        (35,000)             (113,099)
  Payments on notes payable - related parties                                                     (810)              (32,404)
  Proceeds from long-term debt                                                                  80,000                15,484
  Payments on long-term debt                                                                   (55,683)              (44,267)
  Payments on capital lease obligations                                                        (16,613)              (22,835)
  Payments of loan costs                                                                             0                (2,000)
  Proceeds from issuance of common stock, net of issuance costs                              1,114,737                 7,500
  Proceeds from exercise of stock options                                                        8,199                     0
  Collections on stock subscriptions receivable                                                 37,997                     0
                                                                                   --------------------  --------------------
      Cash flows from financing activities                                                   1,132,827              (191,621)
                                                                                   --------------------  --------------------

INCREASE IN CASH AND CASH EQUIVALENTS                                                          953,816                62,035

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                                    72,220                10,185
                                                                                   --------------------  --------------------

CASH AND CASH EQUIVALENTS, END OF YEAR                                             $         1,026,036   $            72,220
                                                                                   ====================  ====================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                     F-6

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIAIRES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 1999 AND 1998

(1) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS - Kensington International Holding Corporation (Kensington or
the Company), was incorporated August 22, 1988, for the purpose of direct
development of oil and gas properties in Kentucky. In 1992, the Company's focus
shifted from development of oil and gas properties to becoming a diversified
company. At December 31, 1999, the Company has three wholly-owned subsidiaries:
Ives Design, Inc. (Ives), Bluegrass Management and Operating Company (Bluegrass)
and Kensington American Gas Drilling #1, LLC (Drilling #1); and three majority
owned corporations: Mail Call, Inc. (Mail Call), I-Med Software, Inc. (I-Med)
and Interchange Medical, Inc. (Interchange).

Ives was acquired in April 1992. Ives manufactures non-refrigerated, customized
display fixtures, primarily for the supermarket industry, and extends unsecured
credit to customers in the normal course of business. Customers are located
throughout the Midwest region of the United States.

Mail Call was formed in June 1997 and Kensington acquired its interests during
1999. Mail Call is in the development stage and has yet to generate significant
revenues. Mail Call is engaged in electronic mail retrieval service via
telephone. Its principal customers are expected to be located worldwide.

Bluegrass was formally the wholly-owned subsidiary of American Gas Corporation
(American). During 1998, American was sold and the ownership of Bluegrass was
transferred to the Company. Bluegrass is currently inactive.

Drilling #1, I-Med and Interchange are inactive.

PRINCIPLES OF CONSOLIDATION - The consolidated financial statements include the
accounts of Kensington, Ives, American, and Mail Call. All significant
intercompany transactions and accounts have been eliminated in consolidation.

CASH AND CASH EQUIVALENTS - The Company includes as cash equivalents
certificates of deposit and all other investments with maturities of three
months or less when purchased which are readily convertible into known amounts
of cash. The Company maintains its cash in high quality financial institutions.
The balances, at times, may exceed federally insured limits.

ACCOUNTS RECEIVABLE - The Company considers all accounts receivable to be fully
collectible, accordingly, no allowance for uncollectible accounts has been
established. If accounts become uncollectible, they are charged to operations
when that determination is made.

INVENTORIES - Inventories consist primarily of display fixtures and related raw
materials and are valued at the lower of cost (first-in, first-out), or market.

DEPRECIATION - Property and equipment are recorded at cost and are being
depreciated over their estimated useful lives using the straight-line method.
Depreciation expense was $49,323 and $53,085 for the years ended December 31,
1999 and 1998.


                                     F-7

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

AMORTIZATION - Loan costs are amortized over the term of the loan on a
straight-line basis. Accumulated amortization was $10,560 and $7,296 at December
31, 1999 and 1998. Intangible asset consists of a trademark and is being
amortized using the straight-line method over a period of fifteen years.

INVESTMENT IN OIL AND GAS PROPERTIES - Investment in oil and gas properties is
recorded at cost and consists of acquisition costs of the natural gas reserves,
oil and gas leases and the related rights-of-way, wells, pipeline and related
equipment. The Company follows the successful efforts method of accounting for
oil and gas properties. Accordingly, intangible development and well completion
costs of oil and gas properties are amortized over the estimated economic life
of the wells when the related reserves are proven. Costs of drilling a well
which do not result in proved reserves, net of any salvage value, are charged to
expense when it is determined that the drilling has been nonproductive.
Geological and geophysical costs and costs of carrying and retaining undeveloped
properties are charged to expense when incurred.

Unproved oil and gas properties are periodically assessed for impairment value,
and any loss is recognized at the time of impairment by providing an impairment
allowance. Capitalized costs of producing oil and gas properties after
considering estimated dismantlement, abandonment costs and estimated salvage
values are depreciated and depleted by the unit-of-production method. Pipeline
and other equipment are being depreciated over their estimated useful lives
using the straight-line method. Depreciation, depletion and amortization expense
was $2,746 and $13,524 for the years ended December 31, 1999 and 1998.

REVENUE RECOGNITION - The Company recognizes revenue from sales at the time that
ownership transfers to the customer, principally at shipment of the product, and
upon completion of the earnings process for oil and gas activities.

ADVERTISING COSTS - Advertising costs are charged to expense as incurred.
Advertising expense was $1,787 and $148 for the years ended December 31, 1999
and 1998.

EARNINGS PER COMMON SHARE - The Company accounts for earnings per share as
required under Statement of Financial Accounting Standards No. 128 "Earnings Per
Share" (Statement 128). Statement 128 requires disclosures of basic earnings per
share (EPS) and diluted EPS. Basic EPS is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the year.
Diluted EPS is computed by dividing net income by the weighted average common
shares outstanding and dilutive common equivalent shares assumed to be
outstanding during each period. Dilutive common stock equivalents are not
included in the computations of diluted EPS if their inclusion would be
antidilutive.

MANAGEMENT'S USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.


                                     F-8

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amounts for all financial
instruments approximates fair value. The carrying amounts for cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses
approximate fair value because of the short maturity of these instruments. The
fair value of debt and capital leases approximates the current rates at which
the Company could borrow funds with similar remaining maturities and risks.

(2) INVESTMENT IN MAIL CALL, INC.

During August 1999, the Company purchased common stock of Mail Call from an
existing stockholder for $25,000. Their ownership interest was approximately 37%
upon completion of the transaction. During November 1999, the Company purchased
additional common stock from Mail Call increasing their ownership interest to
approximately 51%. Mail Call was accounted for under the equity method until
majority ownership was obtained, and consolidated thereafter.

(3) INVENTORIES

Inventories consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                 1999                   1998
                                                         ---------------------- ---------------------
<S>                                                      <C>                    <C>
Raw materials                                            $            136,941   $           113,343
Work in process                                                        23,556                 7,531
Finished goods                                                        126,334                74,969
                                                         --------------------------------------------
   Total                                                 $            286,831   $           195,843
                                                         ====================== =====================
</TABLE>

(4)      PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at December 31:

<TABLE>
<CAPTION>                                                                 1999                   1998
                                                         ---------------------- ---------------------
<S>                                                      <C>                    <C>
Land                                                     $             19,500   $            19,500
Buildings                                                             268,699               268,699
Equipment                                                             376,310               326,668
Less: accumulated depreciation and amortization                      (388,706)             (319,208)
                                                         --------------------------------------------
                                                         $            275,803   $           295,659
                                                         ====================== =====================
</TABLE>


                                     F-9

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

(5) INVESTMENT IN OIL AND GAS PROPERTIES

Investment in oil and gas properties, using successful efforts accounting,
consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                                1999                   1998
                                                                        ---------------------- ---------------------
<S>                                                                     <C>                    <C>
Proved properties                                                       $            111,613   $           111,613
Pipeline and equipment                                                                87,344                87,344
                                                                        ---------------------- ---------------------
                                                                                     198,957               198,957
Less: accumulated depreciation, depletion and amortization                          (133,776)             (131,030)
                                                                        ---------------------- ---------------------
                                                                        $             65,181   $            67,927
                                                                        ====================== =====================
</TABLE>

No costs were incurred in oil and gas property acquisition, exploration and
development activities during 1999 or 1998.

(6) INVESTMENTS IN UNCONSOLIDATED CORPORATIONS

During 1999, the Company purchased 50,000 shares of common stock of You-Do, Inc.
for $30,000 and 10,000 shares of common stock of Microtalk Technologies, Inc.
for $10,000. These investments are being accounted for at cost as the Company's
ownership is less then 20%. The Company's intent is to hold these shares beyond
one year and as such have classified the investments as long-term. In addition,
the Company was granted a five-year option to purchase an additional 30,000
shares of common stock of You-Do, Inc. at $1.00 a share.

(7) INVESTMENT IN UNCONCOLIDATED OIL AND GAS PARTNERSHIP

The Company had a 46.6% limited partner interest in an oil and gas partnership.
During 1998, it was determined the investment was impaired and the investment
was written down to $10,000. During 1999, the partnership sold its assets and
ceased operations. The Company recognized a loss of $6,153 in 1999.

(8) NOTE RECEIVABLE - RELATED PARTY, NET

Note receivable - related party consisted of a note receivable from B & K Oil
Company, Inc. (B & K). The note bears interest at 8%, is unsecured and due on
demand. The Company is currently receiving monthly payments of $500. The balance
at December 31, 1999 and 1998 of $21,125 and $26,625 was reduced by a reserve of
$10,000. B & K is owned by three individuals, two of which are Kensington
stockholders.

During 1998, the Company wrote off a $30,000 note receivable from B & D
Commerical Ventures which had previously been fully reserved for.

                                     F-10

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

(9) LINE OF CREDIT - BANK

The Company has a $200,000 line of credit with Riverside Bank. The line bears
interest at 1.5% over the bank's reference rate (10% at December 31, 1999),
matures October 2000, and is secured by all of the Company's assets and
guaranteed by two of the Company's directors/stockholders. Outstanding
borrowings were $0 and $35,000 at December 31, 1999 and 1998.

(10) NOTES PAYABLE - RELATED PARTIES

Notes payable - related parties consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Note payable to director/stockholder, interest at 12%, due on demand,
unsecured.  Note holder has option to convert to common stock at a conversion
price of $.11 until note is paid.                                                $             16,500   $            16,500

Note payable to stockholder, interest at 8%, due February 1994, unsecured.                      3,750                 3,750

Note payable to stockholder, interest at 9%, due December 1993, unsecured.                     39,800                39,800

Note payable to stockholder, converted to common stock during 1999.                                 0                 7,953

Note payable to director/stockholder, interest at 10%, due May 1996, secured by
Company's assets.  Note holder has option to convert to common stock at a
conversion price of $.11 until note is paid.                                                   14,689                37,500

Various notes payable to stockholders, unsecured.                                               8,226                19,212
                                                                                 ---------------------- ---------------------
                                                                                 $             82,965   $           124,715
                                                                                 ====================== =====================
</TABLE>

(11) LONG-TERM DEBT

Long-term debt consisted of the following at December 31:

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Debentures payable to stockholders and non-stockholders - monthly installments
of interest at 12%, due three years from issue date through April 2001, $176,000
secured by Ives' real estate, remainder unsecured.  Debenture holders have
option to convert to common stock at $1.00 per share until maturity.             $            369,442   $           395,678

Note payable - Regency Savings Bank - monthly installments of $3,654 including
interest at 10.5%, secured by real estate, due August 2007.                                   351,595               357,664
</TABLE>


                                     F-11

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Note payable - Riverside Bank - monthly installments of $2,568 including
interest at 1.5% over bank's reference rate (10% at December 31, 1999), secured
by substantially all of the Company's assets and guaranteed by two of the
Company's directors/stockholders.                                                $             72,271   $                 0

Note payable - Riverside Bank - monthly installments of $493 including interest
at 9%, secured by vehicle, due June 2001.                                                       9,118                13,177

Note payable to stockholder, unpaid principal applied against outstanding stock
subscription receivable (see Note 13).                                                              0                80,348
                                                                                 ---------------------- ---------------------

Total long-term debt                                                                          802,426               846,867
Less:  current portion                                                                       (354,058)              (31,252)
                                                                                 ---------------------- ---------------------
Long-term debt, net                                                              $            448,368   $           815,615
                                                                                 ====================== =====================
</TABLE>

Future maturities of long-term debt are as follows for the years ending December
31:

<TABLE>
                  <S>                                                        <C>
                   2000                                                      $            354,058
                   2001                                                                    91,833
                   2002                                                                    43,210
                   2003                                                                    54,910
                   2004                                                                    60,961
                   Thereafter                                                             197,454
                                                                             ----------------------
                       Total                                                 $            802,426
                                                                             ======================
</TABLE>

(12) CAPITAL LEASE OBLIGATIONS

The Company leases certain equipment under capital lease agreements expiring
through August 2000. Interest is provided for at interest rates ranging from
13.3% to 17.1%. These obligations are secured by the equipment under lease.
Total cost of the leased equipment is $22,950 and $90,862 and the accumulated
amortization on this equipment was $17,350 and $70,819 at December 31, 1999 and
1998.

Future minimum lease payments required under the capital leases are $6,231 for
the year ending December 31, 2000, of which $318 represents interest.

(13) STOCKHOLDERS' EQUITY

SALE OF COMMON STOCK - During 1999, the Company sold units consisting of the
Company's common stock and warrants to purchase common stock. The Company issued
1,255,250 shares of common stock and 1,255,250 warrants to purchase common stock
at $2.50 per share and received proceeds of $1,114,737, net of issuance costs.
The warrants are exercisable for five years. In addition, the Company issued
99,975 dealer warrants to purchase common stock at $1.00 per share exercisable
for five years.


                                     F-12

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

STOCK SUBSCRIPTIONS - During 1992, the Company issued 597,500 shares of common
stock at per share prices ranging from approximately $.40 to $2.00 in exchange
for subscriptions receivable aggregating $455,001. The subscriptions accrue
interest at 8% and matured at various dates from February 1995 to July 1995 and
are secured by the underlying common stock. The subscriptions and accrued
interest are recorded as stock subscriptions receivable.

During 1999, two of the stock subscriptions and accrued interest were collected.

STOCK WARRANTS - Outstanding and fully vested stock warrants (exercisable
through November 2004) consisted of the following:

<TABLE>
<CAPTION>
                                                                                       Number of             Per Share
                                                                                       Warrants                Price
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Outstanding - December 31, 1997                                                             1,467,055          $.50 - $3.00
  Granted                                                                                           0                   .00
  Canceled and expired                                                                       (613,933)          1.00 - 3.00
                                                                                 ---------------------- ---------------------
Outstanding - December 31, 1998                                                               853,122          $.50 - $3.00
  Granted                                                                                   1,604,625            .11 - 2.50
  Exercised                                                                                   (10,500)                  .63
  Canceled and expired                                                                       (439,550)            .50 - .63
                                                                                 ---------------------- ---------------------
Outstanding - December 31, 1999                                                             2,007,697           $.11 - 3.00
                                                                                 ====================== =====================
</TABLE>

STOCK OPTION PLAN - The Company has a stock option plan, which authorizes a
maximum of 750,000 shares of common stock for issuance under the Plan. The Board
of Directors may grant options at their discretion, provided the purchase price
of the option shares are not less than 85% of the fair market value of the
common stock on the date of the grant and have a life of five years.

The Company applies APB Opinion 25 "Accounting for Stock Issued to Employees"
and related Interpretations in accounting for its stock options. Accordingly, no
compensation cost has been recognized for its stock options. Had compensation
cost for the Company's stock options been determined based on the fair value at
the grant dates consistent with the method of Statement of Financial Accounting
Standards No. 123 "Accounting for Stock Based Compensation" (Statement 123), the
Company's net income and basic and diluted EPS would have been decreased to the
proforma net income and basic and diluted EPS indicated below for the years
ended December 31:

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Net income as reported                                                           $            102,942   $           201,028
Proforma net income                                                              $             74,142   $           201,028
Basic EPS as reported                                                            $                .03   $               .06
Diluted EPS as reported                                                          $                .02   $               .06
Proforma basic and diluted EPS                                                   $                .02   $               .06
</TABLE>


                                     F-13

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

In determining the compensation cost of the options granted during 1999 and
1998, as specified by Statement 123, the fair value of each option grant has
been estimated on the date of grant using the Black-Scholes option pricing model
and the weighted average assumptions used in these calculations are summarized
below:

<TABLE>
<CAPTION>
                                                                      1999                  1998
                                                              --------------------- ----------------------
<S>                                                           <C>                   <C>
Risk free interest rate                                                        6%                     7%
Expected life of options granted                                          5 years                5 years
Expected volatility of options granted                                        75%                     0%
Expected dividend yield                                                        0%                     0%
</TABLE>

Information regarding the Company's stock options is summarized below:

<TABLE>
<CAPTION>
                                                        1999                                        1998
                                    ----------------------------------------------------------------------------------------
                                                                 Weighted                                    Weighted
                                          Number of          Average Exercise          Number of         Average Exercise
                                           Options                 Price                Options                Price
                                    ---------------------- -------------------------------------------- --------------------
<S>                                 <C>                    <C>                      <C>                 <C>
Options outstanding, beginning of
year                                            179,700    $                 .32              380,700   $              1.53
  Granted                                       400,000                      .11                    0                   .00
  Canceled or expired                                 0                      .00             (201,000)                 2.62
  Exercised                                      (4,950)                     .32                    0                   .00
                                    ----------------------                       ----------------------
Options outstanding,
  end of year                                   574,750    $                 .17              179,700   $               .32
                                    ====================== ===================== ====================== ====================
Options exercisable, end of
  year                                          574,750    $                 .17              179,700   $               .32
                                    ====================== ===================== ====================== ====================
Weighted average fair value
  of options granted during
  the year                                                 $                 .07
                                                           ======================
</TABLE>

Options outstanding at December 31, 1999 have exercise prices of $.11 and $.32
and a weighted average remaining contractual life of 3.01 years.

MODIFICATION OF AMERICAN GAS CORPORATION ACQUISITION - In 1995, the Company
finalized payment for its acquisition of American by issuing 125,000 shares of
common stock to a court appointed trustee for the benefit of the shareholders of
Liberty National Corporation. The court also required the Company to issue
1,000,000 warrants at an exercise price of $2.50 per share. The warrants are
valid for six months from the date of issue, which is yet to be determined, and
are callable by the Company after three months. The Company is required to issue
new warrants to those who exercise the $2.50 warrants. These new warrants will
have an exercise price of $7.00 per share for a period of three years. The new
warrants are not callable by the Company. The Company's original obligation was
to issue 200,000 shares of common stock and 800,000 warrants.

                                     F-14

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

STOCK CONVERSION OPTION - The Company granted a director/stockholder the option
to convert accrued expenses to common stock at $.11 per share. The individual
can acquire up to 200,000 shares per year through April 2001.

(14) RETIREMENT PLAN

The Company has a Simple IRA retirement plan for the benefit of employees who
qualify for participation. Company contributions to the plan were $21,924 and
$18,110 for the years ended December 31, 1999 and 1998.

(15) COMMITMENTS AND CONTINGENCIES

OPERATING LEASE - The Company leases corporate office space under leases
expiring through December 2000. Monthly base rents are $3,066. In addition, one
of the leases requires the Company to pay its prorata share of operating
expenses. The Company also leases certain equipment under a lease expiring
October 2000. Monthly base rent is $376. Rent expense was $18,451 and $13,363
for the years ended December 31, 1999 and 1998.

Future minimum rental payments are $27,657 for the year ending December 31,
2000.

MAJOR CUSTOMER - The Company had sales to a single customer and its affiliates
representing approximately 73% and 82% of total product sales for the years
ended December 31, 1999 and 1998. Accounts receivable from this customer and its
affiliates represented approximately 59% and 70% of total accounts receivable at
December 31, 1999 and 1998.

EMPLOYMENT AGREEMENT - The Company has an employment agreement with an
officer/stockholder that requires minimum annual compensation of $65,000. The
agreement terminates May 1, 2001.

(16) INCOME TAXES

The Company has incurred cumulative net operating losses for both financial
statement and income tax reporting purposes. As of December 31, 1999, the
Company had net operating loss carryforwards of approximately $2,460,000. Of the
total net operating loss carryforwards, approximately $48,000 will expire in
2004 and the remainder will expire through 2011. Future changes in the ownership
of the Company may place limitations on the use of these net operating loss
carryforwards. The Company has recorded a full valuation allowance against the
net deferred tax asset due to the uncertainty of realizing the related benefits.

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Net operating loss carryforwards                                                 $            980,000   $         1,150,000
Less: valuation allowance                                                                    (980,000)           (1,150,000)
                                                                                 ---------------------- ---------------------
  Net deferred tax asset                                                         $                  0   $                 0
                                                                                 ====================== =====================
</TABLE>

                                     F-15

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

(17) OTHER INCOME (EXPENSE)

Total other income (expense) is as follows for the years ended December 31:

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Interest income                                                                  $             54,816   $                 0
Interest expense                                                                              (93,077)             (102,285)
Interest expense - related parties                                                            (14,424)              (15,052)
Equity in earnings (loss) of unconsolidated oil and gas partnership                               347                  (487)
Equity in loss of unconsolidated corporation                                                  (12,441)                    0
Minority interests in loss of consolidated corporation                                         21,930                     0
Loss on oil and gas investment                                                                 (6,153)                    0
Other income                                                                                        0                31,251
                                                                                 ---------------------- ---------------------
  Total other income (expense)                                                   $            (49,002)  $           (86,573)
                                                                                 ====================== =====================
</TABLE>

(18) SEGMENT REPORTING

The Company operates in three industry segments: manufacturing, oil and gas and
technology. Manufacturing consists of the fabrication, marketing, and
distribution of non-refrigerated, customized display fixtures. Oil and gas
consists of the production of natural gas and oil interests in the United
States. Technology consists of electronic mail retrieval service via telephone.
A summary of the operations by segment is as follows:

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Revenues from unaffiliated customers:
  Manufacturing                                                                  $          3,600,076   $         3,906,590
  Oil and gas                                                                                  20,226                27,989
  Technology                                                                                    1,231                     0
                                                                                 ---------------------- ---------------------
    Consolidated                                                                 $          3,621,533   $         3,934,579
                                                                                 ====================== =====================

Operating profit (loss):

  Manufacturing                                                                  $            389,488   $           419,079
  Oil and gas                                                                                   3,906                   544
  Technology                                                                                  (48,316)                    0
  General corporate                                                                          (193,134)             (132,022)
                                                                                 ---------------------- ---------------------
    Consolidated                                                                 $            151,944   $           287,601
                                                                                 ====================== =====================

Identifiable assets:

  Manufacturing                                                                  $          1,116,282   $         1,180,918
  Oil and gas                                                                                  74,195                82,714
  Technology                                                                                  966,372                     0
  General corporate                                                                            90,344                13,340
                                                                                 ---------------------- ---------------------
    Consolidated                                                                 $          2,247,193   $         1,276,972
                                                                                 ====================== =====================
</TABLE>

                                     F-16

<PAGE>


          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Depreciation, depletion and amortization:

  Manufacturing                                                                  $             49,351   $            59,710
  Oil and gas                                                                                   2,746                13,524
  Technology                                                                                    4,152                     0
  General corporate                                                                             1,084                 1,091
                                                                                 ---------------------- ---------------------
    Consolidated                                                                 $             57,333   $            74,325
                                                                                 ---------------------- ---------------------

Capital expenditures:

  Manufacturing                                                                  $              5,589   $            31,769
  Technology                                                                                    3,559                     0
  General corporate                                                                             3,340                     0
                                                                                 --------------------------------------------
    Consolidated                                                                 $             12,488   $            31,769
                                                                                 ====================== =====================
</TABLE>

(19)       SUPPLEMENTAL CASH FLOWS INFORMATION

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Cash paid for interest                                                           $            117,524   $           106,454
Cash paid for income taxes                                                       $                  0   $                 0

Noncash investing and financing activities:

  Debt and accrued expenses converted to common stock                            $             73,954   $                 0

  Stock subscription and interest receivable exchanged for debt                  $             68,758   $                 0
</TABLE>

(20) SUPPLEMENTAL OIL AND GAS INFORMATION

Results of operations for oil and gas producing activities were as follows for
the years ended December 31:

<TABLE>
<CAPTION>
                                                                                         1999                   1998
                                                                                 ---------------------- ---------------------
<S>                                                                              <C>                    <C>
Oil and gas sales                                                                $             20,226   $            27,989
Well depreciation and depletion                                                                (2,746)              (13,524)
Production and operating costs                                                                (13,574)              (22,488)
                                                                                 ---------------------- ---------------------
Operating income (loss) from oil and gas producing activities
  (excluding corporate overhead and interest costs)                              $              3,906   $            (8,023)
                                                                                 ====================== =====================
</TABLE>

RESERVE INFORMATION (UNAUDITED) - While reserves still exist, higher than
anticipated production costs and substantial additional development expenditures
necessary make it highly unlikely these properties will provide future positive
net cash flows. As a result, accurate and meaningful reserve quantities are
unknown. All of the Company's reserves are located in the United States.

                                     F-17

<PAGE>

          KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                           DECEMBER 31, 1999 AND 1998

(21) SUBSEQUENT EVENTS (UNAUDITED)

SALE OF COMMON STOCK - During February 2000, the Company completed an additional
sale of units consisting of the Company's common stock and warrants to purchase
common stock. The Company issued 668,750 shares of common stock and received net
proceeds of approximately $580,000. In addition, the Company issued 688,750
warrants to purchase common stock at $2.50 per share that are exercisable for
five years and the Company issued 166,850 dealer warrants to purchase common
stock at $1.00 per share exercisable for five years.

INVESTMENT IN MAIL CALL, INC. - During February 2000, the Company issued
1,000,000 shares of common stock to a minority stockholder of Mail Call in
exchange for his 600 shares of Mail Call stock. The transaction increased the
Company's ownership in Mail Call to approximately 85%.

EMPLOYMENT AGREEMENT - On February 18, 2000, the Company entered into an
employment agreement with an officer/stockholder of Mail Call. The agreement is
effective March 1, 2000 and requires annual compensation of $160,000 through
February 2000 and $200,000 annually thereafter. The agreement terminates March
1, 2002 but may be renewed annually. The agreement requires the Company to pay
the individual all remaining compensation due under the agreement if the
individual is terminated without cause. In addition, the agreement required the
Company to issue a warrant to the individual to purchase 440,000 shares of the
Company's common stock at $1.00 per share exercisable for five years. The
individual has the option to put the warrant back to the Company at $1.00 a
share in the Company completes a private placement as outlined in the agreement.
The agreement also restricts the employee from competing with the Company for
two years following employment termination


                                     F-18