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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549

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FORM 10-QSB

Quarterly Report Under Section 13 or 15(d) of the Securities exchange Act of 1934

For Quarter Ending September 30, 1999

Commission File Number #33-38119-C

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

|Minnesota(State or other jurisdiction
of incorporation)                                                     |  | 41-1610632(I.R.S. Employer
Identification No.)
|----------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------
|Suite 654 Interchange Tower,
600 S. Hy. 169,
Minneapolis, Minnesota(Address of principal executive offices) |  | 55426(Zip code)                               

(612) 546-2075Registrant's telephone number, including area code

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Indicate
by Check mark whether the registration (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or of such shorter period that the registrant was required to file such reports), and 92) has been subject to such filing requirements for the past 90
days. Yes /x/  No / /

Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

Weighted
Number of Shares are 3,557,115 of common stock no par value.

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## 

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 quarterly report
on Form 10-QSB.

Part I.Financial Information

Quarter EndedSeptember 30, 1999

GENERAL

The following financial information is submitted in response to the requirements of Form 10-QSB and does not purport to be financial statements prepared in
accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, although the Company believes the disclosures that are made are adequate to make the information presented not misleading. Further, in the opinion
of the management, the interim financial statements reflect fairly the financial position and results of operations for the period indicated.

The
results of operations for the quarter ended as stated above are not necessarily indicative of results to be expected for the entire fiscal year ending December 31st.

Item
1.Financial Statements

The
balance sheet of Kensington International Holding Corporation (the "Company") as of the Quarter stated above, and the related statements of operations and cash flows thereto are
incorporated herein by reference to the Company's quarterly report.

Item
2.Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

For the quarter, revenues totaled $820k. This represents a $81k (11%) increase over revenue for the same period for 1998. Gross profits totaled $292k as
compared to $270k for the previous year. Net income totaled $30k, which represents a 20% increase over the same period in 1998. For the nine months ended September 30, 1999 revenues totaled
$2,835k. This is a $265k (10%) increase over 1998 revenues for the same period. Net income for the nine months of 1999 totaled $119k, which is an increase over 1998 of $23k or 24%. The current backlog
of customer PO's as of the end of the quarter continues to be strong, totaling approximately $450k. In addition a significant amount of work for which the Company has not yet received PO's has been
verbally committed to the Company. The Company continues to explore options such as forming strategic alliances with other manufacturers or acquisition of companies offering similar or complimentary
products in order to grow revenues and profits. Included in the quarter is an $11k loss for the Company's portion of the Mail Call, Inc. performance for the quarter.

Liquidity and Capital Resources

As part of the Mail Call, Inc. investment, the Company took on an $80k note payable. The Company has access to a $200k line of credit. At this time
there are no borrowings against the line. During the period stated the Registrant converted approximately $44k of debt into stock to two directors.

Inflation

The rate of inflation has had a great impact on the Company's results of operations and is expected to have a continued impact on continuing operations due to
the increase in wood product costs and the fact that we have to bid most of our projects and we can not pass all of the cost increases to our customers.

Part
II.Other InformationItem 1.  Legal ProceedingsNone
Item 2.  Changes in SecuritiesNone
Item 3.  Defaults upon Senior SecuritiesNone
Item 4.  Submission of Matters to a Vote of Security HoldersNone
Item 5.  Other Information

Other Information

On June 26, 1999, Kensington signed an agreement with Mail Call, Inc. of Miramar, Florida, in which Kensington agreed to acquire up to 50.05% of
Mail Call, Inc. Kensington completed the acquisition of 36.18% of Mail Call, Inc. in early August 1999. As part of the purchase agreement to reach the 50.05% ownership, Kensington
was to raise 1 million dollars for Mail Call, Inc. This funding has been raised as of October 25, 1999, and the Company plans to finalize the purchase of 50.05% of Mail Call, Inc.
in early November 1999.

Mail
Call's technology allows people to read their E-mail over the telephone and respond to their E-mail by voice even if they do not own a computer. Mail Call users may also fax a
message to a designated fax machine from the phone or send a text message.

Item
6.  Exhibits and Reports on Form 8-K and the October 18, 1995 S-8 filing as described in Item 2 herein.



SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| | KENSINGTON INTERNATIONAL HOLDING CORPORATION         
| | -----------------------------------------------------
| | /S/ MARK HAGGERTYMark HaggertyChief Executive Officer
| | /s/JEFF ETTENJeff Etten, C.F.O.                      

Dated:
November 11, 1999
      Minneapolis, Minnesota



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 1999 AND DECEMBER 31, 1998

(UNAUDITED)

|                                                         |  | 9/30/99 |            | 12/31/98 |  
|-------------------------------------------------------- |  | ------- | ---------- | -------- | -
|ASSETS                                                   | 
|Current assets:                                          |  |         |            |          |  
|Cash                                                     |  | $       | 118,365    |          | $
|Accounts receivable                                      |  |         | 507,449    |          |  
|Inventories:                                             |  |         |            |          |  
|Raw material                                             |  |         | 63,343     |          |  
|Work in progress                                         |  |         | 53,531     |          |  
|Finished Goods                                           |  |         | 57,572     |          |  
|Other current assets                                     |  |         | 46,368     |          |  
|                                                         |  |         |            |          |  
|Total current assets                                     |  |         | 846,628    |          |  
|                                                         |  |         |            |          |  
|Other assets:                                            |  |         |            |          |  
|Investment in oil and gas properties, net                |  |         | 9,999      |          |  
|Investment in oil and gas partnerships                   |  |         | 66,620     |          |  
|Investment in unconsolidated corporation                 |  |         | 164,616    |          |  
|Property and equipment, net                              |  |         | 262,911    |          |  
|Loan fees, net                                           |  |         | 30,150     |          |  
|Notes receivablerelated parties                         |  |         | 12,125     |          |  
|                                                         |  |         |            |          |  
|Total other assets                                       |  |         | 546,421    |          |  
|                                                         |  |         |            |          |  
|                                                         |  | $       | 1,393,049  |          | $
|                                                         |  |         |            |          |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                    | 
|Current liabilities:                                     |  |         |            |          |  
|Line of credit                                           |  | $       | 0          |          | $
|Note payablerelated parties                             |  |         | 92,260     |          |  
|Current portion of long-term debt                        |  |         | 36,221     |          |  
|Current portion of obligations under capital leases      |  |         | 9,900      |          |  
|Accounts payable                                         |  |         | 272,583    |          |  
|Accrued expenses                                         |  |         | 228,783    |          |  
|                                                         |  |         |            |          |  
|Total current liabilities                                |  | $       | 639,747    |          | $
|Long-term debt, net of current portion                   |  |         | 799,739    |          |  
|Obligations under capital leases, net of current portion |  |         | 5,912      |          |  
|                                                         |  |         |            |          |  
|Total liabilities                                        |  |         | 1,445,398  |          |  
|STOCKHOLDERS' DEFICIT                                    |  |         |            |          |  
|Common stock                                             |  |         | 3,667,478  |          |  
|Additional paid-in capital                               |  |         | 0          |          |  
|Accumulated deficit                                      |  |         | (3,592,233 | )        |  
|Stock subscriptions receivable                           |  |         | (127,594   | )        |  
|                                                         |  |         |            |          |  
|Total stockholders' deficit                              |  |         | (52,349    | )        |  
|                                                         |  |         |            |          |  
|                                                         |  | $       | 1,393,049  |          | $
|                                                         |  |         |            |          |  

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND 1998

(UNAUDITED)

|                                                            |  | 1999 |           | 1998 |  
|----------------------------------------------------------- |  | ---- | --------- | ---- | -
|Revenues:                                                   |  |      |           |      |  
|Product sales                                               |  | $    | 819,884   |      | $
|Oil and gas sales                                           |  |      | 0         |      |  
|                                                            |  |      |           |      |  
|Total revenues                                              |  |      | 819,884   |      |  
|                                                            |  |      |           |      |  
|Cost of sales:                                              |  |      |           |      |  
|Cost of products sold                                       |  |      | 528,067   |      |  
|Oil and gas costs                                           |  |      | 0         |      |  
|                                                            |  |      |           |      |  
|Total cost of sales                                         |  |      | 528,067   |      |  
|                                                            |  |      |           |      |  
|Gross profit                                                |  |      | 291,817   |      |  
|                                                            |  |      |           |      |  
|Operating expenses                                          |  |      | 239,006   |      |  
|                                                            |  |      |           |      |  
|Income (loss) from operations                               |  |      | 52,811    |      |  
|                                                            |  |      |           |      |  
|Other income (expense):                                     |  |      |           |      |  
|Interest expense                                            |  |      | (32,211   | )    |  
|Minority interest in earnings of unconsolidated corporation |  |      | (10,996   | )    |  
|Interest income                                             |  |      | 20,118    |      |  
|                                                            |  |      |           |      |  
|Total other income (expense)                                |  |      | (23,089   | )    |  
|                                                            |  |      |           |      |  
|Income (loss) before income taxes and extraordinary item    |  |      | 29,672    |      |  
|Provision for income taxes (benefit)                        |  |      | 0         |      |  
|                                                            |  |      |           |      |  
|Net income (loss)                                           |  |      | 29,672    |      |  
|Earnings Per Share                                          |  | $    | 0.01      |      | $
|WEIGHTED NUMBER OF SHARES OUTSTANDING                       |  |      | 3,557,115 |      |  



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998

(UNAUDITED)

|                                                            |  | 1999 |           | 1998 |  
|----------------------------------------------------------- |  | ---- | --------- | ---- | -
|Revenues:                                                   |  |      |           |      |  
|Product sales                                               |  | $    | 2,834,900 |      | $
|Oil and gas sales                                           |  |      | 0         |      |  
|                                                            |  |      |           |      |  
|Total revenues                                              |  | $    | 2,834,900 |      | $
|                                                            |  |      |           |      |  
|Cost of sales:                                              |  |      |           |      |  
|Cost of products sold                                       |  |      | 1,895,245 |      |  
|Oil and gas costs                                           |  |      | 0         |      |  
|                                                            |  |      |           |      |  
|Total cost of sales                                         |  | $    | 1,895,245 |      | $
|                                                            |  |      |           |      |  
|Gross profit                                                |  | $    | 939,655   |      | $
|                                                            |  |      |           |      |  
|Operating expenses                                          |  | $    | 721,351   |      | $
|                                                            |  |      |           |      |  
|Income from operations                                      |  | $    | 218,304   |      | $
|                                                            |  |      |           |      |  
|Other income (expense):                                     |  |      |           |      |  
|Minority interest in earnings of unconsolidated corporation |  |      | (10,996   | )    |  
|Interest expense                                            |  |      | (109,388  | )    |  
|Interest income                                             |  |      | 21,032    |      |  
|                                                            |  |      |           |      |  
|Total other income (expense)                                |  | $    | (99,352   | )    | $
|                                                            |  |      |           |      |  
|Income before income taxes                                  |  | $    | 118,952   |      | $
|Provision for Income Taxes                                  |  |      | 0         |      |  
|                                                            |  |      |           |      |  
|Net income                                                  |  | $    | 118,952   |      | $
|                                                            |  |      |           |      |  
|NET INCOME PER SHARE                                        |  | $    | 0.03      |      | $
|WEIGHTED NUMBER OF SHARES OUTSTANDING                       |  |      | 3,557,115 |      |  

KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE QUARTER ENDED SEPTEMBER 30, 1999 AND 1998

(UNAUDITED)

|                                                                                    |  | 1999 |          | 1998 |  
|----------------------------------------------------------------------------------- |  | ---- | -------- | ---- | -
|Cash flows from operating activities:                                               |  |      |          |      |  
|Net income (loss)                                                                   |  | $    | 29,672   |      | $
|Adjustments to reconcile net income (loss) to cash flows from operating activities: |  |      |          |      |  
|Depreciation, depletion and amortization                                            |  |      | 30,049   |      |  
|Changes in operating assets and liabilities:                                        |  |      |          |      |  
|Accounts receivable                                                                 |  |      | (169,697 | )    |  
|Inventories                                                                         |  |      | (6,000   | )    |  
|Other current assets                                                                |  |      | 7,347    |      |  
|Other assets                                                                        |  |      | 0        |      |  
|Accounts payable                                                                    |  |      | (13,828  | )    |  
|Other current liabilities                                                           |  |      | (6,731   | )    |  
|                                                                                    |  |      |          |      |  
|Cash flows from operating activities                                                |  |      | (129,188 | )    |  
|                                                                                    |  |      |          |      |  
|Cash flows from investing activities:                                               |  |      |          |      |  
|Decrease in notes receivablerelated parties                                        |  |      | 1,500    |      |  
|Investment in Unconsolidated Subsidiary                                             |  |      | 164,616  |      |  
|Purchase of property and equipment                                                  |  |      | 1,000    |      |  
|Sale of Stock                                                                       |  |      | 8,991    |      |  
|Proceeds from Stock Subscriptions                                                   |  |      | 44,881   |      |  
|                                                                                    |  |      |          |      |  
|Cash flows from investing activities                                                |  |      | (110,244 | )    |  
|                                                                                    |  |      |          |      |  
|Cash flows from financing activities:                                               |  |      |          |      |  
|Increase (decrease) in Line of Credit                                               |  |      | 0        |      |  
|Increase (decrease) in notes payablerelated parties                                |  |      | (4,017   | )    |  
|Proceeds short, long-term debt                                                      |  |      | 80,000   |      |  
|Payments on long-term debt                                                          |  |      | (22,016  | )    |  
|Payments on obligations under capital leases                                        |  |      | (2,009   | )    |  
|                                                                                    |  |      |          |      |  
|Cash flows from financing activities                                                |  | $    | 51,958   |      | $
|                                                                                    |  |      |          |      |  
|Increase (decrease) in cash                                                         |  | $    | (187,474 | )    | $
|Cash, beginning                                                                     |  |      | 305,839  |      |  
|                                                                                    |  |      |          |      |  
|Cash, ending                                                                        |  | $    | 118,365  |      | $
|                                                                                    |  |      |          |      |  



KENSINGTON INTERNATIONAL HOLDING CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999, 1998

(UNAUDITED)

|                                                                                    |  | 1999 |         | 1998 |  
|----------------------------------------------------------------------------------- |  | ---- | ------- | ---- | -
|Cash flows from operating activities:                                               |  |      |         |      |  
|Net income (loss)                                                                   |  | $    | 118,952 |      | $
|Adjustments to reconcile net income (loss) to cash flows from operating activities: |  |      |         |      |  
|Depreciation, depletion and amortization                                            |  |      | 79,761  |      |  
|Changes in operating assets and liabilities:                                        |  |      |         |      |  
|Accounts receivable                                                                 |  |      | 56,374  |      |  
|Inventories                                                                         |  |      | 21,397  |      |  
|Other current assets                                                                |  |      | (24,160 | )    |  
|Other assets                                                                        |  |      | 0       |      |  
|Accounts payable                                                                    |  |      | (10,782 | )    |  
|Other current liabilities                                                           |  |      | (45,106 | )    |  
|                                                                                    |  |      |         |      |  
|Cash flows from operating activities                                                |  | $    | 196,436 |      | $
|                                                                                    |  |      |         |      |  
|Cash flows from investing activities:                                               |  |      |         |      |  
|Decrease in notes receivablerelated parties                                        |  |      | 4,500   |      |  
|Investment in Unconsolidated Subsidiary                                             |  |      | 164,616 |      |  
|Purchase of property and equipment                                                  |  |      | 3,101   |      |  
|Sale of Stock                                                                       |  |      | 33,695  |      |  
|Proceeds from Stock Subscriptions                                                   |  |      | 44,881  |      |  
|                                                                                    |  |      |         |      |  
|Cash flows from investing activities                                                |  |      | (84,641 | )    |  
|                                                                                    |  |      |         |      |  
|Cash flows from financing activities:                                               |  |      |         |      |  
|Increase (decrease) line of credit                                                  |  |      | (35,000 | )    |  
|Increase (decrease) in notes payablerelated parties                                |  |      | (38,304 | )    |  
|Proceeds from long-term debt                                                        |  |      | 80,000  |      |  
|Payments on term debt                                                               |  |      | 66,816  |      |  
|Payments on Obligations under Capital Leases                                        |  |      | 5,530   |      |  
|Payments received on stock subscriptions                                            |  |      | 0       |      |  
|Increase (decrease) in intercompany accounts                                        |  |      | 0       |      |  
|                                                                                    |  |      |         |      |  
|Cash flows from financing activities                                                |  | $    | (65,650 | )    | $
|                                                                                    |  |      |         |      |  
|Increase (decrease) in cash                                                         |  | $    | 46,145  |      | $
|Cash, beginning                                                                     |  |      | 72,220  |      |  
|                                                                                    |  |      |         |      |  
|Cash, ending                                                                        |  | $    | 118,365 |      | $
|                                                                                    |  |      |         |      |  



## QuickLinks

Quarterly Report Under Section 13 or 15(d) of the Securities exchange Act of 1934

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995GENERALSIGNATURES