ý
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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For
the fiscal year ended December 31, 2007
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or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________ |
New
York
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11-2037182
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(State
or other jurisdiction of
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(I.R.S.
Employer
|
|
incorporation
or organization)
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Identification
No.)
|
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275
Wagaraw Road, Hawthorne, New Jersey
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07506
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|
(Address
of principal executive offices)
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(Zip
Code)
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Title
of each class
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Name
of each exchange on which registered
|
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None
|
OTC
Bulletin Board
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Large
accelerated filer o
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Accelerated
filer o
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Non-accelerated filer o
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Smaller
reporting company x
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Class
|
Outstanding
at March 1, 2008
|
|
Common
Stock, $.05 par value per share
|
4,645,680
shares
|
|
Convertible
Preferred Stock, $.05 par value per share
|
467,500
shares
|
PART
I
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Page
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Item
1.
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2
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Item
1A.
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4
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Item
1B.
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7
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Item
2.
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7
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Item
3.
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7
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Item
4.
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10
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PART
II
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||
Item
5.
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10
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Item
6.
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13
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Item
7.
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14
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Item
7A.
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20
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Item
8.
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21
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Item
9.
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21
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Item
9A.
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21
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Item
9B.
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22
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PART
III
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||
Item
10.
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23
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Item
11.
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25
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||
Item
12.
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35
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Item
13.
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37
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Item
14.
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41
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PART
IV
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||
Item
15.
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42
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a.
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employment
levels and job growth;
|
|
b.
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population
growth;
|
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c.
|
housing
demand or modernization of existing
homes;
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d.
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consumer
confidence (which can be substantially affected by external conditions,
including international hostilities involving the United States);
and
|
|
e.
|
the
availability of financing for homeowners and
homebuyers.
|
Common Stock
|
Convertible Preferred Stock
|
|||||||||||||||
2007
|
High
|
Low
|
High
|
Low
|
||||||||||||
First
Quarter
|
$ | 1.95 | $ | 1.70 | $ | 1.95 | $ | 1.75 | ||||||||
Second
Quarter
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1.78 | 1.50 | 1.85 | 1.51 | ||||||||||||
Third
Quarter
|
1.68 | 1.25 | 1.65 | 1.35 | ||||||||||||
Fourth
Quarter
|
1.45 | 0.95 | 1.36 | 1.16 |
Common Stock
|
Convertible Preferred Stock
|
|||||||||||||||
2006
|
High
|
Low
|
High
|
Low
|
||||||||||||
First
Quarter
|
$ | 2.38 | $ | 1.95 | $ | 2.40 | $ | 1.79 | ||||||||
Second
Quarter
|
3.00 | 2.10 | 2.85 | 2.10 | ||||||||||||
Third
Quarter
|
2.50 | 1.85 | 2.30 | 2.00 | ||||||||||||
Fourth
Quarter
|
2.35 | 1.70 | 2.40 | 1.80 |
Approximate
Number of Record Holders
|
||
Title
of Class
|
(As
of March 1, 2008)
|
|
Common
stock par value $.05 per share
|
290
|
|
Convertible
preferred stock par value $.05 per share
|
838
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Equity Compensation
Plan Information
|
||||||||||||
Number
of securities to be issued upon exercise of outstanding options, warrants
and rights
|
Weighted-average
exercise price of outstanding options, warrants and rights
|
Number
of securities remaining available for future issuance under equity
compensation plans
|
||||||||||
1996 Stock Incentive
Plan:
|
||||||||||||
Equity
compensation plans approved by security holders
|
22,000 | $ | 0.25 | 0 | ||||||||
Equity
compensation plans not approved by security holders
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0 | $ | 0.00 | 0 | ||||||||
Colonial Commercial
Corp. 2006 Stock Plan:
|
||||||||||||
Equity
compensation plans approved by security holders
|
75,000 | $ | 1.85 | 925,000 | ||||||||
Equity
compensation plans not approved by security holders
|
0 | $ | 0.00 | 0 | ||||||||
Total
|
97,000 | $ | 1.49 | 925,000 |
Total
Number of Shares (or Units) Purchased
|
Average
Price Paid per Share (or Unit)
|
Total
Number of Shares (or Units) Purchased as Part of Publicly Announced Plans
or Programs
|
Maximum
Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be
Purchased Under the Plans or Programs
|
|||||||||||||
October
1, 2007-October 31, 2007
|
0 | $ | 0 | 0 | $ | 250,000 | ||||||||||
November
1, 2007-November 30, 2007
|
0 | 0 | 0 | 250,000 | ||||||||||||
December
1, 2007-December 31, 2007
|
8,150 | 1.21 | 8,150 | 240,168 | ||||||||||||
Total
|
8,150 | $ | 1.21 | 8,150 | $ | 240,168 |
Years
Ended December 31,
|
||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
Sales
|
$ | 82,425,865 | $ | 71,494,652 | $ | 66,690,945 | $ | 61,454,128 | $ | 44,671,136 | ||||||||||
Operating
income
|
1,258,951 | 2,017,082 | 2,347,645 | 1,580,076 | 1,167,591 | |||||||||||||||
Net
(loss) income
|
$ | (51,637 | ) | $ | 815,772 | $ | 2,062,852 | $ | 1,523,420 | $ | 1,191,257 | |||||||||
Income
per common share:
|
||||||||||||||||||||
Basic:
|
||||||||||||||||||||
Net
(loss) income per common share
|
$ | (0.01 | ) | $ | 0.18 | $ | 0.48 | $ | 0.45 | $ | 0.60 | |||||||||
Diluted:
|
||||||||||||||||||||
Net (loss) income per common share
|
$ | (0.01 | ) | $ | 0.16 | $ | 0.40 | $ | 0.34 | $ | 0.34 |
December
31,
|
||||||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||||||
Total
assets
|
$ | 36,107,221 | $ | 28,517,944 | $ | 27,217,854 | $ | 24,248,516 | $ | 20,489,981 | ||||||||||
Current
liabilities
|
||||||||||||||||||||
Borrowings under credit facility
|
18,027,055 | 13,615,696 | 11,745,985 | 12,325,209 | 12,232,030 | (1) | ||||||||||||||
Other
|
10,044,287 | 6,832,504 | 8,216,989 | 6,617,377 | 7,089,276 | (2) | ||||||||||||||
Long-term
liabilities, less current obligations
|
1,267,314 | 1,317,394 | 1,400,834 | 1,398,774 | 326,700 |
(1)
|
The
amounts shown in the table as “Borrowings under Credit Facility,” as of
December 31, 2003, include $2,500,000 which Colonial Commercial Corp. and
Universal agreed to pay to their lending bank in consideration of the bank
releasing Colonial Commercial Corp. and Universal from their guarantees to
the bank of an additional $3,300,695 of Atlantic Hardware & Supply
Corporation’s (“Atlantic”) line of credit. Atlantic is an
inactive wholly owned subsidiary of the Company with no
assets.
|
(2)
|
Amount
includes $219,007 of contingent liabilities of Atlantic. This
liability was settled in June 2004.
|
Payment
Due by Period (in thousands)
|
||||||||||||||||||||
Less
than
|
Over
|
|||||||||||||||||||
Total
|
1
Year
|
2-3
Years
|
4-5
Years
|
5
Years
|
||||||||||||||||
Operating
leases
|
$ | 20,221 | $ | 3,840 | $ | 6,686 | $ | 5,025 | $ | 4,670 | ||||||||||
Compensation
agreements
|
1,340 | 495 | 845 | - | - | |||||||||||||||
Notes
payable
|
1,564 | 296 | 1,238 | 30 | - | |||||||||||||||
Notes
payable interest
|
106 | 36 | 70 | - | - | |||||||||||||||
Line
of credit
|
18,027 | 18,027 | - | - | - | |||||||||||||||
Line
of credit interest
|
1,262 | 1,262 | - | - | - | |||||||||||||||
Totals
|
$ | 42,520 | $ | 23,956 | $ | 8,839 | $ | 5,055 | $ | 4,670 |
Name
|
Age
|
Position with the
Company
|
Directors and
Executive Officers:
|
||
Dr.
E. Bruce Fredrikson
|
69
|
Director,
Chairman of Audit Committee
|
Melissa
Goldman-Williams
|
40
|
Director
|
Michael
Goldman
|
69
|
Director,
Chairman of the Board
|
Stuart
H. Lubow
|
50
|
Director,
Chairman of Nominating Committee
|
Ronald
H. Miller
|
64
|
Director
|
William
Pagano
|
68
|
Director
and Chief Executive Officer of the Company and President of
Universal
|
William
Salek
|
46
|
Chief
Financial Officer and Secretary of the Company and Vice President of
Universal
|
|
a.
|
Attract,
motivate and retain qualified and dedicated executive
officers.
|
|
b.
|
Retain
talented executives and motivate them to achieve business objectives that
will enhance stockholder value.
|
|
c.
|
Provide
our executive officers with cash incentives to further the interests of
the Company and our stockholders.
|
|
a.
|
Company
performance, both separately and in relation to similar
companies;
|
|
b.
|
The
individual performance, experience and scope of responsibilities of each
executive officer;
|
|
c.
|
Compensation
and stock award information disclosed in the proxy statements of other
companies;
|
|
d.
|
Historical
compensation levels and stock awards at the
Company;
|
|
e.
|
The
overall competitive environment for executives and the level of
compensation necessary to attract and retain executive talent;
and
|
|
f.
|
The
recommendations of management.
|
|
i.
|
base
salaries
|
ii.
|
performance-based
annual incentive compensation
awards
|
iii.
|
periodic
grants of stock options
|
Non-Equity
|
All
|
||||||||||||||||
Incentive
Plan
|
Other
|
||||||||||||||||
Name and Principal Position
|
Year
|
Salary
|
Compensation
|
Compensation
|
Total
|
||||||||||||
Bernard
Korn*
|
2007
|
$ | 200,000 | - | $ | 37,888 | $ | 237,888 | |||||||||
|
2006
|
$ | 200,000 | - | $ | 30,699 | $ | 230,699 | |||||||||
|
|||||||||||||||||
William
Pagano—Director and Chief
|
2007
|
$ | 200,000 | - | - | $ | 200,000 | ||||||||||
Executive
Officer of the Company and,
|
2006
|
$ | 200,000 | $ | 260,109 | - | $ | 460,109 | |||||||||
President
of Universal
|
|||||||||||||||||
William
Salek—Chief Financial Officer
|
2007
|
$ | 120,000 | $ | 14,235 | - | $ | 134,235 | |||||||||
and
Secretary of the Company and Vice
|
2006
|
$ | 120,000 | $ | 30,958 | - | $ | 150,958 | |||||||||
President
and Secretary of Universal
|
Portion
of Incentive
|
Additional
Compensation
|
|||
Compensation
Base
|
Percentages
|
|||
Up
to
|
$ 250,000
|
8%
|
||
$ 251,000
|
to
|
$ 500,000
|
9%
|
|
$ 501,000
|
to
|
$ 750,000
|
10%
|
|
$ 751,000
|
to
|
$
1,000,000
|
11%
|
|
$
1,001,000
|
And
over
|
12%
|
2007
|
|||||||
Incentive
|
Additional
|
||||||
Compensation
|
Compensation
|
Incentive
|
|||||
Base
|
Percentages
|
Compensation
|
|||||
$ | 250,000 |
at
8%
|
$ | 20,000 | |||
$ | 250,000 |
at
9%
|
$ | 22,500 | |||
$ | 250,000 |
at
10%
|
$ | 25,000 | |||
$ | 250,000 |
at
11%
|
$ | 27,500 | |||
$ | 473,150 |
at
12%
|
$ | 56,778 | |||
$ | 1,473,150 | $ | 151,778 | ||||
2006
|
|||||||
Incentive
|
Additional
|
||||||
Compensation
|
Compensation
|
Incentive
|
|||||
Base
|
Percentages
|
Compensation
|
|||||
$ | 250,000 |
at
8%
|
$ | 20,000 | |||
$ | 250,000 |
at
9%
|
$ | 22,500 | |||
$ | 250,000 |
at
10%
|
$ | 25,000 | |||
$ | 250,000 |
at
11%
|
$ | 27,500 | |||
$ | 1,375,908 |
at
12%
|
$ | 165,109 | |||
$ | 2,375,908 | $ | 260,109 |
Portion
of Incentive
|
Additional
Compensation
|
|||
Compensation
Base
|
Percentages
|
|||
Up
to
|
$ 250,000
|
.25%
|
||
$ 251,000
|
to
|
$ 500,000
|
.50%
|
|
$ 501,000
|
to
|
$ 750,000
|
.75%
|
|
$ 751,000
|
to
|
$
1,000,000
|
1.00%
|
|
$
1,001,000
|
to
|
$
1,250,000
|
1.25%
|
|
$
1,251,000
|
to
|
$
1,500,000
|
1.50%
|
|
$
1,501,000
|
to
|
$
1,750,000
|
1.75%
|
|
$
1,751,000
|
to
|
$
2,000,000
|
2.00%
|
|
$
2,001,000
|
And
over
|
2.25%
|
2007
|
||||
Incentive
|
Additional
|
|||
Compensation
|
Compensation
|
Incentive
|
||
Base
|
Percentages
|
Compensation
|
||
$ 250,000
|
.25%
|
$ 625
|
||
$ 250,000
|
.50%
|
$ 1,250
|
||
$ 250,000
|
.75%
|
$ 1,875
|
||
$ 250,000
|
1.00%
|
$ 2,500
|
||
$ 250,000
|
1.25%
|
$ 3,125
|
||
$ 250,000
|
1.50%
|
$ 3,750
|
||
$ 63,429
|
1.75%
|
$ 1,110
|
||
$
1,563,429
|
$14,235
|
|||
2006
|
||||
Incentive
|
Additional
|
|||
Compensation
|
Compensation
|
Incentive
|
||
Base
|
Percentages
|
Compensation
|
||
$ 250,000
|
.25%
|
$ 625
|
||
$ 250,000
|
.50%
|
$ 1,250
|
||
$ 250,000
|
.75%
|
$ 1,875
|
||
$ 250,000
|
1.00%
|
$ 2,500
|
||
$ 250,000
|
1.25%
|
$ 3,125
|
||
$ 250,000
|
1.50%
|
$ 3,750
|
||
$ 250,000
|
1.75%
|
$ 4,375
|
||
$ 250,000
|
2.00%
|
$ 5,000
|
||
$ 375,908
|
2.25%
|
$ 8,458
|
||
$
2,375,908
|
$30,958
|
Pre-Tax
Profit
|
Incentive
Award
|
|
$ 800,000
|
5% of
Salary or $ 6,500
|
|
$ 900,000
|
10%
of Salary or $13,000
|
|
$1,000,000
|
15%
of Salary or $19,500
|
|
$1,100,000
|
20%
of Salary or $26,000
|
|
$1,200,000
|
25%
of Salary or $32,500
|
|
$1,300,000
|
30%
of Salary or $39,000
|
|
$1,350,000
|
35%
of Salary or $45,500
|
|
Severance
pay for termination without cause
|
Termination
by death
|
Change
of control
|
|||
William
Pagano
|
None.
|
None.
|
None.
|
|||
William
Salek
|
None.
|
None.
|
None.
|
Name
|
Fees
Earned or Paid in
Cash
|
Option Awards*
|
All
Other Compensation
|
Total
|
||||||||||||
E.
Bruce Fredrikson
|
$ | 22,000 | $ | 10,122 | - | $ | 32,122 | |||||||||
Melissa
Goldman-Williams
|
$ | 12,000 | - | - | $ | 12,000 | ||||||||||
Michael
Goldman
|
$ | 12,000 | - | - | $ | 12,000 | ||||||||||
Stuart
H. Lubow
|
$ | 12,000 | $ | 10,121 | - | $ | 22,121 | |||||||||
Ronald
H. Miller
|
$ | 12,000 | $ | 10,121 | - | $ | 22,121 | |||||||||
Phillip
Siegel
|
$ | 3,000 | - | - | $ | 3,000 |
Common Stock
|
Preferred Stock
|
|||||||||||||||
Amount
and
|
Amount
and
|
|||||||||||||||
Nature
of
|
Nature
of
|
|||||||||||||||
Beneficial
|
Percent
of
|
Beneficial
|
Percent
of
|
|||||||||||||
Name
of Beneficial Owner
|
Ownership*
|
Class
|
Ownership*
|
Class
|
||||||||||||
Officers and
Directors***:
|
||||||||||||||||
E.
Bruce Fredrikson
|
25,600 | (1) | ** | 500 | (1) | ** | ||||||||||
Melissa
Goldman-Williams
|
5,400 | ** | 0 | ** | ||||||||||||
Michael
Goldman
|
1,312,255 | (2) | 27.41 | % | 0 | ** | ||||||||||
Stuart
H. Lubow
|
15,000 | (3) | ** | 0 | ** | |||||||||||
Ronald
H. Miller
|
16,054 | (4) | ** | 0 | ** | |||||||||||
William
Pagano
|
767,973 | (5) | 16.44 | % | 0 | ** | ||||||||||
William
Salek
|
61,667 | (6) | 1.32 | % | 0 | ** | ||||||||||
All Officers and
Directors as a Group:
|
2,203,949 | 45.15 | % | 500 | ** | |||||||||||
Holders of over 5% of
a class of stock who are not Officers or Directors:
|
||||||||||||||||
Rita
C. Folger
|
578,719 | (7) | 12.39 | % | 0 | ** | ||||||||||
Goldman
Associates of New York, Inc.
|
1,129,255 | (8) | 23.59 | % | 0 | ** |
|
1.
|
Employment
of executive officers. Any employment by the Company of an
executive officer of the Company
if:
|
|
a.
|
the
related compensation is required to be reported in the Company’s proxy
statement under Item 402 of the Securities and Exchange Commission’s
(“SEC’s”) compensation disclosure requirements (generally applicable to
“named executive officers”); or
|
|
b.
|
the
executive officer is not an immediate family member of another executive
officer or Director of the Company, the related compensation would be
reported in the Company’s proxy statement under Item 402 of the SEC’s
compensation disclosure requirements if the executive officer was a “named
executive officer”, and the Company’s Compensation Committee approved (or
recommended that the Board approve) such
compensation.
|
|
2.
|
Director
compensation. Any compensation paid to a Director if the
compensation is required to be reported in the Company’s proxy statement
under Item 402 of the SEC’s compensation disclosure
requirements;
|
|
3.
|
Certain
transactions with other companies. Any transaction with another
company at which a Related Person’s only relationship is as an employee
(other than an executive officer), Director or beneficial owner of less
than 10% of that company’s shares;
|
|
4.
|
Transactions
where all shareholders receive proportional benefits. Any
transaction where the Related Person’s interest arises solely from the
ownership of the Company’s common stock and all holders of the Company’s
common stock received the same benefit on a pro rata basis (e.g.
dividends);
|
|
5.
|
Transactions
involving competitive bids. Any transaction involving a Related
Party where the rates or charges involved are determined by competitive
bids.
|
(a)
|
A
subsidiary of the Company leases a warehouse and store in Wharton, New
Jersey comprising of 27,000 square feet from a company owned by Mr. Paul
Hildebrandt under a lease that expires in June 2010. The
Company paid Mr. Hildebrandt’s company $234,866, $224,885 and $215,674
during the years ended December 31, 2007, 2006 and 2005,
respectively. The Company owes Mr. Hildebrandt $80,000 pursuant
to two notes: (a) a subordinated note in the amount of $150,000, paid
$30,000 annually commencing December 31, 2004 and (b) a $50,000
convertible note due 50% on June 1, 2008 and 50% on June 1,
2009. William Salek, the Company’s Chief Financial Officer, is
the son-in-law of Mr. Hildebrandt. Mr. Hildebrandt served as a
Director of the Company from July 2004 to January
2005.
|
(b)
|
Goldman
Associates of New York, Inc. (“Goldman Associates”) has agreed that it and
its affiliates will not until May 31, 2008 without the prior written
consent of the Board of Directors of the Company (i) acquire, agree to
acquire or make any proposal to acquire any voting securities or assets of
the Company or any of its affiliates, (ii) propose to enter into any
merger, consolidation, recapitalization, business combination, or other
similar transaction involving the Company or any of its affiliates, (iii)
make, or in any way participate in any “solicitation” of “proxies” (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) to vote or seek to advise or influence any person with respect
to the voting of any voting securities of the Company or any of its
affiliates or (iv) form, join or in any way participate in a “group” as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, in connection with any of the foregoing or (v) advise, assist or
encourage any other persons in connection with the
foregoing. Michael Goldman is the beneficial owner of the
shares held by Goldman Associates.
|
(c)
|
Oscar
and Jeffrey Folger acted as legal counsel for the Company through April
20, 2005. Oscar and Jeffrey Folger acted as legal consultants
for the Company from April 21, 2005 through December 31, 2005 and each
became an employee of the Company as Vice President-Chief Legal Counsel
and Assistant Vice President-Legal, respectively, on January 1, 2006 until
March 31, 2007. As of April 1, 2007, Oscar and Jeffrey Folger
ceased to act as employees of the Company, but Oscar Folger’s law firm
remains as counsel to the Company. Mrs. Folger is the wife of
Oscar Folger and the mother of Jeffrey Folger. Professional
fees paid to Oscar Folger’s law firm for the years ended 2007, 2006 and
2005 were $115,412, $89,826 and $79,973, respectively. Jeffrey
Folger is an associate of Oscar Folger’s law
firm. Additionally, in 2006, $12,000 was paid to each Oscar and
Jeffrey Folger as part time employees of the
Company.
|
(d)
|
William
Pagano is employed pursuant to an employment agreement that provides for a
salary of $200,000 per year, reduced by any amounts payable to Mr. Pagano
for loss of earnings or the like under any insurance plan or policy, the
premiums for which are paid for in their entirety by the Company; (ii)
fringe benefits commensurate with Mr. Pagano’s position as President, in
such group life, health, accident, disability or hospitalization insurance
plans, subject to underwriting requirements as Universal, or its parent,
may make available to its other executive employees and (iii) additional
incentive compensation based on a percentage of earnings, as defined
below, of the subsidiaries, limited to two times his base compensation.
The amended employment agreement contains confidentiality and non-compete
provisions and expires on December 31, 2010. William Pagano’s total
incentive compensation for the fiscal years ended December 31, 2007, 2006
and 2005 was $151,778, $260,109 and $317,924, respectively. On
March 3, 2008, Mr. Pagano waived his right to receive this incentive
compensation for 2007.
|
(e)
|
Pioneer
Realty Holdings, LLC, a New York limited liability company (“Pioneer”), is
the owner of the premises located at 836 Route 9, Fishkill, New York,
formerly known as 2213 Route 9, Fishkill, New York that is leased to a
subsidiary of the Company under a lease that was set to expire in
September 2008, subject to renewal options, and provided for a current
aggregate annual rent of $133,500. Pioneer is the landlord
under the Lease pursuant to an assignment and assumption agreement dated
April 12, 2005.
|
(f)
|
Each
of Messrs. Goldman, Korn, Pagano, Rozzi, and Mrs. Folger had agreed that
until May 31, 2008 he or she will not purchase any stock of the Company
without written consent from the Company and that he or she will not sell
any stock to any person if the sale would create a new 5% shareholder
within the meaning of Internal Revenue Code Section 382 unless the buyer
first enters into a similar standstill agreement. On November
2, 2007, the Company terminated said Standstill Agreements dated June 21,
2004 between the Company and Messrs. Goldman, Korn, Pagano, Rozzi, and
Mrs. Folger.
|
(g)
|
Mr.
Pagano, Mr. Salek, Mrs. Folger and the wife of Michael Goldman are holders
of convertible unsecured notes in the amounts of $100,000, $50,000,
$100,000 and $25,000, respectively, issued pursuant to the terms of a
private placement made on July 29,
2004.
|
(h)
|
On
September 5, 2006, the Company was appointed a non-exclusive distributor
of Speed Queen home laundry equipment in the New York metropolitan area,
and in portions of Connecticut, Delaware and Eastern
Pennsylvania. The Company succeeded Goldman Associates of New
York, Inc. in this distributorship and, on August 31, 2006, purchased
Goldman Associates’ Speed Queen accounts receivable, inventory and related
assets at fair value for $149,625. Goldman Associates is a
private Company controlled by Michael Goldman who is the Chairman of
Colonial. The Company also established a “Goldman Universal”
division to distribute the Speed Queen home laundry system line and other
appliances.
|
(a)
|
Exhibits
and Financial Statements
|
|
(1)
|
Financial Statements. See Item 8., Financial Statements
and Supplementary Data
|
|
(2)
|
Financial Statement Schedules. See F-1 through F-33,
attached
|
|
(3)
|
Exhibits
|
Incorporated
By
|
|||||||||||
Filed
|
Date
Filed
|
Reference
|
|||||||||
Exhibit
|
Exhibit Name
|
Herewith
|
Form
|
With SEC
|
From Exhibit
|
||||||
|
|||||||||||
3.01
|
Restated
Certificate of Incorporation of Registrant dated January 6,
1983
|
10-K
|
03-30-06
|
3.01
|
|||||||
(a)
|
Certificate
of Amendment of the Certificate of Incorporation dated October 31,
1986
|
10-K
|
03-30-06
|
3.01(a)
|
|||||||
(b)
|
Certificate
of Amendment of the Certificate of Incorporation dated June 24,
1988
|
10-K
|
03-30-06
|
3.01(b)
|
|||||||
(c)
|
Certificate
of Amendment of the Certificate of Incorporation dated January 13,
1998
|
10-K
|
03-30-06
|
3.01(c)
|
|||||||
(d)
|
Certificate
of Amendment of the Certificate of Incorporation dated January 13,
1998
|
10-K
|
03-30-06
|
3.01(d)
|
|||||||
(e)
|
Certificate
of Amendment of the Certificate of Incorporation dated September 29,
2006
|
10-Q
|
11-13-06
|
3.01
|
|||||||
3.02
|
By-Laws
of Registrant
|
10-K
|
03-30-06
|
3.02
|
|||||||
(a)
|
Amended
and Restated By-Laws of Registrant, ratified and adopted June 13,
2006
|
8-K
|
06-19-06
|
3.01
|
|||||||
4.01
|
Specimen
of Common Stock Certificate
|
10-K
|
03-30-06
|
4.01
|
|||||||
4.02
|
Specimen
of Convertible Preferred Stock Certificate
|
10-K
|
03-30-06
|
4.02
|
|||||||
10.01
|
Employment
Agreement dated as of January 1, 1998 between Registrant and Bernard
Korn
|
10-KSB
|
03-31-98
|
10(a)
|
|||||||
(a)
|
Amendment
Number 1 dated April 1, 1999 to Employment Agreement dated as of January
1, 1998 between Registrant and Bernard Korn
|
10-K
|
04-11-01
|
10(a)(i)
|
|||||||
(b)
|
Amendment
Number 2 dated April 1, 2000 to Employment Agreement dated as of January
1, 1998 between Registrant and Bernard Korn
|
10-K
|
04-11-01
|
10(a)(ii)
|
|||||||
(c)
|
Amendment
Number 3 dated October 29, 2002 to Employment Agreement dated as of
January 1, 1998 between Registrant and Bernard Korn
|
10-K
|
11-18-03
|
10(a)(iii)
|
(d)
|
Amendment
Number 4 dated October 29, 2002 to Employment Agreement dated as of
January 1, 1998 between Registrant and Bernard Korn
|
10-K
|
11-18-03
|
10(a)(iv)
|
|||||||
(e)
|
Amendment
Number 5 dated May 17, 2004 to Employment Agreement dated as of January 1,
1998 between Registrant and Bernard Korn
|
10-K
|
03-30-06
|
10.01(e)
|
|||||||
(f)
|
Employment
Agreement dated April 17, 2006 between Registrant and Bernard
Korn
|
8-K
|
04-21-06
|
10.01
|
|||||||
10.02
|
Employment
Agreement dated as of June 25, 1999 between Universal Supply Group, Inc.
and William Pagano
|
8-K
|
07-09-99
|
10(a)(iii)
|
|||||||
(a)
|
Amendment
Number 1 dated October 29, 2002 to Employment Agreement dated as of June
25, 1999 between Universal Supply Group, Inc. and William
Pagano
|
8-K
|
11-02-05
|
10.02
|
|||||||
(b)
|
Amendment
Number 2 dated as of June 15, 2005 to Employment Agreement dated as of
June 25, 1999 between Universal Supply Group, Inc. and William
Pagano
|
8-K
|
06-20-05
|
99.1
|
|||||||
(c)
|
Amendment
Number 3 dated as of March 12, 2007 to Employment Agreement dated as of
June 25, 1999 between Universal Supply Group, Inc. and William
Pagano
|
8-K
|
03-12-07
|
10.04
|
|||||||
10.03
|
Employment
Agreement dated June 25, 1999 between Universal Supply Group, Inc. and
William Salek
|
10-K
|
03-30-06
|
10.03
|
|||||||
(a)
|
Amended
and Restated Employment Agreement dated as of January 20, 2005 to
Employment Agreement dated as of June 25, 1999 between Universal Supply
Group, Inc. and William Salek
|
8-K
|
01-20-05
|
10.01
|
|||||||
10.04
|
1996
Stock Option Plan
|
S-8
|
10-02-97
|
28B
|
|||||||
10.05
|
2006
Stock Plan
|
10-Q
|
11-13-06
|
10.01
|
|||||||
(a)
|
Form
of stock option grant letter
|
8-K
|
12-06-06
|
10.01
|
|||||||
10.06
|
Purchase
Agreement dated March 25, 1999 for business and assets subject to certain
liabilities of Universal Supply Group, Inc.
|
10-KSB
|
03-30-99
|
10(g)
|
|||||||
(a)
|
Amendment
Number 1 dated June 25, 1999 to Purchase Agreement dated March 25,
1999
|
8-K
|
07-09-99
|
10(a)(ii)
|
|||||||
(b)
|
Loan
and Security Agreement dated June 24, 1999 between LaSalle Bank National
Association and Universal Supply Group, Inc.
|
8-K
|
07-09-99
|
10(a)(iv)
|
|||||||
(c)
|
Demand
Note dated June 24, 1999 between LaSalle Bank National Association and
Colonial Commercial Sub Corp.
|
8-K
|
07-09-99
|
10(a)(v)
|
(d)
|
Guaranty
of All Liabilities and Security Agreement of Colonial Commercial Sub Corp.
by Colonial Commercial Corp. to LaSalle Bank National Association dated
June 24, 1999
|
8-K
|
07-09-99
|
10(a)(vi)
|
|||||||
(e)
|
Waiver
and Tenth Amendment dated November 21, 2002 to the Loan and Security
Agreement dated June 24, 1999 between LaSalle Bank National Association
and Universal Supply Group, Inc.
|
10-K
|
11-18-03
|
10(e)(vi)
|
|||||||
(f)
|
Securities
Pledge Agreement dated November 21, 2002 made by the Registrant in favor
of LaSalle Bank National Association, re: Universal Supply Group,
Inc.
|
10-K
|
11-18-03
|
(10)(e)(vii)
|
|||||||
10.07
|
Certain
documents related to refinance with Wells Fargo Business Credit, Inc. of
asset based loan and term loan dated July 28, 2004, previously with
LaSalle Bank National Association:
|
||||||||||
(a)
|
Credit
Security Agreement dated July 28, 2004 between American/Universal Supply,
Inc., The RAL Supply Group, Inc. and Universal Supply Group, Inc. to Wells
Fargo Business Credit, Inc.
|
10-Q
|
08-16-04
|
10.1
|
|||||||
(b)
|
First
Amendment to the Credit Security Agreement dated May 11,
2006
|
8-K
|
06-27-06
|
10.02
|
|||||||
(c)
|
Second
Amendment to the Credit Security Agreement dated September 10,
2007
|
8-K
|
09-14-07
|
10.08
|
|||||||
10.08
|
Certain
documents related to Well-Bilt Steel Products, Inc.:
|
||||||||||
(a)
|
Reaffirmation
Agreement, General Release Consent and Acknowledgement of Commercial
Reasonableness of Private Sale dated February 1, 2001between Atlantic
Hardware & Supply Corporation, Universal Supply Group, Inc., Colonial
Commercial Corp., and the Secured Lender
|
8-K
|
02-16-01
|
10(a)(i)
|
|||||||
(b)
|
Reaffirmation
Agreement, General Release Consent and Acknowledgement of Commercial
Reasonableness of Private Sale dated February 1, 2001between Well-Bilt
Steel Products, Inc. and the Secured Lender
|
8-K
|
02-16-01
|
10(a)(ii)
|
|||||||
(c)
|
Foreclosure
Agreement dated February 1, 2001 between Independent Steel Products, LLC,
the Secured Lender, Atlantic Hardware & Supply Corporation, Universal
Supply group, Inc. and Well-Bilt Steel Products, Inc.
|
8-K
|
02-16-01
|
10(a)(iii)
|
|||||||
(d)
|
Bill
of Sale and Assignment dated February 1, 2001 made by the Secured Lender
in favor of Independent Steel Products, LLC
|
8-K
|
02-16-01
|
10(a)(iv)
|
10.09
|
Inventory
Control Agreement re: Universal Supply Group, Inc. taking in inventory on
a consignment basis dated August 9, 2001 between Douglas-Guardian Services
Corporation, Universal Supply Group, Inc. and GMC Sales
corp.
|
10-K
|
11-18-03
|
10(g)
|
|||||||
10.10
|
Agreement
of Purchase of Sale of Assets dated July 1, 2002 between Goldman
Associates of New York, Inc. and Universal Supply Group,
Inc.
|
10-K
|
11-18-03
|
10(h)
|
|||||||
10.11
|
Private
Placement Purchase Agreement dated June 30, 2003 by and among Colonial
Commercial Corp. and the persons who are counterparts to the Agreement as
“Investors”
|
10-K
|
03-30-06
|
10.10
|
|||||||
10.12
|
Private
Placement Purchase Agreement dated February 12, 2004 by and among Colonial
Commercial Corp. and the persons who are counterparts to the Agreement as
“Investors”
|
10-K
|
03-30-06
|
10.11
|
|||||||
10.13
|
Private
Placement Purchase Agreement dated July 29, 2004 by and among Colonial
Commercial Corp, and the persons who are counterparts to the Agreement as
“Investors” including:
|
||||||||||
(a)
|
Private
Placement Purchase Agreement
|
10-Q
|
08-16-04
|
4.1
|
|||||||
(b)
|
Convertible
Note Payable
|
10-Q
|
08-16-04
|
4.2
|
|||||||
Amendment
No. 1 dated March 27, 2008 to the Convertible Note Payable dated as of
July 29, 2004 by and among Colonial Commercial Corp. and Rita
Folger
|
Yes
|
||||||||||
Amendment
No. 1 dated March 27, 2008 to the Convertible Note Payable dated as of
July 29, 2004 by and among Colonial Commercial Corp. and William
Pagano
|
Yes
|
||||||||||
10.14
|
Private
Placement Purchase Agreement dated July 29, 2004 by and among Michael
Goldman and Goldman Associates of New York, Inc.
including:
|
10-Q
|
08-16-04
|
4.3
|
|||||||
(a)
|
Private
Placement Agreement
|
10-Q
|
08-16-04
|
4.4
|
|||||||
(b)
|
Secured
Note
|
10-Q
|
08-16-04
|
4.5
|
|||||||
(c)
|
Warrant
|
10-Q
|
08-16-04
|
4.6
|
|||||||
Amendment
No. 1 dated March 27, 2008 to the Secured Note Payable dated as of July
29, 2004 by and among Colonial Commercial Corp. and Goldman Associates of
New York, Inc.
|
Yes
|
||||||||||
10.15
|
Asset
Purchase Agreement dated September 5, 2003 for the purchase of certain
assets, subject to certain liabilities of The RAL Supply Group, Inc., by
RAL Purchasing Corp., a wholly-owned subsidiary of Colonial Commercial
Corp.
|
8-K
|
10-15-03
|
10(a)(i)
|
10.16
|
RAL
Closing Statement dated September 30, 2003
|
8-K
|
10-15-03
|
10(a)(ii)
|
|||||||
10.17
|
Asset
Purchase Agreement dated September 10, 2007 for the purchase of certain
assets, subject to certain liabilities of S&A Supply, Inc. by S&A
Purchasing Corp., a wholly-owned subsidiary of Colonial Commercial
Corp.
|
8-K
|
09-14-07
|
10.01
|
|||||||
Form
of Amendment Number 1 dated March 26, 2008 to Asset Purchase Agreement
dated September 10, 2007 for the purchase of certain assets, subject to
certain liabilities of S&A Supply, Inc. by S&A Purchasing Corp., a
wholly-owned subsidiary of Colonial Commercial Corp.
|
Yes
|
||||||||||
10.18
|
Lease
Agreement by and between Zanzi Realty, Inc. and The RAL Supply Group,
Inc., dated September 1, 1998
|
8-K
|
11-02-05
|
10.04
|
|||||||
(a)
|
First
Modification of Lease Agreement dated September 30, 2003 to Lease
Agreement by and between Zanzi Realty, Inc. and The RAL Supply Group,
Inc., dated September 1, 1998
|
8-K
|
11-02-05
|
10.05
|
|||||||
(b)
|
Second
Modification of Lease Agreement dated April 12, 2005 to Lease Agreement by
and between Zanzi Realty, Inc. and The RAL Supply Group, Inc., dated
September 1, 1998
|
8-K
|
11-02-05
|
10.06
|
|||||||
(c)
|
Third
Modification of Lease Agreement dated February 21, 2007 to Lease Agreement
by and between Zanzi Realty, Inc. and The RAL Supply Group, Inc., dated
September 1, 1998
|
8-K
|
02-23-07
|
10.04
|
|||||||
(d)
|
Option
Agreement by and between Pioneer Realty Holdings, LLC and Colonial
Commercial Corp., dated as of February 21, 2007.
|
8-K
|
02-23-07
|
10.05
|
|||||||
10.19
|
Offer
to Purchase Odd Lot Shares and Letter of Transmittal dated August 16,
2005
|
8-K
|
08-18-05
|
10.01
|
|||||||
11.01
|
Statement
re computation of per share earnings (loss)—Not filed since computations
are readily apparent from the Consolidated Financial
Statements
|
||||||||||
14.01
|
Code
of Ethics
|
10-K
|
04-15-05
|
14
|
|||||||
Subsidiaries
of Registrant
|
Yes
|
||||||||||
Consent
of Registered Independent Public Accounting Firm—Eisner
LLP
|
Yes
|
||||||||||
Consent
of Registered Independent Public Accounting Firm—Weiser
LLP
|
Yes
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
Yes
|
||||||||||
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
Yes
|
||||||||||
Certification
of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
Yes
|
||||||||||
Certification
of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
Yes
|
||||||||||
99.01
|
Affidavit
dated January 28, 2002 in support of Atlantic Hardware & Supply
Corporation’s Petition for Relief under Chapter 11 of the U.S. Bankruptcy
Code
|
10-K
|
11-18-03
|
99.1
|
|||||||
99.02
|
Dismissal
of Atlantic Hardware & Supply Corporation’s Petition for Relief by the
U.S. Bankruptcy Court for the Eastern District of New York dated May 18,
2005
|
10-K
|
03-30-06
|
99.02
|
CONTENTS
|
|
Page
|
|
Report
of Independent Registered Public Accounting Firm: Eisner
LLP
|
F-2
|
Report
of Independent Registered Public Accounting Firm: Weiser
LLP
|
F-3
|
Consolidated
Balance Sheets as of December 31, 2007 and 2006
|
F-4
|
Consolidated
Statements of Operations for the Years Ended December 31, 2007, 2006 and
2005
|
F-5
|
Consolidated
Statements of Stockholders’ Equity for the Years Ended December 31, 2007,
2006 and
2005
|
F-6 |
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and
2005
|
F-7
|
Notes
to the Consolidated Financial Statements
|
F-8
|
Schedule
II – Valuation and Qualifying Accounts
|
F-33
|
All
other schedules are omitted because they are not required or the
information required is given in the consolidated financial statements or
notes thereto.
|
PART I. FINANCIAL
INFORMATION
|
||||||||
Item
1. Financial Statements
|
||||||||
COLONIAL
COMMERCIAL CORP. AND SUBSIDIARIES
|
||||||||
Consolidated
Balance Sheets
|
||||||||
December
31,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 622,723 | $ | 482,251 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $478,857 in
2007 and $212,043 in 2006
|
11,364,038 | 9,069,301 | ||||||
Inventory
|
17,282,661 | 12,854,317 | ||||||
Prepaid
expenses and other current assets
|
1,107,623 | 1,057,099 | ||||||
Deferred
tax asset - current portion
|
532,500 | 420,000 | ||||||
Total
current assets
|
30,909,545 | 23,882,968 | ||||||
Property
and equipment
|
1,799,689 | 1,512,666 | ||||||
Goodwill
|
1,628,133 | 1,628,133 | ||||||
Other
intangibles
|
366,376 | 3,500 | ||||||
Other
assets - noncurrent
|
227,478 | 202,177 | ||||||
Deferred
tax asset - noncurrent
|
1,176,000 | 1,288,500 | ||||||
$ | 36,107,221 | $ | 28,517,944 | |||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Trade
payables
|
$ | 7,774,988 | $ | 4,719,160 | ||||
Accrued
liabilities
|
1,970,396 | 1,975,175 | ||||||
Income
taxes payable
|
2,576 | 1,630 | ||||||
Borrowings
under credit facility - revolving credit
|
18,027,055 | 13,615,696 | ||||||
Convertible
notes payable, includes related party notes of $62,500 in 2007 and $0
in 2006
|
137,500 | - | ||||||
Notes
payable - current portion; includes related party notes of $30,000 in
2007 and $30,000 in 2006
|
158,827 | 136,539 | ||||||
Total
current liabilities
|
28,071,342 | 20,448,200 | ||||||
Convertible
notes payable, includes related party notes of $262,500 in 2007 and
$325,000 in 2006
|
337,500 | 525,000 | ||||||
Notes
payable, excluding current portion; includes related party notes
of $750,000 in 2007 and $683,125 in 2006
|
929,814 | 792,394 | ||||||
Total
liabilities
|
29,338,656 | 21,765,594 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
equity:
|
||||||||
Redeemable
convertible preferred stock, $.05 par value, 2,500,000
shares authorized, 467,500 shares issued and outstanding in 2007 and
2006, liquidation preference of $2,337,500 in 2007 and
2006
|
23,375 | 23,375 | ||||||
Common
stock, $.05 par value, 20,000,000 shares authorized, 4,637,530
and 4,593,680 shares issued and outstanding in 2007 and 2006,
respectively
|
231,876 | 229,684 | ||||||
Additional
paid-in capital
|
10,773,451 | 10,707,791 | ||||||
Accumulated
deficit
|
(4,260,137 | ) | (4,208,500 | ) | ||||
Total
stockholders' equity
|
6,768,565 | 6,752,350 | ||||||
$ | 36,107,221 | $ | 28,517,944 | |||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
COLONIAL
COMMERCIAL CORP. AND SUBSIDIARIES
|
||||||||||||
Consolidated
Statements of Operations
|
||||||||||||
For
the Years Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Sales
|
$ | 82,425,865 | $ | 71,494,652 | $ | 66,690,945 | ||||||
Cost
of sales
|
58,870,973 | 50,057,446 | 46,560,548 | |||||||||
Gross
profit
|
23,554,892 | 21,437,206 | 20,130,397 | |||||||||
Selling,
general and administrative expenses, net
|
22,295,941 | 19,420,124 | 17,782,752 | |||||||||
Operating
income
|
1,258,951 | 2,017,082 | 2,347,645 | |||||||||
Other
income
|
297,218 | 277,866 | 272,597 | |||||||||
|
||||||||||||
Interest
expense, net; includes related party interest of $101,770 in
2007, $104,485 in 2006 and $93,154 in 2005
|
(1,502,319 | ) | (1,354,785 | ) | (1,044,454 | ) | ||||||
Income
from operations before income tax expense (benefit)
|
53,850 | 940,163 | 1,575,788 | |||||||||
Income
tax expense (benefit)
|
105,487 | 124,391 | (487,064 | ) | ||||||||
Net
(loss) income
|
$ | (51,637 | ) | 815,772 | $ | 2,062,852 | ||||||
(Loss)
income per common share:
|
||||||||||||
Basic
|
$ | (0.01 | ) | $ | 0.18 | $ | 0.48 | |||||
Diluted
|
$ | (0.01 | ) | $ | 0.16 | $ | 0.40 | |||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
|
4,645,186 | 4,579,129 | 4,295,697 | |||||||||
Diluted
|
4,645,186 | 5,125,646 | 5,293,114 | |||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Consolidated
Statements of Stockholders' Equity
|
||||||||||||||||||||||||||||
For
the Years Ended December 31, 2007, 2006 and 2005
|
||||||||||||||||||||||||||||
Number
of shares
|
||||||||||||||||||||||||||||
Redeemable
Convertible Preferred Stock
|
Common
Stock
|
Redeemable
Convertible Preferred Stock
|
Common
Stock
|
Additional
Paid-In Capital
|
Accumulated
Deficit
|
Total
Stockholders' Equity
|
||||||||||||||||||||||
Balance
at December 31, 2004
|
790,439 | 4,158,441 | $ | 39,522 | $ | 207,922 | $ | 10,746,836 | $ | (7,087,124 | ) | $ | 3,907,156 | |||||||||||||||
Net
income
|
2,062,852 | 2,062,852 | ||||||||||||||||||||||||||
Stock-based
compensation
|
(74,450 | ) | (74,450 | ) | ||||||||||||||||||||||||
Conversion
of shares of
|
- | |||||||||||||||||||||||||||
preferred
stock to common stock
|
(298,018 | ) | 298,018 | (14,901 | ) | 14,901 | - | |||||||||||||||||||||
Retirement
of preferred stock
|
(7,700 | ) | (385 | ) | (15,015 | ) | (15,400 | ) | ||||||||||||||||||||
Options
exercised
|
88,000 | 4,400 | 17,600 | 22,000 | ||||||||||||||||||||||||
Tax
effect of options exercised
|
(48,112 | ) | (48,112 | ) | ||||||||||||||||||||||||
Balance
at December 31, 2005
|
484,721 | 4,544,459 | 24,236 | 227,223 | 10,626,859 | (5,024,272 | ) | 5,854,046 | ||||||||||||||||||||
Net
income
|
815,772 | 815,772 | ||||||||||||||||||||||||||
Conversion
of shares of
|
- | |||||||||||||||||||||||||||
preferred
stock to common stock
|
(17,221 | ) | 17,221 | (861 | ) | 861 | - | |||||||||||||||||||||
Options
exercised
|
32,000 | 1,600 | 6,400 | 8,000 | ||||||||||||||||||||||||
Options
issued
|
53,412 | 53,412 | ||||||||||||||||||||||||||
Tax
effect of options exercised
|
21,120 | 21,120 | ||||||||||||||||||||||||||
Balance
at December 31, 2006
|
467,500 | 4,593,680 | 23,375 | 229,684 | 10,707,791 | (4,208,500 | ) | 6,752,350 | ||||||||||||||||||||
Net
loss
|
(51,637 | ) | (51,637 | ) | ||||||||||||||||||||||||
Options
exercised
|
52,000 | 2,600 | 10,400 | 13,000 | ||||||||||||||||||||||||
Stock-based
compensation
|
30,364 | 30,364 | ||||||||||||||||||||||||||
Repurchase
of common stock
|
(8,150 | ) | (408 | ) | (9,424 | ) | (9,832 | ) | ||||||||||||||||||||
Tax
effect of options exercised
|
34,320 | 34,320 | ||||||||||||||||||||||||||
Balance
at December 31, 2007
|
467,500 | 4,637,530 | $ | 23,375 | $ | 231,876 | $ | 10,773,451 | $ | (4,260,137 | ) | $ | 6,768,565 | |||||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Consolidated
Statements of Cash Flows
|
||||||||||||
For
The Year Ended
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
(loss) income
|
$ | (51,637 | ) | $ | 815,772 | $ | 2,062,852 | |||||
Adjustments
to reconcile net (loss) income to net cash provided by (used in)
operating activities:
|
||||||||||||
Deferred
tax benefit
|
- | - | (641,500 | ) | ||||||||
Stock-based
compensation
|
30,364 | 53,412 | (74,450 | ) | ||||||||
Provision
for doubtful accounts
|
652,468 | 191,357 | 101,724 | |||||||||
Depreciation
|
554,076 | 457,322 | 387,719 | |||||||||
Amortization
of intangibles
|
11,954 | 7,834 | 16,166 | |||||||||
Accretion
of debt discount
|
39,183 | 37,500 | 37,500 | |||||||||
Tax
effect of options exercised
|
34,320 | 21,120 | (48,112 | ) | ||||||||
Changes
in operating assets and liabilities
|
||||||||||||
Accounts
receivable
|
(1,426,013 | ) | (701,615 | ) | (816,853 | ) | ||||||
Inventory
|
(821,110 | ) | (867,398 | ) | (1,159,168 | ) | ||||||
Prepaid
expenses and other current assets
|
(34,833 | ) | (2,321 | ) | (200,926 | ) | ||||||
Other
assets - noncurrent
|
(25,301 | ) | (66,345 | ) | 47,351 | |||||||
Trade
payables
|
2,108,151 | (1,272,786 | ) | 1,270,156 | ||||||||
Accrued
liabilities
|
(23,663 | ) | (71,984 | ) | 303,153 | |||||||
Income
taxes payable
|
946 | (11,142 | ) | (23,544 | ) | |||||||
Net
cash provided by (used in) operating activities
|
1,048,905 | (1,409,274 | ) | 1,262,068 | ||||||||
Cash
flows from investing activities:
|
||||||||||||
Acquisition
of S&A Supply Inc.
|
(4,703,375 | ) | - | - | ||||||||
Acquisition
of Speed Queen assets from Goldman Associates of NY,
Inc.
|
- | (149,625 | ) | - | ||||||||
Additions
to property and equipment
|
(451,095 | ) | (300,504 | ) | (401,054 | ) | ||||||
Net
cash used in investing activities
|
(5,154,470 | ) | (450,129 | ) | (401,054 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Issuance
of common stock and exercise of stock options
|
13,000 | 8,000 | 22,000 | |||||||||
Retirement
of preferred stock
|
- | - | (15,400 | ) | ||||||||
Repurchase
of common stock
|
(9,832 | ) | - | - | ||||||||
Repayments
of notes payable: includes related party repayments of $30,000 in 2007,
$60,389 in 2006 and $48,091 in 2005
|
(215,242 | ) | (162,586 | ) | (141,292 | ) | ||||||
Issuance
of notes payable
|
46,752 | 13,073 | 155,699 | |||||||||
Repayments
under credit facility – term loan/overadvance
|
- | (562,977 | ) | (1,103,690 | ) | |||||||
Borrowings
under credit facility - revolving credit, net
|
4,411,359 | 2,432,688 | 524,466 | |||||||||
Net
cash provided by (used in) financing activities
|
4,246,037 | 1,728,198 | (558,217 | ) | ||||||||
Increase
(decrease) in cash
|
140,472 | (131,205 | ) | 302,797 | ||||||||
Cash
- beginning of period
|
482,251 | 613,456 | 310,659 | |||||||||
Cash
- end of period
|
$ | 622,723 | $ | 482,251 | $ | 613,456 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
1.
|
Summary of Significant
Accounting Policies and
Practices
|
Computer
hardware and software
|
3-5
years
|
|
Furniture
and fixtures
|
5
years
|
|
Automobiles
|
3-5
years
|
|
Showroom
fixtures and displays
|
3
years
|
2005
|
||||
Net
income, as reported
|
$ | 2,062,852 | ||
Add:
Stock-based compensation related to option repricing
|
(74,450 | ) | ||
Pro
forma
|
$ | 1,988,402 | ||
Basic
net income per common share
|
||||
As
reported
|
$ | 0.48 | ||
Pro
forma
|
$ | 0.46 | ||
Diluted
net income per common share
|
||||
As
reported
|
$ | 0.40 | ||
Pro
forma
|
$ | 0.38 | ||
2.
|
Business
Acquisitions
|
Inventory
|
$ | 3,610,000 | ||
Accounts
receivable
|
1,520,000 | |||
Other
current assets
|
36,000 | |||
Property
and equipment, net
|
390,000 | |||
Customer
List
|
290,000 | |||
Trade
Name
|
73,000 | |||
Covenant
not to compete
|
10,000 | |||
Total
tangible and intangible assets acquired
|
5,929,000 | |||
Less
liabilities assumed:
|
||||
Current
liabilities
|
1,100,000 | |||
Long-term
liabilities
|
125,000 | |||
Total
liabilities
|
1,225,000 | |||
Net
Assets Acquired
|
$ | 4,704,000 |
Pro Forma Condensed
Consolidated Operating Data
|
||||||||
(Unaudited)
|
||||||||
For the Year Ended
|
||||||||
December 31,
|
||||||||
2007
|
2006
|
|||||||
Net
Sales
|
$ | 91,753,435 | $ | 86,461,466 | ||||
Operating
income
|
970,451 | 2,285,082 | ||||||
Net
(loss) income
|
$ | (559,972 | ) | $ | 793,002 | |||
(Loss)
income per common share:
|
||||||||
Basic:
|
$ | (0.12 | ) | $ | 0.17 | |||
Diluted:
|
$ | (0.12 | ) | $ | 0.15 |
3.
|
Property and
Equipment
|
2007
|
2006
|
|||||||
Computer
hardware and software
|
$ | 1,259,181 | $ | 1,040,441 | ||||
Furniture
and fixtures
|
177,077 | 91,558 | ||||||
Leasehold
improvements
|
1,552,898 | 1,410,425 | ||||||
Showroom
fixtures and displays
|
29,958 | 79,606 | ||||||
Automobiles
|
950,814 | 550,829 | ||||||
3,969,928 | 3,172,859 | |||||||
Less
accumulated depreciation and amortization
|
(2,170,239 | ) | (1,660,193 | ) | ||||
$ | 1,799,689 | $ | 1,512,666 |
4.
|
Other Intangible
Assets
|
December
31, 2007
|
December
31, 2006
|
|||||||||||||||||||||||||||
Estimated
|
||||||||||||||||||||||||||||
Gross
|
Net
|
Gross
|
Net
|
Useful
|
||||||||||||||||||||||||
Carrying
|
Accumulated
|
Carrying
|
Carrying
|
Accumulated
|
Carrying
|
Life
|
||||||||||||||||||||||
Amount
|
Amortization
|
Amount
|
Amount
|
Amortization
|
Amount
|
(Years)
|
||||||||||||||||||||||
Covenants
Not to Compete
|
$ | 251,667 | $ | (241,000 | ) | $ | 10,667 | $ | 241,667 | $ | (238,167 | ) | $ | 3,500 | 3-5 | |||||||||||||
Customer
List
|
$ | 291,864 | $ | (8,209 | ) | $ | 283,655 | - | - | - | 10 | |||||||||||||||||
Trade
Name
|
$ | 72,966 | $ | (912 | ) | $ | 72,054 | - | - | - | 20 | |||||||||||||||||
Total
|
$ | 616,497 | $ | (250,121 | ) | $ | 366,376 | $ | 241,667 | $ | (238,167 | ) | $ | 3,500 |
For
the Years Ended December 31,
|
|||||
2008
|
$ | 34,500 | |||
2009
|
33,000 | ||||
2010
|
33,000 | ||||
2011
|
33,000 | ||||
2012
|
33,000 | ||||
Thereafter
|
199,876 | ||||
|
$ | 366,376 |
5.
|
Financing
Arrangements
|
6.
|
Notes
Payable
|
2007
|
2006
|
|||||||
Various
term notes payable, (collateralized by the book value of equipment, the
purchase of which such notes financed) with aggregate monthly principal
and interest installments of $13,043 and $6,378 for 2007 and 2006,
respectively, bearing interest between .9% to 5.9%
|
$ | 336,333 | $ | 155,808 | ||||
Subordinated
term note payable to a private individual, $30,000 annual principal
payment, interest at 9% payable monthly.*
|
30,000 | 60,000 | ||||||
Subordinated
term note payable to an investment company, $30,000 annual principal
payments, interest at 9% payable monthly.
|
30,000 | 60,000 | ||||||
Term
notes payable to private investors, subordinated unsecured convertible
notes payable, bearing interest at 11% per annum, interest payable
quarterly, with 50% of the principal payable on June 1, 2008 and the
balance on June 1, 2009. The notes are convertible into 91,666
shares in 2007 and 108,333 shares in 2006 of common stock at $3.00 per
share during the term of the notes.**
|
275,000 | 325,000 | ||||||
Term
notes payable to private investors, subordinated unsecured convertible
notes payable, bearing interest at 11% per annum, interest payable
quarterly, with 50% of the principal payable on January 1, 2009 and the
balance on June 1, 2009. The notes are convertible into 66,667
shares in 2007 and 66,667 shares in 2006 of common stock at $3.00 per
share during the term of the notes.***
|
200,000 | 200,000 | ||||||
Term
note payable of $750,000 to a corporation, subordinated secured note
payable, bearing interest at the prime rate and payable quarterly,
principal payable on January 1, 2009 and warrants to purchase 150,000
shares of common stock at $3.00 per share expiring December 31, 2008. The
warrant was initially recorded at a fair value of $187,500 and recorded as
a discount from the face value of the note and an increase to additional
paid in capital. The discount is being accreted over the term of the note
as additional interest expense. The Company recorded $39,183 and $37,500
in interest expense during 2007 and 2006, respectively, related to the
warrant.****
|
692,308 | 653,125 | ||||||
1,563,641 | 1,453,933 | |||||||
Less
current installments
|
(296,327 | ) | (136,539 | ) | ||||
$ | 1,267,314 | $ | 1,317,394 |
2008
|
$ | 296,327 | ||
2009
|
1,183,356 | |||
2010
|
53,953 | |||
2011
|
21,878 | |||
2012
|
8,127 | |||
$ | 1,563,641 |
7.
|
Capital
Stock
|
8.
|
Equity
Transactions
|
9.
|
Stock Option
Plans
|
2006
|
||||
Historical
stock price volatility
|
160.50 | % | ||
Risk-free
interest rate
|
4.44 | % | ||
Expected
life (in years)
|
6.34 | |||
Dividend
yield
|
0.00 | |||
Shares
Subject to Option
|
Weighted
Average Exercise Price
|
Aggregate
Intrinsic
Value
|
||||||||||
Balance
at December 31, 2004
|
194,000 | 0.25 | ||||||||||
Options
Exercised
|
(88,000 | ) | 0.25 | |||||||||
Balance
at December 31, 2005
|
106,000 | 0.25 | ||||||||||
|
||||||||||||
Options
Exercised
|
(32,000 | ) | 0.25 | |||||||||
Options
Granted
|
100,000 | 1.85 | ||||||||||
Balance
at December 31, 2006
|
174,000 | 1.17 | $ | 330,600 | ||||||||
|
||||||||||||
Options
Exercised
|
(52,000 | ) | 0.25 | |||||||||
Options
Forfeited
|
(25,000 | ) | 1.85 | |||||||||
Balance
at December 31, 2007
|
97,000 | 1.49 | $ | 24,200 | ||||||||
|
||||||||||||
Exercisable
at December 31, 2006
|
114,000 | 0.81 | $ | 216,600 | ||||||||
Exercisable
at December 31, 2007
|
67,000 | 1.32 | $ | 24,200 |
Options
Outstanding and Exercisable
|
||||||||||||||
Weighted
Average
|
||||||||||||||
Range
of
|
Remaining
|
Weighted
Average
|
||||||||||||
Exercise Prices
|
Shares
|
Contractual Life
|
Exercise Price
|
|||||||||||
$ | .25 | 22,000 | 1.47 | $ | .25 | |||||||||
$ | 1.85 | 45,000 | 8.94 | $ | 1.85 | |||||||||
Options
Outstanding and Non-exercisable
|
||||||||||||||
$ | 1.85 | 30,000 | 8.95 | $ | 1.85 | |||||||||
10.
|
Net (Loss) Income Per
Common Share
|
2007
|
2006
|
2005
|
||||||||||
Net
(loss) income (numerator for basic income per
share)
|
$ | (51,637 | ) | $ | 815,772 | $ | 2,062,852 | |||||
Interest
expense on convertible notes (net of tax)
|
- | - | 51,513 | |||||||||
Adjusted
net (loss) income (numerator for diluted income per
share)
|
$ | (51,637 | ) | $ | 815,772 | $ | 2,114,365 | |||||
Weighted
average common shares
|
||||||||||||
(denominator
for basic income per share)
|
4,645,186 | 4,579,129 | 4,295,697 | |||||||||
Effect
of dilutive securities:
|
||||||||||||
Convertible
preferred stock
|
- | 472,451 | 683,695 | |||||||||
Convertible
notes
|
- | - | 175,000 | |||||||||
Employee
stock options
|
- | 74,066 | 138,722 | |||||||||
Weighted
average common and potential common shares
|
||||||||||||
outstanding
(denominator for diluted income per share)
|
4,645,186 | 5,125,646 | 5,293,114 | |||||||||
Basic
net (loss) income per share
|
$ | (0.01 | ) | $ | 0.18 | $ | 0.48 | |||||
Diluted
net (loss) income per share
|
$ | (0.01 | ) | $ | 0.16 | $ | 0.40 | |||||
11.
|
Income
Taxes
|
2007
|
2006
|
2005
|
||||||||||||||||||||||||||||||||||
State
|
State
|
State
|
||||||||||||||||||||||||||||||||||
And
|
And
|
And
|
||||||||||||||||||||||||||||||||||
Federal
|
Local
|
Total
|
Federal
|
Local
|
Total
|
Federal
|
Local
|
Total
|
||||||||||||||||||||||||||||
Current
|
$ | 22,751 | $ | 82,736 | $ | 105,487 | $ | 17,698 | $ | 106,693 | $ | 124,391 | $ | (16,239 | ) | $ | 170,675 | $ | 154,436 | |||||||||||||||||
Deferred
|
- | - | - | - | - | - | (641,500 | ) | - | (641,500 | ) | |||||||||||||||||||||||||
Total
tax expense
|
||||||||||||||||||||||||||||||||||||
(benefit)
|
$ | 22,751 | $ | 82,736 | $ | 105,487 | $ | 17,698 | $ | 106,693 | $ | 124,391 | $ | (657,739 | ) | $ | 170,675 | $ | (487,064 | ) |
2007
|
2006
|
2005
|
||||||||||
Deferred
tax expense (benefit), exclusive of the effects of the other components
listed below
|
$ | 0 | $ | 0 | $ | 0 | ||||||
Decrease
in beginning-of-the-year balance of the valuation allowance for deferred
tax assets
|
0 | 0 | (641,500 | ) | ||||||||
Generation
of continuing operations net operating loss carryforward
|
0 | 0 | 0 | |||||||||
$ | 0 | $ | 0 | $ | (641,500 | ) |
2007
|
2006
|
2005
|
||||||||||
Tax
provision at Federal statutory rate
|
34.00 | % | 34.00 | % | 34.00 | % | ||||||
Utilization
of net operating loss
|
0.00 | % | (34.00 | )% | (34.00 | )% | ||||||
Alternative
minimum tax
|
42.25 | % | ||||||||||
State
income taxes, net of federal benefit
|
100.09 | % | 7.08 | % | 7.15 | % | ||||||
Change
in valuation allowance for deferred tax assets
|
(10.06 | )% | 0.00 | % | (40.71 | )% | ||||||
Permanent
differences
|
26.12 | % | 1.67 | % | 1.59 | % | ||||||
Other
|
3.49 | % | 4.48 | % | 1.05 | % | ||||||
Total
|
195.89 | % | 13.23 | % | (30.92 | )% |
2007
|
2006
|
|||||||
Current
Deferred Tax Assets:
|
||||||||
Federal
net operating loss carryforwards
|
$ | 532,500 | $ | 420,000 | ||||
Current
Deferred Tax Assets
|
$ | 532,500 | $ | 420,000 | ||||
Non-current
Deferred Tax Assets:
|
||||||||
Federal
net operating loss carryforwards
|
$ | 7,481,331 | $ | 9,937,591 | ||||
State
net operating loss carryforwards
|
136,501 | 75,121 | ||||||
Allowance
for doubtful accounts
|
253,514 | 107,647 | ||||||
Additional
costs inventoried for tax purposes
|
702,761 | 553,991 | ||||||
Alternative
Minimum Tax Credit Carryforward
|
49,436 | 47,467 | ||||||
Compensation
|
125,625 | 206,031 | ||||||
Rent
|
67,484 | 64,557 | ||||||
Non-current
Deferred Tax Assets
|
8,816,652 | 10,992,405 | ||||||
Non-current
Deferred Tax Liabilities:
|
||||||||
Goodwill
|
(874,415 | ) | (755,542 | ) | ||||
Depreciation
|
(13,251 | ) | (47,483 | ) | ||||
Non-current
Deferred Tax Liabilities
|
(887,666 | ) | (803,025 | ) | ||||
Non-current
Deferred Tax Assets
|
7,928,986 | 10,189,380 | ||||||
Less
Valuation Allowance
|
(6,752,986 | ) | (8,900,880 | ) | ||||
Net
Non-Current Deferred Tax Assets
|
$ | 1,176,000 | $ | 1,288,500 |
Expiration Year
|
Net Operating Losses
|
|||
2008
|
$ | 415,000 | ||
2020
|
5,960,000 | |||
2021
|
2,737,000 | |||
2022
|
14,532,000 | |||
$ | 23,644,000 |
12.
|
Fair Value of
Financial Instruments
|
13.
|
Supplemental Cash Flow
Information
|
Cash
paid during the years for:
|
2007
|
2006
|
2005
|
|||||||||
Interest
|
$ | 1,443,514 | $ | 1,290,724 | $ | 971,629 | ||||||
Income
taxes
|
$ | 87,773 | $ | 104,932 | $ | 308,585 |
14.
|
Employee Benefit
Plans
|
15.
|
Business and Credit
Concentrations
|
16.
|
Commitments and
Contingencies
|
2008
|
$ | 3,840,161 | ||
2009
|
3,558,770 | |||
2010
|
3,127,399 | |||
2011
|
2,818,665 | |||
2012
|
2,206,818 | |||
Thereafter
|
4,669,921 | |||
Total
|
$ | 20,221,734 |
17.
|
Related Party
Transactions
|
(a)
|
A
subsidiary of the Company leases a warehouse and store in Wharton, New
Jersey comprising of 27,000 square feet from a company owned by Mr. Paul
Hildebrandt under a lease that expires in June 2010. The
Company paid Mr. Hildebrandt’s company $234,866, $224,885 and $215,674
during the years ended December 31, 2007, 2006 and 2005,
respectively. The Company owes Mr. Hildebrandt $80,000 pursuant
to two notes: (a) a subordinated note in the amount of $150,000, paid
$30,000 annually commencing December 31, 2004 and (b) a $50,000
convertible note due 50% on June 1, 2008 and 50% on June 1,
2009. William Salek, the Company’s Chief Financial Officer, is
the son-in-law of Mr. Hildebrandt. Mr. Hildebrandt served as a
Director of the Company from July 2004 to January
2005.
|
(b)
|
Goldman
Associates of New York, Inc. (“Goldman Associates”) has agreed that it and
its affiliates will not until May 31, 2008 without the prior written
consent of the Board of Directors of the Company (i) acquire, agree to
acquire or make any proposal to acquire any voting securities or assets of
the Company or any of its affiliates, (ii) propose to enter into any
merger, consolidation, recapitalization, business combination, or other
similar transaction involving the Company or any of its affiliates, (iii)
make, or in any way participate in any “solicitation” of “proxies” (as
such terms are used in the proxy rules of the Securities and Exchange
Commission) to vote or seek to advise or influence any person with respect
to the voting of any voting securities of the Company or any of its
affiliates or (iv) form, join or in any way participate in a “group” as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, in connection with any of the foregoing or (v) advise, assist or
encourage any other persons in connection with the
foregoing. Michael Goldman is the beneficial owner of the
shares held by Goldman Associates.
|
(c)
|
Oscar
and Jeffrey Folger acted as legal counsel for the Company through April
20, 2005. Oscar and Jeffrey Folger acted as legal consultants
for the Company from April 21, 2005 through December 31, 2005 and each
became an employee of the Company as Vice President-Chief Legal Counsel
and Assistant Vice President-Legal, respectively, on January 1, 2006 until
March 31, 2007. As of April 1, 2007, Oscar and Jeffrey Folger
ceased to act as employees of the Company, but Oscar Folger’s law firm
remains as counsel to the Company. Mrs. Folger is the wife of
Oscar Folger and the mother of Jeffrey Folger. Professional
fees paid to Oscar Folger’s law firm for the years ended 2007, 2006 and
2005 were $115,412, $89,826 and $79,973, respectively. Jeffrey
Folger is an associate of Oscar Folger’s law
firm. Additionally, in 2006, $12,000 was paid to each Oscar and
Jeffrey Folger as part time employees of the Company. As of December 31,
2007, there is $1,000 in outstanding liabilities to Oscar
Folger. As of December 31, 2006 and 2005, there was $3,975 and
$2,775, respectively, in outstanding liabilities to Oscar
Folger.
|
(d)
|
William
Pagano is employed pursuant to an employment agreement that provides for a
salary of $200,000 per year, reduced by any amounts payable to Mr. Pagano
for loss of earnings or the like under any insurance plan or policy, the
premiums for which are paid for in their entirety by the Company; (ii)
fringe benefits commensurate with Mr. Pagano’s position as President, in
such group life, health, accident, disability or hospitalization insurance
plans, subject to underwriting requirements as Universal, or its parent,
may make available to its other executive employees and (iii) additional
incentive compensation based on a percentage of earnings, as defined
below, of the subsidiaries, limited to two times his base compensation.
The amended employment agreement contains confidentiality and non-compete
provisions and expires on December 31, 2010. William Pagano’s total
incentive compensation for the fiscal years ended December 31, 2007, 2006
and 2005 was $151,778, $260,109 and $317,924, respectively. On
March 3, 2008, Mr. Pagano waived his right to receive this incentive
compensation for 2007.
|
(e)
|
Pioneer
Realty Holdings, LLC, a New York limited liability company (“Pioneer”), is
the owner of the premises located at 836 Route 9, Fishkill, New York,
formerly known as 2213 Route 9, Fishkill, New York that is leased to a
subsidiary of the Company under a lease that was set to expire in
September 2008, subject to renewal options, and provided for a current
aggregate annual rent of $133,500. Pioneer is the landlord
under the Lease pursuant to an assignment and assumption agreement dated
April 12, 2005.
|
(f)
|
Each
of Messrs. Goldman, Korn, Pagano, Rozzi, and Mrs. Folger had agreed that
until May 31, 2008 he or she will not purchase any stock of the Company
without written consent from the Company and that he or she will not sell
any stock to any person if the sale would create a new 5% shareholder
within the meaning of Internal Revenue Code Section 382 unless the buyer
first enters into a similar standstill agreement. On November
2, 2007, the Company terminated said Standstill Agreements dated June 21,
2004 between the Company and Messrs. Goldman, Korn, Pagano, Rozzi, and
Mrs. Folger.
|
(g)
|
Mr.
Pagano, Mr. Salek, Mrs. Folger and the wife of Michael Goldman are holders
of convertible unsecured notes in the amounts of $100,000, $50,000,
$100,000 and $25,000, respectively, issued pursuant to the terms of a
private placement made on July 29,
2004.
|
(h)
|
On
September 5, 2006, the Company was appointed a non-exclusive distributor
of Speed Queen home laundry equipment in the New York metropolitan area,
and in portions of Connecticut, Delaware and Eastern
Pennsylvania. The Company succeeded Goldman Associates of New
York, Inc. in this distributorship and, on August 31, 2006, purchased
Goldman Associates’ Speed Queen accounts receivable, inventory and related
assets at fair value for $149,625. Goldman Associates is a
private Company controlled by Michael Goldman who is the Chairman of
Colonial. The Company also established a “Goldman Universal”
division to distribute the Speed Queen home laundry system line and other
appliances.
|
18.
|
Quarterly Results
(Unaudited)
|
QUARTER
ENDED
|
||||||||||||||||
March 31
|
June 30
|
September 30
|
December 31
|
|||||||||||||
(Dollars
in thousands, except per share data)
|
||||||||||||||||
2007
|
||||||||||||||||
Net
sales
|
$ | 16,042 | $ | 22,129 | $ | 20,522 | $ | 23,733 | ||||||||
Gross
profit
|
4,872 | 6,103 | 5,981 | 6,599 | ||||||||||||
Net
(loss) income
|
(390 | ) | 407 | 134 | (203 | ) | ||||||||||
(Loss)
income per common share:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Net
(loss) income
|
(0.08 | ) | 0.09 | 0.03 | (0.04 | ) | ||||||||||
Diluted:
|
||||||||||||||||
Net
(loss) income
|
(0.08 | ) | 0.08 | 0.03 | (0.04 | ) | ||||||||||
2006
|
||||||||||||||||
Net
sales
|
$ | 14,884 | $ | 18,156 | $ | 19,218 | $ | 19,237 | ||||||||
Gross
profit
|
4,685 | 5,438 | 5,659 | 5,655 | ||||||||||||
Net
(loss) income
|
(325 | ) | 338 | 476 | 327 | |||||||||||
(Loss)
income per common share:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Net
(loss) income
|
(0.07 | ) | 0.07 | 0.10 | 0.07 | |||||||||||
Diluted:
|
||||||||||||||||
Net
(loss) income
|
(0.07 | ) | 0.06 | 0.09 | 0.06 |
Additions
|
||||||||||||||||||||
Balance
at
|
Charged
to
|
Charged
to
|
||||||||||||||||||
Beginning
|
Costs
and
|
Other
|
Balance
at
|
|||||||||||||||||
Description
|
of Year
|
Expenses
|
Accounts
|
Deductions
|
End of Year
|
|||||||||||||||
For
the year ended December 31, 2007
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 212,043 | $ | 652,468 | $ | 65,937 | (a) | $ | (451,591 | ) (b) | $ | 478,857 | ||||||||
For
the year ended December 31, 2006
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 185,971 | $ | 191,357 | $ | 90,405 | (a) | $ | (255,690 | ) (b) | $ | 212,043 | ||||||||
For
the year ended December 31, 2005
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 290,448 | $ | 101,724 | $ | 69,144 | (a) | $ | (275,345 | ) (b) | $ | 185,971 |
a.
|
Comprised
primarily of accounts that were previously charged against the allowance,
and have since been collected.
|
b.
|
Comprised
primarily of uncollected accounts charged against the
allowance.
|
By: | /s/ William Pagano | |
William Pagano, | ||
Chief
Executive Officer and Director
|
||
By: | /s/ William Salek | |
William Salek, | ||
Chief
Financial Officer & Principal Accounting Officer
|
||
Dated: March 31, 2008 |
By: | /s/ E. Bruce Fredrikson | |
E. Bruce Fredrikson, Director | ||
By: | /s/ Melissa Goldman-Williams | |
Melissa
Goldman-Williams, Director
|
||
By: | /s/ Michael Goldman | |
Michael Goldman, Chairman of the
Board
|
||
By: | /s/ Stuart H. Lubow | |
Stuart H. Lubow, Director | ||
By: | /s/ Ronald H. Miller | |
Ronald H. Miller, Director | ||
By: | /s/ William Pagano | |
William Pagano, | ||
Chief
Executive Officer and Director
|
||