ý
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
||
For
the fiscal year ended December 31, 2008
|
||
or
|
||
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
|
|
SECURITIES
EXCHANGE ACT OF 1934
|
||
For the transition period from ____________ to ____________ |
New
York
|
11-2037182
|
|
(State or other
jurisdiction of incorporation
or organization)
|
(I.R.S. Employer
Identification
No.)
|
|
275
Wagaraw Road, Hawthorne, New Jersey
|
07506
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Title of each class
|
Name of each exchange on which
registered
|
|
None
|
OTC
Bulletin Board
|
Class
|
Outstanding at March 1,
2009
|
|
Common
Stock, $.05 par value per share
|
4,654,953
shares
|
|
Convertible
Preferred Stock, $.05 par value per share
|
447,891
shares
|
PART
I
|
||||
Page
|
||||
Item
1.
|
2
|
|||
Item
1A.
|
4
|
|||
Item
1B.
|
4
|
|||
Item
2.
|
4
|
|||
Item
3.
|
5
|
|||
Item
4.
|
8
|
|||
PART
II
|
||||
Item
5.
|
9
|
|||
Item
6.
|
11
|
|||
Item
7.
|
11
|
|||
Item
7A.
|
16
|
|||
Item
8.
|
16
|
|||
Item
9.
|
16
|
|||
Item
9A.
|
16
|
|||
Item
9B.
|
17
|
|||
PART
III
|
||||
Item
10.
|
18
|
|||
Item
11.
|
20
|
|||
Item
12.
|
24
|
|||
Item
13.
|
26
|
|||
Item
14.
|
27
|
|||
PART
IV
|
||||
Item
15.
|
29
|
|
i.
|
Indemnification
|
ii.
|
Insurance
|
Common Stock
|
Convertible Preferred Stock
|
|||||||||||||||
2008
|
High
|
Low
|
High
|
Low
|
||||||||||||
First
Quarter
|
$ | 1.45 | $ | 0.90 | $ | 1.20 | 0.95 | |||||||||
Second
Quarter
|
1.45 | 0.70 | 0.95 | 0.65 | ||||||||||||
Third
Quarter
|
1.25 | 0.51 | 11.00 | 0.75 | ||||||||||||
Fourth
Quarter
|
0.73 | 0.30 | 5.00 | 1.50 | ||||||||||||
Common Stock
|
Convertible Preferred Stock
|
|||||||||||||||
2007
|
High
|
Low
|
High
|
Low
|
||||||||||||
First
Quarter
|
$ | 1.95 | $ | 1.70 | $ | 1.95 | $ | 1.75 | ||||||||
Second
Quarter
|
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 |
Approximate
Number of Record Holders
|
||
Title of Class
|
(As of March 1, 2009)
|
|
Common
stock par value $.05 per share
|
283
|
|
Convertible
preferred stock par value $.05 per share
|
769
|
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
|
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, 2008-October 31, 2008
|
757 | $ | 1.25 | 757 | 13,243 | |||||||||||
November
1, 2008-November 30, 2008
|
1,046 | 1.25 | 1,046 | 12,197 | ||||||||||||
December
1, 2008-December 31, 2008
|
383 | 1.25 | 383 | 11,814 | ||||||||||||
Total
|
2,186 | $ | 1.25 | 2,186 | 11,814 |
Name
|
Age
|
Position with the
Company
|
||
Directors and Executive
Officers:
|
||||
Dr.
E. Bruce Fredrikson
|
71
|
Director,
Chairman of Audit Committee
|
||
Melissa
Goldman-Williams
|
41
|
Director
|
||
Michael
Goldman
|
70
|
Director,
Chairman of the Board
|
||
Stuart
H. Lubow
|
51
|
Director,
Chairman of Nominating Committee
|
||
Ronald
H. Miller
|
65
|
Director
|
||
William
Pagano
|
69
|
Director
and Chief Executive Officer of the Company and President of
Universal
|
||
William
Salek
|
47
|
Chief
Financial Officer and Secretary of the Company and Vice President of
Universal
|
Non-Equity
|
All
|
|||||||||||||||||
Incentive
Plan
|
Other
|
|||||||||||||||||
Name and Principal Position
|
Year
|
Salary
|
Compensation
|
Compensation
|
Total
|
|||||||||||||
William
Pagano—Director and Chief
|
2008
|
$ | 200,000 | - | - | $ | 200,000 | |||||||||||
Executive
Officer of the Company and,
|
2007
|
$ | 200,000 | - | - | $ | 200,000 | |||||||||||
President
of Universal*
|
||||||||||||||||||
William
Salek—Chief Financial Officer
|
2008
|
$ | 130,000 | - | - | $ | 130,000 | |||||||||||
and
Secretary of the Company and Vice
|
2007
|
$ | 120,000 | $ | 14,235 | - | $ | 134,235 | ||||||||||
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%
|
2008
|
||||
Incentive
|
Additional
|
|||
Compensation
|
Compensation
|
Incentive
|
||
Base
|
Percentages
|
Compensation
|
||
$ 250,000
|
at 8%
|
$ 20,000
|
||
$ 250,000
|
|
at 9%
|
$ 22,500
|
|
$ 17,100
|
|
at 10%
|
$ 1,710
|
|
$ 0
|
|
at 11%
|
$ 0
|
|
$ 0
|
at 12%
|
$ 0
|
||
$ 517,100
|
|
$ 44,210
|
||
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
|
|||
Name
|
Fees
Earned or Paid in
Cash
|
Option Awards*
|
All
Other Compensation
|
Total
|
||||||||||||
Dr.
E. Bruce Fredrikson
|
$ | 22,000 | $ | 8,902 | - | $ | 30,902 | |||||||||
Melissa
Goldman-Williams
|
$ | 12,000 | - | - | $ | 12,000 | ||||||||||
Michael
Goldman
|
$ | 12,000 | - | $ | 13,221 | $ | 25,221 | |||||||||
Stuart
H. Lubow
|
$ | 12,000 | $ | 8,902 | - | $ | 20,902 | |||||||||
Ronald
H. Miller
|
$ | 12,000 | $ | 8,902 | - | $ | 20,902 |
Common Stock
|
Preferred Stock
|
|||||||||||||||
Amount
and
|
Amount
and
|
|||||||||||||||
Nature
of
|
Percent
|
Nature
of
|
||||||||||||||
Beneficial
|
of
|
Beneficial
|
Percent
of
|
|||||||||||||
Name of Beneficial Owner
|
Ownership*
|
Class
|
Ownership*
|
Class
|
||||||||||||
Officers and Directors:
|
||||||||||||||||
Dr.
E. Bruce Fredrikson
|
30,600 | (1) | ** | 0 | ** | |||||||||||
Melissa
Goldman-Williams
|
5,400 | ** | 0 | ** | ||||||||||||
Michael
Goldman
|
1,317,329 | (2) | 29.68 | % | 91,065 | 20.33 | % | |||||||||
Stuart
H. Lubow
|
20,000 | (3) | ** | 0 | ** | |||||||||||
Ronald
H. Miller
|
21,054 | (4) | ** | 0 | ** | |||||||||||
William
Pagano
|
768,971 | (5) | 16.40 | % | 0 | ** | ||||||||||
William
Salek
|
53,333 | (6) | 1.14 | % | 0 | ** | ||||||||||
All Officers and Directors as a
Group:
|
2,216,687 | *** | 47.61 | % | 91,065 | 20.33 | % | |||||||||
Holders of over 5% of a class of stock who are not
Officers or Directors:
|
||||||||||||||||
Rita
C. Folger
|
578,719 | (7) | 12.34 | % | 0 | ** | ||||||||||
Goldman Associates of New York,
Inc.
|
979,255 | (8) | 21.04 | % | 0 | ** |
(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 $241,095 and $234,866 as rent
during the years ended December 31, 2008 and 2007,
respectively.
|
(b)
|
Pursuant
to a secured note dated July 29, 2004, as amended by Amendment 1 dated
March 27, 2008 and further amended by Amendment 2 dated February 12, 2009,
the Company owes Goldman Associates of New York, Inc. (“Goldman
Associates”), the principal amount of $750,000 collateralized by the
assets of the Company. The secured note is subordinate to the borrowings
under the credit facility, bears interest at the prime rate plus 2% and is
due on January 1, 2010.
|
(c)
|
Oscar
and Jeffrey Folger were each an employee of the Company as Vice
President-Chief Legal Counsel and Assistant Vice President-Legal,
respectively, until March 31, 2007. As of April 1, 2007, Oscar
and Jeffrey Folger ceased to act as employees of the Company, but their
law firm Folger & Folger remains as counsel to the
Company. Rita Folger, a more than 5% shareholder of the
Company, is the wife of Oscar Folger and the mother of Jeffrey
Folger. Professional fees paid to Folger & Folger for the
years ended 2008 and 2007 were $60,087 and $115,412,
respectively.
|
(d)
|
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 expires on March 31, 2017,
subject to two five-year renewal
options.
|
(e)
|
Mr.
Pagano and Mrs. Folger are each holders of convertible unsecured notes in
the amount of $100,000, issued pursuant to the terms of a private
placement made on July 29, 2004, as amended by Amendment 1 dated March 27,
2008 and further amended by Amendment 2 dated February 12, 2009. The
convertible unsecured notes bear interest at the prime rate plus 2% and
are due on January 1, 2010.
|
(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-30,
attached
|
|
(3)
|
Exhibits
|
Exhibit
|
Exhibit Name
|
Filed Herewith
|
Form
|
Date
Filed With SEC
|
Incorporated
By Reference 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
|
||||||
(c)
|
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
|
10-K
|
03-31-08
|
10.13(c)
|
||||||
(d)
|
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
|
10-K
|
03-31-08
|
10.13(d)
|
||||||
(e)
|
Amendment
No. 2 dated February 12, 2009 to the Convertible Note Payable dated as of
July 29, 2004 by and between Colonial Commercial Corp. and Rita
Folger
|
8-K
|
02-13-09
|
10.06
|
||||||
(f)
|
Amendment
No. 2 dated February 12, 2009 to the Convertible Note Payable dated as of
July 29, 2004 by and between Colonial Commercial Corp. and William
Pagano
|
8-K
|
02-13-09
|
10.09
|
||||||
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
|
||||||
(d)
|
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.
|
10-K
|
03-31-08
|
10.14(d)
|
||||||
(e)
|
Amendment
No. 2 dated February 12, 2009 to the Secured Note Payable dated as of July
29, 2004 by and between Colonial Commercial Corp. and Goldman Associates
of New York, Inc.
|
8-K
|
02-13-09
|
10.03
|
||||||
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
|
||||||
(a)
|
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.
|
10-K
|
03-31-08
|
10.17(a)
|
||||||
|
||||||||||
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
|
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
|
F-2
|
Consolidated
Balance Sheets as of December 31, 2008 and 2007
|
F-3
|
Consolidated
Statements of Operations for the Years Ended December 31, 2008 and
2007
|
F-4
|
Consolidated
Statements of Stockholders’ Equity for the Years Ended December 31, 2008
and 2007
|
F-5
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2008 and
2007
|
F-6
|
Notes
to the Consolidated Financial Statements
|
F-7
|
Schedule
II – Valuation and Qualifying Accounts
|
F-30
|
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,
|
|||||||
2008
|
2007
|
|||||||
Assets
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 417,387 | $ | 622,723 | ||||
Accounts
receivable, net of allowance for doubtful accounts of $472,526 in 2008 and
$478,857 in 2007
|
8,802,631 | 11,364,038 | ||||||
Inventory
|
13,706,594 | 17,282,661 | ||||||
Prepaid
expenses and other current assets
|
1,090,634 | 1,107,623 | ||||||
Deferred
tax asset - current portion
|
170,000 | 532,500 | ||||||
Total
current assets
|
24,187,246 | 30,909,545 | ||||||
Property
and equipment
|
1,684,932 | 1,799,689 | ||||||
Goodwill
|
1,628,133 | 1,628,133 | ||||||
Other
intangibles
|
329,485 | 366,376 | ||||||
Other
assets - noncurrent
|
159,801 | 227,478 | ||||||
Deferred
tax asset - noncurrent
|
830,000 | 1,176,000 | ||||||
$ | 28,819,597 | $ | 36,107,221 | |||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities:
|
||||||||
Trade
payables
|
$ | 7,019,742 | $ | 7,774,988 | ||||
Accrued
liabilities
|
1,467,244 | 1,970,396 | ||||||
Income
taxes payable
|
558 | 2,576 | ||||||
Borrowings
under credit facility - revolving credit
|
13,163,864 | 18,027,055 | ||||||
Convertible
notes payable, includes related party notes of $62,500 in each 2008 and
2007
|
137,500 | 137,500 | ||||||
Notes
payable - current portion; includes related party notes of $30,000 in each
2008 and 2007
|
171,044 | 158,827 | ||||||
Total
current liabilities
|
21,959,952 | 28,071,342 | ||||||
Convertible
notes payable, includes related party notes of $200,000 and $262,500 in
2008 and 2007, respectively
|
200,000 | 337,500 | ||||||
Notes
payable, excluding current portion; includes related party notes of
$750,000 in each 2008 and 2007
|
875,246 | 929,814 | ||||||
Total
liabilities
|
23,035,198 | 29,338,656 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders'
equity:
|
||||||||
Redeemable
convertible preferred stock, $.05 par value, 2,500,000 shares authorized,
447,891and 467,500 shares issued and outstanding in 2008 and 2007,
respectively, liquidation preference of $2,239,455 and $2,337,500 in 2008
and 2007, respectively
|
22,395 | 23,375 | ||||||
Common
stock, $.05 par value, 20,000,000 shares authorized, 4,654,953 and
4,637,530 shares issued and outstanding in 2008 and 2007,
respectively
|
232,747 | 231,876 | ||||||
Additional
paid-in capital
|
10,797,534 | 10,773,451 | ||||||
Accumulated
deficit
|
(5,268,277 | ) | (4,260,137 | ) | ||||
Total
stockholders' equity
|
5,784,399 | 6,768,565 | ||||||
$ | 28,819,597 | $ | 36,107,221 | |||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
COLONIAL
COMMERCIAL CORP. AND SUBSIDIARIES
|
||||||||
Consolidated
Statements of Operations
|
||||||||
For
the Year Ended December 31,
|
||||||||
2008
|
2007
|
|||||||
Sales
|
$ | 85,606,514 | $ | 82,425,865 | ||||
Cost
of sales
|
60,638,850 | 58,870,973 | ||||||
Gross
profit
|
24,967,664 | 23,554,892 | ||||||
Selling,
general and administrative expenses, net
|
24,387,848 | 22,295,941 | ||||||
Operating
income
|
579,816 | 1,258,951 | ||||||
Other
income
|
281,640 | 297,218 | ||||||
Interest
expense, net; includes related party interest of $72,955 in 2008 and
$101,770 in 2007
|
(1,153,746 | ) | (1,502,319 | ) | ||||
(Loss)
income from operations before income tax
|
(292,290 | ) | 53,850 | |||||
Income
tax expense
|
715,850 | 105,487 | ||||||
Net
loss
|
$ | (1,008,140 | ) | $ | (51,637 | ) | ||
Loss per
common share:
|
||||||||
Basic
and diluted
|
$ | (0.22 | ) | $ | (0.01 | ) | ||
Weighted
average shares outstanding:
|
||||||||
Basic
and diluted
|
4,649,478 | 4,645,186 | ||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
COLONIAL
COMMERCIAL CORP. AND SUBSIDIARIES
|
||||||||||||||||||||||||||||
Consolidated
Statements of Stockholders' Equity
|
||||||||||||||||||||||||||||
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, 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 | ||||||||||||||||||||
Net
Loss
|
(1,008,140 | ) | (1,008,140 | ) | ||||||||||||||||||||||||
Conversion
of shares of preferred stock to common stock
|
(17,423 | ) | 17,423 | (871 | ) | 871 | - | |||||||||||||||||||||
Repurchase
of preferred shares
|
(2,186 | ) | (109 | ) | (2,623 | ) | (2,732 | ) | ||||||||||||||||||||
Stock-based
compensation
|
26,706 | 26,706 | ||||||||||||||||||||||||||
Balance at December 31, 2008
|
447,891 | 4,654,953 | $ | 22,395 | $ | 232,747 | $ | 10,797,534 | $ | (5,268,277 | ) | $ | 5,784,399 | |||||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
COLONIAL
COMMERCIAL CORP. AND SUBSIDIARIES
|
||||||||
Consolidated
Statements of Cash Flows
|
||||||||
For
The Year Ended
|
||||||||
2008
|
2007
|
|||||||
Cash
flows from operating activities:
|
||||||||
Net
loss
|
$ | (1,008,140 | ) | $ | (51,637 | ) | ||
Adjustments
to reconcile net (loss) to net cash provided by operating
activities:
|
||||||||
Deferred
tax
|
708,500 | - | ||||||
Stock-based
compensation
|
26,706 | 30,364 | ||||||
Provision
for doubtful accounts
|
736,084 | 652,468 | ||||||
Depreciation
|
634,788 | 554,076 | ||||||
Amortization
of intangibles
|
36,891 | 11,954 | ||||||
Accretion
of debt discount
|
57,692 | 39,183 | ||||||
Tax
effect of options exercised
|
34,320 | |||||||
Changes
in operating assets and liabilities
|
||||||||
Accounts
receivable
|
1,825,323 | (1,426,013 | ) | |||||
Inventory
|
3,576,067 | (821,110 | ) | |||||
Prepaid
expenses and other current assets
|
16,989 | (34,833 | ) | |||||
Other
assets - noncurrent
|
67,677 | (25,301 | ) | |||||
Trade
payables
|
(755,246 | ) | 2,108,151 | |||||
Accrued
liabilities
|
(503,152 | ) | (23,663 | ) | ||||
Income
taxes payable
|
(2,018 | ) | 946 | |||||
Net
cash provided by operating activities
|
5,418,161 | 1,048,905 | ||||||
Cash
flows from investing activities:
|
||||||||
Acquisition
of S&A Supply Inc.
|
(4,703,375 | ) | ||||||
Additions
to property and equipment
|
(520,031 | ) | (451,095 | ) | ||||
Net
cash used in investing activities
|
(520,031 | ) | (5,154,470 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Issuance
of common stock and exercise of stock options
|
- | 13,000 | ||||||
Repurchase
of preferred stock
|
(2,732 | ) | - | |||||
Repurchase
of common stock
|
(9,832 | ) | ||||||
Repayments
of notes payable: includes related party repayments of $92,500 and $30,000
in 2008 and 2007, respectively
|
(296,630 | ) | (215,242 | ) | ||||
Proceeds
from notes payable
|
59,087 | 46,752 | ||||||
(Repayments)
borrowings under credit facility - revolving credit, net
|
(4,863,191 | ) | 4,411,359 | |||||
Net
cash (used in) provided by financing activities
|
(5,103,466 | ) | 4,246,037 | |||||
(Decrease)
increase in cash
|
(205,336 | ) | 140,472 | |||||
Cash
- beginning of period
|
622,723 | 482,251 | ||||||
Cash
- end of period
|
$ | 417,387 | $ | 622,723 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Computer
hardware and software
|
3-5
years
|
|
Furniture
and fixtures
|
5
years
|
|
Automobiles
|
3-5
years
|
|
Showroom
fixtures and displays
|
3
years
|
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
|
||||
Net
Sales
|
$ | 91,753,435 | ||
Operating
income
|
970,451 | |||
Net
loss
|
$ | (559,972 | ) | |
Loss
per common share:
|
||||
Basic
and diluted:
|
$ | (0.12 | ) |
2008
|
2007
|
|||||||
Computer
hardware and software
|
$ | 1,315,149 | $ | 1,259,181 | ||||
Furniture
and fixtures
|
184,026 | 177,077 | ||||||
Leasehold
improvements
|
1,595,212 | 1,552,898 | ||||||
Showroom
fixtures and displays
|
362,720 | 29,958 | ||||||
Automobiles
|
967,373 | 950,814 | ||||||
4,424,480 | 3,969,928 | |||||||
Less
accumulated depreciation and amortization
|
(2,739,548 | ) | (2,170,239 | ) | ||||
$ | 1,684,932 | $ | 1,799,689 |
December 31, 2008
|
December 31, 2007
|
|||||||||||||||||||||||||||
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 | $ | (245,833 | ) | $ | 5,834 | $ | 251,667 | $ | (241,000 | ) | $ | 10,667 | 3-5 | |||||||||||||
Customer
List
|
$ | 291,864 | $ | (36,608 | ) | $ | 255,256 | $ | 291,864 | $ | (8,209 | ) | $ | 283,655 | 10 | |||||||||||||
Trade
Name
|
$ | 72,966 | $ | (4,571 | ) | $ | 68,395 | $ | 72,966 | $ | (912 | ) | $ | 72,054 | 20 | |||||||||||||
Total
|
$ | 616,497 | $ | (287,012 | ) | $ | 329,485 | $ | 616,497 | $ | (250,121 | ) | $ | 366,376 |
For
the Years Ended December 31,
|
||||
2009
|
$ | 36,337 | ||
2010
|
35,504 | |||
2011
|
33,004 | |||
2012
|
33,004 | |||
2013
|
33,004 | |||
Thereafter
|
158,632 | |||
$ | 329,485 |
2008
|
2007
|
|||||||
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 $9,254 and $13,043 for 2008 and 2007,
respectively, bearing interest between 0% to 6.9%
|
$ | 236,290 | $ | 336,333 | ||||
Subordinated
term note payable: $30,000 annual principal payment, interest at 9%
payable monthly. The note was due on December 31, 2008 and deferred to on
or about March 31, 2009.*
|
30,000 | 30,000 | ||||||
Subordinated
term note payable to an investment company: $30,000 annual principal
payments, interest at 9% payable monthly. The note was due on December 31,
2008 and deferred to on or about March 31, 2009.
|
30,000 | 30,000 | ||||||
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 45,833
shares in 2008 and 91,666 shares in 2007 of common stock at $3.00 per
share during the term of the notes.**
|
137,500 | 275,000 | ||||||
Term
notes payable to private investors: subordinated unsecured convertible
notes payable, bearing interest at 11% per annum, interest payable
quarterly, with the principal payable on January 1, 2010. The
notes are convertible into 66,667 shares of common stock at $3.00 per
share during the term of the notes.***
|
200,000 | 200,000 | ||||||
Term
note of $750,000 payable to a corporation: subordinated secured note
payable, bearing interest at the prime rate and payable quarterly,
principal payable on January 1, 2010 and warrants to purchase 150,000
shares of common stock at $3.00 per share that expired 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 $57,692
and $39,183 in interest expense during 2008 and 2007, respectively,
related to the warrant.****
|
750,000 | 692,308 | ||||||
1,383,790 | 1,563,641 | |||||||
Less
current installments
|
(308,544 | ) | (296,327 | ) | ||||
$ | 1,075,246 | $ | 1,267,314 |
2009
|
$ | 308,544 | ||
2010
|
1,024,906 | |||
2011
|
27,927 | |||
2012
|
18,714 | |||
2013
|
3,699 | |||
$ | 1,383,790 |
Shares Subject to Option
|
Weighted Average Exercise
Price
|
Aggregate Intrinsic Value
|
||||||||||
Balance
at December 31, 2006
|
174,000 | $ | 1.17 | |||||||||
Options
Exercised
|
(52,000 | ) | 0.25 | |||||||||
Options
Forfeited
|
(25,000 | ) | 1.85 | |||||||||
Balance
at December 31, 2007
|
97,000 | $ | 1.49 | |||||||||
Balance
at December 31, 2008
|
97,000 | $ | 1.49 | $ | 27,500 | |||||||
Options
vested and expected to vest at December 31, 2008
|
97,000 | $ | 1.49 | $ | 27,500 | |||||||
Exercisable
at December 31, 2008
|
82,000 | $ | 1.42 | $ | 6,160 |
Options Outstanding and
Exercisable
|
||||||||||||
Weighted
Average
|
||||||||||||
Range
of
|
Remaining
|
Weighted
Average
|
||||||||||
Exercise Prices
|
Shares
|
Contractual Life
|
Exercise Price
|
|||||||||
$ .25
|
22,000 | 0.47 | $ | .25 | ||||||||
$
1.85
|
60,000 | 7.94 | $ | 1.85 | ||||||||
Options Outstanding and
Non-exercisable
|
||||||||||||
$1.85
|
15,000 | 7.94 | $ | 1.85 |
2008
|
2007
|
|||||||||||||||||||||||
State
|
State
|
|||||||||||||||||||||||
And
|
And
|
|||||||||||||||||||||||
Federal
|
Local
|
Total
|
Federal
|
Local
|
Total
|
|||||||||||||||||||
Current
|
$ | - | $ | 7,350 | $ | 7,350 | $ | 22,751 | $ | 82,736 | $ | 105,487 | ||||||||||||
Deferred
|
708,500 | - | 708,500 | - | - | - | ||||||||||||||||||
Total
tax (benefit) expense
|
$ | 708,500 | $ | 7,350 | $ | 715,850 | $ | 22,751 | $ | 82,736 | $ | 105,487 |
2008
|
2007
|
|||||||
Deferred
tax expense (benefit), exclusive of the effects of the other components
listed below
|
$ | 0 | $ | 0 | ||||
Increase
in beginning-of-the-year balance of the valuation allowance for deferred
tax assets
|
708,500 | 0 | ||||||
Generation
of continuing operations net operating loss carryforward
|
0 | 0 | ||||||
$ | 708,500 | $ | 0 |
2008
|
2007
|
|||||||
Tax
provision at Federal statutory rate
|
34.00 | % | 34.00 | % | ||||
Alternative
minimum tax
|
0.00 | % | 42.25 | % | ||||
State
income taxes, net of federal benefit
|
(22.26 | )% | 100.09 | % | ||||
Change
in valuation allowance for deferred tax assets
|
(253.42 | )% | (10.06 | )% | ||||
Permanent
differences
|
(5.71 | )% | 26.12 | % | ||||
Other
|
2.48 | % | 3.49 | % | ||||
Total
|
(244.91 | )% | 195.89 | % |
2008
|
2007
|
|||||||
Current
Deferred Tax Assets:
|
||||||||
Federal
net operating loss carryforwards
|
$ | 170,000 | $ | 532,500 | ||||
Current
Deferred Tax Assets
|
$ | 170,000 | $ | 532,500 | ||||
Non-current
Deferred Tax Assets:
|
||||||||
Federal
net operating loss carryforwards
|
$ | 8,071,335 | $ | 7,481,331 | ||||
State
net operating loss carryforwards
|
196,678 | 136,501 | ||||||
Allowance
for doubtful accounts
|
228,482 | 253,514 | ||||||
Additional
costs inventoried for tax purposes
|
545,345 | 702,761 | ||||||
Alternative
Minimum Tax Credit Carryforward
|
49,436 | 49,436 | ||||||
Compensation
|
52,933 | 125,625 | ||||||
Rent
|
79,981 | 67,484 | ||||||
Non-current
Deferred Tax Assets
|
9,224,190 | 8,816,652 | ||||||
Non-current
Deferred Tax Liabilities:
|
||||||||
Goodwill
|
(979,494 | ) | (874,415 | ) | ||||
Depreciation
|
78,148 | (13,251 | ) | |||||
Non-current
Deferred Tax Liabilities
|
(901,346 | ) | (887,666 | ) | ||||
Non-current
Deferred Tax Assets
|
8,322,844 | 7,928,986 | ||||||
Less
Valuation Allowance
|
(7,492,844 | ) | (6,752,986 | ) | ||||
Net
Non-Current Deferred Tax Assets
|
$ | 830,000 | $ | 1,176,000 |
Expiration Year
|
Net Operating Losses
|
|||
2020
|
5,960,000 | |||
2021
|
2,737,000 | |||
2022
|
14,532,000 | |||
2028
|
1,010,000 | |||
$ | 24,239,000 |
Cash
paid during the years for:
|
2008
|
2007
|
||||||
Interest
|
$ | 1,135,526 | $ | 1,443,514 | ||||
Income
taxes
|
$ | 18,248 | $ | 87,773 |
2009
|
$ | 3,757,612 | ||
2010
|
3,286,852 | |||
2011
|
2,959,141 | |||
2012
|
2,264,059 | |||
2013
|
1,630,298 | |||
Thereafter
|
2,926,797 | |||
Total
|
$ | 16,824,759 |
|
A.
|
Indemnification
|
B.
|
Insurance
|
(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 $241,095 and $234,866 as rent
during the years ended December 31, 2008 and 2007,
respectively.
|
(b)
|
Pursuant
to a secured note dated July 29, 2004, as amended by Amendment 1 dated
March 27, 2008 and further amended by Amendment 2 dated February 12, 2009,
the Company owes Goldman Associates of New York, Inc. (“Goldman
Associates”), the principal amount of $750,000 collateralized by the
assets of the Company. The secured note is subordinate to the borrowings
under the credit facility, bears interest at the prime rate plus 2% and is
due on January 1, 2010.
|
(c)
|
Oscar
and Jeffrey Folger were each an employee of the Company as Vice
President-Chief Legal Counsel and Assistant Vice President-Legal,
respectively, until March 31, 2007. As of April 1, 2007, Oscar
and Jeffrey Folger ceased to act as employees of the Company, but their
law firm Folger & Folger remains as counsel to the
Company. Rita Folger, a more than 5% shareholder of the
Company, is the wife of Oscar Folger and the mother of Jeffrey
Folger. Professional fees paid to Folger & Folger for the
years ended 2008 and 2007 were $60,087 and $115,412,
respectively.
|
(d)
|
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 expires on March 31, 2017,
subject to two five-year renewal
options.
|
(e)
|
Mr.
Pagano and Mrs. Folger are each holders of convertible unsecured notes in
the amount of $100,000, issued pursuant to the terms of a private
placement made on July 29, 2004, as amended by Amendment 1 dated March 27,
2008 and further amended by Amendment 2 dated February 12, 2009. The
convertible unsecured notes bear interest at the prime rate plus 2% and
are due on January 1, 2010.
|
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, 2008
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 478,857 | $ | 736,084 | $ | 79,558 | (a) | $ | (821,973 | ) (b) | $ | 472,526 | ||||||||
For
the year ended December 31, 2007
|
||||||||||||||||||||
Allowance
for doubtful accounts
|
$ | 212,043 | $ | 652,468 | $ | 65,937 | (a) | $ | (451,591 | ) (b) | $ | 478,857 |
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
|
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
|