<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, l995 Commission File No. l-6663
- ----------------------------------------------------------------------
COLONIAL COMMERCIAL CORP.
- ----------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
New York ll-2037l82
- ----------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S.Employer Identification Number)
Incorporation or Organization)
360l Hempstead Turnpike, Levittown, New York ll756-l3l5
- ----------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 5l6-796-8400
- -----------------------------------------------------------------------
Indicate by check mark whether Registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of l934 during the preceding l2 months (or for such shorter period
that Registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of Registrant's Common
Stock and Convertible Preferred Stock as of September 30, l995.
Common Stock, par value $.0l per share -6,721,096 shares
Convertible Preferred Stock, par value $.0l per share -8,765,289 shares
<PAGE> 2
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. Financial Information (Unaudited):
Consolidated Balance Sheets as of
September 30, l995 and December 3l, l994 3
Consolidated Statements of Operations for the
Nine Months Ended September 30, l995 and l994 4
Consolidated Statements of Operations for the
Three Months Ended September 30, l995 and l994 5
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, l995 and l994 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. Other Information 10
<PAGE> 3
<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
September 30, 1995 and December 31, 1994
ASSETS 1995 l994
------ ---- -----
<S> <C> <C>
Cash and cash equivalents $ 325,900 805,262
Marketable investment securities
(market value of $700,000 in l995
and $2,600,000 in l994) 700,000 2,600,000
Accounts receivable, net 5,692,378 -
Inventories 1,213,256 -
Notes receivable, net 1,583,750 l,682,786
Prepaid expenses and other assets 96,471 l22,376
Property and equipment, net 85,977 6,519
Investment in Monroc, Inc. 1,650,000 l,650,000
Land held for sale 531,698 522,329
----------- ----------
Total Assets $ 11,879,430 7,389,272
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Accounts payable and accrued liabilities $ 2,600,654 495,488
Borrowing under line of credit 2,054,971 -
Notes payable 1,410,655 1,929,996
Excess of acquired net assets over cost 1,096,478 -
--------- ----------
Total Liabilities 7,162,758 2,425,484
--------- ----------
Stockholders' Equity:
Convertible preferred stock 87,653 88,348
Common stock 67,211 66,516
Additional paid-in capital 9,023,669 9,023,669
Accumulated deficit (4,461,861) (4,214,745)
--------- ---------
Total Stockholders' Equity 4,716,672 4,963,788
Commitments and contingencies - -
---------- ---------
$ 11,879,430 7,389,272
---------- ---------
---------- ---------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
1
<PAGE> 4
<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Nine Months Ended September 30, l995 and l994
1995 l994
---- ----
Revenues:
<S> <C> <C>
Sales $ 7,376,708 -
Interest 213,441 175,975
Other 60,879 24,024
--------- -------
7,651,028 199,999
--------- -------
Expenses:
Cost of sales 5,510,839 -
General and administrative 2,242,923 705,930
Interest 114,922 -
--------- -------
7,868,684 705,930
--------- -------
Operating loss (217,656) (505,931)
Gain on sale of land - 921,816
Write-off of investment in CRF Funding - (18,424)
-------- -------
Earnings (loss) before income taxes (217,656) 397,461
Income taxes 29,460 -
------- -------
Net earnings (loss) $(247,116) 397,461
-------- --------
Earnings (loss) per common and common
equivalent shares $ (.02) .03
------ ----
Common and common equivalent shares
outstanding 15,486,385 15,486,385
---------- ----------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE> 5
<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Three Months Ended September 30, l995 and l994
1995 l994
---- ----
Revenues:
<S> <C> <C>
Sales $ 4,619,499 -
Interest 49,163 71,872
Other 29,462 3,542
--------- ------
4,698,124 75,414
--------- ------
Expenses:
Cost of sales 3,461,753 -
General and administrative 1,292,146 203,715
Interest 64,005 -
--------- -------
4,817,904 203,715
--------- -------
Operating earnings (loss) (119,780) (128,301)
Gain on sale of land - 10,979
Write-off of investment in CRF Funding - (18,424)
-------- -------
Earnings before income taxes (119,780) (135,746)
Income taxes 11,000 -
-------- -------
Net earnings (loss) (130,780) (135,746)
-------- -------
Earnings (loss) per common and
common equivalent shares $ (.01) (.01)
----- ----
Common and common equivalent shares
outstanding 15,486,385 15,486,385
---------- ----------
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE> 6
<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Nine Months Ended September 30, l995 and l994
l995 l994
---- ----
Reconciliation of net earnings (loss) to net
cash provided (used) by operating activities:
<S> <C> <C>
Net earnings (loss) $ (247,116) 397,461
Adjustments to reconcile net earnings
(loss) to cash provided (used) by
operating activities:
Gain on sale of land - (921,816)
Write-off of investment in CRF Funding - 18,424
Depreciation 17,822 2,020
Amortization of purchase discount (37,808) -
Changes in assets and liabilities net
of effects from purchase of Atlantic:
Accounts receivable (32,077) -
Inventories 307,593 -
Prepaid expenses and other assets 76,288 107,641
Accounts payable and accrued liabilities (258,673) 18,059
------- ------
Net cash provided (used) in operating
activities $ (173,971) (378,211)
------- --------
Cash flows from investing activities:
Payment for purchase of Atlantic Hardware
and Supply Corporation net of cash acquired (3,774,249) -
Investment in marketable investment securities 1,900,000 (20,442)
Payments received on notes receivable 99,036 180,703
Proceeds from sale of land - 2,257,112
Investment in land held for sale (9,369) -
Deed of trust received on land sale - (452,098)
Additions to property and equipment (6,439) -
---------- ----------
Net cash provided (used) by investing activities (1,791,021) 1,965,275
---------- ----------
Cash flows from financing activities:
Payments on note payable (519,341) (548,592)
Borrowing from short-term bank loan 800,000 -
Repayment of short-term bank loan (800,000) -
Borrowing under line of credit 2,219,122 -
Repayments of borrowing under line of credit (214,151) -
--------- ----------
Net cash provided (used) by financing activities 1,485,630 (548,592)
--------- ----------
Increase (decrease) in cash and cash equivalents (479,362) 1,038,472
--------- ---------
Cash and cash equivalents - beginning of period 805,262 540,689
--------- ---------
Cash and cash equivalents - end of period $ 325,900 1,579,161
--------- ---------
</TABLE>
See accompanying notes to unaudited financial statements.
4
<PAGE> 7
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(l) In the opinion of the Registrant, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to
present fairly the financial information contained herein. The
results of operations for the interim periods are not
necessarily indicative of the results which may be expected
for the full year.
For comparative purposes, certain amounts in the l994 con-
solidated financial statements have been reclassified to con-
form to the l995 presentation.
(2) On May l9, l995, Registrant purchased the capital stock of
Atlantic Hardware and Supply Corporation ("Atlantic") for
$3.8 million in cash. The acquisition was accounted for
as a purchase and, accordingly, the cost of the acquisition
was allocated to the net assets acquired based upon their
fair values. The excess of the fair value of net assets
acquired over the cost, amounting to approximately $l,l34,000,
is being amortized over a ten-year period. In connection
with the acquisition, liabilities were assumed as follows:
<TABLE>
<CAPTION>
<S> <C>
Assets Acquired $7,36l,874
Cash Paid for the Capital Stock 3,813,749
---------
Liabilities Assumed $3,548,125
---------
</TABLE>
Atlantic's primary business is the distribution of door
hardware and doors and frames used in new building construction,
buildings being rehabilitated, interior tenant buildouts and
building maintenance. The results of operations of Atlantic
have been included in the Registrant's statement of operations
since May l9, l995, the date of acquisition.
The following unaudited pro forma summary presents information
as if the acquisition had occurred at the beginning of each
calendar year. The pro forma information, which contains
adjustments for interest on acquisition financing and amortiza-
tion of the excess of acquired net assets over cost, is provided
for information only. It is based on historical information and
does not necessarily reflect the actual results that would have
occurred, nor is it necessarily indicative of future results
of operations of the combined companies.
5
<PAGE> 8
<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(Continued)
Nine Months Ended September 30,
l995 l994
---- ----
<S> <C> <C>
Total Revenues $ 14,159,339 12,679,818
---------- ----------
Net Earnings (307,650) 735,720
---------- ----------
Net Earnings Per Share (.02) .05
----- ---
Common and Common Equivalent
Shares Outstanding l5,486,385 l5,486,385
---------- ----------
Three Months Ended September 30,
l995 l994
---- ----
Total Revenues $ 4,699,525 4,753,604
---------- ---------
Net Earnings (Loss) (120,879) 66,977
---------- ---------
Net Earnings Per Share (.01) -
----- -----
Common and Common Equivalent
Shares Outstanding l5,486,385 l5,486,385
---------- ----------
</TABLE>
(3) Earnings (loss) per share is computed by dividing net earnings
(loss) by the weighted average number of shares and equivalent
shares outstanding for the period. For the purpose of
calculating earnings (loss) per share, the convertible preferred
stock has been treated as common stock, even though the effect
of their inclusion is antidilutive. Stock options are not
included in the computation because they dilute earnings (loss)
per share less than three percent.
(4) The Company and its subsidiaries file a consolidated Federal
income tax return. For the nine months ended September 30, l995
and l994, no federal income tax provisions were required.
The Company has Federal book and tax net operating loss carry-
forwards available for future periods of approximately
$4l,000,000 which expire from l995 through 2008 as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C> <C>
l995 - 2000 $ 15,900,000
2002 - 2008 25,100,000
</TABLE>
In the above calculation, approximately $45,000,000 of net
operating loss carryforwards were reduced to $22,000,000 as
a result of certain limitations, and they may be further
limited to utilization against the future earnings of the
subsidiary which sustained the loss.
6
<PAGE> 9
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations - Nine Months Ended
September 30, l995 and l994
Registrant reported net loss of $247,116 for the nine months of
l995 compared to a gain of $397,461 in the first nine months of
l994. There were no land sales in l995 as compared to proceeds from
the sale of land held for sale of $2,257,112 and a gain on sale of
$921,816 in the first nine months of l994. The Registrant expects
additional cash flow and revenues from land sales in l995 and l996.
The l995 first nine months net loss consisted of a loss of $412,720
from parent company operations reduced by net income of $165,604 from
Atlantic Hardware and Supply Corporation ("Atlantic") from its
acquisition date of May l9, l995 to September 30, l995, which
included $37,808 amortization of purchase discount resulting from the
acquisition of Atlantic.
Total revenues increased to $7,651,028 in the l995 period from
$199,999 in the l994 period principally attributable to Atlantic
sales of $7,376,708 (none in l994).
Total cost of sales increased $5,510,839 principally due to the
acquisition of Atlantic (none in l994). General and administrative
expenses increased $1,536,993 and interest expense increased $114,922
principally due to the acquisition of Atlantic.
The parent company offers receivable management and consulting
services to lenders and continues to seek the acquisition of, or
merger with, privately held companies whose business generates a
recurring stream of income. Reported earnings in the near term will
be affected by the timing and the size of any new acquisitions, the
timing of additional land sales and the results of the recently
acquired Atlantic operations.
Results of Operations - Three Months Ended
September 30, l995 and l994
Registrant reported net loss of $130,780 for the third quarter of
l995 compared to net loss of $135,746 in the third quarter of l994.
Proceeds from sale of land were $139,828 and the gain on sale was
$10,979 in the third quarter of l994 (compared to none in the l995
period). The l995 third quarter net loss consisted of earnings of
$31,203 from Atlantic, which included $28,356 amortization of
purchase discount resulting from the acquisition of Atlantic, reduced
by a net loss of $161,983 from parent company operations.
Total revenues increased $4,622,710 attributable to Atlantic
sales of $4,619,499 (none in l994). General and administrative
expenses increased $1,088,431 and interest expenses increased $64,005
in the l995 period principally due to the acquisition of Atlantic.
7
<PAGE> 10
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Results and Operations, Continued
LIQUIDITY AND CAPITAL RESOURCES
- --------------------------------
As of September 30, l995, the Registrant had $1,025,900 in cash,
cash equivalents and marketable investment securities compared to
$2,979,161 at September 30, l994.
The Registrant believes that its cash, cash equivalents, and
investments are adequate for its present operations and that credit
is available should it be required. The Company's capital resources
consist primarily of cash and cash equivalents, notes receivable,
land held for sale and its investments in Atlantic and Monroc, Inc.
The Company believes the carrying value of its assets is less than
their market value.
PART II. OTHER INFORMATION
Item l. Legal Proceedings
- ---------------------------
See Registrant's Annual Report on Form l0-KSB for the year ended
December 3l, l994 for a description of current legal proceedings.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibits - Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of l934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
COLONIAL COMMERCIAL CORP.
Dated: October 24,l995 /s/Bernard Korn
----------------------
Bernard Korn, Chairman
of the Board & President
Dated: October 24,l995 /s/ James W. Stewart
---------------------------
James W. Stewart, Executive
Vice President, Treasurer
and Secretary
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This legend contains summary information extracted from the Form 10-QSB and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 325,900
<SECURITIES> 700,000
<RECEIVABLES> 5,692,378
<ALLOWANCES> 0
<INVENTORY> 1,213,256
<CURRENT-ASSETS> 0
<PP&E> 85,977
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,879,430
<CURRENT-LIABILITIES> 0
<BONDS> 1,410,655
<COMMON> 67,211
0
87,653
<OTHER-SE> 4,561,808
<TOTAL-LIABILITY-AND-EQUITY> 11,879,430
<SALES> 7,376,708
<TOTAL-REVENUES> 7,651,028
<CGS> 5,510,839
<TOTAL-COSTS> 5,510,839
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 114,922
<INCOME-PRETAX> (217,656)
<INCOME-TAX> 29,460
<INCOME-CONTINUING> (247,116)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247,116)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
