<PAGE>
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 June 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 June 30, l995.
Common Stock, par value $.0l per share -6,686,878 shares Convertible Preferred
Stock, par value $.0l per share -8,799,507 shares
<PAGE>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. Financial Information (Unaudited):
Consolidated Balance Sheets as of
June 30, l995 and December 3l, l994 l
Consolidated Statements of Operations for the
Six Months Ended June 30, l995 and l994 2
Consolidated Statements of Operations for the
Three Months Ended June 30, l995 and l994 3
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, l995 and l994 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 7
PART II. Other Information 8
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
June 30, 1995 and December 31, 1994
ASSETS 1995 l994
------ ---- -----
<S> <C> <C>
Cash and cash equivalents $ 412,070 805,262
Marketable investment securities
(market value of $1,800,000 in l995
and $2,600,000 in l994) 1,800,000 2,600,000
Accounts receivable, net 5,653,519 -
Inventories 1,115,571 -
Notes receivable, net 1,628,750 l,682,786
Prepaid expenses and other assets l54,948 l22,376
Property and equipment, net 90,936 6,519
Investment in Monroc, Inc. 1,650,000 l,650,000
Land held for sale 531,698 522,329
----------- ----------
Total Assets $13,037,492 7,389,272
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Accounts payable and accrued liabilities $ 2,638,159 495,488
Short-term bank loan 1,180,543 -
Borrowing under line of credit 1,835,849 -
Notes payable 1,410,655 1,929,996
Excess of acquired net assets over cost 1,124,834 -
--------- ----------
Total Liabilities 8,190,040 2,425,484
--------- ----------
Stockholders' Equity:
Convertible preferred stock 87,995 88,348
Common stock 66,869 66,516
Additional paid-in capital 9,023,669 9,023,669
Accumulated deficit (4,331,081) (4,214,745)
--------- ---------
Total Stockholders' Equity 4,847,452 4,963,788
Commitments and contingencies - -
---------- ---------
$ 13,037,492 7,389,272
---------- ---------
---------- ---------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Six Months Ended June 30, l995 and l994
1995 l994
---- ----
Revenues:
<S> <C> <C>
Sales $ 2,757,209 -
Interest 164,277 115,410
Other 31,417 9,l76
--------- -------
2,952,903 l24,586
--------- -------
Expenses:
Cost of sales 2,049,086 -
General and administrative 950,776 502,215
Interest 50,917 -
--------- -------
3,050,779 502,215
--------- -------
Operating loss (97,876) (377,629)
Gain on sale of land - 9l0,837
-------- -------
Earnings (loss) before income taxes (97,876) 533,208
Income taxes 18,460 -
------- -------
Net earnings (loss) $(116,336) 533,208
-------- --------
Earnings (loss) per common and common
equivalent shares $ (.0l) .03
----- ----
Common and common equivalent shares
outstanding 15,486,385 15,486,385
---------- ----------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
Three Months Ended June 30, l995 and l994
1995 l994
---- ----
Revenues:
<S> <C> <C>
Sales $ 2,757,209 -
Interest 91,542 57,266
Other 28,409 l,746
--------- ------
2,877,160 59,012
--------- ------
Expenses:
Cost of sales 2,049,086 -
General and administrative 739,586 272,406
Interest 50,917 -
--------- -------
2,839,589 272,406
--------- -------
Operating earnings (loss) 37,571 (213,394)
Gain on sale of land - 320,9l5
-------- -------
Earnings before income taxes 37,571 107,521
Income taxes 18,460 -
-------- -------
Net earnings $ 19,111 107,521
-------- -------
Earnings (loss) per common and
common equivalent shares $ - .0l
--- ---
Common and common equivalent shares
outstanding 15,486,385 15,486,385
---------- ----------
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Six Months Ended June 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) $ (116,336) 533,208
Adjustments to reconcile net earnings
(loss) to cash provided (used) by
operating activities:
Gain on sale of land - (910,837)
Depreciation 6,423 l,347
Amortization of purchase discount (9,452) -
Changes in assets and liabilities net
of effects from purchase of Atlantic:
Accounts receivable 6,782 -
Inventories 405,278 -
Prepaid expenses and other assets 6,288 77,994
Accounts payable and accrued liabilities (221,168) 30,531
------- ------
Net cash provided (used) in operating
activities $ 77,8l5 (267,757)
------ --------
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 800,000 (20,442)
Payments received on notes receivable 54,036 180,703
Proceeds from sale of land - 2,117,284
Investment in land held for sale (9,369) -
Principal collected on other receivables 11,524 18,059
Deed of trust received on land sale - (452,098)
---------- ----------
Net cash provided (used) by investing activities (2,918,058) 1,843,506
---------- ----------
Cash flows from financing activities:
Payments on note payable (519,341) (546,680)
Borrowing from short-term bank loan 1,800,000 -
Repayment of short-term bank loan (619,457) -
Borrowing under line of credit 2,000,000 -
Repayments of borrowing under line of credit (214,151) -
--------- ----------
Net cash provided (used) by financing activities 2,447,051 (546,680)
--------- ----------
Increase (decrease) in cash and cash equivalents (393,192) 1,029,069
--------- ---------
Cash and cash equivalents - beginning of period 805,262 540,689
--------- ---------
Cash and cash equivalents - end of period $ 412,070 1,569,758
--------- ---------
See accompanying notes to unaudited financial statements.
</TABLE>
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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.
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
(Continued)
Six Months Ended June 30,
l995 l994
---- ----
<S> <C> <C>
Total Revenues $ 9,459,813 7,926,215
--------- ---------
Net Earnings (Loss) (186,776) 668,745
--------- ---------
Net Earnings (Loss)Per Share (.01) .04
----- ---
Common and Common Equivalent
Shares Outstanding l5,486,385 l5,486,385
---------- ----------
Three Months Ended June 30,
l995 l994
---- ----
Total Revenues $ 5,169,628 4,127,768
--------- ---------
Net Earnings 39,195 191,004
--------- ---------
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 six months ended June 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 $45,000,000 which expire from
l995 through 2008 as follows:
<TABLE>
<CAPTION>
Year
----
<S> <C>
l995 - 2000 $ 20,000,000
200l - 2008 25,000,000
</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.
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<PAGE>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations - Six Months Ended
June 30, l995 and l994
Registrant reported a net loss of $116,336 for the first half of l995
compared to a gain of $533,208 in the first half of l994. There were no land
sales in l995 as compared to proceeds from the sale of land held for sale of
$2,117,300 and a gain on sale of $910,837 in the first half of l994. The
Registrant expects additional cash flow and revenues from land sales in l995 and
l996. The l995 first half net loss consisted of a loss of $250,737 from parent
company operations reduced by net income of $l34,401 from Atlantic Hardware and
Supply Corporation ("Atlantic") from its acquisition date of May l9, l995 to
June 30, l995, which included $9,452 amortization of purchase discount resulting
from the acquisition of Atlantic.
Total revenues increased to $2,952,903 in the l995 period from $124,586 in
the l994 period principally attributable to Atlantic sales of $2,757,209 (none
in l994).
Total cost of sales increased $2,049,086 principally due to the acquisition
of Atlantic (none in l994). General and administrative expenses increased
$448,561 and interest expense increased $50,917 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
June 30, l995 and l994
Registrant reported net income of $19,111 for the second quarter of l995
compared to net income of $107,521 in the second quarter of l994. Proceeds from
sale of land were $ 539,122 and the gain on sale was $320,915 in the second
quarter of l994 (compared to none in the l995 period). The l995 second quarter
net income consisted of earnings of $l34,401 from Atlantic, which included
$9,452 amortization of purchase discount resulting from the acquisition of
Atlantic, reduced by a net loss of $115,290 from parent company operations.
Total revenues increased $2,818,848 attributable to Atlantic sales of
$2,757,209 (none in l994). General and administrative expenses increased
$467,180 and interest expenses increased $50,917 in the l995 period principally
due to the acquisition of Atlantic.
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<PAGE>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Results and Operations, Continued
LIQUIDITY AND CAPITAL RESOURCES
--------------------------------
As of June 30, l995, the Registrant had $2,212,070 in cash, cash equivalents
and marketable investment securities compared to $2,969,758 at June 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 - During the three months ended June 30, l995, the
Registrant filed a report on Form 8-K dated June 2, l995. The Form 8-K reported
the Registrant's acquisition of the capital stock of Atlantic Hardware and
Supply Corporation on May l9, l995 for $3.8 million in cash. The report included
audited financial statements of Atlantic for each of the years ended December
3l, l994, l993 and l992.
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: August 8,l995 /s/Bernard Korn
----------------------
Bernard Korn, Chairman
of the Board & President
Dated: August 8,l995 /s/ James W. Stewart
---------------------------
James W. Stewart, Executive
Vice President, Treasurer
and Secretary
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000021828
<NAME> COLONIAL COMMERICAL CORP.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 412,070
<SECURITIES> 1,800,000
<RECEIVABLES> 5,653,519
<ALLOWANCES> 0
<INVENTORY> 1,115,571
<CURRENT-ASSETS> 0
<PP&E> 90,936
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,037,492
<CURRENT-LIABILITIES> 0
<BONDS> 1,410,655
<COMMON> 66,869
0
87,995
<OTHER-SE> 4,692,588
<TOTAL-LIABILITY-AND-EQUITY> 13,037,492
<SALES> 2,757,209
<TOTAL-REVENUES> 2,952,903
<CGS> 2,049,086
<TOTAL-COSTS> 2,049,086
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,917
<INCOME-PRETAX> (97,876)
<INCOME-TAX> 18,460
<INCOME-CONTINUING> (116,336)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,336)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
