<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 March 31, 1996 Commission File No. 1-6663
------------------------------------ ------------------- ------
COLONIAL COMMERCIAL CORP.
-------------------------
(Exact Name of Registrant as Specified in its Charter)
New York 11-2037182
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(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
3601 Hempstead Turnpike, Levittown, New York 11756-1315
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: 516-796-8400
------------
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or 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 March 31, 1996.
Common Stock, par value $.01 per share - 6,774,819 shares
Convertible Preferred Stock, par value $.01 per share - 8,711,566 shares
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COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
INDEX
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item l - Financial Statements
Consolidated Balance Sheets as of
March 31, 1996 (unaudited)
and December 31, 1995 1
Consolidated Statements of Operations
Three Months Ended March 31, 1996
and 1995 (unaudited) 2
Consolidated Statements of Stockholders' Equity
as of March 31, 1996 (unaudited)
and December 31, 1995 3
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1996
and 1995 (unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings 6
Item 6 - Exhibits and Reports on Form 8-K 6
SIGNATURES 7
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<TABLE>
<CAPTION>
PART I.
Item 1. Financial Statments
- ----------------------------
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 1996 and December 31, 1995
Assets 1996 1995
------ ---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 834,591 1,856,008
Accounts receivable, net of allowance for
doubtful accounts of $193,900 in 1996 and $137,650 in 1995 6,318,148 6,815,401
Inventory 1,984,677 1,301,455
Notes receivable - current portion 497,000 659,500
Prepaid expenses and other assets 111,108 156,360
---------- ----------
Total current assets 9,745,524 10,788,724
Notes receivable, excluding current portion 1,434,250 1,271,750
Investment in Monroc, Inc. 1,748,578 2,032,132
Property and equipment, net 100,060 109,300
Land held for sale 387,377 407,377
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13,415,789 14,609,283
========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable 2,494,248 2,565,016
Accrued liabilities 890,942 930,013
Income taxes payable 206,356 206,356
Borrowings under line of credit 1,995,749 2,209,815
Notes payable - current portion 469,082 494,211
---------- ----------
Total current liabilities 6,056,377 6,405,411
Notes payable, excluding current portion 447,362 916,444
Excess of acquired net assets over cost 1,035,174 1,066,249
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Total liabilities 7,538,913 8,388,104
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Stockholders' equity:
Convertible preferred stock, $.01 par value
liquidation preference of $8,711,566 and
$8,719,171 at March 31, 1996 and December
31, 1995, respectively, 12,344,300 shares
authorized, 8,711,566 and 8,719,171 shares issued
and outstanding at March 31, 1996 and
December 31, 1995, respectively 87,116 87,192
Common stock, $.01 par value, 40,000,000 shares
authorized, and 6,774,819 shares issued and 6,767,214
outstanding at March 31, 1996 and December 31,
1995, respectively 67,748 67,672
Additional paid-in capital 9,023,669 9,023,669
Unrealized gain on investment security 98,578 382,132
Accumulated deficit (3,400,235) (3,339,486)
----------- -----------
Total stockholders' equity 5,876,876 6,221,179
--------- ---------
Commitments and contingencies
$ 13,415,789 14,609,283
See accompanying notes to consolidated financial statements. ========== ==========
</TABLE>
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP.
Consolidated Statements of Operations
Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Revenues:
Sales $ 5,311,665 -
Interest 30,471 69,788
Other 1,359 5,955
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Total revenues 5,343,495 75,743
--------- ------
Expenses:
Cost of sales 3,961,890 -
Selling, general and administrative, net 1,367,537 211,190
--------- -------
Total expenses 5,329,427 211,190
--------- -------
Operating income (loss) 14,068 (135,447)
Interest (59,817) -
------ -------
Loss before income taxes (45,749) (135,447)
Income taxes 15,000 -
------ --------
Net loss $ (60,749) (135,447)
====== =======
Net loss per common and preferred
share $ (0.0) (.01)
=== ===
Common and preferred shares outstanding 15,486,385 15,486,385
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Three Months Ended March 31, 1996 and 1995
(Unaudited)
Net un-
Con- realized Total
vertible Additional gain on Accu - stock-
preferred Common paid-in investment mulated holders'
stock stock capital security deficit equity
----- ----- ------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances at
December 31, 1994 $ 88,348 66,516 9,023,669 - (4,214,745) 4,963,788
Conversion of 115,671
shares of preferred
stock to common
stock (1,156) 1,156 - - - -
Net income - - - - 875,259 875,259
Net unrealized gain
on investment
security - - - 382,132 - 382,132
------- ----- -------- ------- -------- -------
Balances at
December 31, 1995 87,192 67,672 9,023,669 382,132 (3,339,486) 6,221,179
Conversion of 7,605
shares of preferred
stock to common
stock (76) 76 - - - -
Net loss - - - - (60,749) (60,749)
Net unrealized loss
on investment
security - - - (283,554) - (283,554)
------ ------ --------- -------- ------- -------
Balances at
March 31, 1996 $ 87,116 67,748 9,023,669 98,578 (3,400,235) 5,876,876
====== ====== ========= ====== =========== =========
See accompanying notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Reconciliation of net loss to net cash used in operating activities:
Net loss $ (60,749) (135,447)
Adjustments to reconcile net loss to cash provided by (used in) operating
activities.
Provision for allowance for doubtful accounts 56,250 -
Depreciation 13,709 673
Amortization of excess of acquired net assets over cost (31,075) -
Changes in assets and liabilities:
Accounts receivable 441,003 -
Inventory (683,222) -
Prepaid expenses and other assets 45,252 28,847
Accounts payable (70,768) -
Accrued liabilities (39,071) (5,018)
---------- ---------
Net cash used in operating activities (328,671) (110,945)
Cash flows from investing activities:
Proceeds from investment securities - 200,000
Change in land held for sale 20,000 -
Additions to property and equipment (4,469) -
-------- --------
Net cash provided by investing activities 15,531 200,000
Cash flows from financing activities:
Payments on notes payable (494,211) (519,341)
Net repayments under line of credit (214,066) -
--------- ---------
Net cash used in financing activities (708,277) (519,341)
--------- ---------
Decrease in cash and cash equivalents (1,021,417) (430,286)
Cash and cash equivalents - beginning of period 1,856,008 805,262
--------- -------
Cash and cash equivalents - end of period 834,591 374,976
======= =======
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE> 7
COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 1996 and December 31, 1995
(Unaudited)
(1) The consolidated financial statements of Colonial Commercial Corp. and
subsidiaries (the Company), included herein has been prepared by the
Company and is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of the
financial position, results of operations, and cash flows for the interim
periods to which the report relates. The results of operations for the
period ended March 31, 1996 are not necessarily indicative of the operating
results which may be achieved for the full year.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It is
suggested that these consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1995 Annual Report filed on Form 10-KSB.
(2) Supplemental Cash Flow Information
----------------------------------
The following is supplemental information relating to the consolidated
statements of cash flows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Cash paid during the period for:
Interest $ 64,341 $ -0-
Income taxes $ -0- $ -0-
</TABLE>
(3) Notes Receivable
----------------
Included in notes receivable is a $1,000,000 unsecured note which required
payment to be made on December 31, 1995. In March 1996, a written
understanding to restructure the terms of the note was reached which
provided for collateral and scheduled principal payments beginning in April
1996. Agreement on the restructuring of the note was not reached and the
Company is now pursuing legal action to obtain a judgment against the
assets of the debtor. Management is of the opinion that the present value
of the expected future cash flows of the sale of assets anticipated to be
obtained from enforcement of the judgment will be at least equal to the
amount of the note. Accordingly, the Company did not record an allowance
for this note at March 31, 1996. The amounts the Company will ultimately
realize could differ materially in the near term from the amounts assumed
in arriving at the present value of the expected future cash flows of the
sale of assets to be obtained upon legal action.
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<PAGE> 8
Item 2. Management's Discussion and Analysis of
- -----------------------------------------------
Financial Condition and Results of Operations
---------------------------------------------
Results of Operations - Three Months Ended
March 31, 1996 and 1995
Registrant reported a net loss of $60,749 for the three months of 1996,
compared to a net loss of $135,447 in the first three months of 1995. The 1996
loss consisted of a net loss of $134,662 from parent company operations offset
by net income of $73,913 from Atlantic Hardware and Supply Corporation
("Atlantic"). There were no land sales in 1996 or for the first three months of
1995. The Registrant expects cash flow and revenues from land sales in 1996 and
1997.
Total revenues increased to $5,343,495 in the 1996 period compared to
$75,743 in the 1995 period, principally attributable to Atlantic's sales of
$5,3ll,665. Atlantic's sales backlog has increased $400,000 to $11,880,000 since
December 31, 1995. The March 31, 1996 backlog has increased $4,000,000 from
March 31, 1995.
Total cost of sales increased $3,961,890 entirely due to the acquisition of
Atlantic. General and administrative expense increased $1,156,347 and interest
expense increased $59,817 principally due to the acquisition of Atlantic.
The Registrant continues to seek the acquisition of or merger with privately
held companies which businesses generate a recurring stream of income. Reported
earnings in the near term will be effected by the timing and the size of any new
acquisitions, the timing of additional land sales and the operating results of
Atlantic.
The Registrant has provided for income taxes primarily as a result of state
income taxes associated with the income from Atlantic.
Liquidity and Capital Resources
As of March 31, 1996, the Registrant had $834,591 in cash and cash
equivalents compared to $1,856,008 at December 31, 1995.
The Registrant believes that its cash and cash equivalents 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 investment in Atlantic and Monroc,
Inc. The Company believes the carrying value of its land held for sale is less
than their market value.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
In January, 1996, Colonial instituted an action for summary judgment against
a partnership and its general partners regarding nonpayment of an unsecured $1
million note, which was due on December 31, 1995. The makers of the note
instituted an action to declare the note invalid in January 1996,
notwithstanding their payments on the note and their previous written
acknowledgments that they had no defenses or offsets to the note. In March 1996,
an understanding was reached to restructure the terms of the note, based upon a
cash payment schedule and collateralization of the note with real property
valued in excess of the outstanding note receivable. The restructuring agreement
has not been completed and Colonial is pursuing its action for summary judgment.
It is the opinion of the Company and its counsel in this matter, that judgment
will be rendered in favor of Colonial for the full principal amount of the note
and for costs, disbursements and reasonable attorneys' fees.
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 March 31, 1996, the
Registrant did not file any reports on Form 8-K.
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<PAGE> 9
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLONIAL COMMERCIAL CORP.
Dated : May 13, 1996
/s/ BERNARD KORN
--------------------------------------
Bernard Korn, Chairman of the Board
and President
/s/ JAMES W. STEWART
--------------------------------------
James W. Stewart, Executive Vice Pres.
Treasurer and Secretary
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-QSB
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000021828
<NAME> COLONIAL COMMERCIAL CORP.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 834,591
<SECURITIES> 0
<RECEIVABLES> 6,512,048
<ALLOWANCES> (193,900)
<INVENTORY> 1,984,677
<CURRENT-ASSETS> 9,908,024
<PP&E> 169,769
<DEPRECIATION> 69,709
<TOTAL-ASSETS> 13,415,789
<CURRENT-LIABILITIES> 6,056,377
<BONDS> 447,362
0
87,116
<COMMON> 67,748
<OTHER-SE> 5,722,012
<TOTAL-LIABILITY-AND-EQUITY> 13,415,789
<SALES> 5,311,665
<TOTAL-REVENUES> 5,343,495
<CGS> 3,961,890
<TOTAL-COSTS> 3,961,890
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 56,250
<INTEREST-EXPENSE> 59,817
<INCOME-PRETAX> (45,749)
<INCOME-TAX> 15,000
<INCOME-CONTINUING> (60,749)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (60,749)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
