UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-K

_______________

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from       to      .

Commission File Number 001-15469

THERMOVIEW INDUSTRIES, INC.

(Exact name of Registrant as specified in its charter)

DELAWARE

61-1325129

(State or other jurisdiction

(I.R.S. Employer

of incorporation or organization)

Identification Number)

5611 Fern Valley Road

40228

Louisville, Kentucky

(Zip Code)

(Address of principal executive offices)

Registrant's telephone number, including area code:

(502) 968-2020

Securities registered pursuant to Section 12(b) of the Act:

NAME OF EACH EXCHANGE

TITLE OF EACH CLASS

ON WHICH REGISTERED

Common Stock, $.001 par value

American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark whether the 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 the 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the Registrant is an accelerated filer (as defined by Rule 12b.2 of the Act). Yes [ ] No [X]

Based upon the June 30, 2004 American Stock Exchange closing price of $.39 per share, the aggregate market value of the Registrant's outstanding common stock, $.001 par value, held by non-affiliates was approximately $3.1 million.

As of March 30, 2005, 8,638,716 shares of the Registrant's common stock, $.001 par value, were issued and outstanding.

Documents Incorporated by Reference

Portions of the Definitive Proxy Statement to be delivered to security holders for the 2005 annual meeting of stockholders to be held on May 18, 2005, are incorporated by reference into Items 10 through 14 of Part III of this Form 10-K.

PART I

Item 1. Business

Overview

     We design, manufacture, sell and install custom vinyl replacement windows for residential and commercial customers. We also sell and install replacement doors, textured coatings, vinyl and steel siding, patio decks, patio enclosures, cabinet refacings, and bathroom and kitchen remodeling products, as well as residential roofing.

     In April 1998, we acquired Thermo-Tilt Window Company, which was established in 1987. Since that time, we have acquired 12 retail and manufacturing businesses which had been in operation an average of approximately 11 years. During 2000, we closed two manufacturing businesses, the finance business and one retail business. At December 31, 2004, we had 834 full-time and 91 part-time employees. We had facilities in 11 states, primarily in the Midwest and southern California, and conduct business in 24 states. For calendar 2003, we generated consolidated revenues of approximately $70 million, and for calendar 2004, we generated consolidated revenues of approximately $69 million.

     Our initial business plan focused on an aggressive acquisition program to build a vertically integrated company in the vinyl window business. We intended to aggressively develop in the manufacturing, retail, and finance segments. We closed our finance subsidiary, two acquired manufacturing businesses and one acquired retail business in 2000. Although we have scaled back on manufacturing and eliminated our finance subsidiary, we continue to search for strategic alliances and business development opportunities that may be beneficial to us in the manufacturing, retail and finance segments.

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We continue to work closely with all of our window manufacturers in the production of our current windows and in the development of windows using new technologies.

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In October 2001, we formed a joint venture with Royal Group Technologies Limited, headquartered in Ontario, Canada, to manufacture leading edge thermoplastic extrusions. The Compozit extrusions are stronger than vinyl, withstand weather and climate extremes, are impact resistant and can be produced in many colors. The joint venture's revenue approximated $2.9 million in 2003 and $3.2 million in 2004. We own 40% of the joint venture operation.

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We plan to introduce new or enhanced products and expand the market areas of our existing retail subsidiaries.

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Since we continue to assist our customers in obtaining financing for about 38% of our sales, we intend to explore economically beneficial strategic alliances with the companies that provide financing to our customers.

     Our custom vinyl and Compozit replacement windows are manufactured by a combination of internal and external manufacturers. Both are capable of supplying quality windows on a timely basis at competitive prices.

     Because we did not have the available capital upon completion of our initial public offering in December 1999 to pursue our initial acquisition strategy, we shifted our focus first to internal cost cutting and closing of non profitable operations, and then in late 2000, to the growth of the retail segment and the introduction of new or enhanced products and product lines in addition to the development of new advertising and marketing programs that foster cross-selling of product lines to our existing customer bases.

The Replacement Window Industry

     Sales of replacement windows have experienced substantial growth in recent years. Three basic categories of windows comprise the replacement window market: vinyl, wood and aluminum. We believe that vinyl windows require less maintenance and are more durable than either wood or aluminum windows and they provide greater energy efficiency than aluminum windows. Since prices for vinyl windows have become more competitive with wood window prices and the durability and energy efficiency of vinyl windows have improved, the demand for vinyl windows has significantly increased in recent years. Today, vinyl windows are the most popular replacement window. We believe that factors driving demand in the replacement window industry include:

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the aging existing housing stock;

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job and wage growth;

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consumer confidence levels;

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consumer credit conditions;

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interest rates;

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rise in residential property values;

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demographic trends;

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population migration between urban and suburban areas; and

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demand for maintenance free products.

Growth Strategy

     Our goal is to become a leader in the home improvement and replacement window industry by building a nationwide network of sales and installation subsidiaries principally through internal growth.

Integration Strategy

     We believe that we can begin to increase our growth through expansion of the markets of our current and acquired subsidiaries. We believe that our brand recognition and integrated management enhances the capability of our subsidiaries to further expand regional market share. We intend to more thoroughly integrate the advertising and marketing programs of our regional subsidiaries into a national home-remodeling business over the next two years. Beginning in 2002 and continuing through 2003, we changed the focus of our expansion strategy to growth of our current subsidiaries during the near future rather than expanding predominantly through acquisitions. Because of the unavailability of capital for acquisitions, we have suspended our pursuit of acquisitions.

Merchandising

     Replacement Windows. We offer three lines of custom-made replacement vinyl windows. We previously offered four lines but have discontinued using the Thermal Industries window. Each of our lines consists of a broad range of window options including casement, awning, bay, bow, double hung, garden, and slider replacement windows. We offer the Barricade, Thermal Line, and Great Lakes lines of windows tailored to fit the various remodeling and financial needs of our customers. Our customers will generally spend in the range of $3,000 to $18,000 for an installed product depending upon the size of the residence.

     Barricade Window. This line consists of our most expensive window products. We design and Winchester Industries, Inc., in Saltsburg, Pennsylvania, manufactures this line of replacement windows for energy performance, strength, security and low maintenance. The windows offer welded vinyl frames reinforced with aluminum for added strength, and with one inch triple insulated glass with low-emissivity, Low-E coatings to reduce heat radiation through the glass and double steel cam locks for security. Our Primax, Rolox and Thermo-Shield subsidiaries utilize the Barricade window. In January, 2005 Thomas Construction, Inc. began purchasing the Barricade window.

     Thermal Line Window. Thermal Line is our sole manufacturing subsidiary located in Mandan, North Dakota. We design and Thermal Line manufactures this line for high performance at an affordable cost. A component of this line of replacement windows is Compozit, a vinyl substitute, which increases strength without the cost of aluminum reinforcement. The use of Compozit also permits the use of dark colors in extreme heat. The Compozit components used to manufacture these windows are being purchased from our joint venture extrusion operation. This line of replacement windows contains double insulated glass and Low-E coatings. Approximately 34% of Thermal Line's sales are to ThermoView subsidiaries with the balance sold to external customers. Thermal Line has been the sole supplier of vinyl and Compozit windows to Leingang Siding and Windows, Inc. of Mandan, North Dakota, and had not sold windows to other ThermoView subsidia ries until January 2004 when they began selling windows to ThermoView of California.

     Great Lakes Window. Great Lakes, owned by Caxton-Iseman Capital, is one of the world's largest producers of custom-made replacement windows. Great Lakes, located in Toledo, Ohio, manufactures a diverse line of replacement products including bay windows, bow windows, garden windows and extra heavy duty patio doors with special enhanced insulating features available. Great Lakes is noted for its innovative approach to product development. Thomas Construction has been designing, selling and installing Great Lakes' top of the line UNIFRAME product line. In January, 2005, Thomas moved away from the Great Lakes product and began selling Barricade windows.

     Compozit Window System. Thermal Line Window, Inc., our wholly owned manufacturing subsidiary in North Dakota, has been producing windows made from a climate-resistant composite resin material for over fifteen years. During this time, Thermal Line has been supplying our North Dakota and South Dakota locations with this superior window product and as of the first of 2004, Thermal Line has been supplying our California and Arizona locations also. In addition, Thermal Line has a very dedicated base of unaffiliated home improvement dealers in fourteen states who have had success in marketing this window product.

     In January 2002, we selected Winchester Industries, Inc. and Thermal Line Window, Inc. to design and build a new line of windows incorporating the climate-resistant composite resin material. We currently purchase the extrusions used to manufacture Compozit windows from our joint venture extrusion operation in Canada. We expected to begin manufacturing this new line of windows in late spring of 2004 but due to design and fabrication difficulties, short supply and rising prices of the composite resins, which we believe is a short term problem, we have placed on hold the production of the new Compozit window. We are now researching the possibility of expanding the distribution of the Thermal Line Compozit window to the balance of our retail locations with Winchester Industries, Inc. to manufacture the window.

     Our windows offer the following features:

     Energy Efficiency. One characteristic of our windows is their insulating qualities. Double and triple-pane glass provides the R-values and U-values, measures of insulation for end-users. With regard to this double and triple-pane glass, we incorporate state-of-the-art Low-E coatings. Low-E coatings allow the passage of light but selectively block infrared radiation. As a result, less heat escapes on cold days, and less heat enters on warm days. We further increase the insulation value of our windows by sandwiching a layer of argon, krypton and sulfur hexafluoride gas mixture between panes of glass.

     High Quality Frames. Our windows incorporate fusion-welded corners, and our Barricade line includes an internal aluminum support system. This structure enhances the durability of the windows and prevents warping problems.

     Custom Design. We custom design windows in varying dimensions. This process involves the retro-fitting of existing homes with custom-made, energy efficient, vinyl windows.

     Installation Service. Some of our subsidiaries use only their employees for installation of our replacement windows. Others subcontract with crews that work exclusively for us. Generally, we complete installation within the same or the second day of commencing installation.

     Low Maintenance Product. Our windows require little or no external maintenance due to the vinyl materials used. The tilt-in feature of our windows eases their cleaning.

     Competitive Pricing. We believe that, with increased sales volume, we can reduce purchased product costs through purchasing and distribution channels that will benefit the customer and create a competitive advantage over the small, fragmented competition.

     Replacement Doors. We offer custom-made insulated steel doors with wood-grain embossed finishes in 36 styles and sliding glass doors in six variations.

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The steel doors range in price from $750 to $3,000 per door as installed depending upon the styles, hardware and art-glass options and wood grain finishings chosen.

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The sliding glass doors range in price from $1,500 to $3,000 per door as installed.

     Energy Efficiency, Design, And Installation. Our sliding glass doors and insulated steel doors that contain glass have the same energy efficiency characteristics as our vinyl replacement windows. We custom design and install our sliding glass doors and insulated steel doors in a similar fashion to our vinyl replacement windows.

     Home Textured Coatings. We offer home textured coatings for residential use, the cost of which ranges approximately from $8,000 to $22,000 per residence as installed. Home textured coating is a paint and service that usually takes seven days to complete. The process involves four coats of primer and two finish coats, together with a trenching operation to prevent ground moisture penetration and patching and repairs of the surface to be coated.

     Installation Service. Both employee and exclusive subcontractor painters provide the home textured coatings to our customers.

     Product Guarantee. The manufacturer of the product, Textured Coatings of America, Inc., provides a limited lifetime warranty to the owner of the home against chipping, flaking and peeling of its product.

     Vinyl Siding. We offer vinyl siding in several colors and styles. Our customers will generally spend in the range of $2,800 to $25,000 as installed depending upon the size of the residence. The average time for installation is seven days and generally the vinyl siding is maintenance free.

     Cabinet Refacings. We offer kitchen cabinet refacings in a number of designs that range in cost to our customer from $4,000 to $15,000 per kitchen as installed and generally take one day to complete.

     Kitchen and Bathroom Remodeling. We offer kitchen and bathroom remodeling through four of our subsidiaries. We estimate the cost to our customer for kitchen remodeling to range from $3,000 to $40,000. Generally, remodeling takes one week to complete. We charge our customers for bathroom remodeling from $3,000 to $8,000 per residence as installed.

     Patio Decks and Patio Enclosures. We offer patio decks and patio enclosures with single or double-pane glass as a less expensive alternative to room additions. Most sales involve single-pane glass together with a modular roof. Generally, installation takes three days, and the cost to our customer ranges from $8,000 to $20,000 as installed depending on the size and options chosen.

     Retail Businesses. ThermoView's retail segment consists of the following businesses:

     Thomas Construction, Inc. Thomas Construction, Inc., founded in 1981 and headquartered in Earth City, Missouri, designs, sells and installs replacement windows, siding, patio enclosures, kitchen and bathroom remodeling, roofing and various other home improvement products in Illinois and Missouri. Thomas had 423 full and part-time employees as of December 31, 2004. Stephen C. Townzen, an employee of the business for 18 years, manages its operations.

     ThermoView Industries, Inc., of California. (formerly Five Star Builders now combined with American Home Remodeling, Inc.) ThermoView of California, founded in 1992 and headquartered in San Diego, California, designs, sells and installs replacement windows, siding, kitchen and bathroom remodeling, textured exterior coatings, and various other home improvement products in California and Arizona. ThermoView of California had 136 full and part-time employees as of December 31, 2004. George Jenkins, Executive Vice President of Sales Development, is currently managing the operations in California.

     Primax Window Company. Primax Window Company, founded in 1981 and headquartered in Louisville, Kentucky, sells and installs replacement windows, doors, siding as well as bathroom remodeling in Illinois, Indiana, Kentucky, Missouri, Ohio and Tennessee. Commencing January 1, 2004, we divided Primax into two divisions. Joe Beisler manages the East Division covering Louisville and Lexington, Kentucky, and Cincinnati, Ohio, and Doug Miles manages the West Division covering middle to southern Illinois, portions of St. Louis, Missouri and Henderson, Kentucky. Joe Beisler has been in the business for 19 years, and Doug Miles 21 years. Primax, including the integrated businesses, had 142 full and part-time employees as of December 31, 2004.

     The Thermo-Shield Companies. Thermo-Shield, founded in 1984, was headquartered in Wheeling, Illinois. In 2004, we closed the Wheeling location and opened two new streamlined retail showroom locations in Peoria, Illinois and Paducah, Kentucky. These showrooms were opened in conjunction with our new growth strategy labeled the "Model THV" initiative. The new streamlined model requires only two employees at each location. Accordingly, Thermo-Shield had 4 full-time employees at December 31, 2004. ThermoView's corporate office is currently providing management oversight for this operation.

     The Rolox Companies. The Rolox Companies, founded in 1973 and headquartered in Grandview, Missouri, sell and install vinyl replacement windows, steel doors, siding and bathroom remodeling in Iowa, Kansas, Missouri, Nebraska, Oklahoma, and Tennessee. Rolox had 89 full and part-time employees as of December 31, 2004. Robert L. Cox II has been in the business for 20 years and manages its operations.

     Leingang Siding And Window, Inc. Leingang Siding and Window, Inc., founded in 1991 and headquartered in Mandan, North Dakota, sells and installs quality remodeling products such as premium replacement windows, steel, vinyl and seamless steel siding, asphalt and cedar roofs, soffit and fascia, doors, awnings, seamless gutters, cabinet refacing and bathtub liners in North Dakota and South Dakota. Leingang had 59 full and part-time employees as of December 31, 2004. John Frohlich, an employee of the business for 19 years, manages its operations.

Manufacturing

     Initially, our goal was to vertically integrate our replacement window sales, installation and manufacturing functions. In 2000, we decided to close two of our three acquired manufacturers because of operating losses. We decided to rely more heavily on unrelated third-party manufacturing with a significant reduction in our own manufacturing. Consequently, we offer three lines of custom-made replacement vinyl windows. Our Thermal Line Windows plant in North Dakota manufactures one line, and the other two lines are manufactured by unaffiliated third parties: Winchester Industries, Inc., located in Saltsburg, Pennsylvania, and Great Lakes Window, Inc., located in Toledo, Ohio.

     Low-Tech Manufacturing Process. The process of manufacturing custom replacement windows consists of measuring, cutting and assembling glass and extruded vinyl "lineal" components to create windows that match customer specifications. For those windows that we continue to manufacture in our own facility, we have invested in sophisticated machinery to create an assembly line environment designed to further automate the production process. A summary of the assembly of a vinyl replacement window is as follows:

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we receive orders from customers and enter the desired dimensions of the windows into a computer;

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through the use of a proprietary computer program, we map the dimensions of multiple windows onto a large sheet of glass in the configuration that will maximize the number of windows to be cut from each sheet, thereby minimizing waste;

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once the glass is cut, we wash it and coat the edges with an insulating material that will separate the two or three layers of glass panes and create the desired air-tight seal around the window;

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while cutting the glass, another procedure measures and cuts vinyl "lineals" according to the specifications of the window types and dimensions required by the order;

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the cut and processed lineals then move to a welding area, where we weld the four sides together and complete any final fabricating attachments;

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we then send the completed sash to the glass insertion area, where we insert the window panes into the proper sash units; and

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all of the major components of the window arrive at the final assembly area concurrently to produce the finished product.

     Because we assemble our windows on a made-to-order basis utilizing a just-in-time inventory system, we do not maintain a large finished goods inventory at our manufacturing plant. We typically deliver finished products to our customers. Service personnel complete the installation and servicing of the product at the customer's home. Integration of our sales, shipping, installation, and service operations enables us to provide a complete window or door installation service for customers. The average time between the execution of a customer sales contract and completion of installation is approximately 4 to 6 weeks.

     Suppliers. Thermal Line Windows, our manufacturing subsidiary, purchases its extrusions from our joint venture extrusion operation. Extrusions constitute the largest portion of our raw materials costs, accounting for approximately 30%-40% of our window. We primarily purchase glass from Cardinal Glass. Glass constitutes approximately 10%-15% of our window content.

     Manufacturing Businesses. ThermoView's sole manufacturing subsidiary is Thermal Line Windows, Inc.

     Thermal Line Windows, Inc., formerly Thermal Line Windows, L.L.P., founded in 1984 and headquartered in Mandan, North Dakota, manufactures Compozit replacement and new construction windows and doors for residential and commercial use for sale in Colorado, Idaho, Iowa, Kansas, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wisconsin and Wyoming. Thermal Line Windows, Inc. had 56 full and part-time employees as of December 31, 2004. Brad Bushaw, an employee of the business for 11 years, manages its operations. Approximately 34% of Thermal Line's sales are to ThermoView subsidiaries with the balance being to external customers.

Sales and Marketing

     Each one of our subsidiaries has its own sales staff.  We pay members of our sales staff on a commission basis and on the profitability of the subsidiary for which they work.

     We have a centralized advertising group for major media efforts such as direct mail and/or new product roll outs, but each subsidiary also maintains its own advertising and promotions staff for activities best handled locally.  A corporate-driven consulting group comprised of a national sales development director, a national marketing director and a national advertising director is headed by George Jenkins.  Its purpose is to oversee and implement company-wide marketing programs and to explore, develop, and test new methods of advertising and marketing.

     Our marketing approach varies from subsidiary to subsidiary and also varies based upon the geographic market area.

     Advertising.  We generally give all subsidiaries discretion to choose the most effective form of advertising for its geographic market.  Each subsidiary can advertise locally or take advantage of our national advertising program, with the objective of achieving the most effective use of each subsidiary's advertising budget. The corporate consulting group monitors Budgets monthly and makes modifications and recommendations in order to ensure effective communications to our customers as well as maximize lead generation and company recognition for each execution.

     We utilize a number of methods to create opportunities for direct contact with potential customers, including renting space at local fairs and manning kiosks in shopping malls.  Other advertising and promotion media used to acquire bona-fide sales leads include direct mail, television spots, radio, newspaper ads and inserts, ads in home lifestyle magazines, internet-based advertising, neighborhood canvassing and telemarketing.

     While the form of media may vary, each advertising message carries an attractive offer to homeowners who may be considering a home improvement. The offer can include an opportunity to enter our Home Improvement Sweepstakes, discounts on selected home improvement projects if purchased during a specific time frame, customer financing and seasonal savings.

     Telemarketing.  A majority of our retail subsidiaries solicit customers through an internally-managed telemarketing system.  Through the use of predictive dialing systems (an automated system that calls multiple phone numbers and directs those calls to operators), we have increased efficiency while reducing the costs associated with telemarketing.  Special care is taken to politely provide helpful information about our products and services to homeowners when telemarketing. We utilize specific routines and proven practices to stay in compliance with national and state do-not-call laws. Due to the strict enforcement of do-not-call laws in 2003 and 2004, we anticipate reduced focus on telemarketing.

     In-Home Demonstration.  When a sales representative receives an expression of interest from a potential customer, he or she will then arrange for an in-home demonstration at the customer's residence.  We have developed a standard list of procedures for in-home sales presentations, which features a free, no-obligation design and estimate of the work being considered by the homeowner.  Furthermore, we teach our sales staff that they have limited discretion to negotiate on price.  We pay our sales staff solely on a commission basis to provide for maximum incentives.

Customer Payment

     As of December 31, 2004 for approximately 62% of our sales, customers pay in cash upon completion of installation of our products. For the remaining 38% of sales, customers pay for the products under installment or conditional sales contracts with unaffiliated local and national financial institutions. In these sales, a customer contracts to pay the retail sales price, plus a finance charge, in equal installments over a predetermined period of time. A security interest or chattel mortgage collateralizes the purchased goods. We execute the customer contracts and then assign all of these contracts to unaffiliated local and national financial institutions, in return for the cash sales price of the products involved, upon execution of a certificate of completion by a customer after completion of installation.

Competition

     Vinyl Replacement Windows and Doors. The vinyl replacement window and door industry is highly competitive. The industry is significantly fragmented at both the manufacturing level and at the retail level. Most of our retail competitors are smaller than us and consist of small contractors and construction companies as well as installed product programs at local wholesalers and lumber yards. We also compete with larger home improvement chain store operations such as Home Depot, Lowes and Scotty's. These stores, which usually sell windows with limited warranties and without in-house installation services, have significantly greater financial and operating resources and greater name recognition than we have. Additional competitors include Champion Windows, Pacesetters and the Sears Group.

     Brands in the window industry with the highest name recognition include Andersen Corporation, Pella Corporation and Marvin Windows. These companies primarily compete in the new construction segment of the window market. While these companies also produce replacement windows, they currently sell a relatively small percentage of their products for replacement applications. Furthermore, these companies generally emphasize wood windows rather than vinyl and market their products primarily to higher-end homeowners.

     Home Textured Coatings. The competitors for our textured coating products include small remodelers and painting contractors who use the textured coating product or other painting products. We are not aware of a significantly large company that competes with us directly in the installation of textured coating.

     Vinyl Siding. We compete in the sale and installation of our vinyl siding with PaceSetters, Champion Windows and the Sears Group.

     Cabinet Refacings and Kitchen and Bathroom Remodeling. Our principal competitors include PaceSetters and the Sears Group. In addition, smaller remodelers and contractors in each of the regions in which we engage in the cabinet refacing and kitchen and bathroom remodeling businesses compete with us.

     Patio Decks and Patio Enclosures. Our competition in the installation of patio decks and patio enclosures includes PaceSetters and a number of smaller remodelers and contractors in each of the regions in which we install patio decks and patio enclosures.

Government Regulations

     Our business is subject to various federal, state and local laws, regulations and ordinances relating to, among other things, in-home sales, telemarketing, consumer financing, retail installment sales, advertising, the licensing of home improvement independent contractors, OSHA standards, building and zoning, consumer protection and environmental protection and regulations relating to the disposal of other solid wastes. Some jurisdictions require us to secure a license as a contractor. In addition, some jurisdictions require us to obtain a building permit for each installation. We are also subject to federal, state and local laws and regulations, which, among other things, regulate our advertising, telemarketing, warranties and disclosures to customers. Although we believe that we are currently in compliance in all material respects with these laws and regulations, existing or new laws or regulations applicable to our business i n the future may materially adversely affect our results of operations.

Intellectual Property

     We do not have any material patents related to our products. Two of our subsidiaries have sales and installation processes that they consider trade secrets. These subsidiaries protect these trade secrets by requiring their employees to enter into confidentiality agreements. We have filed for a trademark with the U.S. Patent and Trademark Office under the names "THV", "THV: America's Home Improvement Company", and "NuBath."

Employees

     As of December 31, 2004 we had 925 full and part-time employees. With the exception of the assembly line employees of Thermal Line Windows, none of our employees are subject to a collective bargaining agreement. Thirteen of the assembly employees at Thermal Line are members of the United Steel Workers of America, and are working under a one-year contract that expires April 30, 2005. We have never experienced a work stoppage, and we consider our relations with our employees to be satisfactory.

     Our employees typically receive an hourly wage or salary and are generally eligible for bonuses, except for our sales staff that we pay on a commission basis. Our compensation system is directly related to profitability and accordingly compensation expense increases and decreases as sales and profits fluctuate. We emphasize incentive compensation, including cash bonus arrangements and various other incentive programs which offer our personnel an opportunity for additional earnings and benefits.

FORWARD-LOOKING STATEMENTS

     Some of the statements under "Business," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this Form 10-K constitute forward-looking statements. These statements involve risks and uncertainties about ThermoView and its business, including, among other things:

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the successful implementation of our business plan and growth including access to adequate capital;

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our ability to successfully integrate our past acquisitions; and

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anticipated economic and demographic trends affecting the replacement window industry generally and our business in particular.

     Specific factors which could cause our actual results to differ materially from those expressed or implied by forward-looking statements include those risk factors listed below.

     In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "could," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," or "continue" or the negative of such terms or other comparable language.

     Although we believe that the expectations and assumptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Risk Factors

     You should carefully consider the following risk factors in addition to the other information and financial data contained elsewhere in this Form 10-K.

Risks Related To Our Operations

We have a history of operating losses

     We have incurred a net loss attributable to common stockholders before gain on forgiveness of debt for each year we have had consolidated operations. If we cannot increase our revenues and control our costs, we may not achieve profitability. If we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis in the future due to decreased demand for our products, increases in expenses or unprofitable acquisitions. Our continuing losses and failure to become profitable could result in the bankruptcy of ThermoView and the complete loss in the value of our common stock.

Cash and non-cash dividends and interest related to financings will increase our losses or reduce potential net income

     We will suffer losses or reductions in future potential net income as a result of the 8% dividends on our Series D and Series E preferred stock and the 8% to 10% stated interest on our debt. Also, fees and expenses and the amortization and accretion of the discounts on the debt related to detachable stock warrants issued in connection with the debt will contribute to our losses or lower potential future income.

Fluctuations in our quarterly operating results may cause a drop in our stock price

     Our operating results are unpredictable and may fluctuate on a quarterly basis due to the markets for our products or our operating problems. These fluctuations may cause a decrease in the price of our common stock. You should not rely on our results of operations during any quarter as an indication of our results for a full year or any other quarter.

Our debt documents impose restrictions on us and limit our operations

     Our debt requires us to comply with affirmative and negative covenants. We must maintain various financial ratios and our lenders may restrict us from incurring other debt. We cannot pay dividends on our common stock while our debt is outstanding. We are also subject to other restrictions, including restrictions pertaining to additional borrowings, significant corporate transactions and management changes. In the past, and most recently in March, June and December 2003, December 2004 and March 2005, we have had our lenders waive our non-compliance with covenants and, in some instances, adjust the covenants to avoid future non-compliance. We may require lender waivers in the future. However, we cannot assure that lenders will grant any future waiver requests.

     In January 2001, we defaulted under our term loan with PNC Bank. GE Capital Equity Investments, Inc. (GE Equity) and an investor group consisting principally of ThermoView directors and officers waived payment and other defaults upon purchase of the term loan from PNC Bank. Consequently, GE Equity and the investor group under the restructured term loan could, among other items, accelerate all amounts owed to them and increase the interest rate on the borrowings, if we default under our debt documents. In the event of acceleration of our debt, ThermoView would be unable to pay the amounts due which this could result in the bankruptcy of ThermoView as an enterprise. Under our debt, an event of default could result in the loss of our subsidiaries because of the pledge of our ownership in all of our subsidiaries to our lenders.

Our inability to refinance a portion of our debt could increase our expenses

     The majority of our long-term debt is due in June of 2006. Because of the amount of the debt and declining revenues, our independent accountants have issued a going concern opinion. If we are unable to restructure the due date of this debt prior to June 2005, the debt would be considered as a current obligation for financial reporting purposes. We do not have the ability to satisfy the outstanding indebtedness by June 2006. The issuance of this going concern opinion from our independent accountants may cause third party lenders to become unwilling to provide financing.

Our operations and future direction will suffer from the loss of our key executive

     If we were to lose the service of Charles L. Smith without an adequate replacement, we will suffer from a lack of leadership in our future financial planning and operations management. The departure or death of Mr. Smith, in spite of our key person life insurance on his life, will not replace the lost leadership he provides. This management gap would cause potential revenue reduction and operating cost increases.

Anti-takeover provisions affecting us could prevent or delay a change of control, discourage takeover bids and cause the market price of our common stock to fall

     Provisions of our restated certificate of incorporation and bylaws and provisions of applicable Delaware law may discourage, delay or prevent a merger or other change of control that a stockholder may consider favorable. Our Board of Directors has the authority to issue up to 5,000,000 shares of our preferred stock and to determine the price and the terms, including preferences and voting rights, of those shares without stockholder approval. To date, we have issued and outstanding 756,900 shares of Series D preferred stock and 336,600 shares of Series E preferred stock. Additionally, we have a classified Board of Directors whereby directors serve staggered three-year terms. Our Certificate of Incorporation requires a supermajority vote of the common stockholders to remove or modify this staggered board. Furthermore, we require advance notice for stockholder proposals and director nominations. These items could:

--  

have the effect of delaying, deferring or preventing a change of control of ThermoView;

--  

discourage bids for our common stock at a premium over the market price; or

--  

cause the market price of our common stock to fall.

     We are subject to Delaware laws that could delay, deter or prevent a change of control of ThermoView. One of these laws prohibits us from engaging in a business combination with any interested stockholder for a period of three years from the date the person became an interested stockholder, unless conditions are met.

Risks Related To the Market for Our Common Stock

We likely will not pay cash dividends on the common stock in the foreseeable future

     Our debt documents preclude us from paying dividends on our common stock. Additionally, the terms of our Series D and Series E preferred stock prevent us from paying dividends on our common stock as long as the Series D and Series E preferred stock is outstanding. We anticipate using future earnings for our operations. Accordingly, it is unlikely that we will pay dividends on the common stock in the foreseeable future.

Future dilution may occur from exercise of options and warrants

     Future dilution may occur from option and warrant exercises. As of December 31, 2004, we have issued options and warrants to purchase in the aggregate 4,575,750 shares of our common stock. Some of these options and warrants contain an exercise price below the current market price for the common stock. Additionally, many of these options and warrants contain registration rights.

Risks Related To the Replacement Window Industry

With the greater name recognition and resources of some of our competitors, we may lose potential revenue

     A number of our competitors have longer operating histories, greater name recognition, larger customer bases and greater financial, technical and marketing resources than we do. These resources may allow them to respond more quickly than we can to new or emerging technologies and changes in customer requirements. It may also allow them to devote greater resources than we can to the development, promotion and sale of their products. Our competitors may also engage in more extensive research and development, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies. Increased competition in addition to our present lack of capital could cause a decrease in our potential revenue and potential income, and the deterioration in our financial position and the value of our common stock.

     The market for our products is highly competitive and it is very fragmented at the manufacturing and retail levels. We expect competition to continue to increase because our markets pose no substantial barriers to entry. To the extent one of our competitors undertakes a consolidation program, our competition would increase further.

We may suffer lost potential revenue from our inability to satisfy current and future governmental regulations

     Government regulations related to in-home sales, telemarketing and consumer financing may prevent us from engaging in business in some jurisdictions. Consequently, we will lose potential customers and revenue from these areas.

Risks Related To Litigation

     Pending litigation against ThermoView is fully described under Part III of this Form 10-K. Although we intend to vigorously defend the Clemmens suit, an adverse outcome in the appeal of this action could have a material adverse effect on our cash flow.

     We are subject to other legal proceedings and claims which have arisen in the ordinary course of our business and have not been finally adjudicated. Although there can be no assurance as to the ultimate disposition of these matters, it is the opinion of our management, based upon the information available at this time, that the expected outcome of these matters, individually or in the aggregate, will not have a material adverse effect on our financial position, results of operations or cash flows.

Item 2. Properties

     The following lists our property locations having in excess of 6,000 square feet. We lease all of our facilities. In many cases, we lease the property, at market rates, from the former owners of the subsidiaries which operate on the property.

ThermoView or
Subsidiary as Lessee

Property Address

Property Description
and Use

Lease Expiration
Date (Exclusive of
Renewal Options)

Retail Subsidiaries:

Leingang Siding and Window, Inc.*

2601 Twin City Drive
Mandan, ND 58554
2605 Twin City Drive
Mandan, ND 58554

6,000 sq. ft.
Office/Showroom
13,000 sq. ft.
Office/Warehouse

December 2006

December 2006

Primax Window Co.*

5611 Fern Valley Rd.
Louisville, KY 40228

15,000 sq. ft.
Headquarters

December 2006

2975 North Woodford
Decatur, IL 62526
1501 Woodson Road
St. Louis, MO 63114

9,000 sq. ft. Office
6,600 sq. ft.
Office

Month-to-month

December 2009

Rolox, Inc.*

4002 Main Street
Grandview, MO 64030

16,000 sq. ft.
Headqtrs/Warehouse

December 2006

1440 S. Ridge Road
Wichita, KS 67209

10,000 sq. ft.
Office/Warehouse

December 2006

ThermoView of California

8445 Camino Santa Fe
San Diego, CA 92121

9,000 sq. ft.
Headquarter/Office

January 2006

6627 Valjean Avenue
Van Nuys, CA 91406
3025 S. 48^th St.
Tempe, AZ

12,600 sq. ft.
Office/Warehouse
6,500 sq. ft.
Office

July 2005

December 2007

Thomas Construction, Inc.

13397 Lake Front Dr.
Earth City, MO 63045

60,000 sq. ft.
Office/Warehouse

December 2006

Manufacturing Subsidiaries:

Thermal Line Windows, Inc.*

3601 30^th Ave., NW
Mandan, ND 58554

2605 Twin City Drive
Mandan, ND 58554

49,500 sq. ft.
Headquarter/Office
Manufacturing
15,500 sq. ft.
Manufacturing

December 2006


December 2006

*      Related party lease.

     The leases of our properties provide for monthly rentals ranging from approximately $500 to $25,000.

     See Note 5 of Notes to Consolidated Financial Statements for more information regarding our leases.

Item 3. Legal Proceedings

     On November 19, 2001, Nelson E. Clemmens, former director and president of ThermoView, filed an action titled Nelson E. Clemmens v. ThermoView Industries, Inc., Civil Action No. 01-CI-07901 (Jefferson Circuit Court, November 19, 2001) against us alleging subrogation and indemnity rights associated with Mr. Clemmens' loss of guaranty collateral to PNC Bank. These claims are in connection with the April 2000 amendment to our previous bank debt with PNC Bank, in which Stephen A. Hoffmann, Richard E. Bowlds, Nelson E. Clemmens and Douglas I. Maxwell, III guaranteed $3,000,000 of our PNC Bank debt. In January 2001, PNC seized the collateral pledged as security by the guarantors for the loan guaranty. In March 2001, we reached settlements with Messrs. Bowlds and Hoffmann for any claims that they may hold against us regarding their loss of assets in connection with the guaranty. We did not reach a settlement with Mess rs. Clemmens and Maxwell with regard to guarantees of $1,000,000. Clemmens sought a judicial determination that our March 2001 assignment of the underlying debt relieved him of a contractual obligation to refrain from asserting a claim of repayment until the debt was ultimately satisfied. The Jefferson Circuit Court initially issued an order of summary judgment stating that Clemmens could not assert a claim for repayment until the debt was ultimately satisfied. Clemmens filed a motion with the court to reconsider the September 30, 2002, ruling, and on February 26, 2003, the Jefferson Circuit Court reversed the previous judgment granted to us and awarded judgment to Clemmens against us. We then sought a reconsideration of the February 26, 2003 ruling. On May 9, 2003, the Jefferson Circuit Court upheld the previous ruling in favor of Clemmens, and entered a final, appealable judgment which allowed Clemmens to seek collection against us for the loss of collateral in the amount of $500,000 plus interest at the rate of 10% annually beginning January 1, 2001 ($200,000 through December 31, 2004). On May 19, 2003, we appealed the judgment issued to Clemmens to the Kentucky Court of Appeals. On June 6, 2003 with the guarantee of GE Capital Equity, we posted a supercedeas bond in the amount of $690,000 with the Jefferson Circuit Court to prevent Clemmens from enforcing the judgment awarded to him during the pendency of the appeal of this matter. In order to secure the supercedeas bond, we entered into an agreement with GE Capital Equity to deposit funds monthly into a sinking fund to serve as security for the amount of the supercedeas bond. Pursuant to this agreement, we made payments of $50,000 monthly for the months of July through December, 2003 and 2004 and $30,000 monthly during the months January through June, 2004. We discontinued making payments in October, 2004 due to our interim appellate success, detailed below. At December 31, 2004, we included $630,000 on the accompanying balance sheet as other a ssets, restricted cash. We believe that the outcome of this litigation will be in our favor and should be concluded in less than twelve months. Further, in the event that we prevail upon the appeal and no amounts are drawn upon the bond, we will apply the balance of the sinking fund to the Series A and B notes on a pro-rata basis. We have presented the sinking fund as other assets, restricted cash. In consideration for the supercedeas bond agreement, we agreed to pay to GE Capital Equity a fee of 2.5% of the face amount of the bond and granted GE Capital Equity a first priority lien on its assets to secure any amounts drawn on the bond. On October 8, 2004, the Kentucky Court of Appeals issued a four-page 3-0 decision in our favor, reversing the trial court. The Kentucky Court of Appeals agreed with us that the contract is properly interpreted as providing that Clemmens is not to be paid until the PNC obligation is paid, regardless of its current holder. On October 28, 2004, Clemmens requested that th e entire Kentucky Court of Appeals reconsider this three-judge decision, which the Kentucky Court of Appeals denied. On January 8, 2005, Clemmens sought discretionary review from the Supreme Court of Kentucky. The parties have fully briefed the request for discretionary review, and we expect a decision within the next two to four months. If the Supreme Court of Kentucky rejects Clemmens' request for discretionary review, the matter will be remanded to the trial court for further proceedings consistent with the appellate decision that Clemmens is not now entitled to the repayment of principal of his guarantee. Alternatively, if the Supreme Court of Kentucky decides to accept discretionary review, the parties will file briefs and present oral arguments on the issues. In that instance, we would expect a ruling from the Supreme Court of Kentucky within eighteen to twenty-four months of its accepting discretionary review. Maxwell has not asserted a claim for the loss of his collateral as of the date of filin g of this report. Maxwell could assert claims for the same amount as Clemmens. We have evaluated the potential loss associated with Clemmens' litigation and Maxwell's unasserted claim and believe that we have recorded adequate liabilities on our balance sheet as of December 31, 2004. While we believe that the ultimate resolution of this Clemmens matter on appeal will be favorable to us, an adverse final determination of our position regarding this matter could have a material adverse effect on cash flow and our financial position. A primary reason for this material adverse effect would be that if Mr. Clemmens prevails in his action against us, Mr. Maxwell would likely pursue the identical action against us and the other $500,000, plus interest, guaranteed by Maxwell could become payable by us without any sinking fund as set aside for the Clemmens guarantee.

     We are subject to other legal proceedings and claims, which have arisen in the ordinary course of our business and have not been finally adjudicated. Although there can be no assurance as to the ultimate disposition of these matters, it is our opinion, based upon the information available at this time, that the expected outcome of these matters, individually or in the aggregate, will not have a material adverse effect on our results of operations and financial condition.

Item 4. Submissions of Matters to Vote of Security Holders

     None.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

     (a) Our common stock has traded on the American Stock Exchange since December 2, 1999, under the symbol "THV." Prior to December 2, 1999, we had not previously registered our common stock under either the Securities Act of 1933 or the Securities Exchange Act of 1934, nor had we listed our common stock on any exchange or had it quoted on The NASDAQ Stock Market. The following table sets forth, for the quarterly periods indicated, the high and low closing sale prices per share for the common stock. The American Stock Exchange market quotations reflect inter-dealer prices, without retail mark up, mark down or commission and may not necessarily represent actual transactions.

Price Range

High

Low

Calendar Year 2003

First Quarter................................................

.90

.45

Second Quarter...............................................

.64

.43

Third Quarter................................................

.78

.47

Fourth Quarter...............................................

.83

.41

Calendar Year 2004

First Quarter................................................

.89

.46

Second Quarter...............................................

.58

.35

Third Quarter................................................

.53

.31

Fourth Quarter...............................................

.56

.33

     On March 18, 2005, the last reported sale price of the common stock on the American Stock Exchange was $.40 per share.

     As of March 18, 2005, there were 262 holders of record of our stock consisting of 253 common stockholders. This number does not include stockholders whose shares are held by brokers and other institutions.

     ThermoView has not declared or paid any cash dividends on its common stock and does not expect to pay any cash dividends on our common stock in the foreseeable future. Our agreements with our lenders prohibit us from paying dividends on our common stock. Any future change in our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including:

--  

our future earnings;

--  

capital requirements;

--  

contractual restrictions;

--  

financial condition; and

--  

future prospects.

     There were no issuer purchases of securities in the last three months of the 2004.

Item 6. Selected Financial Data

     The following tables present selected statement of operations and balance sheet financial data for ThermoView.

     The selected financial data for ThermoView as of December 31, 2000, 2001, 2002, 2003 and 2004 and for each of the five years in the period ended December 31, 2004, have been derived from the audited financial statements of ThermoView.

     The following data should be read in conjunction with:

--  

the information set forth under "Management's Discussion and Analysis of Financial Condition and Results of Operations;" and

--  

our consolidated financial statements and the related notes thereto included elsewhere in this Form 10-K.