Attached files
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EX-32.1 - MILLER INDUSTRIES INC | v162973_ex32-1.htm |
EX-31.1 - MILLER INDUSTRIES INC | v162973_ex31-1.htm |
EX-31.2 - MILLER INDUSTRIES INC | v162973_ex31-2.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-K
ANNUAL
REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For the
fiscal year ended April 30, 2009
Commission
File No. 1-5926
MILLER
INDUSTRIES, INC.
(Name of
Small Business Issuer in its Charter)
Florida
|
59-0996356
|
|
(State
or Other Jurisdiction of
(Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
16295
N.W. 13th
Ave., Miami, Florida 33169
|
(Address
of Principal Executive Offices)
|
(305)
621-0501
|
(Issuer’s
Telephone Number, Including Area
Code)
|
Securities
registered under Section 12(b)
of the
Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, $.05 Par Value
|
(Title
of Class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No
x
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 ¨ No
x
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. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of “accelerated filer”, “large accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
Large
accelerated filer ¨ Accelerated
filer ¨ Non-accelerated
filer ¨ Smaller
reporting company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes ¨ No
x
The
aggregate market value of the voting stock held by non-affiliates of the
registrant at April 30, 2009 was $223,000.
As of
September 10, 2009, there were 2,982,662 shares of the registrant’s common stock
outstanding.
PART
I
FORWARD
LOOKING STATEMENTS
This
Form 10-K contains “forward looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward
looking statements represent the Company’s expectations and beliefs including,
but not limited to, statements concerning the Company’s operations, performance,
financial condition, growth or strategies. For this purpose, any
statements contained in this Form 10-K that are not statements of historical
fact may be deemed to be forward looking statements. Without limiting
the generality of the foregoing, words such as “may,” “will,”
“expect,” “believe,” “estimate,” “anticipate” or “continue” or the negative or
other variations thereof or comparable terminology are intended to identify
forward looking statements. The statements by their nature involve
substantial risks and uncertainties, certain of which are beyond the Company’s
control, and actual results may differ materially depending on a variety of
important factors, including but not limited to the potential impact of changes
in interest rates, competition, credit risks and collateral, changes in local or
regional economic conditions, the ability of the Company to continue its growth
strategy, dependence on management and key personnel, and regulatory
supervision.
ITEM
1. BUSINESS
General
Miller
Industries, Inc. (the “Company”) was
incorporated under the laws of the State of Florida on January 21, 1963. The
administrative offices of the Company are located at 16295 N.W. 13th Avenue,
Miami, Florida 33169, and its telephone number is (305) 621-0501.
The
Company’s business is the ownership and management of a 98,000 square feet
warehouse located in Miami, Florida.
Employees
The
Company had no employees during the 2009 and 2008 fiscal years.
The
Company utilizes an independent contractor to perform administrative and
bookkeeping services.
ITEM
2. PROPERTIES
Description of
Warehouse
The
Company owns a one-story concrete block building located at 16295 N.W. 13th
Avenue, Miami, Florida. This facility consists of 97,813 square feet, 7,000 of
which is air-conditioned. The building is zoned for use as a
warehouse or light manufacturing facility. The building has a
relatively low ceiling, which has adversely affected leasing
efforts.
-2-
Financing
At April
30, 2009, the building was subject to an outstanding first mortgage in favor of
a commercial bank with a principal balance of approximately
$1,394,000. The loan accrues interest at 4.0% per annum and is
payable in monthly installments of $10,000, with a balloon payment of $1,377,000
due October 2009. The loan is secured by the Company’s land and
building and a partial guarantee of the Company’s president.
Leasing
Activities
The
Company continues to seek long term commercial tenants for its
building. The building is located in an industrial park which
contains many similar facilities. Current rents for such facilities
range from approximately $5.00 per square foot to approximately $7.50 per square
foot and the occupancy rate in the area is approximately 80%.
During
2009, the Company leased its building to [three] tenants. As of April
30, 2009, the future minimum rental income under these leases, excluding cost of
living adjustments, was as follows:
2010
|
$ | 327,000 | ||
2011
|
$ | 145,000 | ||
Thereafter
|
$ | 206,000 |
Insurance, Depreciation and
Taxes
The
Company believes that the building is adequately
insured. Depreciation is determined using the straight-line method
over five to 31.5 years for tax purposes and 5 to 30 years for accounting
purposes. Real estate taxes paid for calendar year 2009 were
approximately $106,000.
ITEM
3. LEGAL
PROCEEDINGS
Seaboard Chemical
Corporation
In late
1991, the Company was identified by the North Carolina Department of
Environment, Health, and Natural Resources (“DEHNR”) as a member
of a large group of companies who had shipped hazardous waste to a disposal site
owner and operated by Seaboard Chemical Corporation (“Seaboard”). Accordingly,
DEHNR issued a Notice of Responsibility to advise the Company of its liability
as a potentially responsible party (“PRP”) with respect to
the site.
Seaboard
had operated the site in Jamestown, North Carolina for the storage, treatment
and disposal of hazardous waste materials for the period from 1976 to
1989. Operations at the site ceased in 1989 when Seaboard declared
bankruptcy. Beginning in 1990, the bankruptcy trustee for Seaboard
attempted to close the site in accordance with the terms of the Resource
Conservation and Recovery Act (“RCRA”). However,
insufficient funds were available to allow the trustee to complete this
work. As a result, the Federal Environmental Protection Agency (the
“EPA”) and the
DEHNR advised the trustee that if the clean up work were not completed, either
one or both of the agencies would complete the work and would sue the
responsible parties to recover the costs involved. To avoid the
possibility of this lawsuit, in October 1991, the Company entered into an
agreement with other responsible parties to form a group to complete the site
clean up work. Over the next two years, the necessary steps were
taken to complete the clean up of the surface contamination of the
site. In 1994, the Company joined a group to complete the groundwater
clean up (“Phase
II”). Phase II was to begin as soon as a satisfactory plan was
approved by the concerned authorities.
-3-
In June, 2009, the Company entered into
a settlement agreement in which it agreed to settle any potential claims for a
payment of $9,100.
Gold Coast
Oil
In 1981,
the Company was named by the U.S. Environmental Protection Agency (“EPA”) as one of many
potential PRPs with respect to chemical pollution discovered at a site known as
“Gold Coast Oil.”
In 1988,
a settlement was negotiated between the EPA and certain PRPs including the
Company, which resulted in a settlement of the EPA claim. The PRPs
subsequently negotiated a settlement among themselves in which the Company
agreed to pay $50,000 of the anticipated clean up costs. The
Company’s insurance carrier at the time of the alleged violations agreed to pay
$45,000 of this amount in return for a release from any future additional
claims.
In
January 1993, it was determined that additional funds would be required to
complete the clean up of the Gold Coast Oil site. The Company
received an assessment of $10,000 for this obligation and has included such
amount in accrued expenses in the accompanying balance sheets.
ITEM
4. SUBMISSION OF
MATTERS TO VOTE OF SECURITY HOLDERS
Not
applicable.
-4-
PART
II
ITEM
5. MARKET FOR THE
REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
The
Company’s common stock is currently traded on the over-the-counter market under
the symbol “MLLS”.
The range
of the high and low bid quotations for each quarter of the past two (2) fiscal
years is as follows:
FYE
|
CLOSING
BID
|
|||||||
2009
|
HIGH
|
LOW
|
||||||
5/1/08 - 7/31/08
|
$ | .06 | $ | .052 | ||||
8/1/08 - 10/31/08
|
$ | .052 | $ | .045 | ||||
11/1/09 - 1/31/09
|
$ | .045 | $ | .045 | ||||
2/01/09 - 4/30/09
|
$ | .045 | $ | .045 |
FYE
|
CLOSING
BID
|
|||||||
2008
|
HIGH
|
LOW
|
||||||
5/1/07 - 7/31/07
|
$ | .08 | $ | .08 | ||||
8/1/07 - 10/31/07
|
$ | .19 | $ | .08 | ||||
11/1/07 - 1/31/08
|
$ | .10 | $ | .06 | ||||
2/01/08 - 4/30/08
|
$ | .06 | $ | .06 |
As of
September 10, 2009, there were approximately 475 holders of record of the
Company’s common stock.
The
Company has not paid any cash dividends during the last three fiscal
years.
-5-
Equity
Compensation Plan Information
The following table presents
information regarding the Company’s equity compensation plans at April 30,
2009:
Plan Category
|
Number
of shares
of common
stock
to
be issued
upon
exercise of
outstanding
options,
warrants
and rights
|
Weighted-average
exercise
price of
outstanding
options, warrants
and rights
|
Number
of shares of
common
stock
remaining available
for
future issuance
under
equity compensation
plans (excluding
securities reflected
in
first column)
|
|||||||||
Equity
compensation plans approved by security holders
|
- | - | - | |||||||||
Equity
compensation plans not approved by security holders (1)
|
2,017,338
shares
|
$ | 0.18 | - | ||||||||
Total
|
2,017,338
shares
|
$ | 0.18 | - |
(1) On
June 30, 2005, the Company granted Mr. Napolitano stock options in recognition
of the substantial benefits provided to the Company by Mr. Napolitano through
his personal guaranty of the Company’s bank loan as well as the services in
which he has rendered to the Company in his capacity as the Company’s sole
officer and director. Under the terms of the option agreement, Mr.
Napolitano has the right to purchase up to 2,017,338 shares of the Company’s
common stock at a price of $0.18 per share. The options may be
exercised at any time during the ten year term of the options.
-6-
ITEM
6. SELECTED FINANCIAL
DATA
Not
Applicable
ITEM
7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results
of Operations (2008 compared to 2009)
Rental
Income
The
Company’s results of operations are primarily dependant upon the rental income
which it receives from leasing space in its building. Rental income
is a function of the percentage of the building which is occupied, and the level
of rental rates. Rental income during 2008 was $527,000, compared
with $481,000 in 2009. The increase in rental income was due to a
higher level of occupancy at the building.
Hardware
Sales
The
Company receives revenue from the sale of replacement parts for the sliding
glass doors and windows formerly manufactured by the Company. These
sales (net of cost of goods sold) were $500 in 2009 compared to $1,900 in
2008. The sales decrease was due to a decrease in demand for
replacement parts.
Other
Income
The
Company generated other income of $44,000 in 2008, compared to $22,000 in
2009. Other income in 2008 and 2009 principally consisted of interest
income.
Rental Expense (Excluding
Interest)
The
Company incurs rental expense in connection with the leasing of its
building. These expenses consist of management fees, insurance, real
estate taxes, depreciation and amortization, insurance, maintenance and repairs,
utility costs and outside services. Rental expenses were $194,000 in
2008 and $240,000 in 2009. The principal components were management
fees ($36,000 in 2008 and $43,000 in 2009), taxes ($82,000 in 2008 and $106,000
in 2009), depreciation and amortization ($33,000 in 2008 and $31,000 in 2009),
repairs and maintenance ($11,000 in 2008 and $9,000 in 2009) and insurance
($15,000 in 2008 and $25,000 in 2009).
Cost of Hardware
Sales
The
Company records the cost of its hardware sales in connection with the sale of
replacement parts to customers of its former window and sliding glass door
business. These costs are tied to the level of hardware
sales. These costs were not material in 2008 and 2009.
-7-
Administrative
Expenses
The
Company’s administrative expenses were $48,000 in 2009, compared to $51,000 in
2008.
Interest
Expense
The
Company pays interest on the mortgage loan on its building. Interest
expense on the loan was $79,000 in 2009 compared to $110,000 in
2008. The decrease was attributable to a decrease in the interest
rate on the Company’s mortgage loan.
Provision for Income
Taxes
The
provision for taxes (before realization of prior years’ tax benefits) was
$75,000 in 2008 and $41,000 in 2009. In 2009, the Company also
recorded a change of $131,000 in its valuation allowance related to its net
operation loss carryforwards due to the decline in the Company’s
profitability.
Net
Income
As a
result of the foregoing factors, the Company had a net loss of $36,000 in 2009,
compared to a net income of $230,000 in 2009.
Liquidity and Capital
Resources
The
Company’s cash increased by $244,000 during fiscal year 2008 compared with an
increase of approximately $159,000 during fiscal year 2009. The
increase in 2009 in cash was primarily due to positive cash flow from
operations. As of April 30, 2009, the Company’s cash position was
approximately $1,478,000.
At April
30, 2009, the Company’s principal financing consisted of a loan with a principal
balance of approximately $1,394,000 from a third party lender, secured by a lien
on the Company’s building. The loan bears interest at 4% per
annum. It is payable $10,000 per month, with a balloon payment
October 2009 in the approximate amount of $1,377,000. The note is
collateralized by the Company’s land and building, along with the personal
guaranty of the Company’s Chairman of the Board in the amount of 50% of the
mortgage balance. The Company expects to renew the loan in October
2009.
The
Company believes that its working capital needs over the next twelve months will
principally consist of funding routine maintenance of its building and
alterations to the interior of the building to accommodate new
tenants. The Company believes that its existing cash reserves will
allow the Company to continue operations at their current level for at least 12
more months. However, the Company’s long term prospects ultimately
depend on the Company’s ability to lease the space in its building at attractive
rates.
The
Company’s obligations to make payments under existing, material contracts
consists of the following:
-8-
|
·
|
The
Company is obligated to make payments under its existing mortgage
loan. At April 30, 2009, the outstanding balance of the loan
was $1,394,000. The loan bears interest at 4% per
annum. The loan is repayable in monthly installments of
approximately $10,000, with a balloon payment of approximately $1,377,000
due in October 2009.
|
|
·
|
The
Company has agreed to pay Harnap Corp., a corporation controlled by the
Company’s president and principal shareholder, $3,500 per month for
management fees. Accrued fees as of April 30, 2009 were
$317,000, all of which are payable upon the demand of
Harnap.
|
Current
Plans
The
Company operates as a real estate investment and management
company. The Company currently has three tenants for its existing
building and is seeking to obtain additional commercial tenants.
The
Company’s principal operating expenses consist of management and professional
fees associated with the administration of the Company, interest expense on the
Company’s mortgage loan, real estate taxes and insurance.
Critical Accounting
Policies
The
Securities and Exchange Commission (“SEC”) has issued
disclosure guidance for “Critical Accounting Policies.” The SEC
defines critical accounting policies as those that require the application of
management’s most difficult, subjective, or complex judgments, often because of
the need to make estimates about the effect of matters that are inherently
uncertain and may change in subsequent periods.
The
discussion and analysis of the Company’s financial condition and results of
operations are based upon its financial statements, the preparation of which
takes into account estimates based on judgments and assumptions that affect
certain amounts and disclosures. Accordingly, actual results could
differ from these estimates. The accounting policies and estimates
used and outlined in Note 1 to the Company’s financial statements, which are
presented elsewhere in this Form 10-K, have been applied consistently as at
April 30, 2009 and 2008, and for the years ended April 30, 2009 and
2008. The Company’s representatives who are involved in the
preparation of its financial statements and this report believe that the
following accounting policies represent the Company’s critical accounting
policies:
Valuation of Long-Lived
Assets: The Company periodically assesses the carrying value
of long-lived assets whenever events or changes in circumstances indicate that
their carrying amount may not be recoverable. When the Company
determines that the carrying value of long-lived assets may be impaired, the
measurement of any impairment is based on a projected discounted cash flows
method. While the Company believes that this method is reasonable,
different assumptions regarding such cash flows may significantly affect the
measurement of impairment.
-9-
Revenue
Recognition: Rental income is recognized when it becomes
receivable under the terms of each lease. Hardware sales are
recognized upon receipt of payment from customers.
Off-Balance Sheet
Arrangements and Aggregate Contractual Obligations
The
Company is not a party to any material off-balance sheet
arrangements.
The
following is a summary of the Company’s contractual obligations, including
certain on-balance sheet obligations, at April 30, 2009:
Payments Due by Period
|
||||||||||||||||||||
Contractual Obligations
|
Total
|
Less
Than
1 Year
|
1-3
Years
|
4-5
Years
|
More
Than 5
Years
|
|||||||||||||||
Long
Term Debt
|
$ | 1,394,000 | $ | 1,394,000 | - | - | - | |||||||||||||
Capital
Lease Obligations
|
- | - | - | - | - | |||||||||||||||
Operating
Leases
|
- | - | - | - | - | |||||||||||||||
Purchase
Obligations
|
- | - | - | - | - | |||||||||||||||
Other
Long Term Debt
|
||||||||||||||||||||
TOTAL
|
$ | 1,394,000 | $ | 1,394,000 | - | - | - |
ITEM
8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
The
Company’s financial statements and supplementary financial schedules are
attached as an exhibit to this report. See Items 14(a) and 14(b).
ITEM
9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
ITEM
9A. CONTROLS AND
PROCEDURES
In
connection with the filing of this Form 10-K, the Company’s Chief Executive
Officer and Chief Financial Officer evaluated the effectiveness of the Company’s
disclosure controls and procedures as of April 30, 2009. The
Company’s Chief Executive Officer and Chief Executive Financial Officer
concluded that the Company’s disclosure controls and procedures were effective
as of April 30, 2009.
There
were no changes in the Company’s internal controls over financial reporting that
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting during the fiscal quarter
ended April 30, 2009.
-10-
PART
III
ITEM
10. DIRECTORS AND EXECUTIVE OFFICERS OF
THE COMPANY
The
directors and executive officers of the Company are as follows:
Name
|
Position
|
Officer
Since
|
Director
Since
|
|||
Angelo
Napolitano
|
|
President,
Chief Executive Officer, and Chairman of the Board of
Directors
|
|
1992
|
|
1988
|
Each
director is elected for a period of one (1) year, or until his successor is duly
elected by the shareholders. Officers serve at the will of the Board of
Directors.
Angelo
Napolitano, age 72 has been President and Chief Executive Officer of the Company
since 1992. He has been a Director of the Company since 1988 and Chairman since
July 1989. Mr. Napolitano is the Chairman and Chief Executive Officer of Harnap
Corp., a commercial real estate management company which he founded in
1971. Since 1975, Mr. Napolitano has served as a director and
President of Sunshine State Industrial Park Authority, the property owners’
association for the industrial park in which the Company’s building is
located.
Compliance with Section
16(a) of the Securities Exchange Act of 1934
Based
solely upon a review of Forms 3, 4 and 5 furnished to the Company, all of the
Company’s directors and officers have filed reports on a timely
basis.
Audit Committee Financial
Expert
The
Company has determined that it does not have an audit committee financial
expert. The Company has not been able to identify an individual
willing to serve as an audit committee financial expert for the
Company.
Code of
Ethics
The
Company has adopted a code of ethics that applies to the Company’s officers and
persons performing similar functions.
ITEM
11. EXECUTIVE
COMPENSATION
The
following table sets forth information regarding the compensation paid by the
Company to the Company’s chief executive officer. None of the Company’s officers
in fiscal 2009 received compensation in excess of $100,000.
-11-
SUMMARY COMPENSATION
TABLE
Name and Position
|
Fiscal Year
|
Salary (1)
|
Shares
Underlying
Stock Options
Grant
|
|||||||
Angelo
Napolitano, Chief Executive Officer
|
2009
|
$ | 43,000 | - | ||||||
2008
|
$ | 36,000 | - | |||||||
2007
|
$ | 36,000 | - |
(1) Includes
management fees paid to Harnap Corp., a company controlled by Mr. Napolitano,
and director fees paid to Mr. Napolitano.
Options Granted in
2009
No stock
options were granted by the Company in the 2009 fiscal year.
Aggregate Option Exercises
in 2009 and Fiscal Year-End Option Values
The
following table sets forth information with respect to the exercise of options
in the 2009 fiscal year and the value of unexercised options held as of the end
of the 2009 fiscal year held by the executive officer listed above.
Shares
Acquired
on
Exercise
(#)
|
Value
Realized
($)
|
Number
of
Securities
Underlying
Unexercised
Options
at
4/30/09
|
Value
of
Unexercised
In-the-
Money Options at
4/30/09
($)
|
|||||||||||||
Name
|
Exercisable/
Unexercisable
|
Exercisable/
Unexercisable
|
||||||||||||||
Angelo
Napolitano
|
— | — | 2,017,338 / 0 | N/A |
Management
Agreement
In
October 1992, the Company agreed to pay Harnap Corp. a monthly management fee,
which is currently $3,500 per month. Harnap Corp. is owned and
controlled by Angelo Napolitano, the Company’s Chief Executive Officer and
Chairman of the Board. As of April 30, 2009, accrued management fees
totaled $317,000.
-12-
Compensation of
Directors
No
amounts were paid to directors during the 2009 fiscal year for services as
directors.
Stock
Options
On June
30, 2005, the Company granted Mr. Napolitano stock options in recognition of the
substantial benefits provided to the Company by Mr. Napolitano through his
personal guaranty of the Company’s bank loan as well as the services in which he
has rendered to the Company in his capacity as the Company’s sole officer and
director. Under the terms of the option agreement, Mr. Napolitano has
the right to purchase up to 2,017,338 shares of the Company’s common stock at a
price of $0.18 per share. The options may be exercised at any time
during the ten year term of the options.
-13-
ITEM
12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
To the
knowledge of management, as of September 10, 2009, the following persons
beneficially owned 5% or more of the common stock of the Company:
Name
and Address of
Beneficial Owner
|
Amount
Beneficial Owner
|
Percent
Of Class
|
||||||
Angelo
Napolitano
1521
N.W. 165th
Street
Miami,
FL 33169
|
3,148,594 | (1) | 63.0 | % | ||||
Elizabeth
Schuldiner Revocable
Trust
u/a 3/20/90 (2)
80
West 12th
Street
New
York, NY 10011
|
220,567 | 7.4 | % | |||||
Walter
P. Carucci (3)
Uncle
Mills Partners (3)
c/o
Carr Securities Corp. (3)
14
Vanderventer Avenue
Suite
210
Port
Washington, NY 11050
|
273,394 | 9.2 | % |
(1) Mr.
Napolitano has sole voting and investment power with respect to 1,121,256 shares
which he holds of record. Mr. Napolitano has shared voting and investment power
with respect to 10,000 shares which he owns jointly with his wife, Mrs. Helen
Napolitano. Mr. Napolitano is entitled to acquire an additional
2,017,338 shares under outstanding stock options.
(2) Based
on information disclosed in a Schedule 13G filed with the Securities and
Exchange Commission (“SEC”) on June 9,
2006. Elizabeth Schuldiner Revocable Trust has sole voting and
investment power with respect to the shares.
(3) Based
on information disclosed in a Schedule 13G filed with the SEC on February 17,
2009. Walter P. Carucci and Uncle Mills Partners have identified
themselves as a “group” as that term is used in the Securities Exchange Act of
1934, as amended. Walter P. Carucci has sole voting and investment
power with respect to 100,889 shares. Uncle Mills Partners has sole
and investment power with respect to 172,505 shares.
The
shares of common stock beneficially owned by the Company’s sole director and
executive officer as of September 10, 2009 were as follows:
-14-
Name
and Address of
Beneficial Owner
|
Amount
Beneficial Owner (1)
|
Percent
Of Class
|
||||||
Angelo
Napolitano
1521
N.W. 165th
Street
Miami,
FL 33169
|
3,148,594 | (2) | 63.0 | %(2) |
(1) Except
as otherwise indicated, each person has sole voting and investment power as to
the listed shares.
(2) With
respect to Mr. Napolitano’s shares, see Note (1) to the preceding
table.
-15-
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
The
Company has entered into a brokerage agreement with Napolitano Realty
Corporation (“NRC”) with respect to
the lease of the Company’s building. The President of NRC is the son
of Mr. Angelo Napolitano, the Company’s President and Chairman of the
Board. The agreement provides for a 6% commission to be paid to NRC
on sales or lease proceeds received by the Company. No commissions
were paid under this agreement for the 2009 fiscal year.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Larry
Wolfe, CPA performed the review of each of the Company’s quarterly reports for
the 2009 fiscal year and the audit of the Company’s financial statements for the
year ended April 30, 2009.
The
following table presents fees billed for professional audit and other services
rendered by Larry Wolfe, CPA for the periods presented.
Fiscal 2009
|
Fiscal 2008
|
|||||||
Fees
billed by Larry Wolfe, CPA
|
||||||||
Audit
Fees(1)
|
$ | 15,100 | $ | 13,633 | ||||
Audit
Related Fees (2)
|
$ | — | — | |||||
Tax
Fees(3)
|
$ | 750 | 500 | |||||
All
Other Fees (4)
|
— | — | ||||||
Total
|
$ | 15,850 | $ | 14,133 |
(1)
|
Audit
Fees consist of fees billed for professional services rendered for the
audit of the Company’s consolidated annual financial statements and review
of the interim consolidated financial statements included in quarterly
reports and services normally provided in connection with statutory and
regulatory filings or engagements.
|
(2)
|
Audit-Related
Fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the
Company’s consolidated financial statements and are not reported under
“Audit Fees,” including registration statement
filings.
|
(3)
|
Tax
Fees consist of fees billed for professional services rendered for tax
compliance, tax consultation and tax planning (domestic and
international). These services include assistance regarding
federal, state and international tax compliance and international tax
planning.
|
(4)
|
All
Other Fees consist of fees for products and services other than the
services reported above.
|
-16-
PART
IV
ITEM 15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
10-KSB
|
|
(a)
|
Financial
Statements
|
Report of
Independent Certified Public Accountants
Balance
Sheets as of April 30, 2009 and 2008
Statements
of Operations for Years ended April 30, 2008 and 2007.
Statements
of Changes in Shareholders Equity (Deficiency) for Years ended April 30, 2009
and 2008
Statements
of Cash Flows for Years ended April 30, 2009 and 2008
Notes to
Financial Statements
|
(b)
|
All
schedules have been omitted because they are inapplicable, not required or
the information is included elsewhere in the financial statements or notes
thereto.
|
|
(c)
|
Exhibits
|
3.1
|
Articles
of Incorporation
|
(Note
1)
|
3.2
|
Articles
of Amendment
|
(Note
2)
|
3.3
|
By-laws
|
(Note
1)
|
3.4
|
Amendment
to By-laws – Indemnification
|
(Note
1)
|
3.5
|
Amendment
to By-laws —Control Share Acquisitions
|
(Note
3)
|
10.1
|
Indemnification
Agreement with Directors
|
(Note
4)
|
10.2
|
Amended,
Restated and Consolidated Promissory Note dated October 13, 1999 made by
Miller Industries, Inc. in favor of City National Bank of
Florida
|
(Note
5)
|
14.1
|
Code
of Ethics
|
(Note
6)
|
31.1*
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to Rule
13a-14(a)
|
|
32.1*
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted by Section 906 of Sarbanes-Oxley Act of
2002
|
|
Note
1
|
Incorporated
by reference from the Form 10-K filed with the Commission for the year
ended April 30, 1981.
|
|
Note
2
|
Incorporated
by reference from Form 10-K filed with the Commission for the year ended
April 30, 1985.
|
-17-
Note
3
|
Incorporated
by reference from the Form 10-K filed with the Commission for the year
ended April 30, 1993.
|
|
Note
4
|
Incorporated
by reference from the Form 10-K filed with the Commission for the year
ended April 30, 1990.
|
|
Note
5
|
Incorporated
by reference from the Form 10-K filed with the Commission for the fiscal
year ended April 30, 1999.
|
|
Note
6
|
Incorporated
by reference from the Form 10-KSB filed with the Commission for the fiscal
year ended April 30, 2004.
|
|
(*)
|
Filed
as part of this report
|
|
(d)
|
Reports
on Form 8-K
|
There
were no reports on Form 8-K for the three months ended April 30,
2009.
-18-
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized on October 9, 2009.
MILLER
INDUSTRIES, INC.
|
||
/s/ Angelo
Napolitano
|
||
By:
|
Angelo
Napolitano, President
And
Chief Executive Officer
|
In accordance with the Exchange Act,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on October 9,
2009.
Signature
|
Title
|
||
/s/
Angelo Napolitano
|
President,
Chief Executive
|
||
Angelo
Napolitano
|
Officer,
and Director
(Principal
Executive Officer)
(Principal
Financial Officer)
(Principal
Accounting
Officer)
|
-19-
INDEPENDENT
AUDITOR’S REPORT
Shareholders
and Board of Directors
Miller
Industries, Inc.
Miami,
Florida
I have
audited the accompanying balance sheets of Miller Industries, Inc. as of April
30, 2009 and 2008, and the related statements of operations, shareholders’
deficiency, and cash flows for each of the two years in the period ended April
30, 2009. These financial statements are the responsibility of the
Company’s management. My responsibility is to express an opinion on
these financial statements based on my audits.
I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that I plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor was I engaged to perform, an audit of its
internal control over financial reporting. My audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the company’s
internal control over financial reporting. Accordingly, I express no
such opinion. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable basis for
my opinion.
In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Miller Industries, Inc. as of April
30, 2009 and 2008 and the results of its operations and its cash flows for each
of the two years in the period ended April 30, 2009, in conformity with
accounting principles generally accepted in the United States of
America.
/s/ Larry
Wolfe
|
|
LARRY
WOLFE
|
|
Certified
Public Accountant
|
Miami,
Florida
August
18, 2009
F-1
MILLER
INDUSTRIES, INC.
BALANCE
SHEET
APRIL 30, 2009 AND
2008
ASSETS
2009
|
2008
|
|||||||
Investment Property:
|
||||||||
Land
|
$ | 161,443 | $ | 161,443 | ||||
Building
and Improvements
|
1,049,908 | 1,049,908 | ||||||
Machinery
and Equipment
|
11,106 | 11,106 | ||||||
Furniture
and Fixtures
|
10,251 | 10,251 | ||||||
Total
Cost
|
$ | 1,232,708 | $ | 1,232,708 | ||||
Less
Accumulated Depreciation
|
860,467 | 843,540 | ||||||
Net
Book Value
|
$ | 372,241 | $ | 389,168 | ||||
Other Assets:
|
||||||||
Cash
and Cash Equivalents
|
1,477,521 | 1,318,950 | ||||||
Accounts
Receivable (Less Allowance for Doubtful Accounts of $ 15,000 in 2009 and
2008
|
10,561 | 14,525 | ||||||
Prepaid
Expenses and Other Assets
|
2,095 | 9,469 | ||||||
Deferred
Lease Incentive (Net of Accumulated Amortization - $ 53,403 in 2009 and
$50,802)
|
4,195 | 22,798 | ||||||
Loan
Costs, Less Accumulated Amortization of $25,030 and $22,395 in 2009 and
2008, respectively
|
1,318 | 9,953 | ||||||
Deferred
Tax Assets
|
11,000 | 183,000 | ||||||
Deferred
Rent Receivable
|
–– | 16,192 | ||||||
Total
Other Assets
|
$ | 1,506,690 | 1,568,887 | |||||
TOTAL
ASSETS
|
$ | 1,878,931 | $ | 1,958,055 |
F-2
LIABILITIES AND
SHAREHOLDERS’ EQUITY (DEFICIENCY)
Liabilities:
|
||||||||
Mortgage
and Notes Payable
|
$ | 1,394,343 | $ | 1,449,945 | ||||
Accounts
Payable and Accrued Expenses
|
428,301 | 419,202 | ||||||
Tenant’s
Deposits and Advance Rent
|
72,640 | 69,650 | ||||||
Total
Liabilities
|
$ | 1,895,284 | $ | 1,938,797 | ||||
Shareholders’
Deficiency:
|
||||||||
Common
Stock - $.05 par, 5,00,000 shares Authorized; 2,982,662 shares issued and
Outstanding
|
$ | 149,133 | $ | 149,133 | ||||
Paid-In
Capital
|
1,191,929 | 1,191,929 | ||||||
Deficit
|
(1,357,415 | ) | (1,321,804 | ) | ||||
Total
Shareholders’ Equity (Deficiency)
|
$ | (16,353 | ) | $ | 19,258 | |||
TOTAL
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
|
$ | 1,878,931 | $ | 1,958,055 |
See
Accompanying Notes to Financial Statements.
F-3
MILLER INDUSTRIES,
INC.
STATEMENT OF
OPERATIONS
YEARS ENDED APRIL 30, 2009
AND 2008
2009
|
2008
|
|||||||
Revenues:
|
||||||||
Rental
Income
|
$ | 480,742 | $ | 527,320 | ||||
Hardware
Sales (Net)
|
501 | 1,936 | ||||||
Other
Income
|
21,741 | 43,811 | ||||||
Total
Revenues
|
$ | 502,984 | $ | 573,067 | ||||
Expenses:
|
||||||||
Rental
Expenses (Except Interest)
|
$ | 239,748 | $ | 194,408 | ||||
Cost
of Hardware Sales
|
- | - | ||||||
Administrative
|
48,293 | 51,366 | ||||||
Interest
|
78,554 | 110,319 | ||||||
Total
Expenses
|
$ | 366,595 | $ | 356,093 | ||||
Income
Before Tax Provision
|
$ | 136,389 | $ | 216,974 | ||||
Provision (Benefit)
for Income Tax:
|
||||||||
Federal
Income Tax
|
$ | 33,624 | $ | 63,323 | ||||
State
Income Tax
|
7,226 | 11,658 | ||||||
Provision
for Income Tax Before Realization of Prior Years’ Tax
Benefit
|
$ | 40,850 | $ | 74,981 | ||||
Tax
Benefits of Net Operating Loss Carryforward - Change in Valuation
Allowance
|
131,150 | (87,981 | ) | |||||
Total
Provision (Credit) for Income Tax (Net of Tax Benefits) and
Change in Valuation Allowance
|
$ | 172 ,000 | $ | (13,000 | ) | |||
Net
Income (Loss)
|
$ | (35,611 | ) | $ | 229,974 | |||
Income
(Loss) per Common Share
|
$ | (.01 | ) | $ | .08 | |||
Weighted
Average Shares of Common Stock Outstanding
|
||||||||
(Basic
and Diluted)
|
2,982,662 | 2,982,662 |
See
Accompanying Notes to Financial Statements.
F-4
MILLER INDUSTRIES,
INC.
STATEMENT OF CASH
FLOWS
YEARS ENDED APRIL 30, 2009
AND 2008
2009
|
2008
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
Income (Loss)
|
$ | (35,611 | ) | $ | 229,974 | |||
Adjustments
to Reconcile Net Income to Net Cash Provided by (used for) Operating
Activities:
|
||||||||
Depreciation
|
16,927 | 16,927 | ||||||
Amortization
|
14,304 | 15,904 | ||||||
Deferred
Tax Asset Valuation Adjustment
|
172.000 | (13,000 | ) | |||||
Bad
Debt Provision
|
10,027 | 12,000 | ||||||
Loss
on Deferred Lease Incentives
|
6,934 | - | ||||||
Changes
in Operating Assets and Liabilities:
|
||||||||
(Increase)
Decrease in Accounts Receivable
|
3,964 | (21,906 | ) | |||||
(Increase)
Decrease in Deferred Rent Receivable
|
6,165 | 8,070 | ||||||
(Increase)
Decrease in Prepaid Expenses and Other
|
7,374 | (3,953 | ) | |||||
Increase
(Decrease) in Accounts Payable and Accruals
|
9,099 | 43,499 | ||||||
Increase
(Decrease) in Tenant Deposits and Advances
|
2,990 | - | ||||||
Net
Cash Provided by Operating Activities
|
$ | 214,173 | $ | 287,515 | ||||
Cash Flows from
Investing Activities:
|
||||||||
Acquisition
of Property, Equipment, and Intangible
|
$ | - | $ | - | ||||
Net
Cash (used by) Investing Activities
|
$ | - | $ | - | ||||
Cash Flows from
Financing Activities:
|
||||||||
Principal
Payments Under Borrowings
|
$ | (55,602 | ) | $ | (43,130 | ) | ||
Proceeds
from Borrowings
|
- | - | ||||||
Net
Cash Provided by (used by) Financing Activities
|
$ | (55,602 | ) | $ | (43,130 | ) | ||
Net
Increase in Cash and Cash Equivalents
|
$ | 158,571 | $ | 244,385 | ||||
Cash and Cash Equivalents at the Beginning of
Year
|
1,318,950 | 1,074,565 | ||||||
Cash and Cash Equivalents at the End of
Year
|
$ | 1,477,521 | $ | 1,318,950 | ||||
Additional
Cash Flow Information:
|
||||||||
Cash
Payments During the Year
|
||||||||
Interest
|
$ | 80,733 | $ | 110,979 | ||||
Income
Taxes
|
$ | - | $ | - |
See
Accompanying Notes to Financial Statements.
F-5
MILLER INDUSTRIES,
INC.
STATEMENT OF SHAREHOLDERS’
EQUITY (DEFICIENCY)
YEARS ENDED APRIL 30, 2009
AND 2008
Common Stock
|
||||||||||||||||||||
Shares
|
Additional
|
Paid-In
|
||||||||||||||||||
Issued
|
Amount
|
Capital
|
(Deficit)
|
Total
|
||||||||||||||||
Balance
at April 30, 2007
|
2,982,662 | 149,133 | $ | 1,191,929 | $ | (1,551,778 | ) | $ | (210,716 | ) | ||||||||||
Net
Income - 2008
|
- | - | - | 229,974 | 229,974 | |||||||||||||||
Balance
at April 30, 2008
|
2,982,662 | $ | 149,133 | $ | 1,191,929 | $ | (1,321,804 | ) | $ | 19,258 | ||||||||||
Net
(Loss)–2009
|
- | - | - | (35,611 | ) | (35,611 | ) | |||||||||||||
Balance
at April 30, 2009
|
2,982,662 | $ | 149,133 | $ | 1,191,929 | $ | (1,357,415 | ) | $ | (16,353 | ) |
See
Accompanying Notes to Financial Statements.
F-6
MILLER INDUSTRIES,
INC.
NOTES TO FINANCIAL
STATEMENTS
APRIL 30,
2009 AND 2008
NOTE A - Summary of
Significant Accounting Policies
1.
|
Nature
of Business -
|
Miller
Industries, Inc., a Florida corporation, currently and since August 1991, has
been engaged in the ownership and management of 98,000 square feet of offices
and warehouse located in Miami, Florida. The Company also distributes hardware
parts for aluminum windows and doors previously manufactured by
Miller. During August 1991, the Company discontinued its operations
of manufacturing of aluminum windows and doors pursuant to a plan of
reorganization.
2.
|
Real
Property -
|
Property
is carried at cost. The Company calculates depreciation under the
straight-line method at annual rates based upon the estimated service lives of
each type of asset. These service lives are generally as
follows:
Building
and Improvements
|
10
to 30 years
|
Machinery
and Equipment
|
7
years
|
Furniture
and Fixtures
|
7
years
|
Real
property and equipment, with an original cost of approximately $ 720,000, have
been
fully depreciated at April 30, 2009.
3.
|
Deferred
Costs
-
|
Deferred
lease incentive and loan costs are carried at cost. The Company
amortizes these assets on a straight-line basis up to 10 years. Deferred Rent
Receivable is recoverable over the period of the lease.
4.
|
Income
Taxes -
|
The
Company adopted Statement of Financial Accounting Standards No. 109, “Accounting
for Income Taxes”. Under SFAS 109, deferred tax assets and
liabilities are determined based on differences between the financial reporting
and tax basis of assets and liabilities and are measured by applying enacted tax
rates and laws to taxable years in which such differences are expected to
reverse.
F-7
Miller
Industries, Inc.
Notes to
Financial Statements
5.
|
Earnings
Per Share
-
|
|
In
accordance with Financial Accounting Standards No. 128, basic earnings per
share is computed based on the weighted-average number of common shares
outstanding during each year and excludes any potential
dilution. Diluted earning per share is based on the
weighted-average number of common shares outstanding as well as
potentially dilutive common shares, which in the Company’s case include
shares issuable under the stock option agreement. The Company’s
outstanding options are not included in the computation of basic or
diluted earnings per share since they are anti-dilutive. At
April 30, 2009 potentially dilutive securities consist of an option that
could be converted into 2,017,338 common
shares.
|
6.
|
Cash
and Cash Equivalents
–
|
|
The
Company considers all short-term investments with an original maturity of
three months or less to be cash
equivalents.
|
|
The
balances are insured by the Federal Deposit Insurance Corporation up to
$250,000. At April 30, 2009, and 2008 the Company’s uninsured bank
balances approximated $1,173,000 and $ 376,000 respectively. The Company’s
Cash Equivalents at April 30, 2008 was composed of approximately $ 800,000
of U.S. Treasury Bills.
|
7.
|
Financial
Instruments
-
|
The
carrying amounts of cash and cash equivalents, other assets, accounts payable,
and debt approximate fair value.
8.
|
Concentrations
-
|
The
Company is subject to certain risk arising from the concentration of its tenant
income from entities that comprise 10% or more of the Company’s revenue. Tenant
“A” 49% of Revenue. Tenant “B” 33% of
Revenue. Tenant “C” 17% of Revenue.
9.
|
Revenue
Recognition
-
|
The
Company recognizes rental income on a straight-line basis over the respective
lease terms. In accordance with SFAS No. 141. The Company
recognizes hardware sales upon shipment of goods to customers.
10.
|
Environmental
Cleanup Matters
-
|
|
The
Company expenses environmental expenditures related to existing conditions
resulting from past or current operations and from which no current or
future benefit is discernable. The Company determines its
liability on a site-by-site basis and records a liability at the time when
it is probable and can be reasonably
estimated.
|
F-8
Miller
Industries, Inc.
Notes to
Financial Statements
11.
|
Use
of Estimates
-
|
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes
Actual results could differ from those estimates. The most
significant estimates included in the preparation of the financial statements
are related to income taxes, asset lives, accruals and valuation
allowances.
12.
|
Comprehensive
Income
-
|
In June
1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 “Reporting Comprehensive Income”, which is
effective for fiscal years beginning after December 15, 1997. SFAS
No. 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements
which requires the Company to (i) classify items of other comprehensive income
by their nature in a financial statement and (ii) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in-capital in the equity section of the balance
sheet. The company does not have any comprehensive income for fiscal
2009 and 2008.
13.
|
Long-Lived
Assets
-
|
In August
2001, the Financial Accounting Standards Board (“FASB”) approved SFAS
No. 144 “Accounting for the Impairment or Disposal of Long-Lived
Assets”. SFAS No. 144 replaces SFAS No. 121 “Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of”. The Company adopted SFAS No. 144 on May 1, 2002 as required, and
the statement is not expected to have a material impact on the Company’s results
of operations or financial position. Under SFAS No. 144, the Company
must consider whether indicators of impairment of long-lived assets are present,
determine whether the sum of the estimated undiscounted future cash flows
attributable to the assets in question is less than their carrying amounts, and
to recognize an impairment loss based on the excess of the carrying amounts of
the assets over their respective fair values. The respective fair
values of the Company’s long-lived assets exceeded their carrying amounts at
April 30, 2009 based on a quoted market price.
F-9
Miller
Industries, Inc.
Notes to
Financial Statements
14.
|
Segments
-
|
The
Company adopted SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information (“SFAS
131"). SFAS 131 superseded SFAS No. 14, Financial Reporting
for Segments of a Business Enterprise. SFAS 131 establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements and requires that those enterprises
report selected information about operating segments in interim financial
reports. SFAS 131 also establishes standards for related disclosures
about products and services, geographic areas, and major
customers. The Company only has one business segment.
15.
|
Derivative
Instruments
-
|
|
In
June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities (“SFAS 133"),
which is required to be adopted in years beginning after June 15,
2000. SFAS 133 will require the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives
that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of derivatives will either be
offset against the change in fair value of hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive
income until the hedged item is recognized in earnings. The
ineffective portion of a derivative’s change in fair value will be
immediately recognized in earnings. The Company has determined
that SFAS 133 did not have an effect on its financial position or results
of operations.
|
In April
2003, the FASB issued Statement 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133. SFAS No. 149 improves
financial reporting by requiring that contracts with comparable characteristics
be accounted for similarly.
16.
|
Stock-Based
Compensation
-
|
|
In
December 2004, the FASB issued FAS 123R, Share-Based Payment. The new rule
requires that the compensation cost relating to share-based payment
transactions be recognized in financial statements. That cost will be
measured based on the fair value of the equity or liability instruments
issued. The scope of SFAS 123R includes a wide range of share-based
compensation arrangements including share options, restricted share plans,
performance-based awards, share appreciation rights, and employee share
purchase plans. SFAS 123R replaces SFAS 123 and Accounting Principles
Board option 25. The company elected to early adopt SFAS 123R on April 30,
2006. The adoption of SFAS 123R resulted in additional compensation
expense of approximately $65,000 for fiscal
2006.
|
F-10
Miller
Industries, Inc.
Notes to
Financial Statements
17.
|
Pensions
and Other Post-Retirement Benefits
-
|
Effective
January 3, 2001, the Company adopted the provisions of SFAS No. 132, Employers’
Disclosures about Pensions and other Post-Retirement Benefits (“SFAS
132"). SFAS 132 supersedes the disclosure requirements in SFAS
No. 87, Employers’ Accounting for Pensions, and SFAS No. 106, Employers’
Accounting for Post-Retirement Benefits Other Than Pensions. The
overall objective of SFAS 132 is to improve and standardize disclosures about
pensions and other post-retirement benefits and to make the required information
more understandable. The adoption of SFAS 132 did not affect results
of operations or financial position.
The
Company has not initiated benefit plans to date which would require disclosure
under the statement.
18.
|
Advertising
Costs
-
|
Advertising
costs are charged to operations in the period incurred. The Company
has not incurred any advertising costs for fiscal 2009 and 2008.
19.
|
Business
Concentrations
–
|
Rental
income of the Company’s office and warehouse building is subject to the economic
conditions of the industrial real estate market place. Changes in
this industry may significantly affect management’s estimates and the Company’s
performance.
20.
|
Accounting
Changes and Error Corrections
-
|
In May
2005, the FASB issued SFAS No. 154, Accounting Changes and Error
Corrections. This new standard replaces APB opinion No. 20,
Accounting Changes and SFAS No. 3, Reporting Accounting Changes in Interim
Financial Statements, among other changes, SFAS 154 requires that a voluntary
change in accounting principle be applied retrospectively with all prior period
financial statements presented on the new accounting principle, unless it is
impracticable to do so. SFAS No. 154 also provides that a change in
method of depreciating or amortizing a long-lived non-financial asset be
accounting for as a change in estimate prospectively, and corrections of errors
in previously issued financial statements should be termed a
“restatement.” The new standard is effective for accounting changes
and correction of errors made in fiscal years beginning after June 1,
2005. The adoption of SFAS No. 154 did not have a material impact on
the company’s financial condition or result of operations.
F-11
Miller
Industries, Inc.
Notes to
Financial Statements
21.
|
Tenant’s
Security Deposits –
|
The
Company requires security deposits from lessees for the duration of the
lease. The security deposits are refunded when the tenant vacates,
provided the tenant has not damaged the space and is current on rental
payments.
22.
|
Fair
Value Measurements -
|
In
September 2006, the FASB issued SFAS No. 157 “Fair Value
Measurements”. SFAS No. 157 defines fair value as the price that would be
received to sell as asset or paid to transfer a liability in an orderly
transaction between market participants in the market in which the reporting
entity transacts. SFAS No. 157 applies whenever other standards
require assets or liabilities to be measured at fair value and does not expand
the use of fair value in any new circumstances. SFAS No. 157 establishes a
hierarchy that prioritizes the information used in developing fair value
estimates. The Hierarchy gives the highest priority to quoted prices
in active markets and the No. 157 requires fair value measurements to be
disclosed by level within the fair value hierarchy. SFAS No. 157 is
effective for fiscal years beginning after November 15, 2007. The
Company does not anticipate that the adoption of SFAS No. 157 will have a
material effect on the financial statements.
23.
|
Fair
Value Option for Financial Assets and Financial Liabilities
-
|
In
February 2007, the FASB issued SFAS No. 159, “ The Fair Value Option for
Financial Assets and Financial Liabilities”. SFAS No. 159 permits
entities to choose to measure many financial instruments and certain other items
at fair value that are not currently required to be measured at fair
value. The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. SFAS No. 159 also establishes
presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar types
of assets and liabilities. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. The Company has not yet determined
whether it will elect the fair value option for any of its financial
instruments.
F-12
Miller
Industries, Inc.
Notes to
Financial Statements
NOTE
B - Mortgage Payable
Principal
balances outstanding and details of notes payable are summarized as
follows:
2009
|
2008
|
|||||||
4% note payable, collateralized by mortgage on
land and building, improvements, personal property, collateral assignment
of all rents and leases, along with the personal guaranty of the Company’s
Chairman of the Board to 50% of all sums due under the loan. In
addition, the guarantor shall indemnify lender from any and all liability
which may result from the environmental condition of the
property. The note is payable in monthly installments of
$10,071 (including interest) with a final payment of approximately
$1,377,000 due October 2009.
|
$ | 1,394,343 | $ | 1,449,945 |
Payments
of principal required on the foregoing debt are as follows:
Fiscal
Year
|
||||
Ending
|
||||
2010
|
1,394,343 | |||
Thereafter
|
- | |||
Total
|
$ | 1,394,343 |
Land,
buildings and improvements, with an approximate cost of $1,222,000
and an approximate net book value of $ 381,900 are pledged as collateral for
these obligations.
NOTE
C – Income Taxes
The provision (benefit) for income
taxes consists of the following:
2009
|
2008
|
|||||||
Current
|
$ | 42,423 | $ | 85,508 | ||||
Deferred
|
(1,573 | ) | (10,527 | ) | ||||
Tax
Benefit of Net Operating
|
||||||||
Loss
Carryforward and Addition to Valuation Allowance
|
131,150 | (87,981 | ) | |||||
Total
|
$ | 172,000 | $ | (13,000 | ) |
F-13
Miller
Industries, Inc.
Notes to
Financial Statements
Deferred income taxes arise primarily
due to temporary differences in recognizing certain revenues and expenses for
tax purposes, the required use of extended lives for calculation of depreciation
for tax purposes, and the expected use of tax loss carryforwards in future
periods. The components of the net deferred tax asset at April 30,
2009 and 2008 are as follows:
2009
|
2008
|
|||||||
Properties
and Equipment principally due to depreciation
|
$ | 59,296 | $ | 57,899 | ||||
Compensation
– Value of Stock Option Granted
|
24,599 | 24,599 | ||||||
Provision
for Bad Debts
|
5,640 | 5,640 | ||||||
Net
operating loss carry forward (Net of $ 347,747 expired in
2007)
|
87,600 | 138,882 | ||||||
Total
gross deferred tax assets
|
$ | 177,135 | $ | 227,020 | ||||
Less:
Valuation allowance
|
166,135 | 44,020 | ||||||
Net
Deferred Tax Asset
|
$ | 11,000 | $ | 183,000 |
A
valuation allowance is provided to reduce the deferred tax assets to a level
which, more likely than not, will be realized. The net deferred
assets reflect management’s assessment of the amount which will be realized from
future taxable earnings or alternative tax strategies. The valuation
allowance was increased by approximately $172,000 for 2009, and decreased by
approximately $ 13,000 for 2008.
At April
30, 2009, the Company had approximately $ 233,000 of Federal and State net
operating loss carry’s forward available to offset future taxable income. The
net operating loss carryforwards will expire as follows:
2011
|
$ | 60,000 | ||
2012
|
67,500 | |||
2013
|
105,300 | |||
2019
|
200 | |||
Total
|
$ | 233,000 |
At April
30, 2009, the Company had alternative minimum tax credit carryforwards of
approximately $3,500 which my be carried forward indefinitely.
Total
Federal tax expense for years ended April 30, 2009 and 2008 differed from the
amount computed by applying the U.S. federal income tax rate of 34% to income
(loss) from continuing operations before income tax for the following
reasons:
F-14
Miller
Industries, Inc.
Notes to
Financial Statements
2009
|
2008
|
|||||||||||||||
Percent
|
Percent
|
|||||||||||||||
Of
Pre-Tax
|
Of
Pre-Tax
|
|||||||||||||||
Amount
|
Income
|
Amount
|
Income
|
|||||||||||||
Income
before provision for income taxes
|
$ | 136,389 | 100 | % | $ | 216,974 | 100 | % | ||||||||
Computed
expected tax expense
|
$ | 46,372 | 34 | % | $ | 73,771 | 34 | % | ||||||||
Federal
tax (benefit) of State Income Tax
|
(2,457 | ) | (2 | ) | (3,964 | ) | (2 | ) | ||||||||
Sur
Tax Exemption
|
(10,291 | ) | (7 | ) | (6,484 | ) | (3 | ) | ||||||||
Federal
Tax Before Tax Benefits
|
$ | 33,624 | 25 | % | $ | 63,323 | 29 | % | ||||||||
Tax
Benefits of Net Operating Loss Carryforwards- Change in Valuation
Allowance
|
113,376 | 83 | (74,323 | ) | (34 | ) | ||||||||||
Actual
Federal Tax (Benefits)
|
$ | 147,000 | 108 | % | $ | (11,000 | ) | (5 | ) % |
NOTE
D - Rental Income
During
2009 the company leased warehouse and manufacturing space to three unrelated
third parties under leases that expire at various dates thru fiscal
2013. Rental income approximated $ 481,000 and $ 527,000 for fiscal
2009 and 2008, respectively. Rental income from these leases amounted
to 99 % of the total 2009 rental income and 100 % of the total 2008 rental
income.
Effective
October 31, 2008 a tenant leasing approximately 23,800 square feet vacated the
building and it’s lease obligations. For the year ended April 30,
2009 The Company charged to expense deferred rent receivable for approximately $
10,000 and Deferred Lease Incentives in the approximate amount of $ 7,000 in
connection with this tenant.
Future
minimum rental income under non-cancelable leases, excluding cost of living
adjustments are as follows:
2010
|
$ | 327,234 | ||
2011
|
$ | 145,318 | ||
2012
|
$ | 145,318 | ||
Thereafter
|
$ | 60,550 |
F-15
Miller
Industries, Inc.
Notes to
Financial Statements
NOTE
E - (Rental Expenses (Except for Interest)
Rental
expenses consisted of:
2009
|
2008
|
|||||||
Bad
Debt- Provision
|
$ | 10,027 | $ | 12,000 | ||||
Commissions
and Consulting
|
3,682 | - | ||||||
Depreciation
and Amortization
|
31,231 | 32,831 | ||||||
Insurance
|
25,125 | 15,321 | ||||||
Loss
on Deferred Lease Incentives
|
6,934 | - | ||||||
Management
Fees
|
43,000 | 36,000 | ||||||
Outside
Services
|
2,399 | 2,099 | ||||||
Repairs
and Maintenance
|
8,656 | 10,546 | ||||||
Utilities
|
2,518 | 3,491 | ||||||
Taxes
|
106,176 | 82,120 | ||||||
Totals
|
$ | 239,748 | $ | 194,408 |
NOTE
F - Administrative Expenses
Administrative
expenses consisted of:
2009
|
2008
|
|||||||
Accounting
and Legal
|
$ | 22,474 | $ | 24,868 | ||||
Office
Supplies/Postage/Other
|
542 | 668 | ||||||
Stockholders’
Expenses
|
24,309 | 24,286 | ||||||
Telephone
|
968 | 1,544 | ||||||
Totals
|
$ | 48,293 | $ | 51,366 |
NOTE
G - Related Party Transactions
Management fees in the amount of
$43,000 for 2009 and $36,000 for 2008 were incurred by the Company to Harnap
Corp., which is controlled by the Chairman of the Board of Miller Industries,
Inc. Harnap Corp. was reimbursed for bookkeeping services, tenant
improvements, repairs, and office supplies during fiscal 2009 and 2008 for
approximately $ 18,000 for each year. Included in accounts payable is
approximately $ 317,000 for 2009 and 2008 that is owned to Harnap
Corp. The mortgage is guaranteed by the Company’s Chairman for up to
50% of all sums due.
F-16
Miller
Industries, Inc.
Notes to
Financial Statements
NOTE
H – Stock Option Agreement
On June 30, 2005 the Company issued
stock options to Angelo Napolitano in exchange for the benefits he has provided
to the Company through his personal guarantee of the company’s bank loan, and
the services rendered by Mr. Napolitano in his capacity as the company’s sole
officer and director. The options vest 100% at the grant date and
expire in 10 years from the grant date. The company granted options
to Mr. Napolitano to purchase up to 2,017,338 shares of the Company’s Common
Stock during the term of the Options at a price equal to $ .18 per share
(Exercise Price).
The
average fair values of the options granted during fiscal 2006 were estimated
at $.0324, using the Black-Scholes options-pricing model, which
included the following assumptions:
2006
|
||||
Stock
Price
|
$ | .05 | ||
Strike
Price
|
.18 | |||
Expected
Life
|
9.17 years
|
|||
Risk-Free
Interest Rate
|
3.80 | % | ||
Volatility
|
79.23 | % |
Approximately $65,400 was recorded as
compensation expense for fiscal 2006 related to this grant.
A summary
of the status of the company’s stock option agreement as of April 30, 2009 and
2008, and changes during the years then ended were as follows:
2009
|
2008
|
|||||||||||||||
Shares
|
Exercise
|
Shares
|
Excise
|
|||||||||||||
Subject
|
Price
Per
|
Subject
|
Price
Per
|
|||||||||||||
To Option
|
Share
|
To Option
|
Share
|
|||||||||||||
Outstanding,
May 1
|
$ | 2,017,338 | $ | .18 | $ | 2,017,338 | $ | .18 | ||||||||
Granted
|
- | - | - | - | ||||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Cancelled
|
- | - | - | - | ||||||||||||
Outstanding/Exercisable,
|
||||||||||||||||
April
30
|
2,017,338 | .18 | 2,017,338 | .18 |
F-17
Miller
Industries, Inc.
Notes to
Financial Statements
The following summarizes information
concerning currently outstanding and exercisable options at April 30,
2009.
Options Outstanding/
Exercisable
|
||||||||||
Number
|
Average
|
|||||||||
Outstanding
|
Remaining
|
|||||||||
Exercise Price
|
At 4/30/09
|
Life
|
||||||||
$ | .18 | 2,017,338 | 6.2 |
NOTE
I – Other Matters, and Subsequent Events
The
Company’s building insurance policy thru May 15, 2009 excludes windstorm and
hail coverage. Effective May 15, 2009 Windstorm and Hail coverage was
included in the Company’s building insurance policy.
On May
21, 2009, the Company paid $ 9,114 to settle it’s liability for environmental
remediation costs at the seaboard chemical site in Jamestown, North
Carolina. This amount had been accrued for.
F-18