SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-K/A

 

(Amendment No. 1)

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended April 30, 2010

 

Commission File No. 1-5926

 

MILLER INDUSTRIES, INC.

(Exact Name Registrant as specified in its charter) 

 

Florida		59-0996356
(State or Other Jurisdiction of (incorporation or organization)		(I.R.S. Employer Identification No.)

 

16295 N.W. 13th Avenue, Miami, Florida 33169

(Address of Principal Executive Offices)

(305) 621-0501

(Registrant’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, $.04 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 common stock held by non-affiliates of the registrant at October 31, 2009 was $11,084.

 

As of April 30, 2010, there were 2,982,662 shares of the registrant’s common stock outstanding.

 

 

Explanatory Note

 

Miller Industries, Inc. (the “Company”) is filing this Amendment No. 1 on Form 10-K/A (this “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended April 30, 2010, which was originally filed on January 24, 2011 (the “Original Filing”), to include management’s report on internal control over financial reporting and to modify the certifications set forth in Exhibits 31.1 and 31.2.

 

Pursuant to Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, this Amendment amends the Original Filing and contains new certifications pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002. This Amendment does not affect any other parts of, or exhibits to the Original Filing, and those unaffected parts or exhibits are not included in this Amendment. Except as expressly stated in this Amendment, the Original Filing continues to speak as of the date of the Original Filing, and we have not updated the disclosure contained in the Amendment to reflect events that have occurred since the filing of the Original Filing.

 

 

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 2010 and 2009 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.

 

 

Financing

 

At April 30, 2010, the building was subject to an outstanding first mortgage in favor of a commercial bank with a principal balance of approximately $1,338,399. The loan accrues interest at ½% under the lender’s base rate per annum and is payable in monthly installments of $3,715, with a balloon payment of $911,174 due November 2019. 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 $4.00 per square foot to approximately $7.50 per square foot and the occupancy rate in the area is approximately 80%.

 

During 2010, the Company leased its building to three tenants. As of April 30, 2010, the future minimum rental income under these leases, excluding cost of living adjustments, was as follows:

 

2011		$	373,524
2012		$	373,524
2013		$	288,756
2014		$	190,171

 

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 2010 were approximately $59,000.

 

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.

 

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.

 

 

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:

 

		CLOSING BID
2009 Fiscal Year		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

 

		CLOSING BID
2010 Fiscal Year		HIGH				LOW
5/1/09  -  7/31/09		$	.04			$	.04
8/1/09  -  10/31/09		$	.04			$	.04
11/1/09  -  1/31/10		$	.04			$	.04
2/01/10  -  4/30/10		$	.05			$	.04

 

As of April 30, 2010, 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.

 

 

Equity Compensation Plan Information

 

The following table presents information regarding the Company’s equity compensation plans at April 30, 2010:

 

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			$	0.06				-
Total			2,017,338 shares			$	0.06				-

 

(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 had the right to purchase up to 2,017,338 shares of the Company’s common stock at a price of $0.18 per share. On February 22, 2010, the Company reduced the exercise price of the options from $0.18 per share to $.06 per share in consideration of Mr. Napolitano’s continuing guaranty of the Company’s ban loan. The options may be exercised at any time during the ten year term of the options.

 

 

ITEM 6.      SELECTED FINANCIAL DATA

 

Not Applicable

 

ITEM 7.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Results of Operations (2009 compared to 2010)

 

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 2009 was $481,000, compared with $373,000 in 2010. The decrease in rental income was due to a lower level of occupancy at the building, and lower rental rates.

 

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 immaterial in 2010 and 2009.

 

Other Income

 

The Company generated other income of $22,000 in 2009, compared to $7,000 in 2010. Other income in 2008 and 2009 principally consisted of interest income. The decrease was due to lower interest rates in the Company’s deposits.

 

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 $240,000 in 2009 and $150,000 in 2010. The principal components were management fees ($43,000 in 2009 and $36,000 in 2010), taxes ($106,000 in 2009 and $59,000 in 2010), depreciation and amortization ($31,000 in 2009 and $22,900 in 2010), repairs and maintenance ($9,000 in 2009 and $9,500 in 2010) and insurance ($25,000 in 2009 and $21,600 in 2010).

 

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 2009 and 2010.

 

 

Administrative Expenses

 

The Company’s administrative expenses were $55,000 in 2010, compared to $48,000 in 2009.

 

Interest Expense

 

The Company pays interest on the mortgage loan on its building. Interest expense on the loan was $45,000 in 2010 compared to $79,000 in 2009. 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 $41,000 in 2009 and $38,000 in 2010. In 2010, the Company also recorded a change of $(141,500) in its valuation allowance related to its net operation loss carryforwards due to the decline in the Company’s profitability. See Note C to the Company’s financial statements.

 

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 $233,000 in 2010.

 

Liquidity and Capital Resources

 

The Company’s cash increased by $159,000 during fiscal year 2009 compared with an increase of $35,000 during fiscal year 2010. The increase in 2010 in cash was primarily due to positive cash flow from operations. As of April 30, 2010, the Company’s cash position was approximately $1,513,000.

 

At April 30, 2010, the Company’s principal financing consisted of a loan with a principal balance of approximately $1,338,000 from a third party lender, secured by a lien on the Company’s building. The loan bears interest at 50 basis points below the Lender’s base rate. The loan is payable $3,715 per month (plus accrued interest), with a balloon payment due November 2019 in the approximate amount of $911,174. 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 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:

 

 

·

The Company is obligated to make payments under its existing mortgage loan. At April 30, 2010, the outstanding balance of the loan was $1,338,399. The loan bears interest 50 basis points below the Lender’s base rate. The loan is repayable in monthly installments of approximately $3,715, with a balloon payment of approximately $911,174 due in November, 2019.

 

·

The Company has agreed to pay Harnap Corp., a corporation controlled by the Company’s president and principal shareholder, $3,000 per month for management fees. Accrued fees as of April 30, 2010 were $280,000, 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, 2010 and 2009, and for the years ended April 30, 2010 and 2009. 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.

 

 

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, 2010:

 

						Payments Due by Period
Contractual Obligations		Total				Less Than 1 Year				1-3 Years				4-5 Years				More Than 5 Years
Long Term Debt		$	1,338,399			$	48,580			$	97,000			$	97,000			$	1,095,499
Capital Lease Obligations			-				-				-				-				-
Operating Leases			-				-				-				-				-
Purchase Obligations			-				-				-				-				-
Other Long Term Debt
TOTAL		$	1,338,399			$	43,580			$	97,000			$	97,000			$	1,095,499

 

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).

 

Management’s Report on the Consolidated Financial Statements

 

Our management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. The consolidated financial statements, which include amounts based on management’s estimates and judgments, have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities and careful selection and training of qualified personnel.

 

ITEM 9.          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

None.

 

 

ITEM 9A.          CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

In connection with the filing of this Form 10-K/A, 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, 2010. 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, 2010.

 

Management's Report on Internal Control Over Financial Reporting

 

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities and careful selection and training of qualified personnel.

 

Management (with the participation of the Company's principal executive officer and principal financial officer) has evaluated the Company's internal control over financial reporting as of April 30, 2010, based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

 

There are limitations inherent in any internal control, such as the possibility of human error and the circumvention or overriding of controls. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met, and may not prevent or detect misstatements. As conditions change over time, so too may the effectiveness of internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of a Company's financial reporting.

 

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of April 30, 2010.

 

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, 2010.

 

 

ITEM 9B.          OTHER INFORMATION

 

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 had the right to purchase up to 2,017,338 shares of the Company’s common stock at a price of $0.18 per share. On February 22, 2010, the Company reduced the exercise price of the options from $0.18 per share to $0.06 per share in consideration of Mr. Napolitano’s continuing guaranty of the Company’s ban loan. The options may be exercised at any time during the ten year term of the options.

 

 

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, Mr. Napolitano failed to file one report 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 2010 received compensation in excess of $100,000.

 

 

SUMMARY COMPENSATION TABLE

 

Name and Position		Fiscal Year				Salary (1)				Shares Underlying Stock Options Grant
Angelo Napolitano, Chief Executive Officer			2010			$	36,000
			2009			$	43,000				-
			2008			$	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 2010

 

No stock options were granted by the Company in the 2010 fiscal year. However, on February 22, 2010 the Company agreed to reduce the exercise price on the 2,017,338 shares held by Mr. Napolitano from $.18 per share to $.06 per share.

 

Aggregate Option Exercises in 2010 and Fiscal Year-End Option Values

 

The following table sets forth information with respect to the exercise of options in the 2010 fiscal year and the value of unexercised options held as of the end of the 2010 fiscal year held by the executive officer listed above.

 

Shares Acquired on Exercise (#)

Value  Realized  ($)

Number of Securities Underlying Unexercised Options at 4/30/10

Value of Unexercised In-the- Money Options at 4/30/10 ($)

Name

Exercisable/ Unexercisable

Exercisable/ Unexercisable

Angelo Napolitano

—

—

2,017,338 / 0

N/A

 

 

Management Agreement

 

The Company has 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, 2010, accrued management fees totaled $280,000.

 

Compensation of Directors

 

No amounts were paid to directors during the 2010 fiscal year for services as directors.

 

 

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

To the knowledge of management, as of April 30, 2010, the following persons beneficially owned 5% or more of the common stock of the Company:

 

Name and Address of Beneficial Owner		Amount Beneficially Owned				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) Carr Securities Corp. (3) 14 Vanderventer Avenue Suite 210 Port Washington, NY 11050			276,994				9.3	%

   

  

(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 12, 2010. Walter P. Carucci, Uncle Mills Partners and Carr Securities Corp. 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 voting and investment power with respect to 172,505 shares. Carr Securities has sole voting and investment power with respect to 3,600 shares.

 

The shares of common stock beneficially owned by the Company’s sole director and executive officer as of April 30, 2010 were as follows:

 

 

Name and Address of Beneficial Owner		Amount Beneficially Owned (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.

 

 

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 2010 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 2010 fiscal year and the audit of the Company’s financial statements for the year ended April 30, 2010.

 

The following table presents fees billed for professional audit and other services rendered by Larry Wolfe, CPA for the periods presented.

 

		Fiscal 2010				Fiscal 2009
Fees billed by Larry Wolfe, CPA
Audit Fees (1)		$	11,250			$	11,250
Audit Related Fees (2)			4,400				4,000
Tax Fees(3)			750				750
All Other Fees (4)			—				—
Total		$	16,400			$	16,000

 

(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.

 

 

PART IV

 

ITEM 15.            EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K

 

(a)

Financial Statements

 

Report of Independent Certified Public Accountants

 

Balance Sheets as of April 30, 2010 and 2009

 

Statements of Operations for Years ended April 30, 2010 and 2009.

 

Statements of Changes in Shareholders Equity (Deficiency) for Years ended April 30, 2010 and 2009

 

Statements of Cash Flows for Years ended April 30, 2010 and 2009

 

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 and Restated Stock Option Agreement dated February 22, 2010
14.1	Code of Ethics	(Note 5)
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.
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-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, 2010.

 

 

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 April 8, 2012.

 

	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 April 8, 2012.

 

Signature		Title
/s/ Angelo Napolitano		President, Chief Executive
Angelo Napolitano		Officer, and Director (Principal Executive Officer) (Principal Financial Officer) (Principal Accounting Officer)

  

 

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, 2010 and 2009, and the related statements of operations, shareholders’ deficiency, and cash flows for each of the two years in the period ended April 30, 2010. 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, 2010 and 2009 and the results of its operations and its cash flows for each of the two years in the period ended April 30, 2010, in conformity with accounting principles generally accepted in the United States of America.

 

	/s/  Larry Wolfe
	LARRY WOLFE
	Certified Public Accountant

 

Miami, Florida

October 12, 2010

 

 

MILLER INDUSTRIES, INC.

BALANCE SHEET

APRIL 30, 2010 AND 2009

 

ASSETS

 

		2010				2009
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			876,541				860,467
Net Book Value		$	356,167			$	372,241
Other Assets:
Cash and Cash Equivalents			1,512,525				1,477,521
Accounts Receivable (Less Allowance for Doubtful Accounts of $ 6,942 in 2010 and $15,000 in 2009)			—				10,561
Prepaid Expenses and Other Assets			14,854				2,095
Deferred Lease Incentive (Net of Accumulated Amortization - $31,020 in 2010 and $ 53,403 in 2009)			20,768				4,195
Loan Costs, Less Accumulated Amortization of $447 in 2010 and $25,030 in 2009, respectively			10,288				1,318
Deferred Tax Assets			114,500				11,000
Total Other Assets			1,672,935			$	1,506,690
TOTAL ASSETS		$	2,029,102			$	1,878,931

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)

 

		2010				2009
Liabilities:
Mortgage and Notes Payable		$	1,338,399			$	1,394,343
Accounts Payable and Accrued Expenses			403,5450				428,301
Tenant’s Deposits and Advance Rent			70,423				72,640
Total Liabilities		$	1,812,367			$	1,895,284
Shareholders’ Deficiency:
Common Stock - $.05 Par, 5000 shares authorized: 2,982,662 shares issued and Outstanding		$	149,133			$	149,133
Paid-In Capital			1,191,929				1,191,929
Deficit			(1,124,327	)			(1,357,415	)
Total Shareholders’ Equity (Deficiency)			216,735				(16,353	)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)		$	2,029,102			$	1,878,931

 

See Accompanying Notes to Financial Statements.

 

 

MILLER INDUSTRIES, INC.

STATEMENT OF OPERATIONS

YEARS ENDED APRIL 30, 2010 AND 2009

 

		2010				2009
Revenues:
Rental Income		$	373,042			$	480,742
Hardware Sales (Net)			223				501
Other Income		$	6,604			$	21,741
Total Revenues		$	379,869			$	502,748
Expenses:
Rental Expenses (Except Interest)			149,856				239,748
Administrative			55,024				48,293
Interest			45,401				78,554
Total Expenses		$	250,281			$	366,595
Income Before Tax Provision		$	129,588			$	136,389
Provision (Benefit) for Income Tax:
Federal Income Tax		$	31,117			$	33,624
State Income Tax			6,852				7,226
Provision for Income Tax Before Realization of Prior Years’ Tax Benefit		$	37,969			$	40,850
Tax Benefits of Net Operating Loss Carryforward – Change in Valuation Allowance			(141,469	)			131,150
Total Provision (Credit) for Income Tax (net of Tax Benefits) and Change in Valuation Allowance		$	(103,550	)		$	172,000
Net Income (Loss)		$	233,088			$	(35,611	)
Income (Loss) per Common Share		$	.08			$	(.01	)
Weighted Average Shares of Common Stock Outstanding (Basic and Diluted)			2,982,662				2,982,662

 

See Accompanying Notes to Financial Statements.

 

 

MILLER INDUSTRIES, INC.

STATEMENT OF CASH FLOWS

YEARS ENDED APRIL 30, 2010 AND 2009

 

		2010				2009
Cash Flows from Operating Activities:
Net Income (Loss)		$	233,088			$	(35,611	)
Adjustments to Reconcile Net Income to Net Cash Provided by (used for) Operating Activities:
Depreciation			16,074				16,927
Amortization			6,774				14,304
Deferred Tax Asset Valuation Adjustment			(103,500	)			172,000
Bad Debt Provision			(8,058				10,027
Loss on Deferred Lease Incentives			—				6,934
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable			18,619				3,964
(Increase) Decrease in Deferred Rent Receivable			—				6,165
(Increase) Decrease in Prepaid Expenses and Other			(12,759	)			7,374
Increase (Decrease) in Accounts Payable and Accruals			(24,756	)			9,099
Increase (Decrease) in Tenant Deposits and Advances			(2,217	)			2,900
Net Cash Provided by Operating Activities		$	123,265			$	214,173
Cash Flows from Investing Activities:
Acquisition of Property, Equipment and Intangible		$	(32,317	)		$	—
Net Cash (used by) Investing Activities		$	(32,317	)		$	—
Cash Flows from Financing Activities:
Principal Payments Under Borrowings		$	(55,944	)		$	(55,602	)
Proceeds from Borrowings		$	—			$	—
Net Cash Provided by (used by) Financing Activities		$	(55,944	)		$	(55,602	)
Net Increase in Cash and Cash Equivalents		$	35,004			$	158,571
Cash and Cash Equivalents at the Beginning of the year		$	1,477,521			$	1,318,950
Cash and Cash Equivalents at the End of the Year		$	1,512,525			$	1,477,521
Additional Cash Flow Information:
Cash Payments During the Year
Interest		$	46,288			$	80,733
Income Taxes		$	—			$	—

 

See Accompanying Notes to Financial Statements.

 

 

MILLER INDUSTRIES, INC.

STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIENCY)

YEARS ENDED APRIL 30, 2010 AND 2009

 

Common Stock
		Shares Issued				Additional Amount				Paid-In Capital				(Deficit)				Total
Balance at April 30, 2008			2,982,662			$	149,133			$	1,191,929			$	(1,321,804	)		$	19,258
Net (Loss) - 2009			—				—				—				(36,611	)			(36,611	)
Balance at April 30, 2009			2,982,662				$$149,133			$	1,191,929			$	(1,357,415	)		$	(16,353	)
Net Income – 2010			—				—				—				233,088				233,088
Balance at April 30, 2009			2,982,662			$	149,133				1,191,929			$	(1,124,327	)			216,735

 

See Accompanying Notes to Financial Statements.

 

 

MILLER INDUSTRIES, INC.

NOTES TO FINANCIAL STATEMENTS

APRIL 30, 2010 AND 2009

 

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 $ 725,000, have been fully depreciated at April 30, 2010.

 

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.

 

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.

 

 

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, 2010 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, 2010, and 2009 the Company’s uninsured bank balances approximated $1,260,000 and $1,227,000, respectively.

 

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” 58% of Revenue. Tenant “B” 39% 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.

 

 

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 2010 and 2009.

 

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, 2010 based on a quoted market price.

 

 

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.

 

 

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 2010 and 2009.

 

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.

 

 

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.

 

 

Miller Industries, Inc.

Notes to Financial Statements

 

NOTE B - Mortgage Payable

 

Principal balances outstanding and details of notes payable are summarized as follows:

 

		2010				2009
½ of 1% under base rate of Lender, 10-year 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 $3,715 (and accrued interest) with a final payment of approximately $911,174 due November, 2019		$	1,338,399			$	1,394,343

 

Payments of principal required on the foregoing debt are as follows:

 

Fiscal Year Ending
2011			48,580
2012			48,580
2013			48,580
2014			48,580
2015			48,580
Thereafter		$	1,115,499
Total		$	1,388,399

 

Land, buildings and improvements, with an approximate cost of $1,222,000 and an approximate net book value of $356,000 are pledged as collateral for these obligations.

 

 

Miller Industries, Inc.

Notes to Financial Statements

 

NOTE C – Income Taxes

 

The provision (benefit) for income taxes consists of the following:

 

		2010				2009
Current		$	27,066			$	42,423
Deferred			10,903				(1,573	)
Tax Benefit of Net Operating Loss Carryforward and Addition to Valuation Allowance			(141,469	)			131,150
Total		$	(103,500	)		$	172,000

 

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, 2010 and 2009 are as follows:

 

		2010				2009
Properties and Equipment principally due to  depreciation		$	52,566			$	59,296
Compensation – Value of Stock Option granted			24,599				24,599
Provision for Bad Debts			2,610				5,640
Net operating loss carry forward (Net of $347,747 expired in 2007)		$	38,875				87,600
Total gross deferred tax assets			118,650			$	177,135
Less:  Valuation Allowance			4,150				166,135
Net Deferred Tax Asset		$	114,500			$	11,000

 

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 $(103,500) for 2010, and increased by approximately $172,000 for 2009.

 

 

Miller Industries, Inc.

Notes to Financial Statements

 

At April 30, 210, the Company had approximately $103,400 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:

 

2018		$	103,250
2019			200
2013			105,300
2019			200
Total		$	103,400

 

At April 30, 2010, the Company had alternative minimum tax credit carryforwards of approximately $3,500 which may be carried forward indefinitely.

 

Total Federal tax expense for years ended April 30, 2010 and 2009 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:

 

		2010								2009
		Percent of Pre-Tax Income								Percent of Pre-Tax Income
		Amount				Income				Amount				Income
Income before Provision for Income Taxes		$	125,588				100	%		$	136,389				100	%
Computed Expected Tax Expense			44,060				34	%			46,372				34	%
Federal Tax (Benefit) of State Income Tax			(2,330	)			(2	)%			(2,457	)			(2	)%
Sur Tax Exemption			(10,613	)			(8	)%			(10,291	)			(7	)%
Federal Tax Before Tax Benefits		$	31,117				24	%		$	33,624				25	%
Tax Benefits of Net Operating Loss Carryforwards – Change in Valuation Allowance			(119,506	)			(92	)%			113,376				86	%
Actual Federal Tax (Benefits)		$	(88,389	)			(68	)%		$	147,000				108	%

 

NOTE D - Rental Income

 

During 2010 the company leased warehouse and manufacturing space to three unrelated third parties under leases that expire at various dates thru fiscal 2014. Rental income approximated $ 373,000 and $ 481,000 for fiscal 2010 and 2009, respectively. Rental income from these leases amounted to 100 % of the total 2010 rental income and 99% of the total 2009 rental income.

 

 

Miller Industries, Inc.

Notes to Financial Statements

 

Future minimum rental income under non-cancelable leases, excluding cost of living adjustments are as follows:

 

2011		$	373,234
2012		$	373,524
2013		$	288,756
2014		$	190,171

 

NOTE E - (Rental Expenses (Except for Interest)

 

Rental expenses consisted of:

		2010				2009
Bad Debt- Provision		$	(8,058	)		$	10,027
Commissions and Consulting			1,139				3,682
Depreciation and Amortization			22,849				31,231
Insurance			21,673				25,125
Loss on Deferred Lease Incentives			-				6,934
Management Fees			36,000				43,000
Outside Services			3,538				2,399
Repairs and Maintenance			9,537				8,656
Utilities			4,309				2,518
Taxes			58,869				106,176
Totals		$	149,856			$	239,748

 

NOTE F - Administrative Expenses

 

Administrative expenses consisted of:

		2010				2009
Accounting and Legal		$	26,654			$	22,474
Office Supplies/Postage/Other			1,053				542
Stockholders’ Expenses			26,273				24,309
Telephone			1,044				968
Totals		$	55,024			$	48,293

 

 

Miller Industries, Inc.

Notes to Financial Statements

 

NOTE G - Related Party Transactions

 

Management fees in the amount of $36,000 for 2010 and $43,000 for 2009 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 2010 and 2009 for approximately $ 18,000 for each year. Included in accounts payable is approximately $280,000 for 2010 and 2009 that is owned to Harnap Corp. The mortgage is guaranteed by the company’s C.E.O. up to 50% of all sums due.

 

 

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 $0.18 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.

 

On February 22, 2010, the Company modified the option previously granted to Angelo Napolitano that entitled him to acquire 2,017,338 shares of the Company’s common stock. Under the terms of the modification, the exercise price for the options was reduced from $0.18 per share to $0.06 per share. The Company reduced the exercise price of the option in consideration of Mr. Napolitano’s guarantee of the Company’s bank loan and his services as the Company’s president. The average fair values of the options modified during fiscal 2010 were estimated at $.0130 using the Black-Scholes options-pricing model, which included the following assumptions

  

		2010
Stock Price		$	.04
Strike Price		$	.06
Expected Life			5.17 Years
Risk-Free Interest Rate			3.78	%
Volatility			44.6	%

 

 

Miller Industries, Inc.

Notes to Financial Statements

 

The approximate compensation value of the modified option at February 22, 2010 is $26,000 which is less than the $65,000 compensation cost of the original option. Under FASB Statement 123R, the accounting for a modification, total compensation cost for the award should generally not be less than the awards original fair value. Therefore, if the fair value of the modified award is less than the fair value of the original award on the modification date, the grant date value is not reduced.

 

A summary of the status of the company’s stock option agreement as of April 30, 2010 and 2009, and changes during the years then ended were as follows:

 

		2010								2009
		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			-				-				-				-
Modification							(.12	)			-				-
Exercised			-				-				-				-
Cancelled			-				-				-				-
Outstanding/Exercisable,
April 30			2,017,338			$	.06				2,017,338			$	.18

 

The following summarizes information concerning currently outstanding and exercisable options at April 30, 2010.

 

				Options Outstanding/ Exercisable
				Number				Average
				Outstanding				Remaining
Exercise Price				At 4/30/10				Life
$	.06				2,017,338				5.2

   

NOTE I – Other Matters, and Subsequent Events

 

Subsequent events were evaluated through October 1, 2010