Commission File No. 1-5926
MILLER INDUSTRIES, INC.
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(Exact Name Registrant as specified in its charter)
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Florida
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59-0996356
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(State or Other
Jurisdiction of
(incorporation or organization)
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(I.R.S. Employer
Identification No.)
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16295 N.W. 13
th
Avenue, Miami, Florida 33169
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(Address of Principal Executive Offices)
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(305) 621-0501
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(Registrant’s Telephone Number, Including Area Code)
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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
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(Title of Class)
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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
¨
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
x
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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, 2015 was $187,309.
As of April 30, 2016, there were 5,000,000
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.
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 2016 and 2015 fiscal years.
The Company utilizes
an independent contractor to perform administrative and bookkeeping services.
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 are 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, 2016,
the building was subject to an outstanding first mortgage in favor of a commercial bank with a principal balance of approximately
$1,0710,000. 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 $911,000 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 $7.50 per square
foot and the occupancy rate in the area is approximately 80%.
During 2016, the Company
leased its building to three tenants. As of April 30, 2016, the future minimum rental income under these leases, excluding cost
of living adjustments, was as follows:
2017
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$
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501,000
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2018
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$
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265,000
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2019
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$
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245,000
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2020
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$
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61,000
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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 2016 were approximately $109,000.
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ITEM 3.
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LEGAL PROCEEDINGS
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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 cleanup 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 cleanup of the Gold Coast Oil site. The Company received
an assessment of $10,000 for this obligation and has included such amount in accrued expenses in the accompanying balance sheets.
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ITEM 4.
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MINE SAFETY DISCLOSURES
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Not
Applicable.
PART II
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ITEM 5.
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MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
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The Company’s
common stock is currently traded on the over-the-counter market under the symbol “MLLS”.
The range of the high
and low bid quotations for each quarter of the past two (2) fiscal years is as follows:
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CLOSING BID
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2016 Fiscal Year
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HIGH
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LOW
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05/1/15 - 07/31/15
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$
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.55
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$
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.30
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08/1/15 - 10/31/15
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$
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.30
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$
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.21
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11/1/15 - 01/31/16
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$
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.20
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$
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.18
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02/01/16 - 04/30/16
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$
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.19
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$
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.40
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CLOSING BID
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2015 Fiscal Year
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HIGH
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LOW
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05/1/14 - 07/31/14
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$
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.55
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$
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.30
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08/1/14 - 10/31/14
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$
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.35
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$
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.31
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11/1/14 - 01/31/15
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$
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.35
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$
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.31
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02/01/15 - 04/30/15
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$
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.35
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$
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.25
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As of April 30, 2016,
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
On April 30, 2016, the Company
had no equity compensation plans.
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ITEM 6.
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SELECTED FINANCIAL DATA
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Not Applicable.
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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Results of Operations (2016 compared to
2015)
Rental Income
The Company’s
results of operations are primarily dependent 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 2015
was $573,000, compared with $576,000 in 2016.
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 2016 and 2015.
Other Income
The Company generated
other income of $5,000 in 2015 and $6,000 in 2016. Other income 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
$339,000 in 2015 and $338,000 in 2016. The principal components were management fees ($48,000 in 2015 and $60,000 in 2016), taxes
($100,000 in 2015 and $109,000 in 2016), depreciation and amortization ($25,000 in 2015 and $24,000 in 2016), repairs and maintenance
($20,000 in 2015 and $7,000 in 2016), and insurance ($34,000 in 2015 and $27,000 in 2016).
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 2015 and 2016.
Administrative Expenses
The Company’s
administrative expenses were $50,000 in 2014, compared to $61,000 in 2016.
Interest Expense
The Company pays interest
on the mortgage loan on its building. Interest expense on the loan was $32,000 in 2015 compared to $31,000 in 2016.
Provision for Income Taxes
The provision for taxes
(before realization of prior years’ tax benefits) was $86,000 in 2015 and $91,000 in 2016.
Net Income
As a result of the
foregoing factors, the Company had a net income of $160,000 in 2015, compared to a net income of $166,000 in 2016.
Liquidity and Capital Resources
The Company’s
cash increased by $152,000 during each of fiscal year 2015 and 2016. As of April 30, 2016, the Company’s cash position was
approximately $1,818,000.
At April 30, 2016,
the Company’s principal financing consisted of a loan with a principal balance of approximately $1,071,000 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 $911,000. 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 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 consist of the following:
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·
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The Company is obligated to make payments under its existing mortgage loan. At April 30, 2016,
the outstanding balance of the loan was $1,071,000. 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 $911,000 due in
November 2019.
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·
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The Company has agreed to pay Harnap Corp., a corporation controlled by the Company’s president
and principal shareholder, $60,000 per year for management fees. Accrued fees as of April 30, 2016 were $50,000, all of which are
payable upon the demand of Harnap.
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Current Plans
The Company operates
as a real estate investment and management company. The Company currently 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, 2015 and
2016, and for the years ended April 30, 2015 and 2016. 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, 2016:
|
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Payments Due by Period
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Contractual Obligations
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Total
|
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Less
Than
1
Year
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1-3
Years
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4-5
Years
|
|
Long Term Debt
|
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$
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1,070,920
|
|
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$
|
44,850
|
|
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$
|
89,700
|
|
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$
|
937,180
|
|
Capital Lease Obligations
|
|
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-
|
|
|
|
-
|
|
|
|
-
|
|
|
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-
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Operating Leases
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
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|
Purchase Obligations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
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-
|
|
Other Long Term Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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TOTAL
|
|
$
|
1,070,920
|
|
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$
|
44,850
|
|
|
$
|
89,700
|
|
|
$
|
937,180
|
|
|
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, 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, 2016. 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, 2016.
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, 2016, 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, 2016.
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, 2016.
|
ITEM 9B.
|
OTHER INFORMATION
|
Not applicable
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
|
Marc Napolitano
|
Vice President and Secretary
|
2016
|
2016
|
Each director is elected
for a period of one year, or until his successor is duly elected by the shareholders. Officers serve at the will of the Board of
Directors.
Angelo Napolitano,
age 80, 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.
Marc Napolitano has
been the Company’s Vice President and Secretary since 2016. He is the Secretary and Treasury of Harnap Corp. He is the son
of Angelo Napolitano.
Compliance with Section 16(a) of the
Securities Exchange Act of 1934
Not applicable.
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 2016 received compensation in excess of $100,000.
SUMMARY
COMPENSATION TABLE
Name and Position
|
|
April 30
Fiscal Year
|
|
|
Salary (1)
|
|
|
Shares Underlying Stock Options Grant
|
|
|
|
|
|
|
|
|
|
|
|
Angelo Napolitano, Chief Executive Officer
|
|
|
2016
|
|
|
$
|
60,000
|
|
|
|
|
|
|
|
|
2015
|
|
|
$
|
48,000
|
|
|
|
-
|
|
__________________
|
(1)
|
Includes management fees paid to Harnap Corp., a company
controlled by Mr. Napolitano, and director fees paid to Mr. Napolitano.
|
Stock Options
No stock options were
granted, outstanding, or exercised during the 2016 fiscal year.
Management Agreement
The Company has agreed
to pay Harnap Corp. an annual management fee, which is currently $60,000 per year. Harnap Corp. is owned and controlled by Angelo
Napolitano, the Company’s Chief Executive Officer and Chairman of the Board. As of April 30, 2016, accrued management fees
totaled $50,000.
Compensation of Directors
No amounts were paid
to directors during the 2016 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, 2016, 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. 165
th
Street
Miami, FL 33169
|
3,148,594(1)
|
63.0%
|
__________________
(1) Mr.
Napolitano has sole voting and investment power with respect to 1,121,256 shares which he holds of record, and 500,000 shares which
are held in trusts controlled by Mr. Napolitano as the trustee. Mr. Napolitano has shared voting and investment power with respect
to 10,000 shares which he owns jointly with his wife, Mrs. Helen Napolitano.
The shares of common
stock beneficially owned by the Company’s sole director and executive officers as of April 30, 2016 were as follows:
Name and Address of
Beneficial Owner
|
Amount
Beneficially
Owned (1)
|
Percent
Of Class
|
|
|
|
Angelo Napolitano
1521 N.W. 165
th
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 March Napolitano, who 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. The Company did not pay any commissions under this agreement for the 2016 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 2016 fiscal year and the audit of the Company’s financial
statements for the year ended April 30, 2016.
The following table
presents fees billed for professional audit and other services rendered by Larry Wolfe, CPA for the periods presented.
|
|
Fiscal 2016
|
|
|
Fiscal 2015
|
|
Fees billed by Larry Wolfe, CPA
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
15,000
|
|
|
$
|
13,000
|
|
Audit Related Fees
|
|
|
5,000
|
|
|
|
6,000
|
|
Tax Fees
|
|
|
1,000
|
|
|
|
1,000
|
|
All Other Fees
|
|
|
|
|
|
|
-----
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
21,000
|
|
|
$
|
20,000
|
|
|
(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
|
Report
of Independent Certified Public Accountants
Balance Sheets as of
April 30, 2016 and 2015
Statements of Operations
for Years ended April 30, 2016 and 2015
.
Statements
of Changes in Shareholders’ Equity (Deficiency) for Years ended April 30, 2016 and 2015
Statements
of Cash Flows for Years ended April 30, 2016 and 2015
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.
|
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)
|
14.1
|
Code of Ethics
|
(Note 6)
|
31.1*
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
|
|
31.2*
|
Certification of 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-K filed with the Commission for the fiscal year ended April 30, 2010.
|
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
|
There were no reports
on Form 8-K for the three months ended April 30, 2016.
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 January 19, 2017.
|
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 January 19, 2017.
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, 2015 and 2016, and the related statements of operations,
shareholders’ deficiency, and cash flows for each of the two years in the period ended April 30, 2016. 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, 2015 and 2016 and the results of its operations and its cash flows for each of the two years in the period ended
April 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
|
/s/ Larry Wolfe
|
|
LARRY WOLFE
|
|
Certified Public Accountant
|
Miami, Florida
____________, 2016
MILLER INDUSTRIES, INC.
BALANCE SHEET
APRIL 30, 2016 AND 2015
ASSETS
|
|
2016
|
|
|
2015
|
|
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
|
|
|
953,934
|
|
|
|
942,049
|
|
Net Book Value
|
|
$
|
278,774
|
|
|
$
|
290,659
|
|
Other Assets:
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
1,817,572
|
|
|
$
|
1,665,063
|
|
Accounts Receivable ( Less Allowance for Doubtful
|
|
|
|
|
|
|
|
|
Accounts of $0 in 2016 and $0 in 2015)
|
|
|
1,049
|
|
|
|
2,525
|
|
Prepaid Expenses and Other Assets
|
|
|
32,590
|
|
|
|
64,498
|
|
Refundable Income Taxes
|
|
|
4,213
|
|
|
|
|
|
Deferred Lease Incentive (Net of Accumulated
|
|
|
|
|
|
|
|
|
Amortization - $48,080 in 2016 and $37,366 in 2015)
|
|
|
7,142
|
|
|
|
17,856
|
|
Loan Costs, (Less Accumulated Amortization of
|
|
|
|
|
|
|
|
|
$6,888 and $5,815 in 2016 and 2015, respectively
|
|
|
3,847
|
|
|
|
4,920
|
|
Deferred Tax Assets
|
|
|
40,416
|
|
|
|
39,824
|
|
Total Other Assets
|
|
$
|
1,906,829
|
|
|
$
|
1,794,686
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
2,185,603
|
|
|
$
|
2,085,345
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Mortgage and Notes Payable
|
|
$
|
1,070,920
|
|
|
$
|
1,115,500
|
|
Accounts Payable and Accrued Expenses
|
|
|
198,465
|
|
|
|
194,700
|
|
Tenant's Deposits and Advance Rent
|
|
|
76,267
|
|
|
|
80,825
|
|
Income Taxes Payable
|
|
|
|
|
|
|
20,755
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
$
|
1,345,652
|
|
|
$
|
1,411,780
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
Common Stock - $.05 par, 5,000,000 shares
|
|
|
|
|
|
|
|
|
Authorized; 5,000,000 shares in 2015 and 2014
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Paid-In Capital
|
|
|
1,212,102
|
|
|
|
1,212,102
|
|
Deficit
|
|
|
(622,151
|
)
|
|
|
(788,537
|
)
|
|
|
|
|
|
|
|
|
|
Total Shareholders’ Equity
|
|
$
|
839,951
|
|
|
$
|
673,565
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS’
|
|
|
|
|
|
|
|
|
EQUITY
|
|
$
|
2,185,603
|
|
|
$
|
2,085,345
|
|
See Accompanying Notes to Financial Statements.
F3
MILLER INDUSTRIES, INC.
STATEMENT OF OPERATIONS
YEARS ENDED APRIL 30, 2016 AND 2015
|
|
2016
|
|
|
2015
|
|
Revenues
:
|
|
|
|
|
|
|
Rental Income
|
|
$
|
576,422
|
|
|
$
|
314,463
|
|
Utilities and other reimbursement
|
|
|
104,178
|
|
|
|
89,825
|
|
Other Income
|
|
|
6,356
|
|
|
|
4,912
|
|
|
|
|
|
|
|
|
|
|
Total Revenues
|
|
$
|
686,956
|
|
|
$
|
667,257
|
|
|
|
|
|
|
|
|
|
|
Expenses
:
|
|
|
|
|
|
|
|
|
Rental Expenses (Except Interest)
|
|
$
|
337,828
|
|
|
$
|
339,315
|
|
Administrative
|
|
|
60,8524
|
|
|
|
49,754
|
|
Interest
|
|
|
30,692
|
|
|
|
33,138
|
|
|
|
|
|
|
|
|
|
|
Total Expenses
|
|
$
|
429,372
|
|
|
$
|
421,153
|
|
|
|
|
|
|
|
|
|
|
Income Before Tax Provision
|
|
$
|
257,584
|
|
|
$
|
246,104
|
|
|
|
|
|
|
|
|
|
|
Provision (Benefit) for Income Tax
:
|
|
|
|
|
|
|
|
|
Federal Income Tax
|
|
$
|
79,713
|
|
|
$
|
75,024
|
|
State Income Tax
|
|
|
11,485
|
|
|
|
10,786
|
|
|
|
|
|
|
|
|
|
|
Total Provision for Income Tax
|
|
$
|
91,198
|
|
|
$
|
85,810
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
166,386
|
|
|
$
|
160,294
|
|
|
|
|
|
|
|
|
|
|
Income per Common Share (Basic)
|
|
$
|
.03
|
|
|
$
|
.03
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares of Common Stock Outstanding
(Basic)
|
|
|
5,000,000
|
|
|
|
5,000,000
|
|
See Accompanying Notes to Financial Statements.
F4
MILLER INDUSTRIES, INC.
STATEMENT OF CASH FLOWS
YEARS ENDED APRIL 30, 2016 AND 2015
|
|
2016
|
|
|
2015
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
166,386
|
|
|
$
|
160,294
|
|
Adjustments to Reconcile Net Income to Net Cash
|
|
|
|
|
|
|
|
|
Provided by (used for) Operating Activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
11,885
|
|
|
|
11,885
|
|
Amortization
|
|
|
11,787
|
|
|
|
13,102
|
|
Deferred Tax Asset Valuation Adjustment
|
|
|
(592
|
)
|
|
|
552
|
|
|
|
|
|
|
|
|
|
|
Changes in Operating Assets and Liabilities
|
|
|
|
|
|
|
|
|
(Increase) Decrease in Accounts Receivable
|
|
|
1,476
|
|
|
|
(2,525
|
)
|
(Increase) Decrease in Prepaid Expenses and Other
|
|
|
(31,909
|
)
|
|
|
(18,973
|
)
|
Increase (Decrease) in Accounts Payable and
Accruals and Income Taxes
|
|
|
(21,203
|
)
|
|
|
14,631
|
|
Increase (Decrease) in Tenants Deposits
And Advances
|
|
|
(4,558
|
)
|
|
|
17,745
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by (used by) Operating Activities
|
|
$
|
197,090
|
|
|
$
|
196,711
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
(44,580
|
)
|
|
$
|
(44,580
|
)
|
Proceeds from Exercise of Stock Options
|
|
|
|
|
|
|
|
|
Net Cash Provided by (used by) Financing
|
|
|
|
|
|
|
|
|
Activities
|
|
$
|
(44,580
|
)
|
|
$
|
(44,580
|
)
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash
|
|
|
|
|
|
|
|
|
Equivalents
|
|
$
|
152,510
|
|
|
$
|
152,131
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents at the Beginning of Year
|
|
$
|
1,665,062
|
|
|
$
|
1,512,931
|
|
Cash and Cash Equivalents at the End of Year
|
|
$
|
1,817,572
|
|
|
$
|
1,665,062
|
|
|
|
|
|
|
|
|
|
|
Additional Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash Payments During the Year
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
30,753
|
|
|
$
|
32,146
|
|
Income Taxes
|
|
$
|
116,758
|
|
|
$
|
52,940
|
|
See Accompanying Notes to Financial Statements.
MILLER INDUSTRIES, INC.
STATEMENT OF SHAREHOLDERS’ EQUITY
YEARS ENDED APRIL 30, 2016 AND 2015
COMMON STOCK
|
|
Shares
Issued
|
|
|
Amount
|
|
|
Additional
Paid-in Capital
|
|
|
(Deficit)
|
|
|
(Total)
|
|
Balance at April 30, 2014
|
|
|
5,000,000
|
|
|
$
|
250,000
|
|
|
$
|
1,212,102
|
|
|
$
|
(948,831
|
)
|
|
$
|
513,271
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – 2015
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
160,294
|
|
|
|
160,294
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2014
|
|
|
5,000,000
|
|
|
$
|
250,000
|
|
|
$
|
1,212,102
|
|
|
$
|
(788,537
|
)
|
|
$
|
673,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income – 2016
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
166,386
|
|
|
|
166,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at April 30, 2016
|
|
|
5,000,000
|
|
|
$
|
250,000
|
|
|
$
|
1,212,102
|
|
|
$
|
(622,151
|
)
|
|
$
|
839,951
|
|
See Accompanying Notes to Financial Statements.
MILLER INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2016 AND 2015
NOTE A - Summary of Significant Accounting
Policies
This summary of accounting policies for
Miller Industries Inc. is presented to assist in understanding the Company’s financial statements. The accounting policies
conform to U.S. generally accepted accounting principles and have been consistently applied in preparation of the financial statements.
|
1.
|
Nature of Operations
-
|
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 ware-
house located
in Miami, Florida. During August 1991, the Company discontinued its operations of manufacturing of aluminum windows and doors pursuant
to a plan of reorganization.
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 $ 745,000, have
been fully depreciated
at April 30, 2016.
Deferred lease incentive
and loan costs are carried at cost. The Company amortizes
these assets on a straight-line
basis up to 10 years.
The Company accounts
for income taxes under the liability method. Deferred income tax assets and liabilities are determined based on differences between
the financial reporting and tax base of assets and liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to be reversed.
The Company uses a two-step approach to
recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining
if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including
resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount,
which is more than 50% (fifty percent) likely of being realized upon ultimate settlement. The Company considers many factors when
evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments. At April 30, 2015 and 2016,
respectively, the Company did not record any liabilities for uncertain tax positions.
Basic earnings per share (“EPS”)
is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding
during the period, excluding the effects of any potentially dilutive securities. Diluted EPS gives effect to all dilutive potential
of shares of common stock outstanding during the period including stock options or warrants, using the treasury stock method (by
using the average stock price for the period to determine the number of shares assumed to be purchased from the exercise of stock
options or warrants). Diluted EPS excludes all dilutive potential of shares of common stock if their effect is anti-dilutive.
|
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, 2016, and 2015 the Company’s uninsured bank balances approximated
$1,567,000 and $1,415,000 respectively.
|
7.
|
Financial Instruments
-
|
The carrying amounts
of cash and cash equivalents, other assets, accounts payable, and
debt approximate fair
value.
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” 43% of Revenue. Tenant “B” 39% of Revenue. Tenant “C” 18% of Revenue.
The Company recognizes rental
income on a straight-line basis over the respective lease terms.
|
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.
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
-
|
ASC 220, Comprehensive Income
established standards for reporting and displaying comprehensive income and its components in the financial statements. The company
does not have any comprehensive income for fiscal 2016 and 2015.
Under ASC 360, Property, Plant
and Equipment, The Company evaluates the carrying value of long-lived assets (including property, equipment and intangible assets)
when events or circumstances warrant such a review. If the carrying value of the long-lived asset is considered impaired, a loss
is recognized based on the amount by which the carrying value exceeds the fair value of the asset. The respective fair values of
the Company’s long-lived assets exceeded their carrying amounts at April 30, 2016 and April 30, 2015.
The Company operates in one segment
and therefore segment information is not presented.
|
15.
|
Derivative
Instruments
-
|
Under ASC 815, Derivative and
Hedging, the Company will be required to recognize all derivative instruments, including certain derivative instruments embedded
in other contracts 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.
|
16.
|
Stock-Based
Compensation
-
|
In accordance with ASC 718, Compensation-
Stock Based Compensation, the Company accounts for share-based payments using the fair value method. Common shares issued to third
parties for non-cash consideration are valued based on the fair market value of the service provided or the fair market value of
the common stock on the measurement date, whichever is more readily determinable.
|
17.
|
Pensions and
Other Post-Retirement Benefits
-
|
ASC 715, Compensation –
Retirement benefits, requires additional disclosures relating to how investment allocation decisions are made, the major categories
of plan assets and the inputs and valuation techniques used to measure the fair value of plan assets. The overall objective of
ASC 715 is to improve and standardize disclosures about pensions and other post-retirement benefits and to make the required information
more understandable.
The Company has not initiated
benefit plans to date which would require disclosure under the statement.
Advertising costs are charged
to operations in the period incurred. The Company has not incurred any advertising costs for fiscal 2016 and 2015.
|
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
-
|
The Company follows ASC 250,
Accounting Changes and Error Corrections. Changes in accounting principle are reported through retrospective application of the
new accounting principle to all prior periods. Errors in the financial statements of a prior period discovered subsequent to their
issuance shall be reported as a prior period adjustment by restating the prior period.
|
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 and Disclosures –
|
ASC 820, Fair Value Measurements
and Disclosures, 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. ASC 820 established a hierarchy that prioritizes the information used in developing
fair value estimates.
The levels of fair value hierarchy
are as follows:
|
·
|
Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities
that the company has the ability to access;
|
|
·
|
Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly.
Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and
yield curves that are observable at commonly quoted intervals; and
|
|
·
|
Level 3 inputs are unobservable and are typically based on our own assumptions, including situations
where there is little, if any, market activity.
|
In certain cases, the inputs
used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the Company categorizes such
financial asset or liability based on the lowest level input that is significant to the fair value measurement in its entirety.
Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers
factors specific to the asset or liability.
Both observable and unobservable
inputs may be used to determine the fair value of positions that are classified within the Level 3 category. As a result, the unrealized
gains and losses for assets within the Level 3 category can include changes in fair value that were attributable to both observable
and unobservable inputs. The Company has no instruments that require additional disclosure.
|
23.
|
Fair Value Option for Financial
Instruments -
|
The Company’s financial
instruments consist principally of cash, receivables, accounts payable and mortgage payable. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, the fair value of the Company’s financial instruments are determined
based upon Level “1” and Level “2” inputs.
NOTE
B - Mortgage Payable
Principal balances
outstanding and details of notes payable are summarized as follows:
|
|
2016
|
|
|
2015
|
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 bears interest at ½ of 1% (.050%) rate under the lenders prime rate per annum. The Rate of interest is adjustable annually based on the current Prime at the anniversary date. The company’s annual interest Rate at April 30, 2016 is 2.75%. The note is payable in Monthly installments of $3,715, plus accrued interest, with a final payment of approximately $911,000 due November 2019.
|
|
|
|
|
|
|
$
|
1,070,920
|
|
|
$1,115,500
|
Payments of principal required
on the foregoing debt are as follows:
Fiscal Year Ending
|
2017
|
|
|
44,580
|
|
2018
|
|
|
44,580
|
|
2019
|
|
|
44,580
|
|
|
|
|
|
|
Thereafter
|
|
|
937,180
|
|
Total
|
|
$
|
1,115,500
|
|
Land, buildings and improvements,
with an approximate cost of $1,233,000 and an approximate net book value of $ 279,000 are pledged as collateral for these obligations.
NOTE C - Income Taxes
The provision (benefit)
for income taxes consists of the following:
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
80,228
|
|
|
$
|
85,258
|
|
Deferred
|
|
|
(515
|
)
|
|
|
552
|
|
Tax Benefit of Net Operating Loss Carryforward
|
|
|
----
|
|
|
|
----
|
|
Deferred Tax Adjustment and Changes to Valuation Allowance
|
|
|
----
|
|
|
|
----
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
79,713
|
|
|
$
|
85,810
|
|
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.
The components of the net deferred
tax asset at April 30, 2016 and 2015 are as follows:
|
|
2016
|
|
|
2015
|
|
Properties and Equipment principally due to
|
|
|
|
|
|
|
|
|
Depreciation
|
|
$
|
40,416
|
|
|
$
|
39,824
|
|
|
|
|
|
|
|
|
|
|
Provision for Bad Debts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross deferred tax assets
|
|
$
|
40,416
|
|
|
$
|
39,824
|
|
Less: Valuation allowance
|
|
|
---
|
|
|
|
---
|
|
Net Deferred Tax Asset
|
|
$
|
40,416
|
|
|
$
|
39,824
|
|
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.
NOTE C – Income Taxes (continued)
Total Federal tax expense for years ended
April 30, 2016 and 2015 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:
|
|
2016
|
|
|
2015
|
|
|
|
Percent
Of Pre-Tax
|
|
|
Percent
Of Pre-Tax
|
|
|
|
Amount
|
|
|
Income
|
|
|
Amount
|
|
|
Income
|
|
Income before provision for income taxes
|
|
$
|
257,584
|
|
|
|
100
|
%
|
|
$
|
246,104
|
|
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computed expected tax expense
|
|
$
|
87,579
|
|
|
|
34
|
%
|
|
$
|
83,675
|
|
|
|
34
|
%
|
Federal tax (benefit) of State Income Tax
|
|
|
(3.905
|
)
|
|
|
(1
|
%)
|
|
|
(3,667
|
)
|
|
|
(1
|
%)
|
Sur Tax Exemption
|
|
|
(4,383
|
)
|
|
|
(2
|
%)
|
|
|
(4,984
|
)
|
|
|
(2
|
%)
|
Non deductible items
|
|
|
422
|
|
|
|
0
|
%
|
|
|
----
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual Federal Tax
|
|
$
|
79,713
|
|
|
|
31
|
%
|
|
$
|
75,024
|
|
|
|
31
|
%
|
Tax years that remain subject to examination
are years 2011 and forward.
NOTE D - Rental
Income
During 2016 the company leased
warehouse and manufacturing space to three unrelated third parties under leases that expire at various dates thru fiscal 2020.
Rental income approximated $ 560,000 and $ 556,000 for fiscal 2016 and 2015, respectively. Rental income from these leases amounted
to 100 % of the total 2016 rental income and 100 % of the total 2015 rental income.
Future minimum rental income
under non-cancelable leases, excluding cost of living adjustments are as follows:
2017
|
|
$
|
501,000
|
|
2018
|
|
$
|
265,000
|
|
2019
|
|
$
|
245,000
|
|
2020
|
|
$
|
61,000
|
|
NOTE E - Rental Expenses (Except for Interest)
Rental expenses consisted of:
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Commissions
|
|
$
|
16,736
|
|
|
$
|
16,554
|
|
Depreciation and Amortization
|
|
|
23,672
|
|
|
|
24,988
|
|
Insurance
|
|
|
27,077
|
|
|
|
33,646
|
|
Management Fees
|
|
|
60,000
|
|
|
|
48,000
|
|
Outside Services
|
|
|
3,966
|
|
|
|
5,801
|
|
Repairs and Maintenance
|
|
|
7,243
|
|
|
|
19,656
|
|
Utilities
|
|
|
89,980
|
|
|
|
90,240
|
|
Taxes and permits
|
|
|
109,154
|
|
|
|
100,430
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
337,828
|
|
|
$
|
339,315
|
|
NOTE F - Administrative
Expenses
Administrative expenses consisted of:
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Accounting and Legal
|
|
$
|
24,895
|
|
|
$
|
24,123
|
|
Penalties
|
|
|
1,241
|
|
|
|
|
|
Office Supplies/Postage/Other
|
|
|
890
|
|
|
|
1,033
|
|
Stockholders’ Expenses
|
|
|
31,933
|
|
|
|
22,967
|
|
Telephone
|
|
|
1,893
|
|
|
|
1,631
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$
|
60,852
|
|
|
$
|
49,754
|
|
NOTE G - Related
Party Transactions
Management
fees and reimbursements in the amount of $ 60,000 and $48,000 for 2016 and 2015 was paid to Angelo Napolitano, CEO, Harnap Corp
which is controlled by Mr. Napolitano, was reimbursed for bookkeeping services, repairs, legal and office supplies for approximately
$20,165 and $20,350 for 2016 and 2015. Real estate commissions were paid in 2015 of approximately $14,000 to Napolitano Commercial
Properties. Included in accounts payable is approximately $50,000 and $50,000 for 2016 and 2015 that is owned to Harnap Corp. The
mortgage note payable is guaranteed by the company’s C.E.O. up to 50% of all sums due.
NOTE H –
Commitments, Contingent Liabilities, Other Matters, and Subsequent Events
|
1.
|
On June 1, 2016, the Company entered into a month to month lease
agreement for approximately 5,500 square feet at a monthly rental of $3,800.
|
|
2.
|
In April 2015, the FASB issued ASU No. 2015-03, simplifying the
presentation of debt issuance costs. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015. Debt issuance
costs will be required to be classified as a direct reduction of the debt balances. Amortization of Debt Issuance Costs using the
effective interest method with any amortization recorded as part of interest expense. We have adopted the ASU for fiscal years
and interim periods beginning May 1, 2016.
|