ý
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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For
the quarterly period ended March 31, 2007
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OR
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
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SECURITIES
EXCHANGE ACT OF 1934
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For
the transition period from ________________ to
________________
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Delaware
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33-0851302
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(State
or other jurisdiction of
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(I.R.S.
Employer
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incorporation
or organization)
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Identification
No.)
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1160
Commerce Avenue, Bronx, New York
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11462
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(Address
of principal executive offices)
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(Zip
Code)
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Class
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Outstanding
at April 30, 2007
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Common
Stock, $.001 par value per share
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49,003,372
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Page
No.
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FINANCIAL
INFORMATION
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|||
Item
1-
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|||
Balance
Sheets at March 31, 2007 (unaudited) and December 31, 2006
(audited)
|
2
|
||
Statements
of Operations for the Three Months Ended March 31, 2007 and 2006
(unaudited)
|
3
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||
Statement
of Stockholders’ Equity for the Three Months Ended March 31, 2007
(unaudited)
|
4
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||
Statements
of Cash Flows for the Three Months Ended March 31, 2007 and 2006
(unaudited)
|
5
|
||
Notes
to Financial Statements (unaudited)
|
6
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||
Item
2
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
10
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|
Item
3
|
Quantitative
and Qualitative Disclosures about Market Risk
|
14
|
|
Item
4
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Controls
and Procedures
|
14
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PART
II.
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OTHER
INFORMATION
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||
Item
4
|
Submission
of Matters to a Vote of Security Holders
|
15
|
|
Exhibits
|
15
|
||
Signatures
|
16
|
March
31,
|
December
31,
|
||||||
2007
|
2006
|
||||||
Unaudited
|
Derived
from
|
||||||
audited
|
|||||||
financial
|
|||||||
statements
|
|||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and equivalents
|
$
|
110
|
$
|
346
|
|||
Accounts
receivable-net
|
5,811
|
7,922
|
|||||
Inventory
|
7,206
|
9,104
|
|||||
Due
from vendors
|
171
|
83
|
|||||
Prepaid
expenses and other current assets
|
197
|
615
|
|||||
Deferred
income taxes
|
151
|
151
|
|||||
Total
current assets
|
13,646
|
18,221
|
|||||
PROPERTY
AND EQUIPMENT - NET
|
728
|
752
|
|||||
DEFERRED
INCOME TAXES
|
67
|
67
|
|||||
OTHER
ASSETS
|
72
|
77
|
|||||
TOTAL
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$
|
14,513
|
$
|
19,117
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|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Notes
payable - bank
|
$
|
5,820
|
$
|
7,201
|
|||
Accounts
payable
|
5,724
|
8,532
|
|||||
Current
portion of long term obligations
|
8
|
11
|
|||||
Accrued
expenses and other current liabilities
|
234
|
99
|
|||||
Total
current liabilities
|
11,786
|
15,843
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|||||
DEFERRED
LEASE OBLIGATIONS
|
44
|
40
|
|||||
LONG
TERM OBLIGATIONS
|
3
|
4
|
|||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Series
A Convertible Non-Redeemable Preferred Stock, $.001 par value;
|
|||||||
8,530
shares authorized; 262 shares issued and
|
|||||||
outstanding
at March 31, 2007 and December 31, 2006
|
-
|
-
|
|||||
Common
stock, $.001 par value; 100,000 shares authorized; 48,721
|
|||||||
shares
issued and outstanding at March 31, 2007 and
|
|||||||
December
31, 2006
|
49
|
49
|
|||||
Additional
paid-in capital
|
3,458
|
3,415
|
|||||
Accumulated
deficit
|
(827
|
)
|
(234
|
)
|
|||
Total
stockholders’ equity
|
2,680
|
3,230
|
|||||
TOTAL
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$
|
14,513
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$
|
19,117
|
2007
|
2006
|
||||||
NET
SALES
|
$
|
16,273
|
$
|
13,319
|
|||
COST
OF GOODS SOLD
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14,693
|
11,760
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|||||
GROSS
PROFIT
|
1,580
|
1,559
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|||||
OPERATING
COSTS AND EXPENSES:
|
|||||||
Selling
and administrative expenses
|
1,925
|
1,276
|
|||||
Terminated
transaction costs
|
-
|
257
|
|||||
Total
operating expenses
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1,925
|
1,533
|
|||||
(LOSS)
INCOME FROM OPERATIONS
|
(345
|
)
|
26
|
||||
Interest
expense
|
248
|
188
|
|||||
LOSS
BEFORE BENEFIT FROM
|
|||||||
INCOME
TAXES
|
(593
|
)
|
(162
|
)
|
|||
Benefit
from income taxes
|
-
|
(68
|
)
|
||||
NET
LOSS
|
$
|
(593
|
)
|
$
|
(94
|
)
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Net
loss per share - basic and diluted
|
$
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(0.01
|
)
|
$
|
0.00
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||
Weighted
average common shares outstanding -
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|||||||
basic
and diluted
|
48,721
|
48,165
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Preferred
Stock A
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|
Common
Stock
|
|
Additional
Paid
in
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|
Accumulated
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|
Total
Shareholders’
|
|
|||||||||||||
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|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
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|
Capital
|
|
Deficit
|
|
Equity
|
|
|||||||
Balance,
January 1, 2007
|
262
|
$
|
-
|
48,721
|
$
|
49
|
$
|
3,415
|
$
|
(234
|
)
|
$
|
3,230
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|||||||||
Stock
option
|
||||||||||||||||||||||
compensation
expense
|
43
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43
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||||||||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(593
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)
|
(593
|
)
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|||||||||||||
Balance,
March 31, 2007
|
262
|
$
|
-
|
48,721
|
$
|
49
|
$
|
3,458
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$
|
(827
|
)
|
$
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2,680
|
2007
|
2006
|
||||||
OPERATING
ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(593
|
)
|
$
|
(94
|
)
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|
Adjustments
to reconcile net loss to net cash provided by
|
|||||||
(used
in) operating activities:
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|||||||
Deferred
rent
|
4
|
1
|
|||||
Depreciation
and amortization
|
54
|
31
|
|||||
Provision
for doubtful accounts
|
20
|
||||||
Stock
option compensation expense
|
43
|
55
|
|||||
Amortization
of deferred financing costs
|
50
|
30
|
|||||
Deferred
income taxes
|
-
|
(70
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
2,091
|
1,225
|
|||||
Inventory
|
1,898
|
(1,318
|
)
|
||||
Due
from vendors
|
(88
|
)
|
106
|
||||
Prepaid
acquisition and proposed offering costs
|
-
|
162
|
|||||
Prepaid
expenses and other current assets
|
(5
|
)
|
(91
|
)
|
|||
Accounts
payable
|
(2,808
|
)
|
(352
|
)
|
|||
Accrued
expenses and other current liabilities
|
135
|
(177
|
)
|
||||
Net
cash provided by (used in) operating activities
|
801
|
(492
|
)
|
||||
INVESTING
ACTIVITIES:
|
|||||||
Purchase
of property and equipment
|
(30
|
)
|
-
|
||||
Proceeds
from insurance claim
|
378
|
-
|
|||||
|
|||||||
Net
cash provided by investing activities
|
348
|
-
|
|||||
FINANCING
ACTIVITIES:
|
|||||||
Proceeds
from note payable - bank
|
16,038
|
15,297
|
|||||
Repayments
of note payable - bank
|
(17,419
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)
|
(14,274
|
)
|
|||
Payment
of long-term obligations
|
(4
|
)
|
(7
|
)
|
|||
Net
cash (used in) provided by financing activities
|
(1,385
|
)
|
1,016
|
||||
(DECREASE)
INCREASE IN CASH AND EQUIVALENTS
|
(236
|
)
|
524
|
||||
CASH
AND EQUIVALENTS, BEGINNING OF PERIOD
|
346
|
252
|
|||||
CASH
AND EQUIVALENTS, END OF PERIOD
|
$
|
110
|
$
|
776
|
|||
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
227
|
$
|
174
|
|||
Income
taxes
|
$
|
10
|
$
|
82
|
Three
Months ended March 31,
|
|||||||||||||
2007
|
2006
|
||||||||||||
(unaudited;
dollars in thousands)
|
|||||||||||||
Net
sales
|
$
|
16,273
|
100.0
|
%
|
$
|
13,319
|
100.0
|
%
|
|||||
Cost
of goods sold
|
14,693
|
90.3
|
%
|
11,760
|
89.3
|
%
|
|||||||
Gross
profit
|
1,580
|
9.7
|
%
|
1,559
|
11.7
|
%
|
|||||||
Operating
costs and expenses:
|
|||||||||||||
Selling
and administrative expenses
|
1,925
|
11.8
|
%
|
1,276
|
9.6
|
%
|
|||||||
Terminated
transaction costs
|
-
|
-
|
%
|
257
|
1.9
|
%
|
|||||||
Total
operating costs and expenses
|
1,925
|
11.8
|
%
|
1,533
|
11.5
|
%
|
|||||||
(Loss)
income from operations
|
(345
|
)
|
(2.1
|
)%
|
26
|
0.2
|
%
|
||||||
Interest
expense
|
248
|
1.6
|
%
|
188
|
1.4
|
%
|
|||||||
Loss
before benefit from income taxes
|
(593
|
)
|
(3.7
|
)%
|
(162
|
)
|
(1.2
|
)%
|
|||||
Benefit
from income taxes
|
-
|
-
|
%
|
(68
|
)
|
(0.5
|
)%
|
||||||
Net
loss
|
$
|
(593
|
)
|
(3.7
|
)%
|
$
|
(94
|
)
|
(0.7
|
)%
|
Nominee
|
Votes
For
|
|
Votes
Withheld
|
||||
Jay
Gelman
|
46,151,057
|
280,831
|
|||||
Andre
Muller
|
46,151,057
|
280,831
|
|||||
Humbert
B. Powell, III
|
46,170,743
|
261,145
|
|||||
Thomas
Vitiello
|
46,164,307
|
267,581
|
|||||
Steven
H. Nathan
|
46,164,193
|
267,695
|
Votes
For
|
|
Votes
Against
|
|
Votes
Abstain
|
|
Broker
Non-Votes
|
|||||||
Appointment
of Auditors
|
46,391,630
|
22,258
|
18,000
|
-
|
Votes
For
|
|
Votes
Against
|
|
Votes
Abstain
|
|
Broker
Non-Votes
|
|||||||
2006
Stock Plan
|
35,722,705
|
1,011,193
|
18,000
|
9,679,990
|
May 15, 2007 | ||
Alliance Distributors Holding Inc. | ||
|
|
|
By: | /s/ Jay Gelman | |
Jay
Gelman
CEO
and Chairman of the Board
|
||
By: | /s/ Stephen Agress | |
Stephen
Agress
Executive
Vice President and Chief Financial
Officer
|