SECURITIES
      AND EXCHANGE COMMISSION





WASHINGTON,
      D.C. 20549





FORM
      10-Q





QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d)





OF
      THE
      SECURITIES EXCHANGE ACT OF 1934







For
                the Quarter Ended June 30, 2005
            
            Commission
                File No. 1-6663





**COLONIAL
                COMMERCIAL CORP.******(Exact
                Name of Company as Specified in its
                Charter)






New
                York
            
            11-2037182(State
                or Other Jurisdiction of Incorporation or Organization)
            
            (I.R.S.
                Employer Identification Number)275
                Wagaraw Road, Hawthorne, New Jersey
            
            07506(Address
                of Principal Executive Offices)
            
            (Zip
                Code)




Company's
                  Telephone Number, Including Area Code:
              
              973-427-8224




120
                New South Road, Hicksville, New York 11801(Former
                Address of Principal Executive
                Offices)








Indicate
      by check mark whether the Registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Exchange Act).




Yes
o  
Nox








Indicate
      by check mark whether the Company (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 Company was required
      to
      file such reports) and (2) has been subject to such filing requirements for
      the
      past 90 days.




Yes
x  
Noo




Indicate
      the number of shares outstanding of the Company's Common Stock and Convertible
      Preferred Stock as of August 1, 2005.





Common
      Stock, par value $.05 per share - 4,198,592 shares


Convertible
      Preferred Stock, par value $.05 per share - 764,288 shares













COLONIAL
      COMMERCIAL CORP. AND SUBSIDIARIES





INDEX




PART
                I.
            FINANCIAL
                INFORMATION
            PAGE
                NO.Item
                1 -
            Financial
                StatementsCondensed
                Consolidated Balance Sheets as of June 30, 2005
                (Unaudited) and December 31, 2004
            1Condensed
                Consolidated Statements of Operations
                (Unaudited) Quarter Ended June 30, 2005 and 2004
            2Condensed
                Consolidated Statements of Operations
                (Unaudited) Six Months Ended June 30, 2005 and 2004
            3Condensed
                Consolidated Statements of Cash Flows
                (Unaudited) Six Months Ended June 30, 2005 and 2004
            4Notes
                to Condensed Consolidated Financial Statements
                (Unaudited)
            5Item
                2 -
            Management's
                  Discussion and Analysis of
                  Financial Condition and Results of Operations
            11Item
                3 -
            Quantitative
                and Qualitative Disclosures About Market
                Risk
            18Item
                4 -
            Controls
                and Procedures
            18PART
                II.
            OTHER
                INFORMATIONItem
                1 -
            Legal
                Proceedings
            19Item
                4 -
            Submission
                of Matters to a Vote of Security
                Holders
            22Item
                6 -
            Exhibits
            23




*Table
            of Contents*




PART
      I. FINANCIAL INFORMATION


Item
      1. Financial Statements





COLONIAL
      COMMERCIAL CORP. AND SUBSIDIARIES


Condensed
      Consolidated Balance Sheets





June
                  30,
                2005
            
            December
                  31,
                2004(Unaudited)AssetsCurrent
                assets:Cash
                and cash equivalents
            
            $
            493,998
            
            $
            310,659Accounts
                  receivable, net of allowance for doubtful accounts of $230,264
                  in 2005 and
                  $290,448 in 2004
            
            
            8,764,983
            
            
            7,774,588Inventory
            
            
            10,897,809
            
            
            11,002,314Prepaid
                expenses and other current assets
            
            
            1,079,014
            
            
            865,732Deferred
                tax asset - current portion
            
            
            574,061
            
            
            574,061Total
                current assets
            
            
            21,809,865
            
            
            20,527,354Property
                and equipment
            
            
            1,606,099
            
            
            1,656,149Goodwill
            
            
            1,628,133
            
            
            1,628,133Other
                intangibles
            
            
            18,167
            
            
            27,500Other
                assets - noncurrent
            
            
            156,241
            
            
            183,183Deferred
                tax asset - noncurrent
            
            
            492,939
            
            
            492,939$
            25,711,444
            
            $
            24,515,258Liabilities
                and Stockholders' EquityCurrent
                liabilities:Trade
                payables
            
            $
            5,173,920
            
            $
            4,721,790Accrued
                liabilities
            
            
            1,962,673
            
            
            1,744,006Income
                taxes payable
            
            
            92,579
            
            
            36,316Borrowings
                under credit facility
            
            
            12,503,526
            
            
            12,325,209Notes
                  payable - current portion; includes related party notes of $0 in
                  2005 and
                  $30,000 in 2004
            
            
            122,109
            
            
            115,265Total
                current liabilities
            
            
            19,854,807
            
            
            18,942,586Notes
                  payable, excluding current portion; includes related party notes
                  of
                  $871,875 in 2005 and $993,125 in 2004
            
            
            1,383,730
            
            
            1,398,774Total
                liabilities
            
            
            21,238,537
            
            
            20,341,360Commitments
                and contingenciesStockholders'
                equity:Redeemable
                      convertible preferred stock, $.05 par value, liquidation preference
                      of
                      $3,857,555 and $3,952,195 and 2,468,860 shares authorized,
                      771,511 in 2005
                      and 790,439 in 2004 shares, issued and
                      outstanding
            
            
            38,576
            
            
            39,522Common
                  stock, $.05 par value, 20,000,000 shares authorized, 4,191,369
                  in 2005 and
                  4,158,441 in 2004 shares issued and outstanding
            
            
            209,568
            
            
            207,922Additional
                paid-in capital
            
            
            10,723,896
            
            
            10,746,836Accumulated
                deficit
            
            
            (6,499,133
            )
            
            (6,820,382
            )Total
                stockholders' equity
            
            
            4,472,907
            
            
            4,173,898$
            25,711,444
            
            $
            24,515,258


See
        accompanying notes to unaudited condensed consolidated financial
        statements.





1
 *Table
            of Contents*




COLONIAL
      COMMERCIAL CORP.
      AND
      SUBSIDIARIES


Condensed
      Consolidated Statements of Operations


(Unaudited)





For
                The Three Months Ended June
                30,2005
            
            2004Sales
            
            $
            17,501,842
            
            $
            16,148,926Cost
                of sales
            
            
            12,369,723
            
            
            11,351,064Gross
                profit
            
            
            5,132,119
            
            
            4,797,862Selling,
                general and administrative expenses, net
            
            
            4,368,437
            
            
            4,032,186Operating
                income
            
            
            763,682
            
            
            765,676Other
                income
            
            
            87,557
            
            
            125,560Interest
                  expense, net; includes related party interest of $18,646 in 2005
                  and $0 in
                  2004.
            
            
            (250,029
            )
            
            (193,137
            )Income
                  from operations before income tax expense
            
            
            601,210
            
            
            698,099Income
                tax expense
            
            
            81,028
            
            
            34,594Net
                income
            
            $
            520,182
            
            $
            663,505Income
                per common share:Basic
            
            $
            0.12
            
            $
            0.22Diluted
            
            $
            0.10
            
            $
            0.16Weighted
                average shares outstanding:Basic
            
            
            4,185,505
            
            
            3,011,554Diluted
            
            
            5,287,577
            
            
            4,081,840


See
        accompanying notes to unaudited condensed consolidated financial
        statements.





2
 *Table
            of Contents*





COLONIAL
      COMMERCIAL CORP. AND SUBSIDIARIES


Condensed
      Consolidated Statements of Operations


(Unaudited)





For
                  The Six Months EndedJune
                  30,2005
            
            2004Sales
            
            $
            30,849,161
            
            $
            28,674,285Cost
                of sales
            
            
            21,463,971
            
            
            20,066,444Gross
                profit
            
            
            9,385,190
            
            
            8,607,841Selling,
                general and administrative expenses, net
            
            
            8,619,062
            
            
            8,131,238Operating
                income
            
            
            766,128
            
            
            476,603Other
                income
            
            
            149,435
            
            
            182,277Interest
                  expense, net; includes related party interest of $36,391 in 2005
                  and $0 in
                  2004.
            
            
            (493,590
            )
            
            (373,052
            )Income
                  from operations before income tax expense (benefit)
            
            
            421,973
            
            
            285,828Income
                tax expense (benefit)
            
            
            100,724
            
            
            (78,427
            )Net
                income
            
            $
            321,249
            
            $
            364,255Income
                per common share:Basic
            
            $
            0.08
            
            $
            0.13Diluted
            
            $
            0.06
            
            $
            0.09Weighted
                average shares outstanding:Basic
            
            
            4,175,422
            
            
            2,869,123Diluted
            
            
            5,287,377
            
            
            4,078,661


See
        accompanying notes to unaudited condensed consolidated financial
        statements.





3
 *Table
            of Contents*





COLONIAL
      COMMERCIAL CORP. AND SUBSIDIARIES


Condensed
      Consolidated Statements of Cash Flows


(Unaudited)





For
                  The Six Months Ended June
                  30,2005
            
            2004Cash
                flows from operating activities:Net
                income
            
            $
            321,249
            
            $
            364,255Adjustments
                  to reconcile net income to net cash provided by (used in) operating
                  activities:Deferred
                tax benefit
            
            
            -
            
            
            (129,600
            )Stock-based
                compensation
            
            
            (25,740
            )
            
            50,940Provision
                for doubtful accounts
            
            
            30,587
            
            
            150,765Depreciation
            
            
            191,090
            
            
            176,788Amortization
                of intangibles
            
            
            9,333
            
            
            20,833Accretion
                of debt discount
            
            
            18,750
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            (1,020,982
            )
            
            (1,755,496
            )Inventory
            
            
            104,505
            
            
            (488,980
            )Prepaid
                expenses and other current assets
            
            
            (213,282
            )
            
            (274,894
            )Other
                assets - noncurrent
            
            
            26,942
            
            
            -Trade
                payables
            
            
            452,130
            
            
            1,031,147Accrued
                liabilities
            
            
            218,667
            
            
            333,579Income
                taxes payable
            
            
            56,263
            
            
            (29,893
            )Net
                cash provided by (used in) operating activities
            
            
            169,512
            
            
            (550,556
            )Cash
                flows from investing activities:Additions
                to equipment
            
            
            (141,040
            )
            
            (211,106
            )Net
                cash used in investing activities
            
            
            (141,040
            )
            
            (211,106
            )Cash
                flows from financing activities:Issuance
                of common stock
            
            
            3,500
            
            
            360,000Retirement
                of preferred stock
            
            
            -
            
            
            (355,638
            )Repayments
                of notes payable
            
            
            (26,950
            )
            
            (35,232
            )Issuance
                of notes payable
            
            
            -
            
            
            22,871Net
                borrowings under credit facility
            
            
            178,317
            
            
            1,387,332Net
                cash provided by financing activities
            
            
            154,867
            
            
            1,379,333Increase
                in cash and cash equivalents
            
            
            183,339
            
            
            617,671Cash
                and cash equivalents - beginning of period
            
            
            310,659
            
            
            342,756Cash
                and cash equivalents - end of period
            
            $
            493,998
            
            $
            960,427




See
        accompanying notes to unaudited condensed consolidated financial
        statements.





4
 *Table
            of Contents*





COLONIAL
      COMMERCIAL CORP. AND SUBSIDIARIES





Notes
      To
      Condensed Consolidated Financial Statements


June
      30,
      2005


(Unaudited)





1.
            Summary
                of Significant Accounting Policies and
                Practices





The
      condensed consolidated financial statements of Colonial Commercial Corp. and
      Subsidiaries (the "Company") included herein have been prepared by the Company
      and are unaudited; however, such information reflects all adjustments
      (consisting solely of normal recurring adjustments), which are, in the opinion
      of management, necessary for a fair presentation of the financial position,
      results of operations, and cash flows for the interim periods to which the
      report relates. The results of operations for the period ended June 30, 2005
      are
      not necessarily indicative of the operating results that may be achieved for
      the
      full year.





Certain
      information and footnote disclosures, normally included in consolidated
      financial statements prepared in accordance with accounting principles generally
      accepted in the United States of America, have been condensed or omitted. It
      is
      suggested that these consolidated financial statements be read in conjunction
      with the consolidated financial statements and notes thereto included in the
      Company's Form 10-K for the year ended December 31, 2004.





We
      have
      one continuing industry segment - wholesale distribution of heating,
      ventilation, air conditioning equipment and high-end plumbing
      fixtures.





Inventory
      is comprised of finished goods.





Stock
      Options





The
      Company uses the intrinsic-value method of accounting for stock-based awards
      granted to employees. The Company recognizes stock-based compensation related
      to
      option repricing for options previously awarded. For the quarter and six months
      ended June 30, 2005, the amount of stock based compensation was ($14,840) and
      ($25,740), respectively. No stock-based compensation cost is included in net
      income related to options granted during periods presented, since they had
      an
      exercise price equal to the market value of the stock on the date of grant
      and
      all outstanding options are fully vested. During the six months ended June
      30,
      2005, no stock options were granted and all outstanding options were fully
      vested. In accordance with SFAS No. 148, “Accounting for Stock Based
      Compensation - Transition and Disclosure,” the following table presents the
      effect on net income and net income per share, had compensation cost for the
      Company’s stock plans been determined consistent with SFAS No. 123, “Accounting
      for Stock-Based Compensation”. The fair value of each option grant is estimated
      on the date of grant by use of the Black-Scholes option-pricing
      model.




5
 *Table
            of Contents*





The
      following table illustrates the effect on net income if the fair-value-based
      method had been applied to all outstanding awards in each period.




For
                  the Quarter Ended June 30,
            
            For
                  the Six Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Net
                income, as reported
            
            $
            520,182
            
            $
            663,505
            
            $
            321,249
            
            $
            364,255Add:      
                Stock-based compensationrelated
                to option repricing
            
            
            (14,840
            )
            
            (33,960
            )
            
            (25,740
            )
            
            50,940Pro
                forma net income
            
            $
            505,342
            
            $
            629,545
            
            $
            295,509
            
            $
            415,195Basic
                income per share, as reported
            
            
            0.12
            
            
            0.22
            
            
            0.08
            
            
            0.13Basic
                income per share, pro forma
            
            
            0.12
            
            
            0.21
            
            
            0.07
            
            
            0.14Diluted
                income per share, as reported
            
            
            0.10
            
            
            0.16
            
            
            0.06
            
            
            0.09Diluted
                income per share, pro forma
            
            
            0.10
            
            
            0.15
            
            
            0.06
            
            
            0.10





2.
            Equity
                Transactions





During
      the quarter ended March 31, 2005, the Company issued 14,000 shares of common
      stock pursuant to the exercise of outstanding stock options. Bernard Korn
      obtained 10,000 shares of common stock, by exercising outstanding stock options
      on February 2, 2005. Mr. Korn is the Chief Executive Officer and a Director
      of
      the Company. A non-executive employee of Universal obtained 4,000 shares of
      common stock, by exercising his outstanding stock options on March 22, 2005.





During
      the six months ended June 30, 2005, holders of a total of 18,928 shares of
      redeemable Convertible Preferred Stock converted these shares into 18,928 shares
      of Common Stock.




3.
            Supplemental
                Cash Flow Information





The
      following is supplemental information relating to the consolidated statements
      of
      cash flows:





For
                the Six Months EndedJune
                30, 2005
            
            June
                30, 2004Cash
                paid during the period for:Interest
            
            $
            446,212
            
            $
            306,733Income
                taxes
            
            $
            156,206
            
            $
            131,212




During
      the six months ended June 30, 2005 and 2004, the Company converted 18,928 shares
      and 16,450 shares respectively, of Convertible Preferred Stock to a similar
      number of Common Stock.




6
 *Table
            of Contents*





4.
            Net
                Income Per Common Share





Basic
      net
      income per share is computed by dividing income available to common shareholders
      by the weighted-average number of common shares outstanding. Diluted earnings
      per share reflect, in periods in which they have a dilutive effect, the impact
      of common shares issuable upon exercise of stock options.





A
      reconciliation between the numerators and denominators of the basic and diluted
      income per common share is as follows:





For
                  the Quarter Ended June 30,
            
            For
                  the Six Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Net
                income (numerator)
            
            $
            520,182
            
            $
            663,505
            
            $
            321,249
            
            $
            364,255Weighted
                average common shares(denominator
                for basic income per share)
            
            
            4,185,505
            
            
            3,011,554
            
            
            4,175,422
            
            
            2,869,123Effect
                of dilutive securities:Convertible
                preferred stock
            
            
            777,375
            
            
            865,826
            
            
            783,903
            
            
            1,014,639Convertible
                notes
            
            
            175,000
            
            
            -
            
            
            175,000
            
            
            -Stock
                options
            
            
            149,697
            
            
            204,460
            
            
            153,052
            
            
            194,899Weighted
                average common and potentialCommon
                shares outstanding(denominator
                for diluted income per share)
            
            
            5,287,577
            
            
            4,081,840
            
            
            5,287,377
            
            
            4,078,661Basic
                net income per share
            
            $
            0.12
            
            $
            0.22
            
            $
            0.08
            
            $
            0.13Diluted
                net income per share
            
            $
            0.10
            
            $
            0.16
            
            $
            0.06
            
            $
            0.09





5.
            Financing
                Arrangements





At
      June
      30, 2005, amounts outstanding under the credit facility were $12,503,526, of
      which $1,062,977 represents a term loan payable in equal monthly installments
      of
      approximately $83,333. At June 30, 2005, the amount of the unused available
      credit was $769,910. The interest rate on the $1,062,977 term loan was 6.5%
      (prime plus .5%) as of June 30, 2005. The interest rate on the remaining credit
      facility, as of June 30, 2005 was 5.75% (prime minus .25%).








7
 *Table
            of Contents*





6.
            Litigation





Universal
      Supply Group, Inc.





Litigation





Universal
      Supply Group, Inc. is a New York corporation (“Universal”). On June 25, 1999,
      Universal acquired substantially all of the assets of Universal Supply Group,
      Inc., a New Jersey corporation, including its name, pursuant to the terms of
      a
      purchase agreement. The Company filed a copy of the purchase agreement with
      the
      Securities and Exchange Commission on March 30, 1999 as Exhibit 10(g) on Form
      10KSB, and the Company filed a copy of an amendment to the purchase agreement
      on
      July 9, 1999 as Exhibit 10(a)(ii) on Form 8-K. Subsequent to the sale, Universal
      Supply Group, Inc. (the selling corporation) formerly known as Universal
      Engineering Co., Inc., changed its name to Hilco, Inc. Hilco, Inc. acquired
      the
      assets of Amber Supply Co., Inc., formerly known as Amber Oil Burner Supply
      Co.,
      Inc., in 1998, prior to Hilco’s sale of assets to Universal. Hilco, Inc. is
      hereinafter referred to as the “Predecessor.” The majority shareholders of
      Hilco, Inc. were John A. Hildebrandt and Paul Hildebrandt.





The
      Company understands that Predecessor and many other companies have been sued
      in
      the Superior Court of New Jersey (Middlesex County) by 146 active plaintiffs
      in
      43 separate active lawsuits that allege injury due to asbestos. Claims in these
      lawsuits relate to alleged sales of asbestos products, or products containing
      asbestos, by the Predecessor. The Company never sold any asbestos related
      products.





Of
      the
      active cases, four were filed in 2005, 39 were filed in 2004, 31 in 2003, and
      44
      in 2002. Twenty-four other cases have been dismissed and six other cases had
      been settled as of March 2005 for a total of $56,000. There has been no judgment
      against the Predecessor. Our Universal subsidiary was named in ten of these
      cases; of these, six were filed in 2001, one in 2003 and three in 2005. No
      case
      that names our Universal subsidiary has been settled or dismissed.





As
      set
      forth in more detail below, the Company has been indemnified against
      asbestos-based claims, and insurance companies are defending the interests
      of
      the Predecessor and the Company in these cases.





Based
      on
      advice of counsel appointed by the insurance companies, the Company believes
      that none of the litigation that was brought against the Company’s Universal
      subsidiary through March 1, 2005 is material, and that the only material
      litigation that was brought against Predecessor through that date was Rhodes
      v. A.O. Smith Corporation ,
      filed
      on April 26, 2004 in the Superior Court of New Jersey, Law Division, Middlesex
      County, Docket Number MID-L-2979-04AS. The Company was informally advised that
      the Rhodes case was
      settled for $3,250,000 under an agreement reached in connection with a
      $10,000,000 jury verdict that was rendered on August 5, 2005. The Company is
      not
      a defendant in the Rhodes case,
      and is in any event entitled to the indemnification and insurance coverage
      referred to below.




8
 *Table
            of Contents*





The
      Company believes that Rhodes differs
      from the other lawsuits in that plaintiff established that he contracted
      mesothelioma as a result of his occupational exposure to asbestos dust and
      fibers and that a predecessor of the Company was a major supplier of the
      asbestos containing products that allegedly caused his disease.





Indemnification





John
      A.
      Hildebrandt, Paul Hildebrandt and the Predecessor have jointly and severally
      agreed to indemnify our Universal subsidiary from and against any and all
      damages, liabilities and claims due to exposure to asbestos at any time prior
      to
      the June 25, 1999 closing of the purchase agreement referred to earlier. These
      agreements are set forth in the purchase agreement. Paul Hildebrandt, one of
      the
      indemnitors, was a director of the Company from September 29, 2004 to January
      28, 2005.





The
      indemnitors may use their own counsel to defend these claims. The indemnitors
      are not liable for any settlement effected without their consent. The
      indemnitors may settle and pay money claims without the consent of the Company.
      There is no indemnification unless claims aggregate $50,000; once this trigger
      point is reached indemnification is required for all claims, including the
      first
      $50,000, but excluding claims of less than $10,000. The indemnification
      requirement survives at least until 30 days after the running of any relevant
      statutes of limitation.





The
      obligation of the indemnitors is joint and several, so that the Company can
      have
      recourse against any one or more of these indemnitors, whether or not any other
      indemnitor has previously defaulted on its obligation to us.





There
      are
      no other limitations to our rights to indemnification.





Insurance





The
      assets that the Predecessor sold to us included its insurance policies and
      other
      agreements and contracts. The policies provide coverage for liability accruing
      during the periods for which premiums were paid. The Predecessor was formed
      in
      1940. Copies of policies are available for each year beginning in 1970 and
      ending with the closing under the purchase agreement in 1999. Copies of policies
      for the period from 1940 to 1969 are not available.





Insurance
      companies acknowledge coverage for potential asbestos claims under certain
      of
      these policies. Insurance companies under additional policies have reserved
      their right to deny coverage but have continued to defend and indemnify the
      Predecessor and the Company under the contested policies.





9
 *Table
            of Contents*




There
      are
      periods during the years from 1940 to 1999 in which our Predecessor did not
      have
      coverage for potential asbestos claims. Subject to litigation, insurance
      companies may maintain that the existence of these periods’ results in coverage
      for only a portion of a particular injury that varies with the period during
      which there was asbestos coverage relating to the injury, and that the balance
      of any settlement or judgment is to be paid by the insured. To date, no
      insurance company has claimed any contribution for a gap in coverage except
      for
      a claim for $159.64 made by one insurance company to the Predecessor in 1995.
      The Predecessor asserted that it had no obligation to pay this amount and did
      not make any payment.





Insurance
      companies have to date defended our Company and the Predecessor, and have paid
      all settlement amounts and defense costs, except that the Company understands
      that the insurance companies have not yet made payment for amounts owed by
      the
      Predecessor under its August 2005 agreement to settle the Rhodes case.
      Except for $159.64 referred to above, the insurance companies have not requested
      any payments from us or from the Predecessor.





Our
      Universal subsidiary has not engaged in the sale of asbestos products since
      its
      formation in 1997. Its product liability policies for all years since 1998
      exclude asbestos claims.





General





Regardless
      of indemnification and insurance coverage, we do not in any event consider
      our
      Company to be liable for the asbestos-based lawsuits that name us or for any
      other claim that arises as a result of actions or omissions by Predecessor
      companies. We expressly disclaimed the assumption of any liabilities when we
      purchased the assets of the Predecessor.





It
      is
      management’s opinion that the existing asbestos litigation will not have a
      material adverse effect on the Company. Nevertheless, the Company could be
      materially and adversely affected if the Company is held liable for substantial
      asbestos claims or if the Company incurs substantial legal or settlement costs.
      This material and adverse effect would occur if indemnitors fail to honor their
      indemnification agreements and insurance is not available either because policy
      limits are exceeded, or because insurance companies successfully claim
      limitations on their liabilities by reason of gaps in coverage or
      otherwise.





There
      is
      no accrued balance for any period relating to asbestos claims, and no amount
      has
      been recorded for any period in any financial statement by the Company for
      asbestos claims. The Company does not regard as likely the potential payment
      of
      any asbestos based claim.




10
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Atlantic
      Hardware & Supply Corporation





On
      January 28, 2002, Atlantic Hardware & Supply Corporation (“Atlantic”), a
      wholly-owned subsidiary of the Company, filed a voluntary petition with the
      U.
      S. Bankruptcy Court for the Eastern District of New York to reorganize under
      Chapter 11 of the U. S. Bankruptcy Code. On May 18, 2005, the United States
      Bankruptcy Court for the Eastern District of New York dismissed the petition.
      Atlantic is a discontinued operation and has no assets. Neither Colonial
      Commercial Corp. nor any of its other subsidiaries were part of the Chapter
      11
      filing.





7.
            New
                Accounting Pronouncements





In
      December 2004, the FASB issued SFAS No. 123(R), “Share-Based Payment”, which
      establishes standards for transactions in which an entity exchanges its equity
      instruments for goods or services. This standard requires an entity to measure
      the cost of employee services received in exchange for an award of equity
      instruments based on the grant date fair value of the award. This eliminates
      the
      exception to account for such awards using the intrinsic method previously
      allowable under APB Opinion No. 25. SFAS No. 123 (R) will be effective for
      the
      first period after December 31, 2005. The Company is in the process of
      evaluating the impact to its financial statements and believes the adoption
      will
      not have a material effect on our income statement.





8.
            Subsequent
                Events





On
      July
      29, 2005 holders of a total of 7,223 shares of redeemable Convertible Preferred
      Stock converted these shares into 7,223 shares of Common Stock.




**Item
      2.  Management’s Discussion and Analysis of
      Financial Condition and Results** **Of
      Operations**





The
      Company





Colonial
      Commercial Corp. (“Colonial”) is a New York corporation, which was incorporated
      on October 28, 1964. Unless otherwise indicated, the term “Company” refers to
      Colonial Commercial Corp. and its consolidated subsidiaries. The Company’s
      operations are conducted through its wholly owned subsidiaries, Universal Supply
      Group, Inc. (“Universal”), The RAL Supply Group, Inc. (“RAL”) and
      American/Universal Supply, Inc. (“American”).


11
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            of Contents*
  Forward-Looking
      Statements





This
      report on Form 10-Q contains forward-looking statements relating to such matters
      as anticipated financial performance and business prospects. When used in this
      report, the words, “anticipates,”“expects,”“believes,”“may,”“intends,” and
      similar expressions are intended to be among the statements that identify
      forward-looking statements. From time to time, the Company may also publish
      forward-looking statements. The Private Securities Litigation Reform Act of
      1995
      provides a safe harbor for forward-looking statements. Forward-looking
      statements involve risks and uncertainties, including, but not limited to,
      the
      consummation of certain events referred to in this report, technological
      changes, competitive factors, maintaining customer and vendor relationships,
      inventory obsolescence and availability, and other risks detailed in the
      Company's periodic filings with the Securities and Exchange Commission, which
      could cause the Company's actual results and experience to differ materially
      from the anticipated results or other expectations expressed in the Company's
      forward-looking statements.





Critical
      Accounting Policies





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States requires that we make estimates and
      judgments that affect the amounts reported of assets, liabilities, revenues,
      and
      expenses and the related disclosure of contingent assets and liabilities. We
      base our estimates on historical experience and on various other assumptions
      we
      believe to be applicable and reasonable under the current circumstances, the
      results of which form the basis for making judgments about the carrying values
      of assets and liabilities that are not readily apparent from other sources.
      Actual results may differ from these estimates under different assumptions
      or
      conditions.





In
      addition, we are periodically faced with uncertainties, the outcomes of which
      are not within our control and will not be known for prolonged periods of
      time.





We
      believe the following to be critical accounting policies that affect the most
      significant estimates and judgments used in the preparation of our consolidated
      financial statements:





Principles
      of Consolidation





The
      consolidated financial statements include the accounts of the Company and its
      wholly-owned subsidiaries. All significant intercompany balances and
      transactions have been eliminated in consolidation.





12
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            of Contents*





Accounts
      Receivable





Accounts
      receivable consist of trade receivables recorded at original invoice amount,
      less an estimated allowance for uncollectible accounts. Trade credit is
      generally extended on a short-term basis; thus trade receivables generally
      do
      not bear interest. However, a service charge may be applied to receivables
      that
      are past due. These service charges are not recognized until collected, and
      are
      then included in other income. Trade receivables are periodically evaluated
      for
      collectibility based on past credit history with customers and their current
      financial condition. Changes in the estimated collectibility of trade
      receivables are recorded in the results of operations for the period in which
      the estimate is revised. Trade receivables that are deemed uncollectible are
      offset against the allowance for uncollectible accounts. The Company generally
      does not require collateral for trade receivables.




Inventory





Inventory
      is stated at the lower of cost or market and consists solely of finished goods.
      Cost is determined using the first-in, first-out method.





Distribution
      costs of incoming freight, purchasing, receiving, inspection, warehousing and
      handling costs are included in selling, general and administrative expenses.
      Such costs were $90,049 and $75,616 for the quarter ended June 30, 2005 and
      2004, respectively, and $188,998 and $145,328 for the six months ended June
      30,
      2005 and 2004, respectively.





Property
      and Equipment





Property
      and equipment are stated at cost. Depreciation is calculated on the straight
      line method over the estimated useful lives of the assets as follows:





Computer
                hardware and software
            3-5
                yearsFurniture
                and fixtures
            5
                yearsAutomobiles
            3-5
                years





Leasehold
      improvements are amortized over the shorter of the lease term or the estimated
      useful life of the asset.





Goodwill
      and Other Intangible Assets





Statement
      of Financial Accounting Standards (SFAS) 142, "Goodwill and Other Intangible
      Assets," requires that goodwill having indefinite lives not be amortized, but
      instead be tested for impairment at least annually. Intangible assets determined
      to have finite lives are amortized over their remaining useful
      lives.


13
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            of Contents*





Results
      of Operations For the Quarter Ended June 30, 2005 and 2004





The
      Company reported net income of $520,182 for the quarter ended June 30, 2005,
      compared to net income of $663,505 for the same period in 2004.





Sales
      increased 8.4% to $17,501,842 for the quarter ended June 30, 2005 from
      $16,148,926 for the same period in 2004. The
      increase in sales is primarily a result of increased market penetration, an
      increase in general industry pricing, and growing market activity in all areas.





Gross
      profit increased 7.0% to $5,132,119 for the quarter ended June 30, 2005 from
      $4,797,862 for the same period in 2004. Gross profit expressed as a percentage
      of sales decreased to 29.3% in 2005 compared to 29.7 % for the comparable period
      in 2004. This decrease is primarily a result of reduced margins of air
      conditioning equipment caused by manufacturers’ product standardization. Cost of
      sales excludes the distribution costs of incoming freight, purchasing,
      receiving, inspection, warehousing and handling costs, as these costs are
      included in our selling, general and administrative expenses. Our gross margins
      may not be comparable to those of other entities since some entities include
      these distribution costs in the cost of sales. These distribution costs were
      $90,049 and $75,616 for the quarters ended June 30, 2005 and 2004,
      respectively.





Selling,
      general and administrative expenses and cost of operations increased 8.3% to
      $4,368,437 for the quarter ended June 30, 2005 from $4,032,186 for the same
      period in 2004. This increase is primarily a result of costs associated with
      increased utility and fuel costs, increased vehicle expenses required to support
      growing sales at the newest locations, general cost increases and increased
      accounting fees.





Other
      income decreased by $38,003 to $87,557 for the quarter ended June 30, 2005
      from
      $125,560 for the same period in 2004. This decrease is primarily the result
      of a
      $58,007 gain from the settlement of a contingent liability of a discontinued
      operation recognized in the second quarter of 2004 with no such gain in 2005,
      partially offset by a $20,038 increase in service charges collected in the
      second quarter of 2005.





Interest
      expense net increased 29.5% to $250,029 for the quarter ended June 30, 2005
      from
      $193,137 for the same period in 2004. This increase is primarily the result
      of
      the increase in prime rate which was 6.25% at June 30, 2005 compared to 4.0%
      at
      June 30, 2004, and additional interest expense incurred on increased borrowings
      to support the Company’s growth.





Income
      tax expense increased by $46,434 to $81,028 for the quarter ended June 30,
      2005
      from $34,594 for the same period in 2004. This increase is primarily a result
      of
      the applicable state income taxes incurred on taxable income for the
      Company.





14
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            of Contents*


Results
      of Operations For the Six Months Ended June 30, 2005 and 2004





The
      Company reported net income of $321,249 for the six months ended June 30, 2005,
      compared to net income of $364,255 for the same period in 2004. Pre-tax income
      increased $136,145 or 47.6%, to $421,973 for the six months ended June 30,
      2005
      from $285,828 for the same period in 2004.





Sales
      increased 7.6% to $30,849,161 for the six months ended June 30, 2005 from
      $28,674,285 for the same period in 2004. The increase in sales is primarily
      a
      result of increased market penetration, an increase in general industry pricing,
      and growing market activity in all areas.





Gross
      profit increased 9.0% to $9,385,190 for the six months ended June 30, 2005
      from
      $8,607,841 for the same period in 2004. Gross profit expressed as a percentage
      of sales increased to 30.4% in 2005 compared to 30.0% for the comparable period
      in 2004. This increase is primarily a result of increased activity and sales
      of
      control systems as well as high end plumbing fixtures partially offset by lower
      margins in sales of air conditioning equipment. Cost of sales excludes the
      distribution costs of incoming freight, purchasing, receiving, inspection,
      warehousing and handling costs, as these costs are included in our selling,
      general and administrative expenses. Our gross margins may not be comparable
      to
      those of other entities since some entities include these distribution costs
      in
      the cost of sales. These distribution costs were $188,998 and $145,328 for
      the
      six months ended June 30, 2005 and 2004, respectively.





Selling,
      general and administrative expenses and cost of operations increased 6.0% to
      $8,619,062 for the six months ended June 30, 2005 from $8,131,238 for the same
      period in 2004. This increase is primarily a result of costs associated with
      increased utility and fuel costs, increased vehicle expenses required to support
      growing sales at the newest locations, general cost increases and increased
      accounting fees.





Other
      income decreased by $32,842 to $149,435 for the six months ended June 30, 2005
      from $182,277 for the same period in 2004. This decrease is primarily the result
      of a $58,007 gain from the settlement of a contingent liability of a
      discontinued operation recognized in 2004 with no such gain in 2005, partially
      offset by a $29,663 increase in service charges collected in the six months
      ended June 30, 2005.





Interest
      expense net increased 32.3% to $493,590 for the six months ended June 30, 2005
      from $373,052 for the same period in 2004. This increase is primarily the result
      of the increase in prime rate which was 6.25% at June 30, 2005 compared to
      4.0%
      at June 30, 2005, and additional interest expense incurred on increased
      borrowings to support the Company’s growth.


15
 *Table
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Income
      tax expense increased by $179,151 to $100,724 for the six months ended June
      30,
      2005 from a $78,427 tax benefit for the same period in 2004. This increase
      is
      primarily a result of the applicable state income taxes incurred on taxable
      income for the Company and the Company recording a net federal tax benefit
      of $0
      in 2005 and $129,600 in 2004. The income tax benefit realized in 2004, was
      from
      a decrease in its valuation allowance on deferred tax assets in recognition
      of
      its then anticipated utilization of net operating loss carryforwards.





The
      following table summarizes information derived from the Company’s consolidated
      statements of income expressed as a percentage of sales for the quarter and
      six
      months ended June 30, 2005 and 2004.





For
                  the Quarter Ended June 30,
            
            For
                  the Six Months Ended June 30,2005
            
            2004
            
            2005
            
            2004Sales
            
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %
            
            100.0
            %Cost
                of sales
            
            
            70.7
            
            
            70.3
            
            
            69.6
            
            
            70.0Gross
                profit
            
            
            29.3
            
            
            29.7
            
            
            30.4
            
            
            30.0Selling,
                general and administrative expenses
            
            
            25.0
            
            
            25.0
            
            
            27.9
            
            
            28.3Operating
                income
            
            
            4.3
            
            
            4.7
            
            
            2.5
            
            
            1.7Other
                income
            
            
            0.5
            
            
            0.8
            
            
            0.5
            
            
            0.6Interest
                expense
            
            
            (1.4
            )
            
            (1.2
            )
            
            (1.6
            )
            
            (1.3
            )Income
                before taxes
            
            
            3.4
            
            
            4.3
            
            
            1.4
            
            
            1.0Income
                tax (expense) benefit
            
            
            (0.4
            )
            
            (0.2
            )
            
            (0.4
            )
            
            0.3Net
                income
            
            
            3.0
            %
            
            4.1
            %
            
            1.0
            %
            
            1.3
            %




16
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Liquidity
      and Capital Resources





Credit
      Facility





The
      Company has a $15,000,000 secured loan facility pursuant to a credit and
      security agreement (“Agreement”) with Wells Fargo Business Credit, Inc.
      (“Wells”) consisting of a revolving line of credit which expires on August 1,
      2009, and a $2,000,000 term loan with a balance of $1,062,977 as of June 30,
      2005, payable in equal monthly installments of $83,333. Availability under
      the
      revolving credit line is determined by a percentage of eligible assets as
      defined in the Agreement, and was $13,273,436 as of June 30, 2005. The balance
      outstanding under the revolving line of credit including the term loan was
      $12,503,526 as of June 30, 2005. The revolving credit line bears interest at
      .25% below prime, and the term loan bears interest at .50% above prime.
      Substantially all of the assets of the Company, as well as a pledge of the
      stock
      of Colonial Commercial Corp.’s operating subsidiaries, collateralize the loans.
      The facility contains covenants relating to the financial condition of the
      Company, its business operations, and restricts the payment of dividends,
      subordinated debt, purchase of securities and capital expenditures. The Company
      is in compliance with all of its financial loan covenants. All loans are due
      on
      demand by the bank, and accordingly, have been classified as current
      liabilities.





As
      of
      June 30, 2005, the Company had $493,998 in cash and cash equivalents compared
      with $310,659 at December 31, 2004.





Net
      cash
      provided by operating activities was $169,512 for the six months ended June
      30,
      2005 compared to net cash used in operating activities of $550,556 for the
      six
      months ended June 30, 2004. The net cash provided by operating activities for
      the 2005 period is primarily a result of net income approximating $321,000,
      non-cash charges approximating $224,000, offset by cash used in operating assets
      and liabilities approximating $376,000. The increase in accounts receivable
      approximating $1,021,000 was primarily a result of increased sales volume.
      Accounts payable increased due to increased inventory purchases to support
      the
      increased sales.





Cash
      flows used in investing activities of $141,040 during the six months ended
      June
      30, 2005 were due to purchases of equipment.





The
      cash
      flows provided by financing activities of $154,867 consisted of $178,317 net
      borrowings under the Company’s credit facility, and $3,500 received from the
      exercise of stock options. Cash flows used in financing activities consisted
      of
      $26,950 for repayments on notes payable.





The
      Company believes that the credit facility is sufficient to finance its current
      operating needs. However, the business of the Company would be materially and
      adversely affected if the bank demands payment of the loan and the Company
      is
      unable to refinance the loan.




17
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**Item
      3.  Quantitative and Qualitative Disclosures
      About Market Risk**





Market
      risk represents the risk of changes in value of a financial instrument,
      derivative or non-derivative, caused by fluctuations in interest rates, foreign
      exchange rates and equity prices. The Company has no financial instruments
      that
      give it exposure to foreign exchange rates or equity prices.





The
      Company’s pre-tax earnings and cash flows are exposed to changes in interest
      rates. All borrowings under its credit facility bear interest based on the
      prime
      rate less .25%, except for the $2.0 million term loan, which bears interest
      at a
      rate of prime plus .5% and a $750,000 note to Goldman Associates of NY, Inc.
      which bears interest at prime. A hypothetical 10% adverse change in such rates
      would reduce the pre-tax earnings and cash flows for the quarter ended June
      30,
      2005 by approximately $77,200 over a one-year period, assuming the borrowing
      level remains consistent with the outstanding borrowings as of June 30, 2005.
      The fair value of the borrowings under the credit facility is not affected
      by
      changes in market interest rates.





The
      Company’s remaining interest-bearing obligations are at fixed rates of interest
      and as such, do not expose the pre-tax earnings and cash flows to changes in
      market interest rates. The change in fair value of the Company’s fixed rate
      obligations resulting from a hypothetical 10% adverse change in interest rates
      would not be material.





**Item
      4.  Controls and
      Procedures**





(a)
            Evaluation
                of Disclosure Controls and
                Procedures





An
      evaluation has been carried out under the supervision and with the participation
      of our management, including our Chief Executive Officer and Chief Financial
      Officer, of the effectiveness of the design and the operation of our "disclosure
      controls and procedures" (as such term is defined in Rule 13a-15(e) under the
      Securities Exchange Act of 1934) as of June 30, 2005 (“Evaluation Date”). Based
      on such evaluation, our Chief Executive Officer and Chief Financial Officer
      have
      concluded that, as of the Evaluation Date, the disclosure controls and
      procedures are reasonably designed and effective to ensure that (i) information
      required to be disclosed by us in the reports we file or submit under the
      Securities Exchange Act of 1934 is recorded, processed, summarized and reported
      within the time periods specified in the SEC's rules and forms, and (ii) such
      information is accumulated and communicated to our management, including our
      Chief Executive Officer and Chief Financial Officer, as appropriate to allow
      timely decisions regarding required disclosure.





(b)
            Changes
                in Internal Controls





Subsequent
      to that evaluation, there have been no significant changes in our internal
      controls or other factors that could significantly affect these controls after
      such evaluation.




18
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            of Contents*





**PART
      II. OTHER INFORMATION**




**Item
        1. Legal Proceedings**




Universal
      Supply Group, Inc.





Litigation





Universal
      Supply Group, Inc. is a New York corporation (“Universal”). On June 25, 1999,
      Universal acquired substantially all of the assets of Universal Supply Group,
      Inc., a New Jersey corporation, including its name, pursuant to the terms of
      a
      purchase agreement. The Company filed a copy of the purchase agreement with
      the
      Securities and Exchange Commission on March 30, 1999 as Exhibit 10(g) on Form
      10KSB, and the Company filed a copy of an amendment to the purchase agreement
      on
      July 9, 1999 as Exhibit 10(a)(ii) on Form 8-K. Subsequent to the sale, Universal
      Supply Group, Inc. (the selling corporation) formerly known as Universal
      Engineering Co., Inc., changed its name to Hilco, Inc. Hilco, Inc. acquired
      the
      assets of Amber Supply Co., Inc., formerly known as Amber Oil Burner Supply
      Co.,
      Inc., in 1998, prior to Hilco’s sale of assets to Universal. Hilco, Inc. is
      hereinafter referred to as the “Predecessor.” The majority shareholders of
      Hilco, Inc. were John A. Hildebrandt and Paul Hildebrandt.





The
      Company understands that Predecessor and many other companies have been sued
      in
      the Superior Court of New Jersey (Middlesex County) by 146 active plaintiffs
      in
      43 separate active lawsuits that allege injury due to asbestos. Claims in these
      lawsuits relate to alleged sales of asbestos products, or products containing
      asbestos, by the Predecessor. The Company never sold any asbestos related
      products.





Of
      the
      active cases, four were filed in 2005, 39 were filed in 2004, 31 in 2003, and
      44
      in 2002. Twenty-four other cases have been dismissed and six other cases had
      been settled as of March 2005 for a total of $56,000. There has been no judgment
      against the Predecessor. Our Universal subsidiary was named in ten of these
      cases; of these, six were filed in 2001, one in 2003 and three in 2005. No
      case
      that names our Universal subsidiary has been settled or dismissed.





As
      set
      forth in more detail below, the Company has been indemnified against
      asbestos-based claims, and insurance companies are defending the interests
      of
      the Predecessor and the Company in these cases.





Based
      on
      advice of counsel appointed by the insurance companies, the Company believes
      that none of the litigation that was brought against the Company’s Universal
      subsidiary through March 1, 2005 is material, and that the only material
      litigation that was brought against Predecessor through that date was Rhodes
      v. A.O. Smith Corporation ,
      filed
      on April 26, 2004 in the Superior Court of New Jersey, Law Division, Middlesex
      County, Docket Number MID-L-2979-04AS. The Company was informally advised that
      the Rhodes case was
      settled for $3,250,000 under an agreement reached in connection with a
      $10,000,000 jury verdict that was rendered on August 5, 2005. The Company is
      not
      a defendant in the Rhodes case,
      and is in any event entitled to the indemnification and insurance coverage
      referred to below.





19
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The
      Company believes that Rhodes differs
      from the other lawsuits in that plaintiff established that he contracted
      mesothelioma as a result of his occupational exposure to asbestos dust and
      fibers and that a predecessor of the Company was a major supplier of the
      asbestos containing products that allegedly caused his disease.





Indemnification





John
      A.
      Hildebrandt, Paul Hildebrandt and the Predecessor have jointly and severally
      agreed to indemnify our Universal subsidiary from and against any and all
      damages, liabilities and claims due to exposure to asbestos at any time prior
      to
      the June 25, 1999 closing of the purchase agreement referred to earlier. These
      agreements are set forth in the purchase agreement. Paul Hildebrandt, one of
      the
      indemnitors, was a director of the Company from September 29, 2004 to January
      28, 2005.





The
      indemnitors may use their own counsel to defend these claims. The indemnitors
      are not liable for any settlement effected without their consent. The
      indemnitors may settle and pay money claims without the consent of the Company.
      There is no indemnification unless claims aggregate $50,000; once this trigger
      point is reached indemnification is required for all claims, including the
      first
      $50,000, but excluding claims of less than $10,000. The indemnification
      requirement survives at least until 30 days after the running of any relevant
      statutes of limitation.





The
      obligation of the indemnitors is joint and several, so that the Company can
      have
      recourse against any one or more of these indemnitors, whether or not any other
      indemnitor has previously defaulted on its obligation to us.





There
      are
      no other limitations to our rights to indemnification.





Insurance





The
      assets that the Predecessor sold to us included its insurance policies and
      other
      agreements and contracts. The policies provide coverage for liability accruing
      during the periods for which premiums were paid. The Predecessor was formed
      in
      1940. Copies of policies are available for each year beginning in 1970 and
      ending with the closing under the purchase agreement in 1999. Copies of policies
      for the period from 1940 to 1969 are not available.





Insurance
      companies acknowledge coverage for potential asbestos claims under certain
      of
      these policies. Insurance companies under additional policies have reserved
      their right to deny coverage but have continued to defend and indemnify the
      Predecessor and the Company under the contested policies.




20
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            of Contents*





There
      are
      periods during the years from 1940 to 1999 in which our Predecessor did not
      have
      coverage for potential asbestos claims. Subject to litigation, insurance
      companies may maintain that the existence of these periods’ results in coverage
      for only a portion of a particular injury that varies with the period during
      which there was asbestos coverage relating to the injury, and that the balance
      of any settlement or judgment is to be paid by the insured. To date, no
      insurance company has claimed any contribution for a gap in coverage except
      for
      a claim for $159.64 made by one insurance company to the Predecessor in 1995.
      The Predecessor asserted that it had no obligation to pay this amount and did
      not make any payment.





Insurance
      companies have to date defended our Company and the Predecessor, and have paid
      all settlement amounts and defense costs, except that the Company understands
      that the insurance companies have not yet made payment for amounts owed by
      the
      Predecessor under its August 2005 agreement to settle the Rhodes case.
      Except for $159.64 referred to above, the insurance companies have not requested
      any payments from us or from the Predecessor.





Our
      Universal subsidiary has not engaged in the sale of asbestos products since
      its
      formation in 1997. Its product liability policies for all years since 1998
      exclude asbestos claims.





General





Regardless
      of indemnification and insurance coverage, we do not in any event consider
      our
      Company to be liable for the asbestos-based lawsuits that name us or for any
      other claim that arises as a result of actions or omissions by Predecessor
      companies. We expressly disclaimed the assumption of any liabilities when we
      purchased the assets of the Predecessor.





It
      is
      management’s opinion that the existing asbestos litigation will not have a
      material adverse effect on the Company. Nevertheless, the Company could be
      materially and adversely affected if the Company is held liable for substantial
      asbestos claims or if the Company incurs substantial legal or settlement costs.
      This material and adverse effect would occur if indemnitors fail to honor their
      indemnification agreements and insurance is not available either because policy
      limits are exceeded, or because insurance companies successfully claim
      limitations on their liabilities by reason of gaps in coverage or
      otherwise.





There
      is
      no accrued balance for any period relating to asbestos claims, and no amount
      has
      been recorded for any period in any financial statement by the Company for
      asbestos claims. The Company does not regard as likely the potential payment
      of
      any asbestos based claim.


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Atlantic
      Hardware & Supply Corporation





On
      January 28, 2002, Atlantic Hardware & Supply Corporation (“Atlantic”), a
      wholly-owned subsidiary of the Company, filed a voluntary petition with the
      U.
      S. Bankruptcy Court for the Eastern District of New York to reorganize under
      Chapter 11 of the U. S. Bankruptcy Code. On May 18, 2005, the United States
      Bankruptcy Court for the Eastern District of New York dismissed the petition.
      Atlantic is a discontinued operation and has no assets. Neither Colonial
      Commercial Corp. nor any of its other subsidiaries were part of the Chapter
      11
      filing.





**Items
      2 and 3 are not applicable and have been omitted.**




**Item
      4.  Submission of Matters to a Vote of Security
      Holders**





(a)
            An
                Annual Meeting of Shareholders was held on June 15,
                2005.





(b) On
      June
      15, 2005, the preferred shareholders elected William Koon, Ronald Miller and
      Jack Rose as Preferred Stock Directors of the Company, and the common
      shareholders elected E. Bruce Fredrikson, Melissa Goldman, Michael Goldman,
      Bernard Korn, William Pagano and Carl L. Sussman as Common Stock Directors.
      The
      common and preferred shareholders voted in favor of a resolution appointing
      Weiser, LLP as the independent public accountants for the Company for the fiscal
      year ending December 31, 2005.





**PROPOSAL**
            
            **FOR**
            
            **AGAINST**
            
            **ABSTAINED**For
                the preferred shareholders to elect William Koon, Ronald Miller and
                Jack
                Rose as Preferred Stock Directors:William
                Koon
            
            
            585,153
            
            
            -
            
            
            4,218Ronald
                Miller
            
            
            584,751
            
            
            -
            
            
            4,620Jack
                Rose
            
            
            584,614
            
            
            -
            
            
            4,757For
                the common shareholders to elect E. Bruce Fredrikson, Melissa Goldman,
                Michael Goldman, Bernard Korn, William Pagano and Carl L. Sussman
                as
                Common Stock Directors:E.
                Bruce Fredrikson
            
            
            3,714,307
            
            
            -
            
            
            93,047Melissa
                Goldman
            
            
            3,699,147
            
            
            -
            
            
            108,207Michael
                Goldman
            
            
            3,699,247
            
            
            -
            
            
            108,107Bernard
                Korn
            
            
            3,699,127
            
            
            -
            
            
            108,227William
                Pagano
            
            
            3,699,247
            
            
            -
            
            
            107,107Carl
                L. Sussman
            
            
            3,524,207
            
            
            -
            
            
            283,147To
                ratify the selection of Weiser, LLP as independent public accountants
                of
                the Company for the fiscal year ending December 31, 2005:
            
            
            3,792,152
            
            
            15,443
            
            
            3,893




22
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**Item
      5 is not applicable and has been omitted.**





**Item
      6.  Exhibits**




31.1
              Certification
                  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
 
 31.2
              Certification
                  of Chief Financial Office Pursuant to Section 302 of the Sarbanes-Oxley
                  Act of 2002.
 
 32.1
              Certification
                  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-
                  Oxley
                  Act of 2002.
 
 32.2
              Certification
                  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002.





23
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            of Contents*





**SIGNATURES**





Pursuant
      to the requirements of the Securities and Exchange Act of 1934, the Registrant
      has duly caused this report to be signed on its behalf by the undersigned
      thereunto duly authorized.







Dated:August
                12, 2005
              
              COLONIAL COMMERCIAL CORP/s/
                Bernard KornBernard Korn,Chairman of the Board and President/s/
                William SalekWilliam SalekChief Financial Officer