<PAGE>1

                        SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, D.C. 20549

                                    FORM 10-QSB

                     QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

                       OF THE SECURITIES EXCHANGE ACT OF 1934




    For the Quarter Ended September 30, 1996    Commission File No. 1-6663
    ----------------------------------------    --------------------------

                              COLONIAL COMMERCIAL CORP.
                              -------------------------
               (Exact Name of Registrant as Specified in its Charter)

              New York                                  11-2037182
              --------                                  ----------
   (State or Other Jurisdiction of       (I.R.S. Employer Identification Number)
    Incorporation or Organization)

   3601 Hempstead Turnpike, Levittown New York         11756-1315
   -------------------------------------------         ----------
    (Address of Principal Executive Offices)           (Zip Code)

      Registrant's Telephone Number, Including Area Code:  516-796-8400
                                                           ------------


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

                        Yes  X             No 
                             -                --
Indicate  the number of shares  outstanding  of  Registrant's  Common  Stock and
Convertible Preferred Stock as of September 30, 1996.

      Common Stock, par value $.01 per share                - 6,821,710 shares
      Convertible Preferred Stock, par value $.01 per share - 8,664,675 shares

<PAGE>2

                   COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES

                                       INDEX

                                                                 PAGE NO.
                                                                 --------
PART I.   FINANCIAL INFORMATION

 Item 1 - Financial Statements

          Consolidated Balance Sheets as of
           September 30, 1996 (unaudited) and
           December 31, 1995                                      1

          Consolidated Statements of Operations
           Nine Months Ended September 30, 1996 and
           1995 (unaudited)                                       2

          Consolidated Statements of Operations
           Three Months Ended September 30, 1996 and
           1995 (unaudited)                                       3

          Consolidated Statements of Stockholders'
           Equity as of September 30, 1996 (unaudited)
           and December 31, 1995                                  4

          Consolidated Statements of Cash Flows for
           the Nine Months Ended September 30, 1996 and
           1995 (unaudited)                                       5

          Notes to Consolidated Financial Statements
           (unaudited)                                            6

 Item 2 - Management's Discussion and Analysis of
           Financial Condition and Results of Operations          7

PART II.  OTHER INFORMATION

 Item 1 - Legal Proceedings                                       8

 Item 6 - Exhibits and Reports on Form 8-K                        9

SIGNATURES                                                        10



<PAGE>3

                                     PART 1.
Item 1.  Financial Statements
-----------------------------

<TABLE>
<CAPTION>
                      COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES
                              Consolidated Balance Sheets
                       September 30, 1996 and December 31, 1995
     Assets                                                        1996               1995
     ------                                                        ----               ----
                                                                (Unaudited)
<S>                                                          <C>                   <C> 
Current assets:
 Cash and cash equivalents                                   $     849,750          1,856,008
 Accounts receivable, net of allowance for doubtful
  accounts of $306,400 in 1996 and $137,650 in 1995              6,584,256          6,815,401
 Inventory                                                       1,928,993          1,301,455
 Notes receivable - current portion                                120,000            659,500
 Prepaid expenses and other assets                                  57,404            156,360
                                                                ----------         ----------
     Total current assets                                        9,540,403         10,788,724

Notes receivable, excluding current portion                      1,343,750          1,271,750
Investment in Monroc, Inc.                                       1,772,208          2,032,132
Property and equipment, net                                        133,618            109,300
Land held for sale                                                 369,495            407,377
                                                                ----------         ----------
                                                                13,159,474         14,609,283
                                                                ==========         ==========
     Liabilities and Stockholders' Equity
     ------------------------------------
Current liabilities:
 Accounts payable                                                2,382,693          2,565,016
 Accrued liabilities                                             1,119,521            930,013
 Income taxes payable                                                    -            206,356
 Borrowings under line of credit                                 1,834,468          2,209,815
 Notes payable - current portion                                   469,082            494,211
                                                                 ---------         ----------
     Total current liabilities                                   5,805,764          6,405,411
Notes payable, excluding current portion                           447,362            916,444
Excess of acquired net assets over cost                            978,708          1,066,249
                                                                 ---------         ----------
     Total liabilities                                           7,231,834          8,388,104
                                                                 ---------         ----------

Stockholders' equity:
 Convertible preferred stock, $.01 par value liquidation        
  preference $8,664,675 and $8,719,171 at September 30, 
  1996 and December 31, 1995, respectively, 12,344,300 shares
  authorized, 8,664,675 and 8,719,171 shares issued and
  outstanding at September 30, 1996 and December 31, 1995,
  respectively                                                      86,647             87,192
 Common stock,$.01 par value, 40,000,000 shares
  authorized, and 6,821,710 and 6,767,214 shares issued and
  outstanding at September 30,1996 and December 31, 1995,
  respectively                                                      68,217             67,672
 Additional paid-in capital                                      9,023,669          9,023,669
 Unrealized gain on investment security                            122,208            382,132
 Accumulated deficit                                            (3,373,101)        (3,339,486)
                                                                ----------         ----------
     Total stockholders' equity                                  5,927,640          6,221,179
                                                                ----------         ----------

Commitments and contingencies
                                                             $  13,159,474         14,609,283
                                                                ==========         ==========

See accompanying notes to consolidated financial statements.
</TABLE>
                                                  -1-
<PAGE>4

<TABLE>
<CAPTION>
                               COLONIAL COMMERCIAL CORP.

                         Consolidated Statements of Operations

                      Nine Months Ended September 30,1996 and 1995

                                     (Unaudited)


                                                1996               1995
                                                ----               ----

<S>                                      <C>                    <C>      
Revenues:
 Sales                                   $   17,660,124          7,376,708
 Interest                                        87,853            213,441
 Other                                            9,134             60,879
                                             ----------         ----------

     Total revenues                          17,757,111          7,651,028
                                             ----------         ----------

Expenses:
 Cost of sales                               13,219,138          5,510,839
 Selling, general and administrative,
  net                                         4,286,932          2,242,923
                                             ----------         ----------

     Total expenses                          17,506,070          7,753,762
                                             ----------         ----------

     Operating income (loss)                    251,041           (102,734)

Interest                                        194,656            114,922
                                             ----------         ----------

     Income (loss) before income taxes           56,385           (217,656)
                                             ----------         ----------


Income taxes                                     90,000             29,460
                                             ----------         ----------

     Net loss                                   (33,615)          (247,116)
                                             ==========         ========== 

Net loss per common and preferred
   share                                            .00               (.02)
                                             ==========         ========== 

Common and preferred shares outstanding      15,486,385         15,486,385
                                             ==========         ==========

See accompanying notes to consolidated financial statements.
</TABLE>

                                         -2-






<PAGE>5

<TABLE>
<CAPTION>
                               COLONIAL COMMERCIAL CORP.

                         Consolidated Statements of Operations

                    Three Months Ended September 30, 1996 and 1995

                                      (Unaudited)

                                             1996                    1995
                                             ----                    ----
<S>                                       <C>                    <C>      
Revenues:
 Sales                                    $5,876,926               4,619,499
 Interest                                     18,016                  49,163
 Other                                         1,643                  29,462
                                           ---------               ---------

     Total revenues                        5,896,585               4,698,124
                                           ---------               ---------

Expenses:
 Cost of sales                             4,454,154               3,461,753
 Selling, general and administrative,
  net                                      1,427,641               1,292,146
                                           ---------               ---------

     Total expenses                        5,881,795               4,753,899
                                           ---------               ---------

     Operating income (loss)                  14,790                 (55,775)
 
Interest                                      70,656                  64,005
                                           ---------               ---------

     Loss before income taxes                (55,866)               (119,780)
                                           ---------               ---------

Income taxes                                  15,000                  11,000
                                           ---------               ---------

     Net loss                                (70,866)               (130,780)
                                           ---------               ---------

Net loss per common and preferred share        .00                    (.01)
                                               ---                     ----

Common and preferred shares outstanding    15,486,385             15,486,385
                                           ==========             ==========


See accompanying notes to consolidated financial statements.
</TABLE>


                                         -3-
<PAGE>6

<TABLE>
<CAPTION>
                                        COLONIAL COMMERCIAL CORP.
                                            AND SUBSIDIARIES

                           Consolidated Statements of Stockholders' Equity

                            Nine Months Ended September 30, 1996 and 1995
                                              (Unaudited)


                                                         Net un-
                         Con-                            realized                  Total
                        vertible            Additional   gain on       Accu-       stock-
                        preferred  Common    paid-in    investment    mulated      holders'
                         stock      stock    capital     security     deficit      equity
                        ---------  ------   ----------  ----------    -------      --------
<S>                      <C>       <C>      <C>          <C>        <C>           <C>
Balances at
December 31, 1994        88,348    66,516   9,023,669           -   (4,214,745)   4,963,788

Conversion of
 115,671 shares
 of preferred stock
 to common stock         (1,156)    1,156           -           -            -            -
Net income                    -         -           -           -      875,259      875,259
Net unrealized income
 on investment
 security                     -         -           -     382,132            -      382,132
                         ------    ------   ---------     -------    ---------    ---------

Balances at
December 31, 1995        87,192    67,672   9,023,669     382,132   (3,339,486)   6,221,179

Conversion of
 54,496 shares
 of preferred stock
 to common stock           (545)      545           -           -            -            -
Net loss                      -         -           -           -      (33,615)     (33,615)

Net unrealized loss
 on investment
 security                     -         -           -    (259,924)           -     (259,924)
                        -------    ------   ---------     -------    ---------      ------- 

Balances at
September 30,1996        86,647    68,217   9,023,669     122,208   (3,373,101)    5,927,640
                         ======    ======   =========     =======    =========     =========


See accompanying notes to consolidated statements.
</TABLE>
                                             -4-



<PAGE>7

<TABLE>
<CAPTION>
                                         COLONIAL COMMERCIAL CORP.

                                    Consolidated Statements of Cash Flows

                                 Nine Months Ended September 30, 1996 and 1995

                                                   (Unaudited)

                                                              1996           1995
                                                              ----           ----

<S>                                                       <C>            <C> 
Reconciliation of net loss to net cash used in
 operating activities:
  Net loss                                                   (33,615)      (247,116)
  Adjustments to reconcile net loss to cash
   used in operating activities, net of
   effects from the purchase of Atlantic Hardware and
   Supply Corporation:
    Provision for allowance for doubtful accounts            168,750              -
    Depreciation                                              45,409         17,822
    Amortization of excess of acquired net assets
     over cost                                               (87,541)       (37,808)
    Changes in assets and liabilities:
     Accounts receivable                                      62,396        (32,077)
     Inventory                                              (627,538)       307,593
     Prepaid expenses and other assets                        98,956         76,288
     Accounts payable                                       (182,323)      (372,169)
     Accrued liabilities                                     (16,848)       113,496
                                                            --------     ----------

             Net cash used in
               operating activities                         (572,354)      (173,971)
                                                            --------       -------- 

Cash flows from investing activities:
 Payment for purchase of Atlantic Hardware and Supply
   Corporation net of cash acquired                                -     (3,774,249)
 Proceeds from sale of investment securities                       -      1,900,000
 Payments received on notes receivable                       467,500         99,036
 Change in land held for sale                                 37,882         (9,369)  
 Additions to property and equipment                         (69,728)        (6,439)
                                                            --------    -----------

             Net cash provided by (used in)
               investing activities                          435,654     (1,791,021)
                                                             -------      --------- 

Cash flows from financing activities:
 Payments on notes payable                                  (494,211)      (519,341)
 Net borrowings under line of credit                        (375,347)     2,004,971
                                                           ---------      ---------

             Net cash provided by (used in)
               financing activities                         (869,558)     1,485,630
                                                           ---------      ---------

Decrease in cash and cash equivalents                     (1,006,258)      (479,362)
                                                          -----------     ---------

Cash and cash equivalents - beginning of period            1,856,008        805,262
                                                           ---------      ---------

Cash and cash equivalents - end of period                    849,750        325,900
                                                           ---------      ---------

See accompanying notes to consolidated financial statements.
</TABLE>
                                               -5-

<PAGE>8

                      COLONIAL COMMERCIAL CORP. AND SUBSIDIARIES

                      Notes to Consolidated Financial Statements

                       September 30, 1996 and December 31, 1995

                                     (Unaudited)

(1)  The  consolidated  financial  statements of Colonial  Commercial  Corp. and
     subsidiaries  (the  Company),  included  herein  has been  prepared  by the
     Company  and  is  unaudited;   however,   such  information   reflects  all
     adjustments  (consisting solely of normal recurring adjustments) which are,
     in  the  opinion  of  management,  necessary  for a fair  statement  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  September  30, 1996 are not  necessarily  indicative  of the
     operating results which may be achieved for the full year.

    Certain   information  and  footnote   disclosures   normally   included  in
    consolidated  financial  statements  prepared in accordance  with  generally
    accepted  accounting  principles  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 l995 Annual Report filed on Form 10-KSB.

(2)  Supplemental Cash Flow Information
     ----------------------------------
     The following  is supplemental  information relating  to  the  consolidated
     statements of cash flows:
<TABLE>
<CAPTION>
                                                Nine Months Ended
                                      September 30, 1996    September 30, 1995
                                      ------------------    ------------------
     <S>                                   <C>                   <C>   
     Cash paid during the period
       for:
          Interest                         $ 196,393             $ 114,922
          Income taxes                     $ 176,946             $  57,415
</TABLE>

(3)  Notes Receivable
     ----------------
     Included in notes  receivable is a $1,000,000  unsecured note which was not
     paid in accordance with the contractual terms of the note agreement,  which
     required payment to be made on December  31,  1995.  In January  1996,  the
     Company instituted an action against the debtors for a summary judgement to
     enforce payment of the note. The debtors  instituted  an action against the
     Company  and a director  of the  Company to declare the note  unenforceable
     and  for  $3,000,000  in  punitive  damages.  Both actions were  pending as
     the Company and the debtors reached a written understanding to  restructure
     the terms of the note in March  1996.  The  restructured  terms of the note
     provided for collateral and scheduled principal  payments to begin in April
     1996.  The  written  understanding  was  not consummated and  as  such  the
     Company pursued its legal action to obtain summary judgement. In June 1996,
     the  Company's  motion for summary judgement  was denied and the action was
     consolidated with that of the debtors. On September 26, 1996,  the  Company
     filed an  appeal  of the  decision  denying  summary  judgement and is also
     proceeding with the consolidated actions.

                                          -6-

<PAGE>9


     The impact of the final resolution of this matter on the Company's  results
of  operations  or  liquidity  in a  particular  reporting  period is not known.
Management is of the opinion,  however,  that there are meritorious  defenses to
the claim made by the debtors and that the ultimate  outcome of this matter will
not have a  material  adverse  effect on the  Company's  consolidated  financial
position.  The  Company  has not  recorded  an  allowance  against  this note at
September  30,  1996 as  management  is of the  opinion  that the  result of the
litigation  will be favorable  and that the expected  future cash flows upon the
sale of assets  obtained in a judgement  will be at least equal to the amount of
the  note.  The  amount  the  Company  will  ultimately  realize  upon the final
resolution  of this matter  could  differ  materially  in the near term from the
amounts  assumed in arriving at the present  value of the  expected  future cash
flows to be obtained as a result of the litigation.

Item 2.  Management's Discussion and Analysis of
------------------------------------------------
           Financial Condition and Results
           -------------------------------

Results of Operations - Nine Months Ended
  September 30, 1996 and 1995

     Registrant  reported  a net loss of  $33,615  for the nine  months of 1996,
which  included  $446,396  of net  income  from  Atlantic  Hardware  and  Supply
Corporation  ("Atlantic"),  as compared  to a net loss of $247,116  for the nine
months of l995,  which included  $165,604 of net income from Atlantic.  Atlantic
was acquired on May 19, 1995.

     Total  revenues  increased to  $17,757,111  in the l996 period  compared to
revenues  of  $7,651,028  in  the  1995  period,   principally  attributable  to
Atlantic's sales of $17,660,124. Atlantic's sales backlog has increased $540,000
to $12,790,000 since December 31, 1995.

     Total  cost  of  sales   increased   $7,708,299,   selling,   general   and
administrative  expense  increased  $2,044,009  and interest  expense  increased
$79,734  principally due to the Atlantic operations for a full nine month period
compared to the four and one half months of the 1995 period.

     The  Registrant  continues  to  seek  the  acquisition  of or  merger  with
privately held companies which businesses generate a recurring stream of income.
Reported  earnings  in the near term will be affected by the timing and the size
of any new  acquisitions,  the timing of additional land sales and the operating
results of Atlantic.

     The Registrant has provided for income taxes primarily as a result of state
income taxes associated with the income from Atlantic.



                                        -7-

<PAGE>10


Results of Operations - Three Months Ended
  September 30, 1996 and 1995

     Registrant  reported a net loss of $70,866  for the third  quarter of l996,
which included  $75,360 of net income from Atlantic,  as compared to net loss of
$l30,780 for the third  quarter of l995,  which  included  $31,203 of net income
from Atlantic.

     Total  revenues  increased  to  $5,896,585  in the l996 period  compared to
revenues  of  $4,698,124  in the l995  period,  principally  attributable  to an
increase of Atlantic's sales of $1,257,427.  Atlantic's sales backlog  increased
$1,270,000 during the quarter ended September 30, 1996.

     Total cost of sales increased  $992,401  principally due to increased sales
volume of $l,257,427.  Selling,  general and  administrative  expenses increased
$135,495 and interest expense increased $6,651  principally due to the growth in
Atlantic operations.

Liquidity and Capital Resources

     As of September  30,  l996,  the  Registrant  had $849,750 in cash and cash
equivalents compared to $1,856,008 at December 31, 1995.

     A $1,000,000  note  receivable  due December 31, 1995 remains  unpaid.  The
Company is pursuing  legal action in  connection  with this note as described in
Note 3 to the consolidated financial statements. The Company anticipates payment
of the note as a result of the  litigation,  however,  cannot estimate when such
payment  will be made.  The  delay  in  payment  of the note has not  negatively
impacted the Company's present operations or liquidity and is not anticipated to
adversely affect future  operations or liquidity.  Although the final resolution
of this  matter  on the  Company's  results  of  operations  or  liquidity  in a
particular reporting period is not known, management is of the opinion, however,
that there are  meritorious  defenses  to the claim made by the debtors and that
the ultimate  outcome of this matter will not have a material  adverse effect on
the Company's consolidated financial position.

     The Registrant believes that its cash and cash equivalents are adequate for
its present  operations and that credit is available should it be required.  The
Company's  capital  resources  consist  primarily of cash and cash  equivalents,
notes receivable,  land held for sale and its investment in Atlantic and Monroc,
Inc. The Company  believes the carrying  value of its land held for sale is less
than their market value.

                              PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

     On January 16,  1996,  the Company  instituted  an action  against  Breskel
Associates,  Wilbur  Breslin  and the  Estate  of  Robert  Frankel  for  summary
judgement to enforce payment of a $l,000,000 note. On January 11, 1996,  Breskel
Associates, Wilbur Breslin and the Estate of Robert Frankel instituted an action
against  the Company and Bernard  Korn,  who is a director  and chief  executive
officer of the Company,  to declare the note unenforceable and for $3,000,000 in
punitive damages. Both actions were brought in the Supreme Court of the State of
New  York,  County  of  Nassau.  In  March  1996,  a  written  understanding  to
restructure the terms of the note was reached, which provided for collateral and
scheduled  principal  payments beginning in April 1996. The restructuring of the
note was not  consummated  and the Company  pursued  its legal  action to obtain
summary judgement. On June 27, 1996,

                                      -8-


<PAGE>11

the Company's  motion for summary  judgement was denied and the Company's action
was consolidated with the action instituted by Breskel and the other plaintiffs.
On September  26,  1996,  the Company  filed an appeal of the  decision  denying
Summary Judgement and is also proceeding with the consolidated actions.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

      (a)  Exhibits - Exhibit 27.  Financial Data Schedule

      (b)  Reports on Form 8-K  - During the nine  months  ended  September  30,
           l996,  the Registrant did not file any reports on Form 8-K.





                                      -9-

<PAGE>12


                                   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
under-signed thereunto duly authorized.



Dated: November 12, l996                              COLONIAL COMMERCIAL CORP.



                                                      /S/ BERNARD KORN
                                                      --------------------------
                                                      Bernard Korn, Chairman
                                                      of the Board and President


                                                      /S/ JAMES W. STEWART
                                                      -------------------------
                                                      James W. Stewart
                                                      Executive Vice President,
                                                      Treasurer and Secretary





                                        -10-