UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-K

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

~~THE~~For ~~SECURITIES~~the ~~EXCHANGE~~fiscal ~~ACT~~year OFended ~~1934.~~December 31, 2011

For the fiscal year ended December 31, 2010

Commission File Number 1-7190

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IMPERIAL INDUSTRIES, INC.

(Exact name of Registrant as specified in its charter)

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Delaware		65-0854631
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1259 NW 21st Street, Pompano Beach, Florida 33069

(Address of principal executive offices)(Zip Code)

Registrant’s telephone number, including area code: (954) 917-4114

Securities registered pursuant to Section 12(b) of the Act: None.

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ýþ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No ýþ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes ýþ No ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the Registrant was required to submit and post such files). Yes ¨þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ o Accelerated filer ¨ o Non-accelerated filer ¨ o Smaller reporting company ý þ

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) Yes ¨ No ýþ

The aggregate market value of the voting stock of the Registrant held by non-affiliates computed by reference to the closing price of the registrant’s Common Stock ($.01 par value) on the NASDAQ Capital Market as of the last business day of the registrant’s most recently completed second fiscal quarter (June 30, ~~2010~~2011) is: $1,~~207~~486,~~700~~846.

Number of shares of Imperial Industries, Inc. Common Stock ($.01 par value) outstanding on March 1720, ~~2011~~2012 is 2,~~558~~566,~~335~~210.

DOCUMENTS INCORPORATED BY REFERENCE

None

TABLE OF CONTENTS

Page PART I Item 1. Business 1 Item 1A. Risk Factors 6 Item 1B. Unresolved Staff Comments 11 Item 2. Properties 11 Item 3. Legal Proceedings 11 Item 4. Removed and Reserved 12 Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 13 PART II Item 6. Selected Financial Data 13 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 14 Item 8. Financial Statements and Supplementary Data 21 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 45 Item 9A. Controls and Procedures 45 Item 9B. Other Information 45 PART III Item 10. Directors and Executive Officers of the Registrant 46 Item 11. Executive Compensation 48 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 51 Item 13. Certain Relationships and Related Transactions and Directors Independence 51 Item 14. Principal Accounting Fees and Services 52 PART IV Item 15. Exhibits, Financial Statement Schedules 53 SIGNATURES 54

		Page
PART I

Item 1.	Business		1

Item 1A.	Risk Factors		5

Item 1B.	Unresolved Staff Comments		10

Item 2.	Properties		10

Item 3.	Legal Proceedings		11

Item 4.	Mine Safety Disclosures		12

PART II

Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		13

Item 6.	Selected Financial Data		14

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

Item 7A.	Quantitative and Qualitiative Disclosures About Market Risk		20

Item 8.	Financial Statements and Supplementary Data		21

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		44

Item 9A.	Controls and Procedures		44

Item 9B.	Other Information		44

PART III

Item 10.	Directors and Executive Officers of the Registrant		45

Item 11.	Executive Compensation		47

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		50

Item 13.	Certain Relationships and Related Transactions and Directors Independence		51

Item 14.	Principal Accounting Fees and Services		51

PART IV

Item 15.	Exhibits, Financial Statement Schedules		53

SIGNATURES			54

PART I

~~Item~~ITEM 1. BUSINESS

~~Business~~Special Note Regarding Forward-Looking Statements

~~Special~~This ~~Note~~Form 10-K ~~Regarding~~contains ~~Forward~~certain forward-~~Looking~~looking ~~Statements~~statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and business of Imperial Industries, Inc., and its subsidiaries, including statements made under Management’s Discussion and Analysis of Financial Condition and Results of Operations. When this report uses the words the “Company,” “we,” “us,” and “our,” they refer to Imperial Industries, Inc. and its subsidiaries, unless the context otherwise requires. These forward-looking statements involve certain risks and uncertainties. No assurance can be given that any of such matters will be realized. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: realization of tax benefits; impairment of long-lived assets; the ability to collect accounts or notes receivable when due or within a reasonable period of time after they become due and payable; the ability to obtain and maintain adequate financing on terms satisfactory to the Company; the increased cost of capital and related fees; the outcome of any current or future litigation; the adequacy or availability of insurance coverage for certain types of product damage claims; the competitive pressure in the industry; unexpected product shortages, or changes in the terms of purchasing products or raw materials that may not be favorable to us, or changes in policies of vendors that may not be favorable to us; general economic and business conditions may be less favorable than expected; unforeseen weather conditions in our market areas that adversely affects the construction industry; the effectiveness of business strategy and development plans; quality of management; business abilities and judgment of personnel; availability of qualified personnel; changes in accounting policies and practices in internal controls and related requirements as may be adopted by regulatory agencies, as well as the Financial Accounting Standards Board that adversely affect our costs and operations; and labor and employee benefit costs. See “Item 1A Risk Factors” for a more detailed discussion of some of the risks related to the Company and its business.

~~This~~These ~~Form 10-K~~risks ~~contains~~are ~~certain~~not ~~forward~~exhaustive. ~~looking~~We ~~statements~~operate ~~within~~in ~~the~~a ~~meaning~~continually ofchanging ~~the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations and~~ business ~~of Imperial Industries~~environment, ~~Inc.,~~ and ~~its~~new ~~subsidiaries,~~risks ~~including~~emerge ~~statements~~from ~~made~~time ~~under~~to ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~time. ~~When~~We ~~this~~cannot ~~report~~predict ~~uses~~such ~~the~~risks ~~words~~nor ~~the~~can ~~“Company,” “~~we,” ~~“us,”~~assess ~~and~~the ~~“our~~impact,” ~~they~~if ~~refer to Imperial Industries~~any, ~~Inc.~~of ~~and~~such ~~its subsidiaries, unless the context otherwise requires. These forward looking statements involve certain~~ risks ~~and~~on ~~uncertainties.~~our Nobusiness ~~assurance~~or ~~can~~the beextent ~~given~~to ~~that~~which any ofrisk ~~such~~or ~~matters~~combination ~~will~~of berisks ~~realized. Factors that~~ may cause actual results to differ ~~materially~~ from those ~~contemplated~~projected byin ~~such~~any forward -looking statements. ~~include,~~For ~~among others~~example, ~~the~~financial ~~following:~~results ~~realization~~for ofany ~~tax~~quarter ~~benefits;~~are ~~impairment~~not ofnecessarily ~~long-lived~~indicative ~~assets; the ability to collect account or note receivables when due or within a reasonable period~~ of ~~time~~results ~~after they become due and payable; the ability~~ to ~~obtain~~be ~~and~~expected maintain adequate financing on terms satisfactory to the Company; the increased cost of capital and related fees; the outcome of any current or future litigation; the adequacy or availability of insurance coverage for ~~certain types of product damage claims;~~ the ~~competitive~~full ~~pressure in the industry; unexpected product shortages~~year, ordue ~~changes~~ in ~~the~~part ~~terms of purchasing products or raw materials that may not be favorable~~ to ~~us,~~the oreffect ~~changes in policies of vendors that may not be favorable to us; general economic and business conditions may be less favorable than expected; unforeseen~~ weather ~~conditions~~can inhave ~~our~~on ~~market~~sales ~~areas that adversely affects the construction industry; the effectiveness of business strategy~~ and ~~development~~production ~~plans;~~volume. quality of management; business abilities and judgment of personnel; availability of qualified personnel; changes in accounting policies and practices in internal controls and related requirements as may be adopted by regulatory agenciesAccordingly, asinvestors ~~well as the Financial Accounting Standards Board that adversely affect our costs~~ and ~~operations;~~all ~~and~~others ~~labor~~are ~~and~~cautioned ~~employee~~not ~~benefit~~to ~~costs.~~place ~~See~~undue ~~“Item~~reliance 1Aon ~~Risk~~such ~~Factors”~~forward-looking ~~for a more detailed discussion of some of the risks related to the Company and its business~~statements.

These ~~risks~~forward-looking ~~are~~statements ~~not~~speak ~~exhaustive.~~only Weas ~~operate~~of inthe adate ~~continually~~of ~~changing~~this ~~business environment, and new risks emerge from time to time~~document. We ~~cannot~~do ~~predict~~not ~~such~~undertake ~~risks nor can we assess the impact, if~~ any, ofobligation ~~such~~to ~~risks~~update ~~on our business~~ or ~~the~~revise ~~extent to which~~ any ~~risk or combination~~ of ~~risks~~these ~~may cause actual results to differ from those projected in any~~ forward-looking statements. ~~For~~to ~~example,~~reflect ~~financial~~events ~~results~~or ~~for~~circumstance ~~any~~occurring ~~quarter~~after ~~are~~the ~~not~~date ~~necessarily~~of ~~indicative~~this ofdocument ~~results~~or to bereflect ~~expected for~~ the ~~full~~occurrence ~~year,~~of ~~due~~unanticipated ~~in part to the effect weather can have on sales and production volume~~events. ~~Accordingly,~~Any ~~investors~~forward-looking ~~and~~statements ~~all others~~ are ~~cautioned~~ not toguarantees ~~place~~of ~~undue~~future ~~reliance on such forward-looking statements~~performance.

These forward-looking statements speak only as of the date of this document. We do not undertake any obligation to update or revise any of these forward-looking statements to reflect events or circumstance occurring after the date of this document or to reflect the occurrence of unanticipated events. Any forward-looking statements are not guarantees of future performance.General

~~General~~Imperial Industries, Inc. (the “Company”) is a Delaware corporation, which, through its predecessor corporations, has been in existence since 1968. Our executive offices are located at 1259 NW 21st Street, Pompano Beach, Florida 33069 and the telephone number at our office is (954) 917-4114.

~~Imperial~~We ~~Industries~~are engaged in the manufacture and distribution of building materials through our wholly-owned subsidiary, ~~Inc~~Premix-Marbletite Manufacturing Co. (~~the~~ “~~Company~~Premix”) isto abuilding ~~Delaware~~materials ~~corporation,~~dealers ~~which~~and others located primarily in Florida, ~~through~~and ~~its~~to ~~predecessor~~a ~~corporations~~lesser extent, ~~has~~other ~~been~~states in ~~existence~~the ~~since~~Southeastern ~~1968~~United States and the Carribean. ~~Our~~We ~~executive~~have ~~offices~~two ~~are~~facilities. ~~located~~One atfacility ~~1259~~is NWused ~~21st~~primarily ~~Street~~for producing, ~~Pompano~~marketing ~~Beach,~~and ~~Florida~~distributing ~~33069~~our ~~and~~manufactured ~~the~~products. ~~telephone~~The ~~number~~other atfacility is primarily used for marketing and distributing our ~~office~~manufactured isproducts ~~(954)~~as ~~917-4114~~well as products purchased from other manufacturers, in addition to manufacturing products. Such products are sold to building materials dealers, contractors and others.

WeThe ~~are~~Premix ~~engaged~~facilities inprimarily ~~the~~produce ~~manufacture~~ and ~~distribution~~distribute ofpool ~~building~~finish ~~materials~~coatings, ~~through~~roof ~~our~~tile ~~wholly-owned subsidiary~~mortar, ~~Premix-Marbletite~~stucco ~~Manufacturing Co. (“Premix”) to building materials dealers~~ and ~~others~~plaster ~~located~~products. ~~primarily~~Pool infinish ~~Florida,~~products ~~and~~are toapplied aas ~~lesser~~coatings ~~extent,~~for ~~other states~~ in-ground ~~the~~swimming ~~Southeastern United States~~pools. WeRoof ~~have~~tile ~~two~~mortar ~~facilities. One facility~~ is used ~~primarily~~to ~~for~~adhere ~~producing,~~cement ~~marketing~~roof ~~and~~tiles ~~distributing~~to ~~our~~the ~~manufactured products~~roof. ~~The~~Stucco ~~other~~products ~~facility~~are isapplied ~~primarily used for marketing and distributing our manufactured products~~ as ~~well~~a asfinishing ~~products~~coat ~~purchased~~to ~~from~~exterior ~~other~~surfaces ~~manufacturers.~~and ~~Such~~plaster ~~products~~customarily ~~are~~is ~~sold~~used to ~~building~~finish ~~materials~~interiors ~~dealers,~~of ~~contractors and others~~structures.

The Premix facilities primarily produce and distribute pool finish coatings, roof tile mortar, stucco and plaster products. Pool finish products are applied as coatings for in-ground swimming pools. Roof tile mortar is used to adhere cement roof tiles to the roof. Stucco products are applied as a finishing coat to exterior surfaces and plaster customarily is used to finish interiors of structures.1

1Our business is directly related to the level of activity in the new and renovation construction markets in the Southeast United States, principally Florida. Our products are used by developers, general contractors and subcontractors in the construction or renovation of residential, multi-family and commercial buildings and swimming pools. Demand for new construction is related to, among other things, population growth and job growth. Population growth, in turn, is principally a function of migration of new residents to our markets. When economic conditions reduce migration, demand for new construction would be expected to decrease. Construction activity is also affected by the size of the inventory of available housing units, mortgage interest rates, availability of financing and local government growth management policies. Our operations are directly related to the general economic conditions existing in the Southeastern United States, particularly Florida.

~~Our~~During ~~business is directly related to~~ the ~~level~~second quarter of ~~activity~~2006, inresidential ~~the new and renovation~~ construction ~~markets~~demand inbegan ~~the~~to ~~Southeast~~be ~~United~~impacted ~~States,~~by ~~principally~~a ~~Florida.~~number ~~Our~~of ~~products~~adverse ~~are~~factors, ~~used~~including byhigher ~~developers~~interest rates, ~~general~~an ~~contractors~~increase ~~and subcontractors~~ in ~~the~~available ~~construction~~inventory ~~or renovation~~ of ~~residential,~~unsold ~~multi-family~~new and ~~commercial~~existing ~~buildings~~homes, and ~~swimming~~homebuilders ~~pools.~~reporting ~~Demand~~lower order rates for new ~~construction~~homes. isAs ~~related~~a toconsequence, ~~among~~residential ~~other~~construction ~~things~~activity, ~~population~~and ~~growth~~applications ~~and~~for ~~job~~building ~~growth.~~permits ~~Population~~for ~~growth,~~new inresidential ~~turn~~units, isconsidered ~~principally~~ a ~~function~~strong ofsign ~~migration~~for offuture ~~new~~construction ~~residents~~activity, began to ~~our~~decline ~~markets.~~sharply ~~When~~in ~~economic~~Florida ~~conditions~~in ~~reduce~~the ~~migration,~~last ~~demand~~six ~~for~~months ~~new~~of ~~construction would be expected to decrease~~2006. ~~Construction~~Further, ~~activity~~the issignificant ~~also~~decline ~~affected~~in bybuilding ~~the~~permits ~~size~~in of the ~~inventory~~Florida ofmarkets ~~available~~since ~~housing~~2006 ~~units,~~indicates ~~mortgage~~that ~~interest~~future ~~rates,~~residential ~~availability~~construction ofactivity ~~financing~~ and ~~local~~demand ~~government~~for ~~growth~~our ~~management~~products ~~policies.~~is ~~Our~~expected ~~operations are directly related~~ to ~~the~~remain ~~general~~weak ~~economic~~in ~~conditions~~such ~~existing~~markets in ~~the Southeastern United States, particularly Florida~~2012.

~~During~~The ~~the~~challenging ~~second~~market ~~quarter~~conditions ofwe ~~2006,~~faced ~~residential construction demand began to be impacted by a number of adverse factors, including higher interest rates, an increase~~ in ~~available~~2011 ~~inventory~~are ofcontinuing ~~unsold~~due ~~new~~generally and existing homes, and homebuilders reporting lower order rates for new homes. As a consequence, residential construction activity, and applications for building permits for new residential units, considered a strong sign for future construction activity, began to ~~decline sharply in Florida in~~ the last six months of 2006. Further, the significant decline in building permits in the Florida markets since 2006 indicates that future residential construction activity and demand for our products is expected to remain weak in such markets in 2011. following:

~~The~~· ~~challenging~~High ~~market~~levels ~~conditions~~of wenew ~~faced~~and inexisting ~~2010~~home ~~are~~inventory ~~continuing~~available ~~due~~for ~~generally to the following:~~sale;

1.· Low consumer confidence in the housing market;

~~High~~· ~~levels~~Reduced ofhome ~~new~~affordability and ~~existing~~loss ~~home~~of ~~inventory available for sale,~~jobs;

2· Contraction in the mortgage and credit markets.

~~High~~Although ~~foreclosure~~the ~~rates~~current Federal Reserve Board policy initiatives shows its determination to reverse the economy’s downward momentum and improve the bond and credit market conditions which would be beneficial to the residential and commercial construction industry, the depth and duration of the decline in construction activity as well as the strength of any recovery cannot be determined.

3.Discontinued Operations and Closed Facilities

~~Low~~Until ~~consumer~~June 11, ~~confidence~~2009, we were engaged in the ~~housing~~distribution ~~market~~of building materials to builders, contractors and sub-contractors in the Southeastern United States through our wholly-owned subsidiary, Just-Rite Supply, Inc. (“Just-Rite”). The Just-Rite facilities formerly sold gypsum wallboard, roofing, stucco, insulation, doors, windows, lumber and other related products, as well as products manufactured by Premix. Prior to the discontinuance of operations, Just-Rite accounted for approximately 76% of our consolidated net sales in 2008, including Premix products sold through Just-Rite.

4On June 11, 2009, Just-Rite entered into an Assignment for the Benefit of Creditors (the “Assignment”) with Michael P. Phelan, Vice President of Michael Moecker and Associates (the “Assignee”). In connection with the Assignment, Just-Rite transferred all of its assets, subject to any liabilities thereof, to the Assignee, a non-affiliated party, who is winding down, selling and liquidating the assets of Just-Rite for the benefit of creditors in accordance with the laws of the State of Florida. We have not operated any of the assets or the business of Just-Rite since the date of the Assignment. As a result of the Assignment, Just-Rite operations are presented as discontinued operations in 2011 and 2010. All Just-Rite assets are considered held for sale and are reported in the financial statements as “Assets held for sale by assignee”, and all Just-Rite liabilities are reported in the financial statements as “Liabilities related to assets held for sale by assignee”.

~~Reduced~~Just-Rite ~~home~~has ~~affordability~~not obtained either (a) a final court order for the conveyance of assets, (b) a settlement with creditors or (c) a court action granting Just-Rite relief from the creditor’s claims. It cannot be determined when the Assignment will be completed. Also, since the Assignment process has not been completed, it is possible, although not likely, that the ultimate proceeds from the disposition of the assets held for sale by Assignee, and ~~loss~~the settlement of ~~jobs~~liabilities related to sale by Assignee could be at amounts materially different than the carrying amounts, as adjusted during the fourth quarter of 2011, reflected in the accompanying consolidated financial statements. See Note 5 of Notes to the Consolidated Financial Statements.

5.2

~~Shortage~~Sales of ~~mortgage~~Certain ~~financing and,~~Assets

6In April 2010, Just-Rite sold its property located in Tampa, Florida for net proceeds of $554,000. Just-Rite realized a gain of $230,000 from the sale of this parcel, which is included as part of the loss from discontinued operations in the statement of operations for the year ended December 31, 2010.

~~Contraction in the mortgage and credit markets.~~Premix

~~Although~~Premix, ~~the~~together ~~current~~with ~~Federal~~its ~~Reserve~~predecessors, ~~Board~~has ~~policy~~been ~~initiatives~~in ~~shows~~business ~~its~~for ~~determination~~approximately to50 ~~reverse~~years. The names “Premix” and “Premix-Marbletite” are among the ~~economy’s~~registered ~~downward~~trademarks ~~momentum~~of ~~and~~Premix. ~~improve~~We believe the ~~bond~~trade ~~and~~names ~~credit~~of ~~market~~our ~~conditions~~manufactured ~~which~~products ~~would~~represent bea ~~beneficial~~substantial benefit to ~~the~~us ~~residential~~because of industry recognition and ~~commercial~~brand ~~construction~~preference. ~~industry~~Premix manufactures swimming pool finishes, ~~the~~roof ~~depth~~tile mortar, stucco and ~~duration~~plaster coatings. The products manufactured by Premix basically are a combination of ~~the~~portland ~~decline~~(or masonry) cement, sand, lime, marble and a plasticizing agent and other chemicals, including color-impregnating materials. The products are sold primarily to building materials distributors located primarily in ~~construction~~Florida, ~~activity~~and asto ~~well~~a aslesser ~~the~~extent, ~~strength~~other ofstates ~~any~~in ~~recovery~~the ~~cannot~~Southeastern beUnited ~~determined~~States and the Caribbean.

~~Discontinued~~Premix ~~Operations~~has an exclusive license to manufacture and ~~Closed~~sell ~~Facilities~~a roof tile mortar product throughout the State of Florida and certain foreign countries. To date, the majority of all roof tile mortar sales have been to customers in South Florida. We have expanded and are continuing to expand our marketing efforts for this product to other areas of Florida and other states in the Southern United States.

~~Until~~Growth June 11, 2009, we were engaged in the distribution of building materials to builders, contractors and sub-contractors in the Southeastern United States through our wholly-owned subsidiary, Just-Rite Supply, Inc. (“Just-Rite”). The Just-Rite facilities formerly sold gypsum wallboard, roofing, stucco, insulation, doors, windows, lumber and other related products, as well as products manufactured by Premix. Prior to the discontinuance of operations, Just-Rite accounted for approximately 76% of our consolidated net sales for the year ended December 31, 2008, including Premix products sold through Just-Rite.Opportunities

OnWhile ~~June 11,~~many ~~2009,~~industry ~~our~~forecasts ~~subsidiary,~~do ~~Just-Rite,~~not ~~entered~~indicate ~~into~~any anmaterial ~~Assignment~~expected ~~for~~improvement in the ~~Benefit~~construction ofindustry ~~Creditors~~in (the ~~“Assignment”)~~near ~~with Michael P. Phelan~~term, ~~Vice~~we ~~President~~are offocusing ~~Michael~~our ~~Moecker~~efforts ~~and~~on ~~Associates~~addressing (new ~~the~~marketing ~~“Assignee”).~~opportunities, ~~The~~developing ~~Assignment~~new ~~was~~products and ~~considered~~broadening anour ~~event~~geographic ofreach ~~default~~for ~~under~~certain ~~our~~products, ~~then~~including ~~existing~~establishing ~~Line~~arrangements ~~of Credit~~ with ~~our~~other ~~lender,~~manufacturers ~~resulting~~to inproduce ~~the~~our ~~execution~~products offor asale ~~Forbearance~~in ~~and~~other ~~Amendment~~markets. ~~Agreement~~We ~~(the~~are ~~Forbearance~~continually ~~Agreement”)~~working ~~dated June 10, 2009~~ with our ~~lender~~customers ~~and~~in ~~subsequent~~an ~~amendments~~effort to ~~the~~identify ~~Forbearance~~new ~~Agreement~~products ~~(collectively~~to increase the ~~“Forbearance~~breadth ~~Agreement”).The Forbearance Agreement was terminated in 2010 following payment~~ of ~~all~~our ~~sums~~product ~~due~~line ~~under~~to ~~the~~increase ~~Line of Credit~~sales.

In connection with the Assignment on June 11, 2009, Just-Rite transferred all of its assets, subject to any liabilities thereof, to the Assignee, a non-affiliated party, who is winding down, selling and liquidating the assets of Just-Rite for the benefit of creditors in accordance with the laws of the State of Florida. We no longer operate any of the assets or business of Just-Rite since the date of the Assignment. As a result of the Assignment, Just-Rite operations, which ended June 11, 2009, are presented as discontinued operations for the years ended December 31, 2010 and 2009 and all Just-Rite assets and liabilities are considered held for sale and are reported on the financial statements as “assets held for sale by assignee” and “liabilities related to assets held for sale by assignee”.Suppliers

2The majority of Premix’s raw materials and products are purchased from approximately thirty seven suppliers. While five suppliers account for approximately 43% of Premix’s raw material purchases, Premix is not dependent on any one supplier for its requirements. Historically, equivalent materials have been available from other sources at similar prices. We have not experienced any raw material product shortages since the second quarter of 2006.

~~Since~~Sales ~~Just-Rite~~and has not obtained either (a) a final court order for the conveyance of assets, (b) a settlement with creditors, or (c) a court action granting Just-Rite relief from the creditor’s claims, Just-Rite’s liabilities continue to be recorded at full historical value on the Company’s financial statements as “liabilities related to assets held for sale by assignee”.Marketing

AsOur ~~the~~sales ~~Assignment~~and ~~process~~marketing ~~has~~strategy ~~not~~is ~~been~~to ~~completed,~~provide ita iswide ~~possible~~range ~~that~~of products and superior service to our customers for the ~~ultimate~~products ~~proceeds~~we ~~from~~manufacture and distribute, as well as enlarging our product offerings through the ~~disposition~~development of ~~the~~new ~~assets~~products, and to include additional complementary products and other building materials manufactured by other companies. The other building materials and complementary items are purchased by us and held in inventory, together with our manufactured products, for sale byto ~~assignee~~customers. Currently, we are making an effort to extend our geographic territory and ~~the~~expand ~~settlement~~our product line at both of ~~liabilities~~our ~~related~~facilities to ~~assets~~increase ~~held~~sales ~~for~~by ~~sale~~selling bymore ~~assignee~~products ~~could~~to beexisting atcustomers ~~amounts~~and ~~that~~attracting new customers. Generally, sales orders are ~~materially~~filled ~~different~~out ~~than~~of existing inventory within several days of receipt of the ~~carrying~~order. ~~amounts~~Our ~~reflected~~sales inapproach to the ~~accompanying~~new ~~consolidated~~and ~~financial~~renovation ~~statements~~construction markets is targeted at both the end user of our products, being primarily the contractor or subcontractor, and the distributor, principally building materials dealers who purchase products from us and sell to the end-user, and in some instances, retail customers.

~~Sales~~While our manufactured products have typically been sold to distributors, we focus our marketing efforts on the contractor/sub-contractor end user to create a brand preference for our manufactured products. One customer accounted for 28% and 29%, and another customer accounted for 12% and 14%, of ~~Certain~~the ~~Assets~~Company’s net sales from continuing operations for 2011 and 2010, respectively. The majority of sales of our manufactured products are sold directly by Premix to building materials distributors.

In February 2009, Just-Rite sold a parcel of real property in Gulfport, Mississippi, to the Mississippi Department of Transportation (“MDOT”), resulting in net cash proceeds to Just-Rite of $865,000. Just-Rite realized a gain of $573,000 from the sale of this parcel in the first quarter of 2009. During the fourth quarter of 2009 the Assignee received $335,000 in reimbursement costs from MDOT for vacating its Gulfport facilities. The gain as well as the reimbursement amount received by the Assignee are reflected in loss from discontinued operations in the statements of operations for the year ended 2009. All of the remaining Gulfport assets were transferred to the Assignee on June 11, 2009.3

InWe ~~April 2010,~~believe ~~Just-Rite~~that ~~sold~~the ~~its~~loss ~~property~~of ~~located~~any one independent distributor would not cause a material loss in ~~Tampa,~~sales ~~Florida~~of our manufactured products because the brand preference contractors and subcontractors generally have for ~~net~~our ~~proceeds~~products ofcause ~~$554,000.~~the ~~Just-Rite~~user ~~realized~~to seek a ~~gain~~distributor ofwho ~~$230,000~~carries ~~from~~our manufactured products. However, the ~~sale~~loss of ~~this~~the ~~parcel~~above noted significant customers, ~~which~~or isour ~~included~~inability asto ~~part~~successfully ofdevelop ~~the~~relationships ~~loss~~with ~~from~~additional ~~discontinued~~key ~~operations~~customers incould ~~the~~have ~~statement~~a material adverse effect on our business, financial condition and results of operations. ~~for~~We ~~the~~market ~~year~~our ~~ended~~products ~~December 31,~~to ~~2010~~distributors through Company salespeople and outside sales representatives located throughout the Southeastern United States.

~~Premix~~Seasonality

~~Premix,~~The ~~together~~sale ~~with~~of ~~its~~our ~~predecessors,~~products ~~has been~~ in ~~business for approximately 50 years. The names “Premix” and “Premix-Marbletite” are among~~ the ~~registered~~construction ~~trademarks~~market offor ~~Premix. We believe~~ the ~~trade~~Southeastern ~~names~~United ofStates ~~our~~is ~~manufactured~~somewhat ~~products~~seasonal ~~represent~~due ain ~~substantial~~part ~~benefit~~ to usperiods ~~because~~ of ~~industry~~adverse ~~recognition~~weather ~~and brand preference. Premix manufactures swimming pool finishes~~conditions, ~~roof~~with ~~tile mortar, stucco and plaster coatings. The products manufactured by Premix basically are~~ a ~~combination~~lower rate of ~~portland~~sales ~~(or~~historically ~~masonry)~~occurring ~~cement,~~in ~~sand,~~the ~~lime,~~period ~~marble~~December through ~~and~~February compared ~~a plasticizing agent and other chemicals, including color-impregnating materials. The products are sold primarily~~ to ~~building~~the ~~materials~~rest ~~distributors~~of ~~located primarily in Florida, and to a lesser extent, other states in~~ the ~~Southeastern United States~~year.

Premix has an exclusive license to manufacture and sell a roof tile mortar product throughout the State of Florida and certain foreign countries. To date, the majority of all roof tile mortar sales have been to customers in South Florida. We have expanded and are continuing to expand our marketing efforts for this product to other areas of Florida and the Caribbean.Competition

~~Premix~~Our ~~sales~~industry tois ~~its~~highly ~~discontinued~~competitive ~~subsidiary~~and varies depending on product line and geographic market. Our manufacturing facilities encounter significant competition from local, ~~Just-Rite~~independent companies, ~~accounted~~as ~~for~~well ~~approximately~~as 1regional and national manufacturers of cement and plaster products, most of whom manufacture similar products.9% A number of ~~its~~these ~~net~~competitors ~~sales~~are ~~for~~larger, more established and better financed than we are. We compete with the ~~year~~other ~~ended~~companies ~~December 31,~~based ~~2009~~primarily ~~(through~~upon ~~June 11~~product performance and quality, ~~2009).~~customer ~~Such~~service ~~intercompany~~and ~~sales~~pricing ~~have~~by ~~been~~striving ~~eliminated~~to inmaintain ~~consolidation.~~lower overhead than larger national companies.

~~Growth~~Environmental ~~Opportunities~~Matters

~~While~~Our ~~industry~~operations ~~forecasts~~are dosubject ~~not~~to ~~indicate~~various ~~any~~federal, ~~expected~~state ~~improvement~~and inlocal ~~the~~environmental ~~construction~~laws ~~industry~~and regulations in the ~~near~~normal ~~term,~~course weof ~~are~~our ~~focusing~~business. ~~our~~Although ~~efforts~~we onbelieve ~~addressing~~that ~~new~~our ~~marketing~~manufacturing, ~~opportunities~~handling, consuming, selling and ~~broadening~~disposing of our ~~geographic~~raw ~~reach~~materials ~~for~~and ~~certain~~ products ~~through~~are ~~establishing~~in ~~arrangements~~accordance with ~~other~~current ~~manufacturers~~environmental toregulations, ~~produce~~future ~~our~~developments ~~products~~could ~~for~~require ~~sale~~us into ~~other~~make ~~markets~~unforeseen expenditures relating to environmental matters. WeIncreasingly ~~are~~strict ~~continually~~environmental ~~working~~laws, standards and environmental policies may increase the risk of liability and compliance costs associated with our ~~customers~~operations. Capital expenditures on environmental matters have not been material in anpast ~~effort~~years, and expenditures for 2012 to ~~identify~~comply ~~new~~with ~~products~~existing laws and regulations are also not expected to ~~increase~~have ~~the~~a ~~breadth~~material ofeffect on our ~~product~~financial ~~line~~position, toresults ~~increase~~of ~~sales~~operations or liquidity.

~~Suppliers~~Employees

~~The~~We ~~majority~~had of25 ~~Premix’s~~full ~~raw~~time ~~materials~~employees ~~and~~at ~~products~~December 31, ~~are purchased from approximately thirty seven suppliers~~2011. ~~While~~Employee ~~five~~relations ~~suppliers~~are ~~account~~considered ~~for~~good ~~approximately~~and ~~43%~~employees ofare ~~Premix’s raw material purchases, Premix is~~ not ~~dependent~~subject onto any ~~one~~collective ~~supplier~~bargaining ~~for its requirements~~agreement. ~~Historically, equivalent materials have been available from other sources at similar prices. We have not experienced any raw material product shortages since the second quarter of 2006.~~

3Available Information

~~Sales~~Copies of our quarterly reports on Form 10-Q, annual reports on Form 10-K and ~~Marketing~~current reports on Form 8-K, and any amendments to the foregoing, will be provided without charge to any shareholder submitting a written request to the Secretary of the Company or by calling 954-917-4114. All of our SEC filings are also available on our website at www.imperialindustries.com as soon as reasonably practicable after having been electronically filed or furnished to the SEC. In addition, our Code of Business Conduct is available at our website and will be provided without charge to any shareholder submitting a written request.

Our sales and marketing strategy is to provide a wide range of products and superior service to our customers for the products we manufacture and distribute, as well as enlarging our product offerings to include additional complementary products and other building materials manufactured by other companies. The ~~other~~content building materials and complementary items are purchased by us and held in inventory, together with our manufactured products, for sale to customers. Currently, we are making an effort to extend our geographic territory and expand our product line at both of our ~~facilities~~website to increase sales by selling more products to existing customers and attracting new customers. Generally, sales orders are filled out of existing inventory within several days of receipt of the order. Our sales approach to the new and renovation construction markets is ~~targeted at both the end user of our products~~not, ~~being~~nor ~~primarily~~should ~~the~~it ~~contractor~~be ordeemed ~~subcontractor, and the distributor, principally building materials dealers who purchase products from us and sell~~ to ~~the end-user~~be, ~~and~~incorporated inby ~~some~~reference ~~instances,~~into ~~retail~~this ~~customers~~Form 10-K.

~~While our manufactured products have typically been sold to distributors~~Additionally, materials we ~~focus~~file ~~our~~with ~~marketing efforts on~~ the ~~contractor/sub-contractor~~SEC ~~end~~are ~~user~~available toat ~~create a brand preference for our manufactured products. One customer accounted for 29% and 26% of~~ the ~~Company~~SEC’s ~~net~~Public ~~sales~~Reference ~~from~~Room ~~continuing~~at ~~operations~~450 ~~for~~Fifth ~~2010~~Street, ~~and~~N.W., ~~2009~~Washington, ~~respectively~~D.C. ~~Another~~20549. ~~customer~~Information ~~accounted~~on ~~for~~the ~~14%~~operation of the ~~Company’s~~Public ~~net~~Reference ~~sales~~Room ~~from~~may ~~continuing~~be ~~operations~~obtained ~~during~~by ~~2010~~calling ~~(sales~~the toSEC ~~this~~at ~~customer~~1-800-SEC-0330. ~~were~~The ~~less~~SEC ~~than~~maintains ~~10%~~a ofwebsite ~~total net sales during 2009)~~(www.sec.gov) ~~The~~that ~~majority~~contains ofreports, ~~sales~~proxy ofand ~~our~~information ~~manufactured~~statements, ~~products~~and ~~are~~other ~~sold~~information ~~directly~~regarding byissuers ~~Premix~~that tofile ~~non-affiliated~~electronically ~~building~~with ~~materials~~the ~~distributors~~SEC.

We believe that the loss of any one independent distributor would not cause a material loss in sales of our manufactured products because the brand preference contractors and subcontractors generally have for our products cause the user to seek a distributor who carries our manufactured products. However, the loss of the above noted significant customers, or our inability to successfully develop relationships with additional key customers could have a material adverse effect on our business, financial condition and results of operations. We market our products to distributors through Company salespeople and outside sales representatives located throughout the Southeastern United States.4

~~Seasonality~~ITEM 1A. RISK FACTORS

~~The~~Our ~~sale~~business, ofoperations ~~our~~and ~~products~~financial incondition are subject to various risks and uncertainties. You should carefully consider the ~~construction~~risks ~~market~~and ~~for~~uncertainties described below, together with all of the ~~Southeastern~~other ~~United~~information ~~States~~in isthis ~~somewhat~~annual ~~seasonal~~report ~~due~~on Form 10-K and in ~~part~~other documents that we file with the SEC, before making any investment decision with respect to ~~periods~~our securities. If any of ~~adverse~~the ~~weather~~following risks or uncertainties actually occur or develop, ~~with~~our abusiness, ~~lower~~financial ~~rate~~condition, results of ~~sales~~operations ~~historically~~and ~~occurring~~future ingrowth ~~the~~prospects ~~period~~could ~~December through~~change. ~~February compared~~Under tothese circumstances, the ~~rest~~trading price of ~~the~~our ~~year.~~common stock could decline, and you could lose all or part of your investment in our common stock.

~~Competition~~We have experienced losses and negative cash flow in each of the past five years and expect to incur losses and negative cash flow in 2012. Without additional financing in 2012, it is not likely the Company will be able to continue operations in its current form.

~~Our~~We operate in the construction industry, iswhich ~~highly~~has ~~competitive~~been ~~and~~negatively ~~varies~~impacted ~~depending~~by oneconomic ~~product~~conditions ~~line~~since 2007. As a result, the Company’s sales have continued to decline and ~~geographic~~the ~~market.~~Company’s ~~Our~~operations ~~manufacturing~~have ~~facilities~~generated ~~encounter~~negative ~~significant~~cash ~~competition~~flows ~~from~~since ~~local,~~2007. ~~independent~~As ~~companies,~~of asDecember ~~well~~31, as2011, ~~regional~~we ~~and~~had ~~national~~a ~~manufacturers~~cash balance of ~~cement~~$636,000. In ~~and~~2011, ~~plaster~~we ~~products~~had negative cash flow of $743,000 ~~most~~which included receipt of ~~whom~~$825,000 ~~manufacture~~from ~~similar~~settlements ~~products~~of litigation. AWithout ~~number~~the receipt of ~~these~~such ~~competitors~~proceeds ~~are~~from ~~larger~~the settlement of litigation, ~~more~~our ~~established~~negative cash flow would have been $1,568,000. Unless sales increase in future periods, we will continue to incur negative cash flows and ~~better~~will ~~financed~~not ~~than~~have sufficient cash to operate our business over the next 12 months unless we are able to obtain financing. We ~~compete~~cannot ~~with~~assure ~~the~~that our business will generate sufficient cash flow from operations or that future borrowing or other ~~companies~~financings ~~based~~will ~~primarily~~be ~~upon~~available ~~product~~to ~~performance~~us ~~and~~in ~~quality~~amounts sufficient to fund our needs, ~~customer~~if ~~service~~at ~~and~~all. ~~pricing~~Any bycurtailment ~~striving~~of tooperations, ~~maintain~~or ~~lower~~reduction ~~overhead~~or ~~than~~delay ~~larger~~in ~~national~~planned ~~companies~~capital expenditures may materially and adversely affect our future revenue prospects.

~~Environmental~~In ~~Matters~~addition, we are guarantors of certain Just-Rite obligations, including obligations collateralized by assets being sold in the liquidation of that business through the Assignment process, and other obligations related to Just-Rite’s obligations under noncancellable lease agreements. To the extent the proceeds realized from the assets sold are less than the amount of the guaranteed obligations, or the amounts claimed by lessors are in excess of the amounts we have estimated, it will result in a remaining obligation for the Company. At this date, it is uncertain what the amount of any remaining obligation will be after the sale of those collateralized assets, and the final disposition of our guarantee obligations under the leases. Many of these factors are beyond our control.

Our ~~operations are subject to various federal, state and local environmental laws and regulations in the normal course of our~~ business. ~~Although~~is wedependent ~~believe~~on ~~that~~demand ~~our~~for ~~manufacturing~~construction, ~~handling,~~renovation ~~consuming, selling~~ and ~~disposing~~repair of ~~our~~residential ~~raw materials~~ and ~~products~~commercial ~~are in accordance with current environmental regulations, future developments could require us to make unforeseen expenditures relating to environmental matters~~buildings. ~~Increasingly~~Such ~~strict~~demand ~~environmental~~is ~~laws,~~influenced ~~standards~~by ~~and~~changes ~~environmental~~in ~~policies may increase~~ the ~~risk~~overall condition of ~~liability~~the ~~and~~U. ~~compliance costs associated with our operations~~S. ~~Capital~~economy ~~expenditures~~including oninterest ~~environmental~~rates, ~~matters~~job ~~have not been material in past years~~formation, ~~and~~consumer ~~expenditures~~confidence ~~for 2011 to comply with existing laws~~ and ~~regulations~~other ~~are~~important ~~also not expected to have a material effect on our financial position, results of operations or liquidity~~factors.

~~Employees~~The building products industry is cyclical in nature and sensitive to changes in general economic conditions, including, in particular, conditions in the residential and commercial construction markets. Prices for our products and services are affected by overall supply and demand in the market for our products and for our competitors’ products. The recent economic downturn has resulted in a prolonged period of weak demand and excess supply which has negatively affected our revenues and margins and adversely affected our liquidity, financial condition and operating results. Any future economic downturn could have the same effect on us.

WeThe ~~had~~markets 25we ~~full~~serve, ~~time~~principally ~~employees~~the atresidential ~~December 31~~housing and commercial construction markets, ~~2010~~are significantly affected by the movement of interest rates. ~~Employee~~Significantly ~~relations~~higher interest rates or lack of available credit could weaken demand for construction activities, which could lower demand for the Company’s products. Other factors beyond our control may also impact demand for the Company’s products, including, but not limited to new housing starts, which are ~~considered~~influenced ~~good~~by availability of financing, housing affordability, demographic trends, employment levels, unforeseen inflationary pressures and ~~employees~~consumer ~~are~~confidence. ~~not~~Since our operations occur in limited geographic markets in the Southeast United States, our business is subject to ~~any~~the ~~collective~~economic ~~bargaining~~conditions ~~agreement~~in each such geographic market, particularly in the State of Florida.

~~Available~~Beginning ~~Information~~in the second quarter of 2006, residential construction demand began to be impacted by a number of factors, including higher interest rates, an increase in available inventory of unsold new and existing homes, and homebuilders reporting lower order rates for new homes. As a consequence, applications for building permits for new residential units, considered a strong sign for future construction activity, began to decline sharply in Florida in the last six months of 2006 and continued through 2009. While there was a modest increase in building permits for the construction of new residential units in Florida during 2010 and 2011, our current business environment remains depressed and we expect general construction activity in our principal trade area to continue to be slow for the foreseeable future. The depth and duration of the decline cannot be predicted. A continued depressed residential and commercial construction market has and is expected to continue to have an adverse effect on our liquidity, capital resources and results of operations.

~~Copies~~Our ofindependent ~~our~~registered ~~quarterly~~public ~~reports~~accounting onfirm ~~Form 10-Q,~~has ~~annual~~expressed ~~reports~~substantial ondoubt ~~Form 10-K~~about ~~and~~our ~~current~~ability ~~reports on Form 8-K, and any amendments~~ to ~~the~~continue foregoing, will be provided without charge to any shareholder submitting a written request to the Secretary of the Company or by calling 954-917-4114. All of our SEC filings are also available on our website at www.imperialindustries.com as soon as reasonably practicable after having been electronically filed or furnished to the SEC. In addition, our Code of Business Conduct is available at our website and will be provided without charge to any shareholder submitting a ~~written~~going ~~request~~concern.

~~The~~Our ~~content~~independent registered public accounting firm issued its report dated March 29, 2012 in connection with the audit of our ~~website~~financial isstatements ~~not~~as of and for the year ended December 31, ~~nor~~2011 ~~should~~that itincluded bean ~~deemed~~explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to becontinue as a going concern. Our consolidated financial statements as of and for the year ended December 31, ~~incorporated~~2011 byhave ~~reference~~been ~~into~~prepared ~~this~~under the assumption that we will continue as a going concern. We have taken and are taking several responsive steps, as set forth in Note 2 to the accompanying consolidated financial statements appearing elsewhere in the Form 10-K, that management hopes will be sufficient to allow the Company to continue as a going concern and to improve our operating results and financial condition. There can be no assurance that such actions will be effective. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Additionally,~~ Additional ~~materials~~adverse wechanges ~~file~~in ~~with~~economic ~~the~~conditions ~~SEC~~where ~~are~~we ~~available~~conduct atour ~~the~~operations ~~SEC’s~~and ~~Public~~where ~~Reference~~prospective ~~Room~~customers atlive ~~450~~could ~~Fifth~~further ~~Street,~~reduce ~~N.W., Washington, D.C. 20549. Information on~~ the ~~operation~~demand offor ~~the~~our ~~Public~~products ~~Reference~~and, ~~Room~~as ~~may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains~~ a ~~website~~result, ~~(www.sec.gov)~~could ~~that~~further ~~contains~~reduce ~~reports,~~our ~~proxy~~results ~~and~~of ~~information~~operations ~~statements,~~ and ~~other~~continue ~~information~~to ~~regarding~~adversely ~~issuers~~affect ~~that~~our ~~file~~financial ~~electronically with the SEC~~condition.

5 Adverse changes in national, regional and local economic conditions where we conduct our operations and where prospective purchasers of our products live, have had and may continue to have a negative impact on our business. Adverse changes in employment levels, job growth, consumer confidence, interest rates and population growth, or an oversupply of already constructed homes for sale may further reduce demand and depress prices for our products. These adverse economic conditions could further reduce our results of operations and continue to adversely affect our financial condition.

~~Item~~If 1Awe are unable to satisfy certain financial obligations assigned to the Assignee which remain outstanding after the sale and liquidation of the underlying collateralized assets, principally certain fixed assets of Just-Rite guaranteed by our parent company, it would have a material adverse effect on our financial condition.

~~Risk~~We ~~Factors~~remain liable on guarantees of certain obligations of Just-Rite related to specific underlying assets, including noncancellable lease agreements, that were used in Just-Rite’s former operations. To the extent the proceeds derived from the sale of such assets are less than those guaranteed obligations, or the amounts claimed by lessors are in excess of the amounts we have estimated we will be responsible for the short-fall. Such amount of these potential obligations cannot be determined until the assets are sold by the Assignee and the amount of deficiencies remaining to satisfy these obligations arising after said sale, if any, are known. During 2009, we established a loss contingency estimate of $529,000, of which, after subsequent settlement payments have been made for certain of the obligations, $172,000 remains in accrued expenses and other liabilities in the accompanying consolidated balance sheet as of December 31, 2011. The accrued loss contingency will continue to be adjusted in future periods as more current information is obtained.

~~Our~~The ~~business,~~loss ~~operations and financial condition are subject to various risks and uncertainties. You should carefully consider the risks and uncertainties described below, together with all~~ of ~~the other information in this annual report on Form 10-K and in other documents that we file with the SEC, before making~~ any ~~investment~~of ~~decision with respect to~~ our ~~securities.~~largest Ifcustomers ~~any~~could ofhave ~~the~~a ~~following~~material ~~risks~~adverse oreffect ~~uncertainties~~on ~~actually occur or develop,~~ our business, financial condition, and results of operations ~~and future growth prospects could change~~. ~~Under these circumstances, the trading price of our common stock could decline, and you could lose all or part of your investment in our common stock.~~

~~Our~~One ~~business~~customer isaccounted ~~dependent~~for on28% ~~demand~~and 29% of the Company’s net sales from continuing operations for ~~construction~~2011 and 2010, ~~renovation~~respectively. This customer’s accounts receivable represented 35% and ~~repair~~23% of ~~residential~~total accounts receivable at December 31, 2011 and ~~commercial~~2010, ~~buildings~~respectively. ~~Such~~Another ~~demand~~customer isaccounted ~~influenced~~for by12% ~~changes~~and in14% of the ~~overall~~Company’s ~~condition~~net sales from continuing operations for 2011 and 2010, respectively. This customer’s accounts receivable represented 12% and 17% of ~~the~~total Uaccounts receivable at December 31, 2011 and 2010, respectively. SAlthough we expect these customers to remain for the foreseeable future, there can be no assurance that we will be able to retain them, or that we would be able to recruit additional key customers to replace the loss of these customers. ~~economy~~The ~~including~~loss ~~interest~~of ~~rates~~these customers, ~~job~~or ~~formation~~our inability to successfully develop relationships with additional key customers could have a material adverse effect on our business, ~~consumer~~financial ~~confidence~~condition and ~~other~~results ~~important~~of ~~factors~~operations.

The building products industry is cyclical in nature and sensitive to changes in general economic conditions, including, in particular, conditions in the residential and commercial construction markets. Prices for our products and services are affected by overall supply and demand in the market for our products and for our competitors’ products. Future economic downturns could result in prolonged periods of weak demand or excess supply which could negatively affect our revenues and margins and adversely affect our liquidity, financial condition and operating results.6

~~The~~Our ~~markets~~business wehas ~~serve,~~substantial ~~principally~~fixed ~~the residential housing and commercial construction markets~~costs, are significantly affected by the movement of interest rates. Significantly higher interest rates or lack of available credit could weaken demand for construction activities, which could lower demand for the Company’s products. Other factors beyond our control may also impact demand for the Company’s products, including, but not limited to new housing starts, which are influenced by availability of financing, housing affordability, demographic trends, employment levels, unforeseen inflationary pressures and ~~consumer~~as ~~confidence.~~a ~~Since our operations occur in limited geographic markets in the Southeast United States~~result, our ~~business~~operating income is ~~subject~~sensitive to ~~the~~changes ~~economic conditions~~ in ~~each~~net ~~such geographic market, particularly in the State of Florida~~sales. ~~The~~Declines ~~continuing general economic downturn or localized downturns~~ in ~~the~~net ~~Florida~~sales ~~market~~adversely ~~where~~affect ~~we have operations had, and will continue to have a material adverse effect on our business, financial condition and~~ operating results.

~~Beginning~~A insignificant ~~the~~portion ~~second quarter~~ of ~~2006,~~our ~~residential~~expenses ~~construction~~are ~~demand~~fixed ~~began to be impacted by a number of factors~~costs, ~~including~~which ~~higher~~do ~~interest~~not ~~rates,~~fluctuate anwith ~~increase~~variations in ~~available~~net ~~inventory of unsold new and existing homes, and homebuilders reporting lower order rates for new homes~~sales. AsA ~~a consequence, applications for building permits for new residential units, considered a strong sign for future construction activity, began to~~ decline ~~sharply~~ in ~~Florida~~net insales ~~the~~is ~~last~~expected ~~six~~to ~~months~~cause ofa ~~2006.~~greater ~~The~~proportional ~~significant~~ decline in ~~building~~operating ~~permits continued in the Florida market through 2009, but increased 10~~results.2% ~~for~~A ~~the~~continuing ~~year~~reduction ~~ended December 31, 2010 as compared to 2009. This is a first indication that the construction industry may begin to improve~~ in ~~Florida from the existing low levels of construction. Florida is our largest market, representing the majority of consolidated~~ net sales incould ~~2010.~~have ~~Due~~an tounfavorable ~~the~~effect ~~existing~~on ~~low levels of construction activity and~~ future ~~residential~~operating ~~construction~~results ~~activity,~~due ~~demand for our products is expected~~ to ~~remain weak during 2011 in this market. The depth and duration of~~ the ~~decline~~negative inoperating ~~construction activity cannot be predicted~~leverage.

Our ~~independent~~business ~~registered~~is ~~public~~subject ~~accounting firm has expressed substantial doubt about our ability~~ to ~~continue~~intense ~~as a going concern~~competition.

~~Our~~We ~~independent~~experience ~~registered~~competition ~~public~~for ~~accounting~~our ~~firm~~products ~~has~~and ~~issued~~services ~~its~~from ~~report~~many ~~dated~~distributors ~~March 28~~and manufacturers, ~~2011~~including inmanufacturers ~~connection~~that ~~with~~distribute ~~the~~a ~~audit~~significant portion of ~~our~~their ~~financial~~products ~~statements~~through astheir ofown ~~December 31,~~distribution ~~2010~~organizations. ~~that~~Competition ~~included~~within anany ~~explanatory~~given ~~paragraph~~geographic ~~describing~~market ~~the~~is ~~existence~~based ofon ~~conditions~~many ~~that~~factors, ~~raise~~including, ~~substantial~~but ~~doubt~~not ~~about~~limited ~~our ability~~ to ~~continue~~customer asclassification, aproduct ~~going~~line, ~~concern.~~product ~~Our~~availability, ~~consolidated~~customer ~~financial statements as of December 31~~service, ~~2010~~technical ~~have~~product ~~been~~knowledge ~~prepared~~and ~~under~~expertise ~~the assumption that we will continue~~ as ato ~~going~~application ~~concern.~~and Weusage, ~~have~~price, ~~taken~~quality and ~~are~~availability ~~taking~~of ~~several~~credit. ~~responsive~~In ~~steps~~addition, asthe ~~set~~barriers ~~forth in Note 2~~ to ~~the~~entry ~~accompanying~~for ~~consolidated~~local ~~financial~~competitors ~~statements~~are ~~appearing~~relatively ~~elsewhere~~low. inWe ~~the~~may ~~Form 10-K,~~not ~~that management hopes will~~ be ~~sufficient~~able to ~~allow~~maintain ~~the~~our ~~Company~~costs toat ~~continue~~a aslevel asufficiently ~~going~~low ~~concern~~for ~~and~~us to ~~improve~~compete ~~our~~effectively. ~~operating~~We ~~results~~may ~~and~~not ~~financial~~be ~~condition.~~successful ~~There~~in ~~can~~responding beeffectively noto ~~assurance~~competitive ~~that~~pressures, ~~such~~particularly ~~actions~~from ~~will~~competitors bewith ~~effective.~~substantially ~~Our~~greater financial ~~statements~~and doother ~~not~~resources ~~include~~than ~~any~~we ~~adjustments that might result from the outcome of this uncertainty~~have.

6Our operating results are affected by fluctuations in our costs and the availability of raw materials and building material products from our vendors.

~~Additional~~Prices ~~adverse~~of ~~changes~~raw inmaterials ~~economic~~and ~~conditions~~building ~~where~~material weproducts ~~conduct~~are ~~our~~historically ~~operations~~volatile and ~~where~~are ~~prospective~~subject ~~customers~~to ~~live~~fluctuations ~~could~~arising ~~further~~from ~~reduce~~changes ~~the~~in ~~demand~~domestic ~~for~~and ~~our~~international ~~products~~supply and demand, aslabor acosts, ~~result~~competition, ~~could~~market ~~further~~speculation, ~~reduce~~government ~~our~~regulations ~~results~~and ofperiodic ~~operations~~delays in delivery. Rapid and ~~continue~~significant tochanges ~~adversely~~in product prices may affect ~~our~~sales ~~financial~~as ~~condition~~well as margins due to a limited ability to pass on short-term price changes. We do not use derivative financial instruments to hedge commodity price changes.

~~Adverse~~Our ~~changes~~products are currently obtainable from various sources and in ~~national~~sufficient quantities. However, ~~regional~~from ~~and~~time ~~local~~to ~~economic~~time ~~conditions~~it ~~where~~is possible we ~~conduct~~may ~~our~~experience ~~operations~~shortages ~~and~~of ~~where~~building ~~prospective~~products ~~purchasers~~as a result of ~~our~~unexpected ~~products~~demand ~~live~~or production difficulties as well as transportation limitations. In addition, ~~have~~we ~~had~~purchase ~~and~~products ~~may~~from ~~continue~~many tovendors ~~have~~under arelationships ~~negative~~that ~~impact~~are onterminable without cause or written notice which is customary in our ~~business~~industry. ~~Adverse~~Any ~~changes~~disruption in ~~employment~~our ~~levels,~~sources ~~job~~of ~~growth,~~supply ~~consumer~~for ~~confidence,~~raw ~~interest~~materials ~~rates~~or building materials could negatively impact our financial condition and ~~population~~results ~~growth,~~of operations. If shortages or andisruptions ~~oversupply~~in our supply of ~~already~~products ~~constructed~~from ~~homes~~our ~~for~~vendors ~~sale~~were ~~may~~to ~~further~~become ~~reduce~~severe ~~demand~~and occur on a more frequent basis in the future, there could be a short-term adverse effect on our operations and ~~depress~~a ~~prices~~long-term ~~for~~adverse effect on our customer relationships and reputation if we were unable to obtain a sufficient allocation of products from other vendors. ~~These~~In ~~adverse~~addition, ~~economic~~we ~~conditions~~have ~~could~~strategic ~~further~~relationships ~~reduce~~with ~~our~~several ~~results~~key ofvendors. ~~operations~~In ~~and~~the ~~continue~~event we are unable to maintain these relationships, we could lose some of the competitive advantages that those relationships offer us, which could, in turn, adversely affect our results of operations and financial condition.

IfWe we are ~~unable~~subject to ~~satisfy~~continuing ~~certain~~business ~~financial~~risk ~~obligations~~related ~~assigned~~ to ~~the~~insurance ~~Assignee~~coverage. ~~which~~We ~~remain~~have ~~outstanding~~been ~~after~~unable ~~the~~to ~~sale~~obtain ~~and~~product ~~liquidation~~liability coverage for certain types of ~~the~~product ~~underlying~~applications ~~collateralized~~since ~~assets~~March 15, ~~principally~~2004. ~~certain~~Losses ~~fixed~~from ~~assets~~claims in excess of ~~Just-Rite~~insurance ~~guaranteed~~coverage, byor ~~our~~for ~~parent~~matters ~~company~~not insured, itcould ~~would~~ have a material adverse effect on our operating results and financial condition.

We ~~remain~~carry ~~liable~~general ~~for~~liability, ~~certain~~comprehensive ~~obligations~~property ofdamage, ~~Just-Rite~~workers’ ~~associated~~compensation ~~with~~and ~~our~~other ~~guarantee~~insurance ofcoverages ~~obligations~~for ~~related~~the toprotection ~~specific~~of ~~underlying~~our assets ~~used~~and ~~in Just-Rite’s former~~ operations. ToThere ~~the~~can ~~extent~~be ~~the~~no ~~proceeds~~assurance, ~~derived~~however, ~~from~~that the ~~sale~~coverage limits of such ~~collateralized~~policies ~~assets~~will ofbe ~~Just-Rite~~adequate ~~are~~to ~~less~~cover ~~than~~losses ~~those~~and ~~guaranteed~~expenses ~~obligations,~~for welawsuits ~~will~~brought beor ~~responsible~~which ~~for~~may ~~the~~be ~~short-fall.~~brought ~~Such~~against ~~amount~~us. ofEffective ~~these~~March 15, ~~potential~~2004, ~~obligations~~we ~~cannot~~were beunable ~~determined~~to ~~until~~renew ~~the~~our ~~assets~~product ~~are~~liability ~~sold~~coverage bywith ~~the~~coverage ~~Assignee~~for ~~and~~alleged ~~the~~damages ~~amount~~caused ~~of deficiencies remaining~~ to ~~satisfy~~building ~~these~~structures ~~obligations~~because ~~arising~~of ~~after~~moisture ~~said~~intrusion ~~sale,~~due ifto ~~any,~~the ~~are~~use ~~known.~~of ~~During~~products ~~2009,~~formerly wemanufactured ~~established~~by aour ~~loss contingency estimate of $529~~subsidiary,~~000,~~ ~~of which~~DFH, ~~after~~for ~~settlement~~exterior ~~payments~~insulation ~~were~~finish ~~made~~wall ~~for~~systems ~~certain~~(“EIFS”), ofon ~~the~~single ~~obligations during 2009~~ and ~~2010,~~multi-family ~~$221~~residences,~~000~~ ~~remains~~as inwell ~~accrued~~as ~~expenses~~commercial ~~and~~buildings. ~~other~~While ~~liabilities~~no inuninsured ~~the~~lawsuits ~~accompanying~~have ~~consolidated~~been ~~balance~~filed ~~sheet~~against asDFH ofto ~~December 31~~date, ~~2010.~~there ~~The~~can ~~accrued~~be ~~loss~~no ~~contingency~~assurance ~~will~~that ~~continue~~this tofact bewill ~~adjusted~~continue in ~~future~~the ~~periods as more current information is obtained~~future.

~~The~~Our ~~loss~~subsidiary, Premix, is a defendant (together with our parent Company in certain claims), together with non-affiliated parties, in sixteen claims which allege bodily injury due to exposure to asbestos in products manufactured in excess of ~~any~~thirty (30) years ago. We believe we currently have more than adequate insurance coverage for these asbestos claims and such policies are not subject to self-insured retention. However, losses and expenses in excess of ~~our~~insurance ~~largest~~coverage ~~customers~~for the EIFS and asbestos product liability claims, as well as any uninsured lawsuits for EIFS product claims, in the future, could have a material adverse effect on our ~~business,~~operating results and financial condition. See Item 3. – Legal Proceedings and ~~results~~Note 15 of Notes ~~operations~~to Consolidated Financial Statements included elsewhere in the Report for further discussion of litigation matters.

One customer accounted for 29% and 26% of the Company’s net sales from continuing operations for 2010 and 2009, respectively. This customer’s accounts receivable represented 23% of total accounts receivable at December 31, 2010 and 2009, respectively. Another customer accounted for 14% of the Company’s net sales from continuing operations during 2010 (sales to this customer were less than 10% of total net sales during 2009). This customer’s accounts receivable represented 17% of total accounts receivable at December 31, 2010. Although we expect these customers to remain for the foreseeable future, there can be no assurance that we will be able to retain them, or that we would be able to recruit additional key customers to replace the loss of these customers. The loss of these customers, or our inability to successfully develop relationships with additional key customers could have a material adverse effect on our business, financial condition and results of operations.7

~~Our~~We ~~business~~depend ~~has~~on ~~substantial~~our ~~fixed~~senior ~~costs,~~management team and askey apersonnel ~~result,~~for ~~our~~their ~~operating~~expertise ~~income~~and isleadership. ~~sensitive~~The toloss ~~changes~~of inany ~~net~~member ~~sales.~~of ~~Declines~~our insenior ~~net~~management ~~sales~~could adversely affect ~~operating~~our ~~results~~operations.

AWe ~~significant~~believe ~~portion~~that ofour ability to implement our ~~expenses~~business ~~are~~strategy ~~fixed~~and ~~costs~~our continued success will largely depend upon the efforts, ~~which~~skills, doabilities ~~not~~and ~~fluctuate~~judgment ~~with~~of ~~variations~~our inexecutive ~~net~~management ~~sales~~team. AOur ~~decline~~success inalso ~~net~~depends ~~sales~~upon isour ~~expected~~ability to ~~cause~~recruit aand ~~greater~~retain ~~proportional~~highly ~~decline~~knowledgeable inand ~~operating~~skilled ~~results~~sales, marketing, operations, finance and other senior managers. AWe ~~continuing~~may ~~reduction~~not be successful in ~~net~~attracting ~~sales~~and ~~could~~retaining these employees or in managing our growth successfully, which may in turn have an ~~unfavorable~~adverse effect on ~~future~~our ~~operating~~ results ~~due~~of tooperations ~~the~~and ~~negative~~financial ~~operating leverage~~condition.

WeBecause ~~require~~our abusiness ~~significant~~is ~~amount~~working ofcapital ~~liquidity~~intensive, we rely on our ability to ~~fund~~manage ~~operations~~our product purchasing and ~~meet~~customer ~~cash~~credit ~~requirements~~policies. ofIf we are not successful in managing our working capital, ~~expenditures~~our financial condition would be adversely affected.

WeOur ~~require~~operations aare ~~significant~~working ~~amount~~capital ofintensive, ~~liquidity~~and toour ~~fund~~levels ~~operations~~of ~~and~~inventories, ~~capital~~accounts ~~expenditures.~~receivable ~~Our~~and ~~ability~~accounts topayable ~~fund~~are ~~our~~significant ~~operations,~~components ~~capital~~of ~~expenditures~~our ~~and~~net ~~other~~asset ~~corporate~~base. ~~expenses,~~We ~~depends~~manage on our ~~ability~~inventories toand ~~generate~~accounts ~~cash~~payable through ~~future~~purchasing ~~operating~~policies ~~performance,~~and ~~which~~accounts isreceivable ~~subject~~through toour ~~economic,~~customer ~~financial,~~credit ~~competitive~~ and ~~other~~collection ~~factors~~policies. ~~Also,~~The welarge ~~are~~majority ~~guarantors~~ of ~~certain~~our ~~Just-Rite~~net ~~obligations~~sales ~~collateralized~~are bycredit ~~assets~~sales ~~being~~through ~~sold~~open inunsecured ~~the~~accounts ~~liquidation~~with ofour ~~that business through the Assignment process~~customers. ToOur ~~the~~customers’ ~~extent~~ability ~~the~~to ~~proceeds~~pay ~~realized from the assets sold are less than the amount of the guaranteed obligations~~depend, itamong ~~will~~other ~~result in our obligations. At this date~~things, iton ~~is uncertain what~~ the ~~amount~~economic strength of ~~any remaining obligation will be after~~ the ~~sale~~construction ofindustry ~~those~~and ~~collateralized~~regional ~~assets~~economies. ~~Many~~If ofwe ~~these~~fail ~~factors~~to ~~are~~adequately ~~beyond~~manage our ~~control.~~product Wepurchasing ~~cannot~~or ~~assure~~customer ~~that~~credit policies, our ~~business~~working ~~will~~capital ~~generate~~and ~~sufficient~~financial ~~cash~~condition ~~flow~~may ~~from operations or that future borrowings or other financings will~~ be ~~available~~adversely ~~to us in amounts sufficient to fund our needs~~affected.

~~Any~~The ~~curtailment~~seasonal nature of our operations, ~~or reduction or delay in planned capital expenditures~~ may ~~materially and~~ adversely affect our ~~future~~quarterly ~~revenue~~financial ~~prospects~~results. InFluctuations ~~addition,~~in weour ~~cannot~~quarterly ~~assure~~results ~~that~~may wealso ~~will~~have bean ~~able~~adverse toeffect ~~raise additional equity capital, or obtain additional financing~~ on ~~commercially~~the ~~acceptable~~market ~~terms~~price orof atour ~~all~~common stock.

7Our operating results are somewhat seasonal. Historically, we have experienced lower operating results in the first and fourth quarters than in the second and third quarters of our fiscal year. Seasonal weather conditions, such as cold or wet weather, can also delay construction projects, further contributing to quarterly fluctuation in our operating results. If our financial results for a quarter fall below investors’ expectations, the market price of our common stock may decline, perhaps significantly.

~~Our~~Implementation ~~business~~of isour ~~subject~~growth strategy has certain risks. If we are unable to ~~intense~~effectively ~~competition~~implement or manage our growth strategy, our operating results and financial condition could be materially and adversely affected.

WeAs ~~experience~~part ~~competition~~of ~~for~~ our ~~products~~growth ~~and~~strategy, ~~services~~we ~~from~~may ~~many~~add ~~distributors~~additional ~~and~~product ~~manufacturers,~~lines ~~including~~or ~~manufacturers~~build ~~that~~additional ~~distribute~~plants. aThere ~~significant~~are ~~portion~~certain ofrisks ~~their~~inherent ~~products~~in ~~through~~such ~~their~~growth ~~own~~strategy ~~distribution~~that ~~organizations.~~could ~~Competition~~adversely ~~within~~affect ~~any~~our ~~given~~ability ~~geographic~~to ~~market~~achieve isthese ~~based~~objectives ~~on many factors,~~ including, but not limited to customer classification, product line, product availability, customer service, technical product knowledge and expertise as to application and usage, price, quality and availability of credit. In addition, the barriers to entry for local competitors are relatively low. We may not be able to maintain our costs at a level sufficiently low for us to compete effectively. We may not be successful in responding effectively to competitive pressures, particularly from competitors with substantially greater financial and other resources than we have.following:

~~Our~~· ~~operating~~The ~~results~~potential ~~are~~disruption ~~affected by fluctuations in our costs and the availability~~ of ~~raw materials and building material products from~~ our ~~vendors.~~business;

~~Prices~~· ofThe ~~raw~~uncertainty ~~materials~~that ~~and~~new building material products are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, labor costs, competition, market speculation, government regulations and periodic delays in delivery. Rapid and significant changes in product ~~prices~~lines ~~may~~will ~~affect~~generate ~~sales~~anticipated ~~as well as margins due to a limited ability to pass on short-term price changes. We do not use derivative financial instruments to hedge commodity price changes.~~sales;

~~Our~~· ~~products~~The ~~are~~diversion ~~currently obtainable from various sources and in sufficient quantities. However, from time to time we may experience shortages~~ of ~~building~~resources products as a result of unexpected demand or production difficulties as well as transportation limitations. Also, we purchase products from many vendors under relationships that are terminable without cause or written notice which is customary in our industry. Any disruption in our sources of supply for raw materials or building materials could negatively impact our financial condition and ~~results~~management’s of operations. If shortages or disruptions in our supply of products from our vendors were to become severe and occur on a more frequent basis in the future, there could be a short-term adverse effect on our operations and a long-term adverse effect on our customer relationships and reputation if we were unable to obtain a sufficient allocation of products from other vendors. In addition, we have strategic relationships with several key vendors. In the event we are unable to maintain these relationships, we could lose some of the competitive advantages that those relationships offer us, which could, in turn, adversely affect our results of operations and financial condition. time;

We· ~~are~~The ~~subject~~difficulty ~~to continuing business risk related to insurance coverage. We have been unable to obtain product liability coverage for certain types~~ of ~~product~~managing ~~applications~~the ~~since~~operations ~~March 15, 2004. Losses from claims in excess~~ of ~~insurance coverage, or for matters not insured, could have~~ a ~~material~~larger ~~adverse effect on our operating results and financial condition.~~company;

We· ~~carry~~The ~~general~~risk ~~liability, comprehensive property damage, workers’ compensation and other insurance coverages for the protection~~ of ~~our~~becoming ~~assets~~involved ~~and~~in ~~operations. There can be no assurance~~labor, ~~however,~~commercial ~~that~~or ~~the~~regulatory ~~coverage~~disputes ~~limits of such policies will be adequate to cover losses and expenses for lawsuits brought~~ or ~~which~~litigation ~~may~~related ~~be brought against us. Effective March 15, 2004, we were unable~~ to ~~renew our product liability coverage with coverage for alleged damages caused to building structures because of moisture intrusion due to~~ the ~~use~~new of products formerly manufactured by our subsidiary, DFH, for exterior insulation finish wall systems (“EIFS”), on single and multi-family residences, as well as commercial buildings. While no uninsured lawsuits have been filed against DFH to date, there can be no assurance that this fact will continue in the future. enterprise;

~~Our~~Pursuing ~~subsidiary,~~our ~~Premix,~~growth isstrategy amay ~~defendant~~be ~~(together~~required ~~with~~for ~~our~~us ~~parent~~to ~~Company~~remain ~~in certain claims)~~competitive, ~~together~~but ~~with~~we ~~non-affiliated~~may ~~parties,~~not inbe ~~twenty~~able ~~one~~to ~~claims~~obtain ~~which~~financing, ~~allege~~if ~~bodily~~necessary, ~~injury due~~ to ~~exposure~~implement tosuch ~~asbestos~~strategy inon ~~products~~favorable ~~manufactured~~terms inor ~~excess~~at ~~of thirty (30) years ago~~all. WeFuture ~~believe~~transactions wemay ~~currently~~not ~~have~~improve ~~more~~the ~~than~~competitive ~~adequate~~position ~~insurance coverage for these asbestos claims~~ and ~~such~~business ~~policies~~prospects ~~are~~as ~~not subject to self-insured retention. However~~anticipated, ~~losses~~ and ~~expenses~~could inreduce ~~excess~~sales ofor ~~insurance~~profit ~~coverage~~margins, ~~for the EIFS~~ and ~~asbestos product liability claims~~, ~~as well as any uninsured lawsuits for EIFS product claims~~therefore, inadversely ~~the~~affect ~~future, could have a material adverse effect on~~ our operating results and financial condition if they are not successful.

~~We depend on our senior management team and key personnel for their expertise and leadership. The loss of any member of our senior management could adversely affect our operations.~~8

We ~~believe~~are ~~that~~subject ~~our ability~~ to ~~implement~~environmental ~~our business strategy~~ and ~~our~~safety ~~continued~~regulations ~~success~~that ~~will~~are ~~largely~~subject ~~depend~~to ~~upon the efforts, skills, abilities and judgment of our executive management team~~change. ~~Our~~Such ~~success~~regulations ~~also~~could ~~depends~~cause ~~upon~~us ~~our ability~~ to ~~recruit~~make ~~and~~modifications ~~retain~~to ~~highly~~how ~~knowledgeable~~we manufacture and ~~skilled~~distribute ~~sales,~~our ~~marketing, operations, finance and~~ products.

8We are subject to federal, state and local laws and regulations governing the protection of the environment and occupational health and safety, including laws regulating air emissions, wastewater discharges, the management and disposal of hazardous materials and wastes, and the health and safety of our employees. We are also required to obtain permits from governmental authorities for certain operations. If we were to violate or fail to comply with these laws, regulations or permits, we could incur fines, penalties or other sanctions. In addition, we could be held responsible for costs and damages arising from any contamination at our past or present facilities or at third-party waste disposal sites. We cannot completely eliminate the risk of contamination or injury resulting from hazardous materials.

~~other~~Environmental ~~senior~~laws ~~managers~~tend to become more stringent over time, and we could incur significant expenses in the future relating to compliance with future environmental laws. WeIn ~~may~~addition, ~~not~~the beprice ~~successful~~and availability of certain of the raw materials that we use may vary in ~~attracting~~the future as a result of environmental laws and ~~retaining~~regulation ~~these~~affecting ~~employees~~certain orof our suppliers. An increase in ~~managing~~the price of our ~~growth~~raw ~~successfully~~materials, ~~which~~a ~~may~~decline in ~~turn~~their ~~have~~availability anor ~~adverse~~future ~~effect~~costs onrelating to our ~~results~~compliance ofwith ~~operations~~environmental laws could negatively affect our operating margins or result in reduced demand for our products and adversely affect our financial condition.

~~Because~~Natural ~~our~~disasters ~~business~~could isnegatively ~~working~~affect ~~capital intensive, we rely on~~ our ~~ability~~operating toresults ~~manage our product purchasing~~ and ~~customer credit policies. If we are not successful in managing our working capital, our~~ financial condition ~~would be adversely affected~~.

~~Our~~Future ~~operations~~disasters ~~are~~caused ~~working~~by ~~capital~~earthquakes, ~~intensive~~hurricanes, ~~and~~floods, ~~our~~or ~~levels~~other ofsimilar ~~inventories,~~events ~~accounts~~could ~~receivable~~have ~~and~~a ~~accounts~~significant ~~payable~~adverse ~~are~~effect ~~significant~~on ~~components~~the ofgeneral ~~our~~economic ~~net~~and ~~asset~~market ~~base.~~conditions Wein ~~manage~~ our ~~inventories~~markets, ~~and~~which ~~accounts~~in ~~payable~~turn ~~through~~could ~~purchasing~~have ~~policies~~a ~~and~~material ~~accounts~~adverse ~~receivable~~effect ~~through~~on our ~~customer~~financial ~~credit and collection policies~~condition. ~~The~~In ~~large~~addition, ~~majority~~natural ofcatastrophes ~~our~~may ~~net~~cause ~~sales are credit sales through open unsecured accounts with~~ our ~~customers.~~operating ~~Our~~results ~~customers’ ability~~ to ~~pay~~fluctuate ~~depend,~~from ~~among~~time ~~other~~to ~~things,~~time ondue ~~the economic strength of the construction industry and regional economies. If we fail~~ to ~~adequately~~increased ~~manage~~demand ~~our product purchasing~~ or ~~customer~~interruption ~~credit~~of ~~policies, our working capital and financial condition may be adversely affected~~operations.

~~The~~Our ~~seasonal~~Common ~~nature~~Stock ofis ~~our~~subject ~~operations~~to ~~may~~“Penny ~~adversely~~Stock” ~~affect~~rules ~~our~~and ~~quarterly~~these ~~financial~~regulations ~~results. Fluctuations in our quarterly results~~ may ~~also~~limit ~~have an adverse effect on~~ the ~~market~~liquidity ~~price~~ of our ~~common~~Common ~~stock~~Stock.

Our ~~operating~~common ~~results~~stock ~~are~~was ~~somewhat~~listed ~~seasonal. Historically, we have experienced lower operating results~~ in the ~~first~~NASDAQ ~~and~~Capital ~~fourth~~Market ~~quarters~~until ~~than~~January 27, in2010. ~~the~~Since ~~second~~that ~~and~~date ~~third quarters of~~ our ~~fiscal~~shares ~~year.~~have ~~Seasonal~~been ~~weather~~quoted ~~conditions, such as cold or wet weather, can also delay construction projects, further contributing to quarterly fluctuation~~ in ~~our~~the ~~operating~~Over-the-Counter ~~results.~~Bulletin ~~If our financial results for a quarter fall below investors’ expectations~~Board, under the ~~market price of our common stock may decline~~symbol, ~~perhaps significantly~~“IPII.OB”.

~~Implementation~~The ofSEC ~~our~~has ~~growth~~promulgated ~~strategy~~rules ~~has~~governing ~~certain~~the ~~risks.~~over Ifthe wecounter trading in penny stocks, defined generally as securities trading below $5 per share that are ~~unable~~not toquoted ~~effectively~~on ~~implement~~a securities exchange or ~~manage~~which do not meet other substantive criteria. Under these rules, our ~~growth~~common ~~strategy~~stock is currently classified as a penny stock. As a penny stock, our ~~operating~~common ~~results~~stock is currently subject to rules promulgated by the SEC that impose additional sales practice requirements on broker-dealers that might sell such securities to persons other than established customers and ~~financial~~institutional ~~condition~~accredited ~~could~~investors. beFor ~~materially~~transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser’s written consent to the transaction prior to the sale. Further, if the price of the stock is below $5 per share and the issuer does not have $2.0 million or more net tangible assets or is not listed on a registered national securities exchange, sales of such stock in the secondary trading market are subject to certain additional rules promulgated by the SEC. These rules generally require, among other things, that brokers engaged in secondary trading of penny stocks provide customers with written disclosure documents, monthly statements of the market value of penny stocks, disclosure of the bid and asked prices, and disclosure of the compensation of the broker-dealer and the salesperson working for the broker-dealer in connection with the transaction. If a trading market for our common stock develops, these rules and regulations may affect the ability of broker-dealers to sell our common stock, thereby effectively limiting the liquidity of our common stock. These rules may also adversely ~~affected~~affect the ability of persons that acquire our common stock to resell their securities in any trading market that may exist at the time of such intended sale.

AsWe ~~part~~do ofnot ~~our~~expect ~~growth~~to ~~strategy,~~pay wedividends ~~may~~on ~~open~~our ~~new~~common ~~facilities,~~stock ~~expand~~for ~~existing~~the ~~facilities,~~foreseeable ~~add~~future. ~~additional~~Dividends ~~product~~are ~~lines,~~payable ~~build~~at ~~additional~~the ~~plants,~~discretion orof ~~acquire businesses that complement~~ our ~~existing~~Board ~~business~~of Directors. ~~There~~The ~~are~~failure ~~certain~~to ~~risks~~declare ~~inherent~~and inpay ~~such~~dividends ~~growth~~may ~~strategy~~have ~~that~~an ~~could~~adverse ~~adversely~~effect ~~affect~~on ~~our~~the ~~ability~~market toprice ~~achieve~~of ~~these~~our ~~objectives~~common ~~including, but not limited to the following:~~stock.

·The payment of future dividends, if any, will be at the discretion of our Board of Directors, after taking into account various factors, including earnings, capital requirements and surplus, financial position, contractual restrictions and other relevant business considerations. In the future, we may become a party to debt instruments or agreements that further restrict our ability to pay dividends.

~~The potential disruption of our business;~~9

·Actual and perceived vulnerabilities as a result of terrorist activities and armed conflict may adversely impact consumer confidence and our business.

~~The~~Instability ~~uncertainty~~in ~~that~~the ~~new~~economy ~~product~~and ~~lines~~financial ~~will~~markets ~~generate~~as ~~anticipated~~a ~~sales;~~result of terrorism or war may impact consumer confidence and result in a decrease in residential and commercial construction in our markets. Terrorist attacks may also directly impact our ability to maintain operations and may have a material adverse effect on our business.

·Certain anti-takeover provisions may make our stock less attractive to investors.

~~The~~Our ~~uncertainty~~certificate ~~that~~of aincorporation, ~~new~~as amended, as well as Delaware law applicable to our company contain provisions which may delay or ~~acquired~~prevent ~~business~~other companies from completing transactions in which shareholders may receive a substantial premium for their shares over then-prevailing market prices. These provisions may also limit shareholders’ ability to approve transactions they may otherwise believe are in their best interests. For example, our Board of Directors is divided into three classes of directors and as such is elected for staggered three-year terms. Normally this would make it difficult for another company to succeed in proxy contests to obtain control of the Board. However, as we have not had an annual meeting of stockholders for the last two years, all of our directors, regardless of class, will ~~achieve~~be ~~anticipated~~up ~~operating~~for ~~results;~~election at the next annual meeting. The certificate of incorporation also permits the Board of Directors to issue, at any time without shareholder approval, shares of preferred stock, with such terms it may determine in the Board’s discretion. These provisions and others could delay, prevent or allow the Board of Directors to resist an acquisition of our company, even if a majority of the shareholders favor such a transaction.

·ITEM 1B. UNRESOLVED STAFF COMMENTS

~~The diversion of resources and management’s time;~~None.

·ITEM 2. PROPERTIES

We conduct operations through our subsidiaries from two facilities located in Florida. The ~~difficulty~~location and size of ~~managing~~our current facilities and the ~~operations~~principal nature of athe ~~larger~~operations ~~company;~~in which such facilities are used, are as follows:

Location	Approximate Sq. Footage	Owned/Leased	Company
Pompano Beach, FL	19,600	Leased	Premix/Imperial
Winter Springs, FL (1)	26,000	Leased	Premix

~~The risk of becoming involved in labor, commercial or regulatory disputes or litigation related to the new enterprise;~~——————

·(1) In November 2008, we sold our Winter Springs, Florida manufacturing facility under the terms of a sales-leaseback agreement. In connection with such closing, Premix entered into a five year lease. The lease contains two five year renewal options, and also provides the Company with an option to repurchase the facility at a price defined in the agreement at any time after two years, during the term of its lease period. As a result of the repurchase option, we accounted for the sale of the facility as a secured financing. See Note 6 of Notes to the Consolidated Financial Statements included elsewhere in this Report.

~~The~~We ~~difficulty~~currently oflease ~~competing~~such ~~for~~properties ~~acquisitions~~from ~~and~~unaffiliated third parties. In the event we are unable to renew the above leases on acceptable terms, management believes there are other ~~growth~~available ~~opportunities~~facilities ~~with~~at ~~companies~~each ~~having~~location ~~greater~~and ~~financial~~the ~~resources~~cost of moving is not material other than wethe ~~have;~~location for our manufacturing facility in Winter Springs, Florida. The Winter Springs facility lease expires October 31, 2013 but contains lease purchase and renewal options, as described above.

·Management believes that our facilities and equipment are well-maintained, in good operating condition and sufficient for its present operating needs.

~~The difficulty of, and costs associated with, integration of acquired operations and personnel into our existing business; and~~10

·ITEM 3. LEGAL PROCEEDINGS

~~Possible~~(a) Legal ~~departures of key personnel from any acquired business.~~Proceedings

~~Pursuing~~ Asbestos our growth strategy may be required for us to remain competitive, but we may not be able to complete any such transactions or obtain financing, if necessary, for such transactions on favorable terms or at all. Future transactions may not improve the competitive position and business prospects as anticipated, and could reduce sales or profit margins, and, therefore, adversely affect our operating results and financial condition if they are not successful.Litigation

9Premix is a defendant together with non-affiliated parties in sixteen claims (eight of which include Imperial as a defendant) which allege bodily injury due to exposure to asbestos contained in products manufactured in excess of thirty (30) years ago. The table below lists each of these pending claims, in addition to the court in which the action is pending and the date that Premix and/or Imperial was served with the complaint.

We are subject to environmental and safety regulations that are subject to change. Such regulations could cause us to make modifications to how we manufacture and distribute our products.

STYLE OF CASE	COURT/TRIBUNAL	CASE NUMBER	DATE OF SERVICE OF COMPLAINT
Marilyn Adair v. Premix, et al	15th Judicial Circuit - Palm Beach County	07-9343	June 29, 2007
Elaine Legault v. Premix, et al(1)	13th Judicial Circuit - Hillsborough County	08-10789	June 23, 2008
Edward Pryzbyla v. Premix, et al	17th Judicial Circuit-Broward County	09-053844-07	November 4, 2009
Nancy Henley v. Imperial, Premix, et al	13th Judicial Circuit - Hillsborough County	09-27856	March 12, 2010
Bruce Weisemann v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-005365	March 17, 2010
Shirley Picklo v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-000262-07	April 21, 2010
Betty Trowsse v. Imperial, Premix, et al	13th Judicial Circuit - Hillsborough County	10-02779	May 5, 2010
Edward Evans v. Imperial, Premix, et al	11th Judicial Circuit - Miami-Dade County	10-9106-CA-42	May 13, 2010
Herman Roberts v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-006329	July 2, 2010
Lawrence McFarlin v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-007786	August 5, 2010
Pauline Marley v. Imperial, Premix, et al	11th Judicial Circuit - Miami-Dade County	10-17557-CA-42	August 6, 2010
Isabel Perry v. Imperial, Premix, et al	17th Judicial Circuit-Broward County	10-23096	September 24, 2010
Craig Comes v. Imperial, Premix, et al	13th Judicial Circuit - Hillsborough County	10-014949	November 12, 2010
Claudia Fils-Aime v. Imperial, Premix, et al(1)	11th Judicial Circuit - Miami-Dade County	10-63197-CA-06	March 11, 2011
Hidelisa Cordovez v. Premix, et al(1)	11th Judicial Circuit - Miami-Dade County	11-08485-CA-24	April 13, 2011
Julius B. Sanders v. Imperial, Premix, et al	17th Judicial Circuit-Broward County	11-016176	August 17, 2011
James R. Williams v. Premix, et al	13th Judicial Circuit - Hillsborough County	11-8564Z	November 2, 2011

We(1) ~~are~~During ~~subject to federal, state and local laws and regulations governing~~ the ~~protection~~first ofquarter ~~the environment and occupational health and safety, including laws regulating air emissions, wastewater discharges, the management and disposal~~ of ~~hazardous~~2012 ~~materials~~these ~~and~~cases ~~wastes, and the health and safety of our employees. We are also required to obtain permits from governmental authorities for certain operations. If we~~ were ~~to violate or fail to comply with these laws~~dismissed, ~~regulations~~which ordid ~~permits,~~not weresult ~~could~~in ~~incur~~any ~~fines,~~additional ~~penalties or other sanctions. In addition, we could be held responsible for~~ costs ~~and~~to ~~damages arising from any contamination at~~ our ~~past~~insurance orcarriers ~~present facilities~~ or ~~at third-party waste disposal sites. We cannot completely eliminate~~ the ~~risk of contamination or injury resulting from hazardous materials~~Company.

Environmental laws tend to become more stringent over time, and we could incur significant expenses in the future relating to compliance with future environmental laws. In addition, the price and availability of certain of the raw materials that we use may vary in the future as a result of environmental laws and regulation affecting certain of our suppliers. An increase in the price of our raw materials, a decline in their availability or future costs relating to our compliance with environmental laws could negatively affect our operating margins or result in reduced demand for our products and adversely affect our financial condition.11

~~Natural~~The ~~disasters~~above ~~could~~chart ~~negatively~~depicts ~~affect~~all ~~our~~asbestos ~~operating~~cases ~~results~~that were pending against Premix and/or ~~financial~~Imperial ~~condition~~as of December 31, 2011. During the first quarter of 2012, two additional asbestos claims were filed, including Timmy King v. Imperial, Premix et al., which claim was filed in the 11th Judicial Circuit Court in and for Miami-Dade County, Case No.: 12-0075. Premix was served with a copy of the King Complaint on February 13, 2012, whereas Imperial was served with a copy of the King Complaint on February 20, 2012. In addition, on March 14, 2012, Premix was named in an asbestos lawsuit filed in the District Court of Dallas County, Texas, in the matter of Alan J. Hantak, et al. v. ABB, Inc., Case No. 12-02936. Premix has not yet been served with a copy of the Complaint in the Hantak matter.

~~Future~~We ~~disasters~~believe ~~caused~~that byPremix ~~earthquakes,~~and ~~hurricanes,~~the ~~floods~~Company have meritorious defenses to each of the claims identified in the table above. We have identified at least ten (10) of our prior insurance carriers including both primary and excess/umbrella liability carriers that have provided liability coverage to us, orincluding ~~other~~potential ~~similar~~coverage ~~events~~for ~~could~~alleged injuries relating to asbestos exposure. Several of these insurance carriers have been and continue to provide a ~~significant~~defense ~~adverse~~to ~~effect~~Premix and the Company under a reservation of rights in all of the asbestos cases. Certain of these underlying insurance carriers have denied coverage to Premix and the Company on the ~~general~~basis ~~economic~~that certain exclusions preclude coverage and/or ~~market~~that ~~conditions~~their inpolicies ~~our~~have ~~markets~~been exhausted. In June of 2009, ~~which~~one such carrier filed suit in ~~turn~~Miami-Dade ~~could~~Circuit ~~have~~Court against Premix and Imperial, wherein the carrier sought a ~~material~~declaration ~~adverse~~from ~~effect~~the onCourt ~~our~~that ~~financial~~its ~~condition~~insurance policies do not provide coverage for the asbestos claims against Premix and Imperial. We believed that we had meritorious defenses to these claims, and filed a counterclaim against the carrier for breach of contract. In ~~addition~~December 2010, ~~natural~~Premix, ~~catastrophes~~Imperial ~~may~~and ~~cause~~this ~~our~~carrier ~~operating~~resolved ~~results~~their todispute, ~~fluctuate~~with ~~from~~the ~~time~~carrier paying a settlement of $500,000 to ~~time~~Premix ~~due~~and Imperial. As part of the settlement, there is no longer coverage available under that disputed policy. The settlement was recorded as a receivable and included in other current assets in the accompanying condensed consolidated balance sheet as of December 31, 2010, and as income reflected as litigation settlement during the fourth quarter of 2010. We received payment of the $500,000 settlement during the first quarter of 2011. During the first quarter of 2011, we resolved a dispute with another carrier regarding primary-layer insurance coverage, which resulted in this carrier paying a settlement of $325,000 to ~~increased~~Premix ~~demand~~and orImperial, ~~interruption~~which was recorded as income reflected as litigation settlement during the first quarter of ~~operations~~2011. As part of the settlement, there is no longer coverage available under that disputed policy. Notwithstanding the foregoing, we believe, when considering that Imperial and Premix have substantial umbrella/excess coverage for these claims, that we have more than adequate insurance coverage for these asbestos claims and such policies are not subject to self-insured retention (“SIR”).

~~Our~~ Other ~~Common Stock is subject to “Penny Stock” rules and these regulations may limit the liquidity of our Common Stock.~~Litigation

~~Our~~Premix ~~common~~is ~~stock~~a defendant in a lawsuit in Orange County, Florida brought by the parents of their minor daughter who was ~~listed~~injured when she entered and hit the bottom of the swimming pool located at a resort in Orlando, Florida. Plaintiffs allege claims against the ~~NASDAQ~~owner, ~~Capital~~operator, ~~Market~~and ~~until~~manager ~~January 27~~of the resort, ~~2010~~as well as the landscape architect, pool contractor and various subcontractors that were allegedly involved in the construction and/or supply of materials utilized in the construction of the pool. Notably, ~~Since~~Plaintiffs did not seek to add Premix as a defendant until three (3) years after first filing suit against the other defendants named in the lawsuit. Premix believes that ~~date~~it ~~our~~has ~~shares~~meritorious defenses to Plaintiffs’ claims, including but not limited to the fact that Premix’s products may not have been ~~quoted~~used in the ~~Over-~~construction of the~~-Counter~~ ~~Bulletin~~pool. The ~~Board,~~Company’s ~~under~~carriers ~~the~~have ~~symbol,~~retained ~~“IPII~~counsel to defend Premix’s interests in this matter pursuant to policies of insurance that are not subject to SIR.~~OB”.~~

~~The~~We ~~SEC~~are ~~has~~aggressively ~~promulgated~~defending ~~rules~~all ~~governing~~of the ~~over~~lawsuits ~~the~~and ~~counter~~claims ~~trading~~described ~~in penny stocks~~above, ~~defined generally as securities trading below $5 per share that are not quoted on a securities exchange or which do not meet other substantive criteria. Under these rules~~however, ~~our~~at ~~common~~the ~~stock~~present ~~is currently classified as a penny stock. As a penny stock~~time, ~~our~~we ~~common~~cannot ~~stock~~assess ~~is currently subject to rules promulgated by~~ the ~~SEC~~likely ~~that~~outcome ~~impose~~or additional sales practice requirements on broker-dealers that might sell such securities to persons other than established customers and institutional accredited investors. For transactions covered by the rule, the broker-dealer must make an aestimate ~~special~~of ~~suitability determination for~~ the ~~purchaser~~possible ~~and receive the purchaser’s written consent to the transaction prior to the sale. Further~~loss, if ~~the~~any, ~~price~~related ofto ~~the~~these ~~stock is below $5 per share and the issuer does not have $2~~matters.~~0 million~~ orWhile ~~more~~we ~~net~~do ~~tangible assets or is~~ not ~~listed~~believe ~~on a registered national securities exchange, sales of such stock in~~ the ~~secondary~~ultimate ~~trading~~resolution ~~market are subject to certain additional rules promulgated by the SEC. These rules generally require, among other things, that brokers engaged in secondary trading~~ of ~~penny~~these ~~stocks~~aforementioned ~~provide~~claims ~~customers~~will ~~with~~have ~~written~~a ~~disclosure~~material ~~documents,~~adverse ~~monthly~~effect ~~statements~~on ofour ~~the~~operating ~~market~~results ~~value~~and offinancial ~~penny stocks~~condition, ~~disclosure~~given of the ~~bid~~uncertainty and ~~asked~~unpredictability ~~prices, and disclosure~~ of ~~the compensation of the broker-dealer and the salesperson working for the broker-dealer in connection with the transaction. If a trading market for our common stock develops~~litigation, ~~these~~there ~~rules~~can ~~and~~be ~~regulations~~no ~~may~~assurance ~~affect~~that the ~~ability~~ultimate ofresolution ~~broker-dealers to sell our common stock, thereby effectively limiting the liquidity~~ of ~~our~~such ~~common~~litigation ~~stock.~~would ~~These~~not ~~rules~~have ~~may~~a ~~also~~material ~~adversely~~adverse ~~affect the ability of persons that acquire our common stock to resell their securities in any trading market that may exist at the time of such intended sale~~effect.

We door ~~not~~our ~~expect~~subsidiaries are also parties to ~~pay~~other ~~dividends~~legal onproceedings ~~our~~arising ~~common~~from ~~stock~~time ~~for~~to time in the ~~foreseeable~~normal ~~future.~~course ~~Dividends~~of ~~are~~business. While ~~payable~~litigation atis ~~the~~subject ~~discretion~~to ofinherent uncertainties, our ~~Board~~management currently believes that the outcome of ~~Directors.~~these ~~The~~proceedings, ~~failure~~individually toor ~~declare~~in ~~and~~the ~~pay~~aggregate, ~~dividends~~will ~~may~~not have ana material adverse effect on ~~the~~our ~~market~~financial ~~price~~position, ofcash ~~our~~flows ~~common~~or ~~stock~~results of operations.

~~The~~ITEM payment of future dividends, if any, will be at the discretion of our Board of Directors, after taking into account various factors, including earnings, capital requirements and surplus, financial position, contractual restrictions and other relevant business considerations4. MINE InSAFETY ~~the future, we may become a party to debt instruments or agreements that further restrict our ability to pay dividends.~~DISCLOSURES

10Not applicable.

~~Actual and perceived vulnerabilities as a result of terrorist activities and armed conflict may adversely impact consumer confidence and our business.~~12

~~Instability~~PART in the economy and financial markets as a result of terrorism or war may impact consumer confidence and result in a decrease in residential and commercial construction in our markets. Terrorist attacks may also directly impact our ability to maintain operations and may have a material adverse effect on our business.II

~~Certain~~ITEM ~~anti-takeover~~5. MARKET ~~provisions~~FOR ~~may~~THE ~~make~~REGISTRANT’S ~~our~~COMMON ~~stock~~EQUITY, ~~less~~RELATED ~~attractive~~STOCKHOLDER toMATTERS ~~investors.~~AND ISSUER PURCHASES OF EQUITY SECURITIES

Our ~~certificate~~common ofstock ~~incorporation,~~has asbeen ~~amended,~~quoted ason ~~well~~the asOver-the-Counter ~~Delaware~~Bulletin ~~law~~Board ~~applicable~~since toJanuary ~~our~~27, ~~company~~2010 ~~contain~~under ~~provisions~~the ~~which~~symbol ~~may delay or prevent other companies from completing transactions in which shareholders may receive a substantial premium for their shares over then-prevailing market prices~~“IPII”. Prior ~~These provisions may also limit shareholders’ ability~~ to ~~approve~~that ~~transactions~~date ~~they may otherwise believe are in their best interests. For example,~~ our ~~Board~~common ofstock ~~Directors~~was istraded ~~divided~~on ~~into~~the ~~three~~NASDAQ ~~classes~~Capital ~~of directors and as such is elected for staggered three-year terms~~Market. The ~~Normally~~following ~~this~~table ~~would~~sets ~~make~~forth ~~it difficult for another company to succeed in proxy contests to obtain control of~~ the ~~Board.~~high ~~However,~~and aslow wesales ~~have~~price ~~not~~per ~~had~~share ~~an annual meeting of stockholders~~ for the ~~last~~common ~~two~~stock ~~years, all of our directors, regardless of class, will be up~~ for ~~election~~each atquarter ~~the~~during ~~next~~2011 ~~annual~~and ~~meeting~~2010. ~~The~~Such ~~certificate~~quotations ofrepresent ~~incorporation~~prices ~~also~~between ~~permits~~dealers ~~the~~and ~~Board~~do ofnot ~~Directors~~include toretail ~~issue~~mark-up, ~~at any time without shareholder approval~~mark-down, ~~shares~~or ~~of preferred stock~~commission, ~~with~~and ~~such terms it~~ may ~~determine~~not innecessarily ~~the~~represent ~~Board’s~~actual ~~discretion~~transactions. ~~These provisions and others could delay, prevent or allow the Board of Directors to resist an acquisition of our company, even if a majority of the shareholders favor such a transaction.~~

Item 1B.

Fiscal 2011	High		Low

First Quarter	$	0.81	$	0.30
Second Quarter		1.01		0.40
Third Quarter		1.00		0.18
Fourth Quarter		0.70		0.20

Unresolved Staff Comments

Fiscal 2010	High		Low

First Quarter	$	0.96	$	0.25
Second Quarter		0.59		0.27
Third Quarter		0.55		0.21
Fourth Quarter		0.49		0.21

~~None~~We have not paid any cash dividends on our Common Stock since 1980. We intend to retain earnings, if any, to finance the expansion of our business and do not anticipate paying any dividends in the foreseeable future. On March 20, 2012, the Common Stock was held by 525 stockholders of record.

~~Item~~As 2of March 20, 2012, the closing price of the Common Stock quoted on the Over-the-Counter Bulletin Board was $0.55 per share.

~~Properties~~Purchases of Equity Securities

We ~~conduct~~did ~~operations~~not ~~through~~purchase ~~our~~any ~~subsidiaries~~shares ~~from two facilities located in Florida. The remaining Just-Rite distribution facilities were closed in 2009 and 2008. The location and size~~ of our ~~current~~common ~~facilities~~stock ~~and~~during the ~~principal~~year ~~nature~~ended ~~of the operations in which such facilities are used~~December 31, ~~are as follows:~~2011.

Location	Approximate Sq. Footage	Owned/Leased	Company
Pompano Beach, FL	19,600	Leased	Premix/Imperial
Winter Springs, FL (1)	26,000	Leased	Premix

Securities Authorized for Issuance Under Equity Compensation Plans

~~——————~~The following table includes information as of December 31, 2011 about certain plans which provide for the issuance of common stock in connection with the exercise of stock options and other share-based awards.

(1)

Number of

Securities to

be Issued Upon

Exercise of

Outstanding

Options, Warrants and Rights

Weighted Average

Exercise Price of

Outstanding Options

Number of

Securities

Remaining

Available for

Future Issuance

Under Equity

Compensation

Plans (Excluding

Securities Reflected

in Column (a))

(a)

(b)

(c)

Equity Compensation plans approved by security holders:

2006 Stock Award and Incentive Plan

123,250

0.50

86,241

Equity compensation plans not approved by security holders

––

Total

123,250

0.50

86,241

In November 2008, we sold our Winter Springs, Florida manufacturing facility under the terms of a sales-leaseback agreement. In connection with such closing, Premix entered into a five year lease. The lease contains two five year renewal options, and also provides the Company with an option to repurchase the facility at a price defined in the agreement at any time after two years, during the term of its lease period.13

~~The~~ITEM ~~leased properties are currently leased from unaffiliated third parties~~6. SELECTED InFINANCIAL the event that the Company is unable to renew the above leases on acceptable terms, management believes there are other available facilities at each location and the cost of moving is not material other than the location for our manufacturing facility in Winter Springs, Florida which, as noted above, expires October 31, 2013 and contains lease purchase and renewal options.DATA

~~Management~~Not ~~believes that our facilities and equipment are well-maintained, in good operating condition and sufficient for its present operating needs.~~Applicable

~~Item~~ITEM 37. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Legal~~The ~~Proceedings~~following discussion of the Company’s financial condition should be read in conjunction with our consolidated financial statements and notes to the consolidated financial statements appearing elsewhere in this Form 10-K. This discussion contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” and elsewhere in this Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

~~Asbestos~~Company ~~Litigation~~Overview

~~Premix~~We isare aengaged ~~defendant together with non-affiliated parties~~ in ~~twenty~~the ~~two~~manufacture ~~claims~~and ~~(twelve~~distribution of ~~which~~building ~~include~~materials ~~Imperial~~to asbuilding amaterials ~~defendant)~~dealers ~~which~~and ~~allege~~to ~~bodily~~a ~~injury~~lesser ~~due~~extent, tocontractors ~~exposure~~and tosub-contractors, ~~asbestos~~located ~~contained~~primarily in ~~products~~the ~~manufactured~~Southeastern inUnited ~~excess~~States, ofprincipally ~~thirty (30) years ago~~Florida. We ~~believe~~have ~~that~~two ~~Premix~~facilities ~~and~~through ~~the~~which ~~Company~~we ~~have~~market ~~meritorious~~our ~~defenses to such claims~~products. WeOur ~~have~~business ~~identified~~is atdriven ~~least~~primarily ~~ten~~by ~~(10)~~the level of ~~our~~residential ~~prior insurance carriers including both primary~~ and ~~excess/umbrella~~commercial ~~liability~~construction ~~carriers~~activity ~~that~~in ~~have~~our ~~provided~~trade ~~liability coverage to us~~markets, ~~including~~particularly ~~potential~~in ~~coverage~~the ~~for~~state ~~alleged~~of ~~injuries relating to asbestos exposure~~Florida. ~~Several~~The level of ~~these~~construction ~~insurance~~activity ~~carriers~~is ~~have~~dependent ~~been~~on ~~and~~many ~~continue~~factors toincluding, ~~provide~~but anot ~~defense~~limited to, ~~Premix and~~ the ~~Company~~general ~~under~~state ~~a reservation~~ of ~~rights in all of~~ the ~~asbestos~~economy, ~~cases.~~credit ~~Certain~~markets, ofpopulation ~~these~~growth, ~~underlying~~job ~~insurance~~growth, ~~carriers~~inventory ~~have~~of ~~denied~~available ~~coverage~~residential ~~to Premix~~ and ~~the~~commercial ~~Company~~units, ongovernment ~~the~~growth ~~basis~~policies ~~that certain exclusions preclude coverage~~ and~~/or~~ ~~that~~construction ~~their policies have been exhausted~~funding. ~~In June of 2009, one such carrier filed suit in~~

11We have experienced five consecutive years of operating losses and reductions in sales when compared to prior years. Applications for building permits for construction of new residential units are considered a strong indicator for future construction activity. According to the U.S. Census Bureau, after significant declines in building permits in the Florida market from the second half of 2006 and through 2009, there was a modest increase in permits for the construction of new residential units in Florida during 2010 and 2011. Notwithstanding the modest increase in building permits the last two years, our current business environment continues to be depressed and we expect general construction activity to remain slow for the foreseeable future. The depth and duration of the decline cannot be predicted. A continued depressed residential and commercial construction market has and is expected to continue to have an adverse effect on our liquidity, capital resources and results of operations.

~~Miami-Dade~~Our ~~Circuit~~Ability Court against Premix and Imperial, wherein the carrier sought a declaration from the Court that its insurance policies do not provide coverage for the asbestos claims against Premix and Imperial. The carrier also asserted a claim for reimbursement of defense costs and indemnity payments that it voluntarily made on our behalf in prior asbestos claims. We believe that we had meritorious defenses to ~~these~~Continue ~~claims, and filed a counterclaim against the carrier for breach of contract, and also asserted claims for damages and attorneys’ fees~~ as a ~~result~~Going of the carriers’ unlawful denial of coverage. In December of 2010, Premix, Imperial and this carrier resolved their dispute, with the carrier paying a settlement to Premix and Imperial. As part of the settlement, there is no longer additional coverage under the disputed policy. During the first quarter of 2011, we resolved a dispute with another carrier regarding primary-layer insurance coverage, which also resulted in this carrier paying a settlement to Premix and Imperial. Notwithstanding the foregoing, we believe, when considering that Imperial and Premix have substantial umbrella/excess coverage for these claims, that we have more than adequate insurance coverage for these asbestos claims and such policies are not subject to self-insured retention (“SIR”).Concern

~~EIFS~~Our ~~Litigation~~independent registered public accounting firm issued its report dated March 29, 2012 in connection with the audit of our financial statements as of and for the year ended December 31, 2011 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements as of and for the year ended December 31, 2011 have been prepared under the assumption that we will continue as a going concern. We have taken and are taking several steps that management hopes will be sufficient to allow the Company to continue as a going concern as described in Note 2 to the accompanying consolidated financial statements appearing elsewhere in this Form 10-K. There can be no assurance that such actions will be effective. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~Our~~Critical ~~subsidiary~~Accounting DFH (f/k/a Acrocrete), together with non-affiliated parties, is a defendant in one lawsuit in Florida. This case was brought by a condominium association claiming moisture intrusion damage as a result of the use of exterior insulation finish wall systems (“EIFS”). Our insurance carriers are providing a defense and have accepted coverage under a reservation of rights in this case. This claim is not subject to any SIR.Policies

The ~~allegations~~discussion and analysis of ~~defects~~our inresults ~~EIFS~~of operations, financial condition and liquidity are ~~not~~based ~~restricted~~upon toour ~~DFH~~consolidated ~~products~~financial ~~used~~statements, which have been prepared in anaccordance ~~EIFS~~with ~~application,~~accounting ~~but~~principles ~~rather~~generally ~~are~~accepted anin ~~industry-wide~~the ~~issue~~United States of America. The ~~alleged~~preparation ~~failure~~ of ~~these~~such ~~products~~consolidated financial statements requires management to ~~perform~~make ~~has~~estimates ~~generally~~and ~~been~~assumptions. ~~linked~~As towith ~~improper~~all ~~application~~estimates and ~~the~~assumptions, ~~failure~~they are subject to an inherent degree of ~~adjacent~~uncertainty. ~~building~~Management ~~materials~~bases ~~such~~these asestimates ~~windows~~on historical estimates and assumptions on historical results and known trends, ~~roof~~as ~~flashing~~well as, ~~decking~~forecasts as to how these might change in the future. Actual results could differ from these estimates and assumptions. We believe the ~~lack~~following critical accounting policies have a higher degree of ~~caulking~~judgment and complexity.

As insurance markets for moisture intrusion type coverage have all but disappeared, we were forced on March 15, 2004 to renew our existing products liability coverage with an exclusion for EIFS exposure. The Company has not manufactured EIFS products since December 2005.14

~~Non-EIFS~~Revenue ~~Stucco~~Recognition ~~Litigation~~and Allowance for Doubtful Accounts

~~Our~~We ~~subsidiary~~recognize ~~Premix~~revenue iswhen ~~a defendant in one lawsuit brought by a subcontractor who applied Premix’s stucco product to a condominium in Bay County, Florida. The condominium association brought suit against~~ the ~~general~~following ~~contractor~~four ~~(who~~criteria inare turn sued the subcontractor that is suing Premix) alleging certain construction defects to the property. This claim is subject to a $10,000 non-EIFS SIR, and the Company’s insurance carrier has confirmed that it will assume the defense of the claim, under a reservation of rights, once the $10,000 SIR has been exhausted. met:

We· ~~are~~Persuasive ~~aggressively~~evidence ~~defending all~~ of ~~the~~an ~~lawsuits~~arrangement and claims described above. While we do not believe the ultimate resolution of these aforementioned claims will have a material adverse effect on our financial position, given the uncertainty and unpredictability of litigation, there can be no assurance that the ultimate resolution of such litigation would not have a material adverse effect. exists;

~~Item~~· 4.Delivery has occurred or services have been rendered;

~~Removed~~· ~~and~~Seller’s ~~Reserved~~price to the buyer is fixed or determinable; and

12· Collectability is reasonably assured.

~~PART~~We IIgenerally recognize revenue, net of discounts and allowances, at the point of sale or upon delivery to the customer’s site. For goods shipped by third party carriers, we recognize revenue upon shipment since the terms are FOB shipping point.

~~Item~~Provisions 5for the estimated allowance for doubtful accounts are recorded in selling, general and administrative expense at the end of each reporting period. The allowance for doubtful accounts is based on an analysis of the aging of accounts receivables, collateral, if any, securing the amount due, the subsequent collections of the receivables, the current financial condition of the customers with aged receivables, including credit terms offered (most invoices are due within 30 days of shipment) payment history, purchase history, direct communication, and other factors that include changes in (1) general business conditions, such as competitive conditions in the market, and (2) the economic condition of the residential and commercial construction industry. The aging of accounts receivable is based on the number of days an invoice is past due and invoices in the same past due ranges are aggregated. At the end of each fiscal quarter, we identify all customers with significant invoices more than 60 days past due. For each customer, we then evaluate each of the factors noted above to arrive at a specific reserve. We then consider historical bad debt rates to arrive at a reserve for receivables not over 60 days past due. The aggregate of the specific reserve for over 60 days past due receivables and the reserve for the receivables not yet over 60 days past due represents our allowance for doubtful accounts as of the end of the reporting period. Additionally, at the end of each reporting period, we analyze the historical trend of various ratios including charges to bad debt expense compared to net sales, bad debt write-offs to net sales and the balance of the allowance for doubtful accounts to net sales to determine whether the calculated allowance appears adequate. The primary assumption we use for determining our allowance for doubtful accounts is the historical rate of bad debt write offs as a percentage of sales.

~~Market~~Judgment ~~for~~is required in evaluating all of these factors and in determining the ~~Registrant’s~~appropriate ~~Common~~amounts ~~Equity~~to record in the allowance for doubtful accounts. Additionally, ~~Related~~such ~~Stockholder~~judgments ~~Matters~~may prove to be incorrect in the future. We believe that our procedures for estimating such amounts are reasonable and ~~Issuer~~historically ~~Purchases~~have not resulted in material adjustments in subsequent periods. However, if actual market conditions are less favorable than those assumed by management, or if the financial condition of ~~Equity~~customers ~~Securities~~were to unexpectedly deteriorate, resulting in an impairment of their ability to make payments, additional provisions may be required. As a result, our financial condition, results of operations and cash flow could be adversely affected.

~~Our~~As ~~common~~discussed ~~stock~~in ~~was~~Notes ~~traded~~3 onand 5 to the ~~NASDAQ~~consolidated ~~Capital~~financial ~~Market~~statements, ~~under~~we transferred all assets of Just-Rite to the ~~symbol~~Assignee, ~~“IPII”~~including ~~until~~the ~~January 27~~Just-Rite accounts receivable, ~~2010~~and discontinued operations of Just-Rite pursuant to the Assignment. Since ~~that~~the date of the Assignment, the Assignee has assisted our ~~common~~management ~~stock~~in ~~has~~determining ~~been~~the ~~quoted~~amount onof the ~~Over-~~allowance for doubtful accounts for the~~-Counter~~ ~~Bulletin~~accounts ~~Board.~~receivables ~~The~~related ~~following~~to ~~table~~the ~~sets~~former ~~forth~~customers of Just-Rite based on the ~~high~~Assignee’s ~~and~~experience ~~low~~collecting ~~sales~~receivables ~~price~~from ~~per~~liquidating ~~share~~assets ~~for~~of ~~the~~closed ~~common~~businesses ~~stock~~and ~~for~~collection ~~each~~efforts ~~quarter~~of the Just-Rite accounts during ~~2010~~the ~~and~~period ~~2009~~of the Assignment. ~~Such~~As ~~quotations~~further ~~represent~~discussed ~~prices~~in ~~between~~Note ~~dealers~~5 ~~and~~of doNotes ~~not~~to ~~include~~Consolidated ~~retail~~Financial ~~mark-up~~Statements, ~~mark-down,~~we orwrote ~~commission~~off the remaining accounts receivable against the allowance for doubtful accounts balance as of December 31, ~~and~~2011 ~~may~~since ~~not~~the ~~necessarily~~collectability ~~represent~~of ~~actual~~these ~~transactions.~~balances cannot be reasonably assured.

Fiscal 2010	High		Low
First Quarter	$	0.96	$	0.25
Second Quarter		0.59		0.27
Third Quarter		0.55		0.21
Fourth Quarter		0.49		0.21

Based on the above, Just-Rite wrote off the remaining accounts receivable with a gross balance of approximately $2,406,000 against the allowance for doubtful accounts balance as of December 31, 2011, resulting in no gain or loss.

Fiscal 2009	High		Low
First Quarter	$	0.86	$	0.21
Second Quarter		1.20		0.36
Third Quarter		3.69		0.35
Fourth Quarter		1.49		0.60

WeInventory have not paid any cash dividends on our Common Stock since 1980. We intend to retain earnings, if any, to finance the expansion of our business and do not anticipate paying any dividends in the foreseeable future. On March 17, 2011, the Common Stock was held by 1,452 stockholders of record.Valuation

AsInventories are valued at the lower of ~~March 17,~~cost ~~2011~~or market using the first-in, first-out cost basis. We record a provision to reserve for obsolete and slow moving inventory so that our inventory is reported at estimated net realizable value. The provision is determined by identifying obsolete and slow moving inventory by comparing quantity on hand to historical and projected sales activity. This information is aggregated and the ~~closing~~estimated ~~price~~provision is determined. Judgment is required in evaluating these factors and in determining the appropriate amounts to record in the provision because management must use judgment to estimate when the inventory will be sold and the quantities and prices at which the inventory will be sold in the normal course of business. Accelerating the ~~Common~~disposal ~~Stock~~process ~~quoted~~or onincorrect estimates of future sales potential may cause the ~~Over-~~actual results to differ from the~~-Counter~~ ~~Bulletin~~estimates ~~Board~~at ~~was~~the $0time such inventory is disposed or sold.72 ~~per~~We ~~share~~believe that our procedures for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods. However, if actual market conditions are less favorable than those assumed by management, additional inventory write-downs may be required. As a result, our financial condition, results of operations and cash flow could be adversely affected.

~~Purchases of Equity Securities~~Litigation

WeOn ~~did~~an ~~not~~ongoing ~~purchase~~basis, we assess the potential liabilities related to any ~~shares~~lawsuits or claims brought against us. While it is typically very difficult to determine the timing and ultimate outcome of such actions, we use our ~~common~~best ~~stock~~judgment ~~during~~to determine if it is probable that we will incur an expense related to the ~~year~~settlement ~~ended~~or ~~December 31~~final adjudication of such matters and whether a reasonable estimation of such probable loss, ~~2010~~if any, can be made. We accrue legal fees and a loss contingency when we believe a loss is probable and the amount of loss and legal fees can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that have been previously made.

~~Securities~~Asset ~~Authorized for Issuance Under Equity Compensation Plans~~Impairment

~~The~~Whenever ~~following~~events ~~table~~or ~~includes~~changes ~~information~~in ascircumstance indicate that the carrying amount of ~~December 31~~our assets may not be fully recoverable, ~~2010~~we ~~about~~do ~~certain~~an ~~plans~~initial ~~which~~analysis ~~provide~~of ~~for~~long-lived assets whereby we estimate the ~~issuance~~undiscounted future cash flow of ~~common~~these ~~stock~~assets. inIf ~~connection~~such ~~with~~analysis indicates that a possible impairment may exist, we are required to then estimate the ~~exercise~~fair value of ~~stock~~the ~~options~~asset, principally determined either by third party appraisals, sales price negotiations or estimated discounted future cash flows, which includes estimating the timing of the future cash flows, discount rates and ~~other~~reflecting ~~share-based~~varying ~~awards~~degrees of perceived risk.

Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted Average Exercise Price of Outstanding Options

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

(a)

(b)

(c)

Equity Compensation plans approved by security holders:

2006 Stock Award and Incentive Plan

112,125

$0.52

105,241

Equity compensation plans not approved by security holders

––

Total

112,125

$0.52

105,241

The determination of fair value includes numerous uncertainties. We believe that we have made reasonable estimates and judgments in determining whether our long-lived assets have been impaired. However, if there is a material change in the assumptions used in our determination of fair values or if there is a material change in the conditions or circumstances influencing fair value, we could be required to recognize a material non-cash impairment charge.

~~Item~~As 6the Assignment process has not been completed, it is possible, although not likely, that the ultimate proceeds from the disposition of the assets held for sale by assignee, and the settlement of liabilities related to assets held for sale by assignee, could be at amounts that are materially different than the carrying amounts reflected in the accompanying consolidated financial statements.

~~Selected~~Income ~~Financial Data~~Taxes

~~Not~~We ~~Applicable~~account for income taxes using the liability method. This method requires that the deferred tax consequences of temporary differences between the amounts recorded in our Consolidated Financial Statements and the amounts included in our federal and state income tax returns be recognized in the balance sheet. Estimates are often required with respect to, among other things, the appropriate state income tax rates to use in the various states in which we and our subsidiaries are required to file, the potential utilization of any operating and capital loss carry-forwards for both federal and state income tax purposes and valuation allowances required, if any, for tax assets that may not be realizable in the future. We believe that it is more likely than not that the amounts recorded as deferred income tax assets will not be recoverable through future taxable income generated by us. As a result, the Company recorded a 100% valuation allowance against our net deferred tax assets as of December 31, 2011. We believe the procedures and estimates used in our accounting for income taxes are reasonable and in accordance with established tax law.

1316

~~Item~~Results 7.of Operations

~~Management’s~~Year ~~Discussion~~Ended ~~and~~December ~~Analysis~~31, of2011 ~~Financial~~compared ~~Condition~~to ~~and Results of Operations~~2010

~~The~~Net ~~following~~sales ~~discussion~~decreased ofapproximately ~~the~~$981,000, ~~Company’s~~or ~~financial~~11.9%, ~~condition~~during ~~should~~2011 becompared ~~read~~to in2010. ~~conjunction~~The ~~with~~decrease ~~our~~in ~~consolidated~~net ~~financial~~sales ~~statements~~was ~~and~~primarily ~~notes~~due to the ~~consolidated~~continued ~~financial~~slowdown ~~statements appearing elsewhere~~ in ~~this~~the ~~Form 10-K.~~residential ~~This~~and ~~discussion~~commercial ~~contains~~construction ~~forward-looking~~markets ~~statements~~in ~~that~~our ~~involve~~principal ~~significant~~trade ~~risks~~areas and ~~uncertainties.~~reduced Asdemand afor ~~result~~our ofproducts. ~~many~~We ~~factors,~~believe ~~such~~many asother ~~those~~companies ~~set forth under “Risk Factors” and elsewhere~~ in ~~this Form 10-K,~~ our ~~actual~~industry ~~results~~have ~~may~~experienced ~~differ~~similar ~~materially~~declines ~~from those anticipated~~ in ~~these forward-looking statements~~sales.

~~Company~~Gross ~~Overview~~margin as a percentage of net sales was approximately 26.8% for 2011 compared to 31.5% for 2010. The decrease in gross margin is primarily related to an increase in material costs for certain products, and higher unabsorbed overhead resulting from the decline in sales during 2011. We expect to experience continued lower levels of demand for our products and intense competitive conditions arising from the continuing decline in construction activity and overall state of the economy. Our competitors, having excess capacity, may cause pressure on our gross margins for the foreseeable future.

WeSelling, ~~are~~general ~~engaged~~and inadministrative ~~the~~(“SG&A”) ~~manufacture~~expenses ~~and~~decreased ~~distribution~~$173,000 ofin ~~building~~2011 ~~materials~~compared to ~~building~~2010. ~~materials~~The ~~dealers~~decrease ~~and~~was primarily attributable to a ~~lesser~~decrease ~~extent~~of $119,000 ~~contractors~~in professional fees including legal fees and ~~sub-contractors~~audit related charges, ~~located~~a ~~primarily~~decrease in ~~the~~depreciation ~~Southeastern~~expense ~~United~~of ~~States~~$44,000 ~~principally~~resulting ~~Florida.~~from Wecertain ~~have~~property ~~two~~and ~~facilities~~equipment ~~through~~becoming ~~which~~fully weamortized, ~~market~~and ~~our~~a ~~products.~~decrease ~~Our~~of ~~business~~$84,000 isin ~~driven~~delivery ~~primarily~~and fuel related charges resulting from a reduction in net sales, offset by ~~the~~an ~~level~~increase of ~~residential~~$51,000 in sales promotional and ~~commercial~~certain ~~construction~~other ~~activity~~sales inrelated ~~our~~costs ~~trade~~relating ~~markets,~~to ~~particularly~~increased inefforts ~~the~~to ~~state~~promote ofproducts ~~Florida~~and expand geographical reach. ~~The~~There ~~level~~is ofno ~~construction~~assurance ~~activity~~that isexpenditures ~~dependent~~made onto ~~many~~promote ~~factors~~products ~~including,~~and ~~but~~expand ~~not~~geographical ~~limited~~reach ~~to,~~will ~~the~~result ~~general~~in ~~state~~additional net sales. SG&A expenses as a percent of ~~the~~net ~~economy,~~sales ~~credit~~was ~~markets,~~46.9% ~~population~~in ~~growth,~~2011 ~~job~~compared ~~growth,~~to ~~inventory~~43.4% in 2010. The increased SG&A expenses as a percentage of ~~available~~net ~~residential~~sales ~~and~~in ~~commercial~~2011 ~~units,~~versus ~~government~~2010 ~~growth~~are ~~policies~~due ~~and~~primarily ~~construction~~to ~~funding~~a reduction in net sales.

WeDuring ~~have~~the ~~experienced~~first ~~four~~quarter ~~consecutive years~~ of ~~operating~~2010, ~~losses~~we ~~and~~received ~~reductions~~a indemand ~~sales~~notice ~~when~~from ~~compared~~a tolender ~~prior years. Applications~~ for ~~building~~payment ~~permits~~of ~~for~~certain ~~construction~~obligations, ofresulting ~~new~~in ~~residential~~an ~~units~~additional ~~are~~$42,000 ~~considered~~of aloss ~~strong~~contingency ~~indicator~~expense ~~for~~during ~~future~~the ~~construction~~quarter, ~~activity.~~relating ~~According~~ to ~~the~~Imperial’s ~~U.S.~~guarantees ~~Census~~of ~~Bureau,~~certain ~~building~~Just-Rite ~~permits~~debt ~~for~~(see ~~the~~Note ~~construction~~16(b) of ~~new~~Notes ~~residential~~to ~~units~~Consolidated inFinancial ~~Florida increased 10~~Statements).2% ~~for~~During the ~~twelve~~second ~~months~~quarter ~~ended~~of ~~December 31~~2010, ~~2010~~we asnegotiated ~~compared~~a toreduced settlement with the same ~~period in 2009~~lender, ~~after~~resulting ~~decreasing 41.3%~~ in ~~2009~~a asreduction ~~compared~~of to$74,000, ~~2008.~~or ~~This is~~ a ~~first~~net ~~indication~~reduction ~~that~~of ~~construction~~$32,000 ~~activity~~for in2010, ~~the residential market may begin to improve~~ in ~~Florida from~~ the ~~existing~~loss ~~low~~contingency. ~~levels~~We ofdid ~~construction.~~not ~~Florida~~record isany ~~our~~additions ~~largest~~or ~~market,~~reductions ~~representing~~in the ~~majority~~loss ofcontingency ~~our~~during ~~consolidated net sales in 2010~~2011.

WeInterest ~~operate~~expense inamounted ~~the~~to ~~residential~~$181,000 and ~~commercial~~$141,000 ~~construction~~during ~~industry~~2011 ~~which~~and is2010, ~~down sharply over the last three years~~respectively. InInterest ~~addition,~~expense ~~the~~primarily ~~current~~consisted ~~credit~~of ~~condition~~rental payments and ~~mortgage~~carrying ~~industry~~value inadjustments to the ~~United~~secured ~~States~~financing isliability related ~~expected~~ to ~~further~~a ~~negatively~~sale-leaseback ~~impact~~transaction ~~the~~recorded ~~condition~~in of2008 ~~our industry~~ for anour ~~extended~~Winter ~~period~~Springs, ofFlorida ~~time~~manufacturing facility. Interest Asexpense arelated ~~result,~~to our ~~current~~Winter ~~business~~Springs, ~~environment~~Florida ismanufacturing ~~depressed~~facility ~~and~~increased weto ~~expect~~$171,000 ~~general~~in ~~construction~~2011 ~~activity~~compared to ~~continue~~$137,000 toin ~~be slow for the foreseeable future~~2010. The ~~depth~~increase ~~and~~in ~~duration~~2011 ofwas ~~the~~a ~~decline~~result ~~cannot~~of bea ~~predicted.~~contractual Aadjustment ~~continued~~related ~~depressed~~to ~~residential~~a ~~and~~repurchase ~~commercial~~option ~~construction~~on ~~market~~the ~~has~~facility and is ~~expected~~tied to ~~continue~~changes toin ~~have~~the anCPI ~~adverse~~index ~~effect~~in onthe ~~our~~current ~~liquidity,~~period ~~capital~~as ~~resources~~compared ~~and~~to ~~results~~the ofCPI ~~operations~~index in August 2008.

~~Our~~During ~~Ability~~the first quarter of 2011, we recognized a $325,000 gain on settlement of litigation against a former insurance carrier relating to ~~Continue~~policy ascoverage issues in prior policy years. During the fourth quarter of 2010, we recognized a ~~Going~~$500,000 ~~Concern~~gain on settlement of litigation against another former insurance carrier relating to policy coverage issues in prior policy years. See Note 16(a) of Notes to Consolidated Financial Statements for further discussion.

~~Our~~As ~~independent~~a ~~registered~~result ~~public~~of ~~accounting~~the ~~firm~~above ~~issued its report dated March 28~~factors, ~~2011~~we inhad ~~connection~~a ~~with~~loss ~~the~~from ~~audit~~continuing ofoperations ~~our financial statements as~~ of ~~December 31~~$1,310,000, ~~2010~~or ~~that~~$0.51 ~~included~~per andiluted ~~explanatory~~share, ~~paragraph~~in ~~describing~~2011 ~~the~~compared ~~existence of conditions that raise substantial doubt about our ability~~ to ~~continue as~~ a ~~going~~loss ~~concern.~~from ~~Our~~continuing ~~consolidated~~operations ~~financial statements as~~ of ~~December 31~~$596,000, ~~2010~~or ~~have been prepared under the assumption that we will continue as a going concern~~$0.23 Weper ~~have~~diluted ~~taken~~share, ~~and are taking several steps that management hopes will be sufficient to allow the Company to continue as a going concern as described~~ in ~~Note 2 to the accompanying consolidated financial statements appearing elsewhere in this Form 10-K~~2010. ~~There can be no assurance that such actions will be effective. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.~~

~~Critical~~Discontinued ~~Accounting Policies~~Operations

~~The~~We ~~discussion~~terminated ~~and~~the ~~analysis~~distribution ofoperations ~~our results~~ of ~~operations,~~Just-Rite ~~financial condition~~ and ~~liquidity~~all ~~are~~of ~~based~~its ~~upon~~assets ~~our~~were ~~consolidated~~divested ~~financial~~on ~~statements~~June 11, ~~which~~2009 ~~have~~through ~~been~~the ~~prepared~~Assignment inas ~~accordance~~described ~~with~~in ~~accounting~~Note ~~principles~~3 ~~generally~~of ~~accepted~~Notes into the ~~United~~Consolidated ~~States~~Financial ~~of America~~Statements. The ~~preparation~~Just-Rite ofdistribution ~~such~~operations ~~consolidated~~are ~~financial~~accounted ~~statements~~for ~~requires~~as ~~management~~discontinued tooperations ~~make~~in ~~estimates~~2011 and ~~assumptions~~2010. Just-Rite Asdid ~~with~~not ~~all~~have ~~estimates~~any revenues during 2011 and ~~assumptions~~2010. We recorded income from discontinued operations of $4,063,000, ~~they~~or ~~are~~$1.59 ~~subject~~per diluted share, in 2011, compared to ana ~~inherent~~loss ~~degree~~from discontinued operations of ~~uncertainty~~$638,000, or $0.25 ~~Management~~per ~~bases~~diluted ~~these~~share, ~~estimates~~in on2010. The ~~historical~~income ~~estimates~~from ~~and~~discontinued ~~assumptions~~operations onrecognized ~~historical~~in ~~results~~2011 ~~and~~resulted ~~known~~from ~~trends,~~a asnon-cash ~~well~~net asgain of $4,378,000 ~~forecasts~~recorded asduring tothe ~~how~~fourth ~~these~~quarter ~~might~~of ~~change~~2011 inrelating ~~the~~to ~~future.~~adjustments ~~Actual~~to ~~results~~reduce ~~could~~the ~~differ~~carrying ~~from~~value ~~these~~of ~~estimates~~certain assets and ~~assumptions.~~liabilities, Weas ~~believe~~discussed ~~the~~below, ~~following~~offset ~~critical~~by ~~accounting~~a ~~policies~~loss ~~have~~of a$315,000 ~~higher~~incurred ~~degree~~during ofthe ~~judgment~~year ~~and~~related ~~complexity~~to the Assignee’s efforts to dispose of assets.

~~Revenue Recognition and Allowance for Doubtful Accounts~~17

WeAs ~~recognize~~further ~~revenue~~described ~~when~~in Note 5 of Notes to the ~~following~~Consolidated ~~four~~Financial ~~criteria~~Statements, ~~are~~during ~~met~~the fourth quarter of 2011, Just-Rite recorded adjustments, pursuant to the provisions of FASB ASC 450, Contingencies, to reduce the carrying value of certain assets to their estimated realizable value, and certain liabilities to their estimated amounts payable, resulting in a net non-cash gain of $4,378,000. The adjustments resulted from management’s assessment during the fourth quarter of 2011, based on discussions with the Assignee and evaluation of other relevant facts and circumstances, that there is little, if any, likelihood that the Assignee will realize any further significant value from the disposal of these certain assets, and there is little likelihood, if any, of significant monies being available after liquidation of assets and finalization of the Assignment process, for Just-Rite to pay amounts due under these certain liabilities. The factors leading management to conclude during the fourth quarter of 2011 that these certain assets and liabilities required adjustments to carrying value as of December 31, 2011 consisted of the following:

·● Just-Rite had no cash as of December 31, 2011.

~~Persuasive~~● ~~evidence~~During the third and fourth quarters of 2011, the Assignee collected an ~~arrangement~~insignificant ~~exists;~~amount of accounts receivable and has informed the Company that no further significant collections are expected.

14● The real property in Jacksonville, Florida, with a carrying value of $480,000, continues to have environmental issues that have precluded it from being sold, which has also prevented the Assignee from closing out the Assignment. The ultimate resolution of the environmental issues cannot be determined as of December 31, 2011. There is a mortgage payable on the property of $247,000 to be repaid upon the ultimate sale of the property. In March 2012, Just-Rite leased the property to an unaffiliated third party for a one year period. Annual rent for the property was $36,000, payable in equal monthly installments. The tenant was given a $6,000 rent credit to cover the cost of certain repairs to the improvements on the property. The tenant also has a right of first refusal to purchase the property for the purchase price of $650,000, which right may only be exercised within thirty days receipt of a No Further Action Letter from the State of Florida Department of Environmental Protection pertaining to the existing environmental issues on the property. If the Tenant does not exercise the Right of First Refusal, the Tenant would be required to vacate the property within three months thereafter; provided, however, if there is more than three months remaining on the lease, the tenant would be permitted to remain for the duration of the lease term.

·● The only future funds expected to be received by Just-Rite relate to the ultimate sale, if any, of the Jacksonville, Florida real property and real property located in Mississippi with a carrying value of $66,000. Upon realizing funds, if any, from the disposition of these assets, it is anticipated there will be little, if any, remaining funds for payment to secured and unsecured creditors after payment of the Jacksonville, Florida real property mortgage, except as noted below.

~~Delivery~~Based ~~has~~on ~~occurred~~the factors described above, Just-Rite wrote off the remaining accounts receivable with a gross balance of approximately $2,406,000 against the allowance for doubtful accounts balance as of December 31, 2011, resulting in no gain or ~~services~~loss. ~~have~~Certain ~~been~~property ~~rendered;~~and equipment with a net book value of $396,000 was adjusted to a zero carrying value since there are underlying unpaid equipment notes payable related to the property and equipment, and thus no value is expected to be recovered. The adjustments to asset carrying values resulted in a non-cash loss of $396,000 recorded during the fourth quarter of 2011.

·Total liabilities related to assets held for sale included $3,603,000 of unsecured accounts payables and accrued expenses, $963,000 of noncancellable lease commitments under operating leases, and $396,000 of secured debt related to certain property and equipment that has been written off as discussed above. The aggregate amount of these liabilities, amounting to $4,962,000, was adjusted to $188,000 as of December 31, 2011, representing the estimated excess funds that will be available to such creditors after liquidation of assets and less payment of the mortgage payable. Of the $188,000 adjusted liability amount, $128,000 represents unpaid costs incurred after the Assignment date, resulting in a remaining recorded liability amount of $60,000 estimated as available to creditors for pre-assignment date liabilities. This amount may be further reduced as additional costs are incurred to formally conclude the Assignment process. These adjustments to liability amounts resulted in a non-cash gain of $4,774,000 recorded during the fourth quarter of 2011.

~~Seller’s~~The ~~price~~above liabilities exclude $147,000 pertaining to charges incurred by Imperial after the ~~buyer~~Assignment isdate ~~fixed~~on orbehalf ~~determinable;~~of ~~and~~the Assignee. The amounts payable by Just-Rite to Imperial are eliminated in consolidation.

·The lack of liquidity and profitability for the foreseeable future of these operations due to the downturn in the residential and commercial construction industry was the main reason for termination of these operations.

~~Collectability~~Liquidity isand ~~reasonably~~Capital ~~assured.~~Resources

WeAt ~~generally~~December ~~recognize~~31, ~~revenue~~2011, ~~net~~we had working capital of ~~discounts~~$681,000, ~~and~~compared ~~allowances~~to a working capital deficit of $2,560,000 at December 31, 2010. The working capital deficit in 2010 included a deficit amount of $4,914,000 representing the ~~point~~current assets and liabilities of ~~sale~~Just-Rite. During orthe ~~upon~~fourth ~~delivery~~quarter of 2011, working capital increased by $4,774,000 relating to the ~~customer’s~~non-cash ~~site~~adjustments to reduce the carrying values of certain assets and liabilities of Just-Rite. Excluding ~~For~~the ~~goods~~current ~~shipped~~assets byand ~~third~~current ~~party~~liabilities ~~carriers~~of Just-Rite, we ~~recognize~~had ~~revenue~~working ~~upon~~capital ~~shipment~~of ~~since~~$681,000 ~~the~~and ~~terms~~$2,354,000 ~~are~~as ~~FOB~~of ~~shipping~~December ~~point~~31, 2011 and December 31, 2010, respectively.

Provisions for the estimated allowance for doubtful accounts are recorded in selling, general and administrative expense at the end of each reporting period. The allowance for doubtful accounts is based on an analysis of the aging of accounts receivables, collateral, if any, securing the amount due, the subsequent collections of the receivables, the current financial condition of the customers with aged receivables, including credit terms offered (most invoices are due within 30 days of shipment) payment history, purchase history, direct communication, and other factors that include changes in (1) general business conditions, such as competitive conditions in the market, and (2) the economic condition of the residential and commercial construction industry. The aging of accounts receivable is based on the number of days an invoice is past due and invoices in the same past due ranges are aggregated. At the end of each fiscal quarter, we identify all customers with significant invoices more than 60 days past due. For each customer, we then evaluate each of the factors noted above to arrive at a specific reserve. We then consider historical bad debt rates to arrive at a reserve for receivables not over 60 days past due. The aggregate of the specific reserve for over 60 days past due receivables and the reserve for the receivables not yet over 60 days past due represents our allowance for doubtful accounts as of the end of the reporting period. Additionally, at the end of each reporting period, we analyze the historical trend of various ratios including charges to bad debt expense compared to net sales, bad debt write-offs to net sales and the balance of the allowance for doubtful accounts to net sales to determine whether the calculated allowance appears adequate. The primary assumption we use for determining our allowance for doubtful accounts is the historical rate of bad debt write offs as a percentage of sales. 18

~~Judgment~~Net iscash ~~required~~used in ~~evaluating~~operating ~~all~~activities ofwas ~~these~~$580,000 ~~factors~~during ~~and~~2011, incompared ~~determining the appropriate amounts~~ to ~~record~~net incash ~~the~~provided ~~allowance~~by ~~for~~operations ~~doubtful~~of ~~accounts. Additionally~~$814,000 ~~such~~during ~~judgments may prove to be incorrect in the future~~2010. WeDuring ~~believe~~2010, ~~that~~we ~~our~~received ~~procedures~~cash ~~for~~of ~~estimating~~$1,610,000 ~~such~~from ~~amounts~~collection ~~are~~of ~~reasonable~~an ~~and~~income ~~historically~~tax ~~have~~refund. ~~not~~During ~~resulted~~2011, inwe ~~material~~collected ~~adjustments~~$825,000 in ~~subsequent~~cash ~~periods.~~from ~~However,~~certain iflegal ~~actual~~settlements ~~market~~(of ~~conditions~~which ~~are less favorable than those assumed by management~~$500,000 orwas ifrecorded ~~the~~as ~~financial~~an ~~condition~~other ofreceivable ~~customers~~and ~~were~~included ~~to unexpectedly deteriorate, resulting~~ in another ~~impairment~~current ofassets ~~their~~at ~~ability~~December ~~to make payments~~31, ~~additional~~2010) ~~provisions~~as ~~may~~further bedescribed ~~required.~~in AsNote 16(a) ~~result, our financial condition, results~~ of ~~operations~~Notes ~~and~~to ~~cash~~Consolidated ~~flow~~Financial ~~could be adversely affected~~Statements.

AsNet ~~discussed~~cash used in ~~Notes~~investing 3activities ~~and~~was 5$133,000 toduring ~~the consolidated financial statements~~2011, wecompared ~~transferred all assets of Just-Rite~~ to ~~the~~net ~~Assignee,~~cash ~~including~~provided ~~the~~by ~~Just-Rite~~investing ~~accounts~~activities ~~receivable, and discontinued operations~~ of ~~Just-Rite pursuant to the Assignment. Accordingly~~$435,000 the Assignee assisted our management in determining the amount of the allowance for doubtful accounts for the accounts receivables related to the former customers of Just-Rite based on the Assignee’s experience collecting receivables from liquidating assets of closed businesses and collection efforts of the Just-Rite accounts during ~~the period of the Assignment~~2010. ~~The~~ Just-Rite ~~accounts~~received ~~receivable,~~proceeds ~~net~~ of ~~allowance for doubtful accounts~~$554,000 ~~are~~from ~~included~~the ~~in “current assets held for~~ sale ~~by assignee” in our accompanying consolidated balance sheets. As~~ of ~~December 31,~~real ~~2010,~~property ~~the remaining balance~~ in ~~accounts~~Tampa, ~~receivable~~Florida ~~has~~during ~~been fully reserved due to substantial uncertainty regarding collectability~~2010.

~~Inventory~~Net ~~Valuation~~cash used in financing activities was $30,000 and $393,000 during 2011 and 2010, respectively. Repayments of long-term debt were $413,000 during 2010 (including Just-Rite mortgage note payments by the Assignee related to the Tampa real property sale) compared to $30,000 during 2011. We had $2,810,000 of borrowings and $2,890,000 of repayments under our Line of Credit during 2010. On April 30, 2010, we fully repaid the outstanding principal balance due under the Line of Credit, and terminated the Line of Credit on May 11, 2010. We no longer have a line of credit.

~~Inventories~~During ~~are~~2011 ~~valued~~and at2010, ~~the~~we ~~lower~~entered ofinto ~~cost or market using the first-in~~$127,000 ~~first-out cost basis. We record a provision to reserve for obsolete~~ and ~~slow~~$30,000 ~~moving~~of ~~inventory~~capital solease ~~that~~obligations ~~our inventory is reported at estimated net realizable value. The provision is determined by identifying obsolete~~ and ~~slow~~notes ~~moving~~payable ~~inventory~~for ~~by comparing quantity on hand to historical and projected sales activity. This information is aggregated and~~ the ~~estimated~~acquisition ~~provision~~of isproperty, ~~determined.~~plant ~~Judgment is required in evaluating these factors~~ and inequipment, ~~determining~~respectively, ~~the appropriate amounts to record in the provision because management must use judgment to estimate when the inventory will be sold and the quantities and prices at~~ which ~~the~~are ~~inventory~~not ~~will~~included beas ~~sold~~uses ~~in the normal course~~ of ~~business.~~cash ~~Accelerating~~in ~~the~~investing ~~disposal~~activities, ~~process~~ or ~~incorrect~~sources ~~estimates~~ of ~~future~~cash ~~sales~~in ~~potential~~financing ~~may~~activities, ~~cause~~but ~~the actual results to differ from the estimates at the time such inventory is disposed or sold. We believe that our procedures for estimating such amounts~~ are ~~reasonable~~reported ~~and~~as ~~historically~~a ~~have~~supplemental ~~not~~disclosure ~~resulted~~ in ~~material~~the ~~adjustments~~accompanying inConsolidated ~~subsequent~~Statements ~~periods.~~of ~~However,~~Cash ~~if actual~~ Flows.

15Future Commitments and Funding Sources

~~market~~Historically, ~~conditions~~our ~~are~~primary ~~less~~sources ~~favorable~~of ~~than~~cash ~~those~~were ~~assumed~~proceeds byfrom ~~management,~~sales ~~additional~~to ~~inventory~~customers ~~write-downs~~and ~~may~~a beline ~~required~~of credit. AsOn aApril ~~result~~30, ~~our~~2010, ~~financial~~we ~~condition,~~fully ~~results~~repaid the remaining outstanding principal balance due under the line of ~~operations~~credit, and ~~cash~~terminated ~~flow~~the ~~could~~agreement beeffective ~~adversely~~May ~~affected~~11, 2010 (see Note 4 of Notes to Consolidated Financial Statements). We do not currently have a line of credit or other financing arrangement with a lender.

~~Litigation~~As further discussed in Note 5 of Notes to Consolidated Financial Statements, during the fourth quarter of 2011 Just-Rite recorded adjustments, pursuant to the provisions of FASB ASC 450,Contingencies, to reduce the carrying value of certain assets and liabilities to their estimated realizable value, resulting in a net non-cash gain of $4,378,000. The adjustments resulted from management’s assessment during the fourth quarter of 2011, based on discussions with the Assignee and evaluation of other relevant facts and circumstances, that there is little, if any, likelihood that the Assignee will realize any further value from the disposal of these certain assets, and there is little likelihood, if any, of any monies being available after liquidation of assets and finalization of the Assignment process, for Just-Rite to pay any amounts due under these certain liabilities, except as indicated. At December 31, 2011, the carrying value of “Total assets held for sale by assignee” prior to the carrying value adjustments was $978,000. Just-Rite recorded adjustments to reduce the carrying value to $582,000, resulting in a non-cash loss of $396,000. At December 31, 2011, the carrying value of “Total liabilities related to assets held for sale by assignee” prior to carrying value adjustments was $5,209,000. Just-Rite recorded adjustments to reduce the carrying value to $435,000, resulting in a non-cash gain $4,774,000. We did not receive any cash associated with the adjustments resulting in the net gain of $4,378,000 recorded in the Company’s financial statements.

OnJust-Rite anhas ~~ongoing~~not ~~basis,~~obtained weeither ~~assess~~(a) ~~the~~a ~~potential~~final ~~liabilities~~court ~~related~~order tofor ~~any~~the ~~lawsuits~~conveyance orof ~~claims~~assets, ~~brought~~(b) ~~against~~a ~~us.~~settlement ~~While~~with itcreditors isor ~~typically~~(c) ~~very~~a ~~difficult~~court ~~to determine the timing and ultimate outcome of such~~ action, wegranting ~~use~~Just-Rite ~~our~~relief ~~best~~from ~~judgment~~the tocreditor’s ~~determine~~claims. It ifcannot itbe isdetermined ~~probable~~when ~~that~~the weAssignment will ~~incur~~be ancompleted. ~~expense~~Also, ~~related~~since to the ~~settlement~~Assignment orprocess ~~final~~has ~~adjudication~~not ofbeen ~~such~~completed, ~~matters~~it ~~and~~is ~~whether~~possible, aalthough ~~reasonable~~not ~~estimation of such probable loss~~likely, ifthat ~~any,~~the ~~can~~ultimate beproceeds ~~made.~~from Wethe ~~accrue~~disposition ~~legal~~of ~~fees~~the ~~and~~assets aheld ~~loss~~for ~~contingency~~sale ~~when~~by weassignee, ~~believe a loss is probable~~ and the ~~amount~~settlement of ~~loss~~liabilities ~~and~~related ~~legal~~to ~~fees~~sale ~~can~~by beassignee ~~reasonably~~could ~~estimated.~~be ~~Due~~at toamounts ~~the~~materially ~~inherent~~different ~~uncertainties~~than ~~related to~~ the ~~eventual~~carrying ~~outcome of litigation~~amounts, itas isadjusted ~~possible~~during ~~that~~the ~~certain~~fourth ~~matters~~quarter ~~may~~of be2011, ~~resolved~~reflected ~~for~~in ~~amounts~~the ~~materially~~accompanying ~~different~~consolidated ~~from~~financial ~~any provisions or disclosures that have been previously made~~statements.

~~Asset~~We ~~Impairment~~presently are focusing our efforts on increasing Premix sales through geographic expansion, developing new product offerings, eliminating overhead where possible, preserving liquidity and obtaining additional debt or equity financing, as well as considering other strategic alternatives. We believe capital expenditures during the next twelve months could approximate up to $100,000 and will be funded primarily by our cash balances.

~~Whenever~~In ~~events~~the orsecond ~~changes~~quarter inof ~~circumstance~~fiscal ~~indicate~~2011, ~~that~~we began the ~~carrying~~implementation ~~amount~~phase of ~~our~~a ~~assets~~new ~~may~~accounting ~~not~~software besystem. ~~fully~~We ~~recoverable,~~believe wethe donew anaccounting ~~initial~~software ~~analysis~~system ofwill ~~long-lived~~provide ~~assets~~more ~~whereby~~timely wemanagement ~~estimate~~reporting ~~the~~and ~~undiscounted~~aid ~~future~~production ~~cash~~and ~~flow~~inventory ofcapabilities ~~these~~to ~~assets.~~better Ifserve ~~such~~our ~~analysis~~customers. ~~indicates~~As ~~that~~of aDecember ~~possible~~31, ~~impairment~~2011, ~~may~~approximately ~~exist~~$128,000 weof ~~are~~costs ~~required~~related to ~~then~~the ~~estimate~~implementation ~~the~~project ~~fair~~including ~~value~~related ofhardware ~~the~~costs ~~asset,~~were ~~principally~~capitalized ~~determined~~to ~~either~~property byand ~~third~~equipment ~~party~~as ~~appraisals~~assets not yet placed into service. Of this amount, ~~sales~~$87,000 ~~price~~was ~~negotiations~~financed orunder ~~estimated~~a ~~discounted~~capital ~~future~~lease. ~~cash~~The ~~flows~~conversion is anticipated to result in approximately $150,000 ~~which~~of ~~includes~~capitalized ~~estimating~~costs upon completion. Delays in the ~~timing~~implementation of, or difficulties in the ~~future~~proper ~~cash~~functioning ~~flows~~of the new system, ~~discount~~could ~~rates~~result ~~and~~in ~~reflecting~~unanticipated ~~varying~~increased ~~degrees~~costs of ~~perceived~~the ~~risk~~implementation and/or interruptions to our operations.

AsThe ~~the~~accompanying ~~Assignment~~consolidated ~~process~~financial ~~has~~statements ~~not~~have been ~~completed,~~prepared itand isare ~~possible~~presented ~~that~~assuming ~~the~~our ~~ultimate~~ability ~~proceeds~~to ~~from~~continue ~~the~~as ~~disposition~~a ofgoing ~~the~~concern. ~~assets~~The ~~held~~industry ~~for~~in ~~sale~~which we operate has been impacted by ~~assignee,~~a ~~and~~number of adverse factors over the ~~settlement~~past ofseveral ~~liabilities~~years. ~~related~~As a result, we have continued to ~~assets~~incur ~~held~~losses from continuing operations for ~~sale~~the bypast ~~assignee,~~five ~~could~~fiscal beyears. atOur ~~amounts~~independent ~~that~~registered ~~are~~public ~~materially~~accounting ~~different~~firm ~~than~~issued ~~the~~its ~~carrying~~report ~~amounts~~dated ~~reflected~~March 29, 2012, in connection with the ~~accompanying~~audit ~~consolidated~~of our financial statements as of and for the year ended December 31, 2011 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern.

~~Income~~The ~~Taxes~~accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

WeIn ~~account~~order ~~for~~to ~~income~~address ~~taxes using~~ the ~~liability~~need ~~method.~~to ~~This~~satisfy ~~method requires that the deferred tax consequences of temporary differences between the amounts recorded in~~ our ~~Consolidated~~continuing ~~Financial~~obligations ~~Statements~~ and ~~the~~realize ~~amounts included in~~ our ~~federal~~long-term ~~and state income tax returns be recognized in the balance sheet. Estimates are often required with respect to~~strategy, ~~among~~management ~~other~~continues ~~things, the appropriate state income tax rates~~ to ~~use~~review ~~in the~~ various ~~states~~strategic inalternatives ~~which we~~ and ~~our~~has ~~subsidiaries~~taken ~~are~~several ~~required~~steps ~~to file, the potential utilization of any operating~~ and ~~capital~~is ~~loss~~considering ~~carry-forwards~~additional ~~for~~actions ~~both~~to ~~federal~~improve ~~and~~our ~~state~~operating ~~income tax purposes~~ and ~~valuation~~financial ~~allowances required~~results, ifwhich ~~any,~~we ~~for~~hope ~~tax assets that may not be realizable in the future. We believe that it is more likely than not that the amounts recorded as deferred income tax assets~~ will ~~not~~ be ~~recoverable~~sufficient ~~through~~to ~~future~~provide ~~taxable income generated by~~ us. Aswith ~~a result,~~ the ~~Company~~ability ~~recorded~~to acontinue ~~100% valuation allowance against our net deferred tax assets~~ as ofa ~~December 31~~going concern, ~~2010.~~including ~~We believe~~ the ~~procedures and estimates used in our accounting for income taxes are reasonable and in accordance with established tax law.~~ following:

~~Results~~· ofWe ~~Operations~~are continuing to evaluate and implement additional cost reduction initiatives to reduce unnecessary costs in our operations and to conserve working capital.

~~Year~~· ~~Ended~~We ~~December 31~~are making greater efforts to increase sales in additional geographic markets by seeking new distributors, ~~2010~~and ~~compared~~we are investigating establishing arrangements with other manufacturers to ~~2009~~produce and sell our products in certain markets.

~~Net~~· ~~sales~~We ~~decreased~~are ~~approximately~~attempting ~~$406,000,~~to ordevelop ~~4.7%,~~new ~~for~~product ~~the~~offerings ~~year~~as ~~ended~~well ~~December 31,~~as ~~2010~~seeking ~~compared~~new toproducts ~~the~~from ~~same~~other ~~period~~manufacturers into ~~2009.~~expand ~~The~~our ~~decrease~~product inlines. ~~sales~~· ~~was~~We ~~principally~~are ~~due~~making efforts to ~~the~~establish ~~continued~~arrangements ~~slowdown~~with inprospective ~~the~~customers ~~residential~~to ~~and~~manufacture ~~commercial~~various ~~construction~~products ~~markets~~for inthem ~~our~~under ~~principal~~private ~~trade~~label ~~areas and reduced demand for our products~~arrangements.

~~Gross~~We ~~profit~~presently ondo ~~sales~~not ~~was~~have ~~$2,589,000~~a ~~and~~line ~~$2,457,000~~of ~~during~~credit ~~the~~or ~~years~~other ~~ended~~financing ~~December 31,~~arrangement ~~2010~~ and ~~2009,~~do ~~respectively.~~not ~~Gross~~have ~~margin~~sufficient ascash ~~a percentage~~balances ~~of net sales in 2010 increased~~ to ~~31.5%,~~sustain asoperations ~~compared~~for tothe ~~28.5%,~~next ~~for~~twelve ~~2009~~months. We ~~The~~are ~~increase~~seeking inpossible ~~gross~~financing ~~margin~~from ~~was~~other ~~primarily~~sources, ~~due~~including tobut anot ~~higher~~limited ~~margin in manufactured products due~~ to ~~lower~~various ~~raw~~equity ~~material~~and ~~costs~~debt ~~from certain vendors associated with the reduced demand for products prevalent throughout the construction industry. However~~capital, ~~we expect~~ to ~~experience~~generate ~~continued~~additional ~~lower~~funds ~~levels of demand~~ for ~~our products and~~ operations.

16There can be no assurance that the above actions will be successful. Further, it is not expected that cash on-hand will provide sufficient cash to fund continuing operations or that new financing will be available, or that if available, on satisfactory terms. The extent and duration of the construction industry’s continued unfavorable conditions due to the adverse economic conditions now existing in the general economy, its effect on demand for our products, and consequently our results of operations and our ability to maintain adequate liquidity to continue as a going concern cannot be determined.

~~intense~~ITEM ~~competitive conditions arising from the decline in construction activity and overall state of the economy~~7A. QUANTITATIVE ~~Subsequently,~~AND ~~our~~QUALITATIVE ~~competitors~~DISCLOSURES ~~having~~ABOUT ~~excess~~MARKET ~~capacity may cause pressure on our gross margins for the foreseeable future. To date we have been able to off-set the effect of customer pricing concessions with lower raw material costs.~~RISK

~~Selling,~~Not general and administrative (“SG&A”) expenses decreased approximately $225,000, or 5.9%, for the year ended December 31, 2010 compared to the same period in 2009. The decrease in SG&A expenses for 2010 was primarily attributable to a decrease in payroll and related costs of $122,000 due to a reduction in personnel and salary levels which occurred throughout 2009, and reduced depreciation expense ($91,000 in 2010 versus $159,000 in 2009) resulting from certain property and equipment becoming fully depreciated during 2010. SG&A expenses as a percent of net sales was 43.4% and 43.9% for the years ended December 31, 2010 and 2009, respectively.applicable

In connection with the discontinuance of our Just-Rite operations and transfer of Just-Rite assets to the Assignee on June 11, 2009, we recognized a loss contingency expense of $529,000 in 2009. The loss contingency expense relates to our guarantee of certain Just-Rite obligations transferred to the Assignee which may remain outstanding after the liquidation of the underlying collateralized assets. During the first quarter of 2010, we received a demand payment notice from a lender for settlement of related obligations, resulting in an additional $42,000 of loss contingency expense during the quarter. During the second quarter of 2010, the Company negotiated a reduced settlement with the same lender, resulting in a reduction of $74,000 in the loss contingency. The cumulative impact of the 2010 adjustments was a net recovery in loss contingency of $32,000. See Note 16(b) of notes to consolidated financial statements for further discussion.20

WeITEM ~~had an operating loss of $948,000 and $1,866,000 during the years ended December 31, 2010 and 2009, respectively~~8. FINANCIAL ~~Several~~STATEMENTS ~~factors~~AND ~~resulting~~SUPPLEMENTARY ~~in a decrease in pretax loss from continuing operations during 2010 are discussed above.~~ DATA

Interest expense amounted to $141,000 and $115,000 during the years ended December 31, 2010 and 2009, respectively. Interest expense includes rental payments related to a sale-leaseback transaction recorded in 2008 for our Winter Springs, Florida manufacturing facility.

	Page

Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm – Grant Thornton LLP		22

Consolidated Balance Sheets		23

Consolidated Statements of Operations		24

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)		25

Consolidated Statements of Cash Flows		26

Notes to Consolidated Financial Statements		27

~~During~~All ~~the~~schedules ~~nine~~have ~~months~~been ~~ended~~omitted ~~September 30,~~because ~~2009~~they are not required, weare ~~recognized~~not aapplicable ~~$193,000~~or ~~gain~~the oninformation ~~settlement~~is ofincluded ~~litigation~~in ~~against~~the ~~DFH’s~~consolidated ~~former~~financial ~~insurance~~statements ~~carrier.~~or notes thereto.

During the fourth quarter of December 31, 2010, we recognized a $500,000 gain on settlement of litigation against a former insurance carrier relating to policy coverage issues in prior policy years. See Item 3 – Legal Proceedings. 21

AsREPORT aOF ~~result~~INDEPENDENT ofREGISTERED ~~the~~PUBLIC ~~above~~ACCOUNTING factors, we had a net loss from continuing operations of $596,000, or $0.23 per diluted share, for the year ended December 31, 2010 compared to $1,188,000, or $0.47 per diluted share, for the same period in 2009. FIRM

~~Discontinued~~Board ~~Operations~~of Directors

WeImperial ~~terminated the distribution operations of Just-Rite and all of its assets were divested on June 11~~Industries, ~~2009 through the Assignment as described in Note 3 of Notes to the Consolidated Financial Statements~~Inc. We had closed certain Just-Rite distribution facilities in prior years. The Just-Rite distribution operations are accounted for as discontinued operations for the years ended December 2010 and 2009. Net revenues from the discontinued operations were $10,550,000 during the year ended December 31, 2009. Just-Rite did not have any revenues during the year ended December 31, 2010. We had losses from discontinued operations of $638,000 and $4,115,000, or $0.25 and $1.62 per diluted share, for the years ended December 31, 2010 and 2009, respectively.

~~The~~We ~~lack~~have audited the accompanying consolidated balance sheets of ~~liquidity~~Imperial ~~and~~Industries, ~~profitability~~Inc. ~~for~~(a ~~the~~Delaware ~~foreseeable~~corporation) ~~future~~and subsidiaries as of ~~these~~December 31, ~~operations~~2011 ~~due~~and to2010, and the ~~downturn~~related consolidated statements of operations, changes in ~~the~~stockholders’ ~~residential~~equity (deficit) and ~~commercial~~cash ~~construction~~flows ~~industry~~for ~~was~~ the ~~main~~years ~~reason~~then ~~for~~ended. ~~termination~~These financial statements are the responsibility of ~~these~~the ~~operations~~Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

~~Liquidity~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and ~~Capital~~perform ~~Resources~~the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

AtIn ~~December 31,~~our ~~2010~~opinion, wethe ~~had~~consolidated afinancial ~~working~~statements ~~capital~~referred ~~deficit of $2,560,000, compared~~ to aabove ~~working~~present ~~capital~~fairly, ~~deficit~~in ofall ~~$2,458,000~~material ~~at December 31~~respects, ~~2009.~~the ~~Current~~consolidated ~~assets~~financial ~~held~~position ~~for~~of ~~sale~~Imperial ~~by assignee were $74~~Industries,~~000~~ Inc. and ~~$578,000~~subsidiaries as of December 31, ~~2010~~2011 and ~~2009~~2010, ~~respectively. Included in current assets held for sale by assignee were accounts receivable, net, of $67,000~~ and ~~$549,000~~the asresults of ~~December 31,~~their ~~2010~~operations and ~~2009,~~their ~~respectively.~~cash Asflows offor ~~December 31, 2010, Just-Rite fully reserved~~ the ~~remaining~~years ~~accounts~~then ~~receivable due to the substantial uncertainty regarding their collectability~~ended, ~~except~~in ~~for~~conformity ~~specific~~with ~~accounts~~accounting ~~that~~principles ~~were~~generally ~~collected~~accepted byin the ~~Assignee~~United ~~during~~States ~~the first quarter~~ of ~~2011~~America.

17The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the industry in which the Company is operating has been impacted by a number of factors and accordingly, the Company has experienced a significant reduction in its sales volume. In addition, for the year ended December 31, 2011, the Company has a loss from continuing operations of approximately $1,310,000. These factors, among others, as discussed in Note 2 to the consolidated financial statements, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Current liabilities related to assets held for sale by assignee decreased from $5,581,000 as of December 31, 2009 to $4,988,000 as of December 31, 2010. The reduction in these liabilities resulted primarily from (i) the sale of Just-Rite’/s/ ~~real~~GRANT ~~property~~THORNTON in Tampa, Florida, the proceeds of which were partially used to pay off related mortgage notes by approximately $348,000, and (ii) a decrease in Just-Rite’s note payable obligations by approximately $327,000 resulting from the settlement and release from obligations under notes payable on certain personal property and equipment. Excluding the effects of the current assets and current liabilities of Just-Rite, we had working capital of $2,354,000 and $2,545,000 as of December 31, 2010 and 2009. LLP

~~Cash~~Fort ~~and cash equivalents increased to $1~~Lauderdale,~~379,000~~ as of December 31, 2010, compared to $523,000 as of December 31, 2009, resulting primarily from the receipt of an income tax refund described below, providing immediate liquidity to the Company. In addition, included in other current assets at December 31, 2010 is $500,000 relating to an insurance settlement agreement entered into during the fourth quarter of 2010, of which actual payment was received in the first quarter of 2011. The settlement was reflected as litigation settlement in the accompanying consolidated statement of operations for the year ended December 31, 2010. In May 2010, in connection with the termination of the Forbearance Agreement, a $100,000 restricted certificate of deposit was released by the Lender, becoming immediately available for Company operations. The certificate of deposit was terminated and converted to cash in July 2010.Florida

~~Net cash provided by operating activities was $814,000 and $2,689,000 during the years ended December~~March 3129, 2010 and 2009, respectively. Cash received from an income tax refund was $1,610,000 in the 2010 period, compared to cash received from an income tax refund of $1,044,000 in the 2009 period. As discussed above, during 2010 the Company recorded a receivable of $500,000 related to a litigation settlement. Cash provided by operating activities related to change in assets held for sale by assignee, offset by liabilities related to assets held for sale by assignee, was $588,000 during 2010, compared to $4,206,000 during 2009. 2012

Net cash provided by investing activities was $435,000 and $900,000 during the years ended December 31, 2010 and 2009, respectively. During the 2010 period, Just-Rite received proceeds of $554,000 from the sale of real property in Tampa, Florida. During the 2009 period, Just-Rite received proceeds of $1,029,000 from the sale of real and personal property and equipment.22

~~Net~~IMPERIAL ~~cash used in financing activities was $393~~INDUSTRIES,~~000~~ ~~and $3,447,000 during the years ended December 31, 2010 and 2009, respectively~~INC. ~~Repayments~~AND of long-term debt were $413,000 in 2010 (including Just-Rite mortgage note payments by the Assignee related to the Tampa real property sale as described above), compared to $591,000 in 2009, and there was a net reduction of our then outstanding line of credit of $80,000 in 2010 compared to a net reduction in the line of credit of $2,799,000 in 2009. Borrowing and repayment activity under the line of credit significantly declined in conjunction with the Just-Rite Assignment. On April 30, 2010, we fully repaid the outstanding principal balance due under the line of credit. We no longer have a line of credit.SUBSIDIARIES

~~Future~~CONSOLIDATED ~~Commitments~~BALANCE ~~and Funding Sources~~SHEETS

On November 6, 2009, the “Worker, Homeownership and Business Assistance Act of 2009” was signed into law. The new law extended the time-frame for certain companies to carry-back net operating losses (“NOL”) from 2 years to 5 years. As a result, we elected to carry-back our 2009 NOL to claim a refund of Federal taxes paid. As of December 31, 2009, we had $1,610,000 of income tax receivable, of which we filed for a refund with the Internal Revenue Service. In April 2010, we received the payment of the income tax receivable amounting to $1,610,000. At present, we cannot carry back any of our losses to claim any additional Federal taxes paid.

	December 31,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	636,000		$	1,379,000
Trade accounts receivable, net		537,000			499,000
Inventories		688,000			967,000
Other current assets		69,000			543,000
Current assets held for sale by assignee		—			74,000
Total current assets		1,930,000			3,462,000

Property, plant and equipment, net		1,563,000			1,528,000
Assets held for sale by assignee		582,000			983,000
Other assets		155,000			144,000
Total assets	$	4,230,000		$	6,117,000

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:
Accounts payable	$	433,000		$	430,000
Payable to former preferred stockholders		48,000			50,000
Accrued expenses and other liabilities		292,000			546,000
Current liabilities related to assets held for sale by assignee		435,000			4,988,000
Current portion of long-term debt		41,000			8,000
Total current liabilities		1,249,000			6,022,000

Long-term debt, less current maturities		87,000			23,000
Secured financing		1,146,000			1,119,000
Total liabilities		2,482,000			7,164,000
Commitments and contingencies (Note 16)
Stockholders’ equity (deficit):
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued at December 31, 2011 and 2010		—			—
Common stock, $.01 par value; 10,000,000 shares authorized; 2,566,210 issued and outstanding at December 31, 2011 and 2,558,335 issued and outstanding at December 31, 2010		26,000			26,000
Additional paid-in capital		14,975,000			14,933,000
Accumulated deficit		(13,253,000	)		(16,006,000	)
Total stockholders’ equity (deficit)		1,748,000			(1,047,000	)
Total liabilities and stockholders’ equity (deficit)	$	4,230,000		$	6,117,000

Historically, our primary sources of cash were proceeds from sales to customers and a line of credit. As a result of the Assignment, on June 10, 2009, we executed the Forbearance Agreement to our then existing line of credit. The ~~Forbearance~~accompanying ~~Agreement~~notes ~~and~~are ~~its~~an ~~five~~integral ~~subsequent~~part ~~amendments effectively extended the line~~ of ~~credit~~these ~~until~~consolidated ~~April 30,~~financial ~~2010, but significantly reduced borrowing availability~~statements. Under the Forbearance Agreement, the lender agreed to forbear from exercising any of its rights in response to the occurrence of certain events of default under the line of credit, subject to our compliance with certain requirements set forth in the terms of the Forbearance Agreement.

On April 30, 2010, we fully repaid the remaining outstanding principal balance due under the line of credit, and the Forbearance Agreement was terminated effective May 11, 2010. We do not currently have a line of credit or other financing arrangement with a lender and believe we have sufficient cash on hand to meet our current operating needs without a line of credit.23

18IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

~~Collections~~CONSOLIDATED ofSTATEMENTS ~~accounts~~OF receivable of Just-Rite, included in Assets held for sale by assignee, significantly worsened through 2009 and 2010 primarily due to the financial difficulties our former Just-Rite customers were experiencing because of the deteriorating condition in the residential and commercial construction industry and the overall condition of the economy and the financial markets in the United States. The Assignee continues to experience difficulty collecting the remaining Just-Rite receivables transferred to the Assignee on June 11, 2009. As a result, all of Just-Rite’s accounts receivable have been fully reserved as of December 31, 2010, except for certain specific accounts which were collected by the Assignee during the first quarter of 2011.OPERATIONS

At December 31, 2010, the carrying amount of the remaining “Total assets held for sale by assignee” and the “Total liabilities related to assets held for sale by assignee” included in the accompanying consolidated balance sheet was $1,057,000 and $4,988,000, respectively, associated with the Just-Rite discontinued operations. During the year ended 2009 and to a lesser extent during 2010, our stockholders’ equity was significantly impacted by Just-Rite’s losses (classified as loss from discontinued operations). Since Just-Rite has not obtained either (a) a final court order for the conveyance of assets, (b) a settlement with creditors or (c) a court action granting Just-Rite relief from the creditor’s claims, Just-Rite’s liabilities continue to be recorded at full historical value. As of December 31, 2010, the excess of Just-Rite liabilities over Just-Rite assets held by the Assignee included in the accompanying consolidated balance sheet was $3,931,000. Upon completion of the Assignment, we will record pre-tax earnings amounting to the excess, if any, of remaining liabilities extinguished over the carrying value of assets sold, which would positively impact our stockholders’ equity. It cannot be determined when the Assignment will be completed. Also, since the Assignment process has not been completed, it is possible that the ultimate proceeds from the disposition of the assets held for sale by assignee, and the settlement of liabilities related to sale by assignee could be at amounts that are materially different than the carrying amounts reflected in the accompanying consolidated financial statements.

	Years Ended December 31,
	2011			2010

Net sales	$	7,248,000		$	8,229,000

Cost of sales		5,303,000			5,640,000

Gross profit		1,945,000			2,589,000

Selling, general and administrative expenses		3,396,000			3,569,000

Accrued (recovery) loss contingency		—			(32,000	)

Operating loss		(1,451,000	)		(948,000	)

Other (expense) income:
Interest expense		(181,000	)		(141,000	)
Litigation settlement		325,000			500,000
Miscellaneous expense		(3,000	)		(7,000	)
		141,000			352,000
Loss from continuing operations before income tax provision		(1,310,000	)		(596,000	)

Income tax provision		—			—

Loss from continuing operations		(1,310,000	)		(596,000	)

Income (loss) from discontinued operations, net of taxes		4,063,000			(638,000	)

Net income (loss)	$	2,753,000		$	(1,234,000	)

Income (loss) per Common Share:
Loss from continuing operations – basic and diluted	$	(0.51	)	$	(0.23	)
Income (loss) from discontinued operations – basic and diluted		1.59			(0.25	)
Net income (loss) per share – basic and diluted	$	1.08		$	(0.48	)

Weighted average shares outstanding – basic and diluted		2,559,090			2,551,129

WeThe ~~presently~~accompanying notes are ~~focusing~~an ~~our~~integral ~~efforts~~part onof ~~increasing~~these ~~Premix~~consolidated ~~sales~~financial through geographic expansion, obtaining new product offerings, eliminating overhead where possible, preserving liquidity and obtaining additional debt or equity financing, as well as considering other strategic alternativesstatements. ~~We believe capital expenditures during the next twelve months could approximate up to $350,000 and will be funded primarily by our cash balances.~~

Beginning March 15, 2004, we were forced to renew our products liability coverage with an exclusion for EIFS exposure. Due to the uncertainty and unpredictability of litigation, there can be no assurances as to when or if any future uninsured claims may be filed, and if they are, to not be material. While we do not believe the outstanding insured EIFS claim against DFH will have a material effect on our financial position, there can be no assurance of this because of the uncertainty of litigation. See Note 16(a) of Notes to Consolidated Financial Statements.24

~~The~~IMPERIAL accompanying consolidated financial statements have been prepared and are presented assuming the Company’s ability to continue as a going concern. The industry in which the Company is operating has been impacted by a number of adverse factors over the past several years. As a resultINDUSTRIES, ~~the Company has incurred losses from continuing operations for the past four fiscal years~~INC. ~~Our~~AND independent registered public accounting firm issued its report dated March 28, 2011, in connection with the audit of our financial statements as of December 31, 2010 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern.SUBSIDIARIES

~~The~~CONSOLIDATED ~~accompanying~~STATEMENTS ~~consolidated~~OF ~~financial~~CHANGES ~~statements~~IN doSTOCKHOLDERS’ ~~not~~EQUITY include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.(DEFICIT)

In order to address the need to satisfy our continuing obligations and realize our long term strategy, management continues to review various strategic alternatives and has taken several steps and is considering additional actions to improve our operating and financial results, which we hope will be sufficient to provide us with the ability to continue as a going concern, including the following:

	Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2009		2,550,460	$	25,000	$	14,862,000	$	(14,772,000	)	$	115,000

Issuance of common stock		—		—		34,000		—			34,000

Restricted stock release		7,875		1,000		37,000		—			38,000

Net loss		—		—		—		(1,234,000	)		(1,234,000	)

Balance at December 31, 2010		2,558,335	$	26,000	$	14,933,000	$	(16,006,000	)	$	(1,047,000	)

Issuance of stock options		—		—		7,000		—			7,000

Restricted stock release		7,875		—		35,000		—			35,000

Net income		—		—		—		2,753,000			2,753,000

Balance at December 31, 2011		2,566,210	$	26,000	$	14,975,000	$	(13,253,000	)	$	1,748,000

·The accompanying notes are an integral part of these consolidated financial statements.

Discontinuance of Just-Rite’s operations and assignment of all of its assets, subject to its liabilities, as of June 11, 2009, via the Assignment. The Assignee is winding down, selling and liquidating the assets of Just-Rite for the benefit of creditors in accordance with the laws of the State of Florida. We no longer operate any of the assets or business of Just-Rite, or fund its losses from discontinued operations since the date of the Assignment, although we are required to maintain financial reporting of the discontinued operations.25

19IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

·CONSOLIDATED STATEMENTS OF CASH FLOWS

Implementation of more stringent credit and collection procedures and controls in an attempt to reduce days outstanding of trade accounts receivable and improve working capital.

	Years Ended December 31,
	2011			2010
Cash flows from operating activities:
Net income (loss)	$	2,753,000		$	(1,234,000	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation		225,000			267,000
Amortization		2,000			3,000
Interest accretion on secured financing		27,000			(7,000	)
(Recovery) provision for doubtful accounts		(5,000	)		124,000
Recovery of loss contingency		—			(32,000	)
Share-based compensation		42,000			71,000
Non-cash adjustments, net to the carrying value of assets held for sale by assignee and liabilities related to assets held for sale by assignee		(4,378,000	)		196,000
Gain on disposal of assets held for sale by assignee, net		—			(155,000	)
Changes in operating assets and liabilities:
Trade accounts receivable		(56,000	)		30,000
Inventories		279,000			(29,000	)
Income tax receivable		—			1,610,000
Other current assets		461,000			(438,000	)
Accounts payable		3,000			(184,000	)
Payable to former preferred shareholders		(2,000	)		—
Accrued expenses and other liabilities		(254,000	)		4,000
Assets held for sale by assignee		101,000			735,000
Liabilities related to assets held for sale by assignee		222,000			(147,000	)
Net cash (used in) provided by operating activities		(580,000	)		814,000

Cash flows from investing activities:
Purchases of property, plant and equipment		(133,000	)		(119,000	)
Proceeds received from sale of property and equipment		—			554,000
Net cash (used in) provided by investing activities		(133,000	)		435,000
Cash flows from financing activities:
Proceeds from notes payable Line of Credit		—			2,810,000
Repayments of notes payable Line of Credit		—			(2,890,000	)
Repayment of long-term debt		(30,000	)		(413,000	)
Decrease in restricted cash		—			100,000
Net cash used in financing activities		(30,000	)		(393,000	)
Net (decrease) increase in cash and cash equivalents		(743,000	)		856,000
Cash and cash equivalents, beginning of year		1,379,000			523,000
Cash and cash equivalents, end of year	$	636,000		$	1,379,000
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	181,000		$	165,000
Cash refunded during the year for income taxes	$	—		$	(1,610,000	)
Non-cash investing and financing activities:
Capital lease obligations and equipment notes for new equipment	$	127,000		$	30,000

·The accompanying notes are an integral part of these consolidated financial statements.

Reduction of compensation for senior management and other employees in 2009. In addition, we made personnel reductions in our continuing operations in 2009. These reductions continued to impact results in 2010.26

·IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES

~~Consolidation~~NOTES ofTO ~~our~~CONSOLIDATED ~~manufacturing~~FINANCIAL operations in 2009 by shifting a portion of the manufacturing in Pompano Beach, Florida to Winter Springs, Florida. Also, we consolidated our corporate office into the distribution center in Pompano Beach to reduce costs. Furthermore, we are continuing to evaluate and implement additional cost reduction initiatives to reduce unnecessary costs in our operations and to conserve working capital. We are also investigating establishing arrangements with other manufacturers to produce and sell our products in additional geographic markets to increase sales, as well as seeking new product offerings to expand our product lines.STATEMENTS

~~Based~~(1) The ~~upon~~Company the steps outlined above being successful, we believe our cash on hand arising from the receipt of our tax refund in the second quarter of 2010 will provide sufficient cash to meet current obligations for our operations and ~~support~~Summary ~~the cash requirements~~ of ~~our~~Significant ~~capital~~Accounting expenditure programs to allow us to remain a going concern. While we presently do not have a line of credit or other financing arrangement and have sufficient cash balances to sustain operations for the immediate future, we continue to seek possible financing from other sources, primarily asset based lending opportunities, to generate additional funds for operations. Policies

~~There~~Imperial ~~can~~Industries, beInc. no(“Imperial”) ~~assurance~~through ~~that~~its ~~the~~wholly-owned ~~above~~subsidiary, ~~actions~~Premix-Marbletite ~~will~~Manufacturing beCo. ~~successful~~(“Premix”), ~~new~~collectively ~~financing~~with ~~will~~Imperial be(the ~~available~~“Company”, or“we”, ~~that~~“us”, weand ~~could~~“our”) ~~obtain~~is ~~any~~primarily ~~such~~involved ~~financing~~in onthe ~~terms~~manufacture ~~suitable~~and tosale ~~us.~~of ~~The~~exterior ~~extent~~and ofinterior finishing wall coatings and mortar products for the construction industry, as well as the purchase and resale of building materials from other manufacturers. Sales of the Company’s ~~continued~~and ~~unfavorable~~other ~~conditions~~products ~~due~~are made to customers primarily in Florida and the ~~unprecedented~~Southeastern ~~adverse~~United ~~economic~~States ~~conditions~~through ~~now~~distributors ~~existing~~and incompany-owned ~~the~~distribution ~~general~~facilities. ~~economy,~~The ~~its~~Company ~~effect~~has onthree ~~demand~~other ~~for~~subsidiaries, ~~our~~Just-Rite ~~products~~Supply, ~~and~~Inc. ~~consequently~~(“Just-Rite”), ~~our~~DFH, ~~results~~Inc. of(“DFH”), ~~operations~~formerly ~~and~~known ~~our~~as ~~ability~~Acrocrete, toInc. ~~maintain~~(“Acrocrete”) ~~adequate~~and ~~liquidity~~Triple toI ~~continue~~Leasing, asInc. None aof ~~going~~these ~~concern~~subsidiaries ~~cannot~~have beany ~~determined~~operations.

20A summary of the significant accounting policies followed by us in the preparation of our consolidated financial statements is presented below.

~~Item 8.~~(a) Consolidation

~~Financial~~The ~~Statements~~consolidated financial statements contain the accounts of Imperial and ~~Supplementary~~its ~~Data~~wholly-owned subsidiaries. However, Just-Rite’s assets were assigned to a third party on June 11, 2009 through an Assignment for the Benefit of Creditors proceeding under Florida state law (see Note 3). As a result, the remaining balances of Just-Rite’s assets and related liabilities as of June 11, 2009 are reflected in the December 31, 2011 and 2010 consolidated balance sheets as Assets held for sale by assignee and Liabilities related to assets held for sale by assignee. Additionally, the related consolidated statements of operations and cash flows include all Just-Rite business activity (liquidation of its assets) for all periods presented, which are reflected as Income (loss) from Discontinued Operations, Net of Taxes. All material intercompany transactions and balances have been eliminated in consolidation.

~~Page~~(b) Concentration of Credit Risk

~~Consolidated~~We ~~Financial~~perform ~~Statements~~credit evaluations on customers prior to extending credit. Substantially all of our customers are affected by the current events in the construction industry. Trade accounts receivable are generally unsecured open accounts. The allowance for doubtful accounts is considered sufficient to absorb any losses which may arise from uncollectible accounts receivable. Concentration of trade accounts receivable is discussed further in Note 18.

~~Report~~We place our cash with commercial banks. At December 31, 2011 and 2010, we had cash balances with banks in excess of ~~Independent~~Federal ~~Registered~~Deposit ~~Public~~Insurance ~~Accounting~~Corporation ~~Firm~~insured –limits. Management believes the credit risk related to these deposits to be minimal.

~~Grant~~(c) Allowance ~~Thornton~~for ~~LLP~~Doubtful Accounts

22The allowance for doubtful accounts is evaluated monthly and is based on the collectability of customer accounts and the aging of customer invoices. Many factors are considered in evaluating collectability including, but not limited to, payment history, current economic condition and an assessment of our lien and bond rights for certain jobs. We review our accounts receivable aging on a monthly basis to identify slow paying or problem customers. All related write-offs are charged to the allowance for doubtful accounts.

~~Consolidated~~As ~~Balance~~discussed ~~Sheets~~in Notes 3 and 5, we transferred all assets of Just-Rite to the Assignee, including the Just-Rite accounts receivable, and discontinued operations of Just-Rite pursuant to the Assignment. Since the date of the Assignment, the Assignee has assisted our management in determining the amount of the allowance for doubtful accounts for the accounts receivables related to the former customers of Just-Rite based on the Assignee’s experience collecting receivables from liquidating assets of closed businesses and collection efforts of the Just-Rite accounts during the period of the Assignment. As further discussed in Note 5, the remaining balance in Just-Rite’s accounts receivable and allowance for doubtful accounts have been adjusted to zero value as of December 31, 2011 since the collectability of these balances cannot be reasonably assured.

2327

~~Consolidated~~(1) The ~~Statements~~Company and Summary of ~~Operations~~Significant Accounting Policies – (Continued)

24(d) Inventories

~~Consolidated~~Inventories ~~Statements~~are valued at the lower of ~~Changes~~cost or market and cost is determined using the first-in, ~~Stockholders’~~first-out ~~(Deficit)~~cost ~~Equity~~basis. We record a provision to write down obsolete and slow moving inventory to estimated net realizable value when cost exceeds estimated net realizable value. The provision is determined by identifying obsolete and slow moving inventory by comparing quantity on hand to historical and projected sales activity. This information is aggregated and the estimated provision is determined. Judgment is required in evaluating these factors and in determining the appropriate amounts to record in the provision. Accelerating the disposal process or incorrect estimates of future sales potential may cause the actual results to differ from the estimates at the time such inventory is disposed or sold. We believe that our procedures for estimating such amounts are reasonable and historically have not resulted in material adjustments in subsequent periods. However, if actual market conditions are less favorable than those assumed by management, additional inventory write-downs may be required. As a result, our financial condition, results of operations and cash flow could be adversely affected. Finished goods include the cost of raw materials, freight in, direct labor and plant overhead.

25(e) Property, plant and equipment

~~Consolidated~~Property, ~~Statements~~plant and equipment is recorded at cost, less accumulated depreciation. Equipment under capital leases is recorded at the present value of ~~Cash~~minimum ~~Flows~~lease payments at inception. Leasehold improvements are depreciated over the useful life of the asset or the remaining lease term, whichever is shorter. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. Repairs and maintenance that does not extend the useful of the asset is expensed as incurred.

26(f) Income taxes

~~Notes~~We utilize the liability method for determining our income taxes. Under this method, deferred taxes and liabilities are recognized for the expected future tax consequences of events that have been recognized in the consolidated financial statements or income tax returns. Deferred tax assets and liabilities are measured using the enacted tax rates expected to ~~Consolidated~~apply ~~Financial~~to ~~Statements~~taxable income in the years in which temporary differences are expected to be realized or settled; valuation allowances are provided against deferred tax assets when our management determines it is more likely than not that the deferred tax asset will not be realized.

28We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

~~All~~There ~~schedules~~are ~~have~~no ~~been~~unrecognized ~~omitted~~tax ~~because~~benefits ~~they~~during ~~are~~fiscal ~~not~~years ~~required,~~2011 or 2010. We are ~~not~~no ~~applicable~~longer subject to U.S Federal or State tax examinations by tax authorities for the ~~information~~years isbefore ~~included~~2008 infor Federal taxes and for the ~~consolidated~~years ~~financial~~before ~~statements~~2006 orfor ~~notes~~State ~~thereto~~taxes.

21Our policy for interest and penalties related to unrecognized tax benefits is to include interest expense and penalties in operating expenses for all periods presented. There are no accruals for the payment of interest and penalties at December 31, 2011 and 2010.

~~REPORT~~(g) Share-based ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~compensation

~~Board~~We recognize stock based compensation expense using the fair value method. Accordingly, we recognize the cost of ~~Directors~~employee services received in exchange for awards of equity instruments based upon the grant date fair value of those awards. We use a Black-Scholes option valuation model to estimate the fair value of each option awarded. The impact of forfeitures that may occur prior to vesting is also estimated and considered in the amount recognized.

~~Imperial Industries, Inc.~~28

~~We have audited the accompanying consolidated balance sheets of Imperial Industries, Inc.~~ (~~a Delaware corporation~~1) The ~~and~~Company ~~subsidiaries as of December 31, 2010~~ and ~~2009,~~Summary ~~and the related consolidated statements~~ of ~~operations,~~Significant ~~changes~~Accounting inPolicies ~~stockholders’~~– (~~deficit~~Continued) equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board~~ (~~United States~~h). Basic ~~Those standards require that we plan~~ and ~~perform~~diluted ~~the~~earnings ~~audit~~per to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.share

InBasic ~~our~~earnings ~~opinion,~~per ~~the~~share ~~consolidated~~is ~~financial~~computed ~~statements~~by ~~referred~~dividing tonet ~~above~~income ~~present~~available ~~fairly,~~to incommon ~~all~~stockholders ~~material~~by ~~respects,~~ the ~~consolidated~~weighted-average ~~financial~~number ~~position~~ of ~~Imperial~~common ~~Industries,~~shares ~~Inc~~outstanding. ~~and~~Diluted ~~subsidiaries~~earnings asper ofshare ~~December 31,~~is ~~2010~~computed ~~and~~by ~~2009,~~dividing ~~and~~net income available to common stockholders by the ~~results~~weighted-average number of ~~their~~shares ~~operations~~outstanding ~~and~~plus ~~their~~the ~~cash~~additional ~~flows~~dilutive ~~for~~effect of common stock equivalents outstanding during the ~~years~~year. ~~then~~The ~~ended,~~dilutive ineffect ~~conformity~~of ~~with~~options ~~accounting~~and ~~principles~~warrants ~~generally~~is ~~accepted~~calculated inusing the ~~United~~treasury ~~States~~stock ~~of America~~method.

~~The~~(i) Cash accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the industry in which the Company is operating has been impacted by a number of factors and ~~accordingly,~~cash the Company has experienced a significant reduction in its sales volume. In addition, for the year ended December 31, 2010, the Company has a loss from continuing operations of approximately $596,000. These factors, among others, as discussed in Note 2 to the consolidated financial statements, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. equivalents

~~/s/~~Cash ~~GRANT~~and ~~THORNTON~~cash ~~LLP~~equivalents are those highly liquid investments with original maturities when purchased of three months or less.

~~Fort~~ (j) Revenue ~~Lauderdale,~~recognition ~~Florida~~policy

~~March 28,~~We ~~2011~~recognize revenue when the following four criteria are met.

22· Persuasive evidence of an arrangement exists;

~~IMPERIAL~~· ~~INDUSTRIES,~~Delivery ~~INC.~~has ~~AND~~occurred ~~SUBSIDIARIES~~or services have been rendered;

~~CONSOLIDATED~~· ~~BALANCE~~The ~~SHEETS~~seller’s price to the buyer is fixed or determinable; and

	December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	1,379,000		$	523,000
Restricted cash		—			100,000
Trade accounts receivable, net		499,000			553,000
Inventories		967,000			938,000
Income tax receivable		—			1,610,000
Other current assets		543,000			105,000
Current assets held for sale by assignee		74,000			578,000
Total current assets		3,462,000			4,407,000
Property, plant and equipment, net		1,528,000			1,646,000
Assets held for sale by assignee		983,000			1,910,000
Other assets		144,000			147,000
Total assets	$	6,117,000		$	8,110,000
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	430,000		$	616,000
Payable to former preferred stockholders		50,000			50,000
Accrued expenses and other liabilities		546,000			574,000
Current liabilities related to assets held for sale by assignee		4,988,000			5,581,000
Current portion of long-term debt		8,000			44,000
Total current liabilities		6,022,000			6,865,000
Long-term debt, less current maturities		23,000			4,000
Secured financing		1,119,000			1,126,000
Total liabilities		7,164,000			7,995,000
Commitments and contingencies (Note 16)
Stockholders’ (deficit) equity:
Preferred stock, $.01 par value; 2,000,000 shares authorized; none issued at December 31, 2010 and 2009		—			—
Common stock, $.01 par value; 10,000,000 shares authorized; 2,558,335 issued and outstanding at December 31, 2010 and 2,550,460 issued and outstanding at December 31, 2009		26,000			25,000
Additional paid-in capital		14,933,000			14,862,000
Accumulated deficit		(16,006,000	)		(14,772,000	)
Total stockholders’ (deficit) equity		(1,047,000	)		115,000
Total liabilities and stockholders’ (deficit) equity	$	6,117,000		$	8,110,000

Collectability is reasonably assured.

~~The~~Revenue ~~accompanying~~is ~~notes~~recognized ~~are~~net anof ~~integral~~discounts ~~part~~and allowances, at the point of ~~these~~sale ~~consolidated~~or ~~financial~~upon ~~statements~~delivery to our customer’s site. For goods shipped by third party carriers, we recognize revenue upon shipment since the terms are FOB shipping point. We record sales taxes collected from customers on a net basis.

23(k) Use of estimates

~~IMPERIAL~~Management ~~INDUSTRIES~~uses estimates and assumptions relating to reporting assets and liabilities, ~~INC~~the disclosure of contingent assets and liabilities, and the recording of revenues and expenses to prepare our financial statements in conformity with accounting principles generally accepted in the United States of America. ~~AND~~Actual ~~SUBSIDIARIES~~results could differ from those estimates. Significant estimates include the allowance for doubtful accounts, inventory reserve, litigation reserves and asset impairment.

~~CONSOLIDATED~~(l) Fair ~~STATEMENTS~~value OFof ~~OPERATIONS~~Financial Instruments

	Years Ended December 31,
	2010			2009
Net sales	$	8,229,000		$	8,635,000
Cost of sales		5,640,000			6,178,000
Gross profit		2,589,000			2,457,000
Selling, general and administrative expenses		3,569,000			3,794,000
Accrued (recovery) loss contingency		(32,000	)		529,000
Operating loss		(948,000	)		(1,866,000	)
Other (expense) income:
Interest expense		(141,000	)		(115,000	)
Litigation settlement		500,000			193,000
Miscellaneous expense		(7,000	)		(13,000	)
		352,000			65,000
Loss from continuing operations before income tax benefit		(596,000	)		(1,801,000	)
Income tax benefit:
Current		—			613,000
Deferred		—			—
		—			613,000
Loss from continuing operations		(596,000	)		(1,188,000	)
Loss from discontinued operations, net of taxes		(638,000	)		(4,115,000	)
Net loss	$	(1,234,000	)	$	(5,303,000	)
Loss per Common Share:
Loss from continuing operations – basic and diluted	$	(0.23	)	$	(0.47	)
Loss from discontinued operations – basic and diluted		(0.25	)		(1.62	)
Net loss per share – basic and diluted	$	(0.48	)	$	(2.09	)
Weighted average shares outstanding – basic and diluted		2,551,129			2,536,121

Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, the current portion of long-term debt, borrowings under a line of credit and debt instruments included in other long-term debt. At December 31, 2011 and 2010, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values due to the short-term nature of these instruments.

~~The~~Our ~~accompanying~~debt obligations consist of promissory notes which are not traded in an ~~integral~~active ~~part~~market. As a result of ~~these~~the ~~consolidated~~volatility ~~financial~~of ~~statements~~substantially all domestic credit markets that currently exist and our difficulty obtaining similar financing, we are unable, as of December 31, 2011 and 2010, to determine the fair value of our debt.

24 (m) Advertising and Promotional Costs

~~IMPERIAL~~Advertising ~~INDUSTRIES,~~costs ~~INC~~are expensed as incurred. ~~AND~~Advertising ~~SUBSIDIARIES~~expense amounted to $9,000 for 2011 and 2010, and is included in selling, general and administrative expenses.

~~CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’~~ (~~DEFICIT~~n) Shipping ~~EQUITY~~and Handling

	Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total
	Shares		Amount
Balance at December 31, 2008		2,533,085	$	25,000	$	14,850,000	$	(9,469,000	)	$	5,406,000
Issuance of common stock		8,500		—		7,000		—			7,000
Restricted stock release		8,875		—		—		—			—
Fair value of restricted stock		—		—		5,000		—			5,000
Net loss		—		—		—		(5,303,000	)		(5,303,000	)
Balance at December 31, 2009		2,550,460	$	25,000	$	14,862,000	$	(14,772,000	)	$	115,000
Issuance of and repricing of stock options		—		—		34,000		—			34,000
Restricted stock release		7,875		1,000		—		—			1,000
Fair value of restricted stock		—		—		37,000		—			37,000
Net loss		—		—		—		(1,234,000	)		(1,234,000	)
Balance at December 31, 2010		2,558,335	$	26,000	$	14,933,000	$	(16,006,000	)	$	(1,047,000	)

Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are included in selling, general and administrative expenses. Shipping and handling fees charged to customers are recorded in revenue. Shipping and handling costs, included in selling, general and administrative expenses, were $606,000 and $655,000 for the years ended December 31, 2011 and 2010, respectively.

~~The accompanying notes are an integral part of these consolidated financial statements.~~29

25(1) The Company and Summary of Significant Accounting Policies – (Continued)

~~IMPERIAL~~(o) Segment ~~INDUSTRIES, INC. AND SUBSIDIARIES~~Reporting

~~CONSOLIDATED~~For ~~STATEMENTS~~the OFyears ~~CASH~~ended ~~FLOWS~~December 31, 2011 and 2010, management has determined that we operated in a single operating segment, manufacturing and distribution of building materials.

	Years Ended December 31,
	2010			2009
Cash flows from operating activities:
Net loss	$	(1,234,000	)	$	(5,303,000	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		267,000			614,000
Amortization		3,000			18,000
Interest accretion on secured financing		(7,000	)		(8,000	)
Provision for doubtful accounts		124,000			1,468,000
(Recovery) provision for loss contingency		(32,000	)		529,000
Gains on sales of fixed assets, net		—			(600,000	)
Share-based compensation		71,000			5,000
Write down of assets held for sale by assignee		196,000			279,000
(Gain) loss on disposal of assets held for sale by assignee, net		(155,000	)		1,864,000
Changes in operating assets and liabilities:
Trade accounts receivable		30,000			203,000
Inventories		(29,000	)		198,000
Other current assets and income tax receivable		1,172,000			(603,000	)
Other assets		—			262,000
Accounts payable		(184,000	)		28,000
Accrued expenses and other liabilities		4,000			(216,000	)
Deferred compensation		—			(255,000	)
Assets held for sale by assignee		735,000			4,586,000
Liabilities related to assets held for sale by assignee		(147,000	)		(380,000	)
Net cash provided by operating activities		814,000			2,689,000
Cash flows from investing activities:
Purchases of property, plant and equipment		(119,000	)		(181,000	)
Proceeds received from sale of property and equipment		554,000			1,081,000
Net cash provided by investing activities		435,000			900,000

(p) Litigation

~~(Continued)~~On an ongoing basis, we assess the potential liabilities related to any lawsuits or claims brought against us. While it is typically difficult to determine the timing and ultimate outcome of such actions, we use our best judgment to determine if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss, if any, can be made. We accrue legal fees and a loss contingency when we believe a loss is probable and the amount of loss and legal fees can be reasonably estimated. Due to the inherent uncertainties related to the eventual outcome of litigation, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that have been previously made.

~~The~~(q) Impairment ~~accompanying notes are an integral part~~ of ~~these~~Long-Lived ~~consolidated financial statements.~~Assets

26Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. If such assets are considered to be impaired, the impairment to be recognized is the total by which the carrying amounts of the assets, if any, exceed the fair values determined using a discounted cash flow model. As of December 31, 2011 and 2010, an impairment analysis of the long-lived assets associated with our continuing operations was performed which resulted in no impairment charge.

~~IMPERIAL~~(r) Product ~~INDUSTRIES, INC. AND SUBSIDIARIES~~Warranty

~~CONSOLIDATED~~We ~~STATEMENTS~~provide OFour ~~CASH~~customers ~~FLOWS~~with limited warranties on certain manufactured products. Limited warranties generally range from 5 to 10 years. Warranty reserves are established based on known or probable claims, together with historical experience factors. Management periodically assesses the adequacy of its recorded warranty liability and adjusts the amount as necessary. The warranty reserve is included in the balance sheet in accrued expenses and other liabilities.

~~(Continued)~~Product warranty accrual activity for the years ended December 31, 2011 and 2010 is as follows:

	Year Ended December 31,
	2011				2010
	2010			2009
Beginning balance	$	76,000			$	40,000
Cash flows from financing activities:
Warranty provision		28,000				68,000
Proceeds from notes payable Line of Credit		2,810,000			21,290,000
Warranty payments		(61,000	)			(32,000	)
Repayments of notes payable Line of Credit		(2,890,000	)		(24,089,000	)
Ending balance	$	43,000			$	76,000
Proceeds from exercise of stock options		—			7,000
Payment to former preferred stockholders		—			(6,000	)
Repayment of long-term debt		(413,000	)		(591,000	)
(Increase) decrease in restricted cash		100,000			(58,000	)
Net cash used in financing activities		(393,000	)		(3,447,000	)
Net increase in cash and cash equivalents		856,000			142,000
Cash and cash equivalents, beginning of year		523,000			381,000
Cash and cash equivalents, end of year	$	1,379,000		$	523,000
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$	165,000		$	288,000
Cash refunded during the year for income taxes	$	(1,610,000	)	$	(1,044,000	)
Non-cash investing and financing activities:
Capital lease obligations for new equipment	$	30,000		$	—

~~The~~(2) Going ~~accompanying notes are an integral part of these consolidated financial statements.~~Concern

27The accompanying consolidated financial statements have been prepared and are presented assuming the Company’s ability to continue as a going concern. The construction industry in which the Company is operating has been impacted by a number of adverse factors over the past four years. As a result, the Company has continued to incur losses from continuing operations for the years ended December 31, 2011 and December 31, 2010. Our independent registered public accounting firm issued its report dated March 29, 2012, in connection with the audit of our financial statements as of December 31, 2011 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern.

~~IMPERIAL~~The ~~INDUSTRIES,~~accompanying ~~INC.~~consolidated ~~AND~~financial ~~SUBSIDIARIES~~statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~30

(12) Going Concern – (Continued)

~~The~~In ~~Company~~order to address the need to satisfy our continuing obligations and ~~Summary~~realize ofour ~~Significant~~long-term ~~Accounting~~strategy, ~~Policies~~management continues to review various strategic alternatives and has taken several steps and is considering additional actions to improve our operating and financial results, which we hope will be sufficient to provide us with the ability to continue as a going concern, including the following:

~~Imperial~~· ~~Industries,~~We ~~Inc.~~are ~~(“Imperial”)~~continuing ~~and~~to ~~its~~evaluate ~~wholly-owned subsidiaries, Premix-Marbletite Manufacturing Co. (“Premix”), Just-Rite Supply, Inc. (“Just-Rite”), DFH, Inc. (“DFH”), formerly known as Acrocrete, Inc. (“Acrocrete”)~~ and ~~Triple~~implement Iadditional ~~Leasing,~~cost ~~Inc.,~~reduction ~~collectively~~initiatives ~~with~~to ~~Imperial~~reduce ~~(the~~unnecessary ~~“Company”,~~costs ~~“we”,~~in ~~“us”, and “~~our”) ~~are~~operations ~~primarily involved in the manufacture~~ and sale of exterior and interior finishing wall coatings and mortar products for the construction industry, as well as the purchase and resale of building materials from other manufacturers. Sales of the Company’s and other products are made to ~~customers~~conserve ~~primarily~~working ~~in Florida and the Southeastern United States through distributors and company-owned distribution facilities~~capital.

A· ~~summary~~We ofare ~~the~~making ~~significant~~greater ~~accounting~~efforts ~~policies~~to ~~followed~~increase sales in additional geographic markets by usseeking innew ~~the~~distributors, ~~preparation~~and ofwe ~~our~~are ~~consolidated~~investigating ~~financial~~establishing ~~statements~~arrangements iswith ~~presented~~other ~~below~~manufacturers to produce and sell our products in certain markets.

~~(a)~~· We are attempting to develop new product offerings as well as seeking new products from other manufacturers to expand our product lines. · We are making efforts to establish arrangements with prospective customers to manufacture various products for them under private label arrangements.

~~Consolidation~~We presently do not have a line of credit or other financing arrangement and do not have sufficient cash balances to sustain operations for the next twelve months. Therefore, we are seeking possible financing from third party sources, including but not limited to various equity and debt capital, to generate additional funds for operations.

~~The~~There ~~consolidated~~can ~~financial~~be ~~statements~~no ~~contain~~assurance that the ~~accounts~~above ofactions ~~Imperial~~will ~~and~~be ~~its~~successful. It ~~wholly-owned~~is ~~subsidiaries.~~not ~~However,~~expected ~~Just-Rite’s~~that ~~assets~~cash ~~were~~on-hand ~~assigned~~will toprovide asufficient ~~third~~cash ~~party~~to onfund ~~June 11,~~continuing ~~2009~~operations through ~~an Assignment for~~ the ~~Benefit~~remainder of ~~Creditors~~2012. There ~~proceeding~~is ~~under~~no ~~Florida~~assurance ~~state~~that ~~law~~new ~~and,~~financing aswill abe ~~result,~~available ~~all~~or ofthat ~~Just-Rite’s~~if ~~assets~~available ~~and~~on ~~related~~satisfactory ~~liabilities~~terms. asThe ofextent ~~June 11,~~and ~~2009~~duration ~~are~~of ~~reflected in~~ the ~~December 31,~~construction ~~2010~~industry’s ~~and~~continued ~~2009~~unfavorable ~~consolidated~~conditions ~~balance~~due ~~sheets~~to asthe ~~Assets~~adverse ~~held~~economic ~~for~~conditions ~~sale~~now byexisting ~~assignee~~in ~~and~~the ~~Liabilities~~general ~~related~~economy, toits ~~assets~~effect ~~held~~on demand for ~~sale~~our ~~by assignee. Additionally~~products, ~~the~~and ~~related~~consequently ~~consolidated~~our ~~statement~~results of operations and ~~cash~~our ~~flows~~ability ~~includes~~to ~~all~~maintain ~~Just-Rite~~adequate ~~business~~liquidity ~~activity~~to ~~for~~continue ~~all periods presented and is reflected~~ as ~~Loss~~a ~~from~~going ~~Discontinued~~concern ~~Operations,~~cannot ~~Net~~be ~~of Taxes~~determined. ~~All material intercompany transactions and balances have been eliminated in consolidation.~~

(b3) Assignment for the Benefit of Creditors

~~Concentration~~On June 11, 2009, Just-Rite entered into an Assignment for the Benefit of ~~Credit~~Creditors ~~Risk~~(the “Assignment”) with Michael P. Phelan, Vice President of Michael Moecker and Associates (the “Assignee”). In connection with the Assignment, Just-Rite transferred all of its assets, subject to any liabilities thereof, to the Assignee, a non-affiliated party, who is winding down, selling and liquidating the assets of Just-Rite for the benefit of creditors in accordance with the laws of the State of Florida. We have not operated any of the assets or the business of Just-Rite since the date of the Assignment. As a result of the Assignment, Just-Rite operations are presented as discontinued operations for the years ended December 31, 2011 and 2010. All remaining Just-Rite assets are considered held for sale and are reported on the financial statements as “Assets held for sale by assignee”.

WeJust-Rite ~~perform~~has ~~credit~~not ~~evaluations~~obtained oneither ~~customers~~(a) ~~prior~~a tofinal ~~extending~~court ~~credit.~~order ~~Substantially~~for ~~all~~the conveyance of ~~our~~assets, ~~customers~~(b) ~~are~~a ~~affected~~settlement bywith ~~the~~creditors ~~current~~or ~~events~~(c) ina court action granting Just-Rite relief from the ~~construction~~creditor’s ~~industry~~claims. It ~~Trade~~cannot ~~accounts~~be ~~receivable~~determined ~~are~~when ~~generally~~the ~~unsecured~~Assignment ~~open~~will ~~accounts~~be completed. ~~The~~Also, ~~allowance~~since ~~for~~the ~~doubtful~~Assignment ~~accounts~~process ishas ~~considered~~not ~~sufficient~~been tocompleted, ~~absorb~~it ~~any~~is ~~losses~~possible, ~~which~~although ~~may~~not ~~arise~~likely, that the ultimate proceeds from ~~uncollectible~~the ~~accounts~~disposition ~~receivable.~~of ~~Concentration~~the assets held for sale by assignee, and the settlement of ~~trade~~liabilities ~~accounts~~related ~~receivable~~to issale ~~discussed~~by ~~further~~assignee could be at amounts materially different than the carrying amounts, as adjusted during the fourth quarter of 2011, reflected in ~~Note~~the 18consolidated financial statements. See Note 5 for a discussion of the 2011 adjustment to the carrying value of certain assets and liabilities of Just-Rite.

We(4) Terminated ~~place~~Line ~~our cash with commercial banks. At December 31, 2010 and 2009, we had cash balances with banks in excess~~ of ~~Federal Deposit Insurance Corporation insured limits. Management believes the credit risk related to these deposits to be minimal.~~Credit

On April 30, 2010, we fully repaid the remaining outstanding principal balance due under our line of credit (cthe “Line of Credit”), and the Line of Credit was terminated effective May 11, 2010. We no longer have a line of credit.

~~Allowance for Doubtful Accounts~~31

~~The~~(5) Discontinued allowance for doubtful accounts is evaluated monthly and is based on the collectability of customer accounts and the aging of customer invoices. Many factors are considered in evaluating collectability including, but not limited to, payment history, current economic condition and an assessment of our lien and bond rights for certain jobs. We review our accounts receivable aging on a monthly basis to identify slow paying or problem customers. All related write-offs are charged to the allowance for doubtful accounts.Operations

AsEffective ~~discussed~~with ~~in Notes 3 and 5 to~~ the ~~consolidated financial statements~~Assignment, we ~~transferred~~discontinued all ~~assets~~ of Just-Rite’s ~~to the Assignee~~operations, ~~including~~and ~~the~~ Just-Rite ~~accounts~~became ~~receivable,~~a ~~and~~non-operating ~~discontinued~~subsidiary. ~~operations~~The ofAssignee ~~Just-Rite~~is ~~pursuant~~winding todown, ~~the~~selling ~~Assignment.~~and ~~Accordingly,~~liquidating the ~~Assignee~~assets ~~assisted~~for ~~our~~the ~~management~~benefit of creditors in ~~determining~~accordance with the ~~amount~~laws of the ~~allowance~~State ~~for~~of ~~doubtful~~Florida. ~~accounts~~Cash proceeds associated with Just-Rite assets for the ~~accounts~~years ~~receivables~~ended ~~related~~December to31, ~~the~~2011 ~~former~~and ~~customers~~2010 ofwere ~~Just-Rite~~primarily ~~based~~generated onfrom ~~the~~collections ~~Assignee~~of Just-Rite’s ~~experience~~accounts ofreceivable, ~~collecting~~as ~~receivables~~well ~~from~~as ~~liquidating~~the ~~assets~~sale of ~~closed~~certain ~~businesses~~real ~~and~~property ~~collection~~during ~~efforts~~the ofsecond ~~the~~quarter ~~Just-Rite~~of ~~accounts~~2010. ~~since~~As ~~the~~a ~~Assignment.~~result, ~~The~~all of Just-Rite’s ~~accounts~~results ~~receivables~~of operations are ~~included~~presented inas ~~“current~~discontinued ~~assets~~operations ~~held~~ for ~~sale~~the byyears ~~assignee”~~ended inDecember ~~our~~31, ~~accompanying~~2011 ~~consolidated~~and ~~balance sheets~~2010.

28Just-Rite did not have any sales during 2011 or 2010. Pretax income (loss) amounted to $4,063,000 (including a net non-cash gain of $4,378,000 recorded during the fourth quarter of 2011), and ($638,000) during 2011 and 2010, respectively, and were reported as discontinued operations. No income taxes were allocated to these losses for any of the respective periods.

~~IMPERIAL~~The ~~INDUSTRIES,~~carrying ~~INC.~~amount ~~AND~~of ~~SUBSIDIARIES~~the remaining major classes of “Assets held for sale by assignee” and “Liabilities related to assets held for sale by assignee” of Just-Rite that were transferred to the Assignee are as follows at December 31:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)

	2011		2010

Cash and cash equivalents	$	—	$	7,000
Accounts receivable, net of allowance for doubtful accounts of $0 and $2,429,000 as of December 31, 2011 and 2010, respectively		—		67,000
Total current assets held for sale by assignee		—		74,000

Property, plant and equipment, at cost, net of accumulated depreciation of $48,000 and $499,000 at December 31, 2011 and 2010, respectively		546,000		943,000
Other assets		36,000		40,000
Total non-current assets held for sale by assignee		582,000		983,000
Total assets held for sale by assignee	$	582,000	$	1,057,000

Accounts payable and accrued expenses		188,000		4,346,000
Current portion of long term debt		247,000		642,000
Total current liabilities related to assets held for sale by assignee	$	435,000	$	4,988,000

~~(1)~~During the fourth quarter of 2011, Just-Rite recorded adjustments, pursuant to the provisions of FASB ASC 450, Contingencies, to reduce the carrying value of certain assets to their estimated realizable value, and certain liabilities to their estimated amounts payable, resulting in a net non-cash gain of $4,378,000. The adjustments resulted from management’s assessment during the fourth quarter of 2011, based on discussions with the Assignee and evaluation of other relevant facts and circumstances, that there is little, if any, likelihood that the Assignee will realize any further significant value from the disposal of these certain assets, and there is little likelihood, if any, of significant monies being available after liquidation of assets and finalization of the Assignment process, for Just-Rite to pay amounts due under these certain liabilities. The factors leading management to conclude during the fourth quarter of 2011 that these certain assets and liabilities required adjustments to carrying value as of December 31, 2011 consisted of the following:

~~The Company and Summary of Significant Accounting Policies – (Continued)~~32

(d5) Discontinued Operations – (Continued)

~~Inventories~~● Just-Rite had no cash as of December 31, 2011.

~~Inventories~~● ~~are~~During ~~valued at~~ the ~~lower~~third ~~of cost or market~~ and ~~cost~~fourth isquarters ~~determined~~of ~~using the first-in~~2011, first-out cost basis. We record a provision to write down obsolete and slow moving inventory to estimated net realizable value when cost exceeds estimated net realizable value. The provision is determined by identifying obsolete and slow moving inventory by comparing quantity on hand to historical and projected sales activity. This information is aggregated and the ~~estimated~~Assignee ~~provision~~collected isan ~~determined.~~insignificant ~~Judgment~~amount isof ~~required~~accounts inreceivable ~~evaluating these factors~~ and inhas ~~determining~~informed the ~~appropriate~~Company amounts to record in the provision. Accelerating the disposal process or incorrect estimates of future sales potential may cause the actual results to differ from the estimates at the time such inventory is disposed or sold. We believe that ~~our~~no ~~procedures~~further ~~for~~significant ~~estimating~~collections ~~such amounts~~ are ~~reasonable and historically have not resulted in material adjustments in subsequent periods~~expected. However, if actual market conditions are less favorable than those assumed by management, additional inventory write-downs may be required. As a result, our financial condition, results of operations and cash flow could be adversely affected. Finished goods include the cost of raw materials, freight in, direct labor and plant overhead.

~~(e)~~● The real property in Jacksonville, Florida, with a carrying value of $480,000, continues to have environmental issues that have precluded it from being sold, which has also prevented the Assignee from closing out the Assignment. The ultimate resolution of the environmental issues cannot be determined as of December 31, 2011. There is a mortgage payable on the property of $247,000 to be repaid upon the ultimate sale of the property. In March 2012, Just-Rite leased the property to an unaffiliated third party for a one year period. Annual rent for the property was $36,000, payable in equal monthly installments. The tenant was given a $6,000 rent credit to cover the cost of certain repairs to the improvements on the property. The tenant also has a right of first refusal to purchase the property for the purchase price of $650,000, which right may only be exercised within thirty days receipt of a No Further Action Letter from the State of Florida Department of Environmental Protection pertaining to the existing environmental issues on the property. If the Tenant does not exercise the Right of First Refusal, the Tenant would be required to vacate the property within three months thereafter; provided, however, if there is more than three months remaining on the lease, the tenant would be permitted to remain for the duration of the lease term.

~~Property~~● The only future funds expected to be received by Just-Rite relate to the ultimate sale, ~~plant~~if any, of the Jacksonville, Florida real property and ~~equipment~~real property located in Mississippi with a carrying value of $66,000. Upon realizing funds, if any, from the disposition of these assets, it is anticipated there will be little, if any, remaining funds for payment to secured and unsecured creditors after payment of the Jacksonville, Florida real property mortgage, except as noted below.

~~Property,~~Based ~~plant~~on ~~and~~the ~~equipment~~factors isdescribed ~~recorded~~above, atJust-Rite ~~cost,~~wrote ~~less~~off ~~accumulated~~the ~~depreciation.~~remaining ~~Equipment~~accounts ~~under~~receivable ~~capital~~with ~~leases~~a isgross ~~recorded~~balance atof approximately $2,406,000 against the ~~present~~allowance ~~value~~for doubtful accounts balance as of ~~minimum~~December ~~lease~~31, ~~payments~~2011, atresulting ~~inception~~in no gain or loss. ~~Leasehold~~Certain ~~improvements~~property ~~are~~and ~~depreciated~~equipment ~~over~~with ~~the~~a ~~useful~~net ~~life~~book value of ~~the~~$396,000 ~~asset~~was oradjusted ~~the~~to ~~remaining~~a ~~lease~~zero ~~term,~~carrying ~~whichever~~value issince ~~shorter.~~there ~~Depreciation~~are isunderlying ~~calculated~~unpaid ~~using~~equipment ~~the~~notes ~~straight-line~~payable ~~method~~related ~~over~~to the ~~estimated~~property ~~useful~~and ~~life~~equipment, ofand ~~the~~thus ~~asset~~no value is expected to be recovered. The ~~Repairs~~adjustments ~~and~~to ~~maintenance~~asset ~~that~~carrying ~~does~~values ~~not~~resulted ~~extend~~in ~~the~~a non-cash ~~useful~~loss of ~~the~~$396,000 ~~asset~~recorded isduring ~~expensed~~the asfourth ~~incurred~~quarter of 2011.

~~(f)~~Total liabilities related to assets held for sale included $3,603,000 of unsecured accounts payables and accrued expenses, $963,000 of noncancellable lease commitments under operating leases, and $396,000 of secured debt related to certain property and equipment that has been written off as discussed above. The aggregate amount of these liabilities, amounting to $4,962,000, was adjusted to $188,000 as of December 31, 2011, representing the estimated excess funds that will be available to such creditors after liquidation of assets and less payment of the mortgage payable. Of the $188,000 adjusted liability amount, $128,000 represents unpaid costs incurred after the Assignment date, resulting in a remaining recorded liability amount of $60,000 estimated as available to creditors for pre-assignment date liabilities. This amount may be further reduced as additional costs are incurred to formally conclude the Assignment process. These adjustments to liability amounts resulted in a non-cash gain of $4,774,000 recorded during the fourth quarter of 2011.

~~Income~~The ~~taxes~~above liabilities exclude $147,000 pertaining to charges incurred by Imperial after the Assignment date on behalf of the Assignee. The amounts payable by Just-Rite to Imperial are eliminated in consolidation.

WeExcluding ~~utilize~~ the ~~liability~~combined ~~method~~non-cash ~~for~~loss ~~determining~~and ~~our~~non-cash ~~income~~gain ~~taxes. Under this method~~described, ~~deferred~~which ~~taxes~~amounted ~~and~~to ~~liabilities~~a ~~are~~net ~~recognized~~non-cash ~~for~~gain ~~the expected future tax consequences~~ of ~~events~~$4,378,000, ~~that~~Just-Rite ~~have~~incurred ~~been~~a ~~recognized~~loss inof ~~the~~$315,000 ~~consolidated~~during ~~financial~~2011, ~~statements~~compared orto ~~income~~a ~~tax~~loss ~~returns.~~of ~~Deferred~~$638,000 ~~tax~~during ~~assets~~2010, ~~and~~relating ~~liabilities~~to ~~are measured using~~ the ~~enacted~~Assignee’s ~~tax~~liquidation ~~rates~~of ~~expected~~assets. The toloss ~~apply to taxable income~~ in ~~the~~2010 ~~years~~is innet ~~which~~of ~~temporary~~a ~~differences~~gain ~~are~~of ~~expected~~$230,000 ~~to be~~ realized orupon ~~settled;~~the ~~valuation~~sale ~~allowances~~of ~~are~~real ~~provided~~property ~~against~~located ~~deferred~~in ~~tax~~Tampa, ~~assets~~Florida ~~when~~for ~~our~~net ~~management~~proceeds ~~determines~~of ~~it is more likely than not that the deferred tax asset will not be realized~~$554,000.

WeCertain ~~recognize~~vehicles ~~the~~and ~~financial~~equipment, ~~statement~~for ~~benefit~~which ofthere aremains ~~tax~~debt ~~position~~outstanding, ~~only~~were ~~after~~repossessed ~~determining~~by ~~that~~ the ~~relevant~~lenders ~~tax~~pending ~~authority~~liquidation ~~would~~of ~~more~~the ~~likely~~assets ~~than~~and ~~not~~settlement ~~sustain~~of the ~~position~~obligations. ~~following~~As andiscussed ~~audit.~~above, ~~For~~the ~~tax~~carrying ~~positions~~amounts ~~meeting~~of the ~~more-likely-than-not~~repossessed ~~threshold,~~assets and the ~~amount~~related ~~recognized~~debt inwere ~~the~~adjusted ~~financial~~to ~~statements~~zero isas ~~the~~of ~~largest~~December ~~benefit~~31, ~~that~~2011. ~~has~~See Note 16(b) for discussion of a ~~greater~~loss ~~than~~contingency ~~50 percent~~recorded ~~likelihood~~by ofImperial ~~being~~as ~~realized~~result ~~upon~~of ~~ultimate~~being ~~settlement~~a ~~with~~guarantor ~~the~~of ~~relevant~~certain ~~tax~~Just-Rite ~~authority~~obligations.

There are no unrecognized tax benefits during fiscal years 2010 or 2009. We are no longer subject to U.S Federal or State tax examinations by tax authorities for the years before 2007 for Federal taxes and for the years before 2005 for State taxes. 33

~~Our~~(5) Discontinued ~~policy~~Operations ~~for~~– interest and penalties related to unrecognized tax benefits is to include interest expense and penalties in operating expenses for all periods presented. There are no accruals for the payment of interest and penalties at December 31, 2010 and 2009.(Continued)

Long-term debt owed by Just-Rite represented (gi) amounts outstanding under various mortgage and equipment notes payable totaling $516,000 at December 31, 2011 and 2010, at various interest rates ranging from 6.87% to 8.0% per annum, and (ii) amounts outstanding under capitalized lease obligations amounting to $126,000 at December 31, 2011 and 2010, at various rates ranging from 7.75% to 8.0%. These notes payable and capitalized

~~Share~~lease obligations are in default due to non-~~based~~payment ~~compensation~~and/or as a result of the Assignment and, as a result, have been classified as current liabilities. As noted above, except for a mortgage payable of $247,000 relating to the Jacksonville, Florida real property, the remaining long-term secured debt amounts were adjusted to zero as of December 31, 2011.

WeAs ~~recognize~~of ~~stock~~December ~~based~~31, ~~compensation~~2011, ~~expense~~Just-Rite ~~using~~had ~~the~~noncancellable ~~fair~~lease ~~value~~commitments ~~method.~~under ~~Accordingly,~~operating weleases ~~recognize~~amounting ~~the~~to ~~cost~~$963,000, ofrepresenting ~~employee~~the ~~services~~aggregate ~~received~~of inunpaid ~~exchange~~amounts ~~for~~under ~~awards~~such ofleases ~~equity~~from ~~instruments based upon~~ the ~~grant~~ date ~~fair value~~ of ~~those~~Assignment ~~awards.~~through Wethe ~~use~~respective alease ~~Black-Scholes~~termination ~~option~~dates. ~~valuation~~As ~~model~~noted toabove, ~~estimate~~ the ~~fair~~amounts ~~value~~payable ofunder ~~each~~such ~~option~~lease ~~awarded.~~commitments ~~The~~were ~~impact~~adjusted ~~of forfeitures that may occur prior~~ to ~~vesting~~zero isas ~~also~~of ~~estimated~~December ~~and~~31, ~~considered in the amount recognized~~2011.

29Just-Rite has not obtained either (a) a final court order for the conveyance of assets, (b) a settlement with creditors or (c) a court action granting Just-Rite relief from the creditor’s claims. It cannot be determined when the Assignment will be completed. Also, since the Assignment process has not been completed, it is possible, although not likely, that the ultimate proceeds from the disposition of the assets held for sale by assignee, and the settlement of liabilities related to sale by assignee could be at amounts materially different than the carrying amounts, as adjusted during the fourth quarter of 2011, reflected in the consolidated financial statements.

~~IMPERIAL~~(6) Sale-Leaseback ~~INDUSTRIES,~~of ~~INC.~~Manufacturing ~~AND SUBSIDIARIES~~Facility

~~NOTES~~In TONovember 2008, ~~CONSOLIDATED~~we ~~FINANCIAL~~sold ~~STATEMENTS~~our –Winter Springs, Florida manufacturing facility under the terms of a sale-leaseback agreement for the gross sales price of $1,290,000. We generated net cash of approximately $692,000 from the sale of the facility, after paying off the existing mortgages, closing costs and other adjustments. In connection with such closing, we entered into a five year lease for this property. The lease contains two five year renewal options, and also provides us with an option to repurchase the facility at a price defined in the agreement at any time after two years, during the term of its lease period. The purchase price under the repurchase option includes adjustments based on increases in CPI, as well as a monthly credit of $621, from commencement date through closing of the option. Since we have an option to repurchase the property, the sale has been treated as a financing and the net sales proceeds of $1,134,000 were recorded as secured financing as of the date of the transaction, with adjustments to be recorded from period to period relating to the purchase price adjustments as noted above (~~CONTINUED~~offset to interest expense). The secured financing amount recorded was $1,146,000 and 1,119,000 as of December 31, 2011 and 2010, respectively, and will remain as a long-term obligation until the lease expires or the option to purchase is exercised. As a result, the property will remain an asset and will continue to be depreciated for financial statement purposes. The net book value of the property as of December 31, 2011 and 2010 is $166,000 and $100,000, respectively.

(17) Trade Accounts Receivables

~~The~~Trade ~~Company~~accounts ~~and~~receivable ~~Summary~~consisted of ~~Significant~~the ~~Accounting~~following ~~Policies~~at ~~– (Continued)~~December 31:

(h)

	2011			2010
Accounts receivable, gross	$	592,000		$	541,000
Allowance for doubtful accounts		(55,000	)		(42,000	)
	$	537,000		$	499,000

~~Basic and diluted earnings per share~~34

Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the additional dilutive effect of common stock equivalents outstanding during the year. The dilutive effect of options and warrants is calculated using the treasury stock method.(8) Inventories

~~(i)~~Inventories consisted of the following at December 31:

Cash and cash equivalents

	2011			2010
Raw materials	$	288,000		$	428,000
Finished goods		292,000			435,000
Packaging materials		124,000			145,000
Gross inventory		704,000			1,008,000
Provision for obsolete and slow moving inventory		(16,000	)		(41,000	)
	$	688,000		$	967,000

~~Cash~~(9) Property, Plant and ~~cash equivalents are those highly liquid investments with original maturities when purchased of three months or less.~~ Equipment

~~(j)~~Property, plant and equipment consisted of the following at December 31:

Restricted cash

	2011			2010			Estimated useful life (years)
Land	$	1,000		$	1,000			—
Buildings and leasehold improvements		624,000			556,000			5 – 40
Machinery and delivery equipment		2,946,000			2,941,000			3 – 15
Vehicles		142,000			99,000			3 – 10
Furniture, fixtures, and data processing equipment		186,000			537,000			3 – 10
Assets not yet placed into service		128,000			—			—
		4,027,000			4,134,000
Less accumulated depreciation		(2,464,000	)		(2,606,000	)
	$	1,563,000		$	1,528,000

AtDuring ~~December 31,~~the ~~2009~~second quarter of fiscal 2011, ~~restricted~~we ~~cash~~began ~~consisted~~the implementation phase of a ~~certificate~~new ofaccounting ~~deposit~~software ~~pledged~~system. We asare ~~collateral~~recording ~~for~~costs ~~all~~related ~~obligations~~to ~~under~~the ~~our~~software ~~then~~implementation ~~existing~~pursuant ~~line~~to ofFinancial ~~credit~~Accounting Standards Board ASC 350-40, Intangibles – Goodwill and Other – Internal-Use Software (“FASB ASC 350-40”). FASB ~~The~~ASC ~~Line~~350-40 provides for the capitalization of ~~Credit~~certain ~~was~~internal ~~terminated~~payroll ~~effective~~and ~~May 11,~~payroll-related ~~2010~~costs asand ~~further~~other ~~discussed~~costs inthat ~~Note~~are 4,directly ~~and~~related to the ~~restricted~~development ~~cash~~of ~~was~~certain ~~released~~systems tofor the internal use of the Company. All costs that are not capitalized under FASB ASC 350-40 are recorded as an operating expense as incurred.

As of December 31, 2011, approximately $128,000 of costs related to the software implementation project including related hardware costs were capitalized to property and equipment as assets not yet placed into service. Of this amount, $87,000 was financed under a capital lease (ksee Note 10). Under FASB ASC 350-40, interest costs incurred under the capital lease will be capitalized to property and equipment during the application development phase of the software implementation project.

~~Revenue~~The ~~recognition~~net ~~policy~~book value of property, plant and equipment pursuant to capital lease agreements aggregated $170,000 and $35,000 at December 31, 2011 and 2010, respectively. Depreciation expense includes depreciation of property, plant and equipment pursuant to capital lease agreements.

~~We recognize revenue when the following four criteria are met.~~35

·(10) Long-Term Debt

~~Persuasive~~Long-term ~~evidence~~debt consisted of anthe ~~arrangement~~following ~~exists;~~at December 31:

	2011			2010
Capitalized lease obligations, interest at various rates ranging from 11.9% to 13.4% per annum, principal and interest payable monthly expiring at various dates through August 2015	$	94,000		$	31,000

Equipment notes payable, interest at 3.9% per annum, principal and interest payable monthly expiring in April 2016		34,000			—
		128,000			31,000
Less current maturities		(41,000	)		(8,000	)
Long-term portion	$	87,000		$	23,000

~~Delivery~~Long-term ~~has~~debt ~~occurred~~matures oras ~~services have been rendered;~~follows:

Year ending December 31,	Amount
2012	$	52,000
2013		52,000
2014		31,000
2015		14,000
2016		3,000
		152,000
Less amount representing interest		(24,000	)
		128,000
Less current portion		(41,000	)
Long-term portion	$	87,000

~~The~~(11) Income ~~seller’s price to the buyer is fixed or determinable; and~~Taxes

·Deferred tax assets and liabilities consisted of the following at December 31:

Collectability is reasonably assured.

	2011				2010
Allowance for doubtful accounts		$	20,000			$	16,000
Inventory reserve			6,000				16,000
Closure costs			—				273,000
Loss contingency			64,000				83,000
Other			32,000				21,000
Current deferred tax asset			122,000				409,000
Valuation allowance			(122,000	)			(409,000	)
Net current deferred tax asset		$	—			$	—

			2011		2010
State net operating loss carryforward		$	520,000			$	465,000
Federal net operating loss carryforward			821,000				314,000
Tax credit carryforwards			120,000				120,000
Share-based compensation			104,000				89,000
Property, plant and equipment			(148,000	)			353,000
Other			6,000				5,000
Long term deferred asset			1,423,000				1,346,000
Valuation allowance			(1,423,000	)			(1,346,000	)
Net long-term deferred tax asset		$	—			$	—

Revenue is recognized net of discounts and allowances, at the point of sale or upon delivery to our customer’s site. For goods shipped by third party carriers, we recognize revenue upon shipment since the terms are FOB shipping point. We record sales taxes collected from customers on a net basis.36

(l11) Income Taxes – (Continued)

~~Use~~The difference between the statutory rate of ~~estimates~~34% and the effective rate of 0% for 2011 and 2010, respectively, is primarily related to the change in the valuation allowance.

~~Management~~The ~~uses~~Company ~~estimates~~had ~~and~~a ~~assumptions~~net ~~relating~~operating toloss ~~reporting~~for ~~assets~~the ~~and~~year ~~liabilities~~ended December 31, 2009 and carried back the ~~disclosure~~2009 taxable loss resulting in a federal tax refund of ~~contingent~~approximately ~~assets~~$1,610,000 which was recorded as an Income Tax Receivable in 2009 and ~~liabilities~~received in April 2010. As of December 31, ~~and~~2011, the ~~recording~~Company has a federal net operating loss carryforward of ~~revenues~~approximately $2,416,000 which begins expiring in 2028, and ~~expenses~~State tonet ~~prepare~~operating ~~our~~loss ~~financial~~carryforwards ~~statements~~of approximately $13,627,000 which begin expiring in ~~conformity~~2022. ~~with~~In ~~accounting~~2010, ~~principles~~the ~~generally~~federal ~~accepted~~net inoperating loss carryforward was reduced by approximately $5.6 million as a result of the ~~United~~Company’s ~~States~~election to not defer the $5.6 million of ~~America~~cancellation of debt income related to Just-Rite. ~~Actual~~Due ~~results~~to ~~could~~the ~~differ~~cumulative ~~from~~losses ~~those~~over ~~estimates~~the past five years, the Company believes it is more likely than not that the deferred tax assets will not be realized. ~~Significant~~As ~~estimates~~a ~~include~~result, the Company has recorded a full valuation allowance ~~for~~on ~~doubtful~~its ~~accounts~~current and noncurrent net deferred tax assets. The valuation allowance decreased by $210,000 ~~inventory~~and ~~reserve~~$1,677,000 ~~litigation~~during ~~reserves~~2011 and ~~asset~~2010, ~~impairment~~respectively.

~~(m)~~We are subject to income taxes in the U.S. federal jurisdiction and various state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2008.

~~Fair~~(12) Capital ~~value of Financial Instruments~~Stock

~~Financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, the current portion of long-term debt, borrowings under~~ (a) Common line of credit and debt instruments included in other long-term debt. At December 31, 2010 and 2009, the fair values of cash and cash equivalents, accounts receivable and accounts payable approximated their carrying values due to the short-term nature of these instruments.Stock

~~Our~~At ~~debt~~December 31, ~~obligations~~2011 ~~consist of promissory notes~~ and a2010, ~~credit~~we ~~facility~~had ~~(the~~authorized ~~credit~~10,000,000 ~~facility~~shares ~~was~~of ~~terminated~~common ~~effective May 11~~stock, ~~2010 as discussed in Note 4) which are not traded in an active market~~$.01 Aspar avalue ~~result~~per ofshare, ~~the volatility~~ of ~~substantially~~which ~~all~~2,566,210 ~~domestic credit markets that currently exist~~ and ~~our difficulty obtaining similar financing~~2, ~~we are unable~~558, ~~as of December 31~~335, ~~2010 and 2009~~respectively, toshares ~~determine~~were ~~the~~issued ~~fair~~and ~~value of our debt~~outstanding.

30In 2011 and 2010, we issued 7,785 shares of common stock in connection with the vesting of restricted stock units. As of December 31, 2011, we no longer have any restricted stock units outstanding.

~~IMPERIAL~~ (b) Preferred ~~INDUSTRIES, INC. AND SUBSIDIARIES~~Stock

~~NOTES~~At TODecember 31, ~~CONSOLIDATED~~2011 ~~FINANCIAL~~and ~~STATEMENTS~~2010, –we ~~(CONTINUED)~~had authorized 2,000,000 shares of preferred stock, $.01 par value per share, of which no shares were issued and outstanding. The preferred stock is issuable in series, each of which may vary, as determined by the Board of Directors, as to the designation and number of shares in such series, the voting power of the holders thereof, the dividend rate, the redemption terms and prices, the voluntary and involuntary liquidation preferences, the conversion rights and the sinking fund requirements.

(113) Share-Based Compensation

~~The~~We ~~Company~~have a 2006 Stock Award and ~~Summary~~Incentive Plan (the “2006 Plan”). The 2006 Plan includes the following equity compensation awards: (i) stock options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock units; (v) other awards based in common stock; (vi) dividend equivalents; (vii) performance shares or other stock-based performance awards; (viii) cash-based performance awards tied to achievement of ~~Significant~~specific ~~Accounting~~performance ~~Policies~~objectives; –and (~~Continued~~ix) shares issuable in lieu of rights to cash compensation.

The 2006 Plan provides for 209,491 shares of common stock available for equity awards including shares that became available under previous plans (nplus additional shares that may be available due to cancellation of options). The 2006 Plan is administered by the Board’s Compensation and Stock Option Committee (the “Committee”), which is comprised of three non-employee directors. The Committee determines who is eligible to participate and the number of shares for which awards are to be granted.

~~Advertising~~In November 2011 and ~~Promotional~~2010, ~~Costs~~an aggregate 7,875 shares in each period, respectively, of common stock were issued upon vesting of an equivalent restricted stock unit. As of December 31, 2011, there are no restricted stock units outstanding. Share-based compensation expense related to the restricted stock units was $35,000 and $38,000 for 2011 and 2010, respectively.

Advertising costs are expensed as incurred. Advertising expense amounted to $9,000 and $18,000 for the years ended December 31, 2010 and 2009, and is included in selling, general and administrative expenses.37

(o13) Share-Based Compensation – (Continued)

~~Shipping~~In January 2011, we issued options to purchase 19,000 shares of common stock. These stock options have a five-year term, vested 100% upon grant and ~~Handling~~have an exercise price of $0.35 per share. In June 2010, we re-priced options to purchase 19,000 shares of common stock previously outstanding which had an exercise price of $0.79 per share. The new exercise price is $0.41 per share and the options were exercisable immediately. The grant date fair value of the re-priced options was not material. These options expired in December 2010. In June 2010, we issued options to purchase 73,000 shares of common stock. These stock options have a five-year term, vested 100% upon grant and have an exercise price of $0.41 per share.

~~Shipping~~The ~~and~~weighted ~~handling~~average ~~costs~~fair ~~associated~~value ~~with~~of ~~inbound~~stock ~~freight~~options ~~are~~granted ~~capitalized~~during to2011 ~~inventories~~and 2010 were $0.35 and ~~relieved~~$0.41 ~~through~~per ~~cost~~share, ofrespectively, ~~sales~~at asthe ~~inventories~~date ~~are~~of ~~sold~~grant. ~~Shipping~~The ~~and~~fair ~~handling~~value ~~costs~~of ~~associated~~the options was estimated using the Black-Scholes option pricing model with the ~~delivery~~following ofweighted ~~products~~average ~~are~~assumptions ~~included~~for in2011 ~~selling~~and 2010, ~~general~~respectively; no expected dividend yield; expected volatility of 441% and ~~administrative~~365%; ~~expenses~~risk free interest rate of 2.03% ~~Shipping~~and 2.04%; and ~~handling~~an ~~fees~~expected ~~charged~~option tolife ~~customers~~of ~~are~~4 ~~recorded~~years infor ~~revenue~~each period. ~~Shipping~~The ~~and~~expected ~~handling~~volatility ~~costs,~~was ~~included~~determined inbased ~~selling,~~primarily ~~general~~on ~~and~~the ~~administrative~~historical ~~expenses,~~volatility ~~were~~of ~~$655,000~~the ~~and~~Company’s ~~$503,000~~common ~~for~~stock ~~the~~over ~~years~~a ~~ended~~period ~~December 31,~~commensurate ~~2010~~with ~~and~~the ~~2009,~~expected ~~respectively~~term of the stock options.

~~(p)~~The risk free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. The estimated expected option life is based primarily on historical employee exercise patterns. The Company issues new shares as shares are required to be delivered upon exercise of all outstanding stock options. We recorded share-based compensation expense of $8,000 and $34,000 during 2011 and 2010, respectively, in connection with the issued and re-priced options.

~~Segment~~At ~~Reporting~~December 31, 2011, there were 86,241 shares remaining available for awards under the 2006 Plan. There is no future share-based compensation related to previous awards under the 2006 Plan.

~~For~~A ~~the~~summary ~~years~~of ~~ended~~the ~~December 31,~~option ~~2010~~activity ~~and~~under ~~2009,~~our ~~management~~stock ~~has~~option ~~determined~~plans ~~that~~as weof ~~operated~~December 31, in2011 aand ~~single~~2010 ~~operating~~are ~~segment,~~presented ~~manufacturing~~in ~~and~~the ~~distribution~~following ~~of building materials.~~table:

(q)

	Number of Options					Weighted-Average Exercise Price Per Share
	2011		2010			2011			2010
Options outstanding at January 1		104,250		93,000		$	0.52	*	$	2.30
Granted		19,000		73,000		$	0.35		$	0.41
Exercised		—		—			—		$	—
Forfeited or expired		—		(61,750	)	$	—		$	2.95
Options outstanding at December 31		123,250		104,250		$	0.50		$	0.52	*
Vested at December 31		123,250		104,250		$	0.50		$	0.52	*
Exercisable at December 31		123,250		104,250		$	0.50		$	0.52	*

~~Litigation~~———————

On* anThis ~~ongoing~~weighted-average ~~basis,~~exercise weprice ~~assess~~reflects ~~the~~re-pricing ~~potential~~during ~~liabilities~~2010 ~~related to any lawsuits or claims brought against us. While it is typically difficult to determine the timing and ultimate outcome~~ of ~~such~~previously ~~actions,~~issued weoptions ~~use our best judgment~~ to ~~determine~~purchase ~~if it is probable that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable loss~~19,000 ifshares ~~any, can be made. We accrue legal fees and a loss contingency when we believe a loss is probable and the amount~~ of ~~loss~~common ~~and legal fees can be reasonably estimated~~stock. Due to the inherent uncertainties related to the eventual outcome of litigation, it is possible that certain matters may be resolved for amounts materially different from any provisions or disclosures that have been previously made.

~~(r)~~At December 31, 2011, there was approximately $9,000 of intrinsic value relating to vested or exercisable options to purchase 92,000 shares of the Company’s common stock. At December 31, 2010 there was no intrinsic value in vested or exercisable stock options outstanding since the respective exercise prices exceeded the Company’s stock price on such respective dates.

~~Impairment~~Weighted average information of ~~Long-Lived~~stock ~~Assets~~options outstanding, vested and exercisable at December 31, 2011 was as follows:

Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. If such assets are considered to be impaired, the impairment to be recognized is the total by which the carrying amounts of the assets, if any, exceed the fair values determined using a discounted cash flow model. As of December 31, 2010 and 2009, an impairment analysis of the long-lived assets associated with our continuing operations was performed which resulted in no impairment charge.

Shares		Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price
	31,250	1.83	$	0.79
	73,000	3.52	$	0.41
	19,000	4.12	$	0.35

~~(s)~~38

~~Product~~(13) Share-Based ~~Warranty~~Compensation – (Continued)

WeAll ~~provide~~restricted ~~our~~stock ~~customers~~units ~~with~~granted ~~limited~~and ~~warranties~~outstanding onunder ~~certain~~our ~~manufactured~~2006 ~~products.~~Plan ~~Limited~~were ~~warranties~~valued ~~generally~~at ~~range from 5 to 10 years~~$3.66 ~~Warranty~~per ~~reserves~~share, ~~are~~which ~~established~~was based on ~~known~~the orprice ~~probable~~of ~~claims,~~the ~~together~~Company’s ~~with~~common ~~historical~~stock ~~experience~~at ~~factors.~~the ~~Management~~grant ~~periodically~~date. ~~assesses~~A ~~the~~summary ~~adequacy~~ of ~~its~~the ~~recorded~~nonvested ~~warranty~~restricted ~~liability~~stock ~~and~~activity ~~adjusts the amount~~ as ~~necessary.~~of ~~The~~December 31, ~~warranty~~2011 ~~reserve~~and 2010 is ~~included~~presented in the ~~balance~~following ~~sheet in accrued expenses and other liabilities.~~table:

Product warranty accrual activity for the years ended December 31, 2010 and 2009 is as follows:

	2011			2010
Nonvested restricted stock outstanding at January 1		7,875			15,750
Granted		—			—
Vested		(7,875	)		(7,875	)
Forfeited		—			—
Nonvested restricted stock outstanding at December 31		—			7,875

	Year Ended December 31,
	2010			2009
Beginning balance	$	40,000		$	41,000
Warranty provision		68,000			20,000
Warranty payments		(32,000	)		(21,000	)
Ending balance	$	76,000		$	40,000

(14) Basic and Diluted (Loss) Earnings Per Share

Anti-dilutive common stock equivalents are not included in our loss per share calculations. Due to the loss, all common stock equivalents were excluded from the diluted per share calculation for the years ended December 31, 2011 and 2010 because their inclusion would have been anti-dilutive. There were 123,250 anti-dilutive common stock equivalents at December 31, 2011, consisting of stock options that had exercise prices of $0.35, $0.41 and $0.79 per share. There were 112,125 anti-dilutive common stock equivalents at December 31, 2010, consisting of 104,250 stock options that had exercise prices of $0.41 and $0.79 per share, and 7,875 shares of unvested restricted stock.

~~IMPERIAL~~(15) Related ~~INDUSTRIES,~~Party ~~INC. AND SUBSIDIARIES~~Transactions

~~NOTES~~We TOpaid ~~CONSOLIDATED~~legal ~~FINANCIAL~~fees ~~STATEMENTS~~of –$100,000 ~~(CONTINUED)~~and $133,000 during 2011 and 2010, respectively, to a law firm with which our Chairman of the Board is affiliated. We had amounts payable to this law firm of approximately $5,000 and $7,000 at December 31, 2011 and 2010, respectively. Such fees were for services rendered by members and associates of such law firm other than our Chairman.

~~(2)~~The husband of a member of our board of directors was an executive officer of a company which was a vendor of Just-Rite and is a customer of Premix. This individual terminated employment with that company during the first quarter of fiscal 2011. Premix had sales of $27,000 and $58,000 to this company during 2011 and 2010, respectively.

~~Going~~The ~~Concern~~son of one of our Directors was employed by us as a salesman commencing in the latter part of 2010. During 2011, in accordance with our sales commission policies, we paid this individual combined salary and sales related expenses of $29,000. This individual terminated his employment with the Company during the third quarter of 2011.

The accompanying consolidated financial statements have been prepared and are presented assuming the Company’s ability to continue as a going concern. The industry in which the Company is operating has been impacted by a number of adverse factors over the past three years. As a result, the Company has incurred losses for the years ended December 31, 2010 and December 31, 2009. Our independent registered public accounting firm issued its report dated March 28, 2011, in connection with the audit of our financial statements as of December 31, 2010 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern.39

~~The~~(16) Commitments ~~accompanying consolidated financial statements do not include any adjustments relating to the recoverability~~ and ~~classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.~~Contingencies

In order to address the need to satisfy our continuing obligations and realize our long term strategy, management has been reviewing various strategic alternatives and has taken several steps and is considering additional actions to improve our operating and financial results, which we hope will be sufficient to provide the Company with the ability to continue as (a) Legal ~~going concern, including the following:~~Proceedings

· Asbestos Litigation

~~Discontinuance~~Premix ofis ~~Just-Rite’s~~a ~~operations~~defendant ~~and~~together ~~assignment~~with ofnon-affiliated ~~all~~parties ofin ~~its~~sixteen ~~assets,~~claims ~~subject~~(eight ~~to its liabilities, as~~ of ~~June 11,~~which ~~2009,~~include ~~via~~Imperial ~~the~~as ~~Assignment.~~a ~~The~~defendant) ~~Assignee~~which isallege ~~winding~~bodily ~~down,~~injury ~~selling~~due ~~and~~to ~~liquidating~~exposure ~~the~~to ~~assets~~asbestos ofcontained ~~Just-Rite~~in ~~for~~products ~~the~~manufactured ~~benefit of creditors~~ in ~~accordance~~excess ~~with the laws~~ of ~~the~~thirty ~~State~~(30) ofyears ~~Florida~~ago. The Wetable nobelow ~~longer~~lists ~~operate~~each ~~any~~ of ~~the~~these ~~assets~~pending ~~or business of Just-Rite~~claims, orin ~~fund~~addition ~~its~~to ~~losses~~the ~~from~~court ~~discontinued~~in ~~operations~~which ~~since~~ the ~~date~~action ofis ~~the~~pending ~~Assignment,~~and ~~although~~the wedate ~~are~~that ~~required~~Premix toand/or ~~maintain~~Imperial ~~financial~~was ~~reporting~~served ofwith the ~~discontinued operations~~complaint.

STYLE OF CASE	COURT/TRIBUNAL	CASE NUMBER	DATE OF SERVICE OF COMPLAINT
Marilyn Adair v. Premix, et al	15th Judicial Circuit - Palm Beach County	07-9343	June 29, 2007
Elaine Legault v. Premix, et al(1)	13th Judicial Circuit - Hillsborough County	08-10789	June 23, 2008
Edward Pryzbyla v. Premix, et al	17th Judicial Circuit-Broward County	09-053844-07	November 4, 2009
Nancy Henley v. Imperial, Premix, et al	13th Judicial Circuit - Hillsborough County	09-27856	March 12, 2010
Bruce Weisemann v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-005365	March 17, 2010
Shirley Picklo v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-000262-07	April 21, 2010
Betty Trowsse v. Imperial, Premix, et al	13th Judicial Circuit - Hillsborough County	10-02779	May 5, 2010
Edward Evans v. Imperial, Premix, et al	11th Judicial Circuit - Miami-Dade County	10-9106-CA-42	May 13, 2010
Herman Roberts v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-006329	July 2, 2010
Lawrence McFarlin v. Premix, et al	13th Judicial Circuit - Hillsborough County	10-007786	August 5, 2010
Pauline Marley v. Imperial, Premix, et al	11th Judicial Circuit - Miami-Dade County	10-17557-CA-42	August 6, 2010
Isabel Perry v. Imperial, Premix, et al	17th Judicial Circuit-Broward County	10-23096	September 24, 2010
Craig Comes v. Imperial, Premix, et al	13th Judicial Circuit - Hillsborough County	10-014949	November 12, 2010
Claudia Fils-Aime v. Imperial, Premix, et al(1)	11th Judicial Circuit - Miami-Dade County	10-63197-CA-06	March 11, 2011
Hidelisa Cordovez v. Premix, et al(1)	11th Judicial Circuit - Miami-Dade County	11-08485-CA-24	April 13, 2011
Julius B. Sanders v. Imperial, Premix, et al	17th Judicial Circuit-Broward County	11-016176	August 17, 2011
James R. Williams v. Premix, et al	13th Judicial Circuit - Hillsborough County	11-8564Z	November 2, 2011

~~Implementation~~(1) ofDuring ~~more~~the ~~stringent~~first ~~credit~~quarter ~~and~~of ~~collection~~2012 ~~procedures~~these ~~and~~cases ~~controls~~were indismissed, anwhich ~~attempt~~did tonot ~~reduce~~result ~~days~~in ~~outstanding~~any ofadditional ~~trade~~costs ~~accounts~~to ~~receivable~~our ~~and~~insurance ~~improve~~carriers ~~working~~or ~~capital~~the Company.

·40

~~Reduction~~16) Commitments ~~of compensation for senior management~~ and ~~other~~Contingencies ~~employees~~– ~~in 2009. In addition, we made personnel reductions in our continuing operations in 2009. These reductions continued to impact results in 2010.~~(Continued)

·The above chart depicts all asbestos cases that were pending against Premix and/or Imperial as of December 31, 2011. During the first quarter of 2012, two additional asbestos claims were filed, including Timmy King v. Imperial, Premix et al., which claim was filed in the 11th Judicial Circuit Court in and for Miami-Dade County, Case No.: 12-0075. Premix was served with a copy of the King Complaint on February 13, 2012, whereas Imperial was served with a copy of the King Complaint on February 20, 2012. In addition, on March 14, 2012, Premix was named in an asbestos lawsuit filed in the District Court of Dallas County, Texas, in the matter of Alan J. Hantak, et al. v. ABB, Inc., Case No. 12-02936. Premix has not yet been served with a copy of the Complaint in the Hantak matter.

~~Consolidation~~We believe that Premix and the Company have meritorious defenses to each of ~~our~~the ~~manufacturing~~claims ~~operations~~identified in ~~2009~~the bytable ~~shifting~~above. We have identified at least ten (10) of our prior insurance carriers including both primary and excess/umbrella liability carriers that have provided liability coverage to us, including potential coverage for alleged injuries relating to asbestos exposure. Several of these insurance carriers have been and continue to provide a ~~portion~~defense to Premix and the Company under a reservation of rights in all of the ~~manufacturing~~asbestos cases. Certain of these underlying insurance carriers have denied coverage to Premix and the Company on the basis that certain exclusions preclude coverage and/or that their policies have been exhausted. In June of 2009, one such carrier filed suit in ~~Pompano~~Miami-Dade ~~Beach~~Circuit Court against Premix and Imperial, ~~Florida~~wherein the carrier sought a declaration from the Court that its insurance policies do not provide coverage for the asbestos claims against Premix and Imperial. We believed that we had meritorious defenses to ~~Winter~~these ~~Springs~~claims, ~~Florida~~and filed a counterclaim against the carrier for breach of contract. ~~Also~~In December 2010, wePremix, ~~consolidated~~Imperial ~~our~~and ~~corporate~~this ~~office~~carrier ~~into~~resolved their dispute, with the ~~distribution~~carrier ~~center~~paying ina ~~Pompano~~settlement ~~Beach~~of $500,000 to ~~reduce~~Premix ~~costs~~and Imperial. As ~~Furthermore~~part of the settlement, wethere ~~are~~is ~~continuing~~no tolonger ~~evaluate~~coverage ~~and~~available ~~implement~~under ~~additional~~that ~~cost~~disputed ~~reduction~~policy. ~~initiatives~~The tosettlement ~~reduce~~was ~~unnecessary~~recorded ~~costs~~as a receivable and included in ~~our~~other ~~operations~~current assets in the accompanying condensed consolidated balance sheet as of December 31, 2010, and toas ~~conserve~~income ~~working~~reflected ~~capital.~~as litigation settlement during the fourth quarter of 2010. We ~~are~~received ~~also~~payment ~~investigating~~of ~~establishing~~the ~~arrangements~~$500,000 settlement during the first quarter of 2011. During the first quarter of 2011, we resolved a dispute with ~~other~~another ~~manufacturers~~carrier toregarding ~~produce~~primary-layer ~~and~~insurance ~~sell~~coverage, ~~our~~which ~~products~~resulted in ~~additional~~this ~~geographic~~carrier ~~markets~~paying a settlement of $325,000 to ~~increase~~Premix ~~sales~~and Imperial, which was recorded as ~~well~~income reflected as ~~seeking~~litigation ~~new~~settlement ~~product~~during ~~offerings~~the tofirst ~~expand~~quarter ~~our~~of ~~product~~2011. As ~~lines~~part of the settlement, there is no longer coverage available under that disputed policy. Notwithstanding the foregoing, we believe, when considering that Imperial and Premix have substantial umbrella/excess coverage for these claims, that we have more than adequate insurance coverage for these asbestos claims and such policies are not subject to self-insured retention (“SIR”).

~~Based~~Other upon the steps outlined above being successful, we believe our cash on hand arising from the receipt of our tax refund in the second quarter of 2010 and litigation settlements collected in 2011 discussed in Notes 16(a) and 20 will provide sufficient cash to meet current obligations for our operations and support the cash requirements of our capital expenditure programs to allow us to remain a going concern. While we presently do not have a line of credit or other financing arrangement and have sufficient cash balances to sustain operations for the immediate future, we continue to seek possible financing from other sources, primarily asset based lending opportunities, to generate additional funds for operations. Litigation

~~There~~Premix ~~can~~is bea nodefendant ~~assurance~~in ~~that~~a lawsuit in Orange County, Florida brought by the ~~above~~parents ~~actions~~of ~~will~~their beminor ~~successful,~~daughter ~~that~~who ~~cash~~was ~~on-hand~~injured when she entered and ~~additional~~hit ~~cash~~the ~~received~~bottom inof the ~~first~~swimming ~~quarter~~pool oflocated ~~2011~~at ~~from~~a ~~litigation~~resort ~~settlements~~in ~~will~~Orlando, ~~provide~~Florida. Plaintiffs ~~sufficient~~allege ~~cash~~claims toagainst ~~fund~~the ~~continuing~~owner, ~~operations~~operator, orand ~~that~~manager ~~new~~of ~~financing~~the ~~will~~resort, beas ~~available~~well oras ~~that~~the welandscape ~~could~~architect, ~~obtain~~pool ~~any~~contractor ~~such~~and ~~financing~~various onsubcontractors ~~terms~~that ~~suitable~~were toallegedly ~~us.~~involved ~~The~~in ~~extent~~the construction and/or supply of materials utilized in the construction ~~industry’s~~of ~~continued~~the ~~unfavorable~~pool. Notably, ~~conditions~~Plaintiffs ~~due~~did not seek to ~~the~~add ~~unprecedented~~Premix ~~adverse~~as ~~economic~~a ~~conditions~~defendant ~~now~~until ~~existing~~three (3) years after first filing suit against the other defendants named in the ~~general~~lawsuit. Premix ~~economy~~believes that it has meritorious defenses to Plaintiffs’ claims, ~~its~~including ~~effect~~but onnot ~~demand~~limited ~~for~~to ~~our~~the fact that Premix’s products, ~~and~~may ~~consequently~~not ~~our~~have ~~results~~been used in the construction of ~~operations~~the ~~and~~pool. The ~~our~~Company’s ~~ability~~carriers have retained counsel to ~~maintain~~defend ~~adequate~~Premix’s ~~liquidity~~interests in this matter pursuant to ~~continue~~policies asof ainsurance ~~going~~that ~~concern~~are ~~cannot~~not besubject ~~determined~~to SIR.

32We are aggressively defending all of the lawsuits and claims described above, however, at the present time, we cannot assess the likely outcome or make an estimate of the possible loss, if any, related to these matters. While we do not believe the ultimate resolution of these aforementioned claims will have a material adverse effect on our operating results and financial condition, given the uncertainty and unpredictability of litigation, there can be no assurance that the ultimate resolution of such litigation would not have a material adverse effect.

~~IMPERIAL~~We ~~INDUSTRIES,~~or ~~INC~~our subsidiaries are also parties to other legal proceedings arising from time to time in the normal course of business. While ~~AND~~litigation ~~SUBSIDIARIES~~is subject to inherent uncertainties, our management currently believes that the outcome of these proceedings, individually or in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations.

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)~~41

(3b) Contingencies from Imperial’s Guarantee of Certain Just-Rite Debt and Leases

Imperial is a guarantor of the outstanding principal and interest on certain Just-Rite debt and Just-Rite’s remaining obligations under certain leases. These obligations aggregated approximately $684,000 as of December 31, 2011 ($1,787,000 as of the date of the Assignment), consisting of certain mortgage and equipment notes payable and capitalized and operating lease obligations. We believe the sale or disposition of certain pieces of equipment may not generate sufficient proceeds to satisfy the amounts due on the respective equipment notes or the leases resulting in a remaining obligation for the ~~Benefit~~Company. As further discussed in Note 5, Just-Rite wrote down certain obligations related to property and equipment to zero during the fourth quarter of ~~Creditors~~2011 since it is not anticipated that there will be any remaining funds available by Just-Rite upon finalization of the Assignment process to pay these obligations.

OnBased ~~June 11,~~on ~~2009, Just-Rite entered into an Assignment for~~ the ~~Benefit~~estimated shortfall of ~~Creditors (~~the ~~“Assignment”)~~amount ~~with~~that ~~Michael~~may P.be ~~Phelan,~~realized ~~Vice~~on ~~President~~the sale of ~~Michael~~the ~~Moecker~~assets ~~and~~compared ~~Associates~~to (the ~~“Assignee”).~~amount Inof ~~connection with~~ the ~~Assignment,~~payments ~~Just-Rite~~and ~~transferred~~obligations ~~all~~guaranteed ofby ~~its assets~~Imperial, ~~subject~~we toestablished ~~any~~a ~~liabilities~~loss ~~thereof,~~contingency toduring the ~~Assignee,~~second aquarter ~~non-affiliated~~of ~~party,~~2009. ~~who~~During ~~is winding down~~2010, ~~selling and liquidating~~ the ~~assets~~re-assessment of ~~Just-Rite~~certain ~~for~~guaranteed ~~the~~debt ~~benefit~~obligations ofresulted ~~creditors~~ in ~~accordance with~~ the ~~laws~~recording of ~~the~~a ~~State~~reduction ofin ~~Florida.~~loss Wecontingency ~~no longer operate any~~ of ~~the~~$32,000. No ~~assets~~additional orcontingency ~~the~~was ~~business~~recorded ofduring ~~Just-Rite from the date of the Assignment~~2011. As ~~a result~~ of ~~the~~December ~~Assignment~~31, ~~Just-Rite~~2011 ~~operations~~and ~~are~~2010, ~~presented~~there asis ~~discontinued~~a ~~operations~~remaining ~~for~~liability ~~the~~balance ~~years~~related ~~ended~~to ~~December 31,~~these ~~2010~~guarantees ~~and~~of ~~2009~~$172,000 and ~~all~~$221,000, ~~Just-Rite~~respectively, ~~assets~~which ~~are~~is ~~considered~~included ~~held~~in ~~for~~accrued ~~sale~~expenses and ~~are~~other ~~reported on the financial statements as “Assets held for sale by assignee”~~liabilities.

~~Since~~Due ~~Just-Rite~~to ~~has~~the ~~not~~uncertainty ~~obtained~~of ~~either~~the ~~(a)~~market avalue ~~final~~of ~~court order for~~ the ~~conveyance~~collateralized of assets, ~~(b) a settlement with creditors~~ or ~~(c)~~the aamount ~~court~~of ~~action~~proceeds ~~granting~~to ~~Just-Rite~~be ~~relief~~realized from the ~~creditor’s~~sale ~~claims~~of such assets, ~~Just-Rite’s~~loss ~~liabilities~~contingency estimates will continue to be ~~recorded~~adjusted ~~at full historical value~~ in ~~our~~future ~~consolidated~~periods ~~financial~~based ~~statements~~upon asmore ~~“Liabilities~~current ~~related~~information, towhen ~~assets held for sale by assignee”~~applicable.

As(c) 401(k) the Assignment process has not been completed, it is possible that the ultimate proceeds from the disposition of the assets held for sale by the assignee, and the settlement of liabilities related to assets held for sale by the Assignee could be at amounts that are materially different than the carrying amounts reflected in the accompanying consolidated financial statements.Plan

We have a profit sharing retirement plan for our employees that is qualified under Section 401(4k) of the Internal Revenue Code. We made matching contributions based on a percentage of eligible employee compensation deferrals. The aggregate matching contribution to the plan was approximately $11,000 and $5,000 during 2011 and 2010, respectively. We made matching contributions only during the third and fourth quarters of 2010 and during all four quarters of 2011.

~~Forbearance~~(d) Lease ~~Agreement~~ Commitments

OnCertain ~~June 10~~property, ~~2009,~~plant ~~in anticipation of executing the Assignment, we executed a Forbearance~~ and ~~Amendment~~equipment ~~Agreement~~were ~~(the~~leased ~~“Forbearance~~by ~~Agreement”)~~us to our then existing Consolidating, Amended and Restated Financing Agreement dated as of January 28, 2000 (the “Line of Credit”) with Wachovia Bank, N.A. (the “Lender”). The Assignment was considered an event of default under ~~the~~long-term ~~Line~~leases ofwhich ~~Credit.~~contain ~~Under~~provisions ~~the~~for ~~Forbearance~~fixed ~~Agreement,~~rental the Lender agreed to forbear from exercising any of its rights in response to the occurrence of certain events of default under the Line of Credit, subject to our compliance with certain requirements set forth in the terms of the Forbearance Agreement, and to reduce the amount of available borrowingsincreases. ~~The~~For ~~Forbearance~~all ~~Agreement~~noncancellable ~~was~~operating ~~subsequently amended and extended five times~~leases, onfuture ~~August 7,~~minimum ~~2009,~~lease ~~August 28,~~commitments ~~2009,~~consisted ~~September 30, 2009, November 30, 2009, and January 29, 2010. On April 30, 2010, we fully repaid the remaining outstanding principal balance due under the Line~~ of ~~Credit, and~~ the ~~Forbearance~~following ~~Agreement~~at ~~and underlying Line of Credit were terminated effective May~~December ~~11, 2010. We no longer have a line of credit.~~31:

(5)

	Amount*
2012	$	216,000
2013		173,000
2014		21,000
2015		21,000
2016		5,000
	$	436,000

~~Discontinued Operations~~———————

~~Effective~~* ~~with~~Amounts ~~the~~relating ~~Assignment,~~to ~~we discontinued all of Just-Rite’s operations. The Assignee is winding down, selling and liquidating these assets for~~ the ~~benefit~~Winter ofSprings ~~creditors~~facility in accordance with the laws of the State of Florida. Cash proceeds associated with the Just-Rite assets for the year ended December 31, 2010 and from June 12, 2009 through December 31, 2009 were primarily generated from collections of Just-Rite’s accounts receivable and the dispositions of certain property, plant and equipment and inventory. As a result, all of Just-Rite’s results of operations are ~~presented~~recorded as ~~discontinued~~interest ~~operations~~expense ~~for~~(see ~~the~~Note ~~years ended December 31, 2010 and 2009~~6).

~~Revenue,~~Rent ~~pretax~~expense ~~loss~~for warehouses, ~~tax~~distribution ~~benefit~~facilities, ~~net~~manufacturing plants and ~~net~~the ~~loss~~corporate ~~from~~office ~~Just-Rite~~incurred isunder ~~reported~~operating asleases ~~discontinued~~was ~~operations~~$209,000 ~~for~~and ~~the years ended December 31~~$239,000 ~~2010~~for ~~and~~2011 ~~2009~~ and is2010, ~~summarized as follows:~~ respectively.

	2010		2009
Revenue	$	—	$	10,550,000
Pretax loss	$	638,000	$	5,077,000
Tax benefit, net	$	—	$	(962,000)
Loss from discontinued operations, net of taxes	$	638,000	$	4,115,000

In addition, rental amounts incurred for the Winter Springs facility and recorded as interest expense amounted to $174,000 and $138,000 for 2011 and 2010, respectively. See Note 6.

33See Note 5 for discussion of Just-Rite noncancellable operating lease commitments.

~~IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES~~42

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS –~~ (~~CONTINUED~~17) Employment Agreement

~~(5)~~We are party to a one-year renewable employment agreement with our Chief Operating Officer which provides the executive with an annual base salary plus a severance amount upon a change in control, as defined in the agreement.

~~Discontinued~~(18) Business ~~Operations~~and –Credit ~~(Continued)~~Concentrations

~~The~~During ~~carrying~~2011 ~~amount~~and of2010, ~~the~~two ~~major~~vendors ~~classes~~in ofaggregate, ~~“Assets~~accounted ~~held~~ for ~~sale~~approximately by33% ~~assignee”~~ and ~~“Liabilities~~26% of total purchases related to ~~assets~~continuing ~~held~~operations, and no single vendor accounted for ~~sale~~more bythan ~~assignee”~~24% and 17%, respectively, of ~~Just-Rite~~our purchases. Management believes that ~~were~~alternative ~~transferred~~suppliers are available to meet the ~~Assignee~~Company’s ~~are~~purchasing asneeds ~~follows~~at prices which would not significantly impair our ability to compete effectively. One customer accounted for 28% and 29% of our net sales from continuing operations for 2011 and 2010, respectively. Accounts receivable from this customer represented 35% and 23% of total accounts receivable at December 31:, 2011 and 2010, respectively. Another customer accounted for 12% and 14% of our net sales from continuing operations during 2011 and 2010, respectively. Accounts receivable from this customer represented 12% and 17% of total accounts receivable at December 31, 2011 and 2010, respectively.

	2010		2009
Cash and cash equivalents	$	7,000	$	29,000
Accounts receivable, net of allowance for doubtful accounts of $2,429,000 and $2,677,000 as of December 31, 2010 and 2009, respectively		67,000		549,000
Total current assets held for sale by assignee		74,000		578,000
Property, plant and equipment, at cost, net of accumulated depreciation of $499,000 and $1,013,000 at December 31, 2010 and 2009, respectively		943,000		1,827,000
Other assets		40,000		83,000
Total non-current assets held for sale by assignee		983,000		1,910,000
Total assets held for sale by assignee	$	1,057,000	$	2,488,000
Accounts payable and accrued expenses		4,346,000		4,165,000
Notes payable – Line of Credit		—		80,000
Current portion of long term debt		642,000		1,336,000
Total current liabilities related to assets held for sale by assignee	$	4,988,000	$	5,581,000

(19) Payable to Former Preferred Stockholders

~~The~~As ~~Just-Rite~~a ~~assets~~result ~~are recorded at the lower~~ of ~~cost or market. The Assignee assisted our management in determining~~ the ~~amount~~consummation of the allowance for doubtful accounts on accounts receivables based on the Assignee’s experience collecting receivables from liquidating assets of closed businesses and collection efforts of the Just-Rite accounts since the commencement of the Assignment. As of December 31, ~~2010,~~1998 ~~the~~merger ~~remaining~~with ~~balance~~our inwholly-owned ~~accounts receivable has been fully reserved due to substantial uncertainty regarding collectability~~subsidiary, ~~except~~we ~~for~~have ~~$67,000~~a ~~related to specific accounts which were collected by the Assignee during the first quarter of 2011. Just~~non-~~Rite~~interest ~~incurred~~bearing ~~bad~~payable ~~debt~~to ~~expense~~former ofpreferred ~~$55,000~~stockholders ~~and~~who ~~$1,131,000~~have ~~during~~not ~~the~~yet ~~years~~tendered ~~ended~~their ~~December 31,~~shares ~~2010 and 2009, respectively, in connection with the Assignee’s collection efforts and allowance for doubtful accounts adjustments. Inventories, which amounted to $2,451,000~~ as ofrequired ~~the date of the Assignment, were liquidated~~ by the ~~Assignee~~terms ~~for a total~~ of ~~$1,140,000~~such ~~at various dates through December 31, 2009, resulting in a loss of $1,311,000 during the year ended December 31, 2009~~merger. ~~There~~Amounts ~~were~~payable no inventories remaining as of December 31, 2009. Certain other miscellaneous receivables and other current assets were fully reserved or written off as of December 31, 2009, resulting in losses of $279,000 during the year ended December 31, 2009. During the year ended December 31, 2010, certain other long-term assets amounting to ~~$38,000~~former ~~were~~preferred ~~written~~stockholders ~~off.~~on ~~Just-Rite~~our ~~incurred~~consolidated ~~operating~~balance ~~charges~~sheets ofare $~~230~~48,000 and $~~790~~50,000 ~~during~~at ~~the years ended~~ December 31, ~~2010~~2011 and ~~2009~~2010, respectively~~, resulting from the Assignee’s efforts to liquidate assets~~.

In April 2010, Just-Rite sold its real property located in Tampa, Florida for net proceeds of $554,000. Just-Rite realized a gain of $230,000 from the sale of this parcel, which is included in loss from discontinued operations in the accompanying consolidated statement of operations for the year ended December 31, 2010. In June 2010, Just-Rite entered into a sale agreement to sell its real property located in Jacksonville, Florida for $600,000 in gross proceeds. The sale was subject to certain contingencies, including receipt of a satisfactory environmental report. Just-Rite recorded a charge of $95,000 in June 2010, included in loss from discontinued operations, to reduce the carrying value of the real property to its net realizable value based on the estimated net cash proceeds to be received from the pending sale. During the first quarter of 2011, the proposed sale was terminated. During the year ended December 31, 2010, Just-Rite recorded charges of $63,000 to write down certain other property, plant and equipment to net realizable value, and recorded charges of $75,000 relating to certain other disposals of property, plant, and equipment. Certain property, plant and equipment with a net book value of $742,000 were liquidated by the Assignee for $189,000 at various dates through December 31, 2009, resulting in a loss of $553,000. 43

34ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

~~IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES~~ None

~~NOTES~~ITEM TO9A. CONTROLS ~~CONSOLIDATED~~AND ~~FINANCIAL STATEMENTS – (CONTINUED)~~PROCEDURES

~~(5)~~a. Evaluation of disclosure controls and procedures.

~~Discontinued~~We ~~Operations~~have –established ~~(Continued)~~disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officer who certifies our financial reports, as well as to other members of senior management and the Board of Directors.

InOur ~~February 2009~~management, ~~Just-Rite~~under ~~sold~~the asupervision ~~parcel~~ of ~~real~~our ~~property~~Principal inExecutive ~~Gulfport,~~and ~~Mississippi~~Financial Officer, tohave evaluated the ~~Mississippi~~effectiveness ~~Department~~ of ~~Transportation~~our disclosure controls and procedures as defined in Securities and Exchange Commission (“~~MDOT~~SEC”), ~~resulting~~Rule 13a-15(e) inas ~~net~~of ~~cash~~the ~~proceeds~~end toof ~~Just-Rite~~the ofperiod ~~$865,000.~~covered ~~Just-Rite~~by ~~realized~~this areport ~~gain~~(“Evaluation ofDate”). ~~$573,000~~Management ~~from~~has ~~the~~concluded ~~sale~~that ofour ~~this~~disclosure ~~parcel~~controls inand ~~the~~procedures ~~first~~were ~~quarter~~effective as of ~~2009~~December 31, 2011. ~~During~~Such ~~the~~controls ~~fourth~~and ~~quarter~~procedures ofare ~~2009~~intended ~~the~~to ~~Assignee~~ensure ~~received~~that ~~$335,000~~information inwe ~~reimbursement~~are ~~costs~~required ~~from~~to ~~MDOT~~disclose ~~for~~in ~~vacating~~reports ~~its~~that ~~Gulfport~~we ~~facilities.~~file ~~The~~or ~~gain~~submit asunder ~~well~~the asSecurities ~~the~~Exchange ~~reimbursement~~Act ~~amount~~is ~~received~~communicated byto management, including the ~~Assignee~~Principal ~~are~~Executive ~~reflected~~and inFinancial ~~loss~~Officer, ~~from~~as ~~discontinued~~appropriate, ~~operations~~to inallow ~~the~~timely ~~statements~~decisions ofregarding ~~operations~~required ~~for~~disclosure ~~the~~and ~~year~~is ~~ended~~recorded, ~~2009.~~processed, ~~All~~summarized, ofand ~~the~~reported ~~remaining~~within ~~Gulfport~~the ~~assets~~time ~~were~~periods ~~transferred~~specified toin the ~~Assignee~~SEC’s onrules ~~June 11,~~and ~~2009~~forms.

~~Certain vehicles and equipment, for which there remains debt outstanding, were repossessed by the lenders pending liquidation of the assets and settlement of the obligations~~b. ~~These~~Changes ~~repossessed assets and the related debt, continue to be recorded~~ in ~~our~~internal balance sheets as of December 31, 2010 and 2009, and are recorded in Assets held for sale by assignee and Liabilities related to assets held for sale by assignee, respectively, since such lenders have not yet transferred title from Just-Rite and the related debt is still an obligation of Just-Rite. The aggregate net book value of these assets as of December 31, 2010 and 2009 was $397,000 and $717,000, respectively. See Note 16(b) for discussion of a loss contingency recorded by Imperial as result of being a guarantor of certain Just-Rite obligations.controls

AtThere ~~December 31,~~were ~~2009,~~no ~~Notes~~changes ~~payable~~in ~~– line of credit, represented amounts outstanding under~~ our ~~then~~internal ~~existing~~controls ~~line~~that ofoccurred ~~credit.~~in ~~The line of credit was collateralized by accounts receivable and inventory of Premix and Just-Rite. However, accounts receivable and inventory of Just-Rite were not considered eligible collateral for~~ the ~~purpose~~fourth ofquarter ~~determining available borrowing. The line~~ of ~~credit~~fiscal ~~bore~~2011 ~~interest~~that athave amaterially ~~variable~~affected, ~~rate~~or ~~based~~are onreasonably ~~Libor,~~likely ~~subject~~ to amaterially ~~minimum~~affect ofour ~~1.5%,~~internal ~~plus~~controls ~~the~~over ~~applicable~~financial ~~margin (7~~reporting.5% at December 31, 2009). At December 31, 2009, the outstanding balance on the line of credit was $80,000. The Forbearance Agreement and the line of credit expired as of April 30, 2010. On April 30, 2010, the outstanding principal balance under the line of credit was paid in full and the Forbearance Agreement with the Lender was terminated effective May 11, 2010.

Long-term debt owed by Just-Rite represents (i) amounts outstanding under various mortgage and equipment notes payable totaling $516,000 and $1,210,000 at December 31, 2010 and 2009, respectively, at various interest rates ranging from 6c.~~87%~~ toManagement’s ~~8.0%~~Annual ~~per~~Report ~~annum,~~on ~~and~~Internal ~~(ii)~~Control ~~amounts~~Over ~~outstanding~~Financial under capitalized lease obligations amounting to $126,000 at December 31, 2010 and 2009, respectively, at various rates ranging from 7.75% to 8.0%. These notes payable and capitalized lease obligations are in default due to non-payment and/or as a result of the Assignment and, as a result, have been classified as current liabilities. Reporting

AsManagement ofis ~~December 31,~~responsible ~~2010~~for establishing and maintaining adequate internal control over financial reporting, ~~Just~~as such term is defined in Exchange Act Rule 13a-~~Rite~~15(f). ~~had~~The ~~noncancellable~~Company’s ~~lease~~internal ~~commitments~~control ~~under~~over ~~operating~~financial ~~leases~~reporting ~~amounting~~includes tothose ~~$1,041,000,~~policies ~~representing~~and procedures that (i) pertain to the ~~aggregate~~maintenance of ~~unpaid~~records ~~amounts~~that, ~~under~~in ~~such~~reasonable ~~leases~~detail, ~~from~~accurately and fairly reflect the ~~date~~transactions ofand ~~Assignment~~dispositions ~~through~~of the ~~respective~~assets ~~lease~~of ~~termination~~the ~~dates.~~Company; ~~Included~~(ii) provide inreasonable ~~Just-Rite’s~~assurance ~~accrued~~that ~~expenses~~transactions are recorded as necessary to permit preparation of ~~December 31~~financial statements in accordance with generally accepted accounting principles, ~~2010~~and that receipts and ~~2009~~expenditures of the Company are ~~accrued~~being ~~closure~~made ~~costs~~only in accordance with authorizations of ~~$878,000~~management and ~~$703~~directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,~~000,~~ ~~respectively~~use, ~~representing~~or ~~such~~disposition ~~future~~of ~~noncancellable~~the ~~commitment~~Company’s ~~amounts~~assets ~~less~~that ~~estimated~~could ~~sub-lease~~have ~~rental~~a ~~amounts~~material effect on the financial statements.

~~Since~~Internal ~~Just-Rite~~control ~~has~~over ~~not~~financial ~~obtained~~reporting ~~either~~is ~~(a)~~designed ato ~~final~~provide ~~court~~reasonable ~~order~~assurance ~~for~~regarding the ~~conveyance~~reliability of ~~assets,~~financial ~~(b)~~reporting aand ~~settlement~~the ~~with~~preparation ~~creditors~~of orfinancial ~~(c)~~statements orprepared afor ~~court~~external ~~action~~purposes ~~granting~~in ~~Just-Rite~~accordance ~~relief~~with ~~from~~generally ~~the~~accepted ~~creditors’~~accounting ~~claims,~~principles. ~~Just-Rite’s~~Because ~~liabilities~~of ~~continue~~its toinherent belimitations, ~~recorded~~internal atcontrol ~~full~~over ~~historical~~financial ~~value.~~reporting Asmay ~~the~~not ~~Assignment~~prevent ~~process~~or ~~has~~detect ~~not~~misstatements. ~~been completed~~Also, itprojections isof ~~possible~~any ~~that~~evaluation ~~the ultimate proceeds from the disposition~~ of ~~the~~effectiveness ~~assets~~to ~~held~~future ~~for~~periods ~~sale~~are bysubject ~~assignee,~~to ~~and~~ the ~~settlement~~risk ofthat ~~liabilities~~controls ~~related~~may tobecome ~~assets~~inadequate ~~held~~because ~~for~~of ~~sale~~changes byin ~~assignee~~conditions, ~~could~~or ~~be at amounts~~ that ~~are materially different than~~ the ~~carrying~~degree ~~amounts~~of ~~reflected~~compliance inwith the ~~accompanying~~policies ~~consolidated~~or ~~balance~~procedures ~~sheets~~may ~~as of December 31, 2010 and 2009~~deteriorate.

~~(6)~~Under the supervision and with the participation of the Company’s Principal Executive Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2011 based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and in accordance with the interpretive guidance issued by the SEC in Release No. 34-55929. Based on that evaluation, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2011.

~~Sale-Leaseback~~This annual report does not include an attestation report of ~~Manufacturing~~the ~~Facility~~Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s Annual Report on Internal Control Over Financial Reporting was not subject to attestation by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report

InITEM ~~November 2008, we sold our Winter Springs, Florida manufacturing facility under the terms of a sale-leaseback agreement for the gross sales price of $1,290,000~~9B. OTHER The Company generated net cash of approximately $692,000 from the sale of the facility, after paying off the existing mortgages, closing costs and other adjustments. In connection with such closing, the Company entered into a five year lease for this property. The lease contains two five year renewal options, and also provides the Company with an option to repurchase the facility at a price defined in the agreement at any time after two years, during the term of its lease period. The purchase price under the repurchase option includes adjustments based on increases in CPI, as well as a monthly credit of $621, from INFORMATION

35None.

~~IMPERIAL INDUSTRIES, INC. AND SUBSIDIARIES~~44

~~NOTES~~PART ~~TO CONSOLIDATED FINANCIAL STATEMENTS – (CONTINUED)~~III

~~(6)~~ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

~~Sale-Leaseback~~The offollowing ~~Manufacturing~~table ~~Facility~~sets –forth ~~(Continued)~~certain information with respect to the directors and executive officers of the Company:

commencement date through closing of the option. Since we have an option to repurchase the property, the sale has been treated as a financing and the net sales proceeds of $1,134,000 was recorded as secured financing as of the date of the transaction, with adjustments to be recorded from period to period relating to the purchase price adjustments as noted above (offset to interest expense). The secured financing amount recorded was $1,119,000 and $1,126,000 as of December 31, 2010 and 2009, respectively, and will remain as a long-term obligation until the lease expires or the option to purchase is exercised. As a result, the property will remain an asset and will continue to be depreciated for financial statement purposes. The net book value of the property as of December 31, 2010 and 2009 is $100,000 and $105,000, respectively.

Name	Age	Position with Company
S. Daniel Ponce(1)	63	Chairman of the Board
Lisa M. Brock(1)	53	Vice Chairman of the Board, Chief Operating Officer of Premix and Vice President of Just-Rite
Milton J. Wallace(2)	76	Director
Morton L. Weinberger, CPA(2)	82	Director
Howard L. Ehler, Jr.(3)	68	Director, Principal Executive Officer, Chief Operating Officer, Principal Financial Officer, and Secretary of the Company, Vice President of Premix and Vice President of Just-Rite

~~(7)~~———————

~~Trade~~(1) ~~Accounts~~Class ~~Receivables~~III Director

~~Trade~~(2) ~~accounts~~Class ~~receivable~~II ~~consisted of the following at December 31:~~Director

	2010			2009
Accounts receivable, gross	$	541,000		$	596,000
Allowance for doubtful accounts		(42,000	)		(43,000	)
	$	499,000		$	553,000

(3)	Class I Director

~~(8)~~Pursuant to our Certificate of Incorporation, our Board of Directors is currently divided into three classes, with one class standing for election each year for three year terms. The terms of the Class I, Class III and Class II directors would have expired at the 2011, 2010 and 2009 annual meetings, respectively, but will continue to serve until the next annual meeting.

~~Inventories~~Subject to certain contractual rights, each officer serves at the discretion of the board of directors.

~~Inventories~~S. ~~consisted~~Daniel Ponce. Mr. Ponce has been Chairman of the ~~following~~Board atof ~~December~~the Company since 1988. Mr. ~~31:~~Ponce has been engaged in the practice of law for over thirty (30) years and is currently a shareholder in the law firm of Legon, Ponce & Fodiman, P.A. During 2002, Mr. Ponce served as special counsel to then United States Senator Bob Graham. During 2008, Mr. Ponce served as the President and Chairman of the Orange Bowl Committee and was a trustee of the University of Florida from 2008 through 2011. He is also a non-practicing certified public accountant.

	2010			2009
Raw materials	$	428,000		$	364,000
Finished goods		435,000			417,000
Packaging materials		145,000			185,000
Gross inventory		1,008,000			966,000
Provision for obsolete and slow moving inventory		(41,000	)		(28,000	)
	$	967,000		$	938,000

Lisa M. Brock. Mrs. Brock has been a director of the Company since 1988 and has served as its Vice Chairman of the Board since November 2007. Effective January 1, 2011, Mrs. Brock was appointed as Chief Operating Officer of Premix. Mrs. Brock was employed by the Company and its subsidiaries, Premix-Marbletite Manufacturing Co. and Acrocrete, Inc., as Vice President for over five (5) years until December 1994, when she retired. Mrs. Brock also serves as Vice President of Just-Rite.

~~(9)~~Milton J. Wallace. Mr. Wallace has been a member of the Board of Directors since 1999. Mr. Wallace was a practicing attorney in Miami, Florida for over 40 years until 2005, when he retired. From 2002 until November 2011, Mr. Wallace served as Chairman of the Board of Directors of RENAL CAREPARTNERS, Inc., a kidney and dialysis provider. He currently serves as Vice Chairman of the Board of Directors of Preferred Care Partners Holding Corp., a Medicare Advantage HMO, and as a member of the board of directors of Catalyst Pharmaceutical Partners, Inc., a pharmaceutical company. Mr. Wallace was Chairman of the Board of Med/Waste, Inc., an entity engaged in medical waste disposal from June 1993 until February 13, 2002, when the company filed a voluntary petition for bankruptcy under Federal bankruptcy law.

~~Property~~Morton L. Weinberger. Mr. Weinberger has been a Director of the Company since 1988. Mr. Weinberger, ~~Plant~~a certified public accountant, has been self-employed as a consultant to various professional organizations for the past sixteen (16) years. For the previous thirty (30) years, he was engaged in the practice of public accounting. During a significant portion of such period, he was a partner with Peat Marwick Mitchell & Co., now known as KPMG Peat Marwick, and ~~Equipment~~thereafter BDO Seidman, both public accounting firms.

~~Property~~Howard L. Ehler, ~~plant~~Jr. Mr. Ehler has been a Director of the Company since 2000. He has been Principal Executive Officer of the Company since March 1990 and ~~equipment~~Executive ~~consisted~~Vice President, Chief Financial Officer (through November 2005) and Secretary of the ~~following~~Company atsince ~~December~~April ~~31:~~1988. Mr. Ehler has also served as Principal Financial Officer since November 2009. Prior thereto he was Vice President, Chief Financial Officer and Assistant Secretary of the Company for over five years. In August 2004, Mr. Ehler assumed the position of President of Premix until May 2007 while maintaining his other positions with the Company. Mr. Ehler also serves as Vice President of Premix and Just-Rite.

	2010			2009			Estimated useful life (years)
Land	$	1,000		$	1,000		—
Buildings and leasehold improvements		556,000			546,000		5 – 40
Machinery and delivery equipment		2,941,000			2,828,000		3 – 15
Vehicles		99,000			119,000		3 – 10
Furniture, fixtures, and data processing equipment		537,000			512,000		3 – 10
		4,134,000			4,006,000
Less accumulated depreciation		(2,606,000	)		(2,360,000	)
	$	1,528,000		$	1,646,000

When considering whether directors and nominees have the experience, qualifications, attributes or skills, taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and structure, the board of directors focuses primarily on each person’s background and experience as reflected in the information discussed in each of the directors’ individual biographies set forth above. We believe that our directors are committed to employing their skills and abilities to aid the long-term interests of our shareholders. Our directors are knowledgeable and experienced in multiple business endeavors which further qualify them for service as members of the board of directors. In particular, the members of our board of directors considered the following important characteristics:

~~The~~● ~~net~~Mr. ~~book~~Ponce ~~value~~has ofover ~~property,~~23 ~~plant~~years’ ~~and~~experience ~~equipment~~in ~~collateralizing~~our ~~notes~~business ~~payable~~having ~~aggregated~~served ~~$42,000~~as atChairman ~~December 31,~~of ~~2009.~~the ~~The~~Board ~~note~~since ~~payable~~1988 ~~was~~and ~~fully~~his ~~repaid~~legal ~~during~~background ~~2010.~~provides ~~The~~unique ~~net~~skills ~~book~~as ~~value~~the ofCompany ~~property,~~has ~~plant~~been ~~and~~involved ~~equipment~~in ~~pledged~~significant aslitigation ~~collateral~~for ~~under~~much ~~capital~~of ~~lease~~his ~~agreements~~term. ~~aggregated~~He ~~$35,000~~is ~~and~~also ~~$11,000~~a atcertified ~~December 31,~~public ~~2010 and 2009, respectively~~accountant.

36● Ms. Brock has extensive knowledge of our business as she has been a long term employee of Premix prior to her initial retirement, having served as Vice President of Premix with significant involvement in the day-to-day oversight of Premix’s business operations.

~~IMPERIAL~~● ~~INDUSTRIES, INC~~Mr. ~~AND~~Ehler ~~SUBSIDIARIES~~has been employed by the Company in various positions for more than 30 years and is intimately familiar with our business and the industry in which we operate.

~~NOTES~~● TOMr. ~~CONSOLIDATED~~Weinberger ~~FINANCIAL~~has ~~STATEMENTS~~more –than ~~(CONTINUED)~~50 years of financial experience, being involved in various accounting firms during his entire business career.

~~(10)~~● Mr. Wallace has over 50 years of business experience in numerous industries, including the construction, real estate and medical industries and has served as a director, chairman of the board and CEO of several companies during his career. He also has extensive experience in corporate finance through his over forty years as a practicing attorney.

~~Long-Term Debt~~45

~~Long-term~~Section 16 ~~debt~~(a) ~~consisted~~Beneficial ofOwnership ~~the~~Reporting ~~following at December 31:~~Compliance

	2010		2009
Capitalized lease obligations, interest at various rates ranging from 10.1% to 11.9% per annum, principal and interest payable monthly expiring at various dates through August 2015	$	31,000	$	8,000
E

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