**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 Washington,
        D.C. 20549
  
 **FORM
        10-Q**
 **(Mark
                    One)****x**
                **QUARTERLY
                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES****EXCHANGE
                    ACT OF 1934****For
                    the quarterly period ended March 31, 2008****OR**** ̈**
                **TRANSITION
                    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES****EXCHANGE
                    ACT OF 1934**
 **For
        the transition period from ______** **to _________** **.**
 
 
 **Commission
        File Number: 000-25781**
 
 **STAMFORD
        INDUSTRIAL GROUP, INC.**
 (Exact
        name of registrant as specified in its charter)
 
 **Delaware**
              
              **41-1844584**(State
                  or other jurisdiction of
                incorporation
                  or organization)
              
              (I.R.S.
                  Employer
                Identification
                  No.)
 
 **One
        Landmark Square**
 **Stamford,
        Connecticut 06901**
 (Address
        of principal executive offices, Zip Code)
 
 **(203)
        428-2200**
 (Registrant’s
        telephone number, including area code)
 
 (Former
        name, former address, and former fiscal year, if changed since last
        report)
 
 Indicate
        by check mark whether the registrant: (1) has filed all reports required
        to be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days. YES x NO  ̈
 
 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
        the definitions of “large accelerated filer,” “accelerated filer” and “smaller
        reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer  ̈ Accelerated filer x Non-accelerated filer  ̈ Smaller
        reporting company  ̈ .
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act) YES  ̈ NO x
 
 **As
        of May 05, 2008, there were outstanding 41,801,380 shares of the registrant’s
        Common Stock, $0.0001 par value.**
  
 
  **STAMFORD
          INDUSTRIAL GROUP, INC.**
 **FORM
          10-Q**
 For
          the
          Quarter Ended March 31, 2008
  **TABLE
          OF CONTENTS**
 
  **Page****PART
                    I. FINANCIAL INFORMATION**Item
                    1.
                Financial
                    StatementsConsolidated
                    Balance Sheets as of March 31, 2008 and December 31, 2007
                
                1Consolidated
                    Statements of Income for the three months ended March 31, 2008
                    and
                    2007
                
                2Consolidated
                    Statements of Cash Flows for the three months ended March 31,
                    2008 and
                    2007
                
                3Notes
                    to the Consolidated Financial Statements
                
                4Item
                    2.
                Management’s
                    Discussion and Analysis of Financial Condition and Results of
                    Operations
                
                16Item
                    3.
                Quantitative
                    and Qualitative Disclosures about Market Risk
                
                20Item
                    4.
                Controls
                    and Procedures
                
                21**PART
                    II. OTHER INFORMATION**Item
                    1A.
                Risk
                    Factors
                
                22Item
                    6.
                Exhibits
                
                23**SIGNATURES**
                
                24**EXHIBIT
                    INDEX**
                
                25
  
 
 **PART
          I.**  **FINANCIAL
          INFORMATION**
  **Item
          1.**  **Financial
          Statements**
  **STAMFORD
          INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
          BALANCE SHEETS (UNAUDITED)**
 **(in
          thousands)**
 
 **March
                    31,**
                  **2008**
                
                **December
                    31,**
                  **2007****ASSETS**Current
                    assets:Cash
                    and cash equivalents
                
                $
                —
                
                $
                1,236Accounts
                    receivable, net
                
                
                16,327
                
                
                8,341Inventories
                
                
                14,198
                
                
                13,825Deferred
                    tax asset
                
                
                2,684
                
                
                2,684Prepaid
                    expenses and other current assets
                
                
                247
                
                
                496Total
                    current assets
                
                
                33,456
                
                
                26,582Property,
                    plant and equipment, net
                
                
                8,638
                
                
                8,608Deferred
                    financing costs, net
                
                
                606
                
                
                645Intangible
                    assets, net
                
                
                20,262
                
                
                20,524Deferred
                    tax asset
                
                
                5,368
                
                
                5,368Other
                    assets
                
                
                205
                
                
                210Total
                    assets
                
                $
                68,535
                
                $
                61,937**LIABILITIES
                    AND STOCKHOLDERS’ EQUITY**Current
                    liabilities:Notes
                    payable
                
                $
                5,786
                
                $
                5,286Current
                    portion of long-term debt
                
                
                4,000
                
                
                4,000Accounts
                    payable
                
                
                12,946
                
                
                7,768Accrued
                    expenses and other liabilities
                
                
                3,073
                
                
                2,815Total
                    current liabilities
                
                
                25,805
                
                
                19,869Long-term
                    debt, less current portion
                
                
                20,533
                
                
                21,533Other
                    long-term liabilities
                
                
                1,028
                
                
                889Total
                    liabilities
                
                
                47,366
                
                
                42,291Commitments
                    and contingencies (Note 12)Stockholders’
                    equity:Preferred
                    stock — $.0001 par value; 5,000 shares authorized; no shares issued or
                    outstanding
                
                
                —
                
                
                —Common
                    stock — $.0001 par value; 100,000 shares authorized; 41,858 and 41,801
                    shares issued and outstanding at March 31, 2008 and December
                    31, 2007,
                    respectively
                
                
                3
                
                
                3Additional
                    paid-in capital
                
                
                246,450
                
                
                246,346Accumulated
                    deficit
                
                
                (225,284
                )
                
                (226,703
                )Total
                    stockholders’ equity
                
                
                21,169
                
                
                19,646Total
                    liabilities and stockholders’ equity
                
                $
                68,535
                
                $
                61,937
 
 See
          accompanying notes to the consolidated financial statements.
  1
  **STAMFORD
          INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
          STATEMENTS OF INCOME (UNAUDITED)**
 **(in
          thousands, except per share amounts)**
 
 **Three
                    Months Ended****March
                    31,**
                  **2008**
                
                **March
                    31,**
                  **2007**Revenues
                
                $
                32,677
                
                $
                27,904Cost
                    of revenues
                
                
                27,112
                
                
                22,566Gross
                    margin
                
                
                5,565
                
                
                5,338Operating
                    expenses:Sales
                    and marketing
                
                
                415
                
                
                372General
                    and administrative
                
                
                2,703
                
                
                2,728Related
                    party stock compensation
                
                
                177
                
                
                129Total
                    operating expenses
                
                
                3,295
                
                
                3,229Income
                    from operations
                
                
                2,270
                
                
                2,109Other
                    (expense) income:Interest
                    income
                
                
                1
                
                
                6Interest
                    expense
                
                
                (790
                )
                
                (671
                )Other
                    income (expense)
                
                
                27
                
                
                (122
                )Total
                    other expense, net
                
                
                (762
                )
                
                (787
                )Income
                    before taxes
                
                
                1,508
                
                
                1,322Provision
                    for income taxes
                
                
                89
                
                
                570Net
                    income
                
                $
                1,419
                
                $
                752Basic
                    net income per share
                
                $
                0.03
                
                $
                0.02Shares
                    used in basic calculation
                
                
                41,836
                
                
                41,676Diluted
                    net income per share
                
                $
                0.03
                
                $
                0.02Shares
                    used in diluted calculation
                
                
                47,830
                
                
                49,554
 
 See
          accompanying notes to the consolidated financial statements.
  2
  **STAMFORD
          INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
          STATEMENTS OF CASH FLOWS (UNAUDITED)**
 **(in
          thousands)**
 
 **Three
                    Months Ended****March
                    31,**
                  **2008**
                
                **March
                    31,**
                  **2007**Cash
                    flows from operating activities:Net
                    income
                
                $
                1,419
                
                $
                752Reconciliation
                    of net income to net cash used in operating activities:Depreciation
                
                
                249
                
                
                79Amortization
                    of intangible assets
                
                
                262
                
                
                477Provision
                    for doubtful accounts
                
                
                26
                
                
                3Amortization
                    of deferred financing costs
                
                
                39
                
                
                38Deferred
                    income taxes
                
                
                —
                
                
                361Stock-based
                    compensation
                
                
                230
                
                
                730Changes
                    in assets and liabilities:Accounts
                    receivable
                
                
                (8,012
                )
                
                (3,442
                )Inventory
                
                
                (373
                )
                
                2,628Prepaid
                    expenses and other current assets
                
                
                249
                
                
                151Other
                    assets
                
                
                5
                
                
                (10
                )Accounts
                    payable
                
                
                5,178
                
                
                (2,061
                )Accrued
                    expenses and other liabilities
                
                
                258
                
                
                (499
                )Other
                    liabilities
                
                
                13
                
                
                —Net
                    cash used in operating activities
                
                
                (457
                )
                
                (793
                )Cash
                    flows from investing activities:Capital
                    expenditures for property and equipment
                
                
                (279
                )
                
                (666
                )Net
                    cash used in investing activities
                
                
                (279
                )
                
                (666
                )Cash
                    flows from financing activities:Net
                    proceeds on line of credit
                
                
                500
                
                
                —Principal
                    payments on long-term debt
                
                
                (1,000
                )
                
                (1,500
                )Net
                    cash used in financing activities
                
                
                (500
                )
                
                (1,500
                )Net
                    decrease in cash and cash equivalents
                
                
                (1,236
                )
                
                (2,959
                )Cash
                    and cash equivalents at beginning of period
                
                
                1,236
                
                
                3,703Cash
                    and cash equivalents at end of period
                
                $
                —
                
                $
                744Supplemental
                    cash flow disclosures:Interest
                    paid
                
                $
                523
                
                $
                702Taxes
                    paid
                
                $
                107
                
                $
                252
 
 See
          accompanying notes to the consolidated financial statements.
  3
  STAMFORD
          INDUSTRIAL GROUP, INC.
 NOTES
          TO
          THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (dollars
          in thousands, except per share amounts unless otherwise indicated)
  **Note
          1. Overview and Basis of Presentation**
 
 ***Overview***
 
 Stamford
          Industrial Group, Inc. ( the
          “Company”), through its wholly-owned subsidiary Concord
          Steel, Inc. (“Concord”) ,
          is a
          leading independent manufacturer of steel counterweights and structural
          weldments. The Company sells
          its products primarily in the United States to original equipment manufacturers
          (“OEM”) of certain construction and industrial related equipment that employ
          counterweights for stability through counterweight leverage in the operation of equipment
          used to
          hoist heavy loads, such as elevators and cranes. The counterweight market the
          Company targets
          is primarily comprised of OEMs within the (i) commercial and industrial
          construction equipment industry that manufactures aerial work platforms,
          telehandlers, scissor lifts, cranes, and a variety of other construction
          related
          equipment and vehicles; and (ii) the elevator industry, that incorporates
          counterweights as part of the overall elevator operating mechanism to balance
          the weight of the elevator cab and load.
 
 The
          Company was initially established in 1996 under the name “Net Perceptions, Inc.”
as a provider of marketing software solutions. In 2003, as a result of
          continuing losses and the decline of its software business, the Company
          began
          exploring various strategic alternatives, including sale or liquidation,
          and
          ceased the marketing and development of its marketing solutions software
          business in 2004. On April 21, 2004, the Company announced an investment
          into
          the Company by Olden Acquisition LLC (“Olden”), an affiliate of Kanders &
Company, Inc., an entity owned and controlled by the Company’s Non-Executive
          Chairman, Warren B. Kanders, for the purpose of initiating a strategy to
          redeploy the Company’s assets and use its cash, cash equivalent assets and
          marketable securities to enhance stockholder value. As part of this strategy,
          on
          October 3, 2006, the Company acquired the assets of CRC Acquisition Co.
          LLC
          (“CRC”), a manufacturer of steel counterweights doing business as Concord Steel.
          With this initial acquisition, management is now focused on building a
          diversified global industrial manufacturing group through both organic
          and
          acquisition growth initiatives that are expected to complement and diversify
          existing business lines.
 
 ***Basis
          of Presentation***
 
 The
          accompanying unaudited consolidated financial statements of the Company
          have
          been prepared in accordance with generally accepted accounting principles
          in the
          United States of America and instructions to Form 10-Q and Article 10 of
          Regulation S-X. Accordingly, they do not include all of the information
          in notes
          required by generally accepted accounting principles in the United States
          of
          America for complete financial statements. In the opinion of management,
          all
          adjustments (consisting of normal recurring accruals) necessary for a fair
          presentation of the unaudited consolidated financial statements have been
          included. The results of the three months ended March 31, 2008 are not
          necessarily indicative of the results to be obtained for the year ending
          December 31, 2008. These interim financial statements should be read in
          conjunction with the Company’s audited consolidated financial statements and
          footnotes thereto included in the Company’s Annual Report on Form 10-K for the
          year ended December 31, 2007, filed with the Securities and Exchange Commission
          on March 17, 2008.
 
 The
          consolidated financial statements include the accounts of the Company and
          its
          wholly-owned subsidiaries. All inter-company accounts and transactions
          have been
          eliminated. Certain prior period balances have been reclassified to conform
          to
          current period presentation.
  4
  ***Critical
          Accounting Policies***
  The
          Company’s discussion and analysis of financial condition and results of
          operations is based upon our consolidated financial statements, which have
          been
          prepared in accordance with accounting principles generally accepted in
          the
          United States of America. The preparation of these financial statements
          requires
          us to make estimates and judgments that affect the reported amounts of
          assets,
          liabilities, revenues and expenses, and related disclosure of contingent
          assets
          and liabilities. On an on-going basis, the Company evaluates its estimates,
          including those related to bad debts, investments, intangible assets,
          restructuring liabilities, contingencies and litigation. The Company bases
          its
          estimates on historical experience and on various other assumptions that
          are
          believed to be reasonable under the circumstances, the results of which
          form the
          basis for making judgments about the carrying values of assets and liabilities
          that are not readily apparent from other sources. Actual results may differ
          from
          these estimates under different assumptions or conditions.
  The
          Company believes the following critical accounting policies affect significant
          judgments and estimates used in the preparation of its consolidated financial
          statements. Events occurring subsequent to the preparation of the consolidated
          financial statements may cause the Company to re-evaluate these
          policies.
 
 *Use
          of estimates* . ** The
          preparation of financial statements in conformity with generally accepted
          accounting principles in the United States of America requires management
          to
          make estimates and assumptions that affect the reported amounts therein.
          Management’s estimates are based on historical experience and on various other
          assumptions that are believed to be reasonable under the circumstances. Estimates
          inherent in the preparation of the accompanying consolidated financial
          statements include the carrying value of long-lived assets, valuation allowances
          for receivables, inventories and deferred income tax assets, liabilities
          for
          potential litigation claims and settlements, and potential liabilities
          related
          to tax filings in the ordinary course of business. Management’s
          estimates and assumptions are evaluated on an on-going basis. Due to the
          inherent uncertainty involved in making estimates, actual results may differ
          from those estimates.
 
 *Revenue
          Recognition.* The
          Company’s revenue recognition policy for the sale of steel counterweights or
          structural weldments requires the recognition of sales when there is evidence
          of
          a sales agreement, the delivery of goods has occurred, the sales price
          is fixed
          or determinable and the collectability of revenue is reasonably assured.
          The
          Company generally records sales upon shipment of product to customers and
          transfer of title under standard commercial terms.
 
 *Allowance
          for doubtful accounts.* The
          Company maintains allowances for doubtful accounts for estimated losses resulting
          from
          the inability of its customers to make required payments. If the financial
          condition of our customers deteriorates, resulting in an impairment of
          their
          ability to make payments, additional allowances will be required.
 
 *Litigation.* The
          Company has not recorded an estimated liability related to the pending
          class
          action lawsuit in which it was named. For a discussion of this matter,
          see Note
          12. Due to the uncertainties related to both the likelihood and the amount
          of
          any potential loss, no estimate was made of the liability that could result
          from
          an unfavorable outcome. As additional information becomes available, the
          Company
          will assess the potential liability and make or revise its estimate(s)
          accordingly, which could materially impact its results of operations and
          financial position.
 
 *Income
          taxes.* Deferred
          income taxes are provided on the liability method whereby deferred tax
          assets
          are recognized for deductible temporary differences and operating loss
          and tax
          credit carryforwards and deferred tax liabilities are recognized for taxable
          temporary differences. Temporary differences are the differences between
          the
          reported amounts of assets and liabilities and their income tax bases.
          Deferred
          tax assets are reduced by a valuation allowance when, in the opinion of
          management, it is more likely than not that some portion or all of the
          deferred
          tax assets will not be realized. The recognition of a valuation allowance
          for
          deferred taxes requires management to make estimates about the Company’s future
          profitability. The estimates associated with the valuation of deferred
          taxes are
          considered critical due to the amount of deferred taxes recorded on the
          consolidated balance sheet and the judgment required in determining the
          Company’s future profitability. Deferred tax assets were $8.1 million at
          March 31, 2008 and December 31, 2007, respectively.
 
 *Derivatives
          and hedging activities.* The
          Company recognizes all derivatives on the balance sheet as either an asset
          or
          liability measured at fair value. Changes in the derivative’s fair value are
          recognized currently in income unless specific hedge accounting criteria
          are
          met. Special accounting for qualifying hedges allows a derivative’s gains and
          losses to offset related results on the hedged item in the statement of
          income
          and requires the Company to formally document, designate and assess
          effectiveness of transactions that receive hedge accounting. Derivatives
          that
          are not hedges are adjusted to fair value through income. If the derivative
          qualifies as a hedge, depending on the nature of the hedge, changes in
          the fair
          value of derivatives are either offset against the change in fair value
          of
          hedged assets, liabilities, or firm commitments through earnings, or recognized
          in other comprehensive income until the hedged item is recognized in earnings.
          The ineffective portion of a derivative’s change in fair value is immediately
          recognized in earnings.
  5
  During
          the three months ended March 31, 2008, there have been no significant changes
          to
          the Company’s critical accounting policies and estimates as disclosed in the
          Company’s Annual Report on Form 10-K for the year ended December 31,
          2007.
  ***Recent
          Accounting Pronouncements***
  In
          September 2006, the FASB issued Statement of Financial Accounting Standards
          No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair
          value, establishes a framework for measuring fair value under generally
          accepted
          accounting principles, and requires expanded disclosures about fair value
          measurements. SFAS 157 emphasizes that fair value is a market-based measurement,
          not an entity-specific measurement, and states that a fair value measurement
          should be determined based on the assumptions that market participants
          would use
          in pricing the asset or liability. SFAS 157 applies under other accounting
          pronouncements that require or permit fair value measurements, the FASB
          having
          previously concluded in those accounting pronouncements that fair value
          is the
          relevant measurement attribute. Accordingly, SFAS 157 does not require
          any new
          fair value measurements. In February 2008, the FASB issued Staff Positions
          157-1 and 157-2 which remove certain leasing transactions from the scope
          of SFAS
          157 and partially defer the effective date of SFAS 157 for one year for
          certain
          nonfinancial assets and liabilities. SFAS 157 is effective for fiscal years
          beginning after November 15, 2007. The adoption of FAS 157 on January 1,
          2008 did not have a material impact on the Company's financial position,
          results
          of operations and cash flows.
 
 In
          December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
          Combinations” (“SFAS No. 141R”), which replaces SFAS No. 141, “Business
          Combinations.” SFAS No. 141R retains the underlying concepts of SFAS No. 141 in
          that all business combinations are still required to be accounted for at
          fair
          value under the acquisition method of accounting, but SFAS No. 141R changes
          the
          application of the acquisition method in a number of significant aspects.
          Acquisition costs will generally be expensed as incurred; non-controlling
          interests will be valued at fair value at the acquisition date; in-process
          research and development will be recorded at fair value as an indefinite-lived
          intangible asset at the acquisition date; restructuring costs associated
          with a
          business combination will generally be expensed subsequent to the acquisition
          date; and changes in deferred tax asset valuation allowances and income
          tax
          uncertainties after the acquisition date generally will affect income tax
          expense. SFAS No. 141R is effective on a prospective basis for all business
          combinations for which the acquisition date is on or after the beginning
          of the
          first annual period subsequent to December 15, 2008. Early adoption is not
          permitted. The Company is currently evaluating the effects, if any, that
          SFAS
          No. 141R may have on its financial statements.
 
 **Note
          2. Inventories**
  Inventories,
          net of inventory reserves at March 31, 2008 and December 31, 2007 are as
          follows:
  **March
                    31,**
                  **2008**
                
                **December
                    31,**
                  **2007**Finished
                    goods
                
                $
                124
                
                $
                101Work-in-process
                
                
                1,182
                
                
                1,197Raw
                    materials
                
                
                12,892
                
                
                12,527$
                14,198
                
                $
                13,825
  6
  **Note
          3** **.
          Property, Plant and Equipment**
  Property,
          plant and equipment, net as of March 31, 2008 and December 31, 2007 are
          as
          follows:
  **March
                    31,**
                  **2008**
                
                **December
                    31,**
                  **2007**Land
                
                $
                350
                
                $
                350Building
                    and improvements
                
                
                1,299
                
                
                1,294Leasehold
                    improvements
                
                
                1,238
                
                
                1,275Machinery
                    and equipment
                
                
                5,456
                
                
                5,361Office
                    equipment and furniture
                
                
                1,161
                
                
                985Construction
                    in progress
                
                
                40
                
                
                —9,544
                
                
                9,265Less:
                    Accumulated depreciation
                
                
                (906
                )
                
                (657
                )Property,
                    plant and equipment, net
                
                $
                8,638
                
                $
                8,608
  **Note
          4. Intangible assets**
 
 As
          part
          of the acquisition of Concord, the Company allocated a portion of the purchase
          cost to intangible assets consisting of trade names, customer relationships
          and
          non-compete agreements. These intangible assets are amortized over their
          expected useful lives which are between 3 and 12 years using the straight-line
          method.
 
 Intangible
          assets, net of amortization at March 31, 2008 and December 31, 2007 are
          as
          follows:
 
 **March
                    31, 2008****Gross**
                
                **Accumulated**
                  **Amortization**
                
                **Net**
                
                **Life**Intangibles
                    subject to amortization:Customer
                    relationships
                
                $
                12,399
                
                $
                (1,553
                )
                $
                10,846
                
                
                12
                    yrsNon-compete
                    agreements
                
                
                37
                
                
                (18
                )
                
                19
                
                
                3
                    yrsIntangibles
                    not subject to amortization:Trade
                    name
                
                
                9,397
                
                
                —
                
                
                9,397
                
                
                —Intangibles,
                    net
                
                $
                21,833
                
                $
                (1,571
                )
                $
                20,262
  **December
                    31, 2007****Gross**
                
                **Accumulated**
                  **Amortization**
                
                **Net**
                
                **Life**Intangibles
                    subject to amortization:Customer
                    relationships
                
                $
                12,399
                
                $
                (1,294
                )
                $
                11,105
                
                
                12
                    yrsNon-compete
                    agreements
                
                
                37
                
                
                (15
                )
                
                22
                
                
                3
                    yrsIntangibles
                    not subject to amortization:Trade
                    name
                
                
                9,397
                
                
                —
                
                
                9,397
                
                
                —Intangibles,
                    net
                
                $
                21,833
                
                $
                (1,309
                )
                $
                20,524
 
  7
  **Note
          5. Accrued expenses and other liabilities**
 
 Accrued
          expenses and other liabilities of the Company as of March 31, 2008 and
          December
          31, 2007 are
          as
          follows :
 
 **March
                    31,**
                  **2008**
                
                **December
                    31,**
                  **2007**Accrued
                    compensation, benefits andcommissions
                
                $
                950
                
                $
                705Accrued
                    interest payable
                
                
                555
                
                
                339Accrued
                    professional services
                
                
                34
                
                
                343Accrued
                    insurance
                
                
                319
                
                
                426Accrued
                    property taxes
                
                
                52
                
                
                33Other
                    accrued liabilities
                
                
                1,163
                
                
                969$
                3,073
                
                $
                2,815
 
 **Note
          6. Long-term Debt and Notes Payable**
 
 In
          connection with the Company’s acquisition of the assets of Concord, Concord entered
          into a senior secured credit facility (the “Credit Agreement”) with LaSalle Bank
          National Association, as administrative agent (the “Agent”) and the lenders
          party thereto.
 
 The
          Credit Agreement establishes a commitment by the lenders to Concord to
          provide
          up to $40.0 million in the aggregate of loans and other financial accommodations
          consisting of (i) a five-year senior secured term loan in an aggregate
          principal
          amount of $28.0 million, (ii) a five-year senior secured revolving credit
          facility in the aggregate principal amount of $10.0 million (the “Revolving
          Facility”) and (iii) a five-year senior secured capital expenditure facility in
          the aggregate principal amount of $2.0 million. The Revolving Facility
          is
          further subject to a borrowing base consisting of up to 85% of eligible
          accounts
          receivable and up to 55% of eligible inventory. The Revolving Facility
          includes
          a sublimit of up to an aggregate amount of $5.0 million in letters of credit
          and
          a sublimit of up to an aggregate amount of $2.5 million in swing line loans.
          The
          capital expenditure facility permitted the Company to draw funds for the
          purchase of machinery and equipment during the 6-month period ended March
          3,
          2007, and then converted into a 4.5-year term loan. Immediately following
          the
          closing of the Concord acquisition, the Company drew down approximately
          $31.3
          million and had additional availability under the Revolving Facility of
          approximately $6.7 million. There were no amounts drawn under the capital
          expenditure facility at the time of closing of the credit facility nor
          were
          there any amounts drawn down prior to March 3, 2007. The capital expenditure
          facility expired on March 3, 2007. On
          March
          13, 2008, the Company entered into a second amendment to the Credit Agreement
          to
          provide for, among other things, revisions to certain of the financial
          covenants
          under the bank credit facilities.
 
 At
          March
          31, 2008 and December 31, 2007, the outstanding balance from the revolving
          credit facility amounted to $5.8 million and $5.3 million, respectively.
          At
          March 31, 2008, the Company had $2.6 million available in additional borrowings
          net of $1.6 million in outstanding letters of credit which have not been
          drawn
          upon. The balance under the term loan at March 31, 2008 and December 31,
          2007
          was $22.0 million and $23.0 million, respectively. At March 31, 2008 and
          December 31, 2007, the Company had $4.0 million, respectively, classified
          as
          current and $18.0 million and $19.0 million, respectively classified as
          long-term. The bank credit facilities have various financial covenants
          and also
          have various non-financial covenants, requiring the Company to refrain
          from
          taking certain actions and requiring it to take certain actions, such as
          keeping
          in good standing the corporate existence, maintaining insurance, and providing
          the bank lending group with financial information on a timely
          basis.
 
 Borrowings
          under the Credit Agreement bear interest, at the Company’s election, at either
          (i) a rate equal to three month variable London Interbank Offer Rate (“LIBOR”),
          plus an applicable margin ranging from 1.25% to 2.5%, depending on certain
          conditions, or (ii) an alternate base rate which will be the greater of
          (a) the
          Federal Funds rate plus 0.5% or (b) the prime rate publicly announced by
          the
          Agent as its prime rate, plus, in both cases, an applicable margin ranging
          from
          0% to 1.0%, depending on certain conditions. At March 31, 2008 and December
          31,
          2007, the applicable interest rate for the outstanding borrowings under
          the
          Credit Agreement was 5.20% and 7.24%, respectively.
  8
  The
          Credit Agreement is guaranteed by the Company and its direct and indirect
          subsidiaries and is secured by, among other things, (a) (i) all of the
          equity
          interests of Concord’s subsidiaries and (ii) a pledge by the Company of all of
          the issued and outstanding shares of stock of Concord by the Company and
          (b) a
          first priority perfected security interest on substantially all the assets
          of
          the Company and its direct and indirect subsidiaries pursuant to a guaranty
          and
          collateral agreement dated October 3, 2006 and delivered in connection
          with the
          Credit Agreement (the “Guaranty Agreement”). In addition, LaSalle Bank National
          Association, acting as the Agent for the benefit of the lenders, has a
          mortgage
          on all owned real estate of the Company and its direct and indirect
          subsidiaries, as well as deposit account control agreements with respect
          to
          funds on deposit in bank accounts of the Company and its direct and indirect
          subsidiaries.
 
 The
          Company is exposed to interest rate volatility with regard to existing
          issuances
          of variable rate debt. Primary exposure includes movements in the U.S.
          prime
          rate and LIBOR. The Company uses interest rate swaps to reduce interest
          rate
          volatility. On January 2, 2007, the Company entered into an interest rate
          protection agreement that currently has approximately $11.8 million of
          interest
          rate swaps fixing interest rates between 5.0% and 5.8%.
 
 On
          April
          21, 2004, the Company closed on an investment into the Company by Olden
          Acquisition LLC (“Olden”) , an
          affiliate of Kanders & Company, Inc., for
          the
          purpose of initiating a strategy to redeploy the Company’s assets and use the
          Company’s cash, cash equivalent assets and marketable securities to enhance
          stockholder value. The Company issued and sold to Olden a 2% ten-year
          Convertible Subordinated Note, which is convertible after one year (or
          earlier upon a call by the Company and in certain other circumstances) at
          a
          conversion price of $0.45 per share of Company common stock into approximately
          19.9% of the outstanding common equity of the Company as of the closing
          date.
          Proceeds to the Company from this transaction totaled approximately $2.5
          million
          before transaction costs of $0.3 million. The transaction costs are being
          amortized over ten years, the term of the debt. Interest on the note accrues
          semi-annually but is not payable currently or upon conversion of the note.
          The
          note matures on April 21, 2014. The convertible subordinated note was deemed
          to
          include a beneficial conversion feature. At the date of issue, the Company
          allocated $0.1 million to the beneficial conversion feature and amortized
          the
          beneficial conversion feature over one year (the period after which the
          note is
          convertible). As of March 31, 2008 and December 31, 2007, the outstanding
          balance on the note payable amounted to $2.5 million and is classified
          as
          long-term debt.
 
 
 **Note
          7. Other long-term liabilities**
 
 **March
                    31,**
                  **2008**
                
                **December
                    31,**
                  **2007**Deferred
                    compensation
                
                $
                825
                
                $
                699Accrued
                    interest payable
                
                
                203
                
                
                190$
                1,028
                
                $
                889
  Effective
          December 27, 2007, the Company and Albert Weggeman entered into a deferred
          compensation agreement pursuant to which Mr. Weggeman would be entitled
          to
          receive deferred compensation of up to $1,519,766, which may be reduced
          if the
          stock price at the time of distribution is less than $1.25. The deferred
          compensation shall vest on the following basis: (i) 19.4% shall be immediately
          vested; (ii) 30.6% shall vest in twenty-two equal monthly consecutive tranches
          commencing on December 27, 2007, subject to Mr. Weggeman being employed by
          the Company on each vesting date; (iii) up to 50.0% shall vest as follows,
          provided that Mr. Weggeman is actively employed as of the vesting date:
          (A)
          16.7% shall vest as of March 31, 2008, if the Company’s Adjusted Earnings Before
          Interest Taxes Depreciation and Amortization (“Adjusted EBITDA”), as more fully
          described in the agreement, for the year ending December 31, 2007
          (“Year 1”) is not less than $13,800,000 (the “Year 1 Target”); if the Year
          1 Target is not achieved, and if the sum of the Company’s Adjusted EBITDA for
          the years ending December 31, 2007 and 2008 is not less than the sum of
          the Year
          1 Target plus the Year 2 Target (as defined below), then such 16.7% shall
          vest
          as of March 31, 2009; (B) 16.7% shall vest as of March 31, 2009, if the
          Company’s Adjusted EBITDA for the year ending December 31, 2008 (“Year 2”)
          is not less than $15,700,000 (the “Year 2 Target”); if the Year 2 Target is not
          achieved, and if the sum of the Company’s Adjusted EBITDA for the years ending
          December 31, 2008 and 2009 is not less than the sum of the Year 2 Target
          plus
          the Year 3 Target (as defined below), then such 16.7% shall vest as of
          March 31,
          2010; (C) 16.6% shall vest as of March 31, 2010, if the Company’s Adjusted
          EBITDA for the year ending December 31, 2009 (“Year 3”) is not less than
          $17,200,000 (the “Year 3 Target”); if (i) the Year 3 Target is not
          achieved, and (ii) the Company renews the employment agreement of Mr.
          Weggeman for another three-year term, and (iii) the sum of the Company’s
          Adjusted EBITDA for the years ending December 31, 2009 and 2010 is not
          less than
          the sum of the Year 3 Target plus the Year 4 Target (as defined hereinafter),
          then such 16.6% shall vest as of March 31, 2011. “Year 4 Target” means an amount
          of the Company’s Adjusted EBITDA for the year ending December 31, 2010 that will
          be agreed upon by the parties in the renewed employment agreement, if
          any.
  9
  Amounts
          vesting on or before October 1, 2009 shall be payable not later than October
          31,
          2009. Amounts vesting after October 1, 2009 shall be payable promptly after
          vesting. Payments shall be made in cash or in common stock of the Company,
          as
          determined by the Compensation Committee in its absolute
          discretion.
 
 Accrued
          interest represents interest on the Olden note. Interest on the note accrues
          semi-annually on the last day of June and December in each year and is
          payable,
          together with the principal sum of the note, on the maturity date of the
          note
          (see Note 6 for further details).
 
 **Note
          8. Per Share Data**
  Basic
          earnings per share is computed using net income and the weighted average
          number
          of common shares outstanding. Diluted earnings per share reflects the weighted
          average number of common shares outstanding plus any potentially dilutive
          shares
          outstanding during the period. Potentially dilutive shares
          consist of shares issuable upon the exercise of stock options, convertible
          notes
          and restricted stock awards. Shares used in the diluted net income per
          share for
          the three months ended March 31, 2008, exclude the impact of 3,012 potential
          common shares issuable upon the exercise of stock options, which
          were anti-dilutive .
          Shares
          used in the diluted net income per share for the three months ended March
          31,
          2007, exclude the impact of 250 of potential common shares issuable upon
          the
          exercise of stock options, which
          were anti-dilutive .
  **Three
                    Months Ended**
                  **March
                    31,****2008**
                
                **2007****Basic
                    net income per share calculation:**Net
                    income
                
                $
                1,419
                
                $
                752Weighted
                    average common shares - basic
                
                
                41,836
                
                
                41,676**Basic
                    net income per share**
                
                $
                0.03
                
                $
                0.02**Diluted
                    income per share calculation:**Net
                    income
                
                $
                1,419
                
                $
                752Weighted
                    average common shares - basic
                
                
                41,836
                
                
                41,676Effect
                    of dilutive stock options
                
                
                —
                
                
                2,017Effect
                    of restricted stock awards
                
                
                —
                
                
                140Effect
                    of convertible note
                
                
                5,628
                
                
                5,628Effect
                    of stock fee
                
                
                366
                
                
                93Weighted
                    average common shares - diluted
                
                
                47,830
                
                
                49,554**Diluted
                    net income per share**
                
                $
                0.03
                
                $
                0.02
 
 **Note
          9. Income Taxes**
 
 For
          federal income tax purposes, the Company has available net operating loss
          carry-forwards of approximately $121.2 million and research and development
          credit carry-forwards of $0.2 million at March 31, 2008. The net operating
          loss
          and research and development credit carry-forwards expire in 2011 through
          2026,
          if not previously utilized. The utilization of these carry-forwards may
          be
          subject to limitations based on past and future changes in ownership of
          the
          Company pursuant to Internal Revenue Code Section 382. The recognition
          of a
          valuation allowance for deferred taxes requires management to make estimates
          about the Company’s future profitability. Deferred tax assets are reduced by
          valuation allowance when, in the opinion of management, it is more likely
          than
          not that some portion or all of the deferred tax assets will not be realized.
          The estimates associated with the valuation of deferred taxes are considered
          critical due to the amount of deferred taxes recorded on the consolidated
          balance sheet and the judgment required in determining the Company’s future
          profitability. In 2006, the Company reduced $8.1 million of valuation allowance
          as a reduction of goodwill and intangible assets acquired from the Concord
          acquisition, based on the expectation that these deferred tax assets are
          more
          likely than not to be realized. Deferred tax assets were $8.1 million at
          March
          31, 2008 and December 31, 2007, respectively, net of a valuation allowance
          of
          $34.9 million and $35.4 million, respectively.
  10





Because
      the majority of the Company’s deferred tax asset consists of net operating loss
      carryforwards for federal tax purposes, the key to the Company’s ability to
      realize the deferred tax asset will be to generate sufficient income in future
      years to utilize the loss carryforwards prior to expiration.





The
      Company has an effective tax rate of 5.9% for the three months ended March
      31,
      2008, which consists of a federal alternative minimum tax and state tax. There
      is no current or deferred federal income tax provision due to the availability
      of net operating loss carry-forwards and the maintenance of a deferred tax
      valuation allowance at consistent levels. The change in the Company’s effective
      tax rate is due to Concord’s taxable income within its relevant
      states.




The
      Company files income tax returns in the U.S. federal jurisdiction and various
      state jurisdictions.





**Note
      10. Employee Benefit Plan**





The
      Company sponsors a 401(k) Plan (the "Plan"), covering substantially all
      employees of the Company. Under this Plan, eligible employees who elect to
      participate in the Plan may contribute between 2% and 20% of eligible
      compensation to the Plan. For the three months ended March 31, 2008 and 2007,
      respectively, the Company made matching contributions of approximately $40
      thousand and $28 thousand.





**Note
      11. Stockholders’ equity**





The
      Company measures compensation costs for all share-based payments (including
      employee stock options) at fair value and recognizes such costs in the statement
      of operations. The Company estimates the fair value of share-based payments
      using the binomial stock option valuation model and the market price of the
      Company’s common stock at date of award for restricted stock awards. Total
      share-based compensation expense for the three months ended March 31, 2008
      and
      2007 was $0.2 million and $0.7 million, respectively.




On
      June
      21, 2007, the Company’s stockholders approved the Company’s 2007 Stock Incentive
      Plan (the “2007 Stock Incentive Plan”). Under the 2007 Stock Incentive Plan,
      10,000,000 shares of the Company’s common stock will be initially reserved for
      issuance and available for awards, subject to an automatic annual increase
      equal
      to 4% of the total number of shares of the Company’s common stock outstanding at
      the beginning of each fiscal year (the “Annual Share Increase”). Awards under
      the 2007 Stock Incentive Plan may include non-qualified stock options, incentive
      stock options, stock appreciation rights, restricted shares of common stock,
      restricted units and performance awards. Awards under the 2007 Stock Incentive
      Plan may be granted to employees, officers, directors, consultants, independent
      contractors and advisors of the Company or any subsidiary of the Company. In
      any
      calendar year, no participant may receive awards under the 2007 Stock Incentive
      Plan for more than 2,500,000 shares of the Company’s common stock. Additionally,
      no more than 2,500,000 of the total shares of common stock available for
      issuance under the 2007 Stock Incentive Plan may be granted in the form of
      restricted shares, restricted units or performance awards, subject to an
      automatic annual increase, beginning with January in year 2008 and continuing
      through January in year 2017, equal to 75% of the total number of shares of
      the
      Company’s common stock increased pursuant to the Annual Share Increase. The 2007
      Stock Incentive Plan will have a term of ten years expiring on June 21, 2017.
      The Company recorded $0.2 million of compensation expense relating to these
      awards for the three months ended March 31, 2008.





On
      June
      21, 2007, the Company’s stockholders approved the Company’s 2007 Annual
      Incentive Plan (the “2007 Annual Incentive Plan”). The 2007 Annual Incentive
      Plan will enable the Company to award certain executive officers of the Company
      or any subsidiary of the Company, with “performance-based compensation” as
      defined under Section 162(m) of the Internal Revenue Code of 1986, as amended,
      which will enable the Company to deduct such compensation from its taxable
      income. As of March 31, 2008, no awards have been issued under this
      plan.





In
      April
      2000, the Company’s Board of Directors adopted the 2000 Stock Plan (the “2000
      Plan”), which provides for the issuance of non-qualified stock options to
      employees who are not officers. The options allow the holder to purchase shares
      of the Company’s common stock at fair market value on the date of the grant.
      Stock options granted under the 2000 Plan typically vest over three years and
      generally expire ten years from the date of grant. As a result of shareholder
      approval of the 2007 Stock Incentive Plan, the Company's 2000 Plan has been
      frozen and will remain in effect only to the extent of awards outstanding under
      the plan as of June 21, 2007.


11





In
      February 1999, the Company’s Board of Directors adopted the 1999 Equity
      Incentive Plan (the “1999 Plan”), which provides for the issuance of both
      incentive and non-qualified stock options. The options allow the holder to
      purchase shares of the Company’s common stock at fair market value on the date
      of the grant. For options granted to holders of more than 10% of the outstanding
      common stock, the option price at the date of the grant must be at least equal
      to 110% of the fair market value of the stock. Stock options granted under
      the
      1999 Plan typically vest when performance conditions are met or over three
      years
      and generally expire ten years from the date of grant. As a result of
      shareholder approval of the 2007 Stock Incentive Plan, the Company's 1999 Plan
      has been frozen and will remain in effect only to the extent of awards
      outstanding under the plan as of June 21, 2007.





A
      summary
      of option activity ,
      excluding performance-based awards, under
      the
      Plans as of March 31, 2008, and changes during the period then ended is
      presented below:


**Options**
              
              **Shares**
                **(000)**
              
              **Weighted-**
                **Average**
                **Exercise**
                **Price**
              
              **Weighted-**
                **Average**
                **Remaining**
                **Contractual**
                **Term
                  (years)**
              
              **Aggregate**
                **Intrinsic**
                **Value**Outstanding
                  at January 1, 2008
              
              
              1,541
              
              $
              1.22Granted
              
              
              —
              
              
              —Exercised
              
              
              —
              
              
              —Forfeited
                  or expired
              
              
              —
              
              
              —Outstanding
                  at March 31, 2008
              
              
              1,541
              
              $
              1.22
              
              
              6.2
              
              $
              193Vested
                  or expected to vest at March 31, 2008
              
              
              1,541
              
              $
              1.22
              
              
              6.2
              
              $
              193Exercisable
                  at March 31, 2008
              
              
              701
              
              $
              1.19
              
              
              6.7
              
              $
              109




A
      summary
      of the option activity under the performance-based awards as of March 31, 2008,
      and changes during the period then ended is presented below:


**Performance
                  Options**
              
              **Shares**
                **(000)**
              
              **Weighted**
                **Average**
                **Exercise Price**
              
              **Remaining**
                **Contractual**
                **Term (years)**
              
              **Aggregate**
                **Intrinsic Value**Outstanding
                  at January 1, 2008
              
              
              1,471
              
              $
              1.25Granted
              
              
              —
              
              
              —Exercised
              
              
              —
              
              
              —Forfeited
                  or expired
              
              
              —
              
              
              —Outstanding
                  at March 31, 2008
              
              
              1,471
              
              $
              1.25
              
              
              9.75
              
              $
              147Vested
                  or expected to vest at March 31, 2008
              
              
              1,471
              
              $
              1.25
              
              
              9.75
              
              $
              147Exercisable
                  at March 31, 2008
              
              
              —
              
              $
              —
              
              
              —
              
              $
              —





Effective
      February 6, 2008, the Company issued to Albert W. Weggeman, the Company's
      President and Chief Executive Officer, a restricted stock award of 56,818 shares
      of common stock pursuant to the Company's 2007 Stock Incentive Plan. The terms
      of the award provide that the award would vest and Mr. Weggeman would be
      entitled to receive the common stock on the earliest to occur of (i) a
      Change-of-Control Event as defined in the 2007 Stock Incentive Plan,
      (ii) the termination of his employment by the Company without "cause" as
      defined in the 2007 Stock Incentive Plan and his employment agreement, and
      (iii) the third anniversary of the grant of the restricted stock award,
      provided that he is then employed by the Company as its President and Chief
      Executive Officer. The award will become fully vested on the occurrence of
      the
      earliest of the aforementioned events.





**Note
      12. Commitments and Contingencies**





Contingencies





Except
      as
      set forth below, t he
      Company is not a
      party to, nor are any of its properties, subject to any pending legal,
      administrative or judicial proceedings other than routine litigation incidental
      to our business.


12





Public
      Offering Securities Litigation





On
      November 2, 2001, Timothy J. Fox filed a purported class action lawsuit against
      the Company; FleetBoston Robertson Stephens, Inc., the lead underwriter of
      the
      Company’s April 1999 initial public offering; several other underwriters who
      participated in the initial public offering; Steven J. Snyder, the Company’s
      then president and chief executive officer; and Thomas M. Donnelly, the
      Company’s then chief financial officer. The lawsuit was filed in the United
      States District Court for the Southern District of New York and was assigned
      to
      the pretrial coordinating judge for substantially similar lawsuits involving
      more than 300 other issuers. An amended class action complaint, captioned *In
      re
      Net Perceptions, Inc. Initial Public Offering Securities*  *Litigation,* 01
      Civ.
      9675 (SAS), was filed on April 22, 2002, expanding the basis for the action
      to
      include allegations relating to the Company’s March 2000 follow-on public
      offering in addition to those relating to its initial public offering.  The
      action against the Company was thereafter coordinated with the other
      substantially similar class actions as *In
      re
      Initial Public Offering Securities Litigation* ,
      21 MC
      (SAS) (the “Coordinated Class Actions”).





The
      amended complaint generally alleges that the defendants violated federal
      securities laws by not disclosing certain actions taken by the underwriter
      defendants in connection with the Company’s initial public offering and
      follow-on public offering.





On
      August
      31, 2005, the Court gave preliminary approval to a settlement reached by the
      plaintiffs and issuer defendants in the Coordinated Class Actions. On December
      5, 2006, the United States Court of Appeals for the Second Circuit overturned
      the District Court's certification of the class of plaintiffs who are pursuing
      the claims that would be settled in the settlement against the underwriter
      defendants. Plaintiffs filed a Petition for Rehearing with the Second Circuit
      on
      January 5, 2007 in response to the Second Circuit's decision. On April 6, 2007,
      the Second Circuit denied plaintiffs' Petition for Rehearing but clarified
      that
      the plaintiffs may seek to certify a more limited class in the District Court.
      On June 25, 2007, the District Court signed an Order terminating the settlement.
      In the option of management, the ultimate disposition of this matter will not
      have a material effect on the Company’s financial position, results of operation
      or cash flows.





Concord
      Steel, Inc. v. Wilmington Steel Processing Co., Inc., et al.




On
      November 21, 2007, Concord filed a Verified Complaint in the Delaware Chancery
      Court against Wilmington Steel, Kenneth Neary and William Woislaw for violation
      of non-compete provisions contained in an Asset Purchase Agreement, dated
      September 19, 2006 and certain related agreements, and at the same time moved
      for a preliminary injunction to prohibit breaches of those restrictive
      covenants.  On January 18, 2008, the defendants in that case served an
      Answer denying the material allegations of the Complaint and asserting
      counterclaims for tortious interference with business relations and
      defamation arising from alleged telephone calls made by Concord to the
      customer to which Wilmington was selling. On
      April
      3, 2008, the Court granted the preliminary injunction sought by the Company
      and
      thereafter denied defendants’ request for a stay and for certification of an
      interlocutory appeal. On May 8, 2008, the Delaware Supreme Court rejected
      defendants’ application for interlocutory review. Trial is scheduled for July
      2008. The Company believes that it has valid claims and defenses.





**Note
      13. Related Party Transactions**





On
      September 22, 2006, the Company entered into a five-year consulting agreement
      (the “Consulting Agreement”) with Kanders & Company, Inc. (“Kanders &
Company”). The Consulting Agreement provides that Kanders & Company will
      render investment banking and financial advisory services to the Company on
      a
      non-exclusive basis, including strategic planning, assisting in the development
      and structuring of corporate debt and equity financings, introductions to
      sources of capital, guidance and advice as to (i) potential targets for mergers
      and acquisitions, joint ventures, and strategic alliances, including
      facilitating the negotiations in connection with such transactions, (ii) capital
      and operational restructuring, and (iii) shareholder
      relations.


13





The
      Consulting Agreement provides for Kanders & Company to receive a fee equal
      to (i) $0.5 million in cash per year during the term of the Consulting
      Agreement, payable monthly, and (ii) 1% of the amount by which the Company’s
      revenues as reported in the Company’s Form 10-K, or if no such report is filed
      by the Company, as reflected in the Company’s audited financial statements for
      the applicable fiscal year, exceeds $60.0 million, payable in shares of common
      stock of the Company (the “Stock Fee”) valued at the weighted average price of
      the Company’s Common Stock for the applicable fiscal year. Upon a
“change-in-control” (as defined in the Consulting Agreement), Kanders &
Company will be entitled to a one-time lump sum cash payment equal to three
      times the average amount Kanders & Company received during each of the two
      fiscal years preceding such “change-in-control,” subject to certain limitations
      as set forth in the Consulting Agreement. Upon the death or permanent disability
      of Mr. Kanders, the Company has agreed to make a one-time lump sum cash payment
      to Kanders & Company equal to that amount Kanders & Company would be
      entitled to receive upon a “change-in-control.” Upon payment of the amounts due
      to Kanders & Company either upon the occurrence of a “change-in-control,” or
      upon the death or permanent disability of Mr. Kanders, the Consulting Agreement
      will terminate. For the three months ended March 31, 2008 and 2007, the Company
      recorded consulting fees of $0.1 million and $0.2 million, respectively, related
      to the Consulting Agreement. As of March 31, 2008 and December 31, 2007, the
      accrued balance due to Kanders & Company under this agreement amounted to
      $0.7 million and $0.5 million, respectively.





For
      the
      three months ended March 31, 2008 and 2007, the Company reimbursed Clarus
      Corporation (“Clarus”) an entity it shared office space with until October 1,
      2007, an aggregate of $10 thousand and $45 thousand, respectively, for
      telecommunication, professional and general office expenses which Clarus
      incurred on behalf of the Company. Warren B. Kanders, the Company’s
      Non-Executive Chairman, also serves as the Executive Chairman of
      Clarus.





On
      April
      21, 2004, the Company closed on an investment into the Company by Olden for
      the
      purpose of initiating a strategy to redeploy the Company’s assets and use the
      Company’s cash, cash equivalent assets and marketable securities to enhance
      stockholder value. The Company issued and sold to Olden a 2% ten-year
      Convertible Subordinated Note, which is convertible after one year (or
      earlier upon a call by the Company and in certain other circumstances) at
      a
      conversion price of $0.45 per share of Company common stock into approximately
      19.9% of the outstanding common equity of the Company as of the closing date.
      Proceeds to the Company from this transaction totaled approximately $2.5 million
      before transaction costs of $0.3 million. The transaction costs are being
      amortized over ten years, the term of the debt. Interest on the note accrues
      semi-annually on the last day of June and December in each year and is payable,
      together with the principal sum of the note, on the maturity date of the note.
      The note matures on April 21, 2014 unless accelerated earlier as provided by
      the
      note. The convertible subordinated note was deemed to include a beneficial
      conversion feature. At the date of issuance, the Company allocated $0.1 million
      to the beneficial conversion feature and amortized the beneficial conversion
      feature over one year (the period after which the note is convertible). As
      of
      December 31, 2006, zero remains to be amortized of the note discount due to
      the
      beneficial conversion feature. Also in connection with this transaction, the
      Company entered into a Registration Rights Agreement, which requires the
      Company, upon request of the purchaser of the note or its assignee, to register
      under the Securities Act of 1933, as amended, the resale of the shares of common
      stock into which the note is convertible. As of March 31, 2008 and
      December 31, 2007, the outstanding balance on the note payable amounted to
      $2.5
      million and is classified as long-term debt. The Company believes it has the
      financial ability to make all payments on this note.





**Note
      14. Fair Value Measurements**





SFAS
      157
      defines fair value, establishes a framework for measuring fair value in
      accordance with accounting principles generally accepted in the United States
      of
      America, and expands disclosures about fair value measurements. The Company
      has
      adopted the provisions of SFAS 157 as of January 1, 2008 for its financial
      instruments. Although the adoption of SFAS 157 did not materially impact its
      financial condition, results of operations, or cash flows, the Company is now
      required to provide additional disclosures as part of its financial
      statements.





SFAS
      157
      establishes a three-tier fair value hierarchy, which prioritizes the inputs
      used
      in measuring fair value.  These tiers include: Level 1, defined as
      observable inputs such as quoted prices in active markets; Level 2, defined
      as
      inputs other than quoted prices in active markets that are either directly
      or
      indirectly observable; and Level 3, defined as unobservable inputs in which
      little or no market data exists, therefore requiring an entity to develop its
      own assumptions.





As
      of
      March 31, 2008, the Company has interest rate swap contracts that are required
      to be measured at fair value on a recurring basis.


14





The
      inputs utilized to determine the fair values of these contracts are obtained
      in
      quoted public markets. The Company has consistently applied these valuation
      techniques in all periods presented.





The
      Company’s liabilities measured at fair value on a recurring basis subject to the
      disclosure requirements of SFAS 157 at March 31, 2008, were as
      follows:


**Fair Value Measurements at Reporting Date Using****Description**
              
              **3/31/2008**
              
              **Quoted**
                **Prices
                  in**
                **Active**
                **Markets
                  for**
                **Identical**
                **Liabilities**
                **(Level
                  1)**
              
              **Significant**
                **Other**
                **Observable**
                **Inputs**
                **(Level
                  2)**
              
              **Significant**
                **Unobservable**
                **Inputs**
                **(Level
                  3)**Interest
                  Rate Derivatives
              
              $
              475
              
              $
              —
              
              $
              475
              
              $
              —Total
                  liabilities measured at fair value
              
              $
              475
              
              $
              —
              
              $
              475
              
              $
              —





**Note
      15. Rights Agreement**





On
      February 11, 2008, the Company entered into an
      amendment to its shareholder rights agreement (the “Rights Agreement”)
      that decreases the trigger threshold to 4.9%, from 15%, as the amount of the
      Company’s outstanding common stock that a person must beneficially own before
      being deemed to be an “Acquiring Person” under the Rights Agreement.
      Stockholders who own 4.9% or more of the Company’s outstanding common stock as
      of the effective date of the amendment would not trigger the Rights Agreement
      so
      long as they do not subsequently increase their ownership of the Company’s
      common stock. The amendment also provides that if a person inadvertently becomes
      an Acquiring Person by acquiring shares of the Company’s common stock, and
      thereafter promptly disposes of shares to bring its ownership of shares below
      4.9% of the common stock, such person shall not be deemed an Acquiring Person.
      The Company’s Board of Directors determined that the amendment would be in the
      best interests of the Company and its stockholders, because it is expected
      to
      assist in limiting the number of 5% or more owners and thus is expected to
      reduce the risk of a possible “change of ownership” as defined under Section 382
      of the Internal Revenue Code of 1986, as amended. Any such “change of ownership”
under these rules would limit or eliminate the ability of the Company to use
      its
      existing NOL’s for federal income tax purposes. There is no guaranty that the
      objective of the amendment of preserving the value of NOL’s will be achieved.
      There is a possibility that certain stock transactions may be completed by
      stockholders or prospective stockholders that could trigger a “change of
      ownership,” and there are other limitations on the use of NOL’s set forth in the
      Internal Revenue Code of 1986, as amended.


15


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




**Forward-Looking
      Statements**





This
      report on Form 10-Q contains certain forward-looking statements, including
      information about or related to our future results, certain projections and
      business trends. Assumptions relating to forward-looking statements involve
      judgments with respect to, among other things, future economic, competitive
      and
      market conditions and future business decisions, all of which are difficult
      or
      impossible to predict accurately and many of which are beyond our control.
      When
      used in this report, the words "estimate," "project," "intend," "believe,"
      "expect" and similar expressions are intended to identify forward-looking
      statements. Although we believe that our assumptions underlying the
      forward-looking statements are reasonable, any or all of the assumptions could
      prove inaccurate, and we may not realize the results contemplated by the
      forward-looking statements. Management decisions are subjective in many respects
      and susceptible to interpretations and periodic revisions based upon actual
      experience and business developments, the impact of which may cause us to alter
      our business strategy or capital expenditure plans that may, in turn, affect
      our
      results of operations. In light of the significant uncertainties inherent in
      the
      forward-looking information included in this report, you should not regard
      the
      inclusion of such information as our representation that we will achieve any
      strategy, objectives or other plans. The forward-looking statements contained
      in
      this report speak only as of the date of this report, and we have no obligation
      to update publicly or revise any of these forward-looking statements.





These
      forward-looking and other statements, which are not historical facts, are based
      largely upon our current expectations and assumptions and are subject to a
      number of risks and uncertainties that could cause actual results to differ
      materially from those contemplated by such forward-looking statements. These
      risks and uncertainties include, among others, our inability to implement our
      acquisition growth strategy and integrate and successfully manage any businesses
      that we acquire, our inability to continue to generate revenues at historic
      levels in our newly acquired operating divisions, changes in the demand for
      counterweights, changes in the elevator or construction industries and to use
      our net operating loss carry forward, and the risks and uncertainties set forth
      in the section headed “Risk Factors” of Part I, Item 1A of our Annual Report on
      Form 10-K, for the fiscal year ended December 31, 2007 and described below.
      The
      Company cannot guarantee its future performance. We cannot assure you that
      we
      will be successful in the implementation of our growth strategy or that any
      such
      strategy will result in the Company’s future profitability. Our failure to
      successfully implement our growth strategy could have a material adverse effect
      on the market price of our common stock and our business, financial condition
      and results of operations.





References
      in this report to “Stamford Industrial Group,” the “Company,” “we,” “our” and
“us” refer to Stamford Industrial Group, Inc. (formerly known as “Net
      Perceptions, Inc.”) and, if so indicated or the context requires, includes our
      wholly-owned subsidiary, Concord Steel, Inc. (formerly known as “SIG Acquisition
      Corp., Inc.”) (which is doing business as Concord Steel and is referred to in
      this report as “Concord”).




**OVERVIEW**





Stamford
      Industrial Group, through
      its wholly-owned subsidiary Concord Steel, Inc. (“Concord”), is a
      leading independent manufacturer of steel counterweights and structural
      weldments. We sell our products primarily in the United States to original
      equipment manufacturers (“OEM”) of certain construction and industrial related
      equipment that employ counterweights for stability through counterweight
      leverage in the operation of equipment used to hoist heavy loads, such as
      elevators and cranes. The counterweight market we target is primarily comprised
      of OEMs within the (i) commercial and industrial construction equipment industry
      that manufactures aerial work platforms, telehandlers, scissor lifts, cranes,
      and a variety of other construction related equipment and vehicles; and (ii)
      the
      elevator industry, that incorporates counterweights as part of the overall
      elevator operating mechanism to balance the weight of the elevator cab and
      load.


16





Stamford
      Industrial Group was initially established in 1996 under the name “Net
      Perceptions, Inc.” as a provider of marketing software solutions. In 2003, as a
      result of continuing losses and the decline of its software business, the
      Company began exploring various strategic alternatives, including sale or
      liquidation, and ceased the marketing and development of its marketing solutions
      software business in 2004. On April 21, 2004, the Company announced an
      investment into the Company by Olden Acquisition LLC (“Olden”), an affiliate of
      Kanders & Company, Inc., an entity owned and controlled by the Company’s
      Non-Executive Chairman, Warren B. Kanders, for the purpose of initiating a
      strategy to redeploy the Company’s assets and use its cash, cash equivalent
      assets and marketable securities to enhance stockholder value. As part of this
      strategy, on October 3, 2006, the Company, acquired the assets of CRC
      Acquisition Co. LLC (“CRC”), a manufacturer of steel counterweights doing
      business as Concord Steel. With this initial acquisition, management is now
      focused on building a diversified global industrial manufacturing group through
      both organic and acquisition growth initiatives that are expected to complement
      and diversify existing business lines. The Company’s acquisition program is
      focused on building a diversified industrial growth company providing engineered
      products and solutions for global niche markets. The Company seeks acquisitions
      with transactions valued up to $150 million and having an EBITDA range of $5-$25
      million.





The
      following management’s discussion and analysis of financial condition and
      results of operations of Stamford Industrial Group, Inc. should be read in
      conjunction with the historical financial statements and footnotes of Stamford
      Industrial Group included elsewhere in this report and in the Company’s 2007
      Annual Report on Form 10-K filed with the Securities and Exchange Commission.
      Our future results of operations may change materially from the historical
      results of operations reflected in Stamford Industrial Group’s historical
      financial statements.





**Consolidated
      Operating Results for the Three Months Ended March 31, 2008 Compared to the
      Three Months Ended March 31, 2007**





REVENUES





Revenue
      increased $4.8 million or 17.2% to $32.7 million for the three months ended
      March 31, 2008 as compared to $27.9 million for the three months ended March
      31,
      2007. The increase of $4.8 million is primarily due to higher sales volume
      resulting from increased demand for our products from existing customers of
      $4.7
      million, as a result of increased spending in commercial and industrial
      construction, and infrastructure building end markets. Revenue in the elevator
      market and theatrical market remained flat, and scrap metal sales increased
      $0.1
      million.





GROSS
      MARGIN





Gross
      margin was $5.6 million or 17.1% of sales for the three months ended March
      31,
      2008 as compared to $5.3 million or 19.0% of sales for the three months ended
      March 31, 2007. The 10.0% decrease in gross margin percentage was due to
      significantly higher costs for raw material, an increase in direct labor costs
      associated with the ramp up of our Essington, PA manufacturing facility,
      partially offset by sales volume and price increases.





OPERATING
      EXPENSES





Operating
      expenses for the three months ended March 31, 2008 increased $0.1 million or
      3.1% to $3.3 million as compared to $3.2 million for
      the
      three months ended March 31, 2007 .





*Sales
      and marketing* .
      Sales
      and marketing expenses consisted primarily of freight costs, salaries, other
      employee-related costs, commissions and other incentive compensation, travel
      and
      entertainment and expenditures for marketing programs such as collateral
      materials, trade shows, public relations and creative services. For the three
      months ended March 31, 2008, sales and marketing expenses remained constant
      at
      approximately $0.4 million compared to $0.4 million for the three months ended
      March 31, 2007.





*General
      and administrative* *.* General
      and administrative expenses consist primarily of employee compensation,
      insurance, legal, accounting and other professional fees as well as public
      company expenses such as transfer agent expenses. For the three months ended
      March 31, 2008, general and administrative expenses was $2.7 million as compared
      to $2.7 million for the three months ended March 31, 2007. Stock based
      compensation expense decreased by $0.5 million as a result of a stock option
      modification made in the fourth quarter of 2007, offset by an increase in
      employee related expenses of $0.2 million due to the transition of temporary
      employees to full-time, depreciation expense of $0.1 million related to capital
      expenditures associated with the establishment of the Company’s corporate
      office, leasing expense of $0.1 million for the corporate office, and an
      increase in utilities and other overhead expenses of $0.1 million.




*Related
      party stock compensation.* For
      the
      three months ended March 31, 2008, the Company had related party stock
      compensation expense of $0.2 million associated with the stock consulting
      agreement with Kanders & Company as compared to $0.1 million for the three
      months ended March 31, 2007. The increase of $0.1 million is the result of
      increased revenues for the quarter. (See Note 13 to the financial
      statements)


17





*Interest
      expense.* Interest
      expense was $0.8 million for the three months ended March 31, 2008 compared
      to
      interest expense of $0.7 million for the three months ended March 31, 2007.
      The
      primary reason for the increase in interest expense is the market to market
      adjustment of $0.2 million on interest rate swap agreements, offset by the
      overall decrease in long-term debt. (See Note 6 to the financial
      statements)





PROVISION
      FOR INCOME TAXES





For
      income tax purposes, the Company has available federal net operating loss
      carry-forwards of approximately $121.2 million and research and development
      credit carry-forwards of approximately $0.2 million at March 31, 2008. The
      net
      operating loss and research and development credit carry-forwards expire in
      2011
      through 2026 if not previously utilized. The utilization of these carry-forwards
      may be subject to limitations based on past and future changes in ownership
      of
      the Company pursuant to Internal Revenue Code Section 382, as amended. If the
      Company were to be acquired at its recent stock value such that Section 382
      is
      applicable, this would eliminate the ability to use a substantial majority
      of
      these carry-forwards. The recognition of a valuation allowance for deferred
      taxes requires management to make estimates about the Company’s future
      profitability. The estimates associated with the valuation of deferred taxes
      are
      considered critical due to the amount of deferred taxes recorded on the
      consolidated balance sheet and the judgment required in determining the
      Company’s future profitability. Deferred tax assets were $8.1 million at both
      March 31, 2008 and December 31, 2007, net of a valuation allowance of $34.9
      million and $35.4 million, respectively.





The
      Company has an effective tax rate of 5.9% for the three months ended March
      31,
      2008, which consists of a federal alternative minimum tax and state tax. There
      is no current or deferred federal income tax provision due to the availability
      of net operating loss carry-forwards and the maintenance of a deferred tax
      valuation allowance at consistent levels.





LIQUIDITY
      AND CAPITAL RESOURCES





**Liquidity**





In
      connection with the Company’s acquisition of the assets of Concord, Concord entered
      into a senior secured credit facility (the “Credit Agreement”) with LaSalle Bank
      National Association, as administrative agent (the “Agent”) and the lenders
      party thereto.





The
      Credit Agreement establishes a commitment by the lenders to Concord to provide
      up to $40.0 million in the aggregate of loans and other financial accommodations
      consisting of (i) a five-year senior secured term loan in an aggregate principal
      amount of $28.0 million, (ii) a five-year senior secured revolving credit
      facility in the aggregate principal amount of $10.0 million (the “Revolving
      Facility”) and (iii) a five-year senior secured capital expenditure facility in
      the aggregate principal amount of $2.0 million. The Revolving Facility is
      further subject to a borrowing base consisting of up to 85% of eligible accounts
      receivable and up to 55% of eligible inventory. The Revolving Facility includes
      a sublimit of up to an aggregate amount of $5.0 million in letters of credit
      and
      a sublimit of up to an aggregate amount of $2.5 million in swing line loans.
      The
      capital expenditure facility permitted the Company to draw funds for the
      purchase of machinery and equipment during the 6-month period ended March 3,
      2007, and then converted into a 4.5-year term loan. Immediately following the
      closing of the Concord acquisition, the Company drew down approximately $31.3
      million and had additional availability under the Revolving Facility of
      approximately $6.7 million. There were no amounts drawn under the capital
      expenditure facility at the time of closing of the credit facility nor were
      there any amounts drawn down prior to March 3, 2007. The capital expenditure
      facility expired on March 3, 2007. On
      March
      13, 2008, we entered into a second amendment to the Credit Agreement to provide
      for, among other things, revisions to certain of the financial covenants under
      the bank credit facilities.





At
      March
      31, 2008 and December 31, 2007, the outstanding balance from the revolving
      credit facility amounted to $5.8 million and $5.3 million, respectively. At
      March 31, 2008, the Company had $2.6 million available in additional borrowings
      net of $1.6 million in outstanding letters of credit which have not been drawn
      upon. The balance under the term loan at March 31, 2008 and December 31, 2007
      was $22.0 million and $23.0 million, respectively. At March 31, 2008 and
      December 31, 2007, the Company had $4.0 million, respectively, classified as
      current and $18.0 million and $19.0 million, respectively classified as
      long-term. During the period ended March 31, 2008, the Company was in compliance
      with all financial covenants under the bank credit facilities. The Company’s
      future compliance with its financial covenants under the bank credit facilities
      will depend on its ability to generate earnings and manage its assets
      effectively. The bank credit facilities also have various non-financial
      covenants, requiring the Company to refrain from taking certain actions and
      requiring it to take certain actions, such as keeping in
      good
      standing the corporate existence, maintaining insurance, and providing the
      bank
      lending group with financial information on a timely basis.


18





Borrowings
      under the Credit Agreement bear interest, at the Company’s election, at either
      (i) a rate equal to three month variable London Interbank Offer Rate (“LIBOR”),
      plus an applicable margin ranging from 1.25% to 2.5%, depending on certain
      conditions, or (ii) an alternate base rate which will be the greater of (a)
      the
      Federal Funds rate plus 0.5% or (b) the prime rate publicly announced by the
      Agent as its prime rate, plus, in both cases, an applicable margin ranging
      from
      0% to 1.0%, depending on certain conditions. At March 31, 2008 and December
      31,
      2007, the applicable interest rate for the outstanding borrowings under the
      Credit Agreement was 5.20% and 7.24%, respectively.





The
      Credit Agreement is guaranteed by the Company and its direct and indirect
      subsidiaries and is secured by, among other things, (a) (i) all of the equity
      interests of Concord’s subsidiaries and (ii) a pledge by the Company of all of
      the issued and outstanding shares of stock of Concord by the Company and (b)
      a
      first priority perfected security interest on substantially all the assets
      of
      the Company and its direct and indirect subsidiaries pursuant to a guaranty
      and
      collateral agreement dated October 3, 2006 and delivered in connection with
      the
      Credit Agreement (the “Guaranty Agreement”). In addition, LaSalle Bank National
      Association, acting as the Agent for the benefit of the lenders, has a mortgage
      on all owned real estate of the Company and its direct and indirect
      subsidiaries, as well as deposit account control agreements with respect to
      funds on deposit in bank accounts of the Company and its direct and indirect
      subsidiaries.





The
      Company is exposed to interest rate volatility with regard to existing issuances
      of variable rate debt. Primary exposure includes movements in the U.S. prime
      rate and LIBOR. The Company uses interest rate swaps to reduce interest rate
      volatility. On January 2, 2007, the Company entered into an interest rate
      protection agreement that currently has approximately $11.8 million of interest
      rate swaps fixing interest rates between 5.0% and 5.8%.





On
      April
      21, 2004, the Company closed on an investment into the Company by Olden
      Acquisition LLC (“Olden”) , an
      affiliate of Kanders & Company, Inc., for
      the
      purpose of initiating a strategy to redeploy the Company’s assets and use the
      Company’s cash, cash equivalent assets and marketable securities to enhance
      stockholder value. The Company issued and sold to Olden a 2% ten-year
      Convertible Subordinated Note, which is convertible after one year (or
      earlier upon a call by the Company and in certain other circumstances) at
      a
      conversion price of $0.45 per share of Company common stock into approximately
      19.9% of the outstanding common equity of the Company as of the closing date.
      Proceeds to the Company from this transaction totaled approximately $2.5 million
      before transaction costs of $0.3 million. The transaction costs are being
      amortized over ten years, the term of the debt. Interest on the note accrues
      semi-annually but is not payable currently or upon conversion of the note.
      The
      note matures on April 21, 2014. The convertible subordinated note was deemed
      to
      include a beneficial conversion feature. At the date of issue, the Company
      allocated $0.1 million to the beneficial conversion feature and amortized the
      beneficial conversion feature over one year (the period after which the note
      is
      convertible). As of March 31, 2008 and December 31, 2007, the outstanding
      balance on the note payable amounted to $2.5 million and is classified as
      long-term debt.





**Operating
      Activities**





Net
      cash
      used in operating activities was $0.5 million for the three months ended March
      31, 2008, reflecting net income of $1.4 million, depreciation and amortization
      of $0.6 million, non-cash deferred stock-based compensation expenses of $0.2
      million offset by the impact of changes in working capital of $2.7 million.
      The
      change in working capital is primarily due to the timing difference between
      increased revenues generated and cash collections. Net cash used in operating
      activities was $0.8 million for the three months ended March 31, 2007,
      reflecting net income of $0.8 million, depreciation and amortization of $0.6
      million, a deferred tax provision of $0.4 million, non-cash deferred stock-based
      compensation expenses of $ 0.7 million offset by the impact of changes in
      working capital of $3.3 million. The change in working capital is primarily
      due
      to the timing difference between increased revenues generated and cash
      collections.





**Investing
      Activities**





Net
      cash
      used in investing activities was $0.3 million for the three months ended March
      31, 2008, primarily resulting from implementation of Concord’s new IT platform
      and the purchase of machinery and equipment. Net cash used in investing
      activities was $0.7 million for the three months ended March 31, 2007, primarily
      resulting from the purchase of machinery and equipment.


19





**Financing
      Activities**





Net
      cash
      used in financing activities was $0.5 million for the three months ended March
      31, 2008. The net cash used in financing activities was primarily from an
      increase in the Company’s line of credit facility of $0.5 million which was used
      for working capital expansion and capital expenditures, offset by cash used
      to
      paydown long-term debt in the amount of $1.0 million. Net cash used in financing
      activities was $1.5 million for the three months ended March 31, 2007. The
      net
      cash was used for an early pay down on long-term debt of $1.5
      million.





We
      believe that the Company’s revolving credit facility and cash from operations
      will be sufficient to meet our expected working capital needs for at least
      the
      next twelve months.





**Capital
      Expenditures**





The
      Company anticipates capital expenditures, excluding acquisitions, of $0.8
      million for the remainder of fiscal 2008. The Company expects capital
      expenditures will be funded from cash generated by operations and its revolving
      credit facility.





RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair
      value, establishes a framework for measuring fair value under generally accepted
      accounting principles, and requires expanded disclosures about fair value
      measurements. SFAS 157 emphasizes that fair value is a market-based measurement,
      not an entity-specific measurement, and states that a fair value measurement
      should be determined based on the assumptions that market participants would
      use
      in pricing the asset or liability. SFAS 157 applies under other accounting
      pronouncements that require or permit fair value measurements, the FASB having
      previously concluded in those accounting pronouncements that fair value is
      the
      relevant measurement attribute. Accordingly, SFAS 157 does not require any
      new
      fair value measurements. In February 2008, the FASB issued Staff Positions
      157-1 and 157-2 which remove certain leasing transactions from the scope of
      SFAS
      157 and partially defer the effective date of SFAS 157 for one year for certain
      nonfinancial assets and liabilities. SFAS 157 is effective for fiscal years
      beginning after November 15, 2007. The adoption of FAS 157 did not have a
      material impact on the Company's financial position, results of operations
      and
      cash flows.





In
      December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
      Combinations” (“SFAS No. 141R”), which replaces SFAS No. 141, “Business
      Combinations.” SFAS No. 141R retains the underlying concepts of SFAS No. 141 in
      that all business combinations are still required to be accounted for at fair
      value under the acquisition method of accounting, but SFAS No. 141R changes
      the
      application of the acquisition method in a number of significant aspects.
      Acquisition costs will generally be expensed as incurred; noncontrolling
      interests will be valued at fair value at the acquisition date; in-process
      research and development will be recorded at fair value as an indefinite-lived
      intangible asset at the acquisition date; restructuring costs associated with
      a
      business combination will generally be expensed subsequent to the acquisition
      date; and changes in deferred tax asset valuation allowances and income tax
      uncertainties after the acquisition date generally will affect income tax
      expense. SFAS No. 141R is effective on a prospective basis for all business
      combinations for which the acquisition date is on or after the beginning of
      the
      first annual period subsequent to December 15, 2008. Early adoption is not
      permitted. The Company is currently evaluating the effects, if any, that SFAS
      No. 141R may have on its financial statements.





**Item
      3. Quantitative and Qualitative Disclosures about Market
      Risk**




Through
      March 31, 2008, the majority of our recognized revenues were denominated in
      United States dollars and were primarily from customers in the United States,
      and our exposure to foreign currency exchange rate changes has been immaterial.
      Accordingly, we do not consider significant our exposure to foreign currency
      exchange rate changes arising from revenues being denominated in foreign
      currencies.




The
      Company’s primary exposure to market risk is interest rate risk associated with
      our senior credit facilities. The
      Company has a long-term credit facility that bears interest, at the Company’s
      election, at either (i) a rate equal to three month variable London
      Interbank Offer Rate (“LIBOR”) ,
      plus an
      applicable margin ranging from 1.25% to 2.5%, depending on certain conditions,
      or (ii) an alternate base rate which will be the greater of (a) the Federal
      Funds rate plus 0.5% or (b) the prime rate publicly announced by the Agent
      as
      its prime rate, plus, in both cases, an applicable margin ranging from 0% to
      1.0%, depending on certain conditions. At March 31, 2008, the applicable
      interest rate for the outstanding borrowings under the Credit Agreement was
      5.20%.





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The
        Company is exposed to interest rate volatility with regard to existing issuances
        of variable rate debt. Primary exposure includes movements in the United
        States
        prime rate and LIBOR. The Company uses interest rate swaps to reduce interest
        rate volatility. On January 2, 2007, the Company entered into an interest
        rate
        protection agreement that has approximately $11.8 million of interest rate
        swaps
        fixing interest rates between 5.0% and 5.8%. At March 31, 2007, the net loss
        of
        $0.2 million on the interest rate swap is reported in the statement of
        operations as part of interest expense.




The
      Company’s exposure to market risk is limited to interest income sensitivity,
      which is affected by changes in the general level of United States interest
      rates because all of our investments are in debt securities issued by the United
      States government. The Company’s investments consist of United States Government
      Agency and Treasury Securities in order to preserve principal, liquidity and
      stabilize interest income. Therefore, due to the conservative nature of our
      investments, our future interest income sensitivity and risk are
      limited.





**Item
      4. Controls and Procedures**





**Evaluation
      of Disclosure Controls and Procedures**





The
      Company’s Chief Executive Officer and Chief Financial Officer, its principal
      executive officer and principal financial officer, respectively, carried out
      an
      evaluation of the effectiveness of the design and operation of the Company’s
      disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
      and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) as of March 31, 2008, pursuant to Exchange Act Rule 13a-15.
      Based upon that evaluation, the Company’s Chief Executive Officer and Chief
      Financial Officer concluded that the Company’s disclosure controls and
      procedures as of March 31, 2008 are effective.





**Changes
      in Internal Control over Financial Reporting**





There
      have not been any changes in the Company’s internal control over financial
      reporting that have come to management’s attention during the quarter ended
      March 31, 2008 that have materially affected, or are reasonable likely to
      materially affect the Company’s internal control over financial reporting.


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**PART
      II. OTHER INFORMATION**


**Item
        1. Legal Proceedings**
  Concord
        Steel, Inc. v. Wilmington Steel Processing Co., Inc., et al.
 
 On
        November 21, 2007, Concord filed a Verified Complaint in the Delaware Chancery
        Court against Wilmington Steel, Kenneth Neary and William Woislaw for violation
        of non-compete provisions contained in an Asset Purchase Agreement, dated
        September 19, 2006 and certain related agreements, and at the same time moved
        for a preliminary injunction to prohibit breaches of those restrictive
        covenants.  On January 18, 2008, the defendants in that case served an
        Answer denying the material allegations of the Complaint and asserting
        counterclaims for tortious interference with business relations and
        defamation arising from alleged telephone calls made by Concord to the
        customer to which Wilmington was selling.  On April 3, 2008, the Court
        granted the preliminary injunction sought by the Company and thereafter denied
        defendants’ request for a stay and for certification of an interlocutory appeal.
        On May 8, 2008, the Delaware Supreme Court rejected defendants’ application for
        interlocutory review. Trial is scheduled for July 2008. The Company believes
        that it has valid claims and defenses.


**Item
      1A.**  **Risk
      Factors**




There
      are
      no material changes to the risk factors disclosed in the factors discussed
      in
“Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form
      10-K for the year ended December 31, 2007, which could materially affect
      the Company’s business, financial condition or future results. The risks
      described in the Company’s Annual Report on Form 10-K are not the only risks
      facing the Company. Additional risks and uncertainties not currently known
      to
      the Company or that the Company currently deems to be immaterial also may
      materially adversely affect the Company’s business, financial condition and/or
      operating results.


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**Item
      6.**  **Exhibits**


**Exhibit**
                **Number**
              
              **Description**31.1
              
              Certification
                  of Principal Executive Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 200231.2
              
              Certification
                  of Principal Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 200232.1
              
              Certification
                  of Principal Executive Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 200232.2
              
              Certification
                  of Principal Financial Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of
                  2002


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**SIGNATURES**




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




Stamford
                Industrial Group, Inc.Date:
                May 12, 2008
            By:
            /s/
                Albert W. Weggeman Jr.Albert
                W. Weggeman, Jr.*President
                and Chief Executive Officer*Date:
                May 12, 2008
            By:
            /s/
                Jonathan LaBarreJonathan
                LaBarre*Chief
                Financial Officer, Secretary and
                Treasurer*




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**EXHIBIT
      INDEX**


**Exhibit**
                **Number**
              
              **Description**31.1
              
              Certification
                  of Principal Executive Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 200231.2
              
              Certification
                  of Principal Financial Officer pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 200232.1
              
              Certification
                  of Principal Executive Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 200232.2
              
              Certification
                  of Principal Financial Officer pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002




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