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, 2009




OR




o  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 o





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files).
YES oNO o





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  o
            Accelerated
      filer xNon-accelerated
      filer    o
            Smaller
      reporting company o





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) YES o NO x





As
of May 04, 2009, there were outstanding 8,408,787 shares of the registrant’s
Common Stock, $0.0001 par value.










STAMFORD
INDUSTRIAL GROUP, INC.


FORM
10-Q


For the
Quarter Ended March 31, 2009







TABLE
OF CONTENTS







PagePART
      I.  FINANCIAL INFORMATIONItem
      1.
              Financial
      Statements (Unaudited)Consolidated
      Balance Sheets as of March 31, 2009 and December 31, 2008
              1Consolidated
      Statements of Operations for the three months ended March 31, 2009 and
      March 31, 2008
              2Consolidated
      Statements of Cash Flows for the three months ended March 31, 2009
      andMarch
      31, 2008
              3Notes
      to the Consolidated Financial Statements
              4Item
      2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
              18Item
      3.
              Quantitative
      and Qualitative Disclosures about Market Risk
              24Item
      4.
              Controls
      and Procedures
              24PART
      II.  OTHER INFORMATIONItem
      1.
              Legal
      Proceedings
              26Item
      1A.
              Risk
      Factors
              27Item
      6.
              Exhibits
              28SIGNATURES
              29EXHIBIT
      INDEX
              30
  
  PART
      I.
                FINANCIAL
      INFORMATIONItem
      1.
                Financial
      Statements




STAMFORD
INDUSTRIAL GROUP, INC.
 CONSOLIDATED
BALANCE SHEETS (UNAUDITED)
 (in
thousands, except per share amounts)
  March 31,
                2009
              
              
              December 31,
                2008ASSETSCurrent
      assets:Cash
      and cash equivalents
              
              $
              1,014
              
              
              $
              303Accounts
      receivable, net
              
              
              8,332
              
              
              
              9,806Inventories,
      net
              
              
              11,578
              
              
              
              15,748Deferred
      tax asset, net
              
              
              519
              
              
              
              519Prepaid
      expenses and other current assets
              
              
              142
              
              
              
              149Total
      current assets
              
              
              21,585
              
              
              
              26,525Property,
      plant and equipment, net
              
              
              7,873
              
              
              
              8,160Deferred
      financing costs, net
              
              
              455
              
              
              
              493Intangible
      assets, net
              
              
              19,213
              
              
              
              19,476Deferred
      tax asset, net
              
              
              39,624
              
              
              
              39,188Other
      assets
              
              
              358
              
              
              
              205Total
      assets
              
              $
              89,108
              
              
              $
              94,047LIABILITIES
      AND STOCKHOLDERS’ EQUITYCurrent
      liabilities:Notes
      payable
              
              $
              —
              
              
              $
              286Current
      portion of long-term debt
              
              
              4,000
              
              
              
              4,000Accounts
      payable
              
              
              3,478
              
              
              
              6,335Accrued
      expenses and other liabilities
              
              
              3,095
              
              
              
              3,070Total
      current liabilities
              
              
              10,573
              
              
              
              13,691Long-term
      debt, less current portion
              
              
              16,533
              
              
              
              17,533Other
      long-term liabilities
              
              
              704
              
              
              
              242Total
      liabilities
              
              
              27,810
              
              
              
              31,466Commitments
      and contingencies (Note 11)Stockholders’
      equity: (Note 10)Preferred
      stock — $.0001 par value; 5,000 shares authorized; no shares issued or
      outstanding
              
              
              —
              
              
              
              —Common
      stock — $.0001 par value; 100,000 shares authorized; 8,420 and 8,420
      shares issued and outstanding at March 31, 2009 and December 31, 2008,
      respectively
              
              
              3
              
              
              
              3Additional
      paid-in capital
              
              
              248,020
              
              
              
              247,885Accumulated
      deficit
              
              
              (186,725
              )
              
              
              (185,307
              )Total
      stockholders’ equity
              
              
              61,298
              
              
              
              62,581Total
      liabilities and stockholders’ equity
              
              $
              89,108
              
              
              $
              94,047
 
 See
accompanying notes to the consolidated financial statements.
  1
 STAMFORD
INDUSTRIAL GROUP, INC.
 CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
 (in
thousands, except per share amounts)
 
 Three Months EndedMarch 31,
                  2009
                
                
                March 31,
                  2008Revenues
                
                $
                17,114
                
                
                $
                32,677Cost
      of revenues
                
                
                15,260
                
                
                
                27,112Gross
      margin
                
                
                1,854
                
                
                
                5,565Operating
      expenses:Sales
      and marketing
                
                
                336
                
                
                
                415General
      and administrative
                
                
                2,557
                
                
                
                2,578Related
      party cash fee
                
                
                125
                
                
                
                125Related
      party stock compensation
                
                
                22
                
                
                
                177Total
      operating expenses
                
                
                3,040
                
                
                
                3,295(Loss)
      income from operations
                
                
                (1,186
                )
                
                
                2,270Other
      (expense) income:Interest
      income
                
                
                -
                
                
                
                1Interest
      expense
                
                
                (287
                )
                
                
                (790
                )Other
      income
                
                
                1
                
                
                
                27Total
      other (expense), net
                
                
                (286
                )
                
                
                (762
                )(Loss)
      income before taxes
                
                
                (1,472
                )
                
                
                1,508(Benefit)
      provision for income taxes
                
                
                (504
                )
                
                
                89Net
      (loss) income
                
                $
                (968
                )
                
                $
                1,419Basic
      net (loss) income per share
                
                $
                (0.11
                )
                
                $
                0.17Shares
      used in basic calculation
                
                
                8,420
                
                
                
                8,367Diluted
      net (loss) income per share
                
                $
                (0.11
                )
                
                $
                0.15Shares
      used in diluted calculation
                
                
                8,420
                
                
                
                9,566
 
 See
accompanying notes to the consolidated financial statements.
  2
  STAMFORD
INDUSTRIAL GROUP, INC.
 CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
 (in
thousands)
 
 Three Months EndedMarch 31,
                    2009
                  
                  
                  March 31,
                    2008Cash
      flows from operating activities:Net
      (loss) income
                  
                  $
                  (968
                  )
                  
                  $
                  1,419Reconciliation
      of net income (loss) to net cash provided by (used in)
      operating
                    activities:Provision
      for doubtful accounts
                  
                  
                  40
                  
                  
                  
                  26Depreciation
                  
                  
                  287
                  
                  
                  
                  249Amortization
      of intangible assets
                  
                  
                  263
                  
                  
                  
                  262Amortization
      of deferred financing costs
                  
                  
                  38
                  
                  
                  
                  39Deferred
      income taxes
                  
                  
                  (436
                  )
                  
                  
                  —Stock-based
      compensation
                  
                  
                  103
                  
                  
                  
                  230Related
      party stock compensation
                  
                  
                  22
                  
                  
                  
                  177Changes
      in assets and liabilities:Accounts
      receivable
                  
                  
                  1,434
                  
                  
                  
                  (8,012
                  )Inventory
                  
                  
                  4,170
                  
                  
                  
                  (373
                  )Prepaid
      expenses and other current assets
                  
                  
                  7
                  
                  
                  
                  249Other
      assets
                  
                  
                  (153
                  )
                  
                  
                  5Accounts
      payable
                  
                  
                  (2,857
                  )
                  
                  
                  5,178Accrued
      expenses and other liabilities
                  
                  
                  35
                  
                  
                  
                  81Other
      liabilities
                  
                  
                  12
                  
                  
                  
                  13Net
      cash provided by (used in) operating activities
                  
                  
                  1,997
                  
                  
                  
                  (457
                  )Cash
      flows from investing activities:Capital
      expenditures for property and equipment
                  
                  
                  —
                  
                  
                  
                  (279
                  )Net
      cash used in investing activities
                  
                  
                  —
                  
                  
                  
                  (279
                  )Cash
      flows from financing activities:Borrowings
      from revolving credit agreement
                  
                  
                  —
                  
                  
                  
                  500Payments
      on revolving credit agreement
                  
                  
                  (286
                  )
                  
                  
                  —Principal
      payments on long-term debt
                  
                  
                  (1,000
                  )
                  
                  
                  (1,000
                  )Net
      cash used in financing activities
                  
                  
                  (1,286
                  )
                  
                  
                  (500
                  )Net  increase
      (decrease) in cash and cash equivalents
                  
                  
                  711
                  
                  
                  
                  (1,236
                  )Cash
      and cash equivalents at beginning of period
                  
                  
                  303
                  
                  
                  
                  1,236Cash
      and cash equivalents at end of period
                  
                  $
                  1,014
                  
                  
                  $
                  —Supplemental
      cash flow disclosures:Interest
      paid
                  
                  $
                  232
                  
                  
                  $
                  523Taxes
      paid
                  
                  $
                  77
                  
                  
                  $
                  107
  See
accompanying notes to the consolidated financial statements.


3




STAMFORD
INDUSTRIAL GROUP, INC.




NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


(dollars
and shares in thousands, except per share amounts unless otherwise
indicated)








Note
1.  Overview and Basis of Presentation





Overview





Stamford
Industrial Group, Inc. (the “Company”, “we”, “our” and “us”), 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 and cash equivalents
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.





On
February 20, 2009, the Company executed a one-for-five reverse stock split of
the outstanding shares of common stock. As a result of the reverse stock split
our common stock is now quoted on the OTC Pink Sheets Electronic Quotation
Service under the symbol SIDG.PK.  Except as otherwise noted herein,
all prior period common stock and per share information included in this Form
10-Q, financial statements and related notes have been adjusted to give effect
to this reverse stock split.





Going
Concern





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 6 to the financial
statements, the Company believes it may be in violation of one or more of the
financial covenants contained in its credit agreement in the second quarter of
2009, which would result in a default under its credit agreement, which if not
amended, cured or waived would cause all amounts outstanding under our credit
agreement to become immediately due and payable. As a result of the foregoing,
there is substantial doubt about our ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 6. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.  We have commenced discussions with the
lender under our credit agreement to seek an amendment of the credit agreement
in the second quarter of 2009.  However, no assurance can be given
that we will be able to successfully amend our credit agreement and avoid a
default.  The Company expects to incur upfront fees and higher
interest costs as a result of any such amendment. An amendment could also
involve other changes to the credit agreement not directly related to changing
the relevant financial covenant measures that could restrict the Company’s
operations.




4





Basis
of Presentation





The
accompanying unaudited consolidated financial statements of the Company have
been prepared in accordance with accounting principles generally accepted 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 accounting principles generally accepted in the
United States of America for complete financial statements.  In the
opinion of management, all adjustments (consisting of normal recurring accruals,
unless otherwise noted) necessary for a fair presentation of the unaudited
consolidated financial statements have been included.  The results of
the three months ended March 31, 2009 are not necessarily indicative of the
results to be obtained for the year ending December 31, 2009.  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, 2008, filed
with the Securities and Exchange Commission on March 16, 2009.





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.




Significant
Accounting Policies




The
Company believes the following 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 accounting principles generally accepted
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 evidence
of a sales agreement, the delivery of goods, 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.





The Company recognizes revenue for
amounts billed to customers for scrap metal on a gross basis. Scrap revenues
were approximately $0.4 million and $1.9 million for the three months ended
March 31, 2009 and 2008, respectively.





Shipping and handling.Amounts billed to customers for shipping and handling costs are included
in revenues. Costs incurred for shipping and handling are included in sales and
marketing expense. Shipping and handling costs were approximately $0.2 million
for both the three months ended March 31, 2009 and 2008.




5





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.




Inventories.Inventories are stated at
the lower of cost or market using the average cost method. Costs included in
inventories consist of materials, labor and manufacturing overhead, which are
related to the purchase and production of inventories.




Impairment of
Long-Lived Assets.The
Company’s policy is to assess the realizabilityofits long-lived assets, including
intangible assets and to evaluate such assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of such assets (or
group of assets) may not be recoverable. Impairment is determined to exist if
the estimated future undiscounted cash flows are less thanthe related asset (or asset
group)carrying value.
Future cash flow projectionsmayinclude assumptions regarding future
sales levels, the impact of cost reduction programs, and the  level of
working capital needed to support the business. The Company uses data developed
by its business management as well as macroeconomic data in making these
calculations. There are no assurances that future cash flow assumptions will be
achieved. The amount of any impairment then recognized would be calculated as
the difference between estimated fair value and the carrying value of the
asset.The Company performs anannualevaluation of itsindefinitelong-lived assetsin October of each year.TheCompany did not have any impairment for
thethree
monthsendedMarch 31, 2009.




Litigation.The Company is
involved in legal proceedings and claims arising from time to time. Management,
in connection with outside advisors, periodically assesses liabilities and
contingencies in connection with these matters, based on the latest information
available. For those matters where it is probable that a loss has been or will
be incurred, we record the loss, or a reasonable estimate of the loss, in the
consolidated financial statements. As additional information becomes available,
estimates of probable losses are adjusted based on an assessment of the
circumstances.





Income taxes.Deferred income
taxes are evaluated on the asset and 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. These temporary differences are the differences
between the reported amounts of assets and liabilities and their income tax
bases. If, in the opinion of management, it becomes more likely than not that
some portion or all of the deferred tax assets will not be realized, deferred
tax assets would be reduced by a valuation allowance and any such reduction
could be material. The recognition of a valuation allowance for deferred taxes
requires management to make estimates and judgments about the Company’s future
profitability which are inherently uncertain but are considered critical due to
the amount of deferred taxes recorded on the Company’s consolidated balance
sheet.





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
consolidated statement of operations 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
earnings. 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 (loss) until the hedged
item is recognized in earnings. The ineffective portion of a derivative’s change
in fair value is immediately recognized in earnings.





During
the three months ended March 31, 2009, there have been no significant changes to
the Company’s significant accounting policies and estimates as disclosed in the
Company’s Annual Report on Form 10-K for the year ended December 31,
2008.




Recent
Accounting Pronouncements




On
April 9, 2009, the Financial
Accounting Standards Board (“FASB”)issued Staff Position FAS
107-1 (“FSP FAS 107-1”) and Accounting Principles Board 28-1 (“APB 28-1”),
entitled “Interim Disclosures about Fair Value of Financial Instruments” which
requires disclosures about fair value of financial instruments within the scope
of FAS 107 for interim reporting periods. FSP FAS 107-1 and APB 28-1 is
effective for interim reporting periods ending after June 15, 2009 with
early adoption permitted. The Company does not expect these pronouncements to
have a material impact on the consolidated financial statements.




6





In March 2008, the FASB issued Statementof Financial Accounting StandardsNo. 161, Disclosures about
DerivativeInstruments and Hedging Activities - an
amendment of FASB Statement No. 133 ("SFAS 161").SFAS 161 changes the disclosure
requirements for derivative instruments and hedging activities. UnderSFAS 161, entities are required to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows.SFAS 161is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008.SFAS 161encourages, but does not
require,comparative disclosures for earlier
periods at initial adoption.The adoption of SFAS 161 did not have a
significant impact on the Company’s financial position, results of operations or
cash flows.





In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141R”), which replaces SFAS No. 141, “Business
Combinations (“SFAS 141”).” SFAS 141R retains the underlying concepts of SFAS
141 in that all business combinations are still required to be accounted for at
fair value under the acquisition method of accounting, but SFAS 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 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 as SFAS 141R will generally be applicable to future business
combinations and will not have a significant effect on the Company’s financial
statements prior to such an acquisition.




In June
2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities”. FSP EITF 03-6-1 clarified that all outstanding
unvested share-based payment awards that contain rights to nonforfeitable
dividends participate in undistributed earnings with common shareholders. Awards
of this nature are considered participating securities and the two-class method
of computing basic and earnings per dilutive share must be applied. The
restricted stock awards the Company has granted to employees and directors are
considered participating securities as they receive rights to nonforfeitable
dividends should they be granted. The Company has adopted FSP EITF 03-6-1
effective January 1, 2009.




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 for non-financial
assets did not have a material impact on the Company's financial position,
results of operations and cash flows. The adoption of SFAS 157 did not have a
significant impact on the Company’s financial position, results of operations or
cash flows.




In June
2008, the FASB issued EITF Issue 07-5 (EITF 07-5),Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock. EITF No. 07-5
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early
application is not permitted. Paragraph 11(a) of SFAS No. 133Accounting for Derivatives and
Hedging Activities, specifies that a contract that would otherwise meet
the definition of a derivative but is both (a) indexed to the Company’s own
stock and (b) classified in stockholders’ equity in the statement of financial
position would not be considered a derivative financial instrument. EITF 07-5
provides a new two-step model to be applied in determining whether a financial
instrument or an embedded feature is indexed to an issuer’s own stock and thus
able to qualify for the SFAS No. 133 paragraph 11(a) scope exception. The
application of this guidance at January 1, 2009 did not have a significant
impact on the Company’s financial statements.


Note
2.  Inventories




Inventories,
net of inventory reserves at March 31, 2009 and December 31, 2008 are as
follows:




March 31,
                2009
              
              
              December 31,
                2008Finished
    goods
              
              $
              1,233
              
              
              $
              832Work-in-process
              
              
              935
              
              
              
              800Raw
    materials
              
              
              9,410
              
              
              
              14,116Total inventories,
      net
              
              $
              11,578
              
              
              $
              15,748


Inventory reservewhich is primarilyfor scrap inventory was $0.8million and $0.1 million at March 31,
2009 and December 31, 2008, respectively.




7




Note 3. Property, Plant and
Equipment




Property, plant and equipment,net, as of March 31, 2009
and December 31, 2008 are as follows:




March 31,
                2009
              
              
              December 31,
                2008Land
              
              $
              350
              
              
              $
              350Building and
      improvements
              
              
              1,397
              
              
              
              1,397Leasehold
      improvements
              
              
              1,238
              
              
              
              1,238Machinery and
      equipment
              
              
              5,682
              
              
              
              5,682Office equipment and
      furniture
              
              
              1,224
              
              
              
              1,2249,891
              
              
              
              9,891Less: Accumulated
      depreciation
              
              
              (2,018
              )
              
              
              (1,731
              )Property, plant and equipment,
      net
              
              $
              7,873
              
              
              $
              8,160




Note
4. Intangible Assets





As part
of the acquisition of Concord on October 3, 2006, 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, 2009 and December 31, 2008 are as
follows:




March 31,
    2009Gross
              
              
              Accumulated
                Amortization
              
              
              Net
              
              
              LifeIntangibles subject to
      amortization:Customer
      relationships
              
              $
              12,399
              
              
              $
              (2,589
              )
              
              $
              9,810
              
              
              12 yrsNon-compete
      agreements
              
              
              37
              
              
              
              (31
              )
              
              
              6
              
              
              3 yrsIntangibles not subject to
      amortization:Trade name
              
              
              9,397
              
              
              
              —
              
              
              
              9,397
              
              
              
              —Intangibles,
      net
              
              $
              21,833
              
              
              $
              (2,620
              )
              
              $
              19,213




December 31,
      2008Gross
              
              
              Accumulated
                Amortization
              
              
              Net
              
              
              LifeIntangibles subject to
      amortization:Customer
      relationships
              
              $
              12,399
              
              
              $
              (2,330
              )
              
              $
              10,069
              
              
              12 yrsNon-compete
      agreements
              
              
              37
              
              
              
              (27
              )
              
              
              10
              
              
              3 yrsIntangibles not subject to
      amortization:Trade name
              
              
              9,397
              
              
              
              —
              
              
              
              9,397
              
              
              
              —Intangibles,
      net
              
              $
              21,833
              
              
              $
              (2,357
              )
              
              $
              19,476








8





Note
5. Accrued Expenses and Other Liabilities





Accrued
expenses and other liabilities of the Company as of March 31, 2009 and December
31, 2008 are as
follows:




March 31,
                2009
              
              
              December 31,
                2008Accrued compensation, benefits andcommissions
              
              $
              640
              
              
              $
              983Accrued interest
      payable
              
              
              361
              
              
              
              357Accrued professional
      services
              
              
              219
              
              
              
              233Accrued
      insurance
              
              
              286
              
              
              
              273Accrued property
      taxes
              
              
              136
              
              
              
              119Accrued related party stock
      fee
              
              
              851
              
              
              
              829Other accrued
      liabilities
              
              
              602
              
              
              
              276Total Accrued Expenses and Other
      Liabilities
              
              $
              3,095
              
              
              $
              3,070


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”)dated
October 3, 2006with
LaSalle Bank National Associationwhich was acquired by Bank of America
on October 1, 2007, as
administrative agent (the “Agent”) and the lenders party
thereto.





The Credit Agreement establishes a
commitmentby the lenderstoConcordto provide up to $40.0 millionin 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 millionin letters of credit and a sublimit of
up to an aggregate amount of $2.5millionin swing line loans. The capital
expenditure facility permittedthe Company to draw funds for the
purchase of machinery and equipment during the 6-month period endedMarch 3, 2007, and then
convertedinto a 4.5-year term loan. Immediately following
the closing of theConcordacquisition, the Company drew down
approximately $31.3
millionand 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
facilitynor were there any
amounts drawn down prior to March 3, 2007, the date the capital expenditure
facility expired.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 discussed
above.





At March
31, 2009 and December 31, 2008, the outstanding balance under the Revolving
Facility was $0 and $0.3 million, respectively. At March 31, 2009, the Company
had $8.4 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, 2009 and December 31, 2008 was $18.0 million and
$19.0 million, respectively. At March 31, 2009 and December 31, 2008, the
Company had $4.0 million classified as the current portion of long-term debt and
$14.0 million and $15.0 million, respectively, classified as long-term. At both
March 31, 2009 and December 31, 2008, the Company was in compliance with all of
its financial covenants under the bank credit facilities. These covenants
require the Company to meet certain financial tests, namely (a) to maintain a
consolidated leverage ratio not in excess of 2.75 to 1.00 on the last day of any
fiscal quarter, and (b) to maintain a consolidated fixed charge coverage ratio
of not less than 1.50 to 1.00 for the period of four consecutive fiscal quarters
ending on or after March 31, 2009.  As of March 31, 2009 the Company’s
consolidated leverage ratio was 1.49 and its fixed charge coverage ratio was
1.98. 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 Company’s 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 its corporate existence, maintaining insurance, and providing
the bank lending group with financial information on a timely basis. The
Company’s failure to comply with these financial covenants could result in a
default which if not cured or waived could cause all amounts outstanding under
the bank credit facilities to become immediately due and payable.




9





A
continuing recession which started in the U.S. and is spreading across the
globe, as well as the distress in the financial and credit markets, has resulted
in declining revenues and earnings in our business, and has put additional
pressure on our ability to remain in compliance with the financial covenant
ratios contained in our Credit Agreement. These downward trends in our revenues
and earnings are expected to continue to adversely affect our financial results
causing us to lower our expectations for at least the remainder of
2009.





Consequently,
the Company believes it may be in violation of one or more of the financial
covenants under its Credit Agreement at the end of the second quarter of fiscal
2009, which would result in a default under its Credit Agreement, which if not
amended, cured or waived would cause all amounts outstanding under our Credit
Agreement to become immediately due and payable.  In the event of a
default, we would not have sufficient funds to repay all of the outstanding
amounts, which could result in the exercise by the Agent of all of its rights
and remedies available to it, such as seizing any and all collateral pledged
under the Credit Agreement which would have a material adverse effect on the
market price of our common stock, our business, financial condition and results
of operations.  We have commenced discussions with the Agent under our
Credit Agreement to seek an amendment of the Credit Agreement in the second
quarter of 2009.  However, no assurance can be given that we will be
able to successfully amend our Credit Agreement and avoid a
default.  The Company expects to incur upfront fees and higher
interest costs as a result of any such amendment. An amendment could also
involve other changes to the Credit Agreement not directly related to changing
the relevant financial covenant measures that could restrict the Company’s
operations.





Borrowings under the Credit Agreement
bear interest, at the Company’s election, at either (i) a rate equal tothree month variableLondon 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, 2009 and December 31, 2008,
the applicable interest
rate for the outstanding borrowings under the Credit Agreementwas3.48%and 3.79%, 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 ofConcord’s subsidiaries and (ii) a pledgeby the Companyof all of the issued and outstanding
shares of stock ofConcordbythe Companyand (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, LaSalleBank 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 Credit Agreement expires on October 2, 2011.





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. As of March 31, 2009, the notional amount was
approximately $9.8 million of interest rate swaps fixing interest rates between
5.0% and 5.8%.





Market
volatility in LIBOR has recently exposed the Company to fluctuations in interest
rates on outstanding borrowings provided under the Credit Agreement. Based on
available information, we believe the financial institutions syndicated under
our Credit Agreement are able to fulfill their commitments as of the date of
this filing, however, there can be no assurance that one or more financial
institutions will be able to fulfill their funding obligations.





On April 21, 2004, the Company closed on
an investment into the Company by OldenAcquisition 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 Companyissued and sold to Olden a 2% ten-year
Convertible Subordinated Note, which ispresentlyconvertibleand (subject to a call by the
Company under certain circumstances) at a conversion price of $2.25per 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
tenyears, 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.  As ofMarch31, 2009andDecember 31, 2008, the outstanding balance on the note
payable amounted to $2.5
million and is classified as long-term debt.As of March 31, 2009 and December 31,
2008, accrued interest on thenotewas $0.3 million and $0.2 million,
respectively and is classified as other long-term liabilities on the accompanyingconsolidated balance sheets.




10





Note
7.  Per Share Data






Basic earnings per share is computed
using net income and the weighted average number of shares of common stock
outstanding.  Diluted earnings per share reflects the weighted average
number of shares of common stock outstanding plus any potentially dilutive
shares outstanding during the period. Potentially dilutiveshares 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, 2009, exclude the impact of 1,126 potential shares
of common stock issuable upon the conversion of the convertible note (see note
6), 141 potential shares of common stock issuable pursuant to the consulting
agreement between the Company and Kanders & Company (see note 12) and 608
potential shares of common stock issuable upon the exercise of stock options,
all of which were
anti-dilutive. Shares used in the diluted net income per share for the
three months ended March 31, 2008, exclude the impact of 602 potential shares of
common stock issuable upon the exercise of stock options, which were
anti-dilutive.






The following table shows the
computation of the Company’s basic and diluted earnings per share, as adjusted
for the Company’s February 20, 2009 one-for-five reverse stock split, for the
three months ended March 31, 2009 and 2008, respectively.




Three Months
      Ended
                March 31,2009
              
              
              2008Basic net (loss) income per share
      calculation:Net (loss)
      income
              
              $
              (968
              )
              
              $
              1,419Weighted average common shares -
      basic
              
              
              8,420
              
              
              
              8,367Basic net (loss) income per
      share
              
              $
              (0.11
              )
              
              $
              0.17Diluted net (loss) income per
      share calculation:Net (loss) income as
      reported
              
              $
              (968
              )
              
              $
              1,419Add: convertible debt
      interest
              
              
              13
              
              
              
              13Adjusted net (loss)
      income
              
              $
              (955
              )
              
              $
              1,432Weighted average common shares -
      basic
              
              
              8,420
              
              
              
              8,367Effect of dilutive stock
      options
              
              
              —
              
              
              
              —Effect of convertible
      note  (see Note 6)
              
              
              —
              
              
              
              1,126Effect of stock
      fee  (see Note 13)
              
              
              —
              
              
              
              73Weighted average common shares -
      diluted
              
              
              8,420
              
              
              
              9,566Diluted net  (loss)
      income per share
              
              $
              (0.11
              )
              
              $
              0.15




Note
8.  Income Taxes





For
federal income tax purposes, the Company has available net operating loss
carry-forwards of approximately $114.4 million and research and development
credit carry-forwards of $0.4 million at March 31, 2009. 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 Section 382 of the Internal Revenue Code, as
amended.




11





During
the second quarter of  2008, based on the Company’s revised
projections for future taxable income over the periods that the Company's
deferred tax assets are deductible, the Company determined that it was more
likely than not that it will have future taxable income sufficient to realize an
additional portion of the Company’s net deferred tax assets and therefore
released a significant portion of the remaining valuation allowance as a
discrete item via a credit to income tax expense. During the remainder
of  2008, the Company released an additional portion of the valuation
allowance to income tax expense.





Deferred
tax assets were $40.1 million at March 31, 2009 and $39.7 million at December
31, 2008, respectively, net of a valuation allowance of $0.3 million for both
periods.





The
recognition of a valuation allowance for deferred taxes requires management to
make estimates and judgments about the Company’s future profitability which are
inherently uncertain. 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 estimates and
judgments associated with the Company’s valuation of deferred taxes are
considered critical due to the amount of deferred taxes recorded by the Company
on its consolidated balance sheet and the judgment required in determining the
Company’s future profitability.  If, in the opinion of management, it
becomes more likely than not that some portion or all of the deferred tax assets
will not be realized, deferred tax assets would be reduced by a valuation
allowance and any such reduction could have a material adverse effect on the
financial condition of the Company.





The
Company’s conclusion, based upon applicable accounting guidelines, that the
deferred tax assets noted above is more likely than not to be realized reflects,
among other things, its ability to generate taxable income and its projections
of future taxable income and includes future years that the Company estimates it
would have available net operating loss carryforwards.  While the
Company believes that its estimate of future taxable income is reasonable, it is
inherently uncertain. If the Company realizes unforeseen material losses in the
future, or its ability to generate future taxable income necessary to realize a
portion of the deferred tax assets is materially reduced, additions to the
valuation allowance which reduce the deferred tax assets could be recorded.
Moreover, because the majority of the Company’s deferred tax assets consist of
net operating loss carryforwards for federal tax purposes, if change in control
events occur which could limit the availability of the net operating loss
carryforwards under Section 382 of the Internal Revenue Code of 1986, as
amended, additions to the valuation allowance which would reduce the deferred
tax assets could also be recorded.  Any such reduction could have a
material adverse effect on the financial condition of the Company.





The
Company has an effective tax rate benefit of 34.2% for the three months ended
March 31, 2009, which includes the impact of federal alternative minimum tax and
state taxes. 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.




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





Note
9. Employee Benefit Plan





The
Company sponsors a 401(k) Plan (the "Plan"), covering substantially all
employees of the Company. Under the 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, 2009 and 2008 the
Company made matching contributions of approximately $29 thousand and $40
thousand, respectively.





Note
10. 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
consolidated statements of income. The Company estimates the fair value of
share-based payments using the Black-Scholes 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, 2009 and 2008 was $0.1 million and $0.2 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, 2,000,000 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 500,000 shares of the
Company’s common stock. Additionally, no more than 1,500,000 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. For the three months ended March 31, 2009 and 2008,
the Company recorded $0.1 million and $0.2 million, respectively, of
compensation expense relating to these awards.




12





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 allows 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 enables the Company to deduct such compensation from its taxable
income. As of March 31, 2009, 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.





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 for the
three months ended March 31, 2009, is presented below:




Options
              
              Shares
                (000)
              
              
              Weighted-Average Exercise
      Price
              
              
              Weighted-Average Remaining
      Contractual Term (years)
              
              
              Aggregate Intrinsic
      ValueOutstanding at January 1,
      2009
              
              
              314
              
              
              $
              6.14Granted
              
              
              —
              
              
              
              —Exercised
              
              
              —
              
              
              
              —Forfeited or
      expired
              
              
              —
              
              
              
              —Outstanding at March 31,
      2009
              
              
              314
              
              
              $
              6.14
              
              
              
              7.5
              
              
              $
              1Vested or expected to vest at
      March 31, 2009
              
              
              314
              
              
              $
              6.14
              
              
              
              7.5
              
              
              $
              1Exercisable at March 31,
      2009
              
              
              241
              
              
              $
              6.10
              
              
              
              7.1
              
              
              $
              —




13




A summary
of the option activity under the performance-based awards for the three months
ended March 31, 2009, is presented below:




Performance
      Options
              
              Shares
                (000)
              
              
              Weighted Average Exercise
      Price
              
              
              Remaining Contractual Term
      (years)
              
              
              Aggregate
                Intrinsic
                ValueOutstanding at January 1,
      2009
              
              
              294
              
              
              $
              6.25Granted
              
              
              —
              
              
              
              —Exercised
              
              
              —
              
              
              
              —Forfeited or
      expired
              
              
              —
              
              
              
              —Outstanding at March 31,
      2009
              
              
              294
              
              
              $
              6.25
              
              
              
              8.75
              
              
              $
              —Vested or expected to vest at
      March 31, 2009
              
              
              —
              
              
              $
              —
              
              
              
              —
              
              
              $
              —Exercisable at March 31,
      2009
              
              
              —
              
              
              $
              —
              
              
              
              —
              
              
              $
              —


Effective
February 6, 2008, the Company issued to Albert W. Weggeman, the Company's
President and Chief Executive Officer, a restricted stock award of 11,364 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, or
(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 restricted stock award will become fully vested on the
occurrence of the earliest of the aforementioned events.





Note
11.  Commitments and Contingencies





Except as
set forth below, the
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.





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 coordinated with the other substantially similar
class actions as In re Initial
Public Offering Securities Litigation, 21 MC 92 (SAS) (the
“Coordinated Class Actions”).




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. On June 25, 2007,
the District Court signed an Order terminating the settlement. On November 13,
2007, the issuer defendants in certain designated “focus cases” filed a motion
to dismiss the second consolidated amended class action complaints that were
filed in those cases. On March 26, 2008, the District Court issued an Opinion
and Order denying, in large part, the motions to dismiss the amended complaints
in the “focus cases.” On April 2, 2009, the plaintiffs filed a motion for
preliminary approval of a new proposed settlement between plaintiffs, the
underwriter defendants, the issuer defendants and the insurers for the issuer
defendants.




14





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 July 22, 2008, defendants withdrew their counterclaims without prejudice. A
three-day trial was held during the week of October 20, 2008, post-trial briefs
have been submitted and final arguments were held on April 17, 2009. A decision
from the Court is expected by this summer.





John
F. Steward v. Concord Steel, Inc.





A former
employee of CRC Acquisition Corp. filed suit against Concord in June 2007 in the
Court of Common Pleas, Trumbull County, Ohio alleging that he was terminated by
Concord in August 2006 (prior to the acquisition on October 3,
2006 by Concord (formerly known as SIG Acquisition Corp.) of the assets of
CRC Acquisition Co. LLC (“CRC”)) in violation of his rights under the federal
Family and Medical Leave Act. Plaintiff John F. Steward seeks compensatory
damages in an unstated amount, liquidated damages, injunctive relief and
reinstatement to his job. Concord is vigorously defending the
action and maintains that CRC is the proper party defendant,
denominated as “Concord Steel.” On August 18, 2008, the Plaintiff served its
amended complaint to add as named defendants in addition to Concord, the
original named defendant, each of Concord, SIG Acquisition Corp., and CRC. CRC
subsequently asserted cross claims against Concord which we intend to defend
vigorously and Concord has asserted cross claims against CRC.  The action
was settled on a no-admission basis by the Company during April
2009.





Note
12.  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.





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, 2009 and 2008, the Company
recorded consulting fees of $0.1 million and $0.1 million, respectively, related
to the Consulting Agreement. As of March 31, 2009 and December 31, 2008, the
accrued balance due to Kanders & Company under this agreement amounted to
$0.9 million and $0.8 million, respectively.





During
2009 and 2008, Kanders & Company was issued 0 and 46 shares,
respectively of the Company’s common stock as a stock fee for services provided
under the Consulting Agreement.





For the
three months ended March 31, 2009 and 2008, the Company reimbursed Clarus
Corporation (“Clarus”) an entity it shared office space with until October 1,
2007, an aggregate of $8 thousand and $10 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.




15





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(see Note 6).The Companyissued and sold to Olden a 2% ten-year
Convertible Subordinated Note, which ispresentlyconvertible(and subject to a
call by the Company under certain circumstances) at a conversion price of $2.25per 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-annuallybut is not payable currently or upon
conversion of the note.The
note matures on April 21, 2014unlessaccelerated earlier as provided by the
note.  As ofMarch31, 2009and December 31, 2008, the outstanding balance on the note
payable amountedto $2.5
million and is classified as long-term debt.





Note
13.  Derivative Financial Instruments





On January 2, 2007, the Company entered
into a derivative or interest rate swap agreement with fair value exposure to
reduce interest rate volatility.





The
Company recognizes the derivative at fair value within the Consolidated Balance
Sheet as other assets or accrued liabilities. As of March 31, 2009, the fair
value of the derivative was $0.3 million and reported in accrued
liabilities.  Changes in the derivative’s fair value are recognized
currently in the Consolidated Statement of Operations as interest
expense.  As of March 31, 2009, the change in fair value for the
period was $0.1 million.





SFAS 157 defines fair value, establishes
a framework for measuring fair value in accordance with accounting principles
generally accepted in theUnited 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 and for non-financial instruments
as of January 1, 2009. 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, 2009, the Company’s
interest rate swap contract is required to be measured at fair value on a
recurring basis.





The inputs utilized to determine the
fair values of these contracts are determined using published market prices or
estimates based on observable inputs such as interest rates, yield curves, and
spot rates. 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, 2009, were as follows:




Fair Value Measurements at
      Reporting Date UsingDescription
              
              3/31/2009
              
              
              Quoted
                Prices in
                Active
                Markets for
                Identical
                Liabilities
                (Level 1)
              
              
              Significant
                Other
                Observable
                Inputs
                (Level 2)
              
              
              Significant
                Unobservable
                Inputs
                (Level 3)Convertible
      note
              
              $
              450
              
              
              $
              —
              
              
              $
              450
              
              
              $
              —Interest rate
      derivative
              
              $
              269
              
              
              $
              —
              
              
              $
              269
              
              
              $
              —Total liabilities measured at fair
      value
              
              $
              719
              
              
              $
              —
              
              
              $
              719
              
              
              $
              —





16





Note
14.  Rights Agreement





On February 11, 2008, the Company
entered intoan amendment
to its shareholder rights agreement (the “Rights Agreement”) thatdecreases the trigger threshold to
4.9%, from 15%, as the amount of the Company’s outstandingcommonstock 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 definedunder 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 guarantee
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 Codeof 1986, as amended.





Note
15.  Reverse Stock Split





On
February 20, 2009, a reverse stock split of the Company’s outstanding shares of
common stock at an exchange ratio of one-for-five became effective after the
Company filed an Amendment to its Amended and Restated Certificate of
Incorporation. As a result of the reverse stock split, the number of outstanding
shares of the Company’s common stock was reduced from 42,043,935 shares to
approximately 8,408,787 and our common stock is now quoted on the OTC Pink
Sheets Electronic Quotation Service under the symbol “SIDG.PK”.





The
reverse stock split was approved by the Company’s stockholders at its annual
meeting of stockholders held on June 2, 2008, at which time the Board of
Directors was authorized, at its discretion, to amend the Company’s Amended and
Restated Certificate of Incorporation to effect a reverse split of the Company’s
issued and outstanding shares of common stock at an exchange ratio ranging
from one-to-two to one-to-five, at any time before the first anniversary of the
annual meeting.




17




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 secure necessary
financing, our inability to continue to comply with the financial covenants
under our credit agreement, our inability to obtain waivers and amendments to
our credit agreement in the event of default, 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, changes in
our relationship with our unionized employees, the current economic downturn and
its effect on the credit and capital markets as well as the industries and
customers that utilize our products, declines in the businesses of our
customers, the loss of any of our major customers, reductions to our deferred
tax assets or recognition of such assets and our ability to fully 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, 2008 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, 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.




18





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 $100 million and having an EBITDA
range of $5-$15 million.




During
the three months ended March 31, 2009, Concord, our wholly-owned subsidiary,
entered into a new collective bargaining agreement with employees at its Warren,
Ohio facility that are members of the United Steelworkers Union ("Local 2243").
The new collective bargaining agreement, which expires on August 31, 2012,
replaces the previous agreement between Concord and Local 2243 that expired on
August 31, 2008.




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 2008
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, 2009 Compared to the
Three Months Ended March 31, 2008





REVENUES





Revenue
decreased $15.6 million or 47.7% to $17.1 million for the three months ended
March 31, 2009 as compared to $32.7 million for the three months ended March 31,
2008. The decrease of $15.6 million is primarily due to price reductions and
lower sales volume resulting from decreased demand for our products from
existing customers, as a result of decreased spending in commercial and
industrial construction end markets.




GROSS
MARGIN





Gross
margin was $1.9 million or 11.1% of sales for the three months ended March 31,
2009 as compared to $5.6 million or 17.1% of sales for the three months ended
March 31, 2008. The35.1% decrease in gross margin
percentage was due to significantly higher costs for raw material and
significant price reductions on lower sales volume.





OPERATING
EXPENSES





Operating
expenses for the three months ended March 31, 2009 decreased $0.3 million or
9.1% to $3.0 million as compared to $3.3 million for the three months ended
March 31, 2008.





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, 2009, sales and marketing expenses decreased to $0.3
million compared to $0.4 million for the three months ended March 31, 2008 due
to lower sales volume.





General and administrative and
related party cash fee.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, 2009, general and administrative
expenses was $2.6 million as compared to $2.7 million for the three months ended
March 31, 2008. Legal expense increased $0.3 million and accounting fees
increased by $0.2 million offset by a decrease in stock based compensation
expense of $0.1 million, a decrease in employee related expenses of $0.3 million due to a reduction in
work force and a decrease in other overhead expenses of $0.2 million.




19





Related party stock compensation.For the three months ended March 31, 2009, the Company had related party
stock compensation expense of less than $0.1 million associated with the stock
consulting agreement with Kanders & Company as compared to $0.2 million for
the three months ended March 31, 2008.





Interest expense.Interest
expense was $0.3 million for the three months ended March 31, 2009 compared to
interest expense of $0.8 million for the three months ended March 31, 2008. The
primary reason for the decrease in interest expense is due to the overall
reduction in the Company’s revolving credit agreement and term loan, offset by
the mark to market adjustment of $0.1 million on interest rate swap
agreements.





PROVISION
FOR INCOME TAXES





For
income tax purposes, the Company has available federal net operating loss
carry-forwards of approximately $114.4 million and research and development
credit carry-forwards of approximately $0.2 million at March 31, 2009. The net
operating loss and research and development credit carry-forwards expire in 2011
through 2027 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 including assumptions based on normalized taxable income patterns.
An analysis was performed as of March 31, 2009, which resulted in
management’s
belief that the deferred tax asset is realizeable based on projected future
taxable income. 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 $40.1 million and $39.7
million at March 31, 2009 and December 31, 2008, net of a valuation allowance of
$0.3 million for both periods.





The
Company has an effective tax rate benefit of 34.2% for the three months ended
March 31, 2009, which includes the impact of a federal alternative minimum tax
and state tax. 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.





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”)dated
October 3, 2006with
LaSalle Bank National Association, as administrative agent (the “Agent”) and the
lenders party thereto.





The Credit Agreement establishes a
commitmentby the lenderstoConcordto provide up to $40.0 millionin 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 millionin letters of credit and a sublimit of
up to an aggregate amount of $2.5millionin swing line loans. The capital
expenditure facility permittedthe Company to draw funds for the
purchase of machinery and equipment during the 6-month period endedMarch 3, 2007, and then
convertedinto a 4.5-year term loan. Immediately following
the closing of theConcordacquisition, the Company drew down
approximately $31.3
millionand 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
facilitynor were there any
amounts drawn down prior to March 3, 2007 the date the capital expenditure
facility expired.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 discussed
above.




20





AtMarch31, 2009and December 31, 2008, the outstanding balance from the
revolving credit facilitywas$0and $0.3million, respectively. AtMarch31, 2009, the Company had $8.4million available in additional
borrowings net of $1.6million in outstanding letters of
credit which have not been drawn upon. The balance under the term loan atMarch31, 2009and December 31, 2008was $18.0 million and $19.0 million, respectively. Atboth March31, 2009and December 31, 2008, the Company had $4.0 million
classified as current and $14.0 million and $15.0 million, respectively,classified as long-term.During the three month period ended
March 31, 2009, the Company was in compliance withall financial covenants under the bank
credit facilities.These covenants require us to meet certain financial
tests, namely (a) to maintain a consolidated leverage ratio not in excess of
2.75 to 1.00 on the last day of any fiscal quarter, and (b) to maintain a
consolidated fixed charge coverage ratio of not less than 1.50 to 1.00 for the
period of four consecutive quarters ending on or after March 31, 2009.  As
of March 31, 2009 our consolidated leverage ratio was 1.49 and our fixed charge
coverage ratio was 1.98. 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 alsohavevarious 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. Our failure to comply with these financial
covenants could result in a default which if not cured or waived could cause all
amounts outstanding under our bank credit facilities to become immediately due
and payable.





A
continuing recession which started in the U.S. and is spreading across the
globe, as well as the distress in the financial and credit markets, has resulted
in declining revenues and earnings in our business, and has put additional
pressure on our ability to remain in compliance with the financial covenant
ratios contained in our Credit Agreement. These downward trends in our revenues
and earnings are expected to continue to adversely affect our financial results
causing us to lower our expectations for at least the remainder of
2009.





Consequently,
the Company believes it may be in violation of one or more of the financial
covenants under its Credit Agreement at the end of the second quarter of fiscal
2009, which would result in a default under its Credit Agreement, which if not
amended, cured or waived would cause all amounts outstanding under our Credit
Agreement to become immediately due and payable.  In the event of a
default, we cannot assure you that we would have sufficient funds to repay all
of the outstanding amounts, which could result in the exercise by the Agent of
all of its rights and remedies available to it, such as seizing any and all
collateral pledged under the Credit Agreement which would have a material
adverse effect on the market price of our common stock, our business, financial
condition and results of operations.  We have commenced discussions
with the Agent under our Credit Agreement to seek an amendment of the Credit
Agreement in the second quarter of 2009.  However, no assurance can be
given that we will be able to successfully amend our Credit Agreement and avoid
a default.  The Company expects to incur upfront fees and higher
interest costs as a result of any such amendment. An amendment could also
involve other changes to the Credit Agreement not directly related to changing
the relevant financial covenant measures that could restrict the Company’s
operations.





Borrowings under the Credit Agreement
bear interest, at the Company’s election, at either (i) a rate equal tothree month variableLondon 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, 2009 and December 31, 2008,
the applicable interest
rate for the outstanding borrowings under the Credit Agreementwas3.48%and 3.79%, 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 ofConcord’s subsidiaries and (ii) a pledgeby the Companyof all of the issued and outstanding
shares of stock ofConcordbythe Companyand (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, LaSalleBank 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. As of March 31, 2009, the notional amount was
approximately $9.8 million of interest rate swaps fixing interest rates between
5.0% and 5.8%.




21





Market
volatility in LIBOR has recently exposed the Company to fluctuations in interest
rates on outstanding borrowings provided under the Credit Agreement. Based on
available information, we believe the financial institutions syndicated under
our Credit Agreement are able to fulfill their commitments as of the date of
this report, however, there can be no assurance that one or more financial
institutions will be able to fulfill their funding obligations.





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 Companyissued and sold to Olden a 2% ten-year
Convertible Subordinated Note, which ispresentlyconvertible(and
subject to a call by the Company under certain circumstances) at a conversion price of $2.25per 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. As ofMarch31, 2009and December 31, 2008, the outstanding balance on the note payable amounted to $2.5
million and is classified as long-term debt.





Operating
Activities





Net cash
provided by operating activities was $2.0 million for the three months ended
March 31, 2009, reflecting a net loss of $1.0 million and the change in deferred
tax assets of $0.4 million offset by depreciation and amortization of $0.6
million, non-cash deferred stock-based compensation expense of $0.1 million and
changes in working capital of $2.7 million. The change in working capital is
primarily due to the timing of price increases to customers, tight credit
markets experienced by our vendors and the timing difference between decreased
revenues generated and cash collections. 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.





Investing
Activities





Investing
activities were $0 for the three months ended March 31, 2009. 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.





Financing
Activities





Net cash
used in financing activities was $1.3 million for the three months ended March
31, 2009. The net cash used in financing activities was primarily used to pay
down a portion of the Company’s line of credit facility in the amount of $0.3
million and to pay down long-term debt in the amount of $1.0 million. 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
pay down long-term debt in the amount of $1.0 million.





We
believe that the Company’s Revolving Facility to the extent of no event of
default, and cash from operations will be sufficient to meet our expected
working capital needs for at least the next twelve months. However, the various
sectors of the credit markets and financial services industry have been
experiencing a period of unprecedented turmoil and upheaval characterized by
disruption in the credit markets and availability of credit and other financing,
the failure, bankruptcy, collapse or sale of various financial institutions and
an unprecedented level of intervention from the United States federal
government. While the ultimate outcome of these events cannot be predicted, they
may have a material adverse effect on our ability to obtain financing necessary
to effectively execute our acquisition strategy, the ability of our customers
and suppliers to continue to operate their businesses or the demand for our
products which could have a material adverse effect on the market price of our
common stock and our business, financial condition and results of operations. If
the Company has a need for funding, we believe our liquidity requirements can be
satisfied by drawing upon our contractually committed Credit Agreement, but
under extreme market conditions, there can be no assurance that this agreement
would be available or sufficient. See “Risk Factors - The Company’s existing
credit facility contains financial and restrictive covenants that may limit its
ability to operate its business and the Company believes it may be in violation
of one or more of these covenants in the second quarter of 2009 which would
cause all amounts under the credit facility to become due and payable” in Part
I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008, for more information.




22





Recent
distress in the financial markets has had an adverse impact on financial market
activities including among other things, extreme volatility in security prices,
severely diminished liquidity and credit availability, rating downgrades of
certain investments and declining valuations of others. The Company has assessed
the implication of these factors on our current business and determined that
there has not been a significant impact on our financial position or liquidity
during the three months ended March 31, 2009. However, there can be no assurance
that as a result of these conditions there will not be an impact on our future
financial position, results of operations or liquidity. Based on available
information, we believe the financial institutions syndicated under our Credit
Agreement are able to fulfill their commitments as of the date of this filing;
however, there can be no assurance that one or more financial institutions will
be able to fulfill their funding obligations.





Capital
Expenditures





The Company anticipates capital
expenditures, excluding acquisitions, of$0.7million for fiscal 2009. The Company expects capital
expenditures will be funded fromcash generated by
operationsand its revolving credit
facility.





RECENTLY
ISSUED ACCOUNTING PRONOUNCEMENTS




On
April 9, 2009, the Financial
Accounting Standards Board (“FASB”)issued Staff Position FAS
107-1 (“FSP FAS 107-1”) and Accounting Principles Board 28-1 (“APB 28-1”),
entitled “Interim Disclosures about Fair Value of Financial Instruments” which
requires disclosures about fair value of financial instruments within the scope
of FAS 107 for interim reporting periods. FSP FAS 107-1 and APB 28-1 is
effective for interim reporting periods ending after June 15, 2009 with
early adoption permitted. The Company does not expect these pronouncements to
have a material impact on the consolidated financial statements.





In March 2008, the FASB issued Statementof Financial Accounting StandardsNo. 161, Disclosures about
DerivativeInstruments and Hedging Activities - an
amendment of FASB Statement No. 133 ("SFAS 161").SFAS 161 changes the disclosure
requirements for derivative instruments and hedging activities. UnderSFAS 161, entities are required to
provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows.SFAS 161is effective for financial statements
issued for fiscal years and interim periods beginning after November 15, 2008,
with early application encouraged. The Statement encourages, but does not
require,comparative disclosures for earlier
periods at initial adoption.The adoption of SFAS 161 did not have a
significant impact on the Company’s financial position, results of operations or
cash flows.




In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations” (“SFAS 141R”), which replaces SFAS No. 141, “Business
Combinations (“SFAS 141”).” SFAS 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 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 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 as SFAS 141R will generally be applicable to future business
combinations and will not have a significant effect on the Company’s financial
statements prior to such an acquisition.




In June
2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities”. FSP EITF 03-6-1 clarified that all outstanding
unvested share-based payment awards that contain rights to nonforfeitable
dividends participate in undistributed earnings with common shareholders. Awards
of this nature are considered participating securities and the two-class method
of computing basic and earnings per dilutive share must be applied. The
restricted stock awards the Company has granted to employees and directors are
considered participating securities as they receive rights to nonforfeitable
dividends should they be granted. The Company has adopted FSP EITF 03-6-1
effective January 1, 2009.








23





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 157-2 did not have a
material impact on the Company's financial position, results of operations and
cash flows. The adoption of SFAS 157 did not have a significant impact on the
Company’s financial position, results of operations or cash flows.




In June
2008, the FASB issued EITF Issue 07-5 (EITF 07-5),Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock. EITF No. 07-5
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years. Early
application is not permitted. Paragraph 11(a) of SFAS No. 133Accounting for Derivatives and
Hedging Activities, specifies that a contract that would otherwise meet
the definition of a derivative but is both (a) indexed to the Company’s own
stock and (b) classified in stockholders’ equity in the statement of financial
position would not be considered a derivative financial instrument. EITF 07-5
provides a new two-step model to be applied in determining whether a financial
instrument or an embedded feature is indexed to an issuer’s own stock and thus
able to qualify for the SFAS No. 133 paragraph 11(a) scope exception. The
application of this guidance at January 1, 2009 did not have a significant
impact on the Company’s financial statements.




Item
3.  Quantitative and Qualitative Disclosures about Market
Risk





There
have been no material changes to our exposure to market risk since December 31,
2008.





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, 2009, pursuant to Exchange Act Rule
13a-15(d).  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, 2009 are not effective, because of the
material weakness described in the Form 10-K for the period ended December 31,
2008, and as described below.




Changes
in Internal Control over Financial Reporting





There
have not been any changes in the Company’s internal control over financial
reporting during the three months ended March 31, 2009 that have materially
affected, or are reasonably likely to materially affect the Company’s internal
control over financial reporting.




Status
of Remediation of the Previously Identified Material
Weakness


The
following material weakness was disclosed in Item 9A of the Companies Form 10-K
for the period ended December 31, 2008 and remains unremediated as of March 31,
2009:




As of
December 31, 2008, the Company did not maintain effective control over the
valuation of inventory and cost of goods sold. Specifically, the Company did not
have effective supervisory and review controls over the valuation of inventory
including the average cost calculation and application of production variances
in order to ensure accurate reporting and disclosure in its interim and annual
financial statements. This control deficiency resulted in material audit
adjustments to the fourth quarter 2008 financial statements.





In
response to the material weakness identified in the fourth quarter 2008, the
Company has taken actions to strengthen its control processes and procedures in
order to remediate the material weakness as described below. The Company will
continue to evaluate the effectiveness of its internal controls and procedures
on an ongoing basis and will take further action as
appropriate.





·
            The
      Company engaged an outside professional service provider to review the
      Company’s existing set of internal controls and procedures associated with
      its physical inventory observation and reconciliation process and make
      recommended improvements;





·
            The
      Company has taken disciplinary actions and/or made changes with respect to
      certain personnel as a result of the errors in accounting and failure to
      account in accordance with generally accepted accounting
      principles;





·
            The
      Company has made appropriate personnel changes to improve the inventory
      valuation and the financial reporting requirements required by generally
      accepted accounting principles;




24




·
            The
      Company has and will continue to provide additional training to our
      employees as it relates to inventory valuation and the financial reporting
      requirements required by generally accepted accounting principles;
      and





·
            The
      Company has and will continue to review the qualifications and assessment
      of the Company’s needs with respect to personnel in areas related to
      inventory, and make appropriate personnel changes and increase supervision
      and training to effectuate the foregoing
  changes.





The
Company expects to continue to develop new policies and procedures and educate
and train its employees on its existing policies and procedures in a continual
effort to improve its internal control over financial reporting, and expects to
take further actions as appropriate.




25





PART
II.  OTHER INFORMATION




Item
1.      Legal Proceedings





Except as
set forth below, there have been no material changes to the legal proceedings
described in the Company’s Annual Report Form 10-K for the year ended December
31, 2008.





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 coordinated with the other substantially similar
class actions as In re Initial
Public Offering Securities Litigation, 21 MC (SAS) (the “Coordinated
Class Actions”).




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. On June 25, 2007,
the District Court signed an Order terminating the settlement. On November 13,
2007, the issuer defendants in certain designated “focus cases” filed a motion
to dismiss the second consolidated amended class action complaints that were
filed in those cases. On March 26, 2008, the District Court issued an Opinion
and Order denying, in large part, the motions to dismiss the amended complaints
in the “focus cases.” On April 2, 2009, the plaintiffs filed a motion for
preliminary approval of a new proposed settlement between plaintiffs, the
underwriter defendants, the issuer defendants and the insurers for the issuer
defendants.





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 July 22, 2008, defendants withdrew their counterclaims without prejudice. A
three-day trial was held during the week of October 20, 2008, post-trial briefs
have been submitted and final arguments were held on April 17, 2009. A decision
from the Court is expected by this summer.





John
F. Steward v. Concord Steel, Inc.





A former
employee of CRC Acquisition Corp. filed suit against Concord in June 2007 in the
Court of Common Pleas, Trumbull County, Ohio alleging that he was terminated by
Concord in August 2006 (prior to the acquisition on October 3,
2006 by Concord (formerly known as SIG Acquisition Corp.) of the assets of
CRC Acquisition Co. LLC (“CRC”)) in violation of his rights under the federal
Family and Medical Leave Act. Plaintiff John F. Steward seeks compensatory
damages in an unstated amount, liquidated damages, injunctive relief and
reinstatement to his job. Concord is vigorously defending the
action and maintains that CRC is the proper party defendant,
denominated as “Concord Steel.” On August 18, 2008, the Plaintiff served its
amended complaint to add as named defendants in addition to Concord, the
original named defendant, each of Concord, SIG Acquisition Corp., and CRC. CRC
subsequently asserted cross claims against Concord which we intend to defend
vigorously and Concord has asserted cross claims against CRC.  The action
was settled on a no-admission basis by the Company during April
2009.




26







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, 2008, which could materially affect the Company’s business,
financial condition or future results. The risks described in the Company’s
filings with the Securities and Exchange Commission 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.




27




Item
6.   Exhibits




ExhibitNumber
              
              Description31.1
              
              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


28




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 11, 2009
              By:
              /s/ Albert W. Weggeman Jr.Albert
      W. Weggeman, Jr.President and Chief Executive
      Officer(Principal Executive
      Officer)By:
              /s/
      Jonathan
      LaBarreJonathan LaBarreChief
      Financial Officer, Secretary and Treasurer
                (Principal
      Financial Officer and Chief Accounting Officer)


29
  EXHIBIT INDEX


ExhibitNumber
              
              Description31.1
              
              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
  30