| x    | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   |
|----------------|------------------------------------------------------------------------------------------------|
|           | For the quarterly period ended April 4, 2010or                                                 |
| o    | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  |

| Indiana                                                        | 20-0995245                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |

|   | Large accelerated filer o                                                              | Accelerated filer o         |
|--------|----------------------------------------------------------------------------------------|-----------------------------|
|   |                                                                                   |                        |
|   | Non-accelerated filer    o(Do not check if a smaller reporting company) | Smaller reporting company x |

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

----

| Item                           |                                                                                                                     | Page   |
|--------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------|
| Number                         |                                                                                                                     | Number |
|                           |                                                                                                                     |   |
| PART I - FINANCIAL INFORMATION |
|                           |                                                                                                                     |   |
| 1.                             | Financial Statements:                                                                                                    |   |
|                           |                                                                                                                     |   |
|                           | Condensed Consolidated Balance Sheets April 4, 2010 (Unaudited) and December 31, 2009                          | 1      |
|                           |                                                                                                                     |   |
|                           | Condensed Consolidated Statements of Operations (Unaudited) Three Months ended April 4, 2010 and April 5, 2009      | 2      |
|                           |                                                                                                                     |   |
|                           | Condensed Consolidated Statements of Cash Flows (Unaudited) Three Months ended April 4, 2010 and April 5, 2009 | 3      |
|                           |                                                                                                                     |   |
|                           | Notes to Condensed Consolidated Financial Statements                                                                     | 4      |
|                           |                                                                                                                     |   |
| 2.                             | Management’s Discussion and Analysis of Financial Condition and Results of Operations                              | 23     |
|                           |                                                                                                                     |   |
| 3.                             | Quantitative and Qualitative Disclosures about Market Risk                                                               | 30     |
|                           |                                                                                                                     |   |
| 4.                             | Controls and Procedures                                                                                                  | 30     |
|                           |                                                                                                                     |   |
| PART II - OTHER INFORMATION    |
|                           |                                                                                                                     |   |
| 2.                             | Unregistered Sales of Equity Securities and Use of Proceeds                                                              | 31     |
|                           |                                                                                                                     |   |
| 6.                             | Exhibits                                                                                                                 | 32     |
|                           |                                                                                                                     |   |
|                           | Signatures                                                                                                               | 33     |

----

| ITEM 1.   FINANCIAL STATEMENTS |
|-----------------------------------------------|

|                                                                                                                            |   | April 4,    |    |   | December 31, |   |
|---------------------------------------------------------------------------------------------------------------------------------|--------|-------------|---------|--------|--------------|--------|
|                                                                                                                            |   | 2010        |    |   | 2009         |   |
| ASSETS                                                                                                                          |   | (Unaudited) |    |   |         |   |
| CURRENT ASSETS                                                                                                                  |   |        |    |   |         |   |
| Cash and cash equivalents                                                                                                       |   | $           | -       |   |         | $      | - |   |
| Accounts receivable, net of allowance for doubtful accounts of $239 and $766, respectively                                      |   |        | 5,208   |   |         |   | 4,083 |   |
| Inventories, net                                                                                                                |   |        | 5,777   |   |         |   | 5,349 |   |
| Other current assets                                                                                                            |   |        | 691     |   |         |   | 261 |   |
| Total current assets                                                                                                            |   |        | 11,676  |   |         |   | 9,693 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| PROPERTY AND EQUIPMENT, net                                                                                                     |   |        | 6,646   |   |         |   | 7,050 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| OTHER ASSETS                                                                                                                    |   |        |    |   |         |   |   |   |
| Goodwill                                                                                                                        |   |        | 7,831   |   |         |   | 7,831 |   |
| Customer relationships, net                                                                                                     |   |        | 6,826   |   |         |   | 6,922 |   |
| Other intangible assets, net                                                                                                    |   |        | 632     |   |         |   | 643 |   |
| Deposits and other assets                                                                                                       |   |        | 412     |   |         |   | 117 |   |
| Assets held-for-sale                                                                                                            |   |        | 4,255   |   |         |   | 15,914 |   |
| Total other assets                                                                                                              |   |        | 19,956  |   |         |   | 31,427 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| Total Assets                                                                                                                    |   | $           | 38,278  |   |         | $      | 48,170 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                            |   |        |    |   |         |   |   |   |
| CURRENT LIABILITIES                                                                                                             |   |        |    |   |         |   |   |   |
| Revolving credit line, net of discount of $78 and $100, respectively                                                            |   |        | 3,405   |   |         | $      | 3,207 |   |
| Current portion of long-term debt                                                                                               |   |        | 2,937   |   |         |   | 430 |   |
| Current portion of long-term debt, Officers                                                                                     |   |        | 2,060   |   |         |   | 4,600 |   |
| Accounts payable                                                                                                                |   |        | 3,696   |   |         |   | 2,549 |   |
| Liabilities of held-for-sale operations                                                                                         |   |        | 1,182   |   |         |   | 9,581 |   |
| Accrued expenses and other current liabilities                                                                                  |   |        | 1,145   |   |         |   | 1,636 |   |
| Total current liabilities                                                                                                       |   |        | 14,425  |   |         |   | 22,003 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| LONG TERM LIABILITIES                                                                                                           |   |        |    |   |         |   |   |   |
| Long-term debt                                                                                                                  |   |        | 1,248   |   |         |   | 2,003 |   |
| Long-term debt, Officers                                                                                                        |   |        | 1,939   |   |         |   | 2,418 |   |
| Total long-term liabilities                                                                                                     |   |        | 3,187   |   |         |   | 4,421 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| Total liabilities                                                                                                               |   |        | 17,612  |   |         |   | 26,424 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| Commitments and Contingencies                                                                                                   |   |        |    |   |         |   |   |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| STOCKHOLDERS' EQUITY                                                                                                            |   |        |    |   |         |   |   |   |
| Preferred stock, no par value; 800,000 shares authorized; no shares issued and outstanding                                      |   |        | -       |   |         |   | - |   |
| Common stock, no par value; 30,000,000 shares authorized; 11,786,826 and 11,801,326 shares issued and outstanding, respectively |   |        | 50,920  |   |         |   | 50,920 |   |
| Additional paid in capital                                                                                                      |   |        | 8,418   |   |         |   | 8,452 |   |
| Accumulated deficit                                                                                                             |   |        | (38,672 | )      |         |   | (37,626 | ) |
| Total Stockholders' equity                                                                                                      |   |        | 20,666  |   |         |   | 21,746 |   |
|                                                                                                                            |   |        |    |   |         |   |   |   |
| Total Liabilities and Stockholders' Equity                                                                                      |   | $           | 38,278  |   |         | $      | 48,170 |   |

----

|                                                                                                          |   | For the 3 months ended |       |
|---------------------------------------------------------------------------------------------------------------|--------|------------------------|------------|
|                                                                                                          |   | April 4, 2010     |       |   | April 5, 2009 |   |
|                                                                                                          |   | (Unaudited)            |       |   | (Unaudited)(Restated) |   |
| Revenues                                                                                                      |   |                   |       |   |   |   |
| Product Sales                                                                                                 |   | $                      | 1,301      |   |   | $ | 1,598 |   |
| Service Revenue                                                                                               |   |                   | 6,730      |   |   |   | 8,661 |   |
| Total Revenues                                                                                                |   |                   | 8,031      |   |   |   | 10,259 |   |
|                                                                                                          |   |                   |       |   |   |   |   |   |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Cost of Revenues                                                                                              |   |                   |       |   |   |   |   |   |
| Cost of Product Sales                                                                                         |   |                   | 1,002      |   |   |   | 1,254 |   |
| Cost of Service Revenue                                                                                       |   |                   | 5,824      |   |   |   | 8,328 |   |
| Total Cost of Revenues                                                                                        |   |                   | 6,826      |   |   |   | 9,582 |   |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Gross Profit                                                                                                  |   |                   | 1,205      |   |   |   | 677 |   |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Selling, General and Administrative Expenses                                                                  |   |                   | 2,351      |   |   |   | 3,626 |   |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Loss From Operations                                                                                          |   |                   | (1,146     | ) |   |   | (2,949 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Other (Income) Expense                                                                                        |   |                   |       |   |   |   |   |   |
| Interest Expense                                                                                              |   |                   | 205        |   |   |   | 221 |   |
| Other (Income)                                                                                                |   |                   | (23        | ) |   |   | (382 | ) |
|                                                                                                          |   |                   | 182        |   |   |   | (161 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Loss From Continuing Operations Before Taxes                                                                  |   |                   | (1,328     | ) |   |   | (2,788 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Income Tax Expense                                                                                            |   |                   | -          |   |   |   | - |   |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Loss From Continuing Operations                                                                               |   |                   | (1,328     | ) |   |   | (2,788 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Income (Loss) From Discontinued Operations  (See Note C, Discontinued and Held-for-Sale Operations) |   |                   | 283        |   |   |   | (542 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| NET LOSS                                                                                                      |   | $                      | (1,045     | ) |   | $ | (3,330 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Basic and Diluted Income (Loss) per Common Share                                                              |   |                   |       |   |   |   |   |   |
| From Continuing Operations                                                                                    |   | $                      | (0.11      | ) |   | $ | (0.24 | ) |
| From Discontinued Operations                                                                                  |   |                   | 0.02       |   |   | $ | (0.04 | ) |
| Basic and Diluted Loss per Common Share                                                                       |   | $                      | (0.09      | ) |   | $ | (0.28 | ) |
|                                                                                                          |   |                   |       |   |   |   |   |   |
| Weighted Average Number of Common Shares Outstanding                                                          |   |                   | 11,794,112 |   |   |   | 11,758,280 |   |

----

|                                                                                       |   | For the Three Months Ended |   |
|--------------------------------------------------------------------------------------------|--------|----------------------------|--------|
|                                                                                       |   | April 4, 2010              |   |   | April 5, 2009 |   |
|                                                                                       |   | (Unaudited)                |   |   | (Unaudited) |   |
| OPERATING ACTIVITIES                                                                       |   |                       |   |   |   |   |
|                                                                                       |   |                       |   |   |   |   |
| Net loss                                                                                   |   | $                          | (1,045 | ) |   | $ | (3,330 | ) |
| Adjustments to reconcile net loss to net cash provided (utilized) by operating activities: |   |                       |   |   |   |   |   |   |
| Depreciation and amortization                                                              |   |                       | 523    |   |   |   | 713 |   |
| Bad Debts                                                                                  |   |                       | -      |   |   |   | 299 |   |
| Inventory reserves                                                                         |   |                       | 33     |   |   |   | 78 |   |
| Gain on disposal of discontinued operations                                                |   |                       | (394   | ) |   |   | - |   |
| Amortization of stock-based compensation plans                                             |   |                       | (32    | ) |   |   | 22 |   |
| Amortization of debt issuance costs and debt discount                                      |   |                       | 26     |   |   |   | 18 |   |
| Unrealized gain on conversion option                                                       |   |                       | (18    | ) |   |   | (376 | ) |
| Changes in:                                                                                |   |                       |   |   |   |   |   |   |
| Accounts receivable                                                                        |   |                       | (306   | ) |   |   | 6,563 |   |
| Inventories                                                                                |   |                       | (413   | ) |   |   | 1,525 |   |
| Prepaid expenses and other current assets                                                  |   |                       | (110   | ) |   |   | (62 | ) |
| Deposits and other non-current assets                                                      |   |                       | (25    | ) |   |   | (45 | ) |
| Accounts payable                                                                           |   |                       | 1,498  |   |   |   | (667 | ) |
| Accrued expenses and other current liabilities                                             |   |                       | (456   | ) |   |   | (1,307 | ) |
| Net cash provided (utilized) by operating activities                                       |   |                       | (719   | ) |   |   | 3,431 |   |
|                                                                                       |   |                       |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                       |   |                       |   |   |   |   |   |   |
|                                                                                       |   |                       |   |   |   |   |   |   |
| Proceeds from disposal of discontinued operations                                          |   |                       | 746    |   |   |   | - |   |
| Acquisition of property and equipment                                                      |   |                       | -      |   |   |   | (180 | ) |
| Proceeds from disposal of property and equipment                                           |   |                       | 7      |   |   |   | - |   |
| Net cash provided (utilized) by investing activities                                       |   |                       | 753    |   |   |   | (180 | ) |
|                                                                                       |   |                       |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                       |   |                       |   |   |   |   |   |   |
|                                                                                       |   |                       |   |   |   |   |   |   |
| Payments on capital lease obligations                                                      |   |                       | (14    | ) |   |   | (22 | ) |
| Short term borrowings (repayments), net                                                    |   |                       | 213    |   |   |   | (3,220 | ) |
| Borrowings of long-term debt                                                               |   |                       | 6      |   |   |   | 63 |   |
| Repayments of long-term debt                                                               |   |                       | (237   | ) |   |   | (108 | ) |
| Proceeds from the issuance of shares                                                       |   |                       | -      |   |   |   | 6 |   |
| Cash repurchase of restricted stock                                                        |   |                       | (2     | ) |   |   | (5 | ) |
| Net cash utilized by financing activities                                                  |   |                       | (34    | ) |   |   | (3,286 | ) |
|                                                                                       |   |                       |   |   |   |   |   |   |
| DECREASE IN CASH                                                                           |   |                       | -      |   |   |   | (35 | ) |
| Cash, beginning of period                                                                  |   |                       | -      |   |   |   | 76 |   |
|                                                                                       |   |                       |   |   |   |   |   |   |
| Cash, end of period                                                                        |   | $                          | -      |   |   | $ | 41 |   |
|                                                                                       |   |                       |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                         |   |                       |   |   |   |   |   |   |
| Cash paid during the period for:                                                           |   |                       |   |   |   |   |   |   |
| Interest                                                                                   |   | $                          | 165    |   |   | $ | 165 |   |

----

----

----

|   |                                     |   | Three Months Ended |   |
|--------|------------------------------------------|--------|--------------------|--------|
|   |                                     |   | April 5, 2009      |   |
|   |                                     |   |               |   |
|   | Revenue from discontinued operations     |   | $                  | 1,335  |   |
|   | Pretax loss from discontinued operations |   |               | (66    | ) |

|   |                                               |   | Three Months Ended |   |
|--------|----------------------------------------------------|--------|--------------------|--------|
|   |                                               |   | April 4, 2010      |   |   | April 5, 2009 |   |
|   |                                               |   |               |   |   |   |   |
|   | Revenue from discontinued operations               |   | $                  | 1,721  |   |   | $ | 6,779 |   |
|   | Pretax loss from discontinued operations           |   |               | (141   | ) |   |   | (215 | ) |
|   | Pretax gain on disposal of discontinued operations |   |               | 216    |   |   |   | - |   |

----

|   |                                                                                       |   | February 3, |   |   | December 31, |   |
|--------|--------------------------------------------------------------------------------------------|--------|-------------|--------|--------|--------------|--------|
|   |                                                                                       |   | 2010        |   |   | 2009         |   |
|   | ASSETS                                                                                     |   |        |   |   |         |   |
|   | Accounts receivable, net of allowance for doubtful accounts of $210 and $209, respectively |   | $           | 5,116  |   |         | $      | 6,317 |   |
|   | Inventories, net                                                                           |   |        | 171    |   |         |   | 172 |   |
|   | Other current assets                                                                       |   |        | 2,208  |   |         |   | 2,325 |   |
|   | Total current assets                                                                       |   |        | 7,495  |   |         |   | 8,814 |   |
|   |                                                                                       |   |        |   |   |         |   |   |   |
|   | PROPERTY AND EQUIPMENT, net                                                                |   |        | 500    |   |         |   | 500 |   |
|   |                                                                                       |   |        |   |   |         |   |   |   |
|   | Total Assets                                                                               |   | $           | 7,995  |   |         | $      | 9,314 |   |
|   |                                                                                       |   |        |   |   |         |   |   |   |
|   | LIABILITIES                                                                                |   |        |   |   |         |   |   |   |
|   | Accounts payable                                                                           |   | $           | 5,252  |   |         | $      | 5,174 |   |
|   | Accrued expenses and other liabilities                                                     |   |        | 1,033  |   |         |   | 1,279 |   |
|   | Total liabilities                                                                          |   |        | 6,285  |   |         |   | 6,453 |   |
|   |                                                                                       |   |        |   |   |         |   |   |   |
|   | Net Assets                                                                                 |   | $           | 1,710  |   |         | $      | 2,861 |   |

|   |                                               |   | Three Months Ended |   |
|--------|----------------------------------------------------|--------|--------------------|--------|
|   |                                               |   | April 4, 2010      |   |   | April 4, 2009 |   |
|   | Revenue from discontinued operations               |   | $                  | 709    |   |   | $ | 1,414 |   |
|   | Pretax loss from discontinued operations           |   |               | (241   | ) |   |   | (849 | ) |
|   | Pretax gain on disposal of discontinued operations |   |               | 178    |   |   |   | - |   |

----

|   |                                                                                     |   | March 8, |   |   | December 31, |   |
|--------|------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------------|--------|
|   |                                                                                     |   | 2010     |   |   | 2009         |   |
|   | ASSETS                                                                                   |   |     |   |   |         |   |
|   | Accounts receivable, net of allowance for doubtful accounts of $56 and $55, respectively |   | $        | 564    |   |         | $      | 490 |   |
|   | Inventories, net                                                                         |   |     | 1,153  |   |         |   | 1,152 |   |
|   | Other current assets                                                                     |   |     | 479    |   |         |   | 723 |   |
|   | Total current assets                                                                     |   |     | 2,196  |   |         |   | 2,365 |   |
|   |                                                                                     |   |     |   |   |         |   |   |   |
|   | Other assets                                                                             |   |     | -      |   |         |   | 262 |   |
|   |                                                                                     |   |     |   |   |         |   |   |   |
|   | Total Assets                                                                             |   | $        | 2,196  |   |         | $      | 2,627 |   |
|   |                                                                                     |   |     |   |   |         |   |   |   |
|   | LIABILITIES                                                                              |   |     |   |   |         |   |   |   |
|   | Accounts payable                                                                         |   | $        | 683    |   |         | $      | 643 |   |
|   | Accrued expenses and other current liabilities                                           |   |     | 1,691  |   |         |   | 1,576 |   |
|   | Total liabilities                                                                        |   |     | 2,374  |   |         |   | 2,219 |   |
|   |                                                                                     |   |     |   |   |         |   |   |   |
|   | Net Assets                                                                               |   | $        | (178   | )      |         | $      | 408 |   |

|   |                                       |   | Three Months Ended |   |
|--------|--------------------------------------------|--------|--------------------|--------|
|   |                                       |   | April 4, 2010      |   |   | April 5, 2009 |   |
|   |                                       |   |               |   |   |   |   |   |   |
|   | Revenue from discontinued operations       |   | $                  | 2,195  |   |   | $ | 3,618 |   |
|   | Pretax income from discontinued operations |   |               | 271    |   |   |   | 588 |   |

----

|   |                                                                                       |   | April 4,2010 |   |   | December 31,2009 |   |
|--------|--------------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|
|   | ASSETS                                                                                     |   |         |   |   |             |   |
|   | Accounts receivable, net of allowance for doubtful accounts of $142 and $142, respectively |   | $            | 899    |   |             | $      | 592 |   |
|   | Inventories, net                                                                           |   |         | 2,045  |   |             |   | 2,094 |   |
|   | Other current assets                                                                       |   |         | 70     |   |             |   | 30 |   |
|   | Total current assets                                                                       |   |         | 3,014  |   |             |   | 2,716 |   |
|   |                                                                                       |   |         |   |   |             |   |   |   |
|   | PROPERTY AND EQUIPMENT, net                                                                |   |         | 1,225  |   |             |   | 1,233 |   |
|   |                                                                                       |   |         |   |   |             |   |   |   |
|   | Other assets                                                                               |   |         | 16     |   |             |   | 24 |   |
|   |                                                                                       |   |         |   |   |             |   |   |   |
|   | Total Assets                                                                               |   | $            | 4,255  |   |             | $      | 3,973 |   |
|   |                                                                                       |   |         |   |   |             |   |   |   |
|   | LIABILITIES                                                                                |   |         |   |   |             |   |   |   |
|   | Accounts payable                                                                           |   | $            | 883    |   |             | $      | 601 |   |
|   | Accrued expenses and other liabilities                                                     |   |         | 299    |   |             |   | 308 |   |
|   | Total liabilities                                                                          |   |         | 1,182  |   |             |   | 909 |   |
|   |                                                                                       |   |         |   |   |             |   |   |   |
|   | Net Assets                                                                                 |   | $            | 3,073  |   |             | $      | 3,064 |   |

|   |                                                     |   | April 4, |   |   | December 31, |   |
|--------|----------------------------------------------------------|--------|----------|--------|--------|--------------|--------|
|   |                                                     |   | 2010     |   |   | 2009         |   |
|   |                                                     |   |     |   |   |         |   |
|   | Raw materials                                            |   | $        | 2,745  |   |         | $      | 2,705 |   |
|   | Work-in-process                                          |   |     | 3,076  |   |         |   | 2,486 |   |
|   | Finished goods                                           |   |     | 775    |   |         |   | 855 |   |
|   |                                                     |   |     | 6,596  |   |         |   | 6,046 |   |
|   | Less: allowance for slow moving and obsolete inventories |   |     | (819   | )      |         |   | (697 | ) |
|   |                                                     |   | $        | 5,777  |   |         | $      | 5,349 |   |

----

|   |                        |   | December 31, 2008 |   |   | Impact of New Accounting Guidance Adoption |   |   | January 1, 2009 |   |
|--------|-----------------------------|--------|-------------------|--------|--------|--------------------------------------------|--------|--------|-----------------|--------|
|   |                        |   |              |   |   |                                       |   |   |            |   |
|   | Long-term debt, Officers    |   | $                 | 5,000  |   |                                       | $      | 638    |            |   | $ | 5,638 |   |
|   | Total long-term liabilities |   |              | 9,635  |   |                                       |   | 638    |            |   |   | 10,273 |   |
|   |                        |   |              |   |   |                                       |   |   |            |   |   |   |   |
|   | Total liabilities           |   | $                 | 36,033 |   |                                       | $      | 638    |            |   | $ | 36,671 |   |
|   |                        |   |              |   |   |                                       |   |   |            |   |   |   |   |
|   | Additional paid in capital  |   | $                 | 9,056  |   |                                       | $      | (638   | )               |   | $ | 8,418 |   |
|   |                        |   |              |   |   |                                       |   |   |            |   |   |   |   |
|   | Total Stockholders' equity  |   | $                 | 42,757 |   |                                       | $      | (638   | )               |   | $ | 42,119 |   |

|   |                                                          |   | Three Months Ended |   |
|--------|---------------------------------------------------------------|--------|--------------------|--------|
|   |                                                          |   | April 5, 2009      |   |   | April 5, 2009 |   |
|   |                                                          |   | (As restated)      |   |   | (As previously reported) |   |
|   |                                                          |   |               |   |   |   |   |
|   | Estimated fair value of derivative liability                  |   | $                  | 262    |   |   | $ | - |   |
|   | Income resulting from change in value of derivative liability |   |               | 376    |   |   |   | - |   |
|   | Other Income                                                  |   |               | 382    |   |   |   | 6 |   |
|   |                                                          |   |               |   |   |   |   |   |   |
|   | Net Loss                                                      |   |               | (3,330 | ) |   |   | (3,706 | ) |
|   |                                                          |   |               |   |   |   |   |   |   |
|   | Basic and Diluted Loss per Common Share                       |   | $                  | (0.28  | ) |   | $ | (0.32 | ) |

----

|   |                    |   | April 5, 2009 |   | January 1, 2009 |
|--------|-------------------------|--------|---------------|--------|-----------------|
|   |                    |   |          |   |            |
|   | Expected volatility     |   | 47.59%        |   | 47.48%          |
|   | Risk-free interest rate |   | 1.87%         |   | 1.72%           |
|   | Expected term           |   | 5.75 years    |   | 6.0 years       |
|   | Dividend yield          |   | 0%            |   | 0%              |

|   |                      |   |                              |   |   | April 4, 2010         |   |   | December 31, 2009        |   |
|--------|---------------------------|--------|-----------------------------------|--------|--------|-----------------------|--------|--------|--------------------------|--------|
|   |                      |   | Estimated Useful Lives (in Years) |   |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |   | Net |   |   | Gross Carrying Amount |   |   | Accumulated Amortization |   |   | Impairment |   |   | Net |   |
|   |                      |   |                              |   |   |                  |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Patents and Trademarks    |   |                              | 10     |   |                  | $      | 4      |                     |   | $ | (3 | ) |   | $ | 1 |   |   | $ | 4 |   |   | $ | (3 | ) |   | $ | - |   |   | $ | 1 |   |
|   | Mutual Services Agreement |   |                              | 1      |   |                  |   | -      |                     |   |   | - |   |   |   | - |   |   |   | 100 |   |   |   | (100 | ) |   |   | - |   |   |   | - |   |
|   | Technical Library         |   |                              | 20     |   |                  |   | 700    |                     |   |   | (82 | ) |   |   | 618 |   |   |   | 700 |   |   |   | (73 | ) |   |   | - |   |   |   | 627 |   |
|   | Customer Relationships    |   |                              | 15-20  |   |                  |   | 7,722  |                     |   |   | (896 | ) |   |   | 6,826 |   |   |   | 9,592 |   |   |   | (1,044 | ) |   |   | (1,626 | ) |   |   | 6,922 |   |
|   | Non-Compete Agreements    |   |                              | 3      |   |                  |   | 17     |                     |   |   | (4 | ) |   |   | 13 |   |   |   | 807 |   |   |   | (518 | ) |   |   | (274 | ) |   |   | 15 |   |
|   |                      |   |                              |   |   |                  |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                     |   |                              |   |   |                  | $      | 8,443  |                     |   | $ | (985 | ) |   | $ | 7,458 |   |   | $ | 11,203 |   |   | $ | (1,738 | ) |   | $ | (1,900 | ) |   | $ | 7,565 |   |

----

|   | Year Ending December 31 -- |   |   |   |
|--------|----------------------------|--------|--------|--------|
|   | 2010                       |   | $      | 323    |   |
|   | 2011                       |   |   | 428    |   |
|   | 2012                       |   |   | 421    |   |
|   | 2013                       |   |   | 421    |   |
|   | 2014                       |   |   | 421    |   |
|   | Thereafter                 |   |   | 5,445  |   |
|   |                       |   |   |   |   |
|   | Total                      |   | $      | 7,458  |   |

----

----

| ·   | Waived the Company’s noncompliance with the minimum net income and debt service coverage ratio covenants for the year ended December 31, 2008 |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Eliminated the minimum net income and debt service coverage ratio covenants for the year ending December 31, 2009 |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | Adjusted the minimum book net worth covenant to $38,750 as of December 31, 2009 |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Incorporated a monthly minimum EBITDA covenant commencing in April, 2009 |
|--------------------|--------------------------------------------------------------------------|

| ·   | Reduced the revolving credit line limit to $11,000 (from $13,750) |
|--------------------|-------------------------------------------------------------------|

| ·   | Reset the interest rate on the revolving credit line and term notes to the Daily Three Month LIBOR plus 5.25% effective April 14, 2009 |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Suspended interest payments on the Company’s subordinated debt to the Company’s CEO, John A. Martell. |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

| ·   | Revised the definition of “Borrowing Base”, resulting in lower available borrowings |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | Adjusted the interest rate on the revolving credit line and term notes (defined in the Credit Agreement as the “LIBOR Advance Rate”) to the Daily Three Month LIBOR (0.56% at July 5, 2009) plus 8.25%, effective June 1, 2009 |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lowered the amount of the minimum EBITDA that the Company is required to achieve in future periods |
|--------------------|----------------------------------------------------------------------------------------------------|

| ·   | Requires the Company to raise $2,000 in additional capital by August 31, 2009 through subordinated debt, asset sales or additional cash equity |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lowered eligible progress accounts advance rates by $50 per week commencing August 3, 2009. |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Lowered the special accounts advanced rate to 35% effective July 22, 2009 further reducing it to 30% effective August 31, 2009 or such lesser rate the lender may determine |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Added conditions regarding marketing assets, the validation of the Company’s cash flow forecast and future financial projections |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revised the definition of “Borrowing Base”, resulting in lower available borrowings |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | Extended until October 31, 2009 the previously agreed upon requirement for the Company to raise $2,000 in additional capital through subordinated debt, asset sales, or additional cash equity |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Consented to the Company’s planned sale of its CES Business; |
|--------------------|--------------------------------------------------------------------|

| ·   | Revised the definition of “Borrowing Base”, resulting in lower available borrowings; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Required additional weekly principal payments of $10 on the real estate term note; and |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | Extended until January 27, 2010, and reduced to $1,000 the previously agreed upon requirement for the Company to raise $2,000 additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revised the terms of Wells Fargo’s consent to the sale of the Company’s CES Business; and |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | Extended until February 19, 2010 the previously agreed upon requirement for the Company to raise $1,000 additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Waived the Company’s noncompliance with the minimum book net worth and maximum capital expenditures from working capital covenants for the year ending December 31, 2009; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Adjusted the minimum book net worth covenant to $21,500 as of December 31, 2009; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | Eliminated the automatic renewal or our revolving credit line in January, 2011; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Adjusted the allowable capital expenditures for the year ending December 31, 2010 to a maximum of  $500; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Incorporated a monthly minimum EBITDA covenant commencing in April, 2010; and |
|--------------------|-------------------------------------------------------------------------------|

| ·   | Eliminated the previously agreed upon requirement for the Company to raise $1,000 additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | April 4, |   |   | December 31, |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | 2010     |   |   | 2009         |   |
| Note payable to former  members of 3-D Service, Ltd. (XGen III, Ltd.) due November 30, 2010, plus interest at prime rate (3.25% at April 4, 2010 and December 31, 2009) secured by a subordinated interest in machinery and equipment of 3-D Services, Ltd.                                                                                                                                                                                                   |   | $        | 2,000  |   |         | $      | 2,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Note payable to former  members of 3-D Service, Ltd. (BDeWees, Inc.) due November 30, 2010, plus interest at prime rate (3.25% at April 4, 2010 and December 31, 2009) secured by a subordinated interest in machinery and equipment of 3-D Services, Ltd.                                                                                                                                                                                                    |   |     | 2,000  |   |         |   | 2,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Note payable to Officer, payable in monthly installments of $5 beginning April 1, 2010, with outstanding balance payable at maturity date of February 28, 2012, plus interest at the greater of 5% or the prime rate (3.25% at April 4, 2010 and December 31, 2009) plus 2%, secured by a subordinated interest in substantially all assets owned by the Company.                                                                                                       |   |     | 1,999  |   |         |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Convertible Note payable to Officer, payable in monthly installments of $50 beginning February 1, 2010, plus interest at prime rate (3.25% at December 31, 2009) less 1% through December 31, 2008, interest rate increased to prime plus 1% beginning on January 1, 2009 and was reset to the greater of 5% or prime plus 1% beginning April 14, 2009, secured by a subordinated interest in substantially all assets owned by the Company                             |   |     | -      |   |         |   | 3,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Liability for conversion option on note payable to Officer (See Note E, Derivative Instruments)                                                                                                                                                                                                                                                                                                                                                                         |   |     | -      |   |         |   | 18 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Note payable to bank in monthly installments of $10 through May 2018, plus interest at prime rate (3.25% at December 31, 2008) through December 31, 2008, increased to prime rate plus 3% through April 13, 2009, reset to Daily Three Month LIBOR plus 5.25%  beginning April 14, 2009, increased to Daily Three Month LIBOR (0.29% at April 4, 2010) plus 8.25% beginning June 1, 2009, secured by certain real estate (see Note G, Senior Credit Facility) |   |     | 632    |   |         |   | 809 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Note payable to bank in monthly installments of $21 through May 2012, plus interest at prime rate through December 31, 2008, increased to prime plus 3% through April 13, 2009, reset to Daily Three Month LIBOR plus 5.25% beginning April 14, 2009, increased to Daily Three Month LIBOR (0.29% at April 4, 2010) plus 8.25% beginning June 1, 2009, secured by inventory and substantially all machinery and equipment (see Note G, Senior Credit Facility)          |   |     | 517    |   |         |   | 580 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Note payable to bank in monthly installments of $3 through November 16, 2014, plus interest at 8% secured by a security interest in certain equipment                                                                                                                                                                                                                                                                                                                   |   |     | 140    |   |         |   | 147 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Notes payable in monthly installments of $1 through April 2014, without interest, secured by certain equipment.                                                                                                                                                                                                                                                                                                                                                         |   |     | -      |   |         |   | 136 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
| Capital lease obligations                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |     | 1,036  |   |         |   | 1,044 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     | 8,324  |   |         |   | 9,734 |   |
| Less: current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |     | 5,024  |   |         |   | 5,097 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |     |   |   |         |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   | $        | 3,300  |   |         | $      | 4,637 |   |

----

|   | Years Ending December 31, |   | Amount |   |
|--------|---------------------------|--------|--------|--------|
|   |                      |   |   |   |
|   | 2010                      |   | $      | 4,884  |   |
|   | 2011                      |   |   | 442    |   |
|   | 2012                      |   |   | 2,073  |   |
|   | 2013                      |   |   | 899    |   |
|   | 2014                      |   |   | 26     |   |
|   | Thereafter                |   |   | -      |   |
|   |                      |   | $      | 8,324  |   |

|   |                                                    |   | Three Months Ended |   |
|--------|---------------------------------------------------------|--------|--------------------|--------|
|   |                                                    |   | April 4, 2010      |   |   | April 5, 2009 |   |
|   |                                                    |   |               |   |   |   |   |
|   | Interest expense on principal                           |   | $                  | 182    |   |   | $ | 245 |   |
|   |                                                    |   |               |   |   |   |   |   |   |
|   | Amortization of debt issue costs                        |   |               | 3      |   |   |   | 4 |   |
|   |                                                    |   |               |   |   |   |   |   |   |
|   | Amortization of debt discount - revolving notes payable |   |               | 23     |   |   |   | 14 |   |
|   |                                                    |   |               |   |   |   |   |   |   |
|   |                                                    |   | $                  | 208    |   |   | $ | 263 |   |

----

----

|   |                                                                                                              |   | Three Months ended April 4, 2010 |   |   | Three Months ended April 5, 2009 |   |
|--------|-------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|
|   |                                                                                                              |   |                             |   |   |                             |   |   |   |
|   | Balance at beginning of period                                                                                    |   | $                                | 394    |   |                             | $      | 589 |   |
|   | Warranty claims paid                                                                                              |   |                             | (26    | )      |                             |   | (189 | ) |
|   | Warranty expense                                                                                                  |   |                             | 36     |   |                             |   | 84 |   |
|   | Other1                                                                                                            |   |                             | (150   | )      |                             |   | - |   |
|   | Balance at end of period                                                                                          |   | $                                | 254    |   |                             | $      | 485 |   |
|   | _________________________________________________1Warranty reserve for AMP subsidiary divested in February, 2010. |   |                             |   |   |                             |   |   |   |

----

----

| 2010                                      |   | Industrial Services |   |   | Construction & Engineering Services |   |   | Rail Services |   |   | Corporate |   |   | Intersegment Eliminations |   |   | Discontinued/ Held-for-Sale Operations |   |   | April 4, 2010 Consolidated |   |
|-------------------------------------------|--------|---------------------|--------|--------|-----------------------------------------|--------|--------|---------------|--------|--------|-----------|--------|--------|---------------------------|--------|--------|----------------------------------------|--------|--------|----------------------------|--------|
|                                      |   |                |   |   |                                    |   |   |          |   |   |      |   |   |                      |   |   |                                   |   |   |                       |   |
| External revenue:                         |   |                |   |   |                                    |   |   |          |   |   |      |   |   |                      |   |   |                                   |   |   |                       |   |
| Product sales                             |   | $                   | 1,301  |   |                                    | $      | -      |          |   | $      | 2,195     |   |   | $                         | -      |   |                                   | $      | -      |                       |   | $ | (2,195 | ) |   | $ | 1,301 |   |
| Service revenue                           |   |                | 6,730  |   |                                    |   | 1,721  |          |   |   | 709       |   |   |                      | -      |   |                                   |   | -      |                       |   |   | (2,430 | ) |   |   | 6,730 |   |
| Intersegment revenue:                     |   |                |   |   |                                    |   |   |          |   |   |      |   |   |                      |   |   |                                   |   |   |                       |   |   |   |   |   |   |   |   |
| Product sales                             |   |                | -      |   |                                    |   | -      |          |   |   | -         |   |   |                      | -      |   |                                   |   | -      |                       |   |   | - |   |   |   | - |   |
| Service revenue                           |   |                | -      |   |                                    |   | -      |          |   |   | -         |   |   |                      | -      |   |                                   |   | -      |                       |   |   | - |   |   |   | - |   |
| Depreciation Included in Cost of Revenues |   |                | 356    |   |                                    |   | -      |          |   |   | -         |   |   |                      | -      |   |                                   |   | -      |                       |   |   | - |   |   |   | 356 |   |
| Gross profit                              |   |                | 1,205  |   |                                    |   | 36     |          |   |   | 414       |   |   |                      | -      |   |                                   |   | -      |                       |   |   | (450 | ) |   |   | 1,205 |   |
| Other depreciation & amortization     |   |                | 121    |   |                                    |   | -      |          |   |   | -         |   |   |                      | 36     |   |                                   |   | -      |                       |   |   | - |   |   |   | 157 |   |
| Interest expense                          |   |                | 73     |   |                                    |   | -      |          |   |   | 3         |   |   |                      | 132    |   |                                   |   | -      |                       |   |   | (3 | ) |   |   | 205 |   |
| Net income (loss)                         |   |                | (280   | )      |                                    |   | 20     |          |   |   | 113       |   |   |                      | (898   | )      |                                   |   | -      |                       |   |   | - |   |   |   | (1,045 | ) |
| Total assets                              |   |                | 32,690 |   |                                    |   | -      |          |   |   | 4,255     |   |   |                      | 1,333  |   |                                   |   | -      |                       |   |   | - |   |   |   | 38,278 |   |
| Capital expenditures                      |   |                | -      |   |                                    |   | -      |          |   |   | -         |   |   |                      | -      |   |                                   |   | -      |                       |   |   | - |   |   |   | - |   |

| 2009                                      |   | Industrial Services |   |   | Construction & Engineering Services |   |   | Rail Services |   |   | Corporate |   |   | Intersegment Eliminations |   |   | Discontinued/ Held-for-Sale Operations |   |   | April 5, 2009 Consolidated |   |
|-------------------------------------------|--------|---------------------|--------|--------|-----------------------------------------|--------|--------|---------------|--------|--------|-----------|--------|--------|---------------------------|--------|--------|----------------------------------------|--------|--------|----------------------------|--------|
|                                      |   |                |   |   |                                    |   |   |          |   |   |      |   |   |                      |   |   |                                   |   |   |                       |   |
| External revenue:                         |   |                |   |   |                                    |   |   |          |   |   |      |   |   |                      |   |   |                                   |   |   |                       |   |
| Product sales                             |   | $                   | 1,598  |   |                                    | $      | -      |          |   | $      | 3,617     |   |   | $                         | -      |   |                                   | $      | -      |                       |   | $ | (3,617 | ) |   | $ | 1,598 |   |
| Service revenue                           |   |                | 8,661  |   |                                    |   | 6,779  |          |   |   | 2,750     |   |   |                      | -      |   |                                   |   | -      |                       |   |   | (9,529 | ) |   |   | 8,661 |   |
| Intersegment revenue:                     |   |                |   |   |                                    |   |   |          |   |   |      |   |   |                      |   |   |                                   |   |   |                       |   |   |   |   |   |   |   |   |
| Product sales                             |   |                | -      |   |                                    |   | -      |          |   |   | -         |   |   |                      | -      |   |                                   |   | -      |                       |   |   | - |   |   |   | - |   |
| Service revenue                           |   |                | 21     |   |                                    |   | 35     |          |   |   | -         |   |   |                      | -      |   |                                   |   | (56    | )                          |   |   | - |   |   |   | - |   |
| Depreciation Included in Cost of Revenues |   |                | 310    |   |                                    |   | 18     |          |   |   | 136       |   |   |                      | -      |   |                                   |   | -      |                       |   |   | (154 | ) |   |   | 310 |   |
| Gross profit                              |   |                | 677    |   |                                    |   | 421    |          |   |   | 572       |   |   |                      | -      |   |                                   |   | -      |                       |   |   | (993 | ) |   |   | 677 |   |
| Other depreciation & amortization     |   |                | 121    |   |                                    |   | 4      |          |   |   | 113       |   |   |                      | 11     |   |                                   |   | -      |                       |   |   | (117 | ) |   |   | 132 |   |
| Interest expense                          |   |                | 70     |   |                                    |   | 30     |          |   |   | 12        |   |   |                      | 151    |   |                                   |   | -      |                       |   |   | (42 | ) |   |   | 221 |   |
| Net income (loss)                         |   |                | (2,119 | )      |                                    |   | (369   | )             |   |   | (538      | )      |   |                      | (304   | )      |                                   |   | -      |                       |   |   | - |   |   |   | (3,330 | ) |
| Total assets                              |   |                | 36,261 |   |                                    |   | 8,657  |          |   |   | 23,845    |   |   |                      | 1,101  |   |                                   |   | -      |                       |   |   | - |   |   |   | 69,864 |   |
| Capital expenditures                      |   |                | 66     |   |                                    |   | 91     |          |   |   | 10        |   |   |                      | 13     |   |                                   |   | -      |                       |   |   | (101 | ) |   |   | 79 |   |

----

|   |                                                               |   | Three Months Ended |   |
|--------|--------------------------------------------------------------------|--------|--------------------|--------|
|   |                                                               |   | April 4, 2010      |   |   | April 5, 2009 |   |
|   |                                                               |   |               |   |   |   |   |
|   | Issuance of restricted stock                                       |   | $                  | -      |   |   | $ | 5 |   |
|   |                                                               |   |               |   |   |   |   |   |   |
|   | Reduction of note payable in conjunction with sale of CES business |   | $                  | 1,176  |   |   | $ | - |   |
|   |                                                               |   |               |   |   |   |   |   |   |
|   | Expiration of conversion option                                    |   | $                  | 18     |   |   | $ | - |   |
|   |                                                               |   |               |   |   |   |   |   |   |
|   | Equipment acquired through capital lease obligation                |   | $                  | -      |   |   | $ | 63 |   |

| ·   | Waived the Company’s noncompliance with the minimum book net worth and maximum capital expenditures from working capital covenants for the year ending December 31, 2009; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Adjusted the minimum book net worth covenant to $21,500 as of December 31, 2009; |
|--------------------|----------------------------------------------------------------------------------|

| ·   | Adjusted the allowable capital expenditures for the year ending December 31, 2010 to a maximum of  $500; |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | Eliminated the automatic renewal or our revolving credit line in January, 2011; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Incorporated a monthly minimum EBITDA covenant commencing in April, 2010; and |
|--------------------|-------------------------------------------------------------------------------|

| ·   | Eliminated the previously agreed upon requirement for the Company to raise $1,000 additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|-----------------------------------------------------------------------------------------------------------|

----

| ·   | Waived the Company’s noncompliance with the minimum book net worth and maximum capital expenditures from working capital covenants for the year ending December 31, 2009; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Adjusted the minimum book net worth covenant to $21.5 million as of December 31, 2009; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | Adjusted the allowable capital expenditures for the year ending December 31, 2010 to a maximum of  $500,000; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | Eliminated the automatic renewal of our revolving credit line in January, 2011; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Incorporated a monthly minimum EBITDA covenant commencing in April, 2010; and |
|--------------------|-------------------------------------------------------------------------------|

| ·   | Eliminated the previously agreed upon requirement for the Company to raise $1 million additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | Buildings                     |   | 30 years                             |   |
|--------|-------------------------------|--------|--------------------------------------|--------|
|   | Leasehold improvements        |   | Shorter of lease term or useful life |   |
|   | Machinery and equipment       |   | 5 to 10 years                        |   |
|   | Vehicles                      |   | 3 to 5 years                         |   |
|   | Office and computer equipment |   | 3 to 10 years                        |   |

----

----

----

| ·   | Consented to the Company’s planned sale of its CES Business; |
|--------------------|--------------------------------------------------------------------|

| ·   | Revised the definition of “Borrowing Base”, resulting in lower available borrowings; |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | Required additional weekly principal payments of $10,000 on the real estate term note; and |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Extended until January 27, 2010, and reduced to $1 million the previously agreed upon requirement for the Company to raise $2 million additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revised the terms of Wells Fargo’s consent to the sale of the Company’s CES Business; and |
|--------------------|-------------------------------------------------------------------------------------------------------|

----

| ·   | Extended until February 19, 2010 the previously agreed upon requirement for the Company to raise $1 million additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Waived the Company’s noncompliance with the minimum book net worth and maximum capital expenditures from working capital covenants for the year ending December 31, 2009; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Adjusted the minimum book net worth covenant to $21.5 million as of December 31, 2009; |
|--------------------|----------------------------------------------------------------------------------------|

| ·   | Adjusted the allowable capital expenditures for the year ending December 31, 2010 to a maximum of  $500,000; |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

| ·   | Eliminated the automatic renewal of our revolving credit line in January, 2011; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | Incorporated a monthly minimum EBITDA covenant commencing in April, 2010; and |
|--------------------|-------------------------------------------------------------------------------|

| ·   | Eliminated the previously agreed upon requirement for the Company to raise $1 million additional capital through subordinated debt, asset sales, or additional cash equity. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Exhibit No. |   | Description                                                                                                                                                                                                                                                                                                                                  |
|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.1        |   | Secured Promissory Note dated February 3, 2010, among John A. Martell and the registrant (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.2        |   | Sixth Amendment to Credit and Security Agreement dated January 14, 2010, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report or Form 8-K filed January 21, 2010)                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.3        |   | Letter Agreement dated September 8, 2009, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant, acknowledged and agreed to by the registrant and such subsidiaries on September 16, 2009 (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on September 21, 2009) |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.4        |   | Consent and release by Wells Fargo Bank, National Association, dated March 15, 2010 (incorporated by reference to Exhibit 10.10 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                                                      |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.5        |   | Letter Agreement dated February 9, 2010, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                              |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.6        |   | Seventh Amendment to Credit and Security Agreement and Limited Waiver of Defaults dated April 15, 2010, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant (incorporated by reference to Exhibit 10.56i to the registrant's Annual Report on Form 10-K filed on April 15, 2010)                               |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.7        |   | Purchase Agreement dated February 3, 2010, among John A. Martell and Bonnie Martell and the registrant (incorporated by reference to Exhibit 2.1 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.8        |   | Lender’s Receipt and Acknowledgement dated February 3, 2010, among John A. Martell and the registrant (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.9        |   | Security Agreement dated February 3, 2010, among Magnetech Industrial Services, Inc. and the registrant (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                 |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.10       |   | Indemnification Agreement dated February 3, 2010, among John A. Martell and Bonnie Martell and the registrant(incorporated by reference to Exhibit 10.5 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.11       |   | Amendment No. 1 to Employment Agreement dated February 3, 2010, among John A. Martell and the registrant (incorporated by reference to Exhibit 10.6 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.12       |   | AMP Stock Purchase Agreement dated March 8, 2010, between LMC Transport, LLC, and the registrant (incorporated by reference to Exhibit 2.1 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.13       |   | Release of Tenant Guaranty made by Dansville Properties, LLC, in favor of the registrant and certain of its affiliates (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.14       |   | Release of Landlord Guaranty made by American Motive Power, Inc. in favor of Lawrence Mehlenbacher (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 31.1        |   | Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 31.2        |   | Certification by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 32          |   | Section 1350 Certifications                                                                                                                                                                                                                                                                                                                  |

----

|         | MISCOR GROUP, LTD. |
|--------------|--------------------|
|         |               |   |
|         |               |   |
| May 18, 2010 | By:                | /s/ Michael Topa |
|         |               | Michael Topa |
|         |               | Chief Financial Officer |
|         |               | (Signing on behalf of the registrant as Principal Financial and Accounting Officer) |

----

| Exhibit No. |   | Description                                                                                                                                                                                                                                                                                                                                  |
|-------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.1        |   | Secured Promissory Note dated February 3, 2010, among John A. Martell and the registrant (incorporated by reference to Exhibit 10.3 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.2        |   | Sixth Amendment to Credit and Security Agreement dated January 14, 2010, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant (incorporated by reference to Exhibit 10.1 of the registrant’s Current Report or Form 8-K filed January 21, 2010)                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.3        |   | Letter Agreement dated September 8, 2009, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant, acknowledged and agreed to by the registrant and such subsidiaries on September 16, 2009 (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on September 21, 2009) |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.4        |   | Consent and release by Wells Fargo Bank, National Association, dated March 15, 2010 (incorporated by reference to Exhibit 10.10 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                                                      |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.5        |   | Letter Agreement dated February 9, 2010, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                              |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.6        |   | Seventh Amendment to Credit and Security Agreement and Limited Waiver of Defaults dated April 15, 2010, among Wells Fargo Bank, the registrant and certain subsidiaries of the registrant (incorporated by reference to Exhibit 10.56i to the registrant's Annual Report on Form 10-K filed on April 15, 2010)                               |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.7        |   | Purchase Agreement dated February 3, 2010, among John A. Martell and Bonnie Martell and the registrant (incorporated by reference to Exhibit 2.1 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                   |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.8        |   | Lender’s Receipt and Acknowledgement dated February 3, 2010, among John A. Martell and the registrant (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                             |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.9        |   | Security Agreement dated February 3, 2010, among Magnetech Industrial Services, Inc. and the registrant (incorporated by reference to Exhibit 10.4 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                 |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.10       |   | Indemnification Agreement dated February 3, 2010, among John A. Martell and Bonnie Martell and the registrant(incorporated by reference to Exhibit 10.5 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                            |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.11       |   | Amendment No. 1 to Employment Agreement dated February 3, 2010, among John A. Martell and the registrant (incorporated by reference to Exhibit 10.6 to the registrant's Current Report on Form 8-K filed on February 9, 2010)                                                                                                                |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.12       |   | AMP Stock Purchase Agreement dated March 8, 2010, between LMC Transport, LLC, and the registrant (incorporated by reference to Exhibit 2.1 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                                           |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.13       |   | Release of Tenant Guaranty made by Dansville Properties, LLC, in favor of the registrant and certain of its affiliates (incorporated by reference to Exhibit 10.1 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                    |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 10.14       |   | Release of Landlord Guaranty made by American Motive Power, Inc. in favor of Lawrence Mehlenbacher (incorporated by reference to Exhibit 10.2 to the registrant's Current Report on form 8-K filed on March 15, 2010)                                                                                                                        |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 31.1        |   | Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 31.2        |   | Certification by Chief Financial Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act                                                                                                                                                                                                                                         |
|        |   |                                                                                                                                                                                                                                                                                                                                         |
| 32          |   | Section 1350 Certifications                                                                                                                                                                                                                                                                                                                  |