|   | x      | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   |   |
|--------|--------|------------------------------------------------------------------------------------------------|--------|
|   |   | For the quarterly period ended July 4, 2010 or                                       |   |
|   | 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 July 4, 2010 (Unaudited) and December 31, 2009                            | 1      |
|                           |                                                                                                                 |   |
|                           | Condensed Consolidated Statements of Operations (Unaudited) Three and Six Months ended July 4, 2010 and July 5, 2009 | 2      |
|                           |                                                                                                                 |   |
|                           | Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months ended July 4, 2010 and July 5, 2009           | 3      |
|                           |                                                                                                                 |   |
|                           | Notes to Condensed Consolidated Financial Statements                                                                 | 4      |
|                           |                                                                                                                 |   |
| 2.                             | Management’s Discussion and Analysis of Financial Condition and Results of Operations                          | 20     |
|                           |                                                                                                                 |   |
| 3.                             | Quantitative and Qualitative Disclosures about Market Risk                                                           | 26     |
|                           |                                                                                                                 |   |
| 4.                             | Controls and Procedures                                                                                              | 27     |
|                           |                                                                                                                 |   |
| PART II - OTHER INFORMATION    |
|                           |                                                                                                                 |   |
| 2.                             | Unregistered Sales of Equity Securities and Use of Proceeds                                                          | 28     |
|                           |                                                                                                                 |   |
| 6.                             | Exhibits                                                                                                             | 28     |
|                           |                                                                                                                 |   |
|                           | Signatures                                                                                                           | 28     |

----

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

| MISCOR GROUP, LTD. AND SUBSIDIARIES                                                                                                                                                                                         |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                       |   |
| (Amounts in thousands, except share and per share data)                                                                                                                                                                     |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |
| ASSETS                                                                                                                                                                                                                      |   |
|                                                                                                                                                                                                                        |   | July 4, |   |   | December 31, |   |
|                                                                                                                                                                                                                        |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                                        |   | (Unaudited) |   |   |   |   |
|    CURRENT ASSETS                                                                                                                                                                                            |   |   |   |   |   |   |
|       Cash and cash equivalents                                                                                                                                                               |   | $ | - |   |   | $ | - |   |
|       Accounts receivable, net of allowance for doubtful accounts                                                                                                                             |   |   |   |   |   |   |   |   |
|          of $197 and $766, respectively                                                                                                                                        |   |   | 5,551 |   |   |   | 4,083 |   |
|       Inventories, net                                                                                                                                                                        |   |   | 5,558 |   |   |   | 5,349 |   |
|       Assets held-for-sale                                                                                                                                                                    |   |   | 4,088 |   |   |   | 15,914 |   |
|       Other current assets                                                                                                                                                                    |   |   | 641 |   |   |   | 261 |   |
|                                 Total current assets        |   |   | 15,838 |   |   |   | 25,607 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|    PROPERTY AND EQUIPMENT, net                                                                                                                                                                               |   |   | 6,108 |   |   |   | 7,050 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|    OTHER ASSETS                                                                                                                                                                                              |   |   |   |   |   |   |   |   |
|       Goodwill                                                                                                                                                                                |   |   | 7,831 |   |   |   | 7,831 |   |
|       Customer relationships, net                                                                                                                                                             |   |   | 6,729 |   |   |   | 6,922 |   |
|       Other intangible assets, net                                                                                                                                                            |   |   | 621 |   |   |   | 643 |   |
|       Deposits and other assets                                                                                                                                                               |   |   | 368 |   |   |   | 117 |   |
|                                 Total other assets          |   |   | 15,549 |   |   |   | 15,513 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                 Total Assets                |   | $ | 37,495 |   |   | $ | 48,170 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                        |   |
|    CURRENT LIABILITIES                                                                                                                                                                                       |   |   |   |   |   |   |   |   |
|       Revolving credit line, net of discount of $55 and $100, respectively                                                                                                                    |   | $ | 3,828 |   |   | $ | 3,207 |   |
|       Current portion of long-term debt                                                                                                                                                       |   |   | 2,733 |   |   |   | 430 |   |
|       Current portion of long-term debt, Officers and Affiliates                                                                                                                              |   |   | 2,060 |   |   |   | 4,600 |   |
|       Accounts payable                                                                                                                                                                        |   |   | 3,474 |   |   |   | 2,549 |   |
|       Liabilities of held-for-sale operations                                                                                                                                                 |   |   | 1,022 |   |   |   | 9,581 |   |
|       Accrued expenses and other current liabilities                                                                                                                                          |   |   | 1,293 |   |   |   | 1,636 |   |
|                                 Total current liabilities   |   |   | 14,410 |   |   |   | 22,003 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|    LONG TERM LIABILITIES                                                                                                                                                                                     |   |   |   |   |   |   |   |   |
|       Long-term debt                                                                                                                                                                          |   |   | 1,179 |   |   |   | 2,003 |   |
|       Long-term debt, Officers                                                                                                                                                                |   |   | 2,019 |   |   |   | 2,418 |   |
|                                 Total long-term liabilities |   |   | 3,198 |   |   |   | 4,421 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|                                 Total liabilities           |   |   | 17,608 |   |   |   | 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;                                                                                                                               |   |   |   |   |   |   |   |   |
|           11,785,826 and 11,801,326 shares issued and outstanding, respectively                                                                                           |   |   | 50,920 |   |   |   | 50,920 |   |
|       Additional paid in capital                                                                                                                                                              |   |   | 8,420 |   |   |   | 8,452 |   |
|       Accumulated deficit                                                                                                                                                                     |   |   | (39,453 | ) |   |   | (37,626 | ) |
|                                 Total Stockholders' equity  |   |   | 19,887 |   |   |   | 21,746 |   |
|                                                                                                                                                                                                                        |   |   |   |   |   |   |   |   |
|           Total Liabilities and Stockholders' Equity                                                                                                                      |   | $ | 37,495 |   |   | $ | 48,170 |   |

----

|                                                    |   | For the Three Months Ended |       |   | For the Six Months Ended |   |
|---------------------------------------------------------|--------|----------------------------|------------|--------|--------------------------|--------|
|                                                    |   | July 4, 2010               |       |   | July 5, 2009             |   |   | July 4, 2010 |   |   | July 5, 2009 |   |
|                                                    |   | (Unaudited)                |       |   | (Unaudited)              |   |   | (Unaudited) |   |   | (Unaudited) |   |
|                                                    |   |                       |       |   | (Restated)               |   |   |   |   |   | (Restated) |   |
| Revenues                                                |   |                       |       |   |                     |   |   |   |   |   |   |   |
| Product Sales                                           |   | $                          | 1,150      |   |                     | $      | 650 |   |   | $ | 2,450 |   |   | $ | 2,248 |   |
| Service Revenue                                         |   |                       | 7,955      |   |                     |   | 6,301 |   |   |   | 14,686 |   |   |   | 14,961 |   |
| Total Revenues                                          |   |                       | 9,105      |   |                     |   | 6,951 |   |   |   | 17,136 |   |   |   | 17,209 |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Revenues                                        |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Product Sales                                   |   |                       | 783        |   |                     |   | 403 |   |   |   | 1,784 |   |   |   | 1,657 |   |
| Cost of Service Revenue                                 |   |                       | 6,626      |   |                     |   | 5,883 |   |   |   | 12,451 |   |   |   | 14,211 |   |
| Total Cost of Revenues                                  |   |                       | 7,409      |   |                     |   | 6,286 |   |   |   | 14,235 |   |   |   | 15,868 |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                            |   |                       | 1,696      |   |                     |   | 665 |   |   |   | 2,901 |   |   |   | 1,341 |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative Expenses            |   |                       | 2,146      |   |                     |   | 2,722 |   |   |   | 4,497 |   |   |   | 6,349 |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss From Operations                                    |   |                       | (450       | )      |                     |   | (2,057 | ) |   |   | (1,596 | ) |   |   | (5,008 | ) |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Other (Income) Expense                                  |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Interest Expense                                        |   |                       | 208        |   |                     |   | 185 |   |   |   | 413 |   |   |   | 405 |   |
| Other (Income) Expense                                  |   |                       | 32         |   |                     |   | (226 | ) |   |   | 9 |   |   |   | (608 | ) |
|                                                    |   |                       | 240        |   |                     |   | (41 | ) |   |   | 422 |   |   |   | (203 | ) |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss From Continuing Operations Before Taxes            |   |                       | (690       | )      |                     |   | (2,016 | ) |   |   | (2,018 | ) |   |   | (4,805 | ) |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense                                      |   |                       | -          |   |                     |   | - |   |   |   | - |   |   |   | - |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss From Continuing Operations                         |   |                       | (690       | )      |                     |   | (2,016 | ) |   |   | (2,018 | ) |   |   | (4,805 | ) |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) From Discontinued Operations              |   |                       | (91        | )      |                     |   | (620 | ) |   |   | 192 |   |   |   | (1,162 | ) |
| (See Note C, Discontinued and Held-for-Sale Operations) |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS                                                |   | $                          | (781       | )      |                     | $      | (2,636 | ) |   | $ | (1,826 | ) |   | $ | (5,967 | ) |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted Income (Loss) per Common Share        |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| From Continuing Operations                              |   | $                          | (0.06      | )      |                     | $      | (0.17 | ) |   | $ | (0.17 | ) |   | $ | (0.41 | ) |
| From Discontinued Operations                            |   |                       | (0.01      | )      |                     |   | (0.05 | ) |   |   | 0.02 |   |   |   | (0.10 | ) |
| Basic and Diluted Loss per Common Share                 |   | $                          | (0.07      | )      |                     | $      | (0.22 | ) |   | $ | (0.15 | ) |   | $ | (0.51 | ) |
|                                                    |   |                       |       |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Number of Common Shares Outstanding    |   |                       | 11,786,727 |   |                     |   | 11,763,478 |   |   |   | 11,790,480 |   |   |   | 11,756,654 |   |

----

|                                                                                       |   | For the Six Months Ended |   |
|--------------------------------------------------------------------------------------------|--------|--------------------------|--------|
|                                                                                       |   | July 4, 2010             |   |   | July 5, 2009 |   |
|                                                                                       |   | (Unaudited)              |   |   | (Unaudited) |   |
|                                                                                       |   |                     |   |   |   |   |
| OPERATING ACTIVITIES                                                                       |   |                     |   |   |   |   |
|                                                                                       |   |                     |   |   |   |   |
| Net loss                                                                                   |   | $                        | (1,826 | ) |   | $ | (5,967 | ) |
| Adjustments to reconcile net loss to net cash provided (utilized) by operating activities: |   |                     |   |   |   |   |   |   |
| Depreciation and amortization                                                              |   |                     | 975    |   |   |   | 1,577 |   |
| Bad Debts                                                                                  |   |                     | -      |   |   |   | 187 |   |
| Inventory reserves                                                                         |   |                     | (12    | ) |   |   | 196 |   |
| Loss on sale of equipment                                                                  |   |                     | 37     |   |   |   | - |   |
| Gain on disposal of discontinued operations                                                |   |                     | (314   | ) |   |   | - |   |
| Amortization of stock-based compensation plans                                             |   |                     | (30    | ) |   |   | 38 |   |
| Amortization of debt issuance costs and debt discount                                      |   |                     | 52     |   |   |   | 36 |   |
| Unrealized gain on conversion option                                                       |   |                     | (18    | ) |   |   | (555 | ) |
| Changes in:                                                                                |   |                     |   |   |   |   |   |   |
| Accounts receivable                                                                        |   |                     | (689   | ) |   |   | 7,268 |   |
| Inventories                                                                                |   |                     | 55     |   |   |   | 2,566 |   |
| Other current assets                                                                       |   |                     | (41    | ) |   |   | (159 | ) |
| Deposits and other non-current assets                                                      |   |                     | 5      |   |   |   | 129 |   |
| Accounts payable                                                                           |   |                     | 1,120  |   |   |   | (2,442 | ) |
| Accrued expenses and other current liabilities                                             |   |                     | (308   | ) |   |   | (403 | ) |
| Net cash provided (utilized) by operating activities                                       |   |                     | (994   | ) |   |   | 2,471 |   |
|                                                                                       |   |                     |   |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                       |   |                     |   |   |   |   |   |   |
|                                                                                       |   |                     |   |   |   |   |   |   |
| Proceeds from disposal of discontinued operations                                          |   |                     | 746    |   |   |   | - |   |
| Acquisition of property and equipment                                                      |   |                     | (1     | ) |   |   | (455 | ) |
| Proceeds from disposal of property and equipment                                           |   |                     | 166    |   |   |   | 21 |   |
| Net cash provided (utilized) by investing activities                                       |   |                     | 911    |   |   |   | (434 | ) |
|                                                                                       |   |                     |   |   |   |   |   |   |
| FINANCING ACTIVITIES                                                                       |   |                     |   |   |   |   |   |   |
|                                                                                       |   |                     |   |   |   |   |   |   |
| Payments on capital lease obligations                                                      |   |                     | (26    | ) |   |   | (50 | ) |
| Short term borrowings (repayments), net                                                    |   |                     | 610    |   |   |   | (1,803 | ) |
| Borrowings of long-term debt                                                               |   |                     | 12     |   |   |   | 70 |   |
| Repayments of long-term debt                                                               |   |                     | (511   | ) |   |   | (298 | ) |
| Proceeds from the issuance of shares                                                       |   |                     | -      |   |   |   | 44 |   |
| Cash repurchase of restricted stock                                                        |   |                     | (2     | ) |   |   | (5 | ) |
| Net cash provided (utilized) by financing activities                                       |   |                     | 83     |   |   |   | (2,042 | ) |
|                                                                                       |   |                     |   |   |   |   |   |   |
| DECREASE IN CASH AND CASH EQUIVALENTS                                                      |   |                     | -      |   |   |   | (5 | ) |
| Cash, and cash equivalents beginning of period                                             |   |                     | -      |   |   |   | 76 |   |
|                                                                                       |   |                     |   |   |   |   |   |   |
| Cash and cash equivalents, end of period                                                   |   | $                        | -      |   |   | $ | 71 |   |
|                                                                                       |   |                     |   |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                         |   |                     |   |   |   |   |   |   |
| Cash paid during the period for:                                                           |   |                     |   |   |   |   |   |   |
| Interest                                                                                   |   | $                        | 344    |   |   | $ | 390 |   |

----

----

|   |                                     |   | Three Months Ended |   |   | Six Months Ended |   |
|--------|------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|   |                                     |   | July 5, 2009       |   |   | July 5, 2009     |   |
|   | Revenue from discontinued operations     |   | $                  | 867    |   |             | $      | 2,203 |   |
|   | Pretax loss from discontinued operations |   |               | (352   | )      |             |   | (418 | ) |

|   |                                                      |   | Three Months Ended |   |   | Six Months Ended |   |
|--------|-----------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|   |                                                      |   | July 4, 2010       |   |   | July 5, 2009     |   |   | July 4, 2010 |   |   | July 5, 2009 |   |
|   | Revenue from discontinued operations                      |   | $                  | -      |   |             | $      | 8,576 |   |   | $ | 1,721 |   |   | $ | 15,390 |   |
|   | Pretax income (loss) from discontinued operations         |   |               | -      |   |             |   | 58 |   |   |   | (171 | ) |   |   | (156 | ) |
|   | Pretax gain (loss) on disposal of discontinued operations |   |               | (80    | )      |             |   | - |   |   |   | 136 |   |   |   | - |   |

----

|   |                                                                                                                                                                                                                 |   | 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 |   |   | Six Months Ended |   |
|--------|----------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|   |                                               |   | July 4, 2010       |   |   | July 5, 2009     |   |   | July 4, 2010 |   |   | July 5, 2009 |   |
|   | Revenue from discontinued operations               |   | $                  | -      |   |             | $      | 1,170 |   |   | $ | 709 |   |   | $ | 2,584 |   |
|   | Pretax loss from discontinued operations           |   |               | -      |   |             |   | (623 | ) |   |   | (241 | ) |   |   | (1,474 | ) |
|   | 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 |   |   | Six Months Ended |   |
|--------|---------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|   |                                              |   | July 4, 2010       |   |   | July 5, 2009     |   |   | July 4, 2010 |   |   | July 5, 2009 |   |
|   | Revenue from discontinued operations              |   | $                  | 1,849  |   |             | $      | 1,873 |   |   | $ | 4,044 |   |   | $ | 5,490 |   |
|   | Pretax income (loss) from discontinued operations |   |               | (143   | )      |             |   | 297 |   |   |   | 260 |   |   |   | 886 |   |

----

|   |                                                                                                                                                                                                                 |   | July 4, 2010 |   |   | December 31, 2009 |   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|-------------------|--------|
|   |    ASSETS                                                                                                                                                                                             |   |              |   |   |              |   |
|   |       Accounts receivable, net of allowance for doubtful accounts of $81 and $142, respectively                                                                                        |   | $                 | 939    |   |              | $      | 592 |   |
|   |       Inventories, net                                                                                                                                                                 |   |              | 1,841  |   |              |   | 2,094 |   |
|   |       Other current assets                                                                                                                                                             |   |              | 51     |   |              |   | 30 |   |
|   |                                 Total current assets |   |              | 2,831  |   |              |   | 2,716 |   |
|   |                                                                                                                                                                                                                 |   |              |   |   |              |   |   |   |
|   |    PROPERTY AND EQUIPMENT, net                                                                                                                                                                        |   |              | 1,225  |   |              |   | 1,233 |   |
|   |                                                                                                                                                                                                                 |   |              |   |   |              |   |   |   |
|   |       Other assets                                                                                                                                                                     |   |              | 31     |   |              |   | 24 |   |
|   |                                                                                                                                                                                                                 |   |              |   |   |              |   |   |   |
|   |                                 Total Assets         |   | $                 | 4,088  |   |              | $      | 3,973 |   |
|   |                                                                                                                                                                                                                 |   |              |   |   |              |   |   |   |
|   |    LIABILITIES                                                                                                                                                                                        |   |              |   |   |              |   |   |   |
|   |       Accounts payable                                                                                                                                                                 |   | $                 | 728    |   |              | $      | 601 |   |
|   |       Accrued expenses and other liabilities                                                                                                                                           |   |              | 294    |   |              |   | 308 |   |
|   |                                 Total liabilities    |   |              | 1,022  |   |              |   | 909 |   |
|   |                                                                                                                                                                                                                 |   |              |   |   |              |   |   |   |
|   |                                 Net Assets           |   | $                 | 3,066  |   |              | $      | 3,064 |   |

|   |                                                     |   | July 4, |   |   | December 31, |   |
|--------|----------------------------------------------------------|--------|---------|--------|--------|--------------|--------|
|   |                                                     |   | 2010    |   |   | 2009         |   |
|   | Raw materials                                            |   | $       | 2,651  |   |         | $      | 2,705 |   |
|   | Work-in-process                                          |   |    | 2,867  |   |         |   | 2,486 |   |
|   | Finished goods                                           |   |    | 745    |   |         |   | 855 |   |
|   |                                                     |   |    | 6,263  |   |         |   | 6,046 |   |
|   | Less: allowance for slow moving and obsolete inventories |   |    | (705   | )      |         |   | (697 | ) |
|   |                                                     |   | $       | 5,558  |   |         | $      | 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        |   |   | Six Months Ended                     |   |
|--------|---------------------------------------------------------------|--------|---------------------------|--------|--------|--------------------------------------|--------|
|   |                                                          |   | July 5, 2009(As restated) |   |   | July 5, 2009(As previously reported) |   |   | July 5, 2009(As restated) |   |   | July 5, 2009(As previously reported) |   |
|   | Estimated fair value of derivative liability                  |   | $                         | 83     |   |                                 | $      | - |   |   | $ | 83 |   |   | $ | - |   |
|   | Income resulting from change in value of derivative liability |   |                      | 179    |   |                                 |   | - |   |   |   | 555 |   |   |   | - |   |
|   | Other income (expense)                                        |   |                      | 49     |   |                                 |   | (130 | ) |   |   | 405 |   |   |   | (150 | ) |
|   |                                                          |   |                      |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
|   | Net Loss                                                      |   |                      | (2,639 | )      |                                 |   | (2,818 | ) |   |   | (5,969 | ) |   |   | (6,524 | ) |
|   |                                                          |   |                      |   |   |                                 |   |   |   |   |   |   |   |   |   |   |   |
|   | Basic and Diluted Loss per Common Share                       |   | $                         | (0.22  | )      |                                 | $      | (0.24 | ) |   | $ | (0.51 | ) |   | $ | (0.55 | ) |

|   |                    |   | July 5, 2009 |   | April 5, 2009 |   | January 1, 2009 |
|--------|-------------------------|--------|--------------|--------|---------------|--------|-----------------|
|   | Expected volatility     |   | 47.57%       |   | 47.59%        |   | 47.48%          |
|   | Risk-free interest rate |   | 2.43%        |   | 1.87%         |   | 1.72%           |
|   | Expected term           |   | 5.5 years    |   | 5.75 years    |   | 6.0 years%      |
|   | Dividend yield          |   | 0%           |   | 0%            |   | 0               |

----

|   |                      |   |                                   |   |   | July 4, 2010          |   |   | December 31, 2009        |   |
|--------|---------------------------|--------|----------------------------------------|--------|--------|-----------------------|--------|--------|--------------------------|--------|
|   |                      |   | Estimated Useful Lives (in Years) |   |   | Gross Carrying Amount |   |   | Accululated Amortization |   |   | Net |   |   | Gross Carrying Amount |   |   | Accululated Amortization |   |   | Impairment |   |   | Net |   |
|   |                      |   |                                   |   |   |                  |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Patents and Trademarks    |   | 10                                     |   |   | $                     | 4      |   |                     | $      | (4 | ) |   | $ | 0 |   |   | $ | 4 |   |   | $ | (3 | ) |   | $ | - |   |   | $ | 1 |   |
|   | Mutual Services Agreement |   | 1                                      |   |   |                  | -      |   |                     |   | - |   |   |   | - |   |   |   | 100 |   |   |   | (100 | ) |   |   | - |   |   |   | - |   |
|   | Technical Library         |   | 20                                     |   |   |                  | 700    |   |                     |   | (89 | ) |   |   | 611 |   |   |   | 700 |   |   |   | (73 | ) |   |   | - |   |   |   | 627 |   |
|   | Customer Relationships    |   | 15-20                                  |   |   |                  | 7,722  |   |                     |   | (993 | ) |   |   | 6,729 |   |   |   | 9,592 |   |   |   | (1,044 | ) |   |   | (1,626 | ) |   |   | 6,922 |   |
|   | Non-Compete Agreements    |   | 3                                      |   |   |                  | 17     |   |                     |   | (7 | ) |   |   | 10 |   |   |   | 807 |   |   |   | (518 | ) |   |   | (274 | ) |   |   | 15 |   |
|   |                      |   |                                   |   |   |                  |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                     |   |                                   |   |   | $                     | 8,443  |   |                     | $      | (1,093 | ) |   | $ | 7,350 |   |   | $ | 11,203 |   |   | $ | (1,738 | ) |   | $ | (1,900 | ) |   | $ | 7,565 |   |

|   | Year Ending December 31 -- |   |
|--------|----------------------------|--------|
|   | 2010                       |   | $ | 216 |   |
|   | 2011                       |   |   | 428 |   |
|   | 2012                       |   |   | 421 |   |
|   | 2013                       |   |   | 421 |   |
|   | 2014                       |   |   | 421 |   |
|   | Thereafter                 |   |   | 5,443 |   |
|   |                       |   |   |   |   |
|   | Total                      |   | $ | 7,350 |   |

----

----

| ·   | 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 Chairman and former 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 of 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | July 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 July 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 July 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 July 4, 2010 and December 31, 2009) plus 2%, secured by a subordinated interest in substantially all assets owned by the Company                                                                                                        |   |    | 2,079  |   |         |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |    |   |   |         |   |   |   |
| 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 (0.53% at July 4, 2010) plus 8.25% beginning June 1, 2009, secured by certain real estate (see Note G, Senior Credit Facility) |   |    | 428    |   |         |   | 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 (0.53% at July 4, 2010) plus 8.25% beginning June 1, 2009, secured by inventory and substantially all machinery and equipment (see Note G, Senior Credit Facility)          |   |    | 454    |   |         |   | 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                                                                                                                                                                                                                                                                                                                  |   |    | 136    |   |         |   | 147 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |    |   |   |         |   |   |   |
| Notes payable in monthly installments of $1 through April 2014, without interest, secured by certain equipment.                                                                                                                                                                                                                                                                                                                                                        |   |    | -      |   |         |   | 136 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |    |   |   |         |   |   |   |
| Capital lease obligations                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |    | 1,030  |   |         |   | 1,044 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |    | 8,127  |   |         |   | 9,734 |   |
| Less: current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |    | 4,821  |   |         |   | 5,097 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |    |   |   |         |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | $       | 3,306  |   |         | $      | 4,637 |   |

----

|   | Years Ending December 31, |   | Amount |   |
|--------|---------------------------|--------|--------|--------|
|   | 2010                      |   | $      | 4,607  |   |
|   | 2011                      |   |   | 435    |   |
|   | 2012                      |   |   | 2,153  |   |
|   | 2013                      |   |   | 906    |   |
|   | 2014                      |   |   | 26     |   |
|   | Thereafter                |   |   | -      |   |
|   |                      |   | $      | 8,127  |   |

|   |                                                    |   | Three Months Ended |   |   | Six Months Ended |   |
|--------|---------------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|   |                                                    |   | July 4,            |   |   | July 5,          |   |   | July 4, |   |   | July 5, |   |
|   |                                                    |   | 2010               |   |   | 2009             |   |   | 2010 |   |   | 2009 |   |
|   |                                                    |   |               |   |   |             |   |   |   |   |   |   |   |
|   | Interest expense on principal                           |   | $                  | 184    |   |             | $      | 209 |   |   | $ | 366 |   |   | $ | 454 |   |
|   |                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   | Amortization of debt issue costs                        |   |               | 3      |   |             |   | 4 |   |   |   | 7 |   |   |   | 8 |   |
|   |                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   | Amortization of debt discount - revolving notes payable |   |               | 23     |   |             |   | 14 |   |   |   | 45 |   |   |   | 28 |   |
|   |                                                    |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|   |                                                    |   | $                  | 209    |   |             | $      | 227 |   |   | $ | 418 |   |   | $ | 490 |   |

----

----

----

|   |                           |   | Three Months ended July 4, 2010 |   |   | Three Months ended July 5, 2009 |   |   | Six Months ended July 4, 2010 |   |   | Six Months ended July 5, 2009 |   |
|--------|--------------------------------|--------|---------------------------------|--------|--------|---------------------------------|--------|--------|-------------------------------|--------|--------|-------------------------------|--------|
|   | Balance at beginning of period |   | $                               | 254    |   |                            | $      | 485    |                          |   | $      | 394                           |   |   | $ | 589 |   |
|   | Warranty claims paid           |   |                            | (26    | )      |                            |   | (20    | )                             |   |   | (36                           | )      |   |   | (151 | ) |
|   | Warranty expense               |   |                            | 53     |   |                            |   | 15     |                          |   |   | 73                            |   |   |   | 42 |   |
|   | Other1                         |   |                            | -      |   |                            |   | -      |                          |   |   | (150                          | )      |   |   | - |   |
|   | Balance at end of period       |   | $                               | 281    |   |                            | $      | 480    |                          |   | $      | 281                           |   |   | $ | 480 |   |

----

|   |                                                               |   | Six Months Ended |   |
|--------|--------------------------------------------------------------------|--------|------------------|--------|
|   |                                                               |   | July 4, 2010     |   |   | July 5, 2009 |   |
|   |                                                               |   |             |   |   |   |   |
|   | Issuance of restricted stock                                       |   | $                | -      |   |   | $ | 5 |   |
|   |                                                               |   |             |   |   |   |   |   |   |
|   | Reduction of note payable in conjunction with sale of CES business |   | $                | 1,096  |   |   | $ | - |   |
|   |                                                               |   |             |   |   |   |   |   |   |
|   | Expiration of conversion option                                    |   | $                | 18     |   |   | $ | 555 |   |
|   |                                                               |   |             |   |   |   |   |   |   |
|   | Equipment acquired through capital lease obligation                |   | $                | -      |   |   | $ | 70 |   |

----

----

----

|   | 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| ITEM 4.   CONTROLS AND PROCEDURES |
|---------------------------------------------|

----

----

| ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
|---------------------------------------------------------------------------------|

| ITEM 6.   EXHIBITS |
|------------------------------|

| Exhibit No. |                                                                                                 | Description                                                                                                                                                                                            |
|-------------|------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |                                                                                                 |                                                                                                                                                                                                   |
| 10.1        |                                                                                                 | Employment Agreement dated June 18, 2010 between Michael P. Moore and the registrant (incorporated by reference to Exhibit 99.1 to the registrant's Current Report on Form 8-K filed on June 18, 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. |
|-----------------|--------------------|
|            |               |   |
|            |               |   |
| August 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        |                                                                                                 | Employment Agreement dated June 18, 2010 between Michael P. Moore and the registrant (incorporated by reference to Exhibit 99.1 to the registrant's Current Report on Form 8-K filed on June 18, 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                                                                          |