<PAGE>

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    ---------
                                    FORM 10-K
                                    ---------

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 1 - 5332

                             P & F INDUSTRIES, INC.
             (Exact name of Registrant as specified in its charter)

        DELAWARE                                        22-1657413
(State of incorporation)                 (I.R.S. Employer Identification Number)

300 SMITH STREET, FARMINGDALE, NEW YORK                   11735
(Address of principal executive offices)                (Zip Code)

       Registrant's telephone number, including area code: (631) 694-1800

           Securities registered pursuant to Section 12(b) of the Act:

                                          Name of each exchange
           Title of Class                  on which registered
                NONE                               NONE

           Securities registered pursuant to Section 12(g) of the Act:

                      CLASS A COMMON STOCK, $1.00 PAR VALUE
                                (Title of class)

        Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES  X     NO
   -----     -----

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

        The aggregate market value of the voting stock held by non-affiliates of
the Registrant, based on the last sale price on March 17, 2000, was
approximately $20,034,000.

        As of March 17, 2000, there were outstanding 3,601,893 shares of the
Registrant's Class A Common Stock, par value $1.00 per share.

                       DOCUMENTS INCORPORATED BY REFERENCE

        Part III incorporates by reference information from the Registrant's
definitive Proxy Statement for the 2000 Annual Meeting of Stockholders.

                             P & F INDUSTRIES, INC.

                                    FORM 10-K

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999


<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   PAGE
                                                                                   ----
<S>               <C>                                                             <C>
PART I
Item 1.           Business                                                        1 - 4

Item 2.           Properties                                                          4

Item 3.           Legal Proceedings                                                   4

Item 4.           Submission of Matters to a Vote of Security Holders                 4


PART II
Item 5.           Market for Registrant's Common Equity and Related
                    Stockholder Matters                                               5

Item 6.           Selected Financial Data                                             6

Item 7.           Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                          7 - 11

Item 7A.          Quantitative and Qualitative Disclosures
                    About Market Risk                                                12

Item 8.           Financial Statements and Supplementary Data                   13 - 40

Item 9.           Changes in and Disagreements with Accountants on

                    Accounting and Financial Disclosures                             41

PART III
Item 10.          Directors and Executive Officers of the Registrant                 41

Item 11.          Executive Compensation                                             41

Item 12.          Security Ownership of Certain Beneficial Owners
                    and Management                                                   41

Item 13.          Certain Relationships and Related Transactions                     41


PART IV
Item 14.          Exhibits, Financial Statement Schedules and
                    Reports on Form 8-K                                         42 - 43

                  Signatures                                                         44

                  Exhibit Index                                                 45 - 46
</TABLE>



                                       i


<PAGE>



                              SAFE HARBOR STATEMENT
                          UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995

This Annual Report on Form 10-K may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Any
forward-looking statements contained herein, including those related to the
Company's performance for the year 2000, are based upon the Company's historical
performance and on current plans, estimates and expectations. They are subject
to various risks and uncertainties, including, but not limited to, the impact of
competition, product demand and pricing, investment results, legislative and
regulatory developments and other risks detailed from time to time in the
Company's filings with the Securities and Exchange Commission. These risks could
cause the Company's actual results for the 2000 fiscal year and beyond to differ
materially from those expressed in any forward-looking statement made by or on
behalf of the Company. Forward-looking statements speak only as of the date on
which they are made, and the Company undertakes no obligation to update publicly
or revise any forward-looking statement, whether as a result of new information,
future developments or otherwise.


                                       ii


<PAGE>




PART I
ITEM 1.           BUSINESS

         P & F Industries, Inc. (the "Company") conducts its business operations
through three wholly-owned subsidiaries. Embassy Industries, Inc. ("Embassy") is
engaged in the manufacture and sale of baseboard heating products and the
importation and sale of radiant heating systems. Embassy also imports a line of
door and window hardware items through its Franklin Hardware division
("Franklin"). Florida Pneumatic Manufacturing Corporation ("Florida Pneumatic")
is engaged in the importation, manufacture and sale of pneumatic hand tools,
primarily for the industrial and retail markets, and the importation and sale of
compressor air filters. Florida Pneumatic also markets, through its Berkley Tool
division ("Berkley"), a line of pipe cutting and threading tools, wrenches and
replacement electrical components for a widely used brand of pipe cutting and
threading machines. Green Manufacturing, Inc. ("Green"), which was acquired by
the Company on September 16, 1998, is engaged primarily in the manufacture,
development and sale of heavy-duty welded custom designed hydraulic cylinders.
Green also manufactures a line of access equipment for the petro-chemical
industry and a line of post hole digging equipment for the agricultural
industry. Note 9 of the Notes to Consolidated Financial Statements presents
additional information regarding the acquisition of Green. Note 11 of the Notes
to Consolidated Financial Statements presents financial information for the
segments of the Company's business.

         Florida Pneumatic has two major customers, Sears, Roebuck and Co. and
W.W. Grainger, Inc., that accounted for 24.7%, 35.7% and 45.4% and 7.7%, 10.1%
and 9.1% of consolidated revenues for the years ended December 31, 1999, 1998
and 1997, respectively. A third major customer, The Home Depot, is a customer of
both Florida Pneumatic and Franklin and accounted for 10.1% of consolidated
revenues for the year ended December 31, 1999. Revenues derived from countries
outside the United States were immaterial for the years ended December 31, 1999,
1998 and 1997.

EMBASSY

                                       1


<PAGE>

         Embassy's baseboard heating products are sold nationally, under the
Embassy name and under its Panel-Track and System 6 trademarks, for use in
hot-water heating systems installed in single family homes, multi-unit dwellings
and commercial and industrial buildings. Products are sold principally to
wholesalers by manufacturers' representatives and in-house sales support
personnel. Embassy's products are also sold to other manufacturers for
incorporation into their products and for distribution on a private label basis.

         Hot-water heating systems operate by heating water in a boiler and
circulating it through the copper tubing in the baseboard along the perimeter of
the space to be heated. Attached to the copper tubing are numerous
closely-spaced aluminum fins which dissipate the heat. Sections are two to ten
feet in length, project several inches from the wall and rise less than a foot
from the floor. These sections may be combined for longer installations.
Embassy's baseboard contains patented plastic tracks which ease handling and
reduce operating noise.

         Embassy also imports a line of radiant heating systems. These systems
are different from baseboard heating systems in that the radiant heating systems
radiate heat provided by hot water circulating through plastic tubing, which is
generally installed beneath the surface of the floor. These systems include the
tubing, manifolds, controls and installation supplies. Embassy also provides
computer software which aids in the design of the system. Sales of this product
accounted for 15.4% of Embassy's total heating equipment revenues in 1999.

         Baseboard and radiant heating systems compete with forced hot-air and
electric heating systems. Compared to baseboard and radiant heating systems,
electric heating systems are generally more expensive to operate, while forced
hot-air systems are noisier, sometimes cause discomfort from fluctuations in
temperature as the furnace cycles on and off and do not distribute warm air
uniformly within the room. Radiant heating systems are generally the most
expensive of these systems to install and therefore tend to be installed more
often in custom and higher priced homes. Since Embassy's products are used
primarily in new installations, its sales are related to housing starts.

         Embassy's baseboard heating products are sold off the shelf and no
material backlog of orders exists. Raw materials are readily available. The
business is seasonal, with approximately 60.0% of Embassy's heating equipment
revenues coming in the last six months of the year.

         The primary competitive factors in the baseboard and radiant heating
market are quality, price, service and brand-name awareness.

         The Franklin division of Embassy imports and packages approximately 225
types of hardware products, including locksets, deadbolts, door and window
security hardware, rope-related hardware products and fire escape ladders.
Products generally range in price from under $1.00 to $30.00 and are sold to
retailers, wholesalers and private label accounts through manufacturers'
representatives and in-house sales support personnel. Nearly all of Franklin's
sales are of products imported from the Far East. Three customers accounted for
approximately 41.4%, 48.9% and 55.9% of Franklin's revenues in 1999, 1998 and
1997, respectively. A fourth major customer accounted for 26.5% of Franklin's
for the year ended December 31, 1999. The Company believes that its
relationships with these customers remain excellent.

         The primary competitive factors in the hardware business are price,
service, skill in packaging and point-of-sale marketing.

         Franklin's products are sold off the shelf and no material backlog of
orders exists. Sources of imported products are readily available. Franklin's
business is not seasonal.

FLORIDA PNEUMATIC

         Florida Pneumatic imports or manufactures approximately fifty types of
pneumatic hand tools, most of which are sold at prices ranging from $50 to
$1,000, under the names "Florida Pneumatic", "Universal Tool" and "Fuji", as
well as under the trade names or trademarks of several private label customers.
The line of products includes sanders, grinders, drills, saws, impact wrenches,
nailers and staplers. These tools are similar in appearance and function to
electric hand tools but are powered by compressed air, rather than directly by
electricity. Air tools, as they are also called, are generally less expensive to
operate, offer better performance and are lighter in weight than their
electrical counterparts.

         Most of Florida Pneumatic's sales are of pneumatic tools imported from
Japan and Taiwan, along with sales of some products imported from mainland
China. Florida Pneumatic manufactures high speed rotary and reciprocating
pneumatic tools at its factory in Jupiter, Florida and imports air filters.

         Products are sold to distributors, retailers and private label
customers through in-house sales personnel and manufacturers' representatives.
Typical users of Florida Pneumatic's hand tools include industrial maintenance
and production staffs, do-it-yourself mechanics, automobile mechanics and auto
body repairmen.

         The primary competitive factors in the pneumatic tool market are price,
service and brand-name awareness.

         Two customers accounted for 57.4%, 70.4% and 72.9% of Florida
Pneumatic's revenues in 1999, 1998 and 1997, respectively. A third customer
accounted for 14.6% of Florida Pneumatic's revenues in 1999. The Company
believes that its relationships with these customers remain excellent.

                                       2


<PAGE>

         Berkley markets a product line consisting of pipe and bolt dies, pipe
taps, pipe and tubing cutter wheels and replacement electrical components for a
widely used brand of pipe cutting and threading machines. Florida Pneumatic
markets Berkley's products through industrial distributors and contractors.

         Florida Pneumatic's products are sold off the shelf and no material
backlog of orders exists. The business is not seasonal, but it may be subject to
significant periodic changes resulting from occasional sales promotions by
customers.

         Florida Pneumatic purchases significant amounts of pneumatic tools from
two foreign suppliers. Other sources are available. However, the loss of either
supplier could cause a temporary disruption in the flow of products, possibly
creating an adverse effect on operating results.

GREEN

         Green is engaged primarily in the manufacture, development and sale of
heavy-duty welded custom designed hydraulic cylinders. All of Green's hydraulic
cylinders are sold on an OEM basis and are integrated components on a variety of
equipment and machinery. Hydraulic cylinders are welded casings whose internal
chambers consist of a rod and piston surrounded by a petroleum-based fluid. The
casings contain openings or valves which allow the introduction of fluid into
one side of the chamber at high pressure. The introduction of fluid causes the
rod/piston to move with tremendous force and allows for the pushing or lifting
of extremely heavy loads.

         Green's products, which are sold throughout the United States, are used
on tow trucks and car carriers for hoisting and lifting cars and on aerial lifts
and cranes to raise platforms and other heavy objects. The cylinders are also
used on various types of construction equipment for digging and as steering
mechanisms. They are also installed in compacting equipment, as the means to
compress recyclable cardboard or other refuse.

         Green specializes in cylinders that range in bore size from 1 to 8
inches and stroke, or extend, up to 180 inches. Each cylinder is engineered to
the customer's specifications.

         Green sells its products directly to OEM customers, at prices ranging
from $50 to $1,500, with an approximate average selling price of $150.

         The primary competitive factors in the hydraulic cylinder industry are
quality and timely delivery.

         Green also manufactures a line of access equipment for the
petro-chemical and bulk storage industries. This product line, which accounts
for about 10% of Green's revenues, consists of bridges, platforms, walkways and
stairways, constructed of steel or aluminum and generally installed outdoors.
These products are designed to customers' specifications and sold directly to
them for use in overhead and elevated access to large containers, including rail
cars and storage tanks.

         Green also markets a small line of diggers used primarily as
attachments to small tractors for light farm work. This product line, which
accounts for less than 5% of Green's revenues, is marketed through farm
equipment dealers and wholesalers.

         Green's business does not exhibit a great deal of seasonality, except
for the agricultural equipment business, which is stronger during the growing
season. Backlogs totalling as much as 25% of yearly sales are standard for the
cylinder business.

         One customer accounted for 22.6% and 24.1% of Green's revenues in 1999
and 1998, respectively. The Company believes that its relationship with this
customer remains excellent.

         Green purchases significant amounts of raw materials from one supplier.
Other sources are available. The Company believes that the loss of this supplier
would not cause any disruption in the flow of products or have an adverse effect
on operating results.

EMPLOYEES

         The Company employed 422 persons as of December 31, 1999, including 5
at corporate headquarters. The 100 employees of the pneumatic tool segment and
the 225 employees of the hydraulic cylinder segment are not represented by a
union. Of the 92 persons employed in the heating equipment and hardware
segments, 65 factory workers are covered by a single-employer union contract.
The heating equipment union contract expires on November 30, 2001. The Company
believes that its relations with its employees are satisfactory.

ITEM 2. PROPERTIES
                                       3


<PAGE>

         Embassy, Florida Pneumatic and Green each own the plant facilities
which they occupy. The facilities owned by Embassy and Florida Pneumatic are
subject to mortgages. Embassy's 75,000 square foot plant facility is located in
Farmingdale, New York. Florida Pneumatic's 72,000 square foot plant facility is
located in Jupiter, Florida. Green's 85,000 square foot plant facility is
located in Bowling Green, Ohio. Each facility either provides adequate space for
the operations of the respective subsidiary in the foreseeable future or can be
expanded to provide additional space. The Company's executive offices are
located in Embassy's facility in Farmingdale, New York.

ITEM 3. LEGAL PROCEEDINGS

         The Company is not a party to any litigation that is expected to have a
material adverse effect on its business.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of security holders during the last
quarter of the period covered by this report.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.

         The Company's Class A Common Stock trades on The Nasdaq Stock Market.
The price range of the Company's Class A Common Stock during the last two fiscal
years was as follows:

<TABLE>
<CAPTION>
            1999                          HIGH               LOW
            ----                          ----               ---
<S>                                    <C>                <C> <C>
       First Quarter                   $10                $ 8 15/16
       Second Quarter                   10 1/8              8  1/2
       Third Quarter                     9 3/4              8  1/16
       Fourth Quarter                    8 3/8              6  3/8
</TABLE>

<TABLE>
<CAPTION>
            1998                          HIGH               LOW
            ----                          ----               ---
<S>                                    <C>                <C> <C>
       First Quarter                   $ 8                $ 5 7/8
       Second Quarter                   11 5/16             7 9/16
       Third Quarter                    10 9/16             7 1/8
       Fourth Quarter                    9 7/8              7 3/8
</TABLE>

         As of March 17, 2000, there were approximately 1,700 holders of record
of the Company's Class A Common Stock.

         The Company has not declared any cash dividends on its Class A Common
Stock since its incorporation in 1962 and has no plans to declare any cash
dividends in the immediate future. On January 30, 1997, the Company redeemed all
of the outstanding shares of its $1.00 Cumulative Preferred Stock, at the par
value of $10 per share, for a total of $2,633,450, plus an interim dividend
totalling $21,858.



                                       4


<PAGE>



ITEM 6. SELECTED FINANCIAL DATA

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                      SELECTED CONSOLIDATED FINANCIAL DATA
                     =======================================

         The following selected consolidated financial data has been derived
from the audited consolidated financial statements of P & F Industries, Inc. and
subsidiaries. The selected financial data should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
Form 10-K.

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,

                                       -----------------------------------------------------------------------
                                           1999           1998           1997           1996           1995
                                       -----------    -----------    -----------    -----------    -----------
<S>                                    <C>            <C>            <C>            <C>            <C>
 Revenues                              $82,700,440    $58,165,715    $50,026,947    $43,078,371    $43,047,601
                                       ===========    ===========    ===========    ===========    ===========
 Income from continuing operations     $ 4,545,505    $ 3,943,441    $ 2,513,779    $ 1,953,287    $ 1,491,975
                                       ===========    ===========    ===========    ===========    ===========

 Income from continuing operations per share of common stock:

     Basic                             $      1.35    $      1.23    $       .83    $       .58    $       .42
                                       ===========    ===========    ===========    ===========    ===========
     Diluted                           $      1.23    $      1.07    $       .71    $       .52    $       .39
                                       ===========    ===========    ===========    ===========    ===========

 Total assets                          $54,240,359    $48,078,479    $32,648,895    $31,331,643    $35,415,672
                                       ===========    ===========    ===========    ===========    ===========

 Long-term obligations                 $ 7,325,661    $10,193,064    $ 5,124,883    $ 5,288,570    $ 7,414,181
                                       ===========    ===========    ===========    ===========    ===========
 Cash dividends declared per
   common share                        $        --    $        --    $        --    $        --    $        --
                                       ===========    ===========    ===========    ===========    ===========
</TABLE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

1999 COMPARED TO 1998

         Consolidated revenues increased 42.2%, from $58,165,715 to $82,700,440.
Revenues from pneumatic tools and related equipment increased substantially,
from $37,806,138 to $46,708,679, due primarily to the addition of a new large
customer during the fourth quarter. The selling prices of pneumatic tools and
related equipment were unchanged during the year.

                                       5


<PAGE>

         Heating equipment revenues increased 4.5%, from $9,423,633 to
$9,843,257. This increase was consistent across both the baseboard and radiant
product lines. Average selling prices for baseboard product, the bulk of the
product line, were unchanged from 1998. Selling prices of radiant tubing were
reduced by an average of 12% in 1999 in an attempt to stimulate demand.

         Hardware revenues increased 27.3%, from $4,351,114 to $5,536,822. This
increase was almost exclusively the result of shipments to a new large customer
that was obtained midway through 1998. Selling prices of hardware products were
virtually unchanged, with the exception of one significant region where
discounting was undertaken to maintain competitiveness.

         Revenues for hydraulic cylinders and other equipment increased 213.0%,
from $6,584,830 to $20,611,682. Revenues for 1999 were for the entire year,
while revenues for 1998 were for only the period from the date of the
acquisition of Green to December 31, 1998. Selling prices for hydraulic
cylinders and other equipment were unchanged during the year.

         Consolidated gross profit, as a percentage of revenues, decreased from
35.5% to 30.9%, due primarily to the lower overall gross margins from hydraulic
cylinders and other equipment. Gross profit from pneumatic tools and related
equipment decreased from 40.1% to 37.5%, due to a less favorable exchange rate
of the dollar compared to the Japanese yen, which raised the cost of imported
product. Gross profit from heating equipment increased from 34.1% to 35.8%, due
primarily to an increase in labor productivity and a reduction in the cost of
some raw materials. Gross profit from hardware decreased from 28.3% to 26.3%,
due to the price discounting noted above. In addition, an increase in warehouse
expenses associated with a large increase in the average number of orders per
dollar of revenue had a negative impact on gross profit from hardware. Gross
profit from hydraulic cylinders decreased from 15.8% to 14.6%, due primarily to
a temporary decrease in labor productivity, as well as to a less favorable
product mix.

         Consolidated selling, general and administrative expenses increased
27.1%, from $13,332,424 to $16,944,706, due primarily to the inclusion of
Green's expenses for the entire year in 1999. As a percentage of revenues,
selling, general and administrative expenses decreased from 22.9% to 20.5%, due
primarily to the increase in revenues.

          Interest expense increased 80.0%, from $772,035 to $1,389,383,
primarily due to the debt related to the Green acquisition, the funds borrowed
to build-up inventory associated with the large new customer gained in the
fourth quarter and, to a lesser extent, an increase in the average borrowing
rate.

          The effective tax rates for the years ended December 31, 1999 and 1998
were 36.8% and 39.6%, respectively. See Note 8 of the Notes to Consolidated
Financial Statements.

1998 COMPARED TO 1997

         Consolidated revenues increased 16.3%, from $50,026,947 to $58,165,715.
Revenues from pneumatic tools and related equipment were essentially flat,
increasing from $37,485,572 to $37,806,138. This increase would have been 18.2%
over the same period in 1997 if not for a one time order in 1997 of a special
product from one large customer. This order, which amounted to $5,494,865, was
shipped in the third and fourth quarters of 1997. The increase, after adjusting
for the shipments noted above, was the result of both the addition of a major
new line of pneumatic tools and an increase in sales to the industrial sector.
Selling prices of pneumatic tools and related equipment were unchanged during
the year.

         Heating equipment revenues increased 13.0%, from $8,342,996 to
$9,423,633. This increase was consistent across both the baseboard and radiant
product lines. Selling prices for several large new accounts opened in 1999 were
lower than the average selling prices on existing business.

         Hardware revenues increased 3.7%, from $4,196,351 to $4,351,114. A
decrease in sales to one large customer was more than offset by the combination
of a large increase in sales to another large customer and the addition of
another large customer in the second half of 1998. Selling prices of hardware
were unchanged during the year.

         Revenues for hydraulic cylinders and other equipment, attributable to
the acquisition of Green, were $6,584,830 for the period from the date of the
acquisition to December 31. Selling prices for hydraulic cylinders and other
equipment were unchanged during the year.

         Consolidated gross profit, as a percentage of revenues, increased from
33.0% to 35.5%. Gross profit from pneumatic tools and related equipment
increased from 33.2% to 40.1%, due to a more favorable exchange rate of the
dollar compared to the Japanese yen, which reduced the cost of imported product,
and a slightly more favorable product mix. Gross profit from heating equipment
decreased from 35.3% to 34.1%, due primarily to several new large accounts
receiving slightly lower prices than existing accounts. Gross profit from
hardware increased from 26.1% to 28.3%, due to a more favorable product mix.
Gross profit from hydraulic cylinders was 15.8%.

         Consolidated selling, general and administrative expenses increased
15.2%, from $11,573,473 to $13,332,424, primarily as the result of both an
increase in marketing and compensation program expenditures and the acquisition
of Green.

                                       6


<PAGE>

As a percentage of revenues, selling, general and administrative expenses
decreased from 23.1% to 22.9%, due to the increase in revenues.

          Interest expense increased 11.3%, from $693,660 to $772,035, primarily
due to the borrowing in September to effect the acquisition of Green.

         The effective tax rates for the years ended December 31, 1998 and 1997
were 39.6% and 45.6%, respectively. See Note 8 of the Notes to Consolidated
Financial Statements.






LIQUIDITY AND CAPITAL RESOURCES

         The Company gauges its liquidity and financial stability by the
measurements shown in the following table:

<TABLE>
<CAPTION>
                                           DECEMBER 31,

                                  ------------------------------
                                  1999         1998         1997
                                  ----         ----         ----
                            (amounts in thousands, except for ratios)
<S>                             <C>          <C>          <C>
  Working Capital               $17,921      $15,994      $17,060

  Current Ratio                2.04 to 1    2.24 to 1    3.45 to 1

  Shareholders' Equity          $29,025      $24,450      $20,121
</TABLE>


         During 1999, gross accounts receivable increased by $3,812,583. Florida
Pneumatic's accounts receivable increased by approximately $4,050,000, while
Green's accounts receivable decreased by approximately $400,000. The increase at
Florida Pneumatic was primarily the result of the timing of shipments to a large
customer, which resulted in an increase of approximately $2,125,000 in accounts
receivable. During 1999, sales to the new customer noted above increased
accounts receivable by approximately $1,300,000. The decrease in accounts
receivable at Green was primarily the result of improved collections, which
resulted in a 9% decrease in average days of accounts receivable outstanding.
Inventories increased $3,593,026, primarily to support the increase in revenues.
The increases in accounts receivable and inventories were financed by an
increase in short-term borrowings of $2,500,000 and by the cash derived from
operations.

         During 1998, gross accounts receivable increased by $694,918, caused by
two factors. The acquisition of Green resulted in an increase in accounts
receivable of approximately $3,200,000, which was substantially offset by a
decrease of approximately $3,000,000 in accounts receivable at Florida
Pneumatic. A majority of Florida Pneumatic's fourth quarter sales occurred in
October. Because substantially all of Florida Pneumatic's accounts receivable
are collected in approximately 60 days, accounts receivable were unusually low
at December 31. The remainder of the increase was due to a very strong fourth
quarter for Embassy. Also during 1998, inventories increased $3,638,995, due to
the acquisition of Green, which increased inventories by over $1,100,000, a
build-up at Florida Pneumatic related to two large promotional orders to be
shipped in early 1999 and an increase at Franklin to support the addition of a
new account. This increase in inventories was financed by an increase in
short-term borrowings of $3,500,000.

         On July 26, 1999, the Company renewed its credit agreement, as amended,
with European American Bank. This agreement provides the Company with various
credit facilities, including revolving credit loans, term loans for acquisitions
and a foreign exchange line. The revolving credit loan facility provides a total
of $12,000,000, with various sublimits, for direct borrowings, letters of
credit, bankers' acceptances and equipment loans. The amended credit agreement
also includes a step-up period, from the date of renewal through January 31,
2000, during which the total availability under the revolving credit loan
facility was increased to $17,000,000 to support the buildup of inventory
related to a significant new customer. At December 31, 1999, there was
$6,000,000 outstanding against the revolving credit loan facility. There was
also a commitment of approximately $464,000 at December 31, 1999 for open
letters of credit.

         The term loan facility provides a commitment of $15,000,000 to
finance acquisitions subject to the lending banks approval. As noted below,
$10,000,000 of the term loan facility was used to help finance the
acquisition of Green and there was $3,833,333 still outstanding against this
facility at December 31, 1999. The amended credit agreement also includes a
step-up period, from the date of renewal through January 31, 2000, during
which the total availability under the term loan facility was increased to
$18,000,000 to support potential acquisitions. There was also a standby
letter of credit totalling approximately $821,000 outstanding against this
facility at December 31, 1999. This standby letter of credit was used to
secure the Economic Development Revenue Bond assumed as part of the
acquisition of Green.
                                       7


<PAGE>

         The foreign exchange line provides for the availability of up to
$10,000,000 in foreign currency forward contracts. These contracts fix the
exchange rate on future purchases of Japanese yen needed for payments to foreign
suppliers. The total amount of foreign currency forward contracts outstanding at
December 31, 1999 was approximately $507,000.

         The Company's credit agreement is subject to annual review by the
lending bank. Under this agreement, the Company is required to adhere to certain
financial covenants. At December 31, 1999, and for the year then ended, the
Company satisfied all of these covenants.

         On September 16, 1998, the Company acquired certain assets and
liabilities of Green Manufacturing, Inc. for $10,500,000. The acquisition was
financed with $500,000 in working capital funds and a $10,000,000 7-year term
loan from the Company's principal bank. This loan bears interest at LIBOR
(London Interbank Offered Rates) plus 1.75%. The Company made payments of
principal only through October 1999, at which time payments of both principal
and interest became due. As of December 31, 1999, $6,166,667 of the loan had
been repaid. The Economic Development Revenue Bond was issued on November 16,
1994 and provides for annual retirement payments each November 1, over a 10-
year period. The Bond bears interest at variable rates. The interest rate at
December 31, 1999 was 5.7%.

         On January 30, 1998, the Company redeemed all of its outstanding 13.75%
Subordinated Debentures, due January 1, 2017, at 100% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date. The funds used
for this redemption, totalling $1,384,686, were derived from working capital.

         In August 1997, the Company sold the 36,000 square foot building it
owned in New Hyde Park, New York. This building was being leased to Triangle
Sheet Metal Works, Inc. ("Triangle"), a former subsidiary of the Company. The
sale of the building, with proceeds totalling approximately $1,766,000, resulted
in a gain of $542,837, net of income taxes. This gain is presented in the
financial statements as income from discontinued operation.

         On January 30, 1997, the Company redeemed all of its outstanding $1.00
Cumulative Preferred Stock at the par value of $10 per share, plus an interim
dividend, through the redemption date, of $.083 per share. The funds used for
this redemption, totalling $2,655,308, were derived from working capital.

         Capital spending was approximately $1,647,000, $1,416,000 and $652,000
in 1999, 1998 and 1997, respectively. The total amount was provided from working
capital. Capital expenditures for 2000 are expected to be approximately
$1,750,000, some of which may be financed through the Company's credit
facilities. Included in the expected total for 2000 are capital expenditures
relating to new products, expansion of existing product lines and replacement of
old equipment.

         The Company, through Florida Pneumatic, imports a significant amount of
its purchases from Japan, with payment due in Japanese yen. As a result, the
Company is subject to the effects of foreign currency exchange fluctuations. The
Company uses a variety of techniques to protect itself from any adverse effects
from these fluctuations, including increasing its selling prices, obtaining
price reductions from its overseas suppliers, using alternative supplier sources
and entering into foreign currency forward contracts. Nevertheless, the
weakening of the U.S. dollar versus the Japanese yen in 1999 had a negative
effect on the Company's results of operations and its financial position.

         The Company believes that cash on hand, cash derived from operations
and cash available through borrowings under its credit facilities will be
sufficient to allow the Company to support its capital expenditure program and
to meet its foreseeable working capital needs.

YEAR 2000

The Company made substantial preparations for the Year 2000 (Y2K) issue, which
is the result of computer programs being written for, or microprocessors using,
two digits (rather than four) to define the applicable year. Company computer
programs that have date-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000, which could result in system failures
or miscalculations. The vast majority of the products produced by the Company
are unaffected by the Y2K issue, because they do not contain microprocessors.

Based on the information to date, the Company has not experienced any
significant events attributable to the Y2K issue. The Company will continue to
monitor its internal systems for any potential problems and it believes that if
any Y2K problem were to arise at this point, the impact would be immaterial and
short-lived.

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 is effective for
transactions

                                       8


<PAGE>

entered into after January 1, 2001 and requires that all derivative instruments
be recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of the hedge
transaction and the type of hedge transaction. The ineffective portion of all
hedges will be recognized in earnings. The Company is in the process of
reviewing SFAS 133 to determine what impact, if any, the adoption of SFAS 133
will have on its results of operations and its financial position. Based on
current market conditions, the Company does not believe that the impact will be
material.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risks, which include changes in U.S.
and international exchange rates, the prices of certain commodities and currency
rates as measured against the U.S. dollar and each other. The Company attempts
to reduce the risks related to foreign currency fluctuation by utilizing
financial instruments, pursuant to Company policy.

         The value of the U.S. dollar affects the Company's financial results.
Changes in exchange rates may positively or negatively affect the Company's
gross margins and operating expenses. The Company engages in hedging programs
aimed at limiting, in part, the impact of currency fluctuations. Using primarily
forward exchange contracts, the Company hedges some of those transactions that,
when remeasured according to generally accepted accounting principles, impact
the income statement. Factors that could impact the effectiveness of the
Company's programs include volatility of the currency markets and availability
of hedging instruments. All currency contracts that are entered into by the
Company are components of hedging programs and are entered into for the sole
purpose of hedging an existing or anticipated currency exposure, not for
speculation. The Company does not buy or sell financial instruments for trading
purposes. Although the Company maintains these programs to reduce the impact of
changes in currency exchange rates, when the U.S. dollar sustains a weakening
exchange rate against currencies in which the Company incurs costs, the
Company's costs are adversely affected. At year-end, the Company held open hedge
forward contracts to deliver approximately $507,000 of Japanese Yen. The
potential loss in value of the Company's net investment in foreign currency
forward contracts resulting from a hypothetical 10 percent adverse change in
foreign currency exchange rates at December 31, 1999 is approximately $56,000.



                                       9


<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
                                                                                       PAGE
                                                                                       ----
<S>                                                                                 <C>
  Report of Independent Certified Public Accountants                                     14

  Consolidated Balance Sheets as of December 31, 1999
    and 1998                                                                        15 - 16

  Consolidated Statements of Income for each of
    the three years ended December 31, 1999, 1998
    and 1997                                                                        17 - 18

  Consolidated Statements of Shareholders' Equity for
    each of the three years ended December 31, 1999,
    1998 and 1997                                                                        19

  Consolidated Statements of Cash Flows for each of
    the three years ended December 31, 1999,
    1998 and 1997                                                                   20 - 21

  Notes to Consolidated Financial Statements                                        22 - 40

  Schedule II - Valuation and Qualifying Accounts for
    each of the three years ended December 31, 1999,
    1998 and 1997                                                                        43
</TABLE>




























                                       10


<PAGE>


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
and the Shareholders of
P & F Industries, Inc.
Farmingdale, New York

We have audited the accompanying consolidated balance sheets of P & F
Industries, Inc. and subsidiaries as of December 31, 1999 and 1998 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended December 31, 1999. We have also
audited the schedule listed in the accompanying index. These consolidated
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of P & F Industries,
Inc. and subsidiaries at December 31, 1999 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999 in conformity with generally accepted accounting principles.

Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.



/s/ BDO Seidman, LLP

BDO Seidman, LLP

New York, New York
March 7, 2000
                                       11


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     =======================================

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                ---------------------------
                  ASSETS                            1999           1998
                                                ------------   ------------
<S>                                             <C>            <C>
CURRENT:
  Cash                                          $  1,305,351   $  2,280,788
  Accounts receivable, less allowance
    for possible losses of $767,456
    and $498,669                                  12,086,000      8,542,204
  Inventories (Note 2)                            20,614,501     17,021,475
  Deferred income taxes (Note 8)                     532,000        507,000
  Prepaid expenses and other                         570,914        586,913
                                                ------------   ------------

         TOTAL CURRENT ASSETS                     35,108,766     28,938,380
                                                ------------   ------------

PROPERTY AND EQUIPMENT:
  Land                                             1,182,939      1,182,939
  Buildings and improvements                       5,942,838      5,773,608
  Machinery and equipment                         11,078,539      9,724,919
                                                ------------   ------------
                                                  18,204,316     16,681,466

  Less accumulated depreciation                    7,200,142      6,052,899
                                                ------------   ------------

         NET PROPERTY AND EQUIPMENT               11,004,174     10,628,567
                                                ------------   ------------
GOODWILL, net of accumulated
  amortization of $1,514,476
  and $1,190,040                                   7,950,482      8,274,918
                                                ------------   ------------

OTHER ASSETS                                         176,937        236,614
                                                ------------   ------------

                                                $ 54,240,359   $ 48,078,479
                                                ============   ============
</TABLE>



          See accompanying notes to consolidated financial statements.



                                       12


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     =======================================

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                ---------------------------
  LIABILITIES AND SHAREHOLDERS' EQUITY              1999           1998
                                                ------------   ------------
<S>                                             <C>            <C>
CURRENT LIABILITIES:
  Short-term borrowings                         $  6,000,000   $  3,500,000
  Accounts payable                                 5,592,249      4,844,403
  Accruals:
    Compensation                                   2,474,519      1,944,960
    Other                                          2,173,516      2,130,026
  Current maturities of long-term
    debt (Note 5)                                    947,884        524,974
                                                ------------   ------------
         TOTAL CURRENT LIABILITIES                17,188,168     12,944,363

LONG-TERM DEBT, less current
  maturities (Note 5)                              7,325,661     10,193,064
DEFERRED INCOME TAXES (Note 8)                       702,000        491,000
                                                ------------   ------------
         TOTAL LIABILITIES                        25,215,829     23,628,427
                                                ------------   ------------

COMMITMENTS AND CONTINGENCIES
  (Notes 3 and 10)

SHAREHOLDERS' EQUITY (Notes 6 and 7):
  Preferred stock - $10 par
    authorized - 2,000,000 shares;
    no shares outstanding                                 --             --
  Common stock:
    Class A - $1 par
     authorized - 7,000,000 shares;
     issued - 3,504,893 shares
     and 3,239,345 shares                          3,504,893      3,239,345
    Class B - $1 par
     authorized - 2,000,000 shares;
     no shares issued or outstanding                      --             --
  Additional paid-in capital                       8,282,602      8,020,677
  Retained earnings                               17,735,535     13,190,030
  Treasury stock,
    at cost (49,235 shares)                         (498,500)            --
                                                ------------   ------------
         TOTAL SHAREHOLDERS' EQUITY               29,024,530     24,450,052
                                                ------------   ------------

                                                $ 54,240,359   $ 48,078,479
                                                ============   ============
</TABLE>






          See accompanying notes to consolidated financial statements.

                                       13


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                     =======================================

<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                     ----------------------------------------
                                         1999          1998          1997
                                     ------------  ------------  ------------
<S>                                  <C>           <C>           <C>
REVENUES (Note 11):
  Net sales                          $ 81,936,434  $ 57,363,317  $ 49,605,480
  Other                                   764,006       802,398       421,467
                                     ------------  ------------  ------------
                                       82,700,440    58,165,715    50,026,947
                                     ------------  ------------  ------------

COSTS AND EXPENSES:
  Cost of sales                        57,168,846    37,534,815    33,535,035
  Selling, administrative
    and general                        16,944,706    13,332,424    11,573,473
  Interest                              1,389,383       772,035       693,660
                                     ------------  ------------  ------------
                                       75,502,935    51,639,274    45,802,168
                                     ------------  ------------  ------------

INCOME BEFORE TAXES ON INCOME           7,197,505     6,526,441     4,224,779

TAXES ON INCOME (Note 8)                2,652,000     2,583,000     1,711,000
                                     ------------  ------------  ------------

INCOME FROM CONTINUING OPERATIONS       4,545,505     3,943,441     2,513,779

INCOME FROM DISCONTINUED
  OPERATION (NET OF INCOME
  TAXES OF $850,000) (Note 9(b))               --            --       542,837
                                     ------------  ------------  ------------

NET INCOME                           $  4,545,505  $  3,943,441  $  3,056,616
                                     ============  ============  ============
</TABLE>



          See accompanying notes to consolidated financial statements.

                                       14


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (CONTINUED)
                     =======================================

<TABLE>
<CAPTION>
                                              YEAR ENDED DECEMBER 31,
                                     ----------------------------------------
                                         1999          1998          1997
                                     ------------  ------------  ------------
<S>                                  <C>           <C>           <C>
NET INCOME                           $  4,545,505  $  3,943,441  $  3,056,616
                                     ============  ============  ============
PREFERRED DIVIDENDS                  $         --  $         --  $     21,858
                                     ============  ============  ============
INCOME AVAILABLE TO
  COMMON SHAREHOLDERS                $  4,545,505  $  3,943,441  $  3,034,758
                                     ============  ============  ============

WEIGHTED AVERAGE COMMON SHARES
  OUTSTANDING:
    BASIC                               3,370,098     3,208,181     2,986,920
                                        =========     =========     =========
    DILUTED                             3,704,633     3,689,963     3,525,690
                                        =========     =========     =========

EARNINGS PER SHARE OF COMMON STOCK:
  BASIC:
    CONTINUING OPERATIONS                  $ 1.35        $ 1.23        $  .83
    DISCONTINUED OPERATION                     --            --           .18
                                           ------        ------        ------
    NET INCOME                             $ 1.35        $ 1.23        $ 1.01
                                           ======        ======        ======

  DILUTED:
    CONTINUING OPERATIONS                  $ 1.23        $ 1.07        $  .71
    DISCONTINUED OPERATION                     --            --           .15
                                           ------        ------        ------
    NET INCOME                             $ 1.23        $ 1.07        $  .86
                                           ======        ======        ======
</TABLE>












          See accompanying notes to consolidated financial statements.

                                       15


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                 ===============================================
<TABLE>
<CAPTION>
                                      PREFERRED STOCK         CLASS A COMMON
                                        - $10 PAR             STOCK - $1 PAR        ADDITIONAL                   TREASURY STOCK
YEARS ENDED DECEMBER 31,           --------------------   ----------------------     PAID-IN       RETAINED    -------------------
  1997, 1998 AND 1999               SHARES     AMOUNT       SHARES      AMOUNT       CAPITAL       EARNINGS     SHARES    AMOUNT
------------------------           -------  -----------   ---------  -----------   -----------   -----------   -------  ----------
<S>                                <C>      <C>           <C>        <C>           <C>           <C>                <C> <C>
BALANCE, January 1, 1997           263,345  $ 2,633,450   2,928,867  $ 2,928,867   $ 7,607,614   $ 6,211,831        --  $       --

  Net income for the year
    ended December 31, 1997             --           --          --           --            --     3,056,616        --          --

  Redemption of
    preferred stock               (263,345)  (2,633,450)         --           --            --            --        --          --

  Exercise of stock options
    and warrants                        --           --     172,978      172,978        87,625            --        --          --

  Tax benefit from exercise
    of stock options                    --           --          --           --        77,000            --        --          --

  Dividends on
    preferred stock                     --           --          --           --            --       (21,858)       --          --
                                   -------  -----------   ---------  -----------   -----------   -----------   -------  ----------
BALANCE, December 31, 1997              --           --   3,101,845    3,101,845     7,772,239     9,246,589        --          --

  Net income for the year
    ended December 31, 1998             --           --          --           --            --     3,943,441        --          --

  Exercise of stock options             --           --     137,500      137,500        91,438            --        --          --

  Tax benefit from exercise
    of stock options                    --           --          --           --       157,000            --        --          --
                                   -------  -----------   ---------  -----------   -----------   -----------   -------  ----------
BALANCE, December 31, 1998              --           --   3,239,345    3,239,345     8,020,677    13,190,030        --          --

  Net income for the year
    ended December 31, 1999             --           --          --           --            --     4,545,505        --          --

  Exercise of stock options             --           --     265,548      265,548       261,925            --        --          --

  Shares surrendered as
    payment for exercise
    of stock options                    --           --          --           --            --            --   (49,235)   (498,500)
                                   -------  -----------   ---------  -----------   -----------   -----------   -------  ----------

BALANCE, December 31, 1999              --  $        --   3,504,893  $ 3,504,893   $ 8,282,602   $17,735,535   (49,235) ($ 498,500)
                                   =======  ===========   =========  ===========   ===========   ===========   =======  ==========
</TABLE>








          See accompanying notes to consolidated financial statements.

                                       16


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     =======================================

<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                         ---------------------------------------
                                             1999          1998          1997
                                         -----------   -----------   -----------
<S>                                      <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                             $ 4,545,505   $ 3,943,441   $ 3,056,616
                                         -----------   -----------   -----------
  Adjustments to reconcile net income
    to net cash provided by (used in)
    operating activities:
      Depreciation                         1,240,600       795,198       661,275
      Amortization                           354,940       183,707       128,278
      Provision for losses on
        accounts receivable - net            268,787        18,776        77,327
      Deferred income taxes                  186,000       (95,000)      465,000
      Loss on disposal
        of fixed assets                       22,262            --            --
      (Gain) on disposal of fixed
        assets of discontinued
        operation                                 --            --    (1,392,837)
  Decrease (increase):
    Accounts receivable                   (3,812,583)    1,948,907    (1,889,009)
    Inventories                           (3,593,026)   (2,020,088)   (2,262,630)
    Prepaid expenses and other                15,999      (231,668)       76,406
    Other assets                              29,173         2,450       (56,400)
  Increase (decrease):
    Accounts payable                         747,846        12,250     1,378,536
    Accruals                                 573,049       850,407       461,149
                                         -----------   -----------   -----------
        Total adjustments                 (3,966,953)    1,464,939    (2,352,905)
                                         -----------   -----------   -----------
          Net cash provided by
           operating activities              578,552     5,408,380       703,711
                                         -----------   -----------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                    (1,646,999)   (1,415,999)     (652,223)
  Purchase of assets of Green
    Manufacturing, Inc.                           --   (10,284,685)           --
  Payments for acquisition-related
    expenses                                      --      (448,163)           --
  Proceeds from sale of fixed assets           8,530            --            --
  Proceeds from sale of fixed assets
    of discontinued operation                     --            --     1,724,564
                                         -----------   -----------   -----------
          Net cash (used in)
           provided by investing
           activities                     (1,638,469)  (12,148,847)    1,072,341
                                         -----------   -----------   -----------
</TABLE>






          See accompanying notes to consolidated financial statements.

                                       17


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (CONTINUED)
                     =======================================

<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                         ---------------------------------------
                                             1999          1998          1997
                                         -----------   -----------   -----------
<S>                                       <C>           <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings     12,500,000    16,253,023    19,088,495
  Repayments of short-term borrowings    (10,000,000)  (14,013,023)  (19,088,495)
  Proceeds from acquisition loan                  --    10,000,000            --
  Proceeds from mortgage refinancing       1,800,000            --            --
  Principal payments on long-term debt    (4,244,493)   (4,327,727)   (1,924,238)
  Redemption of subordinated debentures           --    (1,369,200)           --
  Proceeds from exercise of stock
    options and warrants                      28,973       228,938       260,603
  Tax benefit from exercise
    of stock options                              --       157,000        77,000
  Redemption of preferred stock                   --            --    (2,633,450)
  Dividends paid on preferred stock               --            --       (21,858)
                                         -----------   -----------   -----------
          Net cash (used in)
           provided by financing
           activities                         84,480     6,929,011    (4,241,943)
                                         -----------   -----------   -----------

NET INCREASE (DECREASE) IN CASH             (975,437)      188,544    (2,465,891)

CASH AT BEGINNING OF YEAR                  2,280,788     2,092,244     4,558,135
                                         -----------   -----------   -----------

CASH AT END OF YEAR                      $ 1,305,351   $ 2,280,788   $ 2,092,244
                                         ===========   ===========   ===========
</TABLE>




          See accompanying notes to consolidated financial statements.

                                       18



<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ==========================================

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

         The consolidated financial statements contained herein include the
accounts of P & F Industries, Inc. and its subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated.

         P & F Industries, Inc. conducts its business operations through three
wholly-owned subsidiaries. Embassy Industries, Inc. ("Embassy") is engaged in
the manufacture and sale of baseboard heating products and the importation and
sale of radiant heating systems. Embassy also imports a line of door and window
hardware items through its Franklin Hardware division. Florida Pneumatic
Manufacturing Corporation is engaged in the importation, manufacture and sale of
pneumatic hand tools, primarily for the industrial and retail markets, and the
importation and sale of compressor air filters. Florida Pneumatic also markets,
through its Berkley Tool division, a line of pipe cutting and threading tools,
wrenches and replacement electrical components for a widely used brand of pipe
cutting and threading machines. Green Manufacturing, Inc. ("Green") is engaged
primarily in the manufacture, development and sale of heavy-duty welded custom
designed hydraulic cylinders. Green also manufactures a line of access equipment
for the petro-chemical industry and a line of post hole digging equipment for
the agricultural industry. Note 11 presents financial information for the
segments of the Company's business.

BASIS OF FINANCIAL STATEMENT PRESENTATION

         In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

REVENUE RECOGNITION

         The Company records revenues when products are shipped.

FINANCIAL INSTRUMENTS

         The carrying amounts of financial instruments, including cash and
short-term debt, approximated fair value as of December 31, 1999 and 1998,
because of the relatively short-term maturity of these instruments. The carrying
value of long-term debt, including the current portion, approximated fair value
as of December 31, 1999 and 1998, based upon quoted market prices for the same
or similar debt issues.

         At December 31, 1999, the Company had foreign currency forward
contracts, maturing in 2000, to purchase approximately $507,000 in Japanese yen
at contracted forward rates.



                                       19


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

FINANCIAL INSTRUMENTS (continued)

         The Company enters into foreign currency forward contracts as a hedge
against foreign accounts payable. At December 31, 1999, gains and losses on such
contracts were included in the measurement of the related foreign currency
transactions and reflected in the cost of sales. The Company does not hold or
issue financial instruments for trading purposes.

INVENTORIES

         Inventories are valued at the lower of cost or market. Cost is
determined by the first-in, first-out method.

PROPERTY AND EQUIPMENT AND DEPRECIATION

         Property and equipment are stated at cost.

         Depreciation is computed by the straight-line method for financial
reporting purposes and by the straight-line and accelerated methods for income
tax purposes. The estimated useful lives for financial reporting purposes are as
follows:

           Buildings and improvements       10 - 30 years
           Machinery and equipment           3 - 12 years


LONG-LIVED ASSETS

         The Company reviews certain long-lived assets and identifiable
intangibles for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. In that regard, the Company
assesses the recoverability of such assets based upon estimated non-discounted
cash flow forecasts.

GOODWILL

         The excess of the purchase price over fair value of net assets of
acquired businesses arises from business combinations accounted for as purchases
and is amortized on a straight-line basis over periods from 25 to 40 years.

         The Company's operational policy for the assessment and measurement of
any impairment in the value of excess of cost over net assets acquired which is
other than temporary is to evaluate the recoverability and remaining life of its
goodwill and determine whether the goodwill should be completely or partially
written off or the amortization period accelerated. The Company will recognize
an impairment of goodwill if the fair value of the goodwill is deemed to be less
than its carrying value. If the Company determines that goodwill has been
impaired, the Company will reflect the impairment through a reduction in the
carrying value of goodwill, in an amount equal to the excess of the carrying
amount of the goodwill over the amount of the undiscounted estimated operating
cash flows.

                                       20


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                    =========================================

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

TAXES ON INCOME

         The Company files a consolidated Federal tax return. The parent company
and each of its subsidiaries file separate state and local tax returns.

         Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and any operating loss or tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of
any change in the tax rate is recognized in income in the period that includes
the enactment date of such change.

EARNINGS PER SHARE

         Basic earnings per share is based only on the average number of common
shares outstanding for the period. Diluted earnings per share reflects the
effect of common shares issuable upon the exercise of options, warrants and
convertible securities.

         Diluted earnings per share is computed using the treasury stock method.
Under this method, the aggregate number of shares outstanding reflects the
assumed use of proceeds from the hypothetical exercise of any outstanding
options or warrants to repurchase shares of common stock. The average market
value for the period is used as the assumed repurchase price.

STOCK-BASED COMPENSATION

         The Company accounts for its stock option awards under the intrinsic
value based method of accounting prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees". Under the intrinsic
value based method, compensation cost is the excess, if any, of the quoted
market price of the stock at grant date or other measurement date over the
amount an employee must pay to acquire the stock. The Company makes pro forma
disclosures of net income and earnings per share as if the fair value based
method of accounting had been applied, as required by Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation."

                                       21


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                    =========================================

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (continued)

NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 is effective for the
Company beginning January 1, 2001 and requires that all derivative instruments
be recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of the hedge
transaction and the type of hedge transaction. The ineffective portion of all
hedges will be recognized in earnings. The Company is in the process of
reviewing SFAS 133 to determine what impact, if any, the adoption of SFAS 133
will have on its results of operations and its financial position. Based on
current market conditions, the Company does not believe that the impact will be
material.

RECLASSIFICATIONS

         Certain prior year amounts have been reclassified to conform with the
current year's presentation.

NOTE 2 - INVENTORIES

         Inventories consist of:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                ---------------------------
                                                    1999           1998
                                                ------------   ------------
<S>                                             <C>            <C>
         Raw materials                          $  4,128,374   $  3,444,804
         Work-in-process                             812,929        435,453
         Finished goods                           15,673,198     13,141,218
                                                ------------   ------------
                                                $ 20,614,501   $ 17,021,475
                                                ============   ============
</TABLE>








                                       22


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                    =========================================

NOTE 3 - SHORT-TERM BORROWINGS

         The Company's credit agreement with a bank includes a revolving credit
loan facility which provides a total of $12,000,000, with various sublimits, for
direct borrowings, letters of credit, bankers' acceptances and equipment loans.
The credit agreement also includes a step-up period, from the date of renewal
through January 31, 2000, during which the total availability under the
revolving credit loan facility was increased to $17,000,000 to support the
buildup of inventory related to a significant new customer. At December 31,
1999, there was $6,000,000 outstanding against the revolving credit loan
facility. There was also a commitment of approximately $464,000 at December 31,
1999 for open letters of credit.

         The credit agreement also includes a foreign exchange line, which
provides for the availability of up to $10,000,000 in foreign currency forward
contracts. These contracts fix the exchange rate on future purchases of Japanese
yen needed for payments to foreign suppliers. The total amount of foreign
currency forward contracts outstanding at December 31, 1999 was approximately
$507,000.

         Direct borrowings under the Company's revolving credit loan facility
are secured by the accounts receivable, inventory and equipment of the Company
and are cross-guaranteed by each of the Company's subsidiaries. These borrowings
bear interest at either the prime interest rate or LIBOR plus 1.60%. The prime
interest rate at December 31, 1999 was 8.5% and LIBOR was approximately 5.8%.

         The Company's credit agreement is subject to annual review by the
lending bank. Under this agreement, the Company is required to adhere to certain
financial covenants. At December 31, 1999, and for the year then ended, the
Company satisfied all of these covenants.

     The maximum short-term borrowings outstanding at month-end during the years
ended December 31, 1999, 1998 and 1997 were approximately $13,000,000,
$3,610,000 and $4,250,000, respectively.

     The weighted average monthly balances for the years ended December 31,
1999, 1998 and 1997 were approximately $8,038,000, $4,656,000 and $1,920,000,
respectively. The weighted average interest rates of 7.3%, 7.5% and 8.5% for the
years ended December 31, 1999, 1998 and 1997, respectively, were calculated by
dividing the weighted average monthly interest expense by the weighted average
monthly balance.

NOTE 4 - SUBORDINATED DEBENTURES

         The Company's 13.75% Subordinated Debentures were unsecured general
obligations of the Company, subordinate to all senior indebtedness of the
Company. On January 30, 1998, the Company redeemed all of the outstanding
Debentures at 100% of the principal amount thereof, plus accrued and unpaid
interest to the redemption date.

         Interest expense on the Subordinated Debentures was $15,486 and
$188,265 for the years ended December 31, 1998 and 1997, respectively.

                                       23


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 5 - LONG-TERM DEBT

     Long-term debt consists of:

<TABLE>
<CAPTION>
                                                        DECEMBER 31,
                                                  -------------------------
                                                      1999          1998
                                                  -----------   -----------
<S>                                               <C>           <C>
 Term loan - principal amount outstanding
  at October 1, 1999 to be paid in equal
  monthly installments (plus interest at
  LIBOR plus 1.75%) through September 2005.(a)    $ 3,833,333   $ 6,000,000

 Mortgage loan - $17,438 payable monthly
  (plus interest at 8.16%) through May
  2006, when a final payment of approximately
  $1,435,000 is due.(b)                             1,884,993     1,938,054

 Mortgage loan - $16,370 payable monthly
  (plus interest at 7.09%) through
  February 2014.(b)                                 1,745,219            --

 Mortgage loan - $9,095 payable monthly
  (plus interest at 1/2% above prime)
  through February 1999, when a final
  payment of approximately $1,798,000
  was due. (b)(c)(d)                                       --     1,824,984

 Economic Development Revenue Bond
  -- payable yearly in various principal
  amounts (plus interest at variable rates)
  through November 2004 (e)                           810,000       955,000
                                                  -----------   -----------
                                                    8,273,545    10,718,038

 Less current maturities                              947,884       524,974
                                                  -----------   -----------
                                                  $ 7,325,661   $10,193,064
                                                  ===========   ===========
</TABLE>

----------
(a)      LIBOR at December 31, 1999 was approximately 5.8%.
(b)      These mortgages payable relate to the land and buildings of the
         Company's subsidiaries. Property with a net book value of approximately
         $5,121,000 is pledged as collateral.
(c)      The prime interest rate at December 31, 1999 was 8.5%. (d) This
         mortgage was refinanced in March 1999.
(e)      The interest rate at December 31, 1999 was 5.7%. This bond was secured
         by a standby letter of credit.

         The aggregate amounts of the long-term debt scheduled to mature in each
of the years ended December 31 are as follows: 2000 - $947,884; 2001 - $962,743;
2002 - $978,787; 2003 - $995,702; 2004 - $1,023,556; 2005 - $690,758; and 2006
and thereafter - $2,674,115. Interest expense on long-term debt was $653,297,
$528,824 and $478,229 for the years ended December 31, 1999, 1998 and 1997,
respectively.


                                       24


<PAGE>




                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 6 - CAPITAL STOCK TRANSACTIONS

         On June 1, 1999, an officer of the Company surrendered 49,235 shares of
Class A Common Stock, with a fair value of $498,500, in connection with the
exercise of stock options for 250,000 shares of Class A Common Stock.

         On January 30, 1997, the Company redeemed all of the outstanding shares
of its $1.00 Cumulative Preferred Stock at $10 per share.

         In 1994, in connection with its Stockholder Rights Plan, the Company
entered into a Rights Agreement (as amended) and distributed as a dividend to
each holder of Class A Common Stock a preferred stock purchase right. These
rights entitle the stockholders, in certain circumstances, to purchase one
one-thousandth of a share of the Company's Series A Junior Participating
Preferred Stock for $10. The Stockholder Rights Plan is intended to protect,
among other things, the interests of the Company's stockholders in the event the
Company is confronted with coercive or unfair takeover tactics.

NOTE 7 - STOCK OPTIONS AND WARRANTS

         In 1992, the Company adopted its Incentive Stock Option Plan (as
amended) (the "Plan"), which authorizes the issuance, to employees and
directors, of options to purchase a maximum of 1,100,000 shares of Class A
Common Stock. These options must be issued within ten years of the effective
date of the Plan and are exercisable for a ten year period from the date of
grant at prices not less than 100% of the market value of the Class A Common
Stock on the date the option is granted. Options granted to any 10% stockholder
are exercisable for a five year period from the date of the grant at prices not
less than 110% of the market value of the common stock on the date the option is
granted.

         The Company applies the Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees" ("APB Opinion 25"), and related
interpretations in accounting for the Plan. Under APB Opinion 25, no
compensation cost is recognized if the exercise price of the Company's employee
stock options is equal to or greater than the market price of the underlying
stock on the date of the grant.

         Statement of Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation", requires the Company to provide pro
forma information regarding net income and earnings per share as if compensation
cost for the Company's stock option plan had been determined in accordance with
the fair value method prescribed by SFAS 123. The Company estimates the fair
value of each stock option at the grant date by using the Black-Scholes
option-pricing model with the following weighted-average assumptions for options
granted in 1999, 1998 and 1997, respectively: no dividends paid for any of these
years; expected volatility of 33.9%, 35.2% and 34.5%; risk-free interest rates
of 5.1%, 5.5% and 6.6%; and expected lives of 10.0 years, 9.7 years and 4.0
years.



                                       25


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 7 - STOCK OPTIONS AND WARRANTS (continued)

         The weighted-average fair values of options for which the exercise
price equaled the market price on the grant date were $4.97 in 1999, $4.53 in
1998 and $2.83 in 1997. The weighted-average fair values of options for which
the exercise price exceeded the market price on the grant date were $2.89 in
1998 and $1.98 in 1997.

         Under the provisions of SFAS 123, the Company's income from continuing
operations available to common shareholders and its basic and diluted earnings
per share would have decreased to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                   YEAR ENDED DECEMBER 31,
                                            ------------------------------------
                                               1999         1998         1997
                                            ----------   ----------   ----------
<S>                                         <C>          <C>          <C>
      Income from continuing operations
          available to common shareholders:
          As reported                       $4,545,505   $3,943,441   $2,491,921
          Pro forma                         $4,492,088   $3,485,588   $2,296,814

      Basic earnings per share:
          As reported                            $1.35        $1.23         $.83
          Pro forma                              $1.33        $1.09         $.77

      Diluted earnings per share:
          As reported                            $1.23        $1.07         $.71
          Pro forma                              $1.21        $ .94         $.65
</TABLE>

         The following table contains information on stock options for the three
years ended December 31, 1999:

<TABLE>
<CAPTION>
                                                          EXERCISE     WEIGHTED
                                                            PRICE       AVERAGE
                                             OPTION         RANGE      EXERCISE
                                             SHARES       PER SHARE      PRICE

                                          -------------------------------------

<S>                                       <C>         <C>       <C>      <C>
         Outstanding, January 1, 1997     $ 741,200   $ 1.44 to 2.61     1.85
         Granted                            147,800     3.75 to 5.71     5.33
         Exercised                         (103,000)    1.50 to 1.88     1.51
                                          ---------

         Outstanding, December 31, 1997     786,000     1.44 to 5.71     2.55
         Granted                            171,500     7.88 to 8.66     7.93
         Exercised                         (137,500)    1.50 to 1.94     1.67
                                          ---------

         Outstanding, December 31, 1998     820,000     1.44 to 8.66     3.82
         Granted                             17,000     8.94 to 9.00     8.96
         Exercised                         (265,600)    1.81 to 1.99     1.99
                                          ---------

         Outstanding, December 31, 1999     571,400     1.44 to 9.00     4.83
                                          =========
</TABLE>
                                       26


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 7 - STOCK OPTIONS AND WARRANTS (continued)

         There were options available for issuance under the Plan as of December
31 of each year as follows: 1997 - 548,700; 1998 - 377,200; and 1999 - 360,200.
Of the 571,400 options outstanding at December 31, 1999, 452,300 options were
issued under the Plan and 119,100 options were issued under a previous plan.

         The following table summarizes information about stock options
outstanding and exercisable at December 31, 1999:

<TABLE>
<CAPTION>
                                 WEIGHTED
                                  AVERAGE      WEIGHTED                 WEIGHTED
                                 REMAINING      AVERAGE                  AVERAGE
   RANGE OF                     CONTRACTUAL    EXERCISE                 EXERCISE
EXERCISE PRICES   OUTSTANDING   LIFE (YEARS)     PRICE    EXERCISABLE     PRICE
---------------   -----------   ------------   --------   -----------   --------
<S>                <C>          <C>              <C>     <C>              <C>
$ 1.50 to 2.61      169,100          .6          $2.01    $ 169,100       $2.01

      5.71           17,500         2.4           5.71       17,500        5.71

      5.71           52,500         2.4           5.71           --          --

      8.66           11,500         3.2           8.66           --          --

      1.44           15,000         3.6           1.44       15,000        1.44

      1.94           51,000         5.0           1.94       51,000        1.94

  3.75 to 5.25       77,800         7.2           5.00       77,800        5.00

      7.88          160,000         8.2           7.88      160,000        7.88

  8.94 to 9.00       17,000         9.2           8.96       17,000        8.96
                    -------                                 -------
  1.44 to 9.00      571,400         4.6           4.83      507,400        4.65
                    =======                                 =======
</TABLE>
                                       27


<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 8 - TAXES ON INCOME

         Provisions for taxes on income in the consolidated statements of income
consist of:

<TABLE>
<CAPTION>
                                                YEAR ENDED DECEMBER 31,
                                          ----------------------------------
                                             1999        1998        1997
                                          ----------  ----------  ----------
<S>                                       <C>         <C>         <C>
     Continuing operations:
       Current:
         Federal                          $2,262,000  $2,476,000  $1,520,000
         State and local                     204,000     202,000     112,000
                                          ----------  ----------  ----------
           Total current                   2,466,000   2,678,000   1,632,000
                                          ----------  ----------  ----------
       Deferred:
         Federal                             170,000     (90,000)     38,000
         State and local                      16,000      (5,000)     41,000
                                          ----------  ----------  ----------
           Total deferred                    186,000     (95,000)     79,000
                                          ----------  ----------  ----------
       Taxes on income from
         continuing operations             2,652,000   2,583,000   1,711,000
                                          ----------  ----------  ----------

     Discontinued operation:
       Current:
         Federal                                  --          --     464,000
         State and local                          --          --          --
                                          ----------  ----------  ----------
           Total current                          --          --     464,000
                                          ----------  ----------  ----------
       Deferred:
         Federal                                  --          --     117,000
         State and local                          --          --     269,000
                                          ----------  ----------  ----------
           Total deferred                         --          --     386,000
                                          ----------  ----------  ----------
       Taxes on income from
         discontinued operation                   --          --     850,000
                                          ----------  ----------  ----------

       Total taxes on income              $2,652,000  $2,583,000  $2,561,000
                                          ==========  ==========  ==========
</TABLE>
                                       28


<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 8 - TAXES ON INCOME (continued)

         Deferred tax assets (liabilities) consist of:

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                      --------------------
                                                        1999        1998
                                                      --------    --------
<S>                                                   <C>         <C>
       Current deferred tax assets:
         Bad debt reserves                            $145,000    $131,000
         Warranty and other reserves                   387,000     376,000
                                                      --------    --------
                                                      $532,000    $507,000
                                                      ========    ========

       Non-current deferred tax liabilities:
           Depreciation                              ($635,000)   ($474,000)
           Goodwill                                    (67,000)     (17,000)
                                                     ---------    ---------
                                                     ($702,000)   ($491,000)
                                                     =========    =========
</TABLE>


     A reconciliation of the Federal statutory rate to the total effective tax
rate applicable to income before taxes on income is as follows:

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                             -------------------------------------------------
                                   1999              1998              1997
                             ---------------   ---------------   ---------------
                                 $       %         $       %         $       %
                             ---------  ----   ---------  ----   ---------  ----
<S>                          <C>        <C>    <C>        <C>    <C>        <C>
 Federal income
  taxes computed at
  statutory rates            2,447,000  34.0   2,219,000  34.0   1,910,000  34.0

 Increase in taxes resulting from:
   State and local taxes,
    net of Federal tax
    benefit                    135,000   1.9     128,000   2.0     384,000   6.9

   Expenses not deductible
     for tax purposes          110,000   1.5      97,000   1.5     100,000   1.7

   Other                       (40,000)  (.6)    139,000   2.1     167,000   3.0
                             ---------  ----   ---------  ----   ---------  ----

 Taxes on income             2,652,000  36.8   2,583,000  39.6   2,561,000  45.6
                             =========  ====   =========  ====   =========  ====
</TABLE>




                                       29


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 9 - ACQUISITION AND DISCONTINUED OPERATION

(a) Acquisition

         On September 16, 1998, the Company acquired certain assets, including
cash totalling $215,315, and assumed certain liabilities of Green Manufacturing,
Inc., a manufacturer of custom-engineered hydraulic cylinders, prefabricated
stairways and platforms and tractor-mounted post hole diggers. The purchase
price for the acquisition was $10,500,000 in cash, $10,000,000 of which was
provided by an acquisition loan made pursuant to the Company's credit agreement
and $500,000 of which was provided by working capital funds.

         As part of the acquisition, the Company assumed $1,095,000 of
outstanding Economic Development Revenue Bonds issued by Wood County, Ohio and
$1,260,000 in short-term borrowings from a bank.

         The acquisition has been accounted for using the purchase method of
accounting and, accordingly, the accompanying consolidated financial statements
include the results of operations of the acquired company only from the date of
acquisition. The excess of acquisition costs over the fair value of net assets
acquired is included in the accompanying balance sheets as "Goodwill". Also
included in "Goodwill" are costs totalling $448,163 incurred in connection with
the acquisition.

         The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company and Green, as though the
acquisition had been made January 1, 1997. The pro forma amounts give effect to
adjustments for amortization of goodwill, interest expense and income taxes. The
pro forma amounts presented are not necessarily indicative of future operating
results.

<TABLE>
<CAPTION>
                                        YEAR ENDED DECEMBER 31,
                               ---------------------------------------
                                   1999          1998          1997
                               -----------   -----------   -----------
<S>                            <C>           <C>           <C>
   Revenues                    $82,700,440   $72,082,186   $68,246,335
                               ===========   ===========   ===========
   Net income from
     continuing operations
     available to common
     shareholders              $ 4,545,505   $ 4,013,224   $ 2,576,074
                               ===========   ===========   ===========


   Earnings per share of
     common stock from
     continuing operations:
       Basic                        $ 1.35        $ 1.25         $ .86
                                    ======        ======         =====

       Diluted                      $ 1.23        $ 1.08         $ .73
                                    ======        ======         =====
</TABLE>





                                       30


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 9 - ACQUISITION AND DISCONTINUED OPERATION (continued)

(b) Discontinued operation

         In 1994, the Company sold substantially all of the assets and
liabilities of Triangle Sheet Metal Works, Inc. ("Triangle"), its sheet metal
contracting subsidiary. The assets sold did not include Triangle's land,
building and building improvements. As part of the sale agreement, the Company
leased this building to the acquirer. In August 1997, the Company sold the land
and building to the acquirer for approximately $1,766,000. The Company realized
a gain of $542,837 on the sale, net of related taxes.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

         (a) The Company and two of its subsidiaries have adopted a defined
contribution pension plan, which covers substantially all non-union employees.
Contributions to this plan were determined as a percentage of compensation. The
amounts recognized as pension expense for this plan were approximately $312,000,
$278,000 and $258,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.

         In conjunction with the acquisition of Green, the Company acquired a
defined contribution 401(k) plan, which covers all of Green's employees.
Employer contributions to this plan were determined as a percentage of employee
contributions. The amounts recognized as expense for this plan were
approximately $62,000 for the year ended December 31, 1999 and approximately
$26,000 for the period from the date of acquisition to December 31, 1998.

         One of the Company's subsidiaries also participates in a multi-employer
pension plan. This plan provides defined benefits to all union workers.
Contributions to this plan are determined by union contracts and the Company
does not administer or control the funds in any way. The amounts recognized as
pension expense for this plan were approximately $32,000, $29,000 and $29,000
for the years ended December 31, 1999, 1998 and 1997, respectively.

         (b) The Company has an employment agreement with an officer. This
agreement currently provides for a minimum annual aggregate salary of $610,000
through February 2004. This agreement provides that if a change in control of
the Company occurs and, as a result, the officer is terminated or is unable to
exercise his functions and duties and therefore resigns, he shall have the
option to receive either full compensation for the remaining term of the
agreement or a severance allowance equal to three times average annual
compensation for the five previous years.

         (c) Florida Pneumatic purchases significant amounts of pneumatic tools
from two foreign suppliers. Other sources are available. However, the loss of
either supplier could cause a temporary disruption in the flow of products,
possibly creating an adverse effect on operating results.

         (d) Green purchases significant amounts of raw materials from one
supplier. Other sources are available. The Company believes that the loss of
this supplier would not cause any disruption in the flow of products or have an
adverse effect on operating results.



                                       31


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 11 - SEGMENTS OF BUSINESS

         The Company currently operates four business segments: pneumatic tools
and related equipment, hydraulic cylinders, heating equipment and hardware. The
accounting policies of each of the segments are the same as those described in
Note 1. The Company evaluates segment performance based on operating income.

         The following presents financial information by segment for the years
ended December 31, 1999, 1998 and 1997. Operating income excludes general
corporate expenses, interest expense and income taxes. Identifiable assets are
those assets directly owned or utilized by the particular business segment.

<TABLE>
<CAPTION>
                                       PNEUMATIC
 (IN THOUSANDS)                        TOOLS AND
                              CON-      RELATED     HYDRAULIC     HEATING
      1999                 SOLIDATED   EQUIPMENT    CYLINDERS    EQUIPMENT    HARDWARE
      ----                 ---------   ---------    ---------    ---------    --------
<S>                        <C>         <C>          <C>          <C>          <C>
 Revenues from
   external customers      $  82,700   $  46,708    $  20,612    $   9,843    $  5,537
                           =========   =========    =========    =========    ========

 Operating income          $  11,736   $   9,304    $   1,208    $     718    $    506
 General corporate                     =========    =========    ========     ========
   expense                    (3,149)
 Interest expense             (1,389)
                           ---------
 Income before
   taxes on income         $   7,198
                           =========

 Identifiable assets at
   December 31, 1999       $  52,066   $  31,127    $  14,563    $   4,031    $  2,345
 Corporate assets              2,174   =========    =========    =========    ========
                           ---------
 Total assets at
   December 31, 1999       $  54,240
                           =========


 Depreciation (including
  $13 corporate)           $   1,241   $     440    $     528    $     230    $     30
                           =========   =========    =========    =========    ========

 Amortization              $     355   $     109    $     240    $       6    $     --
                           =========   =========    =========    =========    ========

 Capital expenditures
   (including $7
      corporate)           $   1,647   $     867    $     773    $      --    $     --
                           =========   =========    =========    =========    ========
</TABLE>

                                       32


<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 11 - SEGMENTS OF BUSINESS (continued)

<TABLE>
<CAPTION>
                                  PNEUMATIC
 (IN THOUSANDS)                   TOOLS AND
                          CON-     RELATED   HYDRAULIC   HEATING
      1998             SOLIDATED  EQUIPMENT  CYLINDERS  EQUIPMENT  HARDWARE
      ----             ---------  ---------  ---------  ---------  --------
<S>                    <C>        <C>        <C>        <C>        <C>
 Revenues from
   external customers  $  58,166  $  37,806  $   6,585  $   9,424  $  4,351
                       =========  =========  =========  =========  ========

 Operating income      $   9,770  $   8,410  $     417  $     471  $    472
 General corporate                =========  =========  =========  ========
   expense                (2,472)
 Interest expense           (772)
                       ---------
 Income before
   taxes on income     $   6,526

                       =========
 Identifiable assets at
   December 31, 1998   $  44,342  $  22,672  $  14,225  $   5,013  $  2,432
 Corporate assets          3,736  =========  =========  =========  ========
                       ---------
 Total assets at
   December 31, 1998   $  48,078
                       =========

 Depreciation (including
  $7 corporate)        $     795  $     419  $     111  $     238  $     20
                       =========  =========  =========  =========  ========

 Amortization          $     184  $     112  $      66  $       6  $     --
                       =========  =========  =========  =========  ========

 Capital expenditures
   (including $29
      corporate)       $   1,416  $     383  $     397  $     607  $     --
                       =========  =========  =========  =========  ========
</TABLE>




                                       33


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 11 - SEGMENTS OF BUSINESS (continued)

<TABLE>
<CAPTION>
                                           PNEUMATIC
 (IN THOUSANDS)                            TOOLS AND
                                   CON-     RELATED    HEATING
       1997                     SOLIDATED  EQUIPMENT  EQUIPMENT  HARDWARE
       ----                     ---------  ---------  ---------  --------
<S>                              <C>       <C>        <C>        <C>
  Revenues from
    external customers           $ 50,027  $  37,486  $   8,343  $  4,198
                                 ========  =========  =========  ========

  Operating income               $  7,337  $   6,488  $     420  $    429
  General corporate                        =========  =========  ========
    expense                        (2,418)
  Interest expense                   (694)
                                 --------
  Income before
    taxes on income              $  4,225
                                 ========

  Identifiable assets at
    December 31, 1997            $ 29,833  $  22,629  $   5,115  $  2,089
  Corporate assets                  2,816  =========  =========  ========
                                 --------
  Total assets at
    December 31, 1997            $ 32,649
                                 ========

  Depreciation
    (including $23 corporate)    $    661    $   387   $    231  $     20
                                 ========  =========  =========  ========

  Amortization                   $    128    $   122   $      6  $     --
                                 ========  =========  =========  ========

  Capital expenditures
    (including $2 corporate)     $    652    $   486   $    164  $     --
                                 ========  =========  =========  ========
</TABLE>

         The heating equipment segment, which sells to plumbing supply houses
primarily in the northern tier of the United States, is directly affected by the
housing industry. The pneumatic tools, hydraulic cylinders and hardware segments
sell primarily throughout the United States.

         The pneumatic tools segment has two customers that accounted for 24.7%,
35.7% and 45.4% and 7.7%, 10.1% and 9.1%, respectively, of consolidated revenues
for the years ended December 31, 1999, 1998 and 1997, respectively. These two
customers also accounted for 37.6% and 25.5% of consolidated accounts receivable
as of December 31, 1999 and 1998, respectively. A third customer, a customer of
both the pneumatic tools segment and the hardware segment, accounted for 10.1%
of consolidated revenues for the year ended December 31, 1999 and 13.2% of
consolidated accounts receivable as of December 31, 1999. There were no other
major customers requiring disclosure.



                                       34


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 12 - UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION

         Unaudited interim consolidated financial information for the two years
ended December 31, 1999 and 1998 is summarized as follows:

<TABLE>
<CAPTION>
                                              QUARTER  ENDED
                           ----------------------------------------------------
                            MARCH 31,    JUNE 30,   SEPTEMBER 30,  DECEMBER 31,
                           ----------   ----------  -------------  ------------
    1999                        $            $              $             $
    ----
<S>                        <C>          <C>            <C>           <C>
  Revenues                 18,108,268   17,092,157     20,358,379    27,141,636
                           ==========   ==========     ==========    ==========

  Gross profit              5,562,207    5,433,028      6,330,645     8,205,714
                           ==========   ==========     ==========    ==========

  Net income                  961,407      754,024      1,233,942     1,596,132
                           ==========   ==========     ==========    ==========

  Earnings per share
   of common stock:
      Basic                       .30          .23            .35           .46
                                  ===          ===            ===           ===
      Diluted                     .26          .20            .33           .44
                                  ===          ===            ===           ===
</TABLE>

<TABLE>
<CAPTION>
    1998                        $            $              $             $
    ----
<S>                        <C>          <C>            <C>           <C>
  Revenues                 12,541,124   11,997,372     14,118,689    19,508,530
                           ==========   ==========     ==========    ==========

  Gross profit              4,681,236    4,830,800      5,361,648     5,757,216
                           ==========   ==========     ==========    ==========

  Net income                  780,869      950,009      1,220,719       991,844
                           ==========   ==========     ==========    ==========

  Earnings per share
   of common stock:
      Basic                       .25          .29            .38           .31
                                  ===          ===            ===           ===
      Diluted                     .22          .25            .33           .27
                                  ===          ===            ===           ===
</TABLE>


                                       35


<PAGE>




                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 13 - EARNINGS PER SHARE

         The following table sets forth the computation of basic and diluted
earnings per common share from continuing operations:

<TABLE>
<CAPTION>
                                                  YEAR ENDED DECEMBER 31,
                                           ------------------------------------
                                              1999         1997         1996
                                              ----         ----         ----
<S>                                        <C>          <C>          <C>
 Numerator:
   Net income from continuing operations   $4,545,505   $3,943,441   $2,513,779
   Dividends on preferred stock                    --           --      (21,858)
                                           ----------   ----------   ----------
   Numerator for basic and diluted
     earnings per common share - income
     from continuing operations available
     to common shareholders                $4,545,505   $3,943,441   $2,491,921
                                           ==========   ==========   ==========


 Denominator:
   Denominator for basic earnings
     per share - weighted average
     common shares outstanding              3,370,098    3,208,181    2,986,920

   Effect of dilutive securities:
     Common stock options                     334,535      481,782      538,770
                                           ----------   ----------   ----------
   Denominator for diluted earnings
     per share - adjusted weighted
     average common shares and
     assumed conversions                    3,704,633    3,689,963    3,525,690
                                           ==========   ==========   ==========

 Basic earnings per common share
   from continuing operations                  $ 1.35       $ 1.23        $ .83
                                               ======      =======        =====

 Diluted earnings per common share
   from continuing operations                  $ 1.23       $ 1.07        $ .71
                                               ======       ======        =====
</TABLE>



                                       36


<PAGE>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)
                   ==========================================

NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION

         Cash paid during the year for:

<TABLE>
<CAPTION>
                                            YEAR ENDED DECEMBER 31,
                                    -------------------------------------
                                        1999         1998         1997
                                    -----------  -----------  -----------
<S>                                 <C>          <C>          <C>
        Interest                    $ 1,400,165  $   673,814  $   818,552
                                    ===========  ===========  ===========

        Income taxes                $ 2,414,890  $ 2,539,601  $ 2,113,329
                                    ===========  ===========  ===========

        Accruals included in
          gain on sale of fixed
          assets of discontinued
          operation                 $        --  $        --  $   218,894
                                    ===========  ===========  ===========
</TABLE>


         The Company received 49,235 shares of Class A Common Stock in
connection with the exercise of stock options by an officer of the Company. The
value of these shares was recorded at $498,500.


                                       37


<PAGE>



PART II (continued)

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

        None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information relating to the directors and executive officers of the
Registrant is set forth in the Registrant's definitive Proxy Statement for its
2000 Annual Meeting of Stockholders (the "Proxy Statement") to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended, and is hereby incorporated by reference.

ITEM 11. EXECUTIVE COMPENSATION

         Information relating to executive compensation is set forth in the
Proxy Statement to be filed with the Securities and Exchange Commission pursuant
to Regulation 14A of the Securities Exchange Act of 1934, as amended, and is
hereby incorporated by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Information relating to the security ownership of certain beneficial
owners and management is set forth in the Proxy Statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended, and is hereby incorporated by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Information relating to certain relationships and related transactions
is set forth in the Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934, as
amended, and is hereby incorporated by reference.



                                       38


<PAGE>



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
         AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
                                                                                                  PAGE
                                                                                                  ----
<S>                                                                                               <C>
(a)      Financial statements and financial statement schedules

         (1) The consolidated financial statements of the Registrant as set
         forth under Item 8 are filed as part of this report.

         (2) The following consolidated financial statement schedule for the
         three years ended December 31, 1999, 1998 and 1997 is filed as part of
         this report:

               Schedule II - Valuation and Qualifying Accounts                                   43

              All other schedules are omitted because they are not required, are not
         applicable, or the required information is otherwise shown in the financial
         statements or notes thereto.

         (3) The following exhibits are filed as part of this report:

               See "Exhibit Index" immediately following the signature
               page.                                                                             45 - 46

(b)      Reports on Form 8-K.

           No reports on Form 8-K were filed by the Registrant during the
           quarter ended December 31, 1999.
</TABLE>



                                       39


<PAGE>




                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                                   SCHEDULE II

                        VALUATION AND QUALIFYING ACCOUNTS
                     =======================================

<TABLE>
<CAPTION>
           COLUMN A                 COLUMN B            COLUMN C            COLUMN D      COLUMN E
           --------                ----------   -----------------------   -----------    ----------
                                                       ADDITIONS
                                                -----------------------
                                                  CHARGED
                                   BALANCE AT    TO COSTS     CHARGED                      BALANCE
                                   BEGINNING        AND       TO OTHER                      AT END
         DESCRIPTION               OF PERIOD     EXPENSES     ACCOUNTS     DEDUCTIONS     OF PERIOD
         -----------               ----------   ----------   ----------    ----------    ----------
<S>                                <C>          <C>          <C>           <C>           <C>
Year ended December 31, 1999:
  Allowance for possible losses    $  498,669   $  339,743   $       --    $   70,956(b) $  767,456
                                   ==========   ==========   ==========    ==========    ==========

Year ended December 31, 1998:
  Allowance for possible losses    $  421,014   $   18,776   $  177,517(a) $  118,638(b) $  498,669
                                   ==========   ==========   ==========    ==========    ==========

Year ended December 31, 1997:
  Allowance for possible losses    $  370,410   $   77,327  $        --    $   26,723(b) $  421,014
                                   ==========   ==========   ==========    ==========    ==========
</TABLE>


-----------------
(a) Amount received as part of purchase of net assets of Green
    Manufacturing, Inc.

(b) Write-off of expenses against reserve.

                                       40


<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                             P & F INDUSTRIES, INC.
                                  (Registrant)

By:   /s/ RICHARD A. HOROWITZ        By:   /s/ JOSEPH A. MOLINO, JR.

   ------------------------------       ------------------------------
        Richard A. Horowitz                  Joseph A. Molino, Jr.
       Chairman of the Board                     Vice President
             President                      Principal Financial and
    Principal Executive Officer                Accounting Officer
    Principal Operating Officer

Date: March 17, 2000

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

/s/ ROBERT L. DUBOFSKY                /s/ ALAN GOLDBERG
--------------------------------      --------------------------------
Robert L. Dubofsky, Director          Alan Goldberg, Director

/s/ RICHARD A. HOROWITZ               /s/ SIDNEY HOROWITZ
--------------------------------      --------------------------------
Richard A. Horowitz, Director         Sidney Horowitz, Director

/s/ ARTHUR HUG, JR.                   /s/ DENNIS KALICK
--------------------------------      --------------------------------
Arthur Hug, Jr., Director             Dennis Kalick, Director

/s/ NEIL NOVIKOFF                     /s/ MARC A. UTAY
--------------------------------      --------------------------------
Neil Novikoff, Director               Marc A. Utay, Director



Date: March 17, 2000



                                       41


<PAGE>



                                  EXHIBIT INDEX

EXHIBIT
NO.

2.1      Asset Purchase Agreement, dated as of September 16, 1998, by and
         between Green Manufacturing, Inc., an Ohio corporation, and the
         Registrant (Incorporated by reference to Exhibit 2.1 of the
         Registrant's Current Report on Form 8-K dated September 16, 1998).
         Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant agrees to
         furnish supplementally a copy of any exhibit or schedule omitted from
         the Asset Purchase Agreement to the Commission upon request.

3.1      Restated Certificate of Incorporation of the Registrant.

3.2      Amended By-laws of the Registrant (Incorporated by reference to Exhibit
         3.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter
         ended September 30, 1999).

4.1      Rights Agreement, dated as of August 23, 1994, between the Registrant
         and American Stock Transfer & Trust Company, as Rights Agent
         (Incorporated by reference to Exhibit 1 to the Registrant's
         Registration Statement on Form 8-A dated August 24, 1994).

4.2      Amendment to Rights Agreement, dated as of April 11, 1997, between the
         Registrant and American Stock Transfer & Trust Company, as Rights Agent
         (Incorporated by reference to Exhibit 4.1 to the Registrant's Current
         Report on Form 8-K dated April 11, 1997).

4.3      Credit Agreement, dated as of July 23, 1998, by and among the
         Registrant, Florida Pneumatic Manufacturing Corporation, a Florida
         corporation, Embassy Industries, Inc., a New York corporation, and
         European American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.3 to the Registrant's Annual Report on Form
         10-K/A for the fiscal year ended December 31, 1998).

4.4      Amendment No. 1 to Credit Agreement, dated as of September 16, 1998, by
         and among the Registrant, Florida Pneumatic Manufacturing Corporation,
         a Florida corporation, Embassy Industries, Inc., a New York
         corporation, Green Manufacturing, Inc., a Delaware corporation, and
         European American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.4 to the Registrant's Annual Report on Form
         10-K/A for the fiscal year ended December 31, 1998).

4.5      Amendment No. 2 to Credit Agreement, dated as of July 28, 1999, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, and European
         American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.5 to the Registrant's Quarterly Report on Form
         10-Q for the quarter ended June 30, 1999).

4.6      Certain instruments defining the rights of holders of the long-term
         debt securities of the Registrant are omitted pursuant to Section
         (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant agrees to
         furnish supplementally copies of these instruments to the Commission
         upon request.



                                       42


<PAGE>



                                  EXHIBIT INDEX

(CONTINUED)
EXHIBIT
NO.

10.1     Amended and Restated Employment Agreement, dated as of May 28, 1997,
         between the Registrant and Richard A. Horowitz (Incorporated by
         reference to Exhibit 10.1 to the Registrant's Annual Report on Form
         10-K/A for the fiscal year ended December 31, 1998).

10.2     Consulting Agreement, effective as of November 1, 1998, between the
         Registrant and Sidney Horowitz (Incorporated by reference to Exhibit
         10.2 to the Registrant's Annual Report on Form 10-K/A for the fiscal
         year ended December 31, 1998).

10.3     1992 Incentive Stock Option Plan of the Registrant, as amended and
         restated as of March 13, 1997 (Incorporated by reference to Exhibit
         10.3 to the Registrant's Annual Report on Form 10-K/A for the fiscal
         year ended December 31, 1998).

21       Subsidiaries of the Registrant.

23       Consent of the Registrant's Independent Certified Public Accountants.

27       Financial Data Schedules (submitted to the Securities and Exchange
         Commission in electronic format).



                                       43