**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, 2007




OR





o
            TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934





For
      the
      transition period
      from          to





Commission
      File Number 000-25781









**STAMFORD
      INDUSTRIAL GROUP, INC.**


**(Exact
      Name of Registrant as Specified in its Charter)**









**Delaware**
            **41-1844584****(State
                or Other Jurisdiction**
            **(I.R.S.
                Employer Identification No.)****of
                Incorporation or Organization)****One
                Landmark Square, Stamford, Connecticut**
            **06901****(Address
                of Principal Executive Offices)**
            **(Zip
                Code)**




**(203)
      428-2200**


**(Registrant’s
      telephone number, including area code)**









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





**Title
                of each class**
            **Name
                of each exchange on which registered**None
            Not
                applicable





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





**Common
      Stock, par value $.0001 per share**


**(Title
      of class)**





**Preferred
      Stock Purchase Rights**


**(Title
      of class)**





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. YES o NO x





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Exchange Act.
      YES o NO x





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 12 months (or for such shorter period that the Registrant was required
      to file such reports), and (2) has been subject to such filing requirements
      for
      the past 90 days. YES x
      NO o





Indicate
      by check mark 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 the definitive proxy or information statement
      incorporated by reference in Part III
      of
      this Form 10-K or any amendment to this Form 10-K. x





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Large
      accelerated filer o Accelerated
      filer x Non-accelerated
      filer o





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





The
      aggregate market value of voting and non-voting stock held by non-affiliates
      of
      the Registrant, based upon the last sale price of the Registrant’s Common Stock,
      par value $0.0001 per share, reported on the OTC Pink Sheets Electronic
      Quotation Service on June 30, 2007 was $88,268,362.





As
      of
      March 14, 2008, there were outstanding 41,507,262 shares of the Registrant’s
      Common Stock, $0.0001 par value.





**DOCUMENT
      INCORPORATED BY REFERENCE**




Portions
      of our Proxy Statement for the 2008 Annual Meeting of Stockholders to be filed
      with the Securities and Exchange Commission within 120 days of the Registrant's
      2007 fiscal year end are incorporated by reference into Part III of this report.












**STAMFORD
      INDUSTRIAL GROUP, INC.**


**ANNUAL
      REPORT ON FORM 10-K**


**FOR
      THE YEAR ENDED DECEMBER 31, 2007**





**TABLE
      OF CONTENTS**





**Page****PART
                I**ITEM
                1.
            BUSINESS
            1ITEM
                1A.
            RISK
                FACTORS
            7ITEM
                1B.
            UNRESOLVED
                STAFF COMMENTS
            14ITEM
                2.
            PROPERTIES
            15ITEM
                3.
            LEGAL
                PROCEEDINGS
            15ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            16**PART
                II**ITEM
                5.
            MARKET
                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY SECURITIES
            17ITEM
                6.
            SELECTED
                CONSOLIDATED FINANCIAL DATA
            20ITEM
                7.
            MANAGEMENT'S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            21ITEM
                7A.
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            31ITEM
                8.
            FINANCIAL
                STATEMENTS
            33ITEM
                9.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            64ITEM
                9A.
            CONTROLS
                AND PROCEDURES
            64ITEM
                9B.
            OTHER
                INFORMATION
            65**PART
                III**ITEM
                10.
            DIRECTORS,
                EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            66ITEM
                11.
            EXECUTIVE
                COMPENSATION
            66ITEM
                12.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            66ITEM
                13.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
            66ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            66**PART
                IV**ITEM
                15.
            EXHIBITS,
                FINANCIAL STATEMENT SCHEDULES
            67**SIGNATURES**
            
            71**EXHIBIT
                INDEX**
            72











**FORWARD-LOOKING
      STATEMENTS**





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





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





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





**PART
      I**




**ITEM
      1. BUSINESS**





**Stamford
      Industrial Group**





**Overview**





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




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





1




**Industry
      Overview**





Management
      believes that the North American counterweight and related steel weldments
      industry, including captive in-house and independent operations, is worth over
      $350 million.




We
      believe that growth of the construction equipment markets we target will be
      driven by increasing demand for construction equipment and by increasing
      government spending. By 2009, it is estimated that non-residential and
      infrastructure construction spending in the United States will grow from
      approximately $660 billion today to more than $742 billion. We believe that
      these increased construction spending levels will drive higher demand for
      construction related equipment on which our counterweights are ultimately used.
      It is anticipated that as the United States’ highways and infrastructures
      continue to grow older, local, state and federal municipalities will be required
      to increase spending on repairing, maintaining and rebuilding such highways
      and
      infrastructures. The Company believes that U.S. federal government initiatives,
      such as the renewal of the six-year federal highway-funding plan, continue
      to
      provide favorable conditions for highway and infrastructure construction
      spending. For 2009, it is estimated that government spending on repairing and
      rebuilding infrastructures will grow from approximately $76 billion in 2007
      to
      more than $78 billion. It is expected that increased spending in government
      related construction and infrastructure programs should drive increased demand
      for construction related equipment, which should in turn increase demand for
      our
      counterweight products.




We
      believe that growth of the elevator industry we target will be driven by
      increasing demand for elevators. By 2009, it is estimated that global demand
      for
      elevator products and services will grow from approximately $50 billion today,
      to more than $60 billion. The increased growth in the elevator market is
      expected to result in increased growth in counterweights. Part of this growth
      is
      attributable to the low-rise elevator market segment (four floors or less)
      assessing a change in technology that may drive a switch from hydraulic
      elevators to traction or cable and weight. Management believes that this may
      increase the demand for elevator counterweights as a cost efficient
      substitution. This switch is primarily being driven by manufacturing and service
      cost considerations and environmental risk factors. Additionally, there are
      several other inter-related factors supporting growth within this industry,
      including demographic and socio-economic development, desire for efficient
      use
      of space, increasing movement of people and goods through airports and metros,
      and safety requirements.




**Growth
      Strategy**




*Acquire
      Complementary Businesses* .  The
      Company is working to build a diversified global industrial manufacturer through
      acquisitions that complement and diversify our existing business. The Company
      also intends to continue its program of targeted acquisitions, subject to the
      availability of financing, to gain access to new sales channels, acquire new
      product lines, increase penetration of our existing markets, and gain entry
      into
      new market sectors.




*Introduce
      New Products and Product Enhancements and Improve Manufacturing
      Operations* .  
      We are working to improve our manufacturing processes in an effort to improve
      cycle times and production and output consistency, reduce work-in-progress
      inventory and lower unit production costs. We believe that new product
      introductions and product enhancements and operational manufacturing
      improvements will further enhance growth and provide an advantage over our
      competitors in the future.




*Gain
      Access to New Sales Channels and Leverage Customer
      Relationships* .  
      We are focused on expanding our customer base and offering an increasing array
      of products and distribution channels to improve profitability. We believe
      this
      diversification will facilitate access to a new customer base for our historical
      products, as well as provide the opportunity to offer new products to our
      existing customers.




**Competitive
      Strengths**




*Cost
      Savings to Customers.* Concord
      has built its core business around being able to demonstrate manufacturing
      cost
      savings to customers that currently manufacture their counterweights in-house
      or
      purchase from less competitive external suppliers. In many cases, these
      manufacturers used less cost effective materials in their production than are
      used by Concord in the production of its counterweights. Management believes
      that the cost savings alternatives offered by Concord have led to increased
      outsourcing of counterweights by customers that have traditionally manufactured
      their counterweights in-house.




2




*Leadership
      Team* .  
      Our leadership team has been involved in the acquisition and integration of
      a
      substantial number of companies. Our Non-Executive Chairman of the Board of
      Directors, Warren B. Kanders, has extensive experience building public companies
      through strategic acquisitions to enhance organic growth. The Company’s Chief
      Executive Officer, Al Weggeman, has over 20 years of strategic and operational
      leadership experience in multinational industrial manufacturing companies,
      such
      as General Electric, Asea Brown Boveri Ltd., and Saint Gobain. Our Chief
      Financial Officer, Jon LaBarre, has more than 12 years of diverse financial
      management and executive leadership experience in the manufacturing, aerospace,
      specialty manufacturing, construction equipment and professional services
      industries.




*Service
      & Delivery* .  
      Concord has established itself as a high level service provider in terms of
      both
      service and delivery. The Company also works with its customers to develop
      more
      cost effective counterweight and weldment design options for their existing
      and
      new products. We believe that Concord’s manufacturing locations are also
      beneficial in terms of being able to provide its customers with cost effective
      and timely deliveries.




**Products
      and Services**




Concord
      primarily produces three styles of counterweights: profile cut, stack and weld,
      and box enclosures. Profile cut is the most prevalent method whereby the plate
      is cut into a specified configuration, de-slagged and staged. The counterweight
      can either be shipped in its original form or may require added processing
      (i.e.
      painting, drilling or shot blasting). Stack and weld products involve various
      pieces and shapes welded together to create the fabricated end-product. Box
      enclosures, mainly sold to crane OEMs, are fabricated and welded boxes filled
      with predetermined weights of material and closed with a welded lid. Profile
      cut
      products are typically individual counterweights or weldment components that
      are
      integrated into aerial work platforms, material telehandlers, and elevator
      OEMs.
      Stack and weld products are generally used in crane and heavy vehicle
      applications.




Concord
      also manufactures steel weldments in a variety of shapes and sizes as specified
      by its customers. Weldments are typically steel components that serve as both
      a
      counterweight and as part of the structure of an OEMs end product. Typical
      weldments could include vehicle body parts such as panels, bumpers, beams,
      and
      plates. Since weldments frequently serve the purpose of providing counterweight
      to a product, the Company typically refers to weldments as counterweights.





The
      following table shows Concord’s percentage of sales revenue by major product
      lines for 2007, 2006 and 2005:


**Percentage
                  of Revenue****Product
                  Line**
              
              **2007**
              
              **2006**
              
              **2005**Profile
                  Cut
              
              
              67
              %
              
              69
              %
              
              71
              %Box
                  Enclosure
              
              
              22
              
              
              18
              
              
              15Stack
                  and Weld
              
              
              4
              
              
              7
              
              
              9Other
              
              
              7
              
              
              6
              
              
              5Total
              
              
              100
              %
              
              100
              %
              
              100
              %





The
      majority of the products sold by Concord are processed. Concord uses techniques
      such as cutting to length, leveling, milling, boring, flame and laser cutting,
      fabricating, welding, polishing, shearing and grinding to process materials
      to
      specified thickness, length, width, shape and surface quality pursuant to
      specific customer orders.




The
      plate
      burning and fabrication processes are particularly important to the Company.
      These processes require sophisticated and expensive processing equipment. As
      a
      result, many OEMs have chosen not to make ongoing significant investments in
      such equipment and have increasingly outsourced these processes to specialty
      companies such as Concord.




As
      part
      of securing customer orders, Concord also provides technical services to its
      customers designed to assure cost effective product application while
      maintaining or improving the customer’s product quality. Concord’s services
      include: just-in-time inventory programs, production of kits containing multiple
      products for ease of assembly by the customer, and technical assistance.




3




**Customers**




In
      2007,
      the Company’s top three customers represented approximately 60% of our net
      revenue while our top 10 customers represented approximately 88% of net revenue.
      While past experience is not a guaranty of future results, Concord has
      maintained a consistent customer base, with the average customer relationship
      being approximately 10 years in duration for the top 10 customers and being
      approximately 15 years in duration for the top three customers. Many of
      Concord’s end customers are dependent on construction spending and the capital
      expenditures of national and global equipment rental companies, who acquire
      fleets of construction equipment to either lease or rent to construction
      companies. The Company has continued its efforts with developing and enhancing
      its sales and customer service relations personnel to grow and diversify its
      business. In 2007, this group penetrated new markets within the aircraft ground
      equipment, locomotive and construction markets.




The
      North
      American equipment rental industry has been consolidating since the mid-1990s,
      resulting in a number of larger national and regional companies. The
      consolidation in the equipment rental industry has contributed to a significant
      reduction in the number of equipment manufacturers as the larger equipment
      rental companies have sought to reduce the number of suppliers from which they
      purchase equipment. Since 1997, the number of significant North American and
      European broad-line aerial work platform manufacturers and telehandler
      manufacturers has decreased. Given that our counterweight products are used
      on
      the manufacturers’ end-product, management believes that this consolidation has
      significantly contributed to its customer consolidation as well. Concord’s
      customer base services a number of construction related end-markets, most of
      which are cyclical.




The
      following table shows Concord’s percentage of sales revenue by class of customer
      for 2007, 2006 and 2005:


**Percentage
                  of Revenue****Class
                  of Customer**
              
              **2007**
              
              **2006**
              
              **2005**Aerial
                  Work Platforms (AWP)
              
              
              47
              %
              
              47
              %
              
              48
              %Cranes
              
              
              22
              
              
              19
              
              
              15Elevator
              
              
              11
              
              
              13
              
              
              15Other
              
              
              20
              
              
              21
              
              
              22Total
              
              
              100
              %
              
              100
              %
              
              100
              %




**Sales,
      Marketing and Distribution**




The
      Company’s sales, marketing and distribution are managed by 8 sales
      representatives, which include technical personnel, who are regionally and
      nationally based. The Company’s sales representatives, who also develop
      advertising materials and schedule trade shows targeting industries serviced
      by
      Concord, have extensive knowledge of our product offerings and our customer
      base. The Company intends to manage its sales and marketing efforts in a unified
      effort, and it plans to leverage relationships to increase sales and utilize
      resources most effectively to increase the opportunity and visibility of its
      product offerings.





**Manufacturing
      and Sourcing**




The
      Company manufactures its products in its manufacturing facilities located in Warren,
      Ohio, Chicago Heights, Illinois and our newest facility in Essington,
      Pennsylvania. The Essington, Pennsylvania facility has continued to make good
      progress in its initial ramp-up and now operates with two full shifts and a
      partial third shift. The
      Company is
      currently in the process of working toward ISO compliance at these facilities;
      however, no assurance can be made that such compliance can be obtained and
      maintained. Concord has on occasion out-sourced select production operations
      in
      order to increase production capacity and maintain customer-shipping
      requirements.





**Competition**




The
      Company operates in the United States as a supplier of counterweights to
      multinational construction, maintenance, and industrial equipment OEM’s. Its
      competitors are primarily domestic and range from mid-size steel processors
      to
      small single-product niche manufacturers. Within this market, the Company faces
      competition principally from two mid-size counterweight manufacturers, as well
      as numerous other smaller niche manufacturers of competitive products. Certain
      of our competitors in the markets we compete in may have more resources and
      experience than us.




4




Management
      believes that competition from Chinese and other foreign-based competitors
      is
      prevalent for products sold within their local markets. However, given the
      high
      costs associated with shipping counterweights, imports to the United States
      from
      these foreign-based manufacturers remains minimal. As customers continually
      assess new materials and product designs and configurations, there is always
      a
      risk of counterweight products being developed by a lower cost overseas
      manufacturer.




**Suppliers**




In
      2007,
      the Company purchased approximately 244 million pounds of materials from
      several suppliers, including steel mills located throughout the United States
      and Canada. The Company’s top 10 suppliers accounted for approximately 92
      percent of 2007 purchase dollars. No supplier accounted for 30% or more of
      the
      2007 purchase dollars. The Company ’s
      primary raw material is secondary carbon steel plate. Secondary material is
      a
      steel mill product that typically is either dimensionally or materially
      non-conforming so the mill cannot sell it to its customers that require
      certified production material.




The
      Company purchases the majority of its inventories at prevailing market prices
      from key suppliers with which it has had long-standing, established
      relationships. The Company is generally able to meet its materials requirements
      because it uses many suppliers, there is a substantial overlap of product
      offerings from these suppliers, and there are a number of other suppliers able
      to provide identical or similar materials. Due to the competitive nature of
      the
      steel business, metal prices may increase as a result of product demand, mill
      surcharges, supplier consolidation or other factors that in turn lead to supply
      constraints or longer mill lead times, Concord may not be able to pass its
      increased material costs fully to customers. In recent years and continuing
      in
      2007, there have been significant consolidations among suppliers of carbon
      steel. This trend may lead to disruptions in the Company’s ability to meet its
      material requirements. The Company anticipates it will be able to meet its
      material requirements because it believes it has good relationships with its
      suppliers and believes it will continue to be among the largest customers of
      secondary steel from its suppliers. We cannot assure you that we will continue
      to maintain satisfactory terms with our suppliers. Our inability to maintain
      such terms, the loss of any of our key suppliers, or any other interruption
      or
      delay in the supply of our required materials, or our inability to obtain these
      materials at acceptable prices or within a reasonable amount of time could
      impair our ability to meet scheduled product deliveries to our customers and
      could hurt our reputation and cause customers to cancel orders.




**Environmental,
      Health and Safety Matters**




The
      Company’s operations are subject to many federal, state and local regulations
      relating to the protection of the environment and to workplace health and
      safety. In particular, its operations are subject to federal, state and local
      laws and regulations governing waste disposal, air and water emissions, the
      handling of hazardous substances, environmental protection, remediation,
      workplace exposure and other matters. Management believes that the Company’s
      operations are presently in substantial compliance with all such laws and does
      not presently anticipate that it will be required to expend any material amounts
      in the foreseeable future in order to meet present environmental, workplace
      health or safety requirements. However, additional costs and liabilities may
      be
      incurred to comply with future requirements, which costs and liabilities could
      have a material adverse effect on the Company’s results of operations, financial
      condition or cash flows. Some of the properties owned or leased by the Company
      are located in industrial areas or have a history of heavy industrial use.
      The
      Company may incur environmental liabilities with respect to these properties
      in
      the future that could have a material adverse effect on the Company’s financial
      condition or results of operations. See “Risk
      Factors - The Company could incur substantial costs in order to comply with,
      or
      to address any violations under, environmental laws that could significantly
      increase its operating expenses and reduce its operating income” for
      additional information.




**Patents
      and Trademarks**




The
      Company does not
      own any United States or foreign patents, trademarks or licenses that are
      material to its business. However, it does rely on certain data and processes,
      including trade secrets and know-how, and the success of our business depends,
      to some extent, on such information remaining confidential. Each of our
      executive officers is subject to a non-competition and confidentiality agreement
      that seeks to protect this information. The
      Company protects its trade secrets by, among other things, entering into
      confidentiality agreements with key employees regarding such matters and
      implementing measures to restrict access to sensitive data. While the Company
      considers all of its intellectual property rights as a whole to be important,
      it
      does not consider any single right to be essential to its operations as a
      whole.




**Employees**




As
      of
      December 31, 2007, the Company employed approximately 366 people in the
      United States, of whom 16 were office employees and approximately 350 were
      plant
      employees. Approximately 31% of our plant employees are members of the United
      Steelworkers Union. In December 2007, the employees of our Essington,
      P ennsylvania
      facility ratified a union contract effective February 1, 2008 with the United
      Steel, Paper and Forestry, Rubber, Manufacturing, Energy Allied Industrial
      and
      Service Workers International Union Local 404, of which approximately 90% of
      the
      employees at this facility are new members of the union. On August 31, 2008,
      a
      union contract covering approximately 100 employees at our Warren, Ohio facility
      will expire. The Company expects to begin negotiations sometime after the
      first quarter of 2008. We have not experienced a work stoppage during the past
      five years and management believes that our relationships with our employees
      and
      unions are satisfactory.




5


**Seasonal
      Nature of Business**




A
      portion
      of the Company’s customers experience seasonal slowdowns. The Company’s revenues
      in the months of July, November and December traditionally have been lower
      than
      in other months because of a reduced number of shipping days, plant shutdowns
      and holiday or vacation closures for some customers. Consequently, the Company’s
      sales in the first two quarters of the calendar year are usually higher than
      in
      the third and fourth quarters.




**Available
      Information**





Our
      Internet address is www.stamfordig.com. We make available free of charge on
      or
      through our Internet website our annual reports on Form 10-K, quarterly reports
      on Form 10-Q, current reports on Form 8-K, and amendments to those reports,
      and
      the proxy statement for our annual meeting of stockholders as soon as reasonably
      practicable after we electronically file such material with, or furnish it
      to,
      the Securities and Exchange Commission. Forms 3, 4 and 5 filed with respect
      to
      our equity securities under section 16(a) of the Securities Exchange Act of
      1934, as amended, are also available on our Internet website. All of the
      foregoing materials are located at the ‘‘SEC Filings’’ tab. The information
      found on our website shall not be deemed incorporated by reference by any
      general statement incorporating by reference this report into any filing under
      the Securities Act of 1933, as amended, or under the Securities Exchange Act
      of
      1934, as amended, and shall not otherwise be deemed filed under such
      Acts.





We
      have
      adopted a Code of Ethics for Senior Executive Officers and Senior Financial
      Officers, a Code of Business Conduct and Ethics for directors, officers,
      employees, agents, representatives, subsidiaries and affiliates, an Audit
      Committee Charter, Complaint Procedures for Accounting and Auditing Matters,
      a
      Compensation Committee Charter, a Nominating/Corporate Governance Committee
      Charter, and Corporate Governance Guidelines, all of which are available at
      our
      Internet website at the tab ‘‘Investor Relations.’’ We will provide to any
      person without charge, upon request, a copy of the foregoing materials. We
      intend to disclose future amendments to the provisions of the foregoing
      documents, policies and guidelines and waivers therefrom, if any, on our
      Internet website and/or through the filing of Current Reports on Form 8-K with
      the Securities and Exchange Commission.





Materials
      we file with the Securities and Exchange Commission may be read and copied
      at
      the Securities and Exchange Commission’s Public Reference Room at 100 F Street,
      N.E., Washington, D.C. 20549. You may obtain information on the operation of
      the
      Securities and Exchange Commission’s Public Reference Room by calling the
      Securities and Exchange Commission at 1-800-SEC-0330. The Securities and
      Exchange Commission also maintains an Internet website that contains reports,
      proxy and information statements, and other information regarding issuers that
      file electronically with the Securities and Exchange Commission at www.sec.gov.
      In addition, you may request a copy of any such materials, without charge,
      by
      submitting a written request to: Stamford Industrial Group, c/o the Secretary,
      One Landmark Square, 21st Floor, Stamford, Connecticut 06901.





Information
      on our Internet website does not constitute a part of this Annual Report on
      Form
      10-K or any
      of our other filings made with the Securities and Exchange
      Commission .





**Executive
      Officers of the Registrant**




Pursuant
      to General Instruction G(3), the information regarding our executive officers
      called for by Item 401(b) of Regulation S-K is hereby included in Part I of
      this Annual Report on Form 10-K.





The
      executive officers of our Company as of March 17, 2008 are as
      follows:





*Albert
      W. Weggeman,* who
      is 44
      years of age, ** joined
      Stamford Industrial Group in 2006. Mr. Weggeman has served as President and
      Chief Executive Officer since October 3, 2006. From 2005 until 2006, he served
      as President of Tyden Group, Inc. a global manufacturer of cargo security and
      product identification and traceability technology. From 2001 until 2005 Mr.
      Weggeman was Chief Operating Officer for Key Components, Inc. LLC a company
      specializing in the design and manufacture of engineered components for a broad
      range of OEM applications and customers. From 1999 until 2001 Mr. Weggeman
      was
      President of a General Electric Company subsidiary focused on the manufacture
      and sale of outdoor electrical products. Mr. Weggeman also served in various
      leadership roles in M&A, Marketing, Operations and Strategic Planning
      functions for multinational manufacturing companies. Mr. Weggeman graduated
      with
      an Electrical Engineering degree from Northeastern University in 1988 and an
      MBA
      from Kellogg Graduate School of Management in Chicago in 1992. He is a graduate
      of General Electric Company’s Manufacturing Management Program.




6





*Jonathan
      LaBarre,* who is
      38 years of age, ** joined
      Stamford Industrial Group in 2006. Mr. LaBarre has served as our Chief
      Financial Officer since December 1, 2006. Prior to Stamford Industrial Group,
      he served
      as
      a Senior Finance Manager and Global SOX Leader with Terex Corporation, a
      diversified global manufacturer, where he was responsible for corporate
      accounting, mergers and acquisitions due diligence and integration, financial
      planning, and internal compliance functions from February 2002 to November
      2006.
      From April 1999 until January 2002, Mr. LaBarre held various management
      leadership positions in accounting and finance at Pratt & Whitney's
      International Product Center, an operating company of United Technologies
      Corporation and The Stanley Works. Before that, Mr. LaBarre served with the
      U.S.
      Army as a Medical Supply Logistics Non-Commissioned Officer, with eight years
      of
      procurement and management of medical supply warehouses located in Texas, South
      Korea, and the Middle East. He is a CPA and graduated with a B.S. in accounting
      from Central Connecticut State University in 1994 and an MBA from Western New
      England College in 2000.





*Paul
      Vesey,* who
      is 52
      years of age, ** has
      served as the President
      of Concord since October 3, 2006 and previously served as Concord’s Vice
      President from 1991 to 2006. Since 1980 Mr. Vesey has been employed by Concord
      in a variety of positions including Plant and General Manager with
      responsibilities that have included product development, sales and
      marketing.




**ITEM
      1A. RISK FACTORS**




In
      addition to other information in this annual report on Form 10-K, the following
      risk factors should be carefully considered in evaluating our business because
      such factors may have a significant impact on our business, operating results,
      liquidity and financial condition. However, the risks and uncertainties
      described below are not the only ones we face. Additional risks and
      uncertainties not presently known to us, or that we currently consider to be
      immaterial, may also impact our business, operating results, liquidity and
      financial condition. If any of the following risks occur, our business,
      operating results, liquidity and financial condition could be materially
      adversely affected. In such case, the trading price of our securities could
      decline, and you may lose all or part of your investment.





**RISKS
      RELATED TO OUR INDUSTRY**





**Our
      future operating results may be affected by fluctuations in raw material costs
      and steel prices.**





Our
      principal raw material is non-prime (or secondary) carbon steel, which we
      purchase from multiple primary steel producers and steel brokers. A significant
      by-product of our manufacturing process is scrap steel that we resell to scrap
      brokers and dealers. The steel and scrap industries as a whole are very
      cyclical, and at times availability and pricing can be volatile due to a number
      of factors beyond our control. These factors include general economic
      conditions, domestic and worldwide demand, curtailed production at major mills
      due to factors such as equipment breakdowns, repairs or catastrophic events,
      labor costs or problems, competition, import duties, tariffs, energy costs,
      availability and cost of steel inputs (e.g. ore, scrap, coke, energy, etc.),
      currency exchange rates and those other factors described under “The costs of
      manufacturing our products and the ability to supply our customers could be
      negatively impacted if we experience interruptions in deliveries of needed
      raw
      materials or supplies.” This volatility can significantly affect our steel costs
      and scrap prices. In an environment of increasing prices for steel and other
      raw
      materials, competitive conditions may impact how much of the price increases
      we
      can pass on to our customers and to the extent we are unable to pass on future
      price increases in our raw materials to our customers, our financial results
      could be adversely affected. Also, if steel prices in general decrease,
      competitive conditions may impact how quickly we must reduce our prices to
      our
      customers and we could be forced to use higher-priced raw materials to complete
      orders for which the sales prices have decreased. If scrap prices in general
      decrease, we may recoup less scrap dollars which will have a negative impact
      on
      our operating results.





**The
      costs of manufacturing our products and the ability to supply our customers
      could be negatively impacted if we experience interruptions in deliveries of
      needed raw materials or supplies.**





If
      for
      any reason our supply of carbon steel is curtailed or we are otherwise unable
      to
      obtain the quantities we need at competitive prices, our business could suffer
      and our financial results could be adversely affected. Such interruptions might
      result from a number of factors including events such as a shortage of capacity
      in the supplier base or of the raw materials, energy or the inputs needed to
      make steel or other supplies, financial difficulties of suppliers, significant
      events affecting their facilities, significant weather events, or those factors
      listed under “Our future operating results may be affected by fluctuations in
      raw material costs and steel prices or other factors beyond our control.”
Further, the number of suppliers has decreased in recent years due to industry
      consolidation and the financial difficulties of certain suppliers, and
      consolidation may continue. Accordingly, if delivery from a major supplier
      is
      disrupted, it may be more difficult to obtain an alternative supply than in
      the
      past.




7


**Downturns
      or weakness in the economy in general or in key industries, such as commercial,
      industrial or residential construction or government and municipal
      infrastructure projects, may adversely affect our customers, which may cause
      the
      demand for our products and services to decline and adversely affect our
      financial results.**





Many
      of
      our customers are in industries and businesses that are cyclical in nature
      and
      affected by changes in general economic conditions or conditions specific to
      their respective markets and industries. Product demand in our customers’ end
      markets is based on numerous factors such as interest rates, general economic
      conditions, consumer confidence, and other factors beyond our control. Downturns
      in demand in the metal-consuming industries we serve, or a decrease in the
      margins that we can realize from sales of our products to customers in any
      of
      these industries, could adversely affect our financial results.





**The
      loss of significant volume from key customers could adversely affect us.**





In
      2007,
      our three largest customers accounted for approximately 60% of our net revenue,
      with our top customer accounting for a significant portion of that number,
      and
      our ten largest customers accounted for approximately 88% of our net revenue.
      A
      significant loss of or decrease in business from one or more of our largest
      customers could have an adverse effect on our sales and financial results if
      we
      cannot obtain replacement business. Also, due to consolidation in the industries
      we serve, our gross sales may be increasingly sensitive to deterioration in
      the
      financial condition of, or other adverse developments with respect to, one
      or
      more of our top customers. Although
      we have long-established relationships with many of our customers, we do not
      have any long-term supply or binding contracts or guarantees of minimum
      purchases. Purchases by our customers are generally made using individual
      purchase orders. As a result, these customers may cancel their orders, change
      purchase quantities from forecast volumes, or delay purchases for a number
      of
      reasons beyond our control. Significant or numerous cancellations, reductions,
      or delays in purchases by customers could have a material adverse effect on
      our
      business, results of operations and financial condition.





**Our
      business could be harmed if we fail to maintain proper inventory levels.**





We
      are
      required to maintain substantial inventories to accommodate the needs of our
      customers, including in many cases, short lead times and just-in-time delivery
      requirements. We purchase raw materials on a regular basis in an effort to
      maintain our inventory at levels that we believe are sufficient to satisfy
      the
      anticipated needs of our customers based upon orders, customers volume
      expectations, historic buying practices and market conditions. Inventory levels
      in excess of customer demand may result in the use of higher-priced inventory
      to
      fill orders reflecting lower sales prices, if steel prices have significantly
      decreased. These events could adversely affect our financial results.
      Conversely, if we underestimate demand for our products or if our suppliers
      fail
      to supply quality products in a timely manner, we may experience inventory
      shortages. Inventory shortages might result in unfilled orders, negatively
      impact customer relationships, and result in lost revenues, any of which could
      harm our business and adversely affect our financial results.





**Our
      business is highly competitive, and increased competition could negatively
      impact our financial results.**





The
      metals processing industry is very fragmented and competitive, consisting of
      a
      large number of small companies and a few relatively large companies.
      Competition is based principally on price, service, quality, production
      capabilities, inventory ability and timely delivery. Competition in the various
      markets in which the Company participates comes from companies of various sizes,
      some of which have greater financial resources than the Company and some of
      which have more established brand names in the local markets served by the
      Company. Increased competition could force the Company to lower its prices
      or to
      offer increased services at a higher cost, which could reduce the Company’s
      profitability.




8


**The
      Company could incur substantial costs in order to comply with, or to address
      any
      violations under, environmental laws that could significantly increase its
      operating expenses and reduce its operating income.**




The
      Company’s operations are subject to various environmental statutes and
      regulations, including laws and regulations governing materials it uses. In
      addition, certain of its operations are subject to federal, state and local
      environmental laws and regulations that impose limitations on the discharge
      of
      pollutants into the air and water and establish standards for the treatment,
      storage and disposal of solid and hazardous wastes. Failure to maintain or
      achieve compliance with these laws and regulations or with the permits required
      for its operations could result in substantial operating costs and capital
      expenditures, in addition to fines and civil or criminal sanctions, third party
      claims for property damage or personal injury, cleanup costs or temporary or
      permanent discontinuance of operations. Certain of its facilities are located
      in
      industrial areas, have a history of heavy industrial use and have been in
      operation for many years. Over time, the Company and other predecessor operators
      of these facilities have generated, used, handled and disposed of hazardous
      and
      other regulated wastes. Environmental liabilities could exist, including cleanup
      obligations at these facilities or at off-site locations where materials from
      Company operations were disposed of, which could result in future expenditures
      that cannot be currently quantified and which could have a material adverse
      effect on its financial position, results of operations or cash flows.





**Disruptions
      to our business or the business of our customers or suppliers, could adversely
      impact our operations and financial results.**





Business
      disruptions, including increased costs for or interruptions in the supply of
      energy or raw materials, resulting from severe weather events such as
      hurricanes, floods, blizzards, from casualty events, such as fires or material
      equipment breakdown, from acts of terrorism, or from other events such as
      required maintenance shutdowns, can cause interruptions to our businesses as
      well as the operations of our customers and suppliers. Such interruptions can
      have an adverse effect on our operations and financial results.





**If
      any of the products that the Company sells cause harm to any of its customers,
      the Company could be exposed to product liability lawsuits.**





If
      the
      Company were found liable under product liability claims, it could be required
      to pay substantial monetary damages. We currently maintain product liability
      insurance coverage; however, we cannot assure that this coverage would be
      sufficient to cover the payment of any potential claim. In addition, we cannot
      assure you that this or any other insurance coverage will continue to be
      available or, if available, will be obtainable at a reasonable cost. Our
      existing product liability insurance coverage may be inadequate to protect
      us
      from any liabilities we might incur, and we will continue to be exposed to
      the
      risk that our claims may be excluded and that our insurers may become insolvent.
      A product liability claim or series of claims brought against us for uninsured
      liabilities or liabilities in excess of our insurance coverage could have a
      material adverse effect on the market price of our common stock and our
      business, financial condition and results of operations. In addition, as a
      result of a product liability claim, our reputation could be harmed and we
      may
      have to recall some of our products, which could result in significant costs
      to
      us and have a material adverse effect on the market price of our common stock
      and our business, financial condition and results of operations.





**RISKS
      RELATED TO OUR BUSINESS**





**We
      have a short operating history with respect to our current and proposed
      businesses, so it will be difficult for investors to predict our future
      success.**





The
      Company had no active operations between April 11, 2004 and October 3, 2006,
      the
      date on which we acquired assets and certain liabilities of CRC. As a result,
      we
      have a limited operating history to evaluate in assessing our business and
      prospects in light of the risks and difficulties we may encounter as a company
      with a limited operating history in our current business. If we are unable
      to
      successfully address these risks and difficulties, our business and operating
      results could be materially adversely affected.





**There
      are significant risks associated with our strategy of acquiring and integrating
      businesses.**





A
      key
      element of our strategy is the acquisition of businesses and assets that will
      complement our current business, increase size, expand our geographic scope
      of
      operations, and otherwise offer growth opportunities. We may not be able to
      successfully identify attractive acquisition opportunities, obtain financing
      for
      acquisitions, make acquisitions on satisfactory terms, or successfully acquire
      and/or integrate identified targets. In identifying, evaluating and selecting
      a
      target business for a potential acquisition, we expect to encounter intense
      competition from other entities including blank check companies, private equity
      groups, venture capital funds, leveraged buyout funds, and operating businesses
      seeking strategic acquisitions. Many of these entities are well-established
      and
      have extensive experience identifying and effecting business combinations
      directly or through affiliates. Moreover, many of these competitors possess
      greater financial, technical, human and other resources than us which will
      give
      them a competitive advantage in pursuing the acquisition of certain target
      businesses.




9


Our
      ability to implement our acquisition strategy is also subject to other risks
      and
      costs, including:





·
            loss
                of key employees, customers or suppliers of acquired
                businesses;





·
            diversion
                of management's time and attention from our core
                businesses;





·
            adverse
                effects on existing business relationships with suppliers and
                customers;





·
            our
                ability to realize operating efficiencies, synergies, or other benefits
                expected from an acquisition;





·
            risks
                associated with entering markets in which we have limited or no
                experience;





·
            risks
                associated with our ability to execute successful due diligence;
                and





·
            assumption
                of contingent or undisclosed liabilities of acquisition
                targets.





The
      above
      risks could have a material adverse effect on the market price of our common
      stock and our business, financial condition and results of
      operations.





**The
      loss of services of the Company's executive management team could harm its
      business.**





The
      success of the Company's business depends on the continued services of its
      executive management team. The Company may not be able to retain its executive
      management team or attract suitable replacements or additional personnel if
      required. The loss of the services of one or more members of its executive
      management team could have a material adverse effect on its
      business.





**We
      may not be able to adequately manage our growth.**





We
      have
      expanded, and are seeking to continue to expand, our business. This growth
      has
      placed significant demands on our management, administrative, operating and
      financial resources as well as our manufacturing capacity capabilities. The
      continued growth of our customer base, the types of products offered and the
      geographic markets served can be expected to continue to place a significant
      strain on our resources. Personnel qualified in the production and marketing
      of
      our products are difficult to find and hire, and enhancements of information
      technology systems to support growth are difficult to implement. Our future
      performance and profitability will depend in large part on our ability to
      attract and retain additional management and other key personnel as well as
      our
      ability to increase and maintain our manufacturing capacity capabilities to
      meet
      the needs of our current and future customers. Any failure to adequately manage
      our growth could have a material adverse effect on the market price of our
      common stock and our business, financial condition and results of
      operations.





**As
      a result of an acquisition of a business or assets we may be required to
      subsequently take writedowns or write-offs, restructuring, and impairment or
      other charges that could have a significant negative effect on our financial
      condition, results of operations and our stock price, which could cause you
      to
      lose some or all of your investment.**





We
      must
      conduct a due diligence investigation of the target businesses we intend to
      acquire. Intensive due diligence is time consuming and expensive due to the
      operations, accounting, finance and legal professionals who must be involved
      in
      the due diligence process. Even if we conduct extensive due diligence on a
      target business with which we acquire, we cannot assure that this diligence
      will
      reveal all material issues that may affect a particular target business, or
      that
      factors outside the control of the target business and outside of our control
      will not later arise. If our diligence fails to identify issues specific to
      a
      target business, industry or the environment in which the target business
      operates, we may be forced to later write-down or write-off assets, restructure
      our operations, or incur impairment or other charges that could result in our
      reporting losses. Even though these charges may be non-cash items and not have
      an immediate impact on our liquidity, the fact that we report charges of this
      nature could contribute to negative market perceptions about us or our common
      stock. In addition, charges of this nature may cause us to violate net worth
      or
      other covenants to which we may be subject as a result of assuming pre-existing
      debt held by a target business or by virtue of our existing debt
      financing.





**The
      Company’s existing credit facility contains covenant restrictions that may limit
      its ability to operate its business.**




The
      agreements governing the Company’s credit facility contain, and any of its other
      future debt agreements may contain, covenant restrictions that limit its ability
      to operate its business, including restrictions on its ability to:




10




•
            
            incur
                debt (including secured debt) or issue guarantees;




•
            
            grant
                liens on its assets;




•
            
            make
                certain investments;




•
            
            enter
                into sale and leaseback transactions;




•
            
            enter
                into transactions with its affiliates;




•
            
            sell
                certain assets;




•
            
            repurchase
                capital stock or make other restricted payments;




•
            
            declare
                or pay dividends or make other distributions to stockholders; and




•
            
            enter
                into merger or consolidations or make certain acquisitions.




In
      addition, the Company’s existing credit facility contains other affirmative and
      negative covenants. The Company’s ability to comply with these covenants is
      dependent on its future performance, which will be subject to many factors,
      some
      of which are beyond its control, including prevailing economic conditions.




As
      a
      result of these covenants, the Company’s ability to respond to changes in
      business and economic conditions and to obtain additional financing, if needed,
      may be significantly restricted, and the Company may be prevented from engaging
      in transactions or making acquisitions of a business that might otherwise be
      beneficial to it. In addition, the Company’s failure to comply with these
      covenants could result in a default under its debt, which could permit the
      holders to accelerate such debt. If any of the Company’s debt is accelerated, it
      may not have sufficient funds available to repay such debt.





**We
      may be unable to realize the benefits of our net operating loss ("NOL") and
      tax
      credit carryforwards.**





NOL’s
      may
      be carried forward to offset federal and state taxable income in future years
      and eliminate income taxes otherwise payable on such taxable income, subject
      to
      certain adjustments. Based on current federal corporate income tax rates, our
      NOL and other carryforwards, if fully utilized, could provide a benefit to
      us of
      significant future tax savings. However, our ability to use these tax benefits
      in future years will depend upon the amount of our otherwise taxable income.
      If
      we do not have sufficient taxable income in future years to use the tax benefits
      before they expire, we will lose the benefit of these NOL carryforwards
      permanently. Consequently, our ability to use the tax benefits associated with
      our substantial NOL will depend significantly on our success in integrating
      Concord, identifying additional suitable merger partners and/or acquisition
      candidates, and, once identified, successfully consummating a merger with and/or
      acquisition of these candidates.





If
      we
      undergo an ownership change, the NOL carryforward limitations would impose
      an
      annual limit on the amount of taxable income that may be offset by our NOL
      generated prior to the ownership change and, accordingly, we may be unable
      to
      use a significant portion of our NOL to offset taxable income. In general,
      an
      ownership change occurs when, as of any testing date, the aggregate of the
      increase in percentage points of the total amount of a corporation's stock
      owned
      by "5-percent stockholders", within the meaning of the NOL carryforward
      limitations, whose percentage ownership of the stock has increased as of such
      date over the lowest percentage of the stock owned by each such "5-percent
      stockholder" at any time during the three-year period preceding such date is
      more than 50 percentage points. In general, persons who own 5% or more of a
      corporation's stock are "5-percent stockholders," and all other persons who
      own
      less than 5% of a corporation's stock are treated, together, as a single, public
      group "5-percent stockholder," regardless of whether they own an aggregate
      of 5%
      of a corporation's stock.





The
      amount of NOL and tax credit carryforwards that we have claimed have not been
      audited or otherwise validated by the U.S. Internal Revenue Service (“IRS”). The
      IRS could challenge our calculation of the amount of our NOL or our
      determinations as to when a prior change in ownership occurred and other
      provisions of the Internal Revenue Code may limit our ability to carry forward
      our NOL to offset taxable income in future years. If the IRS were successful
      with respect to any such challenge, the potential tax benefit of the NOL
      carryforwards to us could be substantially reduced.




11




**Amendments
      to our stockholder rights agreement intended to preserve our NOL may not be
      effective or may have some unintended negative effects.**





We
      recently amended our stockholder rights agreement to decrease the trigger
      threshold to 4.9%, from 15%, as the amount of the Company’s outstanding common
      stock that a person must beneficially own before being deemed to be an
“Acquiring Person” under the stockholder rights agreement. The principal purpose
      of the amendment to the stockholder rights agreement is to protect the ability
      of the Company to use its existing NOL’s for federal income tax purposes by
      limiting the number of 5% or more owners of our common stock and thus reduce
      the
      risk of a possible “change of ownership” under Section 382 of the Internal
      Revenue Code of 1986, as amended.





Although
      the amendment to the stockholder rights agreement is intended to reduce the
      likelihood of an impermissible ownership change, there is no guarantee that
      such
      restrictions would prevent all transfers that would result in an impermissible
      ownership change. The amendment to the stockholder rights agreement will also
      require any person attempting to acquire a significant interest in us to seek
      the approval of our Board of Directors. This may have an "anti-takeover" effect
      because our Board of Directors may be able to prevent any future takeover.
      Similarly, any limits on the amount of capital stock that a stockholder may
      own
      could have the effect of making it more difficult for stockholders to replace
      current management. Additionally, because the stockholder rights agreement
      will
      have the effect of restricting a stockholder's ability to acquire our common
      stock, the liquidity and market value of our common stock might suffer.





**If
      we acquire a company located outside of the United States, we would be subject
      to a variety of additional risks that may negatively impact our operations.**





We
      may
      effect an acquisition or merger with a company located outside of the United
      States. If we did, we would be subject to any special considerations or risks
      associated with companies operating in the target business’ home jurisdiction,
      including any of the following:





•
rules
      and regulations or currency conversion or corporate withholding taxes on
      individuals;





•
tariffs
      and trade barriers;





•
      regulations related to customs and import/export matters;





•
longer
      payment cycles;





•
tax
      issues, such as tax law changes and variations in tax laws as compared to the
      United States;





•
      currency fluctuations and exchange controls;





•
      challenges in collecting accounts receivable;





•
      cultural and language differences;





•
      employment regulations;





•
crime,
      strikes, riots, civil disturbances, terrorist attacks and wars; and





•
      deterioration of political relations with the United States.





We
      cannot
      assure you that we would be able to adequately address these additional risks.
      If we were unable to do so, our operations might suffer.




12





**If
      we effect an acquisition or merger with a company located outside of the United
      States, the laws applicable to such company will likely govern all of our
      material agreements and we may not be able to enforce our legal rights.**





If
      we
      effect an acquisition or merger with a company located outside of the United
      States, the laws of the country in which such company operates will govern
      almost all of the material agreements relating to its operations. We cannot
      assure you that the target business will be able to enforce any of its material
      agreements or that remedies will be available in this new jurisdiction. The
      system of laws and the enforcement of existing laws in such jurisdiction may
      not
      be as certain in implementation and interpretation as in the United States.
      The
      inability to enforce or obtain a remedy under any of our future agreements
      could
      result in a significant loss of business, business opportunities or capital.
      Additionally, if we acquire a company located outside of the United States,
      it
      is likely that substantially all of our assets would be located outside of
      the
      United States and some of our officers and directors might reside outside of
      the
      United States. As a result, it may not be possible for investors in the United
      States to enforce their legal rights, to effect service of process upon our
      directors or officers or to enforce judgments of United States courts predicated
      upon civil liabilities and criminal penalties of our directors and officers
      under Federal securities laws.





**Compliance
      with the Sarbanes-Oxley Act of 2002 will require substantial financial and
      management resources and may increase the time and costs of completing an
      acquisition.**





Section
      404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report
      on
      our system of internal controls and requires that we have such system of
      internal controls audited. If we fail to maintain the adequacy of our internal
      controls, we could be subject to regulatory scrutiny, civil or criminal
      penalties and/or stockholder litigation. Any inability to provide reliable
      financial reports could harm our business. Section 404 of the Sarbanes-Oxley
      Act
      also requires that our independent registered public accounting firm audit
      the
      effectiveness of the Company’s internal control over financial reporting. An
      acquisition target may not be in compliance with the provisions of the
      Sarbanes-Oxley Act regarding adequacy of their internal control. The development
      of the internal controls of any such acquisition target to achieve compliance
      with the Sarbanes-Oxley Act may increase the time and costs necessary to
      complete any such acquisition. Furthermore, any failure to implement required
      new or improved controls, or difficulties encountered in the implementation
      of
      adequate controls over our financial processes and reporting in the future,
      could harm our operating results or cause us to fail to meet our reporting
      obligations. Inferior internal controls could also cause investors to lose
      confidence in our reported financial information, which could have a negative
      effect on the trading price of our stock.





**RISKS
      RELATED TO OUR COMMON STOCK**





**Our
      common stock is no longer listed on the NASDAQ Small Cap Market.**





On
      September 3, 2004, our common stock was delisted from the NASDAQ Small Cap
      Market. The delisting followed a determination by the NASDAQ Listing
      Qualifications Panel that the Company was a "public shell" and should be
      delisted due to policy concerns raised under NASDAQ Marketplace Rules 4300
      and
      4300(a)(3). Additional information concerning the delisting is set forth in
      the
      Company's Report on Form 8-K filed with the Securities and Exchange Commission
      on September 1, 2004. The Company's common stock is now quoted on the OTC Pink
      Sheets Electronic Quotation Service under the symbol "STMF.PK." As a result
      of
      the delisting, stockholders may find it more difficult to dispose of, or to
      obtain accurate quotations as to the price of our common stock, the liquidity
      of
      our stock may be reduced, making it difficult for a stockholder to buy or sell
      our stock at competitive market prices or at all, we may lose support from
      institutional investors and/or market makers that currently buy and sell our
      stock and the price of our common stock could decline.





**We
      are vulnerable to volatile market conditions.**





The
      market prices of our common stock have been highly volatile. The market has
      from
      time to time experienced significant price and volume fluctuations that are
      unrelated to the operating performance of particular companies. Please see
      the
      table contained in Part II, Item 5 of this report which sets forth the range
      of
      high and low closing prices of our common stock for the calendar quarters
      indicated.





**We
      do not expect to pay dividends on our common stock in the foreseeable future.**





Although
      our stockholders may receive dividends if, as and when declared by our Board
      of
      Directors, we do not intend to pay dividends on our common stock in the
      foreseeable future. Therefore, you should not purchase our common stock if
      you
      need immediate or future income by way of dividends from your investment.





13





**Our
      amended and restated certificate of incorporation authorizes the issuance of
      shares of preferred stock.**





Our
      Amended and Restated Certificate of Incorporation provides that our Board of
      Directors will be authorized to issue from time to time, without further
      stockholder approval, up to 5,000,000 shares of preferred stock in one or more
      series and to fix or alter the designations, preferences, rights and any
      qualifications, limitations or restrictions of the shares of each series,
      including the dividend rights, dividend rates, conversion rights, voting rights,
      terms of redemption, including sinking fund provisions, redemption price or
      prices, liquidation preferences and the number of shares constituting any series
      or designations of any series. Such shares of preferred stock could have
      preferences over our common stock with respect to dividends and liquidation
      rights. We may issue additional preferred stock in ways which may delay, defer
      or prevent a change in control of the Company without further action by our
      stockholders. Such shares of preferred stock may be issued with voting rights
      that may adversely affect the voting power of the holders of our common stock
      by
      increasing the number of outstanding shares having voting rights, and by the
      creation of class or series voting rights.





**We
      may issue a substantial amount of equity and cash compensation and other shares
      of our common stock in the future which could cause dilution to investors and
      otherwise adversely affect our stock price.**





A
      key
      element of our growth strategy is to make acquisitions. As part of our
      acquisition strategy, we may issue additional shares of common stock as
      consideration for such acquisitions. In addition, we have limited cash
      compensation to management pending consummation of a redeployment transaction
      and expect to award cash and equity compensation to management in connection
      with such a transaction. These issuances could be significant. To the extent
      that we make acquisitions and issue our shares of common stock as consideration
      or as compensation to management, your equity interest in us will be diluted.
      Any such issuance will also increase the number of outstanding shares of common
      stock that will be eligible for sale in the future. Persons receiving shares
      of
      our common stock in connection with these acquisitions may be more likely to
      sell off their common stock, which may influence the price of our common stock.
      In addition, the potential issuance of additional shares in connection with
      anticipated acquisitions could lessen demand for our common stock and result
      in
      a lower price than might otherwise be obtained. We may issue common stock in
      the
      future for other purposes as well, including in connection with financings,
      for
      compensation purposes, in connection with strategic transactions or for other
      purposes. Cash payments as compensation or otherwise can also significantly
      diminish cash that is available to the Company for working capital and other
      purposes, which could have a material adverse effect on the
      Company.





**ITEM
      1B. UNRESOLVED STAFF COMMENTS**





None.




14




**ITEM
      2. PROPERTIES**





The
      following table lists the principal manufacturing and office facilities and
      the
      primary use of the property at each of the facilities:


**Location**
              
              **Approximate**
                **Square Footage**
              
              **Owned/Leased**
              
              **Use of Property****Corporate**Stamford,
                  Connecticut (1)
              
              5,750
              
              Leased
              
              Headquarters
                    and
                    administrative**Concord
                  Steel**Warren,
                  Ohio
              
              133,000
              
              Owned
              
              Manufacturing andadministrativeWarren,
                  Ohio
              
              4,006
              
              Leased
              
              AdministrativeChicago
                  Heights, Illinois
              
              187,000
              
              Leased
              
              ManufacturingEssington,
                  Pennsylvania
              
              82,800
              
              Leased
              
              Manufacturing





(1)
            The
                Company has entered into a ten year lease with Reckson Operating
                Partnership, L.P. for approximately 5,750 square feet of office
                space.





The
      Company believes that its current manufacturing and office facilities are
      suitable and adequate for its present and anticipated near-term
      needs.





**ITEM
      3. LEGAL PROCEEDINGS**





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





*Public
      Offering Securities Litigation*





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





The
      amended complaint generally alleges that the defendants violated federal
      securities laws by not disclosing certain actions taken by the underwriter
      defendants in connection with the Company’s initial public offering and
      follow-on public offering. The amended complaint alleges specifically that
      the
      underwriter defendants, with the Company’s direct participation and agreement
      and without disclosure thereof, conspired to and did raise and increase their
      underwriters’ compensation and the market prices of the Company’s common stock
      following its initial public offering and in its follow-on public offering
      by
      requiring their customers, in exchange for receiving allocations of shares
      of
      the Company’s common stock sold in its initial public offering, to pay excessive
      commissions on transactions in other securities, to purchase additional shares
      of the Company’s common stock in the initial public offering aftermarket at
      pre-determined prices above the initial public offering price, and to purchase
      shares of the Company’s common stock in its follow-on public offering. The
      amended complaint seeks unspecified monetary damages and certification of a
      plaintiff class consisting of all persons who acquired the Company’s common
      stock between April 22, 1999 and December 6, 2000. The plaintiffs have since
      agreed to dismiss the claims against Mr. Snyder and Mr. Donnelly without
      prejudice, in return for their agreement to toll any statute of limitations
      applicable to those claims; and those claims have been dismissed without
      prejudice.




15


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





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





On
      November 21, 2007, Concord Steel, Inc. (“Concord”) filed a Verified Complaint in
      the Delaware Chancery Court against Wilmington Steel, Kenneth Neary and William
      Woislaw for violation of non-compete provisions contained in an Asset Purchase
      Agreement, dated September 19, 2006 and certain related agreements, and at
      the
      same time moved for a preliminary injunction to prohibit breaches of those
      restrictive covenants.  On January 18, 2008, the defendants in that case
      served an Answer denying the material allegations of the Complaint and asserting
      counterclaims for tortious interference with business relations and
      defamation arising from alleged telephone calls made by Concord to the
      customer to which Wilmington was selling.  The case is in its early stages
      and since discovery has not been completed, we cannot opine as to the ultimate
      outcome, although we believe that Concord has valid claims and
      defenses.





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





No
      matters were submitted to a vote of security holders, through the solicitation
      of proxies or otherwise, during the quarter ended December 31,
      2007.





16




**PART
      II**





**ITEM
      5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
      AND**  **ISSUER
      PURCHASES OF EQUITY SECURITIES**





**Common
      Stock Information**





Our
      common stock was listed on the NASDAQ National Market System on April 23, 1999
      until September 3, 2004, when our common stock was delisted from the NASDAQ
      Small Cap Market following a determination by the NASDAQ Listing Qualifications
      Panel that the Company was a "public shell" and should be delisted due to policy
      concerns raised under NASDAQ Marketplace Rules 4300 and 4300(a) (3). Additional
      information concerning the delisting is set forth in the Company's Current
      Report on Form 8-K filed with the Securities and Exchange Commission on
      September 1, 2004. The Company's common stock is now quoted on the OTC Pink
      Sheets Electronic Quotation Service under the symbol "STMF.PK".





The
      following table sets forth, for the indicated periods, the high and low closing
      sales prices for our common stock as reported by the OTC Pink Sheets Electronic
      Quotation Service. The quotes listed below reflect inter-dealer prices or
      transactions solely between market-makers, without retail mark-up, mark-down
      or
      commission and may not represent actual transactions.


**Price
                  Range of**
                **Common
                  Stock****High**
              
              **Low****2008**First
                  quarter(through
                  March 14, 2008)
              
              $
              1.78
              
              $
              1.00**2007**First
                  Quarter
              
              $
              2.92
              
              $
              1.92Second
                  Quarter
              
              $
              2.98
              
              $
              2.05Third
                  Quarter
              
              $
              2.84
              
              $
              1.60Fourth
                  Quarter
              
              $
              2.05
              
              $
              1.19**2006**First
                  Quarter
              
              $
              0.75
              
              $
              0.55Second
                  Quarter
              
              $
              0.66
              
              $
              0.55Third
                  Quarter
              
              $
              1.80
              
              $
              0.63Fourth
                  Quarter
              
              $
              2.76
              
              $
              1.72





**Recent
      Sales of Unregistered Securities**





None .





**Recent
      Purchases Of Our Registered Equity Securities**





We
      did
      not purchase any shares of our common stock during the Company’s fourth quarter
      of 2007.




**Performance
      Graph**





Set
      forth
      below is a line graph comparing the yearly percentage change in the cumulative
      total stockholder return on our common stock to the cumulative total return
      of
      the NASDAQ National Market Composite and the Russell 2000 Index for the period
      commencing on December 31, 2002 and ending December 31, 2007 (the “Measuring
      Period”). The graph assumes that the value of the investment in our common stock
      and each index was $100 on December 31, 2002. The yearly change in cumulative
      total return is measured by dividing (1) the sum of (i) the cumulative amount
      of
      dividends for the Measuring Period, assuming dividend reinvestment, and (ii)
      the
      change in share price between the beginning and end of the Measuring Period,
      by
      (2) the share price at the beginning of the Measuring Period.




17


The
      Company considered providing a comparison consisting of a group of peer
      companies in an industry or line-of business similar to ours, but could not
      reasonable identify a group of comparable peer companies that the Company
      believed would provide our stockholders with a meaningful comparison. The stock
      price performance on the following graph is not necessarily indicative of future
      stock price performance.





**Comparison
      of five-year cumulative return among STMF, NASDAQ and Russell 2000 Composite
      Index**


**12/31/2002**
              
              **12/31/2003**
              
              **12/31/2004**
              
              **12/31/2005**
              
              **12/31/2006**
              
              **12/31/2007**Stamford
                  Industrial Group
              
              
              $100.00
              
              
              $28.99
              
              
              $53.62
              
              
              $44.93
              
              
              $177.54
              
              
              $90.58NASDAQ
              
              
              $100.00
              
              
              $150.01
              
              
              $162.89
              
              
              $165.14
              
              
              $180.85
              
              
              $198.60Russell
                  2000
              
              
              $100.00
              
              
              $145.37
              
              
              $170.08
              
              
              $175.73
              
              
              $205.61
              
              
              $199.96




Stamford




**Stockholders**





On
      March
      14, 2008, the last reported sales price for our common stock was $1.25 per
      share. As of March 14, 2008, there were 207 beneficial shareholders of record
      and 4,171 individual shareholders of record of our common stock.





**Dividends**





We
      currently anticipate that we will retain our cash and all potential future
      earnings for use in our business and do not anticipate that we will pay any
      cash
      dividends in the foreseeable future. The payment of any future dividends will
      be
      at the discretion of our Board of Directors and will depend upon, among other
      things, our results of operations, capital requirements, general business
      conditions, contractual restrictions on payment of dividends, if any, legal
      and
      regulatory restrictions on the payment of dividends, and other factors our
      Board
      of Directors deems relevant.




18


**Securities
      authorized for issuance under equity compensation plans**




The
      following table sets forth certain information regarding our equity plans as
      of
      December 31, 2007:




Plan Category
              
              (A)Number of securities to beissued upon exercise ofoutstanding options,warrants and rights
              
              (B)Weighted averageexercise price ofoutstanding options,warrants and rights
              
              (C)Number of securities remaining availablefor future issuance under equitycompensation plans (excluding securitiesreflected in column (A))Equity
                    compensation plans approved by security holders (1)(2)
              
              
              3,012,080
              
              $
              1.15
              
              
              8,730,634Equity
                  compensation plans not approved by security holders
              
              
              —
              
              $
              —
              
              
              —Total
              
              
              3,012,080
              
              $
              1.15
              
              
              8,730,634





(1)
            On
                June 21, 2007 the Company’s stockholders approved the Company’s 2007 Stock
                Incentive Plan (the “2007 Stock Incentive Plan”). Under the 2007 Stock
                Incentive Plan, 10,000,000 shares of the Company’s common stock were
                initially reserved for issuance and available for awards, subject
                to an
                automatic annual increase equal to 4% of the total number of shares
                of the
                Company’s common stock outstanding at the beginning of each fiscal year
                (the “Annual Share Increase”). Awards under the 2007 Stock Incentive Plan
                may include non-qualified stock options, incentive stock options,
                stock
                appreciation rights, restricted shares of common stock, restricted
                units
                and performance awards. Awards under the 2007 Stock Incentive Plan
                may be
                granted to employees, officers, directors, consultants, independent
                contractors and advisors of the Company or any subsidiary of the
                Company.
                In any calendar year, no participant may receive awards under the
                2007
                Stock Incentive Plan for more than 2,500,000 shares of the Company’s
                common stock. Additionally, no more than 2,500,000 of the total shares
                of
                common stock available for issuance under the 2007 Stock Incentive
                Plan
                may be granted in the form of restricted shares, restricted units
                or
                performance awards, subject to an automatic annual increase, beginning
                with January in year 2008 and continuing through January in year
                2017,
                equal to 75% of the total number of shares of the Company’s common stock
                increased pursuant to the Annual Share Increase. The 2007 Stock Incentive
                Plan has a term of ten years expiring on June 21, 2017. As of December
                31,
                2007, the total number of awards granted under 2007 Plan were 2.9
                million
                and primarily represented replacement of awards granted to management
                under our prior equity compensation
                plans.





(2)
            As
                a result of stockholder approval of the 2007 Stock Incentive Plan,
                the
                Company's 1999 Plan has been frozen and will remain in effect only
                to the
                extent of awards outstanding under the plan as of June 21, 2007.
                As of
                December 31, 2007, the total number of awards granted under 1999
                Plan were
                0.1 million.




19




**ITEM
      6. SELECTED CONSOLIDATED FINANCIAL DATA**





In
      2004,
      the Company ceased previous operations as a developer of marketing software
      solutions. On October 3, 2006, the Company acquired the assets of CRC
      Acquisition Co. LLC (“CRC”), a manufacturer of steel counterweights doing
      business as Concord Steel (“Concord”). Because the Company had no operations at
      the time of the Concord acquisition, the Concord business is considered to
      be a
      predecessor company (“Predecessor”) from an accounting treatment perspective. To
      assist in the understanding of the results of operations, balance sheet data
      of
      the Company, relevant prior year financial information regarding the Predecessor
      is, therefore, presented herein.





The
      statement of operations data for each of the years ended December 31, 2007,
      2006, and 2005, and the balance sheet data at December 31, 2007 and 2006, are
      derived from, and are qualified by reference to, the audited financial
      statements included elsewhere in this report. The statement of operations data
      for the years ended December 31, 2004 and 2003 and the balance sheet data at
      December 31, 2005, 2004 and 2003 represents the pre-Concord operating results
      of
      Stamford Industrial Group, and are derived from audited financial statements
      not
      included in this report. The data appearing in the table below should be read
      in
      conjunction with “Management’s Discussion and Analysis of Financial Condition
      and Results of Operations” and the consolidated financial statements and the
      related notes thereto included elsewhere herein.




**STAMFORD
        INDUSTRIAL GROUP, INC.**
 **FIVE
        YEAR CONSOLIDATED FINANCIAL DATA**
  Years
                    Ended December 31,2007
                
                2006
                
                2005
                
                2004
                
                2003**(in
                    thousands, except per share amounts)****Statement
                    of Operations Data**Revenues
                
                $
                110,743
                
                $
                24,078
                
                $
                118
                
                $
                927
                
                $
                2,584Gross
                    margin
                
                $
                17,817
                
                $
                4,277
                
                $
                118
                
                $
                707
                
                $
                1,817Operating
                    expenses (1)
                
                $
                11,760
                
                $
                11,576
                
                $
                553
                
                $
                2,671
                
                $
                7,971Income
                    (loss) from operations
                
                $
                6,057
                
                $
                (7,299
                )
                $
                (435
                )
                $
                (1,964
                )
                $
                (6,154
                )Other
                    income (expense), net
                
                $
                (2,822
                )
                $
                (231
                )
                $
                642
                
                $
                1,903
                
                $
                861Net
                    income (loss)
                
                $
                3,032
                
                $
                (7,753
                )
                $
                207
                
                $
                (61
                )
                $
                (5,293
                )Basic
                    net income/(loss) per share
                
                $
                0.07
                
                $
                (0.24
                )
                $
                0.01
                
                $
                —
                
                $
                (0.19
                )Shares
                    used in basic calculation
                
                $
                41,749
                
                
                32,577
                
                
                28,918
                
                
                28,574
                
                
                27,683Diluted
                    net income/(loss) per share
                
                $
                0.06
                
                $
                (0.24
                )
                $
                0.01
                
                $
                —
                
                $
                (0.19
                )Shares
                    used in diluted calculation
                
                
                47,647
                
                
                32,577
                
                
                33,438
                
                
                28,574
                
                
                27,683Cash
                    distributions paid (2)
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                —
                
                $
                1.50**Balance
                    Sheet Data**Cash
                    and cash equivalents
                
                $
                1,236
                
                $
                3,703
                
                $
                203
                
                $
                14,444
                
                $
                11,932Marketable
                    securities
                
                $
                —
                
                $
                —
                
                $
                14,659
                
                $
                —
                
                $
                —Working
                    capital
                
                $
                6,713
                
                $
                10,870
                
                $
                14,631
                
                $
                14,306
                
                $
                11,600Total
                    assets
                
                $
                61,937
                
                $
                62,125
                
                $
                15,195
                
                $
                14,723
                
                $
                12,803Long-term
                    liabilities, net of current portion
                
                $
                22,422
                
                $
                27,172
                
                $
                2,533
                
                $
                2,517
                
                $
                —Total
                    stockholders’ equity
                
                $
                19,646
                
                $
                15,505
                
                $
                12,308
                
                $
                12,028
                
                $
                11,635





(1)
            On
                  September 30, 2006, the Company recorded a non-cash compensation
                  expense
                  of $7.5 million. The expense was for grants of restricted common
                  stock to
                  the Company’s board of directors and common stock to Kanders &
                  Company. See Note 15 to the consolidated financial
                  statements.




(2)
            On
                September 2, 2003, the Company paid a return of capital cash distribution
                to stockholders of record as of August 18, 2003 in the amount of
                $1.50 per
                share.




20




In
      the
      table below, we have provided selected historical financial data of the
      Predecessor to assist in the understanding of the results of operations and
      balance sheet data of the Company. The Predecessor’s statement of operations
      data for each of the years in the periods ended December 31, 2005 and 2004,
      respectively and the balance sheet data at December 31, 2005 and 2004 are
      derived from audited financial statements not included in this report. The
      selected financial data as of October 3, 2006 and for the period January 1,
      2006
      through October 3, 2006 represents the pre-acquisition financial condition
      and
      operating results of the Predecessor in 2006 and are unaudited.




**PREDECESSOR'S
      SELECTED FINANCIAL DATA**




**Years
                  Ended December 31,****January 1, 2006**
                **to**
                **October 3, 2006**
              
              **2005**
              
              **2004****(in
                  thousands, except per share amounts)****Statement
                  of Operations Data**Revenues
              
              $
              61,625
              
              $
              64,404
              
              $
              45,911Gross
                  margin
              
              $
              13,274
              
              $
              10,693
              
              $
              8,204*Gross
                  margin percentage*
              
              
              21.5
              %
              
              16.6
              %
              
              17.9
              %Operating
                  expenses
              
              $
              2,509
              
              $
              2,816
              
              $
              2,515Income
                  from operations
              
              $
              10,765
              
              $
              7,877
              
              $
              5,689Other
                  expense
              
              $
              4,043
              
              $
              593
              
              $
              512Net
                  income
              
              $
              6,511
              
              $
              7,228
              
              $
              5,012**Balance
                  Sheet Data**Cash
                  and cash equivalents
              
              $
              —
              
              $
              1,003
              
              $
              79Working
                  capital
              
              $
              2,966
              
              $
              6,576
              
              $
              3,943Total
                  assets
              
              $
              29,103
              
              $
              20,208
              
              $
              14,740Long-term
                  liabilities, net of current portion
              
              $
              641
              
              $
              796
              
              $
              1,095Total
                  stockholders’ equity
              
              $
              8,976
              
              $
              9,792
              
              $
              6,512




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





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




**OVERVIEW**





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




21




Stamford
      Industrial Group, Inc. was initially established in 1996 under the name “Net
      Perceptions, Inc.”, as a provider of marketing software solutions. In 2003, as a
      result of continuing losses and the decline of its software business, the
      Company began exploring various strategic alternatives, including sale or
      liquidation and ceased the marketing and development of its marketing solutions
      software business in 2004. On April 21, 2004, the Company announced an
      investment into the Company by Olden Acquisition LLC (“Olden”), an affiliate of
      Kanders & Company, Inc., an entity owned and controlled by the Company’s
      Non-Executive Chairman, Warren B. Kanders, for the purpose of initiating a
      strategy to redeploy the Company’s assets and use its cash, cash equivalent
      assets and marketable securities to enhance stockholder value. As part of this
      strategy, on October 3, 2006, the Company acquired the assets of CRC Acquisition
      Co. LLC (“CRC”), a manufacturer of steel counterweights doing business as
      Concord. With this initial acquisition, management is now focused on building
      a
      diversified global industrial manufacturing group through both organic and
      acquisition growth initiatives that are expected to complement and diversify
      existing business lines. The Company’s acquisition program is focused on
      building a diversified industrial growth company providing engineered products
      and solutions for global niche markets. Our investment criteria generally
      includes companies having a transaction value up to $150 million and with levels
      of earnings before interest, taxes, depreciation and amortization in the range
      of $5-$25 million. Because the Company had no operations at the time of the
      Concord acquisition, the Concord business is considered to be a predecessor
      company (“Predecessor”) for accounting purposes. Accordingly, Stamford
      Industrial Group’s consolidated results for the year ended December 31, 2007
      have been compared with the combined results of Stamford Industrial Group’s
      results for the year ended December 31, 2006 and the Predecessor’s results for
      the year ended December 31, 2006 and relevant and prior year financial
      information regarding the Predecessor is presented herein.





The
      following management’s discussion and analysis of financial condition and
      results of operations of Stamford Industrial Group and its Predecessor should
      be
      read in conjunction with the historical financial statements and footnotes
      of
      Stamford Industrial Group included elsewhere in this report and of Concord
      as
      Predecessor, included in the Company’s amended Current Report on Form 8-K/A
      filed with the Securities and Exchange Commission on December 18, 2006. Our
      future results of operations may change materially from the historical results
      of operations reflected in Stamford Industrial Group, and the Predecessors,
      historical financial statements.





Management’s
      discussion and analysis of financial condition and results of operations is
      based on the historical financial condition and results of operations of Concord
      as Predecessor, rather than those of Stamford Industrial Group, prior to October
      3, 2006.





**CRITICAL
      ACCOUNTING POLICIES AND ESTIMATES**





The
      Company’s discussion and analysis of financial condition and results of
      operations is based upon our consolidated financial statements, which have
      been
      prepared in accordance with accounting principles generally accepted in the
      United States. The preparation of these financial statements requires us to
      make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosure of contingent assets and
      liabilities. On an on-going basis, the Company evaluates its estimates,
      including those related to bad debts, investments, intangible assets,
      restructuring liabilities, contingencies and litigation. The Company bases
      its
      estimates on historical experience and on various other assumptions that are
      believed to be reasonable under the circumstances, the results of which form
      the
      basis for making judgments about the carrying values of assets and liabilities
      that are not readily apparent from other sources. Actual results may differ
      from
      these estimates under different assumptions or conditions.





The
      Company believes the following critical accounting policies affect significant
      judgments and estimates used in the preparation of its consolidated financial
      statements. Events occurring subsequent to the preparation of the consolidated
      financial statements may cause the Company to re-evaluate these
      policies.





*Use
      of estimates.* The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts therein.
      Management’s estimates are based on historical experience and on various other
      assumptions that are believed to be reasonable under the circumstances. Estimates
      inherent in the preparation of the accompanying consolidated financial
      statements include the carrying value of long-lived assets, valuation allowances
      for receivables, inventories and deferred income tax assets, liabilities for
      potential litigation claims and settlements, and potential liabilities related
      to tax filings in the ordinary course of business. Management’s
      estimates and assumptions are evaluated on an on-going basis. Due to the
      inherent uncertainty involved in making estimates, actual results may differ
      from those estimates.




22




*Revenue
      Recognition.* The
      Company’s revenue recognition policy requires the recognition of sales when
      there is evidence of a sales agreement, the delivery of goods has occurred,
      the
      sales price is fixed or determinable and the collectability of revenue is
      reasonably assured. The Company records sales upon shipment of product to
      customers and transfer of title under standard commercial terms.





*Allowance
      for doubtful accounts.* The
      Company maintains allowances for doubtful accounts for estimated losses resulting from
      the inability of its customers to make required payments. If the financial
      condition of our customers deteriorates, resulting in an impairment of their
      ability to make payments, additional allowances will be required.





*Litigation.* The
      Company has not recorded an estimated liability related to the pending class
      action lawsuit in which it was named. For a discussion of this matter, see
      “Legal Proceedings,” in Part I, Item 3 of this report. Due to the uncertainties
      related to both the likelihood and the amount of any potential loss, no estimate
      was made of the liability that could result from an unfavorable outcome. As
      additional information becomes available, the Company will assess the potential
      liability and make or revise its estimate(s) accordingly, which could materially
      impact its results of operations and financial position.





*Income
      taxes.* Deferred
      income taxes are provided on the liability method, using presently enacted
      tax
      rates, whereby deferred tax assets are recognized for deductible temporary
      differences and operating loss and tax credit carryforwards and deferred tax
      liabilities are recognized for taxable temporary differences. Temporary
      differences are the differences between the reported amounts of assets and
      liabilities and their income tax bases. Deferred tax assets are reduced by
      a
      valuation allowance when, in the opinion of management, it is more likely than
      not that some portion or all of the deferred tax assets will not be realized.
      The recognition of a valuation allowance for deferred tax assets requires
      management to make estimates about the Company’s future profitability. The
      estimates associated with the valuation of deferred tax assets are considered
      critical due to the amount of deferred tax assets recorded on the consolidated
      balance sheet and the judgment required in determining the Company’s future
      profitability. We continually review the adequacy of the valuation allowance
      and
      recognize these benefits only as our reassessment indicates that it is more
      likely than not that these benefits will be realized. Net deferred tax assets
      were $8.1 million at both December 31, 2007 and 2006. In addition, we
      continually evaluate our contingencies in accordance with Financial Accounting
      Standards Board Interpretation No. 48 “Accounting for Uncertainty in Income
      Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”).





*Derivatives
      and hedging activities* .
      The
      Company recognizes all derivatives on the balance sheet as either an asset
      or
      liability measured at fair value. Changes in the derivative’s fair value are
      recognized currently in income unless specific hedge accounting criteria are
      met. Special accounting for qualifying hedges allows a derivative’s gains and
      losses to offset related results on the hedged item in the statement of income
      and requires the Company to formally document, designate and assess
      effectiveness of transactions that receive hedge accounting. Derivatives that
      are not hedges are adjusted to fair value through income. If the derivative
      qualifies as a hedge, depending on the nature of the hedge, changes in the
      fair
      value of derivatives are either offset against the change in fair value of
      hedged assets, liabilities, or firm commitments through earnings, or recognized
      in other comprehensive income until the hedged item is recognized in earnings.
      The ineffective portion of a derivative’s change in fair value is immediately
      recognized in earnings.




COMPARISON
      OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND
      2005





**Operating
      Results for the Year Ended December 31, 2007 compared to the year ended December
      31, 2006**





For
      the
      purpose of management’s discussion and analysis of financial condition and
      results of operations, we have compared the Company’s consolidated results of
      operations for the year ended December 31, 2007 to the Company’s results of
      operations for the year ended December 31, 2006 combined with that of the
      Predecessor for the period January 1, 2006 to October 3, 2006 (“Combined”).
      Management believes that this provides the most meaningful analysis of the
      Company’s results for the year ended December 31, 2007. No pro forma adjustments
      have been included in the table below. Our future operating results may change
      materially from the historical results of operations reflected in the Company’s
      and the Predecessor’s historical financial statements.




23




**STAMFORD
        INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share amounts)**


**Stamford Industrial**
              
              **Stamford Industrial**
              
              **Predecessor****Group**
                **Year Ended**
                **December 31,**
                **2007**
              
              **Group**
                **Year Ended**
                **December 31,**
                **2006**
              
              **Company**
                **January 1, 2006**
                **to**
                **October 3, 2006**
              
              **Combined Total**
              
              **Variance (1)**Revenues:Product
              
              $
              110,743
              
              $
              24,058
              
              $
              61,625
              
              $
              85,683
              
              $
              25,060Service,
                      maintenance and royalty
              
              
              —
              
              
              20
              
              
              —
              
              
              20
              
              
              (20
              )Total
                  revenues
              
              
              110,743
              
              
              24,078
              
              
              61,625
              
              
              85,703
              
              
              25,040Cost
                of revenues:Product
              
              
              92,926
              
              
              19,801
              
              
              48,351
              
              
              68,152
              
              
              24,774Total
                  cost of revenues
              
              
              92,926
              
              
              19,801
              
              
              48,351
              
              
              68,152
              
              
              24,774Gross
                  margin
              
              
              17,817
              
              
              4,277
              
              
              13,274
              
              
              17,551
              
              
              266Operating
                  expenses:Sales
                  and marketing
              
              
              1,315
              
              
              322
              
              
              912
              
              
              1,234
              
              
              81General
                  and administrative
              
              
              9,938
              
              
              3,616
              
              
              1,597
              
              
              5,213
              
              
              4,725Related
                  party stock compensation
              
              
              507
              
              
              7,638
              
              
              —
              
              
              7,638
              
              
              (7,131
              )Total
                  operating expenses
              
              
              11,760
              
              
              11,576
              
              
              2,509
              
              
              14,085
              
              
              (2,325
              )Income
                  (loss) from operations
              
              
              6,057
              
              
              (7,299
              )
              
              10,765
              
              
              3,466
              
              
              2,591Other
                  (expense) income:Interest
                  income
              
              
              6
              
              
              566
              
              
              —
              
              
              566
              
              
              (560
              )Interest
                  expense
              
              
              (2,691
              )
              
              (775
              )
              
              (507
              )
              
              (1,282
              )
              
              (1,409
              )Management
                  and loan guaranty fees
              
              
              —
              
              
              —
              
              
              (710
              )
              
              (710
              )
              
              710Other
                  (expense)
              
              
              (137
              )
              
              (22
              )
              
              (2,826
              )
              
              (2,848
              )
              
              2,711Total
                  other (expense) income,
                  net
              
              
              (2,822
              )
              
              (231
              )
              
              (4,043
              )
              
              (4,274
              )
              
              1,452Income
                  (loss) before taxes
              
              
              3,235
              
              
              (7,530
              )
              
              6,722
              
              
              (808
              )
              
              4,043Provision
                  for income taxes
              
              
              203
              
              
              223
              
              
              211
              
              
              434
              
              
              (231
              )Net
                  income (loss)
              
              $
              3,032
              
              $
              (7,753
              )
              $
              6,511
              
              $
              (1,242
              )
              $
              4,274





(1)
      Variance represents the difference between Combined Total and the Company at
      December 31, 2007 and has been presented to assist in evaluating our financial
      statements.





REVENUES





Revenues
      increased $25.0 million or 29.2% to $110.7 million for the year ended December
      31, 2007 as compared to combined revenue of $85.7 million for the year ended
      December 31, 2006. The increase of $25.0 million is primarily due to price
      increases as a result of increased material costs, and higher sales volume
      due
      to increased demand for our products from existing customers of approximately
      $21.5 million, as a result of increased spending in the commercial and
      industrial construction, and infrastructure building end markets, the addition
      of several new customers within the aircraft ground equipment and construction
      markets of $1.1 million and an increase in scrap metal sales of $2.4 million.





24




GROSS
      MARGIN





Gross
      margin was $17.8 million or 16.1% of sales for the year ended December 31,
      2007
      as compared to $17.6 million or 20.5% of sales for the Combined year ended
      December 31, 2006. The 21.4% decrease in margin percentage is primarily a result
      of significantly higher costs for raw material, a one time increase in scrap
      related to lean manufacturing initiatives, increase in manufacturing overhead
      costs associated with the ramp up of the Essington, Pennsylvania manufacturing
      facility, additional expenses related to repairs and maintenance and additional
      outside fabrication costs partially offset by sales volume and price
      increases.





OPERATING
      EXPENSES





Operating
      expenses for the year ended December 31, 2007 decreased $2.3 million or 16.3%
      to
      $11.8 million as compared to the Combined operating expenses of $14.1 million
      for the year ended December 31, 2006.





*Sales
      and marketing* .
      Sales
      and marketing expenses consisted primarily of salaries, other employee-related
      costs, commissions and other incentive compensation, travel and entertainment
      and expenditures for marketing programs such as collateral materials, trade
      shows, public relations and creative services. For the year ended December
      31,
      2007, sales and marketing expenses increased $0.1 million or 8.3% to $1.3
      million as compared to $1.2 million for the Combined year ended December 31,
      2006. The increase is primarily the result of increased revenues discussed
      above.





*General
      and administrative* .
      General
      and administrative expenses consist primarily of employee compensation,
      insurance, legal, accounting and other professional fees as well as public
      company expenses such as transfer agent expenses and costs related to the
      transition of the Company in October 2006. For the year ended December 31,
      2007,
      general and administrative expenses increased $4.7 million or 90.4% to $9.9
      million as compared to $5.2 million for the Combined year ended December 31,
      2006. The increase is primarily the result of increases in deferred compensation
      expenses of $1.3 million, employee related expenses of $0.2 million,
      professional fees of $1.1 million, consulting expenses of $0.4 million which
      relate to the Kanders & Company consulting agreement fee (see Note 15 to the
      consolidated financial statements for further discussion), one time first year
      Sarbanes-Oxley implementation of $0.3 million, increase in amortization expense
      of $0.8 million related to intangible assets acquired as part of the Concord
      acquisition and other general expenses of $0.6 million.





*Related
      party stock compensation.* For
      the
      year ended December 31, 2007, the Company had related party stock compensation
      expense of $0.5 million associated with the stock consulting agreement with
      Kanders & Company (see Note 15 to the consolidated financial statements).
      The related party stock compensation expense for the year ended December 31,
      2006 was primarily due to non-cash compensation expense incurred for the grants
      of restricted common stock to members of the Company’s Board of Directors and a
      one time common stock grant to Kanders & Company, as discussed in Note 15 to
      the consolidated financial statements.





*Interest
      expense.* Interest
      expense was $2.7 million for the year ended December 31, 2007 as compared to
      Combined interest expense of $1.3 million for the year ended December 31, 2006.
      The expense was primarily from the issuance of long-term debt used to finance
      the purchase of Concord. The increase in interest expense is the result of
      debt
      outstanding for the full year ended December 31, 2007.




*Other
        expense* .
        For the
        year ended December 31, 2007 the Company had other expense of $0.1 million
        compared to $2.8 million for the year ended December 31, 2006. The variance
        of
        $2.7 million is primarily related to transaction costs incurred by the
        Predecessor related to the sale of CRC.


PROVISION
      FOR INCOME TAXES





For
      federal income tax purposes, the Company has available federal net operating
      loss carryforwards of approximately $122.6 million and research and development
      credit carryforwards of approximately $0.2 million at December 31, 2007. The
      net
      operating loss and research and development credit carryforwards expire in
      2011
      through 2026 if not previously utilized. The utilization of these carry-forwards
      may be subject to limitations based on past and future changes in ownership
      of
      the Company pursuant to Internal Revenue Code Section 382. If the Company were
      to be acquired at its recent stock value such that Section 382 is applicable,
      this would eliminate the ability to use a substantial amount of these
      carryforwards. The recognition of a valuation allowance for deferred tax assets
      requires management to make estimates about the Company’s future profitability.
      The estimates associated with the valuation of deferred tax assets are
      considered critical due to the amount of deferred tax assets recorded on the
      consolidated balance sheet and the judgment required in determining the
      Company’s future profitability. We continually review the adequacy of the
      valuation allowance and recognize these benefits only as our reassessment
      indicates that it is more likely than not that these benefits will be realized.
      Net deferred tax assets were $8.1 million at both December 31, 2007 and 2006,
      net of a valuation allowance of $35.4 million and $36.3 million, respectively.
      We continually evaluate our contingencies in accordance with Financial
      Accounting Standards Board Interpretation No. 48 “Accounting for Uncertainty in
      Income Taxes, an interpretation of FASB Statement No. 109” (“FIN 48”). The
      Company has an effective tax rate of 6.7% which consists of a federal
      alternative tax and state tax offset by a state tax credit. There is no current
      or deferred federal income tax provision due to the availability of net
      operating loss carry-forwards and the maintenance of a deferred tax valuation
      allowance at consistent levels.





25




**Combined
      Operating Results for the Year Ended December 31, 2006 compared to the Year
      Ended December 31, 2005**





Because
      the Company had no operations at the time of the acquisition of the assets
      of
      the Concord business, Concord is considered to be the Predecessor from an
      accounting treatment perspective and Concord’s historical results are therefore
      presented.  For
      the
      purpose of management’s discussion and analysis of financial condition and
      results of operations, we have combined the Company’s results for the year ended
      December 31, 2006 with that of the Predecessor for the period January 1, 2006
      to
      October 3, 2006 and compared that to the results of the Predecessor for the
      year
      ended December 31, 2005. Management believes that this provides the most
      meaningful analysis of the Company’s results for the year ended December 31,
      2006. No pro forma adjustments have been included in the table below. Our future
      operating results may change materially from the historical results of
      operations reflected in the Company’s and the Predecessor’s historical financial
      statements.




**Stamford Industrial****Group****Year Ended****December 31,****2006**
              
              **Predecessor****Company****January 1, 2006****to****October 3, 2006**
              
              **Combined Total**
              
              **Predecessor****Company****Year Ended****December 31, 2005**
              
              **Variance (1)**Revenues:Product
              
              $
              24,058
              
              $
              61,625
              
              $
              85,683
              
              $
              64,404
              
              $
              21,279Service,
                  maintenance and royalty
              
              
              20
              
              
              —
              
              
              20
              
              
              —
              
              
              20Total
                  revenues
              
              
              24,078
              
              
              61,625
              
              
              85,703
              
              
              64,404
              
              
              21,299Cost
                  of revenues:Product
              
              
              19,801
              
              
              48,351
              
              
              68,152
              
              
              53,711
              
              
              14,441Total
                  cost of revenues
              
              
              19,801
              
              
              48,351
              
              
              68,152
              
              
              53,711
              
              
              14,441Gross
                  margin
              
              
              4,277
              
              
              13,274
              
              
              17,551
              
              
              10,693
              
              
              6,858Operating
                  expenses:Sales
                  and marketing
              
              
              322
              
              
              912
              
              
              1,234
              
              
              999
              
              
              235General
                  and administrative
              
              
              3,616
              
              
              1,597
              
              
              5,213
              
              
              1,817
              
              
              3,396Related
                  party stock compensation
              
              
              7,638
              
              
              —
              
              
              7,638
              
              
              —
              
              
              7,638Total
                  operating expenses
              
              
              11,576
              
              
              2,509
              
              
              14,085
              
              
              2,816
              
              
              11,269(Loss)
                  income from operations
              
              
              (7,299
              )
              
              10,765
              
              
              3,466
              
              
              7,877
              
              
              (4,411
              )Other
                  (expense) income:Interest
                  income
              
              
              566
              
              
              —
              
              
              566
              
              
              —
              
              
              566Interest
                  expense
              
              
              (775
              )
              
              (507
              )
              
              (1,282
              )
              
              (270
              )
              
              (1,012
              )Management
                  and loan guaranty fees
              
              
              —
              
              
              (710
              )
              
              (710
              )
              
              (323
              )
              
              (387
              )Other
                  (expense)
              
              
              (22
              )
              
              (2,826
              )
              
              (2,848
              )
              
              —
              
              
              (2,848
              )Total
                  other (expense), net
              
              
              (231
              )
              
              (4,043
              )
              
              (4,274
              )
              
              (593
              )
              
              (3,681
              )(Loss)
                  income before taxes
              
              
              (7,530
              )
              
              6,722
              
              
              (808
              )
              
              7,284
              
              
              (8,092
              )Provision
                  for income taxes
              
              
              223
              
              
              211
              
              
              434
              
              
              56
              
              
              378Net
                  (loss) income
              
              $
              (7,753
              )
              $
              6,511
              
              $
              (1,242
              )
              $
              7,228
              
              $
              (8,470
              )





(1)
      Variance represents the difference between Combined Total and Predecessor
      Company at December 31, 2005 and has been presented to assist in evaluating
      our
      financial statements.





REVENUES





On
      a
      combined basis, revenue increased $21.3 million or 33.1% to $85.7 million for
      the year ended December 31, 2006 as compared to $64.4 million for the
      Predecessor for the year ended December 31, 2005. The increase of $21.3 million
      was primarily due to higher sales volume resulting from increased demand for
      our
      products from existing customers of approximately $16.3 million, as a result
      of
      increased spending in the commercial and industrial construction, and
      infrastructure building end markets, the addition of several new customers
      within the elevator market and theatrical market for $3.6 million and an
      increase in scrap metal sales of $1.4 million.





26




GROSS
      MARGIN





Gross
      margin as a percentage of sales increased to 20.5% for the year ended December
      31, 2006 as compared to 16.6% for year ended December 31, 2005. The 20.5%
      increase in margin was due to higher fixed cost absorption primarily driven
      by
      increased revenues.





OPERATING
      EXPENSES





Combined
      operating expenses for the year ended December 31, 2006 increased $11.3 million
      or 403.6% to $14.1 million as compared to $2.8 million for the Predecessor
      for
      the year ended December 31, 2005.





*Sales
      and marketing* .
      Sales
      and marketing expenses consisted primarily of salaries, other employee-related
      costs, commissions and other incentive compensation, travel and entertainment
      and expenditures for marketing programs such as collateral materials, trade
      shows, public relations and creative services. For the year ended December
      31,
      2006, sales and marketing expenses increased $0.2 million or 20.0% to $1.2
      million as compared to $1.0 million for the Predecessor for the year ended
      December 31, 2005. The increase was primarily the result of increased revenues
      as discussed above.





*General
      and administrative* .
      General
      and administrative expenses consist primarily of employee compensation,
      insurance, legal, accounting and other professional fees as well as public
      company expenses such as transfer agent expenses and costs related to the
      transition of the Company in October 2006. At December 31, 2006, general and
      administrative expenses increased $3.4 million or 188.9% to $5.2 million as
      compared to $1.8 million for the Predecessor for the year ended December 31,
      2005. The increase was primarily the result of non-recurring charges related
      to
      the sale of Concord.





*Related
      party stock compensation.* The
      Company incurred $7.6 million of compensation expense for the year ended
      December 31, 2006. The increase in related party stock compensation expense
      during the period was primarily due to non-cash compensation expense incurred
      for the grants of restricted common stock to members of the Company’s Board of
      Directors and common stock to Kanders & Company, as discussed in Note 15 to
      the financial statements. ** There
      is
      no comparable number for the period ended December 31, 2005.





*Amortization
      of intangibles* .
      The
      Company had amortization expense of $0.3 million for the year ended December
      31,
      2006. The amortization was related to intangible assets acquired as part of
      the
      Concord acquisition.





*Interest
      expense.* Interest
      expense was $1.3 million for the year ended December 31, 2006. The expense
      was
      primarily from the issuance of long-term debt used to finance the purchase
      of
      Concord. The Predecessor had interest expense of $0.3 million in
      2005.




PROVISION
      FOR INCOME TAXES





The
      Company’s provision for income taxes consists of a federal alternative tax and
      state taxes. There is no deferred federal income tax provision due to the
      availability of net operating loss carryforwards and the maintenance of a
      deferred tax valuation allowance at consistent levels.




27




SELECTED
      CONSOLIDATED AND COMBINED QUARTERLY OPERATING RESULTS





The
      following table sets forth quarterly unaudited financial data for 2007 and
      2006
      for Stamford Industrial Group, which ceased previous operations as a developer
      of marketing software solutions in 2004. Because the Company had no operations
      at the time of the acquisition of the assets of Concord, Concord is considered
      to be the Predecessor from an accounting treatment perspective and therefore,
      Stamford Industrial Group’s quarterly results for the year ended December 31,
      2006 have been combined with quarterly results of the Predecessor. This
      unaudited financial data has been prepared on the same basis as the audited
      financial statements included in this report and includes all adjustments,
      consisting only of normal recurring accruals that are considered necessary
      for a
      fair presentation of such information when read in conjunction with our audited
      financial statements and notes thereto appearing elsewhere in this report.
      The
      information appearing below is not indicative of the results that may be
      expected for any subsequent period and should be read in conjunction with the
      pre-acquisition operating results of the Predecessor, which are included
      elsewhere in this report.




**STAMFORD INDUSTRIAL GROUP, INC. AND PREDECESSOR**
                **THREE MONTHS ENDED**
              ********
              ****
              **2007**
              
              **2006****Dec. 31**
              
              **Sep. 30**
              
              **Jun. 30**
              
              **Mar. 31**
              
              **Dec. 31**
              
              **Sep. 30**
              
              **Jun. 30**
              
              **Mar. 31****(Amounts in
                  thousands, except per share amounts)**
                **(Unaudited)****Results
                  of Operations:**Revenues:Product
              
              $
              26,361
              
              $
              28,197
              
              $
              28,281
              
              $
              27,904
              
              $
              24,945
              
              $
              22,095
              
              $
              20,475
              
              $
              18,168Service,
                  maintenance and royalty
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              1
              
              
              19Total
                  revenues
              
              
              26,361
              
              
              28,197
              
              
              28,281
              
              
              27,904
              
              
              24,945
              
              
              22,095
              
              
              20,476
              
              
              18,187Cost
                  of revenues:Product
              
              
              23,386
              
              
              23,102
              
              
              23,872
              
              
              22,566
              
              
              20,285
              
              
              18,072
              
              
              15,427
              
              
              14,368Total
                  cost of revenues
              
              
              23,386
              
              
              23,102
              
              
              23,872
              
              
              22,566
              
              
              20,285
              
              
              18,072
              
              
              15,427
              
              
              14,368Gross
                  margin
              
              
              2,975
              
              
              5,095
              
              
              4,409
              
              
              5,338
              
              
              4,660
              
              
              4,023
              
              
              5,049
              
              
              3,819*Gross
                  margin percentage*
              
              
              11.3
              %
              
              18.1
              %
              
              15.6
              %
              
              19.1
              %
              
              18.7
              %
              
              18.2
              %
              
              24.7
              %
              
              21.0
              %Operating
                  expenses:Sales
                  and Marketing
              
              
              272
              
              
              368
              
              
              303
              
              
              372
              
              
              329
              
              
              338
              
              
              319
              
              
              248General
                  and administrative
              
              
              1,910
              
              
              2,933
              
              
              2,367
              
              
              2,728
              
              
              3,081
              
              
              859
              
              
              719
              
              
              554Related
                  party stock compensation
              
              
              113
              
              
              132
              
              
              133
              
              
              129
              
              
              96
              
              
              7,542
              
              
              —
              
              
              —Total
                  operating expenses
              
              
              2,295
              
              
              3,433
              
              
              2,803
              
              
              3,229
              
              
              3,506
              
              
              8,739
              
              
              1,038
              
              
              802Income
                  (loss) from operations
              
              
              680
              
              
              1,662
              
              
              1,606
              
              
              2,109
              
              
              1,154
              
              
              (4,716
              )
              
              4,011
              
              
              3,017Interest
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              6
              
              
              47
              
              
              184
              
              
              176
              
              
              159Interest
                  expense
              
              
              (756
              )
              
              (720
              )
              
              (544
              )
              
              (671
              )
              
              (780
              )
              
              (162
              )
              
              (171
              )
              
              (169
              )Other
                  income (expense), net
              
              
              2
              
              
              —
              
              
              (17
              )
              
              (122
              )
              
              (1,462
              )
              
              (1,865
              )
              
              (124
              )
              
              (107
              )(Loss)
                  income before income taxes
              
              
              (74
              )
              
              942
              
              
              1,045
              
              
              1,322
              
              
              (1,041
              )
              
              (6,559
              )
              
              3,892
              
              
              2,900(Benefit)
                  provision for income taxes
              
              
              (433
              )
              
              331
              
              
              (265
              )
              
              570
              
              
              223
              
              
              36
              
              
              114
              
              
              61Net
                  income (loss)
              
              $
              359
              
              $
              611
              
              $
              1,310
              
              $
              752
              
              $
              (1,264
              )
              $
              (6,595
              )
              $
              3
                  ,778
              
              $
              2,839




28




**LIQUIDITY
      AND CAPITAL RESOURCES**





**Liquidity**





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





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





At
      December 31, 2007 and 2006, the outstanding balance from the revolving credit
      facility amounted to $5.3 and $3.3, million, respectively. At December 31,
      2007,
      the Company had $3.1 million available in additional borrowings net of $1.6
      million in outstanding letters of credit which have not been drawn upon. The
      balance under the term loan at December 31, 2007 and December 31, 2006 was
      $23.0
      million and $28.0 million, respectively. At December 31, 2007 and December
      31,
      2006, the Company had $4.0 million and $3.5 million, respectively classified
      as
      current and $19.0 million and $24.5 million, respectively classified as
      long-term .
      During
      the year ended December 31, 2007, the Company was in compliance with all
      of
      our financial covenants under the bank credit facilities. On March 13, 2008,
      we
      entered into a second amendment to the Credit Agreement to provide
      for, among other thing, revisions to certain of the financial covenants
      under the bank credit facilities. Our future compliance with our financial
      covenants under the bank credit facilities will depend on our ability to
      generate earnings and manage our assets effectively. Our bank credit facilities
      also have various non-financial covenants, requiring us to refrain from taking
      certain actions and requiring us to take certain actions, such as keeping in
      good standing our corporate existence, maintaining insurance, and providing
      our
      bank lending group with financial information on a timely basis.





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





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





The
      Company is exposed to interest rate volatility with regard to existing issuances
      of variable rate debt. Primary exposure includes movements in the U.S. prime
      rate and LIBOR. The Company uses interest rate swaps to reduce interest rate
      volatility. On January 2, 2007, the Company entered into an interest rate
      protection agreement that has approximately $12.3 million of interest rate
      swaps
      fixing interest rates between 5.0% and 5.8%.




29




On
      April
      21, 2004, the Company closed on an investment into the Company by Olden
      Acquisition LLC (“Olden”) ,
      an
      affiliate of Kanders & Company, Inc., for
      the
      purpose of initiating a strategy to redeploy the Company’s assets and use the
      Company’s cash, cash equivalent assets and marketable securities to enhance
      stockholder value. The Company issued and sold to Olden a 2% ten-year
      Convertible Subordinated Note, which is convertible after one year (or
      earlier upon a call by the Company and in certain other circumstances) at
      a
      conversion price of $0.45 per share of Company common stock into approximately
      19.9% of the outstanding common equity of the Company as of the closing date.
      Proceeds to the Company from this transaction totaled approximately $2.5 million
      before transaction costs of $0.3 million. The transaction costs are being
      amortized over ten years, the term of the debt. Interest on the note accrues
      semi-annually but is not payable currently or upon conversion of the note.
      The
      note matures on April 21, 2014. The convertible subordinated note was deemed
      to
      include a beneficial conversion feature. At the date of issuance, the Company
      allocated $0.1 million to the beneficial conversion feature and amortized the
      beneficial conversion feature over one year (the period after which the note
      is
      convertible). As of December 31, 2007 and 2006, the outstanding balance on
      the
      note payable amounted to $2.5 million and is classified as long-term
      debt.





**Operating
      Activities**





Net
      cash
      provided by operating activities was $5.9 million for the year ended December
      31, 2007, reflecting net income of $3.0 million, depreciation and amortization
      of $1.8 million, non-cash deferred stock-based compensation expenses of $2.2
      million offset by the impact of changes in working capital of $1.1 million.
      The
      change in working capital is primarily due to the timing difference between
      increased revenues generated and cash collections in 2007 versus 2006, in
      addition to one time finders fees of $1.0 million related to the
      acquisition of Concord in 2006.  Net
      cash
      provided by operating activities was $1.1 million for the year ended December
      31, 2006, reflecting the net loss of $7.8 million, which includes non-cash
      related party stock compensation expenses of $7.5 million. Net cash provided
      by
      operating activities for the Predecessor was $4.3 million for the year ended
      December 31, 2005, reflecting the net income of $7.2 million, which includes
      depreciation and amortization expenses of $0.4 million.





**Investing
      Activities**





Net
      cash
      used in investing activities was $5.4 million for the year ended December 31,
      2007, primarily resulting from the purchase of machinery and equipment and
      leasehold improvements.  Net
      cash
      used in investing activities was $31.3 million for the year ended December
      31,
      2006. Cash paid for acquisitions and related costs were $45.3 million partially
      offset by $14.7 million of proceeds from the sale of marketable securities
      used
      to purchase Concord. Capital expenditures were $0.6 million. Net cash used
      in
      investing activities for the Predecessor was $0.8 million for the year ended
      December 31, 2005, primarily resulting from capital expenditures.





**Financing
      Activities**





Net
      cash
      used in financing activities was $3.0 million for the year ended December 31,
      2007. The net cash used in financing activities was primarily from an increase
      in the Company’s line of credit facility of $2.0 million which was used for
      working capital expansion and capital expenditures, offset by cash used to
      pay
      down long-term debt in the amount of $5.0 million.  Net
      cash
      provided by financing activities was $33.7 million for the year ended December
      31, 2006. The net proceeds were from the issuance of long-term debt of $28.0
      million, $3.3 million of borrowings under the short-term revolving facility
      as a
      result of the acquisition of Concord Steel, $3.0 million investment from CRC
      Acquisition Co. LLC offset by debt issuance costs of $0.6 million. Net cash
      used
      in financing activities for the Predecessor was $2.5 million for the year ended
      December 31, 2005. The cash was used to pay down long-term debt of $0.3 million,
      to make distributions to members in the amount of $3.9 million and was offset
      by
      proceeds of $1.7 million from the line of credit.





We
      believe that existing cash and investments along with the use of our Revolving
      Facility will be sufficient to meet our expected working capital needs for
      at
      least the next twelve months.




**Capital
      Expenditures**




The
      Company anticipates capital expenditures, excluding acquisitions, of $1.1
      million for fiscal 2008. The Company expects capital expenditures will be funded
      from cash generated by operations. The primary driver of increased capital
      expenditures in 2008 is related to the purchase of machinery and
      equipment.





30




**CONTRACTUAL
      OBLIGATIONS**





In
      addition to our scheduled maturities of debt, we have future cash obligations
      under various types of contracts. We lease office space, manufacturing
      facilities and equipment under long-term operating leases. We have also entered
      into long-term employment agreements with certain of our executives and other
      key employees. These contracts typically contain provisions that allow us to
      terminate the contract with good cause.




The
      following summarizes the Company's contractual obligations and commercial
      commitments at December 31, 2007 with initial or remaining terms of one or
      more
      years, and the effect such obligations are expected to have on our liquidity
      and
      cash flow in future periods:




**Contractual
                  Obligations**
              
              **Total**
              
              **Less
                  than**
                **1
                  year**
              
              **1
                  - 3**
                **years**
              
              **3
                  - 5**
                **years**
              
              **More
                  Than**
                **5
                  years**Long-term
                  debt and notes payable
              
              $
              30,819
              
              $
              9,286
              
              $
              8,000
              
              $
              11,000
              
              $
              2,533Estimated
                  interest on long-term debt (1) (2)
              
              
              4,562
              
              
              1,634
              
              
              2,377
              
              
              484
              
              
              67Non-cancelable
                  operating leases
              
              
              7,555
              
              
              1,051
              
              
              2,134
              
              
              1,668
              
              
              2,702Total
              
              $
              42,936
              
              $
              11,971
              
              $
              12,511
              
              $
              13,152
              
              $
              5,302





(1)
            Variable
                rates used were those in effect atDecember
                31, 2007.


(2)
            Interest
                paymentsrelated
                to our short-term debt are not included in the table as they do not
                represent a significant obligation as of December 31,
                2007.





The
      Company does not engage in any transactions or have relationships or other
      arrangements with unconsolidated entities. These include special purpose and
      similar entities or other off-balance sheet arrangements. The Company also
      does
      not engage in the trading of energy, weather or other commodity-based
      contracts.





**RECENTLY
      ISSUED ACCOUNTING PRONOUNCEMENTS**





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





In
      September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” which
      provides enhanced guidance for using fair value to measure assets and
      liabilities. The standard also expands the amount of disclosure regarding the
      extent to which companies’ measure assets and liabilities at fair value, the
      information used to measure fair value, and the effect of fair value
      measurements on earnings. The standard applies whenever other standards require
      (or permit) assets or liabilities to be measured at fair value but does not
      expand the use of fair value in any new circumstances. This statement is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The Company
      does not anticipate any material impact to its financial statements from the
      adoption of this standard.





**ITEM
      7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK**





Through
      December 31, 2007, the majority of our recognized revenues were denominated
      in
      United States dollars and were primarily from customers in the United States,
      and our exposure to foreign currency exchange rate changes has been immaterial.
      Accordingly, we do not consider significant our exposure to foreign currency
      exchange rate changes arising from revenues being denominated in foreign
      currencies.




31




***Interest
      Rate Risk***





The
      Company’s primary exposure to market risk is interest rate risk associated with
      our senior credit facilities. The
      Company has a long-term credit facility that bears interest, at the Company’s
      election, at either (i) a rate equal to three month variable London
      Interbank Offer Rate (“LIBOR”) ,
      plus an
      applicable margin ranging from 1.25% to 2.5%, depending on certain conditions,
      or (ii) an alternate base rate which will be the greater of (a) the Federal
      Funds rate plus 0.5% or (b) the prime rate publicly announced by the Agent
      as
      its prime rate, plus, in both cases, an applicable margin ranging from 0% to
      1.0%, depending on certain conditions. At December 31, 2007, the applicable
      interest rate for the outstanding borrowings under the Credit Agreement was
      7.24%.





The
      Company is exposed to interest rate volatility with regard to existing issuances
      of variable rate debt. Primary exposure includes movements in the United States
      prime rate and LIBOR. The Company uses interest rate swaps to reduce interest
      rate volatility. On January 2, 2007, the Company entered into an interest rate
      protection agreement that has approximately $12.3 million of interest rate
      swaps
      fixing interest rates between 5.0% and 5.8%. At December 31, 2007, the net
      loss
      of $0.2 million on the interest rate swap is reported in the statement of
      operations as part of interest expense.





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





32


**ITEM
      8. FINANCIAL STATEMENTS**




**STAMFORD
      INDUSTRIAL GROUP, INC.**





**Index
      to Consolidated Financial Statements**




******Page**Reports
                of Independent Registered Public Accounting Firms
            
            34Consolidated
                Balance Sheets – December 31, 2007 and 2006
            
            38Consolidated
                Statements of Operations - Years ended December 31, 2007,2006
                and 2005, the period January 1, 2006 to October 3, 2006 (Predecessor)
                and
                the year ended December 31, 2005 (Predecessor)
            
            39Consolidated
                Statement of Stockholders’ Equity and Comprehensive Income(Loss) –
                Years Ended December 31, 2007, 2006 and 2005
            
            40Consolidated
                Statements of Cash Flows – Years Ended December 31, 2007,2006
                and 2005, the period January 1, 2006 to October 3, 2006 (Predecessor)
                and
                the year ended December 31, 2005 (Predecessor)
            
            41Notes
                to the Consolidated Financial Statements
            
            42




33




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders


Stamford
      Industrial Group, Inc.





We
      have
      audited the consolidated balance sheets of Stamford Industrial Group, Inc.
      (the
“Company”) as of December 31, 2007 and 2006, and the related consolidated
      statements of operations, stockholders’ equity and comprehensive income (loss),
      and cash flows for the years then ended. These financial statements are the
      responsibility of the Company's management. Our responsibility is to express
      an
      opinion on these financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statement presentation. 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 Stamford Industrial Group,
      Inc. as of December 31, 2007 and 2006, and the results of its operations and
      its
      cash flows for the years then ended in conformity with U.S. generally accepted
      accounting principles.





We
      have
      also audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States) Stamford Industrial Group, Inc.’s internal
      control over financial reporting as of December 31, 2007, based on*criteria established in*  *Internal
      Control-Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (COSO)* and our
      report dated March 17, 2008 expressed an unqualified opinion on the
      effectiveness of Stamford Industrial Group, Inc.’s internal control over
      financial reporting.




/s/
      McGladrey & Pullen, LLP


McGladrey
&
Pullen,
      LLP


Stamford,
      CT


March
      17,
      2008




34


**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders


Stamford
      Industrial Group, Inc.





We
      have
      audited Stamford Industrial Group, Inc.’s (the “Company”) internal control over
      financial reporting as of December 31, 2007, based on *criteria
      established in*  *Internal
      Control* — *Integrated
      Framework issued by the Committee of Sponsoring Organizations of the Treadway
      Commission (COSO)* .
      Stamford Industrial Group, Inc.’s management is responsible for maintaining
      effective internal control over financial reporting and for its assessment
      of
      the effectiveness of internal control over financial reporting included in
      the
      accompanying ** Management's
      Report on Internal Control over Financial Reporting. Our responsibility is
      to
      express an opinion on the Company's internal control over financial reporting
      based on our audit.





We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether effective
      internal control over financial reporting was maintained in all material
      respects. Our audit included obtaining an understanding of internal control
      over
      financial reporting, assessing the risk that a material weakness exists, and
      testing and evaluating the design and operating effectiveness of internal
      control based on the assessed risk. Our audit also included performing such
      other procedures as we considered necessary in the circumstances. We believe
      that our audit provides a reasonable basis for our opinion.





A
      company's internal control over financial reporting is a process designed to
      provide reasonable assurance regarding the reliability of financial reporting
      and the preparation of financial statements for external purposes in accordance
      with generally accepted accounting principles. A company's internal control
      over
      financial reporting includes those policies and procedures that (1) pertain
      to
      the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company; (2)
      provide reasonable assurance that transactions are recorded as necessary to
      permit preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the company are
      being made only in accordance with authorizations of management and directors
      of
      the company; and (3) provide reasonable assurance regarding prevention or timely
      detection of unauthorized acquisition, use, or disposition of the company's
      assets that could have a material effect on the financial
      statements.





Because
      of its inherent limitations, internal control over financial reporting may
      not
      prevent or detect misstatements. Also, projections of any evaluation of
      effectiveness to future periods are subject to the risk that controls may become
      inadequate because of changes in conditions, or that the degree of compliance
      with the policies or procedures may deteriorate.





In
      our
      opinion, Stamford Industrial Group, Inc. maintained, in all material respects,
      effective internal control over financial reporting as of December 31, 2007,
      based on *criteria
      established in*  *Internal
      Control—Integrated Framework issued by the Committee of Sponsoring Organizations
      of the Treadway Commission (COSO)* .





We
      have
      also audited, in accordance with the standards of the Public Company Accounting
      Oversight Board (United States), the consolidated balance sheets of Stamford
      Industrial Group, Inc. as of December 31, 2007 and 2006, and the related
      consolidated statements of operations, stockholders’ equity and comprehensive
      income (loss), and cash flows for the years then ended and our report dated
      March 17, 2008 expressed an unqualified opinion.





/s/
      McGladrey & Pullen, LLP


McGladrey
&
Pullen,
      LLP


Stamford,
      CT


March
      17,
      2008




35





**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders


Stamford
      Industrial Group, Inc.





We
      have
      audited the statements of operations and cash flows of CRC Acquisition Co.,
      LLC
      (the “predecessor company”-see Note 1 to the consolidated financial statements)
      for the period from January 1, 2006 to October 3, 2006, and for the year ended
      December 31, 2005. These financial statements are the responsibility of the
      Company's management. Our responsibility is to express an opinion on these
      financial statements based on our audits.





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





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the results of operations and cash flows of CRC Acquisition
      Co., LLC for the period from January 1, 2006 to October 3, 2006 and for the
      year
      ended December 31, 2005, in conformity with U.S. generally accepted accounting
      principles.




/s/
      McGladrey & Pullen, LLP


McGladrey
&
Pullen,
      LLP


Stamford,
      Connecticut


March
      29,
      2007





36


**Report
        of Independent Registered Public Accounting Firm**
  To
        the
        Board of Directors and Stockholders
 Stamford
        Industrial Group, Inc.
  In
        our
        opinion, the consolidated statements of operations, stockholders equity and
        comprehensive income (loss), and cash flows **** for
        the
        year ended December 31, 2005 present fairly, in all material respects, the
        results of operations and cash flows of Stamford Industrial Group, Inc.
        (formerly known as Net Perceptions, Inc.) and its subsidiaries for the year
        ended December 31, 2005, in conformity with accounting principles generally
        accepted in the United States of America. These financial statements are
        the
        responsibility of the Company's management. Our responsibility is to express
        an
        opinion on these financial statements based on our audit. We conducted our
        audit
        of these statements in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audit to obtain reasonable assurance about whether the financial
        statements are free of material misstatement. An audit includes examining,
        on a
        test basis, evidence supporting the amounts and disclosures in the financial
        statements, assessing the accounting principles used and significant estimates
        made by management, and evaluating the overall financial statement presentation.
        We believe that our audit provides a reasonable basis for our opinion.
  /s/
        PricewaterhouseCoopers LLP
 PricewaterhouseCoopers
        LLP
 Charlotte,
        North Carolina
 March
        17,
        2008





37




**STAMFORD
        INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
        BALANCE SHEETS**
 **(in
        thousands, except per share amounts)**


**Years Ended****December 31,****2007**
              
              **December 31,****2006****ASSETS**Current
                  assets:Cash
                  and cash equivalents
              
              $
              1,236
              
              $
              3,703Accounts
                  receivable, net
              
              
              8,341
              
              
              9,276Inventories
              
              
              13,825
              
              
              14,094Deferred
                  tax asset
              
              
              2,684
              
              
              2,684Prepaid
                  expenses and other current assets
              
              
              496
              
              
              561Total
                  current assets
              
              
              26,582
              
              
              30,318Property,
                  plant and equipment, net
              
              
              8,608
              
              
              3,773Deferred
                  financing costs, net
              
              
              645
              
              
              797Intangible
                  assets, net
              
              
              20,524
              
              
              21,572Deferred
                  tax asset
              
              
              5,368
              
              
              5,368Other
                  assets
              
              
              210
              
              
              297Total
                  assets
              
              $
              61,937
              
              $
              62,125**LIABILITIES
                  AND STOCKHOLDERS’ EQUITY**Current
                  liabilities:Notes
                  payable
              
              $
              5,286
              
              $
              3,286Current
                  portion of long-term debt
              
              
              4,000
              
              
              3,500Accounts
                  payable
              
              
              7,768
              
              
              9,596Accrued
                  expenses and other liabilities
              
              
              2,815
              
              
              2,890Income
                  taxes payable
              
              
              —
              
              
              176Total
                  current liabilities
              
              
              19,869
              
              
              19,448Long-term
                  debt, less current portion
              
              
              21,533
              
              
              27,033Other
                  long-term liabilities
              
              
              889
              
              
              139Total
                  liabilities
              
              
              42,291
              
              
              46,620Commitments
                  and contingencies (Note 13)Stockholders’
                  equity:Preferred
                  stock — $.0001 par value; 5,000 shares authorized; no shares issued or
                  outstanding
              
              
              —
              
              
              —Common
                  stock — $.0001 par value; 100,000 shares authorized; 41,801 and 41,676
                  shares issued andoutstanding at December 31, 2007 and 2006, respectively
              
              
              3
              
              
              3Additional
                  paid-in capital
              
              
              246,346
              
              
              245,237Accumulated
                  deficit
              
              
              (226,703
              )
              
              (229,735
              )Total
                  stockholders’ equity
              
              
              19,646
              
              
              15,505Total
                  liabilities and stockholders’ equity
              
              $
              61,937
              
              $
              62,125




See
        accompanying notes to the consolidated financial statements.


38


**STAMFORD
        INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
        STATEMENTS OF OPERATIONS**
 **(in
        thousands, except per share amounts)**
 
 **Predecessor Company (1)****Years Ended**
              
              
              
              **Year Ended****January 1, 2006****December 31,**
              
              **December 31,**
              
              **December 31,**
              
              **to**
              
              **December 31,****2007**
              
              **2006**
              
              **2005**
              
              **October 3, 2006**
              
              **2005**Revenues:Product
              
              $
              110,743
              
              $
              24,058
              
              $
              —
              
              $
              61,625
              
              $
              64,404Service,
                  maintenance and royalty
              
              
              —
              
              
              20
              
              
              118
              
              
              —
              
              
              —Total
                  revenues
              
              
              110,743
              
              
              24,078
              
              
              118
              
              
              61,625
              
              
              64,404Cost
                  of revenues:Product
              
              
              92,926
              
              
              19,801
              
              
              —
              
              
              48,351
              
              
              53,711Total
                  cost of revenues
              
              
              92,926
              
              
              19,801
              
              
              —
              
              
              48,351
              
              
              53,711Gross
                  margin
              
              
              17,817
              
              
              4,277
              
              
              118
              
              
              13,274
              
              
              10,693Operating
                  expenses:Sales
                  and marketing
              
              
              1,315
              
              
              322
              
              
              —
              
              
              912
              
              
              999General
                  and administrative
              
              
              9,938
              
              
              3,616
              
              
              553
              
              
              1,597
              
              
              1,817Related
                  party stock compensation
              
              
              507
              
              
              7,638
              
              
              —
              
              
              —
              
              
              —Total
                  operating expenses
              
              
              11,760
              
              
              11,576
              
              
              553
              
              
              2,509
              
              
              2,816Income
                  (loss) from operations
              
              
              6,057
              
              
              (7,299
              )
              
              (435
              )
              
              10,765
              
              
              7,877Other
                  (expense) income:Interest
                  income
              
              
              6
              
              
              566
              
              
              454
              
              
              —
              
              
              —Interest
                  expense
              
              
              (2,691
              )
              
              (775
              )
              
              (68
              )
              
              (507
              )
              
              (270
              )Management
                  and loan guaranty fees
              
              
              —
              
              
              —
              
              
              —
              
              
              (710
              )
              
              (323
              )Other
                  (expense) income
              
              
              (137
              )
              
              (22
              )
              
              256
              
              
              (2,826
              )
              
              —Total
                  other (expense) income, net
              
              
              (2,822
              )
              
              (231
              )
              
              642
              
              
              (4,043
              )
              
              (593
              )Income
                  (loss) before taxes
              
              
              3,235
              
              
              (7,530
              )
              
              207
              
              
              6,722
              
              
              7,284Provision
                  for income taxes
              
              
              203
              
              
              223
              
              
              —
              
              
              211
              
              
              56Net
                  income (loss)
              
              $
              3,032
              
              $
              (7,753
              )
              $
              207
              
              $
              6,511
              
              $
              7,228Basic
                  net income (loss) per share
              
              $
              0.07
              
              $
              (0.24
              )
              $
              0.01Shares
                  used in basic calculation
              
              
              41,749
              
              
              32,577
              
              
              28,918Diluted
                  net income (loss) per share
              
              $
              0.06
              
              $
              (0.24
              )
              $
              0.01Shares
                  used in diluted calculation
              
              
              47,647
              
              
              32,577
              
              
              33,438
 
 (1)  Because
        the Company had no operations at the time of the Concord Steel acquisition
        (see
        Note 1 and 16), Concord Steel is considered to be the “Predecessor” of the
        Company for accounting purposes and, therefore relevant prior year financial
        information regarding the Predecessor has been presented herein.
 
 See
        accompanying notes to the consolidated financial statements.
  39
  **STAMFORD
        INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
        STATEMENT OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
        (LOSS)**
 **Years
        Ended December 31, 2007, 2006 and 2005**
 **(in
        thousands)**
 
 **Accumulated****Additional**
              
              **Other**
              
              **Unearned**
              
              
              
              **Total****Common Stock**
              
              **Paid-in**
              
              **Comprehensive**
              
              **Stock**
              
              **Accumulated**
              
              **Stockholders'**
              
              **Comprehensive****Shares**
              
              **Amount**
              
              **Capital**
              
              **Income (Loss)**
              
              **Compensation**
              
              **Deficit**
              
              **Equity**
              
              **Income (Loss)**Balance,
                  December 31, 2004
              
              
              29,282
              
              $
              2
              
              $
              234,350
              
              $
              —
              
              $
              (135
              )
              $
              (222,189
              )
              $
              12,028Restricted
                  stock grant and related compensation
              
              
              66
              
              
              —
              
              
              50
              
              
              —
              
              
              27
              
              
              —
              
              
              77Change
                  in unrealized loss on available-for-sale securities
              
              
              —
              
              
              —
              
              
              —
              
              
              (4
              )
              
              —
              
              
              —
              
              
              (4
              )
              $
              (4
              )Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              207
              
              
              207
              
              
              207Balance,
                  December 31, 2005
              
              
              29,348
              
              $
              2
              
              $
              234,400
              
              $
              (4
              )
              $
              (108
              )
              $
              (221,982
              )
              $
              12,308
              
              $
              203Exercise
                  of stock options
              
              
              100
              
              
              —
              
              
              74
              
              
              —
              
              
              —
              
              
              —
              
              
              74Restricted
                  stock grant and related compensation
              
              
              425
              
              
              —
              
              
              399
              
              
              —
              
              
              108
              
              
              —
              
              
              507Registered
                  stock issued to CRC
              
              
              3,529
              
              
              —
              
              
              3,000
              
              
              —
              
              
              
              
              
              —
              
              
              3,000Unregistered
                  stock issued
              
              
              8,274
              
              
              1
              
              
              7,364
              
              
              —
              
              
              —
              
              
              —
              
              
              7,365Change
                  in unrealized loss on available-for-sale securities
              
              
              —
              
              
              —
              
              
              —
              
              
              4
              
              
              —
              
              
              —
              
              
              4
              
              $
              4Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (7,753
              )
              
              (7,753
              )
              
              (7,753
              )Balance,
                  December 31, 2006
              
              
              41,676
              
              $
              3
              
              $
              245,237
              
              $
              —
              
              $
              —
              
              $
              (229,735
              )
              $
              15,505
              
              $
              (7,749
              )Exercise
                  of stock options
              
              
              84
              
              
              —
              
              
              47
              
              
              —
              
              
              —
              
              
              —
              
              
              47Stock
                  based compensation
              
              
              —
              
              
              —
              
              
              1,264
              
              
              —
              
              
              —
              
              
              —
              
              
              1,264Reclassification
                  of paid-in capital to long-term liability
              
              
              —
              
              
              —
              
              
              (298
              )
              
              —
              
              
              —
              
              
              —
              
              
              (298
              )Related
                  party stock compensation
              
              
              41
              
              
              —
              
              
              96
              
              
              —
              
              
              —
              
              
              —
              
              
              96Net
                  income
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              3,032
              
              
              3,032
              
              $
              3,032Balance,
                  December 31, 2007
              
              
              41,801
              
              $
              3
              
              $
              246,346
              
              $
              —
              
              $
              —
              
              $
              (226,703
              )
              $
              19,646
              
              $
              3,032
  40
  **STAMFORD
        INDUSTRIAL GROUP, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
 **(in
        thousands)**
 
 **Predecessor Company (1)****Years Ended**
              
              
              
              **Year Ended****January 1, 2006****December 31,**
              
              **December 31,**
              
              **December 31,**
              
              **to**
              
              **December 31,****2007**
              
              **2006**
              
              **2005**
              
              **October 3, 2006**
              
              **2005**Cash
                  flows from operating activities:Net
                  income (loss)
              
              $
              3,032
              
              $
              (7,753
              )
              $
              207
              
              $
              6,511
              
              $
              7,228Reconciliation
                  of net income (loss) to net cash provided by operating
                  activities:Depreciation
              
              
              586
              
              
              71
              
              
              —
              
              
              414
              
              
              443Amortization
                  of intangible assets
              
              
              1,048
              
              
              261
              
              
              —
              
              
              3
              
              
              4Provision
                  for doubtful accounts
              
              
              2
              
              
              —
              
              
              —
              
              
              13
              
              
              (20
              )Amortization
                  of debt issuance costs
              
              
              152
              
              
              60
              
              
              29
              
              
              —
              
              
              —Amortization
                  of discount on notes payable
              
              
              —
              
              
              —
              
              
              16
              
              
              —
              
              
              —Stock-based
                  compensation
              
              
              1,665
              
              
              330
              
              
              77
              
              
              —
              
              
              —Related
                  party stock compensation
              
              
              96
              
              
              7,542
              
              
              —
              
              
              —
              
              
              —(Discount
                  of) premium on investments, net
              
              
              —
              
              
              —
              
              
              (174
              )
              
              —
              
              
              —Changes
                  in assets and liabilities:Accounts
                  receivable
              
              
              933
              
              
              955
              
              
              —
              
              
              (5,930
              )
              
              (114
              )Inventory
              
              
              269
              
              
              (1,945
              )
              
              —
              
              
              312
              
              
              (3,986
              )Prepaid
                  expenses and other current assets
              
              
              65
              
              
              (343
              )
              
              (83
              )
              
              122
              
              
              (47
              )Other
                  assets
              
              
              87
              
              
              (172
              )
              
              —
              
              
              —
              
              
              —Accounts
                  payable
              
              
              (1,828
              )
              
              2,846
              
              
              —
              
              
              3,408
              
              
              988Accrued
                  expenses and other liabilities
              
              
              (251
              )
              
              (798
              )
              
              176
              
              
              51
              
              
              385Other
                  liabilities
              
              
              51
              
              
              —
              
              
              —
              
              
              —
              
              
              (588
              )Net
                  cash provided by operating activities
              
              
              5,907
              
              
              1,054
              
              
              248
              
              
              4,904
              
              
              4,293Cash
                  flows from investing activities:Acquisition
                  of Concord Steel, net of cash acquired
              
              
              —
              
              
              (45,335
              )
              
              —
              
              
              —
              
              
              —Purchases
                  of short-term investments and marketable securities
              
              
              —
              
              
              —
              
              
              (20,539
              )
              
              (3,312
              )
              
              —Sales
                  and maturities of short-term investments and marketable
                  securities
              
              
              —
              
              
              14,663
              
              
              6,050
              
              
              —
              
              
              —Capital
                  expenditures for property and equipment
              
              
              (5,421
              )
              
              (624
              )
              
              —
              
              
              (570
              )
              
              (824
              )Net
                  cash used in investing activities
              
              
              (5,421
              )
              
              (31,296
              )
              
              (14,489
              )
              
              (3,882
              )
              
              (824
              )Cash
                  flows from financing activities:Net
                  proceeds on line of credit
              
              
              2,000
              
              
              3,286
              
              
              —
              
              
              6,613
              
              
              1,708Proceeds
                  from long-term debt
              
              
              —
              
              
              28,000
              
              
              —
              
              
              —
              
              
              —Debt
                  issuance costs
              
              
              —
              
              
              (618
              )
              
              —
              
              
              —
              
              
              —Principal
                  payments on long-term debt
              
              
              (5,000
              )
              
              —
              
              
              —
              
              
              (208
              )
              
              (305
              )Distributions
                  to members
              
              
              —
              
              
              —
              
              
              —
              
              
              (8,430
              )
              
              (3,948
              )Proceeds
                  from sale of common stock
              
              
              —
              
              
              3,000
              
              
              —
              
              
              —
              
              
              —Proceeds
                  from exercise of stock options and warrants
              
              
              47
              
              
              74
              
              
              —
              
              
              —
              
              
              —Net
                  cash (used in) provided by financing activities
              
              
              (2,953
              )
              
              33,742
              
              
              —
              
              
              (2,025
              )
              
              (2,545
              )Net
                  (decrease) increase in cash and cash equivalents
              
              
              (2,467
              )
              
              3,500
              
              
              (14,241
              )
              
              (1,003
              )
              
              924Cash
                  and cash equivalents at beginning of year
              
              
              3,703
              
              
              203
              
              
              14,444
              
              
              1,003
              
              
              79Cash
                  and cash equivalents at end of year
              
              $
              1,236
              
              $
              3,703
              
              $
              203
              
              $
              -
              
              $
              1,003Supplemental
                  cash flow disclosure:Interest
                  paid
              
              $
              2,825
              
              $
              73
              
              $
              68
              
              $
              —
              
              $
              264Taxes
                  paid
              
              $
              306
              
              $
              132
              
              $
              —
              
              $
              —
              
              $
              14Increase
                  in other long term liabilities and decrease in paid-in capital
                (See
                  Note 8).
              
              $
              298
              
              $
              —
              
              $
              —
              
              $
              —
              
              $
              —
 
 (1)  Because
        the Company had no operations at the time of the Concord Steel acquisition
        (see
        Notes 1 and 16), Concord Steel is considered to be the “Predecessor” of the
        Company for accounting purposes and, therefore relevant prior year financial
        information regarding the Predecessor has been presented herein.
  See
        accompanying notes to the consolidated financial statements




41




**STAMFORD
      INDUSTRIAL GROUP, INC.**


**NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS**


**December
      31, 2007, 2006 and 2005**


**(in
      thousands, unless otherwise indicated)**





**1.
      Organization**





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





The
      Company was initially established in 1996 under the name “Net Perceptions,
      Inc.”, as a provider of marketing software solutions. In 2003, as a result of
      continuing losses and the decline of its software business, the Company began
      exploring various strategic alternatives, including sale or liquidation, and
      ceased the marketing and development of its marketing solutions software
      business in 2004. On April 21, 2004, the Company announced an investment into
      the Company by Olden Acquisition LLC (“Olden”), an affiliate of Kanders &
Company, Inc., an entity owned and controlled by the Company’s Non-Executive
      Chairman, Warren B. Kanders, for the purpose of initiating a strategy to
      redeploy the Company’s assets and use its cash, cash equivalent assets and
      marketable securities to enhance stockholder value. As part of this strategy,
      on
      October 3, 2006, the Company acquired the assets of CRC Acquisition Co. LLC
      (“CRC”), a manufacturer of steel counterweights doing business as Concord Steel
      (“Concord”). With this initial acquisition, management is now focused on
      building a diversified global industrial manufacturing group through both
      organic and acquisition growth initiatives that are expected to complement
      and
      diversify existing business lines. Because the Company had no operations at
      the
      time of the acquisition of the assets of Concord, the Concord business is
      considered to be a predecessor company (“Predecessor”). Accordingly, relevant
      financial information regarding the Predecessor, including financial statements
      for the year ended December 31, 2005 and the period from January 1, 2006 through
      October 3, 2006 has been presented (see Note 16 for a more detailed explanation
      of the acquisition).




**2.
      Summary of significant accounting policies**





*Basis
      of presentation*





The
      consolidated financial statements include accounts of the Company and its
      wholly-owned subsidiaries. All inter-company accounts and transactions have
      been
      eliminated.





*Use
      of estimates*





The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts therein.
      Management’s estimates are based on historical experience and on various other
      assumptions that are believed to be reasonable under the circumstances.
      Estimates inherent in the preparation of the accompanying consolidated financial
      statements include the carrying value of long-lived assets, valuation allowances
      for receivables, inventories and deferred income tax assets, liabilities for
      potential litigation claims and settlements, and potential liabilities related
      to tax filings in the ordinary course of business. Management’s estimates and
      assumptions are evaluated on an on-going basis. Due to the inherent uncertainty
      involved in making estimates, actual results may differ from those
      estimates.





*Revenue
      recognition*





The
      Company’s revenue recognition policy for the sale of steel counterweights or
      structural weldments requires the recognition of sales when there is evidence
      of
      a sales agreement, the delivery of goods has occurred, the sales price is fixed
      or determinable and the collectability of revenue is reasonably assured. The
      Company generally records sales upon shipment of product to customers and
      transfer of title under standard commercial terms.


42


*Concentrations
      of credit risk and significant customers*





Financial
      instruments that potentially subject the Company to credit risk consist
      primarily of accounts receivable. The Company grants credit to customers in
      the
      ordinary course of business. Revenues for 2007 were primarily from three major
      customers accounting for 38%, 13% and 9% of total revenues, respectively.
      Revenues for 2006 were primarily from three major customers accounting for
      38%,
      10% and 9% of total revenues, respectively. Revenues for 2005 were primarily
      from three major customers accounting for 42%, 9% and 8% of total revenues,
      respectively. At December 31, 2007, outstanding accounts receivable from these
      customers were $4.0 million.





*Cash
      and cash equivalents*





The
      Company considers all highly liquid investments purchased with an original
      maturity of three months or less to be cash equivalents.





*Accounts
      Receivable*





Accounts
      receivable consist of amounts billed and currently due from customers. The
      Company extends credit to customers in the normal course of business and
      maintains an allowance for estimated losses resulting from the inability or
      unwillingness of customers to make required payments. The accrual for estimated
      losses is based on its historical experience, existing economic conditions
      and
      any specific customer collection issues the Company has identified. The
      allowance for doubtful accounts and accrued credits for returns amounted to
      $0.1
      million and $0 at December 31, 2007 and 2006, respectively.




*Inventories*




Inventories
      are stated at the lower of cost or market using the first-in, first-out (“FIFO”)
      average cost method. Costs included in inventories consist of materials, labor
      and manufacturing overhead, which are related to the purchase and production
      of
      inventories.




*Property,
      Plant and Equipment*




Property,
      plant and equipment are recorded at cost and depreciated over their estimated
      useful lives utilizing the straight-line method. The estimated useful lives
      range from 39 years for buildings and improvements, 10 years for machinery
      and
      equipment, 7 years for office equipment and furniture and 5 years for
      transportation equipment. Depreciation expense was $0.6 million, $0.1 million
      and $0 for the years ended December 31, 2007, 2006 and 2005,
      respectively.




*Impairment
      of Long-Lived Assets*




Property,
      plant and equipment and other purchased intangible assets are reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount may not be recoverable. If the sum of the expected undiscounted
      cash flows is less than the carrying value of the related asset or group of
      assets, a loss is recognized for the difference between the fair value and
      carrying value of the asset or group of assets. Such analyses necessarily
      involve significant judgment.




*Fair
      value of financial instruments*





The
      carrying amounts of the Company’s financial instruments, which include cash and
      cash equivalents, note payable, long-term debt and interest rate swap
      approximate their fair values at December 31, 2007 and 2006.





*Deferred
      financing costs*




Deferred
      financing costs are primarily related to the acquisition by the Company of
      Concord Steel in the fourth quarter of 2006 and costs associated with the
      issuance of long-term debt related to the investment in the Company by Olden
      Acquisition LLC in the second quarter of 2004. Deferred financing costs are
      amortized using the interest method over the term of the debt. Amortization
      expense was $0.2 million, $0.1 million and $0, for the years ended December
      31,
      2007, 2006 and 2005, respectively.


43




*Environmental
      Remediation Costs*




The
      Company accrues for losses associated with environmental remediation obligations
      when such losses are probable and reasonably estimable. The liabilities are
      developed based on currently available information and reflect the participation
      of other potentially responsible parties, depending on the parties’ financial
      condition and probable contribution. The accruals are recorded at undiscounted
      amounts and are reflected as liabilities on the accompanying consolidated
      balance sheets. Recoveries of environmental remediation costs from other parties
      are recorded as assets when their receipt is deemed probable. The accruals
      are
      adjusted as further information develops or circumstances change. There are
      no
      amounts accrued by the Company with respect to environmental remediation costs
      at December 31, 2007 and 2006.




*Income
      taxes*




The
      Company calculates income taxes in accordance with the provisions of SFAS No.
      109, “Accounting for Income Taxes,” which requires the use of the liability
      method of accounting for income taxes. Income taxes are deferred for all
      temporary differences between the financial statement and income tax basis
      of
      assets and liabilities. Further, deferred tax amounts are recognized for the
      expected benefits of available net operating loss carryforwards and tax credit
      carryforwards. Deferred taxes are recorded using the enacted tax rates scheduled
      by tax law to be in effect when the temporary differences are expected to settle
      or be realized. Deferred tax assets are reduced by a valuation allowance to
      the
      extent that utilization is considered uncertain. In addition, the Company
      continuously evaluates its tax contingencies in accordance with FASB
      Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”. The Company
      will include interest and penalties related for uncertain tax positions as
      a
      component of its provision for income taxes.




The
      Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN
      48”), on January 1, 2007. Upon the adoption of FIN 48, the Company commenced a
      review of all open tax years in all jurisdictions. The Company does not believe
      it has included any “uncertain tax positions” in its federal income tax return
      or any of the state income tax returns it is currently filing, and has no
      significant unrecognized tax benefits recorded. The Company has made an
      evaluation of the potential impact of additional state taxes being assessed
      by
      jurisdictions in which the Company does not currently consider itself liable.
      The Company does not anticipate that such additional taxes, if any, would result
      in a material change to its financial position.





*Income
      per share*




Basic
      income per share is computed using net income (loss) and the weighted average
      number of common shares outstanding. Diluted income per share reflects the
      weighted average number of common shares outstanding plus any potentially
      dilutive shares outstanding during the period. Potentially dilutive shares
      consist of shares issuable upon the exercise of stock options, convertible
      notes, and restricted stock awards.





*Comprehensive
      income (loss)*





Comprehensive
      income (loss), as defined by SFAS No. 130, “Reporting Comprehensive Income,”
includes net loss and items defined as other comprehensive income. SFAS No.
      130
      requires that items defined as other comprehensive income (loss), such as
      foreign currency translation adjustments and unrealized gains and losses on
      certain investments in debt securities, be separately classified in the
      financial statements. Such disclosures are included in the accompanying
      consolidated statements of stockholders’ equity and comprehensive income
      (loss).





*Stock-based
      compensation*





On
      January 1, 2006, the Company adopted Statement of Financial Accounting Standards
      No. 123 (revised 2004), “Share-Based Payment” (“FAS 123R”), requiring
      recognition of expense related to the fair value of stock option awards. The
      Company recognizes the cost of the share-based awards on a straight-line basis
      over the requisite service period of the award, which is usually the vesting
      period. Prior to January 1, 2006, the Company accounted for stock option plans
      under the recognition and measurement provisions of Accounting Principles Board
      Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and
      related interpretations, as permitted by Statement of Financial Accounting
      Standard No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”).
      Effective January 1, 2006, the Company adopted the fair value provisions of
      FAS
      123R, using the modified prospective transition method. Under this transition
      method, compensation cost recognized during the period ended December 31, 2006
      includes compensation cost for all share-based payments granted prior to, but
      not yet vested as of January 1, 2006, based on the grant date fair value
      estimated in accordance with the original provisions of SFAS 123. Results for
      prior periods have not been restated.


44






*Derivatives
      and hedging activities.* **





The
      Company recognizes all derivatives on the balance sheet as either an asset
      or
      liability measured at fair value. Changes in the derivative’s fair value are
      recognized currently in income unless specific hedge accounting criteria are
      met. Special accounting for qualifying hedges allows a derivative’s gains and
      losses to offset related results on the hedged item in the statement of income
      and requires the Company to formally document, designate and assess
      effectiveness of transactions that receive hedge accounting. Derivatives that
      are not hedges are adjusted to fair value through income. If the derivative
      qualifies as a hedge, depending on the nature of the hedge, changes in the
      fair
      value of derivatives are either offset against the change in fair value of
      hedged assets, liabilities, or firm commitments through earnings, or recognized
      in other comprehensive income until the hedged item is recognized in earnings.
      The ineffective portion of a derivative’s change in fair value is immediately
      recognized in earnings.





*Recently
      issued accounting pronouncements*





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





In
      September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
      No. 157 “Fair Value Measurements” which provides enhanced guidance for using
      fair value to measure assets and liabilities. The standard also expands the
      amount of disclosure regarding the extent to which companies measure assets
      and
      liabilities at fair value, the information used to measure fair value, and
      the
      effect of fair value measurements on earnings. The standard applies whenever
      other standards require (or permit) assets or liabilities to be measured at
      fair
      value but does not expand the use of fair value in any new circumstances. This
      statement is effective for financial statements issued for fiscal years
      beginning after November 15, 2007, and interim periods within those fiscal
      years. The Company does not anticipate any material impact to its financial
      statements from the adoption of this standard.





**3.
      Inventories**





Inventories
      as of December 31, 2007 and 2006 are
      as
      follows:


**December
                    31,**
                
                **December
                    31,****2007**
                
                **2006**Finished
                    goods
                
                $
                101
                
                $
                89Work-in-process
                
                
                1,197
                
                
                613Raw
                    materials
                
                
                12,527
                
                
                13,392$
                13,825
                
                $
                14,094




45




**4.
      Property, Plant and Equipment**




Property,
      plant and equipment, net as of December 31, 2007 and 2006 are as
      follows:


**December
                  31,**
              
              **December
                  31,****2007**
              
              **2006**Land
              
              $
              350
              
              $
              350Building
                  and improvements
              
              
              1,294
              
              
              883Leasehold
                  improvements
              
              
              1,275
              
              
              —Machinery
                  and equipment
              
              
              5,361
              
              
              1,878Office
                  equipment and furniture
              
              
              985
              
              
              196Construction
                  in progress
              
              
              —
              
              
              5379,265
              
              
              3,844Less:
                  Accumulated depreciation
              
              
              (657
              )
              
              (71
              )Property,
                  plant and equipment, net
              
              $
              8,608
              
              $
              3,773




**5.
      Intangible assets**





As
      part
      of the acquisition of Concord, the Company allocated a portion of the purchase
      cost to intangible assets consisting of trade names, customer relationships
      and
      non-compete agreements. These intangible assets are amortized over their
      expected useful lives which are between 3 and 12 years using the straight-line
      method (see Note 16 for further explanation of the acquisition).





Intangible
      assets, net of amortization at December 31, 2007 and 2006 are as
      follows:


**December
                    31, 2007****Accumulated****Gross**
                
                **Amortization**
                
                **Net**
                
                **Life**Intangibles
                    subject to amortization:Customer
                    relationships
                
                $
                12,399
                
                $
                (1,294
                )
                $
                11,105
                
                
                12
                    yrsNon-compete
                    agreements
                
                
                37
                
                
                (15
                )
                
                22
                
                
                3
                    yrsIntangibles
                    not subject to amortization:Trade
                    name
                
                
                9,397
                
                
                —
                
                
                9,397
                
                
                —Intangibles,
                    net
                
                $
                21,833
                
                $
                (1,309
                )
                $
                20,524
  **December
                    31, 2006****Accumulated****Gross**
                
                **Amortization**
                
                **Net**
                
                **Life**Intangibles
                    subject to amortization:Customer
                    relationships
                
                $
                12,399
                
                $
                (258
                )
                $
                12,141
                
                
                12
                    yrsNon-compete
                    agreements
                
                
                37
                
                
                (3
                )
                
                34
                
                
                3
                    yrsIntangibles
                    not subject to amortization:Trade
                    name
                
                
                9,397
                
                
                —
                
                
                9,397
                
                
                —Intangibles,
                    net
                
                $
                21,833
                
                $
                (261
                )
                $
                21,572


46


The
      following table shows the expected amortization of other intangible assets
      over
      the next five years:


**2008**
                ****
                **2009**
                ****
                **2010**
                ****
                **2011**
                ****
                **2012**
                ********
                ****Intangibles
                    subject to amortization:Customer
                    relationships
                
                $
                1,033
                
                $
                1,033
                
                $
                1,033
                
                $
                1,033
                
                $
                1,033Non-compete
                    agreements
                
                
                12
                
                
                10
                
                
                —
                
                
                —
                
                
                —$
                1,045
                
                $
                1,043
                
                $
                1,033
                
                $
                1,033
                
                $
                1,033




**6.
      Accrued expenses and other liabilities**





Accrued
      expenses and other liabilities of the Company as of December 31, 2007 and 2006
      are as follows:


**December
                  31,****2007**
              
              **December
                  31,****2006**Accrued
                  compensation, benefits and commissions
              
              $
              705
              
              $
              706Accrued
                  interest payable
              
              
              339
              
              
              701Accrued
                  professional services
              
              
              343
              
              
              25Accrued
                  insurance
              
              
              426
              
              
              216Accrued
                  property taxes
              
              
              33
              
              
              41Accrued
                  other liabilities
              
              
              969
              
              
              1,201$
              2,815
              
              $
              2,890




**7.
      Long-term Debt and Notes Payable**





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





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





At
      December 31, 2007 and 2006, the outstanding balance from the revolving credit
      facility amounted to $5.3 million and $3.3 million, respectively. At December
      31, 2007, the Company had $3.1 million available in additional borrowings net
      of
      $1.6 million in outstanding letters of credit which have not been drawn upon.
      The balance under the term loan at December 31, 2007 and 2006 was $23.0 million
      and $28.0 million, respectively. At December 31, 2007 and 2006, the Company
      had
      $ 4.0 million and $3.5 million, respectively, classified as current and $19.0
      million and $24.5 million, respectively classified as long-term. During the
      period ended December 31, 2007 the Company was in compliance with all
      financial covenants under the bank credit facilities. The Company’s future
      compliance with its financial covenants under the bank credit facilities will
      depend on its ability to generate earnings and manage its assets effectively.
      The bank credit facilities also has various non-financial covenants, requiring
      the Company to refrain from taking certain actions (as described above) and
      requiring it to take certain actions, such as keeping in good standing the
      corporate existence, maintaining insurance, and providing the bank lending
      group
      with financial information on a timely basis.


47


Borrowings
      under the Credit Agreement bear interest, at the Company’s election, at either
      (i) a rate equal to three month variable London Interbank Offer Rate (“LIBOR”),
      plus an applicable margin ranging from 1.25% to 2.5%, depending on certain
      conditions, or (ii) an alternate base rate which will be the greater of (a)
      the
      Federal Funds rate plus 0.5% or (b) the prime rate publicly announced by the
      Agent as its prime rate, plus, in both cases, an applicable margin ranging
      from
      0% to 1.0%, depending on certain conditions. At December 31, 2007 and 2006,
      respectively, the applicable interest rate for the outstanding borrowings under
      the Credit Agreement was 7.24% and 7.87%, respectively.





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





The
      Company is exposed to interest rate volatility with regard to existing issuances
      of variable rate debt. Primary exposure includes movements in the U.S. prime
      rate and LIBOR. The Company uses interest rate swaps to reduce interest rate
      volatility. On January 2, 2007, the Company entered into an interest rate
      protection agreement that has approximately $12.3 million of interest rate
      swaps
      fixing interest rates between 5.0% and 5.8%.





On
      April
      21, 2004, the Company closed on an investment into the Company by Olden
      Acquisition LLC (“Olden”), an affiliate of Kanders & Company, Inc., for the
      purpose of initiating a strategy to redeploy the Company’s assets and use the
      Company’s cash, cash equivalent assets and marketable securities to enhance
      stockholder value. The Company issued and sold to Olden a 2% ten-year
      Convertible Subordinated Note, which is convertible after one year (or earlier
      upon a call by the Company and in certain other circumstances) at a conversion
      price of $0.45 per share of Company common stock into approximately 19.9% of
      the
      outstanding common equity of the Company as of the closing date. Proceeds to
      the
      Company from this transaction totaled approximately $2.5 million before
      transaction costs of $0.3 million. The transaction costs are being amortized
      over ten years, the term of the debt. Interest on the note accrues semi-annually
      but is not payable currently or upon conversion of the note. The note matures
      on
      April 21, 2014. The convertible subordinated note was deemed to include a
      beneficial conversion feature. At the date of issue, the Company allocated
      $0.1
      million to the beneficial conversion feature and amortized the beneficial
      conversion feature over one year (the period after which the note is
      convertible). As of December 31, 2007 and 2006, the outstanding balance on
      the
      note payable amounted to $2.5 million and is classified as long-term
      debt.


48


As
      of
      December 31, 2007 and 2006, the Company had long-debt and notes payable
      consisting of the following:


**December
                  31,****2007**
              
              
              **2006**Five-Year
                  Senior Secured Term Loan Due June 30, 2011
              
              $
              23,000
              
              $
              28,0002%
                  Convertible Note Due April 21, 2014
              
              
              2,533
              
              
              2,533Total
                  long-term debt and notes payable
              
              $
              25,533
              
              $
              30,533Less:
                  Current portion of long-term debt
              
              
              (4,000
              )
              
              (3,500
              )Long-term
                  debt and notes payable, less current portion
              
              $
              21,533
              
              $
              27,033





Aggregate
      maturities of long-term debt and notes payable at December 31, 2007 are
      summarized below:




2008
                
                $
                4,0002009
                
                
                4,0002010
                
                
                4,0002011
                
                
                11,0002012
                
                
                —Thereafter
                
                
                2,533Total
                
                $
                25,533


**8.
      Other long-term liabilities**




**December
                  31,****2007**
              
              **December
                  31,****2006**Deferred
                  compensation
              
              $
              699
              
              $
              —Accrued
                  interest payable
              
              
              190
              
              
              139$
              889
              
              $
              139


Effective
      December 27, 2007, the Company and Albert Weggeman entered into a deferred
      compensation agreement pursuant to which Mr. Weggeman would be entitled to
      receive deferred compensation of up to $1,519,766, which may be reduced if
      the
      stock price at the time of distribution is less than $1.25. The deferred
      compensation shall vest on the following basis: (i) 19.4% shall be immediately
      vested; (ii) 30.6% shall vest in twenty-two equal monthly consecutive tranches
      commencing on December 27, 2007, subject to Mr. Weggeman being employed by
      the Company on each vesting date; (iii) up to 50.0% shall vest as follows,
      provided that Mr. Weggeman is actively employed as of the vesting date: (A)
      16.7% shall vest as of March 31, 2008, if the Company’s Adjusted Earnings Before
      Interest Taxes Depreciation and Amortization (“Adjusted EBITDA”), as more fully
      described in the agreement, for the year ending December 31, 2007
      (“Year 1”) is not less than $13,800,000 (the “Year 1 Target”); if the Year
      1 Target is not achieved, and if the sum of the Company’s Adjusted EBITDA for
      the years ending December 31, 2007 and 2008 is not less than the sum of the
      Year
      1 Target plus the Year 2 Target (as defined below), then such 16.7% shall
      vest as of March 31, 2009; (B) 16.7% shall vest as of March 31, 2009, if the
      Company’s Adjusted EBITDA for the year ending December 31, 2008 (“Year 2”)
      is not less than $15,700,000 (the “Year 2 Target”); if the Year 2 Target is not
      achieved, and if the sum of the Company’s Adjusted EBITDA for the years ending
      December 31, 2008 and 2009 is not less than the sum of the Year 2 Target plus
      the Year 3 Target (as defined below), then such 16.7% shall vest as of March
      31,
      2010; (C) 16.6% shall vest as of March 31, 2010, if the Company’s Adjusted
      EBITDA for the year ending December 31, 2009 (“Year 3”) is not less than
      $17,200,000 (the “Year 3 Target”); if (i) the Year 3 Target is not
      achieved, and (ii) the Company renews the employment agreement of Mr.
      Weggeman for another three-year term, and (iii) the sum of the Company’s
      Adjusted EBITDA for the years ending December 31, 2009 and 2010 is not less
      than
      the sum of the Year 3 Target plus the Year 4 Target (as defined hereinafter),
      then such 16.6% shall vest as of March 31, 2011. “Year 4 Target” means an amount
      of the Company’s Adjusted EBITDA for the year ending December 31, 2010 that will
      be agreed upon by the parties in the renewed employment agreement, if
      any.


49


Amounts
      vesting on or before October 1, 2009, shall be payable not later than October
      31, 2009. Amounts vesting after October 1, 2009, shall be payable promptly
      after
      vesting. Payments shall be made in cash or in common stock of the Company,
      as
      determined by the Compensation Committee in its absolute
      discretion.




This
        deferred compensation agreement resulted from the modification of stock options
        described in Note 12. In accordance with Internal Revenue Code Section 409A
        and
        Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based
        Payment” (“FAS 123R”), a portion of the current year’s deferred compensation
        $699 thousand, was recorded as a $298 thousand reduction of paid-in
        capital.




**9.
      Per Share Data**




Basic
      net
      income (loss) per share is computed using net income (loss) and the weighted
      average number of common shares outstanding. Diluted income per share reflects
      the weighted average number of common shares outstanding plus any potentially
      dilutive shares outstanding during the period. Potentially dilutive shares
      consist of shares issuable upon the exercise of stock options, convertible
      notes
      and restricted stock awards. For the year ended December 31, 2007, diluted
      net
      income per share includes the impact of 132 potential common shares from
      the exercise of stock options and restricted stock awards, 5,628 potential
      common shares from the convertible note and 138 potential common shares from
      the
      stock fee agreement all of which were dilutive. For the year ended December
      31,
      2006, diluted net loss per share does not differ from basic net loss per share
      since potentially dilutive shares were anti-dilutive. Shares used in the diluted
      net loss per share for the period ended December 31, 2006 exclude the impact
      of
      513 common shares issuable upon the exercise of stock options, 5,628 common
      shares issuable upon the conversion of the convertible note and 141 common
      shares issuable pursuant to restricted stock awards. The diluted net income
      per
      share computation for the year ended December 31, 2005, includes the impact
      of
      299 potential common shares from the exercise of stock options and restricted
      stock awards and 4,221 potential common shares from the convertible note all
      of
      which were dilutive.




The
      following table shows the computation of the Company’s basic and diluted
      earnings per share for the years ended December 31, 2007, 2006 and
      2005.


**December
                    31,****2007**
                
                **2006**
                
                **2005****Basic
                    net income (loss) per share calculation:**Net
                    income (loss)
                
                $
                3,032
                
                $
                (7,753
                )
                $
                207Weighted
                    average common shares - basic
                
                
                41,749
                
                
                32,577
                
                
                28,918**Basic
                    net income (loss) per share**
                
                $
                0.07
                
                $
                (0.24
                )
                $
                0.01**Diluted
                    income (loss) per share calculation:**Net
                    income (loss)
                
                $
                3,032
                
                $
                (7,753
                )
                $
                207Weighted
                    average common shares - basic
                
                
                41,749
                
                
                32,577
                
                
                28,918Effect
                    of dilutive stock options
                
                
                77
                
                
                —
                
                
                47Effect
                    of restricted stock awards
                
                
                55
                
                
                —
                
                
                252Effect
                    of convertible note
                
                
                5,628
                
                
                —
                
                
                4,221Effect
                    of stock fee
                
                
                138
                
                
                —
                
                
                -Weighted
                    average common shares - diluted
                
                
                47,647
                
                
                32,577
                
                
                33,438**Diluted
                    net income (loss) per share**
                
                $
                0.06
                
                $
                (0.24
                )
                $
                0.01




50


**10.
      Income taxes**





The
      Company files a consolidated federal income tax return with its wholly-owned
      subsidiaries. The components of income tax expense are as follows (in
      thousands):




**For the Years Ended****December 31,****2007**
                
                **2006**
                
                **2005**Current:Federal
                
                $
                60
                
                $
                —
                
                $
                —State
                
                
                143
                
                
                223
                
                
                —$
                203
                
                $
                223
                
                $
                —


Deferred
      income taxes reflect the tax effects of temporary differences between the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      the amounts used for income tax purposes. Significant components of the
      Company’s deferred tax assets are as follows:




**December
                  31,****2007**
              
              **2006**Deferred
                  tax assets:Net
                  operating loss carry-forwards
              
              $
              42,036
              
              $
              42,986Research
                  and development credit carry-forwards
              
              
              151
              
              
              151Intangible
                  assets and other accrued / current Liabilities
              
              
              1,251
              
              
              1,216AMT
                  credit
              
              
              60
              
              
              —Total
                  deferred tax assets
              
              
              43,498
              
              
              44,353Valuation
                  allowance
              
              
              (35,446
              )
              
              (36,301
              )Total
                  net deferred income taxes
              
              $
              8,052
              
              $
              8,052





For
      federal income tax purposes, the Company has available net operating loss
      carryforwards of approximately $122.6 million and research and development
      credit carryforwards of $0.2 million at December 31, 2007. The net operating
      loss and research and development credit carryforwards expire in 2011 through
      2026, if not previously utilized. The utilization of these carryforwards may
      be
      subject to limitations based on past and future changes in ownership of the
      Company pursuant to Internal Revenue Code Section 382. The recognition of a
      valuation allowance for deferred tax assets requires management to make
      estimates about the Company’s future profitability. Deferred tax assets are
      reduced by a valuation allowance when, in the opinion of management, it is
      more
      likely than not that some portion or all of the deferred tax assets will not
      be
      realized. The estimates associated with the valuation of deferred tax assets
      are
      considered critical due to the amount of deferred tax assets recorded on the
      consolidated balance sheet and the judgment required in determining the
      Company’s future profitability. As described in Note 16, in conjunction with the
      acquisition of Concord, the Company reduced $8.1 million of valuation allowance
      as a reduction of goodwill and intangible assets acquired from the Concord
      acquisition, based on the expectation that these deferred tax assets are more
      likely than not to be realized. Deferred tax assets were $8.1 million at
      December 31, 2007 and 2006.


51


The
      following is a summary of the items that caused recorded income taxes to differ
      from income taxes computed using the statutory federal income tax
      rate:


**December
                    31,****2007**
                
                **2006**
                
                **2005**Computed
                    "expected" income tax expense (benefit)
                
                
                34.0
                %
                
                (34.0)
                %
                
                34.0
                %Increase
                    (decrease) in income taxes resulting from:State
                    income taxes, net of federal income taxes and credits
                
                
                2.5
                
                
                —
                
                
                5.0State
                    net operating loss adjustment
                
                
                —
                
                
                —
                
                
                (8.4
                )Non-cash
                    stock compensation
                
                
                —
                
                
                12.7
                
                
                —Change
                    in valuation allowance and other items
                
                
                (29.8
                )
                
                24.3
                
                
                (30.6
                )Income
                    tax expense
                
                
                6.7
                %
                
                3.0
                %
                
                —
                %





The
      Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
      Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109” (“FIN
      48”), on January 1, 2007. Upon the adoption of FIN 48, the Company commenced a
      review of all open tax years in all jurisdictions. The Company does not believe
      it has included any “uncertain tax positions” in its federal income tax return
      or any of the state income tax returns it is currently filing, and has no
      significant unrecognized tax benefits recorded. The Company has made an
      evaluation of the potential impact of additional state taxes being assessed
      by
      jurisdictions in which the Company does not currently consider itself liable.
      The Company does not anticipate that such additional taxes, if any, would result
      in a material change to its financial position.





During
      2007, the Company will have a tax deduction for the amortization of certain
      intangible assets that will exceed the book amortization. The tax benefit for
      this excess tax deduction is typically recorded as a decrease of intangible
      assets. However, because the Company is in a net operating loss position for
      tax
      purposes and has a full valuation allowance recorded for its net deferred tax
      asset, the Company has not recorded the tax benefit of this deduction in 2007,
      and will not record such benefit until the Company’s net operating losses are
      fully utilized. At December 31, 2007, approximately $0.1 million of net
      operating losses resulting from this deduction, and related tax benefit of
      approximately $43 thousand, have been excluded from the calculation of deferred
      tax assets.





**11.
      Employee Benefit Plan**





The
      Company sponsors a 401(k) Plan (the "Plan"), covering substantially all
      employees of the Company. Under this Plan, eligible employees who elect to
      participate in the Plan may contribute between 2% and 20% of eligible
      compensation (as defined herein) to the Plan. The Company made matching
      contributions during the years ended December 31, 2007 and 2006 of approximately
      $0.1 million, $0.1 million, respectively, and $0 million for the year ended
      December 31, 2005. ****





**12.
      Stockholders’ equity**





The
      Company is authorized to issue two classes of stock designated as common and
      preferred. As of December 31, 2007, the total number of shares that the Company
      was authorized to issue was 105,000,000 shares, of which 100,000,000 were common
      stock and 5,000,000 were preferred stock.





*Stock
      compensation plans*





On
      June
      21, 2007 the Company’s stockholders approved the Company’s 2007 Stock Incentive
      Plan (the “2007 Stock Incentive Plan”). Under the 2007 Stock Incentive Plan,
      10,000,000 shares of the Company’s common stock were initially reserved for
      issuance and available for awards, subject to an automatic annual increase
      equal
      to 4% of the total number of shares of the Company’s common stock outstanding at
      the beginning of each fiscal year (the “Annual Share Increase”). Awards under
      the 2007 Stock Incentive Plan may include non-qualified stock options, incentive
      stock options, stock appreciation rights, restricted shares of common stock,
      restricted units and performance awards. Awards under the 2007 Stock Incentive
      Plan may be granted to employees, officers, directors, consultants, independent
      contractors and advisors of the Company or any subsidiary of the Company. In
      any
      calendar year, no participant may receive awards under the 2007 Stock Incentive
      Plan for more than 2,500,000 shares of the Company’s common stock. Additionally,
      no more than 2,500,000 of the total shares of common stock available for
      issuance under the 2007 Stock Incentive Plan may be granted in the form of
      restricted shares, restricted units or performance awards, subject to an
      automatic annual increase, beginning with January in year 2008 and continuing
      through January in year 2017, equal to 75% of the total number of shares of
      the
      Company’s common stock increased pursuant to the Annual Share Increase. The 2007
      Stock Incentive Plan has a term of ten years expiring on June 21, 2017. As
      of
      December 31, 2007 the total number of options issued under 2007 Plan was 2.9
      million and primarily represented replacement options issued to management
      (see
      below for further discussion).


52


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





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





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





Outstanding
      options, consisting of incentive and non-qualified stock options, generally
      vest
      and become exercisable over a one to three year period from the date of grant.
      The outstanding options generally expire ten years from date of grant or upon
      retirement from the Company and are contingent upon continued employment during
      the applicable ten-year period.





Stock
      compensation expense related to all plans recorded in the general and
      administrative expense category within operating expenses in 2007, 2006 and
      2005, was $1.7 million, $0.4 million and $0.1 million,
      respectively.





Prior
      to
      January 1, 2007, the Company estimated the fair value of our option awards
      granted using the Black-Scholes option pricing model. Beginning in 2007, the
      Company has used the binomial valuation model. The binomial valuation model
      considers certain characteristics of fair value option pricing that are not
      considered under the Black-Scholes model. Similar to the Black-Scholes model,
      the binomial valuation model takes into account variables such as volatility,
      dividend yield, and the risk-free interest rate. However, the binomial valuation
      model also considers the expected exercise multiple (the multiple of exercise
      price to grant price at which exercises are expected to occur on average) and
      the termination rate (the probability of a vested option being cancelled due
      to
      the termination of the option holder) in computing the value of the option.
      Accordingly, the Company believes that the binomial valuation model should
      produce a fair value that is more representative of the value of an employee
      option.





The
      expected exercise multiple may be influenced by the Company’s future stock
      performance, stock price volatility, and employee turnover rates.


53


Effective
      December 27, 2007, the Company’s Board of Directors and Mr. Albert W. Weggeman,
      the President and Chief Executive Officer of the Company, agreed to cancel
      non-plan options to purchase 2,491,419 shares of the Company's common stock
      at
      an exercise price of $0.64 per share, which were granted to Mr. Weggeman
      pursuant to the terms of his employment agreement dated as of September 22,
      2006, and award to Mr. Weggeman options under the Company's 2007 Stock Incentive
      Plan to purchase 2,491,419 shares of common stock at an exercise price of $1.25
      per share, which was the closing price of the common stock as reported by
      the OTC Pink Sheet Electronic Quotation Service on December 27, 2007.
      Options to purchase (i) 484,442 shares are immediately vested and
      exercisable, (ii) 761,267 shares shall vest and become exercisable in 22
      equal consecutive monthly tranches commencing on January 3, 2008; provided,
      that, upon the occurrence of a Change-of-Control Event as defined in the 2007
      Stock Incentive Plan, the vesting of such 761,267 shares shall accelerate and
      they shall automatically vest, to the extent not previously vested, immediately
      prior to the effective time of such Change-of-Control Event, and
      (iii) 1,245,710 shares shall vest and become exercisable upon the
      occurrence of both of the following events: (A) the Company's common
      stock reaching a price of at least $5.12 per share (subject to adjustment for
      stock splits and similar events) for 20 consecutive trading days, and
      (B) the aggregate amount of Adjusted Earnings Before Interest Taxes
      Depreciation and Amortization (“Adjusted EBITDA”) for any four consecutive
      calendar quarters, commencing with the calendar quarter beginning January 1,
      2008, being not less than $70,000,000; provided, that, if the conditions
      specified in clauses (A) and (B) of this clause (iii) have not been satisfied
      on
      or before the fourth anniversary of the date of grant of such options, then
      the
      options described in this clause (iii) shall have lapsed without vesting. The
      1,245,710 shares acquirable under clause (iii) described above may not
      be sold or otherwise transferred (except on the death of Mr. Weggeman) prior
      to
      December 27, 2011.




Also
      effective December 27, 2007, the Company’s Board of Directors and Mr. Jonathan
      LaBarre, Chief Financial Officer of the Company, agreed to cancel options
      awarded to Mr. LaBarre under
      the Company's 1999 Equity Incentive Plan and
      pursuant to the terms of his employment agreement dated as of December 1, 2006,
      to purchase 250,000 shares of the Company's common stock at an exercise price
      of
      $2.56 per share and award to Mr. LaBarre options under the Company’s 2007 Stock
      Incentive Plan to purchase 250,000 shares of stock at an exercise price of
      $1.25
      per share, which was the closing price of the common stock as reported by the
      OTC Pink Sheet Electronic Quotation Service on December 27, 2007. Options to
      purchase 125,000 shares vest and become exercisable as follows: 41,666 options
      vest immediately; 41,667 options vest on December 1, 2008; and 41,667 options
      vest on December 1, 2009; provided, that upon the occurrence of a
      Change-of-Control Event as defined in the 2007 Stock Incentive Plan, the vesting
      of such 83,334 options shall accelerate, and they shall automatically vest,
      to
      the extent not previously vested, immediately prior to the effective time of
      such Change-of-Control Event. The other 125,000 options vest and become
      exercisable upon the occurrence of both of the following events: (A) the
      Company's common stock reaching a price of at least $5.12 per share (subject
      to
      adjustment for stock splits and similar events) for 20 consecutive trading
      days,
      and (B) the aggregate amount of Adjusted EBITDA for any four consecutive
      calendar quarters, commencing with the calendar quarter beginning January 1,
      2008, being not less than $70,000,000; provided, that if the conditions
      specified in clauses (A) and (B) above have not been satisfied on or before
      the
      fourth anniversary of the date of grant of such options, the options described
      in this sentence shall have lapsed without vesting. The shares of common stock
      acquirable on exercise of these options may not be sold or otherwise transferred
      (except on the death of Mr. LaBarre) prior to December 27, 2011.




The
      cancellation and award of new stock option awards to Albert Weggeman and
      Jonathan LaBarre as described above resulted in a stock option modification.
      The
      effect of the modification and change in management's
      estimates resulted in a reduction in stock compensation expense of
      $1.0 million and was recorded in operating expenses for the year ended December
      31, 2007.




The
      fair
      value of the options granted during the years ended December 31, 2007, 2006
      and
      2005 was estimated at the date of grant using the following
      assumptions:




**2007**
                
                **2006**
                
                **2005**Expected
                    Volatility
                
                
                46.0% - 51.9
                %
                
                50.0
                %
                
                57.0
                %Expected
                    dividends
                
                
                0.0
                %
                
                0.0
                %
                
                0.0
                %Expected
                    term (in years)
                
                
                4
                
                
                5
                
                
                5Risk
                    free rate
                
                
                4.4
                %
                
                4.7
                %
                
                4.0
                %Weighted-average
                    fair value of options granted
                
                
                $0.58
                
                
                $0.80
                
                
                $0.37




54




A
      summary
      of option activity under the Plans as of December 31, 2007 and 2006 and changes
      during the years ended is presented below:


**Options**
              
              **Shares**
                **(000)**
              
              **Weighted-**
                **Average**
                **Exercise**
                **Price**
              
              **Weighted-**
                **Average**
                **Remaining**
                **Contractual**
                **Term (years)**
              
              **Aggregate**
                **Intrinsic**
                **Value**Outstanding
                  at January 1, 2006
              
              
              321
              
              $
              0.68Granted
              
              
              1,370
              
              $
              0.81Exercised
              
              
              (100
              )
              $
              0.75Forfeited
                  or expired
              
              
              —
              
              
              —Outstanding
                  at December 31, 2006
              
              
              1,591
              
              $
              0.80
              
              
              8.2
              
              $
              2,625Vested
                  or expected to vest at December 31, 2006
              
              
              1,591
              
              $
              0.80
              
              
              8.2
              
              $
              2,625Exercisable
                  at December 31, 2006
              
              
              186
              
              $
              0.61
              
              
              8.0
              
              $
              342


**Options**
              
              **Shares**
                **(000)**
              
              **Weighted-**
                **Average**
                **Exercise**
                **Price**
              
              **Weighted-**
                **Average**
                **Remaining**
                **Contractual**
                **Term (years)**
              
              **Aggregate**
                **Intrinsic**
                **Value**Outstanding
                  at January 1, 2007
              
              
              1,591
              
              $
              0.80Granted
              
              
              1,533
              
              $
              1.29Exercised
              
              
              (84
              )
              $
              0.57Forfeited
                  or expired
              
              
              (1,499
              )
              $
              0.87Outstanding
                  at December 31, 2007
              
              
              1,541
              
              $
              1.22
              
              
              6.4
              
              $
              39Vested
                  or expected to vest at December 31, 2007
              
              
              1,541
              
              $
              1.22
              
              
              6.4
              
              $
              39Exercisable
                  at December 31, 2007
              
              
              576
              
              $
              1.20
              
              
              7.0
              
              $
              28




The
      weighted-average grant-date fair value of options granted during the years
      2007,
      2006, 2005 was $1.29, $0.80, and $0, respectively. The
      total
      intrinsic value of options exercised during the years ended December 31, 2007,
      2006, and 2005, was $0.1 million, $0.2 million, and $0, respectively.
      Unrecognized compensation cost at December 31, 2007 was $1.2
      million.





A
      summary
      of the status of the Company’s nonvested restricted share awards as of December
      31, 2007 and 2006, and changes during the years ended is presented
      below:


**Nonvested Restricted Shares**
              
              **Shares**
                **(000)**
              
              **Weighted-**
                **Average**
                **Grant Date**
                **Fair Value**Nonvested
                  at January 1, 2006
              
              
              310
              
              $
              0.54Granted
              
              
              506
              
              $
              0.92Vested
              
              
              (356
              )
              $
              0.89Forfeited
              
              
              —
              
              
              —Nonvested
                  at December 31, 2006
              
              
              460
              
              $
              1.15




55


**Nonvested Restricted Shares**
              
              **Shares**
                **(000)**
              
              **Weighted-**
                **Average**
                **Grant Date**
                **Fair Value**Nonvested
                  at January 1, 2007
              
              
              460
              
              $
              1.35Granted
              
              
              —
              
              
              —Vested
              
              
              (460
              )
              
              1.35Forfeited
              
              
              —
              
              
              —Nonvested
                  at December 31, 2007
              
              
              —
              
              
              —





As
      of
      December 31, 2007, there was no unrecognized compensation cost related to
      nonvested restricted share-based compensation arrangements granted under the
      Plans. The cost was recognized over a weighted-average period of 1 year. The
      total fair value of the shares vested during the years ended December 31, 2007,
      2006 and 2005 was $0.6 million, $7.7 million, and $0.1 million,
      respectively.





A
      summary
      of the activity under the performance plans as of December 31, 2007 and 2006,
      and changes during the years then ended is presented below:


**Performance Options**
              
              **Shares**
                **(000)**
              
              **Weighted**
                **Average**
                **Exercise Price**
              
              **Remaining**
                **Contractual**
                **Term (years)**
              
              **Aggregate**
                **Intrinsic Value**Outstanding
                  at January 1, 2006
              
              
              —Granted
              
              
              1,371
              
              $
              0.81Exercised
              
              
              —Forfeited
                or expired
              
              
              —Outstanding
                  at December 31, 2006
              
              
              1,371
              
              $
              0.81
              
              
              9.75
              
              $
              2,255Vested
                  or expected to vest at December 31, 2006
              
              
              1,371
              
              $
              0.81
              
              
              9.75
              
              $
              2,255Exercisable
                  at December 31, 2006
              
              
              —
              
              $
              —
              
              
              —
              
              $
              —


**Performance Options**
              
              **Shares**
                **(000)**
              
              **Weighted**
                **Average**
                **Exercise Price**
              
              **Remaining**
                **Contractual**
                **Term (years)**
              
              **Aggregate**
                **Intrinsic Value**Outstanding
                  at January 1, 2007
              
              
              1,371
              
              $
              0.81Granted
              
              
              1,533
              
              $
              1.29Exercised
              
              
              —Forfeited
                  or expired
              
              
              (1,433
              )
              $
              0.88Outstanding
                  at December 31, 2007
              
              
              1,471
              
              $
              1.25
              
              
              9.99
              
              $
              —Vested
                  or expected to vest at December 31,
                  2007
              
              
              1,471
              
              $
              1.25
              
              
              9.99
              
              $
              —Exercisable
                  at December 31, 2007
              
              
              —
              
              $
              —
              
              
              —
              
              $
              —


The
      weighted-average grant-date fair value of performance options granted during
      the
      years 2007, 2006, 2005 was $1.29, $0.81, and $0, respectively. The total
      intrinsic value of options exercised during the years ended December 31, 2007,
      2006, and 2005 was $0 for all three years. As of December 31, 2007, there was
      $0.8 million of total unrecognized compensation cost related to nonvested
      share-based compensation arrangements granted under the performance plans that
      may be recognized over a period of three years if performance conditions are
      met.


56


The
      following table shows the effect on December 31, 2005 net income and earnings
      per share if the fair value method of accounting had been applied. For purposes
      of this pro forma disclosure, the estimated fair value of an option utilizing
      the Black-Scholes option-pricing model is assumed to be amortized to expense
      over the option's vesting periods:


**Year Ended**
                **December 31, 2005**
                **(000)**Net
                  income, as reported
              
              $
              207Add:
                  Stock-based employee compensation expense included in reported
                  net
                  income
              
              
              77Deduct:
                  Total stock-based employee compensation expense determined under
                  fair
                  value based method for all awards
              
              
              (96
              )Pro
                  forma net income
              
              $
              188Basic
                  net income per share:As
                  reported
              
              $
              0.01Pro
                  forma
              
              $
              0.01Diluted
                  net income per share:As
                  reported
              
              $
              0.01Pro
                  forma
              
              $
              0.01




Cash
      received from exercises under all stock-based compensation arrangements for
      the
      year ended December 31, 2007 was approximately $47 thousand. The Company did
      not
      realize any windfall tax benefits for the tax deductions resulting from option
      exercises during the year ended December 31, 2007. The Company issues newly
      certificated shares upon exercise of options granted under stock-based
      compensation arrangements.





The
      Company did not capitalize stock-based compensation expense as part of the
      cost
      of an asset for any periods presented.




*Restricted
        stock*
 
 Effective
        December 27, 2007, the Company’s Board of Directors and Albert Weggeman agreed
        to cancel the restricted stock award that was granted to Mr. Weggeman pursuant
        to the terms of his employment agreement dated as of September 22, 2006,
        and to
        issue to Mr. Weggeman a new restricted stock award pursuant to the 2007 Stock
        Incentive Plan. Under the new award, Mr. Weggeman shall earn shares of
        restricted common stock on the following basis: (i) $1,000,000 of
        Restricted Stock upon the Company achieving annual earnings before interest,
        taxes, depreciation and amortization, and excluding capital gains ("Adjusted
        EBITDA" as defined in the Plan) as computed by the Company on or prior to
        its
        filing of its annual report on Form 10-K, on a consistent basis, of at least
        $25,000,000 in a fiscal year of the Company commencing after fiscal year
        ended
        December 31, 2007; (ii) $1,000,000 of Restricted Stock upon the Company
        achieving annual Adjusted EBITDA as computed by the Company on or prior to
        its
        filing of its annual report on Form 10-K, on a consistent basis, of at least
        $50,000,000 in a subsequent fiscal year of the Company; and
        (iii) $1,000,000 of Restricted Stock upon the Company achieving annual
        Adjusted EBITDA as computed by the Company on or prior to its filing of its
        annual report on Form 10-K, on a consistent basis, of at least $75,000,000
        in a
        subsequent fiscal year of the Company. Each of the grants specified in (i)-(iii)
        above are one-time grants which vest on the date on which the Company’s Form
        10-K is filed in respect of the fiscal year for which the grant is being
        made
        and the grant price will be the closing price of the Common Stock of the
        Company
        on the principal exchange on which it is traded on such date. The
        right
        Mr. Weggeman has to receive the shares of common stock underlying this
        restricted stock award shall expire upon the earlier to occur of: (i)
        termination of his employment agreement with the Company or (ii) the fifth
        anniversary of the grant date of the award.
 
 On
        October 3, 2006, in connection with the acquisition of the assets of Concord,
        the Company entered into an employment agreement with Mr. Paul Vesey, who
        serves
        as president of Concord, the Company's wholly-owned subsidiary which was
        acquired in 2006. Under the employment agreement, Mr. Vesey received a
        restricted stock award under the Company's 1999 Equity Incentive Plan, of
        which
        11,765 shares are fully vested, and 147,059 shares will vest if the Company
        achieves, in the fiscal year ending December 31, 2007, (i) revenue of $90.0
        million, or (ii) gross profit of at least $18.6 million, or
        (iii) EBITDA of at least $14.8 million. The aggregate value of the award
        was $0.3 million, which was based upon the Company’s closing stock price of
        $1.80 per share on October 3, 2006, the date of the grant. As of December
        31,
        2007 Mr. Vesey is fully vested in his shares.
  On
          September 22, 2006, the Company entered into a Restricted Stock Award Agreement
          with each of Mr. David A. Jones and Mr. Nicholas Sokolow, directors of
          the
          Company. Under each agreement, the directors have been awarded 100,000
          shares of
          restricted stock under the Company's 1999 Equity Incentive Plan, which
          vested
          immediately but are subject to prohibitions on transfer which expire in
          eight
          consecutive quarterly tranches of 12,500 shares, commencing September 30,
          2006
          and expiring June 30, 2008. The aggregate value of the awards was $0.2
          million,
          which was based upon the closing price of the Company’s common stock of $0.89 on
          September 22, 2006, the date of the grant. The Company recorded compensation
          expense of $0.2 million relating to these restricted stock awards for the
          year
          ended December 31, 2006.
 
 On
          April
          1, 2005, the Company issued restricted stock to Nigel Ekern, the Company’s then
          Chief Administrative Officer, in the amount of 66,667 shares of the Company’s
          common stock under the Company’s incentive plans, vesting over three years. The
          fair value of $0.1 million for the restricted stock will be amortized over
          the
          three-year vesting period.
 
 On
          April
          21, 2004, the Company granted restricted stock to Nigel Ekern, the Company’s
          then Chief Administrative Officer, in the amount of 364,583 shares of the
          Company’s common stock under the Company’s incentive plans, vesting over three
          years. The fair value of $0.2 million for the restricted stock was amortized
          over the three-year vesting period. The Company recorded total compensation
          expense of $0, $0.1 million, and $0.1 million relating to restricted stock
          grants during the years ended December 31, 2007, 2006, and 2005,
          respectively.
 
 See
          Note
          15 regarding Equity Compensation Agreement with Kanders & Company, Inc. and
          Note 16 for CRC’s investment in the Company.





57




*Stockholders’
        rights plan*
 
 In
        June
        2001, the Company entered into a Rights Agreement (the “Rights Agreement”),
        commonly known as a “poison pill.” Under the Rights Agreement, stockholders of
        record on June 14, 2001 were distributed Rights (the “Rights”) to acquire one
        one-thousandth of a share of the Company’s Series A Junior Participating
        Preferred Stock (the “Preferred Stock”), at a rate of one Right for each share
        of the Company’s common stock held by stockholders on such date. Each share of
        common stock issued after the June 14, 2001 record date has an attached Right.
        The Rights trade together with the common stock and generally become exercisable
        on the tenth day after a person or group (i) acquires 15% of more of the
        outstanding common stock or (ii) commences a tender offer or exchange offer
        that
        would result in such a person or group owning 15% or more of the common stock.
        In the event that a person or group acquires 15% or more of the Common Stock
        (a
“Stock Acquisition”), each Right not owned by the 15% or more stockholder (the
“Acquiring Person”) and its affiliates would become exercisable for, upon
        payment of the exercise price of the Right (currently, $15), either Preferred
        Stock or common stock in an amount equal to the then current exercise price
        of
        the Right divided by one half the then current market price of the common
        stock.
        Alternatively, in the event of certain business combinations following a
        Stock
        Acquisition, each Right not owned by the Acquiring Person and its affiliates
        would become exercisable for, upon payment of the exercise price of the Right,
        common stock of the Acquiring Person in an amount equal to the then current
        exercise price of the Right divided by one half the market price of the
        Acquiring Person’s common stock. At any time until ten days following a Stock
        Acquisition, the Rights are redeemable by the Company’s board of directors at a
        price of $.01 per Right. The Rights have no voting privileges. The Rights
        will
        terminate upon the earlier of the date of their redemption or ten years from
        the
        date of issuance.





On
      December 22, 2003, the Company’s Board of Directors adopted an amendment to the
      Rights Agreement. The amendment provides, in effect, that the rights issued
      under the Rights Agreement will not be separately distributed to the Company’s
      stockholders and become exercisable solely as a result of the commencement
      of a
      tender offer or exchange offer for all outstanding shares of the Company’s
      common stock. In addition, the amendment provides that the rights will not
      “flip-in” and entitle a holder to purchase shares of the Company’s common stock
      at a discount upon consummation of such an offer that results in the bidder
      beneficially owning at least 85% of the outstanding shares of the Company’s
      common stock, excluding for purposes of determining the number of shares of
      common stock outstanding those shares owned by directors who are also officers
      of the Company and shares owned by stock plans sponsored by the Company in
      which
      Company employee participants do not have the right to determine confidentially
      whether shares of Company common stock held subject to such stock plan(s) will
      be tendered in a tender offer or exchange offer. Also, pursuant to the
      amendment, the rights will not be triggered by a subsequent merger of the
      Company with such a bidder in which the Company’s stockholders receive the same
      consideration as was paid or issued in the tender offer or exchange offer.
      The
      amendment was intended to remove the Rights Agreement as an impediment to a
      bidder completing its offer and a subsequent merger, while also affording
      protection to stockholders who did not tender their shares in the bidder’s
      first-step tender or exchange offer, if the holders of a substantial majority
      of
      the Company’s stock elected to accept the bidder’s offer. The amendment also
      clarified that stockholders who entered into voting agreements or understandings
      solely regarding voting on the plan of liquidation would not be deemed, for
      purposes of the Rights Agreement, to beneficially own the shares owned by the
      other parties to such agreements or understandings. This aspect of the amendment
      was intended to allow stockholders to freely consult with one another, form
      groups, and enter into agreements, with respect to voting at the special meeting
      on the plan of liquidation, without triggering the rights under the Rights
      Agreement. However, since the plan of liquidation did not receive the requisite
      stockholder vote required for approval, this aspect of the amendment is no
      longer applicable.





On
      April
      21, 2004, in connection with closing of the Olden investment, the Company’s
      Board of Directors adopted an amendment to the Company’s Rights Agreement such
      that the transaction would not trigger the rights thereunder. Additionally,
      on
      September 22, 2006, in connection with the Company entering into an equity
      compensation agreement with Kanders & Company, Inc., the Company’s Board of
      Directors adopted an amendment to the Company’s Rights Agreement such that the
      transaction would not trigger the rights thereunder.





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


58




**13.
      Commitments and contingencies**





*Operating
      leases*





The
      Company has lease obligations for facilities and equipment that expire at
      various dates through 2017.





The
      Company’s corporate
      headquarters is currently located in Stamford, Connecticut.





As
      of
      December 31, 2007, future minimum lease payments under non-cancelable operating
      leases are as follow:


**Operating****Leases**2008
              
              **$**
              1,0512009
              
              
              1,0622010
              
              
              1,0722011
              
              
              9402012
              
              
              728Thereafter
              
              
              2,702**$**
              7,555




Rent
      expense for the years ended December 31, 2007, 2006 and 2005 was $1.2 million,
      $0.2 million and $0, respectively.





*Contingencies*





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




59




*Public
      Offering Securities Litigation*





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





The
      amended complaint generally alleges that the defendants violated federal
      securities laws by not disclosing certain actions taken by the underwriter
      defendants in connection with the Company’s initial public offering and
      follow-on public offering. The amended complaint alleges specifically that
      the
      underwriter defendants, with the Company’s direct participation and agreement
      and without disclosure thereof, conspired to and did raise and increase their
      underwriters’ compensation and the market prices of the Company’s common stock
      following its initial public offering and in its follow-on public offering
      by
      requiring their customers, in exchange for receiving allocations of shares
      of
      the Company’s common stock sold in its initial public offering, to pay excessive
      commissions on transactions in other securities, to purchase additional shares
      of the Company’s common stock in the initial public offering aftermarket at
      pre-determined prices above the initial public offering price, and to purchase
      shares of the Company’s common stock in its follow-on public offering. The
      amended complaint seeks unspecified monetary damages and certification of a
      plaintiff class consisting of all persons who acquired the Company’s common
      stock between April 22, 1999 and December 6, 2000. The plaintiffs have since
      agreed to dismiss the claims against Mr. Snyder and Mr. Donnelly without
      prejudice, in return for their agreement to toll any statute of limitations
      applicable to those claims; and those claims have been dismissed without
      prejudice.





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





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





On
      November 21, 2007, Concord Steel, Inc. (“Concord”) filed a Verified Complaint in
      the Delaware Chancery Court against Wilmington Steel, Kenneth Neary and William
      Woislaw for violation of non-compete provisions contained in an Asset Purchase
      Agreement, dated September 19, 2006 and certain related agreements, and at
      the
      same time moved for a preliminary injunction to prohibit breaches of those
      restrictive covenants.  On January 18, 2008, the defendants in that case
      served an Answer denying the material allegations of the Complaint and asserting
      counterclaims for tortious interference with business relations and
      defamation arising from alleged telephone calls made by Concord to the
      customer to which Wilmington was selling.  The case is in its early stages
      and since discovery has not been completed, the Company cannot opine as to
      the
      ultimate outcome, although the Company believes that it has valid claims and
      defenses.




**14.
      Segment data**





The
      Company views its operations and manages its business as one segment. Factors
      used to identify the Company’s single operating segment include the
      organizational structure of the Company and the financial information available
      for evaluation by the chief operating decision maker in making decisions about
      how to allocate resources and assess performance.




60




**15.
      Related Party Transactions**





The
      Company occupied space made available to it at no cost by Kanders & Company,
      Inc., an entity owned and controlled by the Company's Non-Executive Chairman,
      Warren B. Kanders until October 2007 at which time the Company relocated to
      its
      new offices.





On
      September 22, 2006, the Company entered into an Equity Compensation Agreement
      (the “Compensation Agreement”) with Kanders & Company, Inc. (“Kanders &
Company”), the sole stockholder of which is Warren B. Kanders, who was then the
      Company’s Executive Chairman of the Board of Directors, for prior strategic,
      consulting, investment banking and advisory services to the Company in
      connection with Company’s asset redeployment strategy. As compensation for such
      past services, the Company agreed to issue to Kanders & Company 8,274,000
      shares of its common stock. Kanders & Company will receive no cash payment
      for its services pursuant to the Compensation Agreement. Pursuant to the terms
      and conditions of the Compensation Agreement, the Company granted “demand” and
“piggyback” registration rights to Kanders & Company with respect to the
      shares of common stock that are issuable under the Compensation Agreement.
      The
      aggregate value of the awards was $7.4 million, which was based upon the closing
      price of the Company’s common stock of $0.89 on September 22, 2006, the date of
      the grant. The Company recorded compensation expense of $7.4 million relating
      to
      the grant of stock during the fourth quarter of the year ended December 31,
      2006.





On
      September 22, 2006, the Company entered into a five-year consulting agreement
      (the “Consulting Agreement”) with Kanders & Company, which became effective
      as of the closing of the Concord Acquisition (as described in Note 16) on
      October 3, 2006. In addition, effective with the closing of the Concord
      Acquisition, Mr. Kanders resigned as Executive Chairman of the Company’s Board
      of Directors upon being nominated and elected to the position of Non-Executive
      Chairman of the Board of Directors. The Consulting Agreement provides that
      Kanders & Company will render investment banking and financial advisory
      services to the Company on a non-exclusive basis, including strategic planning,
      assisting in the development and structuring of corporate debt and equity
      financings, introductions to sources of capital, guidance and advice as to
      (i)
      potential targets for mergers and acquisitions, joint ventures, and strategic
      alliances, including facilitating the negotiations in connection with such
      transactions, (ii) capital and operational restructuring, and
      (iii) shareholder relations.





The
      Consulting Agreement provides for Kanders & Company to receive a fee equal
      of (i) $0.5 million in cash per year during the term of the Consulting
      Agreement, payable monthly, and (ii) 1% of the amount by which the Company’s
      revenues as reported in the Company’s Form 10-K, or if no such report is filed
      by the Company, as reflected in the Company’s audited financial statements for
      the applicable fiscal year, exceeds $60.0 million, payable in shares of common
      stock of the Company (the “Stock Fee”) valued at the weighted average price of
      the Company’s Common Stock for the applicable fiscal year. Upon a
“change-in-control” (as defined in the Consulting Agreement), Kanders &
Company will be entitled to a one-time lump sum cash payment equal to three
      times the average amount Kanders & Company received during each of the two
      fiscal years preceding such “change-in-control,” subject to certain limitations
      as set forth in the Consulting Agreement. Upon the death or permanent disability
      of Mr. Kanders, the Company has agreed to make a one-time lump sum cash payment
      to Kanders & Company equal to that amount Kanders & Company would be
      entitled to receive upon a “change-in-control”. Upon payment of the amounts due
      to Kanders & Company either upon the occurrence of a “change-in-control”, or
      upon the death or permanent disability of Mr. Kanders, the Consulting Agreement
      will terminate. For the years ended December 31, 2007 and 2006, the Company
      paid
      Kanders and Company $0.5 million and $0.1 million, respectively. At December
      31,
      2007 and 2006, the Company had accrued liabilities of $0.6 million and $0.1
      million, respectively, related to the Kanders and Company consulting
      agreement.





During
      both of the years ended December 31, 2007 and 2006, the Company reimbursed
      Clarus Corporation (“Clarus”) an aggregate of $0.1 million and $0.1 million for
      telecommunication, professional and general office expenses which Clarus
      incurred on behalf of the Company. Warren B. Kanders, our Non-Executive
      Chairman, also serves as the Executive Chairman of Clarus.





On
      April
      21, 2004, the Company closed on an investment into the Company by Olden
      Acquisition LLC (“Olden”) , an
      affiliate of Kanders & Company, Inc., for
      the
      purpose of initiating a strategy to redeploy the Company’s assets and use the
      Company’s cash, cash equivalent assets and marketable securities to enhance
      stockholder value. The Company issued and sold to Olden a 2% ten-year
      Convertible Subordinated Note, which is convertible after one year (or
      earlier upon a call by the Company and in certain other circumstances) at
      a
      conversion price of $0.45 per share of Company common stock into approximately
      19.9% of the outstanding common equity of the Company as of the closing date.
      Proceeds to the Company from this transaction totaled approximately $2.5 million
      before transaction costs of $0.3 million. The transaction costs are being
      amortized over ten years, the term of the debt. Interest on the note accrues
      semi-annually but is not payable currently or upon conversion of the note.
      The
      note matures on April 21, 2014. The convertible subordinated note was deemed
      to
      include a beneficial conversion feature. At the date of issue, the Company
      allocated $0.1 million to the beneficial conversion feature and amortized the
      beneficial conversion feature over one year (the period after which the note
      is
      convertible). Also in connection with this transaction, the Company entered
      into
      a Registration Rights Agreement, which requires the Company, upon request of
      the
      purchaser of the note or its assignee, to register under the Securities Act
      of
      1933, as amended, the resale of the shares of common stock into which the note
      is convertible. In connection with this transaction, the board of directors
      adopted an amendment to the Company’s Rights Agreement such that the transaction
      would not trigger the rights thereunder. As of December 31, 2007 and 2006,
      the
      outstanding balance on the note payable amounted to $2.5 million and is
      classified as long-term debt.




61




**16.
      Acquisition**





On
      October 3, 2006, the Company acquired the assets of CRC Acquisition Co. LLC
      (“CRC”), a manufacturer of steel counterweights doing business as Concord Steel
      (“Concord”). Concord is one of the nation’s leading independent manufacturers of
      steel counterweights that are incorporated into a variety of industrial
      equipment including aerial work platforms, cranes, elevators and material
      handling equipment.





The
      acquisition was accounted for under the purchase method of accounting with
      assets acquired and liabilities assumed recorded at their estimated fair values.
      Accordingly, the results of operations of Concord are included in the Company’s
      statement of operations since the date of acquisition. Goodwill was generated
      to
      the extent that the purchase price consideration exceeded the fair value of
      net
      assets acquired.





The
      total
      purchase price of the acquisition was $45.3 million, including transaction
      costs
      of approximately $3 million. In addition, CRC invested $3.0 million of their
      proceeds from the sale of CRC to purchase 3,529,412 unregistered shares of
      the
      common stock of the Company at the closing price per share of $0.85. Such shares
      are subject to a six-month lock-up agreement and a registration rights agreement
      containing customary “demand” and “piggyback” registration rights. In addition,
      pursuant to the purchase agreement, a final working capital adjustment of $0.5
      million was returned to the Company as the opening balance sheet working capital
      was reconciled with CRC.




The
      funding of the consideration paid for the acquisition was as
      follows:





Cash,
                net
            
            $
            10,981Notes
                payable from bank
            
            
            31,286Transaction
                costs
            
            
            3,068Purchase
                price
            
            $
            45,335




The
      total
      purchase price of $45.3 million was initially allocated as follows:





Assets
                acquired:Accounts
                receivable
            
            $
            10,231Inventory
            
            
            12,149Property,
                plant and equipment
            
            
            3,220Goodwill
            
            
            3,154Intangible
                assets
            
            
            24,516Other
                assets
            
            
            86854,138Liabilities
                assumed:Accounts
                payable
            
            
            (6,704
            )Accrued
                expenses and other liabilities
            
            
            (1,034
            )Other
                current liabilities
            
            
            (1,065
            )(8,803
            )Net
                purchase price
            
            $
            45,335




As
      a
      result of this business combination, the Company assessed the impact of
      Concord’s operations in the determination of its required valuation allowance
      for deferred tax assets. As a result of this assessment, the Company reduced
      its
      deferred tax valuation allowance by approximately $8 million. As a result of
      the
      Company’s estimated deferred tax asset valuation, goodwill was eliminated and
      intangible assets were reduced by $2.6 million.




62




The
      following unaudited pro forma consolidated results are presented to show the
      results on a pro forma basis as if the 2006 acquisition of Concord had been
      completed as of January 1, 2005.





**Years
                Ended December 31,****2006**
            
            **2005**Net
                  (loss) income
            
            $
            (1,461
            )
            $
            3,550Basic
                net (loss) income per share:
            
            $
            (0.04
            )
            $
            0.11Diluted
                net (loss) income per share:
            
            $
            (0.04
            )
            $
            0.10




Pro
      forma
      results ** including
      historical financial statements and footnotes of Concord were included in the
      Company’s amended Current Report on Form 8-K/A filed with the Security and
      Exchange Commission on December 18, 2006.





**17.
      Subsequent event**





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





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




63




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




None




**ITEM
      9A. CONTROLS AND PROCEDURES**





**Evaluation
      of Disclosure Controls and Procedures**





The
      Company maintains disclosure controls and procedures that are designed to ensure
      that information required to be disclosed in the reports it files under the
      Exchange Act are recorded, processed, summarized and reported within the time
      periods specified in the SEC’s rules and forms, and that such information is
      accumulated and communicated to management, including the Chief Executive
      Officer (“CEO”) and Chief Financial Officer (“CFO”) its principal executive
      officer and principal financial officer respectively, as appropriate, to allow
      timely decisions regarding required financial disclosure. In connection with
      the
      preparation of this Annual Report on Form 10-K, management carried out an
      evaluation, under the supervision and with the participation of management,
      including the CEO and CFO, as of December 31, 2007, of the effectiveness of
      the
      design and operation of the disclosure controls and procedures, as such term
      is
      defined under Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act
      of
      1934, as amended. Based upon this evaluation, the CEO and CFO concluded that
      the
      Company’s disclosure controls and procedures over financial reporting were
      effective as of December 31, 2007.





**Management’s
      Report on Internal Control over Financial Reporting**





The
      Company’s management is responsible for establishing and maintaining adequate
      internal control over financial reporting as defined in Rules 13a-15(f) and
      15d-15(f) under the Securities Exchange Act of 1934. Because of its inherent
      limitations, internal control over financial reporting may not prevent or detect
      misstatements. Also, projections of any evaluation of effectiveness to future
      periods are subject to the risk that controls may become inadequate because
      of
      changes in conditions, or that the degree of compliance with the policies or
      procedures may deteriorate.





The
      Company conducted an evaluation, with the participation of its CEO and CFO,
      of
      the effectiveness of its internal control over financial reporting as of
      December 31, 2007. This evaluation was performed based on the framework in
      “Internal Control — Integrated Framework” issued by the Committee of Sponsoring
      Organizations of the Treadway Commission (“COSO”).





Management
      has concluded that the Company maintained effective internal control over
      financial reporting as of December 31, 2007, based on criteria established
      in
“Internal Control — Integrated Framework” issued by the COSO.





Management’s
      assessment of the effectiveness of the Company’s internal control over financial
      reporting as of December 31, 2007 has been audited by McGladrey & Pullen,
      LLP, an independent registered public accounting firm, as stated in their report
      which is included in this Form 10-K.





**Changes
      in Internal Control Over Financial Reporting**





There
      have been no changes in the Company’s internal control over financial reporting
      or in factors affecting internal control over financial reporting during the
      fourth quarter ended December 31, 2007 that have materially affected, or are
      reasonably likely to materially affect the Company’s internal control over
      financial reporting.




64


**ITEM
        9B. OTHER INFORMATION**
  *Indemnification
        Agreement for
        Directors*
 
 On
        March
        12, 2008, the Board of Directors of the Company approved the Company entering
        into individual indemnification agreements with its directors. The
        indemnification agreements for directors provide that the Company will indemnify
        a director to the fullest extent permitted by law and the Company’s Amended and
        Restated Certificate of Incorporation and Bylaws. Under the indemnification
        agreements, a director will be indemnified against certain expenses, judgments,
        fines, penalties, damages, liabilities, claims, and amounts paid in settlement
        and incurred by or on such director’s behalf in connection with a proceeding or
        any claim, issue or matter therein, if the director acted in good faith and
        in a
        manner the director reasonably believed to be in or not opposed to the best
        interests of the Company.




The
      summary of the indemnification agreements described above is qualified in its
      entirety by reference to the form indemnification agreement for directors
      attached hereto as Exhibit 10.36 and incorporated herein by
      reference.




65




**PART
      III**





**ITEM
      10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**





Information
      regarding executive officers is included in Part I of this Form 10-K as
      permitted by General Instruction G (3).





The
      Company has adopted a code of ethics that applies to its principal executive
      officer and principal financial officer, and to all of its other officers,
      directors and employees. The code of ethics may be accessed at www.stamfordig.com ,
      our
      Internet website, at the tab “Corporate Governance”. The Company intends to
      disclose future amendments to, or waivers from, certain provisions of its code
      of ethics, if any, on the above website within four business days following
      the
      date of such amendment or waiver.





Other
      information required by Item 10, including information regarding directors,
      membership and function of the audit committee, including the financial
      expertise of its members, and Section 16(a) compliance, appearing under the
      captions “Election of Directors”, “Information Regarding Board of Directors and
      Committees” and “Other Matters” Security Ownership of Certain Beneficial Owners
      and Management in our Proxy Statement used in connection with the 2008 Annual
      Meeting of Stockholders, is incorporated herein by reference.




**ITEM
      11. EXECUTIVE COMPENSATION**





The
      information set forth under the caption "Executive Compensation" in our Proxy
      Statement used in connection with our 2008 Annual Meeting of Stockholders,
      is
      incorporated herein by reference.





**ITEM
      12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**





The
      information set forth under the caption "Principal Stockholders" in our Proxy
      Statement used in connection with our 2008 Annual Meeting of Stockholders,
      is
      incorporated herein by reference.




**ITEM
      13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**





The
      information set forth under the caption "Certain Relationships and Related
      Transactions" in our Proxy Statement used in connection with our 2008 Annual
      Meeting of Stockholders, is incorporated herein by reference.




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**





The
      information set forth under the caption “Principal Accountant Fees and Services”
in our Proxy Statement used in connection with our 2008 Annual Meeting of
      Stockholders, is incorporated herein by reference.




66




**PART
      IV**





**ITEM
      15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES**





*(a)*  *Financial
      Statements*





*1.* The
      financial statements filed as part of this report are listed on the Index to
      Consolidated Financial Statements under Item 8 of Part II of this Form
      10-K.





*2.* All
      schedules for which provision is made in the applicable accounting regulations
      of the Securities and Exchange Commission are not required. The information
      required to be set forth therein is not applicable or is shown in the
      Consolidated Financial Statements or notes thereto included in this
      report.





*3.* The
          following Exhibits are hereby filed as part of this Annual Report on Form
          10-K:




**Exhibit**
                **Number**
              
              **Description**2.1
              
              Patent
                  Purchase Agreement, dated December 30, 2003, between Thalveg Data
                  Flow LLC
                  and Net Perceptions, Inc., as amended on March 31, 2004 (filed
                  as Exhibit
                  2.1 to our Current Report on Form 8-K filed with the Securities
                  and
                  Exchange Commission on April 1, 2004).3.1
              
              Amended
                  and Restated Certificate of Incorporation (filed as Exhibit 3.1
                  to our
                  Registration Statement on Form S-1) (Registration No.
                  333-71919).3.2
              
              Certificate
                  of Amendment to the Amended and Restated Certificate of Incorporation
                  (filed as Exhibit 3.1(b) to our Annual Report on Form 10-K for
                  the Fiscal
                  Year Ended December 31, 2002 filed with the Securities and Exchange
                  Commission on March 26, 2003).3.3
              
              Certificate
                  of Amendment to the Amended and Restated Certificate of Incorporation
                  (filed as Appendix A of the Net Perceptions, Inc. Definitive Proxy
                  Statement filed with the Securities and Exchange Commission on
                  May 11,
                  2007).3.4
              
              Amended
                  and Restated Bylaws as amended through August 5, 2003 (filed as
                  Exhibit
                  3.2 to our Quarterly Report on Form 10-Q for the Quarter Ended
                  June 30,
                  2003 filed with the Securities and Exchange Commission on August
                  14,
                  2003).4.1
              
              Specimen
                  common stock certificate (filed as Exhibit 4.2 to our Registration
                  Statement on Form S-1/A) (Registration No. 333-71919).4.2
              
              Specimen
                  common stock certificate (including Rights Agreement Legend) (filed
                  as
                  Exhibit 4.4 to our Quarterly Report on Form 10-Q for the Quarter
                  Ended
                  June 30, 2001 filed with the Securities and Exchange Commission
                  on August
                  14, 2001).4.3
              
              Rights
                  Agreement between Net Perceptions, Inc. and Wells Fargo Bank Minnesota,
                  as
                  Rights Agent (filed as Exhibit 1 to our Registration Statement
                  on Form
                  8-A12G filed with the Securities and Exchange Commission on June
                  6, 2001).4.4
              
              Amendment
                  No. 1 to Rights Agreement between Net Perceptions, Inc. and Wells
                  Fargo
                  Bank Minnesota, as Rights Agent dated as of December 22, 2003 (filed
                  as
                  Exhibit 2 to our Registration Statement on Form 8-A12G/A filed
                  with the
                  Securities and Exchange Commission on December 24, 2003).4.5
              
              Amendment
                  No. 2 to Rights Agreement between Net Perceptions, Inc. and Wells
                  Fargo
                  Bank Minnesota, as Rights Agent dated as of April 21, 2004 (filed
                  as
                  Exhibit 3 to our Registration Statement on Form 8-A12G/A filed
                  with the
                  Securities and Exchange Commission on April 22, 2004).4.6
              
              Amendment
                  No. 3 to Rights Agreement between Net Perceptions, Inc. and Wells
                  Fargo
                  Bank Minnesota, as Rights Agent dated as of September 22, 2006
                  (filed as
                  Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities
                  and Exchange Commission on September 28, 2006).4.7
              
              Amendment
                  No. 4 to Rights Agreement between Stamford Industrial Group, Inc.
                  and
                  American Stock Transfer & Trust Company, as Rights Agent dated as of
                  February 11, 2008 (filed as Exhibit 4.1 to our Current Report on
                  Form 8-K
                  filed with the Securities and Exchange Commission on February 12,
                  2008).4.8
              
              Form
                  of Certificate of Designation of Series A Junior Participating
                  Preferred
                  Stock (filed as Exhibit 1 to our Registration Statement on Form
                  8-A12G
                  filed with the Securities and Exchange Commission on June 6, 2001).




67


4.9
              
              Form
                  of Rights Certificate (filed as Exhibit 1 to our Registration Statement
                  on
                  Form 8-A12G filed with the Securities and Exchange Commission on
                  June 6,
                  2001).10.1*
              
              1999
                  Equity Incentive Plan (filed as Exhibit 10.3 to our Registration
                  Statement
                  on Form S-1) (Registration No. 333-71919).10.2*
              
              Amended
                  and Restated 1999 Non-Employee Director Option Plan, as amended
                  through
                  April 2, 2001 (filed as Exhibit 10.4 to our Quarterly Report on
                  Form 10-Q
                  for the Quarter Ended March 31, 2001 filed with the Securities
                  and
                  Exchange Commission on May 15, 2001).10.3*
              
              2%
                  Convertible Subordinated Note Due April 21, 2014 (filed as Exhibit
                  4.1 to
                  our Quarterly Report on Form 10-Q for the Quarter Ended March 31,
                  2004
                  filed with the Securities and Exchange Commission on May 11,
                  2004).10.4*
              
              Form
                  of Net Perceptions, Inc. 1999 Equity Incentive Plan Stock Option
                  Agreement
                  (filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for
                  the
                  Quarter Ended September 30, 2005 filed with the Securities and
                  Exchange Commission on November 9, 2005).10.5*
              
              Employment
                  Agreement dated as of May 1, 2006, between Net Perceptions, Inc.
                  and Nigel
                  P. Ekern, (filed as Exhibit 10.1 to our Current Report on Form
                  8-K filed
                  with the Securities and Exchange Commission on May 4,
                  2006).10.6*
              
              Equity
                  compensation Agreement by and between Net Perceptions, Inc. and
                  Kanders
                  & Company, Inc., dated as of September 22, 2006 (filed as Exhibit
                  10.1
                  to our Current Report on Form 8-K filed with the Securities and
                  Exchange
                  Commission on September 28, 2006).10.7*
              
              Consulting
                  Agreement by and between Net Perceptions, Inc. and Kanders & Company
                  Inc., dated as of September 22, 2006 (filed as Exhibit 10.2 to
                  our Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  on
                  September 28, 2006).10.8*
              
              Employment
                  Agreement by and between Net Perceptions, Inc. and Albert W. Weggeman,
                  Jr., dated as of September 22, 2006 (filed as Exhibit 10.3 to our
                  Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  on
                  September 28, 2006).10.9*
              
              Stock
                  Option Agreement between Net Perceptions, Inc. and Albert W. Weggeman,
                  Jr., dated as of October 3, 2006 (filed as Exhibit 10.13 to our
                  Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  on
                  October 10, 2006).10.10*
              
              Restricted
                  Stock Award Agreement dated as of September 22, 2006, between Net
                  Perceptions, Inc., and Mr. David A. Jones re Restricted Stock Award
                  under
                  1999 Equity Incentive Plan (filed as Exhibit 10.4 to our Current
                  Report on
                  Form 8-K filed with the Securities and Exchange Commission on September
                  28, 2006).10.11*
              
              Restricted
                  Stock Award Agreement dated as of September 22, 2006, between Net
                  Perceptions, Inc., and Mr. Nicholas Sokolow re Restricted Stock
                  Award
                  under 1999 Equity Incentive Plan (filed as Exhibit 10.5 to our
                  Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  on
                  September 28, 2006).10.12
              
              Credit
                  Agreement dated October 3, 2006, between the SIG Acquisition Corp.
                  and
                  LaSalle Bank National Association, as agent, and the lenders named
                  therein
                  (filed as Exhibit 10.1 to our Current Report on Form 8-K filed
                  with the
                  Securities and Exchange Commission on October 10,
                  2006).10.13
              
              Second
                  Amendment dated March 13, 2008 to Credit Agreement between Concord
                  Steel,
                  Inc. and LaSalle Bank National Association.**10.14
              
              Guaranty
                  and Security Agreement dated October 3, 2006, among Net Perceptions,
                  Inc.,
                  SIG Acquisition Corp., and LaSalle Bank National Association, as
                  agent,
                  and the lenders named therein (filed as Exhibit 10.2 to our Current
                  Report
                  on Form 8-K filed with the Securities and Exchange Commission on
                  October
                  10, 2006).10.15
              
              Form
                  of Revolving Note (filed as Exhibit 10.3 to our Current Report
                  on Form 8-K
                  filed with the Securities and Exchange Commission on October 10,
                  2006).10.16
              
              Form
                  of Term Note (filed as Exhibit 10.4 to our Current Report on Form
                  8-K
                  filed with the Securities and Exchange Commission on October 10,
                  2006).10.17
              
              Form
                  of Capital Expenditures Note (filed as Exhibit 10.5 to our Current
                  Report
                  on Form 8-K filed with the Securities and Exchange Commission on
                  October
                  10, 2006).10.18
              
              Form
                  of Swing Loan Note (filed as Exhibit 10.6 to our Current Report
                  on Form
                  8-K filed with the Securities and Exchange Commission on October
                  10,
                  2006).10.19*
              
              Employment
                  Agreement dated as of October 3, 2006, between the Company and
                  Paul Vesey
                  (filed as Exhibit 10.7 to our Current Report on Form 8-K filed
                  with the
                  Securities and Exchange Commission on October 10,
                  2006).




68


10.20
              
              Asset
                  Purchase Agreement among the Company, SIG Acquisition Corp. and
                  CRC
                  Acquisition Co. LLC dated as of September 22, 2006 (without exhibits)
                  (filed as Exhibit 10.8 to our Current Report on Form 8-K filed
                  with the
                  Securities and Exchange Commission on October 10,
                  2006).10.21
              
              Stock
                  Purchase Agreement between the Company and CRC Acquisition Co.
                  LLC dated
                  as of October 3, 2006 (without exhibits) (filed as Exhibit 10.9
                  to our
                  Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on October 10, 2006).10.22
              
              Equityholder
                  Registration Rights Agreement dated as of October 3, 2006, between
                  Net
                  Perceptions, Inc., and CRC Acquisition Co. LLC (filed as Exhibit
                  10.10 to
                  our Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on October 10, 2006).10.23
              
              Equityholder
                  Lock-up Agreement dated as of October 3, 2006, between Net Perceptions,
                  Inc., and CRC Acquisition Co. LLC (filed as Exhibit 10.11 to our
                  Current
                  Report on Form 8-K filed with the Securities and Exchange Commission
                  on
                  October 10, 2006).10.24
              
              Escrow
                  Agreement dated as of October 3, 2006, among CRC Acquisition Co.
                  LLC, SIG
                  Acquisition Corp., and The Bank of New York (filed as Exhibit 10.12
                  to our
                  Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on October 10, 2006).10.25
              
              Form
                  of Lock-up Agreement between the Company and certain directors
                  and
                  officers (filed as Exhibit 10.1 to our Current Report on Form 8-K
                  filed
                  with the Securities and Exchange Commission on October 17,
                  2006).10.26*
              
              Employment
                  Agreement dated as of December 1, 2006 between Net Perceptions,
                  Inc. and
                  Jonathan LaBarre (filed as Exhibit 10.1 to our Current Report on
                  Form 8-K
                  filed with the Securities and Exchange Commission on December 5,
                  2006).10.27
              
              Lease
                  dated as of November 30, 2006, between SIG Acquisition Corp., and
                  Castleway Properties, LLC. (filed as Exhibit 10.32 to our Annual
                  Report on
                  Form 10-K filed with the Securities and Exchange Commission on
                  April 2,
                  2007).10.28
              
              2007
                  Stock Incentive Plan (incorporated herein by reference to Appendix
                  B of
                  the Net Perceptions, Inc. Definitive Proxy Statement filed with
                  the
                  Securities and Exchange Commission on May 11, 2007).10.29
              
              2007
                  Annual Incentive Plan (incorporated herein by reference to Appendix
                  C of
                  the Net Perceptions, Inc. Definitive Proxy Statement filed with
                  the
                  Securities and Exchange Commission on May 11, 2007).10.30*
              
              Form
                  of Restricted Stock Award Agreement dated as of December 27, 2007,
                  between
                  Stamford Industrial Group, Inc. and Albert W. Weggeman (filed as
                  Exhibit
                  10.1 to our Current Report on Form 8-K filed with the Securities
                  and
                  Exchange Commission on January 3, 2008).10.31*
              
              Form
                  of Stock Option Agreement dated as of December 27, 2007, between
                  Stamford
                  Industrial Group, Inc. and Albert W. Weggeman (filed as Exhibit
                  10.2 to
                  our Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on January 3, 2008).10.32*
              
              Form
                  of Deferred Compensation Agreement dated as of December 27, 2007,
                  between
                  Stamford Industrial Group, Inc. and Albert W. Weggeman (filed as
                  Exhibit
                  10.3 to our Current Report on Form 8-K filed with the Securities
                  and
                  Exchange Commission on January 3, 2008).10.33*
              
              Form
                  of Stock Option Agreement dated as of December 27, 2007, between
                  Stamford
                  Industrial Group, Inc. and Jonathan LaBarre (filed as Exhibit 10.4
                  to our
                  Current Report on Form 8-K filed with the Securities and Exchange
                  Commission on January 3, 2008).10.34*
              
              Form
                  of Stamford Industrial Group, Inc. 2007 Stock Incentive Plan Stock
                  Option
                  Agreement.**10.35*
              
              Form
                  of Stamford Industrial Group, Inc. 2007 Stock Incentive Plan Restricted
                  Stock Agreement.**




69


10.36
              
              Form
                  of Indemnification Agreement for Directors.**21.1
              
              Subsidiaries
                  of the Registrant.**23.1
              
              Consent
                  of McGladrey & Pullen, LLP, independent registered public accounting
                  firm.23.2
              
              Consent
                  of PricewaterhouseCoopers LLP, independent registered public accounting
                  firm.





*
            Represents
                a management contract or compensatory plan or arrangement.


**
            filed
                herewith.





(1)
            Incorporated
                by reference to Net Perceptions’ Current Report on Form 8-K filed April 1,
                2004.


(2)
            Incorporated
                by reference to Net Perceptions’ Registration Statement on Form S-1
                (Registration No. 333-71919).


(3)
            Incorporated
                by reference to Net Perceptions’ Annual Report on Form 10-K for the Fiscal
                Year Ended December 31, 2002.


(4)
            Incorporated
                by reference to Net Perceptions’ Quarterly Report on Form 10-Q for the
                Quarter Ended June 30, 2003.


(5)
            Incorporated
                by reference to Net Perceptions’ Quarterly Report on Form 10-Q for the
                Quarter Ended June 30, 2001.


(6)
            Incorporated
                by reference to Net Perceptions’ Registration Statement on Form 8-A filed
                June 6, 2001.


(7)
            Incorporated
                by reference to Net Perceptions’ Current Report on Form 8-K filed December
                23, 2003.


(8)
            Incorporated
                by reference to Net Perceptions’ Quarterly Report on Form 10-Q for the
                Quarter Ended March 31, 2001.


(9)
            Incorporated
                by reference to Net Perceptions’ Quarterly Report on Form 10-Q for the
                Quarter Ended June 30, 2000.


(10)
            Incorporated
                by reference to Net Perceptions’ Quarterly Report on Form 10-Q for the
                Quarter Ended March 31, 2004.


(11)
            Incorporated
                by reference to Net Perceptions’ Quarterly Report on Form 10-Q for the
                Quarter Ended September 30, 2005.





*(b)*
            The
                exhibits are listed in Item 15. (a)(3)
                above.





*(c)*
            None.




70




**SIGNATURES**





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





STAMFORD
                INDUSTRIAL GROUP, INC.By:
            */s/
                ALBERT W. WEGGEMAN, JR*Albert
                W. Weggeman, JrPresident
                and Chief Executive Officer


Date:
      March 17, 2008





Pursuant
      to the requirements of the Securities Exchange Act of 1934, as amended, this
      report has been signed below by the following persons on behalf of the
      registrant in the capacities indicated on March 17, 2008.





**Signature**
            
            **Title***/s/
                ALBERT W. WEGGEMAN, JR*
            
            President
                and Chief Executive OfficerAlbert
                W. Weggeman, Jr*/s/
                JONATHAN LABARRE*
            
            Chief
                Financial Officer, Treasurer and SecretaryJonathan
                LaBarre*/s/
                WARREN B. KANDERS*
            
            Non-Executive
                Chairman of the Board of DirectorsWarren
                B. Kanders*/s/
                DAVID A. JONES*
            
            DirectorDavid
                A. Jones*/s/
                NICHOLAS SOKOLOW*
            
            DirectorNicholas
                Sokolow




71




**EXHIBIT
      INDEX**





**Exhibit**
              **Number**
            
            **DESCRIPTION**10.13
            
            Second
                Amendment dated March 13, 2008 to Credit Agreement between Concord
                Steel,
                Inc. and LaSalle Bank National Association10.34
            
            Form
                of Stamford Industrial Group, Inc. 2007 Stock Incentive Plan Stock
                Option
                Agreement10.35
            
            Form
                of Stamford Industrial Group, Inc. 2007 Stock Incentive Plan Restricted
                Stock Agreement10.36
            
            Form
                of Indemnification Agreement for Directors21.1
            
            Subsidiaries
                of the Registrant23.1
            
            Consent
                of McGladrey & Pullen, LLP, independent registered public accounting
                firm.23.2
            
            Consent
                of PricewaterhouseCoopers LLP, independent registered public accounting
                firm.31.1
            
            Certification
                of principal executive officer pursuant to Exchange Act Rules Rule
                13(a)-14(a) and15(a)-14(a), as adopted pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 200231.2
            
            Certification
                of principal financial officer pursuant to Exchange Act Rules Rule
                13(a)-14(a) and15(a)-14(a), as adopted pursuant to Section 302 of
                the
                Sarbanes-Oxley Act of 200232.1
            
            Certification
                of principal executive officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            
            Certification
                of principal financial officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.




72