----

----

| x      |  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|------------------------------------------------------------------------------------------------|
|   |                                                                                           |
|   |      For the quarterly period ended September 30, 2010                |
|   | or                                                                                             |
|   |                                                                                           |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934      |
|   |                                                                                           |
|   |      For the transition period from _____ to _____                    |

| Delaware                                                      |   | 13-4005439                          |
|---------------------------------------------------------------|--------|-------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. EmployerIdentification No.) |

| 100 South Bedford Road, Suite 2 R, Mount Kisco, NY | 10549      |
|----------------------------------------------------|------------|
| (Address of principal executive offices)           | (Zip code) |

| (914) 242-5700                                             |
|------------------------------------------------------------|
| (Registrant’s telephone number, including area code) |

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

----

----

----

|          | Part I.  Financial Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Page No. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| Item 1.  | Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          | Condensed Consolidated Statements of Operations -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |     |
|          | Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 1        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          | Condensed Consolidated Statements of Comprehensive Loss -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |     |
|          | Three Months and Nine Months Ended September 30, 2010 and 2009 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 2        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          | Condensed Consolidated Balance Sheets -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |     |
|          | September 30, 2010 (Unaudited) and December 31, 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 3        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          | Condensed Consolidated Statements of Cash Flows -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |     |
|          | Nine Months Ended September 30, 2010 and 2009 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 4        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          | Condensed Consolidated Statement of Changes in Stockholders’ Equity -                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |     |
|          | Nine Months Ended September 30, 2010 (Unaudited)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 5        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
|          | Notes to Condensed Consolidated Financial Statements -Nine Months Ended September 30, 2010 and 2009 (Unaudited)                                                                                                                       | 6        |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
| Item 2.  | Management’s Discussion and Analysis of Financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |     |
|          | Condition and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 15       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
| Item 3.  | Quantitative and Qualitative Disclosures about Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | 21       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
| Item 4.  | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 21       |
|          |
|          | Part II. Other Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |     |
|          |
| Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | 22       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |     |
| Item 6.  | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 23       |
|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| SIGNATURES    | 24                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

Item 1. Financial Statements

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                              |   | Three months endedSeptember 30, |   |   | Nine months endedSeptember 30, |    |
|-------------------------------------------------------------------|--------|---------------------------------|--------|--------|--------------------------------|---------|
|                                                              |   | 2010                            |   |   | 2009                           |    |   | 2010 |   |   | 2009 |   |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |
| General and administrative expenses                          |   |  $                         | (414   | )      |                           |  $ | (816 | ) |   |  $ | (2,971 | ) |   |  $ | (2,382 | ) |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
|       Operating  loss     |   |                            | (414   | )      |                           |    | (816 | ) |   |   | (2,971 | ) |   |   | (2,382 | ) |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Investment and other income                                       |   |                            | 1      |   |                           |    | 1 |   |   |   | 21 |   |   |   | 15 |   |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations before income tax benefit    |   |                            | (413   | )      |                           |    | (815 | ) |   |   | (2,950 | ) |   |   | (2,367 | ) |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Income tax benefit                                                |   |                            | 123    |   |                           |    | 23 |   |   |   | 1,010 |   |   |   | 95 |   |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Loss from continuing operations                                   |   |                            | (290   | )      |                           |    | (792 | ) |   |   | (1,940 | ) |   |   | (2,272 | ) |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from discontinued operations                   |   |                            | -      |   |                           |    | 25 |   |   |   | (946 | )  |   |   | 129 |   |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                          |   | $                               | (290   | )      |                           | $       | (767 | ) |   | $ | (2,886 | ) |   | $ | (2,143 | ) |
|                                                              |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net (loss) income per share           |   |                            |   |   |                           |    |   |   |   |   |   |   |   |   |   |   |
|        Continuing operations   |   | $                               | (0.02  | )      |                           | $       | (0.05 | ) |   | $ | (0.11 | ) |   | $ | (0.13 | ) |
|        Discontinued operations |   |                            | -      |   |                           |    | 0.01 |   |   |   | (0. 05 | ) |   |   | 0.01 |   |
|        Net loss per share      |   | $                               | (0.02  | )      |                           | $       | (0.04 | ) |   | $ | (0. 16 | ) |   | $ | (0. 12 | ) |

----

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

|                                                                                                       |   | Three months ended |   |   | Nine months ended |   |
|------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                                       |   | September 30,      |   |   | September 30,     |   |
|                                                                                                       |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                                                       |   |               |   |   |              |   |   |   |   |   |   |   |
| Net loss                                                                                                   |   | $                  | (290   | )      |              | $      | (767 | ) |   | $ | (2,886 | ) |   | $ | (2,143 | ) |
|                                                                                                       |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other comprehensive income (loss), before tax:                                                             |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net unrealized (loss) gain on interest rate swap                                                           |   |               |   |   |              |   | (5 | )  |   |   |   |   |   |   |  204 |   |
| Reclassification of loss on interest rate swap to loss fromdiscontinued operations                         |   |               |   |   |              |   |   |   |   |   | 803 |   |   |   |   |   |
| Comprehensive loss before tax                                                                              |   |               | (290   | )      |              |   | (772 | ) |   |   | (2,083 | ) |   |   | (1,939 | ) |
|                                                                                                       |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income tax (expense) benefit related to items of othercomprehensive  income (loss)          |   |               |   |   |              |   | 2 |   |   |   |   |   |   |   | (81 | ) |
| Reclassification of deferred tax benefit related to interestrate swap to loss from discontinued operations |   |               |   |   |              |   |   |   |   |   | (321 | ) |   |   |   |   |
|                                                                                                       |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss                                                                                         |   | $                  | (290   | )      |              | $      | (770 | ) |   | $ | (2,404 | ) |   | $ | (2,020 | ) |

----

CONDENSED CONSOLIDATED BALANCE SHEETS

|                                             |   | September 30, |   |   | December 31, |   |
|--------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                             |   | 2010          |   |   | 2009         |   |
|                                             |   | (unaudited)   |   |   |         |   |
| Assets                                           |   |          |   |   |         |   |
| Current assets                                   |   |          |   |   |         |   |
| Cash and cash equivalents                        |   | $             | 28,341 |   |         | $      | 23,006 |   |
| Cash held in escrow                              |   |          | 300    |   |         |   | - |   |
| Assets held for sale                             |   |          | -      |   |         |   | 30,812 |   |
| Deferred tax asset                               |   |          | -      |   |         |   | 667 |   |
| Refundable and prepaid income tax                |   |          | 975    |   |         |   | - |   |
| Prepaid expenses and other current assets        |   |          | 35     |   |         |   | 901 |   |
| Total current assets                             |   |          | 29,651 |   |         |   | 55,386 |   |
| Property, plant and equipment, net               |   |          | 8      |   |         |   | 18 |   |
| Investment in undeveloped land                   |   |          | 355    |   |         |   | 355 |   |
| Other assets                                     |   |          | 375    |   |         |   | 282 |   |
| Total assets                                     |   | $             | 30,389 |   |         | $      | 56,041 |   |
|                                             |   |          |   |   |         |   |   |   |
| Liabilities and stockholders’ equity       |   |          |   |   |         |   |   |   |
| Current liabilities                              |   |          |   |   |         |   |   |   |
| Liabilities related to assets held for sale      |   | $             | -      |   |         | $      | 22,112 |   |
| Income taxes payable                             |   |          | 434    |   |         |   | 964 |   |
| Accounts payable and accrued expenses            |   |          | 302    |   |         |   | 1,132 |   |
| Total current liabilities                        |   |          | 736    |   |         |   | 24,208 |   |
|                                             |   |          |   |   |         |   |   |   |
| Commitments and contingencies                    |   |          |   |   |         |   |   |   |
|                                             |   |          |   |   |         |   |   |   |
| Stockholders’ equity                       |   |          |   |   |         |   |   |   |
| Common stock                                     |   |          | 181    |   |         |   | 181 |   |
| Additional paid-in capital                       |   |          | 29,799 |   |         |   | 29,574 |   |
| Retained earnings                                |   |          | 1,032  |   |         |   | 3,918 |   |
| Treasury stock, at cost                          |   |          | (1,359 | )      |         |   | (1,358 | ) |
| Accumulated other comprehensive loss             |   |          | -      |   |         |   | (482 | ) |
| Total stockholders’ equity                 |   |          | 29,653 |   |         |   | 31,833 |   |
| Total liabilities and stockholders’ equity |   | $             | 30,389 |   |         | $      | 56,041 |   |

----

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                                                                                           |   | Nine Months Ended |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|----------|
|                                                                                                                                                                                           |   | September 30,     |     |
|                                                                                                                                                                                           |   | 2010              |     |   | 2009 |   |
| Cash flows from operations:                                                                                                                                                                    |   |              |     |   |   |   |
| Net loss                                                                                                                                                                                       |   | $                 | (2,886   | ) |   | $ | (2,143 | ) |
| Adjustments to reconcile net loss to                                                                                                                                                           |   |              |     |   |   |   |   |   |
| net cash (used in) provided by operating activities:                                                                                                                                           |   |              |     |   |   |   |   |   |
| Depreciation and amortization                                                                                                                                                                  |   |              | 10       |   |   |   | 326 |   |
| Loss on interest rate swap                                                                                                                                                                     |   |              | 803      |   |   |   | - |   |
| Expenses paid in common stock                                                                                                                                                                  |   |              | 20       |   |   |   | 20 |   |
| Deferred income taxes                                                                                                                                                                          |   |              | 346      |   |   |   | 238 |   |
| Stock based compensation expense                                                                                                                                                               |   |              | 205      |   |   |   | 687 |   |
| Gain on sale of Five Star                                                                                                                                                                      |   |              | (2,405   | ) |   |   | - |   |
| Changes in other operating items, net of effect of sale of Five Star:                                                                                                                          |   |              |     |   |   |   |   |   |
| Refundable and prepaid income tax                                                                                                                                                              |   |              | (975     | ) |   |   | - |   |
| Income tax payable                                                                                                                                                                             |   |              | (530     | ) |   |   | - |   |
| Accounts and other receivables                                                                                                                                                                 |   |              | -        |   |   |   | (3,164 | ) |
| Inventory                                                                                                                                                                                      |   |              | -        |   |   |   | 1,080 |   |
| Prepaid expenses and other current assets                                                                                                                                                      |   |              | 59       |   |   |   | 213 |   |
| Accounts payable and accrued expenses                                                                                                                                                          |   |              | (1,017   | ) |   |   | 3,806 |   |
| Net cash (used in) provided by operations                                                                                                                                                      |   |              | (6,370   | ) |   |   | 1,063 |   |
|                                                                                                                                                                                           |   |              |     |   |   |   |   |   |
| Cash flows from investing activities:                                                                                                                                                          |   |              |     |   |   |   |   |   |
| Additions to property, plant and equipment, net                                                                                                                                                |   |              | -        |   |   |   | (57 | ) |
| Cash held in escrow                                                                                                                                                                            |   |              | (300     | ) |   |   | - |   |
| Net proceeds from sale of Five Star, net of $1 cash of discontinued operations                                                                                                                 |   |              | 26,463   | (a) |   |   | - |   |
| Net cash provided by (used in) investing activities                                                                                                                                            |   |              | 26,163   |   |   |   | (57 | ) |
|                                                                                                                                                                                           |   |              |     |   |   |   |   |   |
| Cash flows from financing activities:                                                                                                                                                          |   |              |     |   |   |   |   |   |
| Proceeds from short-term borrowings                                                                                                                                                            |   |              | 285      |   |   |   | - |   |
| Purchase of treasury stock                                                                                                                                                                     |   |              | (1       | ) |   |   | - |   |
| Repayment of short-term borrowings                                                                                                                                                             |   |              | (14,804  | ) |   |   | (2,507 | )  |
| Net cash used in financing activities                                                                                                                                                          |   |              | (14, 520 | ) |   |   | (2,507 | )  |
|                                                                                                                                                                                           |   |              |     |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                                                                                                                           |   |              | 5,273    |   |   |   | (1,501 | ) |
| Cash and cash equivalents at beginning of period                                                                                                                                               |   |              | 23,068   | (b) |   |   | 13,089 |   |
| Cash and cash equivalents at end of period, including assets held for sale in 2009                                                                                                             |   |              | 28,341   |   |   |   | 11,588 |   |
| Cash and cash equivalents included in assets held for sale                                                                                                                                     |   |              | -        |   |   |   | (16) |   |
| Cash and cash equivalents at end of period                                                                                                                                                     |   | $                 | 28,341   |   |   | $ | 11,572 |   |
| (a) Includes $14,804 used to repay short-term borrowings simultaneously with closing of sale and $1,344 withheld by the buyer to pay severance and bank fees and $300 cash held in escrow |   |
| (b) Includes $62 included in assets held for sale                                                                                                                                              |   |
|                                                                                                                                                                                           |   |              |     |   |   |   |   |   |
| Supplemental disclosures of cash flow information:                                                                                                                                             |   |              |     |   |   |   |   |   |
| Cash paid (received)  during the period for:                                                                                                                                         |   |              |     |   |   |   |   |   |
| Interest                                                                                                                                                                                       |   |              | 31       |   |   |   | 1,263 |   |
| Income taxes                                                                                                                                                                                   |   |              | 1,121    |   |   |   | (73 | ) |

----

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

|                                                                                                                                                                          | CommonStock |   |   | Additionalpaid-in |   |    | Retained |   |     | Treasurystock, at |   |   | Accumulatedothercomprehensiveincome |   |   | TotalStock-holders’ |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|--------|--------|-------------------|--------|---------|----------|--------|----------|-------------------|--------|--------|-------------------------------------|--------|--------|---------------------------|--------|
|                                                                                                                                                                          | Shares      |   | Amount |              |   | capital |     |   | earnings |              |   | cost   |                                |   | (loss) |                      |   | equity |   |
| Balance at December 31, 2009                                                                                                                                                  | 18,125,809  |   | $      | 181               |   |    | $        | 29,574 |     |              | $      | 3,918  |                                |   | $      | (1,358                    | )      |   | $ | (482 | ) |   | $ | 31,833 |   |
| Reclassification of loss on interest rate swap     to loss from discontinued operations                                                              |        |   |   |              |   |    |     |   |     |              |   |   |                                |   |   |                      |   |   |   | 803 |   |   |   | 803 |   |
| Reclassification of deferred tax benefit related to     loss on interest rate swap to loss from     discontinued operations |        |   |   |              |   |    |     |   |     |              |   |   |                                |   |   |                      |   |   |   | (321 | ) |   |   | (321 | ) |
| Net loss                                                                                                                                                                      |        |   |   |              |   |    |     |   |     |              |   | (2,886 | )                                   |   |   |                      |   |   |   |   |   |   |   | (2,886 | ) |
| Repurchase of 500 shares of common stock                                                                                                                                      |        |   |   |              |   |    |     |   |     |              |   |   |                                |   |   | (1                        | )      |   |   |   |   |   |   | (1 | ) |
| Stock based compensation expense                                                                                                                                              |        |   |   |              |   |    |     | 205    |     |              |   |   |                                |   |   |                      |   |   |   |   |   |   |   | 205 |   |
| Issuance of common stock to directors                                                                                                                                         | 12,602      |   |   |              |   |    |     | 20     |     |              |   |   |                                |   |   |                      |   |   |   |   |   |   |   | 20 |   |
|  Balance at September 30, 2010                                                                                                                                           | 18,138,911  |   | $      | 181               |   |    | $        | 29,799 |     |              | $      | 1,032  |                                |   | $      | (1,359                    | )      |   | $ | - |   |   | $ | 29,653 |   |

----

Notes to Condensed Consolidated Financial Statements

----

----

| Assets sold:                                                                 |   |   |   |
|------------------------------------------------------------------------------|--------|--------|--------|
| Cash and cash equivalents                                                    |   | $      | 1      |   |
| Accounts and other receivables, less allowance for doubtful accounts of $407 |   |   | 8,370  |   |
| Inventories – finished goods                                           |   |   | 19,611 |   |
| Prepaid expenses and other current assets                                    |   |   | 807    |   |
| Property, plant and equipment, net                                           |   |   | 676    |   |
| Intangible assets, net                                                       |   |   | 465    |   |
| Other assets                                                                 |   |   | 45     |   |
| Total assets sold                                                            |   |   | 29,975 |   |
|                                                                         |   |   |   |   |
| Liabilities assumed:                                                         |   |   |   |   |
| Accounts payable and accrued expenses                                        |   |   | 6,041  |   |
| Liability related to interest rate swap                                      |   |   | 803    |   |
| Total liabilities assumed                                                    |   |   | 6,844  |   |
|                                                                         |   |   |   |   |
| Net assets sold                                                              |   |   | 23,131 |   |
|                                                                         |   |   |   |   |
| Selling price, as adjusted                                                   |   |   | 26,463 |   |
| Legal fees and other transaction costs                                       |   |   | (927   | ) |
|                                                                         |   |   |   |   |
| Gain on sale of Five Star                                                    |   |   | 2,405  |   |

----

|                                                                                                                                         |   | Three months ended |   |   | Nine months ended |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                                                                         |   | September 30,      |   |   | September 30,     |   |
|                                                                                                                                         |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                         |   |               |   |   |              |   |   |   |   |   |   |   |
| Five Star                                                                                                                                    |   |               |   |   |              |   |   |   |   |   |   |   |
| Sales                                                                                                                                        |   | $                  | -      |   |              | $      | 27,131 |   |   | $ | 2,635 |   |   | $ | 80,027 |   |
| Cost of sales                                                                                                                                |   |               | -      |   |              |   | 22,591 |   |   |   | 2,294 |   |   |   | 66,631 |   |
| Gross margin                                                                                                                                 |   |               | -      |   |              |   | 4,540 |   |   |   | 341 |   |   |   | 13,396 |   |
|                                                                                                                                         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Selling, general and administrative expenses                                                                                                 |   |               | -      |   |              |   | 4,106 |   |   |   | 423 |   |   |   | 12,042 |   |
| Severance payments                                                                                                                           |   |               | -      |   |              |   | - |   |   |   | 1,062 |   |   |   | - |   |
| Fees and expenses related to repayment of debt                                                                                               |   |               | -      |   |              |   | - |   |   |   | 374 |   |   |   | - |   |
| Loss on interest rate swap                                                                                                                   |   |               | -      |   |              |   | - |   |   |   | 803 |   |   |   | - |   |
|                                                                                                                                         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
|           Operating (loss) income                                                          |   |               | -      |   |              |   | 434 |   |   |   | (2,321 | ) |   |   | 1,354 |   |
|                                                                                                                                         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                                                                                                             |   |               | -      |   |              |   | (389 | ) |   |   | (100 | ) |   |   | (1,138 | ) |
| Other  (expense) income                                                                                                            |   |               | -      |   |              |   | 6 |   |   |   | (53 | ) |   |   | 20 |   |
|                                                                                                                                         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from operations before items shown below                                                                                       |   |               | -      |   |              |   | 51 |   |   |   | (2,474 | ) |   |   | 236 |   |
| Gain on sale of Five Star                                                                                                                    |   |               | -      |   |              |   | - |   |   |   | 2,405 |   |   |   | - |   |
| (Loss) income before income tax expense                                                                                                      |   |               | -      |   |              |   | 51 |   |   |   | (69 | ) |   |   | 236 |   |
| Income tax expense, including deferred tax expense of $346        in nine months ended September 30, 2010 |   |               |   |   |              |   | (26 | ) |   |   | (877 | ) |   |   | (107 | ) |
|                                                                                                                                         |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| (Loss) income from discontinued operations                                                                                                   |   | $                  |   |   |              | $      | 25 |   |   | $ | (946 | ) |   | $ | 129 |   |

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|                                              |   | Three months ended |   |   | Nine months ended |   |
|---------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                              |   | September 30,      |   |   | September 30,     |   |
|                                              |   | 2010               |   |   | 2009              |   |   | 2010 |   |   | 2009 |   |
| Basic and Diluted EPS                        |   |               |   |   |              |   |   |   |   |   |   |   |
| Loss from continuing operations    |   | $                  | (290   | )      |              | $      | (792 | ) |   | $ | (1,940 | ) |   | $ | (2,272 | ) |
| (Loss) income from discontinued operation         |   |               |   |   |              |   | 25 |   |   |   | (946 |  ) |   |   | 129 |   |
| Net loss                                          |   | $                  | (290   | )      |              | $      | (767 | ) |   | $ | (2,886 | ) |   | $ | (2,143 | ) |
|                                              |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding               |   |               | 17,572 |   |              |   | 17,556 |   |   |   | 17,569 |   |   |   | 17,550 |   |
|                                              |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Per share:                                        |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Continuing operations                             |   | $                  | (0.02  | )      |              | $      | (0.05 | ) |   | $ | (0.11 | ) |   | $ | (0.13 | ) |
| Discontinued operations                           |   |               |   |   |              |   | 0.01 |   |   |   | (0.05 | ) |   |   | 0.01 |   |
| Net loss                                          |   | $                  | (0.02  | )      |              | $      | (0.04 | ) |   | $ | (0.16 | ) |   | $ | (0.12 | ) |

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|                                                 |   | StockOptions |      |   | WeightedAverageExercisePrice |   |   | WeightedAverage RemainingContractualTerm |   |   | AggregateIntrinsicValue |   |
|------------------------------------------------------|--------|--------------|-----------|--------|------------------------------|--------|--------|------------------------------------------|--------|--------|-------------------------|--------|
|                                                 |   |         |      |   |                         |   |   |                                     |   |   |                    |   |
| Options outstanding at January 1, 2010               |   |         | 3,350,000 |   |                         | $      | 2.49   |                                     |   |   | 6.9                     |   |   | $ | 0 | * |
| Options granted                                      |   |         | 550,000   |   |                         | $      | 1.33   |                                     |   |   |                    |   |   | $ | 33,000 | * |
| Options cancelled                                    |   |         | (650,000  | )      |                         | $      | 2.28   |                                     |   |   |                    |   |   |   |   | * |
| Options outstanding  at September 30, 2010 |   |         | 3,250,000 |   |                         | $      | 2.31   |                                     |   |   | 7.1                     |   |   | $ | 0 | * |
| Options exercisable at September 30, 2010            |   |         | 2,800,000 |   |                         | $      | 2.46   |                                     |   |   | 6.4                     |   |   | $ | 0 | * |

|   | * | The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

| Dividend yield              |   |   | 0              | %      |
|-----------------------------|--------|--------|----------------|--------|
| Weighted-average volatility |   |   | 47.59          | %      |
| Risk-free interest rate     |   |   | 1.96% and 2.07 | %      |
| Expected life (in years)    |   |   | 4              |   |

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| (a) | On November 12, 2004, the Company entered into an agreement to borrow approximately $1,022,000 from Bedford Oak Partners L.P., which is controlled by Harvey P. Eisen, Chairman, Chief Executive Officer and a director of the Company, and approximately $568,000 from Jerome I. Feldman, who at the time was Chairman and Chief Executive Officer and a director of the Company, which was utilized to exercise an option held by the Company to purchase Series B Convertible Preferred shares of Valera. On January 11, 2005, the Company prepaid the loans and all accrued interest in full. As further consideration for making these loans, Bedford Oak Partners and Mr. Feldman became entitled to a portion of the consideration received by the Company on the sale of certain Valera shares. As a result of the consummation of the acquisition of Valera by Indevus and the merger of Indevus into Endo (see Note 7), the Company has a contingent right to receive from Endo certain cash payments. The two related parties would receive the following portions of the Company’s cash payments upon the occurrence of the following events: (i) upon FDA approval of the Uteral Stent, between $262,000 and $227,000,respectively  and (ii) upon FDA approval of VP003, between $393,000 and $341,000, respectively. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (b) | In March 2010, the Company paid Bedford Oak Advisors, LLC, an aggregate of $150,000 for consulting services rendered through February 28, 2010 by two individuals (together, the “Consultants”), each of whom served as consultants to Bedford Oak Advisors, LLC.  Such consulting services included advice on investment company matters and related issues, the evaluation of potential acquisition and business development opportunities for the Company and capital raises and other financings undertaken by the Company (the “Consulting Services”). As of March 1, 2010, the Consultants terminated their services with Bedford Oak Advisors, LLC and were retained by the Company to provide the Consulting Services to the Company on a month-to-month basis at a rate of $35,000 per month payable to one individual and $25,000 per month payable to the other individual.  The respective agreements with the Consultants expired on June 30, 2010.  However, the Company or either Consultant had the right to terminate the agreement at any time upon thirty days prior written notice to the other party.  The agreement with the individual at the rate of $35,000 per month was terminated by the Company as of May 15, 2010 and the agreement with the individual at the rate of $25,000 per month was terminated by the Company as of June 30, 2010. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) | Effective June 1, 2010, the Company relocated its headquarters to the offices of Bedford Oak Advisors, LLC in Mount Kisco, New York. The Company is subleasing a portion of the space and has access to various administrative support services on a month-to-month basis at the rate of approximately $19,700 per month. General and administrative expenses for the three and nine months ended September 30, 2010, include $60,000 and $79,000 related to the sublease arrangement. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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----

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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----

----

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|                                                                                                                                                                         |   | Increase (decrease) |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|--------|
| Personnel and related  costs, related to the resignation of John Belknap, a former officer of the Company in June 2010                                             |   | $                   | (74    | ) |
|                                                                                                                                                                         |   |                |   |   |
| Professional fees, net (recurring)                                                                                                                                           |   |                | (326   | ) |
|                                                                                                                                                                         |   |                |   |   |
| Office rent and administrative services, related to the relocation of the corporate office in June 2010 (see Note 8 (c ) to the Condensed Consolidated Financial Statements) |   |                | 64     |   |
|                                                                                                                                                                         |   |                |   |   |
| Five Star management fee (eliminated as result of the sale of Five Star in January 2010)                                                                                     |   |                | 120    |   |
|                                                                                                                                                                         |   |                |   |   |
| Reduction in compensation expense related to option grants                                                                                                                   |   |                | (202   | )  |
|                                                                                                                                                                         |   |                |   |   |
| Other                                                                                                                                                                        |   |                | 16     |   |
|                                                                                                                                                                         |   |                |   |   |
| Total reduction in General and administrative expenses                                                                                                                       |   |  $             | (402   | )  |

----

|                                                                                                                                                                                                                                                                                           |   | Increase (decrease) |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------|------------|
| Severance costs related to the Separation Agreement entered into in 2010 between the Company and John Belknap, a former director, officer and employee of the Company                                                                                                                          |   | $                   | 158        |   |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
| Consulting services and professional fees incurred in 2010 related to the evaluation of potential acquisition and business development opportunities for the Company (terminated in June 2010)                                                                                                 |   |                | 388        |   |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
| Discrete  bonus granted by the Board of Directors in 2010 to the Chairman, Chief Executive Officer and President of the Company for his specific role in the completion of the sale of both the Company’s undeveloped real property located in Pawling, New York and Five Star |   |                |   500 |   |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
| Five Star management fee (which was zero in 2010 as result of the sale of Five Star in January 2010)                                                                                                                                                                                           |   |                | 360        |   |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
| Reduction in compensation expense related to option grants                                                                                                                                                                                                                                     |   |                | (482       | ) |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
| Reduced professional fees                                                                                                                                                                                                                                                                      |   |                | (332       | ) |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
| Other                                                                                                                                                                                                                                                                                          |   |                | (3         | ) |
|                                                                                                                                                                                                                                                                                           |   |                |       |   |
|                                                                                                                                                                                                                                                                                           |   | $                   | 589        |   |

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Quantitative and Qualitative Disclosures About Market Risk

Controls and Procedures

----

Unregistered Sales of Equity Securities and Use of Proceeds.

| Period            |               | Total Number of Shares Purchased |   |   | Average Price Paid Per Share |   |   | Total Number of Shares Purchased As Part of Publicly Announced Plan or Program |   |   | Maximum Number of Shares That May Yet be Purchased Under the Plan or Program |      |
|-------------------|--------------------|----------------------------------|--------|--------|-----------------------------------|--------|--------|--------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------|-----------|
|  Beginning   | Ending             |                             |   |   |                              |   |   |                                                                           |   |   |                                                                         |      |   |
| July 1, 2010      | July 31, 2010      |                             |   | -      |                              |   |   | -                                                                              |   |   |                                                                         | -         |   |   |   | 2,208,679 |   |
| August 1, 2010    | August 31, 2010    |                             |   | -      |                              |   |   | -                                                                              |   |   |                                                                         | -         |   |   |   | 2,208,679 |   |
| September 1, 2010 | September 30, 2010 |                             |   | 500    |                              |   | $      | 1.30                                                                           |   |   |                                                                         | 1,791,821 |   |   |   | 2,208,179 |   |
|  Total       |               |                             | 500    |   |                              | $      | 1.30   |                                                                           |   |   | 1,791,821                                                                    |      |   |   | 2,208,179 |   |

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Exhibits.

| Exhibit No. |   |  Description                                                                                                                                                                                                                    |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|        |   |                                                                                                                                                                                                                                 |
| 31.1        | *      | Certification of principal executive officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)                                                                                                                      |
|        |   |                                                                                                                                                                                                                                 |
| 31.2        | *      | Certification of principal financial officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)                                                                                                                      |
|        |   |                                                                                                                                                                                                                                 |
| 32.1        | *      | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the principal executive officer of the Company and the principal financial officer of the Company |

----

SIGNATURES

|                    |   |                                                     |
|-------------------------|--------|----------------------------------------------------------|
|                    |   | NATIONAL PATENT DEVELOPMENT CORPORATION                  |
|                    |   |                                                     |
|                    |   |                                                     |
| Date: November 15, 2010 |   | /s/ HARVEY P. EISEN                                      |
|                    |   | Name: Harvey P. Eisen                                    |
|                    |   | Title: Chairman of the Board and Chief Executive Officer |
|                    |   |                                                     |
|                    |   |                                                     |
|                    |   |                                                     |
| Date: November 15, 2010 |   | /s/ IRA J. SOBOTKO                                       |
|                    |   | Name: Ira J. Sobotko                                     |
|                    |   | Title: Vice President, Chief Financial Officer           |

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