----

----

| Delaware                                                            |   | 75-1277589                                |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| (State      or other jurisdiction of incorporation or organization) |   | (I.R.S.      Employer Identification No.) |

|   | Yes  x |   | No o |   |
|--------|------------------|--------|-----------|--------|

|   | Yes  o |   | No o |   |
|--------|------------------|--------|-----------|--------|

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

|   | Yes  o |   | No x |   |
|--------|------------------|--------|-----------|--------|

| Class                           |   | Outstanding      at October 31, 2009 |
|---------------------------------|--------|--------------------------------------|
| Common      Stock, $1 Par Value |   | 7,951,176      Shares                |

----

INDEX

|    |                  |                                                                                        | Page    |
|---------|-----------------------|---------------------------------------------------------------------------------------------|---------|
| PART I  | FINANCIAL INFORMATION |                                                                                        |
|    |                  |                                                                                        |    |
|    | Item 1.               | Financial Statements:                                                                       |    |
|    |                  |                                                                                        |    |
|    |                  | Condensed Consolidated Balance Sheets                                                       |    |
|    |                  | October 2, 2009 (unaudited) and December 31,      2008                                      | 3,4     |
|    |                  |                                                                                        |    |
|    |                  | Condensed Consolidated Statements of    Operations                                          |    |
|    |                  | For the Three and Nine Months Ended October 2, 2009 and      September 30, 2008 (unaudited) |  5 |
|    |                  |                                                                                        |    |
|    |                  | Condensed Consolidated Statements of Cash    Flows                                          |    |
|    |                  | For the Nine Months Ended October 2, 2009 and September 30,      2008 (unaudited)           | 6       |
|    |                  |                                                                                        |    |
|    |                  | Notes to Condensed Consolidated Financial Statements      (unaudited)                       | 7       |
|    |                  |                                                                                        |    |
|    | Item 2.               | Management's Discussion and Analysis of Financial Condition      and                        |    |
|    |                  | Results of Operations                                                                       | 18      |
|    |                  |                                                                                        |    |
|    | Item 4T.              | Controls and Procedures                                                                     | 22      |
|    |                  |                                                                                        |    |
|    |                  |                                                                                        |    |
| PART II | OTHER INFORMATION     | 23                                                                                          |
|    |                  |                                                                                        |    |
|    | Item 1.               | Legal Proceedings                                                                           | 23      |
|    |                  |                                                                                        |    |
|    | Item 1A.              | Risk Factors                                                                                | 23      |
|    |                  |                                                                                        |    |
|    | Item 2.               | Unregistered Sales of Equity Securities and Use of      Proceeds                            | 23      |
|    |                  |                                                                                        |    |
|    | Item 3.               | Defaults Upon Senior Securities                                                             | 23      |
|    |                  |                                                                                        |    |
|    | Item 4.               | Submission of Matters to a Vote of Security      Holders                                    | 23      |
|    |                  |                                                                                        |    |
|    | Item 5.               | Other Information                                                                           | 23      |
|    |                  |                                                                                        |    |
|    | Item 6.               | Exhibits                                                                                    | 23      |
|    |                  |                                                                                        |    |
|    | Signatures            |                                                                                        | 24      |

----

index

PARTI  FINANCIAL INFORMATION

Item1.  Financial Statements

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                           |   |            |    |   |              |   |
|----------------------------------------------------------------|--------|-----------------|---------|--------|-------------------|--------|
|                                                           |   | October      2, |    |   | December      31, |   |
|                                                           |   | 2009            |    |   | 2008              |   |
| CURRENT      ASSETS:                                           |   |            |    |   |              |   |
|                                                           |   |            |    |   |              |   |
| Cash                                                           |   | $               | 895     |   |              | $      | 683 |   |
| Accounts      receivable, net                                  |   |            | 15,520  |   |              |   | 13,773 |   |
| Inventories,      net                                          |   |            | 16,207  |   |              |   | 19,911 |   |
| Other      current assets                                      |   |            | 1,292   |   |              |   | 3,516 |   |
|                                                           |   |            |    |   |              |   |   |   |
| Total      current assets                                      |   |            | 33,914  |   |              |   | 37,883 |   |
|                                                           |   |            |    |   |              |   |   |   |
|                                                           |   |            |    |   |              |   |   |   |
| OTHER      ASSETS:                                             |   |            |    |   |              |   |   |   |
|                                                           |   |            |    |   |              |   |   |   |
| Goodwill                                                       |   |            | 665     |   |              |   | 665 |   |
| Intangibles,      net                                          |   |            | 4,108   |   |              |   | 4,455 |   |
| Other                                                          |   |            | 2,909   |   |              |   | 1,809 |   |
|                                                           |   |            |    |   |              |   |   |   |
| Total      other assets                                        |   |            | 7,682   |   |              |   | 6,929 |   |
|                                                           |   |            |    |   |              |   |   |   |
|                                                           |   |            |    |   |              |   |   |   |
| PROPERTY      AND EQUIPMENT                                    |   |            |    |   |              |   |   |   |
| Land      and improvements                                     |   |            | 336     |   |              |   | 336 |   |
| Buildings      and improvements                                |   |            | 9,300   |   |              |   | 8,686 |   |
| Machinery      and equipment                                   |   |            | 93,481  |   |              |   | 92,693 |   |
|                                                           |   |            |    |   |              |   |   |   |
|                                                           |   |            | 103,117 |   |              |   | 101,715 |   |
| Less      - Accumulated depreciation                           |   |            | (73,763 | )      |              |   | (69,232 | ) |
|                                                           |   |            |    |   |              |   |   |   |
| Property      and equipment, net                               |   |            | 29,354  |   |              |   | 32,483 |   |
|                                                           |   |            |    |   |              |   |   |   |
| Total      assets                                              |   | $               | 70,950  |   |              | $      | 77,295 |   |
|                                                           |   |            |    |   |              |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements. |   |            |    |   |              |   |   |   |

----

index

|                                                             |   |            |     |   |              |   |
|------------------------------------------------------------------|--------|-----------------|----------|--------|-------------------|--------|
|                                                             |   | October      2, |     |   | December      31, |   |
|                                                             |   | 2009            |     |   | 2008              |   |
| CURRENT      LIABILITIES:                                        |   |            |     |   |              |   |
|                                                             |   |            |     |   |              |   |
| Accounts      payable                                            |   | $               | 9,631    |   |              | $      | 10,283 |   |
| Book      overdraft                                              |   |            | 1,089    |   |              |   | 2,289 |   |
| Accrued      compensation                                        |   |            | 2,895    |   |              |   | 3,015 |   |
| Accrued      expenses                                            |   |            | 15,121   |   |              |   | 14,266 |   |
| Current      maturities of long-term debt                        |   |            | 1,500    |   |              |   | 1,500 |   |
| Revolving      credit agreement                                  |   |            | 9,911    |   |              |   | 9,118 |   |
|                                                             |   |            |     |   |              |   |   |   |
| Total      current liabilities                                   |   |            | 40,147   |   |              |   | 40,471 |   |
|                                                             |   |            |     |   |              |   |   |   |
| LONG-TERM      DEBT, less current maturities                     |   |            | 5,798    |   |              |   | 6,928 |   |
|                                                             |   |            |     |   |              |   |   |   |
| OTHER      LIABILITIES                                           |   |            | 9,044    |   |              |   | 10,603 |   |
|                                                             |   |            |     |   |              |   |   |   |
| Total      liabilities                                           |   |            | 54,989   |   |              |   | 58,002 |   |
|                                                             |   |            |     |   |              |   |   |   |
| COMMITMENTS      AND CONTINGENCIES (Note 8)                      |   |            |     |   |              |   |   |   |
|                                                             |   |            |     |   |              |   |   |   |
| STOCKHOLDERS’      EQUITY                                  |   |            |     |   |              |   |   |   |
| 15%      Convertible preferred stock, $100 par value; authorized |   |            |     |   |              |   |   |   |
| 1,200,000      shares; issued and outstanding 1,131,551 shares;  |   |            |     |   |              |   |   |   |
| liquidation      value $113,155                                  |   |            | 108,256  |   |              |   | 108,256 |   |
| Common      stock, $1 par value; authorized 35,000,000 shares;   |   |            |     |   |              |   |   |   |
| issued      9,822,304 shares                                     |   |            | 9,822    |   |              |   | 9,822 |   |
| Additional      paid-in capital                                  |   |            | 27,162   |   |              |   | 27,248 |   |
| Accumulated      other comprehensive loss                        |   |            | (1,674   | )      |              |   | (1,742 | ) |
| Accumulated      deficit                                         |   |            | (106,169 | )      |              |   | (102,397 | ) |
| Treasury      stock, at cost, 1,871,128 shares                   |   |            | (21,436  | )      |              |   | (21,894 | ) |
|                                                             |   |            |     |   |              |   |   |   |
| Total      stockholders' equity                                  |   |            | 15,961   |   |              |   | 19,293 |   |
|                                                             |   |            |     |   |              |   |   |   |
| Total      liabilities and stockholders' equity                  |   | $               | 70,950   |   |              | $      | 77,295 |   |
|                                                             |   |            |     |   |              |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements.   |   |            |     |   |              |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                              |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|-------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                                              |   | October      2,         |   |   | September      30,     |   |   | October      2, |   |   | September      30, |   |
|                                                              |   | 2009                    |   |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Net      sales                                                    |   | $                       | 37,612 |   |                   | $      | 44,364 |   |   | $ | 110,380 |   |   | $ | 131,189 |   |
| Cost      of goods sold                                           |   |                    | 32,501 |   |                   |   | 41,494 |   |   |   | 93,944 |   |   |   | 122,025 |   |
| Gross      profit                                                 |   |                    | 5,111  |   |                   |   | 2,870 |   |   |   | 16,436 |   |   |   | 9,164 |   |
| Selling,      general and administrative expenses                 |   |                    | 5,695  |   |                   |   | 7,603 |   |   |   | 19,818 |   |   |   | 22,370 |   |
| Severance,      restructuring and related charges                 |   |                    | -      |   |                   |   | - |   |   |   | - |   |   |   | (410 | ) |
| Loss      on sale or disposal of assets                           |   |                    | 49     |   |                   |   | 28 |   |   |   | 61 |   |   |   | 762 |   |
| Operating      loss                                               |   |                    | (633   | )      |                   |   | (4,761 | ) |   |   | (3,443 | ) |   |   | (13,558 | ) |
| Interest      expense                                             |   |                    | (281   | )      |                   |   | (394 | ) |   |   | (873 | ) |   |   | (1,297 | ) |
| Other,      net                                                   |   |                    | 118    |   |                   |   | 18 |   |   |   | 123 |   |   |   | 34 |   |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before income tax            |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| (provision)      benefit                                          |   |                    | (796   | )      |                   |   | (5,137 | ) |   |   | (4,193 | ) |   |   | (14,821 | ) |
| Income      tax (provision) benefit from continuing operations    |   |                    | (14    | )      |                   |   | 65 |   |   |   | 421 |   |   |   | 1,222 |   |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   |                    | (810   | )      |                   |   | (5,072 | ) |   |   | (3,772 | ) |   |   | (13,599 | ) |
| Loss      from operations of discontinued businesses (net of tax) |   |                    | -      |   |                   |   | (71 | ) |   |   | - |   |   |   | (738 | ) |
| Gain      on sale of discontinued businesses (net of tax)         |   |                    | -      |   |                   |   | 190 |   |   |   | - |   |   |   | 1,735 |   |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                     |   | $                       | (810   | )      |                   | $      | (4,953 | ) |   | $ | (3,772 | ) |   | $ | (12,602 | ) |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share of common stock - Basic and diluted:          |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing      operations                                        |   | $                       | (0.10  | )      |                   | $      | (0.64 | ) |   | $ | (0.47 | ) |   | $ | (1.71 | ) |
| Discontinued      operations                                      |   |                    | -      |   |                   |   | 0.02 |   |   |   | - |   |   |   | 0.13 |   |
| Net      loss                                                     |   | $                       | (0.10  | )      |                   | $      | (0.62 | ) |   | $ | (0.47 | ) |   | $ | (1.58 | ) |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average common shares outstanding:                  |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      and diluted                                            |   |                    | 7,951  |   |                   |   | 7,951 |   |   |   | 7,951 |   |   |   | 7,951 |   |
|                                                              |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements.    |   |                    |   |   |                   |   |   |   |   |   |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                           |   |            |   |   |               |   |
|----------------------------------------------------------------|--------|-----------------|--------|--------|--------------------|--------|
|                                                           |   | October      2, |   |   | September      30, |   |
|                                                           |   | 2009            |   |   | 2008               |   |
| Cash      flows from operating activities:                     |   |            |   |   |               |   |
| Net      loss                                                  |   | $               | (3,772 | )      |               | $      | (12,602 | ) |
| Income      from discontinued operations                       |   |            | -      |   |               |   | (997 | ) |
| Loss      from continuing operations                           |   |            | (3,772 | )      |               |   | (13,599 | ) |
| Depreciation                                                   |   |            | 4,691  |   |               |   | 5,847 |   |
| Amortization      of intangible assets                         |   |            | 372    |   |               |   | 362 |   |
| Amortization      of debt issuance costs                       |   |            | 287    |   |               |   | 286 |   |
| Stock-based      compensation                                  |   |            | 372    |   |               |   | (210 | ) |
| Loss      on sale or disposal of assets                        |   |            | 61     |   |               |   | 762 |   |
|                                                           |   |            | 2,011  |   |               |   | (6,552 | ) |
| Changes      in operating assets and liabilities:              |   |            |   |   |               |   |   |   |
| Accounts      receivable                                       |   |            | (1,626 | )      |               |   | (2,577 | ) |
| Inventories                                                    |   |            | 3,745  |   |               |   | 3,037 |   |
| Other      assets                                              |   |            | 1,103  |   |               |   | 181 |   |
| Accounts      payable                                          |   |            | (731   | )      |               |   | 2,835 |   |
| Accrued      expenses                                          |   |            | 670    |   |               |   | (382 | ) |
| Other                                                          |   |            | (1,635 | )      |               |   | (1,550 | ) |
|                                                           |   |            | 1,526  |   |               |   | 1,544 |   |
|                                                           |   |            |   |   |               |   |   |   |
| Net      cash provided by (used in) continuing operations      |   |            | 3,537  |   |               |   | (5,008 | ) |
| Net      cash used in discontinued operations                  |   |            | -      |   |               |   | (897 | ) |
| Net      cash provided by (used in) operating activities       |   |            | 3,537  |   |               |   | (5,905 | ) |
|                                                           |   |            |   |   |               |   |   |   |
| Cash      flows from investing activities:                     |   |            |   |   |               |   |   |   |
| Capital      expenditures                                      |   |            | (1,537 | )      |               |   | (5,122 | ) |
| Proceeds      from sale of assets                              |   |            | 2      |   |               |   | 99 |   |
|                                                           |   |            |   |   |               |   |   |   |
| Net      cash used in continuing operations                    |   |            | (1,535 | )      |               |   | (5,023 | ) |
| Net      cash provided by discontinued operations              |   |            | -      |   |               |   | 8,979 |   |
| Net      cash (used in) provided by investing activities       |   |            | (1,535 | )      |               |   | 3,956 |   |
|                                                           |   |            |   |   |               |   |   |   |
| Cash      flows from financing activities:                     |   |            |   |   |               |   |   |   |
| Net      borrowings on revolving loans                         |   |            | 659    |   |               |   | 3,776 |   |
| Decrease      in book overdraft                                |   |            | (1,200 | )      |               |   | (1,118 | ) |
| Repayments      of term loans                                  |   |            | (1,131 | )      |               |   | (1,716 | ) |
|                                                           |   |            |   |   |               |   |   |   |
| Net      cash (used in) provided by financing activities       |   |            | (1,672 | )      |               |   | 942 |   |
|                                                           |   |            |   |   |               |   |   |   |
| Effect      of exchange rate changes on cash                   |   |            | (118   | )      |               |   | (80 | ) |
| Net      increase (decrease) in cash                           |   |            | 212    |   |               |   | (1,087 | ) |
| Cash,      beginning of period                                 |   |            | 683    |   |               |   | 2,015 |   |
| Cash,      end of period                                       |   | $               | 895    |   |               | $      | 928 |   |
|                                                           |   |            |   |   |               |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements. |   |            |   |   |               |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                    |   | October      2, |   |   | December      31, |   |
|-------------------------|--------|-----------------|--------|--------|-------------------|--------|
|                    |   | 2009            |   |   | 2008              |   |
|                    |   |            |   |   |              |   |
| Raw      materials      |   | $               | 9,825  |   |              | $      | 12,764 |   |
| Work      in process    |   |            | 58     |   |              |   | 718 |   |
| Finished      goods     |   |            | 11,017 |   |              |   | 12,054 |   |
| Inventory      reserves |   |            | (1,218 | )      |              |   | (1,345 | ) |
| LIFO      reserve       |   |            | (3,475 | )      |              |   | (4,280 | ) |
|                    |   | $               | 16,207 |   |              | $      | 19,911 |   |
|                    |   |            |   |   |              |   |   |   |

----

index

|                                           |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                           |   | October      2,         |   |   | September      30,     |   |   | October      2, |   |   | September      30, |   |
|                                           |   | 2009                    |   |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
|                                           |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Stock      option expense (income)             |   | $                       | 98     |   |                   | $      | 106 |   |   | $ | 372 |   |   | $ | (152 | ) |
| Stock      appreciation right expense (income) |   |                    | 8      |   |                   |   | (106 | ) |   |   | - |   |   |   | (58 | ) |
|                                           |   | $                       | 106    |   |                   | $      | - |   |   | $ | 372 |   |   | $ | (210 | ) |
|                                           |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |

|                         | October      2,      |   | September      30,   |
|------------------------------|----------------------|--------|----------------------|
|                         | 2009                 |   | 2008                 |
|                         |                 |   |                 |
| Expected      term (years)   | 0.1      - 4.8       |   | 2.7      - 4.9       |
| Volatility                   | 131.7%      - 206.6% |   | 106.7%      - 137.7% |
| Risk-free      interest rate | 0.1%      - 2.1%     |   | 2.2%      - 3.1%     |

|                                             |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|--------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                             |   | October      2,         |   |   | September      30,     |   |   | October      2, |   |   | September      30, |   |
|                                             |   | 2009                    |   |   | 2008                   |   |   | 2009 |   |   | 2008 |   |
|                                             |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Net      loss                                    |   | $                       | (810   | )      |                   | $      | (4,953 | ) |   | $ | (3,772 | ) |   | $ | (12,602 | ) |
| Foreign      currency translation gains (losses) |   |                    | 20     |   |                   |   | (107 | ) |   |   | 68 |   |   |   | (239 | ) |
| Comprehensive      loss                          |   | $                       | (790   | )      |                   | $      | (5,060 | ) |   | $ | (3,704 | ) |   | $ | (12,841 | ) |
|                                             |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |

----

index

----

index

|                      |   | October      2, |   |   | December      31, |   |
|---------------------------|--------|-----------------|--------|--------|-------------------|--------|
|                      |   | 2009            |   |   | 2008              |   |
|                      |   | Gross           |   |   | Accumulated       |   |   | Net      Carrying |   |   | Gross |   |   | Accumulated |   |   | Net      Carrying |   |
|                      |   | Amount          |   |   | Amortization      |   |   | Amount |   |   | Amount |   |   | Amortization |   |   | Amount |   |
|  Patents             |   | $               | 1,143  |   |              | $      | (905 | ) |   | $ | 238 |   |   | $ | 1,118 |   |   | $ | (832 | ) |   | $ | 286 |   |
|  Customer      lists |   |            | 10,231 |   |              |   | (8,534 | ) |   |   | 1,697 |   |   |   | 10,231 |   |   |   | (8,406 | ) |   |   | 1,825 |   |
|  Tradenames          |   |            | 5,054  |   |              |   | (2,881 | ) |   |   | 2,173 |   |   |   | 5,054 |   |   |   | (2,710 | ) |   |   | 2,344 |   |
|  Total               |   | $               | 16,428 |   |              | $      | (12,320 | ) |   | $ | 4,108 |   |   | $ | 16,403 |   |   | $ | (11,948 | ) |   | $ | 4,455 |   |
|                      |   |            |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 2009      (remainder) |   | $      | 151    |   |
|-----------------------|--------|--------|--------|--------|
| 2010                  |   |   | 527    |   |
| 2011                  |   |   | 500    |   |
| 2012                  |   |   | 474    |   |
| 2013                  |   |   | 454    |   |
| Thereafter            |   |   | 2,002  |   |
|                  |   | $      | 4,108  |   |
|                  |   |   |   |   |

|                                                                             |   | October      2, |   |   | December      31, |   |
|----------------------------------------------------------------------------------|--------|-----------------|--------|--------|-------------------|--------|
|                                                                             |   | 2009            |   |   | 2008              |   |
|                                                                             |   |            |   |   |              |   |
| Term      loan payable under the Bank of America Credit Agreement,      interest |   |            |   |
| based      on LIBOR and Prime Rates (3.00% - 4.25%), due through Nov    2010     |   | $               | 7,298  |   |              | $      | 8,428 |   |
| Revolving      loans payable under the Bank of America Credit Agreement,         |   |            |   |   |
| interest      based on LIBOR and Prime Rates (2.75% - 4.75%)                     |   |            | 9,911  |   |              |   | 9,118 |   |
| Total      debt                                                                  |   |            | 17,209 |   |              |   | 17,546 |   |
| Less      revolving loans, classified as current (see below)                     |   |            | (9,911 | )      |              |   | (9,118 | ) |
| Less      current maturities                                                     |   |            | (1,500 | )      |              |   | (1,500 | ) |
| Long-term      debt                                                              |   | $               | 5,798  |   |              | $      | 6,928 |   |
|                                                                             |   |            |   |   |              |   |   |   |

| 2009      (remainder) |   | $      | 375    |   |
|-----------------------|--------|--------|--------|--------|
| 2010                  |   |   | 6,923  |   |
|                  |   | $      | 7,298  |   |
|                  |   |   |   |   |

----

index

----

index

|                                          |   | Pension      Benefits   |   |
|-----------------------------------------------|--------|-------------------------|--------|
|                                          |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|                                          |   | October      2,         |   |   | September      30, |   |   | October      2, |   |   | September      30, |   |
|                                          |   | 2009                    |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
| Components      of net periodic benefit cost: |   |                    |   |   |   |   |   |   |   |   |   |   |
| Service      cost                             |   | $                       | -      |   |   | $ | 3 |   |   | $ | - |   |   | $ | 10 |   |
| Interest      cost                            |   |                    | 19     |   |   |   | 23 |   |   |   | 57 |   |   |   | 70 |   |
| Expected      return on plan assets           |   |                    | (14    | ) |   |   | (26 | ) |   |   | (40 | ) |   |   | (77 | ) |
| Amortization      of net loss                 |   |                    | 12     |   |   |   | 12 |   |   |   | 34 |   |   |   | 34 |   |
| Net      periodic benefit cost                |   | $                       | 17     |   |   | $ | 12 |   |   | $ | 51 |   |   | $ | 37 |   |
|                                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                          |   | Other      Benefits     |   |
|-----------------------------------------------|--------|-------------------------|--------|
|                                          |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|                                          |   | October      2,         |   |   | September      30, |   |   | October      2, |   |   | September      30, |   |
|                                          |   | 2009                    |   |   | 2008 |   |   | 2009 |   |   | 2008 |   |
| Components      of net periodic benefit cost: |   |                    |   |   |   |   |   |   |   |   |   |   |
| Interest      cost                            |   | $                       | 33     |   |   | $ | 38 |   |   | $ | 104 |   |   | $ | 113 |   |
| Amortization      of net loss                 |   |                    | -      |   |   |   | 7 |   |   |   | - |   |   |   | 23 |   |
| Net      periodic benefit cost                |   | $                       | 33     |   |   | $ | 45 |   |   | $ | 104 |   |   | $ | 136 |   |
|                                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                                           |   |    |      |   |     |   | Weighted    |   |                |   |
|------------------------------------------------|--------|---------|-----------|--------|----------|--------|-------------|--------|---------------------|--------|
|                                           |   |    |      |   | Weighted |   | Average     |   | Aggregate           |   |
|                                           |   |    |      |   | Average  |   | Remaining   |   | Intrinsic           |   |
|                                           |   |    |      |   | Exercise |   | Contractual |   | Value               |   |
|                                           |   | Options |      |   | Price    |   | Life        |   | (in      thousands) |   |
|                                           |   |    |      |   |     |   |        |   |                |   |
| Outstanding      at December 31, 2008          |   |    | 1,624,600 |   |     | $      | 2.41        |   |                |   |   |   |
|                                           |   |    |      |   |     |   |        |   |                |   |   |   |
| Granted                                        |   |    | 125,000   |   |     | $      | 1.00        |   |                |   |   |   |
| Exercised                                      |   |    | -         |   |     | $      | -           |   |                |   |   |   |
| Expired                                        |   |    | (20,300   | )      |     | $      | 17.09       |   |                |   |   |   |
| Cancelled                                      |   |    | (211,500  | )      |     | $      | 2.67        |   |                |   |   |   |
|                                           |   |    |      |   |     |   |        |   |                |   |   |   |
| Outstanding      at October 2, 2009            |   |    | 1,517,800 |   |     | $      | 2.06        |   | 6.98      years     |   | $ | 316 |   |
|                                           |   |    |      |   |     |   |        |   |                |   |   |   |   |
| Vested      and Exercisable at October 2, 2009 |   |    | 642,800   |   |     | $      | 3.28        |   | 4.45      years     |   | $ | 63 |   |
|                                           |   |    |      |   |     |   |        |   |                |   |   |   |   |

|                                      |   |   |    |   | Weighted   |   |
|-------------------------------------------|--------|--------|---------|--------|------------|--------|
|                                      |   |   |    |   | Average    |   |
|                                      |   | SARs   |    |   | Fair Value |   |
|                                      |   |   |    |   |       |   |
| Non-Vested      at December 31, 2008      |   |   | 6,666   |   |       | $      | 0.80 |   |
|                                      |   |   |    |   |       |   |   |   |
| Granted                                   |   |   | 6,000   |   |       | $      | 1.29 |   |
| Vested                                    |   |   | (12,666 | )      |       | $      | 0.66 |   |
|                                      |   |   |    |   |       |   |   |   |
| Non-Vested      at October 2, 2009        |   |   | -       |   |       | $      | - |   |
|                                      |   |   |    |   |       |   |   |   |
| Total      Outstanding at October 2, 2009 |   |   | 483,267 |   |       | $      | 0.91 |   |
|                                      |   |   |    |   |       |   |   |   |

----

index

----

index

----

index

|                                                             |   |   |   |   |                           | Three      months ended |            |   | Nine      months ended |              |
|------------------------------------------------------------------|--------|--------|--------|--------|--------------------------------|-------------------------|-----------------|--------|------------------------|-------------------|
|                                                             |   |   |   |   |                           | October      2,         |            |   | September      30,     |              |   | October      2, |   |   | September      30, |   |
|                                                             |   |   |   |   |                           | 2009                    |            |   | 2008                   |              |   | 2009 |   |   | 2008 |   |
| Maintenance Products Group                                       |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |
|      Net      external sales            |   |   |   |   |                           | $                       | 37,612          |   |                   | $                 | 44,364 |   |   | $ | 110,380 |   |   | $ | 131,189 |   |
|      Operating      income (loss)       |   |   |   |   |                           |                    | 385             |   |                   |              | (2,330 | ) |   |   | 1,940 |   |   |   | (5,585 | ) |
|      Operating      margin (deficit)    |   |   |   |   |                           |                    | 1.0             | %      |                   |              | (5.3 | %) |   |   | 1.8 | % |   |   | (4.3 | %) |
|      Depreciation      and amortization |   |   |   |   |                           |                    | 1,645           |   |                   |              | 2,101 |   |   |   | 5,008 |   |   |   | 6,142 |   |
|      Capital      expenditures          |   |   |   |   |                           |                    | 1,117           |   |                   |              | 2,188 |   |   |   | 1,537 |   |   |   | 5,122 |   |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |
| Total                                                            |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |
| Net      external sales                                          |   |   | -      |   | Segment                        |                    | $               | 37,612 |                   |              | $ | 44,364 |   |   | $ | 110,380 |   |   | $ | 131,189 |   |
|                                                             |   |   |   |   | Total                          |                    | $               | 37,612 |                   |              | $ | 44,364 |   |   | $ | 110,380 |   |   | $ | 131,189 |   |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
| Operating      income (loss)                                     |   |   | -      |   | Segment                        |                    | $               | 385    |                   |              | $ | (2,330 | ) |   | $ | 1,940 |   |   | $ | (5,585 | ) |
|                                                             |   |   | -      |   | Unallocated      corporate     |                    |            | (969   | )                      |              |   | (2,403 | ) |   |   | (5,322 | ) |   |   | (7,621 | ) |
|                                                             |   |   | -      |   | Severance,      restructuring, |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   | and      related charges       |                    |            | -      |                   |              |   | - |   |   |   | - |   |   |   | 410 |   |
|                                                             |   |   | -      |   | Loss      on sale or disposal  |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   | of      assets                 |                    |            | (49    | )                      |              |   | (28 | ) |   |   | (61 | ) |   |   | (762 | ) |
|                                                             |   |   |   |   | Total                          |                    | $               | (633   | )                      |              | $ | (4,761 | ) |   | $ | (3,443 | ) |   | $ | (13,558 | ) |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                               |   |   | -      |   | Segment                        |                    | $               | 1,645  |                   |              | $ | 2,101 |   |   | $ | 5,008 |   |   | $ | 6,142 |   |
|                                                             |   |   | -      |   | Unallocated      corporate     |                    |            | 19     |                   |              |   | 14 |   |   |   | 55 |   |   |   | 67 |   |
|                                                             |   |   |   |   | Total                          |                    | $               | 1,664  |                   |              | $ | 2,115 |   |   | $ | 5,063 |   |   | $ | 6,209 |   |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                        |   |   | -      |   | Segment                        |                    | $               | 1,117  |                   |              | $ | 2,188 |   |   | $ | 1,537 |   |   | $ | 5,122 |   |
|                                                             |   |   |   |   | Total                          |                    | $               | 1,117  |                   |              | $ | 2,188 |   |   | $ | 1,537 |   |   | $ | 5,122 |   |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                    | October      2, |   |                   | December      31, |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                    |            | 2009   |                   |              |   | 2008 |   |   |   |   |   |   |   |   |   |
| Total      assets                                                |   |   | -      |   | Segment                        |                    | $               | 67,442 |                   |              | $ | 73,304 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   | -      |   | Other      [a]                 |                    |            | 1,200  |                   |              |   | 1,200 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   | -      |   | Unallocated      corporate     |                    |            | 2,308  |                   |              |   | 2,791 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   | Total                          |                    | $               | 70,950 |                   |              | $ | 77,295 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                    |            |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                                                |   | Contract    |   |
|-----------------------------------------------------|--------|-------------|--------|
|                                                |   | Termination |   |
|                                                |   | Costs       |   |
| Restructuring      liabilities at December 31, 2008 |   | $           | 569    |   |
| Additions                                           |   |        | -      |   |
| Payments                                            |   |        | (70    | ) |
| Restructuring      liabilities at October 2, 2009   |   | $           | 499    |   |
|                                                |   |        |   |   |

|                  |   | Maintenance |   |
|-----------------------|--------|-------------|--------|
|                  |   | Products    |   |
|                  |   | Group       |   |
| 2009      (remainder) |   |        | 118    |   |
| 2010                  |   |        | 186    |   |
| 2011                  |   |        | 195    |   |
|                  |   | $           | 499    |   |
|                  |   |        |   |   |

----

index

|                                                 |   | Three      Months             |   |   | Nine      Months |   |
|------------------------------------------------------|--------|-------------------------------|--------|--------|------------------|--------|
|                                                 |   | Ended      September 30, 2008 |   |
|                                                 |   |                          |   |   |             |   |
| Net      sales                                       |   | $                             | -      |   |             | $      | - |   |
| Pre-tax      operating loss                          |   | $                             | (6     | )      |             | $      | (235 | ) |
| Pre-tax      gain on sale of discontinued operations |   | $                             | 190    |   |             | $      | 1,735 |   |
|                                                 |   |                          |   |   |             |   |   |   |

Item2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATIONS

| -   | Increases      in the cost of, or in some cases continuation of, the current price levels      of thermoplastic resins, paper board packaging, and other raw      materials. |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Our      inability to reduce product costs, including manufacturing, sourcing,      freight, and other product costs. |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

| -   | Our      inability to reduce administrative costs through consolidation of      functions and systems improvements. |
|---------------|---------------------------------------------------------------------------------------------------------------------|

| -   | Our      inability to protect our intellectual property rights      adequately. |
|---------------|---------------------------------------------------------------------------------|

| -   | Our      inability to reduce our raw materialscosts. |
|---------------|------------------------------------------------------|

| -   | Our      inability to expand our customer base and increase corresponding      revenues. |
|---------------|------------------------------------------------------------------------------------------|

| -   | Our      inability to achieve product price increases, especially as they relate to      potentially higher raw materialcosts. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------|

| -   | Unfavorable      economic or business conditions, as well as our exposure to the credit      risks of our customers and distributors, which may reduce our sales or      make it difficult to collect accounts  receivable. |
|---------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

index

| -   | Competition      from foreign and domesticcompetitors. |
|---------------|--------------------------------------------------------|

| -   | The      potential impact of higher interest rates on our debt outstanding under      the Bank of America CreditAgreement. |
|---------------|----------------------------------------------------------------------------------------------------------------------------|

| -   | Our      inability to meet covenants associated with the Bank of America Credit      Agreement. |
|---------------|-------------------------------------------------------------------------------------------------|

| -   | Our      inability to access funds under our current loan agreements given the      current instability in the creditmarkets. |
|---------------|-------------------------------------------------------------------------------------------------------------------------------|

| -   | Our      failure to identify, and promptly and effectively remediate, any material      weaknesses or significant deficiencies in our internal controls over      financial reporting. |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | The      potential impact of rising costs for insurance for properties and various      forms of liabilities. |
|---------------|---------------------------------------------------------------------------------------------------------------|

| -   | The      potential impact of changes in foreign currency exchange rates related to      our Canadian operations. |
|---------------|------------------------------------------------------------------------------------------------------------------|

| -   | Labor      issues, including union activities that require an increase in production      costs or lead to a strike, thus impairing production and decreasing sales,      and labor relations issues at entities involved in our supply chain,      including both suppliers and those involved in transportation and      shipping. |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| -   | Changes      in significant laws and government regulations affecting environmental      compliance and income taxes. |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

----

index

----

index

----

index

Item4T.  CONTROLS AND PROCEDURES

----

index

PART II - OTHER INFORMATION

Item1.  LEGAL PROCEEDINGS

Item1A.  RISK FACTORS

Item2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OFPROCEEDS

Item3.  DEFAULTS UPON SENIOR SECURITIES

Item4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS

Item5.  OTHER INFORMATION

Item6.  EXHIBITS

| ExhibitNumber |  Exhibit Title                                                                                                                                |                       |
|---------------|----------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|
|          |                                                                                                                                               |             |
| 31.1          | CEO Certification pursuant to Securities Exchange Act      Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act      of 2002. |           * |
| 31.2          | CFO Certification pursuant to Securities Exchange Act      Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act      of 2002. |           * |
| 32.1          | CEO Certification required by 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.              | *#                              |
| 32.2          | CFO Certification required by 18 U.S.C. Section 1350, as      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of      2002.              | *#                              |

----

index

Signatures

----