----

----

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

|   | Yes  x |   | 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 July 31, 2008 |
|---------------------------------|--------|-----------------------------------|
| Common      Stock, $1 Par Value |   | 7,951,176      Shares             |

----

KATY INDUSTRIES, INC.

|    |                  |                                                                      | Page   |
|---------|-----------------------|---------------------------------------------------------------------------|--------|
| PART I  | FINANCIAL INFORMATION |                                                                      |
|    |                  |                                                                      |   |
|    | Item 1.               | Financial Statements:                                                     |   |
|    |                  |                                                                      |   |
|    |                  | Condensed Consolidated Balance Sheets                                     |   |
|    |                  | June 30, 2008 (unaudited) and December 31,    2007                        | 3,4    |
|    |                  |                                                                      |   |
|    |                  | Condensed Consolidated Statements of    Operations                        |   |
|    |                  | Three Months and Six Months Ended June 30, 2008 and 2007      (unaudited) | 5      |
|    |                  |                                                                      |   |
|    |                  | Condensed Consolidated Statements of Cash    Flows                        |   |
|    |                  | Six Months Ended June 30, 2008 and 2007      (unaudited)                  | 6      |
|    |                  |                                                                      |   |
|    |                  | Notes to Condensed Consolidated Financial Statements      (unaudited)     | 7      |
|    |                  |                                                                      |   |
|    | Item 2.               | Management's Discussion and Analysis of Financial      Condition and      |   |
|    |                  | Results of Operations                                                     | 23     |
|    |                  |                                                                      |   |
|    | Item 3.               | Quantitative and Qualitative Disclosures About Market      Risk           | 33     |
|    |                  |                                                                      |   |
|    | Item 4T.              | Controls and Procedures                                                   | 34     |
|    |                  |                                                                      |   |
|    |                  |                                                                      |   |
| PART II | OTHER INFORMATION     |                                                                      |
|    |                  |                                                                      |   |
|    | Item 1.               | Legal Proceedings                                                         | 35     |
|    |                  |                                                                      |   |
|    | Item 1A.              | Risk Factors                                                              | 35     |
|    |                  |                                                                      |   |
|    | Item 2.               | Unregistered Sales of Equity Securities and Use of      Proceeds          | 35     |
|    |                  |                                                                      |   |
|    | Item 3.               | Defaults Upon Senior Securities                                           | 35     |
|    |                  |                                                                      |   |
|    | Item 4.               | Submission of Matters to a Vote of Security      Holders                  | 35     |
|    |                  |                                                                      |   |
|    | Item 5.               | Other Information                                                         | 36     |
|    |                  |                                                                      |   |
|    | Item 6.               | Exhibits                                                                  | 36     |
|    |                  |                                                                      |   |
|    | Signatures            |                                                                      | 37     |

----

index

PARTI  FINANCIAL INFORMATION

Item1.  Financial Statements

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                           |   | June      30, |    |   | December      31, |   |
|----------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                           |   | 2008          |    |   | 2007              |   |
| CURRENT      ASSETS:                                           |   |          |    |   |              |   |
|                                                           |   |          |    |   |              |   |
| Cash      and cash equivalents                                 |   | $             | 1,167   |   |              | $      | 2,015 |   |
| Accounts      receivable, net                                  |   |          | 21,736  |   |              |   | 18,077 |   |
| Inventories,      net                                          |   |          | 25,490  |   |              |   | 26,160 |   |
| Receivable      from disposition                               |   |          | 294     |   |              |   | 6,799 |   |
| Other      current assets                                      |   |          | 2,002   |   |              |   | 2,520 |   |
|                                                           |   |          |    |   |              |   |   |   |
| Total      current assets                                      |   |          | 50,689  |   |              |   | 55,571 |   |
|                                                           |   |          |    |   |              |   |   |   |
|                                                           |   |          |    |   |              |   |   |   |
| OTHER      ASSETS:                                             |   |          |    |   |              |   |   |   |
|                                                           |   |          |    |   |              |   |   |   |
| Goodwill                                                       |   |          | 665     |   |              |   | 665 |   |
| Intangibles,      net                                          |   |          | 4,659   |   |              |   | 4,853 |   |
| Other                                                          |   |          | 2,204   |   |              |   | 3,470 |   |
|                                                           |   |          |    |   |              |   |   |   |
| Total      other assets                                        |   |          | 7,528   |   |              |   | 8,988 |   |
|                                                           |   |          |    |   |              |   |   |   |
|                                                           |   |          |    |   |              |   |   |   |
| PROPERTY      AND EQUIPMENT                                    |   |          |    |   |              |   |   |   |
| Land      and improvements                                     |   |          | 336     |   |              |   | 336 |   |
| Buildings      and improvements                                |   |          | 9,411   |   |              |   | 9,666 |   |
| Machinery      and equipment                                   |   |          | 96,930  |   |              |   | 96,650 |   |
|                                                           |   |          |    |   |              |   |   |   |
|                                                           |   |          | 106,677 |   |              |   | 106,652 |   |
| Less      - Accumulated depreciation                           |   |          | (74,425 | )      |              |   | (72,647 | ) |
|                                                           |   |          |    |   |              |   |   |   |
| Property      and equipment, net                               |   |          | 32,252  |   |              |   | 34,005 |   |
|                                                           |   |          |    |   |              |   |   |   |
| Total      assets                                              |   | $             | 90,469  |   |              | $      | 98,564 |   |
|                                                           |   |          |    |   |              |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements. |   |          |    |   |              |   |   |   |

----

index

|                                                             |   | June      30, |    |   | December      31, |   |
|------------------------------------------------------------------|--------|---------------|---------|--------|-------------------|--------|
|                                                             |   | 2008          |    |   | 2007              |   |
| CURRENT      LIABILITIES:                                        |   |          |    |   |              |   |
|                                                             |   |          |    |   |              |   |
| Accounts      payable                                            |   | $             | 15,739  |   |              | $      | 14,995 |   |
| Accrued      compensation                                        |   |          | 3,185   |   |              |   | 2,629 |   |
| Accrued      expenses                                            |   |          | 21,509  |   |              |   | 22,325 |   |
| Current      maturities of long-term debt                        |   |          | 1,500   |   |              |   | 1,500 |   |
| Revolving      credit agreement                                  |   |          | 5,477   |   |              |   | 2,853 |   |
|                                                             |   |          |    |   |              |   |   |   |
| Total      current liabilities                                   |   |          | 47,410  |   |              |   | 44,302 |   |
|                                                             |   |          |    |   |              |   |   |   |
| LONG-TERM      DEBT, less current maturities                     |   |          | 7,929   |   |              |   | 9,100 |   |
|                                                             |   |          |    |   |              |   |   |   |
| OTHER      LIABILITIES                                           |   |          | 6,713   |   |              |   | 8,706 |   |
|                                                             |   |          |    |   |              |   |   |   |
| Total      liabilities                                           |   |          | 62,052  |   |              |   | 62,108 |   |
|                                                             |   |          |    |   |              |   |   |   |
| COMMITMENTS      AND CONTINGENCIES (Note 8)                      |   |          | 0       |   |              |   | 0 |   |
|                                                             |   |          |    |   |              |   |   |   |
| 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                                  |   |          | 27,041  |   |              |   | 27,338 |   |
| Accumulated      other comprehensive loss                        |   |          | (1,244  | )      |              |   | (1,112 | ) |
| Accumulated      deficit                                         |   |          | (93,564 | )      |              |   | (85,915 | ) |
| Treasury      stock, at cost, 1,871,128 shares                   |   |          | (21,894 | )      |              |   | (21,933 | ) |
|                                                             |   |          |    |   |              |   |   |   |
| Total      stockholders' equity                                  |   |          | 28,417  |   |              |   | 36,456 |   |
|                                                             |   |          |    |   |              |   |   |   |
| Total      liabilities and stockholders' equity                  |   | $             | 90,469  |   |              | $      | 98,564 |   |
|                                                             |   |          |    |   |              |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements.   |   |          |    |   |              |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                              |   | Three      Months   |   |   | Six      Months     |   |
|-------------------------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                                                              |   | Ended      June 30, |   |   | Ended      June 30, |   |
|                                                              |   | 2008                |   |   | 2007                |   |   | 2008 |   |   | 2007 |   |
|                                                              |   |                |   |   |                |   |   |   |   |   |   |   |
| Net      sales                                                    |   | $                   | 45,134 |   |                | $      | 49,972 |   |   | $ | 86,825 |   |   | $ | 95,524 |   |
| Cost      of goods sold                                           |   |                | 42,668 |   |                |   | 43,332 |   |   |   | 80,531 |   |   |   | 83,288 |   |
| Gross      profit                                                 |   |                | 2,466  |   |                |   | 6,640 |   |   |   | 6,294 |   |   |   | 12,236 |   |
| Selling,      general and administrative expenses                 |   |                | 8,030  |   |                |   | 6,797 |   |   |   | 14,767 |   |   |   | 14,371 |   |
| Severance,      restructuring and related charges                 |   |                | (548   | )      |                |   | 2,402 |   |   |   | (410 | ) |   |   | 2,610 |   |
| Loss      on sale of assets                                       |   |                | 201    |   |                |   | 1,691 |   |   |   | 734 |   |   |   | 1,571 |   |
| Operating      loss                                               |   |                | (5,217 | )      |                |   | (4,250 | ) |   |   | (8,797 | ) |   |   | (6,316 | ) |
| Interest      expense                                             |   |                | (420   | )      |                |   | (919 | ) |   |   | (903 | ) |   |   | (2,114 | ) |
| Other,      net                                                   |   |                | 30     |   |                |   | 70 |   |   |   | 16 |   |   |   | 102 |   |
|                                                              |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before benefit from          |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| (provision      for) income taxes                                 |   |                | (5,607 | )      |                |   | (5,099 | ) |   |   | (9,684 | ) |   |   | (8,328 | ) |
| Benefit      from (provision for) income taxes from               |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| continuing      operations                                        |   |                | 805    |   |                |   | (136 | ) |   |   | 1,157 |   |   |   | (225 | ) |
|                                                              |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   |                | (4,802 | )      |                |   | (5,235 | ) |   |   | (8,527 | ) |   |   | (8,553 | ) |
| Loss      from operations of discontinued businesses (net of tax) |   |                | (415   | )      |                |   | (108 | ) |   |   | (667 | ) |   |   | (2,235 | ) |
| Gain      on sale of discontinued businesses (net of tax)         |   |                | 1,002  |   |                |   | 7,151 |   |   |   | 1,545 |   |   |   | 8,817 |   |
|                                                              |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                            |   | $                   | (4,215 | )      |                | $      | 1,808 |   |   | $ | (7,649 | ) |   | $ | (1,971 | ) |
|                                                              |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income per share of common stock - Basic and diluted: |   |                |   |   |                |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   | $                   | (0.60  | )      |                | $      | (0.66 | ) |   | $ | (1.07 | ) |   | $ | (1.08 | ) |
| Discontinued      operations                                      |   |                | 0.07   |   |                |   | 0.89 |   |   |   | 0.11 |   |   |   | 0.83 |   |
| Net      (loss) income                                            |   | $                   | (0.53  | )      |                | $      | 0.23 |   |   | $ | (0.96 | ) |   | $ | (0.25 | ) |
|                                                              |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |
| 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

|                                                              |   | 2008   |   |   | 2007   |   |
|-------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Cash      flows from operating activities:                        |   |   |   |   |   |   |
| Net      loss                                                     |   | $      | (7,649 | )      |   | $      | (1,971 | ) |
| Income      from operations of discontinued business              |   |   | (878   | )      |   |   | (6,582 | ) |
| Loss      from continuing operations                              |   |   | (8,527 | )      |   |   | (8,553 | ) |
| Depreciation      and amortization                                |   |   | 4,094  |   |   |   | 3,799 |   |
| Write-off      and amortization of debt issuance costs            |   |   | 191    |   |   |   | 906 |   |
| Write-off      of assets due to lease termination                 |   |   | -      |   |   |   | 751 |   |
| Stock      option (income) expense                                |   |   | (258   | )      |   |   | 171 |   |
| Loss      on sale of assets                                       |   |   | 734    |   |   |   | 1,571 |   |
| Deferred      income taxes                                        |   |   | -      |   |   |   | (94 | ) |
|                                                              |   |   | (3,766 | )      |   |   | (1,449 | ) |
| Changes      in operating assets and liabilities:                 |   |   |   |   |   |   |   |   |
| Accounts      receivable                                          |   |   | (3,693 | )      |   |   | (3,667 | ) |
| Inventories                                                       |   |   | 603    |   |   |   | (1,009 | ) |
| Other      assets                                                 |   |   | 487    |   |   |   | (107 | ) |
| Accounts      payable                                             |   |   | 1,342  |   |   |   | 2,427 |   |
| Accrued      expenses                                             |   |   | (289   | )      |   |   | (2,186 | ) |
| Other,      net                                                   |   |   | (1,539 | )      |   |   | 1,997 |   |
|                                                              |   |   | (3,089 | )      |   |   | (2,545 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Net      cash used in continuing operations                       |   |   | (6,855 | )      |   |   | (3,994 | ) |
| Net      cash used in discontinued operations                     |   |   | (654   | )      |   |   | (3,989 | ) |
| Net      cash used in operating activities                        |   |   | (7,509 | )      |   |   | (7,983 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                        |   |   |   |   |   |   |   |   |
| Capital      expenditures of continuing operations                |   |   | (2,934 | )      |   |   | (2,040 | ) |
| Proceeds      from sale of assets, net                            |   |   | 49     |   |   |   | 197 |   |
|                                                              |   |   |   |   |   |   |   |   |
| Net      cash used in continuing operations                       |   |   | (2,885 | )      |   |   | (1,843 | ) |
| Net      cash provided by discontinued operations                 |   |   | 8,685  |   |   |   | 15,661 |   |
| Net      cash provided by investing activities                    |   |   | 5,800  |   |   |   | 13,818 |   |
|                                                              |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                        |   |   |   |   |   |   |   |   |
| Net      borrowings (repayments) on revolving loans               |   |   | 2,624  |   |   |   | (6,282 | ) |
| Decrease      in book overdraft                                   |   |   | (544   | )      |   |   | (2,143 | ) |
| Repayments      of term loans                                     |   |   | (1,171 | )      |   |   | (1,700 | ) |
| Direct      costs associated with debt facilities                 |   |   | -      |   |   |   | (127 | ) |
| Repurchases      of common stock                                  |   |   | -      |   |   |   | (3 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Net      cash provided by (used in) continuing operations         |   |   | 909    |   |   |   | (10,255 | ) |
| Net      cash used in discontinued operations                     |   |   | -      |   |   |   | (381 | ) |
| Net      cash provided by (used in) financing activities          |   |   | 909    |   |   |   | (10,636 | ) |
|                                                              |   |   |   |   |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents |   |   | (48    | )      |   |   | (108 | ) |
| Net      decrease in cash and cash equivalents                    |   |   | (848   | )      |   |   | (4,909 | ) |
| Cash      and cash equivalents, beginning of period               |   |   | 2,015  |   |   |   | 7,392 |   |
| Cash      and cash equivalents, end of period                     |   | $      | 1,167  |   |   | $      | 2,483 |   |
|                                                              |   |   |   |   |   |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements.    |   |   |   |   |   |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                    |   | June      30, |   |   | December      31, |   |
|-------------------------|--------|---------------|--------|--------|-------------------|--------|
|                    |   | 2008          |   |   | 2007              |   |
|                    |   |          |   |   |              |   |
| Raw      materials      |   | $             | 16,371 |   |              | $      | 17,022 |   |
| Work      in process    |   |          | 946    |   |              |   | 763 |   |
| Finished      goods     |   |          | 15,105 |   |              |   | 13,762 |   |
| Inventory      reserves |   |          | (1,483 | )      |              |   | (1,376 | ) |
| LIFO      reserve       |   |          | (5,449 | )      |              |   | (4,011 | ) |
|                    |   | $             | 25,490 |   |              | $      | 26,160 |   |
|                    |   |          |   |   |              |   |   |   |

----

index

|                                           |   | Three      Months   |   |   | Six      Months     |   |
|------------------------------------------------|--------|---------------------|--------|--------|---------------------|--------|
|                                           |   | Ended      June 30, |   |   | Ended      June 30, |   |
|                                           |   | 2008                |   |   | 2007                |   |   | 2008 |   |   | 2007 |   |
|                                           |   |                |   |   |                |   |   |   |   |   |   |   |
| Stock      option (income) expense             |   | $                   | (295   | )      |                | $      | 77 |   |   | $ | (258 | ) |   | $ | 171 |   |
| Stock      appreciation right expense (income) |   |                | 212    |   |                |   | (219 | ) |   |   | 48 |   |   |   | (398 | ) |
|                                           |   | $                   | (83    | )      |                | $      | (142 | ) |   | $ | (210 | ) |   | $ | (227 | ) |
|                                           |   |                |   |   |                |   |   |   |   |   |   |   |   |   |   |   |

|                         | June      30,      |   | June      30,      |
|------------------------------|--------------------|--------|--------------------|
|                         | 2008               |   | 2007               |
|                         |               |   |               |
| Expected      term (years)   | 5.5      - 6.6     |   | 5.3      - 6.5     |
| Volatility                   | 55.0%      - 85.9% |   | 53.8%      - 57.6% |
| Risk-free      interest rate | 3.1%      - 4.5%   |   | 4.0%      - 4.5%   |

----

index

|                         | June      30,       |   | June      30,      |
|------------------------------|---------------------|--------|--------------------|
|                         | 2008                |   | 2007               |
|                         |                |   |               |
| Expected      term (years)   | 2.9      - 4.5      |   | 3.0      - 5.0     |
| Volatility                   | 93.4%      - 112.1% |   | 58.4%      - 66.4% |
| Risk-free      interest rate | 2.9%      - 3.3%    |   | 4.5%      - 4.9%   |

|                                             |   | Three      Months Ended June 30, |   |   | Six      Months Ended June 30, |   |
|--------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                             |   | 2008                             |   |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
|                                             |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                           |   | $                                | (4,215 | )      |                           | $      | 1,808 |   |   | $ | (7,649 | ) |   | $ | (1,971 | ) |
| Foreign      currency translation gains (losses) |   |                             | 33     |   |                           |   | (1,810 | ) |   |   | (132 | ) |   |   | (2,144 | ) |
| Other                                            |   |                             | -      |   |                           |   | (14 | ) |   |   | - |   |   |   | (60 | ) |
|                                             |   |                             | 33     |   |                           |   | (1,824 | ) |   |   | (132 | ) |   |   | (2,204 | ) |
| Comprehensive      loss                          |   | $                                | (4,182 | )      |                           | $      | (16 | ) |   | $ | (7,781 | ) |   | $ | (4,175 | ) |
|                                             |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                      |   | June      30, |   |   | December      31, |   |
|---------------------------|--------|---------------|--------|--------|-------------------|--------|
|                      |   | 2008          |   |   | 2007              |   |
|                      |   | Gross         |   |   | Accumulated       |   |   | Net      Carrying |   |   | Gross |   |   | Accumulated |   |   | Net      Carrying |   |
|                      |   | Amount        |   |   | Amortization      |   |   | Amount |   |   | Amount |   |   | Amortization |   |   | Amount |   |
|  Patents             |   | $             | 1,080  |   |              | $      | (783 | ) |   | $ | 297 |   |   | $ | 1,031 |   |   | $ | (734 | ) |   | $ | 297 |   |
|  Customer      lists |   |          | 10,231 |   |              |   | (8,323 | ) |   |   | 1,908 |   |   |   | 10,231 |   |   |   | (8,240 | ) |   |   | 1,991 |   |
|  Tradenames          |   |          | 5,054  |   |              |   | (2,600 | ) |   |   | 2,454 |   |   |   | 5,054 |   |   |   | (2,489 | ) |   |   | 2,565 |   |
|  Other               |   |          | -      |   |              |   | - |   |   |   | - |   |   |   | 441 |   |   |   | (441 | ) |   |   | - |   |
|  Total               |   | $             | 16,365 |   |              | $      | (11,706 | ) |   | $ | 4,659 |   |   | $ | 16,757 |   |   | $ | (11,904 | ) |   | $ | 4,853 |   |
|                      |   |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 2008      (remainder) |   | $      | 243    |   |
|-----------------------|--------|--------|--------|--------|
| 2009                  |   |   | 475    |   |
| 2010                  |   |   | 470    |   |
| 2011                  |   |   | 443    |   |
| 2012                  |   |   | 418    |   |
| Thereafter            |   |   | 2,610  |   |
|                  |   | $      | 4,659  |   |
|                  |   |   |   |   |

|                                                                             |   | June      30, |   |   | December      31, |   |
|----------------------------------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                                                                             |   | 2008          |   |   | 2007              |   |
|                                                                             |   |          |   |   |              |   |
| Term      loan payable under the Bank of America Credit Agreement,      interest |   |          |   |   |              |   |
| based      on LIBOR and Prime Rates (5.25% - 6.00%), due through 2010            |   | $             | 9,429  |   |              | $      | 10,600 |   |
| Revolving      loans payable under the Bank of America Credit Agreement,         |   |          |   |   |              |   |   |   |
| interest      based on LIBOR and Prime Rates (5.00% - 5.75%)                     |   |          | 5,477  |   |              |   | 2,853 |   |
| Total      debt                                                                  |   |          | 14,906 |   |              |   | 13,453 |   |
| Less      revolving loans, classified as current (see below)                     |   |          | (5,477 | )      |              |   | (2,853 | ) |
| Less      current maturities                                                     |   |          | (1,500 | )      |              |   | (1,500 | ) |
| Long-term      debt                                                              |   | $             | 7,929  |   |              | $      | 9,100 |   |
|                                                                             |   |          |   |   |              |   |   |   |

----

index

| 2008   |   | $      | 750    |   |
|--------|--------|--------|--------|--------|
| 2009   |   |   | 1,500  |   |
| 2010   |   |   | 7,179  |   |
|   |   | $      | 9,429  |   |
|   |   |   |   |   |

----

index

|                                          |   | Pension      Benefits |   |
|-----------------------------------------------|--------|-----------------------|--------|
|                                          |   | Three      Months     |   |   | Six      Months |   |
|                                          |   | Ended      June 30,   |   |   | Ended      June 30, |   |
|                                          |   | 2008                  |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Components      of net periodic benefit cost: |   |                  |   |   |   |   |   |   |   |   |   |   |
| Service      cost                             |   | $                     | 4      |   |   | $ | 1 |   |   | $ | 7 |   |   | $ | 3 |   |
| Interest      cost                            |   |                  | 24     |   |   |   | 23 |   |   |   | 47 |   |   |   | 46 |   |
| Expected      return on plan assets           |   |                  | (26    | ) |   |   | (24 | ) |   |   | (51 | ) |   |   | (48 | ) |
| Amortization      of net loss                 |   |                  | 11     |   |   |   | 15 |   |   |   | 22 |   |   |   | 28 |   |
| Net      periodic benefit cost                |   | $                     | 13     |   |   | $ | 15 |   |   | $ | 25 |   |   | $ | 29 |   |
|                                          |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                                          |   | Other      Benefits |   |
|-----------------------------------------------|--------|---------------------|--------|
|                                          |   | Three      Months   |   |   | Six      Months |   |
|                                          |   | Ended      June 30, |   |   | Ended      June 30, |   |
|                                          |   | 2008                |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Components      of net periodic benefit cost: |   |                |   |   |   |   |   |   |   |   |   |   |
| Interest      cost                            |   | $                   | 38     |   |   | $ | 50 |   |   | $ | 75 |   |   | $ | 101 |   |
| Amortization      of prior service cost       |   |                | -      |   |   |   | 22 |   |   |   | - |   |   |   | 44 |   |
| Amortization      of net loss                 |   |                | 8      |   |   |   | 4 |   |   |   | 16 |   |   |   | 8 |   |
| Net      periodic benefit cost                |   | $                   | 46     |   |   | $ | 76 |   |   | $ | 91 |   |   | $ | 153 |   |
|                                          |   |                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                         |   |    |      |   |     |   | Weighted    |   |                |   |
|----------------------------------------------|--------|---------|-----------|--------|----------|--------|-------------|--------|---------------------|--------|
|                                         |   |    |      |   | Weighted |   | Average     |   | Aggregate           |   |
|                                         |   |    |      |   | Average  |   | Remaining   |   | Intrinsic           |   |
|                                         |   |    |      |   | Exercise |   | Contractual |   | Value               |   |
|                                         |   | Options |      |   | Price    |   | Life        |   | (in      thousands) |   |
|                                         |   |    |      |   |     |   |        |   |                |   |
| Outstanding      at December 31, 2007        |   |    | 1,632,200 |   |     | $      | 3.59        |   |                |   |   |   |
|                                         |   |    |      |   |     |   |        |   |                |   |   |   |
| Granted                                      |   |    | 750,000   |   |     | $      | 1.20        |   |                |   |   |   |
| Exercised                                    |   |    | -         |   |     | $      | 0.00        |   |                |   |   |   |
| Expired                                      |   |    | (6,000    | )      |     | $      | 18.13       |   |                |   |   |   |
| Cancelled                                    |   |    | (751,600  | )      |     | $      | 2.77        |   |                |   |   |   |
|                                         |   |    |      |   |     |   |        |   |                |   |   |   |
| Outstanding      at June 30, 2008            |   |    | 1,624,600 |   |     | $      | 2.82        |   | 6.67      years     |   | $ | 563 |   |
|                                         |   |    |      |   |     |   |        |   |                |   |   |   |   |
| Vested      and Exercisable at June 30, 2008 |   |    | 814,600   |   |     | $      | 4.33        |   | 3.74      years     |   | $ | - |   |
|                                         |   |    |      |   |     |   |        |   |                |   |   |   |   |

----

index

| Non-Vested      at December 31, 2007    |   | 13,333  |   |
|-----------------------------------------|--------|---------|--------|
|                                    |   |    |   |
| Granted                                 |   | 6,000   |   |
| Vested                                  |   | (12,667 | )      |
| Cancelled                               |   | -       |   |
|                                    |   |    |   |
| Non-Vested      at June 30, 2008        |   | 6,666   |   |
|                                    |   |    |   |
| Total      Outstanding at June 30, 2008 |   | 615,217 |   |
|                                    |   |    |   |

----

index

----

index

----

index

----

index

|                                                             |   |   |   |   |                           | Three      months ended June 30, |          |   | Six      months ended June 30, |              |
|------------------------------------------------------------------|--------|--------|--------|--------|--------------------------------|----------------------------------|---------------|--------|--------------------------------|-------------------|
|                                                             |   |   |   |   |                           | 2008                             |          |   | 2007                           |              |   | 2008 |   |   | 2007 |   |
| Maintenance Products      Group                                  |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |
|      Net      external sales            |   |   |   |   |                           | $                                | 45,134        |   |                           | $                 | 49,972 |   |   | $ | 86,825 |   |   | $ | 95,524 |   |
|      Operating      (loss) income       |   |   |   |   |                           |                             | (2,380        | )      |                           |              | 1,505 |   |   |   | (3,255 | ) |   |   | 2,193 |   |
|      Operating      (deficit) margin    |   |   |   |   |                           |                             | (5.3          | %)     |                           |              | 3.0 | % |   |   | (3.7 | %) |   |   | 2.3 | % |
|      Depreciation      and amortization |   |   |   |   |                           |                             | 2,243         |   |                           |              | 1,902 |   |   |   | 4,041 |   |   |   | 3,734 |   |
|      Capital      expenditures          |   |   |   |   |                           |                             | 1,897         |   |                           |              | 1,061 |   |   |   | 2,934 |   |   |   | 2,040 |   |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |
| Total                                                            |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |
| Net      external sales                                          |   |   | -      |   | Operating      segments        |                             | $             | 45,134 |                           |              | $ | 49,972 |   |   | $ | 86,825 |   |   | $ | 95,524 |   |
|                                                             |   |   |   |   | Total                          |                             | $             | 45,134 |                           |              | $ | 49,972 |   |   | $ | 86,825 |   |   | $ | 95,524 |   |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss                                              |   |   | -      |   | Operating      segments        |                             | $             | (2,380 | )                              |              | $ | 1,505 |   |   | $ | (3,255 | ) |   | $ | 2,193 |   |
|                                                             |   |   | -      |   | Unallocated      corporate     |                             |          | (3,184 | )                              |              |   | (1,662 | ) |   |   | (5,218 | ) |   |   | (4,328 | ) |
|                                                             |   |   | -      |   | Severance,      restructuring, |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   | and      related charges       |                             |          | 548    |                           |              |   | (2,402 | ) |   |   | 410 |   |   |   | (2,610 | ) |
|                                                             |   |   | -      |   | Loss      on sale of assets    |                             |          | (201   | )                              |              |   | (1,691 | ) |   |   | (734 | ) |   |   | (1,571 | ) |
|                                                             |   |   |   |   | Total                          |                             | $             | (5,217 | )                              |              | $ | (4,250 | ) |   | $ | (8,797 | ) |   | $ | (6,316 | ) |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                               |   |   | -      |   | Operating      segments        |                             | $             | 2,243  |                           |              | $ | 1,902 |   |   | $ | 4,041 |   |   | $ | 3,734 |   |
|                                                             |   |   | -      |   | Unallocated      corporate     |                             |          | 28     |                           |              |   | 32 |   |   |   | 53 |   |   |   | 65 |   |
|                                                             |   |   |   |   | Total                          |                             | $             | 2,271  |                           |              | $ | 1,934 |   |   | $ | 4,094 |   |   | $ | 3,799 |   |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                        |   |   | -      |   | Operating      segments        |                             | $             | 1,897  |                           |              | $ | 1,061 |   |   | $ | 2,934 |   |   | $ | 2,040 |   |
|                                                             |   |   | -      |   | Discontinued      operations   |                             |          | -      |                           |              |   | 143 |   |   |   | - |   |   |   | 294 |   |
|                                                             |   |   |   |   | Total                          |                             | $             | 1,897  |                           |              | $ | 1,204 |   |   | $ | 2,934 |   |   | $ | 2,334 |   |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                             | June      30, |   |                           | December      31, |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                             | 2008          |   |                           | 2007              |   |   |   |   |   |   |   |   |   |
| Total      assets                                                |   |   | -      |   | Segment                        |                             | $             | 86,376 |                           |              | $ | 85,124 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   | -      |   | Other      [a]                 |                             |          | 1,494  |                           |              |   | 8,634 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   | -      |   | Unallocated      corporate     |                             |          | 2,599  |                           |              |   | 4,806 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   | Total                          |                             | $             | 90,469 |                           |              | $ | 98,564 |   |   |   |   |   |   |   |   |   |
|                                                             |   |   |   |   |                           |                             |          |   |                           |              |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                                                                  |   | Three      Months Ended June 30, |   |   | Six      Months Ended June 30, |   |
|-----------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                                                  |   | 2008                             |   |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
|                                                                  |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Consolidation      of St. Louis manufacturing/distribution facilities |   | $                                | (138   | )      |                           | $      | 693 |   |   | $ | - |   |   | $ | 882 |   |
| Consolidation      of Glit facilities                                 |   |                             | (410   | )      |                           |   | 1,709 |   |   |   | (410 | ) |   |   | 1,728 |   |
| Total      severance, restructuring and related charges               |   | $                                | (548   | )      |                           | $      | 2,402 |   |   | $ | (410 | ) |   | $ | 2,610 |   |
|                                                                  |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |

|                                                |   | Contract    |   |
|-----------------------------------------------------|--------|-------------|--------|
|                                                |   | Termination |   |
|                                                |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007 |   | $           | 827    |   |
| Additions                                           |   |        | -      |   |
| Payments                                            |   |        | (114   | ) |
| Restructuring      liabilities at June 30, 2008     |   | $           | 713    |   |
|                                                |   |        |   |   |

|                                                |   | Contract    |   |
|-----------------------------------------------------|--------|-------------|--------|
|                                                |   | Termination |   |
|                                                |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007 |   | $           | 626    |   |
| Additions                                           |   |        | -      |   |
| Payments                                            |   |        | (216   | ) |
|         Reductions                        |   |        | (410   | ) |
| Restructuring      liabilities at June 30, 2008     |   | $           | -      |   |
|                                                |   |        |   |   |

----

index

|                                                |   | Contract    |   |
|-----------------------------------------------------|--------|-------------|--------|
|                                                |   | Termination |   |
|                                                |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007 |   | $           | 1,453  |   |
|       Additions       |   |        | -      |   |
|            Payments        |   |        | (330   | ) |
|            Reductions      |   |        | (410   | ) |
| Restructuring      liabilities at June 30, 2008     |   | $           | 713    |   |
|                                                |   |        |   |   |

|                                                |   | Maintenance |   |
|-----------------------------------------------------|--------|-------------|--------|
|                                                |   | Products    |   |
|                                                |   | Group       |   |
| Restructuring      liabilities at December 31, 2007 |   | $           | 1,453  |   |
|            Additions       |   |        | -      |   |
|       Payments        |   |        | (330   | ) |
|            Reductions      |   |        | (410   | ) |
| Restructuring      liabilities at June 30, 2008     |   | $           | 713    |   |
|                                                |   |        |   |   |

|   |   | Maintenance |   |
|--------|--------|-------------|--------|
|   |   | Products    |   |
|   |   | Group       |   |
| 2008   |   |        | 167    |   |
| 2009   |   |        | 167    |   |
| 2010   |   |        | 179    |   |
| 2011   |   |        | 200    |   |
|   |   | $           | 713    |   |
|   |   |        |   |   |

----

index

|                             |   | June      30, |   |   | December      31, |   |
|----------------------------------|--------|---------------|--------|--------|-------------------|--------|
|                             |   | 2008          |   |   | 2007              |   |
|                             |   |          |   |   |              |   |
| Current      assets:             |   |          |   |   |              |   |
| Receivable      from disposition |   | $             | 294    |   |              | $      | 6,799 |   |
| Other      current assets        |   |          | 1,200  |   |              |   | 1,235 |   |
|                             |   | $             | 1,494  |   |              | $      | 8,034 |   |
|                             |   |          |   |   |              |   |   |   |
| Non-current      assets:         |   |          |   |   |              |   |   |   |
| Other                            |   | $             | -      |   |              | $      | 600 |   |
|                             |   |          |   |   |              |   |   |   |
| Current      liabilities:        |   |          |   |   |              |   |   |   |
| Accounts      payable            |   | $             | -      |   |              | $      | 30 |   |
| Accrued      expenses            |   |          | 172    |   |              |   | 148 |   |
|                             |   | $             | 172    |   |              | $      | 178 |   |
|                             |   |          |   |   |              |   |   |   |

----

index

|                                                 |   | Three      Months Ended June 30, |   |   | Six      Months Ended June 30, |   |
|------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                                 |   | 2008                             |   |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
|                                                 |   |                             |   |   |                           |   |   |   |   |   |   |   |
| Net      sales                                       |   | $                                | -      |   |                           | $      | 34,849 |   |   | $ | - |   |   | $ | 84,100 |   |
| Pre-tax      (loss) profit                           |   | $                                | (99    | )      |                           | $      | 169 |   |   | $ | (229 | ) |   | $ | (1,588 | ) |
| Pre-tax      gain on sale of discontinued operations |   | $                                | 1,002  |   |                           | $      | 7,151 |   |   | $ | 1,545 |   |   | $ | 8,817 |   |
|                                                 |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |

----

index

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

|                                                              |   | 2008                                              |   |   | 2007            |   |
|-------------------------------------------------------------------|--------|---------------------------------------------------|--------|--------|-----------------|--------|
|                                                              |   | (Amounts      in Millions, Except Per Share Data) |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |
|                                                              |   | $                                                 |   |   | %      to Sales |   |   | $ |   |   | %      to Sales |   |
| Net      sales                                                    |   | $                                                 | 45.1   |   |            |   | 100.0 |   |   | $ | 50.0 |   |   |   | 100.0 |   |
| Cost      of goods sold                                           |   |                                              | 42.6   |   |            |   | 94.5 |   |   |   | 43.4 |   |   |   | 86.7 |   |
| Gross      profit                                                 |   |                                              | 2.5    |   |            |   | 5.5 |   |   |   | 6.6 |   |   |   | 13.3 |   |
| Selling,      general and administrative expenses                 |   |                                              | 8.0    |   |            |   | 17.8 |   |   |   | 6.8 |   |   |   | 13.6 |   |
| Severance,      restructuring and related charges                 |   |                                              | (0.5   | )      |            |   | (1.2 | ) |   |   | 2.4 |   |   |   | 4.8 |   |
| Loss      of sale of assets                                       |   |                                              | 0.2    |   |            |   | 0.5 |   |   |   | 1.7 |   |   |   | 3.4 |   |
| Operating      loss                                               |   |                                              | (5.2   | )      |            |   | (11.6 | ) |   |   | (4.3 | ) |   |   | (8.5 | ) |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                             |   |                                              | (0.4   | )      |            |   |   |   |   |   | (0.9 | ) |   |   |   |   |
| Other,      net                                                   |   |                                              | -      |   |            |   |   |   |   |   | 0.1 |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before benefit from          |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| (provision      for) income taxes                                 |   |                                              | (5.6   | )      |            |   |   |   |   |   | (5.1 | ) |   |   |   |   |
| Benefit      from (provision for) income taxes from               |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| continuing      operations                                        |   |                                              | 0.8    |   |            |   |   |   |   |   | (0.1 | ) |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   |                                              | (4.8   | )      |            |   |   |   |   |   | (5.2 | ) |   |   |   |   |
| Loss      from operations of discontinued businesses (net of tax) |   |                                              | (0.4   | )      |            |   |   |   |   |   | (0.1 | ) |   |   |   |   |
| Gain      on sale of discontinued businesses (net of tax)         |   |                                              | 1.0    |   |            |   |   |   |   |   | 7.1 |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Net      (loss) income                                            |   | $                                                 | (4.2   | )      |            |   |   |   |   | $ | 1.8 |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      income per share of common stock - basic and diluted: |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   | $                                                 | (0.60  | )      |            |   |   |   |   | $ | (0.66 | ) |   |   |   |   |
| Discontinued      operations                                      |   |                                              | 0.07   |   |            |   |   |   |   |   | 0.89 |   |   |   |   |   |
| Net      (loss) income                                            |   | $                                                 | (0.53  | )      |            |   |   |   |   | $ | 0.23 |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |

----

index

----

index

|                                                              |   | 2008                                              |   |   | 2007            |   |
|-------------------------------------------------------------------|--------|---------------------------------------------------|--------|--------|-----------------|--------|
|                                                              |   | (Amounts      in Millions, Except Per Share Data) |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |
|                                                              |   | $                                                 |   |   | %      to Sales |   |   | $ |   |   | %      to Sales |   |
| Net      sales                                                    |   | $                                                 | 86.8   |   |            |   | 100.0 |   |   | $ | 95.5 |   |   |   | 100.0 |   |
| Cost      of goods sold                                           |   |                                              | 80.5   |   |            |   | 92.8 |   |   |   | 83.3 |   |   |   | 87.2 |   |
| Gross      profit                                                 |   |                                              | 6.3    |   |            |   | 7.2 |   |   |   | 12.2 |   |   |   | 12.8 |   |
| Selling,      general and administrative expenses                 |   |                                              | 14.8   |   |            |   | 17.0 |   |   |   | 14.3 |   |   |   | 15.0 |   |
| Severance,      restructuring and related charges                 |   |                                              | (0.4   | )      |            |   | (0.5 | ) |   |   | 2.6 |   |   |   | 2.7 |   |
| Loss      of sale of assets                                       |   |                                              | 0.7    |   |            |   | 0.8 |   |   |   | 1.6 |   |   |   | 1.7 |   |
| Operating      loss                                               |   |                                              | (8.8   | )      |            |   | (10.1 | ) |   |   | (6.3 | ) |   |   | (6.6 | ) |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                             |   |                                              | (0.9   | )      |            |   |   |   |   |   | (2.1 | ) |   |   |   |   |
| Other,      net                                                   |   |                                              | -      |   |            |   |   |   |   |   | 0.1 |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before benefit from          |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| (provision      for) income taxes                                 |   |                                              | (9.7   | )      |            |   |   |   |   |   | (8.3 | ) |   |   |   |   |
| Benefit      from (provision for) income taxes from               |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| continuing      operations                                        |   |                                              | 1.2    |   |            |   |   |   |   |   | (0.3 | ) |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   |                                              | (8.5   | )      |            |   |   |   |   |   | (8.6 | ) |   |   |   |   |
| Loss      from operations of discontinued businesses (net of tax) |   |                                              | (0.6   | )      |            |   |   |   |   |   | (2.2 | ) |   |   |   |   |
| Gain      on sale of discontinued businesses (net of tax)         |   |                                              | 1.5    |   |            |   |   |   |   |   | 8.8 |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                     |   | $                                                 | (7.6   | )      |            |   |   |   |   | $ | (2.0 | ) |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share of common stock - basic and diluted:          |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                              |   | $                                                 | (1.07  | )      |            |   |   |   |   | $ | (1.08 | ) |   |   |   |   |
| Discontinued      operations                                      |   |                                              | 0.11   |   |            |   |   |   |   |   | 0.83 |   |   |   |   |   |
| Net      loss                                                     |   | $                                                 | (0.96  | )      |            |   |   |   |   | $ | (0.25 | ) |   |   |   |   |
|                                                              |   |                                              |   |   |            |   |   |   |   |   |   |   |   |   |   |   |

----

index

----

index

----

index

| Contractual Cash      Obligations    |   | Total  |   |   | Due      in less than 1 year |   |   | Due      in 1-3 years |   |   | Due      in 3-5 years |   |   | Due      after 5 years |   |
|--------------------------------------|--------|--------|--------|--------|------------------------------|--------|--------|-----------------------|--------|--------|-----------------------|--------|--------|-----------------------------|--------|
| Revolving      credit facility [a]   |   | $      | 5,477  |   |                         | $      | 5,477  |                  |   | $      | -                     |   |   | $                           | -      |   |   | $ | - |   |
| Term      loans                      |   |   | 9,429  |   |                         |   | 1,500  |                  |   |   | 7,929                 |   |   |                        | -      |   |   |   | - |   |
| Interest      on debt [b]            |   |   | 1,638  |   |                         |   | 733    |                  |   |   | 905                   |   |   |                        | -      |   |   |   | - |   |
| Operating      leases [c]            |   |   | 9,327  |   |                         |   | 4,495  |                  |   |   | 3,798                 |   |   |                        | 784    |   |   |   | 250 |   |
| Severance      and restructuring [c] |   |   | 344    |   |                         |   | 138    |                  |   |   | 159                   |   |   |                        | 47     |   |   |   | - |   |
| Postretirement      benefits [d]     |   |   | 4,064  |   |                         |   | 408    |                  |   |   | 1,197                 |   |   |                        | 787    |   |   |   | 1,672 |   |
| Total      Contractual Obligations   |   | $      | 30,279 |   |                         | $      | 12,751 |                  |   | $      | 13,988                |   |   | $                           | 1,618  |   |   | $ | 1,922 |   |
|                                 |   |   |   |   |                         |   |   |                  |   |   |                  |   |   |                        |   |   |   |   |   |   |
|                                 |   |   |   |   |                         |   |   |                  |   |   |                  |   |   |                        |   |   |   |   |   |   |
| Other Commercial      Commitments    |   | Total  |   |   | Due      in less than 1 year |   |   | Due      in 1-3 years |   |   | Due      in 3-5 years |   |   | Due      after 5 years |   |
| Commercial      letters of credit    |   | $      | 464    |   |                         | $      | 464    |                  |   | $      | -                     |   |   | $                           | -      |   |   | $ | - |   |
| Stand-by      letters of credit      |   |   | 4,849  |   |                         |   | 4,849  |                  |   |   | -                     |   |   |                        | -      |   |   |   | - |   |
| Total      Commercial Commitments    |   | $      | 5,313  |   |                         | $      | 5,313  |                  |   | $      | -                     |   |   | $                           | -      |   |   | $ | - |   |
|                                 |   |   |   |   |                         |   |   |                  |   |   |                  |   |   |                        |   |   |   |   |   |   |

----

index

----

index

|                                                                  |   | Three      Months Ended June 30, |   |   | Six      Months Ended June 30, |   |
|-----------------------------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|
|                                                                  |   | 2008                             |   |   | 2007                           |   |   | 2008 |   |   | 2007 |   |
|                                                                  |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Consolidation      of St. Louis manufacturing/distribution facilities |   | $                                | (138   | )      |                           | $      | 693 |   |   | $ | - |   |   | $ | 882 |   |
| Consolidation      of Glit facilities                                 |   |                             | (410   | )      |                           |   | 1,709 |   |   |   | (410 | ) |   |   | 1,728 |   |
| Total      severance, restructuring and related charges               |   | $                                | (548   | )      |                           | $      | 2,402 |   |   | $ | (410 | ) |   | $ | 2,610 |   |
|                                                                  |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |

|                                                |   | Contract    |   |
|-----------------------------------------------------|--------|-------------|--------|
|                                                |   | Termination |   |
|                                                |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007 |   | $           | 1,453  |   |
|            Additions       |   |        | -      |   |
|            Payments        |   |        | (330   | ) |
|            Reductions      |   |        | (410   | ) |
| Restructuring      liabilities at June 30, 2008     |   | $           | 713    |   |
|                                                |   |        |   |   |

----

index

----

index

| -   | 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 grow our revenue. |
|---------------|-----------------------------------------|

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

| -   | Competition      from foreign competitors. |
|---------------|--------------------------------------------|

| -   | The      potential impact of rising interest rates on our LIBOR-based Bank of      America Credit Agreement. |
|---------------|--------------------------------------------------------------------------------------------------------------|

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

| -   | 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 foreign operations. |
|---------------|-----------------------------------------------------------------------------------------------------------------|

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

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

----

index

Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

----

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

| CLASS      I DIRECTORS:      |           |                |
|------------------------------|----------------|---------------------|
| Name                         | Votes      For | Votes      Withheld |
| Robert      M. Baratta       | 6,535,103      | 775,057             |
| Daniel      B. Carroll       | 6,794,737      | 515,423             |
| Wallace      E. Carroll, Jr. | 6,796,488      | 513,672             |
| David      J. Feldman        | 6,331,103      | 979,057             |

| Votes      For | Votes      Against | Votes      Abstained |
|----------------|--------------------|----------------------|
| 7,289,638      | 19,222             | 1,300                |

----

index

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

----