----

----

| 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 October 31, 2008 |
|---------------------------------|--------|--------------------------------------|
| Common      Stock, $1 Par Value |   | 7,951,176      Shares                |

----

INDEX

|    |                  |                                                                            | Page    |
|---------|-----------------------|---------------------------------------------------------------------------------|---------|
| PART I  | FINANCIAL INFORMATION |                                                                            |
|    |                  |                                                                            |    |
|    | Item 1.               | Financial Statements:                                                           |    |
|    |                  |                                                                            |    |
|    |                  | Condensed Consolidated Balance Sheets                                           |    |
|    |                  | September 30, 2008 (unaudited) and December 31,      2007                       | 3,4     |
|    |                  |                                                                            |    |
|    |                  | Condensed Consolidated Statements of    Operations                              |    |
|    |                  | Three Months and Nine Months Ended September 30, 2008 and 2007      (unaudited) |  5 |
|    |                  |                                                                            |    |
|    |                  | Condensed Consolidated Statements of Cash    Flows                              |    |
|    |                  | Nine Months Ended September 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                                                         | 33      |
|    |                  |                                                                            |    |
|    |                  |                                                                            |    |
| PART II | OTHER INFORMATION     | 35                                                                              |
|    |                  |                                                                            |    |
|    | 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                                                               | 35      |
|    |                  |                                                                            |    |
|    | Item 6.               | Exhibits                                                                        | 36      |
|    |                  |                                                                            |    |
|    | Signatures            |                                                                            | 37      |

----

index

PARTI  FINANCIAL INFORMATION

Item1.  Financial Statements

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                           |   | September      30, |    |   | December      31, |   |
|----------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                           |   | 2008               |    |   | 2007              |   |
| CURRENT      ASSETS:                                           |   |               |    |   |              |   |
|                                                           |   |               |    |   |              |   |
| Cash      and cash equivalents                                 |   | $                  | 928     |   |              | $      | 2,015 |   |
| Accounts      receivable, net                                  |   |               | 20,589  |   |              |   | 18,077 |   |
| Inventories,      net                                          |   |               | 22,994  |   |              |   | 26,160 |   |
| Receivable      from disposition                               |   |               | 190     |   |              |   | 6,799 |   |
| Other      current assets                                      |   |               | 2,290   |   |              |   | 2,520 |   |
|                                                           |   |               |    |   |              |   |   |   |
| Total      current assets                                      |   |               | 46,991  |   |              |   | 55,571 |   |
|                                                           |   |               |    |   |              |   |   |   |
|                                                           |   |               |    |   |              |   |   |   |
| OTHER      ASSETS:                                             |   |               |    |   |              |   |   |   |
|                                                           |   |               |    |   |              |   |   |   |
| Goodwill                                                       |   |               | 665     |   |              |   | 665 |   |
| Intangibles,      net                                          |   |               | 4,562   |   |              |   | 4,853 |   |
| Other                                                          |   |               | 2,045   |   |              |   | 3,470 |   |
|                                                           |   |               |    |   |              |   |   |   |
| Total      other assets                                        |   |               | 7,272   |   |              |   | 8,988 |   |
|                                                           |   |               |    |   |              |   |   |   |
|                                                           |   |               |    |   |              |   |   |   |
| PROPERTY      AND EQUIPMENT                                    |   |               |    |   |              |   |   |   |
| Land      and improvements                                     |   |               | 336     |   |              |   | 336 |   |
| Buildings      and improvements                                |   |               | 9,419   |   |              |   | 9,666 |   |
| Machinery      and equipment                                   |   |               | 97,472  |   |              |   | 96,650 |   |
|                                                           |   |               |    |   |              |   |   |   |
|                                                           |   |               | 107,227 |   |              |   | 106,652 |   |
| Less      - Accumulated depreciation                           |   |               | (74,872 | )      |              |   | (72,647 | ) |
|                                                           |   |               |    |   |              |   |   |   |
| Property      and equipment, net                               |   |               | 32,355  |   |              |   | 34,005 |   |
|                                                           |   |               |    |   |              |   |   |   |
| Total      assets                                              |   | $                  | 86,618  |   |              | $      | 98,564 |   |
|                                                           |   |               |    |   |              |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements. |   |               |    |   |              |   |   |   |

----

index

|                                                             |   | September      30, |    |   | December      31, |   |
|------------------------------------------------------------------|--------|--------------------|---------|--------|-------------------|--------|
|                                                             |   | 2008               |    |   | 2007              |   |
| CURRENT      LIABILITIES:                                        |   |               |    |   |              |   |
|                                                             |   |               |    |   |              |   |
| Accounts      payable                                            |   | $                  | 16,632  |   |              | $      | 14,995 |   |
| Accrued      compensation                                        |   |               | 2,963   |   |              |   | 2,629 |   |
| Accrued      expenses                                            |   |               | 21,397  |   |              |   | 22,325 |   |
| Current      maturities of long-term debt                        |   |               | 1,500   |   |              |   | 1,500 |   |
| Revolving      credit agreement                                  |   |               | 6,629   |   |              |   | 2,853 |   |
|                                                             |   |               |    |   |              |   |   |   |
| Total      current liabilities                                   |   |               | 49,121  |   |              |   | 44,302 |   |
|                                                             |   |               |    |   |              |   |   |   |
| LONG-TERM      DEBT, less current maturities                     |   |               | 7,384   |   |              |   | 9,100 |   |
|                                                             |   |               |    |   |              |   |   |   |
| OTHER      LIABILITIES                                           |   |               | 6,650   |   |              |   | 8,706 |   |
|                                                             |   |               |    |   |              |   |   |   |
| Total      liabilities                                           |   |               | 63,155  |   |              |   | 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                                  |   |               | 27,147  |   |              |   | 27,338 |   |
| Accumulated      other comprehensive loss                        |   |               | (1,351  | )      |              |   | (1,112 | ) |
| Accumulated      deficit                                         |   |               | (98,517 | )      |              |   | (85,915 | ) |
| Treasury      stock, at cost, 1,871,128 shares                   |   |               | (21,894 | )      |              |   | (21,933 | ) |
|                                                             |   |               |    |   |              |   |   |   |
| Total      stockholders' equity                                  |   |               | 23,463  |   |              |   | 36,456 |   |
|                                                             |   |               |    |   |              |   |   |   |
| Total      liabilities and stockholders' equity                  |   | $                  | 86,618  |   |              | $      | 98,564 |   |
|                                                             |   |               |    |   |              |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements.   |   |               |    |   |              |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                                                           |   | Three      Months        |   |   | Nine      Months         |   |
|----------------------------------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                                           |   | Ended      September 30, |   |   | Ended      September 30, |   |
|                                                           |   | 2008                     |   |   | 2007                     |   |   | 2008 |   |   | 2007 |   |
|                                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |
| Net      sales                                                 |   | $                        | 44,364 |   |                     | $      | 49,208 |   |   | $ | 131,189 |   |   | $ | 144,732 |   |
| Cost      of goods sold                                        |   |                     | 41,494 |   |                     |   | 43,669 |   |   |   | 122,025 |   |   |   | 126,957 |   |
| Gross      profit                                              |   |                     | 2,870  |   |                     |   | 5,539 |   |   |   | 9,164 |   |   |   | 17,775 |   |
| Selling,      general and administrative expenses              |   |                     | 7,603  |   |                     |   | 6,611 |   |   |   | 22,370 |   |   |   | 20,982 |   |
| Severance,      restructuring and related charges              |   |                     | -      |   |                     |   | 46 |   |   |   | (410 | ) |   |   | 2,656 |   |
| Loss      (gain) on sale of assets                             |   |                     | 28     |   |                     |   | (44 | ) |   |   | 762 |   |   |   | 1,527 |   |
| Operating      loss                                            |   |                     | (4,761 | )      |                     |   | (1,074 | ) |   |   | (13,558 | ) |   |   | (7,390 | ) |
| Interest      expense                                          |   |                     | (394   | )      |                     |   | (1,051 | ) |   |   | (1,297 | ) |   |   | (3,165 | ) |
| Other,      net                                                |   |                     | 18     |   |                     |   | (230 | ) |   |   | 34 |   |   |   | (128 | ) |
|                                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before benefit from       |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| (provision      for) income taxes                              |   |                     | (5,137 | )      |                     |   | (2,355 | ) |   |   | (14,821 | ) |   |   | (10,683 | ) |
| Benefit      from (provision for) income taxes from            |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| continuing      operations                                     |   |                     | 65     |   |                     |   | (19 | ) |   |   | 1,222 |   |   |   | (651 | ) |
|                                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                           |   |                     | (5,072 | )      |                     |   | (2,374 | ) |   |   | (13,599 | ) |   |   | (11,334 | ) |
| (Loss)      income from operations of discontinued businesses  |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| (net      of tax)                                              |   |                     | (71    | )      |                     |   | 1,564 |   |   |   | (738 | ) |   |   | (264 | ) |
| Gain      on sale of discontinued businesses (net of tax)      |   |                     | 190    |   |                     |   | - |   |   |   | 1,735 |   |   |   | 8,817 |   |
|                                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                  |   | $                        | (4,953 | )      |                     | $      | (810 | ) |   | $ | (12,602 | ) |   | $ | (2,781 | ) |
|                                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share of common stock - Basic and diluted:       |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                           |   | $                        | (0.64  | )      |                     | $      | (0.30 | ) |   | $ | (1.71 | ) |   | $ | (1.43 | ) |
| Discontinued      operations                                   |   |                     | 0.02   |   |                     |   | 0.20 |   |   |   | 0.13 |   |   |   | 1.08 |   |
| Net      loss                                                  |   | $                        | (0.62  | )      |                     | $      | (0.10 | ) |   | $ | (1.58 | ) |   | $ | (0.35 | ) |
|                                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| 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                                                     |   | $      | (12,602 | )      |   | $      | (2,781 | ) |
| Income      from operations of discontinued business              |   |   | (997    | )      |   |   | (8,553 | ) |
| Loss      from continuing operations                              |   |   | (13,599 | )      |   |   | (11,334 | ) |
| Depreciation      and amortization                                |   |   | 6,209   |   |   |   | 5,492 |   |
| Write-off      and amortization of debt issuance costs            |   |   | 286     |   |   |   | 1,194 |   |
| Write-off      of assets due to lease termination                 |   |   | -       |   |   |   | 751 |   |
| Stock      option (income) expense                                |   |   | (152    | )      |   |   | 220 |   |
| Loss      on sale of assets                                       |   |   | 762     |   |   |   | 1,527 |   |
| Deferred      income taxes                                        |   |   | -       |   |   |   | (94 | ) |
|                                                              |   |   | (6,494  | )      |   |   | (2,244 | ) |
| Changes      in operating assets and liabilities:                 |   |   |    |   |   |   |   |   |
| Accounts      receivable                                          |   |   | (2,577  | )      |   |   | (3,557 | ) |
| Inventories                                                       |   |   | 3,037   |   |   |   | (3,064 | ) |
| Other      assets                                                 |   |   | 181     |   |   |   | (584 | ) |
| Accounts      payable                                             |   |   | 2,835   |   |   |   | 3,190 |   |
| Accrued      expenses                                             |   |   | (440    | )      |   |   | (1,467 | ) |
| Other,      net                                                   |   |   | (1,550  | )      |   |   | 2,330 |   |
|                                                              |   |   | 1,486   |   |   |   | (3,152 | ) |
|                                                              |   |   |    |   |   |   |   |   |
| Net      cash used in continuing operations                       |   |   | (5,008  | )      |   |   | (5,396 | ) |
| Net      cash used in discontinued operations                     |   |   | (897    | )      |   |   | (5,648 | ) |
| Net      cash used in operating activities                        |   |   | (5,905  | )      |   |   | (11,044 | ) |
|                                                              |   |   |    |   |   |   |   |   |
| Cash      flows from investing activities:                        |   |   |    |   |   |   |   |   |
| Capital      expenditures of continuing operations                |   |   | (5,122  | )      |   |   | (2,811 | ) |
| Proceeds      from sale of assets                                 |   |   | 99      |   |   |   | 246 |   |
|                                                              |   |   |    |   |   |   |   |   |
| Net      cash used in continuing operations                       |   |   | (5,023  | )      |   |   | (2,565 | ) |
| Net      cash provided by discontinued operations                 |   |   | 8,979   |   |   |   | 15,556 |   |
| Net      cash provided by investing activities                    |   |   | 3,956   |   |   |   | 12,991 |   |
|                                                              |   |   |    |   |   |   |   |   |
| Cash      flows from financing activities:                        |   |   |    |   |   |   |   |   |
| Net      borrowings (repayments) on revolving loans               |   |   | 3,776   |   |   |   | (1,903 | ) |
| Decrease      in book overdraft                                   |   |   | (1,118  | )      |   |   | (1,646 | ) |
| Repayments      of term loans                                     |   |   | (1,716  | )      |   |   | (2,574 | ) |
| Direct      costs associated with debt facilities                 |   |   | -       |   |   |   | (130 | ) |
| Repurchases      of common stock                                  |   |   | -       |   |   |   | (3 | ) |
|                                                              |   |   |    |   |   |   |   |   |
| Net      cash provided by (used in) continuing operations         |   |   | 942     |   |   |   | (6,256 | ) |
| Net      cash used in discontinued operations                     |   |   | -       |   |   |   | (779 | ) |
| Net      cash provided by (used in) financing activities          |   |   | 942     |   |   |   | (7,035 | ) |
|                                                              |   |   |    |   |   |   |   |   |
| Effect      of exchange rate changes on cash and cash equivalents |   |   | (80     | )      |   |   | (133 | ) |
| Net      decrease in cash and cash equivalents                    |   |   | (1,087  | )      |   |   | (5,221 | ) |
| Cash      and cash equivalents, beginning of period               |   |   | 2,015   |   |   |   | 7,392 |   |
| Cash      and cash equivalents, end of period                     |   | $      | 928     |   |   | $      | 2,171 |   |
|                                                              |   |   |    |   |   |   |   |   |
| See      Notes to Condensed Consolidated Financial Statements.    |   |   |    |   |   |   |   |   |

----

index

KATY INDUSTRIES, INC. AND SUBSIDIARIES

|                    |   | September      30, |   |   | December      31, |   |
|-------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                    |   | 2008               |   |   | 2007              |   |
|                    |   |               |   |   |              |   |
| Raw      materials      |   | $                  | 14,103 |   |              | $      | 17,022 |   |
| Work      in process    |   |               | 926    |   |              |   | 763 |   |
| Finished      goods     |   |               | 15,160 |   |              |   | 13,762 |   |
| Inventory      reserves |   |               | (1,177 | )      |              |   | (1,376 | ) |
| LIFO      reserve       |   |               | (6,018 | )      |              |   | (4,011 | ) |
|                    |   | $                  | 22,994 |   |              | $      | 26,160 |   |
|                    |   |               |   |   |              |   |   |   |

----

index

|                                           |   | Three      Months        |   |   | Nine      Months         |   |
|------------------------------------------------|--------|--------------------------|--------|--------|--------------------------|--------|
|                                           |   | Ended      September 30, |   |   | Ended      September 30, |   |
|                                           |   | 2008                     |   |   | 2007                     |   |   | 2008 |   |   | 2007 |   |
|                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |
| Stock      option expense (income)             |   | $                        | 106    |   |                     | $      | 49 |   |   | $ | (152 | ) |   | $ | 220 |   |
| Stock      appreciation right (income) expense |   |                     | (106   | )      |                     |   | 134 |   |   |   | (58 | ) |   |   | (264 | ) |
|                                           |   | $                        | -      |   |                     | $      | 183 |   |   | $ | (210 | ) |   | $ | (44 | ) |
|                                           |   |                     |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |

|                         | September      30, |   | September      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%   |

|                         | September      30,         |   | September      30, |
|------------------------------|----------------------------|--------|--------------------|
|                         | 2008                       |   | 2007               |
|                         |                       |   |               |
| Expected      term (years)   | 2.7      - 4.9             |   | 3.0      - 4.8     |
| Volatility                   |  106.7%      - 137.7% |        | 68.2%      - 77.2% |
| Risk-free      interest rate | 2.2%      - 3.1%           |   | 3.4%      - 4.1%   |

----

index

|                                             |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|--------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                             |   | September      30,      |   |   | September      30,     |   |
|                                             |   | 2008                    |   |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
| Net      loss                                    |   | $                       | (4,953 | )      |                   | $      | (810 | ) |   | $ | (12,602 | ) |   | $ | (2,781 | ) |
| Foreign      currency translation (losses) gains |   |                    | (107   | )      |                   |   | 310 |   |   |   | (239 | ) |   |   | (1,834 | ) |
| Other                                            |   |                    | -      |   |                   |   | (15 | ) |   |   | - |   |   |   | (75 | ) |
|                                             |   |                    | (107   | )      |                   |   | 295 |   |   |   | (239 | ) |   |   | (1,909 | ) |
| Comprehensive      loss                          |   | $                       | (5,060 | )      |                   | $      | (515 | ) |   | $ | (12,841 | ) |   | $ | (4,690 | ) |
|                                             |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                      |   | September      30, |   |   | December      31, |   |
|---------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                      |   | 2008               |   |   | 2007              |   |
|                      |   | Gross              |   |   | Accumulated       |   |   | Net      Carrying |   |   | Gross |   |   | Accumulated |   |   | Net      Carrying |   |
|                      |   | Amount             |   |   | Amortization      |   |   | Amount |   |   | Amount |   |   | Amortization |   |   | Amount |   |
|  Patents             |   | $                  | 1,102  |   |              | $      | (806 | ) |   | $ | 296 |   |   | $ | 1,031 |   |   | $ | (734 | ) |   | $ | 297 |   |
|  Customer      lists |   |               | 10,231 |   |              |   | (8,364 | ) |   |   | 1,867 |   |   |   | 10,231 |   |   |   | (8,240 | ) |   |   | 1,991 |   |
|  Tradenames          |   |               | 5,054  |   |              |   | (2,655 | ) |   |   | 2,399 |   |   |   | 5,054 |   |   |   | (2,489 | ) |   |   | 2,565 |   |
|  Other               |   |               | -      |   |              |   | - |   |   |   | - |   |   |   | 441 |   |   |   | (441 | ) |   |   | - |   |
|  Total               |   | $                  | 16,387 |   |              | $      | (11,825 | ) |   | $ | 4,562 |   |   | $ | 16,757 |   |   | $ | (11,904 | ) |   | $ | 4,853 |   |
|                      |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 2008      (remainder) |   | $      | 140    |   |
|-----------------------|--------|--------|--------|--------|
| 2009                  |   |   | 470    |   |
| 2010                  |   |   | 466    |   |
| 2011                  |   |   | 439    |   |
| 2012                  |   |   | 414    |   |
| Thereafter            |   |   | 2,633  |   |
|                  |   | $      | 4,562  |   |
|                  |   |   |   |   |

|                                                                             |   | September      30, |   | December      31, |   |
|----------------------------------------------------------------------------------|--------|--------------------|--------|-------------------|--------|
|                                                                             |   | 2008               |   |              | 2007   |   |
|                                                                             |   |               |   |              |   |   |
| Term      loan payable under the Bank of America Credit Agreement,      interest |   |               |   |
| based      on LIBOR and Prime Rates (5.63% - 5.75%), due through 2010            |   | $                  | 8,884  |              |   | $ | 10,600 |   |
| Revolving      loans payable under the Bank of America Credit Agreement,         |   |               |   |              |
| interest      based on LIBOR and Prime Rates (5.38% - 5.50%)                     |   |               | 6,629  |              |   |   | 2,853 |   |
| Total      debt                                                                  |   |               | 15,513 |              |   |   | 13,453 |   |
| Less      revolving loans, classified as current (see below)                     |   |               | (6,629 | )                 |   |   | (2,853 | ) |
| Less      current maturities                                                     |   |               | (1,500 | )                 |   |   | (1,500 | ) |
| Long-term      debt                                                              |   | $                  | 7,384  |              |   | $ | 9,100 |   |
|                                                                             |   |               |   |              |   |   |   |   |

----

index

| 2008      (remainder) |   | $      | 375    |   |
|-----------------------|--------|--------|--------|--------|
| 2009                  |   |   | 1,500  |   |
| 2010                  |   |   | 7,009  |   |
|                  |   | $      | 8,884  |   |
|                  |   |   |   |   |

----

index

|                                          |   | Pension      Benefits   |   |
|-----------------------------------------------|--------|-------------------------|--------|
|                                          |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|                                          |   | September      30,      |   |   | September      30, |   |
|                                          |   | 2008                    |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Components      of net periodic benefit cost: |   |                    |   |   |   |   |   |   |   |   |   |   |
| Service      cost                             |   | $                       | 3      |   |   | $ | 6 |   |   | $ | 10 |   |   | $ | 9 |   |
| Interest      cost                            |   |                    | 23     |   |   |   | 22 |   |   |   | 70 |   |   |   | 68 |   |
| Expected      return on plan assets           |   |                    | (26    | ) |   |   | (22 | ) |   |   | (77 | ) |   |   | (70 | ) |
| Amortization      of net loss                 |   |                    | 12     |   |   |   | 9 |   |   |   | 34 |   |   |   | 37 |   |
| Net      periodic benefit cost                |   | $                       | 12     |   |   | $ | 15 |   |   | $ | 37 |   |   | $ | 44 |   |
|                                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

index

|                                          |   | Other      Benefits     |   |
|-----------------------------------------------|--------|-------------------------|--------|
|                                          |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|                                          |   | September      30,      |   |   | September      30, |   |
|                                          |   | 2008                    |   |   | 2007 |   |   | 2008 |   |   | 2007 |   |
| Components      of net periodic benefit cost: |   |                    |   |   |   |   |   |   |   |   |   |   |
| Interest      cost                            |   | $                       | 38     |   |   | $ | 16 |   |   | $ | 113 |   |   | $ | 117 |   |
| Amortization      of prior service cost       |   |                    | -      |   |   |   | (30 | ) |   |   | - |   |   |   | 14 |   |
| Amortization      of net loss                 |   |                    | 7      |   |   |   | 18 |   |   |   | 23 |   |   |   | 26 |   |
| Net      periodic benefit cost                |   | $                       | 45     |   |   | $ | 4 |   |   | $ | 136 |   |   | $ | 157 |   |
|                                          |   |                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                              |   |    |      |   |     |   | 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 September 30, 2008            |   |    | 1,624,600 |   |     | $      | 2.82        |   | 6.42      years     |   | $ | 188 |   |
|                                              |   |    |      |   |     |   |        |   |                |   |   |   |   |
| Vested      and Exercisable at September 30, 2008 |   |    | 864,600   |   |     | $      | 4.21        |   | 3.69      years     |   | $ | - |   |
|                                              |   |    |      |   |     |   |        |   |                |   |   |   |   |

----

index

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

----

index

----

index

----

index

----

index

|                                                          |   |   |   |   |                               | Three      months ended |               |   | Nine      months ended |              |
|---------------------------------------------------------------|--------|--------|--------|--------|------------------------------------|-------------------------|--------------------|--------|------------------------|-------------------|
|                                                          |   |   |   |   |                               | September      30,      |               |   | September      30,     |              |
|                                                          |   |   |   |   |                               | 2008                    |               |   | 2007                   |              |   | 2008 |   |   | 2007 |   |
| Maintenance Products      Group                               |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |
|      Net      external sales         |   |   |   |   |                               | $                       | 44,364             |   |                   | $                 | 49,208 |   |   | $ | 131,189 |   |   | $ | 144,732 |   |
|      Operating      (loss) income    |   |   |   |   |                               |                    | (2,330             | )      |                   |              | 528 |   |   |   | (5,585 | ) |   |   | 2,721 |   |
|      Operating      (deficit) margin |   |   |   |   |                               |                    | (5.3               | %)     |                   |              | 1.1 | % |   |   | (4.3 | %) |   |   | 1.9 | % |
|           Depreciation and amortization   |   |   | 2,101  |   |                               |                    | 1,667              |   |                   |              | 6,142 |   |   |   | 5,401 |   |
|      Capital      expenditures       |   |   |   |   |                               |                    | 2,188              |   |                   |              | 741 |   |   |   | 5,122 |   |   |   | 2,781 |   |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |
| Total                                                         |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |
| Net      external sales                                       |   |   | -      |   | Operating      segments            |                    | $                  | 44,364 |                   |              | $ | 49,208 |   |   | $ | 131,189 |   |   | $ | 144,732 |   |
|                                                          |   |   |   |   | Total                              |                    | $                  | 44,364 |                   |              | $ | 49,208 |   |   | $ | 131,189 |   |   | $ | 144,732 |   |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
| Operating      loss                                           |   |   | -      |   | Operating      segments            |                    | $                  | (2,330 | )                      |              | $ | 528 |   |   | $ | (5,585 | ) |   | $ | 2,721 |   |
|                                                          |   |   | -      |   | Unallocated      corporate         |                    |               | (2,403 | )                      |              |   | (1,600 | ) |   |   | (7,621 | ) |   |   | (5,928 | ) |
|                                                          |   |   | -      |   | Severance,      restructuring,     |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   | and      related charges           |                    |               | -      |                   |              |   | (46 | ) |   |   | 410 |   |   |   | (2,656 | ) |
|                                                          |   |   | -      |   | (Loss)      gain on sale of assets |                    |               | (28    | )                      |              |   | 44 |   |   |   | (762 | ) |   |   | (1,527 | ) |
|                                                          |   |   |   |   | Total                              |                    | $                  | (4,761 | )                      |              | $ | (1,074 | ) |   | $ | (13,558 | ) |   | $ | (7,390 | ) |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                            |   |   | -      |   | Operating      segments            |                    | $                  | 2,101  |                   |              | $ | 1,667 |   |   | $ | 6,142 |   |   | $ | 5,401 |   |
|                                                          |   |   | -      |   | Unallocated      corporate         |                    |               | 14     |                   |              |   | 26 |   |   |   | 67 |   |   |   | 91 |   |
|                                                          |   |   |   |   | Total                              |                    | $                  | 2,115  |                   |              | $ | 1,693 |   |   | $ | 6,209 |   |   | $ | 5,492 |   |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
| Capital      expenditures                                     |   |   | -      |   | Operating      segments            |                    | $                  | 2,188  |                   |              | $ | 741 |   |   | $ | 5,122 |   |   | $ | 2,781 |   |
|                                                          |   |   | -      |   | Unallocated      corporate         |                    |               | -      |                   |              |   | 30 |   |   |   | - |   |   |   | 30 |   |
|                                                          |   |   | -      |   | Discontinued      operations       |                    |               | -      |                   |              |   | 105 |   |   |   | - |   |   |   | 399 |   |
|                                                          |   |   |   |   | Total                              |                    | $                  | 2,188  |                   |              | $ | 876 |   |   | $ | 5,122 |   |   | $ | 3,210 |   |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |                               |                    | September      30, |   |                   | December      31, |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |                               |                    | 2008               |   |                   | 2007              |   |   |   |   |   |   |   |   |   |
| Total      assets                                             |   |   | -      |   | Segment                            |                    | $                  | 82,626 |                   |              | $ | 85,124 |   |   |   |   |   |   |   |   |   |
|                                                          |   |   | -      |   | Other      [a]                     |                    |               | 1,390  |                   |              |   | 8,634 |   |   |   |   |   |   |   |   |   |
|                                                          |   |   | -      |   | Unallocated      corporate         |                    |               | 2,602  |                   |              |   | 4,806 |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   | Total                              |                    | $                  | 86,618 |                   |              | $ | 98,564 |   |   |   |   |   |   |   |   |   |
|                                                          |   |   |   |   |                               |                    |               |   |                   |              |   |   |   |   |   |   |   |   |   |   |   |

| [a]  Amounts      shown as “Other” represent the assets of the Woods US, Woods Canada, CML,      United Kingdom consumer plastics and the Metal Truck Box business      units. |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

index

|                                                                  |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|-----------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                                                  |   | September      30,      |   |   | September      30,     |   |
|                                                                  |   | 2008                    |   |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
|                                                                  |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Consolidation      of St. Louis manufacturing/distribution facilities |   | $                       | -      |   |                   | $      | - |   |   | $ | - |   |   | $ | 882 |   |
| Consolidation      of Glit facilities                                 |   |                    | -      |   |                   |   | 46 |   |   |   | (410 | ) |   |   | 1,774 |   |
| Total      severance, restructuring and related charges               |   | $                       | -      |   |                   | $      | 46 |   |   | $ | (410 | ) |   | $ | 2,656 |   |
|                                                                  |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |

|                                                 |   | Contract    |   |
|------------------------------------------------------|--------|-------------|--------|
|                                                 |   | Termination |   |
|                                                 |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007  |   | $           | 827    |   |
| Additions                                            |   |        | -      |   |
| Payments                                             |   |        | (144   | ) |
| Restructuring      liabilities at September 30, 2008 |   | $           | 683    |   |
|                                                 |   |        |   |   |

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

----

index

|                                                 |   | Contract    |   |
|------------------------------------------------------|--------|-------------|--------|
|                                                 |   | Termination |   |
|                                                 |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007  |   | $           | 1,453  |   |
| Additions                                            |   |        | -      |   |
| Payments                                             |   |        | (360   | ) |
| Other                                                |   |        | (410   | ) |
| Restructuring      liabilities at September 30, 2008 |   | $           | 683    |   |
|                                                 |   |        |   |   |

|                                                 |   | Maintenance |   |
|------------------------------------------------------|--------|-------------|--------|
|                                                 |   | Products    |   |
|                                                 |   | Group       |   |
| Restructuring      liabilities at December 31, 2007  |   | $           | 1,453  |   |
| Additions                                            |   |        | -      |   |
| Payments                                             |   |        | (360   | ) |
| Other                                                |   |        | (410   | ) |
| Restructuring      liabilities at September 30, 2008 |   | $           | 683    |   |
|                                                 |   |        |   |   |

|                  |   | Maintenance |   |
|-----------------------|--------|-------------|--------|
|                  |   | Products    |   |
|                  |   | Group       |   |
| 2008      (remainder) |   |        | 146    |   |
| 2009                  |   |        | 167    |   |
| 2010                  |   |        | 179    |   |
| 2011                  |   |        | 191    |   |
|                  |   | $           | 683    |   |
|                  |   |        |   |   |

----

index

|                             |   | September      30, |   |   | December      31, |   |
|----------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                             |   | 2008               |   |   | 2007              |   |
|                             |   |               |   |   |              |   |
| Current      assets:             |   |               |   |   |              |   |
| Receivable      from disposition |   | $                  | 190    |   |              | $      | 6,799 |   |
| Other      current assets        |   |               | 1,200  |   |              |   | 1,235 |   |
|                             |   | $                  | 1,390  |   |              | $      | 8,034 |   |
|                             |   |               |   |   |              |   |   |   |
| Non-current      assets:         |   |               |   |   |              |   |   |   |
| Other                            |   | $                  | -      |   |              | $      | 600 |   |
|                             |   |               |   |   |              |   |   |   |
| Current      liabilities:        |   |               |   |   |              |   |   |   |
| Accounts      payable            |   | $                  | -      |   |              | $      | 30 |   |
| Accrued      expenses            |   |               | -      |   |              |   | 148 |   |
|                             |   | $                  | -      |   |              | $      | 178 |   |
|                             |   |               |   |   |              |   |   |   |

----

index

|                                                 |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                                 |   | September      30,      |   |   | September      30,     |   |
|                                                 |   | 2008                    |   |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
|                                                 |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Net      sales                                       |   | $                       | -      |   |                   | $      | 46,487 |   |   | $ | - |   |   | $ | 130,587 |   |
| Pre-tax      (loss) profit                           |   | $                       | (6     | )      |                   | $      | 2,501 |   |   | $ | (235 | ) |   | $ | 913 |   |
| Pre-tax      gain on sale of discontinued operations |   | $                       | 190    |   |                   | $      | - |   |   | $ | 1,735 |   |   | $ | 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                                                |   | $                                                 | 44.4   |   |   |   | 100.0 |   |   | $ | 49.2 |   |   |   | 100.0 |   |
| Cost      of goods sold                                       |   |                                              | 41.5   |   |   |   | 93.5 |   |   |   | 43.7 |   |   |   | 88.8 |   |
| Gross      profit                                             |   |                                              | 2.9    |   |   |   | 6.5 |   |   |   | 5.5 |   |   |   | 11.2 |   |
| Selling,      general and administrative expenses             |   |                                              | 7.6    |   |   |   | 17.2 |   |   |   | 6.6 |   |   |   | 13.4 |   |
| Severance,      restructuring and related charges             |   |                                              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Loss      (gain) on sale of assets                            |   |                                              | -      |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Operating      loss                                           |   |                                              | (4.7   | ) |   |   | (10.7 | ) |   |   | (1.1 | ) |   |   | (2.2 | ) |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                         |   |                                              | (0.4   | ) |   |   |   |   |   |   | (1.1 | ) |   |   |   |   |
| Other,      net                                               |   |                                              | -      |   |   |   |   |   |   |   | (0.2 | ) |   |   |   |   |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before benefit from      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (provision      for) income taxes                             |   |                                              | (5.1   | ) |   |   |   |   |   |   | (2.4 | ) |   |   |   |   |
| Benefit      from (provision for) income taxes from           |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| continuing      operations                                    |   |                                              | -      |   |   |   |   |   |   |   | - |   |   |   |   |   |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                          |   |                                              | (5.1   | ) |   |   |   |   |   |   | (2.4 | ) |   |   |   |   |
| (Loss)      income from operations of discontinued businesses |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (net      of tax)                                             |   |                                              | (0.1   | ) |   |   |   |   |   |   | 1.6 |   |   |   |   |   |
| Gain      on sale of discontinued businesses (net of tax)     |   |                                              | 0.2    |   |   |   |   |   |   |   | - |   |   |   |   |   |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                                 |   | $                                                 | (5.0   | ) |   |   |   |   |   | $ | (0.8 | ) |   |   |   |   |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share of common stock - basic and diluted:      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                          |   | $                                                 | (0.64  | ) |   |   |   |   |   | $ | (0.30 | ) |   |   |   |   |
| Discontinued      operations                                  |   |                                              | 0.02   |   |   |   |   |   |   |   | 0.20 |   |   |   |   |   |
| Net      loss                                                 |   | $                                                 | (0.62  | ) |   |   |   |   |   | $ | (0.10 | ) |   |   |   |   |
|                                                          |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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index

|                                                      |   |                                              |   |
|-----------------------------------------------------------|--------|---------------------------------------------------|--------|
|                                                      |   | 2008                                              |   |   | 2007 |   |
|                                                      |   | (Amounts      in Millions, Except Per Share Data) |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | $                                                 |   |   | % to      Sales |   |   | $ |   |   | % to      Sales |   |
| Net      sales                                            |   | $                                                 | 131.2  |   |   |   | 100.0 |   |   | $ | 144.7 |   |   |   | 100.0 |   |
| Cost      of goods sold                                   |   |                                              | 122.0  |   |   |   | 93.0 |   |   |   | 126.9 |   |   |   | 87.7 |   |
| Gross      profit                                         |   |                                              | 9.2    |   |   |   | 7.0 |   |   |   | 17.8 |   |   |   | 12.3 |   |
| Selling,      general and administrative expenses         |   |                                              | 22.4   |   |   |   | 17.0 |   |   |   | 21.0 |   |   |   | 14.5 |   |
| Severance,      restructuring and related charges         |   |                                              | (0.4   | ) |   |   | (0.3 | ) |   |   | 2.7 |   |   |   | 1.8 |   |
| Loss      on sale of assets                               |   |                                              | 0.7    |   |   |   | 0.6 |   |   |   | 1.5 |   |   |   | 1.1 |   |
| Operating      loss                                       |   |                                              | (13.5  | ) |   |   | (10.3 | ) |   |   | (7.4 | ) |   |   | (5.1 | ) |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      expense                                     |   |                                              | (1.3   | ) |   |   |   |   |   |   | (3.2 | ) |   |   |   |   |
| Other,      net                                           |   |                                              | -      |   |   |   |   |   |   |   | (0.1 | ) |   |   |   |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations before benefit from  |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (provision      for) income taxes                         |   |                                              | (14.8  | ) |   |   |   |   |   |   | (10.7 | ) |   |   |   |   |
| Benefit      from (provision for) income taxes from       |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| continuing      operations                                |   |                                              | 1.2    |   |   |   |   |   |   |   | (0.6 | ) |   |   |   |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                      |   |                                              | (13.6  | ) |   |   |   |   |   |   | (11.3 | ) |   |   |   |   |
| Loss      from operations of discontinued businesses      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (net      of tax)                                         |   |                                              | (0.7   | ) |   |   |   |   |   |   | (0.3 | ) |   |   |   |   |
| Gain      on sale of discontinued businesses (net of tax) |   |                                              | 1.7    |   |   |   |   |   |   |   | 8.8 |   |   |   |   |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      loss                                             |   | $                                                 | (12.6  | ) |   |   |   |   |   | $ | (2.8 | ) |   |   |   |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      per share of common stock - basic and diluted:  |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss      from continuing operations                      |   | $                                                 | (1.71  | ) |   |   |   |   |   | $ | (1.43 | ) |   |   |   |   |
| Discontinued      operations                              |   |                                              | 0.13   |   |   |   |   |   |   |   | 1.08 |   |   |   |   |   |
| Net      loss                                             |   | $                                                 | (1.58  | ) |   |   |   |   |   | $ | (0.35 | ) |   |   |   |   |
|                                                      |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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| 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]   |   | $      | 6,629  |   |                         | $      | 6,629  |                        |   | $      | -                           |   |   | $                      | -      |   |   | $ | - |   |
| Term      Loan                       |   |   | 8,884  |   |                         |   | 1,500  |                        |   |   | 7,384                       |   |   |                   | -      |   |   |   | - |   |
| Interest      on debt [b]            |   |   | 1,665  |   |                         |   | 817    |                        |   |   | 848                         |   |   |                   | -      |   |   |   | - |   |
| Operating      leases [c]            |   |   | 29,411 |   |                         |   | 5,165  |                        |   |   | 7,896                       |   |   |                   | 4,726  |   |   |   | 11,624 |   |
| Severance      and restructuring [c] |   |   | 353    |   |                         |   | 165    |                        |   |   | 165                         |   |   |                   | 23     |   |   |   | - |   |
| Postretirement      benefits [d]     |   |   | 3,955  |   |                         |   | 566    |                        |   |   | 1,041                       |   |   |                   | 769    |   |   |   | 1,579 |   |
| Total      Contractual Obligations   |   | $      | 50,897 |   |                         | $      | 14,842 |                        |   | $      | 17,334                      |   |   | $                      | 5,518  |   |   | $ | 13,203 |   |
|                                 |   |   |   |   |                         |   |   |                        |   |   |                        |   |   |                   |   |   |   |   |   |   |
|                                 |   |   |   |   |                         |   |   |                        |   |   |                        |   |   |                   |   |   |   |   |   |   |
| 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    |   | $      | 425    |   |                         | $      | 425    |                        |   | $      | -                           |   |   | $                      | -      |   |   | $ | - |   |
| Stand-by      letters of credit      |   |   | 4,849  |   |                         |   | 4,849  |                        |   |   | -                           |   |   |                   | -      |   |   |   | - |   |
| Total      Commercial Commitments    |   | $      | 5,274  |   |                         | $      | 5,274  |                        |   | $      | -                           |   |   | $                      | -      |   |   | $ | - |   |
|                                 |   |   |   |   |                         |   |   |                        |   |   |                        |   |   |                   |   |   |   |   |   |   |

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|                                                                  |   | Three      Months Ended |   |   | Nine      Months Ended |   |
|-----------------------------------------------------------------------|--------|-------------------------|--------|--------|------------------------|--------|
|                                                                  |   | September      30,      |   |   | September      30,     |   |
|                                                                  |   | 2008                    |   |   | 2007                   |   |   | 2008 |   |   | 2007 |   |
|                                                                  |   |                    |   |   |                   |   |   |   |   |   |   |   |
| Consolidation      of St. Louis manufacturing/distribution facilities |   | $                       | -      |   |                   | $      | - |   |   | $ | - |   |   | $ | 882 |   |
| Consolidation      of Glit facilities                                 |   |                    | -      |   |                   |   | 46 |   |   |   | (410 | ) |   |   | 1,774 |   |
| Total      severance, restructuring and related charges               |   | $                       | -      |   |                   | $      | 46 |   |   | $ | (410 | ) |   | $ | 2,656 |   |
|                                                                  |   |                    |   |   |                   |   |   |   |   |   |   |   |   |   |   |   |

|                                                 |   | Contract    |   |
|------------------------------------------------------|--------|-------------|--------|
|                                                 |   | Termination |   |
|                                                 |   | Costs       |   |
| Restructuring      liabilities at December 31, 2007  |   | $           | 1,453  |   |
| Additions                                            |   |        | -      |   |
| Payments                                             |   |        | (360   | ) |
| Other                                                |   |        | (410   | ) |
| Restructuring      liabilities at September 30, 2008 |   | $           | 683    |   |
|                                                 |   |        |   |   |

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| -   | 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 Bank of America Credit      Agreement. |
|---------------|--------------------------------------------------------------------------------------------------|

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

| -   | Our      inability to access funds under the Revolving Credit Facility 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 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. |
|---------------|-----------------------------------------------------------------------------------------------------------------------|

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Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK

Item4T.  CONTROLS AND PROCEDURES

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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

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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.              | *#           |

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Signatures

----