<PAGE>


                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C. 20549

                                  ------------------
                                      FORM 10-Q
                                  ------------------

                 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                        OF THE SECURITIES EXCHANGE ACT OF 1934
                         FOR THE QUARTER ENDED JUNE 30, 1997

                [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                        OF THE SECURITIES EXCHANGE ACT OF 1934
                                           
                           COMMISSION FILE NUMBER 1 - 5332


                                P & F INDUSTRIES, INC.
                (Exact name of Registrant as specified in its charter)


            DELAWARE                                    22-1657413
    (State of incorporation)             (I.R.S. Employer Identification Number)


    300 SMITH STREET, FARMINGDALE, NEW YORK                     11735
    (Address of principal executive offices)                 (Zip Code)


          REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (516) 694-1800

                            ------------------------------

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


    As of July 31, 1997, there were outstanding 2,978,867 shares of the
Registrant's Class A Common Stock, par value $1.00 per share.


<PAGE>

                                P & F INDUSTRIES, INC.

                                      FORM 10-Q

                         FOR THE QUARTER ENDED JUNE 30, 1997



                                  TABLE OF CONTENTS


                                                                            PAGE
                                       PART I                               ----

Item 1.  Financial Statements

           Consolidated Balance Sheets as of
             June 30, 1997 and December 31, 1996                          1 - 2

           Consolidated Statements of Income for the
             six months ended June 30, 1997 and 1996                          3

           Consolidated Statements of Cash Flows for
             the six months ended June 30, 1997 and 1996                  4 - 5

           Notes to Consolidated Financial Statements                     6 - 7

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations                           8 - 10


                                       PART II

Item 1.  Legal Proceedings                                                   11

Item 2.  Changes in Securities                                               11

Item 3.  Defaults Upon Senior Securities                                     11

Item 4.  Submission of Matters to a Vote of Security Holders                 11

Item 5.  Other Information                                                   11

Item 6.  Exhibits and Reports on Form 8-K                                    11


         Signatures                                                          12

<PAGE>

                            PART I - FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                             CONSOLIDATED BALANCE SHEETS
                                     (UNAUDITED)
                       =======================================

                                            JUNE 30,     DECEMBER 31,
                                              1997           1996
                                            --------     ------------ 
      ASSETS
   ------------

CURRENT:
  Cash                                    $    834,115   $  4,558,135
  Accounts receivable, less allowance
    for possible losses of $389,786
    in 1997 and $370,410 in 1996             6,162,219      6,113,259
  Inventories                               14,262,995     11,119,850
  Note receivable from officer                      --         40,000
  Deferred income taxes                        211,000        211,000
  Prepaid expenses and other assets            156,468        300,850
                                          ------------   ------------
      TOTAL CURRENT ASSETS                  21,626,797     22,343,094
                                          ------------   ------------


PROPERTY AND EQUIPMENT:
  Land                                         993,020        993,020
  Buildings and improvements                 4,505,889      4,505,889
  Machinery and equipment                    5,441,423      5,246,699
                                          ------------   ------------
                                            10,940,332     10,745,608
  Less accumulated depreciation
    and amortization                         5,316,691      4,965,956
                                          ------------   ------------
      NET PROPERTY AND EQUIPMENT             5,623,641      5,779,652
                                          ------------   ------------

DEFERRED INCOME TAXES                          175,000        175,000

GOODWILL, net of accumulated
  amortization of $976,528 in
  1997 and $927,334 in 1996                  2,837,239      2,886,433

OTHER ASSETS, net of accumulated
  amortization of $42,663 in 1997
  and $34,659 in 1996                          139,460        147,464
                                          ------------   ------------
      TOTAL ASSETS                        $ 30,402,137   $ 31,331,643
                                          ------------   ------------
                                          ------------   ------------



                                          1
<PAGE>

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                             CONSOLIDATED BALANCE SHEETS
                                     (UNAUDITED)
                                     (CONTINUED)
                      ==========================================

                                            JUNE 30,     DECEMBER 31,
                                              1997           1996
                                            --------     ------------ 

   LIABILITIES AND SHAREHOLDERS' EQUITY
   ------------------------------------

CURRENT LIABILITIES:
  Short-term borrowings                   $         --   $         --
  Accounts payable                           3,887,809      2,661,589
  Accruals and other liabilities             1,750,015      2,082,031
  Current maturities of long-term debt       1,903,902      1,917,691
                                          ------------   ------------
      TOTAL CURRENT LIABILITIES              7,541,726      6,661,311

LONG-TERM DEBT, less current maturities      3,841,244      3,919,370

SUBORDINATED DEBENTURES                      1,369,200      1,369,200
                                          ------------   ------------
                                            12,752,170     11,949,881
                                          ------------   ------------

SHAREHOLDERS' EQUITY:
  Preferred stock, $10 par, cumulative;
    shares authorized 2,000,000;                    --      2,633,450
  Common stock:
    Class A - $1 par; shares authorized
      7,000,000; outstanding 2,978,867
      and 2,928,867; reserved for
      options - 727,000 shares; reserved
      for warrants - 70,000 shares           2,978,867      2,928,867
    Class B - $1 par; shares authorized
      2,000,000                                     --             --
  Additional paid-in capital                 7,632,614      7,607,614
  Retained earnings                          7,038,486      6,211,831
                                          ------------   ------------
      TOTAL SHAREHOLDERS' EQUITY            17,649,967     19,381,762
                                          ------------   ------------
      TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY              $ 30,402,137   $ 31,331,643
                                          ------------   ------------
                                          ------------   ------------



                                          2
<PAGE>










                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (UNAUDITED)
                        ======================================
 
<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED           SIX MONTHS ENDED
                                                JUNE 30,                    JUNE 30,
                                           ------------------          ------------------
                                           1997          1996          1997          1996
                                          ----          ----          ----          ----

REVENUES:
<S>                                   <C>           <C>           <C>           <C>
  Net sales                            $ 10,533,536  $  9,593,600  $ 19,722,224  $ 18,927,735
  Other                                     109,787        97,610       138,907       139,900
                                       ------------  ------------  ------------  ------------
                                         10,643,323     9,691,210    19,861,131    19,067,635
                                       ------------  ------------  ------------  ------------

COSTS AND EXPENSES:
  Cost of sales                           6,768,469     6,329,359    12,602,683    12,472,364
  Selling, administrative and general     2,759,245     2,443,414     5,238,760     4,716,751
  Interest - net                            152,803       201,369       293,641       432,885
  Depreciation                              169,768       135,272       339,535       303,546
                                       ------------  ------------  ------------  ------------
                                          9,850,285     9,109,414    18,474,619    17,925,546
                                       ------------  ------------  ------------  ------------

INCOME BEFORE TAXES ON INCOME               793,038       581,796     1,386,512     1,142,089

TAXES ON INCOME                             306,000       226,000       538,000       436,000
                                       ------------  ------------  ------------  ------------

NET INCOME                             $    487,038  $    355,796  $    848,512  $    706,089
                                       ------------  ------------  ------------  ------------
                                       ------------  ------------  ------------  ------------


  Preferred dividends                     $      --     $  65,837     $  21,857     $ 131,673
                                       ------------  ------------  ------------  ------------
                                       ------------  ------------  ------------  ------------

  Net income attributable
    to common stock                       $ 487,038     $ 289,959     $ 826,655     $ 574,416
                                       ------------  ------------  ------------  ------------
                                       ------------  ------------  ------------  ------------

  Average number of common shares
    and common share equivalents
      - primary                           3,472,197     3,215,884     3,473,183     3,188,124
                                       ------------  ------------  ------------  ------------
                                       ------------  ------------  ------------  ------------

      - fully diluted                     3,472,197     3,268,415     3,473,183     3,269,371
                                       ------------  ------------  ------------  ------------
                                       ------------  ------------  ------------  ------------

  Earnings per share of common
    stock - primary and fully diluted        $  .14        $  .09        $  .24        $  .18
                                       ------------  ------------  ------------  ------------
                                       ------------  ------------  ------------  ------------
</TABLE>


                                          3
<PAGE>




                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)
                       ======================================= 

                                               SIX MONTHS ENDED
                                                   JUNE 30,
                                             ---------------------
                                              1997          1996
                                             ---------------------  
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                              $    848,512  $    706,089
                                          ------------  ------------
  Adjustments to reconcile net income
    to net cash provided by (used in)
    operating activities:
      Depreciation and amortization            414,533       394,160
      Deferred income taxes                         --            --
      Provision for losses on
        accounts receivable                     41,391        54,486
  Decrease (increase):
    Accounts receivable                        (90,351)    2,750,026 
    Inventories                             (3,143,145)      (41,293)
    Note receivable from officer                40,000        25,000
    Prepaid expenses and other assets          137,782       108,740
    Other assets                                    --         3,200
  Increase (decrease):
    Accounts payable                         1,226,220    (1,191,769)
    Accruals and other                        (332,016)   (1,017,247)
                                          ------------  ------------

      Total adjustments                     (1,705,586)    1,085,303
                                          ------------  ------------
        Net cash (used in) provided by
          operating activities                (857,074)    1,791,392
                                          ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                        (194,724)     (122,851)
                                          ------------  ------------
        Net cash used in
          investing activities                (194,724)     (122,851)
                                          ------------  ------------



                                          4
<PAGE>

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (CONTINUED)
                                     (UNAUDITED)
                       ========================================


                                               SIX MONTHS ENDED
                                                   JUNE 30,
                                             ---------------------
                                              1997          1996
                                             ---------------------  

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings        6,609,726     7,635,754
  Repayments of short-term borrowings       (6,609,726)   (9,341,961)
  Principal payments on long-term debt         (91,915)   (2,338,097)
  Proceeds from exercise of stock options       75,000            --
  Dividends paid on preferred stock            (21,857)     (131,673)
  Redemption of preferred stock             (2,633,450)           --
  Proceeds from mortgage refinancing                --     2,062,500
                                          ------------  ------------
        Net cash used in
          financing activities              (2,672,222)   (2,113,477)
                                          ------------  ------------


NET (DECREASE) INCREASE IN CASH             (3,724,020)     (444,936)

CASH AT BEGINNING OF PERIOD                  4,558,135     1,224,603
                                          ------------  ------------

CASH AT END OF PERIOD                     $    834,115  $    779,667
                                          ------------  ------------
                                          ------------  ------------



SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
    Cash paid during the period for:

      Income taxes                        $    594,908  $    600,449
                                          ------------  ------------
                                          ------------  ------------


      Interest                            $    384,902  $    575,683
                                          ------------  ------------
                                          ------------  ------------



                                          5
<PAGE>

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                            NOTES TO FINANCIAL STATEMENTS
                       =======================================

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements contained herein include the accounts
of P & F Industries, Inc. and its subsidiaries (the "Company").  All significant
intercompany balances and transactions have been eliminated.

    The consolidated financial statements for the periods ended June 30, 1997
and 1996 are presented as unaudited but, in the opinion of the Company, they
include all adjustments necessary for a fair statement of the results of
operations for those periods. All such adjustments are of a normal recurring
nature. The consolidated balance sheet information for December 31, 1996 was
derived from audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996. These interim
financial statements should be read in conjunction with that report.

    Results for interim periods are not necessarily indicative of results to be
expected for a full year, since the operations of some of the Company's
subsidiaries are seasonal in nature.

    The Company conducts its business operations through two wholly-owned
subsidiaries. Florida Pneumatic Manufacturing Corporation ("Florida Pneumatic")
is engaged in the importation, manufacture and sale of pneumatic hand tools for
the industrial, retail and automotive markets and air filters. Florida Pneumatic
also markets, through its Berkley Tool Division ("Berkley"), a line of pipe
cutting and threading tools, wrenches and replacement electrical components for
a widely used brand of pipe cutting and threading machines. Embassy Industries,
Inc. ("Embassy") is engaged in the manufacture and sale of baseboard and radiant
hot-water heating products. Embassy also imports, assembles and packages a line
of small hardware items through its Franklin Hardware division ("Franklin").


BASIS OF FINANCIAL STATEMENT PRESENTATION

    In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.



                                          6
<PAGE>


                       P & F INDUSTRIES, INC. AND SUBSIDIARIES

                            NOTES TO FINANCIAL STATEMENTS
                                     (CONTINUED)
                       =======================================

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

    Primary and fully diluted earnings per share are computed using the
treasury stock method, modified for stock options and warrants outstanding in
excess of 20% of the total outstanding shares of common stock. Under this
method, the aggregate number of shares outstanding reflects the assumed use of
proceeds from the hypothetical exercise of the outstanding options and warrants,
unless the effect on earnings per share is antidilutive. The assumed proceeds
are used to repurchase shares of common stock, to a maximum of 20% of the shares
outstanding. The balance of the proceeds, if any, are used to reduce outstanding
debt. Fully diluted earnings per share also reflects the assumed use of proceeds
from the hypothetical exercise of contingent issuances if such contingent
issuances have a reasonable possibility of occurring.

    In calculating the purchase price of common stock, the average market value
for the period is used for primary earnings per share and the greater of the
average or ending market value for the period is used for fully diluted earnings
per share.

    Net income or loss is adjusted for preferred dividends in computing the net
income or loss attributable to the common stock.


NOTE 2 - INVENTORIES

    Major classes of inventory were as follows:

                                      JUNE 30,      DECEMBER 31,
                                        1997            1996
                                    ------------    ------------
       Finished goods               $ 10,344,264    $  7,661,749
       Work in process                 1,159,852         735,792
       Raw materials and supplies      2,758,879       2,722,309
                                    ------------    ------------
                                    $ 14,262,995    $ 11,119,850
                                    ------------    ------------
                                    ------------    ------------






                                          7
<PAGE>

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES
                       =======================================

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS


SECOND QUARTER ENDED JUNE 30, 1997 COMPARED WITH FIRST QUARTER ENDED
JUNE 30, 1996

    Consolidated revenues increased 9.8%, from $9,691,210 to $10,643,323.
Revenues from pneumatic tools and related equipment increased 10.6%, from
$7,140,977 to $7,894,762. Selling prices of pneumatic tools and related
equipment were virtually unchanged from the prior year.

    Revenues from heating equipment increased 10.4%, from $1,546,595 to
$1,707,685. Revenues from hardware increased 3.7%, from $1,003,051 to
$1,040,454. Selling prices of both heating equipment and hardware were unchanged
from the prior year.

    Consolidated gross profit, as a percentage of revenues, rose from 34.7% to
36.4%. Gross profit from pneumatic tools and related equipment rose from 35.5%
to 37.5%, due to a more profitable product mix and an increase in the value of
the U.S. dollar as compared to the Japanese yen, which lowered the cost of
imported product. Gross profit from heating equipment rose from 33.2% to 33.7%
and gross profit from hardware rose from 27.8% to 28.9%, both due to a more
profitable product mix.

    Consolidated selling, general and administrative expenses increased 12.9%,
from $2,443,414 to $2,759,245, primarily due to increases in advertising,
commissions and salaries. Interest expense fell sharply, from $201,369 to
$152,803, as a result of lower average short-term borrowings in 1997.


SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED
JUNE 30, 1996

    Consolidated revenues increased 4.2%, from $19,067,635 to $19,861,131.
Revenues from pneumatic tools and related equipment increased 4.1%, from
$13,925,344 to $14,489,677. Selling prices of pneumatic tools and related
equipment were virtually unchanged from the prior year.

    Revenues from heating equipment increased 5.8%, from $3,183,256 to
$3,368,627. Revenues from hardware increased 2.2%, from $1,958,088 to
$2,001,653. Selling prices of both heating equipment and hardware were unchanged
from the prior year.




                                          8
<PAGE>

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES
                       =======================================

SIX MONTHS ENDED JUNE 30, 1997 COMPARED WITH SIX MONTHS ENDED
JUNE 30, 1996 (CONTINUED)

    Consolidated gross profit, as a percentage of revenues, rose from 34.6% to
36.6%. Gross profit from pneumatic tools and related equipment rose from 35.6%
to 37.9%, due to a more profitable product mix and an increase in the value of
the U.S. dollar as compared to the Japanese yen, which lowered the cost of
imported product. Gross profit from heating equipment rose from 33.2% to 34.0%
and gross profit from hardware rose from 25.9% to 26.9%, both due to a more
profitable product mix.

    Consolidated selling, general and administrative expenses increased 11.1%,
from $4,716,751 to $5,238,760, primarily due to increases in advertising,
commissions and salaries. Interest expense fell sharply, from $432,885 to
$293,641, as a result of lower average short-term borrowings in 1997.


LIQUIDITY AND CAPITAL RESOURCES

    The Company gauges its liquidity and financial stability by the
measurements shown in the following table (dollar amounts in thousands):

                              JUNE 30,     DECEMBER 31,     JUNE 30,
                                1997           1996           1996
                             ---------     ------------     --------
    Working Capital          $  14,085       $  15,682     $  16,491
    Current Ratio            2.87 to 1       3.35 to 1     3.62 to 1
    Shareholders' Equity     $  17,650       $  19,382     $  18,266

    During the six months ended June 30, 1997, accounts receivable decreased by
approximately $90,000. Inventories increased approximately $3,143,000, to a
level more suitable to the needs of the customers in the current mix of sales.
Accounts payable increased approximately $1,226,000 as a result of the increase
in inventories.

    On January 30, 1997, the Company redeemed all of its outstanding preferred
stock, at the par value of $10 per share, for a total of $2,633,450. This
redemption was funded by working capital and resulted in the decreases in the
Company's working capital, current ratio and shareholders' equity shown above.

    Capital spending for the six months ended June 30, 1997 was approximately
$195,000. The total amount was provided from working capital. Capital
expenditures for the rest of 1997 are expected to total approximately $640,000,
some of which may be financed. Included in the expected total for 1997 are
capital expenditures relating to new products, expansion of existing product
lines and replacement of old equipment.


                                          9
<PAGE>

                       P & F INDUSTRIES, INC. AND SUBSIDIARIES
                       =======================================

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

    The Company's credit facility provides a line of credit totalling
$18,000,000. Of this amount, $14,000,000 is available for direct loans, letters
of credit and bankers' acceptances. At June 30, 1997, there were no loans
outstanding against this line of credit. There was a commitment at June 30, 1997
of approximately $3,900,000 for open letters of credit. In addition, at June 30,
1997, approximately $1,570,000 of the Company's credit facility was used to
secure accounts payable. The total line of credit also includes $4,000,000
earmarked for acquisitions subject to the lending bank's approval. The Company's
credit facility also provides the availability of up to $10,000,000 in foreign
currency forward contracts. These contracts fix the exchange rate on future
purchases of Japanese yen needed for payments to foreign suppliers. The total
amount of foreign currency forward contracts outstanding at June 30, 1997 was
approximately $1,685,000.

    The Company's credit facility agreement is subject to annual review by the
lending bank. Under this agreement, the Company is required to adhere to certain
financial covenants. At June 30, 1997, and for the six months then ended, the
Company satisfied all of these covenants.

    The Company continues to conduct an extensive acquisition search. The funds
for an acquisition will be provided by working capital and existing credit
facilities, including the $4,000,000 credit facility earmarked for acquisitions
referred to above. The total funds available, including cash derived from
operations, will be approximately $9,000,000.

    The Company, through Florida Pneumatic, imports a significant amount of its
purchases from Japan, with payment due in Japanese yen. As a result, the Company
is subject to the effects of foreign currency exchange fluctuations. The Company
uses a variety of techniques to protect itself from any adverse effects from
these fluctuations, including increasing its selling prices, obtaining price
reductions from its overseas suppliers, using alternative supplier sources and
entering into foreign currency forward contracts. Because of these steps taken
by the Company, foreign currency exchange rate fluctuations have not had a
significant negative effect on the Company's results of operations or its
financial position. Any future weakness of the dollar would again, however,
present a problem and there can be no certainty that the Company will continue
to be successful in its efforts to counter this problem.




                                          10
<PAGE>

                             PART II - OTHER INFORMATION


ITEM 1.    LEGAL PROCEEDINGS

           None.

ITEM 2.    CHANGES IN SECURITIES

           None.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

           None.

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

           None.

ITEM 5.    OTHER INFORMATION

           None.

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

           (a)     Exhibits

              The following exhibits have been filed as part of this report:

              Exhibit 4 - Amendment to Rights Agreement, dated April 11, 1997,
              between the Registrant and American Stock Transfer & Trust
              Company.

              Exhibit 11 - Schedule of Computation of Earnings Per Common
              Share.

              Exhibit 27 - Financial Data Schedules (submitted to the
              Securities and Exchange Commission in electronic format).


           (b)     Reports on Form 8-K

              A report on Form 8-K was filed by the Registrant regarding an
              amendment to the Rights Agreement between the Registrant and
              American Stock Transfer & Trust Company. The date of the report
              was April 11, 1997.



                                          11
<PAGE>

                                      SIGNATURES

           Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                 P & F INDUSTRIES, INC.
                                 (Registrant)


                                 By       /s/ Leon D. Feldman
                                    ------------------------------
                                            Leon D. Feldman
                                        Executive Vice President
Dated: July 31, 1997                 (Principal Financial Officer)











                                          12