<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, 2002

              [ ] 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 or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)


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


       Registrant's telephone number, including area code: (631) 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 August 12, 2002, there were 3,516,922 shares of the registrant's
Class A Common Stock outstanding.


<Page>


                             P & F INDUSTRIES, INC.

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2002


                                TABLE OF CONTENTS

                                                                        PAGE
PART I                                                                  ----
------
Item 1.  Financial Statements

            Consolidated Balance Sheets as of
               June 30, 2002 and December 31, 2001                      1 - 2

            Consolidated Statements of Operations
               for the six months ended June 30, 2002 and 2001          3 - 4

            Consolidated Statement of Shareholders' Equity
               for the six months ended June 30, 2002 and 2001            5

            Consolidated Statements of Cash Flows for the
               six months ended June 30, 2002 and 2001                  6 - 7

            Notes to Consolidated Financial Statements                  8 - 19

Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                        20 - 24

Item 3.  Quantitative and Qualitative Disclosures About
            Market Risk                                                   24

PART II
-------
Item 1.  Legal Proceedings                                               25

Item 2.  Changes in Securities and Use of proceeds                       25

Item 3.  Defaults Upon Senior Securities                                 25

Item 4.  Submission of Matters to a Vote of Security Holders             25

Item 5.  Other Information                                               26

Item 6.  Exhibits and Reports on Form 8-K                                26

SIGNATURES                                                               27

EXHIBIT INDEX                                                          28 - 31

                                       i
<Page>


PART I - FINANCIAL INFORMATION
------------------------------

ITEM 1.  FINANCIAL STATEMENTS


                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                            JUNE 30,     DECEMBER 31,
                                              2002           2001
                                          ------------   ------------
<S>                                       <C>            <C>
   ASSETS
   ------
CURRENT:
  Cash                                    $    496,578   $    507,833
  Accounts receivable, less allowance
    for possible losses of $435,676
    in 2002 and $404,557 in 2001            10,604,526      9,729,605
  Inventories                               20,284,060     17,223,225
  Deferred income taxes                        580,000        580,000
  Prepaid expenses and other                   921,685        723,538
                                          ------------   ------------
      TOTAL CURRENT ASSETS                  32,886,849     28,764,201
                                          ------------   ------------

PROPERTY AND EQUIPMENT:
  Land                                       1,582,938      1,182,938
  Buildings and improvements                 8,681,341      6,291,225
  Machinery and equipment                   14,161,130     12,728,582
                                          ------------   ------------
                                            24,425,409     20,202,745
  Less accumulated depreciation
    and amortization                        10,652,181      9,901,650
                                          ------------   ------------
      NET PROPERTY AND EQUIPMENT            13,773,228     10,301,095
                                          ------------   ------------

DEFERRED INCOME TAXES                        1,513,000             --

GOODWILL, net of accumulated
  amortization of $1,419,274                 8,424,835      7,301,611

OTHER ASSETS, net of accumulated
  amortization of $88,667 in 2002            2,667,049        102,615
                                          ------------   ------------
      TOTAL ASSETS                        $ 59,264,961   $ 46,469,522
                                          ============   ============
</Table>



                                       1
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                            JUNE 30,     DECEMBER 31,
                                              2002           2001
                                          ------------   ------------
<S>                                       <C>            <C>
   LIABILITIES AND SHAREHOLDERS' EQUITY
   ------------------------------------
CURRENT LIABILITIES:
  Short-term borrowings                   $  2,500,000   $  2,000,000
  Accounts payable                           3,650,038      1,981,368
  Accruals:
    Compensation                             1,221,950      1,512,141
    Other                                    2,663,864      1,947,143
  Deferred income taxes                        256,700             --
  Current maturities of long-term debt         584,173        313,075
                                          ------------   ------------
      TOTAL CURRENT LIABILITIES             10,876,725      7,753,727

LONG-TERM DEBT, less current maturities     15,226,143      3,548,945

DEFERRED INCOME TAXES                          761,000        939,000
                                          ------------   ------------
                                            26,863,868     12,241,672
                                          ------------   ------------

SHAREHOLDERS' EQUITY:
  Preferred stock - $10 par;
    authorized - 2,000,000 shares;
    no shares outstanding                           --             --
  Common stock:
    Class A - $1 par;
      authorized - 7,000,000 shares;
      issued - 3,677,593 shares              3,677,593      3,677,593
    Class B - $1 par;
      authorized - 2,000,000 shares;
      no shares issued or outstanding               --             --
  Additional paid-in capital                 8,464,139      8,464,139
  Retained earnings                         21,647,326     23,373,283
  Treasury stock, at cost
    (173,445 shares and 157,445 shares)     (1,387,965)    (1,287,165)
                                          ------------   ------------
      TOTAL SHAREHOLDERS' EQUITY            32,401,093     34,227,850
                                          ------------   ------------
      TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY              $ 59,264,961   $ 46,469,522
                                          ============   ============
</Table>



                                       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,
                                           ------------------           ----------------
                                           2002          2001           2002        2001
                                       ------------  ------------  ------------  ------------
<S>                                    <C>           <C>           <C>           <C>
REVENUES:
  Net sales                            $ 18,398,541  $ 15,952,173  $ 35,436,296  $ 33,250,678
  Other                                     267,855       294,003       326,819       439,262
                                       ------------  ------------  ------------  ------------
                                         18,666,396    16,246,176    35,763,115    33,689,940
                                       ------------  ------------  ------------  ------------

COSTS AND EXPENSES:
  Cost of sales                          12,520,520    11,109,972    24,524,742    23,364,765
  Selling, general and administrative     4,424,727     4,224,741     8,513,790     8,439,661
  Interest - net                            162,650       235,894       264,422       505,966
                                       ------------  ------------  ------------  ------------
                                         17,107,897    15,570,607    33,302,954    32,310,392
                                       ------------  ------------  ------------  ------------

INCOME BEFORE TAXES ON INCOME AND
  CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING PRINCIPLE                    1,558,499       675,569     2,460,161     1,379,548

TAXES ON INCOME                             599,000       259,000       947,000       532,000
                                       ------------  ------------  ------------  ------------

INCOME BEFORE CUMULATIVE EFFECT OF
  CHANGE IN ACCOUNTING PRINCIPLE       $    959,499  $    416,569  $  1,513,161  $    847,548

CUMULATIVE EFFECT OF CHANGE IN
  ACCOUNTING FOR GOODWILL,
  NET OF TAXES OF $1,668,000             (3,239,118)           --    (3,239,118)           --
                                       ------------  ------------  ------------  ------------

NET INCOME (LOSS)                      ($ 2,279,619) $    416,569  ($ 1,725,957) $    847,548
                                       ============  ============  ============  ============
</Table>




                                       3
<Page>


                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    =======================================

<Table>
<Caption>
                                           THREE MONTHS ENDED           SIX MONTHS ENDED
                                                JUNE 30,                    JUNE 30,
                                           ------------------           ----------------
                                           2002          2001           2002        2001

<S>                                       <C>           <C>           <C>           <C>
Weighted average common
  shares outstanding:
    Basic                                 3,505,272     3,555,572     3,507,924     3,565,530

    Diluted                               3,582,421     3,633,632     3,584,476     3,641,383




Earnings (loss) per share of common stock:

  Basic:
    Income before cumulative
      effect of change in
      accounting principle                    $ .27         $ .12         $ .43         $ .24

    Cumulative effect of
      change in accounting
      principle, net of taxes                  (.92)           --          (.92)           --
                                             ------         -----         ------        ------


    Net income (loss)                        ($ .65)        $ .12        ($ .49)        $ .24
                                             ======         =====         ======        ======



  Diluted:
    Income before cumulative
      effect of change in
      accounting principle                    $ .27         $ .11         $ .42         $ .23

    Cumulative effect of
      change in accounting
      principle, net of taxes                  (.90)           --          (.90)           --
                                             ------         -----         ------        ------

    Net income (loss)                        ($ .64)        $ .11        ($ .48)        $ .23
                                             ======         =====         ======        ======
</Table>



                                                4
<Page>


                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                   (UNAUDITED)
                 ==============================================

<Table>
<Caption>
                                                                      ADDITIONAL
                            COMMON        PAID-IN        RETAINED      TREASURY
                            STOCK         CAPITAL        EARNINGS        STOCK
                         -----------    -----------    ------------   -----------
<S>                      <C>            <C>            <C>            <C>
Balance,
  January 1, 2002        $ 3,677,593    $ 8,464,139    $ 23,373,283   ($1,287,165)

Net income (loss) for
  the six months ended
  June 30, 2002                   --             --      (1,725,957)           --

Purchase of Class A
  Common Stock                    --             --              --      (100,800)
                         -----------    -----------    ------------   -----------
Balance,
  June 30, 2002          $ 3,677,593    $ 8,464,139    $ 21,647,326   ($1,387,965)
                         ===========    ===========    ============   ===========
</Table>



                                       5
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                               SIX MONTHS ENDED
                                                   JUNE 30,
                                              ------------------
                                              2002          2001
                                          ------------  ------------
<S>                                       <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                       ($ 1,725,957) $    847,548
                                          ------------  ------------

  Adjustments to reconcile net income
    to net cash provided by (used in)
    operating activities:
      Cumulative effect of change in
        accounting for goodwill              3,239,118            --
      Depreciation                             750,531       722,513
      Amortization                              97,256       170,807
      Provision for losses on
        accounts receivable - net               (8,881)       (7,493)
      Deferred income taxes                    (23,000)           --
  Decrease (increase) - net of
    acquisition of Nationwide:
    Accounts receivable                        266,687     1,418,573
    Inventories                               (185,331)    1,169,788
    Prepaid expenses and other                (196,041)     (310,608)
    Other assets                                    --       (17,141)
  Increase (decrease) - net of
    acquisition of Nationwide:
    Accounts payable                           964,488       (58,959)
    Accruals and other                        (142,946)     (982,333)
                                          ------------  ------------
      Total adjustments                      4,761,881     2,105,147
                                          ------------  ------------
        Net cash provided by
          operating activities               3,035,924     2,952,695
                                          ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                      (3,362,664)     (507,467)
  Payments for acquisition
    of Nationwide Industries, Inc.
    - net of $2,920 cash acquired          (10,448,794)           --
  Payments for
    acquisition-related expenses            (1,148,217)           --
                                          ------------  ------------
        Net cash used in
          investing activities             (14,959,675)     (507,467)
                                          ------------  ------------
</Table>



                                       6
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                               SIX MONTHS ENDED
                                                   JUNE 30,
                                              ------------------
                                              2002          2001
                                          ------------  ------------
<S>                                       <C>           <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings        1,500,000     2,500,000
  Repayments of short-term borrowings       (1,435,000)   (4,500,000)
  Proceeds from mortgage                     2,024,000            --
  Proceeds from term loan                   11,500,000            --
  Principal payments on long-term debt      (1,575,704)      (69,946)
  Purchase of Class A Common Stock            (100,800)     (357,045)
                                          ------------  ------------
        Net cash provided by (used in)
          financing activities              11,912,496    (2,426,991)
                                          ------------  ------------


NET INCREASE (DECREASE) IN CASH                (11,255)       18,237

CASH AT BEGINNING OF PERIOD                    507,833       388,422
                                          ------------  ------------

CASH AT END OF PERIOD                     $    496,578  $    406,659
                                          ============  ============



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

      Income taxes                        $    480,000  $    638,000
                                          ============  ============


      Interest                            $    228,461  $    566,976
                                          ============  ============
</Table>



                                       7
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
         The consolidated unaudited financial statements contained herein
include the accounts of P & F Industries, Inc. and its subsidiaries. All
significant intercompany balances and transactions have been eliminated.

         P & F Industries, Inc. ("P & F") conducts business operations through
its four wholly-owned subsidiaries; Florida Pneumatic Manufacturing Corporation
("Florida Pneumatic"), Green Manufacturing, Inc. ("Green"), Embassy Industries,
Inc. ("Embassy") and Countrywide Hardware, Inc. ("Countrywide"). P & F and its
subsidiaries are herein referred to collectively as the "Company".

         Florida Pneumatic is engaged in the importation, manufacture and sale
of pneumatic hand tools, primarily for the industrial and retail markets, and
the importation and sale of compressor 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. Green is engaged
primarily in the manufacture, development and sale of heavy-duty welded custom
designed hydraulic cylinders. Green also manufactures a line of access equipment
for the petro-chemical industry and a line of post hole digging equipment for
the agricultural industry. Embassy is engaged in the manufacture and sale of
baseboard heating products and the importation and sale of radiant heating
systems. Embassy also imports a line of door and window hardware items through
its Franklin hardware division ("Franklin"). Countrywide, through its
subsidiary, Nationwide Industries, Inc. ("Nationwide"), imports and manufactures
door, window and fencing hardware for OEM's throughout the United States. Note 5
of the Notes to Consolidated Financial Statements presents financial information
for the segments of the Company's business.

BASIS OF FINANCIAL STATEMENT PRESENTATION

         The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information, and with the rules
and regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, these interim financial statements do not
include all of the information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial
statements. In the opinion of the Company, these unaudited consolidated
financial statements include all adjustments necessary to present fairly the
information set forth therein. All such adjustments are of a normal recurring
nature. Results for interim periods are not necessarily indicative of results to
be expected for a full year.



                                       8
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

BASIS OF FINANCIAL STATEMENT PRESENTATION (CONTINUED)

         The consolidated balance sheet information for December 31, 2001 was
derived from the audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2001. The interim financial
statements contained herein should be read in conjunction with that Report.

         In preparing financial statements in conformity with accounting
principles generally accepted in the United States of America, 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.

EARNINGS (LOSS) PER SHARE

         Basic earnings (loss) per share is based only on the average number of
shares of the Company's Class A Common Stock common stock outstanding for the
period. Diluted earnings (loss) per share reflects the effect of shares of
common stock issuable upon the exercise of options or warrants.

         Diluted earnings (loss) per share is computed using the treasury stock
method. Under this method, the aggregate number of shares of common stock
outstanding reflects the assumed use of proceeds from the hypothetical exercise
of any outstanding options or warrants to purchase shares of the Company's Class
A Common Stock, unless the effect on earnings (loss) is antidilutive. The
average market value for the period is used as the assumed purchase price.


NOTE 2 - INVENTORIES

         Major classes of inventory were as follows:

<Table>
<Caption>
                                      JUNE 30,     DECEMBER 31,
                                        2002            2001
                                    ------------    ------------
<S>                                 <C>             <C>
       Raw materials and supplies   $  3,771,364    $  3,122,061
       Work in process                   788,582         740,036
       Finished goods                 15,724,114      13,361,128
                                    ------------    ------------
                                    $ 20,284,060    $ 17,223,225
                                    ============    ============
</Table>



                                       9
<Page>


                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 3 - LONG-TERM DEBT

         Long-term debt consists of:

<Table>
<Caption>
                                                                                      JUNE 30,                 DECEMBER 31,
                                                                                       2002                       2001
                                                                                   ------------                -----------
<S>                                                                                <C>                         <C>
     Term loan - payments of interest only are due monthly through May             $ 10,000,000                $        --
      2003. Principal amount outstanding at June 1, 2003 to be paid in
      equal quarterly installments (plus interest at LIBOR plus 175
      basis points) from June 2003 through March 2009
     Mortgage loan - $11,244 payable monthly (plus interest at LIBOR
      plus 155 basis points) through May 2009 (a)                                     2,024,000                         --
     Mortgage loan - $17,438 payable monthly (plus interest at 8.16%)
      through May 2006, when a final payment of approximately $1,435,000
      is due (a)                                                                      1,731,831                  1,765,004
     Mortgage loan - $16,370 payable monthly (plus interest at 7.09%)
      through February 2014 (a)                                                       1,549,485                  1,592,016
     Economic Development Revenue Bond - payable yearly in various
      principal amounts (plus interest at variable rates) through
      November 2004 (b)                                                                 505,000                    505,000
                                                                                   ------------                -----------
                                                                                     15,810,316                  3,862,020
    Less current maturities                                                             584,173                    313,075
                                                                                   ------------                -----------
                                                                                   $ 15,226,143                $ 3,548,945
                                                                                   ============                ===========
</Table>

-------------------------
         (a)      These mortgages payable are collateralized and relate to the
                  land and buildings of the Company's subsidiaries.

         (b)      This bond was assumed by the Company as part of the
                  acquisition of Green and is secured by a standby letter of
                  credit.

         The term loan facility, which is part of the Company's credit agreement
with a bank, provides a commitment of $15,000,000 to finance acquisitions
subject to the lending bank's approval. As noted below, $11,500,000 of this
facility was used to finance the acquisition of Nationwide, and there was
$10,000,000 still outstanding against this facility at June 30, 2002. There was
also a standby letter of credit totaling approximately $510,000 outstanding
against this facility at June 30, 2002. This standby letter of credit is used to
secure the Economic Development Revenue Bond assumed as part of the acquisition
of Green.


                                       10
<Page>


                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 4 - CAPITAL STOCK TRANSACTIONS

         During the six months ended June 30, 2002, the Company purchased 16,000
shares of its Class A Common Stock, at a cost of $100,800.

         On July 12, 2002, the Company issued to various employees options to
purchase an aggregate of 221,100 shares of the Company's Class A Common Stock.

         On July 12, 2002, the Company issued 12,774 unrestricted shares of its
Class A Common Stock to an officer of the Company.


NOTE 5 - SEGMENTS OF BUSINESS

         The following tables present financial information by segment for the
periods ended June 30, 2002 and 2001. Segment profit (loss) excludes general
corporate expenses, interest expense and income taxes. There were no
intersegment revenues.

<Table>
<Caption>
                                  PNEUMATIC
                                  TOOLS AND
 SIX MONTHS ENDED         CON-     RELATED   HYDRAULIC    HEATING
   JUNE 30, 2002       SOLIDATED  EQUIPMENT  CYLINDERS   PRODUCTS  HARDWARE
--------------------   ---------  ---------  ---------   --------  --------
   (In thousands)
<S>                    <C>        <C>        <C>        <C>        <C>
 Revenues from
   external customers  $  35,763  $  19,701  $   6,508  $   4,267  $ 5,287
                       =========  =========  =========  =========  =======

 Segment profit (loss) $   4,334 $   3,894   $    (272) $     124  $   588
                       ========= =========   =========  =========  =======


 Cumulative effect of
   change in accounting
   accounting
   principle          ($   3,239) $      -- ($   3,239) $      --  $    --
                      ==========  ========= ==========  =========  =======
</Table>




                                       11
<Page>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 5 - SEGMENTS OF BUSINESS (CONTINUED)

<Table>
<Caption>
                                  PNEUMATIC
                                  TOOLS AND
 SIX MONTHS ENDED         CON-     RELATED   HYDRAULIC    HEATING
   JUNE 30, 2001       SOLIDATED  EQUIPMENT  CYLINDERS   PRODUCTS  HARDWARE
--------------------   ---------  ---------  ---------   --------  --------
   (In thousands)
<S>                    <C>        <C>        <C>        <C>        <C>
Revenues from
   external customers    $  33,690  $  19,647  $   7,607  $   4,125  $ 2,311
                         =========  =========  =========  =========  =======

 Segment profit (loss)   $   3,382  $   3,266  $    (121) $     174  $    63
                         =========  =========  =========  =========  =======


 Cumulative effect
   of change in
   accounting
   principle             $      --  $      --  $      --  $      --  $    --
                         =========  =========  =========  =========  =======
</Table>



<Table>
<Caption>
                                  PNEUMATIC
                                  TOOLS AND
 THREE MONTHS ENDED       CON-     RELATED   HYDRAULIC    HEATING
   JUNE 30, 2002       SOLIDATED  EQUIPMENT  CYLINDERS   PRODUCTS  HARDWARE
--------------------   ---------  ---------  ---------   --------  --------
   (In thousands)
<S>                    <C>        <C>        <C>        <C>        <C>
 Revenues from
   external customers  $  18,666  $   9,692  $   3,165  $   1,986  $ 3,823
                       =========  =========  =========  =========  =======


 Segment profit (loss) $   2,563  $   2,157  $    (178) $      28  $   556
                       =========  =========  =========  =========  =======


 Cumulative effect
   of change in
   accounting
   principle          ($   3,239) $      -- ($   3,239) $      --  $    --
                       =========  =========  =========  =========  =======
</Table>



                                       12
<Page>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 5 - SEGMENTS OF BUSINESS (CONTINUED)

<Table>
<Caption>
                                  PNEUMATIC
                                  TOOLS AND
 THREE MONTHS ENDED       CON-     RELATED   HYDRAULIC    HEATING
   JUNE 30, 2001       SOLIDATED  EQUIPMENT  CYLINDERS   PRODUCTS  HARDWARE
--------------------   ---------  ---------  ---------   --------  --------
   (In thousands)
<S>                    <C>        <C>        <C>        <C>        <C>
Revenues from
   external customers  $  16,246  $   9,476  $   3,446  $   2,154  $ 1,170
                       =========  =========  =========  =========  =======

 Segment profit (loss) $   1,686  $   1,713  $    (168) $     107  $    34
                       =========  =========  =========  =========  =======


 Cumulative effect
   of change in
   accounting
   principle           $      --  $      --  $      --  $      --  $    --
                       =========  =========  =========  =========  =======
</Table>


         The reconciliation of combined operating profits for reportable
segments to consolidated income before income taxes and cumulative effect of
change in accounting principle is as follows:

<Table>
<Caption>
                                                  SIX MONTHS ENDED
                                                      JUNE 30,
                                              -----------------------
                                                 2002         2001
                                              ----------   ----------
<S>                                           <C>          <C>
   Total profit for reportable segments       $4,333,768   $3,381,648

   General corporate expenses                 (1,609,185)  (1,496,134)

   Interest expense - net                       (264,422)    (505,966)
                                              ----------   ----------

   Income before taxes and
     cumulative effect of change
     in accounting principle                  $2,460,161   $1,379,548
                                              ==========   ==========
</Table>



                                       13
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 5 - SEGMENTS OF BUSINESS (CONTINUED)

<Table>
<Caption>
                                                THREE MONTHS ENDED
                                                     JUNE 30,
                                              -----------------------
                                                 2002         2001
                                              ----------   ----------
<S>                                           <C>          <C>
   Total profit for reportable segments       $2,563,635   $1,686,092

   General corporate expenses                   (842,486)    (774,629)

   Interest expense - net                       (162,650)    (235,894)
                                              ----------   ----------
   Income before taxes and
     cumulative effect of change
     in accounting principle                  $1,558,499   $  675,569
                                              ==========   ==========
</Table>


NOTE 6 - EARNINGS (LOSS) PER SHARE

         The following table sets forth the computation of basic and diluted
earnings (loss) per common share:

<Table>
<Caption>
                                          THREE MONTHS ENDED         SIX MONTHS ENDED
                                               JUNE 30,                  JUNE 30,
                                          ------------------         ----------------
                                          2002          2001         2002        2001
                                      -----------  -----------  -----------  -----------
<S>                                   <C>          <C>          <C>          <C>
  Numerator:
    Numerator for basic and diluted
      earnings (loss) per common
      share - income available to
      common shareholders             ($2,279,619) $   416,569  ($1,725,957) $   847,548
                                      ===========  ===========  ===========  ===========


  Denominator:
    Denominator for basic
      earnings (loss) per common
      share - weighted average
      common shares outstanding         3,505,272    3,555,572    3,507,924    3,565,530

    Effect of dilutive securities:
      Common stock options                 77,149       78,060       76,552       75,853
                                      -----------  -----------  -----------  -----------

    Denominator for diluted
      earnings per common
      share - adjusted weighted
      average common shares and
      assumed conversions               3,582,421    3,633,632    3,584,476    3,641,383
                                      ===========  ===========  ===========  ===========
</Table>

                                       14
<Page>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 6 - EARNINGS (LOSS) PER SHARE (CONTINUED)

<Table>
<Caption>
                                            THREE MONTHS ENDED        SIX MONTHS ENDED
                                                 JUNE 30,                 JUNE 30,
                                            ------------------        -----------------
                                            2002         2001         2002         2001
                                          --------     ---------    --------     --------
<S>                                         <C>          <C>          <C>          <C>
Earnings
  (loss) per common share:
    Basic:
            Income before cumulative
              effect of change in
              accounting principle          $ .27        $ .12        $ .43        $ .24

      Cumulative effect of change
        in accounting principle              (.92)          --         (.92)          --
                                            -----        -----        -----        -----

      Net income (loss)                     ($.65)       $ .12        ($.49)       $ .24
                                            =====        =====        =====        =====


    Diluted:
            Income before cumulative
              effect of change in
              accounting principle          $ .27        $ .11        $ .42        $ .23

      Cumulative effect of change
        in accounting principle              (.90)          --         (.90)          --
                                            -----        -----        -----        -----

      Net income (loss)                     ($.64)       $ .11        ($.48)       $ .23
                                            =====        =====        =====        =====
</Table>


NOTE 7 - ACQUISITION

         On May 3, 2002, Countrywide acquired all of the stock of Nationwide for
approximately $10,452,000, plus acquisition costs and working capital
adjustments of approximately $750,000. Nationwide is engaged in the business of
importing and manufacturing door, window and fencing hardware. This acquisition
was financed through the term loan facility available under the Company's credit
agreement. In addition to the cash paid at the closing, Nationwide's previous
owner is entitled to contingent payments of 30% of the excess of Nationwide's
earnings before interest and taxes over $2,500,000 in each twelve-month period
subsequent to the acquisition, for a period of five years. These contingent
payments will be treated as additions to goodwill.


                                       15
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 7 - ACQUISITION (CONTINUED)

         In connection with this acquisition, Countrywide also entered into a
contract to purchase, for $2,500,000, the real property and the improvements
thereon in which Nationwide conducts its business. This transaction was
completed on May 24, 2002.

         The consolidated financial statements presented in this report include
the combined results of operations of Countrywide and Nationwide for the period
from May 4, 2002 through June 30, 2002.

         The following table summarizes the unaudited estimated fair value of
the assets acquired and the liabilities assumed in connection with the
acquisition of Nationwide. The Company obtained third party valuations for the
property, plant and equipment and intangible assets (i.e., employment agreement
and customer list).

<Table>
<Caption>
         (AMOUNTS IN THOUSANDS)
<S>                                                     <C>
         Current assets                                 $ 4,015
         Property, plant and equipment                      860
         Employment agreement                               760
         Customer list                                    1,900
         Goodwill                                         5,632
                                                          -----

         Total assets acquired                           13,167
                                                         ------

         Current liabilities                             (1,965)
                                                          -----

         Total liabilities assumed                       (1,965)
                                                          -----

         Net assets acquired                            $11,202
                                                        =======
</Table>


         The employment agreement and the customer list have each been assigned
a useful life of five years. The amortization of these intangible assets is not
deductible for tax purposes.

         Amortization expense for intangible assets subject to amortization was
approximately $89,000 for the period ended June 30, 2002. Amortization expense
for each of the years in the five-year period ending December 31, 2006 is
estimated to be approximately $355,000 in 2002, $532,000 in 2003 through 2006,
and approximately $177,000 in 2007.




                                       16
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 7 - ACQUISITION (CONTINUED)

         The following table summarizes, on an unaudited pro forma basis, the
combined results of operations of the Company and Countrywide (combined with
Nationwide), as though the acquisition had been made January 1, 2001. The pro
forma amounts give effect to appropriate adjustments for depreciation of fixed
assets, amortization of intangible assets, interest expense and income taxes.

         The pro forma amounts presented are not necessarily indicative of
future operating results.

<Table>
<Caption>
                                        THREE MONTHS ENDED         SIX MONTHS ENDED
                                             JUNE 30,                  JUNE 30,
                                        ------------------         ------------------
                                        2002          2001         2002          2001
                                    -----------   -----------  -----------   -----------
<S>                                 <C>           <C>          <C>           <C>
     Net sales                      $19,698,000   $18,829,000  $39,277,000   $38,064,000
                                    ===========   ===========  ===========   ===========


     Income before cumulative
       effect of change in
       accounting principle         $   993,000   $   567,000  $ 1,745,000   $ 1,031,000
                                    ===========   ===========  ===========   ===========


     Earnings per share
       of common stock

         Basic                             $.28          $.16         $.50          $.29
                                           ====          ====         ====          ====

         Diluted                           $.28          $.16         $.49          $.28
                                           ====          ====         ====          ====
</Table>



                                       17
<Page>


                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

         In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS" 142), which changed the accounting for goodwill from
an amortization method to an impairment-only approach. Upon the adoption of SFAS
142 on January 1, 2002, the Company had ceased amortizing its goodwill. As
prescribed under SFAS 142, the Company had its goodwill tested for impairment
during the second fiscal quarter of 2002.

         Due to extremely weak market conditions in the hydraulic cylinder
business, the Company has revised its earnings forecasts for Green. As a result,
the fair market value of Green's goodwill, as determined by an independent third
party appraiser, was lower than the carrying value as of December 31, 2001.
Accordingly, the Company has recorded an after-tax impairment charge of
approximately $3.2 million, which is reported as a cumulative effect of change
in accounting principle resulting from the adoption of SFAS 142.

         The impairment tests performed require that the Company determine the
fair market value of its reporting units for comparison to the carrying value of
such net assets to assess whether an impairment exists. The methodologies used
to estimate fair market value involve the use of estimates and assumptions,
including projected revenues, earnings and cash flows.


         The changes in the carrying amounts of goodwill for the six months
ended June 30, 2002 are as follows:

<Table>
<Caption>
                                        PNEUMATIC
                                        TOOLS AND
                                CON-     RELATED   HYDRAULIC    HEATING
    (IN THOUSANDS)           SOLIDATED  EQUIPMENT  CYLINDERS   PRODUCTS  HARDWARE
                             ---------  ---------  ---------   --------  --------
<S>                          <C>        <C>        <C>         <C>       <C>
Balance, January 1, 2002     $   7,302  $   2,327  $   4,907   $     --  $     68

Goodwill acquired during
  the six months ended
  June 30, 2002                  6,030         --        398         --     5,632

Impairment losses               (4,907)        --     (4,907)        --        --
                             ---------  ---------  ---------   --------  --------
Balance, June 30, 2002       $   8,425  $   2,327  $     398   $     --  $  5,700
              === ====       =========  =========  =========   ======    ========
</Table>



                                       18
<Page>



                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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


NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)


         The amortization expense and net income (loss) (including any tax
effects) of the Company for the periods ended June 30, 2002 and June 30, 2001,
respectively, are as follows:

<Table>
<Caption>
                                           THREE MONTHS ENDED           SIX MONTHS ENDED
                                                JUNE 30,                    JUNE 30,
                                           ------------------           -----------------
                                           2002          2001           2002         2001
                                       ------------  ------------   ------------  -----------
<S>                                    <C>           <C>           <C>           <C>
Reported net income (loss)             ($ 2,279,619) $    416,569  ($ 1,725,957) $    847,548

Goodwill amortization                            --        81,109            --       162,218

Tax effect                                       --       (31,000)           --       (62,000)
                                       ------------  ------------   ------------  -----------

Adjusted net income (loss)             ($ 2,279,619) $    466,678  ($ 1,725,957) $    947,766
                                       ============  ============  ============  ============


Earnings per share of common stock:

BASIC:
  Reported net income (loss)                 ($ .65)        $ .12        ($ .49)        $ .24

  Goodwill amortization                          --           .02            --           .05

  Tax effect                                     --          (.01)           --          (.02)
                                              -----         -----         -----         -----
  Adjusted net income (loss)                 ($ .65)        $ .13        ($ .49)        $ .27
                                              =====         =====         =====         =====


DILUTED:
  Reported net income (loss)                 ($ .64)        $ .11        ($ .48)        $ .23

  Goodwill amortization                          --           .03            --           .04

  Tax effect                                     --          (.01)           --          (.01)
                                              -----         -----         -----         -----
  Adjusted net income (loss)                 ($ .64)        $ .13        ($ .48)        $ .26
                                              =====         =====         =====         =====
</Table>


                                       19
<Page>


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


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

COMPARISON OF QUARTERS ENDED JUNE 30, 2002 AND JUNE 30, 2001

         Consolidated revenues increased 14.9%, from $16,246,176 to
$18,666,396. Revenues from pneumatic tools and related equipment increased
2.3%, from $9,476,009 to $9,691,652, due primarily to strong sales of a June
promotion at a major customer and the launch of two new product lines. This
was partially offset by the sale of a product line in the second quarter of
2001 that did not repeat in 2002. Selling prices of pneumatic tools and
related equipment were virtually unchanged from the second quarter of 2001
with the exception of prices to one significant customer which were reduced
by an average of 16%. Revenues from hardware increased 226.7%, from
$1,170,299 to $3,822,901, due primarily to the acquisition of Nationwide on
May 3, 2002. Revenues from hydraulic cylinders and other equipment decreased
8.1%, from $3,445,946 to $3,165,181, due primarily to the phasing out of a
major customer in the first quarter. Selling prices of hydraulic cylinders
were unchanged from the second quarter of 2001. Revenues from heating
products decreased 7.8%, from $2,153,922 to $1,986,662, due primarily to
weakness in the commercial and radiant businesses. Selling prices of heating
products were unchanged from the second quarter of 2001.

         Consolidated gross profit, as a percentage of revenues, increased
from 31.6% to 32.9%. Gross profit from pneumatic tools and related equipment
increased from 40.1% to 41.5%, due primarily to the weakening of the Japanese
yen and productivity improvements that were offset somewhat by a price
reduction to a major customer in the second half of 2001. Gross profit from
hardware increased from 27.2% to 32.6%, due primarily to the addition of
Nationwide's higher margin OEM business now included in the product mix.
Gross profit from hydraulic cylinders and other equipment increased from 7.6%
to 9.0%, due primarily to a change in product mix. Gross profit from heating
products decreased from 34.9% to 29.9%, due primarily to the inability to
reduce fixed expenses in line with the volume decreases, as well as to a
change in product mix.

         Consolidated selling, general and administrative expenses increased
4.7%, from $4,224,741 to $4,424,727, due primarily to the addition of these
expenses at Nationwide, partially offset by major cost cutting efforts across
all of the facilities. Interest expense decreased 31.0%, from $235,894 to
$162,650, as a result of a decrease in the Company's average interest rate on
its borrowings.

         The effective tax rates for the quarters ended June 30, 2002 and 2001
were 38.4% and 38.3%, respectively.



                                       20
<Page>



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

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

COMPARISON OF SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001

         Consolidated revenues increased 6.2%, from $33,689,940 to
$35,763,115. Revenues from pneumatic tools and related equipment increased
..3%, from $19,646,442 to $19,700,562. This marginal increase was the result
of several factors. Strong sales of a June promotion at a major customer and
the launch of two new product lines was almost entirely offset by the sale of
a product line in the second quarter of 2001 that did not repeat in 2002 and
weakness across all customers with the exception of the largest two. Selling
prices of pneumatic tools and related equipment were virtually unchanged from
the second quarter of 2001 with the exception of prices to one significant
customer, which were reduced by an average of 16%. Revenues from hardware
increased 128.7%, from $2,311,715 to $5,287,180, due primarily to the
acquisition of Nationwide. Selling prices of hardware products were unchanged
from the six months ended June 30, 2001. Revenues from hydraulic cylinders
and other equipment decreased 14.4%, from $7,606,788 to $6,508,356, due
primarily to the phasing out of a major customer in the first quarter.
Selling prices of hydraulic cylinders and other equipment were virtually
unchanged from the six months ended June 30, 2001. Revenues from heating
products increased 3.4%, from $4,124,995 to $4,267,017, as increases in sales
of residential products were partially offset by decreases in sales of
commercial and radiant products. Selling prices of heating products were
unchanged from the six months ended June 30, 2001.

         Consolidated gross profit, as a percentage of revenues, increased from
30.6% to 31.4%. Gross profit from pneumatic tools and related equipment
increased from 38.1% to 39.1%, due primarily to the weakening of the Japanese
yen and productivity improvements that were partially offset by a price
reduction to a major customer in the second half of 2001. Gross profit from
hardware increased from 26.9% to 30.5%, due primarily to the addition of
Nationwide's higher margin OEM business now included in the product mix. Gross
profit from hydraulic cylinders and other equipment decreased from 10.4% to
9.1%, due primarily to the decrease in revenues, which reduced coverage of fixed
expenses. Gross profit from heating products decreased from 34.8% to 31.1%, due
primarily to a less profitable product mix and an increase in overhead expenses.

         Consolidated selling, general and administrative expenses increased
..9%, from $8,439,661 to $8,513,790, due primarily to the addition of these
expenses at Nationwide, partially offset by major cost cutting efforts across
all of the facilities. Interest expense decreased 47.7%, from $505,966 to
$264,422, as a result of decreases in both the average outstanding balance of
the Company's borrowings and the average interest rate on these borrowings.

         The effective tax rates for the six months ended June 30, 2002 and 2001
were 38.5% and 38.6%, respectively.



                                       21
<Page>


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

LIQUIDITY AND CAPITAL RESOURCES

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

<Table>
<Caption>
                              JUNE 30,     DECEMBER 31,     JUNE 30,
                                2002           2001           2001
                           -------------   ------------   ------------
<S>                          <C>            <C>            <C>
    Working Capital          $  22,010      $  21,010      $  19,933
    Current Ratio            3.02 to 1      3.71 to 1      2.49 to 1
    Shareholders' Equity     $  32,401      $  34,228      $  33,483
</Table>

         During the six months ended June 30, 2002, gross accounts receivable
decreased by approximately $267,000, with decreases of approximately $592,000,
$42,000 and $18,000 at Florida Pneumatic, Embassy and Green, respectively, being
partially offset by an increase of approximately $385,000 at Countrywide. The
decreases in accounts receivable at Florida Pneumatic and Green were due
primarily to the timing of receipts from customers. The decrease in accounts
receivable at Embassy was consistent with the decrease in revenues between the
fourth quarter of 2001 and the second quarter of 2002. The increase in accounts
receivable at Countrywide was due to increased sales volume.

         During the six months ended June 30, 2002, inventories increased by
approximately $185,000, with increases of approximately $267,000, $161,000
and $102,000 at Embassy, Countrywide and Green, respectively, being partially
offset by a decrease of approximately $345,000 at Florida Pneumatic. The
increase in inventories at Embassy was the result of initial stocking of new
items at its Franklin division, as well as preparation for the busy season
for the heating business. The increase at Countrywide was primarily due to
overall growth in the business. The increase at Green was due primarily to
the receipt in June of a major shipment of materials for the agricultural
products line. The decrease in inventory at Florida Pneumatic was primarily
the result of an unexpected increase in sales of some items whose inventory
has yet to be replenished and lower purchases for domestically manufactured
products.

         During the six months ended June 30, 2002, short-term borrowings
increased by $500,000, primarily to fund working capital changes and capital
expenditures. During the six months ended June 30, 2002, accounts payable
increased by approximately $964,000, with increases of approximately
$876,000, $312,000 and $49,000 at Florida Pneumatic, Green and Countrywide,
respectively, being partially offset by a decrease at Embassy of
approximately $273,000. The increase at Florida Pneumatic was due primarily
to the timing of purchases. The increase at Green was due primarily to the
buildup of agricultural product noted above and the timing of payments. The
increase at Countrywide was due primarily to the growth in business. The
decrease at Embassy was due primarily to the timing of payments.

                                       22
<Page>

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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         On August 1, 2002, the Company renewed its credit agreement, as
amended, with Citibank through July 26, 2003. This agreement provides the
Company with various credit facilities, including revolving credit loans, term
loans for acquisitions and a foreign exchange line. The revolving credit loan
facility provides a total of $12,000,000, with various sublimits, for direct
borrowings, letters of credit, bankers' acceptances and equipment loans. At June
30, 2002, there was $2,500,000 outstanding against the revolving credit loan
facility. There were no commitments for letters of credit at June 30, 2002.

         The term loan facility provides a commitment of $15,000,000 to finance
acquisitions subject to the lending bank's approval. There was a balance
outstanding against this facility at June 30, 2002 of $10,000,000 as a result of
the acquisition of Nationwide. There was also a standby letter of credit
totalling approximately $510,000 outstanding against this facility at June 30,
2002. This standby letter of credit was used to secure the Economic Development
Revenue Bond assumed as part of the acquisition of Green.

         The foreign exchange line provides for 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, 2002 was approximately $930,000.

         The Company's credit agreement is subject to annual review by the
lending bank. Under this agreement, the Company is required to adhere to certain
financial covenants. As a result of both the increased borrowings resulting from
the acquisition of Nationwide and the cumulative effect of the change in
accounting principle, the Company was not in compliance with all of these
covenants at June 30, 2002 and for the six months then ended. The lending bank
has granted a waiver regarding these covenants.

         Capital spending for the six months ended June 30, 2002 was
approximately $3,363,000, including $2,500,000 for the purchase of the real
property and the improvements thereon in which Nationwide conducts its business.
The total amount was provided from working capital. Capital expenditures for the
rest of 2002 are expected to total approximately $500,000, some of which may be
financed through the Company's credit facilities. Included in the expected total
for the rest of 2002 are capital expenditures relating to new products,
expansion of existing product lines and replacement of old equipment.



                                       23
<Page>



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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         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. The strengthening of the
U.S. dollar versus the Japanese yen over the last 12 months has had a positive
effect on the Company's results of operations and its financial position. There
can be no assurance however, that this situation will continue. See "Item 3 -
Quantitative and Qualitative Disclosures About Market Risk."


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risks, which include changes in U.S.
and international exchange rates, the prices of certain commodities and currency
rates as measured against the U.S. dollar and each other. The Company attempts
to reduce the risks related to foreign currency fluctuation by utilizing
financial instruments, pursuant to Company policy.

         The value of the U.S. dollar affects the Company's financial results.
Changes in exchange rates may positively or negatively affect the Company's
gross margins and operating expenses. The Company engages in hedging programs
aimed at mitigating the impact of currency fluctuations. Using primarily forward
exchange contracts, the Company hedges some of those transactions that, when
remeasured according to accounting principles generally accepted in the United
States of America, impact the income statement. Factors that could impact the
effectiveness of the Company's programs include volatility of the currency
markets and availability of hedging instruments. All currency contracts that are
entered into by the Company are components of hedging programs and are entered
into for the sole purpose of hedging an existing or anticipated currency
exposure, not for speculation. The Company does not buy or sell financial
instruments for trading purposes. Although the Company maintains these programs
to reduce the impact of changes in currency exchange rates, when the U.S. dollar
sustains a weakening exchange rate against currencies in which the Company
incurs costs, the Company's costs are adversely affected. At June 30, 2002, the
Company held open hedge forward contracts to deliver approximately $930,000 of
Japanese yen. The potential loss in value of the Company's net investment in
foreign currency forward contracts resulting from a hypothetical 10 percent
adverse change in foreign currency exchange rates at June 30, 2002 is
approximately $103,000.



                                       24
<Page>




PART II - OTHER INFORMATION
---------------------------

ITEM 1.  LEGAL PROCEEDINGS
         The Company is a defendant or co-defendant in various actions brought
         about in the course of conducting its business. The Company has accrued
         approximately $360,000 for possible liability relating to these
         actions.


ITEM 2.  CHANGES IN SECURITIES
         None.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES
         At June 30, 2002 and for the period then ended, the Company was not in
         compliance with all of the financial covenants contained in its credit
         agreement with the lending bank. The Company has received a waiver from
         the lending bank regarding these covenants.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         On May 29, 2002, the Registrant held its Annual Meeting of
         Stockholders, at which three proposals were voted upon: (i) Election of
         Directors; (ii) the Approval of the 2002 Stock Incentive Plan; and
         (iii) the Appointment of Auditors.

         The following persons were duly elected to serve, subject to the
         Company's Bylaws, as directors of the Registrant until the 2005 Annual
         Meeting of Stockholders, or until election and qualification of their
         successor(s):

<Table>
<Caption>
                                            Votes       Votes       Votes
                                          in favor     against    abstained
                                          ---------    -------    ---------
<S>                                       <C>          <C>              <C>
                    Robert L. Dubofsky    2,898,334    404,335            0
                    Neil Novikoff         2,898,354    404,315            0
                    Marc A. Utay          2,898,354    404,315            0
</Table>

         The terms of office of Alan I. Goldberg, Richard A. Horowitz, Sidney
         Horowitz, Arthur Hug, Jr., Dennis Kalick and Robert M. Steinberg as
         directors of the Registrant continued after the Annual Meeting of
         Stockholders.

         The 2002 Stock Incentive Plan was approved by 1,496,953 votes in favor
         and 1,267,230 votes against, with 20,463 votes abstained.

         The appointment of BDO Seidman, LLP as the Company's Auditors was
         ratified by 3,271,884 votes in favor and 15,502 votes against, with
         15,283 votes abstained.

         There were no broker non-votes pertaining to these proposals.



                                       25
<Page>



PART II - OTHER INFORMATION (CONTINUED)
---------------------------------------


ITEM 5.  OTHER INFORMATION
         None.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         (a)      Exhibits
                  See "Exhibit Index" immediately following the
                  signature page.

         (b)      Reports on Form 8-K
                  A report on Form 8-K was filed by the Registrant
                  regarding the acquisition of the outstanding
                  capital stock of Nationwide Industries, Inc. The
                  date of the report was May 3, 2002.



                                       26
<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/ Joseph A. Molino, Jr.
                                         -------------------------------
                                               Joseph A. Molino, Jr.
                                                  Vice President
Dated: August 14, 2002                    (Principal Financial Officer)



                                       27
<Page>


                                  EXHIBIT INDEX

EXHIBIT
NO.
---

2.1      Asset Purchase Agreement, dated as of September 16, 1998, by and
         between Green Manufacturing, Inc., an Ohio corporation, and the
         Registrant (Incorporated by reference to Exhibit 2.1 of the
         Registrant's Current Report on Form 8-K dated September 16, 1998).
         Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant agrees to
         furnish supplementally a copy of any exhibit or schedule omitted from
         the Asset Purchase Agreement to the Securities and Exchange Commission
         upon request.

2.2      Stock Purchase Agreement, dated as of May 3, 2002, by and between Mark
         C. Weldon and the Registrant (Incorporated by reference to Exhibit 2.1
         of the Registrant's Current Report on Form 8-K dated May 3, 2002).
         Pursuant to Item 601(b)(2) of Regulation S-K, the Registrant agrees to
         furnish supplementally a copy of any exhibit or schedule omitted from
         the Asset Purchase Agreement to the Securities and Exchange Commission
         upon request.

3.1      Restated Certificate of Incorporation of the Registrant (Incorporated
         by reference to Exhibit 3.1 to the Registrant's Annual Report on Form
         10-K for the fiscal year ended December 31, 1999).

3.2      Amended By-laws of the Registrant (Incorporated by reference to Exhibit
         3.2 to the Registrant's Quarterly Report on Form 10-Q for the quarter
         ended March 31, 1999).

4.1      Rights Agreement, dated as of August 23, 1994, between the Registrant
         and American Stock Transfer & Trust Company, as Rights Agent
         (Incorporated by reference to Exhibit 1 to the Registrant's
         Registration Statement on Form 8-A dated August 24, 1994).

4.2      Amendment to Rights Agreement, dated as of April 11, 1997, between the
         Registrant and American Stock Transfer & Trust Company, as Rights Agent
         (Incorporated by reference to Exhibit 4.1 to the Registrant's Current
         Report on Form 8-K dated April 11, 1997).

4.3      Credit Agreement, dated as of July 23, 1998, by and among the
         Registrant, Florida Pneumatic Manufacturing Corporation, a Florida
         corporation, Embassy Industries, Inc., a New York corporation, and
         European American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.3 to the Registrant's Annual Report on Form
         10-K/A for the fiscal year ended December 31, 1998).



                                       28
<Page>



                                  EXHIBIT INDEX
                                   (CONTINUED)

EXHIBIT
NO.
---

4.4      Amendment No. 1 to Credit Agreement, dated as of September 16, 1998, by
         and among the Registrant, Florida Pneumatic Manufacturing Corporation,
         a Florida corporation, Embassy Industries, Inc., a New York
         corporation, Green Manufacturing, Inc., a Delaware corporation, and
         European American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.4 to the Registrant's Annual Report on Form
         10-K/A for the fiscal year ended December 31, 1998).

4.5      Amendment No. 2 to Credit Agreement, dated as of July 28, 1999, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, and European
         American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.5 to the Registrant's Quarterly Report on Form
         10-Q for the quarter ended June 30, 1999).

4.6      Amendment No. 3 to Credit Agreement, dated as of July 26, 2000, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, and European
         American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.5 to the Registrant's Quarterly Report on Form
         10-Q for the quarter ended June 30, 2000).

4.7      Amendment No. 4 to Credit Agreement, dated as of June 25, 2001, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, and European
         American Bank, a New York banking corporation (Incorporated by
         reference to Exhibit 4.7 to the Registrant's Quarterly Report on Form
         10-Q for the quarter ended March 31, 2000).

4.8      Amendment No. 5 to Credit Agreement, dated as of May 3, 2002, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, and Citibank, N.A.
         (successor-in-interest to European American Bank), a New York banking
         corporation. (Incorporated by reference to Exhibit 4.7 to the
         Registrant's Quarterly Report on Form 10-Q for the quarter ended March
         31, 2002).



                                       29
<Page>


                                  EXHIBIT INDEX
                                   (CONTINUED)

EXHIBIT
NO.
---

4.9      Amendment No. 6 to Credit Agreement, dated as of June 13, 2002, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, and Citibank, N.A.
         (successor-in-interest to European American Bank), a New York banking
         corporation.

4.10     Amendment No. 7 to Credit Agreement, dated as of August 1, 2002, by and
         among the Registrant, Florida Pneumatic Manufacturing Corporation, a
         Florida corporation, Embassy Industries, Inc., a New York corporation,
         Green Manufacturing, Inc., a Delaware corporation, Countrywide
         Hardware, Inc., a Delaware corporation, and Nationwide Industries,
         Inc., a Florida corporation and Citibank, N.A. (successor-in-interest
         to European American Bank), a New York banking corporation.

4.11     Certain instruments defining the rights of holders of the long-term
         debt securities of the Registrant are omitted pursuant to Section
         (b)(4)(iii)(A) of Item 601 of Regulation S-K. The Registrant agrees to
         furnish supplementally copies of these instruments to the Commission
         upon request.

10.1     Second Amended and Restated Employment Agreement, dated as of May 30,
         2001, between the Registrant and Richard A. Horowitz (Incorporated by
         reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form
         10-Q for the quarter ended March 31, 2000).

10.2     Consulting Agreement, effective as of November 1, 2000, between the
         Registrant and Sidney Horowitz (Incorporated by reference to Exhibit
         10.3 to the Registrant's Quarterly Report on Form 10-Q for the quarter
         ended September 30, 2000).

10.3     Executive Incentive Bonus Plan of the Registrant (Incorporated by
         reference to Exhibit 10.4 to the Registrant's Annual Report on Form
         10-K for the fiscal year ended December 31, 2001).

10.4     2002 Stock Incentive Plan of the Registrant (Incorporated by reference
         to Exhibit 4.7 to the Registrant's Quarterly Report on Form 10-Q for
         the quarter ended March 31, 2002).


                                       30
<Page>



                                  EXHIBIT INDEX
                                   (CONTINUED)

EXHIBIT
NO.
---

10.5     Sale and Purchase Agreement, made as of the 1st day of May 2002,
         between W. I. Commercial Properties, Inc., a Florida corporation and
         Countrywide Hardware, Inc., a Delaware corporation.

99.1     Certification of Richard A. Horowitz, Chief Executive Officer of the
         Registrant, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
         Section 906 OF the Sarbanes-Oxley Act of 2002

99.2     Certification of Joseph A. Molino, Jr., Chief Financial Officer of the
         Registrant, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
         Section 906 OF the Sarbanes-Oxley Act of 2002






                                       31