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 SEPTEMBER 30, 2000

              |_| 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: (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 November 7, 2000, there were outstanding 3,608,433 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 SEPTEMBER 30, 2000

                                TABLE OF CONTENTS

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

          Consolidated Balance Sheets as of
            September 30, 2000 and December 31, 1999                       1 - 2

          Consolidated Statements of Income for the
            three months and the nine months ended
            September 30, 2000 and 1999                                        3

          Consolidated Statement of Shareholders' Equity
            for the nine months ended September 30, 2000                       4

          Consolidated Statements of Cash Flows for the
            nine months ended September 30, 2000 and 1999                  5 - 6

          Notes to Consolidated Financial Statements                      7 - 11

Item 2. Management's Discussion and Analysis of Financial
          Condition and Results of Operations                            12 - 15

Item 3. Quantitative and Qualitative Disclosures About
          Market Risk                                                         16

PART II
Item 1. Legal Proceedings                                                     17

Item 2. Changes in Securities and Use of proceeds                             17

Item 3. Defaults Upon Senior Securities                                       17

Item 4. Submission of Matters to a Vote of Security Holders                   17

Item 5. Other Information                                                     17

Item 6. Exhibits and Reports on Form 8-K                                      17

SIGNATURES                                                                    18

EXHIBIT INDEX                                                            19 - 20


                                       i
<PAGE>

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                          SEPTEMBER 30,  DECEMBER 31,
                                              2000           1999
                                          ------------   ------------

   ASSETS
   ------

CURRENT:
  Cash                                    $    767,532    $ 1,305,351
  Accounts receivable, less allowance
    for possible losses of $495,123
    in 2000 and $767,456 in 1999            14,223,207     12,086,000
  Inventories                               26,104,842     20,614,501
  Deferred income taxes                        532,000        532,000
  Prepaid expenses and other                   907,293        570,914
                                          ------------   ------------
      TOTAL CURRENT ASSETS                  42,534,874     35,108,766
                                          ------------   ------------

PROPERTY AND EQUIPMENT:
  Land                                       1,182,938      1,182,939
  Buildings and improvements                 5,968,893      5,942,838
  Machinery and equipment                   12,026,225     11,078,539
                                          ------------   ------------
                                            19,178,056     18,204,316
  Less accumulated depreciation
    and amortization                         8,267,941      7,200,142
                                          ------------   ------------
      NET PROPERTY AND EQUIPMENT            10,910,115     11,004,174
                                          ------------   ------------

GOODWILL, net of accumulated
  amortization of $1,757,803 in
  2000 and $1,514,476 in 1999                7,707,155      7,950,482

OTHER ASSETS                                   166,588        176,937
                                          ------------   ------------
      TOTAL ASSETS                        $ 61,318,732   $ 54,240,359
                                          ============   ============


                                       1
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                          SEPTEMBER 30,  DECEMBER 31,
                                              2000           1999
                                          ------------   ------------

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

CURRENT LIABILITIES:
  Short-term borrowings                   $ 10,000,000   $  6,000,000
  Accounts payable                           6,375,695      5,592,249
  Accruals:
    Compensation                             2,028,259      2,474,519
    Other                                    2,341,617      2,173,516
  Current maturities of long-term debt         951,136        947,884
                                          ------------   ------------
      TOTAL CURRENT LIABILITIES             21,696,707     17,188,168

LONG-TERM DEBT, less current maturities      6,724,315      7,325,661

DEFERRED INCOME TAXES                          702,000        702,000
                                          ------------   ------------
                                            29,123,022     25,215,829
                                          ------------   ------------

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 - 3,652,893 shares
      and 3,504,893 shares                   3,652,893      3,504,893
    Class B - $1 par;
      authorized -  2,000,000 shares;
      no shares issued or outstanding               --             --
  Additional paid-in capital                 8,451,789      8,282,602
  Retained earnings                         20,782,028     17,735,535
  Treasury stock, at cost
    (69,160 shares and 49,235 shares)         (691,000)      (498,500)
                                          ------------   ------------
      TOTAL SHAREHOLDERS' EQUITY            32,195,710     29,024,530
                                          ------------   ------------
      TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY              $ 61,318,732   $ 54,240,359
                                          ============   ============


                                       2
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
                        ---------------------------------------

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED           NINE MONTHS ENDED
                                              SEPTEMBER 30,               SEPTEMBER 30,
                                           ------------------          ------------------
                                           2000          1999          2000          1999
                                       ------------  ------------  ------------  ------------
<S>                                    <C>           <C>           <C>           <C>
REVENUES:
  Net sales                            $ 21,645,406  $ 20,219,270  $ 61,035,604  $ 54,983,995
  Other                                     199,351       139,109       569,848       574,809
                                       ------------  ------------  ------------  ------------
                                         21,844,757    20,358,379    61,605,452    55,558,804
                                       ------------  ------------  ------------  ------------

COSTS AND EXPENSES:
  Cost of sales                          15,639,334    14,027,734    42,717,447    38,232,924
  Selling, administrative and general     4,262,709     3,987,012    12,910,501    11,603,179
  Interest - net                            389,897       371,691     1,067,011       973,328
                                       ------------  ------------  ------------  ------------
                                         20,291,940    18,386,437    56,694,959    50,809,431
                                       ------------  ------------  ------------  ------------

INCOME BEFORE TAXES ON INCOME             1,552,817     1,971,942     4,910,493     4,749,373

TAXES ON INCOME                             593,000       738,000     1,864,000     1,800,000
                                       ------------  ------------  ------------  ------------

NET INCOME                             $    959,817  $  1,233,942  $  3,046,493  $  2,949,373
                                       ============  ============  ============  ============

Weighted average common
  shares outstanding:
    Basic                                 3,584,324     3,455,208     3,546,203     3,340,868

    Diluted                               3,699,113     3,718,914     3,691,470     3,727,195

Earnings per share of common stock:
  Basic                                       $ .27         $ .35         $ .86         $ .88

  Diluted                                     $ .26         $ .33         $ .83         $ .79
</TABLE>


                                       3
<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, 2000        $ 3,504,893  $ 8,282,602  $ 17,735,535 ($ 498,500)

Net income for the nine months
  ended September 30, 2000               --           --     3,046,493         --

Exercise of stock options,
  148,000 shares                    148,000      169,187            --         --

Common stock received on
  exercise of stock options,
  19,925 shares                          --           --            --   (192,500)
                                -----------  -----------  ------------  ---------
Balance, September 30, 2000     $ 3,652,893  $ 8,451,789  $ 20,782,028 ($ 691,000)
                                ===========  ===========  ============  =========
</TABLE>


                                       4
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                               NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                              ------------------
                                              2000          1999
                                          ------------  ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                              $  3,046,493  $  2,949,373
                                          ------------  ------------

  Adjustments to reconcile net income
   to net cash provided by (used in)
    operating activities:
      Depreciation                           1,067,799       996,394
      Amortization                             254,520       239,872
      (Gain) on disposal of fixed assets       (41,193)           --
      Provision for losses on
        accounts receivable - net                2,655         4,481
  Decrease (increase):
    Accounts receivable                     (2,139,862)   (5,656,303)
    Inventories                             (5,490,341)   (9,433,084)
    Prepaid expenses and other                (336,379)     (297,015)
    Other assets                                  (844)       22,721
  Increase (decrease):
    Accounts payable                           783,446     3,955,768
    Accruals and other                        (278,159)      250,588
                                          ------------  ------------
      Total adjustments                     (6,178,358)   (9,916,578)
                                          ------------  ------------
        Net cash used in
          operating activities              (3,131,865)   (6,967,205)
                                          ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                        (973,741)   (1,646,470)
  Proceeds from sale of fixed assets            41,194            --
                                          ------------  ------------
        Net cash used in
          investing activities                (932,547)   (1,646,470)
                                          ------------  ------------


                                       5
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                               NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                              ------------------
                                              2000          1999
                                          ------------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings        7,000,000    10,500,000
  Repayments of short-term borrowings       (3,000,000)   (1,500,000)
  Proceeds from mortgage refinancing                --     1,800,000
  Principal payments on long-term debt        (598,094)   (3,902,830)
  Proceeds from exercise of stock options      124,687        29,025
                                          ------------  ------------
        Net cash provided by
          financing activities               3,526,593     6,926,195
                                          ------------  ------------

NET (DECREASE) INCREASE IN CASH               (537,819)   (1,687,480)

CASH AT BEGINNING OF PERIOD                  1,305,351     2,280,788
                                          ------------  ------------

CASH AT END OF PERIOD                     $    767,532  $    593,308
                                          ============  ============

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

      Income taxes                        $  1,826,470  $  1,625,300
                                          ============  ============

      Interest                            $  1,064,695  $  1,010,770
                                          ============  ============

      During the nine months ended September 30, 2000, the Company received
19,925 shares of common stock in connection with the exercise of stock options.
The value of these shares was recorded at $192,500.


                                       6
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED 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 Company conducts its business operations through three wholly-owned
subsidiaries. Embassy Industries, Inc. ("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 Manufacturing division. Florida Pneumatic Manufacturing
Corporation ("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, 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 Manufacturing, Inc. ("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.

BASIS OF FINANCIAL STATEMENT PRESENTATION

      The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles 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 generally accepted accounting principles for complete financial
statements. In the opinion of the Company, the unaudited consolidated financial
statements include all adjustments necessary to a fair statement of the results
for the interim periods presented. 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, since the operations of some of the
Company's subsidiaries are seasonal in nature.

      The consolidated balance sheet information for December 31, 1999 was
derived from the audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999. These interim
financial statements should be read in conjunction with that Report.


                                       7
<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)

      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.

NOTE 2 - INVENTORIES

      Major classes of inventory were as follows:

                                    SEPTEMBER 30,   DECEMBER 31,
                                        2000            1999
                                    ------------    ------------
       Finished goods               $ 21,354,264    $ 15,673,198
       Work in process                 1,050,680         812,929
       Raw materials and supplies      3,699,898       4,128,374
                                    ------------    ------------
                                    $ 26,104,842    $ 20,614,501
                                    ============    ============

NOTE 3 - CAPITAL STOCK TRANSACTIONS

      During the nine months ended September 30, 2000, a director of the Company
surrendered 13,144 shares of Class A Common Stock, with a fair value of
$130,625, in connection with the exercise of options to purchase 50,000 shares
of Class A Common Stock.

      Also during the nine months ended September 30, 2000, an employee of the
Company surrendered 6,781 shares of Class A Common Stock, with a fair value of
$61,875, in connection with the exercise of options to purchase 35,000 shares of
Class A Common Stock.


                                       8
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 4 - SEGMENTS OF BUSINESS

      The following tables present financial information by segment for the
periods ended September 30, 2000 and 1999. Segment profit excludes general
corporate expenses, interest expense and income taxes. There were no
intersegment revenues.

                                  PNEUMATIC
                                  TOOLS AND
NINE MONTHS ENDED         CON-     RELATED   HYDRAULIC   HEATING
 SEPTEMBER 30, 2000    SOLIDATED  EQUIPMENT  CYLINDERS  EQUIPMENT  HARDWARE
-------------------    ---------  ---------  ---------  ---------  --------
   (In thousands)

 Revenues from
   external customers  $  61,605  $  33,575  $  16,328  $   7,285  $ 4,417
                       =========  =========  =========  =========  =======

 Segment profit        $   8,272  $   6,376  $   1,052  $     539  $   305
                       =========  =========  =========  =========  =======

                                  PNEUMATIC
                                  TOOLS AND
NINE MONTHS ENDED         CON-     RELATED   HYDRAULIC   HEATING
 SEPTEMBER 30, 1999    SOLIDATED  EQUIPMENT  CYLINDERS  EQUIPMENT  HARDWARE
-------------------    ---------  ---------  ---------  ---------  --------
   (In thousands)

 Revenues from
   external customers  $  55,559  $  29,016  $  15,295  $   6,841  $ 4,407
                       =========  =========  =========  =========  =======

 Segment profit        $   7,982  $   6,501  $     729  $     303  $   449
                       =========  =========  =========  =========  =======

                                  PNEUMATIC
                                  TOOLS AND
THREE MONTHS ENDED        CON-     RELATED   HYDRAULIC   HEATING
 SEPTEMBER 30, 2000    SOLIDATED  EQUIPMENT  CYLINDERS  EQUIPMENT  HARDWARE
-------------------    ---------  ---------  ---------  ---------  --------
   (In thousands)

 Revenues from
   external customers  $  21,844  $  12,543  $   4,971  $   2,895  $ 1,435
                       =========  =========  =========  =========  =======

 Segment profit        $   2,674  $   2,035  $     267  $     298  $    74
                       =========  =========  =========  =========  =======


                                       9
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 4 - SEGMENTS OF BUSINESS (CONTINUED)

                                  PNEUMATIC
                                  TOOLS AND
THREE MONTHS ENDED        CON-     RELATED   HYDRAULIC   HEATING
 SEPTEMBER 30, 1999    SOLIDATED  EQUIPMENT  CYLINDERS  EQUIPMENT  HARDWARE
-------------------    ---------  ---------  ---------  ---------  --------
   (In thousands)

 Revenues from
   external customers  $  20,359  $  10,856  $   4,980  $   2,894  $ 1,629
                       =========  =========  =========  =========  =======

 Segment profit        $   3,155  $   2,652  $     126  $     235  $   142
                       =========  =========  =========  =========  =======

      The reconciliation of combined operating profits for reportable segments
to consolidated income before income taxes is as follows:

                                               NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                            -----------------------
                                               2000         1999
                                            ----------   ----------

   Total profit for reportable segments     $8,272,041   $7,981,890

   General corporate expenses               (2,294,537)  (2,259,189)

   Interest expense                         (1,067,011)    (973,328)
                                            ----------   ----------

   Income before income taxes               $4,910,493   $4,749,373
                                            ==========   ==========

                                               THREE MONTHS ENDED
                                                 SEPTEMBER 30,
                                            -----------------------
                                               2000         1999
                                            ----------   ----------

   Total profit for reportable segments     $2,673,930   $3,154,893

   General corporate expenses                 (731,216)    (811,260)

   Interest expense                           (389,897)    (371,691)
                                            ----------   ----------

   Income before income taxes               $1,552,817   $1,971,942
                                            ==========   ==========


                                       10
<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 5 - EARNINGS PER SHARE

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

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED        NINE MONTHS ENDED
                                            SEPTEMBER 30,             SEPTEMBER 30,
                                         -------------------       -------------------
                                          2000         1999         2000         1999
                                      -----------  -----------  -----------  -----------
<S>                                   <C>          <C>          <C>          <C>
  Numerator:
    Numerator for basic and diluted
      earnings per common share -
      income available to common
      shareholders                    $   959,817  $ 1,233,942  $ 3,046,493  $ 2,949,373
                                      ===========  ===========  ===========  ===========

  Denominator:
    Denominator for basic earnings
      per share - weighted average
      common shares outstanding         3,584,324    3,455,208    3,546,203    3,340,868

    Effect of dilutive securities:
      Common stock options                114,789      263,706      145,267      386,327
                                      -----------  -----------  -----------  -----------
    Denominator for diluted earnings
      per share - adjusted weighted
      average common shares and
      assumed conversions               3,699,113    3,718,914    3,691,470    3,727,195
                                      ===========  ===========  ===========  ===========


  Earnings per common share:
    Basic                                   $ .27        $ .35        $ .86        $ .88
                                            =====        =====        =====        =====

    Diluted                                 $ .26        $ .33        $ .83        $ .79
                                            =====        =====        =====        =====
</TABLE>


                                       11
<PAGE>

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

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

THIRD QUARTER ENDED SEPTEMBER 30, 2000 COMPARED WITH THIRD QUARTER ENDED
SEPTEMBER 30, 1999

      Consolidated revenues increased 7.3%, from $20,358,379 to $21,844,757.
Revenues from pneumatic tools and related equipment increased 15.5%, from
$10,856,349 to $12,543,705, due primarily to the addition of a significant new
account obtained in the fourth quarter of 1999. Selling prices of pneumatic
tools and related equipment were unchanged from the prior year. Revenues from
hydraulic cylinders and other equipment were essentially flat, going from
$4,979,176 to $4,970,459. Selling prices of hydraulic cylinders and other
equipment were unchanged from the prior year. Revenues from heating equipment
were virtually unchanged, going from $2,894,313 to $2,895,530. Selling prices of
heating equipment were unchanged from the prior year. Revenues from hardware
decreased 11.9%, from $1,628,541 to 1,435,063, due primarily to the loss of two
significant customers and a decrease in sales to a third customer. Selling
prices of hardware products were unchanged from the prior year.

      Consolidated gross profit, as a percentage of revenues, decreased from
31.1% to 28.4%. Gross margins from pneumatic tools and related equipment
decreased from 40.4% to 31.9%, due primarily to decreases in the value of the
U.S. dollar as compared to both the Japanese yen and the New Taiwan dollar,
which raised the cost of imported product. This decrease was partially offset by
a more profitable product mix. Gross margins in the third quarter of 1999 were
also higher because of significantly greater production activity in one-time
preparation for a major product launch, which resulted in less fixed overhead
being associated with each unit produced. Gross margins from hydraulic cylinders
and other equipment increased from 11.5% to 15.9%, due primarily to increased
productivity of direct labor. Gross margins from heating equipment increased
from 34.1% to 35.4%, due primarily to an increase in the value of the U.S.
dollar as compared to the Euro, which lowered the cost of imported product.
Gross margins from hardware increased from 23.9% to 26.9%, due primarily to the
discontinuance of initial order discounts to a significant customer opening new
stores.

      Consolidated selling, administrative and general expenses increased 6.9%,
from $3,987,012 to $4,262,709, consistent with the increase in revenues for the
period.

      Interest expense increased 4.9%, from $371,691 to $389,897, due primarily
to higher average interest rates.

      The effective tax rates for the quarters ended September 30, 2000 and 1999
were 38.2% and 37.4%, respectively.


                                       12
<PAGE>

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1999

      Consolidated revenues increased 10.9%, from $55,558,804 to $61,605,452.
Revenues from pneumatic tools and related equipment increased 15.7%, from
$29,016,350 to $33,575,538, due primarily to the addition of a significant new
account obtained in the fourth quarter of 1999, which was partially offset by
the non-renewal of a large promotion that was run during the fourth quarter of
1999. Selling prices of pneumatic tools and related equipment were unchanged
from the prior year. Revenues from hydraulic cylinders and other equipment
increased 6.8%, from $15,294,416 to $16,327,893, due primarily to an increase in
sales to the wrecker and refuse markets, which was partially offset by a
decrease in sales to the aerial lift market. Selling prices of hydraulic
cylinders and other equipment were unchanged from the prior year. Revenues from
heating equipment increased 6.5%, from $6,841,390 to $7,285,172, due primarily
to sales to a new customer in the western territory, higher sales in the radiant
area and an increase in sales of commercial products. Selling prices of heating
equipment were unchanged from the prior year. Revenues from hardware were
virtually unchanged, going from $4,406,648 to $4,416,849. Selling prices of
hardware products were unchanged from the prior year.

      Consolidated gross profit, as a percentage of revenues, decreased from
31.2% to 30.7%. Gross margins from pneumatic tools and related equipment
decreased from 40.3% to 37.4%, due primarily to decreases in the value of the
U.S. dollar as compared to both the Japanese yen and the New Taiwan dollar,
which raised the cost of imported product. Gross margins from hydraulic
cylinders and other equipment increased from 13.7% to 15.7%, due to increased
productivity of direct labor. Gross margins from heating equipment increased
from 34.5% to 34.8%, due to a more profitable product mix and an increase in the
value of the U.S. dollar as compared to the Euro, which lowered the cost of
imported product. Gross margins from hardware increased from 26.3% to 27.9%, due
to a more favorable product mix and the discontinuance of initial order
discounts to a significant customer opening new stores.

      Consolidated selling, administrative and general expenses increased 11.3%
from $11,603,179 to $12,910,501, consistent with the increase in revenues for
the period.

      Interest expense increased 9.6%, from $973,328 to $1,067,011, due
primarily to higher average interest rates.

      The effective tax rates for the quarters ended September 30, 2000 and 1999
were 38.0% and 37.9%, respectively.


                                       13
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

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

                           SEPTEMBER 30,  DECEMBER 31,  SEPTEMBER 30,
                               2000           1999           1999
                           -------------  ------------  --------------
    Working Capital          $  20,838       $  17,921     $  16,062
    Current Ratio            1.96 to 1       2.04 to 1     1.60 to 1
    Shareholders' Equity     $  32,196       $  29,025     $  27,428

      During the nine months ended September 30, 2000, gross accounts receivable
increased by approximately $2,140,000 and inventories increased by approximately
$5,490,000. An increase of approximately $1,325,000 in accounts receivable at
Florida Pneumatic was the result of increased sales to a significant customer
with extended terms, and the timing of cash receipts. An increase of
approximately $700,000 in accounts receivable at Embassy Industries was the
result of greater sales volume at the end of the third quarter of 2000 than at
the end of the fourth quarter of 1999. Florida Pneumatic's inventory increased
by approximately $4,200,000, primarily because sales to two significant
customers for the last six months were well short of forecasts. Green's
inventory increased by approximately $800,000, the result of two factors. First,
year-end inventories are generally reduced in preparation for the taking of a
physical inventory. Second, inventories have increased due to longer production
runs that were initiated to improve profit margins on recurring orders.
Short-term borrowings and accounts payable, combined, increased approximately
$4,800,000 as a result of the increase in inventories discussed above.
Management believes that the inventory is fully saleable.

      On July 26, 2000, the Company renewed its Credit Agreement, which 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 September 30, 2000, there was $10,000,000 outstanding against the revolving
credit loan facility. There was also a commitment of approximately $42,000 at
September 30, 2000 for open letters of credit.

      The term loan facility provides a commitment of $15,000,000 to finance
acquisitions subject to the lending bank's approval. In September 1998,
$10,000,000 of the term loan facility was used to help finance the acquisition
of Green and there was $3,333,333 still outstanding against this facility at
September 30, 2000. This 7-year term loan bears interest at LIBOR (London
Interbank Offered Rates) plus 1.75%. The Company made payments of interest only
through October 1999, at which time payments of both principal and interest
became due. There was also a standby letter of credit totalling approximately
$821,000 outstanding against this facility at September 30, 2000. This standby
letter of credit was used to secure the Economic Development Revenue Bond
assumed as part of the acquisition of Green.


                                       14
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

      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
September 30, 2000 was approximately $2,622,000.

      The Company's Credit Agreement is subject to annual review by the lending
bank. Under the Credit Agreement, the Company is required to adhere to certain
financial covenants. At September 30, 2000, and for the nine months then ended,
the Company satisfied all of these covenants.

      Capital spending for the nine months ended September 30, 2000 was
approximately $974,000. The total amount was provided from working capital.
Capital expenditures for the rest of 2000 are expected to total approximately
$460,000, some of which may be financed under the Company's Credit Agreement.
Included in the expected total for the rest of 2000 are capital expenditures
relating to new products, expansion of existing product lines and replacement of
old equipment.

      The Company, through Florida Pneumatic, imports a significant amount of
its purchases from Japan and Taiwan, with payments due in Japanese yen and New
Taiwan dollars, respectively. As a result, the Company is subject to the effects
of foreign currency exchange fluctuations. The Company uses a variety of
techniques to mitigate 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 for the purchase of yen. See "Item 3, Quantitative and
Qualitative Disclosures About Market Risk."

      The Company believes that cash on hand, cash generated by future
operations and cash available through its credit facilities will be sufficient
to allow the Company to support its capital expenditure program and to meet its
general working capital needs.

NEW ACCOUNTING PRONOUNCEMENTS

      In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities". SFAS 133 is effective for transactions
entered into after January 1, 2001 and requires that all derivative instruments
be recorded on the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of the hedge
transaction and the type of hedge transaction. The ineffective portion of all
hedges will be recognized in earnings. The Company is in the process of
reviewing SFAS 133 to determine what impact, if any, the adoption of SFAS 133
will have on its results of operations and its financial position. Based on
current market conditions, the Company does not believe that the impact will be
material.


                                       15
<PAGE>

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.

      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 limiting, in part, the impact of currency fluctuations. Using primarily
forward exchange contracts, the Company hedges some of those transactions that,
when remeasured according to generally accepted accounting principles, 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 September 30, 2000, the Company held
open hedge forward contracts to deliver approximately $2,622,000 of Japanese
Yen. The potential loss in value of the Company's net investment in these
foreign currency forward contracts resulting from a hypothetical 10 percent
adverse change in yen exchange rates at September 30, 2000 is approximately
$291,000.


                                       16
<PAGE>

PART  II - OTHER INFORMATION

ITEM  1. LEGAL PROCEEDINGS

      The Registrant is not a party to any litigation that is expected to have a
      material adverse effect on its business.

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

               See "Exhibit Index" immediately following the signature page.

         (b)   Reports on Form 8-K

               No reports on Form 8-K were filed by the Registrant during the
               quarter ended September 30, 2000.


                                       17
<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: November 7, 2000                    (Principal Financial Officer)


                                       18
<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 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 September 30, 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).

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).


                                       19
<PAGE>

                                  EXHIBIT INDEX
                                   (CONTINUED)

EXHIBIT
NO.

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 September 30, 2000).

4.7   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  Amended and Restated Employment Agreement, dated as of February 28, 1997,
      between the Registrant and Richard A. Horowitz (Incorporated by reference
      to Exhibit 10.1 to the Registrant's Annual Report on Form 10-K/A for the
      fiscal year ended December 31, 1998).

10.2  Consulting Agreement, effective as of November 1, 1998, between the
      Registrant and Sidney Horowitz (Incorporated by reference to Exhibit 10.2
      to the Registrant's Annual Report on Form 10-K/A for the fiscal year ended
      December 31, 1998).

10.3  Consulting Agreement, effective as of November 1, 2000, between the
      Registrant and Sidney Horowitz.

10.4  1992 Incentive Stock Option Plan of the Registrant, as amended and
      restated as of March 13, 1997 (Incorporated by reference to Exhibit 10.3
      to the Registrant's Annual Report on Form 10-K/A for the fiscal year ended
      December 31, 1998).

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


                                       20