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, 1996

              [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 1 - 5332

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

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

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

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

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

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

     As of October 28, 1996, there were outstanding 2,928,867 shares of the
Registrant's Class A Common Stock, par value $1.00 per share.

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                          SEPTEMBER 30,  DECEMBER 31,
                                              1996           1995
                                          ------------   ------------
   ASSETS
CURRENT:
  Cash                                    $  1,110,691   $  1,224,603
  Accounts receivable, less allowance
    for possible losses of $409,410
    in 1996 and $350,684 in 1995             8,117,591      9,163,246
  Inventories                               13,081,695     14,903,561
  Note receivable from officer                  40,000         65,000
  Deferred income taxes                        423,000        423,000
  Prepaid expenses and other assets            264,680        367,988
                                          ------------   ------------
      TOTAL CURRENT ASSETS                  23,037,657     26,147,398
                                          ------------   ------------

PROPERTY AND EQUIPMENT:
  Land                                         993,020        993,020
  Buildings and improvements                 4,509,960      4,505,889
  Machinery and equipment                    5,585,059      5,394,134
                                          ------------   ------------
                                            11,088,039     10,893,043
  Less accumulated depreciation
    and amortization                         5,248,014      4,760,074
                                          ------------   ------------
      NET PROPERTY AND EQUIPMENT             5,840,025      6,132,969
                                          ------------   ------------

GOODWILL, net of accumulated
  amortization of $902,737 in
  1996 and $828,946 in 1995                  2,911,030      2,984,821

OTHER ASSETS, net of accumulated
  amortization of $30,659 in 1996
  and $18,663 in 1995                          125,388        150,484
                                          ------------   ------------
      TOTAL ASSETS                        $ 31,914,100   $ 35,415,672
                                          ============   ============


                                        1

<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                          SEPTEMBER 30,  DECEMBER 31,
                                              1996           1995
                                          ------------   ------------
   LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Short-term borrowings                   $    805,233   $  4,233,753
  Accounts payable                           2,539,281      3,499,174
  Accruals and other liabilities             2,229,213      2,222,870
  Current maturities of long-term debt         261,470        353,874
                                          ------------   ------------
      TOTAL CURRENT LIABILITIES              5,835,197     10,309,671

LONG-TERM DEBT, less current maturities      5,797,401      6,044,981

SUBORDINATED DEBENTURES                      1,369,200      1,369,200
                                          ------------   ------------
                                            13,001,798     17,723,852
                                          ------------   ------------

SHAREHOLDERS' EQUITY:
  Preferred stock, $10 par, cumulative;
    shares authorized 2,000,000;
    outstanding 263,345                      2,633,450      2,633,450
  Common stock:
    Class A - $1 par; shares authorized 
      7,000,000; outstanding 2,928,867;
      reserved for options 1,632,200 
      shares; reserved for warrants
      70,000 shares                          2,928,867      2,928,867
    Class B - $1 par; shares authorized
      2,000,000                                     --             --
  Additional paid-in capital                 7,607,614      7,607,614
  Retained earnings                          5,742,371      4,521,889
                                          ------------   ------------
      TOTAL SHAREHOLDERS' EQUITY            18,912,302     17,691,820
                                          ------------   ------------
      TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY              $ 31,914,100   $ 35,415,672
                                          ============   ============


                                        2

<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED           NINE MONTHS ENDED
                                              SEPTEMBER 30,               SEPTEMBER 30,
                                           ------------------          ------------------
                                           1996          1995          1996          1995
                                       ------------  ------------  ------------  ------------
<S>                                    <C>           <C>           <C>           <C>         
REVENUES:
  Net sales                            $ 12,857,555  $  9,854,150  $ 31,785,290  $ 30,155,420
  Other                                      97,851        82,233       237,751       208,760
                                       ------------  ------------  ------------  ------------
                                         12,955,406     9,936,383    32,023,041    30,364,180
                                       ------------  ------------  ------------  ------------
COSTS AND EXPENSES:
  Cost of sales                           8,787,068     6,634,725    21,259,432    20,449,078
  Selling, administrative and general     2,681,189     2,528,065     7,397,940     7,391,959
  Interest - net                            194,053       288,324       626,938       806,948
  Depreciation                              156,194       157,075       459,740       467,968
                                       ------------  ------------  ------------  ------------
                                         11,818,504     9,608,189    29,744,050    29,115,953
                                       ------------  ------------  ------------  ------------

INCOME BEFORE TAXES ON INCOME             1,136,902       328,194     2,278,991     1,248,227

TAXES ON INCOME                             425,000       130,000       861,000       479,000
                                       ------------  ------------  ------------  ------------

NET INCOME                             $    711,902  $    198,194  $  1,417,991  $    769,227
                                       ============  ============  ============  ============

  Preferred dividends                  $     65,836  $     65,836  $    197,509  $    197,509
                                       ============  ============  ============  ============
  Net income attributable
    to common stock                    $    646,066  $    132,358  $  1,220,482  $    571,718
                                       ============  ============  ============  ============
  Average number of common shares
    and common share equivalents
      - primary                           3,237,809     3,354,918     3,204,686     3,355,585
                                          =========     =========     =========     =========

      - fully diluted                     3,317,177     3,354,918     3,317,916     3,355,585
                                          =========     =========     =========     =========
  Earnings per share of common stock
      - primary                              $  .20        $  .04        $  .38        $  .18
                                             ======        ======        ======        ======

      - fully diluted                        $  .19        $  .04        $  .37        $  .18
                                             ======        ======        ======        ======
</TABLE>


                                        3

<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                               NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                              ------------------
                                              1996          1995
                                          ------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                              $  1,417,991  $    769,227
                                          ------------  ------------

  Adjustments to reconcile net income
    to net cash provided by (used in)
    operating activities:
      Depreciation and amortization            595,660       678,895
      Deferred income taxes                         --       439,000
      Provision for losses on
        accounts receivable                     76,067        57,687
  Decrease (increase):
    Accounts receivable                        969,588     1,957,191
    Inventories                              1,821,866    (1,773,676)
    Note receivable from officer                25,000        20,000
    Prepaid expenses and other assets           91,275       204,322
    Other assets                                 3,200           400
  Increase (decrease):
    Accounts payable                          (959,893)    1,248,040
    Accruals and other                           6,343      (647,913)
                                          ------------  ------------
      Total adjustments                      2,629,106     2,183,946
                                          ------------  ------------
        Net cash provided by
          operating activities               4,047,097     2,953,173
                                          ------------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures                        (194,996)     (216,654)
  Payment for acquisition of assets
    of Tradesman Tool Co. and Intech
    Industries, Inc.                                --      (752,959)
                                          ------------  ------------
        Net cash used in
          investing activities                (194,996)     (969,613)
                                          ------------  ------------


                                        4

<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

                                               NINE MONTHS ENDED
                                                 SEPTEMBER 30,
                                              ------------------
                                              1996          1995
                                          ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from short-term borrowings       10,525,943    11,115,646
  Repayments of short-term borrowings      (13,954,463)  (12,713,023)
  Proceeds from mortgage refinancing         2,062,500            --
  Principal payments on long-term debt      (2,402,484)     (257,259)
  Dividends paid on preferred stock           (197,509)     (197,509)
                                          ------------  ------------
        Net cash used in
          financing activities              (3,966,013)   (2,052,145)
                                          ------------  ------------


NET INCREASE (DECREASE) IN CASH               (113,912)      (68,585)

CASH AT BEGINNING OF PERIOD                  1,224,603     1,071,903
                                          ------------  ------------

CASH AT END OF PERIOD                     $  1,110,691  $  1,003,318
                                          ============  ============

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

      Income taxes                        $    817,199  $    314,025
                                          ============  ============

      Interest                            $    847,231  $    888,221
                                          ============  ============


                                        5

<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

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

     The consolidated financial statements for the nine months ended September
30, 1996 and 1995 are presented as unaudited but, in the opinion of the Company,
they include all adjustments necessary for a fair statement of the results of
operations for those periods. All such adjustments are of a normal recurring
nature. The consolidated balance sheet information for December 31, 1995 was
derived from audited financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995. These interim
financial statements should be read in conjunction with that report.

     Results for interim periods are not necessarily indicative of results to be
expected for a full year, since some segments of the Company's operations have
sales patterns that are seasonal or irregular.

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

BASIS OF FINANCIAL STATEMENT PRESENTATION

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


                                        6

<PAGE>

                     P & F INDUSTRIES, INC. AND SUBSIDIARIES

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

NOTE 1 - SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

EARNINGS PER SHARE

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

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

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

NOTE 2 - INVENTORIES

     Major classes of inventory were as follows:

                                    SEPTEMBER 30,   DECEMBER 31,
                                        1996            1995
                                    ------------    ------------
       Finished goods               $  9,363,601    $ 11,004,092
       Work in process                   945,133         423,114
       Raw materials and supplies      2,772,961       3,476,355
                                    ------------    ------------
                                    $ 13,081,695    $ 14,903,561
                                    ============    ============


                                        7

<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, 1996 COMPARED WITH THIRD QUARTER ENDED
SEPTEMBER 30, 1995

     Consolidated revenues increased 30.4%, from $9,936,383 to $12,955,406.
Revenues from pneumatic tools and related equipment increased 39.9%, from
$6,688,236 to $9,354,712, reflecting increased sales to existing customers. The
pattern of sales is sometimes irregular and it is not expected that this
increased level of revenues will be sustained in the fourth quarter. Selling
prices of pneumatic tools and related equipment were virtually unchanged.

     Revenues from heating equipment increased 2.1%, from $2,271,102 to
$2,319,108. Revenues from hardware increased 31.3%, from $975,549 to $1,281,132.
Selling prices of both heating equipment and hardware were virtually unchanged.

     Consolidated gross profit, as a percentage of revenues, decreased from
33.2% to 32.2%. Gross profit from pneumatic tools and related equipment
decreased from 34.7% to 33.1%, due to a less favorable product mix. This was
partially offset by a more favorable exchange rate of the dollar compared to the
Japanese yen, which reduced the cost of imported product. Gross profit from
heating equipment increased from 30.9% to 32.3%, due to a more favorable product
mix. Gross profit from hardware decreased from 25.0% to 22.5%, due to a less
favorable product mix.

     Consolidated selling, administrative and general expenses increased 6.1%,
from $2,528,065 to $2,681,189, but decreased as a percentage of revenues, from
25.4% to 20.7%, due to the increased revenues.


                                        8

<PAGE>

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

NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1995

     Consolidated revenues increased 5.5%, from $30,364,180 to $32,023,041.
Revenues from pneumatic tools and related equipment increased 4.2%, from
$22,351,066 to $23,280,056, reflecting increased sales to existing customers.
Partially offsetting these increased sales was the loss of a large customer in
late 1995, which resulted in a decrease in revenues of $1,656,979 in 1996.
Selling prices of pneumatic tools and related equipment increased approximately
1.7%.

     Revenues from heating equipment increased 5.2%, from $5,229,854 to
$5,502,364. Selling prices of heating equipment increased approximately 2.5%.
These higher selling prices and the increased sales of radiant heating products
accounted for the increase in revenues from heating equipment. Revenues from
hardware increased 16.2%, from $2,788,377 to $3,239,220, due to increased sales
to existing customers. Selling prices of hardware were unchanged.

     Consolidated gross profit, as a percentage of revenues, increased from
32.7% to 33.6%. Gross profit from pneumatic tools and related equipment
increased from 32.8% to 34.6%, due to the increased selling prices and a more
favorable exchange rate of the dollar compared to the Japanese yen, which
reduced the cost of imported product. These improvements in gross profit were
partially offset by a less favorable product mix. Gross profit from heating
equipment decreased from 33.0% to 32.8%. Higher material costs offset the
approximately 2.5% increase in selling prices. Gross profit from hardware
decreased from 27.1% to 24.6%, due to a less favorable product mix.

     Consolidated selling, general and administrative expenses were virtually
unchanged, but decreased as a percentage of revenues, from 24.3% to 23.1%, due
to the increased revenues.


                                        9

<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):

                        SEPTEMBER 30,    DECEMBER 31,   SEPTEMBER 30,
                            1996            1995            1995
                        -------------    ------------   -------------
  Working Capital         $  17,202       $  15,838       $  15,254
  Current Ratio           3.95 to 1       2.54 to 1       2.96 to 1
  Shareholders' Equity    $  18,912       $  17,692       $  17,035

     During the nine months ended September 30, 1996, gross accounts receivable
decreased by approximately $990,000. A decrease in gross accounts receivable of
approximately $2,490,000, resulting from the collection of the unusually high
level of accounts receivable at December 31, 1995, including approximately
$2,337,000 in one-time sales to a customer in December 1995, was partially
offset by an increase of approximately $1,500,000 resulting from increased sales
in the third quarter of 1996. Also during the nine months ended September 30,
1996, inventories decreased by approximately $1,825,000. The funds provided by
these decreases in gross accounts receivable and inventories were used in the
reduction of short-term borrowings, which decreased by approximately $3,429,000.
This decrease in short-term borrowings contributed to the increase in the
Company's current ratio.

     The Company's credit facilities provide a line of credit totalling
$18,000,000. Of this amount, $14,000,000 is available for direct loans, letters
of credit and bankers' acceptances. At September 30, 1996, there were loans
totalling approximately $805,000 outstanding against this line of credit. Also
at September 30, 1996, there were commitments for letters of credit totalling
approximately $1,926,000. The total line of credit also includes $4,000,000
earmarked for acquisitions subject to the lending bank's approval. The Company's
credit facilities also provide 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, 1996
was approximately $1,245,000.

     The Company's credit facilities agreement is subject to annual review by
the lending bank. Under this agreement, the Company is required to adhere to
certain financial covenants. At September 30, 1996, and for the nine months then
ended, the Company satisfied all of these covenants.


                                       10

<PAGE>

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

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

     In April 1996, the mortgage on the Company's Farmingdale, New York facility
was refinanced. The original principal balance on the new mortgage was
$2,062,500. Payments of principal and interest are due monthly through May 2006,
at which time the entire remaining unpaid principal balance will be due. The
interest rate on the new mortgage is variable, as was the interest rate on the
previous mortgage. At September 30, 1996, the interest rate on the new mortgage
was approximately 7.9%, which was lower than the interest rate on the previous
mortgage.

     The Company is currently conducting an extensive acquisition search. The
funds for an acquisition will be provided by the Company's credit facilities
described above. The total funds available, including cash derived from
operations, will be approximately $9,000,000.

     Capital spending for the nine months ended September 30, 1996 was
approximately $195,000. The total amount was provided from working capital.
Capital expenditures for the rest of 1996 are expected to total approximately
$114,000, some of which may be financed. Included in the expected total for 1996
are capital expenditures relating to new products, expansion of existing product
lines and replacement of old equipment.

     On February 15, 1995, Florida Pneumatic purchased the assets and business
of Tradesman Tool Co., Inc. ("Tradesman"), a domestic manufacturer of heavy-duty
pipe wrenches. On March 31, 1995, Florida Pneumatic purchased the assets and
business of Intech Industries, Inc. ("Intech"), a domestic manufacturer of air
filters used in compressors. Cash totalling approximately $753,000 was paid for
these purchases. The operations of both Tradesman and Intech were merged into
the operations of Florida Pneumatic.

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


                                         11

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         None.

ITEM 2.  CHANGES IN SECURITIES

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

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

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits

              None.

         (b)  Reports on Form 8-K

              No reports on Form 8-K were filed during the quarter ended
              September 30, 1996.


                                   SIGNATURES

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


                                       P & F INDUSTRIES, INC.
                                       (Registrant)


                                       By /S/ Leon D. Feldman
                                          -------------------------------
                                                 Leon D. Feldman
                                            Executive Vice President
Dated: October 28, 1996                   (Principal Financial Officer)


                                       12