U. S. Securities and Exchange Commission
                             Washington, D.C. 20549

                                    Form 10-K

          [X] Annual Report under Section 13 or 15(d) of the Securities
        Exchange Act of 1934 for the fiscal year ended December 31, 1999

             [ ] Transition Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from        to
                                                              -------    -------

                          Commission file number 0-439

                       American Locker Group Incorporated

--------------------------------------------------------------------------------
             (Exact Name of registrant as specified in its charter)

                  Delaware                       16-0338330
--------------------------------------------------------------------------------
        (State or other jurisdiction of        (I.R.S. Employer
        incorporation or organization)         Identification No.)

     608 Allen Street, Jamestown, New York        14701-3966
--------------------------------------------------------------------------------
   (Address of principal executive offices)       (Zip Code)

(Registrant's telephone number,  including area code) 1-716-664-9600  Securities
registered under Section 12(b) of the Exchange Act:

Title of each class                    Name of each exchange on which registered

    None
                                       -----------------------------------------

Securities registered under Section 12(g) of the Exchange Act:

                     Common Stock Par Value $1.00 Per Share

--------------------------------------------------------------------------------
                                (Title of class)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Exchange Act during the past
12 months (or for such shorter  period that the  registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes X No   .
                 --

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation  S-K is not contained in this form, and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

     At March 15, 2000, the Registrant had outstanding  2,282,718  shares of its
Common Stock. The aggregate  market value of the Registrant's  voting stock held
by  non-affiliates  at this


                                       1
<PAGE>



date was  approximately  $9,493,106,  based on the  closing  price  per share of
Common  Stock on this date of $7.25 as reported on the NASDAQ.  Shares of Common
Stock known by the  Registrant  to be  beneficially  owned by  directors  of the
Registrant and officers of the Registrant and other persons reporting beneficial
ownership of 5% or more of Common Stock  pursuant to the reporting  requirements
of Section 16 of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act"), are not included in the computation. The Registrant, however, has made no
determination  that such  persons  are  "affiliates"  within the meaning of Rule
12b-2 under the Exchange Act.



                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the  definitive  Proxy  Statement for the Annual  Stockholders'
Meeting to be held May 16, 2000, are incorporated by reference into Part III.






                                       2
<PAGE>



PART I

ITEM 1. DESCRIPTION OF BUSINESS

American Locker Group  Incorporated  (the "Company") is engaged primarily in the
sale  and  rental  of  lockers.  This  includes  coin,  key  and  electronically
controlled  checking lockers and related locks and plastic  centralized mail and
parcel distribution lockers. The key controlled checking lockers are sold to the
recreational  and  transportation  industries,  bookstores,  military posts, law
enforcement  agencies,  libraries and for export. The electronically  controlled
lockers are sold for use as secure storage in the business  environment  and the
electronically   controlled,   coin  operated   lockers  are  sold  for  use  in
transportation  industry and other uses. The plastic centralized mail and parcel
distribution  lockers are sold to the United States Postal Service  ("USPS") for
use in  centralized  mail and parcel  delivery  in new  housing  and  industrial
developments,  as well  as  replacement  of  older  style  lockers  in  existing
locations.

The Company is an engineering,  assembling and marketing  enterprise  which also
manufactures its own mechanical locks for use in its products.

The Company was incorporated on December 15, 1958, as a subsidiary of its former
publicly-owned  parent.  In April 1964, the Company's shares were distributed to
the   stockholders  of  its  former  parent,   and  it  became  a  publicly-held
corporation. From 1965 to 1989, the Company acquired and disposed of a number of
businesses including the disposition of its original voting machine business.

One of the Company's  subsidiaries is a party to a Manufacturing  Agreement with
Signore,  Inc.,  formerly a wholly owned  subsidiary of the Company,  to furnish
fabricating,  assembly  and  shipping  services.  The  Agreement,  which  became
effective  January 1, 1990,  has been  extended  and now is for a term  expiring
April 30, 2000.  The  Agreement  provides that the cost to the Company for these
services be equal to Signore's standard cost divided by 80%.

Business Segment Information

The Company,  including its foreign subsidiary, is engaged in one business: sale
and rental of coin and key or  electronically  controlled  checking  lockers and
locks and the sale of plastic centralized mail and parcel distribution lockers.

The  Company has  developed  a range of  products  to support the United  States
Postal  Service  (USPS)  Centralized  Delivery  program.  Outdoor Parcel Lockers
(OPLs) are used by the USPS for  delivery  of parcels.  Since  March  1989,  the
Company has shipped over 155,000 OPLs to the USPS.  Cluster Box Units (CBUs) are
used by the USPS for delivery of letters and parcels and for the  collection  of
outgoing mail. In November 1994, the Company  negotiated a contract to sell Type
Three CBUs in quantity to the United  States Postal  Service.  Type One and Type
Two CBUs are approved and included in the current contract. As of March 5, 2000,
Cluster Box Units with aggregate  invoice  prices in excess of $90,000,000  have
been shipped to the United States Postal  Service  pursuant to the 1994 contract
and subsequent contracts.  Components of these units are made by outside vendors
and the units are assembled by The Company's wholly-owned



                                       3
<PAGE>


subsidiary,  American Locker Security Systems,  Inc. (ALSSI). The units are sold
directly by ALSSI to the United States Postal Service.

The  checking  lockers are  fabricated  by Signore  Inc. and are marketed in the
United  States by ALSSI.  Lockers for the Canadian  market are  manufactured  by
Signore Inc. with locks  supplied from ALSSI.  Lockers are marketed in Canada by
the  Canadian  Locker  Company,   Ltd.  ("Canadian   Locker"),   a  wholly-owned
subsidiary.  These  sales are made  outright,  through  salaried  employees  and
distributors,   to  customers  who  need  storage  facilities  requiring  a  key
controlled lock system in the recreational,  governmental and institutional type
industries. Canadian Locker also owns and operates coin operated lockers in air,
bus and rail terminals and retail  locations in Canada.  ALSSI  manufactures the
lock system,  which is coin or key controlled  and operated,  for use in lockers
sold by ALSSI and Canadian Locker.  ALSSI also provides  nationwide and Canadian
maintenance and repair services with respect to coin operated lockers previously
sold by ALSSI. The Company has developed a coin operated baggage cart system and
is operating the system at one major Canadian  airport,  one major United States
airport and has sold several cart systems for use in US airports.

Additional   information  with  respect  to  business  segment  data,  including
significant  customers,  is  disclosed  in Note 12 of the  financial  statements
included in Item 8 of this Form 10-K.

Competition

While the Company is not aware of any  reliable  trade  statistics,  it believes
that its subsidiaries,  ALSSI and Canadian Locker are the dominant  suppliers of
key controlled  checking lockers in the United States and Canada.  However,  the
Company faces more active competition from several other manufacturers of locker
products sold to the United States Postal Service and other purchasers.

Raw Materials

Present  sources of supplies and raw materials  incorporated  into the Company's
metal and plastic lockers and locks are generally  considered to be adequate and
are  currently  available  in  the  market  place.  The  Company's  supplier  of
polycarbonate  plastic which is used in the parcel lockers and CBUs entered this
market in March 1992 and is presently  supplying  this raw material  which meets
strict specifications  imposed by the United States Postal Service. In the event
the present supplier  declines to continue to supply this material,  the Company
would be required to seek an alternate source of supply.

The Company's  metal lockers are  manufactured  by Signore Inc.  pursuant to the
Manufacturing Agreement, except for the locks which are manufactured by ALSSI.

Patents

The Company owns a number of patents, none of which it considers material to the
conduct of its business.



                                       4
<PAGE>


Employees

The  Company  and  its  subsidiaries  actively  employed  137  individuals  on a
full-time  basis as of December 31, 1999,  in its  businesses  of whom 47 are in
Canada.   The  Company   considers  its  relations  with  its  employees  to  be
satisfactory. None of the Company's employees are represented by a union.

Dependence on Material Customer

During 1999,  1998,  and 1997, one customer,  the United States Postal  Service,
accounted for 74.3%,  76.9%, and 69.2% of net sales,  respectively.  The loss of
this  customer,  or a  reduction  in its  orders,  could  adversely  affect  the
Company's operations and financial results.

Research and Development

The Company engages in research and development  activities  relating to new and
improved  products  as an  incident of its normal  manufacturing  operations  in
conjunction with the continuing  operations.  It expended $26,403,  $17,081, and
$48,735,  in 1999,  1998,  and  1997,  respectively,  for such  activity  in its
continuing businesses, which does not include new product development costs.

Compliance with Environmental Laws and Regulations

Based on the  information  available to it, the Company  believes  that it is in
compliance  with  present  federal,  state  and  local  environmental  laws  and
regulations.

In December  1998,  the Company  was named as a  defendant  in a lawsuit  titled
"ROBERTA RAIPORT, ET AL. V. GOWANDA ELECTRONICS CORP. AND AMERICAN LOCKER GROUP,
INC." pending in the State of New York Supreme Court, County of Cattaragus.  The
suit  involves  property  located  in  Gowanda,  New York  which was sold by the
Company to Gowanda  Electronics Corp. prior to 1980. The plaintiffs,  current or
former  property  owners in  Gowanda,  New York,  assert  that  defendants  each
operated machine shops at the site during their respective  periods of ownership
and that as a  result  of such  operation  soil  and  groundwater  contamination
occurred  which  has  adversely   affected  the  plaintiffs  and  the  value  of
plaintiffs'  properties.  The plaintiffs assert a number of causes of action and
seek  compensatory  damages  of  $5,000,000  related to  alleged  diminution  of
property  values,  $3,000,000 for economic losses and "disruption to plaintiffs'
lives," $10,000,000 for "nuisance,  inconveniences and disruption to plaintiffs'
lives,"  $25,000,000 in punitive damages,  and $15,000,000 to establish a "trust
account"  for  monitoring  indoor air quality and other  remedies."  The Company
believes  that its  potential  liability  with respect to this site,  if any, is
diminimus.  Therefore, based on the information currently available,  management
does not believe the outcome of this suit will have a substantial  impact on the
Company's  operations  or  financial  condition.  Defense  of this case has been
assumed by the Company's insurance carrier,  subject to a customary  reservation
of rights.


                                       5
<PAGE>



General

Backlog of orders is not  significant  in the  Company's  business as  shipments
usually are made shortly after orders are received.  The Company's  sales do not
have marked seasonal variations.

Executive Officers of the Company

                                                                      YEAR FIRST
                                                                        ASSUMED
      NAME             AGE       OFFICE HELD WITH COMPANY              POSITION

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

Edward F. Ruttenberg   53        Chairman of the Board and                  1998
                                 Chief Executive Officer

Roy J. Glosser         39        President, Chief Operating                 1996
                                 Officer and Treasurer

Mr. E.F.  Ruttenberg has been employed in his positions since  September,  1998.
Prior to that  date he served  as Vice  Chairman  of the  Company.  Mr.  Glosser
assumed his position as President  and Chief  Operating  Officer in May 1996 and
became  Treasurer in September  1998.  Prior to that date, Mr. Glosser served as
Vice  President - Operations  of the Company since 1995 and has been employed by
the Company since 1992 in operations and product development.

There  are no  arrangements  or  understandings  pursuant  to  which  any of the
officers were elected as officers, except for an employment contract between the
Company and Roy J. Glosser and an  employment  contract  between the Company and
Edward F.  Ruttenberg.  Except as provided  in such  employment  contracts,  all
officers  hold  office for one year and until their  successors  are elected and
qualified;  provided,  however,  that any officer is subject to removal  with or
without cause, at any time, by a vote of the majority of the Board of Directors.

There have been no events under any bankruptcy act, no criminal  proceedings and
no  judgments  or  injunctions  material  to the  evaluation  of the ability and
integrity of any executive officer during the past five years.



                                       6
<PAGE>



ITEM 2. DESCRIPTION OF PROPERTY

The location and  approximate  floor space of the  Company's  principal  plants,
warehouses and office facilities are as follows ( * indicates leased facility):

<TABLE>
<CAPTION>

<S>                        <C>                                 <C>                    <C>
                                                               APPROXIMATE
                                                                 FLOOR SPACE
LOCATION                   SUBSIDIARY                             IN SQ. FT.          PRODUCTS
--------                   ---------                             -----------          --------

Jamestown, NY              Principal Executive Office            37,000*              Office space/
                           American Locker Company, Inc.                              Assembly and
                           and American Locker Security                               Warehouse
                             Systems, Inc.

Jamestown, NY              American Locker Security              30,200*              Assembly and
                             Systems, Inc.                                            Warehouse

Pittsburgh, PA             Executive Office                         500*              Office space

Ellicottville, NY          American Locker Security              12,800               Lock manufacturing
                             Systems, Inc. - Lock Shop                                service and repair

Toronto,                   Canadian Locker Company, Ltd.          4,000*              Coin-operated lockers
  Ontario                                                                             and locks

Toronto,
  Ontario                  Canadian Locker Company, Ltd.          3,000*              Warehouse

                                                                 -------
                                                   TOTAL         87,500
                                                                 =======

</TABLE>

The Company  believes that its facilities which are of varying ages and types of
construction and the machinery and equipment utilized in such plants are in good
condition and are adequate for its presently  contemplated needs. All facilities
are leased except for the Ellicottville facility. The leases on these properties
terminate at various times from 2000 through 2001.



                                       7
<PAGE>



ITEM 3. LEGAL PROCEEDINGS

In September 1998 and subsequent  months, the Company was named as an additional
defendant  in 67 cases  pending  in state  court in  Massachusetts  and one case
pending in Federal  court.  The  plaintiffs  in each such case  assert  that the
Company  manufactured and furnished to various shipyards  components  containing
asbestos  during the period from 1948 to 1972 and that  injuries  resulted  from
exposure to such products.  The assets of this division were sold by the Company
in 1973. Based upon investigations conducted by the Company to date, the Company
has discovered no evidence that the former division manufactured or supplied any
products  containing  asbestos.  Therefore,  barring the  discovery  of contrary
evidence,  the Company  does not  anticipate  that these  actions  will have any
substantial impact on the Company's operations or financial  condition.  Defense
of these cases has been assumed by the Company's insurance carrier, subject to a
customary reservation of rights.

See "Item 1.  Business - Compliance with Environmental Laws and Regulations."

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

There were no matters submitted to a vote of the security  holders,  by means of
solicitation of proxies or otherwise, during the fourth quarter of 1999.



                                       8
<PAGE>



PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's  shares of Common Stock (Par Value $1.00 per share) are not listed
on any exchange,  but are traded on the  over-the-counter  market and quotations
are reported by the National Association of Security Dealers, Inc. through their
Automated  Quotation System (NASDAQ) on the National Market System.  The trading
symbol is ALGI.  The  following  table  shows the range of the low and high sale
prices for each of the calendar quarters indicated.


<TABLE>
<CAPTION>

                                PER COMMON SHARE
                                  MARKET PRICE

<S>                                 <C>                       <C>                       <C>

                                                                                        DIVIDEND
   1998                             HIGH                      LOW                       DECLARED
   ----                             ----                      ----                      --------

First Quarter                       $12.75                    $ 6.188                    $0.00
Second Quarter                       39.00                     11.50                      0.00
Third Quarter                        37.75                     10.50                      0.00
Fourth Quarter                       30.75                     18.00                      0.00
                                                                                         -----
Total                                                                                    $0.00
                                                                                         =====

     1999                           HIGH                      LOW                       DECLARED
     ----                           ----                      ----                      --------

First Quarter                       $26.00                    $13.25                     $0.00
Second Quarter                       14.25                      6.375                     0.00
Third Quarter                         9.62                      5.25                      0.00
Fourth Quarter                        8.75                      5.125                     0.00
                                                                                         -----
Total                                                                                    $0.00
                                                                                         =====
</TABLE>



As of March 14, 2000, the Company had 1,350 security holders of record.

By agreement with its principal lender,  the Company's ability to declare future
dividends is restricted. See Note 4 to the financial statements included in Item
8 of this Form 10-K.



                                       9
<PAGE>



ITEM 6. ELECTED FINANCIAL DATA

The following table sets forth selected historical financial data of the Company
as of, and for the years ended December 31, 1999,  1998,  1997,  1996, and 1995.
The  financial  data set  forth  below  should be read in  conjunction  with the
information under  "Management's  Discussion and Analysis of Financial Condition
and  Results  of  Operations"  included  in Item 7 of  this  Form  10-K  and the
Financial  Statements of the Company and the notes thereto included in Item 8 of
this Form 10-K.

<TABLE>
<CAPTION>

<S>                                                     <C>           <C>           <C>           <C>           <C>

                                                           1999          1998          1997          1996          1995
                                                           ----          ----          ----          ----          ----
Sales                                                   $34,950,104   $45,011,327   $29,295,533   $22,517,589   $23,677,940

Income before income taxes                                4,395,208     7,103,364     3,454,508     1,819,184     2,747,478

Income taxes                                              1,771,407     2,788,822     1,342,033       674,352       956,909

Net income                                                2,623,801     4,314,542     2,112,475     1,144,832     1,790,569

Earnings per share - basic (2)                                 1.11          1.78          0.72          0.35          0.53

Earnings per share - diluted (2)                               1.09          1.70          0.70          0.35          0.52

Weighted average common shares
    outstanding - basic (2)                               2,363,338     2,420,078     2,909,788     3,232,408     3,381,424

Weighted average common shares
    outstanding - diluted (2)                             2,402,108     2,542,684     3,000,128     3,307,876     3,442,328

Dividends declared                                             0.00          0.00          0.00          0.00          0.00

Interest expense                                            153,861       231,875       181,678       208,827       166,289

Depreciation expense                                        636,047       646,379       600,632       622,392       404,006

Expenditures for property, plant and equipment            1,915,139       536,819       520,358       234,621     1,232,604

YEAR-END POSITION
Total assets                                             15,179,069    13,469,516    11,263,725    10,020,078    10,106,185

Long-term debt, including current portion                 2,034,324       733,333     3,094,000     1,300,000       900,000

Stockholders' equity                                     10,107,210     9,264,056     4,919,145     5,358,147     4,464,066

Stockholders' equity per share of common stock (1)             4.44          3.82          2.04          1.67          1.36
(2)

Common shares outstanding at year-end (2)                 2,277,118     2,422,772     2,405,780     3,200,096     3,274,500

Number of employees                                             137           135           120           134           137


(1) Based on shares outstanding at year-end.

(2)  All  years  presented  have  been  restated  to  reflect  the  impact  of a
four-for-one stock distribution during 1998.

</TABLE>


                                       10
<PAGE>



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS
        OF OPERATIONS

Results of Operations - 1999 Compared to 1998

Consolidated  sales in 1999 totaled  $34,950,000,  a 22% decrease  from sales of
$45,011,000  in  1998.  Income  before  income  taxes  in 1999  declined  38% to
$4,395,000  compared  to  $7,103,000  in 1998.  Sales of the  Company's  plastic
Cluster Box Units (CBUs) to the United States Postal  Service  (USPS)  decreased
23% to $25,969,000 in 1999 from $33,611,000 in 1998. Revenues from the Company's
other  locker  products,  primarily  the sale and  rental of metal  coin and key
electronically  controlled  lockers,  decreased  23% to  $8,442,000 in 1999 from
$11,038,000 in 1998. During 1999, the Company expanded its luggage cart business
for airport terminals by commencing service at the Detroit Metropolitan Airport.
The luggage cart business  generated  revenue of approximately  $539,000 in 1999
compared to $362,000 in 1998.

The  decline in sales of plastic  lockers  resulted  from a decline in the total
number  of CBUs sold to the USPS in 1999 as  compared  to 1998 and also to lower
selling prices per unit. As a result of the USPS accumulation of CBU inventories
in 1998 and the USPS operating  losses  associated  with deferring a postal rate
increase,  the USPS purchased fewer CBUs in 1999. The Company  believes that the
long-term  outlook for CBU volume  remains  favorable in light of the  continued
USPS  commitment to the CBU program and its resulting  operating  cost reduction
benefits. Despite the decline in CBU orders received by the Company in 1999, the
Company has maintained its dominant share of the CBU market.

The Company's  present contract with the USPS covers all three types of CBUs and
the Outdoor Parcel Locker (OPL).  The contract was originally  awarded March 27,
1996 and the USPS has exercised  three one-year  options which have extended the
contract to  mid-April  2000.  The USPS has  advised  the  Company  that it will
exercise  the fourth one year option which will extend the contract to mid-April
2001. Prices and quantities under the anticipated contract renewal have not been
finalized and are subject to negotiation. Effective September 15, 1999, the USPS
announced  it  had  discontinued  the  purchase  of  Neighborhood  Delivery  and
Collection Box Units (NDCBUs). The CBU is a modernization of the NDCBU which the
USPS  had  purchased  for  over 20  years  and is an  integral  part of the USPS
delivery cost reduction program identified as Centralized Delivery. Therefore, a
positive  impact  to  long-term  CBU  volume  is  anticipated  as  a  result  of
replacement of older NDCBUs. The Company believes its CBU product line continues
to represent the best value when all factors including price,  quality of design
and construction, long-term durability and service are considered.

Sales of the Company's other locker products decreased due to a general decrease
in  demand  across  all  markets  served  by the  Company  as well as  increased
competition.

The Company is  addressing  the decline in volume in its other  locker  products
through  several  initiatives.  The Company has  introduced  a new plastic  coin
operated  locker  designed for high  corrosion  environments.  In addition,  the
Company is reviewing and redesigning its international  distribution methods, in
an effort to increase  international  sales activity.  The Company also plans to
increase its efforts to further penetrate the airport luggage cart market during
2000.



                                       11
<PAGE>



Consolidated  cost of sales as a percentage of sales  increased to 71.8% in 1999
compared to 70.0% in 1998.  The  increase was the result of the lower unit sales
of the Company's products, primarily the CBUs, as well as CBU price concessions.

Selling, administrative and general expenses of $5,652,000 during 1999 decreased
14% from $6,608,000 in 1998. The decrease is primarily the result of two unusual
1998 expenses.  In 1998, Roy J. Glosser,  President and Chief Operating  Officer
was granted and exercised stock  appreciation  rights which resulted in $327,000
of  additional  compensation  expense.  The Company  also  expensed  $400,000 to
provide for the entire  obligation under the supplemental  executive  retirement
program  (SERP)  as a result  of the  death of the  former  chairman  and  chief
executive  officer of the Company.  The  remaining  decrease in 1999 compared to
1998 is due to lower  selling  expenses  as a result  of the  decrease  in sales
volume.

Interest  expense  decreased  to  $154,000 in 1999 from  $232,000  in 1998.  The
decrease  in  1999 is due to  lower  average  outstanding  debt  during  1999 as
compared to 1998.  The increase in long-term  debt at December 31, 1999 compared
to December 31, 1998 is due to the Company entering into a term loan during June
1999 which increased long-term debt by $1,500,000.

Results of Operations - 1998 Compared to 1997

In 1998,  consolidated  sales of  $45,011,000  increased  54% over 1997 sales of
$29,296,000.  Income  before income taxes  increased  106% to $7,103,000 in 1998
compared to $3,455,000 in 1997.  Sales of the Company's  plastic  lockers to the
United States Postal  Service  (USPS)  increased 76% to $33,611,000 in 1998 from
$19,112,000  in 1997.  Revenues  from the  Company's  other  non-plastic  locker
products increased 12% to $11,401,000 in 1998 from $10,183,000 in 1997.

During 1998 the  Company  delivered  approximately  34,000 CBUs (all three types
combined) and  approximately  8,000 OPLs.  The USPS  instituted and maintained a
procurement  policy as of October  1997 that limited the purchase of NDCBUs (the
steel  predecessor  to plastic or aluminum CBUs) in relation to the new CBUs. As
stated above, in September 1999, the USPS entirely  discontinued the purchase of
NDCBUs.  Shipments of CBUs by the Company increased  dramatically in 1998 due to
execution  of the policy  limiting  the  purchase  of NDCBUs  and the  Company's
ability to maintain its dominant market share position.

Consolidated  cost of sales as a percentage of sales was  consistent at 70.0% in
1998 and 1997.  Gross margin gains due to higher volume  efficiencies on Cluster
Box Units (CBUs) were offset by price concessions to the USPS.

Selling, administrative and general expenses of $6,608,000 during 1998 increased
29%  from the  $5,120,000  in  1997.  The two  unusual  items  described  above,
accounted  for  approximately  $727,000 of the  $1,488,000  increase in selling,
administrative  and general expenses.  The remainder of the increase in selling,
administrative  and general expense includes  increased costs for  compensation,
selling  expenses,   freight,  and  legal  expenses.  The  previously  disclosed
settlement  with the remaining  plaintiff of Derr et al v. American Locker Group
Inc., 94-CV-05155(M),  for a monetary sum of $400,000 was fully reserved and had
no effect on the Company's results of operations in 1998.




                                       12
<PAGE>


Interest income increased to $103,000 in 1998 compared to $51,000 in 1997 due to
improvements in daily cash management  procedures and higher balances  available
for overnight investment.

Interest  expense  increased  to  $232,000 in 1998 from  $182,000  in 1997.  The
increase in interest expense relates to higher average outstanding debt in 1998.
However,  in October 1998 the Company retired  $1,813,000 of debt related to the
repurchase of a large block of Company stock in 1997.

Liquidity and Sources of Capital

The Company's  liquidity is reflected in the ratio of current  assets to current
liabilities or current ratio and its working capital. The current ratio was 4.68
to 1 and 3.94 to 1 at December 31, 1999 and 1998, respectively. Working capital,
or the excess of current  assets over current  liabilities  was  $9,973,000  and
$9,117,000 at December 31, 1999 and 1998, respectively.  The increase in working
capital resulted  primarily from operations.  In 1999, the Company's  operations
generated $4,994,000 of cash.

In June 1999 the  Company  entered  into a new term  loan,  which  provides  for
borrowing up to $3,000,000.  The Company may draw under this facility until June
30, 2000. The Company  borrowed  $1,500,000 under this facility during 1999, and
used the proceeds,  together with cash from operations,  to  repurchase  221,650
shares of common stock of the Company for $2,367,000.

The Company's  policy is to maintain  modern  equipment  and adequate  capacity.
During 1999,  1998 and 1997,  the Company  expended  $1,915,000,  $537,000,  and
$520,000, respectively, for capital additions. Capital expenditures in all three
years were financed principally from operations.

The Company expects that cash generated from operations in 2000 will be adequate
to fund the needs for working capital,  capital  expenditures and debt payments.
However,   if   necessary,   the  Company  has  a  $3,000,000   revolving   bank
line-of-credit available to assist in satisfying future operating cash needs.

Impact of Inflation and Changing Prices

Although  inflation  has been low in recent  years,  it is still a factor in the
economy and the Company  continues to seek ways to mitigate  its impact.  To the
extent  permitted by competition,  the Company passes  increased costs on to its
customers by increasing sales prices over time.  Specifically,  the Company does
have the ability to modify its contract with the USPS regarding  sales prices in
the event of a  significant  price  increase for  materials  subject  however to
competitive  situations.  In  respect  to its  other  products,  both  steel and
plastic,  the Company  expects  that any raw  material  price  changes  would be
reflected in adjusted sales prices.

The  Company  intends  to  seek  ways to  control  the  administrative  overhead
necessary to  successfully  run the business.  By controlling  these costs,  the
Company can continue to



                                       13
<PAGE>

competitively price its products with other top quality locker manufacturers and
distributors.

The Company has used the LIFO method of  accounting  for its  inventories  since
1974.  This method  matches  current  costs with current  revenues and during an
inflationary  period,  reduces  reported  income but improves cash flow due to a
reduction of taxes based on income.

Interest Rate Risks

The  interest  rate on the  Company's  long-term  debt is based  upon the  prime
interest rate;  accordingly the Company is exposed to interest rate risk.  Based
upon the  Company's  outstanding  long-term  debt at  December  31,  1999,  a 1%
increase in interest  rates would result in an increase to interest  expenses of
approximately $20,000.

Effect of New Accounting Pronouncement

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133").  SFAS 133 establishes  accounting and reporting  standards for derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts, and for hedging activities.  It requires that an entity recognize all
derivatives  as either  assets or  liabilities  in the  statement  of  financial
position and measure those  instruments  at fair value.  The intended use of the
derivative and its  designation as either (1) a hedge of the exposure to changes
in the fair value of a recognized  asset or liability  or a firm  commitment  (a
fair value  hedge),  (2) a hedge of the  exposure  to  variable  cash flows of a
forecasted  transaction  (a cash  flow  hedge),  or (3) a hedge  of the  foreign
currency exposure of a net investment in a foreign operation (a foreign currency
hedge),  will  determine when the gains or losses on the  derivatives  are to be
reported  in earnings  and when they are to be reported as a component  of other
comprehensive  income. This new standard must be adopted for year 2001 financial
reporting. At this time, management does not believe that the pronouncement will
impact the Company's financial statements.

Year 2000

The Company did not experience any disruptions,  internally or externally,  from
Year 2000 issues. The total expenditures for Year 2000 issues,  mainly hardware,
software and implementation consulting fees, were approximately $250,000.

Safe Harbor Statement under the Private Securities Litigation Reform Act Of 1995

Forward-looking   statements  in  this  report,  including  without  limitation,
statements   relating   to  the   Company's   plans,   strategies,   objectives,
expectations,  intentions  and adequacy of  resources,  are made pursuant to the
Safe Harbor Provisions of the Private Securities  Litigation Reform Act of 1995.
Investors are cautioned that such  forward-looking  statements involve risks and
uncertainties  including  without  limitation the  following:  (i) the Company's
plans,  strategies,  objectives,  expectations,  and  intentions  are subject to
change at any time at the  discretion of the Company,  (ii) the Company's  plans
and results of operations  will be affected by the  Company's  ability to manage
its growth and inventory, and (iii) other risks and uncertainties indicated from
time  to  time  in the  Company's  filings  with  the  Securities  and  Exchange
Commission.



                                       14
<PAGE>



ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

The  information  required is reported  under  "Impact of Inflation and Changing
Prices" and "Interest Rate Risk" in Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations.



                                       15
<PAGE>



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Auditors

Board of Directors and Stockholders
American Locker Group Incorporated and Subsidiaries

We have audited the accompanying  consolidated balance sheets of American Locker
Group  Incorporated  and  Subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the three years in the period ended  December  31, 1999.  Our audits
also  included  the  financial  statement  schedule  listed in the Index at Item
14(a).  These financial  statements and schedule are the  responsibility  of the
management of the Company.  Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of American Locker
Group  Incorporated  and  Subsidiaries  at December  31, 1999 and 1998,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity with accounting
principles  generally accepted in the United States.  Also, in our opinion,  the
related financial statement  schedule,  when considered in relation to the basic
financial  statements taken as a whole, presents fairly in all material respects
the information set forth therein.

/s/ Ernst & Young LLP

Buffalo, New York
February 15, 2000



                                       16
<PAGE>


<TABLE>
<CAPTION>





               American Locker Group Incorporated and Subsidiaries

                           Consolidated Balance Sheets

<S>                                                                        <C>                   <C>

                                                                                        December 31

                                                                                 1999                 1998
                                                                        --------------------------------------------

Assets
Current assets:

   Cash and cash equivalents                                               $     3,285,983       $     1,188,007
   Accounts and notes receivable, less allowance for
     doubtful accounts of $222,000 in 1999 and $216,000 in1998
                                                                                 3,814,185             4,062,802
   Inventories                                                                   4,973,269             6,312,131
   Prepaid expenses                                                                125,581               150,808
   Deferred income taxes                                                           481,163               501,477
                                                                        --------------------------------------------
Total current assets                                                            12,680,181            12,215,225

Property, plant and equipment:
   Land                                                                                500                   500
   Buildings                                                                       390,953               388,795
   Machinery and equipment                                                      10,309,324             8,408,983
                                                                        --------------------------------------------
                                                                                10,700,777             8,798,278
   Less allowance for depreciation                                              (8,290,534)           (7,681,632)
                                                                        --------------------------------------------
                                                                                 2,410,243             1,116,646

Deferred income taxes                                                               88,645               137,645








                                                                        --------------------------------------------
Total assets                                                               $    15,179,069       $    13,469,516
                                                                        ============================================

</TABLE>



                                       17
<PAGE>

<TABLE>
<CAPTION>


<S>                                                                        <C>                   <C>

                                                                                       December 31

                                                                                1999                  1998
                                                                        --------------------------------------------

Liabilities and stockholders' equity Current liabilities:

   Accounts payable                                                        $     1,410,948       $     1,574,809
   Commissions, salaries, wages and taxes thereon                                  311,172               639,822
   Other accrued expenses                                                          610,947               600,582
   Federal, state and foreign income taxes payable                                  49,432                82,941
   Current portion of long-term debt                                               325,000               200,000
                                                                        --------------------------------------------
Total current liabilities                                                        2,707,499             3,098,154


Long-term obligations:
   Long-term debt                                                                1,708,324               533,333
   Pension and other benefits                                                      656,036               573,973
                                                                        --------------------------------------------
                                                                                 2,364,360             1,107,306



Stockholders' equity:
   Common stock, $1 par value:
     Authorized shares-- 4,000,000
     Issued  shares -- 2,498,768 -1999 and 2,422,772 - 1998
     Outstanding shares -- 2,277,118 - 1999,
        2,422,772 - 1998                                                         2,498,768             2,422,772
   Other capital                                                                   538,455                74,867
   Retained earnings                                                             9,600,788             6,976,987
   Treasury stock at cost (221,650 shares)                                      (2,367,966)                    -
   Accumulated other comprehensive income                                         (162,835)             (210,570)
                                                                        --------------------------------------------
Total stockholders' equity                                                      10,107,210             9,264,056
                                                                        --------------------------------------------


Total liabilities and stockholders' equity                                 $    15,179,069       $    13,469,516
                                                                        ============================================

</TABLE>


                                       18
<PAGE>



<TABLE>
<CAPTION>


               American Locker Group Incorporated and Subsidiaries

                        Consolidated Statements of Income
<S>                                                       <C>                <C>               <C>

                                                                          Year ended December 31
                                                                1999               1998               1997
                                                         -----------------------------------------------------------

Net sales                                                 $     34,950,104   $     45,011,327  $      29,295,533
Cost of products sold                                           25,099,003         31,493,280         20,533,950
                                                         -----------------------------------------------------------
                                                                 9,851,101         13,518,047          8,761,583
Selling, administrative and general expenses                     5,652,262          6,608,376          5,119,905
                                                         -----------------------------------------------------------
                                                                 4,198,839          6,909,671          3,641,678

Interest income                                                     96,057            102,826             51,270
Other income (expense) - net                                       254,173            322,742            (56,762)
Interest expense                                                  (153,861)          (231,875)          (181,678)
                                                         -----------------------------------------------------------
Income before income taxes                                       4,395,208          7,103,364          3,454,508
Income taxes                                                     1,771,407          2,788,822          1,342,033
                                                         -----------------------------------------------------------
Net income                                                $      2,623,801   $      4,314,542      $   2,112,475
                                                         ===========================================================




Earnings per share of common stock:

   Basic                                                             $1.11             $ 1.78             $  .72
                                                         ===========================================================
   Diluted                                                           $1.09             $ 1.70             $  .70
                                                         ===========================================================

Dividends per share of common stock:                                 $0.00             $ 0.00              $0.00
                                                         ===========================================================


See accompanying notes.



</TABLE>


                                       19
<PAGE>




<TABLE>
<CAPTION>


               American Locker Group Incorporated and Subsidiaries

                 Consolidated Statements of Stockholders' Equity

<S>                                 <C>              <C>             <C>               <C>           <C>               <C>
                                                                                                       Accumulated
                                                                                                          Other            Total
                                        Common           Other          Retained        Treasury      Comprehensive    Stockholders'
                                        Stock           Capital         Earnings         Stock           Income            Equity
                                   -------------------------------------------------------------------------------------------------

Balance at December 31, 1996        $     3,200,096  $    1,083,330  $     1,189,308   $         -   $     (114,587)   $   5,358,147
  Comprehensive income:
     Net income                                   -               -        2,112,475             -                 -       2,112,475
     Other comprehensive income:
       Foreign currency translation               -               -                -             -          (34,493)        (34,493)
  Total comprehensive income                                                                                               2,077,982
  Common stock purchased and
     retired (794,316 shares)             (794,316)     (1,083,330)        (639,338)             -                 -     (2,516,984)
                                   -------------------------------------------------------------------------------------------------
Balance at December 31, 1997
                                          2,405,780               -        2,662,445             -         (149,080)       4,919,145

  Comprehensive income:
     Net income                                   -               -        4,314,542             -                 -       4,314,542
     Other comprehensive income:
       Foreign currency translation               -               -                -             -          (61,490)        (61,490)
  Total comprehensive income                                                                                               4,253,052
  Common stock issued (17,000 shares)        17,000           8,063                -             -                 -          25,063
  Tax benefit of exercised stock
  options                                         -          66,894                -             -                 -          66,894
  Common stock purchased and
     retired (8 shares)                         (8)            (90)                -             -                 -            (98)
                                   -------------------------------------------------------------------------------------------------
  Balance at December 31, 1998            2,422,772          74,867        6,976,987             -         (210,570)       9,264,056

  Comprehensive income:
     Net income                                   -               -        2,623,801             -                 -       2,623,801
     Other comprehensive income:
       Foreign currency translation               -               -                -             -            47,735          47,735
  Total comprehensive income                                                                                               2,671,536
  Common stock issued (76,000 shares)        76,000        (21,375)                -             -                 -          54,625
  Tax benefit of exercised stock
  options                                         -         485,000                -             -                 -         485,000
  Common stock purchased for
     treasury (221,650 shares)                    -               -                -   (2,367,966)                 -     (2,367,966)
  Common stock purchased and retired
     (4 shares)                                 (4)            (37)                -             -                 -            (41)
                                   -------------------------------------------------------------------------------------------------
  Balance at December 31, 1999      $     2,498,768  $      538,455  $     9,600,788  $(2,367,966)   $     (162,835)   $  10,107,210
                                   =================================================================================================

See accompanying notes.

</TABLE>


                                       20
<PAGE>



<TABLE>
<CAPTION>

                      Consolidated Statements of Cash Flows

<S>                                                              <C>               <C>              <C>
                                                                             Year ended December 31
                                                                    1999              1998             1997
                                                              ------------------------------------------------------

Operating activities

Net income                                                       $   2,623,801     $   4,314,542    $   2,112,475
Adjustments to reconcile net income to net cash provided
   by operating activities:
     Depreciation                                                      630,047           646,379          600,632
     Loss on disposition of property, plant and equipment                    -             1,265              490
     Deferred income taxes (credits)                                    69,314           (57,139)          (7,467)
     Pension and other benefits                                         84,863           311,613           58,040
     Change in assets and liabilities:
       Accounts and notes receivable                                   263,872           438,478       (1,164,644)
       Inventories                                                   1,338,862        (2,675,794)        (296,860)
       Prepaid expenses                                                 25,805           (62,058)           7,603
       Accounts payable and accrued expenses                          (493,590)          687,462          154,526
       Income taxes                                                    451,491           182,350           (3,529)
                                                              ------------------------------------------------------
Net cash provided by operating activities                            4,994,465         3,787,098        1,461,266

Investing activities

Purchase of property, plant and equipment                           (1,915,139)         (536,819)        (520,358)
Proceeds from sale of property, plant and equipment                          -             9,426            3,702
                                                              ------------------------------------------------------
Net cash used in investing activities                               (1,915,139)         (527,393)        (516,656)

Financing activities

Net repayment under line of credit                                           -          (850,000)        (275,000)
Long-term debt borrowings                                            1,500,000                 -        3,315,000
Long-term debt payments                                               (200,000)       (2,360,667)      (1,521,000)
Common stock issued                                                     54,625            25,063                -
Common stock purchased for treasury                                 (2,367,966)                -                -
Common stock purchased and retired                                         (41)              (98)      (2,516,984)
                                                              ------------------------------------------------------
Net cash used in financing activities                               (1,013,382)       (3,185,702)        (997,984)
Effect of exchange rate changes on cash                                 32,032           (40,041)         (21,803)
                                                              ------------------------------------------------------
Net increase (decrease) in cash                                      2,097,976            33,962          (75,177)
Cash and cash equivalents at beginning of year                       1,188,007         1,154,045        1,229,222
                                                              ------------------------------------------------------
Cash and cash equivalents at end of year                         $   3,285,983     $   1,188,007    $   1,154,045
                                                              ======================================================

Supplemental cash flow information: Cash paid during the year for:

     Interest                                                    $     143,032     $     240,600   $      172,953
                                                              ======================================================

     Income taxes                                                $   1,250,602     $   2,665,587    $   1,345,562
                                                              ======================================================


See accompanying notes.

</TABLE>


                                       21
<PAGE>



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

American Locker Group Incorporated and Subsidiaries
December 31, 1999

1. BASIS OF PRESENTATION

CONSOLIDATION AND BUSINESS DESCRIPTION

The consolidated  financial  statements  include the accounts of American Locker
Group  Incorporated  and  its  subsidiaries  (the  Company),  all of  which  are
wholly-owned.  Intercompany  accounts and  transactions  have been eliminated in
consolidation. The Company is primarily engaged in one business: coin and key or
electronically   controlled  metal  and  plastic  centralized  mail  and  parcel
distribution  lockers and locks. The Company sells to customers throughout North
America as well as internationally.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

Cash includes currency on hand and demand deposits with financial  institutions.
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

INVENTORIES

Inventories  are  valued  principally  at the  lower  of  cost or  market,  cost
determined by the last-in, first-out method.

PROPERTIES AND DEPRECIATION

Property,  plant and equipment are stated at cost.  Depreciation  is computed by
the straight-line and declining-balance methods for financial reporting purposes
and by accelerated  methods for income tax purposes.  Estimated useful lives for
financial  reporting  purposes are 30 years for  buildings and 3 to 12 years for
machinery and equipment.

REVENUE RECOGNITION

Revenue is recognized at the point of passage of title,  which is at the time of
shipment to the customer. Less than three percent of the Company's revenues were
derived from sales to distributors.  No distributor  stocks a material inventory
of the Company's products and no distributor has the right to return.



                                       22
<PAGE>





2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

The Company  accounts for income taxes using the liability  method in accordance
with Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109").

EARNINGS PER SHARE

The Company reports earnings per share in accordance with Statement of Financial
Accounting  Standards No. 128, "Earnings per Share" ("SFAS 128"). Under SFAS 128
basic earnings per share excludes any dilutive effects of stock options, whereas
diluted  earnings per share assumes  exercise of stock  options,  when dilutive,
resulting in an increase in outstanding shares.

FOREIGN CURRENCY

The assets and liabilities of the Company's foreign subsidiary are translated to
U.S. dollars at current exchange rates.  Income statement amounts are translated
using the average  exchange  rate for the year.  The gains and losses  resulting
from the changes in exchange rates from year to year have been reported in other
comprehensive  income.  The effect on the  statements  of income of  transaction
gains and losses is insignificant for all years presented.

ADVERTISING EXPENSE

The cost of advertising is expensed as incurred.  The Company incurred $332,000,
$310,000  and  $289,000  in  advertising  costs  during  1999,  1998  and  1997,
respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The  carrying  amounts  of  cash  and  cash  equivalents,   accounts  and  notes
receivable, accounts payable, and accrued liabilities approximate fair value due
to the  short-term  maturities  of these  assets and  liabilities.  The carrying
amounts of the Company's  long-term debt also  approximate  fair value since the
interest rates are adjusted based upon changes in the prime interest rate.

STOCK-BASED COMPENSATION

The  Company   accounts  for  stock  options   granted  under  its   stock-based
compensation  plan in  accordance  with the  intrinsic  value  based  method  of
accounting  as  prescribed  by  Accounting  Principles  Board  Opinion  No.  25,
"Accounting  for  Stock  Issued to  Employees"  ("APB  25"),  as  allowed  under
Financial   Accounting   Standards   No.  123,   "Accounting   for   Stock-Based
Compensation" ("SFAS 123"). Accordingly,  no compensation cost for stock options
is  recognized  because the number of options  granted is fixed and the exercise
price of the stock options  equals the market price of the  underlying  stock on
the date of the grant.



                                       23
<PAGE>


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts  reported in the financial  statements  and the  accompanying
notes. Actual results could differ from those estimates.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In June 1998, the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
SFAS  133  establishes   accounting  and  reporting   standards  for  derivative
instruments,   including  certain  derivative   instruments  embedded  in  other
contracts,  and for hedging activities.  It requires that an entity recognize as
either assets or liabilities in the statement of financial  position and measure
those  instruments  at fair value.  The intended use of the  derivative  and its
designation as either (1) a hedge of the exposure to change in the fair value of
a recognized assets or liability or a firm commitment (a fair value hedge),  (2)
a hedge of the exposure to variable  cash flows of a forecasted  transaction  (a
cash flow  hedge),  or (3) a hedge of the  foreign  currency  exposure  of a net
investment in a foreign  operation (a foreign  currency  hedge),  will determine
when the gains or losses on the  derivatives  are to be reported in earnings and
when they are to be reported as a component of other comprehensive income.

This new standard must be adopted for year 2001 financial reporting.  Management
has  determined  that it does not have current  transactions  that would require
reporting under SFAS 133.

3. INVENTORIES

Inventories consist of the following:
                                                      December 31
                                              1999                 1998
                                         ---------------------------------------

Finished products                         $   1,363,889       $  1,763,210
Work-in-process                               1,856,704          2,023,542
Raw materials                                 2,373,527          2,985,888
                                         ---------------------------------------
                                              5,594,120          6,772,640
Less allowance to reduce to LIFO basis         (620,851)          (460,509)
                                         ---------------------------------------
Net inventories                           $   4,973,269       $  6,312,131
                                         =======================================



                                       24
<PAGE>





4. DEBT

Long-term debt consists of the following:

                                                      December 31
                                               1999                 1998
                                         ---------------------------------------
Note payable to bank,  unsecured,
  payable through August 31, 2002 at
  $16,667 per month plus interest at
  prime plus 0.15%                        $     533,324      $      733,333

Note payable  to bank,  unsecured,
  with  interest  at prime,  payable
  in equal monthly  principal  amounts
  from August 2000 through July 2005,
  provides for borrowing up to
  $3,000,000
                                              1,500,000                   -
                                         ---------------------------------------
Total long-term debt                          2,033,324             733,333
Less current portion                            325,000             200,000
                                         ---------------------------------------
Long-term portion                         $   1,708,324      $      533,333
                                         =======================================

The credit  agreement  underlying the notes payable to bank requires  compliance
with certain  covenants and has  restrictions  on the payment of dividends.  The
Company was in compliance with the terms of the agreement in connection with the
notes payable at December 31, 1999.

Based upon the outstanding balances at December 31, 1999, the required principal
payments on long-term  obligations  in each of the years through final  maturity
are as follows:

                      2000                            $        325,000
                      2001                                     500,000
                      2002                                     433,324
                      2003                                     300,000
                      2004                                     300,000
                      2005                                     175,000

The Company has a $3,000,000 unsecured line of credit agreement with a bank with
interest at the prime rate (8.5% at December 31, 1999.) There were no borrowings
outstanding under the line of credit at December 31, 1999.

5. OPERATING LEASES

The  Company   leases   several   operating   facilities   and  vehicles   under
non-cancelable  operating  leases.  Future minimum lease payments consist of the
following at December 31, 1999:

                      2000                            $        302,000
                      2001                                     253,000
                                                      ----------------
                                                      $        555,000
                                                      ================


                                       25
<PAGE>



5. OPERATING LEASES        (CONTINUED)

Rent expense amounted to approximately $322,000,  $252,000 and $360,000 in 1999,
1998 and 1997, respectively.

6. INCOME TAXES

For  financial  reporting  purposes,  income  before  income taxes  includes the
following components:

                                 1999                1998               1997
                         -------------------------------------------------------

United States            $    4,286,818      $     7,055,116        $ 3,475,062
Foreign income (loss)           108,390               48,248            (20,554)
                         -------------------------------------------------------
                         $    4,395,208      $     7,103,364        $ 3,454,508
                         =======================================================


Significant components of the provision for income taxes are as follows:

                                 1999                1998               1997
                         -------------------------------------------------------
Current:
   Federal               $   1,386,855       $     2,431,419        $ 1,162,327
   State                       266,557               390,548            199,227
   Foreign                      48,681                23,954            (12,054)
                         -------------------------------------------------------
Total current                1,702,093             2,845,921          1,349,500

Deferred:
   Federal                      58,917               (48,569)            (6,347)
   State                        10,397                (8,570)            (1,120)
                         -------------------------------------------------------
                                69,314               (57,139)            (7,467)
                         -------------------------------------------------------
                         $   1,771,407       $     2,788,782        $  1,342,033
                         =======================================================

The differences between the federal statutory rate and the effective tax rate as
a percentage of income before taxes are as follows:

                                     1999             1998              1997
                                 -----------------------------------------------

Statutory income tax rate            34%              34%               34%
State and foreign income taxes        5                4                 3
Other permanent differences           1                1                 2
                                 -----------------------------------------------
                                     40%              39%               39%
                                 ===============================================

Differences  between accounting rules and tax laws cause differences between the
bases of certain assets and liabilities for financial reporting purposes and tax
purposes.  The  tax  effects  of  these  differences,  to the  extent  they  are
temporary,  are  recorded as deferred  tax assets and  liabilities.  Significant
components of the Company's  deferred tax assets and  liabilities at December 31
are as follows:



                                       26
<PAGE>
                                                    1999              1998
                                            ------------------------------------
Deferred tax liabilities:
   Property, plant and equipment              $    220,796      $    139,422
   Prepaid expenses and other                       85,005            91,036
                                            ------------------------------------
Total deferred tax liabilities                     305,801           230,458

Deferred tax assets:
   Postretirement benefits                          58,301            61,936
   Pension costs                                   289,663           253,654
   Allowance for doubtful accounts                  46,283            84,360
   Accrued expenses                                110,476           105,102
   Other employee benefits                          28,608            34,256
   Inventory costs                                 342,278           330,272
                                            ------------------------------------
Total deferred tax assets                          875,609           869,580
                                            ------------------------------------
Net deferred tax assets                       $    569,808      $    639,122
                                            ====================================

Current deferred tax asset                    $    481,163      $    501,477
Long-term deferred tax asset                        88,645           137,645
                                            ------------------------------------
                                              $    569,808      $    639,122
                                            ====================================

The Company does not provide  deferred  taxes for amounts that could result from
the remittance of  undistributed  earnings of the Company's  foreign  subsidiary
since it is  generally  the  Company's  intention  to  reinvest  these  earnings
indefinitely.  Undistributed earnings that could be subject to additional income
taxes if remitted was  approximately  $1,004,000  at December 31, 1999.  If such
dividends were to be remitted,  foreign tax credits  available under present law
would reduce the amount of U.S. taxes payable.

7. PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company and its  subsidiaries  have a defined  benefit pension plan covering
substantially  all employees.  Benefits for the salaried  employees are based on
specified  percentages of the employees  annual  compensation.  The benefits for
hourly  employees  are based on stated  amounts  for each year of  service.  The
plan's assets are invested in fixed  interest rate group annuity  contracts with
an insurance company.

In addition to the Company's  defined benefit plan, the Company  provides a life
insurance  benefit to  substantially  all employees  upon  retirement.  Retirees
eligible to participate in this plan have their life insurance  premiums paid on
their behalf by the Company.  The  insurance  premiums  related to this plan are
paid annually.

The  following  table sets forth the changes in benefit  obligation,  changes in
plan assets,  the funded status and the accrued  benefit cost  recognized in the
consolidated balance sheets at December 31, 1999 and 1998.



                                       27
<PAGE>



7. PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

<TABLE>
<CAPTION>

<S>                                         <C>                 <C>              <C>               <C>

                                                     PENSION BENEFITS                      OTHER BENEFITS
                                                    1999             1998                  1999            1998
                                            -----------------------------------------------------------------------
CHANGE IN BENEFIT OBLIGATION
   Benefit obligation at beginning
     of year                                $      2,123,786    $   2,089,481    $        72,284   $        133,302
   Service cost                                      177,064          142,888              1,415              1,332
   Interest cost                                     147,538          134,961              5,623              4,594
   Actuarial (gain) loss                            (151,581)          92,463             (5,141)           (61,644)
   Benefits paid                                     (99,091)        (336,007)            (5,089)            (5,300)
                                            -----------------------------------------------------------------------
Benefit Obligation At End of Year                  2,197,716        2,123,786             69,092             72,284

CHANGE IN PLAN ASSETS
   Fair value of plan assets at
     beginning of year                             1,825,209        1,911,849                  -                  -
   Actual return on plan assets                      126,914          126,330                  -                  -
   Employer contribution                                   -          123,037              5,089              5,300
   Benefits paid                                     (99,091)        (336,007)            (5,089)            (5,300)
                                            -----------------------------------------------------------------------
Fair value of plan assets at end of year           1,853,052        1,825,209                  -                  -

Funded status                                       (344,664)        (298,577)           (69,092)           (72,284)

Unrecognized net transition asset                   (316,974)        (423,015)                 -                  -
Unrecognized net actuarial loss (gain)               288,202          457,665            (65,661)           (64,350)
Unrecognized prior service cost                        2,268            2,693                  -                  -
                                            -----------------------------------------------------------------------
Accrued benefit cost                        $       (371,168)   $    (261,234)   $      (134,753)  $       (136,634)
                                            =======================================================================


                                                      PENSION BENEFITS                    OTHER BENEFITS
                                                     1999            1998                1999              1998
                                            -----------------------------------------------------------------------
COMPONENTS OF NET PERIODIC
   BENEFIT COST

Service cost                                $        177,064    $     142,888    $         1,415   $          1,332
Interest cost                                        147,538          134,961              5,623              4,594
Expected return on plan assets                      (124,677)        (121,896)                 -                  -
Amortization of unrecognized net
   transition asset                                 (106,041)        (106,041)                 -                  -
Net actuarial loss (gain)                             15,645           11,413             (3,830)            (3,830)
Amortization of prior service cost                       425              425                  -                  -
                                            -----------------------------------------------------------------------
Net periodic benefit cost                   $        109,954    $      61,750    $         3,208   $          2,096
                                            =======================================================================
</TABLE>



                                       28
<PAGE>



7. PENSION AND OTHER POSTRETIREMENT BENEFITS (CONTINUED)

                                            PENSION BENEFITS     OTHER BENEFITS
                                            1999      1998       1999    1998
                                          --------------------------------------
Weighted average assumptions
   as of December 31
     Discount rate                         7.50%      6.75%      7.50%     6.75%
     Expected return on plan assets        7.00%      7.00%          -         -
     Rate of compensation increase         5.50%      4.75%          -         -


Effective  January 1, 1998,  the Company  implemented a  Supplemental  Executive
Retirement  Plan.  During 1998, the Company recorded an expense of approximately
$400,000 in accordance with the plan provisions, as a result of the death of the
Company's chief executive officer. The Plan provides for monthly payments to the
former  executive's  widow for the remainder of her life.  Based upon  actuarial
calculations,  the projected liability under the plan is approximately  $352,000
at December 31, 1999 and is recorded as other  accrued  expenses and pension and
other benefits in the consolidated balance sheets.

During 1999 the Company  established a defined  contribution 401(k) plan for the
benefit of its full-time employees. Employees may contribute on a pre-tax basis,
a portion of their  salary up to IRS limits to the Plan.  The Company  matches a
portion  of  the  employees'  contribution.  The  Company  recorded  expense  of
approximately  $12,000 in connection  with its  contribution  to the plan during
1999.

8. CAPITAL STOCK

The Certificate of  Incorporation,  as amended,  authorizes  4,000,000 shares of
common stock, 1,000,000 shares of convertible preferred stock and 200,000 shares
of Series A Junior Participating Preferred Stock.

9. STOCK OPTIONS

In 1999,  the Company  adopted the  American  Locker  Group  Incorporated  Stock
Incentive Plan, permitting the Company to provide incentive  compensation of the
types  commonly  known as  incentive  stock  options,  stock  options  and stock
appreciation  rights. The price of option shares or appreciation  rights granted
under the plan shall not be less than the fair market  value of common  stock on
the date of grant, and the term of the stock option or appreciation  right shall
not exceed ten years from date of grant.  Upon exercise of a stock  appreciation
right granted in connection



                                       29
<PAGE>



9. STOCK OPTIONS (CONTINUED)

with a stock option, the optionee shall surrender the option and receive payment
from the Company of an amount equal to the  difference  between the option price
and the fair market value of the shares applicable to the options surrendered on
the  date of  surrender.  Such  payment  may be in  shares,  cash or both at the
discretion of the Company's Stock Option-Executive Compensation Committee. Prior
to 1999, the Company issued stock options and stock appreciation  rights under a
1988 plan.  The 1988 plan  expired in 1999,  as such no further  options  can be
granted  under the 1988 plan.  As of December 31, 1999,  options with respect to
57,000 shares remained outstanding under the 1988 plan.

During 1998, the Company recorded  approximately  $327,000 of expense related to
stock appreciation rights that were granted and exercised. At December 31, 1999,
1998 and 1997, there were no stock appreciation rights outstanding.

Pro forma information regarding net income and earnings per share is required by
Statement of Financial  Accounting Standards No. 123 "Accounting for Stock-Based
Compensation"  ("SFAS  123"),  and has been  determined  as if the  Company  had
accounted  for its employee  stock  options  under the fair value method of SFAS
123. The fair value for these options was estimated at the date of grant using a
Black-Scholes   option   pricing  model  with  the  following   weighted-average
assumptions for 1999:  risk-free interest rates of 7.0%; dividend yields of 0.0;
volatility factors of the expected market price of the Company's common stock of
 .70;  and a  weighted-average  expected  life  of the  option  of 5  years.  The
pro-forma effect on earnings for the year ended December 31, 1999 is as follows:
net income $2,455,803;  basic earnings per share $1.04, and diluted earnings per
share $1.02.  The pro-forma  effect on earnings for the year ended  December 31,
1997 is as follows:  net income  $2,069,635;  basic  earnings per share $.71 and
diluted  earnings  per share $.69.  The 1998 net income and  earnings  per share
would not have been  impacted,  since no stock options were granted in 1998, and
the options granted in 1997, vested immediately.

The per share fair value of the options granted in 1999 using these  assumptions
was $4.35.



                                       30
<PAGE>



9. STOCK OPTIONS (CONTINUED)

A summary of the  activity  in the  Company's  Employee  Option Plan and related
information for the years ended December 31 follows:

<TABLE>
<CAPTION>

<S>                               <C>           <C>           <C>           <C>            <C>           <C>

                                  1999                        1998                         1997
                                  ----                        ----                         ----
                                                Weighted                    Weighted                     Weighted
                                                Average                     Average                      Average
                                                Exercise                    Exercise                     Exercise Price
                                 Options        Price         Options       Price          Options
                                 ----------------------------------------------------------------------------------------

Outstanding -
  Beginning of year                  133,000    $  1.45       162,000       $  1.55          102,000     $    .81

Exercised and

  Surrendered                        (76,000)       .72       (29,000)         2.03                             -
                                                                                                   -
Granted                               57,000       6.98             -             -           60,000         2.81
                                 =========================================================================================
Outstanding -
  end of year                        114,000    $  5.11       133,000       $  1.45          162,000     $   1.55
                                 =========================================================================================

Exercisable -
   end of year                       114,000                  133,000                        162,000
                                     =======                  =======                        =======

</TABLE>

The  exercise  prices for options  outstanding  as of December  31, 1999 were as
follows:  $1.063 - 13,000 shares,  $2.813 - 44,000 shares, $6.50 - 57,000 shares
and $8.875 - 10,000 shares. The weighted-average  remaining  contractual life of
those options is 7.6 years.

At December 31, 1999,  83,000 options remain available for future issuance under
the 1999 plan.

10. SHAREHOLDER RIGHTS PLAN

In November  1999,  the  Company  adopted a  Shareholder  Rights  Agreement  and
declared  a dividend  distribution  of one Right for each  outstanding  share of
common stock. Under certain conditions,  each right may be exercised to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock at
a price of $40  ("Purchase  Price"),  subject to  adjustment.  The Right will be
exercisable  only if a person  or group (an  "Acquiring  Person")  has  acquired
beneficial  ownership of 20% or more of the  outstanding  common  stock,  or ten
business days (subject to prior extension of the period by the Board)  following
the  commencement  of a  tender  or  exchange  offer  for  20% or  more  of such
outstanding  common stock. The Rights Plan includes certain  exceptions from the
definitions of Acquiring  Person and  beneficial  ownership to take into account
the existing  ownership of common shares by members of one family. If any person



                                       31
<PAGE>


10. SHAREHOLDER RIGHTS PLAN (CONTINUED)

becomes an Acquiring Person, each Right will entitle its holder to receive, upon
exercise  of  the  Right,  such  number  of  common  shares  determined  by  (A)
multiplying the current  Purchase Price by the number of one  one-hundredth of a
preferred  share for which a right is now  exercisable and dividing that product
by (B) 50% of the current market price of the common shares.

In  addition,  if  the  Company  is  acquired  in a  merger  or  other  business
combination  transaction,  each Right will  entitle its holder to receive,  upon
exercise,  that number of the acquiring  Company's common shares having a market
value of twice the exercise price of the Right.  The Company will be entitled to
redeem  the  Rights at $.01 per Right at any time  prior to the  earlier  of the
expiration of the Rights in November  2009 or the time that a person  becomes an
Acquiring  Person.  The Rights do not have voting or dividend rights,  and until
they become exercisable, have no dilutive effect on the Company's earnings.

11. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share for the years ended December 31:

<TABLE>
<CAPTION>

<S>                                                        <C>                  <C>                  <C>
                                                                     1999           1998               1997
                                                            --------------------------------------------------------
Numerator:
   Net income                                               $      2,623,801    $4,314,542           $2,112,475
Denominator:
   Denominator  for basic  earnings per share - weighted
     average shares outstanding                                                  2,420,078            2,909,788
                                                                   2,363,338

   Effect of dilutive securities:
     Employee stock options                                           38,770       122,606               90,340
                                                            ---------------------------------------------------------

   Denominator   for  diluted   earnings   per  share  -
     weighted  average  shares out- standing and assumed
     conversions                                                   2,402,108     2,542,684            3,000,128
                                                            =========================================================
Basic earnings per share                                    $           1.11    $     1.78           $      .72
                                                            =========================================================
Diluted earnings per share                                  $           1.09    $     1.70           $      .70
                                                            =========================================================

</TABLE>

12. GEOGRAPHIC AND CUSTOMER CONCENTRATION DATA

The  Company  primarily  operates  in one line of  business,  sale and rental of
lockers.  This includes coin and key electronically  controlled checking lockers
and locks and sale of plastic centralized mail and parcel distribution lockers.



                                       32
<PAGE>



12. GEOGRAPHIC AND CUSTOMER CONCENTRATION DATA (CONTINUED)

The Company  sells to customers in the United  States,  Canada and other foreign
locations. Net sales to external customers are as follows:

                                1999                 1998               1997
                          ------------------------------------------------------

United States customers   $     32,596,075    $   41,735,153    $     26,170,616
Foreign customers                2,354,029         3,276,174           3,124,917
                          ------------------------------------------------------
                          $     34,950,104    $   45,011,327    $     29,295,533
                          ======================================================

Sales to the U.S. Postal Service represented 74.3%, 76.9% and 69.2% of net sales
in 1999, 1998, and 1997, respectively.

At December  31, 1999 and 1998,  the  Company  had  secured  receivables  from a
customer  under  a  time  payment  arrangement  totaling  $63,000  and  $76,000,
respectively.  At December 31, 1999, the Company had unsecured trade receivables
from  governmental  agencies of $2,416,000 and from  customers  considered to be
distributors of $192,000 (including a United Kingdom distributor of $133,000).

Other  concentrations  of credit risk with respect to trade accounts  receivable
are  limited  due to the  large  number of  entities  comprising  the  Company's
customer base and their dispersion across many different industries. The Company
generally does not require collateral for trade accounts receivable.

13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following is a tabulation of the unaudited  quarterly  results of operations
for the years ended December 31, 1999 and 1998:

                                          1999
                  --------------------------------------------------------------
                                   Three Months Ended

                   March 31       June 30        September 30      December 31
                  --------------------------------------------------------------

Net sales          $  7,857,688  $  10,029,123    $  7,761,363     $   9,301,930
                  ==============================================================

Gross profit          2,323,713      2,890,548       2,327,709         2,309,131
                  ==============================================================

Net income              591,807        911,546         502,159           618,289
                  ==============================================================

Earnings per
share - Basic               .24            .37             .22               .27
                  ==============================================================
Earnings per
share - Diluted             .23            .37             .22               .27
                  ==============================================================

                  ==============================================================




                                       33
<PAGE>




13. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (CONTINUED)

                                          1999
                  --------------------------------------------------------------
                                   Three Months Ended

                   March 31       June 30        September 30      December 31
                  --------------------------------------------------------------

Net sales          $  9,789,657   $  11,604,876  $  15,422,935     $   8,193,859
                  ==============================================================


Gross profit       $  3,046,600   $   3,646,128  $   4,105,444     $   2,719,875
                  ==============================================================

Net income         $    929,896   $   1,246,408  $   1,233,507     $     904,731
                  ==============================================================

Earnings per
share - Basic      $        .38   $         .52  $         .51     $         .37
                  ==============================================================
Earnings per
share - Diluted    $        .37   $         .49  $         .48     $         .36
                  ==============================================================

The  Company's  accounting  practice for interim  periods  provides for possible
accounting  adjustments  at year end.  In 1999,  such  adjustments  resulted  in
decreasing fourth quarter pretax income by $216,000 for inventory costs. In 1998
such adjustments resulted in increasing fourth quarter pretax income by $240,000
for inventory  costs,  decreasing  fourth  quarter pretax income by $150,000 for
accounts  receivable  allowances and increasing  fourth quarter pretax income by
$74,000 for liability reserves.  In 1997 such adjustments resulted in increasing
fourth  quarter  pretax income by $177,000 for inventory  costs,  increasing net
income by $58,000 for income tax expense,  and decreasing  fourth quarter pretax
income by $58,000 for pension costs.

14. RELATED PARTIES

One  Director  of the  Company is a  stockholder  and  director  of  Rollform of
Jamestown  Inc.,  a  rollforming  company.  One  of the  Company's  subsidiaries
purchased $218,000,  $283,000, and $114,000 of fabricated parts from Rollform of
Jamestown,  Inc.  in 1999,  1998,  and 1997,  respectively,  at prices  that the
Company believes are at arms length.

15. CONTINGENCIES

In September 1998 and subsequent  months, the Company was named as an additional
defendant in over 67 cases pending in state court in Massachusetts  and one case
pending in Federal  court.  The  plaintiffs  in each such case  assert  that the
Company  manufactured and furnished to various shipyards  components  containing
asbestos  during the period from 1948 to 1972 and that  injuries  resulted  from
exposure to such products.  The assets of this division were sold by the Company
in 1973. Based upon investigations conducted by the Company to date, the Company
has discovered no evidence that the former division manufactured or supplied any
products  containing  asbestos.  Therefore,  barring the  discovery  of contrary
evidence,  the Company  does not  anticipate  that these  actions  will have any
substantial impact on the Company's operations or financial  condition.  Defense
of these cases has been assumed by the Company's insurance carrier, subject to a
customary reservation of rights.



                                       34
<PAGE>



15. CONTINGENCIES (CONTINUED)

In December  1998,  the Company  was named as a  defendant  in a lawsuit  titled
"ROBERTA RAIPORT, ET AL. V. GOWANDA ELECTRONICS CORP. AND AMERICAN LOCKER GROUP,
INC." pending in the State of New York Supreme Court, County of Cattaragus.  The
suit  involves  property  located  in  Gowanda,  New York  which was sold by the
Company to Gowanda  Electronics Corp. prior to 1980. The plaintiffs,  current or
former  property  owners in  Gowanda,  New York,  assert  that  defendants  each
operated machine shops at the site during their respective  periods of ownership
and that as a  result  of such  operation  soil  and  groundwater  contamination
occurred  which  has  adversely   affected  the  plaintiffs  and  the  value  of
plaintiffs'  properties.  The plaintiffs assert a number of causes of action and
seek  compensatory  damages  of  $5,000,000  related to  alleged  diminution  of
property  values,  $3,000,000 for economic losses and "disruption to plaintiffs'
lives," $10,000,000 for "nuisance,  inconveniences and disruption to plaintiffs'
lives,"  $25,000,000 in punitive damages,  and $15,000,000 to establish a "trust
account"  for  monitoring  indoor air quality and other  remedies."  The Company
believes that its potential  liability  with respect to this site, if any, is de
minimis.  Therefore,  based on the information  currently available,  management
does not believe the outcome of this suit will have a substantial  impact on the
Company's  operations  or  financial  condition.  Defense  of this case has been
assumed by the Company's insurance carrier,  subject to a customary  reservation
of rights.



                                       35
<PAGE>




ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

There have been no changes in or  disagreements  with  accountants on accounting
and financial disclosures during 1999 or 1998.

PART III

Item 10, 11, 12 and 13 will be contained in American Locker Group Incorporated's
Annual Proxy Statement,  incorporated  herein by reference,  which will be filed
within 120 days after year-end.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

        (a)     The documents filed as part of this report are as follows:

            1.  Financial Statements

            2.  Financial Statement Schedules

                See  Index to  Financial  Statements  and  Financial   Statement
                Schedules

                All  other   consolidated   financial  schedules   are   omitted
                because  they  are  inapplicable,     not    required   or   the
                information    is    excluded    elsewhere  in the  consolidated
                financial statements or the notes thereto.

            3.  Exhibits

                (a)  Exhibits  required  by   Item  601 of Regulation   S-K  are
                     submitted   as   a   separate  section  herein  immediately
                     following  the "Exhibit Index".

                (b)  Reports on Form 8-K filed in the fourth quarter of 1999.

                     (i) Report on Form 8-K filed on November 20, 1999.





                                       36
<PAGE>



                       American Locker Group Incorporated

         Index to Financial Statements and Financial Statement Schedules

The  financial  statements  together  with the report of Ernst & Young LLP dated
February 15, 2000, is included in Item 8 Financial  Statments and  Supplementary
Data in the Annual Report on Form 10-K.

Financial Schedules for the years 1999, 1998 and 1997:

Valuation and Qualifying Accounts on page 38.





                                       37
<PAGE>


<TABLE>
<CAPTION>

Schedule II

                       American Locker Group Incorporated

                        Valuation and Qualifying Accounts


<S>      <C>                                <C>             <C>           <C>               <C>
                                            Balance at the  Charged to
                                            Beginning of    Costs and     Write-offs/         Balance at
Year              Description                  Period        Expense       Recoveries       End of Period
---------------------------------------------------------------------------------------------------------
1999     Allowance for Doubtful Accounts    $216,000        $ 12,000      ($ 6,000)           $222,000
1998     Allowance for Doubtful Accounts     439,000          12,000      (235,000)            216,000
1997     Allowance for Doubtful Accounts     386,000         137,000      ( 84,000)            439,000



</TABLE>



                                       38
<PAGE>

Pursuant  to the requirements of Section 13 or 15(d) 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.

                       AMERICAN LOCKER GROUP INCORPORATED

                             /s/Edward F. Ruttenberg
                             -----------------------
                                Edward F. Ruttenberg
                          Chairman and Chief Executive
                                     Officer

                               /s/Wayne L. Nelson
                             -----------------------
                                  Wayne L. Nelson
              Principal Accounting Officer and Assistant Secretary

                                 March 22, 2000

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  registrant and
in the capacities and on the dates indicated.

Signature                              Title                           Date
---------                              -----                           ----

/s/Edward F. Ruttenberg      Chairman, Chief Executive Officer    March 22, 2000
-----------------------      and Director
Edward F. Ruttenberg

/s/Roy J. Glosser            President, Chief Operating           March 22, 2000
-----------------------      Officer, Treasurer and Director
Roy J. Glosser

/s/Alan H. Finegold          Director                             March 22, 2000
-----------------------
Alan H. Finegold

/s/Thomas Lynch IV           Director                             March 22, 2000
-----------------------
Thomas Lynch, IV

/s/James E. Ruttenberg       Director                             March 22, 2000
-----------------------
James E. Ruttenberg

/s/Jeffrey C. Swoveland      Director                             March 22, 2000
------------------------
Jeffrey C. Swoveland

/s/Donald I. Dussing, Jr.    Director                             March 22, 2000
-------------------------
Donald I. Dussing, Jr.



                                       39
<PAGE>


<TABLE>
<CAPTION>




                                  EXHIBIT INDEX

<S>                       <C>                                                  <C>
                                                                               Prior Filing or Sequential Page
EXHIBIT NO.                                                                    No. Herein
-----------                                                                    ----------

  3.1                     Certificate of Incorporation of American Locker      Exhibits to Form 10-K for Year
                          Group Incorporated                                   ended December 31, 1980

  3.2                     Amendment to Certificate of Incorporation changing   Form 10-C filed May 6, 1985
                          name of company

  3.3                     Amendment to Certificate of Incorporation limiting   Exhibit to Form 10-K for year ended
                          liability of Directors and Officers                  December 31, 1987

  3.4                     By-laws of American Locker Group Incorporated as     Exhibit to Form 10-K for year ended
                          amended and restated                                 December 31, 1985

  3.5                     Certificate of Designations of Series                Page
                          A Junior Participating Preferred Stock                    -----

                          Amendment to By-laws of American Locker Group        Exhibit to Form 10-K for year ended
  3.6                     Incorporated dated January 15, 1992                  December 31, 1991
  3.7                     Amendment to Bylaws dated March 3, 1999              Exhibit to Form 10-K for year ended
                                                                               December 31, 1998
  3.8                     Amendment to Bylaws dated November 19, 1999          Page
                                                                                    -----

 10.1                     American Locker Group Incorporated 1988 Stock        Exhibit to Form 10-K for year ended
                          Incentive Plan                                       December 31, 1988

 10.2                     First Amendment dated March 28, 1990 to American     Exhibit to Form 10-K for year ended
                          Locker Group Incorporated  1988 Stock Incentive      December 31, 1989
                          Plan

 10.3                     Form of Indemnification Agreement between American   Exhibit to Form 10-K for year ended
                          Locker Group Incorporated  and its directors and     December 31, 1987
                          officers

 10.4                     Corporate Term Loan Agreement between American       Exhibit to Form 10-K for year ended
                          Locker Group Incorporated and Manufacturers and      December 31, 1991
                          Traders Trust Company covering $2,400,000 loan


                                       40
<PAGE>


 10.5                     Approved Line of Credit from Manufacturers and       Exhibit to Form 10-K for year ended
                          Traders Trust Company to American Locker Group       December 31, 1990
                          Incorporated in the amount of $1,000,000

 10.6                     Amendment Agreement dated May 1, 1994 between        Exhibit to Form 10-KSB for year
                          Manufacturing and Traders Trust Company and          ended December 31, 1994
                          American Locker Group Incorporated [Increase in
                          Term Loan to $1,850,000]

 10.7                     Amendment Agreement dated March 12, 1996 between     Exhibit to Form 10-KSB for year
                          Manufacturing and Traders Trust Company and          ended December 31, 1995
                          American Locker Group Incorporated [Increase in
                          Term Loan to $1,800,000]

 10.8                     Employment Agreement between American Locker Group   Exhibit to Form 10-GSB for quarter
                          Incorporated and  Roy J. Glosser                     ended June 30, 1996

 10.8                     Amendment dated as of March 3, 1999 to Employment    Exhibit to Form 10-KSB for year
                          Agreement between American Locker Group              ended December 31, 1998
                          Incorporated and Roy J. Glosser

 10.9                     Manufacturing Agreement dated as of December 29,     Exhibit to Form 8-K dated
                          1989 between American Locker Security Systems Inc.   January 11, 1990
                          and Signore, Inc.

10.10                     First Amendment dated May 3, 1995 to Manufacturing   Exhibit to Form 10-KSB for year
                          Agreement dated as of December 29, 1989 between      ended December 31, 1995
                          American Locker Security Systems Inc. and Signore
                          Inc.

10.11                     Second Amendment dated March 15, 1996 to             Exhibit to Form 10-KSB for the year
                          Manufacturing Agreement dated as of December 29,     ended December 31, 1995
                          1989 between American Locker Security Systems Inc.
                          and Signore Inc.

10.12                     Third Amendment dated May 21, 1996 to                Exhibit to Form 10-QSB for the
                          Manufacturing Agreement dated as of December 29,     quarter ended June 30, 1996
                          1989 between American Locker Security Systems Inc.
                          and Signore Inc.


                                       41
<PAGE>

10.14                     Contract dated March 27, 1996 between the U.S.       Exhibit to Form 10-QSB for the
                          Postal Service and American Locker Security          quarter ended March 31, 1996
                          Systems, Inc.

10.15                     Modification #MO3 to USPS Contract                   Exhibits to Form 10-QSB for the
                          #072368-96-B-0741 dated April 16, 1997               quarter ended March 31, 1997

10.17                     Fourth Amendment to Manufacturing Agreement dated    Exhibits to Form 10-QSB for the
                          as of May 20, 1997 between American Locker           quarter ended June 30, 1997
                          Security Systems, Inc. and Signore, Inc.

10.18                     Fifth Amendment to Manufacturing Agreement dated     Exhibit to Form 10-QSB for quarter
                          May 19, 1998 between American Locker Security        ended June 30, 1998
                          Systems, Inc. and Signore, Inc.

10.18                     Amendment dated August 22, 1997 to Corporate Term    Exhibit to Form 10-QSB for the
                          Loan Agreement dated August 30, 1991 between         quarter ended September 30, 1997
                          American Locker Group Incorporated and
                          Manufacturers and Traders Trust Company

10.19                     Modification M05 to USPS Contract                    Exhibit to Form 10-QSB for the
                          #072368-96-B-0741, dated October 9, 1997, which      quarter ended September 30, 1997
                          replaces steel pedestals with aluminum pedestals
                          for American Locker Outdoor Parcel Lockers

10.20                     Modification M06 to USPS Contract                    Exhibit to Form 10-QSB for the
                          #072368-96-B-0741, dated October 23, 1997            quarter ended September 30, 1997
                          regarding prices and minimum quantities through
                          April 14, 1998

10.20                     Modification M07 to USPS Contract                    Exhibit to Form 10-QSB for quarter
                          #072368-96-B-0741, dated April 14, 1998 regarding    ended March 31, 1998
                          prices and minimum quantities

10.21                     Modification #M010 to USPS Contract                  Exhibit to Form 10-QSB for the
                          #072368-96-B-0741, dated May 6, 1999                 quarter ended March 31, 1999

10.22                     Sixth Amendment to Manufacturing Agreement dated     Exhibit to Form 10-QSB for the
                          May 13, 1999 between American Locker Security        quarter ended June 30, 1999
                          System, Inc. as Signore, Inc.



                                       42
<PAGE>



10.23                     American Locker Group Incorporated 1999 Stock        Exhibit to Form 10-QSB for the
                          Incentive Plan                                       quarter ended June 30, 1999

10.24                     Amendment dated June 9, 1999 between American        Exhibit to Form 10-QSB for the
                          Locker Group Incorporated and Manufacturers and      quarter ended June 30, 1999
                          Traders Trust Company

10.25                     Rights Agreement dated November 19, 1999 between     Exhibit to Form 8-K dated November
                          American Locker Group Incorporated and Chase         18, 1999
                          Mellon Shareholder Services LLC

10.26                     Form of American Locker Group Incorporated           Exhibit 10.21 to Form 10-QSB for
                          Supplemental Executive Retirement Benefit Plan       year ending December 31, 1998

10.27                     Employment Agreement dated November 19, 1999         Page
                          between American Locker Group Incorporated and            -----
                          Edward F. Ruttenberg

10.28                     Form of Option Agreement under 1999 Stock            Page
                          Incentive Plan                                            -----

22.1                      List of Subsidiaries                                 Page
                                                                                    -----

27.1                      1999 Financial Data Schedule                         Page
                                                                                    -----

</TABLE>



                                       43



                           CERTIFICATE OF DESIGNATIONS
                                       of
                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       of
                       AMERICAN LOCKER GROUP INCORPORATED
                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)
            American  Locker Group  Incorporated,  a  corporation  organized and
existing under the General Corporation Law of the State of Delaware (hereinafter
called the  "Corporation"),  hereby certifies that the following  resolution was
adopted by the Board of Directors of the  Corporation as required by Section 151
of the General Corporation Law at a meeting duly called and held on November 18,
1999.

            RESOLVED,  that,  pursuant to the authority granted to and vested in
the Board of Directors  of this  Corporation  (hereinafter  called the "Board of
Directors" or the "Board") in accordance  with the provisions of the Certificate
of  Incorporation,  the Board of Directors  hereby creates a series of Preferred
Stock,  par value $1.00 (the "Preferred  Stock"),  of the Corporation and hereby
states  the  designation  and number of shares  and fixes the  relative  rights,
preferences, and limitations thereof as follows:

            Section 1.  DESIGNATION AND AMOUNT.  The shares of such series shall
be designated as "Series A Junior Participating  Preferred Stock" (the "Series A
Preferred  Stock") and the number of shares  constituting the Series A Preferred
Stock shall be 200,000.  Such number of shares may be  increased or decreased by
resolution of the Board of Directors;  provided,  that no decrease  shall reduce
the  number  of shares of  Series A  Preferred  Stock to a number  less than the
number of shares  then  outstanding  plus the  number  of  shares  reserved  for
issuance upon the exercise of  outstanding  options,  rights or warrants or upon
the  conversion  or  exchange  of  any  outstanding  securities  issued  by  the
Corporation  convertible  into or exchangeable  for shares of Series A Preferred
Stock.

            Section 2.  DIVIDENDS AND DISTRIBUTIONS.

            (A) Subject to the rights of the holders of any shares of any series
      of Preferred  Stock (or any similar  stock)  ranking prior and superior to
      the Series A Preferred  Stock with  respect to  dividends,  the holders of
      shares of Series A Preferred Stock, in preference to the holders of shares
      of Common Stock,  par value $1.00 per share (the "Common  Stock"),  of the
      Corporation  and of any other junior stock,  shall be entitled to receive,
      when,  as and if declared by the Board of Directors  out of funds  legally
      available  for the  purpose,  quarterly  dividends  payable in cash on the
      first day of March,  June,  September and December in each year (each such
      date being  referred to herein as a "Quarterly  Dividend  Payment  Date"),
      commencing on the first  Quarterly  Dividend  Payment Date after the first
      issuance of a share or fraction of a share of Series A Preferred Stock, in
      an amount per share  (rounded to the nearest cent) equal to the greater of
      (a) $.40 or (b) subject to the provision for  adjustment  hereinafter  set
      forth,  100 times the aggregate per share amount of all cash dividends and
      100 times the aggregate per share amount

<PAGE>

      (payable in kind) of all non-cash dividends or other distributions,  other
      than a dividend  payable in shares of Common Stock or a subdivision of the
      outstanding  shares of Common Stock (by  reclassification  or  otherwise),
      declared on the Common  Stock since the  immediately  preceding  Quarterly
      Dividend  Payment  Date or, with respect to the first  Quarterly  Dividend
      Payment Date, since the first issuance of any share or fraction of a share
      of Series A Preferred  Stock.  In the event the  Corporation  shall at any
      time declare or pay any dividend on the Common Stock  payable in shares of
      Common Stock or effect a subdivision or combination  or  consolidation  of
      the outstanding shares of Common Stock (by  reclassification  or otherwise
      than by payment of a dividend in shares of Common Stock) into a greater or
      lesser number of shares of Common Stock, then in each such case the amount
      to which  holders  of shares of Series A  Preferred  Stock  were  entitled
      immediately prior to such event under clause (b) of the preceding sentence
      shall be adjusted by multiplying such amount by a fraction,  the numerator
      of which is the number of shares of Common Stock  outstanding  immediately
      after such event and the  denominator  of which is the number of shares of
      Common Stock that were outstanding immediately prior to such event.

            (B) The Corporation  shall declare a dividend or distribution on the
      Series A  Preferred  Stock as provided in  paragraph  (A) of this  Section
      immediately  after it  declares a dividend or  distribution  on the Common
      Stock (other than a dividend payable in shares of Common Stock); provided,
      that, in the event no dividend or distribution shall have been declared on
      the Common Stock during the period between any Quarterly  Dividend Payment
      Date and the next subsequent  Quarterly  Dividend Payment Date, a dividend
      of $.40 per share on the Series A Preferred  Stock shall  nevertheless  be
      payable on such subsequent Quarterly Dividend Payment Date.

            (C) Dividends shall begin to accrue and be cumulative on outstanding
      shares of Series A Preferred  Stock from the  Quarterly  Dividend  Payment
      Date next  preceding the date of issue of such shares,  unless the date of
      issue of such shares is prior to the record  date for the first  Quarterly
      Dividend  Payment Date, in which case dividends on such shares shall begin
      to accrue  from the date of issue of such  shares,  or unless  the date of
      issue is a Quarterly  Dividend  Payment Date or is a date after the record
      date for the  determination  of  holders  of shares of Series A  Preferred
      Stock  entitled to receive a quarterly  dividend and before such Quarterly
      Dividend  Payment  Date,  in either of which events such  dividends  shall
      begin to accrue and be cumulative  from such  Quarterly  Dividend  Payment
      Date. Accrued but unpaid dividends shall not bear interest. Dividends paid
      on the shares of Series A Preferred Stock in an amount less than the total
      amount of such  dividends  at the time  accrued and payable on such shares
      shall be  allocated  pro rata on a  share-by-share  basis  among  all such
      shares at the time  outstanding.  The Board of Directors  may fix a record
      date for the  determination  of  holders  of shares of Series A  Preferred
      Stock entitled to receive payment of a dividend or  distribution  declared
      thereon,  which  record  date  shall be not more than 60 days prior to the
      date fixed for the payment thereof.


                                     - 2 -
<PAGE>

            Section 3.  VOTING RIGHTS.  The   holders   of  shares  of  Series A
Preferred Stock shall have the following voting rights:

            (A) Subject to the provision for adjustment  hereinafter  set forth,
      each share of Series A Preferred Stock shall entitle the holder thereof to
      100 votes on all matters  submitted to a vote of the  stockholders  of the
      Corporation. In the event the Corporation shall at any time declare or pay
      any  dividend  on the Common  Stock  payable in shares of Common  Stock or
      effect a subdivision or combination or  consolidation  of the  outstanding
      shares of Common Stock (by  reclassification  or otherwise than by payment
      of a dividend in shares of Common  Stock) into a greater or lesser  number
      of shares of Common Stock,  then in each such case the number of votes per
      share to which holders of shares of Series A Preferred Stock were entitled
      immediately  prior to such event  shall be adjusted  by  multiplying  such
      number by a fraction,  the  numerator  of which is the number of shares of
      Common Stock outstanding  immediately after such event and the denominator
      of which is the  number of shares of Common  Stock  that were  outstanding
      immediately prior to such event.

            (B) Except as otherwise provided herein, in any other Certificate of
      Designations creating a series of Preferred Stock or any similar stock, or
      by law, the holders of shares of Series A Preferred  Stock and the holders
      of shares of Common Stock and any other capital  stock of the  Corporation
      having  general  voting  rights  shall vote  together  as one class on all
      matters submitted to a vote of stockholders of the Corporation.

            (C)  Except as set forth  herein or as  otherwise  provided  by law,
      holders of Series A Preferred  Stock shall have no special  voting  rights
      and their  consent  shall not be  required  (except to the extent they are
      entitled to vote with holders of the Common Stock as set forth herein) for
      taking any corporate action.

            Section 4.  CERTAIN RESTRICTIONS.

            (A) Whenever quarterly dividends or other dividends or distributions
      payable on the Series A  Preferred  Stock as  provided in Section 2 are in
      arrears,  thereafter  and until  all  accrued  and  unpaid  dividends  and
      distributions,  whether or not  declared,  on shares of Series A Preferred
      Stock outstanding shall have been paid in full, the Corporation shall not:

                  (i) declare or pay  dividends or make any other  distributions
            on any  shares of stock  ranking  junior  (as to  dividends)  to the
            Series A Preferred Stock;

                  (ii) declare or pay dividends or make any other  distributions
            on any shares of stock  ranking on a parity (as to  dividends)  with
            the Series A Preferred  Stock,  except dividends paid ratably on the
            Series  A  Preferred  Stock  and all  such  parity  stock  on  which
            dividends  are  payable  and in arrears in  proportion  to the total
            amounts to which the holders of all such shares are then entitled;


                                     - 3 -
<PAGE>

                  (iii) redeem,  purchase or otherwise acquire for consideration
            shares of any stock ranking  junior  (either as to dividends or upon
            liquidation,  dissolution  or winding  up) to the Series A Preferred
            Stock;  provided,  that  the  Corporation  may at any  time  redeem,
            purchase or  otherwise  acquire  shares of any such junior  stock in
            exchange for shares of any stock of the  Corporation  ranking junior
            (either as to dividends or upon dissolution,  liquidation or winding
            up) to the Series A Preferred Stock; or

                  (iv) redeem,  purchase or otherwise  acquire for consideration
            any  shares  of  Series A  Preferred  Stock or any  shares  of stock
            ranking on a parity  with the Series A  Preferred  Stock,  except in
            accordance  with a purchase  offer made in writing or by publication
            (as  determined  by the Board of  Directors)  to all holders of such
            shares   upon  such   terms  as  the  Board  of   Directors,   after
            consideration  of the  respective  annual  dividend  rates and other
            relative  rights  and  preferences  of  the  respective  series  and
            classes,  shall  determine  in good  faith  will  result in fair and
            equitable treatment among the respective series or classes.

            (B)  The  Corporation   shall  not  permit  any  subsidiary  of  the
      Corporation to purchase or otherwise  acquire for consideration any shares
      of stock of the Corporation  unless the Corporation could, under paragraph
      (A) of this Section 4,  purchase or otherwise  acquire such shares at such
      time and in such manner.

            Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased  or otherwise  acquired by the  Corporation  in any manner  whatsoever
shall be retired and cancelled promptly after the acquisition  thereof. All such
shares shall upon their  cancellation  become  authorized and unissued shares of
Preferred  Stock and may be reissued as part of a new series of Preferred  Stock
subject to the conditions and restrictions on issuance set forth herein,  in the
Certificate  of  Incorporation  or in  any  other  Certificate  of  Designations
creating a series of Preferred Stock or any similar stock or otherwise  required
by law.

            Section 6.  LIQUIDATION, DISSOLUTION OR WINDING UP.

            Upon any liquidation,  dissolution or winding up of the Corporation,
no  distribution  shall be made (1) to the  holders  of shares of stock  ranking
junior (upon  liquidation,  dissolution or winding up) to the Series A Preferred
Stock unless,  prior thereto,  the holders of shares of Series A Preferred Stock
shall have  received  $40 per share,  plus an amount  equal to the  accrued  and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such  payment;  provided,  that the  holders of shares of Series A  Preferred
Stock shall be entitled to receive an aggregate amount per share, subject to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount to be distributed  per share to holders of shares of Common Stock, or (2)
to the  holders  of  shares  of stock  ranking  on a parity  (upon  liquidation,
dissolution  or  winding  up)  with  the  Series  A  Preferred   Stock,   except
distributions  made ratably on the Series A Preferred  Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation,  dissolution or winding up. In the event the
Corporation  shall at any time  declare or pay any  dividend on the Common Stock


                                     - 4 -
<PAGE>

payable in shares of Common  Stock or effect a  subdivision  or  combination  or
consolidation of the outstanding shares of Common Stock (by  reclassification or
otherwise  than by  payment  of a  dividend  in shares of Common  Stock)  into a
greater or lesser number of shares of Common  Stock,  then in each such case the
aggregate  amount to which  holders of shares of Series A  Preferred  Stock were
entitled  immediately prior to such event under the proviso in clause (1) of the
preceding  sentence shall be adjusted by  multiplying  such amount by a fraction
the  numerator  of which is the  number of shares  of Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

            Section 7. CONSOLIDATION, MERGER. ETC. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
shares  of  Common  Stock are  exchanged  for or  changed  into  other  stock or
securities,  cash and/or any other property, then in any such case each share of
Series A  Preferred  Stock  shall at the same  time be  similarly  exchanged  or
changed  into an amount  per  share,  subject to the  provision  for  adjustment
hereinafter  set  forth,  equal to 100  times  the  aggregate  amount  of stock,
securities,  cash and/or any other property  (payable in kind),  as the case may
be, into which or for which each share of Common Stock is changed or  exchanged.
In the event the  Corporation  shall at any time  declare or pay any dividend on
the Common Stock  payable in shares of Common Stock or effect a  subdivision  or
combination  or  consolidation  of the  outstanding  shares of Common  Stock (by
reclassification  or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common  Stock,  then in each
such case the amount set forth in the  preceding  sentence  with  respect to the
exchange  or change of shares of Series A  Preferred  Stock shall be adjusted by
multiplying  such amount by a fraction,  the numerator of which is the number of
shares  of  Common  Stock  outstanding  immediately  after  such  event  and the
denominator  of  which is the  number  of  shares  of  Common  Stock  that  were
outstanding immediately prior to such event.

            Section 8.  NO REDEMPTION.  The shares of Series A  Preferred  Stock
shall not be redeemable.

            Section 9.  RANK.  The  Series A  Preferred  Stock  shall rank, with
respect  to  the payment  of dividends and the distribution of assets, junior to
all other series of the Preferred Stock.

            Section 10.  AMENDMENT.  The  Certificate  of  Incorporation  of the
Corporation  shall not be amended in any manner which would  materially alter or
change  the  powers,  preferences  or  special  rights of the shares of Series A
Preferred Stock so as to affect them adversely  without the affirmative  vote of
the  holders  of at least  two-thirds  of the  outstanding  shares  of  Series A
Preferred Stock, voting together as a single class.

            IN WITNESS WHEREOF,  this Certificate of Designations is executed on
behalf of the  Corporation  by its  Chairman  of the Board and  attested  by its
Secretary this 18th day of November, 1999.


                                     - 5 -
<PAGE>

Attest:                                   AMERICAN LOCKER GROUP INCORPORATED


/s/ Charles E. Harris                     /s/ Edward F. Ruttenberg
------------------------------------      ------------------------------
Title:  Secretary                         Title: Chairman and Chief
                                                 Executive Officer











                                     - 6 -

<PAGE>


                                   Exhibit 3.8

                              Amendment to By-Laws


            Section  5 of  Article  II of the  By-Laws  of the  Corporation  was
amended and restated to read as follows:

                  Section  5.  Special  Meetings  of the  stockholders,  for any
                  purpose or purposes, unless otherwise prescribed by statute or
                  by the  certificate  of  incorporation,  may be  called by the
                  President or Chairman or pursuant to a resolution  approved by
                  a majority of the board of directors. Such request shall state
                  the purpose or purposes of the proposed meeting.




<PAGE>

                                Exhibit 10.27

                              EMPLOYMENT AGREEMENT


            THIS  AGREEMENT,  made as of the 18th day of November,  1999, by and
between  AMERICAN  LOCKER  GROUP  INCORPORATED,   a  Delaware  corporation  (the
"Company"),  and EDWARD F.  RUTTENBERG,  an individual  residing in  Pittsburgh,
Pennsylvania (the "Executive"),

                                   WITNESSETH:

            WHEREAS,  the Company wishes to assure itself of the services of the
Executive  for the period  provided  in this  Agreement,  and the  Executive  is
willing to serve in the  employ of the  Company  on a  full-time  basis for such
period upon the terms and conditions set forth below;

            WHEREAS, the Executive's  association with the Company has given and
will  continue  to  give  him  access  to  and  familiarity  with   confidential
information concerning the Company, including, but not limited to, operating and
business methods and developments  and customer  information and  relationships;
and

            WHEREAS,  the Company would be irreparably  injured if the Executive
were to disclose  any of the  confidential  information  concerning  the Company
which the Executive has or may acquire.

            NOW, THEREFORE,  in consideration of the premises; and all the terms
and conditions  contained herein,  and intending to be legally bound hereby, the
parties hereto agree as follows:

            1.    EMPLOYMENT AND DUTIES.

                  (a) The  Company  hereby  agrees to and hereby does employ the
Executive for the term of this  Agreement to render  services to the Company and
in connection  therewith to perform such duties as the Executive may  reasonably
be  directed  to  perform  from  time to time by the Board of  Directors  of the
Company  (the  "Board").  During the  period of his  employment  hereunder,  the
Executive shall substantially  devote his business time,  attention,  skill, and
efforts to the faithful  performance  of his duties  hereunder and shall use his
best  endeavors  diligently  to promote the business and welfare of the Company,
provided  that the Executive may continue to serve as an Officer and Director of
Rollform of Jamestown, Inc.

                  (b) The Executive  hereby  accepts such  employment and agrees
faithfully to perform to the best of his ability the duties described above.

            2.    TERM.  The Company  hereby  agrees to employ the  Executive in
the  capacities  and upon the terms and conditions set forth herein for a period
commencing  on

<PAGE>

November  18,  1999 at 12:00  noon  Eastern  Daylight  Time and  terminating  on
November 18, 2002 (the "Employment  Period"),  unless sooner terminated pursuant
to Section 6 hereof.

            3.    COMPENSATION.  In consideration of the Executive's  agreements
contained herein and as compensation to the Executive for the performance of the
services required hereunder,  during the Employment Period the Company shall pay
or grant to the  Executive  the  following  salary  and other  compensation  and
benefits:

                  (a) a base  salary,  payable  semi-monthly,  of not less  than
$14,583.34  per  month,  as  determined  from  time to time by the  Board  or an
appropriate  committee  thereof;  provided,  however,  that the Executive's base
salary shall be  periodically  reviewed by the Board and may be increased if the
Board  determines  that an increase is  appropriate on the basis of the types of
actions it  generally  takes into  account in  increasing  the  salaries  of the
executive officers of the Company; and

                  (b) such other and  additional  benefits,  including  any long
term incentive  plans,  as may from time to time be applicable to the Executive,
which shall be relatively  commensurate to benefits accorded other executives of
the Company.

                  The  Executive  shall also be entitled  during the  Employment
Period to participate in any pension, life insurance,  accidental death benefit,
medical and  hospital  insurance  plans and programs of the Company in existence
for the benefit of its employees generally and for which he qualifies,  and such
other  employee  benefit  plans and programs  which the Company  provides to its
employees  generally  in  accordance  with the  practices of the Company as such
practices are in effect from time to time.

            4.    RENEWAL OF EMPLOYMENT.

                  (a) Upon termination of the Employment Period, the Company may
elect,  with the approval of the  Executive,  to extend  Executive's  employment
hereunder on a year-to-year  basis, (each such one year extension being referred
to as a "Renewal  Term" and the time period of all Renewal Terms being  referred
to as the "Extended  Employment  Period").  If the Company  elects not to extend
Executive's  employment  hereunder  at the end of the  Employment  Period or any
Renewal  Period,  the Company  agrees to continue  to pay to the  Executive  the
salary and benefits  called for  hereunder  for a period ending on the sooner of
(i) twelve  months from the end of the  Employment  Period or Renewal  Term,  if
applicable,  or (ii) acceptance by the Executive of other  employment,  or (iii)
acceptance by the Executive of paid consulting work.

                  (b) All of the terms and  conditions of this  Agreement  shall
continue in full force and effect during the Extended Employment Period, if any.

            5.    DISABILITY.  In   the  event  of  the permanent  disability of
Executive as determined for purposes of disability  payment under Federal Social
Security,  the Company  shall pay the  Executive  100% of his base salary at the
rate then in effect for a period of six months from the date of  disability  and
at the rate of 60%  thereafter  for the  balance of the term of this


                                     - 2 -
<PAGE>

Agreement. Such payments shall be reduced by any payments to which the Executive
is entitled under any disability  plan then maintained by the Company and by any
payments to which the Executive is entitled  under the Federal  Social  Security
disability program.

            6.    CONFIDENTIALITY.  The Executive agrees:

                  (a) To keep secret all confidential matters of the Company and
its  affiliates,  and not to disclose them to anyone  outside the Company or its
affiliates,  either during or after his employment with the Company, except with
the Company's prior written consent or as required by law; and

                  (b) To deliver  promptly to the Company on  termination of the
Employment  Period all memoranda,  notes,  records,  reports and other documents
(and all copies thereof) with respect to any such confidential matters and other
proprietary  information  which the Executive may then possess or have under his
control and not to engage in  competition  with the  Company  during the term of
this Agreement and for a period of one year thereafter.

            7.    NONCOMPETITION.

                  (a)  Executive   agrees  that   Executive  will  not,  in  the
continental United States and during the term of this Agreement and for a period
of one year thereafter, by himself or in partnership or as an equity owner or in
conjunction  with or as a consultant,  unpaid  adviser,  manager or agent of any
other person, firm,  corporation or other entity, either directly or indirectly,
undertake or carry on or be engaged or have any financial or other  interest in,
or in any other manner, advise or assist any person, firm,  corporation or other
entity engaged or interested in, selling products or services of the nature sold
by the Company.

                  (b) Executive agrees and warrants that the covenants contained
herein are reasonable,  that valid  consideration  has been and will be received
therefor and that the  agreements set forth herein are the result of arms-length
negotiations  between the parties  hereto.  Executive  acknowledges  that in the
event of a violation of the covenants contained in this paragraph, the Company's
damages will be difficult to ascertain and the  Company's  remedy at law will be
inadequate.  Accordingly, Executive agrees that the Company shall be entitled to
specific  performance  of such  covenants  and to an  injunction  to prevent any
continuing violation thereof.

                  (c) If any of the provisions of or covenants contained in this
Section  7 is  hereafter  construed  to  be  invalid  or  unenforceable  in  any
jurisdiction,  the same shall not affect the remainder of the  provisions or the
enforceability  thereof  in any other  jurisdiction,  which  shall be given full
effect,  without  regard to the  invalidity  or  unenforceability  in such other
jurisdiction. If any of the provisions of or covenants contained in this Section
7 is held to be  unenforceable  in any  jurisdiction  because of the duration or
geographical  scope  thereof,  the  parties  agree  that the court  making  such
determination  shall have the power to reduce the duration or geographical scope
of such  provision  or covenant  and, in its reduced  form,  said  provision  or
covenant shall be enforceable; provided, however, that the determination of such
court  shall  not  affect  the  enforceability  of this  Section  7 in any other
jurisdiction.


                                     - 3 -
<PAGE>

            8.  TERMINATION.   Notwithstanding   any  other  provision  of  this
Agreement,  the Executive's  employment hereunder and his compensation,  bonuses
and other benefits shall  terminate and cease to accrue  forthwith upon: (i) his
death;  or (ii) his  disability  (which  shall be  defined as his  inability  to
perform his duties  hereunder for an aggregate  period of six months or more out
of any consecutive twelve month period during the Employment  Period);  or (iii)
by the  Company  for  cause,  as  hereinafter  defined.  For  purposes  of  this
Agreement,  "Cause" shall mean (a) intentional breach of this Agreement,  or (b)
intentional  breach of a fiduciary duty owed to the Company  involving  personal
profit, material, persistent and intentional dereliction,  habitual drunkenness,
habitual  use of  unprescribed  narcotic  drugs,  or (c)  failure to perform the
duties set forth in this  Agreement,  which failure  remains uncured thirty (30)
days after written notice thereof from the Board of Directors of the Company, or
(d) failure to perform  stated duties owed to the Company which causes  material
harm or damage to the Company,  or (e) conviction of Executive of a felony.  For
purposes  of the  foregoing,  no act,  or  failure  to act  shall be  considered
"intentionally  done" or "willfully done" unless done, or omitted to be done, in
bad faith and without  reasonable belief that such action or omission was in the
best interest of the Company.

            9.  TRIGGER EVENT.  In the event  of a Trigger Event during the term
of this  Agreement,  the Company shall pay to the Executive a special bonus,  in
addition to all other compensation hereunder,  equal to two times the sum of his
base salary at the rate in effect on the closing of such Trigger  Event plus the
annual  bonus,  if any,  received  with respect to the most  recently  completed
fiscal year of the Company.  Such special bonus shall be payable  promptly after
the occurrence of such Trigger Event but shall be disregarded in the computation
of benefits  under the profit  sharing or any other benefit or incentive plan of
the Company. For the purposes of this paragraph,  a Trigger Event shall mean the
occurrence of the event described in subsection (i) below and one or more of the
events  described  in  subsection  (ii) below:  (i) any Rights  issued under the
American  Locker Group  Incorporated  Stock Rights  Agreement dated November 18,
1999 become exercisable under terms of such Rights Agreement,  as amended and in
effect from time to time, and (ii) the occurrence of any of the following: (a) a
substantial  reduction in the base salary,  benefits or perquisites provided the
Executive;  (b) a relocation of the Company's  principal  place of business to a
location which is more than 50 miles from its current location in Jamestown, New
York; or (c) the assignment to the Executive of any duties  inconsistent  in any
respect  with the  Executive's  current  position  with the  Company  (including
status,  offices,  titles  and  reporting  requirements),  or any  action by the
Company which results in diminution in such position,  or the Employee's current
authority,  duties or  responsibilities,  but  excluding  for this  purpose  any
isolated,  insubstantial and inadvertent action not taken in bad faith and which
is remedied by the Company,  promptly  after receipt of written  notice  thereof
given by the Executive in accordance with this Agreement.

            10.  EFFECT OF PRIOR AGREEMENTS.  This Agreement contains the entire
understanding  between the parties hereto and  supersedes  any prior  employment
agreement, arrangement or understanding between the Executive and the Company.

            11.  CONSOLIDATION,  MERGER,  OR SALE  OF  ASSETS.  Nothing  in this
Agreement shall preclude the Company from consolidating or merging into or with,
or transferring all or substantially  all of its assets to, another  corporation
which assumes this Agreement and all


                                     - 4 -
<PAGE>

obligations   and   undertakings   of  the  Company   hereunder.   Upon  such  a
consolidation,  merger, or transfer of assets and assumption, the term "Company"
as used herein shall mean such  corporation and this Agreement shall continue in
full force and effect.

            12.   GENERAL PROVISIONS.

                  (a)  Nonassignability.  Neither  this  Agreement nor any right
or interest  hereunder shall be assignable by the Executive,  his beneficiaries,
or legal representatives without the Company's prior written consent;  provided,
however,  that nothing in this Section  12(a) shall  preclude (i) the  Executive
from designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors,  administrators, or other legal representatives of
the Executive or his estate from assigning any rights hereunder to the person or
persons entitled thereto.

                  (b)  Binding Agreement.  This Agreement shall be binding upon,
and inure to the benefit of, the Executive and the Company and their  respective
permitted successors and assigns.

                  (c)  Amendment  of  Agreement.  This   Agreement  may  not  be
modified or amended  except by an  instrument  in writing  signed by the parties
hereto.

                  (d)  Waiver.  No term or condition of this  Agreement shall be
deemed  to have  been  waived,  nor  shall  there be any  estoppel  against  the
enforcement of any provision of this Agreement,  except by written instrument of
the party charged with such waiver or estoppel.  No such written waiver shall be
deemed a continuing  waiver unless  specifically  stated therein,  and each such
waiver shall operate only as to the specific term or condition  waived and shall
not  constitute a waiver of such term or  condition  for the future or as to any
act other than that specifically waived.

                  (e)  Headings.  The  headings of sections  herein are included
solely  for  convenience  of  reference  and shall not  control  the  meaning or
interpretation of any of the provisions of this Agreement.

                  (f)  Notices.  Any   and  all  notices  required  to  be  sent
pursuant to the terms of this  Agreement  shall be sent  registered or certified
mail or personally delivered to the parties hereto at the following addresses or
such other addresses as they may designate in writing:

                       If to the Executive:

                       Edward F. Ruttenberg
                       5864 Aylesboro Avenue
                       Pittsburgh, PA 15217



                                     - 5 -
<PAGE>

                       If to the Company:

                       American Locker Group Incorporated
                       608 Allen Street
                       Jamestown, New York  14702

                  (g)  Governing Law.  This Agreement has been  executed  in the
Commonwealth of Pennsylvania and its validity, interpretation,  performance, and
enforcement shall be governed by the laws of New York.

                  (h)  Enforceability. The invalidity or unenforceability of any
particular  provision of this  Agreement  shall not affect the other  provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
and unenforceable provision were omitted.

            WITNESS the due execution  hereof as of the day and year first above
written.


ATTEST:                                   AMERICAN LOCKER GROUP INCORPORATED

By:  /s/ Charles E. Harris                By:  /s/ Roy J. Glosser
     -------------------------                 ------------------------------
Title:  Secretary                         Title:  President, Chief Executive
                                                  Officer and Treasurer


                                          EXECUTIVE:

                                          /s/ Edward F. Ruttenberg
                                          -----------------------------------
                                          Edward F. Ruttenberg









                                     - 6 -

<PAGE>

                                  Exhibit 10.28

                                OPTION AGREEMENT


      THIS  AGREEMENT  is made as of the  13th day of May,  1999 by and  between
AMERICAN LOCKER GROUP INCORPORATED (The "Company") and the undersigned  optionee
("Optionee").

                                   WITNESSETH

      WHEREAS,  pursuant to the American  Locker Group  Incorporated  1999 Stock
Incentive Plan (the "Plan"), the Stock Option - Executive Compensation Committee
of the Board of Directors of the Company (the  "Committee")  has  authorized the
granting to  Optionee  of an option to  purchase  the number of shares of Common
Stock of the Company  specified  in Paragraph 1 hereof,  at the price  specified
therein,  such  option  to be for the term and upon  the  terms  and  conditions
hereinafter stated.

      NOW, THEREFORE, in consideration of the undertakings of the parties hereto
contained herein, it is hereby agreed:

      1.  NUMBER  OF  SHARES;  OPTION  PRICE.  Pursuant  to said  action  of the
Committee,  the Company  hereby  grants to  Optionee  the option  ("Option")  to
purchase,  upon and subject to the terms and conditions of said Plan, all or any
part of 10,000 shares of Common Stock of the Company for cash or Common Stock of
the Company at the price of $8.875 per share.  It is  intended  that this Option
shall not be an incentive stock option as defined by Section 422 of the Code.

      2.  TERM. This Option shall expire on the day before the tenth anniversary
of the date hereof unless such Option shall have been  terminated  prior to that
date in accordance with the provisions of the Plan or this Agreement.

      3.  VESTING.  This Option shall vest in the following  percentages  on the
respective  dates set forth  below,  and shall be  exercisable  on or after such
dates, as follows:

            VESTING DATE                  TOTAL PERCENT OF OPTION VESTED
            ------------                  ------------------------------

            May 13, 2000                              100%


The Option shall thereafter remain wholly  exercisable for the term specified in
Paragraph 2 hereof,  provided that Optionee is then and has continuously been in
the employ of the Company or a Subsidiary;  subject,  however, to the provisions
of Paragraph 5 hereof.  The term "Subsidiary" as used herein has the meaning set
forth in the Plan.

<PAGE>

      4.  EXERCISE.  The Option may be exercised by written  notice delivered to
the Company  stating  the number of shares  with  respect to which the Option is
being exercised, together with a check made payable to the Company in the amount
of the  purchase  price of such  shares  and/or  shares of  Common  Stock of the
Company  having a Fair  Market  Value (as defined in the Plan) as of the date of
exercise  equal to the  aggregate  purchase  price of the shares as to which the
Option is being exercised. Only whole shares may be purchased.

      5.  EXERCISE ON TERMINATION  OF  EMPLOYMENT.  In the event  Optionee shall
cease  to be  employed  by the  Company  or a  Subsidiary,  Optionee's  right to
exercise his options, if any, shall be governed by Section 6.03(e) of the Plan.

      6.  NONTRANSFERABILITY.  This Option may not  be  assigned  or transferred
except by will or by the laws of descent and distribution,  and may be exercised
only by Optionee during his lifetime,  and after his death by his representative
or by the  person  entitled  hereto  under  his  will or the  laws of  intestate
succession.

      7.  OPTIONEE  NOT A  SHAREHOLDER.  Optionee  shall  have  no  rights  as a
shareholder  with  respect to the Common  Stock of the  Company  covered by this
Option until the date of issuance of a stock  certificate or stock  certificates
to him upon  exercise of the Option.  Except as may be provided in the Plan,  no
adjustment  will be made for dividends or other rights for which the record date
is prior to the date such stock certificate or certificates are issued.

      8.  MODIFICATION  AND  TERMINATION.  The rights of Optionee are subject to
modification and termination in certain events as provided in the Plan.

      9.  PLAN GOVERNS.  This agreement and the Option evidenced hereby are made
and granted  pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of that Plan, as it may be amended from time
to time and construed by the Committee.

      10.  NOTICES.  All  notices to  the  Company  shall  be  addressed  to the
Secretary  of the  Company at the  principal  office of the Company at 608 Allen
Street,  Jamestown,  NY 14702, and all notices to Optionee shall be addressed to
Optionee   at  the  address  of  Optionee  on  file  with  the  Company  or  its
Subsidiaries,  or to such other  address as either may designate to the other in
writing.  A notice  shall be deemed to be duly given if and when  enclosed  in a
properly addressed sealed envelope deposited,  postage prepaid,  with the United
States Postal  Service.  In lieu of giving notice by mail as aforesaid,  written
notices under this Agreement may be given by personal delivery to Optionee or to
the Secretary of the Company (as the case may be).


                                     - 2 -
<PAGE>


      IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as of
the date and year first above written.


                              AMERICAN LOCKER GROUP INCORPORATED


                              By:  /s/ Roy J. Glosser
                                   ------------------------------------------
                                   President, Chief Operating Officer and
                                   Treasurer


                              Optionee:

                              /s/ Edward F. Ruttenberg
                              -----------------------------------------------
                              Edward F. Ruttenberg












                                     - 3 -

<PAGE>

                                  Exhibit 22.1

                              List of Subsidiaries


The following  companies are subsidiaries of the Company and are included in the
consolidated financial statements of the Company:

                                   Jurisdiction Of          Percentage of Voting
Name                                 Organization             Securities Owned
--------------------               ---------------          --------------------
American Locker Security           Delaware                        100%
  Systems, Inc.                                                    100%
American Locker Company, Inc.      Delaware
American Locker Company of         Dominion of Canada              100%(1)
  Canada, Ltd.
Canadian Locker Company, Ltd.      Dominion of Canada              100%(2)
American Locker Security           Virgin Islands                  100%(1)
  Systems International

(1)  Owned by American Locker Security Systems, Inc.
(2)  Owned by American Locker Company of Canada, Ltd.