----

|                                              |   | 2009   |   | 2008   |   | 2007   |   | 2006   |   | 2005    |
|---------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|
| Net      sales                                    | $      | 52,526 | $      | 53,839 | $      | 59,308 | $      | 64,748 | $      | 60,774  |
| Gross      margin                                 | $      | 9,148  | $      | 8,356  | $      | 866    | $      | 10,349 | $      | 6,893   |
| Operating      earnings (loss)                    | $      | 1,377  | $      | 582    | $      | 546    | $      | 1,095  | $      | (2,745) |
| Net      earnings (loss)                          | $      | 1,097  | $      | 204    | $      | 195    | $      | 343    | $      | (2,996) |
|                                              |   |   |   |   |   |   |   |   |   |    |
| Basic      net earnings (loss) per common share   | $      | 0.11   | $      | 0.02   | $      | 0.02   | $      | 0.03   | $      | (0.30)  |
| Diluted      net earnings (loss) per common share | $      | 0.11   | $      | 0.02   | $      | 0.02   | $      | 0.03   | $      | (0.30)  |
|                                              |   |   |   |   |   |   |   |   |   |    |
| Total      assets                                 | $      | 24,305 | $      | 25,848 | $      | 26,601 | $      | 30,187 | $      | 29,077  |
| Long-term      liabilities                        | $      | 2,178  | $      | 5,185  | $      | 6,709  | $      | 9,234  | $      | 8,187   |
| Working      capital                              | $      | 15,569 | $      | 17,302 | $      | 18,376 | $      | 18,863 | $      | $16,626 |

|                | 2009      Prices | 2008      Prices |
|---------------------|------------------|------------------|
|                | High             | Low              | High | Low |
| Quarter      ended: |             |             |   |   |
| March      31       | $0.71            | $0.35            | $1.81 | $1.27 |
| June      30        | $1.28            | $0.42            | $1.88 | $1.19 |
| September      30   | $2.30            | $0.80            | $1.75 | $0.95 |
| December      31    | $3.12            | $1.80            | $1.09 | $0.35 |

----

| ·   | The      Company was profitable for the fourth consecutive year with net earnings      of $1.1 million or $0.11 per share compared to $204,000 or $0.02 per share      in 2008. The 2009 earnings included non recurring tax charges of      $168,000. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | This      was the best fiscal earnings in thisdecade. |
|--------------------|-------------------------------------------------------|

| ·   | Sales      for fiscal 2009 were $52.5 million, a decrease of 2% or $1.3 million      compared to the sales of $53.8 million in the prior year. This sales      decline was due almost entirely to the decline in LCD prices of around 7%,      which resulted in a sales decline of over $3 million. If LCD prices had      held steady, the Company’s sales would have increased by around $2      million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      reason for this increase in net earnings was the improvement in gross      margin to 17.4% from 15.5% and the reduction of interest expense of      $143,000 or 40 percent. This more than offset the loss of margin of      $225,000 caused by the sales decline. The margin improvement was driven by      improved design and purchasing cost control as well as moving more      production to Mainland China. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company’s Balance Sheet strengthened considerably with the generation of      $3 million of free cash flow. Bank debt declined to $2.2 million from $5.2      million at year end 2008. This resulted in the interest reduction of 40      percent. The Company’s debt/equity ratio was reduced to 14 percent from 37      percent at year end 2008. The positive cash flow was driven by an      inventory reduction of $3.8million. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | LCD      sales continue to drive our business and the Company sold almost 104,000      LCDs in 2009, an increase of 19 percent compared to almost 87,000 sold in      2008. The Company sold its 350,000th      LCD in January 2010. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company has been granted two LCD patents. The Company believes that one of      these patents has royalty income potential. We have another 6 LCD patent      applications filed. This is a continuation of our push to broaden the      scope of our Intellectual Property(IP). |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The      Company has embarked on two new directions, namely introducing new 3D      technology to the gaming industry and entering the new Illinois Video      Lottery Terminal market, two opportunities that have huge potential for      Wells-Gardner for the next severalyears. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | LCD      manufacturing in Mainland China and the US, primarily for the gaming      industry. |
|--------------------|----------------------------------------------------------------------------------------------|

| ·   | Distributing      products to the Illinois Video Lottery Terminal  market. |
|--------------------|----------------------------------------------------------------------------|

| ·   | Distributing      Wells-Gardner’s and other manufacturers’ parts to casinos throughout North      America, Central America, South America, Europe, Southeast Asia, including      Macau, the Middle East and Africa. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Servicing      game parts for casinos in NorthAmerica. |
|--------------------|--------------------------------------------------------|

| ·   | Refurbishing      and selling used gaming equipment to customers  worldwide. |
|--------------------|------------------------------------------------------------------------------|

----

----

----

----

----

|                            |   | Payments      Due In year Ending December 31, |   |
|---------------------------------|--------|-----------------------------------------------|--------|
|                            |   |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (in      $000’s)          |   | Total                                         |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | 2013 |   |   | 2014 |   |   |   | 2015 | + |
| Note      Payable (Note 4)      |   | $                                             | 2,178  |   |   | $ | --- |   |   | $ | --- |   |   | $ | --- |   |   | $ | 2,178 |   |   | $ | --- |   |   | $ | --- |   |
| Operating      Leases (Note 11) |   | $                                             | 2,085  |   |   | $ | 766 |   |   | $ | 572 |   |   | $ | 561 |   |   | $ | 186 |   |   | $ | --- |   |   | $ | --- |   |
|                            |   | $                                             | 4,263  |   |   | $ | 766 |   |   | $ | 572 |   |   | $ | 561 |   |   | $ | 2,364 |   |   | $ | --- |   |   | $ | --- |   |

----

|                                                                                |   | 2009   |   |   | 2008   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| ASSETS                                                                              |   |   |   |   |   |   |
| Current      Assets:                                                                |   |   |   |   |   |   |
| Cash                                                                                |   | $      | 131    |   |   | 184    |   |
| Accounts      receivable, net of allowances of $248 in 2009 & $160 in      2008 |   |   | 7,148  |   |   | 6,289  |   |
| Accounts      receivable, subcontractor                                             |   |   | 6,167  |   |   | 4,811  |   |
| Inventory                                                                           |   |   | 8,008  |   |   | 11,786 |   |
| Prepaid      expenses & other assets                                            |   |   | 1,080  |   |   | 913    |   |
| Total      current assets                                                           |   | $      | 22,534 |   |   | 23,983 |   |
|                                                                                |   |   |   |   |   |   |   |
| Property,      Plant & Equipment (at cost):                                     |   |   |   |   |   |   |   |
| Leasehold      improvements                                                         |   |   | 389    |   |   | 389    |   |
| Machinery,      equipment & software                                            |   |   | 8,665  |   |   | 8,612  |   |
| less:      Accumulated depreciation & amortization                              |   |   | (8,789 | )      |   | (8,528 | ) |
| Property,      plant & equipment, net                                           |   | $      | 265    |   |   | 473    |   |
|                                                                                |   |   |   |   |   |   |   |
| Other      Assets:                                                                  |   |   |   |   |   |   |   |
| Investment      in joint venture                                                    |   |   | 0      |   |   | 8      |   |
| Deferred      tax asset, net                                                        |   |   | 177    |   |   | 55     |   |
| Goodwill                                                                            |   |   | 1,329  |   |   | 1,329  |   |
| Total      other assets                                                             |   | $      | 1,506  |   |   | 1,392  |   |
| Total      Assets                                                                   |   | $      | 24,305 |   |   | 25,848 |   |
|                                                                                |   |   |   |   |   |   |   |
| LIABILITIES & SHAREHOLDERS'      EQUITY                                         |   |   |   |   |   |   |   |
| Current      Liabilities:                                                           |   |   |   |   |   |   |   |
| Accounts      payable                                                               |   |   | 1,345  |   |   | 1,794  |   |
| Accounts      payable, subcontractor                                                |   |   | 4,327  |   |   | 3,822  |   |
| Accrued      expenses                                                               |   |   | 1,293  |   |   | 1,066  |   |
| Total      current liabilities                                                      |   | $      | 6,965  |   |   | 6,682  |   |
|                                                                                |   |   |   |   |   |   |   |
| Long-Term      Liabilities:                                                         |   |   |   |   |   |   |   |
| Note      payable                                                                   |   |   | 2,178  |   |   | 5,185  |   |
| Total      long-term liabilities                                                    |   | $      | 2,178  |   |   | 5,185  |   |
| Total      Liabilities                                                              |   | $      | 9,143  |   |   | 11,867 |   |
|                                                                                |   |   |   |   |   |   |   |
| Shareholders'      Equity:                                                          |   |   |   |   |   |   |   |
| Common      shares:                                                                 |   |   |   |   |   |   |   |
| $1      par value; 25,000,000 shares authorized;                                    |   |   |   |   |   |   |   |
| 10,420,965      shares issued and outstanding at December 31, 2009                  |   |   |   |   |   |   |   |
| 10,348,965      shares issued and outstanding at December 31, 2008                  |   |   | 10,421 |   |   | 10,349 |   |
| Capital      in excess of par value                                                 |   |   | 5,968  |   |   | 6,007  |   |
| Accumulated      deficit                                                            |   |   | (1,107 | )      |   | (2,204 | ) |
| Unearned      compensation                                                          |   |   | (120   | )      |   | (171   | ) |
| Total      Shareholders' Equity                                                     |   | $      | 15,162 |   |   | 13,981 |   |
| Total      Liabilities & Shareholders’ Equity                             |   | $      | 24,305 |   |   | 25,848 |   |

----

|                                            |   | 2009   |       |   | 2008   |   |       | 2007   |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| Net      sales                                  |   | $      | 52,526     |   |   | $      | 53,839     |   |   | $ | 59,308 |   |
| Cost      of sales                              |   |   | 43,378     |   |   |   | 45,483     |   |   |   | 49,442 |   |
| Gross      margin                               |   |   | 9,148      |   |   |   | 8,356      |   |   |   | 9,866 |   |
| Engineering,      selling & administrative  |   |   | 7,771      |   |   |   | 7,774      |   |   |   | 9,320 |   |
| Operating      earnings                         |   |   | 1,377      |   |   |   | 582        |   |   |   | 546 |   |
| Other      (income) expense:                    |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest                                        |   |   | 213        |   |   |   | 356        |   |   |   | 683 |   |
| Joint      Venture income                       |   |   | (1         | )      |   |   | (3         | )      |   |   | (24 | ) |
| Other      expense (income)                     |   |   | 170        |   |   |   | 0          |   |   |   | (314 | ) |
| Earnings      before income tax                 |   |   | 995        |   |   |   | 229        |   |   |   | 201 |   |
| Income      tax (benefit) expense               |   |   | (102       | )      |   |   | 25         |   |   |   | 6 |   |
| Net      earnings                               |   | $      | 1,097      |   |   | $      | 204        |   |   | $ | 195 |   |
|                                            |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic      net earnings per common share        |   | $      | 0.11       |   |   | $      | 0.02       |   |   | $ | .02 |   |
|                                            |   |   |       |   |   |   |       |   |   |   |   |   |
| Diluted      net earnings per common share      |   | $      | 0.11       |   |   | $      | 0.02       |   |   | $ | .02 |   |
|                                            |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic      common weighted shares outstanding   |   |   | 10,417,031 |   |   |   | 10,349,778 |   |   |   | 10,309,114 |   |
| Diluted      common weighted shares outstanding |   |   | 10,417,031 |   |   |   | 10,349,778 |   |   |   | 10,342,076 |   |

----

|                                             |   |   |   |   | Capital      In |   |   |        |   |   |         |   |   | Total         |   |
|--------------------------------------------------|--------|--------|--------|--------|-----------------|--------|--------|-------------|--------|--------|--------------|--------|--------|---------------|--------|
|                                             |   | Common |   |   | Excess      Of  |   |   | Accumulated |   |   | Unearned     |   |   | Shareholders' |   |
|                                             |   | Shares |   |   | Par      Value  |   |   | Deficit     |   |   | Compensation |   |   | Equity        |   |
| December      31, 2006                           |   | $      | 9,255  |   |            | $      | 6,755  |        |   | $      | (2,603       | )      |   | $             | (201   | ) |   | $ | 13,207 |   |
|                                             |   |   |   |   |            |   |   |        |   |   |         |   |   |          |   |   |   |   |   |   |
| Net      earnings                                |   |   |   |   |            |   |   |        |   |   | 195          |   |   |          |   |   |   |   | 195 |   |
| Stock      dividend issued                       |   |   | 467    |   |            |   | (467   | )           |   |   |         |   |   |          |   |   |   |   | 0 |   |
| Issuance      / forfeiture of stock awards (net) |   |   | 31     |   |            |   | 85     |        |   |   |         |   |   |          | (116   | ) |   |   | (0 | ) |
| FAS      123R Option compensation                |   |   |   |   |            |   | 3      |        |   |   |         |   |   |          |   |   |   |   | 3 |   |
| Stock      options exercised                     |   |   | 82     |   |            |   | 127    |        |   |   |         |   |   |          |   |   |   |   | 209 |   |
| Amortization      of unearned compensation       |   |   |   |   |            |   |   |        |   |   |         |   |   |          | 90     |   |   |   | 90 |   |
| December      31, 2007                           |   | $      | 9,835  |   |            | $      | 6,503  |        |   | $      | (2,408       | )      |   | $             | (227   | ) |   | $ | 13,704 |   |
|                                             |   |   |   |   |            |   |   |        |   |   |         |   |   |          |   |   |   |   |   |   |
| Net      earnings                                |   |   |   |   |            |   |   |        |   |   | 204          |   |   |          |   |   |   |   | 204 |   |
| Stock      dividend issued                       |   |   | 493    |   |            |   | (493   | )           |   |   |         |   |   |          |   |   |   |   | 0 |   |
| Issuance      / forfeiture of stock awards (net) |   |   | 20     |   |            |   | (3     | )           |   |   |         |   |   |          | (17    | ) |   |   | 0 |   |
| Amortization      of unearned compensation       |   |   |   |   |            |   |   |        |   |   |         |   |   |          | 74     |   |   |   | 74 |   |
| December      31, 2008                           |   | $      | 10,349 |   |            | $      | 6,007  |        |   | $      | (2,204       | )      |   | $             | (171   | ) |   | $ | 13,981 |   |
|                                             |   |   |   |   |            |   |   |        |   |   |         |   |   |          |   |   |   |   |   |   |
| Net      earnings                                |   |   |   |   |            |   |   |        |   |   | 1,097        |   |   |          |   |   |   |   | 1,097 |   |
| Issuance      / forfeiture of stock awards (net) |   |   | 72     |   |            |   | (39    | )           |   |   |         |   |   |          | (33    | ) |   |   | 0 |   |
| Amortization      of unearned compensation       |   |   |   |   |            |   |   |        |   |   |         |   |   |          | 84     |   |   |   | 84 |   |
| December      31, 2009                           |   | $      | 10,421 |   |            | $      | 5,968  |        |   | $      | (1,107       | )      |   | $             | (120   | ) |   | $ | 15,162 |   |

----

|                                                        |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Cash      flows from operating activities:                  |   |   |   |   |   |   |   |   |   |
| Net      earnings                                           |   | $      | 1,097  |   |   | $      | 204    |   |   | $ | 195 |   |
| Adjustments      to reconcile net earnings to net           |   |   |   |   |   |   |   |   |   |   |   |   |
| cash      provided by operating activities:                 |   |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation      and amortization                          |   |   | 268    |   |   |   | 171    |   |   |   | 444 |   |
| Bad      debt expense                                       |   |   | 101    |   |   |   | 31     |   |   |   | 79 |   |
| Amortization      of unearned compensation                  |   |   | 84     |   |   |   | 74     |   |   |   | 90 |   |
| Share      of earnings of joint venture                     |   |   | (1     | )      |   |   | (2     | )      |   |   | (30 | ) |
| Retained      earnings dividend from Joint Venture          |   |   | 0      |   |   |   | 0      |   |   |   | 770 |   |
| Deferred      income tax                                    |   |   | (122   | )      |   |   | 0      |   |   |   | (55 | ) |
| Changes      in current assets & liabilities:           |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts      receivable, net                               |   |   | (960   | )      |   |   | (299   | )      |   |   | 1,082 |   |
| Inventory                                                   |   |   | 3,778  |   |   |   | 1,127  |   |   |   | 905 |   |
| Prepaid      expenses & other                           |   |   | (167   | )      |   |   | 393    |   |   |   | (145 | ) |
| Accounts      payable, net                                  |   |   | (449   | )      |   |   | 166    |   |   |   | (453 | ) |
| Due      to/from subcontractor                              |   |   | (851   | )      |   |   | (389   | )      |   |   | (1,301 | ) |
| Accrued      expenses                                       |   |   | 227    |   |   |   | (69    | )      |   |   | 284 |   |
| Net      cash provided by operating activities              |   | $      | 3,005  |   |   | $      | 1,407  |   |   | $ | 1,865 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows (used in) provided by investing activities: |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital      dividend from Joint Venture                    |   |   | 9      |   |   |   | 123    |   |   |   | 507 |   |
| Additions      to property, plant & equipment, net      |   |   | (60    | )      |   |   | (121   | )      |   |   | (94 | ) |
| Net      cash (used in) provided by investing activities    |   | $      | (51    | )      |   | $      | 2      |   |   | $ | 413 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                  |   |   |   |   |   |   |   |   |   |   |   |   |
| (Repayments)      from note payable                         |   |   | (3,007 | )      |   |   | (1,524 | )      |   |   | (2,525 | ) |
| Proceeds      from stock issued, options exercised          |   |   |   |   |   |   |   |   |   |   |   |   |
| &      employee stock purchase plan                     |   |   | 0      |   |   |   | 0      |   |   |   | 212 |   |
| Net      cash (used in) financing activities                |   | $      | (3,007 | )      |   | $      | (1,524 | )      |   | $ | (2,313 | ) |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      (decrease) in cash                                 |   |   | (53    | )      |   |   | (115   | )      |   |   | (35 | ) |
| Cash      at beginning of year                              |   |   | 184    |   |   |   | 299    |   |   |   | 334 |   |
| Cash      at end of year                                    |   | $      | 131    |   |   | $      | 184    |   |   | $ | 299 |   |
|                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| Supplemental      cash flows disclosure:                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Income      taxes paid                                      |   | $      | 0      |   |   | $      | 33     |   |   | $ | 15 |   |
| Interest      paid                                          |   | $      | 213    |   |   | $      | 356    |   |   | $ | 683 |   |

----

----

----

|                           |   | December      31, |
|--------------------------------|--------|-------------------|
| (in      $000's)               |   | 2009              |   | 2008 |   | 2007 |
| Raw      materials             | $      | 3,112             | $ | 3,706 | $ | 4,525 |
| Work      in progress          | $      | 0                 | $ | 52 | $ | 580 |
| In      transit finished goods | $      | 1,116             | $ | 1,593 | $ | 1,521 |
| Finished      goods            | $      | 3,780             | $ | 6,435 | $ | 6,287 |
| Total                          | $      | 8,008             | $ | 11,786 | $ | 12,913 |

----

|                                  |   |          |   |   |                  |   | Weighted      average |      | Aggregate |
|---------------------------------------|--------|---------------|--------|--------|-----------------------|--------|-----------------------|-----------|-----------|
|                                  |   |          |   |   | Weighted      average |   | Remaining             |      | Intrinsic |
|                                  |   | Options       |   |   | exercise      price   |   | Contractual      Life |      | Value     |
| Outstanding      at beginning of year |   |  66,862  |   |   | $                     | 1.85   |                  |      |      |   |
| Granted                               |   |  0       |   |   | $                     | -      |                  |      |      |   |
| Forfeited                             |   |  (18,408 | )      |   | $                     | 1.40   |                  |      |      |   |
| Exercised                             |   |  0       |   |   | $                     | -      |                  |      |      |   |
| Outstanding,      December 31, 2009   |   |  48,454  |   |   | $                     | 2.02   |                  |  2.1 |      |   |
|                                  |   |          |   |   |                  |   |                  |      |      |   |
| Exercisable,      December 31, 2009   |   |  48,454  |   |   | $                     | 2.02   |                  |  2.1 |      | 12,000 |

|                               |   |   |    |   | Weighted      average |   |
|------------------------------------|--------|--------|---------|--------|-----------------------|--------|
|                               |   |   |    |   | Grant      Date       |   |
|                               |   | Shares |    |   | Fair      Value       |   |
| Unvested      at December 31, 2008 |   |   | 104,961 |   |                  | $      | 2.73 |   |
| Granted                            |   |   | 72,000  |   |                  | $      | 0.46 |   |
| Vested                             |   |   | (11,026 | )      |                  | $      | 3.37 |   |
| Forfeited                          |   |   | 0       |   |                  | $      | 0 |   |
| Unvested,      December 31, 2009   |   |   | 165,935 |   |                  | $      | 1.70 |   |

----

|                             |   | December      31, |   |
|----------------------------------|--------|-------------------|--------|
| (in      $000's)                 |   | 2009              |   |   | 2008 |   |
| Payroll      & related costs |   | $                 | 497    |   |   | $ | 142 |   |
| Sales      commissions           |   | $                 | 71     |   |   | $ | 54 |   |
| Warranty                         |   | $                 | 90     |   |   | $ | 183 |   |
| Other      accrued expenses      |   | $                 | 635    |   |   | $ | 687 |   |
| Total                            |   | $                 | 1,293  |   |   | $ | 1,066 |   |

|                        | Year      Ended December 31, |
|-----------------------------|------------------------------|
| Warranty      Reserve:      |                         | 2009 |   | 2008 |
| Beginning      Balance      | $                            | 183 | $ | 200 |
| Additions                   | $                            | 160 | $ | 334 |
| Payments                    | $                            | (253) | $ | (351) |
| Balance      at end of year | $                            | 90 | $ | 183 |

| (in      $000's)                                                  |   | 2009 |   |   | 2008   |   |   | 2007   |   |
|-------------------------------------------------------------------|--------|------|--------|--------|--------|--------|--------|--------|--------|
| Computed      expected tax expense                                |   | $    | 338    |   |   | $      | 70     |   |   | $ | 66 |   |
| State      income tax expense, net of Federal tax effect          |   | $    | 48     |   |   | $      | 10     |   |   | $ | 9 |   |
| Distribution      from Joint Venture                              |   | $    | 4      |   |   | $      | 48     |   |   | $ | 368 |   |
| Reduction      of valuation allowance                             |   | $    | (122   | )      |   | $      | 0      |   |   | $ | (55 | ) |
| Other,      net  (primarily permanent differences)      |   | $    | 64     |   |   | $      | 92     |   |   | $ | (87 | ) |
| Change      in valuation allowance (regarding utilization of NOL) |   | $    | (434   | )      |   | $      | (195   | )      |   | $ | (295 | ) |
| Income      Tax Expense (Benefit)                                 |   | $    | (102   | )      |   | $      | 25     |   |   | $ | 6 |   |

----

|                                                                   |   | December      31: |   |
|------------------------------------------------------------------------|--------|-------------------|--------|
| (in      $000's)                                                       |   | 2009              |   |   | 2008 |   |   | 2007 |   |
| Deferred      tax assets:                                              |   |              |   |   |   |   |   |   |   |
| Allowance      for doubtful accounts                                   |   | $                 | 96     |   |   | $ | 62 |   |   | $ | 60 |   |
| Warranty      reserve                                                  |   | $                 | 35     |   |   | $ | 71 |   |   | $ | 78 |   |
| Inventory      reserve                                                 |   | $                 | 990    |   |   | $ | 1,061 |   |   | $ | 833 |   |
| Property,      plant, equipment and software, principally depreciation |   | $                 | 87     |   |   | $ | 15 |   |   | $ | 0 |   |
| Net      operating loss carry forwards*                                |   | $                 | 2,118  |   |   | $ | 2,498 |   |   | $ | 2,871 |   |
| Alternative      minimum tax credit carry forwards                     |   | $                 | 74     |   |   | $ | 74 |   |   | $ | 74 |   |
| General      business credit carry forwards                            |   | $                 | 129    |   |   | $ | 129 |   |   | $ | 129 |   |
| Other                                                                  |   | $                 | 52     |   |   | $ | 75 |   |   | $ | 101 |   |
| Total      gross deferred tax assets                                   |   | $                 | 3,581  |   |   | $ | 3,985 |   |   | $ | 4,146 |   |
| Less      valuation allowance                                          |   | $                 | (3,013 | ) |   | $ | (3,569 | ) |   | $ | (3,764 | ) |
| Total      deferred tax assets                                         |   | $                 | 568    |   |   | $ | 416 |   |   | $ | 382 |   |
| Deferred      tax liabilities:                                         |   |              |   |   |   |   |   |   |   |   |   |   |
| Property,      plant, equipment and software, principally depreciation |   | $                 | 0      |   |   | $ | 0 |   |   | $ | 6 |   |
| Goodwill                                                               |   | $                 | 391    |   |   | $ | 361 |   |   | $ | 321 |   |
| Total      deferred tax liabilities                                    |   | $                 | 391    |   |   | $ | 361 |   |   | $ | 327 |   |
| Net      deferred taxes                                                |   | $                 | 177    |   |   | $ | 55 |   |   | $ | 55 |   |

----

| (in      $000's except for per share data)               |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|----------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Basic      earnings (loss) per common share:             |   |   |   |   |   |   |   |   |   |
| Net      earnings (loss)                                 |   | $      | 1,097  |   |   | $      | 204    |   |   | $ | 195 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average      common shares outstanding          |   |   | 10,417 |   |   |   | 10,350 |   |   |   | 10,309 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic      net earnings (loss) per common share          |   | $      | 0.11   |   |   | $      | 0.02   |   |   | $ | 0.02 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      earnings (loss) per common share:           |   |   |   |   |   |   |   |   |   |   |   |   |
| Net      earnings (loss)                                 |   | $      | 1,097  |   |   | $      | 204    |   |   | $ | 195 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average      common shares outstanding          |   |   | 10,417 |   |   |   | 10,350 |   |   |   | 10,309 |   |
| Add:  Effect      of dilutive stock options    |   |   | 0      |   |   |   | 0      |   |   |   | 33 |   |
| Adjusted      weighted-average common shares outstanding |   |   | 10,417 |   |   |   | 10,350 |   |   |   | 10,342 |   |
|                                                     |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted      net earnings (loss) per common share        |   | $      | 0.11   |   |   | $      | 0.02   |   |   | $ | 0.02 |   |

| Years      ending |   |             |   |
|-------------------|--------|------------------|--------|
| December      31  |   | (in      $000's) |   |
| 2010              |   | $                | 766    |   |
| 2011              |   | $                | 572    |   |
| 2012              |   | $                | 561    |   |
| 2013              |   | $                | 186    |   |
| Thereafter        |   | $                | 0      |   |
|              |   | $                | 2,085  |   |

----

|                                       |   | 2009   |
|--------------------------------------------|--------|--------|
| (in      $000's except per share data)     |   | First  |   | Second |   | Third |   | Fourth |
| Net      sales                             | $      | 11,604 | $ | 14,376 | $ | 13,446 | $ | 13,100 |
| Gross      margin                          | $      | 2,083  | $ | 2,601 | $ | 2,391 | $ | 2,072 |
| Net      earnings (loss)                   | $      | 103    | $ | 484 | $ | 266 | $ | 244 |
| Basic      net earnings (loss) per share   | $      | 0.01   | $ | 0.05 | $ | 0.03 | $ | 0.02 |
| Diluted      net earnings (loss) per share | $      | 0.01   | $ | 0.05 | $ | 0.03 | $ | 0.02 |
|                                       |   |   |   |   |   |   |   |   |
|                                       |   | 2008   |
| (in      $000's except per share data)     |   | First  |   | Second |   | Third |   | Fourth |
| Net      sales                             | $      | 14,916 | $ | 14,525 | $ | 11,283 | $ | 13,115 |
| Gross      margin                          | $      | 2,441  | $ | 2,332 | $ | 1,686 | $ | 1,896 |
| Net      (loss) earnings                   | $      | 199    | $ | 170 | $ | (184) | $ | 19 |
| Basic      net (loss) earnings per share   | $      | 0.02   | $ | 0.02 | $ | (0.02) | $ | 0.00 |
| Diluted      net (loss) earnings per share | $      | 0.02   | $ | 0.02 | $ | (0.02) | $ | 0.00 |

----

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| BOARD      OF DIRECTORS                             | EXECUTIVE      OFFICERS                      |
|-----------------------------------------------------|----------------------------------------------|
|                                                |                                         |
| Anthony      Spier                                  | Anthony      Spier                           |
| Chairman,      President                            | Chairman,      President                     |
| &      Chief Executive Officer                  | &      Chief Executive Officer           |
|                                                |                                         |
| Marshall      L. Burman                             | James      F. Brace                          |
| Counsel      to Wildman, Harrold, Allen & Dixon | Executive      Vice President, Secretary,    |
|                                                | Treasurer      & Chief Financial Officer |
| Merle      H. Banta                                 |                                         |
| Chairman      & Chief Executive Officer         |                                         |
| BHH      Management, Inc.                           |                                         |
|                                                |                                         |
| Frank      R. Martin                                |                                         |
| Attorney                                            |                                         |
| Righeimer,      Martin & Cinquino, P.C.         |                                         |

| CORPORATE      INFORMATION                                                                                                                                                                                                                      |                      |                         |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|------------------------------|
|                                                                                                                                                                                                                                            |                      |                         |
| ANNUAL MEETING                                                                                                                                                                                                                                  |                      | BANKER                       |
| The      Annual Meeting of Shareholders will take place at 10:00 a.m. on Tuesday,      May 11, 2010 at the corporate offices of the Company.                                                                                                    |                      | Wells      Fargo Bank N.A.   |
|                                                                                                                                                                                                                                            | Milwaukee,      Wisconsin |
|                                                                                                                                                                                                                                            |                      |
|                                                                                                                                                                                                                                            |                      |                         |
| FORM 10-K                                                                                                                                                                                                                                       |                      | AUDITOR                      |
| A      copy of the Company’s annual report on Form 10-K, as filed with the      Securities and Exchange Commission, is available without charge upon      written request to James F. Brace at the corporate offices of the      Company. |                      | Blackman      Kallick, LLP   |
|                                                                                                                                                                                                                                            | Chicago,      Illinois    |
|                                                                                                                                                                                                                                            |                      |
|                                                                                                                                                                                                                                            |                      |
|                                                                                                                                                                                                                                            |                      |                         |
| TRANSFER AGENT                                                                                                                                                                                                                                  |                      | COUNSEL                      |
| BNY      Mellon Shareowner Services                                                                                                                                                                                                             |                      | Gould      & Ratner, LLP |
| P.O.      Box 358015                                                                                                                                                                                                                            |                      | Chicago,      Illinois       |
| Pittsburgh,      PA  15252-8015                                                                                                                                                                                                       |                      |                         |
| or                                                                                                                                                                                                                                              |                      |                         |
| 480      Washington Boulevard                                                                                                                                                                                                                   |                      |                         |
| Jersey      City, NJ  07310-1900                                                                                                                                                                                                      |                      |                         |
| Telephone:      1-800-853-4967                                                                                                                                                                                                                  |                      |                         |
| Web:      www.bnymellon.com/shareowner/isd                                                                                                                                                                                                      |                      |                         |

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