Richard Goodman - General Counsel Richard Horowitz - Chairman, President and Chief Executive Officer Joe Molino - Chief Operating Officer and Chief Financial Officer

Andrew Shapiro - Lawndale Capital Management Henry Dubro - Private Investor

Good day, ladies and gentlemen and thank you for standing by. Welcome to the P&F Industries Inc. Q3 2016 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Richard Goodman, General Counsel. Please go ahead, sir.

Thank you operator. Good morning and welcome to P&F Industries’ third quarter 2016 earnings conference call. With us today from management are Richard Horowitz, Chairman, President and Chief Executive Officer and Joseph Molino, Chief Operating Officer and Chief Financial Officer. Before we get started, I would like to remind you that any forward-looking statements discussed on today’s call by our management, including those related to the company’s future performance and outlook are based upon the Company’s historical performance and current plans, estimates and expectations, which are subject to various risks and uncertainties, including but not limited to the strength of the markets in which we operate, the impact of competition, product demand, supply chain pricing, Company’s exposure to fluctuations in energy prices and as and as other risks and uncertainties described in the reports and statements filed by the Company with the Securities and Exchange Commission including among others as described in our most recent annual report on Form 10-K, our quarterly reports on Form 10-Q and our subsequent filings. These risks could cause the Company’s actual results for future periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. Forward-looking statements speak only as of the date on which they are made and the Company undertakes no obligation to update publicly or revise any forward-looking statements whether as a result of new information, future developments or otherwise. With that, I would now like to turn the call over to Richard Horowitz. Good morning, Richard.

Good morning, Richard. Thank you everybody for joining us today. I would like to begin today’s call as we always do with a brief summary of the Company’s third quarter, 2016 results from continuing operations and earnings per share from this continuing operations and how they compare to the same period a year ago. As always after that I will ask Joe Molino to briefly review key cash flow information and discuss discontinued operations and provide an update on key events affecting the Company. After that of course we’ll have our question-and-answer session. However, before I begin I wish to remind all of you, once again that the purpose of this call this morning is to discuss and review the Company’s third quarter 2016 results. As such, I kindly request that you please confine your questions and comments to those Company’s results for the third quarter. I wish to point out that unless otherwise noted, the financial information discussed on today’s call first of our continuing operations thus excluding Nationwide industries which of course was sold in February, 2016 and has being discounted for as a discounting operation. The Company’s consolidated revenue for the three and nine months periods ended September 30, 2016 were $14,633,000 and $44,769,000 compared to $15,924,000 and $46,541,000 for the same periods in 2015. Florida Pneumatics third quarter 2016 revenue was $11,702,000 compared to $11,729,000 during the same period a year ago. Florida Pneumatics third quarter, 2016 automotive revenue increased by $741,000 were 24.8% over the same period in 2015 being offset by declines in its retail, industrial catalog and other revenue categories. We believe much of the shortfall in the retail revenue is likely to be made up during the fourth quarter of this year. The shortfall of Florida Pneumatics third quarter industrial catalog revenue was due in part weakness in oil and gas which continues and sluggish shipments to its catalog customers as well. Florida Pneumatics 2016 nine month revenue of $35,270,000 reflects an increase of $1,284,000 over last year’s revenue for the same nine-month period. So automotive revenue for the first nine months of 2016 was $11,336,000 an increase of $2,214,000 over the same nine-month period in 2015. Additionally Florida Pneumatics retail revenue for the nine-month period ended September 30, 2016 increased $59,000 over the same period last year. And lastly, its industrial and catalog revenue declined $836,000 when compared to nine-month period September 30 compared to the same period a year ago. As stated earlier, well let me continue with Hy-Tech first excuse me. Hy-Tech revenue this quarter was $2,931,000 compared to $4,195,000 for the same period in 2015. For the nine months ended September 30, 2016 Hy-Tech’s revenue was $9,499,000 compared to $12,555,000 for the same period a year ago. As stated in previous calls, we believe that the primary course for these declines continues to be the relatively low price of crude oil. With low crude oil pricing many rotary rigs have closed or have been temporarily capped. According to Baker Hughes Incorporated, the average rig count in the United States for September 2016 is 509 down 339 from 848 in the same time last year. Limited production reduces the need for much of Hy-Tech’s parts and tools. Further, as noted on previous call one of Hy-Tech’s largest customers has decided to manufacture several of the tools and parts, it formally acquired from Hy-Tech. And Hy-Tech has been advised that one of its customers that was acquired in the ATSCO acquisition but was not placing orders, which we believe is again the result of oil and gas pricing and other factors. The company’s consolidated gross margin for three and nine-month periods ended September 30, 2016, were 30.8% and 33.6% respectively compared to 35.4% and 36.4% respectively for the same periods last year. Florida Pneumatics gross margins improved 1.9 percentage points this quarter, compared to the same three-month period in 2015. For the nine months period ended September 30, 2016 as gross margin of Florida Pneumatic improved 1.6 percentage points when compared to the same period last year. These improvements were due mostly to product mix emanating from the growth of our automotive revenue and to a lesser degree the strengthening of the US Dollar to the Taiwan Dollar. During the third quarter of 2016, we increased Hy-Tech’s allowance with slow moving inventory. This adjustment contributed to Hy-Tech’s reporting a quarterly gross margin of 9.8% down from 38.7% for the same three-month period last year. This key driver causing the increase in Hy-Tech slow moving inventory was due to notification by a Hy-Tech vendor that it would not restock certain inventory items. Hy-Tech’s gross margin also declined due to lower overhead absorption in turn due to lower manufacturing activity levels as well its decision to manufacture and sell a very low gross margin suite of product to a customer acquired in the ATSCO acquisition, which we discussed previously. It’s nine-month 2016 gross margin of 20.6% is down from 39%, again driven by increased allowance but slow moving inventory, lower overhead absorption, the decision to manufacture and deliver a very low gross margin suite of products. Our selling and G&A expenses for the three-month period ended September 30, 2016, was $4,915,000 compared to $4,787,000 for the same period in 2015. Significant components to this change include increase in professional fees and services related to merger and acquisition activities. Variable expenses incurred in connection with higher automotive revenue and total compensation expenses partially offset by declines in depreciation and amortization expenses. The total selling and general administrative expenses for the nine-month period in September 30, 2016 were $15,088,000 compared to $14,834,000 last year. This increase was driven by greater variable expenses and total compensation cost, which were partially offset by reduction in depreciation and amortization expenses lower professional fees and expenses in stock-based compensation. For the three-month and nine-month periods ended September 30, 2016, other income was $43,000 from the rental income from the Tampa facility and net expense of $38,000 which was a fair value adjustment to the contingent consideration related to the UAT transaction partially offset by this rental income. For the nine-month periods ended September 30, 2016 and 2015 we will be reporting $75,000 and $234,000 respectively with the prior year including then [ph] fair value adjustment credit of $126,000. Our third quarter, 2016 interest expense was $26,000 compared to the $29,000 incurred in the same period last year. Interest expense for the nine-month period ended September 30, 2016 was $164,000 compared to $87,000 in the same period in 2015. During the first quarter of 2016, we required to write down the deferred financing costs that were attributable to the debt that was repaid in February. Further, 2015 interest was reduced to due to accounting requirements to remove and include in discontinued operations certain interest expenses. Taking the above into consideration and we reporting pre-tax loss from continuing operations for the three-month period ended September 30 of $393,000 compared to pre-tax income of $776,000 for the same period in 2015. For the nine-month period ended September 30, 2016 our loss in continuing operations before tax was $8,462,000 compared to a pre-tax income of $2,274,000 for the same nine-month period last year. After tax results for the nine-month periods ended September 30, 2016 and 2015 were a loss of $5,590,000 an income of $1,510,000 respectively. Our basic earnings per share from continuing operations for the three and nine-month periods ended September 30, 2016 was a loss of $0.08 and $1.55 per share compared to earnings of $0.14 and $0.42 per share for the three and nine-month periods ended September 30, 2015. Diluted earnings per share from continuing operations were a loss of $0.08 and a loss of $1.55 per share compared to earnings of $0.13 and $0.40 for the same periods in 2015. Joe please discuss the cash flow and discontinued operations at this point.

Thank you Richard. Capital expenditures during the first nine-month of 2016 and 2015 were $894,000 and $1,044,000 respectively. Significant non-cash items affecting our cash flows during the nine-month period ended September 30, 2016 were impairment of goodwill and other intangible assets of $8,311,000. Depreciation and amortization of $1,227,000, amortization of other intangible assets of $803,000, amortization of debt issue cost of $118,000 and total stock-based compensation of $39,000. There was also a non-cash credit attributable to deferred income taxes of $3,163,000. Other significant components which impacted our cash used in operating activities of continuing operations of $3,985,000 or [ph] increases of $1,947,000 in prepaid expenses and other current assets; $2,166,000 in accounts receivables, increases in inventories of $681,000, a decrease in accrued compensation and benefit of $209,000 an increase in accrued expenses payable of $1,591,000. Subsequently to September 30, 2016 we sold the real property located in Tampa, Florida for $3,750,000. After fees and expenses we received approximately $3.5 million which was used to pay down bank debt. The net book value at the time our Board of Directors approved this transaction was $1,780,000 and will accordingly be reported as assets held for sale in our third quarter Form 10-Q. we believe that for tax purposes the loss carryover from the sale Nationwide will negate almost all the capital gain realized in the sale of this real property. With that, I’d like to turn the call back over to Richard. Richard?

Thank you, Joe. And before we end our report. I would like to acknowledge our employees and our management for working so diligently and for doing such an outstanding job, during this continuing sluggish economic times. That’s the end of our report today and now we’ll be happy to answer any questions, anybody may have. Operator?

[Operator Instructions] and we’ll take our first question from Andrew Shapiro with Lawndale Capital Management.

Good morning I’ll ask. I’ve got bunch of question I’ll ask a few and get out into the queue, in case there is other, but please come back to us. So your merger and acquisition professionals expense was called out in this press release pretty sizable increase. Do that mean you’re getting close on any new purchases and can you update us on the status and focus of your process?

Joe, can add on to it Andrew. But we’re always looking and exploring as you know certainly since we sold Nationwide especially. We’re looking very diligently and for acquisitions and there’s nothing to report as of yet, but we’re spending time and money in that process and I guess that’s what, exactly what it is. Joe, you want to add about that?

No, it’s just we’ve done this periodically over the years as you know, sometimes we spend more money than others, sometimes it’s significant sometimes it isn’t, we can’t really say more than that at this point.

Of course you know Andrew that, these things are moving target and sometimes it takes a little time to do these things and sometimes it doesn’t take so long and but we got to swing it every pitch to hit the ball, so that’s what we’re doing.

One other thing I would add is, there are some expenses in there related to the sale of the building which is you know is completed.

So the sale is on October, but booked the expenses in September.

There’s small expenses in there in the third quarter, yes. That’s not the bulk of it, though.

Okay. Well and if you’re always looking on the M&A trail then the fact that it’s higher year-over-year was one of the reasons I’m calling it out and asking about, did you come close and something to fell through or it could be indicated that you’re getting close on something.

No, we’re not - nothing fell through there’s just few things and we’re just proceeding with them in a matter of course, a normal matter of business. I don’t know what else to say to you about it. Not trying to do it serious, but we’re doing what we have to do to try to pursue companies and do the due diligence and [indiscernible] to make sure that we’re on the right path.

Let’s move on, several questions on Hy-Tech here. Last quarter you said that should Hy-Tech prospects deteriorate there could be additional impairment charges. Approximately how much goodwill and intangible asset value remains on the balance sheet associated with Hy-Tech?

That is not an answer I can you give you off the top of my head. I’d look at it while we’re on the call. I will say what I can say off the top of my head is, a very large piece of it was written down in Q2, but we can get you that figure before the call.

And then your release said, in September we began shipping new products that utilized our extensive air tool motor manufacturing knowledge, to new OEM markets and customers. And is this Hy-Tech or Florida Pneumatics AIRCAT or something else when you refer to your extensive air tool motor manufacturing knowledge to these new markets.

This is Hy-Tech, Andrew. What we discussed in our last couple of quarters, how we were just shifting the focus of our business because of the oil and gas declines and shifting of market. So we’re in midst of taking Hy-Tech keeping the business of course, to whatever it is and hopefully though it will recover when times improve, but we’re also shifting the focus as we discussed with that motor technology etc. and we started shipping in September. Albeit not dramatic amount but we started and it’s going to be continuing from this point on for the foreseeable future.

Okay and what are these new target markets and uses?

I can go into some level of detail. We’re working on projects in food processing, transportation, industrial maintenance, shipping those sorts of things and others. And we have active projects going on for development of products for very specific customers and we’re working directly with those customers in developing those products.

It’s a full time focus, at this point.

And you said that there are multiple customer sponsored projects underway in areas you haven’t traditionally marketed to. Can you clarify what you mean by customer sponsored and also maybe the areas that “not have been traditionally marketed to”?

Okay, so it would be the areas I just gave you food processing, transportation, industrial maintenance and shipping. We’re working with a very specific customer on a very specific project to deliver them on a OEM basis. Some product air tool related, air tool manufacturing motor-based related to satisfy need of theirs and our name won’t go on it. It will be part of their product, their production or something inside of their operation. So we call OEM business in, none of those business are related in any way to what I call our legacy air tool business. Let me just finish, other than the fact it takes our expertise that our air tool manufacturing expertise.

And is this OEM perceptively a big opportunity.

It’s not a single company, it is multiple companies.

And the market itself is pretty big.

The opportunity if you add them all up. We feel certainly would go a long way towards getting the revenue back to where it was, once we’re fully engaged.

All right and when two of the three customers that you called out with reduced business with Hy-Tech were discussed in your release and on last quarter’s conference call as well. Today’s release also said you received “notification” by a Hy-Tech vendor that it would not restock certain inventory items. Can you please clarify if this is the third Hy-Tech customer that we had already previously discussed last quarter or a different instance and to explain whether this is a permanent or the vendor just realigning its inventory.

Okay, so let’s be clear. So we’re talking about a vendor here not a customer. So this is somebody who supplies us.

[Indiscernible] all right.

Does that answer your question?

Okay, so it’s someone who’s supplying you. It’s not going to restock certain inventory items. So what does that mean for you then? Can you further?

Maybe this language is in fact clear. We hold a fair amount of inventory that as a result of market turning on us is now slow moving. There is nothing wrong with it per se, but based on how we go about at least preliminary looking at inventory and its ultimate value. We have - our approach begins formulaically it’s not where we end up. But - that’s how it starts and then we apply some logic to it. We believe that we had an understanding with this vendor periodically to return excess inventory during the third quarter. We asked to return excess inventory unfortunately their world is in a whole lot better than our world and they said, they don’t want to take it, they don’t want to take it and we should just sell it as we can. So that shows to take a reserve against that inventory because now it is slower moving.

And this inventory is primarily related to oil and gas and/or mining and extraction.

Yes.

Okay, so that when those and the products or the componentry [ph] is got a low risk of obsolescence so that when the market’s rebound you’ll just be able to start moving it through.

That’s a very fair assessment these products are not ones where the technology moves very rapidly, so yes to your question, if the markets turn around those products will also start to move. Andrew I did get an answer on the remaining intangibles related to Hy-Tech. so there’s a net book value of little over $1.1 million intangibles and a little under $900,000 in goodwill.

Okay. So maximum of $2 million risk. Okay.

Yes.

And the last question on that until I back out here continuing on the inventory reserves. So when discussing the inventory reserve last quarter you mentioned also the possibility of the reserves could unwind and come back into income which sounds like even with this other slower moving stuff, if things were moving quicker similarly reserves could unwind and come back into income, how does the Board of Directors take into account the incurrence and reversing of inventory reserves when setting performance compensation targets and also in rewarding or not rewarding bonuses.

Well I mean, they’re built into our budgets. They’re extremely familiar with the details behind how we build these reserves. And look I’m not privy to everyday conversation but they know what’s in there, what the potential is for reversal, if that’s the word you want to use.

Okay, great. I’ll back out. I have other questions, so please come back to me.

Sure.

And we’ll now take our next question from Henry Dubro, Private Investor.

I’d like to follow-up regarding the asset held for sale. So in today’s press release I see you’re talking about a book value of approximately $1.7 million and you solid it I guess $3.5 million net of expenses, so we can correlate, the gain will be the difference in the fourth quarter. Correct?

Correct.

Book gain, that’s a book again.

Correct, when was that asset listed for sale?

I’m sorry, say that again.

When was that asset listed for sale with a broker?

I would say March, yes, I want to say March.

March.

Yes, approximately.

And when did you sign the contract?

What’s that?

When did you sign a contract of sale to sell it?

Probably 30 days before we sold it.

30 days, I see. All I want to understand is the requirement or the ability to show it as assets held for sale at the end of the second quarter versus the third quarter.

Yes, at the end of the second quarter it was - the Board did not approve the sale of building. We had listed it with the broker and ask them to begin the process of marketing it and when I said listed that doesn’t mean it’s sitting on some list where anybody could just find it for sale. It’s a whole process, they had to do all bunch of research and they probably didn’t begin contacting people till late in the second quarter.

Okay my final question, if management felt that at the time that you placed it for sale that you could close it within a year it could be considered an asset held for sale. Yes I understand.

That’s actually not the rule, the rule hinges on the Board of Directors approving the sale of the asset just simply trying to market the company, does not satisfy GAAP for listing that as an asset held for sale. And a fact the surprise, if the bids we’ve gotten weren’t good enough we would not have sold the building, so it wasn’t as if we were selling it regardless.

Okay, let me move on back to this inventory reserve. The inventory reserve that you’ve recorded how old is this subject inventory.

It doesn’t really work that way, I mean basically the way it works is product I’m going make these numbers up, if I’ve got a 100 units of product in the last 12 months, I’m selling 100 units in a clip without getting into a lot of detail. I probably wouldn’t put a reserve on that product. But if I got a 100 units and I’m only selling 25 a year and let’s just for argument sake, there is nothing wrong with that equipment and it’s product that has, there’s a low chance of technological obsolescence in the market and there’s inherently wrong with the market in the long run just maybe in a downturn. We would put a reserve on that because it’s slow moving, we wouldn’t write it off because it’s still moving to some extent. So it’s not about how old it is, I mean I could have built it in the last 12 months, I could built it a month ago, it’s the way it’s driven is by what the activity level is in the most recent periods and how that relates to how much we’ve got. And then there were a number of other factors that come in play, which can have an effect on the ultimate figure we could have a commitment from somebody, we could have opportunity convert that into something else that moves. There are multiple factors just beyond a formula.

$427,000 reserve represents what percentage write-down of the cost that you were carrying it at?

I’m going to say less than 5%.

Less than 5%.

And again just to be clear, that’s 5% of total inventory. The way we do this.

No, I’m talking about the products.

No, it’s okay. Let me answer your question. We have 20,000 SKUs. We literally look at the turns for every single one, every quarter. So I can’t tell you in this phone call SKU number 1, 2, 3 has a certain characteristic. There are 20,000 SKUs we look at every quarter and I would venture to say there are various reserves, various sizes on thousands of them. But it’s not a single answer.

Is that if you wrote down, $400,000 reserve was that on inventory that had an original cost of $500,000 to $1 million. I’m just trying to understand the magnitude of the reserve on that slow moving inventory.

Unfortunately that’s not something I can answer simply, it’s too complex to answer that question. I’d have to literally hand you a list with thousands of part numbers and you’d have to go through each one and calculate the percentage reserve to the original value, which is not practical to share that information publicly. I know what you’re trying to do and it does get down to that level of detail, but there’s no practical way to disseminate that information to the public.

My last question before I leave it to others, is the current quarter merger acquisition fees whatever, due diligence fees. These were ex-professional fees for the most part whether they’re legal, accounting, other experts for either proposed or abandoned transactions.

Yes and also experts, professional, other professional experts. There could be travel in there. Anything related to our M&A activity or our exploration of potential activity.

And you said there were some minor amounts that may relate to the closing of the building.

Yes, very minor. We probably should move off that, it’s immaterial. It’s in there but it’s not material. The bulk of those expenses would reside in Q4.

Okay, so if it was materially, you could have deferred that.

Yes, that’s a fair point. Again, I’m just going to make this up, maybe there’s a little bit a travel in there, maybe there was a an expert we needed for something, it was immaterial enough that we left in the prior quarter because as you know there was no guarantee that building would be sold, so I can’t just leave those expenses hanging out waiting for sale to happen. We got to expense them.

Other than that, you know the sale occurred, but as you said it’s immaterial. Okay I’m going to leave for now. Thank you.

And we’ll now take our next question from Andrew Shapiro with Lawndale Capital Management.

One remaining Hy-Tech question and I’m going to move on here. You called out the price of crude oil and the results in reduced rig count as the cause, as the macro cause on Hy-Tech’s revenue decline. With oil prices and rig count up over 20% from the end of June to the end of September, are you seeing stabilization or possibly even sequential that’s this quarter versus last quarter improved impact on Hy-Tech in this area.

We’re not.

We’ve had sporadic upticks, but generally speaking I would say the answer is no. I don’t think it’s from what the experts say and we read and all that. We haven’t hit that inflection point yet. I think it’s more - I mean.

Is there a time lag you encountered from the decline in the rig count and the oil price when it started to hit Hy-Tech which would then give maybe an indication of the time lag on the rebound in pricing and rig count as to when customers would start to need your Hy-Tech tools again.

I would say this, there was a little bit of time lag for a good part of the business I’m going to say it was a quarter, maybe it was two and then there was an even further time lag for one of our largest customers who’s in the oil and gas business, it probably was a quarter after that or two.

Okay, then will ask you next quarter should the rig count and oil prices stick here at the September level or improve even further by the end of December and besides that [indiscernible] March conversation anyway.

I’m sure you follow as well, but we follow very carefully and maybe two weeks ago or three weeks ago oil was north of $50 and now it shot back down to mid-40s again.

Actually I’m following the rig count a bit more because there seems like the rig count would be what would drive the use of your tools. Rig count is up 20% from end of June to end of September. But we’ll about that.

I think they go hand-in-hand a little bit Andrew.

Moving off Hy-Tech in terms of some general things discussed last quarter and to follow-up on them. While you’re looking to acquire companies and assets are low accreted valuations. These purchases still have some form of unknown risk and if investors are going to give away especially in the face of you selling real estate for $3.5 million and paying off all the debt. Okay, if they’re going to give away P&F shares and its assets and assets that you and board best know the risks off, i.e. our company like valuations far less any other assets in fact today our stock trades below net, net working capital per share. Why isn’t P&F backing back shares yet?

Well Andrew, I can only tell you. Joe, why don’t you just?

Sure. I mean that’s a complex decision, it involves means for cash, what the price of stock is, all the various SEC regulations and trading restrictions. So I think intellectually I don’t think there is a disagreement that something that should be looked at, I don’t think we have an issue with that, but it’s not that simple.

Andrew, we’re restricted by quite periods, I mean you know this stuff as well as we do.

I do so let me walk you through something here. Just to make sure you and the Board have explored this okay because last quarter you said the Board discussed the buyback right after the annual meeting when P&F shares were around $8.50 a share and you concurred that the stock then was underpriced. Now that $6.80 a share another 20% lower. Okay. In the last quarter you also referred to “clearance from legal counsel as an impediment”. Now you guys pay your lawyers a lot of money for them not to be familiar with and into advice the Board on a 10b5 repurchase plan. Which when adopted is not blocked by quite period windows. Are you familiar with this 10b5 plans? Yet and if not, will you have your lawyers brief you and your Board about them.

Of course, Andrew. Of course we’re familiar with 10b5. I mean. I don’t.

Well if your familiar with the plan, then why say quite periods at the impediment.

Well it’s not just quite period. Okay here’s the deal. Just an example. If you rewind to November, the fall of 2014 you wouldn’t be area of this. But the Board concluded that we should explore of sale of Nationwide that is the fall of 2014. We were in discussion, heavy discussions through all of 2015 to the end of 2015, to the beginning of 2016. We couldn’t do a thing about setting up a 10b5-1 plan during that period of time.

Totally agreed, totally understand. Okay.

Okay, then let me finish. Right after that the Board decided we should think about selling the buildings that didn’t go along with the sale. Our advice from our attorneys was the same. Guys, we can’t set up a 10b5-1 plan if you’re thinking about selling the building it’s too significant. So now that takes to November 1, 2016 I’m not saying that’s the only reason we didn’t set up a 10b5-1 plan but we absolutely could not set up a 10b5-1 plan from the fall of 2014 to the fall of 2016 and I’m not going to talk about whether we’re in a quiet period now, we’re not but I’m just giving you example how difficult it can be, to do what you say.

So you’ve illustrated to me, you understand how it works and when and how to adopt it. So can we then move the discussion forward that when a quiet period, window finally opens up? Given where you thought the price was undervalued at $8.50, given that our tangible book value is almost $10, given that we’re trading below net, net working capital now. Will the adoption of 10b5 plan when a window opens up be a very or more serious consideration for this management and board?

Andrew, we absolutely have exact same opinion that you do and we understand fully what you’re saying, of course and the Board, situations present themselves in our next Board meeting and we don’t have any lawyer intervention regarding anything going on at that particular moment. Clearly we would consider that discussion, clearly.

Good.

Having said that, I can’t promise you that’s the case. But of course that would be absolutely. And if the discussion at the Board level, even if there is something going on, we still discuss it. As a matter of course, every single Board meeting with great intensity.

Okay and just so you know, as well more than 10% shareholder I’m subject to Form 4 Section 16 short-swing profit issues. I’m buying the shares that Mister and Miss Market are giving up that you guys can’t buy. And it’s not like I’m turning around and looking for somewhere to sell them. Don’t get that impression, I’m buying the shares. I’m just thinking that here we are looking at acquisitions which carry risk relative to where our securities are being offered, you can get assets you know all well about at far bigger discounts and higher rates of return, it’s just great accretive use of capital when you’re allowed to do it.

I’ll let Joe answer this question one more time. But Andrew, with me there have been times that I’ve wanted to buy more stock and I’ve been told that I cannot do that for exactly the same reasons that the Company cannot.

Well there’s a separate region. You’re being usurping a corporate opportunity because the Company ought to buy back shares instead of you, to be honest.

Well, there’s nothing wrong saying I’m not a lawyer, but there’s nothing wrong we couldn’t do both. I mean but right now we can’t do anything so at that time, during this period we could not do anything and as I said, at our next Board meeting in December, we will discuss it again and consider it and if there is nothing else pending in any way, we will definitely entertain that as we do, for all the obvious reasons that you’ve stated and we’re totally aware of.

Now I’m hopeful that you don’t limit yourself just to the scheduled quarterly in person board meetings but should the window open up prior to the in person board meeting you know the emails and the phone calls get done and you have a telephonic does the approval without waiting for the quarterly window, the quarterly meeting.

I think you’ve made your point. I think that we know your point, it’s nothing new. It’s nothing written over relation, we’re just continuing to talk about. We’re talking past each other. We understand it and we will do as we deem appropriate and we’re on the same page, that’s all I could say.

Right. Now P&F’s lie any company’s valuation model will directly impact to your cost to capital and the value that you can add from your acquisitions are other uses of capital. So in order to widen your potential acquisition market, you had a higher value shares, your cost to capital is lower, the accretion of what else you acquired would be better. Now I know in the past, you didn’t feel investor relations efforts were worthwhile. But in light of the fact that on what should have been treated as good liquidity enhancing balance sheet strengthening news of the recent Florida real estate sale investors in one very high volume mind you, over 1.25% of the company’s total shares outstanding sold of P&F shares to absurd valuation levels. So have you given some thought to increasing the company’s investor communication efforts because you mentioned on the last call “if we had something to talk about” but perhaps telling the companies investment proposition basically that you have a grossly undervalued stock relative to the businesses you already own and the cash flow these businesses on a normalized basis generate and their prospects, isn’t that sufficient enough to talk about.

Andrew, again this is a third quarter conference call and you’re using it another platform and that’s not the scope of this call. But I will answer your question and then I’m going to ask you please focus on the third quarter. But yes, we talk about investor relations also on a very regular basis, not just on our meetings but at other times and we talk to people about it and it is been our sense and the board sense that there is nothing much that there is nothing much is not obvious and there is no productive sense for us to be in that route. Having said that, every quarter or whenever we meet and talk and actually we had a conversation about this I’m going to say Monday, this week when we had a telephonic with the board and that was actually one of the brief comments that we talk about and we said, we would discuss it again at the meeting coming up in December. So I don’t know what else to say to you, there is nothing that you’re saying to us, that we’re not fully familiar with and fully aware of. And if you know, I mean I’m going to say you have to trust us that we’re doing what’s right for - doing everything we think is right for the stockholders and that’s not only in this issue but in any issue and I really appreciate everything you always tell us about, when you write us about the 10b5 and all that stuff, but I assure you, we understand all of that stuff. We appreciate your interest and your concern and there’s nothing wrong with your continuing to give us the information. I can assure that management of this company and our board are ultimately and extremely familiar with all the things that you’re discussing. Not to say you shouldn’t continue doing it, don’t misunderstand me. We’re happy to have your comments and your suggestions. But I need you to know that we are ultimately, very intimately familiar with all these things and discuss them on a very regular basis. So you’re not talking to a wall, we understand exactly what you’re saying and we talk about it with or without your prodding. But we’re happy to have your prodding as well.

Right. Okay. Then only it seems we may have a slight disagreement on is that, you had me at the comment, if we had something to talk about. I believe you already have something to talk about. Yes, there is other things that could be better but given the current stock price of the company and what you have, you actually already have something to talk about and.

Okay, I hear you again. And I don’t mean to be disrespectful. I hear you, I understand exactly what you’re saying. Let’s move on and I assure you again, at our meeting next month. We’ll discuss it and the board members of course are on the call today, hear what you’re saying and we will absolutely discuss it yet again and we would anyway.

Good let me back out. I have questions on Florida Pneumatic to come back to me on, but in case someone else is waiting.

There is nobody else on the call. [Indiscernible] you can continue.

All right. Last quarter you didn’t have enough time with the new CNC machine to opine and whether the expenditure was paying off as anticipated. With another quarter of experience is this investment generating the payback and benefits you were hoping for?

Are you talking about Hy-Tech?

I think that was a Hy-Tech, CNC machine it was a pretty big CapEx.

Yes, I mean the activity levels are below where we would like them, so it is not fully utilized.

Okay.

Not even close, actually but obviously our plan is and it will be.

Can you discuss CapEx plans for the current quarter and early and in the upcoming year and major projects in embarked on or too being embarked on?

There’s nothing to discuss for 2017 because we were really just working on budgets for that. There will not be anything unusual in the fourth quarter.

Okay. Florida Pneumatics.

Normally, Hy-Tech is rocking and rolling, we get request for CapEx and we never turn them down. We discuss with them but we never turn them down but of course with the much shorter revenue and with a change in revenue to different types of products demands. I don’t really envision much of anything in the CapEx area next year. Having said that, when we go through the budgets we may see a difference but right now there’s nothing that we’re discussing in any way shape or form.

Okay, on AIRCAT on prior calls you spoke of additional AIRCAT products to come online later this year, can you provide an update and more detail at this time yet?

It’s an ongoing thing, we’ve introduced new products as a matter of fact there was a show last week in Las Vegas.

I believe we launched a dozen new products. Approximately a dozen new products last week at the show.

Yes, saw that in their Twitter feed.

Okay, so if you go to Aircat.com. I think you’ll see those new products.

Yes and it’s a little too early to tell [indiscernible].

The AIRCAT acquisition that we made and the marketing and the development of that line and Florida Pneumatic is but nothing short of sensational in our little world. It’s been doing really, really great and continues to do.

Now you said in your release that Florida Pneumatic or maybe specifically AIRCAT your strategic plan was to move into other sectors of the automotive market. Can you expand on what you mean by other sectors that you’re focusing on, is this is a way from the less cyclical repair maintenance use or is it some other expansion?

It is a way - not a way but it’s an additional silo without going into lot of details different than repairs and maintenance.

Okay and you can’t go into more detail because it’s competitive?

Yes, I’d prefer not to. When we get closer, we can talk about that.

Okay, you said you had additional geography primarily in Central Europe you were developing for AIRCAT and other tools and developing distribution opportunities throughout Europe as well, can you provide an update in more detail yet?

There’s not a whole lot to update you on, it’s ongoing, it’s very slow going. We don’t have a lot of resources in Europe. But we’re still working on it. We’re confident we’re going to have something sometime in 2017.

Okay and regarding your sequential decline in Florida Pneumatic retail revenue this is, the September quarter versus the June quarter, to what extent can you clarify was this related to seasonality or special promotion or other factors at Sears.

In my presentation at the beginning of the call, I said that we expect to pick up the difference in the fourth quarter of this year.

It’s just timing, Andrew.

Yes, so in the middle of November it has some or all of that products and shipped.

Yes, we’re making that up as expected.

And your recent experience in visibility with respect to Craftsman tools both for Sears and its many affiliated spin offs, is there anything new to report in light of the discussions that Sears is having about monetizing Craftsman and it’s in.

We would know, no more than you know about that. We don’t sit in their office. We don’t know, we only know what they tell us and actually they only know what is in the papers in a lot of cases. But the October 31 was the deadline they had put to get all bids in and all that stuff. I can only tell you that at the show last week in Las Vegas. Sears was there and they were very, very upbeat about 2017 for whatever that’s worth and they may not, the people may or may not know what they’re talking about but because they know more than we do that’s for sure.

And on the last call, Joe discussed developing some new products that you were about to launch for the Craftsman line what’s the status of that launch and your experience on these new product so far.

Those are not out yet. In fact, I suspect and I don’t have my notes in front of me that’s probably 2017.

All right, I’ll ask you in March then. Also you stated that Sears had indicated they were working on new additional avenues to sell Craftsman tools, did those new channels materialize yet or and what does your experience selling into these new channels.

Yes, they have not shared anything. They’ve not announced anything new to us since that last comment.

Okay on Home Depot what’s your current experience and visibility, with respect to Home Depot US?

I mean I don’t have anything unusual to report. It’s business as usual. Barely steady year-over-year.

You mentioned on last quarters call that the initial launch experience with Home Depot Canada was quite favorable, even if it was a fraction of the business you do in the US. But you’re also rolling out additional tools there and what’s your current experience and visibility with all of that?

They’re rolling out, but not - I don’t know that it’s particularly material.

Okay and lastly on the last call within industrial you called out aerospace as a sub-segment, that was to see several new products before year end, now that we’re mid-November there’s only a month and half left, have these new products rolled out yet and what’s been your experience the ones that were rolled out so far?

We’re still working on them, they’re very complex and they’re still under development.

We’re hoping to have them out in the fourth quarter and when we get them, the market in the aerospace, I don’t know how much you know about it. It requires a testing on their part and also it’s a long trials before they start using it. Boeing or Airbus or [indiscernible]. So I would expect we’ll have more to say at our March call, I don’t think we have much - I don’t think there’ll be much of any kind of consequence before that.

And it’ll be a slow start.

But once approved it will be a good thing for our company.

Okay and the approval process time lag, three months, less than three months, six months.

It’s varies by company and it can be anywhere from three months to a year frankly. You know it depends on their, it’s their not us. It’s their own schedules, their own needs etc.

And even beyond approval there is acceptance. It takes many months even once it’s approved quarters even for it to get accepted throughout the Boeing infrastructure.

This is a not a sale like the automotive.

And is it approval on their existing models or is it only for new models?

It’s not really an approval by model, it’s an approval by tool. So a particular tool can be used in manufacturing of 737 or 777 or a Dreamliner.

And you think you guys will be price competitive with your competition?

Yes, extremely.

Exactly. Totally. 100%.

And the issue for you is to design it of equal quality.

Exactly.

[Indiscernible] we have its better quality frankly.

Good, good to hear.

We have already good story to tell, but it takes time.

Thanks guys I’m done.

Okay, thank you Andrew for your patience and your time.

And there are no further questions in the queue at this time.

Okay, so thank you all everybody for your time today and we look forward to speaking to you with our year end results in March. Thank you all.