Critical Accounting Policies and Estimates:

Management's Discussion and Analysis of Financial Condition and Results of Operations discuss our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities.

We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the result of which forms the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions. The estimates and judgments utilized are reviewed by management on an ongoing basis and by the audit committee of our board of directors at the end of each quarter prior to the public release of our financial results.

The critical accounting policies and estimates followed in the preparation of the financial information contained in this Quarterly Report on Form 10-Q are the same as those described in the Company's Annual Report on Form 10-K for the year ended August 26, 2012. Refer to the Annual Report on Form 10-K for detailed information on accounting policies.

Results of Operations:

Net sales were $8,584,000 for the first quarter of fiscal year 2013 ending
November 25, 2012, a 43% increase from the same period of the prior year. Sales
by product line for the quarter and year-to-date periods are as below:

                                           Fiscal First Quarter Thirteen Weeks Ended
                                           Percent                          Percent           Dollar
                         November          of Total        November         of Total          Percent
                         25, 2012           Sales          27, 2011          Sales            Change

ATV & Motorcycle       $   5,041,000               59 %   $ 3,645,000               61 %              38 %
Energy                     2,924,000               34 %     1,823,000               30 %              60 %
Aerospace, Defense &
Other                        619,000                7 %       519,000                9 %              19 %
Total Sales            $   8,584,000              100 %   $ 5,987,000              100 %              43 %

Sales from the Company's ATV and motorcycle markets increased 38% in the fiscal 2013 first quarter as compared to the prior year's first quarter. The Company experienced increases in demand from its primary customer across all product lines.

Sales from the Company's energy business for the fiscal first quarter of 2013 increased by 60% versus the prior year's first quarter. The increase in sales comes largely from an increase in the shale fracturing segment of our energy business which was in a start-up phase in the prior year quarter. The Company also experienced a sales increase in its existing blow-out protection product lines which the Company believes to be a general increase in demand that occurred in the fiscal 2013 first quarter. The Company has experienced some softening in demand in its energy business and expects to see some near term impact of this softening in fiscal 2013.

Sales from the Company's aerospace, defense and other markets increased in the Company's fiscal first quarter of 2013 by 19% as compared to the fiscal first quarter of 2012. The increase is attributable to demand increases in the Company's aerospace business.

Gross margin increased to 17.3% of net sales for the quarter ending November 25, 2012 as compared to 15.5% of net sales for the quarter ending November 27, 2011. The increase is due in large measure to fiscal 2012 first quarter start-up costs in the Company's shale fracturing business. The Company incurred start-up costs related to this business during the first two quarters of fiscal 2012. Gross margin also improved in the fiscal 2013 first quarter from volume efficiencies.

Selling and administrative expense was $728,000 in the fiscal 2013 first quarter as opposed to $690,000 for the prior year first quarter. The increase is primarily attributable to higher compensation costs.

Interest expense in the first quarter of fiscal 2013 was $81,000 as compared to $75,000 in first quarter of fiscal 2012. The increase was due to an increase in overall debt related to purchases of machinery and equipment.

The Company recorded income tax expense at an effective tax rate of 36% for the quarter ended November 25, 2012 and November 27, 2011, respectively.

Liquidity and Capital Resources:

On November 25, 2012, working capital was $6,021,000 which was a $395,000 decrease as compared to $6,416,000 at August 26, 2012. The decrease was due primarily to using cash for the building expansion until permanent financing is in place. The ratio of current assets to current liabilities of 2.31 to 1.0 at November 25, 2012 was slightly higher than the 2.29 to 1.0 ratio at August 26, 2012.

It is the Company's belief that its current cash balance, plus future internally generated funds and its line of credit, will be sufficient to enable the Company to meet its working capital requirements through the next 12 months. The Company's line of credit expires February 1, 2013; however, the Company expects that the line of credit will be renewed in addition to a new mortgage that will incorporate the Company's new building expansion. There can be no assurance that the line of credit will be renewed or a new mortgage agreement will be reached. There is also no assurance that if the line of credit is renewed, that the material terms (such as availability and interest rate) will be the same as the Company's current line of credit. No amounts have been borrowed under the line of credit which carries an interest rate at LIBOR plus 3.0% while the interest rate on the Company's existing mortgage is at 4.38%.

Cautionary Statement:

Statements included in this Management's Discussion and Analysis of Financial Condition and Results of Operations, in future filings by the Company with the Securities and Exchange Commission, in the Company's press releases and in oral statements made with the approval of an authorized executive officer that are not historical or current facts are "forward-looking statements." These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. These risks and uncertainties are described in the Company's Annual Report on Form 10-K for the year ended August 26, 2012, as well as other filings the Company makes with the Securities and Exchange Commission. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are not predictions of actual future results. The Company disclaims any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.