P&F Industries (PFIN) SC 13D/AP&F INDUSTRIES / LAWNDALE CAPITAL MANAGEMENT ownership change

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 11)

P&F Industries, Inc.

(Name of Issuer)

Common Stock

(Title of Class of Securities)

692830508

(CUSIP Number)

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

February 2, 2021

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of sections 240.13d-1(e), 240.13d-1(f) or 140.13d-1(g), check the following box. [ ]

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See section 240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

(Items 8 and 10) AF

OO*

This statement relates to shares of Common Stock (the "Stock") of P&F Industries, Inc. (the "Issuer"). The principal executive office of the Issuer is located at 445 Broadhollow Road, Suite 100, Melville, NY 11747.

Item 2. Identity and Background

The persons filing this statement and the persons enumerated in Instruction C of Schedule 13D and, where applicable, their respective places of organization, general partners, directors, executive officers and controlling persons, and the information regarding them, are as follows:

The source and amount of funds used in purchasing the Stock were as follows:

⁽¹⁾ Includes funds of DAP invested in the Stock.
⁽²⁾ 73,800 shares were contributed to DAP by Diamond A Investors, L.P. (DAI), an investment partnership with the same general partner as DAP. On October 1, 2020, as part of a restructuring of those investment partnerships, DAI contributed all of its assets (including 73,800 shares of the Stock) to DAP and was admitted as a limited partner in DAP. The amount of funds listed for DAP above includes amounts paid by DAI for the shares of Stock it contributed to DAP.
⁽³⁾ The Stock beneficially owned by Shapiro directly was received in distributions from DAP.

As disclosed in prior filings, the Filers ("Lawndale") have been in contact with P&F Industries’ ("PFIN", “P&F” or the “Company”) management and members of P&F’s Board of Directors (the “Board”) regarding concerns relating to the Company’s executive compensation and capital allocation policies and the Board’s composition and corporate governance practices. Over several years, Lawndale has requested implementation of constructive changes that would further improve corporate governance, better align management and directors with shareowners’ interests, and other capital allocation steps to maximize value for all PFIN shareowners.

During a four-year period starting March 2016, P&F issued a special one-time cash dividend of $0.50 per share and sustained a regular quarterly cash dividend of $0.20 per share per year. The payment of a regular quarterly cash dividend provided an attractive return to shareholders and qualified investment in PFIN shares by income focused funds, enhancing trading liquidity and valuation, and thus lowering the Company’s cost of capital.

Also, until early Fall of 2019, P&F bought back a substantial number of its shares in both private and public market transactions. Some of these public repurchases were pursuant to Rule 10b5-1 plans (passive investment programs, where plan holders relinquish direct control over transactions), which provided a mechanism for P&F to purchase its securities when there may be material non-public information (“MNPI”) in existence (e.g. quarter- or year-end earnings “quiet periods”, etc.) that would otherwise prevent such public market purchases. Lawndale notes that, even during periods of what were only modest quantities of shares allowed to be repurchased with the 10b5-1 plan, bid-ask pricing spreads in PFIN shares were narrow and trading liquidity in PFIN shares was greatly enhanced.

As Lawndale had over many years requested P&F’s Board to regularly consider returning capital to PFIN shareholders via a sustainable dividend or stock buybacks, Lawndale was pleased with these past capital allocation actions.

In the Fall of 2019, P&F’s Board allowed its 10b5-1 stock buyback plan to expire without renewing it. Lawndale believes the lack of such a plan and the resulting prohibition of the company being in the market consistently repurchasing small amounts of shares, including during earnings “quiet periods” or other instances of MNPI, widens PFIN bid-ask price spreads and reduces trading liquidity, raising ownership transaction costs and the Company’s cost of capital.

In April 2020, P&F requested and received a $2.9 million 1% loan as part the government’s COVID stimulus relief legislation known as the Payroll Protection Program (the “PPP Loan”).

Under terms of the PPP Loan program, up to 100% of the PPP Loan can be forgiven based on the amount of the funds used for certain operating expenses such as payroll, rent and other permitted expenses during a specified period of time. The measurement period for forgiveness application calculations has expired. Lawndale believes the Company has or will soon apply for partial or likely complete forgiveness of this $2.9 million PPP Loan.

In conjunction with receipt of this loan, P&F announced the discontinuation of its regular quarterly dividend. Lawndale notes that P&F did not announce any reduction to sizable senior executive compensation amounts that were in excess of the maximum $100,000/year rate cap counting toward PPP Loan forgiveness.

Following the Company’s determination and execution of PPP Loan forgiveness, Lawndale believes that, should PFIN’s extraordinarily low market valuation continue, the Company’s board should re-initiate a 10b5-1 stock buyback plan, capped at attractive price valuation multiples, enabling periodic open market purchases that are not limited by narrow “insider trading windows”.

Additionally, especially if the P&F Board does not implement a 10b5-1 buyback plan and other measures reasonably calculated to reduce ownership transaction costs, such as engaging in typical investor relations activities (beyond its solely quarterly earnings conference calls), Lawndale believes the Board should reinitiate a sustainable quarterly dividend.

Lawndale believes that almost all of P&F’s independent board members own an inadequate amount of shares in the Company and this lack of meaningful share ownership hinders optimal alignment with shareholder interests and from making further necessary improvements in P&F’s compensation practices. Lawndale believes that the Board should adopt “Best Practices” minimum share ownership requirements for all its Board members and senior management.

Lawndale continues to believe that P&F’s Board should make by-law changes to adopt Best Practices in corporate governance such as de-staggering director terms to a single year vs. the Company’s present three-year terms, adopting a majority vote requirement for director election, and enhancing shareholders’ right to call a Special Meeting or remove a director, among others. Given the highly concentrated shareholder composition of the Company, Lawndale believes that such change-of-control protections are completely unnecessary at P&F and that these archaic barriers to board accountability create undesirable optics, further hurting PFIN’s market valuation.

Lawndale believes the public market price of PFIN shares is undervalued by not adequately reflecting the value of P&F’s business segments and other assets.

While Lawndale acquired the Stock solely for investment purposes, Lawndale has been and may continue to be in contact with P&F management, members of P&F’s Board, other significant shareholders and others regarding alternatives that the Company could employ to maximize shareholder value. Lawndale may from time to time take such actions, as it deems necessary or appropriate to maximize its investment in the Company's shares. Such action(s) may include, but are not limited to, buying or selling the Company's Stock at its discretion, communicating with the Company's shareholders and/or others about actions which may be taken to improve the Company's financial situation or governance policies or practices, as well as such other actions as Lawndale, in its sole discretion, may find appropriate.

The beneficial ownership of the Stock by each Filer at the date hereof is reflected on that Filer's cover page.

The Filers have effected the following transactions in the Stock from the date on which the Filers filed the prior amendment to this Schedule 13D through the date on the cover page:

⁽¹⁾ The price per share is a weighted average price. These shares were sold in multiple transactions at prices ranging from $6.40 to $6.44, inclusive.
⁽²⁾ The price per share is a weighted average price. These shares were sold in multiple transactions at prices ranging from $6.54 to $6.74, inclusive.
⁽³⁾ The price per share is a weighted average price. These shares were sold in multiple transactions at prices ranging from $7.00 to $7.10, inclusive.

LCM is the general partner of its clients pursuant to limited partnership agreements providing to LCM the authority, among other things, to invest the funds of such clients in Stock, to vote and dispose of Stock and to file this statement on behalf of such clients. Pursuant to such limited partnership agreements, the general partner of such clients is entitled to allocations based on assets under management and realized and unrealized gains.

Exhibit A: Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G.

SIGNATURES

After reasonable inquiry and to the best of my knowledge, I certify that the information set forth in this statement is true, complete and correct.

Dated: February 11, 2021

EXHIBIT A

AGREEMENT REGARDING JOINT FILING

OF STATEMENT ON SCHEDULE 13D OR 13G

The undersigned agree to file jointly with the Securities and Exchange Commission (the "SEC") any and all statements on Schedule 13D or Schedule 13G (and any amendments or supplements thereto) required under section 13(d) of the Securities Exchange Act of 1934, as amended, in connection with purchases by the undersigned of the common stock of P&F Industries, Inc. For that purpose, the undersigned hereby constitute and appoint Lawndale Capital Management, LLC as their true and lawful agent and attorney-in-fact, with full power and authority for and on behalf of the undersigned to prepare or cause to be prepared, sign, file with the SEC and furnish to any other person all certificates, instruments, agreements and documents necessary to comply with section 13(d) and section 16(a) of the Securities Exchange Act of 1934, as amended, in connection with said purchases, and to do and perform every act necessary and proper to be done incident to the exercise of the foregoing power, as fully as the undersigned might or could do if personally present.

Dated: February 2, 2010