Presidents Message

Message to Shareholders

July 12, 2008

Dear Fellow Shareholders:

A difficult global economy combined with cautiousness within the retail marketplace led to disappointing second quarter results. Revenue for the second quarter 2008 dropped 9% compared to the prior year, resulting in a net loss for the quarter of $0.7 million. For the first half of 2008, revenue dropped 11% compared to the prior year, resulting in a net loss of $1.5 million.

Sporting Goods segment revenue declined 14% in the second quarter and in the first half of 2008 compared to the prior year. Mass market customers continue to be hard hit with the economic downturn coupled with a general decline in the game room category. We continue to pursue our strategy to grow our business through increasing distribution to the specialty dealer channel which now makes up more than 53% of our Sporting Goods business. During the second quarter, we announced the new Atomic line of hockey and soccer games, designed specifically for the specialty dealer channel, which sets a new standard in performance and value for arcade quality game tables. We also anticipate that recent gains in product distribution to major retailers and dealers will provide consumers with more purchase opportunities within our sporting goods line.

Cost reduction and inventory management have received special attention given the current conditions. In August we announced the consolidation of our Evansville, Indiana manufacturing operation into our Mexico operation. By shutting down our Evansville, Indiana production facility, we will reduce overhead expenses and optimize the utilization of our Mexico operation. Sporting Goods inventory in the first half has been reduced 7% compared to last year.

Office Products segment revenue increased 1% in the second quarter, but declined 4% for the first half of 2008 when compared to the prior year. Sales to the mass market office products channel declined 8% in the second quarter compared to the prior year, while sales were up 5% to the specialty/machine dealer and government channels. Continued weakening in the France, Spain, and the U.K economies caused a sales decline in the European market. In the second quarter we acquired Safe Tech of Sweden, one of our distributors, and we established a branch office in Italy. Combined with our 1^st quarter acquisition of our dealer in South Africa, we have added three new branch offices in 2008 thus increasing our control over valuable distribution channels.

Excellent progress is being made on Project Surge, our Oracle Enterprise Resource Planning (ERP) system implementation. This company-wide information system will assure consistent business processes throughout the organization, provide in-depth reporting on key performance metrics, position us for growth, and allow us to better manage inventory. Several business units will be converted to this new system during the second half of 2008, with the remainder of the company scheduled for implementation in fiscal 2009. We anticipate that the remainder of 2008 will be challenging given the conditions previously discussed. However, I am confident that our strategy of innovation, brand-building, and channel diversification will produce long term profitable growth. We thank you again you for confidence in our mission and our team.

Robert J. Keller

President & CEO

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