Perforated paper needlework was most popular from 1860-1900. It is a heavy weight paper with evenly spaced holes punched in it and came in different counts (holes punched per inch) and was used mostly for cross stitch and needlepoint. The higher count (more holes per inch) were popular in the 1850's and used for samplers and bookmarks. Later, lower count (less holes per inch) was used for motto sayings popular in the late 1800's (God Bless This House, Blessings, etc.). Also, motto's were often printed onto the perforated paper; samplers were not. They were the original design of the stitcher and much more rare than samplers stitched on cloth.
See the photos for the best description of this item. I see no loss of thread, the colors are bright. The frame is appropriate for the age of this stitchery. The outside dimensions of the framed item measures 17.5 inches tall x 13.5 inches wide.