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ACME UNITED CORP
0000002098
10-Q
2011-06-30
false
--12-31
No
No
Yes
Smaller Reporting Company
Q2
2011
2.50
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<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 1 — Basis of Presentation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In the opinion of management, the accompanying condensed consolidated
financial statements include all adjustments necessary to present fairly the financial position, results of operations and cash
flows of Acme United Corporation (the “Company”).  These adjustments are of a normal, recurring nature.  However,
the financial statements do not include all of the disclosures normally required by accounting principles generally accepted in
the United States of America or those normally made in the Company's Annual Report on Form 10-K. Please refer to the Company's
Annual Report on Form 10-K for the year ended December 31, 2010 for such disclosures.  The condensed consolidated balance
sheet as of December 31, 2010 was derived from the audited consolidated balance sheet as of that date.  The results of
operations for interim periods are not necessarily indicative of the results to be expected for the full year.  The information
included in this Quarterly Report on Form 10-Q should be read in conjunction with the Management’s Discussion and Analysis
of Financial Condition and Results of Operations and financial statements and notes thereto, included in the Company’s 2010
Annual Report on Form 10-K.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company has evaluated events and transactions subsequent to
June 30, 2011 and through the date these consolidated financial statements were included in this Form 10-Q and filed with
the SEC.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Recent accounting pronouncements</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In June 2011, the FASB issued a new accounting standard on the presentation
of comprehensive income. The new standard requires the presentation of comprehensive income, the components of net income and the
components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but
consecutive statements. The new standard also requires presentation of adjustments for items that are reclassified from the other
comprehensive income to net income in the statement where the components of net income and the components of other comprehensive
income are presented.  The Company is required to adopt this standard for interim and annual periods beginning after
December 15, 2011. The Company is currently evaluating the impact of adopting this guidance, which may result in changes in the
presentation of its financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 3 —</b> <b>Pension</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Components of net periodic benefit cost are as follows (in thousands):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">Three Months Ended June 30,</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">Six Months Ended June 30,</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Components of net periodic benefit cost:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 34%">Interest cost</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 12%; text-align: right">26</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 12%; text-align: right">31</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 12%; text-align: right">52</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 12%; text-align: right">61</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Service cost</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">6</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">10</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">13</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Expected return on plan assets</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">(26</td>
<td nowrap="nowrap">)</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">(24</td>
<td nowrap="nowrap">)</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">(53</td>
<td nowrap="nowrap">)</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">(48</td>
<td nowrap="nowrap">)</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Amortization of prior service costs</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">3</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">2</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt">Amortization of actuarial loss</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">38</td>
<td nowrap="nowrap" style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">39</td>
<td nowrap="nowrap" style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">76</td>
<td nowrap="nowrap" style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">77</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">45</td>
<td nowrap="nowrap" style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">54</td>
<td nowrap="nowrap" style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">89</td>
<td nowrap="nowrap" style="border-bottom: black 2.25pt double"> </td>
<td style="border-bottom: black 2.25pt double; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">109</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company’s funding policy with respect to its qualified
plan is to contribute at least the minimum amount required by applicable laws and regulations. In 2011, the Company is required
to contribute approximately $250,000.  The Company expects to make contributions to the plan as required during the remainder
of the year.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 5— Segment Information</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company reports financial information based on the organization
structure used by management for making operating and investment decisions and for assessing performance. The Company’s reportable
business segments consist of (1) United States; (2) Canada and (3) Europe. The activities of the Company’s Asian operating
segment are closely linked to those of the U.S. operating segment; accordingly, management reviews the financial results of both
segments on a consolidated basis, and the results of the Asian operating segment have been aggregated with the results of the United
States operating segment to form one reportable segment called the “United States operating segment”. Each reportable
segment derives its revenue from the sales of cutting devices, measuring instruments and safety products for school, office, home,
hardware and industrial use.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The chief operating decision maker evaluates the performance of
each operating segment based on segment revenues and operating income. Segment amounts below are presented after converting to
U.S. dollars and consolidating eliminations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Financial data by segment:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">(in thousands)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Three months ended </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Six months ended </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30,</b></p></td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt">Sales to external customers:</td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 38%; padding-left: 9pt">United States</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">18,527</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">14,995</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">29,086</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">24,626</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt">Canada</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">3,324</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">2,881</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">5,178</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">4,449</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt; padding-left: 9pt">Europe</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">2,178</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">2,709</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">4,166</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">4,631</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt; padding-left: 9pt">Consolidated</td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">24,029</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">20,585</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">38,430</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">33,706</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Operating income (loss):</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 9pt">United States</td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">1,862</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">1,502</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">1,983</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td>$</td>
<td style="text-align: right">1,880</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt">Canada</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">599</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">455</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">749</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">517</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt; padding-left: 9pt">Europe</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(1</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(10</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(89</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(150</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1.5pt; padding-left: 9pt">Consolidated</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid">$</td>
<td style="border-bottom: black 1.5pt solid; text-align: right">2,460</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid">$</td>
<td style="border-bottom: black 1.5pt solid; text-align: right">1,946</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid">$</td>
<td style="border-bottom: black 1.5pt solid; text-align: right">2,643</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid">$</td>
<td style="border-bottom: black 1.5pt solid; text-align: right">2,247</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt">Interest expense, net</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">74</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">38</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">121</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">58</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt; padding-left: 9pt">Other expense (income), net</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">3</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">24</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(22</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">39</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt; padding-left: 9pt">Consolidated income before taxes</td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">2,383</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">1,884</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">2,544</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">2,150</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td>Assets by segment:</td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>(in thousands)</td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">June 30,</td>
<td nowrap="nowrap" style="font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center">December 31,</td>
<td nowrap="nowrap" style="font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 38%; padding-left: 9pt">United States</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">47,073</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">37,685</td>
<td nowrap="nowrap" style="width: 33%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 9pt">Canada</td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">  7,137</td>
<td nowrap="nowrap"> </td>
<td style="text-align: right"> </td>
<td> </td>
<td style="text-align: right">   6,205</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt; padding-left: 9pt">Europe</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">6,854</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">5,691</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt; padding-left: 9pt">Consolidated</td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">61,064</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">49,581</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 6 – Stock Based Compensation</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 12pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="margin-top: 0; margin-bottom: 6pt; margin-left: 0pt; text-indent: 0pt; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">The
Company recognizes share-based compensation at fair value of the equity instrument on the grant date. Compensation expense is
recognized over the required service period. Share-based compensation expense was $125,828 and $112,100 for the quarters ended
June 30, 2011 and June 30, 2010, respectively. Share-based compensation expense was $209,438 and $189,200 for the six months ended
June 30, 2011 and June 30, 2010, respectively. During the three months ended June 30, 2011, the Company issued 18,500 options
with a weighted average fair value of $2.28 per share. During the six months ended June 30, 2011 the Company issued 78,500 options
with a weighted average fair value of $2.46. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">As of June 30, 2011, there was a total of $636,000 of unrecognized
compensation cost related to non-vested share –based payments granted to the Company’s employees.  The remaining
unamortized expense is expected to be recognized over a weighted average period of approximately 3 years.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 7 – Comprehensive Income</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Comprehensive income for the three and six months ended June 30,
2011 and June 30, 2010 consisted of the following (in thousands):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="font-weight: bold; text-align: center">Three Months Ended</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="padding-bottom: 1.5pt; font-weight: bold; text-align: center">Six Months Ended</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">June 30,</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">June 30,</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td style="padding-bottom: 1.5pt; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font-weight: bold; text-align: center">2010</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 38%">Net income</td>
<td style="width: 1%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">1,743</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">1,567</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">1,863</td>
<td nowrap="nowrap" style="width: 2%"> </td>
<td style="width: 2%; text-align: right"> </td>
<td style="width: 1%">$</td>
<td style="width: 11%; text-align: right">1,780</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td>Other comprehensive income / (loss)  -</td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt; padding-left: 9pt">Foreign currency translation</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">85</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(479</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">423</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td>
<td style="padding-bottom: 1.5pt; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid"> </td>
<td style="border-bottom: black 1.5pt solid; text-align: right">(605</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 3pt">Comprehensive income</td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">1,828</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">1,088</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">2,286</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td>
<td style="padding-bottom: 3pt; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double">$</td>
<td style="border-bottom: black 2.25pt double; text-align: right">1,175</td>
<td nowrap="nowrap" style="padding-bottom: 3pt"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 8 – Fair Value Measurements</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The carrying values of cash and cash equivalents, accounts receivable,
accounts payable and bank debt are a reasonable estimate of fair value because of their short term nature. The carrying value of
the Company’s note receivable approximates fair value. Fair value was determined using a discounted cash flow analysis.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 9 – Business Combination</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">On February 28, 2011, the Company purchased substantially all of
the assets of The Pac-Kit Safety Equipment Company, a leading manufacturer of first aid kits for the industrial, safety, transportation
and marine markets. The Company purchased the accounts receivable, inventory, equipment and intangible assets of Pac-Kit for approximately
$3.4 million, less liabilities assumed of $310,000, using funds borrowed under the Company’s revolving loan agreement with
Wells Fargo.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company recorded $1.9 million for assets acquired including
accounts receivable, inventory and fixed assets, as well as $1.5 million for intangible assets, consisting of customer relationships
and the Pac-Kit trade name. During the three and six months ended June 30, 2011, the Company incurred approximately $25,000 and
$125,000, respectively, of integration and transaction costs associated with the acquisition. These costs were recorded in selling,
general and administrative expenses.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The purchase price was allocated to assets acquired and liabilities
assumed as follows (in thousands):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td>Assets:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap"></td></tr>
<tr style="vertical-align: bottom">
<td style="width: 82%; padding-left: 22pt">Accounts Receivable</td>
<td style="width: 1%"> </td>
<td style="width: 1%">$</td>
<td style="width: 15%; text-align: right">592</td>
<td nowrap="nowrap" style="width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 22pt">Inventory</td>
<td> </td>
<td>$</td>
<td style="text-align: right">1,196</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 22pt">Equipment</td>
<td> </td>
<td>$</td>
<td style="text-align: right">150</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-bottom: 1.5pt; padding-left: 22pt">Intangible Assets</td>
<td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: black 1.5pt solid">$</td>
<td style="border-bottom: black 1.5pt solid; text-align: right">1,500</td>
<td nowrap="nowrap" style="padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-left: 22pt">Total assets</td>
<td> </td>
<td>$</td>
<td style="text-align: right">3,438</td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom">
<td>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Liabilities</p></td>
<td> </td>
<td> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="padding-left: 22pt">Accounts Payable</td>
<td> </td>
<td> </td>
<td style="text-align: right">310</td>
<td nowrap="nowrap"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Unaudited net sales for the three and six months ended June
30, 2011 attributable to Pac-Kit were approximately $1.8 million and $2.4 million, respectively. Unaudited proforma net sales attributable
to Pac-Kit for the comparable period in 2010 were approximately $1.6 million and $2.1 million, respectively.  The six
month period ended June 30, 2010 represents a comparable period based on the acquisition date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Unaudited proforma net income, excluding one time transaction and
integration costs of $25,000 and $125,000 respectively, for the three and six months ended June 30, 2011, attributable to Pac-Kit
was approximately $95,000 and $125,000, respectively. Net income for the comparable period in 2010 was immaterial to the financial
statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Assuming Pac-Kit was acquired on January 1, 2011, unaudited proforma
net sales and net income for the six months ended June 30, 2011 attributable to Pac-Kit were approximately $3.2 million and $155,000,
respectively. Net sales for the comparable period in 2010 were approximately $2.9 million.  Net income for the comparable
period in 2010 was immaterial to the consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 4 —Debt and Shareholders Equity</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company’s revolving loan agreement, as amended, provides
for borrowings up to $20 million, with all principal amounts outstanding thereunder required to be repaid in a single amount on
March 31, 2013. In addition, the Company’s revolving loan agreement requires monthly interest payments.  As of
June 30, 2011 and December 31, 2010, the Company had outstanding borrowings of $18,601,000 and $13,522,000, respectively, under
the revolving loan agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">During the three and six months ended June 30, 2011, the Company
issued 13,000 and 42,250 shares of common stock upon the exercise of outstanding stock options and received total proceeds of  $41,100
and $145,925, respectively.</p>
<p style="margin: 0pt"></p>
38430000
33706000
24029000
20585000
24439000
21042000
15346000
13034000
13991000
12664000
8683000
7551000
11348000
10417000
6223000
5605000
2643000
2247000
2460000
1946000
211000
131000
114000
79000
90000
73000
40000
41000
-121000
-58000
-74000
-38000
2544000
2150000
2383000
1884000
681000
370000
640000
317000
1863000
1780000
1743000
1567000
.60
.56
.56
.50
.60
.54
.56
.48
3085000
3163000
3096000
3158000
26000
107000
21000
131000
3111000
3270000
3117000
3289000
.12
.10
.06
.05
22000
-39000
-3000
-24000
-99000
-97000
-77000
-62000
1810000
1839000
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"><b>Note 2 — Contingencies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The Company is involved from time to time in disputes and other
litigation in the ordinary course of business and may encounter other contingencies, which may include environmental and other
matters.  The Company presently believes that none of these matters, individually or in the aggregate, would be likely
to have a material adverse impact on its financial position, results of operations or liquidity, as set forth in these financial
statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In December 2008, the Company sold property it owned in Bridgeport,
Connecticut to B&E Juices, Inc. for $2.5 million, of which $2.0 million is secured by a mortgage on the property.  The
property consists of approximately four acres of land and 48,000 sq. feet of warehouse space.  The property was the site
of the Company’s original scissor factory which opened in 1887 and was closed in 1996.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Under the terms of the sale agreement, and as required by the Connecticut
Transfer Act, the Company is required to remediate any environmental contamination on the property. During 2008, the Company hired
an independent environmental consulting firm to conduct environmental studies in order to identify the extent of the environmental
contamination on the property and to develop a remediation plan. As a result of those studies and the estimates prepared by the
independent environmental consulting firm, the Company recorded an undiscounted liability of approximately $1.8 million related
to the remediation of the property. This accrual includes the costs of required investigation, remedial activities, and post-remediation
operating and maintenance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Remediation work on the project began in the third quarter of 2009
and a major portion of the work has been completed. At June 30, 2011, the Company had approximately $301,000 remaining in its accrual
for environmental remediation, of which approximately $150,000 was classified as a current liability at that date.  It
is estimated that the remediation project will be completed within five years from the date of the sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">In addition to the remediation work, the Company, with the assistance
of its independent environmental consulting firm, must continue to monitor contaminant levels on the property to ensure they comply
with set governmental standards. The Company expects that the monitoring period could last a minimum of three years from the completion
of the remediation work.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">The change in the accrual for environmental remediation for the
six months ended June 30, 2011 follows (in thousands):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: bottom">
<td style="width: 33%; border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Balance at </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>December 31, 2010</b></p></td>
<td style="width: 34%; border-bottom: black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Payments</td>
<td style="width: 33%; border-bottom: black 1.5pt solid">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>Balance at </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"><b>June 30, 2011</b></p></td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2.25pt double">
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: center">$  343</p></td>
<td style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: center">$   (42)</td>
<td style="border-bottom: black 2.25pt double; font: 10pt Times New Roman, Times, Serif; text-align: center">$   301</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0">Also, as part of the sale, the Company provided the buyer with a
mortgage loan of $2.0 million at six percent interest. The mortgage is payable in monthly installments of principal and interest
with the outstanding balance due in full, one year after remediation  and monitoring on the property have been completed.
It is estimated that the remediation project will be completed within five years from the date of the sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0"></p>
<p style="margin: 0pt"></p>