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2012
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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 standard was effective for our quarter ended March 31,
2012. The adoption of this standard was limited to a change in the presentation of our results, which we have elected to include
as separate Condensed Consolidated Statements of Comprehensive Income.
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 2 — Contingencies</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The remediation work, which
began in the third quarter of 2009, was completed during the third quarter of 2012.  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 two years. At
September 30, 2012, the Company had approximately $148,000 remaining in its accrual for post-remediation monitoring and project
closing costs, of which approximately $30,000 was classified as a current liability at that date.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The change in the accrual for
environmental remediation for the nine months ended September 30, 2012 follows (in thousands):</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="width: 33%; border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Balance at</b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>December 31, 2011</b></p></td>
<td style="width: 34%; border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Payments</td>
<td style="width: 33%; border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Balance at</b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>September 30, 2012</b></p></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  239</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  (91)</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  148</td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Also, as part of the sale, the
Company provided the buyer with a mortgage loan of $2.0 million at six percent interest. The mortgage is payable in monthly installments
of principal and interest with the remaining outstanding balance due in full, one year after remediation and monitoring
on the property have been completed.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="width: 33%; border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Balance at</b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>December 31, 2011</b></p></td>
<td style="width: 34%; border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Payments</td>
<td style="width: 33%; border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Balance at</b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>September 30, 2012</b></p></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  239</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  (91)</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  148</td></tr>
</table>
<p style="margin: 0pt"> </p>
148000
239000
91000
2500000
2000000
30000
<p style="margin: 0pt">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>
1800000
2
.06
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 3 —</b> <b>Pension</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Components of net periodic
benefit cost are as follows (in thousands):</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px; font-size: 10pt"> </td>
<td style="padding-bottom: 2px; font-size: 10pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Three Months Ended <br />
September 30,</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Nine Months Ended <br />
September 30,</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Components of net periodic benefit cost:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 38%; text-indent: 0pt">Interest cost</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">26</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">25</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">77</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">74</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Service cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">14</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">14</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expected return on plan assets</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(26</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(24</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(79</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(71</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Amortization of prior service costs</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">8</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Amortization of actuarial loss</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">38</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">31</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">113</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">94</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">46</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">39</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">133</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">118</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Under applicable laws and
regulations, in 2012, the Company is required to contribute to its qualified plan approximately $225,000. At September
30, 2012, the Company had contributed approximately $185,000 to the plan.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px; font-size: 10pt"> </td>
<td style="padding-bottom: 2px; font-size: 10pt; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Three Months Ended <br />
September 30,</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Nine Months Ended <br />
September 30,</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Components of net periodic benefit cost:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 38%; text-indent: 0pt">Interest cost</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">26</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">25</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">77</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">74</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Service cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">14</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">14</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expected return on plan assets</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(26</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(24</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(79</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(71</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Amortization of prior service costs</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">8</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Amortization of actuarial loss</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">38</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">31</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">113</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">94</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">46</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">39</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">133</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">118</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
77000
74000
26000
25000
14000
14000
5000
5000
79000
71000
26000
24000
8000
7000
3000
2000
113000
94000
38000
31000
133000
118000
46000
39000
225000000
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 4 —Debt and Shareholders
Equity</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On April 5, 2012, the Company
entered into a new revolving loan agreement with HSBC Bank, N.A. In conjunction with signing the new revolving loan agreement,
the Company ended its agreement with Wells Fargo and used funds borrowed under the new loan agreement to pay all amounts then outstanding
under the revolving loan agreement with Wells Fargo Bank.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The new five-year credit
facility provides for increased borrowings of up to an aggregate of $30 million at an interest rate of LIBOR plus 1.75%,
which is 0.25% lower than the interest rate under the former loan agreement with Wells Fargo. All principal amounts
outstanding under the agreement are required to be repaid in a single amount on April 5, 2017, the date the agreement
expires; interest is payable monthly. Funds borrowed under the agreement may be used for working capital, general operating
expenses, share repurchases, acquisitions and certain other purposes. Under the revolving loan agreement, the Company is
required to maintain specific amounts of tangible net worth, a specified debt service coverage ratio, and a fixed charge
coverage ratio. These financial covenants in the new loan agreement are similar to the covenants in the prior agreement with
Wells Fargo. At September 30, 2012 the Company was in compliance with these covenants under the new agreement with HSBC
Bank.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">As of September 30, 2012 and
December 31, 2011, the Company had outstanding borrowings of $24,320,828 and $17,568,484, respectively, under the respective revolving
loan agreements.</p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">During the nine months ended September 30, 2012,
the Company issued 5,000 shares of common stock upon the exercise of outstanding stock options and received total proceeds of $21,000.  There
were no stock options exercised during the three months ended September 30, 2012.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
5000
0
21000
24320828
17568484
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 5— Segment Information</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company reports financial
information based on the organizational 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. As described
below, the activities of the Company’s Asian operations are closely linked to those of the U.S. operations; accordingly,
management reviews the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated
with the results of the United States operations to form one reportable segment called the “United States segment”
or “U.S. 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="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Domestic sales orders are filled
from the Company’s distribution center in North Carolina. The Company is responsible for the costs of shipping, insurance,
customs clearance, duties, storage and distribution related to such products.  Orders filled from the Company’s
inventory are generally for less than container-sized lots.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Direct import sales are products
sold by the Company’s Asian subsidiary, directly to major U.S. retailers, who take ownership of the products in Asia. These
sales are completed by delivering product to the customers’ common carriers at the shipping points in Asia. Direct import
sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately
12% and 16% of the Company’s total net sales for the three and nine months ended September 30, 2012 compared to 16% for the
comparable periods in 2011.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 9pt Times New Roman, Times, Serif">Financial data by segment:</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 9pt Times New Roman, Times, Serif">(in thousands)</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Three months ended </b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>September 30,</b></p></td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Nine months ended </b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>September 30,</b></p></td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Sales to external customers:</td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="width: 38%; text-align: left; text-indent: 0pt; padding-left: 27pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">16,541</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">15,020</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">51,702</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">44,104</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,170</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,829</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,137</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,008</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,652</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">2,187</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">5,996</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">6,354</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">20,363</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">19,036</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">64,835</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">57,466</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Operating income (loss):</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">United States</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">1,240</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">923</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">3,992</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">2,904</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">182</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">114</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">753</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">863</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(63</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">83</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">149</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(4</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">1,359</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">1,120</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">4,895</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">3,763</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Interest expense, net</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">83</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">70</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">200</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">191</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Other expense (income), net</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">7</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">20</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">93</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(2</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated income before income taxes</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,269</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,030</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">4,602</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">3,574</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Assets by segment:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">( in thousands )</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">September 30,</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">December 31,</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 64%; padding-left: 27pt; text-indent: 0pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">56,400</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">43,174</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 27pt; text-indent: 0pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,110</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,033</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; padding-left: 27pt; text-indent: 0pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">5,151</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">6,015</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; padding-left: 27pt; text-indent: 0pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">67,661</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">55,222</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif"><b> </b></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 9pt Times New Roman, Times, Serif">Financial data by segment:</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 9pt Times New Roman, Times, Serif">(in thousands)</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Three months ended </b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>September 30,</b></p></td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; text-align: center"><p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>Nine months ended </b></p>
<p style="margin-top: 0; text-align: center; margin-bottom: 0"><b>September 30,</b></p></td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Sales to external customers:</td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="width: 38%; text-align: left; text-indent: 0pt; padding-left: 27pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">16,541</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">15,020</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">51,702</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 11%; text-align: right">44,104</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,170</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,829</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,137</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,008</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,652</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">2,187</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">5,996</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">6,354</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">20,363</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">19,036</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">64,835</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">57,466</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Operating income (loss):</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">United States</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">1,240</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">923</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">3,992</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">2,904</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">182</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">114</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">753</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">863</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(63</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">83</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">149</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(4</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">1,359</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">1,120</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">4,895</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">3,763</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Interest expense, net</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">83</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">70</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">200</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">191</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Other expense (income), net</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">7</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">20</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">93</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(2</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated income before income taxes</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,269</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,030</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">4,602</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">3,574</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
.16
.16
.12
.16
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 6 – Stock Based
Compensation</b></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; 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 $93,000 and $108,766 for the quarters ended September 30, 2012 and September 30, 2011,
respectively. Share-based compensation expense was $325,753 and $318,204 for the nine months ended September 30, 2012 and September
30, 2011, respectively. During the three months ended September 30, 2012, the Company issued 130,500 options with a weighted average
fair value of $2.41 per share. During the nine months ended September 30, 2012 the Company issued 215,438 options with a weighted
average fair value of $2.36.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">As of September 30, 2012, there
was a total of $856,000 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="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
325753
318204
93000
108766
215438
130500
2.36
2.41
856000
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 7 – Fair Value
Measurements</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The carrying value of the Company’s
bank debt and note receivable approximates fair value. Fair value was determined using a discounted cash flow analysis.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 8 – Business Combination</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On June 7, 2012, the Company
purchased certain assets of The C-Thru Ruler Company (“C-Thru”), a leading supplier of drafting, measuring, lettering
and stencil products. The Company purchased inventory and intellectual property for approximately $1.47 million using funds borrowed
under its revolving loan agreement with HSBC. The Company recorded approximately $0.42 million for inventory, as well as approximately
$1.05 million for intangible assets, consisting primarily of customer relationships.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Unaudited net sales for the
three and nine months ended September 30, 2012 attributable to C-Thru were approximately $1 million and $1.1 million, respectively.
Unaudited net income for the three and nine months ended September 30, 2012 attributable to C-Thru was not material to the Company's
financial statements for those periods.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Assuming C-Thru was acquired
on January 1, 2012, unaudited proforma combined net sales for the three and nine months ended September 30, 2012 for the Company
were approximately $20.4 million and $66.0 million, respectively.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Assuming C-Thru was acquired
on January 1, 2011, unaudited proforma combined net sales for the three and nine months ended September 30, 2011, for the Company
were approximately $19.8 million and $59.5 million, respectively.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Assuming Pac-Kit was acquired
on January 1, 2011, unaudited proforma net sales and net income for the nine months ended September 30, 2011 attributable to Pac-Kit
were approximately $4.8 million and $255,000, respectively.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
3400000
1470000
310000
255000
<p style="margin: 0pt"></p>
<p style="margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Assets by segment:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">( in thousands )</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold"> </td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">September 30,</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">December 31,</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 64%; padding-left: 27pt; text-indent: 0pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">56,400</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">43,174</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 27pt; text-indent: 0pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,110</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,033</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; padding-left: 27pt; text-indent: 0pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">5,151</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">6,015</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; padding-left: 27pt; text-indent: 0pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">67,661</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">55,222</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif"><b> </b></p>
4800000
66000000
20400000
59500000
19800000
Under the revolving loan agreement, the Company is required to maintain specific amounts of tangible
net worth, a specified debt service coverage ratio, and a fixed charge coverage ratio. These financial covenants in the new loan
agreement are similar to the covenants in the prior agreement with Wells Fargo. At September 30, 2012 the Company was in compliance
with these covenants under the new agreement with HSBC Bank.
3
420000
1050000
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 1 — Basis of
Presentation and Recent Accounting Pronouncements</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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 condensed consolidated 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, 2011 for such disclosures.  The condensed consolidated balance sheet as of December 31, 2011 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 2011 Annual Report on Form 10-K.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company has evaluated
events and transactions subsequent to September 30, 2012 and through the date these condensed consolidated financial statements
were included in this Form 10-Q and filed with the SEC.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Recent accounting pronouncements</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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 standard was effective for our quarter ended March 31,
2012. The adoption of this standard was limited to a change in the presentation of our results, which we have elected to include
as separate Condensed Consolidated Statements of Comprehensive Income.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
0.0175
30000000
Interest rate of LIBOR plus 1.75%, which is 0.25% lower than the interest rate under the former loan agreement
2017-04-05
3127000
1474000
185000000