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<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>1.  Operations</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 operations of Acme United
Corporation (the “Company”) consist of three reportable segments. The operations of the Company are structured and
evaluated based on geographic location.  The three reportable segments operate in the United States (including Asian
operations), Canada and Germany.  Principal products across all segments are scissors, shears, knives, rulers, pencil
sharpeners, first aid kits, and related products which are sold primarily to wholesale, contract and retail stationery distributors,
office supply super stores, school supply distributors, drug store retailers, industrial distributors, wholesale florists, mass
market retailers and hardware chains.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>2.  Accounting
Policies</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Estimates - The preparation
of financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period.  The most sensitive and significant accounting estimates relate to customer rebates, valuation allowances for
deferred income tax assets, obsolete and slow-moving inventories, potentially uncollectible accounts receivable and accruals for
income taxes.  Actual results could differ from those estimates.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Principles of Consolidation
- The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned
by the Company.  All significant intercompany accounts and transactions are eliminated in consolidation.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Translation of Foreign Currency
- For foreign operations, assets and liabilities are translated at rates in effect at the end of the year; revenues and expenses
are translated at average rates in effect during the year.  Resulting translation adjustments are made directly to accumulated
other comprehensive loss.  Foreign currency transaction gains and losses are recognized in operating results.  Foreign
currency transaction losses, which are included in other income, net, were $25,732 in 2011 and $58,992 in 2010.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Cash Equivalents - Investments
with an original maturity of three months or less, as well as time deposits and certificates of deposit that are readily redeemable
at the date of purchase, are considered cash equivalents.  Included with the cash and equivalents are Certificates of
Deposit totaling approximately $1.0 million.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Accounts Receivable - Accounts
receivable are shown less an allowance for doubtful accounts of $129,242 in 2011 and $57,125 in 2010.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Inventories - Inventories are
stated at the lower of cost, determined by the first-in, first-out method, or market.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Property, Plant and Equipment
and Depreciation – Property, plant and equipment is recorded at cost.  Depreciation is computed by the straight-line
method over the estimated useful lives of the assets, which range from 3 to 30 years.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Intangible Assets– Intangible
assets with finite useful lives are recorded at cost upon acquisition, and amortized over the term of the related contract or useful
life, as applicable.  Intangible assets held by the Company with finite useful lives include patents and trademarks.  Patents
and trademarks are amortized over their estimated useful lives.  The weighted average amortization period for intangible
assets at December 31, 2011 was 14 years.  The Company periodically reviews the values recorded for intangible assets
to assess recoverability from future operations whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable.  At December 31, 2011 and 2010, the Company assessed the recoverability of its long-lived assets
and believed that there were no events or circumstances present that would that would require a test of recoverability on those
assets. As a result, there was no impairment of the carrying amounts of such assets and no reduction in their estimated useful
lives.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Deferred Income Taxes - Deferred
income taxes are provided for the differences between the financial statement and tax bases of assets and liabilities, and on operating
loss carryovers, using tax rates in effect in years in which the differences are expected to reverse.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Revenue Recognition – The Company recognizes
revenue from the sales of its products when ownership transfers to the customers, which occurs either at the time of shipment
or upon delivery based upon contractual terms with the customer.  The Company recognizes customer program costs, including
rebates, cooperative advertising, slotting fees and other sales related discounts, as a reduction to sales.</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">Research and Development
– Research and development costs ($535,500 in 2011 and $486,778 in 2010) are expensed as incurred.</font></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Shipping Costs – The costs
of shipping product to our customers ($3,084,925 in 2011 and $2,656,653 in 2010) are included in selling, general and administrative
expenses.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Advertising Costs – The
Company expenses the production costs of advertising the first time that the related advertising takes place.  Advertising
costs ($1,239,693 in 2011 and $1,039,302 in 2010) are included in selling, general and administrative expenses.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Subsequent Events - The Company
has evaluated events and transactions subsequent to December 31, 2011 through the date the consolidated financial statements were
included in this Form 10-K and filed with the SEC.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Concentration – The Company
performs ongoing credit evaluations of its customers and generally does not require collateral for the extension of credit. Allowances
for credit losses are provided and have been within management's expectations.  In 2011, with respect to concentration
risk related to accounts receivable, the Company had one customer that accounted for greater than 10% of total net receivables.
In 2011 and 2010, the Company had one customer that individually exceeded 10% of consolidated net sales. Net sales to this customer
amounted to approximately 20% in 2011 and 21% in 2010.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Recently Issued Accounting
Standards</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In June 2011 the Financial
Accounting Standards Board (“FASB”) issued an update, Accounting Standards Update (“ASU”) No. 2011-5,
to existing standards on comprehensive income (Accounting Standards Codification (“ASC”) Topic 220). ASU No.
2011-5 was issued to improve the comparability, consistency, and transparency of financial reporting and to increase the
prominence of items reported in other comprehensive income. ASU No. 2011-5 is effective for annual and interim periods ending
beginning after December 15, 2011, and early adoption is permitted. In December 2011 the FASB issued an update to ASU No.
2011-5, ASU No. 2011-12, which was issued to defer the effective date for amendments to the reclassifications of items out of
accumulated other comprehensive income in ASU No. 2011-05. The adoption of this guidance affects the presentation of certain
elements of the Company’s financial statements, but management believes that these changes in presentation would not be
likely to have a material impact on our financial statements.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="8" style="text-align: left; font-weight: bold; text-indent: 0pt">3.  Inventories</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Inventories consisted of:</td>
<td style="border-bottom: black 2px solid; 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="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</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: 68%; text-indent: 0pt">Finished goods</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">22,887,381</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">$</td>
<td style="width: 12%; text-align: right">21,108,954</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Work in process</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">44,564</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">171,673</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Materials and supplies</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,563,047</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,012,282</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 4px double"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">24,494,992</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">22,292,909</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">Inventories are stated net
of valuation allowances for slow moving and obsolete inventory of $551,827 as of December 31, 2011 and $470,749 as of December
31, 2010.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="8" style="text-align: left; font-weight: bold; text-indent: 0pt">4.  Intangible Assets</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Intangible assets consisted of:</td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 68%; text-indent: 0pt">Patents</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">1,885,888</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: 12%; text-align: right">1,794,754</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">Trademarks</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">565,273</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">554,590</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Pac-Kit Tradename, Customer List</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,500,000</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3,951,161</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">2,349,344</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Accumulated amortization</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">666,498</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">483,113</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 4px double"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">3,284,663</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,866,231</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Amortization expense for patents
and trademarks for the years ended December 31, 2011, and 2010 were $183,385 and $114,822, respectively.  <b> </b>The
estimated aggregate amortization expense for each of the next five succeeding years, calculated on a similar basis, is as follows:  2012
- $195,423; 2013 - $195,283; 2014 - $182,053; 2015 - $169,345; and 2016 - $167,521.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="8" style="text-align: left; font-weight: bold; text-indent: 0pt">5.  Other Accrued Liabilities</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="8" style="text-align: left; text-indent: 0pt">Other current and long-term accrued liabilities consisted of:</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 68%; text-indent: 0pt">Customer rebates</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">2,747,352</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: 12%; text-align: right">2,436,993</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">Remediation liability</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">239,016</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">343,539</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">Pension liability</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,012,786</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">1,164,217</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Other</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">943,679</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,083,548</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="border-bottom: black 4px double"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">4,942,832</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">5,028,297</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b> </b></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>6.  Pension and Profit Sharing</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">United States employees, hired
prior to July 1, 1993, are covered by a funded, defined benefit pension plan.  The benefits of this pension plan are
based on years of service and the average compensation of the highest three consecutive years during the last ten years of employment.  In
December 1995, the Company's Board of Directors approved an amendment to the United States pension plan that terminated all future
benefit accruals as of February 1, 1996, without terminating the pension plan.</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’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 contributed $240,000 to the plan and expects to contribute approximately $230,000 during 2012.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The plan asset weighted average
allocation at December 31, 2011 and December 31, 2010, by asset category, were as follows:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="text-align: left; border-bottom: black 2px solid; width: 68%; font-weight: bold; text-indent: 0pt">Asset Category</td>
<td style="border-bottom: black 2px solid; width: 16%; text-align: right; font-weight: bold; text-indent: 0pt">2011</td>
<td style="border-bottom: black 2px solid; width: 16%; text-align: right; font-weight: bold; text-indent: 0pt">2010</td></tr>
<tr style="background-color: #cceeff; vertical-align: top">
<td style="text-align: left; text-indent: 0pt">Equity Securities</td>
<td style="text-align: right; text-indent: 0pt">  68%</td>
<td style="text-align: right; text-indent: 0pt">  68%</td></tr>
<tr style="background-color: white; vertical-align: top">
<td style="text-align: left; text-indent: 0pt">Fixed Income Securities</td>
<td style="text-align: right; text-indent: 0pt">  29%</td>
<td style="text-align: right; text-indent: 0pt">  30%</td></tr>
<tr style="background-color: #cceeff; vertical-align: top">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Other Securities / Investments</td>
<td style="border-bottom: black 2px solid; text-align: right; text-indent: 0pt">    3%</td>
<td style="border-bottom: black 2px solid; text-align: right; text-indent: 0pt">    2%</td></tr>
<tr style="background-color: white; vertical-align: top">
<td style="text-align: left; border-bottom: black 4px double; text-indent: 0pt">Total</td>
<td style="border-bottom: black 4px double; text-align: right; text-indent: 0pt">100%</td>
<td style="border-bottom: black 4px double; text-align: right; text-indent: 0pt">100%</td></tr>
</table>
<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">The Company’s investment policy for the
pension plan is to minimize risk by balancing investments between equity securities and fixed income securities, utilizing a weighted
average approach of 65% equity securities, 30% fixed income securities, and 5% cash investments.  Plan funds are invested
in long-term obligations with a history of moderate to low risk.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">As of each December 31, 2011
and 2010, equity securities in the pension plan included 10,000 shares of the Company's Common Stock, having a market value of
$95,000 and $95,200, respectively.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">The pension plan asset information included below
is presented at fair value. ASC 820 establishes a framework for measuring fair value and requires disclosures about assets and
liabilities measured at fair value. The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair
value into three levels as follows:</font></p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="text-align: center; width: 36pt; font-family: Symbol">· </td>
<td style="font-family: Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Level 1 – Inputs to the valuation methodology based on unadjusted quoted market prices in active markets that are accessible at the measurement date.</td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="text-align: center; width: 36pt; font-family: Symbol">·</td>
<td style="font-family: Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Level 2 – Inputs to the valuation methodology that include quoted market prices that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly.</td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: top">
<td style="text-align: center; width: 36pt; font-family: Symbol">·</td>
<td style="font-family: Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt">Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.</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">The following table presents
the pension plan assets by level within the fair value hierarchy as of December 31, 2011.</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid"> </td>
<td colspan="2" style="border-bottom: black 2px solid; text-align: center; text-indent: 0pt">Level 1</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid"> </td>
<td colspan="2" style="border-bottom: black 2px solid; text-align: center; text-indent: 0pt">Level 2</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid"> </td>
<td colspan="2" style="border-bottom: black 2px solid; text-align: center; text-indent: 0pt">Level 3</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid"> </td>
<td colspan="2" style="border-bottom: black 2px solid; text-align: center; text-indent: 0pt">Total</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 42%; text-indent: 0pt">Money Market Fund</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 10%; text-align: right">32,819</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">$</td>
<td style="width: 10%; text-align: right">-</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 10%; text-align: right">-</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: 10%; text-align: right">32,819</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">Acme United Common Stock</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">95,000</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">-</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">-</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">95,000</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">Equity Common and Collected Funds</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</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">757,371</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">-</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">757,371</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid">Fixed Income Common and Collected Funds</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">361,544</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">-</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">361,544</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; border-bottom: black 4px double; text-indent: 0pt">Total</td>
<td style="text-align: right; border-bottom: black 4px double; 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">127,819</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; border-bottom: black 4px double; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,118,915</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; border-bottom: black 4px double; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">-</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; border-bottom: black 4px double; 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">1,246,734</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </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"> Other disclosures related to the pension plan follow:</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> </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="text-align: right; padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; text-align: center; font-weight: bold; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; text-align: center; font-weight: bold; text-indent: 0pt">2010</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; text-indent: 0pt">Assumptions used to determine benefit obligation:</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: 68%; padding-left: 9pt; text-indent: 0pt">Discount rate</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">3.99%</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: 12%; text-align: right">4.42%</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">Changes in benefit obligation:</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">Benefit obligation at beginning of year</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">(2,479,645</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">(2,555,196</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">Interest cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(99,122</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">(122,416</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">Service cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(19,000</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">(25,000</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">Actuarial gain</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">22,235</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">(117,417</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Benefits and plan expenses paid</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">316,010</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">340,384</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Benefit obligation at end of year</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(2,259,522</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(2,479,645</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; 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></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Changes in plan assets:</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">Fair value of plan assets at beginning of year</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,315,428</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">1,246,541</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">Actual return on plan assets</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,665</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">144,274</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">Employer contribution</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">239,653</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">264,997</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Benefits and plan expenses paid</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(316,010</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(340,384</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; border-bottom: black 2px solid; text-indent: 0pt">Fair value of plan assets at end of year</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,246,736</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,315,428</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; text-indent: 0pt">Funded status</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">(1,012,786</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">(1,164,217</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px">)</td></tr>
</table>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; 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="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</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; text-indent: 0pt">Assumptions used to determine 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></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 68%; text-indent: 0pt">  Discount rate</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">4.42%</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: 12%; text-align: right">5.06%</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; border-bottom: black 2px solid; text-indent: 0pt">  Expected return on plan assets</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">8.25%</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">8.25%</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; text-indent: 0pt">Components of net benefit expense:</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">Interest cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">99,122</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">122,416</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">Service cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">19,000</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">25,000</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">Expected return on plan assets</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(95,470</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">(95,422</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">Amortization of prior service costs</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">9,154</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">9,154</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Amortization of actuarial loss</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">124,536</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">154,555</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; border-bottom: black 4px double; text-indent: 0pt">Net periodic benefit cost</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">156,342</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">215,703</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">The Company employs a building block approach in
determining the long-term rate of return for plan assets. Historical markets are studied and long-term historical relationships
between equity securities and fixed income securities are preserved consistent with the widely-accepted capital market principle
that assets with higher volatility generate higher returns over the long run.   Our expected 8.25% long-term rate of return
on plan assets is determined based on long-term historical performance of plan assets, current asset allocation and projected
long-term rates of return.</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">The following table discloses
the change recorded in other comprehensive income related to benefit costs:</font></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
<pre></pre>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt 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="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</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></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 68%; text-indent: 0pt">Balance at beginning of the year</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">1,830,465</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">1,925,609</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">Change in net loss</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">65,570</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">68,565</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 actuarial loss</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(124,536</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">(154,555</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 prior service cost</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">(9,154</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(9,154</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">     Change recognized in other comprehensive income</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">(68,120</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(95,144</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">Total recognized in other comprehensive income</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">1,762,345</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,830,465</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Amounts recognized in Accumulated Other Comprehensive Income:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 68%; text-indent: 0pt">Net actuarial loss</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">1,723,016</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">$</td>
<td style="width: 12%; text-align: right">1,781,982</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Prior service cost</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">39,329</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">48,483</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; text-indent: 0pt">Total</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,762,345</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,830,465</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"> </p>
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif">In 2012, net periodic benefit cost will include approximately $154,000
of net actuarial loss and $9,000 of prior service cost.</p>
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="margin: 0; font: 10pt Times New Roman, Times, Serif">The following benefits are expected to be paid:</p>
<table cellpadding="0" cellspacing="0" style="width: 80%; font: 10pt Times New Roman, Times, Serif">
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 82%; text-indent: 0pt">2012</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 15%; text-align: right">271,000</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">2013</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">255,000</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">2014</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">247,000</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">2015</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">230,000</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">2016</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">213,000</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">Years 2017 - 2021</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">814,000</td>
<td nowrap="nowrap" style="text-align: left"> </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">The Company also has
a qualified, profit sharing plan covering substantially all of its United States employees. Annual Company contributions
to this profit sharing plan are determined by the Company’s Compensation Committee.  For the years
ended December 31, 2011 and 2010, the Company contributed 50% of employee’s contributions, up to the first 6% of salary
contributed by each employee.  Total contribution expense under this profit sharing plan was $95,088 in 2011 and
$114,085 in 2010.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: left; 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; font-weight: bold; text-indent: 0pt">7.  Income Taxes</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 colspan="8" style="text-align: left; text-indent: 0pt">The amounts of income tax expense (benefit) reflected in operations is as follows:</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; 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="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</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; text-indent: 0pt">Current:</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: 68%; padding-left: 9pt; text-indent: 0pt">Federal</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">756,126</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: 12%; text-align: right">103,040</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; padding-left: 9pt; text-indent: 0pt">State</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">88,741</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">11,312</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; padding-left: 9pt; text-indent: 0pt">Foreign</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">532,827</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">594,110</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,377,694</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">708,462</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; 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></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Deferred:</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; padding-left: 9pt; text-indent: 0pt">Federal</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(142,281</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">(8,160</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt; text-indent: 0pt">State</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(18,802</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">(356,950</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; padding-left: 9pt; text-indent: 0pt">Foreign</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(1,784</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(5,469</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(162,867</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(370,579</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 4px double"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,214,827</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">337,883</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0">  </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The current state tax provision
was comprised of taxes on income, the minimum capital tax and other franchise taxes related to the jurisdictions in which the Company's
facilities are located.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">A summary of United States
and foreign income before income taxes follows:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 68%; text-indent: 0pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">1,901,905</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">$</td>
<td style="width: 12%; text-align: right">12,481</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Foreign</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">2,124,115</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">2,898,366</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="border-bottom: black 4px double"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">4,026,020</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">2,910,847</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">As discussed in Note 10 below,
for segment reporting, Direct Import sales are included in the United States segment. However, the revenues are earned by our Asian
subsidiary and income taxes are paid in Hong Kong.  As such, income of the Asian subsidiary is included in the foreign
income before taxes.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The following schedule reconciles
the amounts of income taxes computed at the United States statutory rates to the actual amounts reported in operations.</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; 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="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</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; text-indent: 0pt">Federal income</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; padding-left: 9pt; text-indent: 0pt">taxes at</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; width: 68%; padding-left: 9pt; text-indent: 0pt">34% statutory rate</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">1,368,847</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: 12%; text-align: right">989,688</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">State and local</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; padding-left: 9pt; text-indent: 0pt">taxes, net of</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; padding-left: 9pt; text-indent: 0pt">federal income</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; padding-left: 9pt; text-indent: 0pt">tax effect</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">46,160</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">3,322</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">Permanent items</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">7,149</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">24,316</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">Charitable Donations</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">-</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">(350,672</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">Foreign tax rate difference</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(308,250</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">(383,179</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">Change in deferred income tax</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; border-bottom: black 2px solid; padding-left: 9pt; text-indent: 0pt">valuation allowance</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">100,921</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">54,358</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></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; text-indent: 0pt"> Provision for income taxes</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,214,827</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">337,833</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">The following summarizes
deferred income tax assets and liabilities:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; 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="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</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; text-indent: 0pt">Deferred income tax liabilities:</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; text-indent: 0pt">Plant, property</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; border-bottom: black 2px solid; width: 68%; padding-left: 9pt; text-indent: 0pt">and equipment</td>
<td style="text-align: right; border-bottom: black 2px solid; width: 1%"> </td>
<td style="border-bottom: black 2px solid; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; width: 12%; text-align: right">322,604</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; width: 2%; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; width: 2%"> </td>
<td style="border-bottom: black 2px solid; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; width: 12%; text-align: right">383,875</td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">322,604</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">383,875</td>
<td nowrap="nowrap" style="text-align: left"> </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></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Deferred income tax assets:</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">Asset valuations</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">426,429</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">372,774</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">Contribution carryforward</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">296,802</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">309,818</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">Operating 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></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt; text-indent: 0pt">carryforwards and credits</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2,148,208</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">2,047,287</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">Pension</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">467,087</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">522,903</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">Foreign tax credit</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">48,847</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">-</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Other</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">418,938</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">328,718</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">3,806,311</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">3,581,500</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Net deferred</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; padding-left: 9pt; text-indent: 0pt">income tax asset before valuation allowance</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3,483,707</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">3,197,625</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">Valuation</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; border-bottom: black 2px solid; padding-left: 9pt; text-indent: 0pt">allowance</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(2,148,208</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(2,047,287</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Net deferred</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; border-bottom: black 4px double; padding-left: 9pt; text-indent: 0pt"> income tax asset</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,335,499</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">1,150,338</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<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">In 2011, the Company evaluated its tax positions
for years which remain subject to examination by major tax jurisdictions, in accordance with the requirements of ASC 740 and as
a result concluded no adjustment was necessary. The Company files income tax returns in the U.S. federal jurisdiction, and various
state and foreign jurisdictions. The Company’s evaluation of uncertain tax positions was performed for the tax years ended
December 31, 2008 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31,
2011.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In accordance with the Company’s
accounting policies, any interest and penalties related to uncertain tax positions are recognized as a component of income tax
expense.</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 provides deferred
income taxes on foreign subsidiary earnings, which are not considered permanently reinvested.  Earnings permanently reinvested
would become taxable upon the sale or liquidation of a foreign subsidiary or upon the remittance of dividends.  During
2011, the Company repatriated $650,000 of foreign earnings from its Canadian subsidiary. U.S. income taxes on those repatriated
earnings have been partially offset by foreign tax credits. The Company plans to continue to repatriate future earnings of its
Canadian subsidiary and will provide for U.S. income taxes accordingly.  Foreign subsidiary earnings of $9,855,053 and
$8,616,398 are considered permanently reinvested as of December 31, 2011 and 2010, respectively, and no deferred income taxes have
been provided on these foreign earnings.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Due to the uncertain nature
of the realization of the Company's deferred income tax assets based on past performance and carry forward expiration dates, the
Company has recorded a valuation allowance for the amount of deferred income tax assets which are not expected to be realized.  This
valuation allowance is subject to periodic review, and if the allowance is reduced, the tax benefit will be recorded in future
operations as a reduction of the Company's tax expense.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">At December 31, 2011, the Company
had tax operating loss carry forwards aggregating $6,952,423, all of which were applicable to Germany, and can be carried forward
indefinitely.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>8. Debt</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Long term debt consists of borrowings
under the Company’s revolving loan agreement with Wells Fargo Bank. As of December 31, 2011<b>, </b>$17,568,484 was outstanding
and $2,431,516 was available for borrowing under the Company’s revolving loan agreement.</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 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.  The Company was in compliance with these financial covenants at December 31, 2011.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On February 23, 2011, the
Company modified its revolving loan agreement with Wells Fargo Bank to amend certain provisions of the agreement.  The
amendments include an increase in the maximum borrowing amount from $18 million to $20 million and an extension of the maturity
date of the loan from February 1, 2012 to March 31, 2013.  The modified loan agreement continues to be secured by the
assets of the U.S. parent company. Funds borrowed under the modified loan agreement may be used for working capital, general operating
expenses, share repurchases and certain other purposes.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>9. Commitments and Contingencies</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 leases certain office,
manufacturing and warehouse facilities and various equipment under non-cancelable operating leases. Total rent expense was $713,925
and $624,734 in 2011 and 2010. Minimum annual rental commitments under non-cancelable leases with remaining terms of one year or
more as of December 31, 2011:  2012 - $712,665; 2013 - $287,141; 2014 - $210,087; 2015 - $159,594; and 2016 - $33,548.</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 is involved, from
time to time, in litigation and other disputes and other litigation in the ordinary course of business, including certain 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 effect on its financial position, results of operations, or liquidity.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>10. 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 include (1) United States; (2) Canada and (3) Europe.  The
financial results for the Company’s Asian operations have been aggregated with the results of its United States operations
to form one reportable segment called the “United States segment”.  Sales in the United States segment include
both domestic sales as well as direct import sales.  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
15% and 16% of the Company’s total net sales in 2011 and 2010, respectively.</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 revenues are
defined as total revenues, including both external customer revenue and inter-segment revenue. Segment operating earnings are defined
as segment revenues, less cost of goods sold and operating expenses. Identifiable assets by segment are those assets used in the
respective reportable segment’s operations. Inter-segment amounts are eliminated to arrive at consolidated financial results.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: left; margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 9pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; font-weight: bold; text-indent: 0pt">Financial data by segment:</td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 2px; font-family: Times New Roman, Times, Serif; font-weight: bold; text-decoration: underline">2011</td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td colspan="2" style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; text-indent: 0pt">(000's omitted)</td>
<td style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; text-indent: 0pt">United States</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; text-indent: 0pt">Canada</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; text-indent: 0pt">Europe</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-family: Times New Roman, Times, Serif; font-weight: bold; text-align: center; text-indent: 0pt">Consolidated</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 42%; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Sales to unaffiliated customers</td>
<td style="text-align: right; width: 1%; font-family: Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font-family: Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font-family: Times New Roman, Times, Serif">56,663</td>
<td nowrap="nowrap" style="width: 2%; text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; width: 2%; font-family: Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="width: 10%; text-align: right; font-family: Times New Roman, Times, Serif">8,514</td>
<td nowrap="nowrap" style="width: 2%; text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; width: 2%; font-family: Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="width: 10%; text-align: right; font-family: Times New Roman, Times, Serif">8,125</td>
<td nowrap="nowrap" style="width: 2%; text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; width: 2%; font-family: Times New Roman, Times, Serif"> </td>
<td style="width: 1%; text-align: left; font-family: Times New Roman, Times, Serif">$</td>
<td style="width: 10%; text-align: right; font-family: Times New Roman, Times, Serif">73,302</td>
<td nowrap="nowrap" style="width: 1%; text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Operating income (loss)</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">3,485</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">924</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">(124</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif">)</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">4,285</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Assets</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">43,174</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">6,033</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">6,015</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">55,222</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Additions to property, plant and equipment</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">912</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">26</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">3</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">941</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Depreciation and amortization</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">857</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">36</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">85</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">978</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: center; padding-bottom: 2px; font-family: Times New Roman, Times, Serif; font-weight: bold; text-decoration: underline">2010</td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Sales to unaffiliated customers</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif">$</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">47,184</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif">$</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">7,720</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif">$</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">8,245</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif">$</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">63,149</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Operating income (loss)</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">2,660</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">807</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">(487</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif">)</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">2,980</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Assets</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">37,683</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">6,205</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">5,691</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">49,581</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Additions to property, plant and equipment</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">788</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">40</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">110</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">937</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font-family: Times New Roman, Times, Serif; text-indent: 0pt">Depreciation and amortization</td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">745</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">52</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">73</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: left; font-family: Times New Roman, Times, Serif"> </td>
<td style="text-align: right; font-family: Times New Roman, Times, Serif">870</td>
<td nowrap="nowrap" style="text-align: left; font-family: Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The following is a reconciliation
of segment operating income to consolidated income before taxes:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt 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="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">2010</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: 68%; text-indent: 0pt">Total operating income</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">4,285</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">$</td>
<td style="width: 12%; text-align: right">2,980</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Interest expense, net</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">255</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">142</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Other (expense)  income, net</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(4</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">72</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Consolidated income before taxes</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left">$</td>
<td style="border-bottom: black 2px solid; text-align: right">4,026</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">$</td>
<td style="border-bottom: black 2px solid; text-align: right">2,910</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt">Net Income</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">2,811</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">$</td>
<td style="border-bottom: black 4px double; text-align: right">2,573</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="text-indent: 0pt; margin: 0"><br />
<font style="font: 10pt Times New Roman, Times, Serif">The table below presents revenue by geographic area. Revenues are attributed
to countries based on location of the customer.</font></p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Revenues</td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-top: black 2px solid; border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-top: black 2px solid; text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="border-top: black 2px solid; padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-top: black 2px solid; border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 68%; padding-left: 18pt; text-indent: 0pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">55,856</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: 12%; text-align: right">46,639</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: 18pt; text-indent: 0pt">International:</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; 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">8,514</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">7,720</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 27pt; text-indent: 0pt">Europe</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">8,125</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">8,245</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">Other</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">807</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">545</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; padding-left: 18pt; text-indent: 0pt">Total International</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">17,446</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">$</td>
<td style="border-bottom: black 2px solid; text-align: right">16,510</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; padding-left: 18pt; text-indent: 0pt">Total Revenues</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">73,302</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">63,149</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b> </b></p>
<p style="margin: 0pt"></p>
-229853
-40237
-40237
-229853
66691
-21950
-21950
66691
2648031
2510777
428439
385732
385732
428439
-806887
-682128
-682128
-806887
263237
162471
153121
198627
9350
64610
61550
79450
-133738
-1566290
-1566290
-133738
-150072
-13810
24034
24034
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>11.  Stock Option
Plans</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 has two stock option
plans: (1) the 2002 Employee Stock Option Plan, as amended (the “Employee Plan”) and (2) the 2005 Non-Salaried Director
Stock Option Plan (the “Director Plan”).</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Employee Plan, which became
effective February 26, 2002, provides for the issuance of incentive and nonqualified stock options at an exercise price equal to
the fair market value of the Common Stock on the date the option is granted.  The terms of the options granted are subject
to the provisions of the Employee Plan. Options granted under the Employee Plan after July 1, 2006 vest 25% one day after the first
anniversary of the grant date and 25% one day after each of the next three anniversaries. Options granted prior to July 1, 2006
vest 25% one day after the date of grant and 25% one day after each of the next three anniversaries.  As of December
31, 2011, the number of shares available for grant under the Employee Plan was 66,938.  Under the terms of the Employee
Plan, no option may be granted under that plan after the tenth anniversary of the adoption of the plan.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif">The Director Plan, as amended, provides for the
issuance of stock options for up to 140,000 shares of the Company's common stock to non-salaried directors.  Under the
Director Plan, Directors elected on April 25, 2005 and at subsequent Annual Meetings who have not received any prior grant under
this or previous plans receive an initial grant of an option to purchase 5,000 shares of Common Stock (the “Initial Option”).
Each year, each elected Director not receiving an Initial Option will receive a 4,500 share option (the “Annual Option”).  The
Initial Option vests 25% on the date of grant and 25% on the anniversary of the grant date in each of the following 3 years. Each
Annual Option becomes fully exercisable one day after the date of grant. The exercise price of all options granted equals the
fair market value of the Common Stock on the date the option is granted and expires ten (10) years from the date of grant. As
of December 31, 2011, the number of shares available for grant under the Director Plan was 40,500.</font></p>
<p style="margin: 0pt"><font style="font: 10pt Times New Roman, Times, Serif"> </font></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">A summary of changes in options
issued under the Company’s stock option plans follows:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="text-align: right; border-bottom: black 2px solid; font-weight: bold; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="text-align: right; border-bottom: black 2px solid; font-weight: bold; text-indent: 0pt">2010</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></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Options outstanding  at the</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: 68%; padding-left: 9pt; text-indent: 0pt">beginning of the year</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">838,950</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: 12%; text-align: right">722,500</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">Options granted</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">185,500</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">203,000</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">Options forfeited</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(2,000</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">(25,000</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Options exercised</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(79,450</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(61,550</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; text-indent: 0pt">Options outstanding at</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; border-bottom: black 4px double; padding-left: 9pt; text-indent: 0pt">the end of the year</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">943,000</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">838,950</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Options exercisable at the</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; border-bottom: black 4px double; padding-left: 9pt; text-indent: 0pt">end of the year</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">554,500</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">499,387</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Common stock available for future</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </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"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; padding-left: 9pt">grants at the end of the year</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">107,438</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">70,938</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td colspan="4" style="text-align: left; text-indent: 0pt">Weighted average exercise price per share:</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; padding-left: 9pt; text-indent: 0pt">Granted</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">9.67</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">10.13</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt; text-indent: 0pt">Forfeited</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">10.10</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">14.77</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt; text-indent: 0pt">Exercised</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3.31</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">2.71</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt; text-indent: 0pt">Outstanding</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">10.84</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">10.38</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt; text-indent: 0pt">Exercisable</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">11.69</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">10.67</td>
<td nowrap="nowrap" style="text-align: left"> </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">A summary of options outstanding
at December 31, 2011 is as follows:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="2" style="border-bottom: black 2px solid"> </td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid"> </td>
<td colspan="10" style="border-bottom: black 2px solid; text-align: center; font-weight: bold">Options Outstanding</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; text-align: center; font-weight: bold; text-indent: 0pt">Options Exercisable</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="text-align: left; border-bottom: black 2px solid; font-weight: bold; text-indent: 0pt">Range of Exercise Prices</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Number Outstanding</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Weighted-Average Remaining Contractual Life (Years)</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Weighted-Average Exercise Price</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">Number Exercisable</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Weighted-Average Exercise Price</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 colspan="2" style="text-align: left">$1.70 to $5.11</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">58,750</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2" style="text-align: center; text-indent: 0pt">  < 1</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">3.73</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">58,750</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">3.73</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td colspan="2" style="text-align: left">$5.12 to $8.51</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">156,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">7</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">7.71</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">90,000</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">7.57</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td colspan="2" style="text-align: left">$8.52 to $10.21</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">367,500</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">9</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">9.82</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">63,500</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">9.77</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td colspan="2" style="text-align: left">$10.22 to $13.62</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">121,000</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: center">7</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">12.98</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">103,500</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">12.95</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td colspan="2" style="text-align: left; padding-bottom: 2px">$13.63 to $17.02</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">239,750</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: center">4</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">15.16</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">238,750</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">15.16</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right; padding-bottom: 4px"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; width: 1%; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; width: 1%; text-align: left"> </td>
<td style="border-bottom: black 4px double; width: 9%; text-align: right">943,000</td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td>
<td style="width: 1%; padding-bottom: 4px"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right; padding-bottom: 4px"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td>
<td style="width: 1%; padding-bottom: 4px"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right; padding-bottom: 4px"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; width: 1%; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; width: 1%; text-align: left"> </td>
<td style="border-bottom: black 4px double; width: 9%; text-align: right">554,500</td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td>
<td style="width: 1%; padding-bottom: 4px"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 9%; text-align: right; padding-bottom: 4px"> </td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The weighted average remaining
contractual life of all outstanding stock options is 6 years.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Stock Based Compensation</b></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Stock-based compensation cost
is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period,
which is generally the vesting period. The Company uses the Black-Scholes option pricing model to determine the fair value of employee
and non-employee director stock options. The determination of the fair value of stock-based payment awards on the date of grant,
using an option-pricing model, is affected by the Company’s stock price as well as assumptions regarding a number of complex
and subjective variables. These assumptions include estimating the length of time employees will retain their vested stock options
before exercising them (“expected term”), the estimated volatility of the Company’s Common Stock price over the
expected term (“volatility”) and the number of options that will not fully vest in accordance with applicable vesting
requirements (“forfeitures”).</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 estimates the expected
term of options granted by evaluating various factors, including the vesting period, historical employee information, as well as
current and historical stock prices and market conditions. The Company estimates the volatility of its common stock by calculating
historical volatility based on the closing stock price on the last day of each of the 60 months leading up to the month the option
was granted. The risk-free interest rate that the Company uses in the option valuation model is the interest rate on U.S. Treasury
zero-coupon bond issues with remaining terms similar to the expected term of the options granted. Historical information was the
basis for calculating the dividend yield. The Company is required to estimate forfeitures at the time of grant and to revise those
estimates in subsequent periods if actual forfeitures differ from those estimates. The Company used a mix of historical data and
future assumptions to estimate pre-vesting option forfeitures and to record stock-based compensation expense only for those awards
that are expected to vest. All stock-based payment awards are amortized over the requisite service periods of the awards, which
are generally the vesting periods.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The assumptions used to value
option grants for the twelve months ended December 31, 2011 and December 31, 2010 were as follows:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px"> </td>
<td colspan="6" style="border-bottom: black 2px solid"> </td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="text-align: right; border-bottom: black 2px solid; font-weight: bold; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="text-align: right; padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="text-align: right; border-bottom: black 2px solid; font-weight: bold; text-indent: 0pt">2010</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: 68%; text-indent: 0pt">Expected life in years</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td>
<td style="width: 12%; text-align: right">5</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: 12%; text-align: right">5</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">Interest rate</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">0.91 – 2.10%</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">1.55 – 2.54%</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">Volatility</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">.327-.330</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">.336-.359</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">Dividend yield</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2.37% - 2.70%</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">1.80% - 2.30%</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Total stock-based compensation recognized in the
Company’s consolidated statements of operations for the years ended December 31, 2011 and 2010 was $428,439 and $385,732,
respectively.  At December 31, 2011, there was approximately $685,386 of unrecognized compensation cost, adjusted for
estimated forfeitures, related to non-vested stock-based payments granted to the Company’s employees. As of December 31,
2011, the remaining unamortized expense is expected to be recognized over a weighted average period of 3 years.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The weighted average fair
value at the date of grant for options granted during 2011 and 2010 was $2.26 and $2.71 per option, respectively.  The
aggregate intrinsic value of outstanding options was $622,710 at December 31, 2011. The aggregate intrinsic value of exercisable
options was $517,010 at December 31, 2011<b>.  </b>The aggregate intrinsic value of options exercised during 2011 was
$482,233.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>12.  Earnings Per
Share</b></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The calculation of earnings
per share follows:</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2010</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Numerator:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; width: 68%; text-indent: 0pt">   Net income</td>
<td style="text-align: right; border-bottom: black 4px double; width: 1%"> </td>
<td style="border-bottom: black 4px double; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 4px double; width: 12%; text-align: right">2,811,193</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; width: 2%; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double; width: 2%"> </td>
<td style="border-bottom: black 4px double; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 4px double; width: 12%; text-align: right">2,572,964</td>
<td nowrap="nowrap" style="width: 1%; text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Denominator:</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">   Denominator for basic earnings per share:</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">      Weighted average shares outstanding</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3,099,982</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">3,128,509</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">   Effect of dilutive employee stock options</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(0</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">65,805</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; text-indent: 0pt">   Denominator for dilutive earnings per share</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">3,099,983</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left"> </td>
<td style="border-bottom: black 4px double; text-align: right">3,194,314</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">   Basic earnings per share</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">0.91</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">0.82</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">   Dilutive earnings per share</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">0.91</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">0.81</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
</table>
<p style="margin: 0"> </p>
<p style="margin: 0"><font style="font: 10pt Times New Roman, Times, Serif">For 2011 and 2010, respectively, 602,895 and 473,750
stock options were excluded from diluted earnings per share calculations because they would have been anti-dilutive.</font></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: left; margin: 0"></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: bottom">
<td colspan="12" style="text-align: left; font-weight: bold; text-indent: 0pt">13. Accumulated Other Comprehensive (loss) income</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td colspan="12" style="text-align: left; text-indent: 0pt">The components of accumulated other comprehensive (loss) income follow:</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Foreign currency translation adjustment</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Net prior service credit and actuarial losses</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left; font-weight: bold"> </td>
<td style="border-bottom: black 2px solid; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Total</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: 51%">Balances, December 31, 2009</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">321,201</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">$</td>
<td style="width: 12%; text-align: right">(1,134,170</td>
<td nowrap="nowrap" style="width: 2%; text-align: left">)</td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 12%; text-align: right">(812,970</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">Change in net prior service credit</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </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"> </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"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt">and actuarial losses, net of</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </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"> </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"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 9pt">income tax expense of $35,053,</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </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">(21,950</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">(21,950</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid">Translation adjustment</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(40,237</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right"> </td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(40,237</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; text-indent: 0pt">Balances, December 31, 2010</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">280,964</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">(1,156,120</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">(875,157</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">Change in net prior service credit</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">   and actuarial losses, net of</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; padding-left: 9pt">income tax expense of $25,094,</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">66,691</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">66,691</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; text-indent: 0pt">Translation adjustment</td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(229,853</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left">)</td>
<td style="border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right"> </td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(229,853</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 4px double; text-indent: 0pt">Balances, December 31, 2011</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">51,111</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">(1,089,429</td>
<td nowrap="nowrap" style="border-bottom: black 4px double; text-align: left">)</td>
<td style="text-align: right; border-bottom: black 4px double"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">(1,038,319</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px">)</td></tr>
</table>
<p style="margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>14.  Financial
Instruments</b></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 is a reasonable estimate of fair value because of its 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="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>15.  Quarterly
Data (unaudited)</b></p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td colspan="20" style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Quarters (000's omitted, except per share data)</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font: 9pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font: 9pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font: 9pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font: 9pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="font: 9pt Times New Roman, Times, Serif"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-indent: 0pt">2011</td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">First</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Second</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Third</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Fourth</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Total</td>
<td nowrap="nowrap" style="font: bold 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 27%; text-indent: 0pt">Net sales</td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 10%; text-align: right">14,401</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 10%; text-align: right">24,029</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 10%; text-align: right">19,036</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 10%; text-align: right">15,836</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 2%"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; width: 10%; text-align: right">73,302</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; width: 1%; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Cost of goods sold</td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">9,093</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">15,346</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">12,396</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">10,142</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">46,977</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Net income</td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">120</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">1,743</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">682</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">266</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">2,811</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Basic earnings per share</td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.04</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.56</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.22</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.08</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.91</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Diluted earnings per share</td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.04</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.55</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.22</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.09</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.91</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Dividends per share</td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.06</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.06</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.07</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.07</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.26</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right"> </td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-indent: 0pt">2010</td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">First</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Second</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Third</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Fourth</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font: bold 9pt Times New Roman, Times, Serif; text-align: center; text-indent: 0pt">Total</td>
<td nowrap="nowrap" style="font: bold 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Net sales</td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">13,121</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">20,585</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">16,083</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">13,360</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">63,149</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Cost of goods sold</td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">8,008</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">13,034</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">10,426</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">8,316</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">39,784</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Net income</td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">214</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">1,566</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">612</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">181</td>
<td nowrap="nowrap" style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="border-bottom: black 2px solid; font: 9pt Times New Roman, Times, Serif; text-align: right">2,573</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Basic earnings per share</td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.07</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.50</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.20</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.06</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.82</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Diluted earnings per share</td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.07</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.48</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.19</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.07</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.81</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; font: 9pt Times New Roman, Times, Serif; text-indent: 0pt">Dividends per share</td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.05</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.05</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.06</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.06</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </td>
<td style="text-align: right; font: 9pt Times New Roman, Times, Serif"> </td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: left">$</td>
<td style="font: 9pt Times New Roman, Times, Serif; text-align: right">0.22</td>
<td nowrap="nowrap" style="font: 9pt Times New Roman, Times, Serif; text-align: left"> </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">Earnings per share were computed
independently for each of the quarters presented.  Therefore, the sum of the four quarterly earnings per share amounts
may not necessarily equal the earnings per share for the year.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>16.  Sale of Property</b></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.  The property consisted of
approximately four acres of land and 48,000 sq. feet of warehouse space.  The property was the site of the original Acme
United 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 responsible 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 in the fourth quarter of 2008, related to the remediation of the property. This accrual
included 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">Remediation work on the project
began in the third quarter of 2009.  The Company expects the remediation work to be completed during the second half
of 2012. During 2011, the Company had paid approximately $105,000 for work related to the remediation and has approximately $239,000
remaining in its accrual for environmental remediation, of which approximately $90,000 was classified as a current liability.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In addition to the remediation
work, the Company, with the assistance of its independent environmental consulting firm, must continue to monitor contaminant levels
on the property to ensure they comply with set governmental standards. The Company expects that the monitoring period could last
a minimum of three years from the completion of the remediation work.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The change in the accrual
for environmental remediation for the year ended December 31, 2011 follows (in thousands):</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid; width: 16%; font-weight: bold; text-align: center; text-indent: 0pt">Balance at December 31, 2010</td>
<td style="border-bottom: black 2px solid; width: 9%; font-weight: bold; text-align: center; text-indent: 0pt">Payments</td>
<td style="border-bottom: black 2px solid; width: 16%; font-weight: bold; text-align: center; text-indent: 0pt">Balance at December 31, 2011</td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$ 344</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  (105)</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  239</td></tr>
</table>
<p style="margin: 0pt"> </p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Also, as part of the sale, the Company has provided
the buyer with a mortgage of $2.0 million at six percent interest.  The mortgage is payable in monthly installments 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="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>17.  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 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="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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 2011, the Company incurred approximately $125,000, of integration
and transaction costs associated with the acquisition.  These costs were recorded in selling, general and administrative
expenses.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The purchase price was allocated
to assets acquired and liabilities assumed as follows (in thousands):</p>
<p style="margin: 0pt"> <b> </b></p>
<table cellpadding="0" cellspacing="0" style="background-color: white; width: 70%; font: 10pt Times New Roman, Times, Serif; font-size: 10pt; font-family: times new roman">
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">
<p style="margin: 0">Assets:</p></td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="width: 82%; text-align: left; text-indent: 0pt">           Accounts Receivable</td>
<td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 15%; text-align: right">592</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td>           Inventory</td>
<td> </td>
<td style="text-align: left"></td>
<td style="text-align: right">1,196</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td>           Equipment</td>
<td> </td>
<td style="text-align: left"></td>
<td style="text-align: right">150</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 2px">           Intangible Assets</td>
<td style="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">1,500</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td>           Total assets</td>
<td> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">3,438</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td><font style="font: 10pt Times New Roman, Times, Serif">  </font> <font style="font: 10pt Times New Roman, Times, Serif">Liabilities</font></td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td>           Accounts Payable</td>
<td> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">310</td>
<td nowrap="nowrap" style="text-align: left"> </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">Net sales for 2011 attributable
to Pac-Kit were approximately $5.2 million. Unaudited net sales attributable to Pac-Kit for the comparable period in 2010
were approximately $4.6 million.  The year ended December 31, 2011 represents a comparable period based on the Pac-Kit
acquisition date.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Unaudited proforma net income,
excluding one time transaction and integration costs of $125,000, for the twelve months ended December 31, 2011, attributable to
Pac-Kit was approximately $175,000. Net income for the comparable period in 2010 was immaterial to the Company’s 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">Assuming Pac-Kit was acquired
on January 1, 2011, unaudited proforma net sales and net income for the year ended December 31, 2011 attributable to Pac-Kit were
approximately $6.0 million and $200,000, respectively. Assuming Pac-Kit was acquired on January 1, 2011, unaudited proforma net
sales for the comparable period in 2010 were approximately $5.4 million.  Unaudited proforma net income for the comparable
period in 2010 was immaterial to the Company’s consolidated financial statements.</p>
<p style="margin: 0pt"> </p>