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2012-01-01
2012-03-31
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2011-03-31
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2010-12-31
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iso4217:USD
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ACME UNITED CORP
0000002098
10-Q
2012-03-31
false
--12-31
No
No
Yes
Smaller Reporting Company
Q1
2012
3103227
4078000
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<p style="margin: 0pt"></p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 1 — Basis of Presentation</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In the opinion of management,
the accompanying condensed consolidated financial statements include all adjustments necessary to present fairly the financial
position, results of operations and cash flows of Acme United Corporation (the “Company”).  These adjustments
are of a normal, recurring nature.  However, the financial statements do not include all of the disclosures normally
required by accounting principles generally accepted in the United States of America or those normally made in the Company's Annual
Report on Form 10-K. Please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2011 for such disclosures.  The
condensed consolidated balance sheet as of December 31, 2011 was derived from the audited consolidated balance sheet as of that
date.  The results of operations for interim periods are not necessarily indicative of the results to be expected for
the full year.  The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the
Management’s Discussion and Analysis of Financial Condition and Results of Operations and financial statements and notes
thereto, included in the Company’s 2011 Annual Report on Form 10-K.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company has evaluated
events and transactions subsequent to March 31, 2012 and through the date these consolidated financial statements were included
in this Form 10-Q and filed with the SEC.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><i>Recent accounting pronouncements</i></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In June 2011, the FASB issued
a new accounting standard on the presentation of comprehensive income. The new standard requires the presentation of comprehensive
income, the components of net income and the components of other comprehensive income either in a single continuous statement of
comprehensive income or in two separate but consecutive statements. The guidance was effective for our quarter ended March 31,
2012. The adoption of this guidance was limited to a change in the presentation of our results, which we have elected to include
as a separate Condensed Consolidated Statement of Comprehensive Income.</p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"></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>Note 2 — Contingencies</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company is involved from
time to time in disputes and other litigation in the ordinary course of business and may encounter other contingencies, which may
include environmental and other matters.  The Company presently believes that none of these matters, individually or
in the aggregate, would be likely to have a material adverse impact on its financial position, results of operations or liquidity,
as set forth in these financial statements.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In December 2008, the Company
sold property it owned in Bridgeport, Connecticut to B&E Juices, Inc. for $2.5 million, of which $2.0 million is secured by
a mortgage on the property.  The property 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 required to remediate any environmental contamination
on the property. During 2008, the Company hired an independent environmental consulting firm to conduct environmental studies in
order to identify the extent of the environmental contamination on the property and to develop a remediation plan. As a result
of those studies and the estimates prepared by the independent environmental consulting firm, the Company recorded an undiscounted
liability of approximately $1.8 million related to the remediation of the property. This accrual includes the costs of required
investigation, remedial activities, and post-remediation operating and maintenance.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">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.  At
March 31, 2012, the Company had approximately $224,000 remaining in its accrual for environmental remediation and monitoring, of
which approximately $71,000 is classified as a current liability in the accompanying balance sheet.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In addition to the remediation
work, the Company, with the assistance of its independent environmental consulting firm, must continue to monitor contaminant levels
on the property to ensure they comply with set governmental standards. The Company expects that the monitoring period could last
a minimum of three years from the completion of the remediation work.</p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The change in the accrual for environmental remediation
for the three months ended March 31, 2012 follows (in thousands):</p>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 80%; font: 10pt Times New Roman, Times, Serif; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 2px solid; width: 33%; text-align: center; vertical-align: bottom">
<p style="margin: 0"><b>Balance at</b></p>
<p style="margin: 0"><b>December 31, 2011</b></p></td>
<td style="border-bottom: black 2px solid; width: 34%; font-weight: bold; text-align: center; text-indent: 0pt">Payments</td>
<td style="border-bottom: black 2px solid; width: 33%; text-align: center; vertical-align: bottom">
<p style="margin: 0"><b>Balance at</b></p>
<p style="margin: 0"><b>March 31, 2012</b></p></td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td> </td>
<td> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  239</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  (15)</td>
<td style="border-bottom: black 4px double; text-align: center; text-indent: 0pt">$  224</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">Also, as part of the sale,
the Company has provided the buyer with a mortgage of $2.0 million at six percent interest per year. The mortgage is payable in
monthly installments of principal and interest with the outstanding balance due in full, one year after remediation and monitoring
on the property have been completed. It is estimated that the remediation project will be completed within five years from the
date of the sale.</p>
<p style="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>Note 3 —</b> <b>Pension</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Components of net periodic
pension cost are as 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="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="6" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">Three Months Ended</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">March 31</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">March 31</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="padding-bottom: 2px"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="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">Components of net periodic benefit cost:</td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td colspan="2"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; width: 64%; text-indent: 0pt">Interest cost</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">26</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">25</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Service cost</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Expected return on plan assets</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(26</td>
<td nowrap="nowrap" style="text-align: left">)</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">(24</td>
<td nowrap="nowrap" style="text-align: left">)</td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Amortization of prior service costs</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">3</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">2</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Amortization of actuarial loss</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">38</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">31</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">45</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">39</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></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 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 2012, the Company is required to contribute approximately $235,000.</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>Note 4 — Long Term
Debt and Shareholders Equity</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company’s revolving
loan agreement with Wells Fargo provided for borrowings up to $20 million, with all principal amounts outstanding thereunder required
to be repaid in a single amount on March 31, 2013. As of March 31, 2012 and December 31, 2011, the Company had outstanding borrowings
of $16,919,519 and $17,568,484, respectively, under the revolving loan agreement.  Under the revolving loan agreement,
the Company was required to maintain specific amounts of tangible net worth, a specified debt service coverage ratio, and a fixed
charge coverage ratio.  At March 31, 2012 the Company was in compliance with these covenants.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">On April 5, 2012, the Company
entered into a new revolving loan agreement with HSBC Bank, N.A. The new five-year credit facility provides for increased borrowings
of up to an aggregate of $30 million at an interest rate of LIBOR plus 1.75%, which is 0.25% lower than the interest rate under
our former loan agreement with Wells Fargo. All principal amounts outstanding under the agreement are required to be repaid in
a single amount on April 5, 2017, the date the agreement expires; interest is payable monthly.  Funds borrowed under
the agreement may be used for working capital, general operating expenses, share repurchases and certain other purposes.  Under
the revolving loan agreement, the Company is required to maintain specific amounts of tangible net worth, a specified debt service
coverage ratio, and a fixed charge coverage ratio. These financial covenants in the new loan agreement are similar to the covenants
in the prior agreement with Wells Fargo.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">In conjunction with signing
the new agreement, the Company ended its agreement with Wells Fargo and used funds borrowed under the new loan agreement to pay
all amounts then outstanding under the revolving loan agreement with Wells Fargo Bank.</p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">During the first three months of 2012, the Company
issued 5,000 shares of common stock and received proceeds of $21,000 upon the exercise of employee stock options.</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>Note 5— Segment Information</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The Company reports financial
information based on the organizational structure used by management for making operating and investment decisions and for assessing
performance. The Company’s reportable business segments consist of: (1) United States; (2) Canada and (3) Europe. As described
below, the activities of the Company’s Asian operations are closely linked to those of the U.S. operations; accordingly,
management reviews the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated
with the results of the United States operations to form one reportable segment called the “United States segment”
or “U.S. operating segment”. Each reportable segment derives its revenue from the sales of cutting devices, measuring
instruments and safety products for school, office, home, hardware and industrial use.</p>
<p style="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
10% and 8% of the Company’s total net sales for the three months ended March 31, 2012 and 2011, respectively.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: justify; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The chief operating decision
maker evaluates the performance of each operating segment based on segment revenues and operating income. Segment amounts are presented
after converting to U.S. dollars and consolidating eliminations.</p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Financial data by segment (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> </td>
<td style="font-weight: bold"> </td>
<td colspan="6" style="text-align: center; vertical-align: bottom"><p style="margin: 0"><b>Three months ended</b></p>
<p style="margin: 0"><b>March 31</b></p></td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Sales to external customers:</td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="width: 64%; text-align: left; text-indent: 0pt; padding-left: 27pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">12,595</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">10,559</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,659</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">1,854</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">2,625</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">1,988</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">16,878</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">$</td>
<td style="border-bottom: black 4px double; text-align: right">14,401</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt">Operating income:</td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">United States</td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">166</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left">$</td>
<td style="text-align: right">120</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">50</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">150</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">242</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">(87</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px">)</td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">458</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">183</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td> </td>
<td style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; text-indent: 0pt; padding-left: 27pt">Interest expense, net</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">56</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">47</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt; padding-left: 27pt">Other (income) expense, 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">42</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">(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; padding-bottom: 4px; text-indent: 0pt; padding-left: 27pt">Consolidated income before taxes</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">360</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">$</td>
<td style="border-bottom: black 4px double; text-align: right">161</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 0pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; font-size: 10pt; font-family: times new roman">
<tr style="vertical-align: bottom">
<td> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">March 31</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td>
<td style="font-weight: bold"> </td>
<td colspan="2" style="font-weight: bold; text-align: center; text-indent: 0pt">December 31</td>
<td nowrap="nowrap" style="text-align: left; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; text-indent: 0pt">Assets by segment</td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2012</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td>
<td style="padding-bottom: 2px; font-weight: bold"> </td>
<td colspan="2" style="border-bottom: black 2px solid; font-weight: bold; text-align: center; text-indent: 0pt">2011</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px; font-weight: bold"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; width: 64%; padding-left: 27pt; text-indent: 0pt">United States</td>
<td style="text-align: right; width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">41,611</td>
<td nowrap="nowrap" style="width: 2%; text-align: left"> </td>
<td style="text-align: right; width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td>
<td style="width: 14%; text-align: right">43,174</td>
<td nowrap="nowrap" style="width: 1%; text-align: left"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-left: 27pt; text-indent: 0pt">Canada</td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">5,190</td>
<td nowrap="nowrap" style="text-align: left"> </td>
<td style="text-align: right"> </td>
<td style="text-align: left"> </td>
<td style="text-align: right">6,033</td>
<td nowrap="nowrap" style="text-align: left"> </td></tr>
<tr style="background-color: #cceeff; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 2px; padding-left: 27pt; text-indent: 0pt">Europe</td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">6,084</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td>
<td style="text-align: right; padding-bottom: 2px"> </td>
<td style="border-bottom: black 2px solid; text-align: left"> </td>
<td style="border-bottom: black 2px solid; text-align: right">6,015</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 2px"> </td></tr>
<tr style="background-color: white; vertical-align: bottom">
<td style="text-align: left; padding-bottom: 4px; padding-left: 27pt; text-indent: 0pt">Consolidated</td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">52,885</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td>
<td style="text-align: right; padding-bottom: 4px"> </td>
<td style="border-bottom: black 4px double; text-align: left">$</td>
<td style="border-bottom: black 4px double; text-align: right">55,222</td>
<td nowrap="nowrap" style="text-align: left; padding-bottom: 4px"> </td></tr>
</table>
<p style="margin: 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>Note 6 – Stock Based
Compensation</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 recognizes share-based
compensation at fair value of the equity instrument on the grant date.  Compensation expense is recognized over the required
service period.   Share-based compensation expense was $87,516 and $83,610 for the quarters ended March 31, 2012
and March 31, 2011, respectively. During the three months ended March 31, 2012 and 2011, the Company granted 64,938 and 60,000
employee stock options, respectively, with a weighted average fair value of $2.23 and $2.52, respectively.   As
of March 31, 2012, there was a total of $733,146 of unrecognized compensation cost, adjusted for estimated forfeitures, related
to non-vested, share –based payments granted to the Company’s employees.</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>Note 7 – Fair Value
Measurements</b></p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">The carrying value of the Company’s
bank debt and note receivable approximates fair value. Fair value was determined using a discounted cash flow analysis.</p>
<p style="margin: 0pt"> </p>
225000
344000
<p style="margin: 0pt"></p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif"><b>Note 8 – Business Combinations</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.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Unaudited net sales and net
income for the three months ended March 31, 2011 attributable to Pac-Kit were approximately $600,000 and $30,000, respectively.</p>
<p style="margin: 0pt"> </p>
<p style="text-align: left; text-indent: 0pt; margin: 0; font: 10pt Times New Roman, Times, Serif">Assuming Pac-Kit was acquired
on January 1, 2011, unaudited proforma net sales and net income for the three months ended March 31, 2011, attributable to Pac-Kit
were approximately $1.3 million and $90,000.</p>
<p style="margin: 0pt"> </p>