(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in ~~its charter)~~Its Charter)

~~Registrant’s~~Registrant's telephone number, including area code:(203) 254-6060

Indicate by check mark whether the registrant ~~(1)~~(l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ~~[X]~~☒ No ~~[_]~~

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T ~~(Sec.~~(sec. 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ~~[X]~~☒ No ~~[_]~~

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See ~~the~~ definitions of “large accelerated ~~filer,”~~filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one).

~~Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [_] Smaller reporting company [X]~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section ~~13(a)~~13(s) of the Exchange ~~Act. [_]~~Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ~~[_]~~☐ No ~~[X]~~☒

~~As of October 24, 2017 the registrant~~Registrant had ~~outstanding 3,374,061~~3,336,413 shares of its $2.50 par value Common ~~Stock.~~Stock outstanding as of August 3, 2020.

		Page Number

Part I — FINANCIAL ~~INFORMATION~~INFORMATION:
Item 1:	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~ 2019	4 3
	Condensed Consolidated Statements of Operations for the ~~Three~~three and ~~Nine Months Ended September~~six months ended June 30, ~~2017~~2020 and ~~2016~~ 2019	6 5
	Condensed Consolidated Statements of Comprehensive Income for the ~~Three~~three and ~~Nine Months Ended September~~six months ended June 30, ~~2017~~2020 and ~~2016~~ 2019	7 6
	Condensed Consolidated Statement of Changes in Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019	7
	Condensed Consolidated Statements of Cash Flows for the ~~Nine Months Ended September~~six months ended June 30, ~~2017~~2020 and ~~2016~~ 2019	8 9
	Notes to Condensed Consolidated Financial Statements	9 10
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15 16
Item 3:	Quantitative and Qualitative Disclosures about Market Risk	18 20
Item 4:	Controls and Procedures	18 20

Part II — OTHER ~~INFORMATION~~INFORMATION:
Item 1:	Legal Proceedings	20 21
Item 1A:	Risk Factors	20 21
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	20 21
Item 3:	Defaults Upon Senior Securities	20 21
Item 4:	Mine Safety Disclosures	20 21
Item 5:	Other Information	20 21
Item 6:	Exhibits	20 21
Signatures		21

Part I - FINANCIAL INFORMATION

Item 1: Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(all amounts in thousands)

	September 30,		December 31,
	2017		2016		June 30,		December 31,
	(unaudited)		(Note 1)		2020		2019
					(unaudited)		(Note 1)
ASSETS
Current assets:
Cash and cash equivalents	$	7,021	$	5,911	$	5,239	$	6,822
Accounts receivable, less allowance		31,579		20,021
Inventories:
Finished goods		30,911		33,972
Work in process		184		188
Raw materials and supplies		5,704		3,078
		36,799		37,238
Accounts receivable, less allowance of $950 in 2020 and $523 in 2019						33,720		25,485
Inventories						44,311		39,261
Prepaid expenses and other current assets		2,448		2,293		2,438		1,578
Total current assets		77,847		65,463		85,708		73,146
Property, plant and equipment:
Land		427		413		1,421		1,420
Buildings		6,232		5,669		10,704		10,096
Machinery and equipment		15,808		13,428		19,833		19,112
		22,467		19,510		31,958		30,628
Less accumulated depreciation		13,018		11,537
Less: accumulated depreciation						17,681		16,592
		9,449		7,973		14,277		14,036

Operating lease right-of-use asset, net						2,438		2,989
Goodwill		3,948		3,948		4,696		4,696
Intangible assets, less accumulated amortization		18,929		13,988		16,376		15,793
Other assets		765		694		41		89
Total assets	$	110,938	$	92,066	$	123,536	$	110,749

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (continued)

(all amounts in thousands, except share amounts)

	September 30,			December 31,
	2017			2016			June 30,			December 31,
	(unaudited)			(Note 1)			2020			2019
							(unaudited)			(Note 1)
LIABILITIES
Current liabilities:
Accounts payable	$	8,463		$	7,339		$	8,733		$	6,693
Operating lease liability - current portion								933			1,047
Current portion of mortgage payable								267			267
Other accrued liabilities		5,520			5,481			10,680			8,576
Total current liabilities		13,983			12,820			20,613			16,583
Non-current liabilities:
Long-term debt		45,969			32,936			35,742			33,240
Long-term debt - PPP Loan								3,508			-
Mortgage payable, net of current portion								3,044			3,178
Operating lease liability - non-current portion								1,573			1,961
Other non-current liabilities		266			190			49			83
Total liabilities		60,218			45,946			64,529			55,045

Commitments and Contingencies
Commitments and Contingencies (see note 2)

STOCKHOLDERS' EQUITY
Common stock, par value $2.50:
authorized 8,000,000 shares;
issued - 4,838,071 shares in 2017 and 4,788,965 in 2016,
issued - 4,838,071 shares in 2020 and 2019,
including treasury stock		12,094			11,972			12,094			12,094
Additional paid-in capital		8,812			8,493			8,304			8,262
Retained earnings		45,492			41,861			55,247			51,571
Treasury stock, at cost - 1,464,010 shares in 2017 and 2016		(13,870	)		(13,870	)
Treasury stock, at cost - 1,501,658 shares in 2020 and 1,487,238 in 2019								(14,522	)		(14,235	)
Accumulated other comprehensive loss:
Minimum pension liability		(664	)		(664	)		(522	)		(522	)
Translation adjustment		(1,144	)		(1,672	)		(1,594	)		(1,466	)
		(1,808	)		(2,336	)		(2,116	)		(1,988	)
Total stockholders’ equity		50,720			46,120			59,007			55,704
Total liabilities and stockholders’ equity	$	110,938		$	92,066		$	123,536		$	110,749

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(all amounts in thousands, except per share amounts)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,					Three Months Ended June 30,						Six Months Ended June 30,
	2017		2016		2017			2016		2020			2019			2020			2019
Net sales	$	33,785	$	31,913	$	100,380		$	98,198	$	44,042		$	40,220		$	79,817		$	71,590
Cost of goods sold		21,559		20,050		63,107			62,455		27,989			25,449			50,234			45,016

Gross profit		12,226		11,863		37,273			35,743		16,053			14,771			29,583			26,574

Selling, general and administrative expenses		10,277		9,723		30,243			28,008		11,670			11,003			23,191			21,271

Operating income		1,949		2,140		7,030			7,735		4,383			3,768			6,392			5,303

Non-operating items:
Interest:
Interest expense											245			502			568			1,013
Interest income											(11	)		(11	)		(14	)		(19	)
Interest expense, net		365		247		949			642		234			491			554			994
Other (income) expense, net		16		65		(44	)		38		(1	)		14			37			12
Total other expense, net		381		312		905			680		233			505			591			1,006
Income before income taxes		1,568		1,828		6,125			7,055
Income before income tax expense											4,150			3,263			5,801			4,297
Income tax expense		366		355		1,418			1,750		951			592			1,325			819
Net income	$	1,202	$	1,473	$	4,707		$	5,305	$	3,199		$	2,671		$	4,476		$	3,478

Basic earnings per share	$	0.36	$	0.44	$	1.40		$	1.59	$	0.96		$	0.80		$	1.34		$	1.04

Diluted earnings per share	$	0.32	$	0.40	$	1.25		$	1.49	$	0.92		$	0.77		$	1.28		$	1.01

Weighted average number of common shares outstanding-
denominator used for basic per share computations		3,373		3,324		3,351			3,329
Weighted average number of dilutive stock options
outstanding		421		317		414			233
Weighted average number of common shares outstanding-denominator used for basic per share computations											3,349			3,351			3,344			3,351
Weighted average number of dilutive stock options outstanding											132			134			155			78
Denominator used for diluted per share computations		3,794		3,641		3,765			3,562		3,482			3,485			3,499			3,429

Dividends declared per share	$	0.11	$	0.10	$	0.32		$	0.30	$	0.12		$	0.12		$	0.24		$	0.24

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(all amounts in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020			2019
Net income	$	3,199	$	2,671	$	4,476		$	3,478
Other comprehensive income (loss):
Foreign currency translation adjustment		201		80		(128	)		81
Comprehensive income	$	3,400	$	2,751	$	4,348		$	3,559

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016

Net income $ 1,202 $ 1,473 $ 4,707 $ 5,305
Other comprehensive income (loss):
Foreign currency translation 234 (26 ) 528 168
Comprehensive income $ 1,436 $ 1,447 $ 5,235 $ 5,473

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(UNAUDITED)

(all amounts in thousands, except share amounts)

For the three months ended June 30, 2019

	Outstanding Shares of Common Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Gain			Retained Earnings			Total
Balances, March 31, 2019		3,350,833	$	12,094	$	(14,235	)	$	9,114		$	(2,179	)	$	48,074		$	52,868
Net income															2,671			2,671
Other comprehensive loss												80						80
Stock compensation expense									286									286
Distributions to shareholders															(404	)		(404	)
Cash settlement of stock options									(699	)								(699	)
Balances, June 30, 2019		3,350,833	$	12,094	$	(14,235	)	$	8,701		$	(2,099	)	$	50,341		$	54,802

For the three months ended June 30, 2020

	Outstanding Shares of Common Stock			Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Gain			Retained Earnings			Total
Balances, March 31, 2020		3,340,114		$	12,094	$	(14,449	)	$	8,048		$	(2,317	)	$	52,448		$	55,824
Net income																3,199			3,199
Other comprehensive loss													201						201
Stock compensation expense										359									359
Distributions to shareholders																(400	)		(400	)
Cash settlement of stock options										(103	)								(103	)
Purchase of treasury stock		(3,701	)				(73	)											(73	)
Balances, June 30, 2020		3,336,413		$	12,094	$	(14,522	)	$	8,304		$	(2,116	)	$	55,247		$	59,007

For the six months ended June 30, 2019

	Outstanding Shares of Common Stock		Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Gain			Retained Earnings			Total
Balances, December 31, 2018		3,350,833	$	12,094	$	(14,235	)	$	8,982		$	(2,058	)	$	47,550		$	52,333
Net income															3,478			3,478
Other comprehensive loss												1						1
Adoption of ASU 2018-02												(42	)		122			80
Stock compensation expense									498									498
Distributions to shareholders															(809	)		(809	)
Cash settlement of stock options									(779	)								(779	)
Balances, June 30, 2019		3,350,833	$	12,094	$	(14,235	)	$	8,701		$	(2,099	)	$	50,341		$	54,802

For the six months ended June 30, 2020

	Outstanding Shares of Common Stock			Common Stock		Treasury Stock			Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Gain			Retained Earnings			Total
Balances, December 31, 2019		3,350,833		$	12,094	$	(14,235	)	$	8,262		$	(1,988	)	$	51,571		$	55,704
Net income																4,476			4,476
Other comprehensive loss													(128	)					(128	)
Stock compensation expense										602									602
Distributions to shareholders																(800	)		(800	)
Cash settlement of stock options										(560	)								(560	)
Purchase of treasury stock		(14,420	)				(287	)											(287	)
Balances, June 30, 2020		3,336,413		$	12,094	$	(14,522	)	$	8,304		$	(2,116	)	$	55,247		$	59,007

See Notes to Condensed Consolidated Financial Statements.

ACME UNITED CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(all amounts in thousands)

	Six Months Ended
	June 30,
	2020			2019
Cash flows from operating activities:
Net income	$	4,476		$	3,478
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation		1,125			1,099
Amortization of intangible assets		659			623
Non-cash lease expense		47			11
Stock compensation expense		602			498
Provision for bad debt		619			-
Changes in operating assets and liabilities:
Accounts receivable		(8,598	)		(10,258	)
Inventories		(4,675	)		1,775
Prepaid expenses and other current assets		(414	)		161
Accounts payable		1,961			1,633
Other accrued liabilities		1,845			1,864
Total adjustments		(6,829	)		(2,594	)
Net cash (used in) provided by operating activities		(2,353	)		884

Cash flows from investing activities:
Purchase of property, plant and equipment		(1,323	)		(759	)
Acquisition of First Aid Central		(2,074	)		-
Net cash used in investing activities		(3,397	)		(759	)

Cash flows from financing activities:
Net borrowings (repayments) of long-term debt		2,502			(895	)
Proceeds from PPP Loan		3,508			-
Cash settlement of stock options		(560	)		(779	)
Repayments on mortgage		(133	)		(133	)
Distributions to shareholders		(800	)		(809	)
Purchase of treasury shares		(287	)		-
Net cash provided by (used in) financing activities		4,230			(2,616	)

Effect of exchange rate changes on cash and cash equivalents		(63	)		6
Net change in cash and cash equivalents		(1,583	)		(2,485	)

Cash and cash equivalents at beginning of period		6,822			4,409

Cash and cash equivalents at end of period	$	5,239		$	1,924

Supplemental cash flow information:
Cash paid for income taxes	$	371		$	225
Cash paid for interest	$	548		$	997

Nine Months Ended
September 30,
2017 2016
Cash flows from operating activities:
  Net income $ 4,707 $ 5,305
  Adjustments to reconcile net income
      to net cash (used) provided by operating activities:
        Depreciation 1,253 1,097
        Amortization 874 693
        Stock compensation expense 552 306
        Changes in operating assets and liabilities:
          Accounts receivable (10,866 ) (5,145 )
          Inventories 1,382 (2,134 )
          Prepaid expenses and other assets (147 ) 219
          Accounts payable 1,079 21
          Other accrued liabilities (30 ) 1,223
          Total adjustments (5,903 ) (3,720 )
        Net cash (used) provided by operating activities (1,196 ) 1,585

Cash flows from investing activities:
  Purchase of property, plant and equipment (2,401 ) (1,320 )
  Purchase of patents and trademarks —   (29 )
  Acquisition of businesses (7,233 ) (6,971 )
        Net cash used by investing activities (9,634 ) (8,320 )

Cash flows from financing activities:
  Net borrowings of long-term debt 13,033 13,793
  Cash settlement of stock options (760 ) (1,700 )
  Proceeds from issuance of common stock 649 390
  Distributions to stockholders (1,037 ) (1,000 )
  Purchase of treasury stock —   (907 )
        Net cash provided by financing activities 11,885 10,576

Effect of exchange rate changes on cash and cash equivalents 55 5
Net decrease in cash and cash equivalents 1,110 3,846

Cash and cash equivalents at beginning of period 5,911 2,426

Cash and cash equivalents at end of period $ 7,021 $ 6,272

Supplemental cash flow information:
          Cash paid for income taxes $ 728 $ 839
          Cash paid for interest $ 908 $ 610

See Notes to Condensed Consolidated Financial Statements

ACME UNITED CORPORATION

~~Notes to~~NOTES TO CONDENSED CONSOLIDATED ~~Financial Statements~~FINANCIAL STATEMENTS

(UNAUDITED)

1. Basis of Presentation

~~In the opinion of management, the~~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, ~~2016~~2019 for such disclosures. The condensed consolidated balance sheet as of December 31, ~~2016~~2019 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 Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto included in the Company’s ~~2016~~2019 Annual Report on Form 10-K.

Certain reclassification of prior years’ amounts have been made to conform to the current years’ presentation.

The Company has evaluated events and transactions subsequent to ~~September~~June 30, ~~2017~~2020 and through the date these condensed consolidated financial statements were ~~included in this Form 10-Q and filed with the SEC.~~

issued.

Recently Issued and Adopted Accounting Standards

In ~~January 2017,~~August 2018, the Financial Accounting Standards Board ~~(FASB)~~(“FASB”) issued ~~Auditing~~Accounting Standards Update ~~(ASU)~~(“ASU”) No. ~~2017-04, Intangibles~~2018-14, Compensation - ~~Goodwill and Other~~Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20), Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans Income Statement - Reporting Comprehensive Income (Topic ~~350): Simplifying the Test for Goodwill Impairment.~~220). This ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the new amendments, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. We adopted this guidance prospectively at the beginning of first quarter 2017 and it has not had a material impact on our financial statements.

~~In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new guidance~~removes disclosures that no longer are considered cost beneficial, clarifies the ~~definition~~specific requirements of ~~a business in order to allow for the evaluation of whether transactions should be accounted for~~disclosures, and adds disclosure requirements identified as ~~acquisitions or disposals of assets or businesses. The new guidance~~relevant. ASU 2018-14 is effective for fiscal years ~~beginning~~ending after December 15, ~~2017, including interim periods within those fiscal years. We do~~2020. The Company does not expect that the adoption of ASU ~~2017-01~~2018-14 will have a material impact on ~~our~~its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09 to improve the accounting for employee share-based payments. This standard simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows, as part of FASB’s simplification initiative to reduce cost and complexity in accounting standards while maintaining or improving the usefulness of the information provided to the users of financial statements. The new standard was effective for the Company beginning on January 1, 2017. The adoption of the new standard resulted in the recognition of excess tax benefits in the amount of approximately $350,000 in our provision for income taxes within the Condensed Consolidated Statement of Operations for the nine months ended September 30, 2017, rather than additional paid-in capital.~~Additionally, our Condensed Consolidated Statement of Cash Flows now present excess tax benefits as an operating activity included in other accrued liabilities, adjusted prospectively.~~

In February 2016, the FASB issued guidance that will change the requirements for accounting for leases. The principal change under the new accounting guidance is that lessees under leases classified as operating leases will recognize a right-of-use asset and a lease liability. Current lease accounting does not require lessees to recognize assets and liabilities arising under operating leases on the balance sheet. Under the new guidance, lessees (including lessees under leases classified as finance leases and operating leases) will recognize a right-to-use asset and a lease liability on the balance sheet, initially measured as the present value of lease payments under the lease. Expense recognition and cash flow presentation guidance will be based upon whether the lease is classified as an operating lease or a finance lease (the classification criteria for distinguishing between finance leases and operating leases is substantially similar to the classification criteria for distinguishing between capital leases and operating leases under current guidance). The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition approach for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements; the guidance provides certain practical expedients. The Company will evaluate this guidance in 2018 to determine its impact on the Company’s results of operations, cash flows and financial position.

~~In May 2014,~~2019, the FASB issued ASU No. ~~2014-09,~~~~Revenue from Contracts with Customers~~2019-12, Income Taxes (Topic ~~606)~~ (“740): Simplifying the Accounting for Income Taxes. The update eliminates, clarifies and modifies certain guidance related to the accounting for income taxes. ASU ~~2014-09”), which requires an entity to recognize revenue to depict~~2019-12 is effective for annual reporting periods beginning after December 15, 2020. The Company does not expect the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing revenue recognition guidance in U.S. GAAP. In August 2015, the FASB issued ASU No. 2015-14,~~Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date~~ (“~~ASU 2015-14”), which had the effect of deferring the effective date of ASU 2014-09 to March 1, 2018 for the Company. Early~~ adoption of ASU 2014-09 became permitted in the first quarter of fiscal year 2017. The Company expects to adopt ASU 2014-09 in the first quarter of 2018. The guidance permits the use of either the retrospective or cumulative effect transition method. We have not yet selected a transition method, and we continue to evaluate the effect that the updated standard will have on our consolidated financial condition, results of operations and cash flows. We generally do not have significant customer contracts and do not provide post-delivery services. As such, adoption of the new guidance is not expected to result in a significant change in the amount of revenue recognized or the timing of when such revenue is recognized and accordingly we do not expect adoption of the guidance2019-12 to have a material ~~impact~~effect on ~~our~~its consolidated financial ~~results.~~

statements.

2. Commitment and Contingencies

The Company may be 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. There are no pending material legal proceedings to which the ~~registrant~~Company is a party, or, to the actual knowledge of the Company, contemplated by any governmental authority.

~~In 2014,~~3. Revenue from Contracts with Customers

Nature of Goods and Services

The Company recognizes revenue from the ~~Company sold~~sales of a broad line of products that are grouped into two main categories: (i) cutting, sharpening and measuring; and (ii) first aid and safety. The cutting, sharpening and measuring category includes scissors, knives, paper trimmers, pencil sharpeners and other sharpening tools. The first aid and safety category includes first aid kits and refills and a variety of safety products. Revenue recognition is evaluated through the following five steps: (i) identification of the contract or contracts with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

When Performance Obligations Are Satisfied

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Revenue is generated by the sale of the Company’s products to its ~~Fremont, NC distribution facility for $850,000~~customers. Sales contracts (purchase orders) generally have a single performance obligation that is satisfied at a point in ~~cash. Under~~time, with shipment or delivery, depending on the terms of the ~~sale agreement,~~underlying contract. Revenue is measured based on the consideration specified in the contract. The amount of consideration we receive and revenue we recognize is impacted by incentives ("customer rebates"), including sales rebates, which are generally tied to sales volume levels, in-store promotional allowances, shared media and customer catalogue allowances and other cooperative advertising arrangements; freight allowance programs offered to our customers; and allowance for returns and discounts. We generally recognize customer rebate costs as a deduction to gross sales at the time that the associated revenue is recognized.

Significant Payment Terms

Payment terms for each customer are dependent on the agreed upon contractual repayment terms. Payment terms typically are between 30 and 90 days and vary depending on the size of the customer and its risk profile to the Company. Some customers receive discounts for early payment.

Product Returns

The Company accepts product returns in the normal course of business. The Company estimates reserves for returns and the related refunds to customers based on historical experience. Reserves for returned merchandise are included as a component of “Accounts receivable” in the condensed consolidated balance sheets.

Practical Expedient Usage and Accounting Policy Elections

For the Company’s contracts that have an original duration of one year or less, the Company ~~is responsible~~uses the practical expedient in ASC 606-10-32-18 applicable to ~~remediate any environmental contamination~~such contracts and does not consider the time value of money in relation to significant financing components. The effect of applying this practical expedient election did not have an impact on the ~~property. In conjunction with~~Company’s condensed consolidated financial statements.

Per ASC 606-10-25-18B, the ~~sale~~Company has elected to account for shipping and handling activities that occur after the customer has obtained control as a fulfilment activity instead of a performance obligation. Furthermore, shipping and handling activities performed before transfer of control of the ~~property,~~product also do not constitute a separate and distinct performance obligation. The effect of applying this practical expedient election did not have an impact on the Company’s condensed consolidated financial statements.

The Company has elected to exclude from the transaction price those amounts which relate to sales and other taxes that are assessed by governmental authorities and that are imposed on and concurrent with a specific revenue-producing transaction and collected by the Company ~~recorded~~from a ~~liability of $300,000~~customer.

Applying the practical expedient in ASC 340-40-25-4, Other Assets and Deferred Costs,the ~~second quarter of 2014, related to~~Company recognizes the ~~remediation of the property. The accrual includes the total estimated~~incremental costs of ~~remedial activities~~obtaining contracts as an expense when incurred. These costs are included in “Selling, general and ~~post-remediation monitoring costs.~~

~~Remediation work~~administrative expenses.” The effect of applying this practical expedient did not have an impact on the ~~project was completed in 2015. The monitoring period is expected to be completed by the end~~Company’s condensed consolidated financial statements.

Disaggregation of ~~2020.~~

Revenues

The ~~change~~following table represents external net sales disaggregated by product category, by segment (amounts in thousands):

For the ~~accrual for environmental remediation for the nine~~three months ended ~~September~~June 30, ~~2017 follows (in thousands):~~

Balance at
December 31,
2016 Payments Balance at
September 30,
2017
Fremont, NC $ 57 $ (9 ) $ 48

2020

	U.S.		Canada		Europe		Total
Cutting, Sharpening and Measuring	$	19,699	$	1,247	$	2,891	$	23,837
First Aid and Safety		18,773		1,141	$	291		20,205

Total Net Sales	$	38,472	$	2,388	$	3,182	$	44,042

~~3. Pension~~

For the three months ended June 30, 2019

	U.S.		Canada		Europe		Total
Cutting, Sharpening and Measuring	$	18,733	$	2,216	$	2,854	$	23,803
First Aid and Safety		16,225		—		192		16,417

Total Net Sales	$	34,958	$	2,216	$	3,046	$	40,220

~~Components of net periodic benefit cost (income) are as follows (in thousands):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2017 2016 2017 2016

Components of Net Periodic Benefit Cost:
Interest cost $ 8 $ 15 $ 36 $ 44
Service cost 9 6 27 19
Expected return on plan assets (12 ) (23 ) (52 ) (69 )
Amortization of prior service costs (4 ) 2 0 7
Amortization of actuarial loss 29 28 81 84
$ 30 $ 28 $ 92 $ 85

For the six months ended June 30, 2020

	U.S.		Canada		Europe		Total
Cutting, Sharpening and Measuring	$	31,427	$	2,661	$	5,497	$	39,585
First Aid and Safety		37,488		2,141		603		40,232

Total Net Sales	$	68,915	$	4,802	$	6,100	$	79,817

~~The Company’s funding policy with respect to its qualified plan is to contribute at least~~

For the ~~minimum amount required by applicable laws and regulations. In 2017, the Company is not required to contribute to the plan. As of September~~six months ended June 30, ~~2017, the Company had not made any contributions to the plan in 2017 and the Company does not anticipate that it will make any such contributions in the balance of 2017.~~2019

	U.S.		Canada		Europe		Total
Cutting, Sharpening and Measuring	$	31,931	$	3,628	$	5,045	$	40,604
First Aid and Safety		30,492		—		494		30,986

Total Net Sales	$	62,423	$	3,628	$	5,539	$	71,590

4. Debt and Shareholders’ Equity

~~On January 27, 2017,~~Long-term debt consists of borrowings under the ~~Company amended its~~Company’s revolving ~~credit~~ loan agreement with HSBC Bank, N.A. ~~on a temporary basis in order~~The agreement provides for borrowings of up to ~~provide for the funding of the Company’s acquisition of the assets of Spill Magic, Inc. as described in Note 8 above. The amended facility provided for an increase in borrowings from~~ $50 million ~~to $55 million for the period commencing on April 1, 2017 and ending on September 30, 2017. Commencing October 1, 2017, the maximum amount outstanding~~ at ~~any time under the~~Prime Rate less 1.25%. The credit facility ~~returned to $50 million. The interest rate on borrowings remains unchanged at a rate~~has an expiration date of ~~LIBOR plus 2.0%. In addition, the amendment modified the debt to net worth ratio covenant applicable during the same nine month period.~~May 24, 2023. The Company must pay a facility fee, payable quarterly, in an amount equal to two tenths of one percent (.20%) per annum of the average daily unused portion of the revolving credit line. ~~All principal amounts outstanding under the agreement are required~~The facility is intended to ~~be repaid in a single amount on May 6, 2019, the date the loan agreement expires; interest is payable monthly. Funds borrowed under the agreement may be used~~provide liquidity for working capital, growth, dividends, acquisitions, ~~general operating expenses,~~ share repurchases and ~~certain~~ other ~~purposes.~~business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of tangible net worth, a specified debt to net worth ratio and a fixed charge coverage ratio and must have annual net income greater than ~~$0,~~zero, measured as of the end of each fiscal year.At ~~September~~June 30, ~~2017,~~2020, the Company was in compliance with the covenants then in effect under the loan agreement.

As of ~~September~~June 30, ~~2017~~2020, and December 31, ~~2016,~~2019, the Company had outstanding borrowings of ~~$45,969,000~~$35,742,167 and ~~$32,936,000,~~$33,240,407, respectively, under the Company’s revolving loan agreement with HSBC.

On October 26, 2017, the Company exercised its option to purchase its First Aid Only manufacturing and distribution center in Vancouver, WA for $4.0 million. The property consists of 53,000 square feet of office, manufacturing, and warehouse space on 2.86 acres. The purchase was financed by a variable rate mortgage with HSBC Bank, N.A. at an interest rate of LIBOR plus 2.5%. Commencing on December 1, 2017, principal payments of $22,222 are due monthly, with all amounts outstanding due on maturity on October 31, 2024.

During the three and six months ended ~~September~~June 30, 2017, the Company issued a total of 2,108 shares of common stock and received aggregate proceeds of $21,291 upon exercise of employee stock options. During the nine months ended September 30, 2017, the Company issued a total of 49,106 shares of common stock and received aggregate proceeds of $649,232 upon exercise of employee stock options. Also during the three and nine months ended September 30, 2017,2020 the Company paid approximately ~~$27,680~~$103,000 and ~~$759,573,~~$560,000, respectively, to optionees who had elected a net cash settlement of their respective employee stock options.

During the three and six months ended June 30, 2020, the Company paid approximately $73,000 and $287,000, respectively, to repurchase a total of 3,701 and 14,420 shares of its Common Stock under its 2010 stock repurchase program. As of June 30, 2020, a total of 203,579 additional shares may be purchased in the future under the repurchase programs announced in 2010 and 2019.

5. Segment Information

The Company reports financial information based on the organizational structure used by the Company’s chief operating decision makers 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, the Company’s chief operating decision makers review the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated with the results of the United States operations to form one reportable segment called the “United States segment” or “U.S. segment”. Each reportable segment derives its revenue from the sales of cutting and sharpening devices, measuring instruments and first aid and safety products for school, office, home, hardware, sporting and industrial use.

Domestic sales orders are filled primarily from the Company’s distribution centers in North Carolina, Washington, Massachusetts, ~~California~~Tennessee and ~~Tennessee.~~California. 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.

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~~Individual direct import sales are made in larger quantities than domestic sales, typically full containers. Direct import sales represented approximately ~~10%~~14% and ~~12%~~11% of the Company’s total net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020, respectively, compared to ~~15%~~19% and ~~19%~~14% for the comparable periods in ~~2016.~~

2019.

The ~~chief operating decision maker~~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 ~~presented after converting~~eliminated to ~~U.S. dollars and consolidating eliminations.~~arrive at consolidated financial results.

The following table sets forth certain financial data by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016:~~

2019:

Financial data by segment:

(in thousands)

	Three months ended June 30,					Six months ended June 30,
Sales to external customers:	2020			2019		2020		2019
United States	$	38,476		$	34,958	$	68,922	$	62,423
Canada		2,381			2,216		4,800		3,628
Europe		3,185			3,046		6,095		5,539
Consolidated	$	44,042		$	40,220	$	79,817	$	71,590

Operating income:
United States	$	3,685		$	3,271	$	5,253	$	4,529
Canada		366			360		573		495
Europe		332			137		566		279
Consolidated	$	4,383		$	3,768	$	6,392	$	5,303

Interest expense, net		234			491		554		994
Other (income) expense, net		(1	)		14		37		12
Consolidated income before income taxes	$	4,150		$	3,263	$	5,801	$	4,297

Assets by segment:

(in thousands)

Three months ended
September 30, Nine months ended
September 30,
Sales to external customers: 2017 2016 2017 2016
United States $ 30,038 $ 28,489 $ 88,653 $ 87,311
Canada 1,661 1,585 5,556 5,623
Europe 2,086 1,839 6,171 5,264
Consolidated $ 33,785 $ 31,913 $ 100,380 $ 98,198

Operating income (loss):
United States $ 1,709 $ 1,974 $ 6,084 $ 7,165
Canada 209 148 744 558
Europe 31 18 202 12
Consolidated $ 1,949 $ 2,140 $ 7,030 $ 7,735

Interest expense, net 365 247 949 642
Other (income) expense, net 16 65 (44 ) 38
Consolidated income before income taxes $ 1,568 $ 1,828 $ 6,125 $ 7,055

	June 30,		December 31,
	2020		2019
United States	$	109,807	$	98,578
Canada		6,538		6,168
Europe		7,191		6,003
Consolidated	$	123,536	$	110,749

Assets by segment:
( in thousands )
September 30, December 31,
2017 2016
United States $ 101,420 $ 84,104
Canada 4,615 3,882
Europe 4,903 4,080
Consolidated $ 110,938 $ 92,066

6. Stock Based Compensation

The Company recognizes share-based compensation at the fair value of the equity instrument on the grant date. Compensation expense is recognized over the required service ~~period.~~period, which is generally the vesting period of the equity instrument. Share-based compensation expenses were ~~$315,000~~$359,000 and ~~$122,001~~$602,181, respectively, for the three and six months ended ~~September~~June 30, ~~2017~~2020, respectively, compared to $286,000 and ~~2016, respectively. Share-based compensation expenses were $551,717 and $305,536~~$498,000 for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017 and 2016,~~2019, respectively.

As of ~~September~~June 30, ~~2017,~~2020, there was a total of ~~$1,053,504~~$1,239,929 of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested ~~share–based~~share-based payments granted to the Company’s employees. As of that date, the remaining unamortized expense is expected to be recognized over a weighted average period of approximately three years.

7. Fair Value Measurements

The carrying value of the Company’s bank debt ~~approximates~~is a reasonable estimate of fair ~~value. Fair~~ value because of the nature of its payment terms and maturity.

8. Leases

The Company has operating leases for office and warehouse space and equipment under various arrangements which provide the right to use the underlying asset and require lease payments for the lease term. The Company’s lease portfolio consists of operating leases which expire at various dates through 2026.

Certain of the Company’s lease arrangements contain renewal provisions, exercisable at the Company's option. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company determines if an arrangement is an operating lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. All other leases are recorded on the balance sheet with right-of-use (“ROU”) assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease.

ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term and include options to extend or terminate the lease when they are reasonably certain to be exercised. As most of our leases do not provide an implicit rate, the present value of lease payments is determined primarily using our incremental borrowing rate based on the information available at the lease commencement date. The incremental borrowing rate is the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term on an amount equal to the lease payments in a similar economic environment. Lease agreements with lease and non-lease components are generally accounted for as a single lease component. The Company’s operating lease expense is recognized on a straight-line basis over the lease term. For the three months ended June 30, 2020, lease expense in the amount of $0.1 million was ~~determined using a discounted cash flow analysis.~~included in cost of goods sold and $0.2 million was included in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations. For the six months ended June 30, 2020, lease expense in the amount of $0.2 million was included in cost of goods sold and $0.4 million was included in selling, general and administrative expenses in the accompanying condensed consolidated statement of operations.

Information related to leases (in 000’s):

	Three months ended		Three months ended
	June 30, 2020		June 30, 2019
Operating lease cost	$	308	$	291
Operating lease - cash flow	$	296	$	286

	Six months ended		Six months ended
	June 30, 2020		June 30, 2019
Operating lease cost	$	615	$	581
Operating lease - cash flow	$	567	$	570

	June 30, 2020			June 30, 2019
Weighted-average remaining lease term	4.0 years			3.2 years
Weighted-average discount rate		5	%		5	%

Future minimum lease payments under non-cancellable leases as of June 30, 2020:

2020 (remaining)	$	541
2021		735
2022		467
2023		462
2024		278
Thereafter		294

Total future minimum lease payments	$	2,777
Less: imputed interest		(271	)
Present value of lease liabilities - current		933
Present value of lease liabilities - non-current	$	1,573

9. Business Combinations

~~Acquisition of the assets of Spill Magic, Inc.~~

On ~~February 1, 2017,~~January 7, 2020, the Company purchased the assets of ~~Spill Magic, Inc., located~~First Aid Central, a Canadian first aid and safety supplier, based in ~~Santa Ana, CA and Smyrna, TN~~Laval, Canada for ~~$7.2~~approximately $2.1 million in cash. First Aid Central products consist of a broad line of first aid kits, refills, and safety products that are sold to a wide range of industries and end users. The ~~Spill Magic~~ products ~~are leaders in absorbents that encapsulate spills into dry powders that can be safely disposed. Many large retail chains use its products to remove liquids from broken glass containers, oil~~meet federal Health Canada and ~~gas spills, bodily fluids and solvents.~~provincial regulatory requirements.

The purchase price was allocated to assets acquired as follows (in thousands):

Assets:
Accounts receivable $ 684
Inventory 453
Equipment 296
Intangible assets 5,800
Total assets $ 7,233

Assets:
Accounts receivable	$	232
Inventory		440
Prepaid Expense		47
Equipment		45
Intangible assets		1,310
Total assets	$	2,074

The acquisition was accounted for as a business combination, pursuant to ASC 805 – Business Combinations. All assets acquired in the acquisition are included in the Company’s Canada segment. Management’s assessment of the valuation of intangible assets is preliminary and finalization of the Company’s purchase price accounting assessment may result in changes to the valuation of the identified intangible assets. The Company will finalize, as of December 31, 2017, the purchase price allocation within the measurement period in accordance with Accounting Standards Codification Topic 805 “Business Combinations”.

Assuming Spill Magic assets were acquired on January 1, 2017, unaudited pro forma combined net sales for the nine months ended September 30, 2017 for the Company would have been approximately $100.8 million. Unaudited pro forma combined net income for the nine months ended September 30, 2017 for the Company would have been approximately $4.8 million.

Net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 attributable to ~~Spill Magic~~the sales of First Aid Central products were approximately ~~$1.9~~$1.1 million and ~~$4.9~~$2.1 million, respectively. Net income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 attributable to ~~Spill Magic~~First Aid Central products was approximately ~~$0.2~~$0.1 million and ~~$0.5 million,~~$0.2, respectively.

Assuming ~~Spill Magic~~First Aid Central assets were acquired on January 1, ~~2016,~~2019, unaudited proforma combined net sales for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016,~~2019, for the Company would have been approximately ~~$33.6 million and $103.2 million, respectively.~~$41.2 million. Unaudited proforma combined net income for the three ~~and nine~~ months ended ~~September~~June 30, ~~2016~~2019 for the Company would have been approximately ~~$1.8 million and $6.1 million, respectively.~~

~~Acquisition of the assets of Vogel Capital, Inc.~~

On February 1, 2016, the Company acquired the assets of Vogel Capital, Inc., d/b/a Diamond Machining Technology (“DMT”) based in Marlborough, MA for $6.97 million in cash. The DMT products are leaders in sharpening tools for knives, scissors, chisels, and other cutting tools. The DMT products use finely dispersed diamonds on the surfaces of sharpeners. The acquired assets include over 50 patents and trademarks.

~~The purchase price was allocated to assets acquired and liabilities assumed as follows (in thousands):~~

Assets:
Accounts receivable $ 1,145
Inventory 280
Equipment 262
Prepaid expenses 176
Intangible assets 5,481
Total assets $ 7,344

Liabilities
Accounts payable $ 192
Accrued expense 181
Total liabilities $ 373

~~Assuming the assets of DMT were acquired on January 1, 2016, unaudited pro forma~~$2.8 million. Unaudited proforma combined net sales for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2019 for the Company would have been approximately ~~$98.8 million.~~$73.3. Unaudited ~~pro forma~~proforma combined net income for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2019 for the Company would have been approximately ~~$5.4 million.~~

~~9. Income Taxes~~

The Company’s effective tax rates for the three and nine month periods ended September 30, 2017 were both 23%, compared to 19% and 25% during the same periods in 2016. In the nine months ended September 30, 2017, the Company recorded approximately $350,000 in excess tax benefits resulting from the adoption of ASU 2016-09 in 2017. Excluding the impact of the tax benefit, the effective tax rate would have been 29% for the nine months ended September 30, 2017. In 2016, the Company donated school products to the Kids In Need Foundation. Excluding the impact of the charitable donation in 2016, the effective tax rate for the three and nine months ended September 30, 2016 would have been 30%.$3.7 million

10. ~~Subsequent Event~~Paycheck Protection Program Loan

On ~~October 26, 2017,~~May 7, 2020, the Company ~~exercised its option~~received a loan (the “PPP Loan”) from HSBC Bank, N.A. in the amount of $3,508,047 under the Paycheck Protection Program established by the Coronavirus Aid, Relief and Economic Security Act. Subject to ~~purchase its First Aid Only manufacturing~~potential forgiveness, as described below, the PPP Loan matures in two years on May 8, 2022, bears interest at a rate of 1.00% per year and ~~distribution center in Vancouver, WA for $4 million. The property consists of 53,000 square feet of office, manufacturing, and warehouse space on 2.86 acres. The purchase was financed~~is evidenced by a ~~variable rate~~promissory note dated May 7, 2020 (the “Note”). Monthly payments of principal and interest are deferred until after any application for forgiveness submitted by the Company has been acted upon, as described below. The PPP Loan is unsecured and federally guaranteed. The Note contains customary events of default relating to, among other things, failure to make payments of principal and interest and breaches of representations and warranties. The Company may prepay the PPP Loan at any time prior to maturity with no penalty.

All or a portion of the PPP Loan may be eligible to be forgiven by the U.S. Small Business Administration (“SBA”) and the lender upon application by the Company, provided that the Company shall have used the loan proceeds for eligible purposes, including the payment of payroll, benefits, rent, mortgage ~~calculated~~interest and utilities, during the [24] week period beginning on the date of funding of the loan (the “covered period”). Not more than 40% of the amount forgiven may be for non-payroll costs. The Company will be eligible to submit an application for forgiveness of the PPP Loan for a period of up to ten months after the end of the covered period.

Consistent with the requirements of the PPP for loan forgiveness, the Company has been using the ~~30 day LIBOR rate plus 2.5%, currently at 3.74% through HSBC Bank NA.~~

loan proceeds solely for payment of payroll and otherwise in a manner which it believes satisfy the requirements for loan forgiveness. However, no assurance can be given that any application for loan forgiveness that the Company may submit will be approved, in whole or in part.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Information

The Company may from time to time ~~make~~makes written or oral “forward-looking statements”, including statements contained in this report and in other communications by the Company, which are made in good faith ~~by the Company~~ pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based on our beliefs as well as assumptions made by and information currently available to us. When used in this document, words like “may,” “might,” “will,” “except,” “anticipate,” “believe,” “potential,” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from our current expectations.

~~These forward-looking~~Forward-looking statements ~~include~~in this report, including without limitation, statements ofrelated to the Company’s plans, strategies, objectives, expectations, ~~estimates~~intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties including the impact that the global COVID-19 pandemic has had and will continue to have on the Company’s business, operations and financial results. These include the severity and duration of the pandemic, whether there is a “second wave,” the effect of measures taken by the Company to limit the spread of the disease at our offices and distribution centers, further actions that may be taken by governmental authorities or by businesses or individuals on their own initiative in response to the pandemic, the pace of recovery when an effective vaccine is widely available or when the pandemic otherwise subsides and the heightened impact the pandemic has on many of the risks described herein, including without limitation risks relating to the on-going world-wide economic downturn and disruptions in our supply chain,, any of which could adversely impact the Company’s ability to manufacture, source or distribute its products, both domestically and internationally.

These risks and uncertainties further include, without limitation, the following: (i) changes in the Company’s plans, strategies, objectives, expectations and intentions, which ~~are subject to change based on various important factors (some of which are beyond~~may be made at any time at the Company’s control). The following factors, in addition to others not listed, could cause the Company’s actual results to differ materially from those expressed in forward looking statements: the strengthdiscretion of the ~~domestic and local economies in which the Company conducts operations,~~Company; (ii) the impact of uncertainties in global economic conditions, including the impact on the Company’s suppliers and customers; (iii) changes in client needs and consumer spending ~~habits,~~habits; (iv) the impact of competition, ~~and technological change on the Company,~~(v) the impact of ~~any loss~~technological changes including specifically the growth of ~~a major customer, whether through consolidation or otherwise,~~online marketing and sales activity; (vi) the Company’s ability to manage its growth effectively, including its ability to successfully integrate any business ~~or assets which~~ it might ~~acquire,~~acquire; (vii) the Company’s ability to effectively manage its inventory in a rapidly changing business environment; (viii) currency ~~fluctuations~~fluctuations; (ix) international trade policies and ~~potential increases~~their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates; and (x) other risks and uncertainties indicated from time to time in the ~~cost of borrowings resulting from rising interest rates.~~ Company’s filings with the Securities and Exchange Commission.

For a more detailed discussion of these and other factors affecting ~~us,~~the Company, see the Risk Factors described in Item 1A included in the Company’s Annual Report on Form 10-K for the fiscal year ~~ended~~ December 31, ~~2016.~~2019 and below under “Financial Condition”. All forward-looking statements in this report are based upon information available to the Company on the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law.

Critical Accounting Policies

~~There have been no material changes to the Company’s~~We discuss our critical accounting policies and estimates ~~from the information provided~~ in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~2019.

COVID-19 Pandemic Related Considerations

As noted above in the “Forward-Looking Statements”, the spread of the coronavirus (COVID-19) through China, the United States, and other countries globally and the related ongoing economic downturn present certain significant risks and uncertainties to the Company and its operations. Commencing late in the first quarter of the current fiscal year and continuing through the filing of this report, the COVID-19 pandemic has affected the Company’s financial results and business operations. During this period, we experienced, and continue to experience, a significant increase in demand for many of the Company’s first aid and safety products, as consumers and commercial enterprises stocked up on these products. On the other hand, the Company experienced weakness in the sales of its office and school supplies due, in part, to pandemic-related closures of retail stores, schools and offices and other COVID-19 related restrictions imposed in our domestic and international markets. The Company has also experienced delays and cancellation of orders and scheduled promotions for the second and third quarters, which are traditionally the strongest quarters for the sales of our school and office products. The ultimate impact of these effects on the Company will depend on the duration and severity of the COVID-19 pandemic, the length of time it takes for normal economic and operating conditions to resume, whether store, office, and school closures and other restrictions that have been imposed to date are extended, and additional actions that may be taken by governmental authorities or by businesses or individuals of their own initiative in response to the pandemic.

Substantially all of our manufacturing facilities and distribution centers and those of our key suppliers currently remain open and continue to operate despite temporary closures. We monitor information on COVID-19 from the Centers for Disease Control and Prevention (“CDC”) and believe we are adhering to their recommendations regarding the health and safety of our personnel. To address the potential human impact of the virus, most of our administrative staff are telecommuting. For those administrative staff not telecommuting and our warehouse and domestic manufacturing employees, we have implemented social distancing and mask policies, instituted daily temperature checks and have increased facility cleaning at each location. Non-essential domestic and international travel for our employees has ceased.

As a result of the COVID-19 pandemic, commencing later in the first quarter and continuing into our second quarter the Company (i) has had to acquire certain of its products at increased costs on the spot market due to dramatic increases in demand for such products (while, to date, the Company has been successful in passing along such increased costs to its customers, there is no assurance that the Company will be able to continue to do so in the future); (ii) has incurred increased labor costs as a result of the payment of additional compensation to employees at its warehouse and distribution centers; and (iii) has incurred costs associated with the additional cleaning and maintenance of its facilities including the temporary closures of facilities for those purposes. The Company has continued to incur such costs as a result of these conditions in the third quarter. In addition, the Company has increased reserves relating to outstanding receivables (The Company continuously evaluates credit risks relating to its customers and may need to increase its reserves relating to its receivables further or even, in the event that one or more significant customers should cease operations or declares bankruptcy, write off a substantial amount of receivables.) The Company has also experienced obstacles resulting from a number of pandemic-related factors such as travel restrictions imposed by governmental authorities which, e.g., inhibit sales and marketing activities, and inefficiencies resulting from many of the Company’s personnel working remotely.

The increases and decreases in the demand for the Company’s products described above have continued to affect the Company’s operations in the second quarter and through the date of this report and are likely to continue to do so in the immediate future. For example, a decrease could occur in the demand for its first aid and safety products as a result of market saturation potentially resulting from customers having stockpiled those products. While there is no certainty that the current high levels of demand for our first aid and safety products will continue, we have increased our short-term manufacturing and sourcing capacity for these products. We are also planning to increase manufacturing and sourcing of other key components and finished goods to minimize the impact of any disruption to our supply chain in the event of a resurgence of an outbreak of the coronavirus in any of our key manufacturing or distribution facilities. The Company anticipates that it has sufficient inventory of its products to meet anticipated demand. However, any prolonged increase in the duration or severity of the COVID-19 pandemic or a resurgence of the pandemic in the future, might adversely affect the Company’s ability to manufacture, source or distribute its products both domestically and internationally. The occurrence of any of these factors could have a material adverse effect on the Company’s business, operations and financial condition.

Results of Operations

On February 1, 2017, the Company purchased the assets of Spill Magic, Inc., located in Santa Ana, CA and Smyrna, TN. The Spill Magic products are leaders in absorbents that encapsulate spills into dry powders that can be safely disposed. Many large retail chains use its products to remove liquids from broken glass containers, oil and gas spills, bodily fluids and solvents. The Company purchased Spill Magic assets for $7.2 million in cash using funds borrowed under its revolving credit facility with HSBC. Additional information concerning the acquisition of Spill Magic assets is set forth in this report in Note 8 – Business Combinations, in the Notes to Condensed Consolidated Financial Statements.

On February 1, 2016, the Company purchased certain assets of Vogel Capital, Inc., d/b/a Diamond Machining Technology (DMT), located in Marlborough, MA. The DMT products are leaders in sharpening tools for knives, scissors, chisels and other cutting tools. The DMT products use finely dispersed diamonds on the surfaces of sharpeners. The Company purchased inventory, accounts receivable, equipment, patents, trademarks and other intellectual property for $6.97 million using funds borrowed under its revolving credit facility with HSBC. Additional information concerning the acquisition of DMT assets is set forth in this report in Note 8 – Business Combinations, in the Notes to Condensed Consolidated Financial Statements.

Traditionally, the Company’s sales are stronger in the second and third quarters and weaker in the first and fourth quarters of the fiscal year, due to the seasonal nature of the back-to-school market.

~~Our online~~Net sales across all product lines, have been growing very rapidly in recent years. The Company has made significant investment to grow the on-line business through promotional and advertising spending. Additionally, warehouse and distribution costs have increased at a higher rate than sales. Although a large majority of the shipments are to distribution centers, these orders have, in comparison to our traditional distribution channels, been smaller, lead-times shorter, shipments more frequent and have special labelling and packing requirements. The Company is making investments in its Rocky Mount, NC distribution facility to make its operations more efficient. These investments include upgrading the skill level of its employees, providing comprehensive training programs upgrading its warehouse management software and re-designed the layout of the warehouse to improve product flow.

~~Net Sales~~

Consolidated net sales for the three months ended ~~September~~June 30, ~~2017~~2020 were ~~$33,785,000~~$44,042,000 compared with ~~$31,913,000~~$40,220,000 in the same period in ~~2016,~~2019, a 6%10% increase. Consolidated net sales for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 were ~~$100,380,000,~~$79,817,000 compared with ~~$98,198,000 for~~$71,590,000 in the same period in ~~2016, a 2%~~2019, an 11% increase.

Net sales for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 in the U.S. segment increased ~~5% and 2%~~10%, compared with the same ~~periods~~period in ~~2016, respectively.~~2019. Sales in the U.S. for the three and six month ~~period~~periods increased compared to the same period last year, primarily due to strong sales of Spill Magic products partially offset by the shift in timing of a promotional sale from Q3 to Q4. The increase in sales for the nine months ended September 30, 2017 was primarily due to the sales of Spill Magic products partially offset by lower sales of Westcottfirst aid and safety products, primarily due to continued market share gains in the industrial and safety channels, as well as the home improvement, mass market and ecommerce channels. Also contributing to the growth in first aid products was the continuation of a ~~second quarter promotion~~surge demand related to the COVID-19 pandemic which had commenced late in ~~2016 that did not repeat in 2017. Sales of Spill Magic products were $1.9 million and $4.9 million for~~ the ~~three and nine months ended September 30, 2017.~~

first quarter.

Net sales in Canada for the three and six months ended ~~September~~June 30, ~~2017~~2020, increased 5%7% and 32% (11% and 35% in local currency), respectively, compared to the same periods last year. Excluding First Aid Central products, sales for the three and six months ended June 30, 2020 decreased 44% and 27%, respectively, in U.S. dollars ~~(constant~~(42% and 25% local currency), compared with the same periods in 2019. Sales of First Aid Central products were approximately $1.0 million and $2.1 million in the three and six months ended June 30, 2020.

European net sales for the three and six months ended June 30, 2020 increased 5% and 10%, respectively, in U.S. dollars (6% and 12% in local currency), compared with the same ~~period~~periods in ~~2016. Net sales in Canada for the nine months ended September 30, 2017 decreased 1% in U.S. dollars (1% in local currency) compared with the same period in 2016.~~

European net sales for the three months ended September 30, 2017 increased 13% in U.S. dollars (8% in local currency), compared with the same period in 2016. Net sales for the nine months ended September 30, 2017 increased 17% in U.S. dollars and local currency.2019. The ~~increases~~increase in net sales for the three and ~~nine~~six months ~~ended September 30, 2017 were~~was primarily due to ~~market share gains~~increased sales of Westcott and Camillus products in the ~~office products and sporting goods channels.~~e-commerce channel as well as continued growth of DMT sharpening products.

Gross ~~Profit~~profit

Gross profit for the three months ended ~~September~~June 30, ~~2017~~2020 was ~~$12,226,000 (36.2%~~$16,053,000 (36.4% of net sales) compared to ~~$11,863,000 (37.2%~~$14,771,000 (36.7% of net sales) in the same period in 2019. Gross profit for the six months ended June 30, 2020 was $29,583,000 (37.1% of net sales) compared to $26,574,000 (37.1% of net sales) for the same period in 2016. The decrease in gross profit percentage for the three months ended September 30, 2017 was primarily due to incremental spending for the online business which included promotional, advertising as well as related warehouse and distribution costs. Gross profit for the nine months ended September 30, 2017 was $37,273,000 (37.1% of net sales) compared to $35,743,000 (36.4% of net sales) in the same period in 2016.

2019.

Selling, ~~General~~general and ~~Administrative Expenses~~administrative expenses

Selling, general and administrative ("SG&A") expenses for ~~the~~ three months ended ~~September~~June 30, ~~2017~~2020 were ~~$10,277,000 (30.4%~~$11,670,000 (26.5% of net sales) compared with ~~$9,723,000 (30.5%~~$11,003,000 (27.4% of net sales) in the same period in 2019, an increase of $667,000. SG&A expenses for the six months ended June 30, 2020 were $23,191,000 (29.1% of net sales) compared with $21,271,000 (29.7% of net sales) for the same ~~period~~periods of ~~2016,~~2019, an increase of $554,000. SG&A expenses for the nine months ended September 30, 2017 were $30,243,000 (30.1% of net sales) compared with $28,008,000 (28.5% of net sales) in the comparable period of 2016, an increase of $2,235,000.$1,920,000. The increases in SG&A expenses for ~~the~~ three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, compared to the same periods in ~~2016,~~2019 were primarily ~~the result of certain costs incurred in connection with the acquisition of Spill Magic assets~~due to higher commissions and ~~higher personnel related costs, which include compensation and recruiting costs, and higher variable selling~~shipping costs related to higher ~~sales.~~sales, provision for bad debt primarily related to the impact of COVID-19 on our customers, as well as added expenses related to the acquisition of First Aid Central partially offset by lower travel and marketing expenses.

Operating ~~Income~~income

Operating income for the three months ended ~~September~~June 30, ~~2017~~2020 was ~~$1,949,000~~$4,383,000 compared with ~~$2,140,000~~$3,768,000 in the same period of ~~2016.~~2019. Operating income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 was ~~$7,030,000~~$6,392,000 compared with ~~$7,735,000~~$5,303,000 in the same period of ~~2016.~~

2019. Operating income in the U.S. segment ~~decreased~~increased by ~~approximately $0.3 million~~$414,000 and ~~$1.1 million~~$724,000 for the, three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, respectively, compared to the same periods in ~~2016. The decrease in operating income was principally due to higher selling, general and administrative expenses.~~2019.

Operating income in the Canadian segment increased by ~~approximately $61,000~~$6,000 and ~~$186,000~~$78,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively,~~2020 compared to the same periods in ~~2016.~~2019.

Operating income in the European segment increased by ~~$13,000~~$195,000 and ~~$190,000~~$287,000 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 compared to the same periods in ~~2016. The increases in operating income in the European segment were principally due to higher sales.~~

2019.

Interest ~~Expense,~~expense, net

Interest expense, net for the three months ended ~~September~~June 30, ~~2017~~2020 was ~~$365,000,~~$234,000 compared with ~~$247,000~~$491,000 in the same period of 2019, a $257,000 decrease. Interest expense, net for the six months ended June 30, 2020 was $554,000 compared with $994,000 for the same period of ~~2016, an $118,000 increase. Interest expense, net for the nine months ended September 30, 2017 was $949,000, compared with $642,000 for the same period of 2016,~~2019, a ~~$307,000 increase.~~$440,000 decrease. The ~~increases~~decrease in interest expense resulted from ~~higher average borrowings and~~ a ~~higher~~lower average interest rate as well as lower average debt outstanding, under the Company’s ~~bank~~ revolving credit ~~facility for the three and nine months ended September 30, 2017. The higher borrowings were primarily the result of funding the acquisition of assets of Spill Magic.~~

~~Other (Income) Expense, net~~facility.

Other (income) expense, net

Other income, net was ~~$16,000~~$1,000 in the three months ended ~~September~~June 30, ~~2017~~2020 compared to ~~$65,000 of~~ other expense, net of $14,000 in the same period of ~~2016. Other~~2019. The increase in other income, net ~~was $44,000 in~~for the ~~nine~~three months ended ~~September~~June 30, ~~2017~~2020 was primarily due to gains from foreign currency transactions. Other expense, net was $37,000 compared to ~~$38,000 of other expense, net~~$12,000 in the same period of ~~2016. The changes in other (income) expense, net for the three and nine months ended September 30, 2017 were primarily due to gains and losses from foreign currency transactions.~~2019.

Income ~~Taxes~~

taxes

The Company’s effective tax rates for the three and ~~nine month periods~~six months ended ~~September~~June 30, ~~2017~~2020 were ~~both~~ 23% and 21%, compared to 18% and 19% ~~and 25% during~~in the same periods in 2016. In the nine months ended September 30, 2017, the Company recorded approximately $350,000 in excess tax benefits resulting from the adoption of ASU 2016-09 in 2017. Excluding the impact of the tax benefit, the effective tax rate would have been 29% for the nine months ended September 30, 2017. In 2016, the Company donated school products to the Kids In Need Foundation. Excluding the impact of the charitable donation in 2016, the effective tax rate for the three and nine months ended September 30, 2016 would have been 30%.2019.

Financial Condition

Liquidity and Capital Resources

During the first ~~nine~~six months of ~~2017,~~2020, working capital increased approximately ~~$11.2~~$8.6 million compared to December 31, ~~2016.~~2019. Inventory ~~decreased by~~increased approximately ~~$0.4~~$5.1 million at ~~September~~June 30, ~~2017~~2020 compared to December 31, ~~2016.~~2019. The increase primarily reflected an increase in volume of sales and greater than usual costs of first aid and safety products on the “spot” market. Inventory turnover, calculated using a ~~twelve month~~twelve-month average inventory balance, was ~~2.2~~2.4 at ~~September~~June 30, ~~2017~~2020 compared to 2.1 at December 31, ~~2016.~~2019. Receivables increased by approximately ~~$11.6~~$8.2 million at ~~September~~June 30, ~~2017~~2020 compared to December 31, ~~2016. This increase includes approximately $700.000 related to the acquisition of Spill Magic.~~2019. The average number of days sales outstanding in accounts receivable was 6460 days at ~~September~~June 30, ~~2017 and~~2020 compared to 66 days at December 31, 2016. The increase in accounts receivables is due to the seasonal nature of the Company’s back to school business. Sales are typically stronger in the second and third quarters compared to the first and fourth quarters.2019. Accounts payable and other current liabilities increased by approximately ~~$1.2~~$4.1 million at ~~September~~June 30, ~~2017~~2020 compared to December 31, ~~2016.~~2019.

The Company's working capital, current ratio and long-term debt to equity ratio ~~were~~are as follows:

	September 30, 2017			December 31, 2016

Working capital	$	63,864		$	52,643		$	65,095		$	56,563
Current ratio		5.57			5.11			4.16			4.41
Long term debt to equity ratio		90.6	%		71.4	%		71.7	%		65.4	%

During the first ~~nine~~six months of ~~2017,~~2020, total debt outstanding under the Company’s revolving credit facility increased by approximately ~~$13.0~~$6.0 million, compared to total debt thereunder at December 31, ~~2016.~~2019. As of ~~September~~June 30, ~~2017, $45,969,000~~2020, $35,742,000 was outstanding and ~~$4,031,000~~$14,258,000 was available for borrowing under the Company’s credit facility. The amount available for borrowing reflects a reduction in the line from $55 million to $50 million commencing on October 1, 2017, as described in this report in note 4 – Debt and Shareholders Equity in the Notes to Condensed Consolidated Financial Statements. The increase in the

Long-term debt ~~outstanding was primarily due to funding the acquisition~~consists of ~~the assets of Spill Magic and the increase in working capital. Increases in accounts receivable and debt outstanding~~borrowings under the Company’s revolving ~~credit facility typically occur in the second and third quarter of each year due to the seasonal nature of the business.~~

~~On January 27, 2017, the Company amended its revolving credit~~ loan agreement with HSBC Bank, N.A. ~~on a temporary basis in order to provide for~~as well as amounts outstanding under the ~~funding of~~variable rate mortgage related on the Company’s ~~acquisition~~manufacturing and distribution facility in Vancouver, WA. At June 30, 2020, there was approximately $3.3 million outstanding on the mortgage. The revolving loan agreement provides for borrowings of ~~the assets of Spill Magic, Inc. as described in Note 8 above. The amended facility provided for an increase in borrowings from~~up to $50 million ~~to $55 million for the period commencing on April 1, 2017 and ending on September 30, 2017. Commencing October 1, 2017, the maximum amount outstanding~~ at ~~any time under the~~Prime Rate less 1.25%. The credit facility ~~returned to $50 million. The interest rate on borrowings remains unchanged at a rate~~has an expiration date of ~~LIBOR plus 2.0%. In addition, the amendment modified the debt to net worth ratio covenant applicable during the same nine month period.~~May 24, 2023. The Company must pay a facility fee, payable quarterly, in an amount equal to two tenths of one percent (.20%) per annum of the average daily unused portion of the revolving credit line. ~~All principal amounts outstanding under the agreement are required~~The facility is intended to ~~be repaid in a single amount on May 6, 2019, the date the loan agreement expires; interest is payable monthly. Funds borrowed under the agreement may be used~~provide liquidity for working capital, growth, dividends, acquisitions, ~~general operating expenses,~~ share repurchases and ~~certain~~ other ~~purposes.~~business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of tangible net worth, a specified debt to net worth ratio and a fixed charge coverage ratio and must have annual net income greater than ~~$0,~~zero, measured as of the end of each fiscal year.At ~~September~~June 30, ~~2017,~~2020, the Company was in compliance with the covenants then in effect under the loan agreement.

As ~~discussed~~described above, commencing late in ~~Note 2 to~~ the ~~Condensed Consolidated Financial Statements set forth in Item 1, above, at September 30, 2017,~~first quarter, the Company ~~had~~has encountered challenges as a ~~total~~result of ~~approximately $48,000 remaining~~the COVID-19 pandemic and related economic downturn that could have adverse consequences for our liquidity as a result of a number of factors. Commencing late in the first quarter, the Company experienced a surge in the ordering of its first aid and safety products. It is uncertain whether such increases will continue and, in fact, decreases could occur if the market becomes saturated with unused first aid and safety products. Further, as stated above, the Company continues to experience weakened sales of school and office products. Additionally, as noted above, the Company has incurred and continues to incur increased operational and other expenses as a result of the COVID-19 pandemic. As discussed above, it is possible that the Company’s sourcing of products may be disrupted if the operations of the Company’s suppliers particularly those located in China, are interrupted by the effects of COVID-19. In order to address problems that may arise as a result of any such potential disruption, the Company is planning to increase its inventory of Westcott cutting and other products above customary levels.

On May 7, 2020, the Company received a loan (the “PPP Loan”) from HSBC Bank, N.A. in the amount of $3,508,047 under the Paycheck Protection Program established by the Coronavirus Aid, Relief and Economic Security Act. Subject to potential forgiveness, as described below, the PPP Loan matures in two years on May 8, 2022, bears interest at a rate of 1.00% per year and is evidenced by a promissory note dated May 7, 2020 (the “Note”). Monthly payments of principal and interest are deferred until after any application for forgiveness submitted by the Company has been acted upon, as described below. The PPP Loan is unsecured and federally guaranteed. The Note contains customary events of default relating to, among other things, failure to make payments of principal and interest and breaches of representations and warranties. The Company may prepay the PPP Loan at any time prior to maturity with no penalty.

All or a portion of the PPP Loan may be eligible to be forgiven by the U.S. Small Business Administration (“SBA”) and the lender upon application by the Company, provided that the Company shall have used the loan proceeds for eligible purposes, including the payment of payroll, benefits, rent, mortgage interest and utilities, during the [24] week period beginning on the date of funding of the loan (the “covered period”). Not more than 40% of the amount forgiven may be for non-payroll costs. The Company will be eligible to submit an application for forgiveness of the PPP Loan for a period of up to ten months after the end of the covered period.

Consistent with the requirements of the PPP for loan forgiveness, the Company has been using the loan proceeds solely for payment of payroll and otherwise in a manner which it believes satisfy the requirements for loan forgiveness. However, no assurance can be given that any application for loan forgiveness that the Company may submit will be approved, in whole or in part.

On April 28, 2020, the U.S. Department of the Treasury stated that the SBA will review each PPP loan over $2.0 million. In order to apply for the PPP Loan, we were required to certify, among other things, that the then current uncertainty made the PPP Loan request necessary to support our ongoing operations. We made this certification in good faith after analyzing, among other things, our financial situation and access to alternative sources of capital. Following this analysis, we believe that we satisfied all eligibility criteria for the PPP Loan, and that our receipt of the PPP Loan is consistent with the objectives of the PPP of the CARES Act. If it is later determined that we were ineligible to receive the PPP Loan, we may be required to repay the PPP Loan in its ~~accruals for environmental remediation~~entirety and/or be subject to additional penalties, which could have a material adverse effect on our business, results of operations and ~~monitoring, related to property in Fremont, NC it had sold in 2014.~~

financial condition.

The Company believes that cash ~~expected to be~~ generated from operating activities, together with proceeds of the PPP Loan and funds available under its revolving credit facility, will, under current conditions, be sufficient to finance the Company’s ~~planned~~ operations over the next twelve months from the filing of this report.

Item 3: Quantitative and Qualitative Disclosure about Market Risk

Not applicable.

Item 4: Controls and Procedures

(a)

~~(a)~~

Evaluation of Internal Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures ~~as required by~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act ~~Rule 13a-15(b)~~of 1934, as amended) as of ~~the end of the period covered by this report.~~June 30, 2020. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective.

(b)

~~(b)~~

Changes in Internal Control over Financial Reporting

During the quarter ended ~~September~~June 30, ~~2017,~~2020, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1 — Legal Proceedings

There are no pending material legal proceedings to which the registrant is a party, or, to the actual knowledge of the Company, contemplated by any governmental authority.

Item 1A — Risk Factors

See Risk Factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, ~~2016.~~

2019.

Item 2 —Unregistered Sales of Equity Securities and Use of Proceeds

The table below lists shares repurchased by the Company during the three months ended June 30, 2020. All shares were repurchased in open market transactions under the repurchase program announced by the Company in 2010(1).

~~None.~~

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of shares Purchased as Part of Publicly Announced Programs		Maximum Number of Shares that may yet be Purchased Under the Programs ⁽²⁾

April		3,701	$	19.85		3,701		203,579

May		-		-		-

June						-

Total		3,701	$	19.85		3,701		203,579

1) A total of 3,579 shares remain available for repurchase under the plan announced in 2010.
2) In addition to the repurchase plan announced in 2010, the Company announced a repurchase plan in 2019. The Plan
allows for the repurchase of up to a total of 200,000 shares.

Item 3 — Defaults upon Senior Securities

None.

Item 4 — Mine Safety Disclosures

Not applicable.

Item 5 — Other Information

None.

Item 6 — Exhibits

Documents filed as part of this ~~report.~~report:

Exhibit 31.1 ~~Certification of Walter C. Johnsen pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~		Certification of Walter C. Johnsen pursuant to 18 U.S.C. Section 1350, as adopted pursuant Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 31.2		Certification of Paul G. Driscoll pursuant to 18 U.S.C. Section 1350, as adopted pursuant Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32.1		Certification of Walter C. Johnsen pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Exhibit 32.2		Certification of Paul G. Driscoll pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
104		The cover page for the Company’s Quarterly Report on Form 10-Q has been formatted in Inline XBRL and contained in Exhibit 101

~~Exhibit 31.2~~ ~~Certification of Paul G. Driscoll pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~Exhibit 32.1~~ ~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~Exhibit 32.2~~ ~~Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ACME UNITED CORPORATION

By
By	/s/ Walter C. Johnsen
	Walter C. Johnsen
	Chairman of the Board and
	Chief Executive Officer

Dated: ~~November 9, 2017~~August 7, 2020

By
By	/s/ Paul G. Driscoll
	Paul G. Driscoll
	Vice President and
	Chief Financial Officer

Dated: ~~November 9, 2017~~August 7, 2020

~~CONNECTICUT~~ Connecticut		06-0236700
( State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation or organization)~~	(	I.R.S. Employer Identification No.)
Incorporation or Organization
	~~55 WALLS DRIVE, Fairfield, Connecticut~~
55 Walls Drive, Fairfield, Connecticut		06824
( Address of ~~principal executive offices)~~Principal Executive Offices	(	Zip ~~Code)~~Code

Title of each class	Trading Symbol	Name of each exchange on which registered
$2.50 par value Common Stock	ACU	NYSE American

Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller Reporting Company	☒

Emerging growth company	☐

		Balance at December 31, 2016					Payments				Balance at September 30, 2017
Fremont, NC		$	57			$	(9	)		$	48


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Components of Net Periodic Benefit Cost:
Interest cost	$	8		$	15		$	36		$	44
Service cost		9			6			27			19
Expected return on plan assets		(12	)		(23	)		(52	)		(69	)
Amortization of prior service costs		(4	)		2			0			7
Amortization of actuarial loss		29			28			81			84
	$	30		$	28		$	92		$	85

Assets by segment:
( in thousands )
	September 30,		December 31,
	2017		2016
United States	$	101,420	$	84,104
Canada		4,615		3,882
Europe		4,903		4,080
Consolidated	$	110,938	$	92,066

Assets:
Accounts receivable	$	1,145
Inventory		280
Equipment		262
Prepaid expenses		176
Intangible assets		5,481
Total assets	$	7,344

Liabilities
Accounts payable	$	192
Accrued expense		181
Total liabilities	$	373