What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-30 · 46 added, 32 removed, 85 unchanged (48% of the section changed)

8 unchanged sentences

The Company sources most of its products from suppliers located outside the United States, primarily in Asia.

The Company assembles its first aid kits at its facilities in Vancouver, WA, Rocky Mount, NC and Laval, Canada.

In recent years, as a result of acquisition, the amount of first aid and medical products produced in North America has been increasing substantially.

The Company assembles its first aid kits at its facilities in Vancouver, WA, Rocky Mount, NC, Keene, NH and Laval, Canada.

The components for the first aid kits are primarily sourced from U.S.

2 unchanged sentences

Recent accomplishments and initiatives

The Company’s key business accomplishments and initiatives include the following elements:

Twelve years of consecutive sales growth averaging 10%;

Diversification of Product Lines – D uring the past six years, sales of first aid and medical products have grown to over 50% of total sales.

As a result, our reliance on sales of school and office products has declined, although such sales have also increased;

S uccessful integration of two first aid and safety acquisitions made in 2020, First Aid Central, a Montreal-based supplier of first aid kits and safety, and Med-Nap LLC, a Florida-based manufacturer of antiseptic prep pad and towelette solutions.

I n addition, we have significantly expanded the production, distribution capacities, and product lines of the two acquired businesses.

Implementation of a new warehouse management system that will lead to improve efficiencies in 2022.

In 2021, the Company took several steps that significantly improved its capital position, including:

Entering into a new mortgage agreement with HSBC Bank in December 2021 covering its properties in Vancouver, Washington and Rocky Mount, North Carolina.

The mortgage is $11.6 million with a fixed rate of 3.8%.

During this time of increasing inflation, the Company has been able to fix the interest rate on $11.6 million of its capitalization.

The new facility also has the effect of increasing capacity under our revolving line of credit to fund growth and potential acquisitions.

In June 2021, the Company’s Paycheck Protection Program (PPP) loan of $3,580,047 was fully forgiven by the Small Business Administration, after management had successfully navigated the SBA’s extensive approval process.

Commencing in 2020 and continuing through the present, Executive management has taken decisive actions to respond to the unprecedented business and operational uncertainties and disruption caused by the pandemic.

These actions included:

Taking steps beginning in 2020 to protect our global workforce, including travel restrictions, work-from-home requirements and preventative measures at our sites, and subsequently taking additional actions in response to changing circumstances.

Increasing inventory across its product lines by approximately 40% through the 21-month period ending December 31, 2021, to ensure adequacy of product availability.

Proactively managing its supply chains to minimize the impact of actual and potential disruptions and to ensure supply chain continuity.

Managing increases in the Company’s costs, labor shortages and other operational challenges.

Managing through macroeconomic uncertainty created by the pandemic by preserving the Company’s liquidity, engaging in cash preservation initiatives, and cost control measures.

In 2022, the Company’s key business accomplishments and initiatives included the following:

Record Sales Growth – The Company has achieved thirteen years of consecutive record annual sales growth averaging 10%;

Successful Responses to Challenging Environment – The Company encountered and successfully met significant macroeconomic and operational challenges.

These included supply chain issues, increased costs (including product costs, extraordinary container expenses, transportation and fuel costs, and rising wages), rising interest rates and shortages of workers.

Notwithstanding these factors, the Company’s revenues for 2022 increased to approximately $194 million, an increase of 7% over its revenues in 2021.

Diversification of Product Lines – D uring the past seven years, sales of first aid and medical products have grown to approximately 55% of total sales.

As a result, our reliance on sales of school and office products has declined, although such sales have remained steady.

First Aid Acquisition – The Company acquired and s uccessfully integrated the assets of Safety Made, a first aid promotional business based in Keene, New Hampshire.

Strengthened Capital Position - In May 2022, the Company significantly improved its capital position by amending its revolving loan agreement with HSBC Bank, N.A.

to increase the amount available for borrowing from $50 million to $65 million.

As a result of the extension and increase in the credit facility, the Company is better positioned to take advantage of its various growth opportunities, including potential acquisitions.

Reduction of Inventory – In 2022, the Company increased inventory by approximately $9 million in anticipation of continued growth and to be positioned to offset potential supply chain interruptions related to COVID-19.

As a result of the disruption in the Company’s supply chains having been reduced significantly, the Company initiated an inventory reduction program in the fourth quarter of 2022;

through the Company’s efforts, inventory was reduced by $2.9 million compared to the end of the third quarter of 2022.

The Company plans to reduce inventory by an additional $5 million in 2023.

Cost Reduction Initiatives – Commencing in the second half of 2022, the Company implemented a series of cost reduction initiatives that are expected to generate over $5 million in savings in 2023.

These initiatives include the implementation of a wide range of productivity improvements in our manufacturing and distribution facilities and a reduction of SG&A expenses and other costs.

Principal Products

The Company markets and sells under two main categories:

i) first aid and safety;

i) first aid and medical;

and ii) cutting, sharpening and measuring.

The first aid and safety category includes first aid and safety products (First Aid Only®, PhysiciansCare®, Pac-Kit®, Spill Magic®, First Aid Central® and Med-Nap brands).

The first aid and medical category includes first aid and safety products (First Aid Only®, PhysiciansCare®, Pac-Kit®, Spill Magic®, First Aid Central®, Med-Nap and Safety Made brands).

The cutting, sharpening and measuring category includes school, home and office products (Westcott® brand), and hardware, industrial and sporting goods products (Clauss®, Camillus®, Cuda® and DMT® brands).

15 unchanged sentences

First Aid Central has been a trusted provider and manufacturer of a wide variety of first aid kits since 2007.

They assist Canadian businesses to stay compliant with federal & provincial first aid and safety regulations through their wide variety of first aid kits, refills, and safety supplies, including CPR kits, burn kits, and automotive and emergency first aid kits.

They assist Canadian businesses to stay compliant with federal & provincial first aid and medical regulations through their wide variety of first aid kits, refills, and safety supplies, including CPR kits, burn kits, and automotive and emergency first aid kits.

Med-Nap, an Acme United brand since 2020, manufactures critical FDA regulated components found in first aid kits and used by healthcare facilities, including alcohol prep pads, alcohol wipes, benzalkonium chloride non-alcohol wipes, various antiseptic wipes, castile soap, and lens cleaning wipes.

2 unchanged sentences

The facilities offer a platform for future product expansion.

Safety Made is a leading manufacturer of first aid kits for the promotional products industry.

CUTTING, SHARPENING AND MEASURING

4 unchanged sentences

Many of the Westcott branded cutting products contain patented titanium bonding and proprietary non-stick coatings, making the blades more than three times harder than stainless steel as well as reducing friction and corrosion.

Westcott continues to expand their catalog of craft items with patented new technologies, handle designs and construction that has driven Westcott to be a leader in fun, fashionable and functional solutions for students and adults.

In addition, Westcott continues to build on its

cutting line with an expanded assortment of ceramic safety knives which include new features, allowing its customers to remain safer on the job.

Westcott continues to expand their catalog of craft items with patented new technologies, handle designs and construction that has driven Westcott to be a leader in fashionable and functional solutions for students and adults.

In addition, Westcott continues to build on its cutting line with an expanded assortment of ceramic safety knives which include new features, allowing its customers to remain safer on the job.

Hardware, Industrial and Sporting Goods

Clauss, with its roots dating back to 1877, offers a line of quality cutting tools for professionals in the hardware & industrial, lawn & garden, food processing, sewing and housewares channels.

Clauss, with its roots dating back to 1877, offers a line of quality cutting tools for professionals in the hardware & industrial, floral, sewing and housewares channels.

Many of the Clauss products are enhanced with the Company’s patented titanium and proprietary non-stick coatings.

In 2021, Clauss was the first to innovate and apply industrial Titanium Carbide infused blades which has revolutionized cutting performance and edge-retention for hardware and industrial based cutting applications.

2021, Clauss was the first to innovate and apply industrial Titanium Carbide infused blades which has revolutionized cutting performance and edge-retention for hardware and industrial based cutting applications.

Since 1876 Camillus has been supplying innovative and high-quality knives.

2 unchanged sentences

Many of the knives are enhanced with titanium carbonitride coatings to increase the hardness of the blade of up to 10 times that of untreated stainless steel.

In 2021 Camillus continued its innovative path in creating outdoor tools that serve its customers with multifunction features, which allow outdoor enthusiasts to carry less tools.

In 2021 Camillus continued its innovative path in creating outdoor tools that serve its customers with multifunction features, which allow outdoor enthusiasts to carry fewer tools.

In 2022, Camillus developed a new ball bearing-based blade launching system, “Cuda Lock” blade locking mechanism.

The Cuda line of fishing tools and knives was launched in 2014.

Featuring titanium bonded German steels and alloys, Cuda tools provide world class hardness, corrosion and adhesive resistance.

Featuring titanium bonded quality steels and alloys, Cuda tools provide world class hardness, corrosion and adhesive resistance.

In 2014, Cuda won Best of Show in the “Fish Smart” category at the ICast show in Orlando, Florida.

2 unchanged sentences

In 2018, Cuda launched a Professional Series of knives, tools and fishing gaffs that are directed towards the commercial fishing market.

In 2022, Cuda launched a line of tools devoted to freshwater angling including cleaning, measuring and sharpening solutions.

Cuda’s newest innovation, AquaTuff® Technology, encapsulates both Zirconium and Carbide Edge infusion, thus creating best in class corrosion resistance and edge retention resulting in a knife that can stand up to the elements and requires significantly less sharpening.

DMT products are leaders in diamond sharpening tools for knives, scissors, chisels, skis, skates and many other edges that require sharpening.

2 unchanged sentences

In 2017, DMT launched 12 new diamond sharpeners that include a gear-driven sharpener, sonic sharpener and pull through sharpeners that provide a simple sharpening solution for beginners as well as sharpening experts.

In 2022, DMT launched an entirely new line of sharpeners.

EdgeSharp allows for a more simplistic sharpening process.

In addition, in 2022 DMT launched a new line of professional and outdoor sharpeners with enhanced features and special grits to optimize the sharpener process.

Intellectual Property

16 unchanged sentences

The major competitors in the first aid and safety category are Honeywell and Cintas.

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.

Traditionally, the Company’s sales and profits 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 Westcott back-to-school market.

Compliance with Environmental Laws

2 unchanged sentences

Employees and Human Capital Considerations

The Company views its human capital as its most important asset.

As of December 31, 2022, the Company employed 619 people, all of whom are full time and none of whom is covered by union contracts.

Employee relations are considered good and no foreseeable problems with the work force are evident.

Culture and Diversity

The Company’s workforce represents nearly all demographics, with diversity in age, race, ethnicity, and gender.

Historically, the Company’s standard recruiting and hiring initiatives have created a diverse workforce.

Our employees reflect the communities in which we are located.

We seek to provide opportunities for growth and development at all levels of our organization.

Creating and fostering inclusive work environments and teams allow us to create an engaging and welcoming culture for our employees, which we believe positively affects the quality of our products and the experience we deliver to our customers.

Compensation and Benefits

The Company is committed to providing market-competitive pay and benefits to attract and retain great talent.

The Company provides a range of benefits to its employees and their families, including medical and prescription drug, dental and vision, long-term disability coverage, as well as 401(k) savings and flexible spending accounts.

Available Information

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business