Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Information
The Company may from time to time make 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 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,” “expect,” “anticipate,” “believe,” “potential,” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from our current expectations.
Forward-looking statements in this report, including without limitation, statements related to the Company’s plans, strategies, objectives, expectations, 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 that may impact the Company’s business, operations and financial results.
These risks and uncertainties include, without limitation, the following: (i) changes in the Company’s plans, strategies, objectives, expectations and intentions, which may be made at any time at the discretion of the Company; (ii) the impact of uncertainties in global economic conditions, including the impact on the Company’s suppliers and customers; (iii) international trade policies and their impact on demand for our products and our competitive position, including the imposition of new tariffs or changes in existing tariff rates by the United States and retaliatory actions by other governments; (iv) the continuing adverse impact of inflation, including product costs, and interest rates; (v) potential adverse effects on the Company, its customers, and suppliers resulting from the conflicts in Ukraine and the Middle East; (vi) additional disruptions in the Company’s supply chains, whether caused by pandemics, natural disasters, or otherwise, including trucker shortages, port closures and delays, and delays with container ships themselves; (vii) labor related costs the Company has and may continue to incur, including costs of acquiring and training new employees and rising wages and benefits; (viii) currency fluctuations; (ix) the Company’s ability to effectively manage its inventory in a rapidly changing business environment; (x) changes in client needs and consumer spending habits; (xi) the impact of competition; (xii) the impact of technological changes including, specifically, the growth of online marketing and sales activity; (xiii) the Company’s ability to manage its growth effectively, including its ability to successfully integrate any business it might acquire; and (xiv) other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission.
For a more detailed discussion of these and other factors affecting the Company, see the Risk Factors described in Item 1A included in this Annual Report on Form 10-K for the fiscal year December 31, 2025 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 Estimates
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, which require our management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statement that require estimation but are not deemed critical, as defined above.
For a detailed discussion of our significant accounting policies and related judgments, see Note 2 of the Notes to Consolidated Financial Statements in "Item 8. Financial Statements and Supplementary Data" of this report.
Results of Operations 2025 Compared with 2024
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.
Net Sales
In 2025, sales increased by $2,051,825, or 1%, to $196,541,816 compared to $194,489,991 in 2024.
The U.S. segment sales decline by 1% in 2025 compared to 2024. Sales of first aid and medical products were strong. However, sales of school and office products were lower mainly due to the cancellation of customer orders in the third and fourth quarters as a result of tariff uncertainty.
European net sales for the year ended December 31, 2025, increased 8% in U.S. dollars (4% in local currency), compared with the same period in 2024. On October 1, 2025, the Company's German subsidiary acquired a line of cutting and sharpening tools that contributed $0.5 million in sales during the year ended December 31, 2025.
Net sales in Canada for the year ended December 31, 2025, increased 14% in U.S. dollars (16% in local currency) compared to the same period in 2024. The increase in sales for the year ended December 31, 2025 was due to strong sales of first aid products.
Gross Profit
Gross profit was $77,409,848 (39.4% of net sales) in 2025 compared to $76,350,824 (39.3% of net sales) in 2024.
Selling, General and Administrative
Selling, general and administrative (“SG&A”) expenses were $62,685,334 in 2025 compared with $62,210,882 in 2024, an increase of $474,452, or 0.8%. SG&A expenses were 31.9% of net sales in 2025 compared to 32.0% in 2024.
Operating Income
Operating income was $14,724,514 in 2025 compared with $14,139,942 in 2024, an increase of $584,572.
Operating income in the U.S. segment increased in 2025 by approximately $117,000 compared to 2024.
Operating income in the European segment increased in 2025 by $143,000 compared to 2024. The increase in operating income was primarily due to higher sales as well as improved gross margins.
Operating income in Canada increased in 2025 by approximately $326,000 compared to 2024. The increase in operating income was primarily due to higher sales as well as improved gross margins.
Interest Expense, net
Net interest expense for 2025 was $1,559,920 compared with $1,942,643 for 2024, a decrease of $382,723. The decrease in net interest expense resulted from lower average outstanding borrowings as well as lower average interest rates on the debt outstanding.
Total Other (Expense) Income, net
Total other (expense), net was $46,972 in 2025 compared to other income, net of $95,110 in 2024. The change in total other expense, net was primarily related to higher losses from foreign currency transactions.
Income Tax Expense
Income tax expense was $2,933,201 in 2025, resulting in an effective tax rate of 22% compared to $2,270,058 in 2024, an effective tax rate of 18%. In 2025, the Company recorded a tax credit of approximately $300,000 related to employee exercise of stock options, compared to $600,000 in 2024.
Off-Balance Sheet Transactions
The Company did not engage in any off-balance sheet transactions during 2025.
Liquidity and Capital Resources
During 2025, working capital increased by approximately $0.7 million compared to December 31, 2024. Inventory increased by approximately $3.6 million, or 6%. Inventory turnover, calculated using a twelve-month average inventory balance, was 2.1 at December 31, 2025 as compared to 2.1 at December 31, 2024. The reserve for slow moving and obsolete inventory was $1,477,849 at December 31, 2025 compared to $1,254,121 at December 31, 2024. We do not anticipate material increases in the allowance for slow moving and obsolete inventory in the ordinary course of business during 2026. Receivables increased by approximately $0.9 million at December 31, 2025 compared to December 31, 2024. The average number of days sales outstanding in accounts receivable was 55 days in 2025 compared to 54 days in 2024.
Long-term debt consists of (i) borrowings under the Company’s revolving loan agreement with HSBC Bank, N.A. and (ii) amounts outstanding under the fixed rate mortgage on the Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA. Effective as of June 26, 2025, Acme United Corporation (the “Company”) entered into Amendment No. 11 to the Revolving Loan Agreement dated as of April 5, 2012, as amended (the ”Loan Agreement”), between the Company and HSBC Bank, N.A. Amendment No. 11 extends the scheduled maturity of the $65 million dollar secured revolving credit facility under the Loan Agreement to May 31, 2027. The revolving loan agreement provides for borrowings of up to $65 million, which presently bears interest at SOFR plus 1.70%; interest is payable monthly. The loan agreement has an expiration date of May 31, 2027. The Company must pay a facility fee, payable quarterly, in an amount equal to one eighth of one percent (.125%) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for growth, share repurchases, dividends, acquisitions, and other business activities. Under the revolving loan agreement, the Company is required to maintain specific amounts of funded debt to EBITDA, a fixed charge coverage ratio and must have annual net income greater than $0, measured as of the end of each fiscal year. As of December 31, 2025, the Company was in compliance with the covenants under the revolving loan agreement as then in effect.
At December 31, 2025, total debt outstanding under the Company’s revolving credit facility decreased by approximately $5.8 million compared to total debt outstanding at December 31, 2024. As of December 31, 2025, $11,863,085 was outstanding, and $53,136,915 was available for borrowing under the Company’s revolving credit facility.
On July 15, 2025, the Company purchased a manufacturing and distribution center in Mt. Pleasant, TN for approximately $6.0 million using funds available under its revolving credit facility. The property consists of 77,000 square feet of manufacturing and warehouse space on 12 acres and is designed to be expanded by up to an additional 60,000 square feet. The facility will primarily be used to manufacture our Spill Magic line of bodily fluid and spill clean up solutions.
The Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA were financed by a fixed rate mortgage with HSBC Bank, N.A. at a fixed interest rate of 3.8%. The Company entered into the agreement on December 1, 2021. Payments of principal and interest are due monthly, with all amounts outstanding due on maturity on December 1, 2031. The outstanding principal on December 31, 2025, was $9,975,587.
On May 23, 2024, the Company acquired the assets of Elite First Aid, Inc ("Elite First Aid") for approximately $7.1 million of which $1.0 million is subject to holdbacks as follows: (a) $500,000, the payment of which is contingent upon certain revenue milestones during an consecutive 12-month period from May 31, 2024 to December 31, 2025. The acquired business did not meet the required milestones within the allowable period; therefore, the contingent amount was not payable. Accordingly, the Company reversed the related $500,000 liability.
An additional holdback of (b) $500,000, was subject to a 13 month holdback as a non-exclusive source of recovery primarily to satisfy certain types of indemnification claims under the Asset Purchase Agreement; the Company paid this amount in July 2025.
Capital expenditures during 2025 and 2024 were $10,651,913 and $7,148,648, respectively, which were, in part, financed with borrowings under the Company’s revolving credit facility. The increase in capital expenditures is primarily related to the purchase of the manufacturing facility in Mt. Pleasant, TN as discussed above.
The Company believes that cash on hand, and cash generated from operating activities, together with funds available under its revolving credit facility, are expected, under current conditions, to be sufficient to finance the Company’s planned operations for at least the next twelve months from the issuance of this Form 10-K.
Recently Issued Accounting Standards
Standards not yet Adopted
In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion) included in certain expense captions presented on the face of the income statement. The ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. The ASU may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements and early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.
Standards Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires additional categories of information about federal, state and foreign income taxes to be included in effective tax rate reconciliation disclosure. Additionally, the newly added categories also apply to the income taxes paid disclosure. Implementation of said additions are subject to quantitative thresholds. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The adoption of ASU 2023-09 did not have a material impact on the financial statements.
Item 7A. Quantitative and Qualitat ive Disclosures about Market Risk
As a smaller reporting company, the Company is not required to provide this information.
Item 8. Financial Statemen ts and Supplementary Data
Acme United Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating items:
Interest:
Interest expense, net
Other (expense) income, net
Income before income tax expense
Income tax expense
Net income
Earnings per share:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
Acme United Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Years Ended
December 31,
Net income
Other comprehensive income (loss)
Foreign currency translation
Comprehensive income
See accompanying Notes to Consolidated Financial Statements.
Acme United Corporation and Subsidiaries
CONSOLIDATED B ALANCE SHEETS
December 31,
December 31,
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, less allowance for credit losses of $ 480,736 and $ 493,705 as of December 31, 2025 and 2024, respectively
Inventories
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment:
Land
Buildings and building improvements
Machinery and equipment
Total property, plant and equipment
Less: accumulated depreciation
Net property, plant and equipment
Intangible assets, less accumulated amortization
Goodwill
Operating lease right-of-use asset, net
Total assets
LIABILITIES
Current liabilities:
Accounts payable
Operating lease liability - current portion
Current portion of mortgage payable
Other accrued liabilities
Total current liabilities
Long-term debt
Mortgage payable, net of current portion
Operating lease liability - non-current portion
Deferred income taxes
Other non-current liabilities
Total liabilities
Commitments and contingencies (see note 16)
STOCKHOLDERS' EQUITY
Common stock, par value $ 2.50 : 5,351,596 shares issued and 3,806,724 shares outstanding in 2025; 5,299,370 shares issued and 3,754,498 shares outstanding in 2024
Treasury stock, at cost, 1,544,872 shares in 2025 and 2024
Additional paid-in capital
Accumulated other comprehensive loss
Retained earnings
Total stockholders' equity
Total liabilities and stockholders' equity
See accompanying Notes to Consolidated Financial Statements.
Acme United Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CH ANGES IN STOCKHOLDERS' EQUITY
Outstanding
Shares of
Common Stock
Common Stock
Treasury
Stock
Additional
Paid-In Capital
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Balances, December 31, 2023
Net income
Other comprehensive loss
Stock compensation expense
Distribution to stockholders ($ 0.60 per common share)
Issuance of common stock
Cash settlement of stock options
Net share settlement of stock options
Balances, December 31, 2024
Net income
Other comprehensive income
Stock compensation expense
Distribution to stockholders ($ 0.63 per common share)
Issuance of common stock
Cash settlement of stock options
Net share settlement of stock options
Balances, December 31, 2025
See accompanying Notes to Consolidated Financial Statements.
Acme United Corporation and Subsidiaries
CONSOLIDATED STATEM ENTS OF CASH FLOWS
For the years ended December 31,
Operating activities:
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation
Amortization of intangible assets
Stock compensation expense
Deferred income taxes
Non-cash lease adjustment
Provision for excess and obsolete inventory
Provision for credit losses
Amortization of deferred financing costs
Change in earnout liability
Changes in operating assets and liabilities
Accounts receivable
Inventories
Prepaid expenses and other current assets
Accounts payable
Other accrued liabilities
Total adjustments
Net cash provided by operating activities
Investing activities:
Purchase of property, plant and equipment
Acquisition of Schmiedeglut
Proceeds from sale of business, net of related costs
Acquisition of Safety Made
Acquisition of Elite First Aid
Net cash used in investing activities
Financing activities:
Net (repayments) borrowings of long-term debt
Repayments on mortgage
Distributions to stockholders
Cash settlement of stock options
Tax paid on net share settlement of stock options
Issuance of common stock
Net cash (used in) provided by financing activities
Effect of exchange rate changes
Net (decrease) increase in cash and cash equivalents and restricted cash
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Supplemental cash flow information:
Cash paid for income taxes
Cash paid for interest expense
Non-cash financing activities
Dividends accrued not paid
See accompanying Notes to Consolidated Financial Statements.
Acme United Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Operations
The operations of Acme United Corporation (the “Company”) consist of three reportable segments. The operations of the Company are structured and evaluated based on geographic location. The three reportable segments operate in the United States (including Asian operations), Canada and Europe. Principal products across all segments are first aid kits and medical products, scissors, shears, knives, and sharpeners, which are sold primarily to wholesale, contract and retail distributors, office supply super stores, mass market retailers, industrial and medical distributors, school supply distributors, drug store retailers, sporting goods stores, hardware chains and wholesale florists.
2. Accounting Policies
Estimates – The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most sensitive and significant accounting estimates relate to customer rebates, valuation allowances for deferred income tax assets, obsolete and slow-moving inventories, potentially uncollectible accounts receivable, intangibles and stock-based compensation. Actual results could differ from those estimates.
Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned by the Company. All significant intercompany accounts and transactions are eliminated in consolidation.
Translation of Foreign Currency – For foreign operations whose functional currencies are not U.S. dollars, assets and liabilities are translated at rates in effect at the end of the year; revenues and expenses are translated at average rates in effect during the year. Resulting translation adjustments are made directly to accumulated other comprehensive income. Foreign currency transaction gains and losses are recognized in operating results. Included in other income (expense), net were foreign currency transaction losses of $ 109,174 in 2025 and transaction gains of $ 79,088 in 2024 .
Cash Equivalents – Investments with an original maturity of three months or less, as well as time deposits and certificates of deposit that are readily redeemable at the date of purchase, are considered cash equivalents.
Accounts Receivable – The Company provides an allowance for expected credit losses based upon a review of outstanding accounts receivable, historical collection information and existing economic conditions. The allowance for expected credit losses represents estimated uncollectible accounts receivables associated with potential customer defaults on contractual obligations, usually due to potential insolvencies. The allowance includes amounts for certain customers where a risk of default has been specifically identified. In addition, the allowance includes a provision for customer defaults based on historical experience. The Company actively monitors its accounts receivable balances, and its historical experience of annual accounts receivable write-offs has been negligible. Accounts receivable are shown less an allowance for expected credit losses of $ 480,736 at December 31, 2025 and $ 493,705 at December 31, 2024 . As of January 1, 2024, accounts receivable, less an allowance for credit losses was $ 32,603,463 .
Allowance for Credit Losses
Beginning balance
Provision for credit losses
Write-offs
Ending balance
Inventories – Inventories are stated at the lower of cost, or net realizable value, determined by the first-in, first-out method for our cutting products. Cost for our first aid and medical products is computed using standard cost, which approximates actual cost on a first in, first out basis.
Property, Plant and Equipment, and Depreciation – Property, plant and equipment are recorded at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets. The range of estimated useful lives of these assets are as follows: buildings and building improvements useful lives range from 10 to 39 years ; machinery and equipment useful lives range from 3 to 10 years . The Company tests its property, plant and equipment whenever events or changes in circumstances (triggering event) indicate that its carrying amount may not be recoverable. During 2025 and 2024, there were no triggering events that would indicate its carrying amount may not be recoverable. As a result, there was no impairment of the carrying amounts of such assets and no reduction in their estimated useful lives.
Intangible Assets and Goodwill – Intangible assets with finite useful lives are recorded at cost upon acquisition and amortized over the term of the related contract, if any, or useful life, as applicable. Intangible assets held by the Company with finite useful lives include patents and trademarks. Patents and trademarks are amortized over their estimated useful lives. The Company periodically reviews the values recorded for finite lived intangible assets whenever events or changes in circumstances (triggering event) indicate that its carrying amount may not be recoverable. During 2025 and 2024, there were no triggering events that would indicate its carrying amount may not be recoverable. As a result, there was no impairment of the carrying amounts of such assets and no reduction in their estimated useful lives. The Company annually reviews goodwill to assess recoverability from future operations whenever events or changes in circumstances indicate that its carrying amounts may not be recoverable. At December 31, 2025 and 2024 , the Company assessed the recoverability of its intangible assets and goodwill and believed that there were no events or circumstances present that would require a test of recoverability on those assets. As a result, there was no impairment of the carrying amounts of such assets.
Contingent Consideration - As part of the acquisition of Elite First Aid, Inc., $ 500,000 of the purchase price was heldback, to be paid to the sellers, contingent on the acquired business meeting certain revenue milestones during any consecutive 12-month period from May 31, 2024 to December 31, 2025. The acquired business did not meet the required milestones within the allowable period; therefore, the contingent amount was not payable. Accordingly, the Company reversed the related $ 500,000 liability to selling, general and administrative expenses.
Deferred Income Taxes – Deferred income taxes are provided for the differences between the financial statement and tax bases of assets and liabilities, and on operating loss carryovers, using tax rates in effect in years in which the differences are expected to reverse.
Fair Value of Financial Instruments - The Company applies various valuation approaches in determining the fair value of its financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:
Level 1 — Quoted prices for identical instruments in active markets.
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 — Significant inputs to the valuation model are unobservable.
The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement. Level 3 inputs are applied in determining the fair value of our mortgage payable and long-term debt as disclosed in Note 8.
Financial instruments including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and other accrued liabilities are considered Level 1 in fair value hierarchy. The amounts reported on the consolidated balance sheets for these financial instruments approximate their fair value due to their relatively short maturities and prevailing interest rates.
Leases – 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 the commencement date of the lease 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 the Company’s 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 arrangements 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.
Revenue Recognition – The Company's revenues result from the sale of goods and reflect the consideration to which the Company expects to be entitled. The Company records revenue based on a five-step model in accordance with Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"). For its contracts with customers, the Company identifies the performance obligations (goods or services), determines the transaction price, allocates the contract transaction price to the performance obligations, and recognizes the revenue when (or as) the performance obligation is transferred to the customer. A good or service is transferred when (or as) the customer obtains control of that good or service. Depending on the contractual terms of each customer, revenue is recognized either at the time of shipment or upon delivery. When revenue is recorded, estimates of returns are made and recorded as a reduction of revenue. Customer rebates and incentives are earned based on promotional programs in place, volume of purchases or other factors are also estimated at the time of revenue recognition and recorded as a reduction of that revenue. Refer to Note 9 – Revenue from Contracts with Customers, for a more detailed discussion.
Shipping Costs – The costs of shipping product to the Company’s customers ($ 8,271,906 in 2025 and $ 8,400,878 in 2024 ) are included in selling, general and administrative expenses.
Advertising Costs – The Company expenses the production costs of advertising the first time that the related advertising takes place. Advertising costs ($ 1,877,844 in 2025 and $ 1,508,685 in 2024 ) are included in selling, general and administrative expenses.
Concentration – The Company performs ongoing credit evaluations of its customers and generally does not require collateral for the extension of credit. Allowances for credit losses are provided and have been within management's expectations. The Company had two customers in 2025 and 2024, that individually exceeded 10% of consolidated net sales. Net sales to these two customers were approximately 13 % of consolidated net sales in 2025 and 14 % and 13 % in 2024. The Company maintains cash balances across multiple financial institutions that are highly rated and considered to have strong creditworthiness. Management believes that the Company is not subject to significant risk of cash concentration.
Recently Issued Accounting Standards
Standards not yet Adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion) included in certain expense captions presented on the face of the income statement. The ASU is effective for fiscal years beginning after December 15, 2026 and for interim periods beginning after December 15, 2027. The ASU may be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to all prior periods presented in the financial statements and early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on our consolidated financial statements and related disclosures.
Standards Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”). ASU 2023-09 requires additional categories of information about federal, state and foreign income taxes to be included in effective tax rate reconciliation disclosure. Additionally, the newly added categories also apply to the income taxes paid disclosure. Implementation of said additions are subject to quantitative thresholds. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 prospectively. The adoption did not have a material impact on the financial statements.
3. Inventories
Inventories consisted of:
December 31,
Finished goods
Work in process
Materials and supplies
Inventories:
Inventories are stated net of valuation allowances for slow moving and obsolete inventory of $ 1,477,849 as of December 31, 2025 and $ 1,254,121 as of December 31, 2024 .
4. Intangible Assets and Goodwill
The Company’s intangible assets and goodwill consisted of:
December 31,
Tradename
Customer List
Non-Compete
Patents
Subtotal
Less: Accumulated Amortization
Translation Adjustments
Intangible Assets
Goodwill
Total:
Amortization expense for intangible assets for the years ended December 31, 2025 and 2024 were $ 2,547,383 and $ 2,568,349 , respectively. The estimated aggregate amortization expense for each of the next five years, calculated on a similar basis, is as follows: 2026 - $ 2,220,266 ; 2027 - $ 1,891,897 ; 2028 - $ 1,775,230 ; 2029 - $ 1,622,696 ; and 2030 - $ 1,508,699 .
5. Other Accrued Liabilities
The Company’s other current and non-current accrued liabilities consisted of:
December 31,
Customer Rebates
Contingent Liability - Elite
Accrued Compensation
Dividend Payable
Other
Total:
6. Profit Sharing
The Company has a qualified 401k plan covering substantially all of its United States employees. Annual Company contributions to this plan are determined by the Company’s Compensation Committee. For the years ended December 31, 2025, the Company contributed 100 % of each employee's contributions, up to the first 3 % contributed by each employee, and 50 % of employee's contributions, for the next 2 % of employee contributions. For 2024, the Company contributed 50 % of employee’s contributions, up to the first 6 % contributed by each employee. Total contribution expense under this 401k plan was $ 674,708 in 2025 and $ 415,530 in 2024.
7. Income Taxes
The amounts of income tax expense reflected in operations is as follows:
Current:
Federal
State
Foreign
Total:
Deferred:
Federal
State
Total:
Total Income Tax Expense:
Cash paid during the year for income taxes, net of refunds, are as follows:
Payments, net of refunds:
United States, federal
United States, state
Canada
Hong Kong
Other
Total taxes paid
Difference between the U.S. statutory federal tax rate and the Company's 2025 effective income tax rate presented prospectively in accordance with ASU 2023-09:
Federal income taxes at 21% statutory rate
State and local taxes, net of federal income tax effect
Nontaxable or nondeductible items
Federal statutory tax rate difference
Tax credit
Provision for income taxes:
Differences between the U.S. statutory federal tax rate and the Company’s effective income tax rate for periods prior to the adoption of ASU 2023-09 are analyzed below:
Federal income taxes at 21% statutory rate
State and local taxes, net of federal income tax effect
Nontaxable or nondeductible items
Federal statutory tax rate difference
Provision for income taxes:
A summary of United States and foreign income before income taxes follows:
United States
Foreign
Total:
As discussed in Note 10 below, for segment reporting, direct import sales are included in the United States segment. However, the revenues are earned by our Hong Kong subsidiary and related income taxes are paid in Hong Kong whose rate approximates 16.5 %. As such, income of the Asian subsidiary is included in the foreign income before taxes.
The following summarizes deferred income tax assets and liabilities:
Deferred income tax liabilities:
Property, plant and equipment
Intangible assets
Other
Total deferred tax liabilities
Deferred income tax assets:
Net operating loss carryover
Stock compensation
Asset valuations
Other
Total deferred tax assets
Less: valuation allowance
Total deferred tax assets, net
Net deferred income tax liability:
The gross amount of the net operating loss available as of December 31, 2025 and 2024, with the net operating loss applying to foreign locations, is $ 2,804,901 and $ 3,050,406 , respectively. These net operating loss carry forwards do not have an expiration date.
The Company files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The Company is no longer subject to U.S. federal examination for years before 2022, state and local examinations for year before 2021 and foreign examinations before 2022. The Company evaluated its tax positions for each year which remain subject to examination by major tax jurisdictions, in accordance with the requirements of ASC 740 and as a result, concluded no adjustment was necessary.
The Company’s evaluation of uncertain tax positions was performed for the tax years ended December 31, 2022 and forward, the tax years which remain subject to examination by major tax jurisdictions as of December 31, 2025.
Due to the uncertain nature of the realization of the Company's deferred income tax assets based on past performance of its German subsidiary, the Company has recorded a valuation allowance for the amount of deferred income tax assets which are not expected to be realized. This valuation allowance, all of which is related to deferred tax assets resulting from net operating losses of the Company’s German subsidiary of approximately $ 0.8 million, is subject to periodic review, and, if the allowance is reduced, the tax benefit will be recorded in future operations as a reduction of the Company's tax expense.
8. Long-Term Debt and Stockholders’ Equity
Long-term debt consists of (i) borrowings under the Company’s revolving loan agreement with HSBC Bank USA, N.A.(“HSBC”) and (ii) amounts outstanding under the fixed rate mortgage on the Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA. Effective as of June 26, 2025, Acme United Corporation (the “Company”) entered into Amendment No. 11 to the Revolving Loan Agreement dated as of April 5, 2012, as amended (the ”Loan Agreement”), between the Company and HSBC. Amendment No. 11 extended the scheduled maturity of the $ 65 million dollar secured revolving credit facility under the Loan Agreement to May 31, 2027 . The terms of the Loan Agreement otherwise remain unchanged. The Loan Agreement provides for borrowings of up to $ 65 million which presently bears interest at Secured Overnight Financing Rate (“ SOFR ”) plus a margin of + 1.70 % ; interest is payable monthly. The Company must pay a facility fee, payable quarterly, in an amount equal to one eighth of one percent ( .125 %) per annum of the average daily unused portion of the revolving credit line. The facility is intended to provide liquidity for operating activities, growth, acquisitions, dividends and share repurchases. Under the revolving loan agreement, the Company is required to maintain a specific ratio of funded debt to EBITDA, a fixed charge coverage ratio and must have annual net income greater than $0, measured as of the end of each fiscal year. As of December 31, 2025, the Company was in compliance with the covenants under the Loan Agreement as then in effect.
As of December 31, 2025, $ 11,863,085 , excluding net deferred financing cost of $ 10,299 , was outstanding and $ 53,136,915 was available for borrowing under the Company’s revolving loan agreement.
The Company’s manufacturing and distribution facilities in Rocky Mount, NC and Vancouver, WA were financed by a fixed rate mortgage with HSBC Bank, N.A. at a fixed interest rate of 3.8 %. The Company entered into the agreement on December 1, 2021. Commencing on January 1, 2022, payments of principal and interest are due monthly, with all amounts outstanding due on maturity on December 1, 2031 . Long-term debt associated with the mortgage consisted of the following at December 31, 2025 and 2024:
December 31, 2025
December 31, 2024
Mortgage payable - HSBC Bank N.A.
Less debt issuance costs
Less current maturities
Long-term mortgage payable less current maturities
Minimum annual mortgage payments are due as follows: 2026 - $ 454,112 ; 2027 - $ 471,948 ; 2028 - $ 489,510 ; 2029 - $ 509,713 ; 2030 - $ 529,733 and thereafter - $ 7,520,571 .
As of December 31, 2025, the Company has pledged certain assets as collateral for its debt obligations under its revolving loan agreement with HSBC Bank, N.A. The collateral consists of all inventory, property, plant, equipment, and accounts receivable. The Company believes that the collateral provided is sufficient to secure the related debt.
The carrying value of the Company’s bank debt is a reasonable estimate of fair value, which uses Level 3 inputs, because of the nature of its payment terms and maturity.
On November 14, 2019, the Company announced a Common Stock repurchase program of up to a total of 200,000 shares. The program does not have an expiration date. During the years ended December 31, 2025 and 2024, the Company did no t repurchase any shares of its Common Stock. As of December 31, 2025 , a total of 160,365 shares may be purchased in the future under the repurchase program.
9. Revenue from Contracts with Customers
Nature of Goods and Services
The Company recognizes revenue from the sales of a broad line of products that are grouped into two main categories: (i) first aid and medical; and (ii) cutting, sharpening and measuring. The first aid and medical category includes first aid kits and refills and a variety of safety products. The cutting and sharpening category includes scissors, knives, paper trimmers, pencil sharpeners and other sharpening tools. 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 customers. Sales contracts (purchase orders) generally have a single performance obligation that is satisfied at a point in time, with shipment or delivery, depending on the terms of the 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. The Company generally recognizes 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. The repayment terms are typically between 30 and 90 days, but they vary dependent 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 receivables” in the 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 uses the practical expedient in ASC 606-10-32-18 applicable to such contracts and accordingly, 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 Company’s consolidated financial statements.
Per ASC 606-10-25-18B, the Company has elected to account for shipping and handling activities that occur after the customer has obtained control as a fulfillment activity instead of a performance obligation. Furthermore, shipping and handling activities performed before transfer of control of the product also do not constitute a separate and distinct performance obligation.
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 from a customer.
Applying the practical expedient in ASC 340-40-25-4 – Other Assets and Deferred Costs , the Company recognizes the incremental costs of obtaining contracts as an expense when incurred. These costs are included in “Selling, general and administrative expenses.”
Disaggregation of Revenues
The following table represents external net sales disaggregated by product category, by segment:
For the twelve months ended December 31, 2025
(amounts in 000's)
United States
Canada
Europe
Total
First Aid and Safety
Cutting and Sharpening
Total Net Sales
For the twelve months ended December 31, 2024
United States
Canada
Europe
Total
First Aid and Safety
Cutting and Sharpening
Total Net Sales
10. Segment Information
The Company aligns its businesses into three reportable business segments based on geographical location. This segment structure reflects (i) the manner in which the Chief Operating Decision Maker (“CODM”), who is the Company’s Chief Executive Officer, regularly assesses information for decision-making purposes, including the allocation of resources, and (ii) how the Company operates its businesses, assesses performance, and communicates results and strategy, among other items, to the Board and its stockholders.
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 CODM reviews the financial results of both on a consolidated basis, and the results of the Asian operations have been aggregated with the results of the United States operations to form one reportable segment called the “United States segment” or “U.S. segment”. Each reportable segment derives its revenue from the sales of i) first aid and medical products and ii) cutting and sharpening tools to school, home, office, hardware, sporting and industrial markets.
The Company's CODM evaluates the performance of each operating segment based on segment revenues and operating income. Segment revenues are defined as total revenues, excluding inter-segment revenue. Segment operating earnings are defined as segment revenues, less cost of goods sold and operating expenses. Assets are reviewed by the CODM on a consolidated basis and therefore are not presented by reportable business segment.
The following table sets forth certain financial data by segment for the years ended December 31, 2025 and 2024:
Financial data by segment:
(000’s omitted)
For the twelve months ended December 31, 2025
(amounts in 000's)
United States
Canada
Europe
Total
Net Sales
Less: Segment cost of sales
Less: Segment selling, general, and administrative expenses
Segment operating income
Interest expense
Interest income
Other income, net
Income before income taxes
Assets
Additions to property, plant and equipment
Depreciation and amortization
For the twelve months ended December 31, 2024
(amounts in 000's)
United States
Canada
Europe
Total
Net Sales
Less: Segment cost of sales
Less: Segment selling, general, and administrative expenses
Segment operating income
Interest expense
Interest income
Other (expense), net
Income before income taxes
Assets
Additions to property, plant and equipment
Depreciation and amortization
T he table below presents revenue by geographic area. Revenues are attributed to countries based on location of the customer.
(000’s omitted)
Revenues
United States
International:
Canada
Europe
Other
Total International
Total Revenues
The table below presents long-lived assets by geographic area. Long-lived assets are attributed to countries based on location of the asset.
(000’s omitted)
Long-lived assets
United States
International:
Canada
Europe
Other
Total International
Total Long-lived assets
11. Stock Option Plans
The Company grants stock options under the 2022 Employee Stock Option Plan (the “2022 Employee Plan”) and under the 2017 Non-Salaried Director Stock Option Plan (the “2017 Director Plan”). The Company also has one plan under which the Company no longer grants options but under which certain options remain outstanding: the 2012 Employee Stock Option Plan (the “2012 Employee Plan”).
The 2022 Employee Plan, which was approved by the stockholders of the Company at the April 20, 2022, Annual Meeting, provides for the issuance of incentive and non-qualified stock options at an exercise price equal to the fair market value of the Common Stock on the date the option is granted. The terms of the options granted are subject to the provisions of the 2022 Employee Plan. Options granted under the 2022 Employee Plan vest 25% one day after the first anniversary of the grant date and 25% one day after each of the next three anniversaries. As of December 31, 2025 , the number of shares available for grant under the 2022 Employee Plan is 85,375 . Under the terms of the 2022 Employee Plan, no option may be granted under that plan after the tenth anniversary of the adoption of the plan.
The 2012 Employee Plan, which became effective April 23, 2012, provides for the issuance of incentive and non-qualified stock options at an exercise price equal to the fair market value of the Common Stock on the date the option is granted. The terms of the options granted are subject to the provisions of the 2012 Employee Plan. Options granted under the 2012 Employee Plan vest 25% one day after the first anniversary of the grant date and 25% one day after each of the next three anniversaries. Under the terms of the 2012 Employee Plan, no option may be granted under that plan after the tenth anniversary of the adoption of the plan.
The 2017 Director Plan provides for the issuance of stock options for up to a total of 50,000 shares of the Company's common stock to non-salaried directors. Under the 2017 Director Plan, Directors elected after the effective date and at subsequent Annual Meetings who have not received any prior grants under the plan or previous plans shall receive an initial grant of an option to purchase 5,000 shares of Common Stock (the “Initial Option”). Each year, each elected non-salaried Director not receiving an Initial Option will receive an option to purchase 5,000 shares of Common Stock (the “Annual Option”). The Initial Option vests 25% on the date of grant and 25% on the anniversary of the grant date in each of the following 3 years. Each Annual Option becomes fully exercisable one day after the date of grant. The exercise price of each option granted equals the fair market value of the Common Stock on the date the option is granted and expires ten (10) years from the date of grant. The 2017 Director Plan provides that the Board of Directors has the authority to increase or decrease the number of shares of Common Stock which are the subject of the annual or initial option grants to directors. No options may be granted under the 2017 Director Plan after the tenth anniversary of the adoption of the Plan, i.e., after April 24, 2027. As of December 31, 2025 , there were 25,000 shares available for grant under the 2017 Director Plan.
The Company’s stock option plans for both employees and directors permit options to be exercised on a net basis and receive either cash or shares of the Company’s Common Stock. Specifically, optionees may, at the time of exercise of an option and subject to the consent of the Company, elect either (i) to receive from the Company cash in an amount equal to the number of shares of Common Stock subject to the option (or portion thereof) that is being exercised multiplied by the excess of (a) the fair market value per share over (b) the exercise price per share of the option (a “net cash settlement”); or (ii) to make payment of the exercise price of the option by reduction in the number of shares of Common Stock otherwise deliverable upon exercise of such option by the number of shares having an aggregate fair market value equal to the total exercise price of the option (or portion thereof). In 2025 and 2024, the Company paid a total of approximately $ 680,977 and $ 415,900 respectively, to optionees who had elected a net cash settlement of their respective share options. In 2025 and 2024, the Company issued 23,725 and 37,944 shares, respectively, to optionees who had elected a net share settlement.
A summary of changes in options issued under the Company’s stock option plans follows:
Options outstanding at the beginning of the year
Options granted
Options forfeited
Options exercised
Options outstanding at the end of the year
Options exercisable at the end of the year
Common stock available for future grants at the end of the year
Weighted average exercise price per share:
Granted
Forfeited
Exercised
Outstanding
Exercisable
A summary of options outstanding as December 31, 2025 is as follows:
Options Outstanding
Options Exercisable
Range of Exercise Prices
Number
Outstanding
Weighted-
Average
Remaining
Contractual
Life (Years)
Weighted-
Average
Exercise
Price
Number
Exercisable
Weighted-
Average
Exercise
Price
The weighted average remaining contractual life of all outstanding stock options is 5 years.
Stock-Based Compensation
Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. The Company uses the Black-Scholes option pricing model to determine the fair value of employee and non-employee director stock options. The determination of the fair value of stock-based payment awards on the date of grant, using an option-pricing model, is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected term”), the estimated volatility of the Company’s Common Stock price over the expected term (“volatility”) and the number of options that will not fully vest in accordance with applicable vesting requirements (“forfeitures”).
The Company estimates the expected term of options granted by evaluating various factors, including the vesting period, historical employee information, as well as current and historical stock prices and market conditions. The Company estimates the volatility of its common stock by calculating historical volatility based on the closing stock price on the last day of each of the 84 months leading up to the month the option was granted. The risk-free interest rate that the Company uses in the option valuation model is the interest rate on U.S. Treasury zero-coupon bond issues with remaining terms similar to the expected term of the options granted. Historical information was the basis for calculating the dividend yield. The Company is required to estimate forfeitures at the time of grant and to revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company used a mix of historical data and future assumptions to estimate pre-vesting option forfeitures and to record stock-based compensation expense only for those awards that are expected to vest. All stock-based payment awards are amortized over the requisite service periods of the awards, which are generally the vesting periods.
The assumptions used to value option grants for the years ended December 31, 2025 and 2024 were as follows:
Expected life in years
Interest rate
Volatility
Dividend yield
Total stock-based compensation recognized in the Company’s consolidated statements of operations for the years ended December 31, 2025 and 2024 were $ 1,993,758 and $ 2,183,001 , respectively. At December 31, 2025 , there was approximately $ 2,512,218 of unrecognized compensation cost, adjusted for estimated forfeitures, related to non-vested stock-based payments granted to the Company’s employees. As of December 31, 2025 , the remaining unamortized expense is expected to be recognized over a weighted average period of 3 years.
The weighted average fair value at the date of grant for options granted during 2025 and 2024 was $ 18.34 and $ 17.16 per option, respectively. The aggregate intrinsic value of outstanding options was $ 12,548,823 and $ 13,865,264 at December 31, 2025 and 2024, respectively. The aggregate intrinsic value of exercisable options was $ 11,673,913 and $ 12,455,936 at December 31, 2025 and 2024, respectively. The aggregate intrinsic value of options exercised during 2025 and 2024 was $ 2,497,556 and $ 4,430,260 , respectively.
A summary of the status of the Company’s non-vested options as of December 31, 2025 and 2024 follows:
For the twelve months ended December 31, 2025
Number of Awards
Weighted Average Grant Date Fair Value
Unvested Outstanding, beginning of year
Granted
Cancelled/Forfeited
Vested, outstanding shares
Unvested Outstanding, end of year
For the twelve months ended December 31, 2024
Number of Awards
Weighted Average Grant Date Fair Value
Unvested Outstanding, beginning of year
Granted
Cancelled/Forfeited
Vested, outstanding shares
Unvested Outstanding, end of year
12. Earnings Per Share
The calculation of earnings per share is as follows:
Numerator:
Net income
Denominator:
Denominator for basic earnings per share:
Weighted average shares outstanding
Effect of diluted employee stock options
Denominator for dilutive earnings per share
Basic earnings per share
Diluted earnings per share
For 2025 324,125 stock options were excluded from diluted earnings per share calculations because they would have been anti-dilutive.
In 2024 , all outstanding options were included in the calculation of diluted shares.
13. Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss follow:
Foreign currency
translation
adjustment
Balances, December 31, 2023
Translation adjustment
Balances, December 31, 2024
Translation adjustment
Balances, December 31, 2025
14. 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 2033.
Certain of the Company’s lease arrangements contain renewal provisions, exercisable at the Company's option. The probability of renewal is not reasonably certain and therefore not included in ROU assets and lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Operating lease cost was $ 1.8 million and $ 1.7 million for the years ended December 31, 2025 and 2024, respectively. For the years ended December 31, 2025 and 2024, $ 0.8 million and $ 0.7 million, respectively, was included in cost of goods sold and $ 1.0 million, respectively, was included in selling, general and administrative expenses in the accompanying consolidated statements of operations.
Information related to leases (dollars in 000’s):
Year ended
Year ended
Operating cash flow information:
December 31, 2025
December 31, 2024
Operating lease cost
Operating lease - cash flow
Non-cash activity:
ROU assets obtained in exchange for lease liabilities
December 31, 2025
December 31, 2024
Weighted-average remaining lease term
5.2 years
Weighted-average discount rate
Future minimum lease payments under non-cancellable leases as of December 31, 2025:
(dollars in 000’s):
Thereafter
Total future minimum lease payments
Less: imputed interest
Present value of lease liabilities - current
Present value of lease liabilities - non-current
15. Business Combinations
On May 23, 2024 , the Company acquired certain assets of Elite First Aid, Inc ("Elite First Aid"). Based in Wake Forest, NC, Elite First Aid is a leading supplier of tactical, trauma and emergency medical products.
The fair value of consideration transferred is as follows:
(dollars in 000’s):
Cash
Contingent consideration
Holdback
Total
The purchase price was allocated to assets acquired as follows (in thousands):
Assets:
Accounts Receivable
Inventory
Prepaid Expense
Intangible Assets
Customer list
Tradename
Non-Compete
Goodwill
Total assets
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 United States operating segment. Intangible assets include Customer List, Trade Names, Non-Compete Agreements, and Goodwill, and each were recorded at fair value as of the acquisition date using Level 3 inputs. The useful lives of the identified intangible assets range from 5 years to 15 years. The non-compete has an estimated useful life of 5 years. The tradename and customer list both have 15 -year estimated useful lives. The weighted average amortization period of intangibles acquired during the year is 13 years. T he excess purchase price over the fair value of the net assets acquired was recorded as goodwill, which is primarily attributable to expanded market opportunities for emergency response products. All goodwill is deductible for tax purposes.
The purchase price for the assets was $ 7,141,000 . At closing, the Company paid $ 6,141,000 to Elite First Aid; the balance of the purchase price, $ 1,000,000 , is subject to holdbacks as follows: (a) $ 500,000 , the payment of which is contingent upon certain revenue milestones during any consecutive 12-month period from May 31, 2024 to December 31, 2025; and (b) $ 500,000 , which is subject to a 13-month holdback as a non-exclusive source of recovery primarily to satisfy indemnification claims under the Asset Purchase Agreement. The acquired business did not meet the required milestones within the allowable period; therefore, the contingent amount was not payable. Accordingly, the Company reversed the related $ 500,000 liability.
Management has determined that providing supplemental pro forma financial information reflecting the combined results of operations as if the acquisition had occurred at the beginning of the prior period is not required, as the impact on the Company’s financial position and results of operations is not significant.
The results of Elite First Aid have been included in the Company’s consolidated financial statements from the acquisition date forward, with no material impact on reported revenue or net income.
On October 1, 2025, the Company's German subsidiary acquired the cutting and sharpening lines of business from Schmiedeglut GmbH for approximately $ 1.6 million.
Management has determined that providing supplemental pro forma financial information reflecting the combined results of operations as if the acquisition had occurred at the beginning of the prior period is not required, as the impact on the Company’s financial position and results of operations is not significant.
The results of Schmiedeglut have been included in the Company’s consolidated financial statements from the acquisition date forward, with no material impact on reported revenue or net income.
16. Commitments and Contingencies
There are no pending material legal proceedings to which the Company is a party, or, to the actual knowledge of the Company, contemplated by any governmental authority.
17. Subsequent Event
On January 15, 2026 , the Company announced that it had acquired the assets of SLED Distribution, LLC. (d/b/a “My Medic”), a leading supplier of tactical, trauma and emergency response products, primarily in the direct-to-consumer channel. My Medic is based in Utah.
The purchase price of the acquisition was $ 18.7 million. At closing, the Company paid $ 14.6 million to My Medic. The $ 4.1 million balance of the purchase price is subject to holdbacks as follows: (a) $ 1,000,000 , the payment of which is contingent upon certain revenue milestones
during the twelve months ended December 31, 2027; and (b) $ 3.1 million, which is subject to a holdback as a non-exclusive source of recovery primarily to satisfy indemnification claims which may be made under the Asset Purchase Agreement.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Acme United Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Acme United Corporation and Subsidiaries (the “Company”) as of December 31, 2025, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”).
In our opinion, based on our audit, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2025, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 11, 2026 , expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/CBIZ CPA's P.C.
CBIZ CPAs P.C.
We have served as the Company’s auditor since 2008; such date takes into account the acquisition of the attest business of Marcum LLP by CBIZ CPAs P.C. effective November 1, 2024.
Hartford, Connecticut
March 11, 2026
PCAOB Firm ID # 199
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To the Stockholders and Board of Directors of
Acme United Corporation
Opinion on Internal Control over Financial Reporting
We have audited Acme United Corporation and Subsidiaries’ (the “Company”) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated balance sheet as of December 31, 2025 and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows and the related notes (collectively referred to as the “financial statements”) for the year ended December 31, 2025 of the Company, and our report dated March 11, 2026 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Management’s Report on Internal Control over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.
/s/ CBIZ CPA's P.C.
CBIZ CPAs P.C.
Hartford, Connecticut
March 11, 2026
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Acme United Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Acme United Corporation and Subsidiaries (the “Company”) as of December 31, 2024, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, based on our audit, the 2024 financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our report dated March 6, 2025 , expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of a material weakness.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Business Combination
As described in Note 16 to the Company’s financial statements, on May 23, 2024, the Company acquired Elite First Aid, Inc. in a business combination for the purchase price of $7,141,000. Management applied significant judgment in estimating the fair value of certain intangible assets. Changes to the underlying valuation of the customer relationship intangible asset could have a material impact on the financial statements. We identified the valuation of the customer relationship intangible asset as a critical audit matter. The significant estimation was primarily due to the complexity of the valuation model used to measure the fair value as well as the sensitivity of the respective fair value to the underlying significant assumption. The significant assumption used to estimate the fair value of the customer relationship intangible asset is the estimated revenue growth rate. Auditing this significant assumption led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the significant assumption.
How We Addressed the Matter in Our Audit
Our audit procedures related to the business combination include the following, amongst others:
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the accounting for the business combination and over the determination of the purchase price allocation. We considered the results of our tests of controls in our audit procedures.
To test the acquisition and the underlying valuation of the customer relationship intangible asset, our audit procedures included, among others, evaluating the Company's selection of the valuation methodology, evaluating the method and significant assumptions used by the Company's valuation specialist, and testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates.
We involved our valuation specialists to assist with our evaluation of the methodology used by the Company.
We audited the assumption of revenue growth rates as follows: a) tested the first year of Elite First Aid, Inc.'s revenue projection by auditing its revenue that the Company recognized from the acquisition date through December 31, 2024; b) compared the assumption to both industry and comparable companies historical revenue and growth rates; and c) compared the assumption to the Company's historical revenue and growth rates.
/s/ Marcum LLP
We have served as the Company’s auditor from 2008 through 2025.
Boston, Massachusetts
March 6, 2025
PCAOB Firm ID # 688
