Note 12 - Gain/Loss Contingency

9 Months Ended

Sep. 30, 2011

Contingencies Disclosure [Text Block]

12. Gain/Loss Contingency

Early in 2008 the Company became aware that competitors had been importing gloves similar to many of its products under a temporary tariff provision at a lower duty rate.  This lower duty rate of 2.8% was significantly less than the 10.4% rate the Company had been paying.  The Company filed retroactive, formal protests with U.S. Customs and Border Protection (CBP) for refund of duties for previous entries totaling approximately $165,000.

In July, 2008, the Company received a written denial on its formal protest from CBP. The Company is continuing to contest this denial through the courts.

In summary, the outcome of the Company’s challenge to the classification of its products for the purpose of determining the appropriate duty rate is still in question at this time.  We have received successful rulings lowering duties on specific styles of gloves, and we have modified the wrist closure on some of our gloves to conform with the current classification, where feasible.  The Company continues to challenge the higher classification for certain styles of gloves under protest and the protest denials have been summonsed to the Court of International Trade (“CIT”).  The first entries at the CIT are being proposed for stipulation to the Justice Department and the Company remains reasonably confident that several products do qualify for the reduced duty rate classification, but the ultimate outcome will be determined by a technical interpretation of the law.

Should the Company prevail in the court on this and later court actions, the Company could receive refunds for previously paid duties of approximately $200,000.