Alpha Pro Tech Ltd 10-Q for FY2026 Q2
Alpha Pro Tech Ltd (APT)
About this 10-Q
Alpha Pro Tech Ltd filed this 10-Q on August 7, 2026, covering the quarter ended June 30, 2026 (FY2026 Q2).
Headline figures
Quarter ended June 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $18.67M
- up 12.0% from $16.67M a year earlier
- Net income
- $1.83M
- up 46.8% from net income of $1.24M a year earlier
- Diluted EPS
- $0.18
- up 50.0% from $0.12 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File No.
(Exact Name of Registrant as Specified in Its Charter)
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(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding August 3, 2026 | |
| Common Stock, $0.01 par value |
Alpha Pro Tech, Ltd.
Index
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PART I. |
FINANCIAL INFORMATION | |
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ITEM 1. |
Financial Statements | |
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Condensed Consolidated Balance Sheets (Unaudited) |
1 |
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Condensed Consolidated Statements of Income (Unaudited) |
2 |
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) |
3 |
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Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) |
4 |
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Condensed Consolidated Statements of Cash Flows (Unaudited) |
5 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
6 |
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ITEM 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 |
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ITEM 3. |
Quantitative and Qualitative Disclosures about Market Risk |
27 |
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ITEM 4. |
Controls and Procedures |
27 |
| PART II. | OTHER INFORMATION | |
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ITEM I. |
Legal Proceedings |
28 |
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ITEM IA. |
Risk Factors |
28 |
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ITEM 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
29 |
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ITEM 5. |
Other Information | 29 |
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ITEM 6. |
Exhibits | 30 |
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SIGNATURES |
31 |
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EXHIBITS |
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets (Unaudited)
| June 30, |
December 31, |
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2026 |
2025 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
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Accounts receivable, net |
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Accounts receivable, related party |
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Inventories, net |
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Prepaid expenses |
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Total current assets |
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Property and equipment, net |
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Goodwill |
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Right-of-use assets |
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Equity investment in unconsolidated affiliate |
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Total assets |
$ | $ | ||||||
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accounts payable |
$ | $ | ||||||
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Accrued liabilities |
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Lease liabilities |
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Total current liabilities |
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Lease liabilities, net of current portion |
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Deferred income tax liabilities, net |
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Total liabilities |
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Commitments and contingencies |
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Shareholders' equity: |
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Common stock, $ par value: |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive loss |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
$ | $ | ||||||
The condensed consolidated balance sheet as of December 31, 2025, has been prepared using information from the audited consolidated balance sheet as of that date.
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Income (Unaudited)
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For the Three Months Ended |
For the Six Months Ended |
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June 30, |
June 30, |
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2026 |
2025 |
2026 |
2025 |
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Net sales |
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Cost of goods sold, excluding depreciation and amortization |
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Gross profit |
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Operating expenses: |
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Selling, general and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Income from operations |
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Other income: |
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Equity in income of unconsolidated affiliate |
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Interest income, net |
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Total other income |
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Income before provision for income taxes |
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Provision for income taxes |
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Net income |
$ | $ | $ | $ | ||||||||||||
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Basic earnings per common share |
$ | $ | $ | $ | ||||||||||||
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Diluted earnings per common share |
$ | $ | $ | $ | ||||||||||||
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Basic weighted average common shares outstanding |
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Diluted weighted average common shares outstanding |
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See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
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For the Three Months Ended |
For the Six Months Ended |
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June 30, |
June 30, |
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2026 |
2025 |
2026 |
2025 |
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Net income |
$ | $ | $ | $ | ||||||||||||
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Other comprehensive income - foreign currency translation gain (loss) |
( |
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Comprehensive income |
$ | $ | $ | $ | ||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)
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For the Six Months Ended June 30, 2026 |
Accumulated |
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Additional |
Other |
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Common Stock |
Paid-in |
Retained |
Comprehensive |
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Shares |
Amount |
Capital |
Earnings |
Income (Loss) |
Total |
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Balance as of December 31, 2025 |
$ | $ | $ | $ | ( |
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Net income |
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Stock-based compensation expense |
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Other comprehensive loss |
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Balance as of March 31, 2026 |
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Net income |
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Common stock repurchased and retired |
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Stock-based compensation expense |
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Options exercised |
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Other comprehensive income |
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Balance as of June 30, 2026 |
$ | $ | $ | $ | ( |
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For the Six Months Ended June 30, 2025 |
Accumulated |
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Additional |
Other |
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Common Stock |
Paid-in |
Retained |
Comprehensive |
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Shares |
Amount |
Capital |
Earnings |
Income (Loss) |
Total |
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Balance as of December 31, 2024 |
$ | $ | $ | $ | ( |
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Net income |
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Common stock repurchased and retired |
( |
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Treasury stock excise tax |
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Stock-based compensation expense |
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Other comprehensive loss |
- | - | ( |
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Balance as of March 31, 2025 |
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Net income |
- | ||||||||||||||||||||||||
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Common stock repurchased and retired |
( |
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Treasury stock excise tax |
- | ( |
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Stock-based compensation expense |
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Other comprehensive loss |
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Balance as of June 30, 2025 |
$ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Condensed Consolidated Statements of Cash Flows (Unaudited)
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For the Six Months Ended June 30, |
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2026 |
2025 |
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Cash Flows From Operating Activities: |
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Net income |
$ | $ | ||||||
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Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities: |
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Stock-based compensation |
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Depreciation and amortization |
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Equity in income of unconsolidated affiliate |
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Amortization of right-of-use assets |
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Changes in operating assets and liabilities: |
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Accounts receivable, net |
( |
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Accounts receivable, related party |
( |
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Inventories, net |
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Prepaid expenses |
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Accounts payable and accrued liabilities |
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Lease liabilities |
( |
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Net cash and cash equivalents provided by (used in) operating activities |
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Cash Flows From Investing Activities: |
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Purchases of property and equipment |
( |
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Net cash and cash equivalents used in investing activities |
( |
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Cash Flows From Financing Activities: |
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Proceeds from exercise of stock options |
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Repurchase of common stock |
( |
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Treasury stock excise tax |
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Net cash and cash equivalents used in financing activities |
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Increase (decrease) in cash and cash equivalents |
( |
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Cash and cash equivalents, beginning of the period |
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Cash and cash equivalents, end of the period |
$ | $ | ||||||
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Supplemental disclosure of non-cash transactions: |
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Net non-cash changes to operating leases |
$ | $ | ||||||
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited).
Notes to Condensed Consolidated Financial Statements (Unaudited)
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1. |
The Company |
Alpha Pro Tech, Ltd. (“Alpha Pro Tech,” the “Company,” “we”, “us” or “our”) is in the business of protecting people, products and environments. The Company accomplishes this by developing, manufacturing and marketing a line of building supply products for the new home and re-roofing markets and a line of disposable protective apparel for the cleanroom, industrial, pharmaceutical, medical and dental markets.
The Building Supply segment consists of construction weatherization products, such as housewrap, housewrap accessories including window and door flashing, seam tape, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven materials.
The Disposable Protective Apparel segment consists of a complete line of disposable protective garments (shoecovers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields. All of our disposable protective apparel products, including face masks and face shields, are sold through similar distribution channels, are single-use and disposable, have the purpose of protecting people, products and environments, and have to be produced in Food and Drug Administration approved facilities, regardless of the market served.
The Company’s products are sold under the “Alpha Pro Tech” brand name as well as under private label and are predominantly sold in the United States of America (“U.S.”).
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2. |
Basis of Presentation and Revenue Recognition Policy |
The interim financial information included in this report is unaudited; however, the information reflects all adjustments (consisting of normal recurring adjustments) that are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods reflected herein. These interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, therefore, omit certain information and note disclosures that would be necessary to present the statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). The interim condensed consolidated financial statements should be read in conjunction with the Company’s current year SEC filings, as well as the Company’s consolidated financial statements for the year ended December 31, 2025, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”), filed with the SEC on March 11, 2026. The results of operations for the three and six months ended June 30, 2026, in this Quarterly Report on Form 10-Q are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet as of December 31, 2025 was prepared using information from the audited consolidated balance sheet contained in the 2025 Form 10-K; however, it does not include all disclosures required by U.S. GAAP for annual consolidated financial statements.
Net sales include revenue from products and shipping and handling charges, net of estimates for product returns and any related sales incentives. Our customer contracts have a single performance obligation: transfer control of products to customers. Revenue is measured as the amount of consideration that we expect to receive in exchange for transferring control of products. All revenue is recognized when we satisfy our performance obligations under the applicable contract. We recognize revenue in connection with transferring control of the promised products to the customer, with revenue being recognized at the point in time when the customer obtains control of the products, which is generally when title passes to the customer upon delivery to a third-party carrier for FOB shipping point arrangements and to the customer for FOB destination arrangements, at which time a receivable is created for the invoice sent to the customer. Shipping and handling activities are performed prior to the customer obtaining control of the goods and are accounted for as fulfillment activities and are not a promised good or service. Shipping and handling charges billed to customers are included in revenue. Shipping and handling costs, associated with the distribution of the Company’s product to the customers, are recorded in cost of goods sold and are recognized when control of the product is transferred to the customer, which is generally when title passes to the customer upon delivery to a third-party carrier for FOB shipping point arrangements and to the customer for FOB destination arrangements. We estimate product returns based on historical return rates and estimate rebates based on contractual agreements. Using probability assessments, we estimate sales incentives expected to be paid over the term of the contract. Sales taxes and value added taxes in foreign and domestic jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and, therefore, are excluded from net sales. The Company manufactures certain private label goods for customers and has determined that control does not pass to the customer at the time of manufacture, based upon the nature of the private labeling. The Company has determined as of June 30, 2026, that it had no material contract assets, and concluded that its contract liabilities (primarily rebates) had the right of offset against customer receivables. See Note 10 and Note 11 of these Notes to Condensed Consolidated Financial Statements (Unaudited) for information on revenue disaggregated by type and by geographic region.
Notes to Condensed Consolidated Financial Statements (Unaudited)
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3. |
Shareholders’ Equity |
Repurchase Program
During the three months ended June 30, 2026, the Company repurchased and retired
Option Activity
The Company previously granted stock options to eligible individuals under the 2004 Stock Option Plan (the “ 2004 Option Plan ”). Grants made under the 2004 Option Plan were intended to recognize the contributions made to the Company by key employees, provide key employees with additional incentive to devote themselves to the future success of the Company and improve the ability of the Company to attract, retain and motivate individuals. Grants made under the 2004 Option Plan also were intended as an incentive to certain members of the Board of Directors of the Company to continue to serve on the Board of Directors and to devote themselves to the future success of the Company. The 2004 Option Plan provided for a total of
At the Company’s 2020 Annual Meeting of Shareholders held on June 9, 2020, the Company’s shareholders approved the Alpha Pro Tech, Ltd. 2020 Omnibus Incentive Plan (the “2020 Incentive Plan”). The 2020 Incentive Plan provides for the grant of incentive and nonqualified stock options, stock appreciation rights, awards of restricted stock and restricted stock units (“RSU”), performance share awards, cash awards and other equity-based awards to employees (including officers), consultants and non-employee directors of the Company and its affiliates. A total of
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table summarizes restricted stock unit (“RSU”) awards activity for the six months ended June 30, 2026:
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Weighted Average |
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Grant Date Price |
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Shares |
RSU Awards |
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Outstanding, December 31, 2025 |
$ | |||||||
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Granted to employees and non-employee directors |
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Canceled/expired/forfeited |
( |
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Vested |
( |
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Outstanding, June 30, 2026 |
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During the six months ended June 30, 2026 and 2025,
The Company uses the Black-Scholes option-pricing model to value the stock options. The Company uses historical data to estimate the expected life of the options. The risk-free interest rate for periods within the contractual life of an award is based on the US Treasury yield curve in effect at the time of grant. The estimated volatility is based on historical volatility and management’s expectations of future volatility. The Company uses an estimated dividend payout of , as the Company has not paid dividends in the past and, at this time, does not expect to do so in the future. The Company accounts for option forfeitures as they occur.
The following table summarizes stock option activity for the six months ended June 30, 2026:
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Weighted Average |
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Exercise Price |
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Options |
Per Option |
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Options outstanding, December 31, 2025 |
$ | |||||||
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Exercised |
( |
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Options outstanding, June 30, 2026 |
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Options exercisable, June 30, 2026 |
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The Company recognized $
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4. |
Recent Accounting Pronouncements |
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments are expected to impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, derivatives, and transfers of financial assets. The amendments will become effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating the impact of these amendments on its consolidated financial statements.
Notes to Condensed Consolidated Financial Statements (Unaudited)
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, which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of this pronouncement on its related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASU Topic 606 (Revenue from Contracts with Customers). The amendment is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The amendment in this update should be applied on a prospective basis. The Company adopted this ASU effective January 1, 2026. The adoption of this pronouncement did not have a significant impact on the Company's consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements,” which provides additional guidance on what disclosures should be provided in interim reporting periods including disclosure of events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this ASU will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of the new guidance and determining the transition method and the timing of adoption.
Management periodically reviews new accounting standards that are issued. Management has not identified any other new standards that it believes merit further discussion at this time.
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5. |
Inventories |
As of June 30, 2026 and December 31, 2025, inventories net of reserves consisted of the following:
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June 30, |
December 31, |
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2026 |
2025 |
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Raw materials |
$ | $ | ||||||
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Work in process |
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Finished goods |
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| $ | $ | |||||||
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6. |
Equity Investment in Unconsolidated Affiliate |
In 2005, Alpha ProTech Engineered Products, Inc. (a subsidiary of Alpha Pro Tech, Ltd.) entered into a joint venture with a manufacturer in India, Maple Industries and associates, for the production of building products. Under the terms of the joint venture agreement, a private company, Harmony Plastics Private Limited (“Harmony”), was created with ownership interests of
This joint venture positions Alpha ProTech Engineered Products, Inc. to respond to current and expected increased product demand for housewrap and synthetic roof underlayment and provides future capacity for sales of specialty roofing component products and custom products for industrial applications requiring high quality extrusion coated fabrics. In addition, the joint venture now supplies products for the Company’s Disposable Protective Apparel segment.
The capital from the initial funding and a bank loan, which is guaranteed exclusively by the individual shareholders of Maple Industries and associates and collateralized by the assets of Harmony, was utilized to purchase the original manufacturing facility in India. Harmony currently has facilities in India ( owned and rented), consisting of: (1) a
Notes to Condensed Consolidated Financial Statements (Unaudited)
In accordance with ASC 810, Consolidation, the Company assesses whether or not related entities are variable interest entities (“VIEs”). For those related entities that qualify as VIEs, ASC 810 requires the Company to determine whether the Company is the primary beneficiary of the VIE, and, if so, to consolidate the VIE. The Company has determined that Harmony is not a VIE and is, therefore, considered to be an unconsolidated affiliate.
The Company records its investment in Harmony as “equity investment in unconsolidated affiliate” in the accompanying consolidated balance sheets. The Company records its equity interest in Harmony’s results of operations as “equity in income of unconsolidated affiliate” in the accompanying consolidated statements of income. The Company periodically reviews its investment in Harmony for impairment. Management has determined that impairment was required as of June 30, 2026, or December 31, 2025. Under the equity method, since the Company’s reporting currency is different from Harmony’s reporting currency, the Company is required to translate our proportionate share of equity for the effects of translations in foreign currency and adjust the investment accordingly and accrue the adjustment as a component of accumulated other comprehensive loss (“AOCL”).
For the three months ended June 30, 2026 and 2025, the Company purchased $
As of June 30, 2026, the Company’s investment in Harmony was $
Notes to Condensed Consolidated Financial Statements (Unaudited)
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7. |
Accrued Liabilities |
As of June 30, 2026 and December 31, 2025, accrued liabilities consisted of the following:
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June 30, |
December 31, |
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2026 |
2025 |
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Payroll expenses and taxes payable |
$ | $ | ||||||
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Commissions and bonuses payable and general accrued liabilities |
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Total accrued liabilities |
$ | $ | ||||||
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8. |
Basic and Diluted Earnings Per Common Share |
The following table provides a reconciliation of both net income and the number of shares used in the computation of “basic” earnings per common share (“EPS”), which utilizes the weighted average number of common shares outstanding without regard to dilutive shares, and “diluted” EPS, which includes all such dilutive shares, for the three and six months ended June 30, 2026 and 2025:
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For the Three Months Ended |
For the Six Months Ended |
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| June 30, |
June 30, |
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2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net income (numerator) |
$ | $ | $ | $ | ||||||||||||
|
Shares (denominator): |
||||||||||||||||
|
Basic weighted average common shares outstanding |
||||||||||||||||
|
Add: dilutive effect of common stock options |
||||||||||||||||
|
Diluted weighted average common shares outstanding |
||||||||||||||||
|
Earnings per common share: |
||||||||||||||||
|
Basic |
$ | $ | $ | $ | ||||||||||||
|
Diluted |
$ | $ | $ | $ | ||||||||||||
|
9. |
Accumulated Other Comprehensive Loss |
AOCL, a component of shareholders' equity, consists of foreign currency translation adjustments related to foreign currency gains or losses on our unconsolidated affiliate as its functional currency is other than the U.S. dollar. The resulting foreign currency translation gains or losses are deferred as AOCL and reclassified to earnings only upon sale or liquidation of that business. The AOCL on equity in unconsolidated affiliate was $
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
10. |
Segments Reporting |
The Company has determined that it has reporting segments, which are also operating segments:
(1) Building Supply: consisting of construction weatherization products, such as housewrap, housewrap accessories including window and door flashing, seam tape, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven materials. The majority of the Company’s equity in income of unconsolidated affiliate (Harmony) is included in the total segment income for the Building Supply segment.
(2) Disposable Protective Apparel: consisting of a complete line of disposable protective garments, including shoecovers (including the Aqua Trak® and spunbond shoecovers), bouffant caps, coveralls, frocks, lab coats, gowns and hoods, as well as face masks and face shields for the pharmaceutical, cleanroom, industrial, medical and dental markets. A portion of the Company’s equity in income of unconsolidated affiliate (Harmony) is included in the total segment income for the Disposable Protective Apparel segment.
The chief operating decision maker (“CODM”) of the Company is the Company’s . The CODM assesses performance and decides how to allocate resources, including employees and financial and capital resources, based on segment net sales.
Segment data excludes charges allocated to the principal executive office and other unallocated corporate overhead expenses and income tax. The Company evaluates the performance of its segments and allocates resources to them based primarily on net sales.
The accounting policies of the segments are the same as those described previously under Summary of Significant Accounting Policies (see Note 2 in the notes to our consolidated financial statements in Item 8 of the 2025 Form 10-K).
The following provides segment information as described below:
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
|
June 30, 2026 |
June 30, 2026 |
|||||||||||||||
|
Building Supply |
Disposable Protective Apparel |
Building Supply |
Disposable Protective Apparel |
|||||||||||||
|
Segment sales |
$ | $ | $ | $ | ||||||||||||
|
Less: |
||||||||||||||||
|
Cost of goods sold |
||||||||||||||||
|
Selling, general and administrative |
||||||||||||||||
|
Depreciation and amortization |
||||||||||||||||
|
Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Segment net income |
$ | $ | $ | $ | ||||||||||||
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
|
June 30, 2025 |
June 30, 2025 |
|||||||||||||||
|
Building Supply |
Disposable Protective Apparel |
Building Supply |
Disposable Protective Apparel |
|||||||||||||
|
Segment sales |
$ | $ | $ | $ | ||||||||||||
|
Less: |
||||||||||||||||
|
Cost of goods sold |
||||||||||||||||
|
Selling, general and administrative |
||||||||||||||||
|
Depreciation and amortization |
||||||||||||||||
|
Other income |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
Segment net income |
$ | $ | $ | $ | ||||||||||||
Notes to Condensed Consolidated Financial Statements (Unaudited)
The following table presents net sales for each segment for the three and six months ended June 30, 2026 and 2025:
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Building Supply |
$ | $ | $ | $ | ||||||||||||
|
Disposable Protective Apparel |
||||||||||||||||
|
Consolidated net sales |
$ | $ | $ | $ | ||||||||||||
The following table presents the reconciliation of total segment income to consolidated net income for the three and six months ended June 30, 2026 and 2025:
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
| June 30, |
June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Building Supply |
$ | $ | $ | $ | ||||||||||||
|
Disposable Protective Apparel |
||||||||||||||||
|
Total segment income |
||||||||||||||||
|
Unallocated corporate overhead expenses |
||||||||||||||||
|
Provision for income taxes |
||||||||||||||||
|
Consolidated net income |
$ | $ | $ | $ | ||||||||||||
The following table presents the net property and equipment, goodwill and definite-lived intangible assets (“total assets”) by segment as of June 30, 2026 and December 31, 2025:
|
June 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Building Supply |
$ | $ | ||||||
|
Disposable Protective Apparel |
||||||||
|
Total segment assets |
||||||||
|
Unallocated corporate assets |
||||||||
|
Total consolidated assets |
$ | $ | ||||||
Notes to Condensed Consolidated Financial Statements (Unaudited)
|
11. |
Financial Information about Geographic Areas |
The following table summarizes the Company’s net sales by geographic region for the three and six months ended June 30, 2026 and 2025:
|
For the Three Months Ended |
For the Six Months Ended |
|||||||||||||||
|
June 30, |
June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net sales by geographic region |
||||||||||||||||
|
United States |
$ | $ | $ | $ | ||||||||||||
|
International |
||||||||||||||||
|
Consolidated net sales |
$ | $ | $ | $ | ||||||||||||
Net sales by geographic region are based on the countries in which our customers are located. For the three and six months ended June 30, 2026 and 2025, the Company did not generate sales from any single country, other than the United States, that were significant to the Company’s consolidated net sales.
The following table summarizes the locations of the Company’s long-lived assets by geographic region as of June 30, 2026 and December 31, 2025:
|
June 30, |
December 31, |
|||||||
|
2026 |
2025 |
|||||||
|
Long-lived assets by geographic region |
||||||||
|
United States |
$ | $ | ||||||
|
International |
||||||||
|
Consolidated total long-lived assets |
$ | $ | ||||||
|
12. |
Related Party Transactions |
As of June 30, 2026, the Company had no related party transactions, other than the Company’s transactions with its unconsolidated affiliate, Harmony. See Note 6 of these Notes to Condensed Consolidated Financial Statements (Unaudited).
|
13. |
Leases |
The Company has operating leases for the Company’s corporate office and manufacturing facilities, which expire at various dates through 2034. The Company’s primary operating lease commitments as of June 30, 2026, related to the Company’s manufacturing facilities in Valdosta, Georgia and Nogales, Arizona, as well as the Company’s corporate headquarters in Aurora, Ontario, Canada.
As of June 30, 2026, the Company had operating lease right-of-use assets of $
Notes to Condensed Consolidated Financial Statements (Unaudited)
The aggregate future minimum lease payments and reconciliation to total lease liabilities as of June 30, 2026 were as follows:
|
June 30, |
||||
|
2026 |
||||
|
Remaining six months of 2026 |
$ | |||
|
2027 |
||||
|
2028 |
||||
|
2029 |
||||
|
2030 |
||||
|
Thereafter |
||||
|
Total future minimum lease payments |
||||
|
Less imputed interest |
( |
) | ||
|
Total lease liabilities |
$ | |||
As of June 30, 2026, the weighted average remaining lease term of the Company’s operating leases was
|
14. |
Income taxes |
The Company accounts for income taxes using the asset and liability method. A valuation allowance is recorded to reduce the carrying amounts of deferred income tax assets unless it is more likely than not that such assets will be realized. The Company’s policy is to record any interest and penalties assessed by the Internal Revenue Service as a component of the provision for income taxes. The Company provides allowances for uncertain income tax positions when it is more likely than not that the position will not be sustained upon examination by the tax authority.
Alpha Pro Tech, Ltd. and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted. Key income tax-related provisions of the OBBBA include the repeal of mandatory capitalization of domestic research and development expenditures under Internal Revenue Code (IRC) Section 174 (reinstating full expensing beginning in 2025), extension of bonus depreciation, and revisions to international tax regimes. The Company recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.
An employer generally does not claim a corporate income tax deduction (which would be in an amount equal to the amount of income recognized by the employee) upon the exercise of its employee's incentive stock options (“ISOs”) unless the employee does not meet the holding period requirements and sells early, making a disqualifying disposition, or if the options otherwise do not qualify as ISOs under applicable tax laws. With non-qualified stock options (“NQSOs”), on the other hand, the employer is typically eligible to claim a deduction upon its employee's exercise of the NQSOs.
The Company is subject to income tax examinations in various jurisdictions with respect to fiscal years after 2022. The timing and potential resolution of income tax examinations is highly uncertain and when, and if, the Company is subject to a tax examination it is reasonably possible that a taxing authority may interpret certain tax laws differently resulting in additional taxes due from the Company.
|
15. |
Contingencies |
The Company is subject to various litigation actions in the ordinary course of business. Although it is not possible to determine with certainty at this point in time what liability, if any, the Company will have as a result of such litigation, based on consultation with legal counsel, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material effect on the Company’s financial condition and results of operations.
Tariff Matter
In February 2026, the U.S. Supreme Court issued a ruling that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") on goods imported into the United States were unauthorized. Following that ruling, the U.S. Court of International Trade ("CIT") issued an order directing U.S. Customs and Border Protection ("CBP") to process refunds of the IEEPA tariffs, although the CIT immediately suspended the order while CBP develops and implements the refund process. The IEEPA tariffs and related refund framework remain subject to ongoing litigation, including potential appeals, as well as regulatory and administrative developments.
Notes to Condensed Consolidated Financial Statements (Unaudited)
As previously disclosed, tariffs imposed under the IEEPA on goods imported into the United States remain subject to ongoing litigation, including appeals of the applicable court rulings, as well as related regulatory and administrative actions. During the six months ended June 30, 2026, the Company received refunds representing a portion of the IEEPA tariffs previously paid. The Company continues to seek recovery of additional IEEPA tariffs; however, the ultimate amount, timing, and final resolution of any additional refunds remain uncertain pending the outcome of the ongoing litigation and related administrative processes.
The Company has elected to use a gain contingency model to account for recoveries of previously paid IEEPA tariffs, in accordance with ASC 450-30 "Gain Contingencies". Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. As of June 30, 2026, the Company has recognized only those refunds received as of the balance sheet date. Tariff recoveries are reflected as a reduction of cost of goods sold for inventory that has already been sold. Subsequent to June 30, 2026, the Company received refunds for IEEPA tariffs previously paid totaling approximately $3.2 million, including an immaterial amount of interest. As of June 30, 2026 these amounts were not deemed to be realized or realizable and, accordingly, these amounts were not recognized in the condensed consolidated financial statements for the period ending June 30, 2026. As of June 30, 2026, the impact to the Company of these subsequently received IEEPA tariff refunds remains uncertain due to uncertainty around customer and vendor refunds, rebates, as well as the final resolution of pending litigation and appeals.
During the quarter ended June 30, 2026, the Company reassessed the appropriate accounting model for its tariff refund claims. Based on further analysis of the applicable accounting guidance and the nature of the claims, management concluded that the claims represent gain contingencies subject to ASC 450-30. (As previously disclosed in the Company's March 31, 2026 interim financial information, no tariff amounts were recorded as of March 31, 2026.)
|
16. |
Subsequent Events |
The Company has reviewed and evaluated whether subsequent events have occurred from the condensed consolidated balance sheet date of June 30, 2026 through the filing date of this Quarterly Report on Form 10-Q. Subsequent to June 30, 2026, the Company received approximately $
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis together with our unaudited condensed consolidated financial statements and the notes to our unaudited condensed consolidated financial statements, which appear elsewhere in this report, as well as our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 11, 2026 (the “2025 Form 10-K”).
Special Note Regarding Forward-Looking Statements
Certain information set forth in this Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of federal securities laws. Forward-looking statements include statements concerning our plans, objectives, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions, including, without limitation, our expected orders, production levels and sales in 2026 and 2027, and other information that is not historical information. When used in this report, the words “estimates,” “expects,” “anticipates,” “forecasts,” “plans,” “intends,” “believes” and variations of such words or similar expressions are intended to identify forward-looking statements. We may make additional forward-looking statements from time to time. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. All forward-looking statements, whether written or oral and whether made by us or on our behalf, are expressly qualified by this special note.
The following are some of the risks that could affect our financial performance or that could cause actual results to differ materially from those expressed or implied in our forward-looking statements:
|
● |
We are exposed to foreign currency exchange risks related to our unconsolidated affiliate operations in India. |
|
|
● |
We are subject to risks associated with our joint venture. |
|
|
● |
The loss of any large customer or a reduction in orders from any large customer could reduce our net sales and harm our operating results. |
|
|
● |
We rely on suppliers and contractors, and our business could be seriously harmed if these suppliers and contractors are not able to meet our requirements. |
|
|
● |
Risks associated with international manufacturing could have a significant effect on our business. |
|
|
● |
Our success depends in part on protection of our intellectual property, and our failure to protect our intellectual property could adversely affect our competitive advantage, our brand recognition and our business. |
|
|
● |
Tariff policies, ongoing trade disputes and related litigation, including related to tariff refunds could increase our costs and disrupt our global supply chain, which could negatively impact the results of our operations and cash flows. | |
|
● |
Our industry is highly competitive, which may negatively affect our ability to grow our customer base and generate sales. |
|
|
● |
The Company’s results are affected by competitive conditions and customer preferences. |
|
|
● |
Environmental laws and regulations may subject us to significant liabilities. |
|
|
● |
The Company’s growth objectives are largely dependent on the timing and market acceptance of our new product offerings, including our ability to continually renew our pipeline of new products and to bring those products to market. |
|
|
● |
Global economic conditions could adversely affect the Company’s business and financial results. |
|
|
● |
We are subject to risks related to climate change and natural disasters or other events beyond our control. |
|
|
● |
Uncertainties with respect to the development, deployment, and use of artificial intelligence. |
|
|
● |
Security breaches and other disruptions to the Company’s information technology infrastructure could interfere with the Company’s operations, compromise information belonging to the Company and our customers and suppliers and expose the Company to liability, which could adversely impact the Company’s business and reputation. |
|
|
● |
The Company’s future results may be affected by various legal and regulatory proceedings and legal compliance risks. |
|
|
● |
Our common stock price is volatile, which could result in substantial losses for individual shareholders. |
The foregoing list of risks is not exhaustive. For a more detailed discussion of the risk factors associated with our business, see the risks described in Part I, Item IA, “Risk Factors,” in the 2025 Form 10-K. These and many other factors could affect the Company’s future operating results and financial condition and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by the Company or on its behalf.
Special Note Regarding Smaller Reporting Company Status
We are filing this report as a “smaller reporting company” (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended). As a result of being a smaller reporting company, we are allowed and have elected to omit certain information from this Management’s Discussion and Analysis of Financial Condition and Results of Operations; however, we have provided all information for the periods presented that we believe to be appropriate.
Where to find more information about us. We make available, free of charge, on our website (http://www.alphaprotech.com) our most recent Annual Report on Form 10-K, any Current Reports on Form 8-K furnished or filed since our most recent Annual Report on Form 10-K, and any amendments to such reports, as soon as reasonably practicable following the electronic filing of such reports with the SEC. In addition, in accordance with SEC rules, we provide paper copies of our filings free of charge upon request.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of net sales and expenses during the periods reported. We base estimates on past experience and on various other assumptions that are believed to be reasonable under the circumstances. The application of these accounting policies on a consistent basis enables us to provide timely and reliable financial information. Our significant accounting policies and estimates are more fully described in Note 2 – “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in Item 8 of the 2025 Form 10-K. Since December 31, 2025, there have been no material changes to our critical accounting policies and estimates as described in the 2025 Form 10-K.
OVERVIEW
Alpha Pro Tech is in the business of protecting people, products and environments. We accomplish this by developing, manufacturing and marketing a line of high-value, disposable protective apparel products for the cleanroom, industrial, pharmaceutical, medical and dental markets. We also manufacture a line of building supply construction weatherization products. Our products are sold under the “Alpha Pro Tech” brand name, as well as under private label.
Our products are grouped into two business segments: (i) the Building Supply segment, consisting of construction weatherization products, such as housewrap, housewrap accessories, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven material; and (ii) the Disposable Protective Apparel segment, consisting of disposable protective garments (including shoecovers, bouffant caps, coveralls, gowns, frocks and lab coats), face masks and face shields.
Our target markets include construction companies and building supply and roofing distributors; companies in pharmaceutical manufacturing, bio-pharmaceutical manufacturing, medical device manufacturing, lab animal research, and high technology electronics manufacturing (which includes the semi-conductor market); and medical and dental distributors.
Our products are used primarily in cleanrooms, industrial safety manufacturing environments, health care facilities, such as hospitals, laboratories and dental offices, and building and re-roofing sites. Our products are distributed principally in the United States through a network consisting of purchasing groups, national distributors, local distributors, independent sales representatives and our own sales and marketing force.
Recent developments in U.S. trade policy continue to introduce uncertainty regarding the future of global trade relations. Following the inauguration of the second Trump administration, there have been numerous announcements and actions related to tariff increases and other trade restrictions on imports into the United States. Changes in tariffs, quotas, embargoes, or other trade barriers affecting countries from which the Company sources products, or affecting its global network of third-party suppliers, could impact the Company's supply chain and cost structure. In addition, retaliatory measures by affected countries could further disrupt operations or reduce our competitiveness in international markets. The Company continues to monitor evolving trade policies and tariff developments. Future changes in tariffs or other trade restrictions could require the Company to adjust pricing, increase inventory levels, or seek alternative suppliers, any of which could materially affect revenue, gross margins, and results of operations.
On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that the President lacked authority under the International Emergency Economic Powers Act ("IEEPA") to impose certain tariffs. During the three months ended June 30, 2026, the Company recognized a recovery of approximately $300,000 of previously paid IEEPA tariffs under the gain contingency model. The related refunds, including applicable statutory interest, were received from U.S. Customs and Border Protection (the “CBP”) during June 2026. The U.S. government has appealed the court's decision, and the litigation remains ongoing. The Company will continue to monitor developments related to the litigation and U.S. trade policy.
Subsequent to June 30, 2026, the Company received approximately $3.2 million in refunds from the CBP related to previously paid IEEPA tariffs. This is in addition to the approximately $300,000 in refunds received (and recorded) during the second quarter of 2026. Although approximately $3.2 million of refunds were received after quarter-end and prior to the filing of this Form 10-Q, the IEEPA tariff matters related to the $3.2 million remain subject to ongoing litigation, including pending appeals, and the ultimate resolution of these matters has not been finalized. Given the uncertainty related to the litigation, management concluded that the ultimate collectability of the $3.2 million could not be deemed to be probable as of June 30, 2026. Accordingly, no additional amounts related to the $3.2 million have been recognized in the accompanying condensed consolidated financial statements as of June 30, 2026.
Management reviews and analyzes several key performance measures which are non-GAAP financial measures when shown excluding the impact of the IEEPA tariff refund, including gross profit; selling, general and administrative expense; income from operations; income before provision for taxes; provision for taxes; net income; basic earnings per share; and diluted earnings per share. These measures are reviewed and analyzed in order to evaluate our business performance, identify trends affecting our business, allocate capital, and make strategic decisions, including those discussed below. See “Results of Operations” below for further discussion on these key performance measures, which are indicated by an asterisk (*).
The non-GAAP financial measures should be considered along with the most directly comparable U.S. GAAP financial measures. Definitions of these non-GAAP financial measures, a discussion of why we believe they are useful to management and investors as well as certain of their limitations, and reconciliations to their most directly comparable U.S. GAAP financial measures are provided below under “Non-GAAP Financial Measures.”
RESULTS OF OPERATIONS
The following table sets forth certain operational data as a percentage of net sales for the periods indicated:
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Net sales |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
|
Gross profit |
37.4 | % | 36.8 | % | 37.6 | % | 37.8 | % | ||||||||
|
Selling, general and administrative expenses |
25.2 | % | 27.3 | % | 28.2 | % | 30.3 | % | ||||||||
|
Income from operations |
10.8 | % | 8.0 | % | 7.8 | % | 5.9 | % | ||||||||
|
Income before provision for income taxes |
12.8 | % | 9.7 | % | 9.8 | % | 7.8 | % | ||||||||
|
Net income |
9.8 | % | 7.5 | % | 7.6 | % | 6.1 | % | ||||||||
For the Three and Six months ended June 30, 2026 compared to the Three and Six months ended June 30, 2025
Sales. Consolidated sales for the three months ended June 30, 2026, increased to $18,674,000, from $16,672,000 for the three months ended June 30, 2025, representing an increase of $2,002,000, or 12.0%. This increase consisted of increased sales in the Building Supply segment of $608,000 and increased sales in the Disposable Protective Apparel segment of $1,394,000.
Building Supply segment sales for the three months ended June 30, 2026, increased by $608,000, or 5.5%, to $11,692,000, compared to $11,084,000 for the three months ended June 30, 2025.
The Building Supply segment sales increase during the three months ended June 30, 2026, was primarily due to a 1.2% increase in sales of housewrap, a 3.4% increase in sales of synthetic roof underlayment, a 6.0% increase in sales of other woven material and a 25.0% decrease in rebates as compared to the same period of 2025.
The sales mix of the Building Supply segment for the three months ended June 30, 2026, was approximately 40% for synthetic roof underlayment, 50% for housewrap and 10% for other woven material, which was the same for the three months ended June 30, 2025. Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® and TECHNO SB and our synthetic roof underlayment accessories consist of our new self-adhered TECHNOplus Ice & Water and REX Hi Temp. Our housewrap product line primarily consists of REX Wrap®, REX Wrap Plus® and REX™ Wrap Fortis. Housewrap accessories consist of REXTREME Window and Door Flashing and REX™ Premium Seam Tape.
The housing market continued to show weakness in the second quarter of 2026, as single-family housing starts declined by 4.2% compared to the corresponding period in 2025. This decline in the second quarter of 2026 represents an improvement from the decline of 6.5% in the first quarter of 2026. Single-family housing starts in the U.S. remained constrained by mortgage rates, increased land, labor and construction costs, affordability pressures, macroeconomic uncertainty, and geopolitical volatility, which has led builders to moderate new construction activity.
During the second quarter of 2026, we again outperformed the market, as our core building products (housewrap and synthetic roof underlayment) were up by 2.2% compared to the same period of 2025, driven by an increase in both housewrap and synthetic roof underlayment sales. Our synthetic roof underlayment sales increased by 3.4% in the second quarter of 2026 compared to the second quarter of 2025, even though the Asphalt Roofing Manufacturers Association (“ARMA”) reported a 10.0% decline in industry shipments. The Company plans to expand our roofing market product offerings in order to enhance our competitive position and support long-term growth.
The building industry outlook for the remainder of 2026 reflects a soft but generally stable market, rather than a meaningful rebound. A modest increase in single-family housing starts is expected in 2027, assuming economic and financing conditions improve. Management remains focused on developing and producing industry-leading products and anticipates growth in the Building Supply segment; however, uncertainty related to the factors described above could adversely impact results.
Disposable Protective Apparel segment sales for the three months ended June 30, 2026, were $6,982,000, compared to $5,588,000 for the same period in 2025, reflecting an increase of $1,394,000, or 24.9%. The segment experienced strong underlying sales growth during the quarter.
The sales mix of the Disposable Protective Apparel segment for the three months ended June 30, 2026, was approximately 93% for disposable protective garments, 4% for face masks and 3% for face shields. This sales mix is compared to approximately 90% for disposable protective garments, 6% for face masks and 4% for face shields for the three months ended June 30, 2025.
Sales of disposable protective garments, which comprised 93% of the segment sales, increased by $1,458,000 or 29.0% in the second quarter of 2026, compared to the same period in 2025. The sales increase was primarily due to improved sales to our largest international channel partner, as well as national and regional distributors. A considerable portion of the increase was attributable to higher selling prices, primarily driven by the impact of U.S. tariffs. Sales of our face mask and face shield products in the second quarter of 2026, which comprise the remaining 7% of the segment sales, were down by $64,000 compared to the same period in 2025.
Consolidated sales for the six months ended June 30, 2026 were $33,259,000, compared with $30,494,000 for the six months ended June 30, 2025, an increase of $2,765,000, or 9.1%. The increase was attributable to higher sales in both operating segments, consisting of a $95,000 increase in the Building Supply segment and a $2,670,000 increase in the Disposable Protective Apparel segment.
Building Supply segment sales for the six months ended June 30, 2026 increased by $95,000, or 0.5%, to $19,551,000, compared to $19,456,000 for the six months ended June 30, 2025.
The Building Supply segment sales increase during the six months ended June 30, 2026, was primarily due to a 5.9% increase in sales of housewrap and a 15.1% increase in sales of other woven material and a 13.6% decrease in rebates, partially offset by an 11.3% decrease in sales of synthetic roof underlayment, compared to the same period of 2025.
The sales mix of the Building Supply segment for the six months ended June 30, 2026 was 51% for housewrap, 39% for synthetic roof underlayment and 10% for other woven material. This compared to 48% for housewrap, 43% for synthetic roof underlayment and 9% for other woven material for the six months ended June 30, 2025.
As per the US Census Bureau, single-family housing starts declined by 5.3% year to date compared to the same period in 2025. The Asphalt Roofing Manufacturers Association (“ARMA”) reported a 10.0% decline in industry shipments compared to the year to date in 2025. Management is encouraged by a 5.9% increase in sales of housewrap and sales of synthetic roof underlayment as compared to the decline in the ARMA figures.
Sales of other woven material were up 15.1% year to date in 2026 compared to the same period in 2025, primarily due to increased sales to our largest customer for this product line.
Management expects growth in the Building Supply segment, however continued uncertainty in housing starts and the economy in general could negatively affect this segment.
Disposable Protective Apparel segment sales for the six months ended June 30, 2026 increased by $2,670,000, or 24.2%, to $13,708,000, compared to $11,038,000 for the six months ended June 30, 2025.
The increase in segment sales was primarily driven by strong demand across the Company's disposable protective product lines. Compared with the first six months of 2025, sales of disposable protective garments increased by 26.4%, sales of face masks increased by 5.7%, and sales of face shields increased by 0.9%. These increases contributed to the segment's strong underlying year-over-year growth.
The sales mix of the Disposable Protective Apparel segment for the six months ended June 30, 2026, was 92% for disposable protective garments, 5% for face masks and 3% for face shields. This sales mix is compared to 90% for disposable protective garments, 6% for face masks and 4% for face shields for the six months ended June 30, 2025.
Gross Profit. Including the impact of the IEEPA tariff refund, gross profit increased by $847,000, or 13.8%, to $6,978,000 for the three months ended June 30, 2026, from $6,131,000 for the three months ended June 30, 2025. The gross profit margin was 37.4% for the three months ended June 30, 2026, compared to 36.8% for the three months ended June 30, 2025.
The net change in gross profit for the second quarter of 2026 due to the IEEPA tariff refund was $294,000, which comprised of lower cost of goods sold.
Excluding the IEEPA tariff refund, gross profit increased by $553,000, or 9.0%, to $6,684,000 for the three months ended June 30, 2026, from $6,131,000 for the three months ended June 30, 2025. The gross profit margin was 35.8% for the three months ended June 30, 2026, compared to 36.8% for the three months ended June 30, 2025.
Including the impact of the IEEPA tariff refund, gross profit increased by $971,000, or 8.4%, to $12,494,000 for the six months ended June 30, 2026, from $11,523,000 for the six months ended June 30, 2025. The gross profit margin was 37.6% for the six months ended June 30, 2026, compared to 37.8% for the six months ended June 30, 2025.
Excluding the IEEPA tariff refund, gross profit increased by $677,000, or 5.9%, to $12,200,000 for the six months ended June 30, 2026, from $11,523,000 for the six months ended June 30, 2025. The gross profit margin was 36.7% for the six months ended June 30, 2026, compared to 37.8% for the six months ended June 30, 2025.
The decrease in gross profit margin for the three and six months ended June 30, 2026 compared to the same period of 2025 was driven by IEEPA tariffs ranging from 10% to 50%. IEEPA tariffs were subsequently rescinded on February 24, 2026, following a Supreme Court decision invalidating the use of IEEPA to authorize such tariffs. On the same date, the U.S. Government announced plans to implement a new 15% tariff under Section 122 of the Trade Act of 1974. Although announced at 15%, the tariff as of June 30, 2026 was at 10%. In addition, beginning in the latter part of the first quarter of 2026, the Company has experienced increased costs associated with global geopolitical instability, including related to the ongoing U.S.-Iran conflict. These conditions have contributed to higher energy, transportation and supply chain costs, as well as volatility in raw material costs, particularly petroleum-based inputs. Many of our products are made from petroleum-based resin, which has seen significant price increases since the start of the conflict. In response to these increased costs, we are implementing a price increase in the third quarter of 2026. Management expects gross profit margin to be positively affected in the coming quarters.
We will continue to monitor developments in U.S. trade policy and global geopolitical conditions. Changes in tariffs, energy markets, or international conflicts, including developments related to the U.S.-Iran conflict, may impact our supply chain, cost structure and profitability.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $142,000, or 3.1%, to $4,698,000 for the three months ended June 30, 2026, from $4,556,000 for the three months ended June 30, 2025. As a percentage of net sales, selling, general and administrative expenses decreased to 25.2% for the three months ended June 30, 2026, from 27.3% for the same period of 2025. Excluding the IEEPA tariff refund, selling, general and administrative expenses would have been $15,000 lower. The change in expenses by segment for the three months ended June 30, 2026, was as follows: Building Supply expenses were down by $10,000, or 0.6%; Disposable Protective Apparel expenses were up by $50,000, or 3.8%; and corporate unallocated expenses were up by $103,000, or 9.4%.
The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation and marketing expenses, partially offset by increased sales-related travel expenses and general office expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased insurance expenses. The increase in corporate unallocated expenses was primarily due to increased employee compensation and general office expenses, partially offset by decreased legal fees.
Selling, general and administrative expenses increased by $134,000, or 1.4%, to $9,384,000 for the six months ended June 30, 2026, from $9,250,000 for the six months ended June 30, 2025. As a percentage of net sales, selling, general and administrative expenses decreased to 28.2% for the six months ended June 30, 2026, from 30.3% for the same period of 2025.
The change in expenses by segment for the six months ended June 30, 2025, was as follows: Building Supply expenses were down by $178,000, or 4.9%; Disposable Protective Apparel expenses were up by $63,000, or 2.3%; and corporate unallocated expenses were up by $250,000, or 8.7%. The decrease in the Building Supply segment expenses was primarily related to decreased employee compensation and trade show expenses, partially offset by increased sales-related travel expenses and general office expenses. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased insurance expenses. The increase in corporate unallocated expenses was primarily due to increased employee bonuses, general office expenses partially offset by lower legal fees in the six months ended June 30, 2026 compared to the same period of 2025.
In accordance with the terms of his employment agreement, the Company’s current President and Chief Executive Officer is entitled to an annual bonus equal to 5% of the pre-tax profits of the Company, excluding bonus expense, up to a maximum of $1.0 million. A bonus amount of $125,000 was accrued for the three months ended June 30, 2026, compared to $84,000 for the three months ended June 30, 2025. A bonus amount of $172,000 was accrued for the six months ended June 30, 2026, compared to $125,000 for the same period of 2025.
Depreciation and Amortization. Depreciation and amortization expense increased by $28,000, or 11.7%, to $268,000 for the three months ended June 30, 2026, from $240,000 for the three months ended June 30, 2025. Depreciation and amortization expense increased by $35,000, or 7.2%, to $518,000 for the six months ended June 30, 2026, from $483,000 for the six months ended June 30, 2025. The increase was primarily due to an increase in depreciation in the Disposable Protective Apparel segment.
Income from Operations. Including the impact of the IEEPA tariff refund, income from operations increased by $677,000, or 50.7%, to $2,012,000 for the three months ended June 30, 2026, compared to $1,335,000 for the three months ended June 30, 2025. The increased income from operations was primarily due to an increase in gross profit of $847,000, partially offset by an increase in selling, general and administrative expenses of $142,000 and an increase in depreciation and amortization expenses of $28,000. Income from operations as a percentage of net sales for the three months ended June 30, 2026, was 10.8%, compared to 8.0% for the three months ended June 30, 2025.
The net change in income from operations for the second quarter of 2026 due to the IEEPA tariff refund was $279,000.
Excluding the impact of the IEEPA tariff refund, income from operations increased by $398,000, or 29.8%, to $1,733,000* for the three months ended June 30, 2026, compared to $1,335,000 for the three months ended June 30, 2025. The increased income from operations was primarily due to an increase in gross profit of $553,000, partially offset by an increase in selling, general and administrative expenses of $127,000 and an increase in depreciation and amortization expenses of $28,000. Income from operations as a percentage of net sales for the three months ended June 30, 2026, was 9.3%, compared to 8.0% for the three months ended June 30, 2025.
Including the impact of the IEEPA tariff refund, income from operations increased by $802,000, or 44.8%, to $2,592,000 for the six months ended June 30, 2026, compared to $1,790,000 for the six months ended June 30, 2025. The increased income from operations was primarily due to an increase in gross profit of $971,000 partially offset by an increase in selling, general and administrative expenses of $134,000 and an increase in depreciation and amortization expenses of $35,000. Income from operations as a percentage of net sales for the six months ended June 30, 2025, was 7.8%, compared to 5.9% for the six months ended June 30, 2025.
Excluding the impact of the IEEPA tariff refund, income from operations increased by $523,000, or 29.2%, to $2,313,000* for the six months ended June 30, 2026, compared to $1,790,000 for the six months ended June 30, 2025.The increased income from operations was primarily due to an increase in gross profit of $677,000, partially offset by an increase in selling, general and administrative expenses of $119,000 and an increase in depreciation and amortization expenses of $35,000. Income from operations as a percentage of net sales for the six months ended June 30, 2026, was 7.0%, compared to 5.9% for the six months ended June 30, 2025.
Other Income. Other income increased by $96,000 to income of $372,000 for the three months ended June 30, 2026, compared to $276,000 for the same period of 2025. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $72,000 and an increase in interest income of $24,000. The increase in interest income was primarily due to interest earned in investments and interest paid by the federal government on our IEEPA tariff refund.
Other income increased by $84,000 to income of $677,000 for the six months ended June 30, 2026, compared to $593,000 for the same period of 2025. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $86,000 and interest paid by the federal government on our IEEPA tariff refund partially offset by a decrease in interest earned on investments.
Income before Provision for Income Taxes. Including the impact of the IEEPA tariff refund, income before provision for income taxes for the three months ended June 30, 2026, was $2,384,000, compared to income before provision for income taxes of $1,611,000 for the same period of 2025, representing an increase of $773,000, or 48.0%. This increase in income before provision for income taxes was due to an increase in income from operations of $677,000 and an increase in other income of $96,000.
The net change in income before provision for income taxes for the second quarter of 2026 due to the IEEPA tariff refund was $294,000.
Excluding the impact of the IEEPA tariff refund, income before provision for income taxes for the three months ended June 30, 2026, was $2,090,000*, compared to income before provision for income taxes of $1,611,000 for the same period of 2025, representing an increase of $479,000, or 29.7%. This increase in income before provision for income taxes would have been due to an increase in income from operations of $398,000 and an increase in other income of $81,000.
Including the impact of the IEEPA tariff refund, income before provision for income taxes for the six months ended June 30, 2026, was $3,269,000, compared to income before provision for income taxes of $2,383,000 for the same period of 2025, representing an increase of $886,000, or 37.2%. This increase in income before provision for income taxes was due to an increase in income from operations of $802,000 and an increase in other income of $84,000.
Excluding the impact of the IEEPA tariff refund, income before provision for income taxes for the six months ended June 30, 2026, was $2,975,000*, compared to income before provision for income taxes of $2,383,000 for the same period of 2025, representing an increase of $592,000, or 24.8%. This increase in income before provision for income taxes was due to an increase in income from operations of $523,000 and an increase in other income of $69,000.
Provision for Income Taxes. Including the impact of the IEEPA tariff refund, the provision for income taxes for the three months ended June 30, 2026, was $558,000, compared to $367,000 for the same period of 2025. The estimated effective tax rate was 23.4% for the three months ended June 30, 2026, compared to 22.8% for the three months ended June 30, 2025.
The net change in provision for income taxes for the second quarter of 2026 due to the IEEPA tariff refund was $75,000.
Excluding the impact of the IEEPA tariff refund, the provision for income taxes for the three months ended June 30, 2026, was $483,000*, compared to $367,000 for the same period of 2025. The estimated effective tax rate was 23.1% for the three months ended June 30, 2026, compared to 22.8% for the three months ended June 30, 2025.
Including the impact of the IEEPA tariff refund, the provision for income taxes for the six months ended June 30, 2026, was $741,000, compared to $526,000 for the same period of 2025. The estimated effective tax rate was 22.7% for the six months ended June 30, 2026, compared to 22.1% for the six months ended June 30, 2025.
Excluding the impact of the IEEPA tariff refund, the provision for income taxes for the six months ended June 30, 2026, was $666,000*, compared to $526,000 for the same period of 2025. The estimated effective tax rate was 22.4% for the six months ended June 30, 2026, compared to 22.1% for the six months ended June 30, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which included permanent extensions of most expiring Tax Cuts and Jobs Act provisions and international tax changes. The Company recognized the income tax effects of the OBBBA in its third quarter 2025 financial statements.
The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate.
Net Income. Including the impact of the IEEPA tariff refund net income for the three months ended June 30, 2026, was $1,826,000, compared to net income of $1,244,000 for the same period of 2025, representing an increase of $582,000, or 46.8%. The net income increase between the three months ended June 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $773,000, partially offset by an increase in provision for income taxes of $191,000. Net income as a percentage of net sales was 9.8% for the three months ended June 30, 2026, compared to 7.5% for the same period of 2025. Basic and diluted earnings per common share for each of the three months ended June 30, 2026 and 2025, were $0.18 and $0.12, respectively.
The net change in net income for the second quarter of 2026 due to the IEEPA tariff refund was $219,000.
Excluding the impact of the IEEPA tariff refund, net income for the three months ended June 30, 2026, was $1,607,000*, compared to net income of $1,244,000 for the same period of 2025, representing an increase of $363,000, or 29.2%. The net income increase between the three months ended June 30, 2026, and the same period of 2025 was due to an increase in income before provision for income taxes of $479,000, partially offset by a decrease in provision for income taxes of $116,000. Excluding the tariff refund, net income as a percentage of net sales would have been 8.6% for the three months ended June 30, 2026, compared to 7.5% for the same period of 2025. Basic and diluted earnings per common share for each of the three months ended June 30, 2026 and 2025, were $0.16 and $0.12, respectively. The comparison excluding the tariff refund reflects the Company's underlying operating performance without the benefit of the tariff refund.
Including the impact of the IEEPA tariff refund, net income for the six months ended June 30, 2026, was $2,528,000 compared to net income of $1,857,000 for the same period of 2025, representing an increase of $671,000, or 36.1%. The net income increase between the six months ended June 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $886,000, partially offset by an increase in provision for income taxes of $215,000. Net income as a percentage of net sales was 7.6% for the six months ended June 30, 2026, compared to 6.1% for the same period of 2025. Basic earnings per common share for each of the six months ended June 30, 2026 and 2025, were $0.25 and $0.18, respectively. Diluted earnings per common share for each of the six months ended June 30, 2026 and 2025, were $0.24 and $0.18, respectively.
Excluding the impact of the IEEPA tariff refund, net income for the six months ended June 30, 2026, was $2,309,000*, compared to net income of $1,857,000 for the same period of 2025, representing an increase of $452,000, or 24.3%. Excluding the impact of the IEEPA refund, the net income increase between the six months ended June 30, 2026 and the same period of 2025 was due to an increase in income before provision for income taxes of $592,000, partially offset by an increase in provision for income taxes of $140,000. Net income as a percentage of net sales was 6.9% for the six months ended June 30, 2026, compared to 6.1% for the same period of 2025. Basic earnings per common share for the six months ended June 30, 2026 and 2025, were $0.23* and $0.18, respectively. Diluted earnings per common share for the six months ended June 30, 2026 and 2025, were $0.22* and $0.18, respectively. This comparison reflects the Company’s underlying operating performance before the effect of the IEEPA tariff refund.
NON-GAAP FINANCIAL MEASURES
The non-GAAP financial measures presented in this Quarterly Report on Form 10-Q are supplemental measures of our performance that we believe will help investors understand our operating results, and assess our future prospects. When read in conjunction with our U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in our underlying businesses and can be used by management as one basis for making financial, operational, and planning decisions. For each financial measure we have excluded the impact of the tariff refunds due to their unusual nature which is not reflective of our ongoing operating results.
Management recognizes that these non-GAAP financial measures have limitations, including that they may be calculated differently by other companies or may be used under different circumstances or for different purposes. In order to compensate for the discussed limitations, management does not consider these measures in isolation from or as alternatives to the comparable financial measures determined in accordance with U.S. GAAP.
The detailed reconciliations of each non-GAAP financial measure to the most directly comparable U.S. GAAP financial measure are provided below, and no single financial measure should be relied on to evaluate our business.
|
For the Three Months |
For the Six Months |
|||||||
|
Ended June 30, |
Ended June 30, |
|||||||
|
2026 |
2026 |
|||||||
|
Gross profit |
$ | 6,978,000 | 12,494,000 | |||||
|
Less impact of tariff refund |
(294,000 | ) | (294,000 | ) | ||||
|
Gross profit excluding tariff refund |
6,684,000 | 12,200,000 | ||||||
|
Income from operations |
2,012,000 | 2,592,000 | ||||||
|
Less impact of tariff refund |
(279,000 | ) | (279,000 | ) | ||||
|
Income from operations excluding tariff refund |
1,733,000 | 2,313,000 | ||||||
|
Income before provision for income taxes |
2,384,000 | 3,269,000 | ||||||
|
Less impact of tariff refund |
(294,000 | ) | (294,000 | ) | ||||
|
Income before provision for income taxes exluding tariff refund |
2,090,000 | 2,975,000 | ||||||
|
Provision for income taxes |
558,000 | 741,000 | ||||||
|
Less impact of tariff refund |
(75,000 | ) | (75,000 | ) | ||||
|
Provision for income taxes exluding tariff refund |
483,000 | 666,000 | ||||||
|
Net income |
1,826,000 | 2,528,000 | ||||||
|
Less impact of tariff refund |
(219,000 | ) | (219,000 | ) | ||||
|
Net income excluding tariff refund |
1,607,000 | 2,309,000 | ||||||
|
Basic earnings per share |
$ | 0.18 | $ | 0.25 | ||||
|
Less impact of tariff refund |
$ | (0.02 | ) | $ | (0.02 | ) | ||
|
Basic earns per share excluding tariff refund |
$ | 0.16 | $ | 0.23 | ||||
|
Diluted earnings per share |
$ | 0.18 | $ | 0.24 | ||||
|
Less impact of tariff refund |
$ | (0.02 | ) | $ | (0.02 | ) | ||
|
Diluted earnings per share excluding tariff refund |
$ | 0.16 | $ | 0.22 | ||||
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2026, the Company had cash and cash equivalents (“cash”) of $18,901,000 and working capital of $51,014,000. As of June 30, 2026, the Company’s current ratio (current assets/current liabilities) was 17:1, compared to a current ratio of 13:1 as of December 31, 2025. Cash increased by 11.3%, or $1,913,000, to $18,901,000 as of June 30, 2026, compared to $16,988,000 as of December 31, 2025, and working capital increased by $2,552,000, to $51,014,000 from $48,462,000 as of December 31, 2025. The increase in cash from December 31, 2025, was due to cash provided by operating activities of $2,225,000 partially offset by cash used in investing activities of $259,000 and used in financing activities of $53,000.
Net cash provided by operating activities of $2,225,000 for the six months ended June 30, 2026 was due to net income of $2,528,000, as adjusted primarily by the following: stock-based compensation expense of $259,000, depreciation and amortization expense of $518,000, equity in income of unconsolidated affiliate of $364,000, operating lease asset amortization of $494,000, an increase in accounts receivable of $2,997,000, an increase in prepaid expenses of $1,712,000, a decrease in inventory of $4,948,000, a decrease in accounts payable and accrued liabilities of $965,000, and a decrease in lease liabilities of $484,000, all compared to December 31, 2025.
Accounts receivable increased by $2,997,000, or 36.8%, to $11,135,000 as of June 30, 2026, from $8,138,000 as of December 31, 2025. The increase in accounts receivable was primarily related to increased sales in the second quarter of 2026 compared to the fourth quarter of 2025. The number of days that sales remained outstanding as of June 30, 2026, calculated by using an average of accounts receivable outstanding and annual revenue, was 47 days, compared to 40 days as of December 31, 2025. The increase in days outstanding was primarily due to increased sales.
Inventory decreased by $4,948,000, or 21.0%, to $18,650,000 as of June 30, 2026, from $23,598,000 as of December 31, 2025. The decrease was due to a decrease in inventory for the Building Supply segment of $3,953,000, or 30.8%, to $8,876,000 and a decrease in inventory for the Disposable Protective Apparel segment of $995,000, or 9.2%, to $9,774,000. We purchased less inventory due to the high tariff rate.
Prepaid expenses increased by $1,712,000, or 45.1%, to $5,508,000 as of June 30, 2026, from $3,796,000 as of December 31, 2025. The increase was primarily due to increased prepayments for inventory.
Right-of-use assets as of June 30, 2026, decreased by $271,000 to $7,504,000 from $7,775,000 as of December 31, 2025, as a result of amortization of the right-of-use assets partially offset by new Aurora Canada lease.
Lease liabilities as of June 30, 2026, decreased by $261,000 to $7,621,000 from $7,882,000 as of December 31, 2025. The decrease in the lease liabilities was the result of lease payments made during the period partially offset by lease for our Aurora location extended for three years.
Accounts payable and accrued liabilities as of June 30, 2026 decreased by $965,000, or 31.2%, to $2,128,000, from $3,093,000 as of December 31, 2025. The decrease was primarily due to decreases in trade payables and accrued bonuses.
Net cash used in investing activities was $259,000 for the six months ended June 30, 2026, compared to net cash used in investing activities of $273,000 for the six months ended June 30, 2025. Investing activities for the six months ended June 30, 2026 and 2025 consisted of the purchase of property and equipment.
Net cash used in financing activities was $53,000 for the six months ended June 30, 2026, compared to net cash used in financing activities of $2,028,000 for the same period of 2025. Net cash used in financing activities for the six months ended June 30, 2026, resulted from the payment of $99,000 for the repurchase of common stock, partially offset by $46,000 from proceeds from stock options exercised. The decrease in net cash used in financing activities for the six months ended June 30, 2026 was due to a decrease in the repurchases of common stock from $2,008,000 for the six months ended June 30, 2025 to $99,000 for the six months ended June 30, 2026.
As of June 30, 2026, we had $1,298,000 available for stock purchases under our stock repurchase program. During the six months ended June 30, 2026, we repurchased 21,800 shares of common stock. As of June 30, 2026, we had repurchased a total of 21,949,740 shares of common stock at a cost of approximately $58,222,000 through our repurchase program which commenced in 1999. We retire all stock upon repurchase. Future repurchases are expected to be funded from cash on hand and cash flows from operating activities.
We believe that our current cash balance and expected cash flow from operations will be sufficient to satisfy our projected working capital and planned capital expenditures for the foreseeable future.
Recent Accounting Pronouncements
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments are expected to impact various disclosure areas, including the statement of cash flows, accounting changes and error corrections, earnings per share, debt, derivatives, and transfers of financial assets. The amendments will become effective on the date the related disclosures are removed from Regulation S-X or Regulation S-K by the SEC and will no longer be effective if the SEC has not removed the applicable disclosure requirement by June 30, 2027. Early adoption is prohibited. The Company is currently evaluating the impact of these amendments on the consolidated financial statements.
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 (“ASU 2024-03”), which requires disclosure about the types of costs and expenses included in certain expense captions presented on the income statement. The new disclosure requirements are effective for the Company’s annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impact of this pronouncement on its related disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (“Topic 326”): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC Topic 606 (Revenue from Contracts with Customers). The amendment is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The amendment in this update should be applied on a prospective basis. The Company adopted this ASU effective January 1, 2025. The adoption of this pronouncement did not have a significant impact on the Company's consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow Scope Improvements,” which provides additional guidance on what disclosures should be provided in interim reporting periods including disclosure of events since the end of the last annual reporting period that have a material impact on the entity. The amendments in this ASU will be effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is in the process of evaluating the impact of the new guidance and determining the transition method and the timing of adoption.
Management periodically reviews new accounting standards that are issued. Management has not identified any other new standards that it believes merit further discussion at this time.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company, we are not required to provide the information otherwise required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our management, including our President and Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of June 30, 2026, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Exchange Act. Disclosure controls and procedures are the controls and other procedures that we have designed to ensure that we record, process, summarize and report in a timely manner the information that we must disclose in reports that we file with or submit to the SEC under the Exchange Act, and such controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and that we are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Based on the evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this report.
Changes in Internal Control Over Financial Reporting
During the quarter to which this report relates, there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is subject to various litigation actions in the ordinary course of business. Although it is not possible to determine with certainty at this point in time what liability, if any, the Company will have as a result of such litigation, based on consultation with legal counsel, management does not anticipate that the ultimate liability, if any, resulting from such litigation will have a material effect on the Company’s financial condition and results of operations.
ITEM 1A. RISK FACTORS
A list of factors that could materially affect our business, financial condition or operating results is described in Part I, Item 1A, “Risk Factors” in the 2025 Form 10-K. Other than the risk factor set forth below, there have been no material changes to our risk factors from those disclosed in Part I, Item 1A, “Risk Factors” in the 2025 Form 10-K.
Tariff policies, ongoing trade disputes, and related litigation, including related to tariff refunds, could increase our costs, disrupt our global supply chain, and adversely affect our business, financial condition, results of operations, and cash flows
Trade policies and disputes have resulted in increased tariffs, trade barriers, and other protectionist measures, which have increased our manufacturing costs, may make our products less competitive, may reduce demand for our products, may limit our ability to sell to certain customers, may disrupt our ability to procure components or raw materials, and may impede or slow the movement of our goods across borders. Increasing protectionism and economic nationalism may lead to further changes in trade policies and regulations, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in, or restrict our access to, certain markets. The United States has imposed increased tariffs on imported products, and certain trading partners have responded with retaliatory tariffs, which could adversely affect our business. In addition, changes in government policies and the uncertainty surrounding such changes could increase market volatility and foreign currency exchange rate fluctuations.
During the three months ended June 30, 2026, the Company recognized a refund of certain tariffs previously paid under the IEEPA, including applicable statutory interest, that were received from U.S. Customs and Border Protection during June 2026. However, the underlying litigation challenging the IEEPA tariffs remains ongoing, and the U.S. government has appealed the applicable court decisions. As a result, there can be no assurance regarding the ultimate outcome of the litigation or whether future judicial, legislative, or administrative actions could adversely affect the Company or require additional actions with respect to the refunded amounts.
The Company received an additional $3.2 million in refunds in July 2026 which were not recognized in the condensed consolidated financial statements as of June 30, 2026 due to the uncertainty described above. There can be no assurance regarding the ultimate recognition of those refunds.
Because of these dynamics, we cannot predict the impact of future changes to U.S. or foreign trade policies, tariffs, or other trade regulations, or the outcome of ongoing litigation relating to such measures. Any such developments could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ISSUER PURCHASES OF EQUITY SECURITIES
The following table sets forth purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act:
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Issuer Purchases of Equity Securities |
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Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Program (1) |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1) |
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April 1 - 30, 2026 |
21,800 | $ | 4.53 | 21,800 | $ | 1,298,000 | ||||||||||
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May 1 - 31, 2026 |
- | 0.00 | 0 | 1,298,000 | ||||||||||||
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June 1 - 30, 2026 |
- | 0.00 | 0 | 1,298,000 | ||||||||||||
| 21,800 | 4.53 | 21,800 | ||||||||||||||
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(1) |
All of the shares included in this table were purchased pursuant to the Company’s existing share repurchase program. Since the inception of the program in 1999, the Company has authorized the repurchase of $59,402,000 of common stock. As of June 30, 2026, we had repurchased a total of 21,949,740 shares of common stock at a cost of approximately $58,222,000. As of June 30, 2026, $1,298,000 was available for repurchase under the program. The stock repurchase plan expires on December 15, 2026. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
We did not sell any unregistered equity securities during the periods covered by this Quarterly Report on Form 10-Q.
ITEM 5. OTHER INFORMATION
(a) .
(b) None.
(c) During the period covered by this report, none of the Company’s directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K under the Securities Exchange Act of 1934, as amended).
ITEM 6. EXHIBITS
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3.1.1(P) |
Certificate of Incorporation of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(f) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893). |
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3.1.2(P) |
Certificate of Amendment of Certificate of Incorporation of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3(j) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893). |
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3.1.3(P) |
Certificate of Ownership and Merger (BFD Industries, Inc. into Alpha Pro Tech, Ltd.), incorporated by reference to Exhibit 3(l) to Form 10-K for the year ended December 31, 1994, filed on March 31, 1995 (File No. 000-19893). |
| 3.2 | Amended and Restated Bylaws of Alpha Pro Tech, Ltd., incorporated by reference to Exhibit 3.1 to Form 8-K, filed on December 19, 2022 (File No. 001-15725). |
| 10.1 | Form of Restricted Stock Unit Award Agreement for Non-Employee Directors. |
| 10.2 | Form of Restricted Stock Unit Award Agreement for Employees. |
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31.1 |
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31.2 |
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32.1 |
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32.2 |
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101 |
Interactive Data Files for Alpha Pro Tech, Ltd’s Form 10-Q for the period ended June 30, 2026, formatted in Inline XBRL. |
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104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| (P) Indicates a paper filing with the SEC. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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DATE: |
August 7, 2026 |
By: |
/s/ Lloyd Hoffman |
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Lloyd Hoffman |
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President and Chief Executive Officer |
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DATE: |
August 7, 2026 |
By: |
/s/ Colleen McDonald |
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Colleen McDonald |
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Chief Financial Officer |
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EXHIBIT 10.1
Alpha Pro Tech, Ltd.
Form of Restricted Stock Unit Award Agreement for Non-Employee Directors
ALPHA PRO TECH, LTD.
2020 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Non-Employee Directors – Time-Based)
This Restricted Stock Unit Award Agreement (this “Agreement”) is made and entered into as of ________ (the “Grant Date”) by and between Alpha Pro Tech, Ltd., a Delaware corporation (the “Company”), and ________ (the “Grantee”).
WHEREAS, the Company has adopted the Alpha Pro Tech, Ltd. 2020 Omnibus Incentive Plan (the “Plan”), pursuant to which awards of Restricted Stock Units (as defined in the Plan) (“RSUs”) may be granted; and
WHEREAS, the Compensation Committee of the Board of Directors (the “Committee”) has determined that it is in the best interests of the Company and its stockholders to grant the award of RSUs provided for herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:
1. Grant of RSUs. Pursuant to Section 7.2 of the Plan, the Company hereby issues to the Grantee on the Grant Date an Award consisting of, in the aggregate, ______RSUs. The RSUs are subject to the terms and conditions, including the restrictions, set forth in this Agreement and the Plan. Capitalized terms that are used but not defined herein have the meaning ascribed to them in the Plan. Subject to the terms and conditions of this Agreement and the Plan, each RSU constitutes the right of the Grantee to receive one share of Common Stock on the Settlement Date (as defined below). The Company shall establish and maintain an RSU bookkeeping account for the Grantee (the “Account”), and the Account shall be credited with the number of RSUs granted to the Grantee. The Grantee’s interest in the Account shall be that of a general, unsecured creditor of the Company.
2. Consideration. The grant of the RSUs is made in consideration of the services to be rendered by the Grantee to the Company as a member of the Company’s Board of Directors.
3. Restricted Period; Vesting and Settlement.
3.1 Except as otherwise provided herein, one hundred percent (100%) of the RSUs will vest and settle on the first anniversary of the Grant Date, provided that the Grantee remains in Continuous Service through the vesting date. The one-year period from the Grant Date through the Settlement Date (as defined below) is referred to as the “Restricted Period.”
3.2 The foregoing vesting schedule notwithstanding:
(a) if the Grantee’s Continuous Service is terminated as a result of the Grantee’s death or Disability, one hundred percent (100%) of the unvested RSUs shall vest as of the date of such termination; and
(b) if a Change in Control occurs, one hundred percent (100%) of the unvested RSUs shall vest immediately.
3.3 Vested RSUs will be settled in shares of Common Stock as soon as reasonably practicable following the date on which such RSUs vest; provided, however, that in no event shall such RSUs be settled more than thirty (30) days after such vesting date. For purposes of this Agreement, the actual date of settlement for the vested RSUs shall in each case be known as the “Settlement Date.” Upon the issuance of the shares to the Grantee, the corresponding RSUs shall cease to be credited to the Account.
4. Restrictions. The RSUs and any rights relating thereto may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than in accordance with the terms of the Plan.
5. Rights as Stockholder; Dividend Equivalents.
5.1 Unless and until the RSUs become settled in shares of Common Stock in accordance with Section 3 above, the Grantee shall have no rights as a stockholder relating thereto. On the Settlement Date, the Grantee shall become the record owner of the shares of Common Stock issued in respect of the vested RSUs, and as record owner shall be entitled to all rights of a stockholder of the Company.
5.2 If the Company pays a cash dividend on its shares of Common Stock for which the record date (for purposes of this Agreement, the “record date” is the date on which holders of record are determined for purposes of paying the cash dividend on shares of Common Stock) occurs after the Grant Date but prior to the Settlement Date, the Grantee shall receive a lump sum cash payment on such Settlement Date (or, with respect to a cash dividend that the Board has specified is to be paid on a payment date subsequent to the Settlement Date, such later payment date) equal to the aggregate amount of the cash dividend paid by the Company on a single share of Common Stock multiplied by the number of RSUs that will settle on the Settlement Date.
6. No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position or as a Director of the Company.
7. Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the shares of Common Stock subject to the award of RSUs shall be adjusted in any manner as contemplated by Section 11 of the Plan.
8. Tax Liability and Withholding.
8.1 The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the RSUs and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:
(a) tendering a cash payment;
authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the RSUs; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by la
(b) delivering to the Company previously owned and unencumbered shares of Common Stock.
8.2 Notwithstanding any action that the Company takes with respect to any or all tax-related withholdings (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility, and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the RSUs or the subsequent sale of any shares; and (b) does not commit to structure the RSUs to reduce or eliminate the Grantee’s liability for Tax-Related Items.
9. Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.
10. Legends. A legend may be placed on any document(s) delivered to the Grantee indicating restrictions on transferability of the RSUs pursuant to this Agreement or any other restrictions that the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws, or any stock exchange on which the shares of Common Stock are then listed or quoted.
11. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Financial Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
12. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.
13. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.
14. Award Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s stockholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.
15. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Award may be transferred by will or the laws of descent or distribution.
16. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.
17. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company in accordance with the terms of the Plan. The grant of the RSUs in this Agreement does not create any contractual right or other right to receive any RSUs or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s service to the Company.
18. Amendment. In accordance and consistent with Section 409A of the Code, as applicable, the Committee has the right to amend, alter, suspend, discontinue or cancel the Award, prospectively or retroactively; provided, however, that no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.
19. Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement and the payment(s) hereunder are intended to either be exempt from or comply with Section 409A of the Code and the regulations and other guidance published thereunder (collectively, “Section 409A”), and shall at all times be interpreted and administered in accordance with such intent. In no event will the Company or its Affiliates or any of their respective employees, directors, officers, agents, representatives, attorneys, equity holders, principals, partners, members, managers or affiliates have any liability for any failure of this Agreement to satisfy the requirements of, or be exempt from, Section 409A, and such parties do not guarantee that this Agreement complies with, or is exempt from, Section 409A. The Grantee acknowledges and agrees that the Grantee shall not have any right to designate, directly or indirectly, the time of payment of any amount payable hereunder.
20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
21. Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the Award subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the grant, vesting or settlement of the RSUs or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such grant, vesting, settlement or disposition.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
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ALPHA PRO TECH, LTD. |
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By: |
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Name: |
Colleen McDonald |
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Its: |
Chief Financial Officer |
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EXHIBIT 10.2
Alpha Pro Tech, Ltd.
Form of Restricted Stock Unit Award Agreement for Employees
ALPHA PRO TECH, LTD.
2020 OMNIBUS INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD AGREEMENT
(Employees – Time-Based)
This Restricted Stock Unit Award Agreement (this “Agreement”) is made and entered into as of ______- (the “Grant Date”) by and between Alpha Pro Tech, Ltd., a Delaware corporation (the “Company”), and _____ (the “Grantee”).
WHEREAS, the Company has adopted the Alpha Pro Tech, Ltd. 2020 Omnibus Incentive Plan (the “Plan”), pursuant to which awards of Restricted Stock Units (as defined in the Plan) (“RSUs”) may be granted; and
WHEREAS, the Compensation Committee of the Board of Directors (the “Committee”) has determined that it is in the best interests of the Company and its stockholders to grant the award of RSUs provided for herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:
1. Grant of RSUs. Pursuant to Section 7.2 of the Plan, the Company hereby issues to the Grantee on the Grant Date an Award consisting of, in the aggregate, _____ RSUs. The RSUs are subject to the terms and conditions, including the restrictions, set forth in this Agreement and the Plan. Capitalized terms that are used but not defined herein have the meaning ascribed to them in the Plan. Subject to the terms and conditions of this Agreement and the Plan, each RSU constitutes the right of the Grantee to receive one share of Common Stock on the Settlement Date (as defined below). The Company shall establish and maintain an RSU bookkeeping account for the Grantee (the “Account”), and the Account shall be credited with the number of RSUs granted to the Grantee. The Grantee’s interest in the Account shall be that of a general, unsecured creditor of the Company.
2. Consideration. The grant of the RSUs is made in consideration of the services to be rendered by the Grantee to the Company as an employee of the Company.
3. Restricted Period; Vesting and Settlement.
3.1 Except as otherwise provided herein, one hundred percent (100%) of the RSUs will vest and settle on the third anniversary of the Grant Date, provided that the Grantee remains in Continuous Service through the Settlement Date (as defined below). The three-year period from the Grant Date through the Settlement Date is referred to as the “Restricted Period.”
3.2 The foregoing vesting schedule notwithstanding:
(c) if the Grantee’s Continuous Service is terminated as a result of the Grantee’s death or Disability, one hundred percent (100%) of the unvested RSUs shall vest as of the date of such termination; and
(d) if a Change in Control occurs, one hundred percent (100%) of the unvested RSUs shall vest immediately.
3.3 Vested RSUs will be settled in shares of Common Stock as soon as reasonably practicable following the date on which such RSUs vest; provided, however, that in no event shall such RSUs be settled more than thirty (30) days after such vesting date. For purposes of this Agreement, the actual date of settlement for the vested RSUs shall in each case be known as the “Settlement Date.” Upon the issuance of the shares to the Grantee, the corresponding RSUs shall cease to be credited to the Account.
4. Restrictions. The RSUs and any rights relating thereto may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than in accordance with the terms of the Plan.
5. Rights as Stockholder; Dividend Equivalents.
5.1 Unless and until the RSUs become settled in shares of Common Stock in accordance with Section 3 above, the Grantee shall have no rights as a stockholder relating thereto. On the Settlement Date, the Grantee shall become the record owner of the shares of Common Stock issued in respect of the vested RSUs, and as record owner shall be entitled to all rights of a stockholder of the Company.
5.2 If the Company pays a cash dividend on its shares of Common Stock for which the record date (for purposes of this Agreement, the “record date” is the date on which holders of record are determined for purposes of paying the cash dividend on shares of Common Stock) occurs after the Grant Date but prior to the Settlement Date, the Grantee shall receive a lump sum cash payment on such Settlement Date (or, with respect to a cash dividend that the Board has specified is to be paid on a payment date subsequent to the Settlement Date, such later payment date) equal to the aggregate amount of the cash dividend paid by the Company on a single share of Common Stock multiplied by the number of RSUs that will vest on the Settlement Date.
6. No Right to Continued Service. Neither the Plan nor this Agreement shall confer upon the Grantee any right to be retained in any position or as a Director of the Company.
7. Adjustments. If any change is made to the outstanding Common Stock or the capital structure of the Company, if required, the shares of Common Stock subject to the award of RSUs shall be adjusted in any manner as contemplated by Section 11 of the Plan.
8. Tax Liability and Withholding.
8.1 The Grantee shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Grantee pursuant to the Plan, the amount of any required withholding taxes in respect of the RSUs and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes. The Committee may permit the Grantee to satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means:
(a) tendering a cash payment;
(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable or deliverable to the Grantee as a result of the vesting of the RSUs; provided, however, that no shares of Common Stock shall be withheld with a value exceeding the minimum amount of tax required to be withheld by law; or
(c) delivering to the Company previously owned and unencumbered shares of Common Stock.
8.2 Notwithstanding any action that the Company takes with respect to any or all tax-related withholdings (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility, and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the RSUs or the subsequent sale of any shares; and (b) does not commit to structure the RSUs to reduce or eliminate the Grantee’s liability for Tax-Related Items.
9. Compliance with Law. The issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Grantee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued or transferred unless and until any then applicable requirements of state and federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel.
10. Legends. A legend may be placed on any document(s) delivered to the Grantee indicating restrictions on transferability of the RSUs pursuant to this Agreement or any other restrictions that the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable federal or state securities laws, or any stock exchange on which the shares of Common Stock are then listed or quoted.
11. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Chief Financial Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Grantee under this Agreement shall be in writing and addressed to the Grantee at the Grantee’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
12. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.
13. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Grantee or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Grantee and the Company.
14. Award Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s stockholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.
15. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Grantee and the Grantee’s beneficiaries, executors, administrators and the person(s) to whom the Restricted Stock may be transferred by will or the laws of descent or distribution.
16. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.
17. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company in accordance with the terms of the Plan. The grant of the RSUs in this Agreement does not create any contractual right or other right to receive any RSUs or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Grantee’s service to the Company.
18. Amendment. In accordance and consistent with Section 409A of the Code, as applicable, the Committee has the right to amend, alter, suspend, discontinue or cancel the RSUs, prospectively or retroactively; provided, however, that no such amendment shall adversely affect the Grantee’s material rights under this Agreement without the Grantee’s consent.
19. Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement and the payment(s) hereunder are intended to either be exempt from or comply with Section 409A of the Code and the regulations and other guidance published thereunder (collectively, “Section 409A”), and shall at all times be interpreted and administered in accordance with such intent, including with respect to any required delay in settlement for a “specified employee” under Section 409A. In no event will the Company or its Affiliates or any of their respective employees, directors, officers, agents, representatives, attorneys, equityholders, principals, partners, members, managers or affiliates have any liability for any failure of this Agreement to satisfy the requirements of, or be exempt from, Section 409A, and such parties do not guarantee that this Agreement complies with, or is exempt from, Section 409A. The Grantee acknowledges and agrees that the Grantee shall not have any right to designate, directly or indirectly, the time of payment of any amount payable hereunder.
20. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
21. Acceptance. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Grantee has read and understands the terms and provisions thereof, and accepts the RSUs subject to all of the terms and conditions of the Plan and this Agreement. The Grantee acknowledges that there may be adverse tax consequences upon the grant, vesting or settlement of the RSUs or disposition of the underlying shares and that the Grantee has been advised to consult a tax advisor prior to such grant, vesting, settlement or disposition.
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
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ALPHA PRO TECH, LTD. |
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By: |
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Name: |
Colleen McDonald |
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Its: |
Chief Financial Officer |
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Exhibit 31.1
Alpha Pro Tech, Ltd.
Certification Under Exchange Act Rules 13a – 14(a) and 15d – 14(a)
I, Lloyd Hoffman, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q of Alpha Pro Tech, Ltd.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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DATE: |
August 7, 2026 |
By: |
/s/ Lloyd Hoffman |
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Lloyd Hoffman |
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President and Chief Executive Officer |
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| (Principal Executive Officer) |
Exhibit 31.2
Alpha Pro Tech, Ltd.
Certification Under Exchange Act Rules 13a – 14(a) and 15d – 14(a)
I, Colleen McDonald, certify that:
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1. |
I have reviewed this Quarterly Report on Form 10-Q of Alpha Pro Tech, Ltd.; |
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
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c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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DATE: |
August 7, 2026 |
By: |
/s/ Colleen McDonald |
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| Colleen McDonald | |||||
| Chief Financial Officer | |||||
| (Principal Financial and Accounting Officer) |
Exhibit 32.1
Alpha Pro Tech, Ltd.
Alpha Pro Tech, Ltd.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Alpha Pro Tech, Ltd. (the “Company”) on Form 10-Q for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lloyd Hoffman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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DATE: |
August 7, 2026 |
By: |
/s/ Lloyd Hoffman |
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| Lloyd Hoffman | |||||
| President and Chief Executive Officer |
Exhibit 32.2
Alpha Pro Tech, Ltd.
Alpha Pro Tech, Ltd.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Alpha Pro Tech, Ltd. (the “Company”) on Form 10-Q for the quarter ended June 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Colleen McDonald, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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DATE: |
August 7, 2026 |
By: |
/s/ Colleen McDonald |
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Colleen McDonald |
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Chief Financial Officer |