UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number: 001-15725 ALPHA PRO TECH, LTD. (Exact Name of Registrant as Specified in Its Charter) Delaware 63-1009183 (State or Other Jurisdiction of Incorpora ...

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Alpha Pro Tech reported strong Q4 2023 performance with **24.9% net sales growth** and **95% net income increase**, concluding the year with **$20.4 million cash** and no debt | Metric | Q4 2023 (USD) | Q4 2022 (USD) | Change | FY 2023 (USD) | FY 2022 (USD) | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $15.3 million | $12.2 million | +24.9% | $61.2 million | $62.0 million | -1.2% | | **Net Income** | $1.1 million | $564 thousand | +95.0% | $4.2 million | $3.3 million | +27.3% | | **Diluted EPS** | $0.09 | $0.05 | +80.0% | $0.35 | $0.26 | +34.6% | - The Building Supply segment was the primary growth driver in Q4 2023, with sales increasing by **$3.5 million (55.7%)**, while the Disposable Protective Apparel segment saw a slight decrease of **7.7%**[2](index=2&type=chunk) - As of December 31, 2023, the company maintained a strong financial position with **$20.4 million** in cash, **$50.3 million** in working capital, and no debt[2](index=2&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management emphasized the Building Supply segment's record performance driven by diversification and new relationships, while anticipating recovery and growth in the Disposable Protective Apparel segment as inventory normalizes [Building Supply Segment Performance and Outlook](index=2&type=section&id=Building%20Supply%20Segment%20Performance%20and%20Outlook) The Building Supply segment achieved record sales despite a soft housing market, driven by housewrap and accessories, with new self-adhered roofing products expected to fuel future growth - The Building Supply segment achieved **record performance**, with six of the highest sales quarters on record occurring in the last two years, despite an **8.8% decrease** in US housing starts in 2023[3](index=3&type=chunk) | Product Line | 2023 Sales Growth vs 2022 | Key Driver | | :--- | :--- | :--- | | Housewrap & Accessories | +22.2% | Market outperformance, new dealers | | - REX Wrap® (Entry-level) | +15.1% | New dealer relationships | | - REX™ Wrap Fortis (Premium) | +33.9% | Inroads into multi-family/commercial sector | | - Housewrap Accessories | +180% | REXTREME Flashing & REX™ Seam Tape | | Synthetic Roof Underlayment | -3.0% | Outperformed a declining market | - A new line of self-adhered roofing products was launched in late 2023, which management expects will drive revenue growth with the current customer base and allow for market expansion[5](index=5&type=chunk) [Disposable Protective Apparel Segment Performance and Outlook](index=2&type=section&id=Disposable%20Protective%20Apparel%20Segment%20Performance%20and%20Outlook) The Disposable Protective Apparel segment saw garment sales increase and exceed pre-pandemic levels, with cautious optimism for face mask and shield sales recovery in 2024 - Sales of disposable protective garments in 2023 increased by **4.0%** and were approximately **19% higher** than pre-pandemic levels as channel partners work through excess inventory[5](index=5&type=chunk) - Face mask and face shield sales showed signs of recovery in Q4 2023, approximately **doubling** compared to the prior quarter, despite a saturated market. Management is cautiously optimistic about growth in 2024[6](index=6&type=chunk) [Detailed Financial Performance Analysis](index=3&type=section&id=Detailed%20Financial%20Performance%20Analysis) Full-year 2023 sales slightly declined to **$61.2 million** due to mixed segment performance, while gross profit margin improved to **37.3%**, and a significant increase in other income drove a **27.6% rise in net income** [Net Sales Analysis](index=3&type=section&id=Net%20Sales%20Analysis) Q4 2023 net sales increased **24.9%** driven by the Building Supply segment, while full-year sales saw a slight **1.2% decrease** due to a decline in Disposable Protective Apparel | Segment | Q4 2023 Sales (USD) | Q4 2022 Sales (USD) | Change | | :--- | :--- | :--- | :--- | | Building Supply | $9.8 million | $6.3 million | +55.7% | | Disposable Protective Apparel | $5.5 million | $5.9 million | -7.7% | | **Total Consolidated Sales** | **$15.3 million** | **$12.2 million** | **+24.9%** | | Segment | FY 2023 Sales (USD) | FY 2022 Sales (USD) | Change | | :--- | :--- | :--- | :--- | | Building Supply | $40.4 million | $36.9 million | +9.4% | | Disposable Protective Apparel | $20.8 million | $25.0 million | -16.8% | | **Total Consolidated Sales** | **$61.2 million** | **$62.0 million** | **-1.2%** | [Gross Profit Analysis](index=4&type=section&id=Gross%20Profit%20Analysis) Gross profit margin for Q4 2023 was **37.4%**, while the full-year margin improved to **37.3%** primarily due to lower freight costs, with similar margins expected in 2024 | Metric | Q4 2023 (USD) | Q4 2022 (USD) | FY 2023 (USD) | FY 2022 (USD) | | :--- | :--- | :--- | :--- | :--- | | Gross Profit | $5.7 million | $4.8 million | $22.8 million | $21.7 million | | Gross Profit Margin | 37.4% | 39.4% | 37.3% | 35.0% | - The improvement in the full-year gross profit margin was positively affected by lower ocean freight rates compared to the latter part of 2022. Management expects a similar margin range in 2024 but notes potential negative impacts from ongoing global conflicts[12](index=12&type=chunk) [Operating Expenses and Profitability](index=4&type=section&id=Operating%20Expenses%20and%20Profitability) Full-year 2023 SG&A expenses increased by **9.6%**, leading to an **11.1% decrease** in income from operations, though net income significantly rose due to increased other income - Full-year 2023 SG&A expenses increased by **$1.6 million (9.6%)** to **$17.8 million**, primarily due to higher employee compensation, sales commissions, and factory expenses in the Building Supply segment[14](index=14&type=chunk) | Metric | FY 2023 (USD) | FY 2022 (USD) | Change | | :--- | :--- | :--- | :--- | | Income from Operations | $4.1 million | $4.6 million | -11.1% | | Other Income (Loss) | $1.3 million | ($0.26 million) | N/A | | **Net Income** | **$4.2 million** | **$3.3 million** | **+27.6%** | - The significant increase in Other Income for FY 2023 was driven by a **$668,000** increase in interest income and a **$390,000** increase in equity income from an unconsolidated affiliate[17](index=17&type=chunk) [Financial Position and Shareholder Returns](index=6&type=section&id=Financial%20Position%20and%20Shareholder%20Returns) The company maintained a strong balance sheet with **$20.4 million cash** and no debt, while strategically reducing inventory by **17.5%** and repurchasing **$4.0 million** in shares | Balance Sheet Item | Dec 31, 2023 (USD) | Dec 31, 2022 (USD) | Change (USD) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $20.4 million | $16.3 million | +$4.1 million | | Working Capital | $50.5 million | $50.2 million | +$0.3 million | | Inventory | $20.1 million | $24.4 million | -$4.3 million (-17.5%) | - During the year ended December 31, 2023, the company repurchased **951,010 shares** of common stock at a cost of **$4.0 million**[21](index=21&type=chunk) - As of December 31, 2023, **$2.2 million** was still available for stock purchases under the company's stock repurchase program[21](index=21&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents the unaudited Consolidated Balance Sheets and Condensed Consolidated Statements of Comprehensive Income for Q4 and full-year 2023 and 2022, providing a comprehensive financial overview [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) This table provides a detailed overview of the company's financial position, including assets, liabilities, and equity, as of December 31, 2023 and 2022 | (in thousands) | Dec 31, 2023 (USD) | Dec 31, 2022 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Total current assets | $53,064 | $52,562 | | Total assets | $68,763 | $64,803 | | **Liabilities & Equity** | | | | Total current liabilities | $2,566 | $2,406 | | Total liabilities | $7,195 | $4,045 | | Total shareholders' equity | $61,568 | $60,758 | | **Total liabilities and equity** | **$68,763** | **$64,803** | [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This table presents the company's comprehensive income performance for the fourth quarter and full year of 2023 and 2022, detailing key revenue and profit metrics | (in thousands) | Q4 2023 (USD) | Q4 2022 (USD) | FY 2023 (USD) | FY 2022 (USD) | | :--- | :--- | :--- | :--- | :--- | | Net sales | $15,265 | $12,225 | $61,232 | $61,981 | | Gross profit | $5,706 | $4,811 | $22,829 | $21,683 | | Income from operations | $971 | $760 | $4,132 | $4,650 | | Net income | $1,061 | $564 | $4,189 | $3,282 | | Diluted EPS | $0.09 | $0.05 | $0.35 | $0.26 |

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended September 30, 2023, show total assets of $64.6 million, a slight decrease from year-end 2022, with net sales of $46.0 million and net income of $3.1 million for the nine months ended [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets were $64.6 million, a slight decrease from $64.8 million at December 31, 2022, driven by a decrease in inventories offset by an increase in cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $18,163,000 | $16,290,000 | | Inventories | $21,526,000 | $24,397,000 | | Total current assets | $52,687,000 | $52,562,000 | | **Total assets** | **$64,611,000** | **$64,803,000** | | **Liabilities & Equity** | | | | Total current liabilities | $1,982,000 | $2,406,000 | | Total liabilities | $3,220,000 | $4,045,000 | | Total shareholders' equity | $61,391,000 | $60,758,000 | | **Total liabilities and shareholders' equity** | **$64,611,000** | **$64,803,000** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q3 2023, net sales increased 9.0% year-over-year to $16.1 million, driving net income up 184.3% to $1.4 million, while nine-month net sales decreased 7.6% to $46.0 million, with net income increasing 15.1% to $3.1 million Q3 2023 vs Q3 2022 Performance (Unaudited) | Metric | Q3 2023 | Q3 2022 | Change | | :--- | :--- | :--- | :--- | | Net sales | $16,053,000 | $14,722,000 | +9.0% | | Gross profit | $6,035,000 | $4,818,000 | +25.3% | | Income from operations | $1,423,000 | $647,000 | +119.9% | | Net income | $1,430,000 | $503,000 | +184.3% | | Diluted EPS | $0.12 | $0.04 | +200.0% | Nine Months 2023 vs 2022 Performance (Unaudited) | Metric | Nine Months 2023 | Nine Months 2022 | Change | | :--- | :--- | :--- | :--- | | Net sales | $45,967,000 | $49,756,000 | -7.6% | | Gross profit | $17,123,000 | $16,872,000 | +1.5% | | Income from operations | $3,161,000 | $3,890,000 | -18.7% | | Net income | $3,128,000 | $2,718,000 | +15.1% | | Diluted EPS | $0.26 | $0.21 | +23.8% | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity increased from $60.8 million at year-end 2022 to $61.4 million as of September 30, 2023, primarily driven by net income partially offset by common stock repurchases - For the nine months ended September 30, 2023, the company repurchased and retired **724,110 shares** of common stock for a total cost of approximately **$2.98 million**[14](index=14&type=chunk)[15](index=15&type=chunk) - Net income of **$3.13 million** for the first nine months of 2023 increased retained earnings[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash provided by operating activities was $4.9 million, a significant improvement from the prior-year period, resulting in a net increase in cash of $1.9 million Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,929,000 | $2,331,000 | | Net cash used in investing activities | ($487,000) | ($349,000) | | Net cash used in financing activities | ($2,569,000) | ($2,772,000) | | **Increase (decrease) in cash** | **$1,873,000** | **($790,000)** | - The primary use of cash in financing activities was the repurchase of common stock, amounting to **$2,979,000** in the first nine months of 2023[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's business segments, revenue recognition policies, and significant transactions, including an investment in an unconsolidated affiliate and an ongoing lawsuit to recover a $490,000 deposit - The company operates in two segments: **Building Supply** (construction weatherization products) and **Disposable Protective Apparel** (garments, masks, shields)[22](index=22&type=chunk)[23](index=23&type=chunk) - The company has a **41.66% ownership interest** in Harmony Plastics Private Limited, a joint venture in India that manufactures building products and disposable apparel[40](index=40&type=chunk) - A lawsuit was filed to recover **$490,000** paid for equipment that was never delivered. The amount has been written off, and any potential recovery is a gain contingency[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 9.0% consolidated sales increase in Q3 2023 to a record quarter in the Building Supply segment, which offset a decline in the Disposable Protective Apparel segment, with improved gross profit margins due to lower freight costs [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q3 2023 sales rose 9.0% year-over-year to $16.1 million, driven by a 19.2% increase in Building Supply sales, partially offset by a 10.0% decrease in Disposable Protective Apparel sales, with gross margin improving to 37.6% Sales by Segment - Q3 2023 vs Q3 2022 | Segment | Q3 2023 Sales | Q3 2022 Sales | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Building Supply | $11,449,000 | $9,604,000 | +$1,845,000 | +19.2% | | Disposable Protective Apparel | $4,604,000 | $5,118,000 | -$514,000 | -10.0% | | **Consolidated** | **$16,053,000** | **$14,722,000** | **+$1,331,000** | **+9.0%** | - Building Supply segment had a record sales quarter, with housewrap sales increasing **25.7%** despite a **6.0%** decrease in U.S. housing starts, indicating market share gains[92](index=92&type=chunk)[93](index=93&type=chunk) - Disposable Protective Apparel sales declined due to a **60.6%** decrease in face mask sales and a **73.8%** decrease in face shield sales, attributed to residual excess inventories from the pandemic[96](index=96&type=chunk)[97](index=97&type=chunk) - Gross profit margin improved to **37.6%** in Q3 2023 from **32.7%** in Q3 2022, positively affected by lower ocean freight rates[101](index=101&type=chunk)[102](index=102&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company's financial position remains robust, with cash and cash equivalents increasing to $18.2 million and working capital at $50.7 million, supported by healthy cash flow from operations and continued stock repurchases - As of September 30, 2023, the company had cash of **$18,163,000** and working capital of **$50,705,000**[117](index=117&type=chunk) - Net cash provided by operating activities for the nine months ended September 30, 2023 was **$4,929,000**, primarily driven by net income and a significant decrease in inventory[117](index=117&type=chunk)[118](index=118&type=chunk) - During the first nine months of 2023, the company repurchased **724,110 shares** of common stock for **$2,979,000**. As of September 30, 2023, **$1,217,000** was available for future repurchases[123](index=123&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Alpha Pro Tech, Ltd. is not required to provide this information - The company is a smaller reporting company and is not required to provide the information otherwise required by this Item[126](index=126&type=chunk) [Controls and Procedures](index=28&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of September 30, 2023, concluding they were effective at a reasonable assurance level with no material changes to internal control over financial reporting - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2023[130](index=130&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[131](index=131&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is pursuing a lawsuit filed in June 2022 against vendors for failing to deliver equipment for which the company paid $490,000, seeking compensatory damages and lost profits, with the deposit written off as a gain contingency - The company filed a lawsuit seeking compensatory damages of **$490,000** for equipment ordered but never delivered[132](index=132&type=chunk) - The **$490,000** balance has been written off as of September 30, 2023, and the final outcome of the lawsuit is uncertain[132](index=132&type=chunk) [Risk Factors](index=30&type=section&id=ITEM%201A.%20Risk%20Factors) There have been no material changes to the company's risk factors from those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 - There have been no material changes to the risk factors previously disclosed in the 2022 Form 10-K[134](index=134&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2023, the company repurchased 249,110 shares of common stock for approximately $1.03 million under its expanded share repurchase program, with $1.22 million remaining available Issuer Purchases of Equity Securities (Q3 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2023 | 56,600 | $3.93 | | August 2023 | 48,600 | $4.00 | | September 2023 | 143,910 | $4.33 | | **Total Q3** | **249,110** | **$4.13** | - On June 22, 2023, the Board of Directors authorized a **$2,000,000** expansion of the existing share repurchase program[135](index=135&type=chunk) - As of September 30, 2023, **$1,217,000** was available for repurchase under the plan, which expires on December 15, 2024[135](index=135&type=chunk) [Exhibits](index=32&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and the Interactive Data Files (101, 104)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-15725 Alpha Pro Tech, Ltd. (Exact Name of Registrant as Specified in Its Charter) Delaware, U.S.A. 63-1009183 (State or Other Jurisdiction of Inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-15725 Alpha Pro Tech, Ltd. (Exact Name of Registrant as Specified in Its Charter) Delaware, U.S.A. 63-1009183 (State or Other Jurisdiction of In ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 2022 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number: 001-15725 _________________________ ALPHA PRO TECH, LTD. (Exact Name of Registrant as Specified in Its Charter) ________________ Delaware 63-100918 ...

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) Unaudited Q2 2022 financial statements show decreased net sales and net income, with positive operating cash flow and increased total assets [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$68.0 million** as of June 30, 2022, with shifts in cash, receivables, and inventories Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $15,342,000 | $16,307,000 | | Accounts receivable, net | $8,049,000 | $4,780,000 | | Inventories | $23,157,000 | $24,969,000 | | Total current assets | $53,666,000 | $52,999,000 | | **Total assets** | **$67,981,000** | **$67,889,000** | | **Liabilities & Equity** | | | | Total current liabilities | $2,602,000 | $2,661,000 | | Total liabilities | $4,745,000 | $5,269,000 | | Total shareholders' equity | $63,236,000 | $62,620,000 | | **Total liabilities and shareholders' equity** | **$67,981,000** | **$67,889,000** | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q2 2022 net sales decreased by **2.4%** to **$17.4 million**, with net income dropping **58.5%** to **$0.7 million** Income Statement Summary (Unaudited) | Metric | Q2 2022 | Q2 2021 | 6 Months 2022 | 6 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $17,373,000 | $17,806,000 | $35,034,000 | $40,967,000 | | Gross profit | $5,612,000 | $6,232,000 | $12,054,000 | $15,411,000 | | Income from operations | $1,320,000 | $1,830,000 | $3,244,000 | $6,233,000 | | Net income | $693,000 | $1,671,000 | $2,215,000 | $5,390,000 | | Diluted EPS | $0.05 | $0.12 | $0.17 | $0.40 | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity increased to **$63.2 million** by June 30, 2022, driven by net income despite **$1.7 million** in stock repurchases - For the six months ended June 30, 2022, the company repurchased and retired **395,500 shares** of common stock for a total cost of **$1,716,000**[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated **$0.9 million** in cash for H1 2022, offsetting cash used in financing and investing, leading to a **$1.0 million** net cash decrease Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $943,000 | $(2,969,000) | | Net cash used in investing activities | $(222,000) | $(1,468,000) | | Net cash used in financing activities | $(1,686,000) | $(3,317,000) | | **Decrease in cash and cash equivalents** | **$(965,000)** | **$(7,754,000)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business segments, revenue recognition, COVID-19 impact, a **41.66%** equity investment, and a **$490,000** lawsuit for undelivered equipment - The company operates in two business segments: Building Supply (construction weatherization products) and Disposable Protective Apparel (garments, face masks, face shields)[17](index=17&type=chunk)[18](index=18&type=chunk) - The positive sales impact from the COVID-19 pandemic has lessened in 2022 compared to 2020 and 2021 as market conditions normalize[19](index=19&type=chunk) - The company holds a **41.66%** ownership interest in Harmony Plastics Private Limited, an unconsolidated affiliate in India that manufactures building products and disposable protective apparel[31](index=31&type=chunk) - On June 7, 2022, the company filed a lawsuit to recover a **$490,000** deposit for undelivered equipment, which was written off as a loss on fixed assets in Q2 2022[60](index=60&type=chunk) Net Sales by Business Segment (Unaudited) | Segment | Q2 2022 | Q2 2021 | 6 Months 2022 | 6 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Building Supply | $10,817,000 | $9,798,000 | $21,054,000 | $18,138,000 | | Disposable Protective Apparel | $6,556,000 | $8,008,000 | $13,980,000 | $22,829,000 | | **Consolidated Net Sales** | **$17,373,000** | **$17,806,000** | **$35,034,000** | **$40,967,000** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q2 2022 sales decreased **2.4%** due to apparel decline, despite Building Supply growth, with compressed margins and a **$490,000** asset loss impacting net income [Impact of the Novel Coronavirus (COVID-19)](index=19&type=section&id=Impact%20of%20the%20Novel%20Coronavirus%20(COVID-19)) COVID-19's positive impact on PPE demand lessened in 2022, but supply chain constraints and inflationary pressures persist - The company experienced a dramatic increase in revenue from PPE products in 2020 and 2021, but this positive impact has diminished in 2022[74](index=74&type=chunk)[80](index=80&type=chunk) - The company is facing ongoing supply chain challenges, including government-mandated shutdowns, raw material shortages, shipping delays, and inflationary cost pressures, especially in logistics[76](index=76&type=chunk)[77](index=77&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Q2 2022 consolidated sales decreased **2.4%** to **$17.4 million**, with Building Supply growth offset by a **18.1%** decline in Disposable Protective Apparel sales Key Operational Data as a Percentage of Net Sales | Metric | Q2 2022 | Q2 2021 | 6 Months 2022 | 6 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Gross profit | 32.3% | 35.0% | 34.4% | 37.6% | | Income from operations | 7.6% | 10.3% | 9.3% | 15.2% | | Net income | 4.0% | 9.4% | 6.3% | 13.2% | - Building Supply segment sales increased **10.4%** in Q2 2022 to a record **$10.8 million**, driven by a **7.7%** increase in housewrap sales and a **116.4%** increase in other woven material sales[86](index=86&type=chunk) - Disposable Protective Apparel segment sales decreased **18.1%** in Q2 2022, primarily due to a **28.9%** drop in disposable protective garment sales as COVID-19 related demand normalized[93](index=93&type=chunk) - Gross profit margin is expected to remain under pressure from significant increases in ocean freight, transportation, raw material, and labor costs, with price increases planned for late Q3 2022 to mitigate this[104](index=104&type=chunk) - Q2 2022 net income was significantly impacted by a **$490,000** loss on fixed assets related to undelivered equipment for which the company has filed a lawsuit[114](index=114&type=chunk)[118](index=118&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$15.3 million** in cash and **$51.1 million** working capital, despite **$1.7 million** in stock repurchases - The company maintained a strong balance sheet with **$15.3 million** in cash and cash equivalents and **$51.1 million** in working capital as of June 30, 2022[120](index=120&type=chunk) - During the first six months of 2022, the company used **$1,716,000** for the repurchase of common stock[125](index=125&type=chunk) - As of June 30, 2022, **$2,362,000** remained available for stock purchases under the company's repurchase program[126](index=126&type=chunk) - The company has committed to a **~$4.0 million** investment in new equipment to increase production capacity for the Building Supply segment, with delivery of a key piece of equipment expected in late Q3 2022[127](index=127&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exempt from providing market risk disclosures as a smaller reporting company - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company[130](index=130&type=chunk) [Controls and Procedures](index=26&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2022, with no material changes to internal controls - Based on an evaluation as of June 30, 2022, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective[133](index=133&type=chunk) - No changes occurred in the company's internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[134](index=134&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=27&type=section&id=ITEM%201.%20Legal%20Proceedings) The company filed a lawsuit on June 7, 2022, seeking **$490,000** in damages for undelivered equipment, which has been written off - The company filed a lawsuit on June 7, 2022, against vendors who failed to deliver equipment, seeking **$490,000** in compensatory damages plus lost profits[135](index=135&type=chunk) - The company has written off the **$490,000** balance of the deposit paid for the equipment, pending any recovery from the lawsuit[135](index=135&type=chunk) [Risk Factors](index=27&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported since the 2021 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2021 Form 10-K have occurred[136](index=136&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2022, the company repurchased **225,500** shares for **$0.95 million**, with **$2.36 million** remaining in the expanded repurchase program Issuer Purchases of Equity Securities (Q2 2022) | Period | Total Shares Purchased | Average Price Paid | Total Cost (Approx.) | | :--- | :--- | :--- | :--- | | April 2022 | 80,600 | $4.19 | $337,714 | | May 2022 | 56,400 | $4.07 | $229,548 | | June 2022 | 88,500 | $4.35 | $384,975 | | **Total** | **225,500** | **$4.22** | **$952,237** | - On June 23, 2022, the Board of Directors authorized a **$2,000,000** expansion of the existing share repurchase program, which expires on December 15, 2022[139](index=139&type=chunk) [Exhibits](index=29&type=section&id=ITEM%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and XBRL data files [Signatures](index=30&type=section&id=SIGNATURES) The report is signed by the President and CEO, Lloyd Hoffman, and CFO, Colleen McDonald, on August 5, 2022