ALPHA PRO TECH LTD 10-Q

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 year ended December 31, 2023, filed with the SEC on March 13, 2024 (the “2023 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 2024 and 2025, 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. ● 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. ● 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. ● 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 exclusive. 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 2023 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. 15 Alpha Pro Tech, Ltd. 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 3 – “Summary of Significant Accounting Policies” in the notes to our consolidated financial statements in Item 8 of the 2023 Form 10-K. Since December 31, 2023, there have been no material changes to our critical accounting policies and estimates as described in the 2023 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 and infection control products for the cleanroom, industrial, pharmaceutical, medical and dental markets through our wholly-owned subsidiary, Alpha Pro Tech, Inc. We also manufacture a line of building supply construction weatherization products through our wholly-owned subsidiary, Alpha ProTech Engineered Products, Inc. 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: (1) the Building Supply segment, consisting of construction weatherization products, such as housewrap, housewrap accessories including window and door flashing, and seam tape, synthetic roof underlayment and synthetic roof underlayment accessories, as well as other woven materials; and (2) 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. All financial information presented in this report reflects the current segmentation. Our target markets include pharmaceutical manufacturing, bio-pharmaceutical manufacturing and medical device manufacturing, lab animal research, high technology electronics manufacturing (which includes the semi-conductor market), medical and dental distributors, and construction, building supply and roofing 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. 16 Alpha Pro Tech, Ltd. 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, 2024 2023 2024 2023 Net sales 100.0 % 100.0 % 100.0 % 100.0 % Gross profit 42.0 % 37.9 % 41.2 % 37.1 % Selling, general and administrative expenses 30.0 % 28.4 % 32.7 % 29.7 % Income from operations 10.5 % 8.1 % 6.8 % 5.8 % Income before provision for income taxes 13.0 % 9.8 % 9.5 % 7.6 % Net income 10.1 % 7.1 % 7.5 % 5.7 % Three and Six months ended June 30, 2024 compared to Three and Six months ended June 30, 2023 Sales . Consolidated sales for the three months ended June 30, 2024, increased to $16,289,000, from $16,115,000 for the three months ended June 30, 2023, representing an increase of $174,000, or 1.1%. This increase consisted of increased sales in the Disposable Protective Apparel segment of $770,000, partially offset by decreased sales in the Building Supply segment of $596,000. Building Supply segment sales for the three months ended June 30, 2024 decreased by $596,000, or 5.7%, to $9,941,000 compared to $10,537,000 for the three months ended June 30, 2023. The Building Supply segment decrease during the three months ended June 30, 2024, was primarily due to a 6.0% decrease in sales of synthetic roof underlayment and a 9.0% decrease in sales of housewrap, partially offset by an increase in sales of other woven material of 12.3%, compared to the same period of 2023. The sales mix of the Building Supply segment for the three months ended June 30, 2024, was approximately 40% for synthetic roof underlayment, 48% for housewrap and 12% for other woven material. This compared to approximately 40% for synthetic roof underlayment, 50% for housewrap and 10% for other woven material for the three months ended June 30, 2023. Our synthetic roof underlayment product line primarily includes REX SynFelt®, REX TECHNOply® TECHNO SB and 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 and our synthetic roof underlayment accessories consist of our new self- adhered TECHNOplus and REX Ultra HT. The housing market continues to show weakness, with housing starts down 7.4% in the second quarter of 2024 compared to the prior year period. Sales of our core building products, which include housewrap and synthetic roof underlayment, were down due to the decrease in housing starts in the second quarter of 2024 compared to the prior year period. Our housewrap and accessories sales were down 9.0% in the second quarter compared to the prior year period, which were negatively affected by our premium housewrap line (REX™ Wrap Fortis) which was down 15.3% in the second quarter of 2024, because of a sharp decline in the multi-family building sector. The synthetic roof underlayment market has also been affected by lower housing starts, uncertain economic conditions, more offshore competition and a push in the market to reduce product selling prices. Despite these pressures, our synthetic roof underlayment sales performed reasonably well, with our economy underlayment, which makes up approximately 90% of our total underlayment sales, down only 0.5% in the second quarter of 2024 compared to the prior year period. Our premium underlayment was down in the second quarter, as the market continues to move away from expensive premium underlayment products. We launched our new line of self-adhered roofing products in late 2023, and we expect continued revenue growth from this new product line. Self-adhered roof underlayment has proven to be a good addition to our roof category, and we expect these products will lead to additional conversions of our full line of mechanically fastened products. Management is currently exploring the possibility of offering additional products such as roof deck flashing. 17 Alpha Pro Tech, Ltd. Other woven material sales increased by 12.3% in the second quarter of 2024 compared to the same period of 2023, due to increased sales to our major customer. The Company is pursuing new opportunities for other woven material sales that may improve sales, but management does not expect other woven material sales to be a growth driver in 2024. Management expects the remainder of 2024 to be challenging from a sales standpoint as single family and multi-family housing starts are both projected to finish lower than 2023. We expect growth in the building supply segment when uncertainty in the housing market abates. Disposable Protective Apparel segment sales for the three months ended June 30, 2024 increased by $770,000, or 13.8%, to $6,348,000, representing the highest quarter in two years, compared to $5,578,000 for the same period of 2023. This segment increase was due to a 9.2% increase in sales of disposable protective garments, an 81.0% increase in sales of face masks and a 64.1% increase in sales of face shields. The sales mix of the Disposable Protective Apparel segment for the three months ended June 30, 2024, was approximately 90% for disposable protective garments, 7% for face masks and 3% for face shields. This sales mix is compared to approximately 93% for disposable protective garments, 5% for face masks and 2% for face shields for the three months ended June 30, 2023. Sales of disposable protective garments in the second quarter of 2024 were up by 9.2%, primarily due to increased sales to our major international supply chain partner, as well as increased sales to regional and national distributors. We expect continued growth for disposable protective garments in the remainder of 2024. Face mask and face shield sales are still suffering from the post COVID-19 residual excess inventories at the distributor level, but sales in the second quarter of 2024 and year to date 2024 are showing signs of improvement. The market continues to be saturated with products, but we are cautiously optimistic that face mask and face shield sales will continue to show growth in 2024. Consolidated sales for the six months ended June 30, 2024 decreased to $29,772,000 from $29,914,000 for the six months ended June 30, 2023, representing a decrease of $142,000, or 0.5%. This decrease consisted of decreased sales in the Building Supply segment of $986,000, partially offset by increased sales in the Disposable Protective Apparel segment of $844,000. Building Supply segment sales for the six months ended June 30, 2024 decreased by $986,000, or 5.1%, to $18,181,000, compared to $19,167,000 for the same period of 2023. Sales of synthetic roof underlayment decreased by 5.7%, sales of other woven material decreased by 31.9% and sales of housewrap increased by 4.9% compared to the same period of 2023. The sales mix of the Building Supply segment for the six months ended June 30, 2024 was 40% for synthetic roof underlayment, 52% for housewrap and 8% for other woven material. This compared to 41% for synthetic roof underlayment, 48% for housewrap and 11% for other woven material for the six months ended June 30, 2023. Management is encouraged by the 4.9% increase in housewrap sales, especially since housing starts are down 2.5% year to date. Although synthetic roof underlayment sales are compared to the same period of 2023, our economy and self-adhered roof underlayment, which comprised approximately 95% of total underlayment sales were up approximately 1% compared to the prior year period. Our premium underlayment, which accounts for only approximately 5% of roof underlayment sales, was down as the market has been moving away from expensive roof underlayment. Sales of other woven material is down compared to the prior year period primarily due to one of our customers being acquired and deciding to go in a different direction. The Company is pursuing new opportunities for other woven materials sales that may improve sales, but management does not expect other woven material sales to be a growth driver in 2024. Disposable Protective Apparel segment sales for the six months ended June 30, 2024 increased by $844,000, or 7.9%, to $11,591,000, compared to $10,747,000 for the same period of 2023. This segment increase was due to a 29.8% increase in sales of face masks, a 28.6% increase in sales of face shields and a 5.2% increase in sales of disposable protective garments. The sales mix of the Disposable Protective Apparel segment for the six months ended June 30, 2024 was 87% for disposable protective garments, 9% for face masks and 4% for face shields. This sales mix is compared to 89% for disposable protective garments, 8% for face masks and 3% for face shields for the six months ended June 30, 2023. 18 Alpha Pro Tech, Ltd. Sales of disposable protective garments for the six months ended June 30, 2024 were up 5.2%, for the reasons as discussed above in the three months ended June 30, 2024 section. Face mask and face shield sales, although up significantly compared to 2023, continue to be affected by excess inventories at the distributor level and in the marketplace. Gross Profit . Gross profit increased by $735,000, or 12.0%, to $6,841,000 for the three months ended June 30, 2024, from $6,106,000 for the three months ended June 30, 2023. The gross profit margin was 42.0% for the three months ended June 30, 2024, compared to 37.9% for the three months ended June 30, 2023. Gross profit increased by $1,171,000, or 10.6%, to $12,259,000 for the six months ended June 30, 2024, from $11,088,000 for the six months ended June 30, 2023. The gross profit margin was 41.2% for the six months ended June 30, 2024, compared to 37.1% for the six months ended June 30, 2023. The gross profit margin in 2024 was positively affected by a margin increase in both the Disposable Protective Apparel and Building Supply segments. However, management expects the gross profit margin could be negatively affected by recent significant increases in ocean freight rates. Selling, General and Administrative Expenses . Selling, general and administrative expenses increased by $309,000, or 6.8%, to $4,884,000 for the three months ended June 30, 2024, from $4,575,000 for the three months ended June 30, 2023. As a percentage of net sales, selling, general and administrative expenses increased to 30.0% for the three months ended June 30, 2024, from 28.4% for 2023. The change in expenses by segment for the three months ended June 30, 2024, was as follows: Disposable Protective Apparel expenses were up by $197,000, or 16.5%; Building Supply expenses were down by $208,000, or 10.5%; and corporate unallocated expenses were up by $320,000, or 22.7%. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation and rent expenses. The decrease in the Building Supply segment expenses was related to decreased employee compensation, marketing expenses, travel expenses and insurance. The increase in corporate unallocated expenses was primarily due to increased employee compensation, stock option and restricted stock expenses and reorganization costs. The reorganization costs were incurred in connection with moving our face mask manufacturing facility from Utah to Arizona. As of the third quarter of 2024, the Disposable Protective Apparel segment, which includes disposable protective garments, face masks and face shields, will all be in Arizona. This move is expected to result in lower costs. Selling, general and administrative expenses increased by $844,000, or 9.5%, to $9,732,000 for the six months ended June 30, 2024, from $8,888,000 for the six months ended June 30, 2023. As a percentage of net sales, selling, general and administrative expenses increased to 32.7% for the six months ended June 30, 2024, from 29.7% for 2023. The change in expenses by segment for the six months ended June 30, 2024, was as follows: Disposable Protective Apparel expenses were up by $305,000, or 12.5%; Building Supply expenses were down by $108,000, or 2.8%; and corporate unallocated expenses were up by $647,000, or 25.0%. The increase in the Disposable Protective Apparel segment expenses was primarily related to increased employee compensation and rent expenses. The decrease in the Building Supply segment expenses was related to decreased travel and insurance expenses, partially offset by an increase in employee compensation and sales commission. The increase in corporate unallocated expenses was primarily due to increased employee compensation, stock option and restricted stock expenses, reorganization costs, professional fees, insurance expenses and general office expenses. 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 $111,000 was accrued for the three months ended June 30, 2024, compared to $83,000 for the three months ended June 30, 2023. A bonus amount of $149,000 was accrued for the six months ended June 30, 2024, compared to $120,000 for the six months ended June 30, 2023. Depreciation and Amortization. Depreciation and amortization expenses increased by $26,000, or 11.9%, to $245,000 for the three months ended June 30, 2024, from $219,000 for the three months ended June 30, 2023. Depreciation and amortization expenses increased by $27,000, or 5.8%, to $489,000 for the six months ended June 30, 2024, from $462,000 for the six months ended June 30, 2023. 19 Alpha Pro Tech, Ltd. The increase in depreciation and amortization for the three and six months ended June 30, 2024 was primarily due to an increase in depreciation on the Building Supply segment. Income from Operations . Income from operations increased by $400,000, or 30.5%, to $1,712,000 for the three months ended June 30, 2024, compared to $1,312,000 for the three months ended June 30, 2023. The increased income from operations was primarily due to an increase in gross profit of $735,000, partially offset by an increase in selling, general and administrative expenses of $309,000 and an increase in depreciation and amortization expenses of $26,000. Income from operations as a percentage of net sales for the three months ended June 30, 2024, was 10.5%, compared to 8.1% for the same period of 2023. Income from operations increased by $300,000, or 17.3%, to $2,038,000 for the six months ended June 30, 2024, compared to $1,738,000 for the six months ended June 30, 2023. The increased income from operations was primarily due to an increase in gross profit of 1,171,000, partially offset by an increase in selling, general and administrative expenses of $844,000 and an increase in depreciation and amortization expenses of $27,000. Income from operations as a percentage of net sales for the six months ended June 30, 2024, was 6.8%, compared to 5.8% for the same period of 2023. Other Income . Other income increased by $135,000 to income of $407,000 for the three months ended June 30, 2024, compared to $272,000 for the same period of 2023. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $97,000 and an increase in interest income of $38,000. Other income increased by $264,000 to income of $803,000 for the six months ended June 30, 2024, compared to $539,000 for the same period of 2023. The increase was primarily due to an increase in equity in income of unconsolidated affiliate of $126,000 and an increase in interest income of $138,000. Income before Provision for Income Taxes . Income before provision for income taxes for the three months ended June 30, 2024, was $2,119,000, compared to income before provision for income taxes of $1,584,000 for the same period of 2023, representing an increase of $535,000, or 33.8%. This increase in income before provision for income taxes was due to an increase in income from operations of $400,000 and an increase in other income of $135,000. Income before provision for income taxes for the six months ended June 30, 2024, was $2,841,000, compared to income before provision for income taxes of $2,277,000 for the same period of 2023, representing an increase of $564,000, or 24.8%. This increase in income before provision for income taxes was due to an increase in income from operations of $300,000 and an increase in other income of $264,000. Provision for Income Taxes. The provision for income taxes for the three months ended June 30, 2024, was $475,000, compared to $438,000 for the same period of 2023. The estimated effective tax rate was 22.4% for the three months ended June 30, 2024, compared to 27.7% for the three months ended June 30, 2023. The provision for income taxes for the six months ended June 30, 2024, was $621,000, compared to $579,000 for the same period of 2023. The estimated effective tax rate was 21.9% for the six months ended June 30, 2024, compared to 25.4% for the six months ended June 30, 2023. The Company does not record a tax provision on equity in income of unconsolidated affiliate, which reduces the effective tax rate. Net Income . Net income for the three months ended June 30, 2024, was $1,644,000 compared to net income of $1,146,000 for the same period of 2023, representing an increase of $498,000, or 43.5%. The net income increase between 2024 and 2023 was due to an increase in income before provision for income taxes of $535,000, partially offset by an increase in provision for income taxes of $37,000. Net income as a percentage of net sales for the three months ended June 30, 2024, was 10.1%, and net income as a percentage of net sales for the same period of 2023 was 7.1%. Basic and diluted earnings per common share for each of the three months ended June 30, 2024 and 2023, was $0.15 and $0.10, respectively. Net income for the six months ended June 30, 2024, was $2,220,000 compared to net income of $1,698,000 for the same period of 2023, representing an increase of $522,000, or 30.7%. The net income increase between 2024 and 2023 was due to an increase in income before provision for income taxes of $564,000, partially offset by an increase in provision for income taxes of $42,000. Net income as a percentage of net sales for the six months ended June 30, 2024, was 7.5%, and net income as a percentage of net sales for the same period of 2023 was 5.7%. Basic and diluted earnings per common share for each of the six months ended June 30, 2024 and 2023, was $0.20 and $0.14, respectively 20 Alpha Pro Tech, Ltd. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2024, the Company had cash and cash equivalents (“cash”) of $16,207,000 and working capital of $50,741,000. As of June 30, 2024, the Company’s current ratio (current assets/current liabilities) was 28:1, compared to a current ratio of 21:1 as of December 31, 2023. Cash decreased by 20.5%, or $4,171,000, to $16,207,000 as of June 30, 2024, compared to $20,378,000 as of December 31, 2023, and working capital increased by $243,000 from $50,498,000 as of December 31, 2023. The decrease in cash from December 31, 2023, was due to cash used in operating activities of $2,042,000, cash used in investing activities of $218,000 and cash used in financing activities of $1,913,000. Net cash used in operating activities of $2,042,000 for the six months ended June 30, 2024, was due to net income of $2,220,000, as adjusted primarily by the following: stock-based compensation expense of $218,000, depreciation and amortization expense of $489,000, equity in income of unconsolidated affiliate of $338,000, operating lease asset amortization of $434,000, an increase in accounts receivable of $2,302,000, a decrease in prepaid expenses of $740,000, an increase in inventory of $654,000, a decrease in accounts payable and accrued liabilities of $923,000, and an decrease in lease liabilities of $444,000, all compared to December 31, 2023. Accounts receivable increased by $2,302,000, or 35.2%, to $8,847,000 as of June 30, 2024, from $6,545,000 as of December 31, 2023. The increase in accounts receivable was primarily related to higher sales in the second quarter of 2024 compared to the quarter ending December 2023. The number of days that sales remained outstanding as of June 30, 2024, calculated by using an average of accounts receivable outstanding and annual revenue, was 43 days, compared to 40 days as of December 31, 2023. The increase in days was due to higher sales in the last month of the first quarter of 2024 compared to the last month of 2023. Inventory increased by $654,000, or 3.2%, to $20,785,000 as of June 30, 2024, from $20,131,000 as of December 31, 2023. The increase was due to an increase in inventory for the Building Supply segment of $1,874,000, or 26.9%, to $8,844,000, partially offset by a decrease in inventory for the Disposable Protective Apparel segment of $1,220,000, or 9.3%, to $11,941,000. Prepaid expenses increased by $742,000, or 12.3%, to $6,752,000 as of June 30, 2024, from $6,010,000 as of December 31, 2023. The increase was primarily due to increased prepaid equipment and inventory. Right-of-use assets as of June 30, 2024, increased by $4,369,000 to $9,179,000 from $4,810,000 as of December 31, 2023, primarily as a result of our new Nogales, Arizona lease, partially offset by amortization of the right of use asset. Lease liabilities as of June 30, 2024, increased by $4,359,000 to $9,207,000 from $4,848,000 as of December 31, 2023. The increase in the lease liabilities was primarily the result of our new Nogales, Arizona lease in March 2024 and the assumption we will lease that facility for at least 5 years, partially offset by lease payments made during the year. Accounts payable and accrued liabilities as of June 30, 2024, decreased by $923,000, or 48.5%, to $982,000, from $1,905,000 as of December 31, 2023. The decrease was primarily due to a decrease in accrued bonuses. Net cash used in investing activities was $216,000 for the six months ended June 30, 2024, compared to net cash used in investing activities of $390,000 for the same period of 2023. Investing activities for the six months ended June 30, 2024 and 2023, consisted of the purchase of property and equipment. Net cash used in financing activities was $1,913,000 for the six months ended June 30, 2024, compared to net cash used in financing activities of $1,538,000 for the same period of 2023. Net cash used in financing activities for the six months ended June 30, 2024, resulted from the payment of $2,701,000 for the repurchase of common stock and $27,000 for treasury stock excise tax, partially offset by $815,000 in proceeds from the exercise of stock options. Net cash used in financing activities for the six months ended June 30, 2023, resulted from the payment of $1,930,000 for the repurchase of common stock and $11,000 for treasury stock excise tax, partially offset by $403,000 in proceeds from the exercise of stock options. 21 Alpha Pro Tech, Ltd. As of June 30, 2024, we had $1,493,000 available for stock purchases under our stock repurchase program. During the six months ended June 30, 2024, we repurchased 515,000 shares of common stock at a cost of $2,701,000. As of June 30, 2024, we had repurchased a total of 20,926,627 shares of common stock at a cost of approximately $53,027,000 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 December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. These amendments address investor requests for enhanced transparency regarding income tax information. Specifically, they improve income tax disclosures related to rate reconciliation and income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses, and is effective for fiscal years beginning after December 31, 2023 and for interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The Company is currently evaluating the impact of this standard on the consolidated financial statements. 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.