What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2026-03-11 compared with 2025-03-12 · 68 added, 59 removed, 553 unchanged (19% of the section changed)

44 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Equity Investment in Unconsolidated Affiliate

4 unchanged sentences

We also visited the factories in India to test the existence of the factories, equipment, and inventory, and to observe operations of the affiliated entity.

Provision for Income Taxes

As more fully described in Note 10 to the consolidated financial statements, the Company’s net deferred income tax liabilities were $503,000 as of December 31, 2024, and income tax expense was $1,091,000 for the year ended December 31, 2024.

As a global organization, the Company files income tax returns in the U.S.

federal jurisdiction and various state and foreign jurisdictions.

Auditing the Company’s provision for income taxes was complex and required a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to (i) management's assessment of complex tax laws and regulations as it relates to determining the provision for income taxes, (ii) management's assessment of the realizability of deferred tax assets, specifically related to available tax planning strategies and (iii) evaluating whether the data utilized in the calculations of the provision for income taxes, and deferred tax assets and liabilities were appropriate and consistent with evidence obtained in other areas of the audit.

Our testing of the Company’s provision for income taxes included, among others (i) testing the accuracy of the provision for income taxes, which included the effective tax rate reconciliation and permanent and temporary differences, (ii) evaluating whether the data utilized in the calculations of the provision for income taxes and deferred tax assets and liabilities were appropriate and consistent with evidence obtained in other areas of the audit, (iii) evaluating the identification of accruals for unrecognized tax benefits and the reasonableness of the more likely than not determination in consideration of court decisions, legislative actions, statutes of limitations, and developments in tax examinations by jurisdiction, and (iv) evaluating the reasonableness of management’s assessment of the realizability of its deferred tax assets based on expectations of the ability to utilize its tax attributes through testing of historical and estimated future taxable income.

/s/ Tanner LLC

/s/ Tanner LLP

March 11, 2026

57 unchanged sentences

Years Ended December 31,

Other comprehensive income (loss)- foreign currency translation gain (loss)

Other comprehensive loss - foreign currency translation loss

Comprehensive income

5 unchanged sentences

Common stock repurchased and retired

Cancellation of stock options

Treasury stock excise tax

1 unchanged sentence

Stock-based compensation expense

Total comprehensive income

Total comprehensive income (loss)

Balance as of December 31, 2024

1 unchanged sentence

Treasury stock excise tax

Options exercised

Stock-based compensation expense

30 unchanged sentences

Net cash used in financing activities

Increase (decrease) in cash and cash equivalents

Decrease in cash and cash equivalents

Cash and cash equivalents, beginning of the year

31 unchanged sentences

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

The Company’s cash and cash equivalents primarily consists of cash in bank and money market accounts.

The Company’s cash and cash equivalents primarily consists of cash in banks and money market accounts.

Investments are classified as available-for-sale in accordance with U.S.

12 unchanged sentences

Account balances are charged against the allowance when management determines that the probability for collection of an account balance is remote.

As of December 31, 2024, 2023, and 2022, the Company had accounts receivable totally $ 4,894,222 , $ 6,545,000 and $ 6,973,000 , respectively.

As of December 31, 2024 and 2023, the Company had recorded an allowance for credit losses on accounts receivable of $ 35,000 for both periods respectively.

As of December 31, 2025 and 2024, the Company had accounts receivable totaling $ 8,138,000 and $ 4,894,000 , respectively.

As of December 31, 2025 and 2024, the Company had recorded an allowance for credit losses on accounts receivable of $ 46,000 and $ 35,000 respectively.

Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost or net realizable value.

52 unchanged sentences

ASC 718 requires companies to record compensation expense for the value of all outstanding and unvested share-based awards, including employee stock options.

For the years ended December 31, 2024 and 2023, there were 0 and 46,400 stock options granted, respectively, under the Company’s stock option plan.

For the years ended December 31, 2025 and 2024, there were no stock options granted under the Company’s stock option plan.

The Company recognized $ 55,000 and $ 59,000 in stock-based compensation expense for the years ended December 31, 2025 and 2024, respectively, related to outstanding options.

60 unchanged sentences

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 became effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is evaluating the impact the adoption of this guidance will have on its consolidated financial statements.

Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid.

ASU 2023-09 was effective for annual periods beginning after December 15, 2024.

The Company adopted this pronouncement and the related disclosure for the year ended December 31, 2025, and revised its income tax disclosures in Note 14 – “Income Taxes” on a retrospective basis.

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 Topic 606.

The amendment is effective for fiscal years beginning after December 15, 2025.

Early adoption is permitted.

The amendments in this update should be applied on a prospective basis.

The Company is evaluating the impact of this pronouncement on the Company’s consolidated financial statements and related disclosures.

Management periodically reviews new accounting standards that are issued.

14 unchanged sentences

Total net property and equipment

Depreciation and amortization expense for property and equipment was $ 873,000 and $ 925,000 for the years ended December 31, 2024 and 2023, respectively.

Goodwill and Intangible Assets

Depreciation and amortization expense for property and equipment were $ 925,000 and $ 873,000 for the years ended December 31, 2025 and 2024, respectively.

Management evaluates goodwill for impairment on an annual basis (in the fourth quarter), and no impairment charge was identified for the years presented.

Definite-lived intangible assets, consisting of patents and trademarks, are amortized over their useful lives.

Amortization expense for intangible assets was $ 0 and $ 1,000 for the years ended December 31, 2024 and 2023, respectively.

There is no estimated future amortization expense related to definite-lived intangible assets as of December 31, 2024.

Equity Investments in Unconsolidated Affiliate

40 unchanged sentences

Option Activity

The 2004 Stock Option Plan (the “2004 Plan”) is an equity compensation plan that provided for grants of stock options to eligible individuals.

The 2004 Stock Option Plan (the “2004 Plan”) was an equity compensation plan that provided for grants of stock options to eligible individuals.

The 2004 Plan was intended to recognize the contributions made to the Company by key employees of the Company, 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.

The 2004 Plan also is 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 Plan also was 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 Plan provided for a total of 5,000,000 common shares eligible for issuance.

7 unchanged sentences

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, 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 1,800,000 shares of the Company’s common stock are reserved for issuance under the 2020 Incentive Plan, plus the number of shares underlying any award granted under the 2004 Option Plan that expires, terminates or is cancelled or forfeited under the terms of the 2004 Option Plan.

A total of 1,800,000 shares of the Company’s common stock were reserved for issuance under the 2020 Incentive Plan, plus the number of shares underlying any award granted under the 2004 Option Plan that expires, terminates or is cancelled or forfeited under the terms of the 2004 Option Plan.

As a result of the approval of the 2020 Incentive Plan, no future equity awards will be made pursuant to the 2004 Option Plan.

15 unchanged sentences

Options outstanding, December 31, 2023

Granted to employees and directors

Canceled/expired/forfeited

Options outstanding, December 31, 2024

1 unchanged sentence

Options exercisable, December 31, 2025

Stock options to purchase 61,100 and 292,766 shares of common stock were outstanding as of December 31, 2024 and 2023, respectively.

All of the stock options were included in the computation of the weighted-average number of dilutive common shares outstanding for the year ended December 31, 2024.

All except 46,400 of the stock options, which were anti-dilutive, were included in the computation of the weighted-average number of dilutive common shares outstanding for the year ended December 31, 2023.

Alpha Pro Tech, Ltd.

Notes to Consolidated Financial Statements

Stock options to purchase 61,100 shares of common stock were outstanding as of both December 31, 2025 and 2024.

All of the stock options were included in the computation of the weighted-average number of dilutive common shares outstanding for both the years ended December 31, 2025 and 2024.

The Company used the Black-Scholes option-pricing model to value the options.

5 unchanged sentences

The Company accounts for option forfeitures as they occur.

Alpha Pro Tech, Ltd.

Notes to Consolidated Financial Statements

The following table summarizes information about stock options as of December 31, 2025:

3 unchanged sentences

Contract Life

Intrinsic Value

Average Exercise

Contract Life

Weighted Average Remaining Contract Life

The intrinsic value is the amount by which the market value of the underlying common stock exceeds the exercise price of the respective stock options.

1 unchanged sentence

As of December 31, 2025, $ 33,000 of total unrecognized compensation cost related to stock options was expected to be recognized over a weighted-average remaining period of 0.74 years.

Cash received from 231,666 options exercised for the year ended December 31, 2024, was $ 832,000 .

The holders of the Company’s common stock are entitled to receive such dividends as may be declared by the Board of Directors of the Company from time to time to the extent that funds are legally available for payment thereof.

6 unchanged sentences

The accumulated other comprehensive loss on equity in unconsolidated affiliate was $ 1,947,000 and $ 1,499,000 as of December 31, 2025 and 2024, respectively.

Alpha Pro Tech, Ltd.

Notes to Consolidated Financial Statements

President Trump signed into laws the One Big Beautiful Bill Act “OBBBA” on July 4, 2025.

This bill included various tax provisions, many of which are applicable for most, if not all, of the 2025 tax year.

Most impactful for the Company are changes related to section 174 for R&D expenditures and section 168 for bonus depreciation.

The OBBBA enacted new Section 174A, which permanently allows taxpayers to fully expense domestic research or experimental expenditures paid or incurred in taxable years beginning after December 31, 2024.

Foreign R&D expenditures must still be capitalized and amortized over 15 years.

Additionally, the new rules provide options to account for any remaining unamortized domestic R&D expenditures paid or incurred in the taxable years beginning after December 31, 2021 and before January 1, 2025.

Taxpayers may continue to amortize such unamortized amounts over the remaining five-year period;

alternatively, they may elect to deduct any remaining unamortized domestic expenditures either entirely in the first tax year beginning after December 31, 2024, or ratably over two taxable years.

The Company is electing to deduct these remaining unamortized costs entirely in 2025.

The OBBBA also permanently restored 100% bonus depreciation under Section 168(k) for qualified property acquired and placed in service after January 19, 2025.

This reverses the phasedown schedule enacted under the Tax Cuts and Jobs Act (“TCJA”), which would have reduced bonus depreciation to 40% for property placed into service in 2025 and eliminated it entirely by 2027.

The Company is claiming 40% bonus on any 2025 assets placed in service before January 19 and 100% bonus on all remaining assets placed in service through the remainder of the year.

The provision (benefit) for income taxes consisted of the following:

1 unchanged sentence

Provision for income taxes

Alpha Pro Tech, Ltd.

Notes to Consolidated Financial Statements

Deferred income tax assets (liabilities) consisted of the following:

4 unchanged sentences

Accrued expenses and inventory

Right of Use Asset

Right of use of asset

Foreign exchange

13 unchanged sentences

Provision for income taxes

Cash paid for taxes:

For the Years Ended December 31,

Total taxes paid, net of refunds

Foreign taxes paid were all paid Canada.

In 2025, taxes paid to Illinois was $ 79,000 , which exceeded 5% of total income taxes paid.

Operating Lease Commitments:

14 unchanged sentences

Legal Proceedings

On June 7, 2022, the Company filed a lawsuit (the “Lawsuit”) in the Fourth Judicial District Court of Utah naming as defendants Mechanized Concepts, LLC, Matthew D.

Collegee, Collegee Machine, Engineering, Design, LLC, Joseph Collegee d/b/a/ Collegee Machine, and Justin Staub (collectively, the “Defendants”).

The Lawsuit relates to certain equipment ordered from Defendants and paid for by the Company, which Defendants never delivered.

In the Lawsuit the Company is seeking the following relief:

compensatory damages in the amount $ 490,000 , representing the money the Company paid for the machines it never received, lost profits in the form of mask sales it could have made if Defendants had delivered the machines on the promised date and other monetary and equitable relief.

In 2022, the Company had written off the $ 490,000 balance of the deposit paid for the equipment, pending any recovery in the Lawsuit.

As of the date hereof, no counterclaims have been asserted against the Company.

The Company believes there would not be any meritorious claims against the Company in the Lawsuit.

The Lawsuit is in its early stages and the final outcome, including the potential amount of any recovery for the Company’s claims, is uncertain.

The Company is subject to various pending and threatened litigation actions in the ordinary course of business.

4 unchanged sentences

The Company contributes an additional 0.5 % of gross earnings for those employees contributing 1% of their gross earnings and contributes 1 % of gross earnings for those employees contributing between 2% and 12% of their gross earnings.

The total amounts contributed to the plans by the Company were $ 46,000 and $ 48,000 for the years ended December 31, 2024 and 2023, respectively.

The total amounts contributed to the plans by the Company was $ 46,000 for both years ended December 31, 2025 and 2024.

The Company does not have any other significant pension, profit sharing or similar plans established for its employees.

1 unchanged sentence

The Company accrued $ 246,000 for the year ended December 31, 2025, compared to $ 264,000 for 2024, in connection with the bonus.

Alpha Pro Tech, Ltd.

Notes to Consolidated Financial Statements

Activity of Business Segments

7 unchanged sentences

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.

Alpha Pro Tech, Ltd.

Notes to Consolidated Financial Statements

The accounting policies of the segments are the same as those described previously under Summary of Significant Accounting Policies (see Note 2).

Segment data excludes charges allocated to the principal executive office and other corporate unallocated expenses and income taxes.

The Company evaluates the performance of its segments and allocates resources to them based primarily on net sales.

The chief operating decision maker (“CODM”) of the Company is the Company’s chief executive officer.

The CODM assesses performance and decides how to allocate resources, including (1) employees, and (2) financial or capital resources, based on net sales.

The following table provides segment information as described below:

Years Ended December 31,

Building Supply

Disposable Protective Apparel

Segment sales

Cost of goods sold

Selling, general and administrative

Depreciation and amortization

Segment net income

The following table presents net sales for each segment:

55 unchanged sentences

Related Party Transactions

During 2024, the Company’s only material related party transactions were the Company’s transactions with its non-consolidated affiliate, Harmony.

( see Note 6.)

During 2025, the Company’s only material related party transactions were the Company’s transactions with its non-consolidated affiliate, Harmony (see Note 6.)

Subsequent Events

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data