What changed in this filing

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Item 1. Financial Statements

2025-09-09 compared with 2025-06-09 · 263 added, 222 removed, 425 unchanged (53% of the section changed)

5 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

Operating expenses

Lease impairments

Operating (loss) income

2 unchanged sentences

(Loss) income before taxes

Income tax (benefit) expense

Net (loss) income

Net (loss) income per common share:

Income tax benefit

Net income (loss)

Net income (loss) per common share:

Weighted average common shares outstanding:

2 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (L OSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended

Net (loss) income

Six Months Ended

Net income (loss)

Other comprehensive income (loss):

Foreign currency translation adjustments

Comprehensive (loss) income

Comprehensive income (loss)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 1,291 and $ 1,237 at April 30, 2025 and January 31, 202 5

, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 1,028 and $ 1,237 at July 31, 2025 and January 31, 2025, respectively

Inventories, net

Prepaid VAT and other taxes

Assets held for sale

Income tax receivable and other current assets

22 unchanged sentences

Common stock, $ 0.01 par;

authorized 20,000,000 shares

Issued 10,872,551 and 10,856,812 ;

outstanding 9,514,343 and 9,498,604 at April 30, 2025 and January 31, 2025, respectively

authorized 20,000,000 shares Issued 10,909,279 and 10,856,812 ;

outstanding 9,551,071 and 9,498,604 at July 31, 2025 and January 31, 2025, respectively

Treasury stock, at cost;

1,358,208 shares at April 30, 2025 and January 31, 2025, respectively

1,358,208 shares at July 31, 2025 and January 31, 2025, respectively

Additional paid-in

8 unchanged sentences

(000’s except for share information)

Comprehensive

Six Months Ended July 31, 2025

Treasury Stock

Comprehensive

Balance, January 31, 2025

Other comprehensive loss

Other comprehensive income

Dividends ($ 0.03 per share)

Stock-based compensation:

3 unchanged sentences

Balance, April 30, 2025

Other comprehensive income

Dividends ($ 0.03 per share)

Stock-based compensation:

Restricted stock issued

Restricted stock plan

Return of shares in lieu of payroll withholding

Balance, July 31, 2025

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

LAKELAND INDUSTRIES, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(000’s except for share information)

Six Months Ended July 31, 2024

Treasury Stock

Comprehensive

Balance, January 31, 2024

Other comprehensive loss

Other comprehensive income

Dividends ($ 0.03 per share)

Stock-based compensation:

3 unchanged sentences

Balance, April 30, 2024

Other comprehensive income

Dividends ($ 0.03 per share)

Stock-based compensation:

Restricted stock issued

Restricted stock plan

Return of shares in lieu of payroll withholding

Balance, July 31, 2024

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities

Adjustments to reconcile net (loss) income to net cash (used in) operating activities

Deferred income taxes

Depreciation and amortization

Lease impairments

Amortization of step-up

1 unchanged sentence

Stock based and restricted stock compensation

Gain on disposal of property and equipment

Equity in loss of equity investment

Change in fair value of earnout consideration

(Increase) decrease in operating assets, net of effect of business acquisition

Accounts receivable

Change in operating assets and liabilities, net of effect of business acquisitions

Accounts receivable, net

Prepaid VAT and other taxes

Other current assets

Increase (decrease) in operating liabilities, net of effect of business acquisition

Accounts payable

1 unchanged sentence

Operating lease liabilities

Net cash (used in) provided by operating activities

Net cash (used in) operating activities

Cash flows from investing activities:

5 unchanged sentences

Term loan borrowings

Term loan repayments

Payments on debt facilities

Credit line borrowings

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

11 unchanged sentences

sales teams, our customer service group, and authorized independent sales representatives to a strategic global network of selective fire safety and industrial distributors and wholesale partners.

Our authorized distributors supply end users, such as integrated oil, chemical/petrochemical, automobile, transportation, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical, and high technology electronics manufacturers, as well as scientific, medical laboratories and the utilities industry.

In addition, we supply federal, state and local governmental agencies and departments, including fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control.

Internationally, we sell to a mix of end-users directly and to industrial distributors, depending on the particular country and market.

In addition to the United States, sales are made into more than 50 foreign countries, the majority of which were into China, the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay, Middle East, Southeast Asia, Australia, Hong Kong and New Zealand.

Our authorized distributors supply end users across various industries, including integrated oil, chemical/petrochemical, automobile, transportation, steel, glass, construction, smelting, cleanroom, janitorial, pharmaceutical and high-tech electronics manufacturers, as well as scientific, medical laboratories and the utilities industry.

We also supply federal, state and local governmental agencies and departments, including fire and law enforcement, airport crash rescue units, the Department of Defense, the Department of Homeland Security and the Centers for Disease Control.

Internationally, we sell to a mix of end-users

directly and to industrial distributors, depending on the particular country and market.

In addition to the United States (U.S.), sales are made into more than 50 foreign countries, the majority of which were into China, the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Uruguay, Middle East, Southeast Asia, Australia, Hong Kong and New Zealand.

Basis of Presentation

9 unchanged sentences

thus, for example, FY26 refers to the fiscal year ending January 31, 2026, (b) “Q” refers to quarter;

thus, for example, Q1 FY26 refers to the first quarter of the fiscal year ending January 31, 2026, (c) “Balance Sheet” refers to the unaudited condensed consolidated balance sheet, and (d) “Statement of Operations” refers to the unaudited condensed consolidated statement of operations.

thus, for example, Q2 FY26 refers to the second quarter of the fiscal year ending January 31, 2026, (c) “Balance Sheet” refers to the unaudited condensed consolidated balance sheet, and (d) “Statement of Operations” refers to the unaudited condensed consolidated statement of operations.

Recent Accounting Pronouncements

19 unchanged sentences

In November 2024, the FASB issued ASU No.

(“ASU 2024-03”),

Disaggregation of Income Statement Expenses (“DISE”)

(“ASU 2024-03”), Disaggregation

of Income Statement Expenses (“DISE”).

requires disaggregated disclosure of income statement expenses for public business entities.

6 unchanged sentences

to have a material effect on our consolidated financial statements taken as a whole.

Investments and Acquisitions

Acquisition of Veridian

On December 16, 2024, the Company acquired 100 % of U.S.-based

Veridian Limited (Veridian) for cash consideration of approximately $ 26.1 million subject to post-closing adjustments and customary holdback provisions.

On December 16, 2024, the Company acquired 100 % of U.S.-based Veridian Limited (Veridian) for cash consideration of approximately $ 26.1 million subject to post-closing adjustments and customary holdback provisions.

Founded in 1992, Veridian is a leading provider of firefighter protective apparel, including fire and rescue garments, gloves and boots.

1 unchanged sentence

The acquisition qualified as a business combination and was accounted for using the acquisition method of accounting.

Veridian’s operating results and assets, including acquired intangibles and goodwill, are reported as part of United States in our geographic segment reporting.

Veridian’s operating results and assets, including acquired intangibles and goodwill, are reported as part of U.S.

in our geographic segment reporting.

The following table summarizes the preliminary fair values of the Veridian assets acquired and liabilities assumed at the date of the acquisition:

8 unchanged sentences

Estimated fair values were determined by management, based in part on an independent valuation performed by a third-party valuation specialist.

The valuation methods used to determine the estimated fair value of intangible assets included the excess earnings approach for customer relationships using customer inputs and contributory charges, the relief from royalty method for trade names and trademarks and technological know-how.

Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasted sales volumes and prices, royalty rates, costs to produce, tax rates, capital spending, discount rates, attrition rates and working capital changes.

Cash flow forecasts were generally based on Veridian’s pre-acquisition

forecasts and management estimates.

Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives.

3 unchanged sentences

Goodwill related to the Veridian acquisition is deductible for tax purposes.

Due to the timing of the completion of the acquisition, the purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding assets acquired and liabilities assumed, and revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals of inventory, contractual relationships, tangible assets and intangible assets.

Due to the timing of the completion of the acquisition, the purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding assets acquired and liabilities assumed, and revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals of inventory, customer relationships, tangible assets and intangible assets.

Changes to the purchase price allocation could be significant.

1 unchanged sentence

Acquisition of LHD

On July 1, 2024, the Company acquired 100 % of the shares of LHD Group Deutschland GmbH’s

fire and rescue business and its subsidiaries in Hong Kong and Australia (collectively, “LHD”) in an all-cash

On July 1, 2024, the Company acquired 100 % of the shares of LHD Group Deutschland GmbH’s fire and rescue business and its subsidiaries in Hong Kong and Australia (collectively, “LHD”) in an all-cash

transaction subject to post-closing adjustments and customary holdback provisions.

Total consideration was $ 14.8 million, net of $ 1.5 million cash acquired, of which $ 15.5 million was paid to retire LHD’s debt and $ 0.8 million was paid to the seller at closing.

LHD is a leading provider of firefighter turnout gear, accessories, and personal protective equipment , as well as decontamination

, repair and maintenance services

LHD is a leading provider of firefighter turnout gear, accessories, and personal protective equipment, as well as decontamination, repair and maintenance services.

LHD has 111 employees worldwide and is headquartered in Wesseling, Germany, with operations in Hong Kong and Australia.

2 unchanged sentences

LHD’s operating results and assets, including acquired intangibles and goodwill, are reported as part of Europe in our geographic segment reporting.

The following table summarizes the preliminary fair values of the LHD assets acquired and liabilities assumed at the date of the acquisition and reflective of measurement period adjustments:

Net working capital acquired, including cash of $1.5 million

In Q2 FY26, the Company finalized the purchase price allocation for the LHD acquisition.

Measurement period adjustments totaling $ 2.3 million from the initial preliminary estimates resulted in changes to net working capital, customer relationship intangible assets, lease liabilities, other liabilities and goodwill.

The following table summarizes the fair values of the LHD assets acquired and liabilities assumed at the date of the acquisition and reflective of measurement period adjustments:

Net working capital acquired, including cash of $ 1.5

Property, plant and equipment

17 unchanged sentences

Goodwill related to the LHD acquisition is not deductible for tax purposes.

Due to the timing of the completion of the acquisition, the purchase price and related allocation are preliminary and could be revised as a result of adjustments made to the purchase price, additional information obtained regarding assets acquired and liabilities assumed, and revisions of provisional estimates of fair values, including, but not limited to, the completion of independent appraisals, inventory, contractual relationships, tangible assets and intangible assets.

These changes to the purchase price allocation could be significant.

The purchase price allocation will be finalized within the measurement period of up to one year from the acquisition date.

Acquisition of Jolly

21 unchanged sentences

Estimated fair values were determined by management, based in part on an independent valuation performed by a third-party valuation specialist.

Cash flow forecasts were generally based on Jolly’s

pre-acquisition

Cash flow forecasts were generally based on Jolly’s pre-acquisition

Identifiable intangible assets with finite lives are subject to amortization over their estimated useful lives.

11 unchanged sentences

Pro forma combined financial information (Unaudited)

(in millions, except per share amount)

Quarter Ended

April 30, 2024

Basic earnings per share

Diluted earnings per share

(in millions, except per share amounts)

Three Months Ended

July 31, 2024

Six Months Ended

July 31, 2024

Net (loss) income

Basic (loss) earnings per share

Diluted (loss) earnings per share

The unaudited pro forma combined financial information is presented for information purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that we would have reported had the acquisition been completed as of the date and for the period presented and should not be taken as representative of our consolidated results of operations or financial condition following the acquisition.

7 unchanged sentences

Excess and obsolete adjustments

Total inventories

Assets Held for Sale

According to ASC 360, “Impairment and Disposal of Long-Lived Assets”,

an asset is considered to be held for sale when all of the following criteria are met:

(i) management commits to a plan to sell the asset;

(ii) the asset is available for immediate sale in its present condition;

(iii) an active program to locate a buyer and complete the sale has been initiated;

(iv) the sale of the asset is probable and expected to be completed within one year;

(v) the asset is actively being marketed for a reasonable sales price;

and (vi) it is unlikely that the plan will be significantly modified or withdrawn.

During Q2 FY26, the Company determined that it met the held for sale criteria pursuant to ASC 360, “Impairment and Disposal of Long-Lived Assets”

on the Decatur, Alabama warehouse facility.

The Company recorded assets held for sale at the lower of their carrying value or fair value less costs to sell.

The total carrying value of the assets held for sale at July 31, 2025 was $ 1.4 million and is separately recorded on the condensed consolidated balance sheets.

3 for further information.

Goodwill and Intangible Assets, Net

Changes in goodwill during the three months ended April 30, 2025, were as follows (in $000s):

Changes in the carrying amount of goodwill for the three and six months ended July 31, 2025 and 2024, are as follows (in $000s):

Balance at January 31,

1 unchanged sentence

Balance at April 30,

Changes in intangible assets, net, during the

three months ended April

2025 , were as follows (in $

Measurement period adjustments

Currency translation

Balance at July 31,

Changes in intangible assets, net, during the three and six months ended July 31, 2025 and 2024, are as follows (in $000s):

Balance at January 31,

1 unchanged sentence

Balance at April 30,

Currency translation

Measurement period adjustments

Balance at July 31,

Amortization expense was $ 0.4 million and $ 0.2 million in the three months ended July 31, 2025 and 2024, respectively, and $ 0.8 million and $ 0.3 million in the six months ended July 31, 2025 and 2024, respectively and was included in operating expenses on the Condensed Consolidated Statements of Operations.

Long-Term Debt

9 unchanged sentences

4 to the Loan Agreement, dated March 28, 2024 (“Amendment No.

4”), and Amendment No.

4”), Amendment No.

5 to the Loan Agreement, dated December 12, 2024 (“Amendment No.

5”), and Amendment No.

6 to the Loan Agreement, dated July 7, 2025 (“Amendment No.

6” and, collectively with Amendment No.

1 unchanged sentence

2, Amendment No.

3, Amendment No.

4, and Amendment No.

1 unchanged sentence

and the Original Loan Agreement, as amended by the Loan Agreement Amendments, the “Amended Loan Agreement”).

The Amended Loan Agreement provides the Company with a secured revolving credit facility of up to $ 60.0 million of borrowings from December 12, 2024 through January 31, 2026 and of up to $ 50.0 million of borrowings from February 1, 2026 through January 31, 2027 (in each case, such limits remain subject to a reduction to no less than $40.0 million from the net proceeds of equity issuances if the Company raises capital during such periods).

million from the net proceeds of equity issuances if the Company raises capital during such periods).

The revolving credit facility includes a $ 10.0 million letter of credit sub-facility.

13 unchanged sentences

In addition, the Company has agreed to maintain a springing “asset coverage ratio” (as defined in the Amended Loan Agreement) of at least 1.10x, but only to the extent that the maximum funded debt to EBITDA ratio exceeds 3.25x at any reporting period.

The Company was in compliance with all of its debt covenants as of April 30, 2025.

The Company also agreed to certain negative covenants under the Amended Loan Agreement that are customary for credit arrangements of this type, including restrictions regarding the ability of the Company and/or its subsidiaries to conduct business, grant liens, make certain investments, make substantial changes in the present executive or management personnel, and incur additional indebtedness, which negative covenants are subject to certain exceptions.

Moreover, the Amended Loan Agreement contains restrictions on the Company’s ability to enter into mergers and other business combination transactions and to purchase or acquire other businesses or their assets, although the Company may purchase a business or its assets without the consent of the Lender if the aggregate amount of consideration paid for by the Company is less than $ 26,000,000 for any individual acquisition or $ 36,000,000 on a cumulative basis for all such acquisitions or purchases subsequent to the date of Amendment No.

The Company was in compliance with all of its debt covenants as of July 31, 2025.

The Company also agreed to certain negative covenants under the Amended Loan Agreement that are customary for credit arrangements of this type, including restrictions regarding the ability of the Company and/or its subsidiaries to conduct business, grant liens, make certain investments, and incur additional indebtedness, which negative covenants are subject to certain exceptions.

$ 26.0 million for any individual acquisition or $ 36.0 million on a cumulative basis for all such acquisitions or purchases subsequent to the date of Amendment No.

The Amended Loan Agreement also authorizes the Company to enter into additional lines of credit or incur liabilities in connection with the acquisitions of foreign subsidiaries in foreign countries where the Lender lacks a physical presence (such amounts not to exceed $ 10.0 million in the aggregate).

3 unchanged sentences

In connection with the Amended Loan Agreement, the Company entered into with the Lender (i) a security agreement dated June 25, 2020, pursuant to which the Company granted to the Lender a first priority perfected security interest in substantially all of the personal property and the intangibles of the Company, and (ii) a pledge agreement, dated June 25, 2020, pursuant to which the Company granted to the Lender a first priority perfected security interest in the stock of its subsidiaries (limited to 65 % of those subsidiaries that are considered “controlled foreign subsidiaries” as set forth in the Internal Revenue Code and regulations).

The Company’s obligations to the Lender under the Amended Loan Agreement are also secured by a negative pledge evidenced by a Non-encumbrance

Agreement covering the real property owned by the Company in Decatur, Alabama.

As of April 30, 2025, the Company had no borrowings outstanding on the letter of credit sub-facility

and borrowings of $ 19.8 million outstanding under the revolving credit facility ,

and there was $ 20.2 million of additional available credit under the Loan Agreement.

As of January 31, 2025, the Company had no borrowings outstanding on the letter of credit sub-facility and borrowings of $ 13.2 million outstanding under the revolving credit facility ,

and there was $ 26.8 million of additional available credit under the Loan Agreement.

The interest rate on outstanding borrowings was

at April 30, 2025 and January 31, 2025.

Borrowings in UK

As of July 31, 2025, the Company had no borrowings outstanding on the letter of credit sub-facility

and borrowings of $ 24.9 million outstanding under the revolving credit facility, and there was $ 15.1 million of additional available credit under the Loan Agreement.

As of January 31, 2025, the Company had no borrowings outstanding on the letter of credit sub-facility

and borrowings of $ 13.2 million outstanding under the revolving credit facility, and there was $ 26.8 million of additional available credit under the Loan Agreement.

The interest rate on outstanding borrowings was 6.47 % at July 31, 2025 and January 31, 2025.

Lakeland UK Borrowings

On December 31, 2014, the Company and Lakeland Industries Europe, Ltd.

(“Lakeland UK”), a wholly owned subsidiary of the Company, amended the terms of its existing line of credit facility with HSBC Bank to provide for (i) a one-year

extension of the maturity date of the existing financing facility to December 19, 2016, (ii) an increase in the facility limit from £ 1.3 million

(approximately USD $ 1.9 million, based on exchange rates at time of closing) to £ 1.5 million

(approximately USD $ 2.3 million, based on exchange rates at time of closing), and (iii) a decrease in the annual interest rate margin from 3.46 % to 3.0 %.

In addition, pursuant to a letter agreement dated December 5, 2014, the Company agreed that £ 0.4 million

(approximately USD $ 0.6 million, based on exchange rates at the time of closing) of the note payable by the UK subsidiary to the Company shall be subordinated in priority of payment to the subsidiary’s obligations to HSBC under the financing facility.

This agreement has been subsequently amended with the most recent amendment on March 8, 2022.

The cumulative result of the amendments through March 8, 2022 ,

a reduction of the service charge to 0.765 %.

extension of the maturity date of the existing financing facility to December 19, 2016, (ii) an increase in the facility limit from £ 1.3 million (approximately $ 1.9 million, based on exchange rates at time of closing) to £ 1.5 million (approximately $ 2.3 million, based on exchange rates at time of closing), and (iii) a decrease in the annual interest rate margin from 3.46 % to 3.0 %.

In addition, pursuant to a letter agreement dated December 5, 2014, the Company agreed that £ 0.4 million (approximately $ 0.6 million, based on exchange rates at the time of closing) of the note payable by Lakeland UK to the Company shall be subordinated in priority of payment to the subsidiary’s obligations to HSBC under the financing facility.

This agreement has been subsequently amended with the most recent amendment dated March 8, 2022.

The cumulative result of the amendments through March 8, 2022, reflects a reduction of the service charge to 0.765 %.

The agreement can be terminated with three months’ notice.

There were no borrowings outstanding under this facility at April 30, 2025 and January 31, 2025.

Pacific Borrowings

Pacific has a term loan facility with the Bank of New Zealand.

There were no borrowings outstanding under this facility at July 31, 2025 and January 31, 2025.

Pacific Helmets Borrowings

Pacific Helmets has a term loan facility with the Bank of New Zealand.

The facility includes two term loans.

The first term loan

of 1.5 million

New Zealand dollars matures on December 17, 2025 , carries an interest rate of 2.3 % per annum and requires monthly payments of $ 19,350.27 New Zealand dollars.

The second term loan of 0.2 millio n

New Zealand dollars matures on November 18, 202 6

, carries an interest rate of 8.07 % per annum and requires monthly payments of 10,545 New Zealand dollars.

Total amounts due under the term loans were

$ 0.5 million at April 30, 2025 and January 31, 2025.

The first term loan of 1.5 million NZD matures on December 17, 2025 , carries an interest rate of 2.3 % per annum and requires monthly payments of 19,350.27 NZD with the outstanding balance due upon maturity.

The second term loan of

0.5 million NZD matures on November 18, 2026, carries an interest rate of

8.07 % per annum and requires monthly payments of 10,545 NZD with the outstanding balance due upon maturity.

As of July 31, 2025 and January 31, 2025, the outstanding balance under the term loans was

$ 0.4 million and $ 0.5 million, respectively.

Jolly Borrowings

On May 9, 2024, Jolly entered into a term loan agreement for 1.5 million

Euros to support working capital requirements with Banca Intesa Spa.

The term loan matures

on March 31, 2027 , and carries an interest rate of 5.42 %.

The term loan is being repaid in 11 quarterly installments of 0.1

On May 9, 2024, Jolly entered into a term loan agreement for 1.5 million EUR to support working capital requirements with Banca Intesa Spa.

The term loan matures on March 31, 2027 , and carries an interest rate of 5.42 %.

The term loan is being repaid in 11 quarterly installments of 0.1 million EUR.

The loan is guaranteed by SACE S.p.A., the Italian state-owned export credit finance agency.

On March 6, 2025, Jolly entered into a term loan agreement for 2.0 million

Euros to support working capital requirements with Banca Intesa Spa.

The term loan matures

on September 30, 2028 , and carries an interest rate with a fixed rate portion

of 1.45 % and variable rate portion

based on the three-month EURIBOR rate.

The interest rate at April 30, 2025 was 3.935 %.

The term loan will be repaid in 11 quarterly

installments of 0.2 million Euros, beginning September 30, 2025.

On March 6, 2025, Jolly entered into a term loan agreement for 2.0 million EUR to support working capital requirements with Banca Intesa Spa.

The term loan matures on September 30, 2028 , and carries an interest rate with a fixed rate portion of 1.45 % and a

variable rate portion based on the three-month EURIBOR rate.

The interest rate at July 31, 2025 was 3.935 %.

The term loan will be repaid in 11 quarterly installments of 0.2 million EUR, beginning September 30, 2025.

Interest payments are made quarterly.

The loan is guaranteed by SACE S.p.A., the Italian state-owned export credit finance agency.

Jolly received an advance of 1.2 million

Euros from BNL Bank as an advance on an Italian firefighters contract that will conclude in FY26.

Interest on the advance is Euribor plus 1.0%.

As of April 30, 2025 and January 31, 2025, the outstanding balance under the term loans was

$ 4.9 million and $ 2.5 million, respectively.

During the three months ended July 31, 2025, Jolly repaid the advance of 1.2 million EUR to BNL Bank which was used as an advance on an Italian firefighters’ contract

that was shipped during the quarter.

Interest on the advance was Euribor plus 1.0%.

As of July 31, 2025 and January 31, 2025, the outstanding balance under the term loans was $ 3.4 million and $ 2.5 million, respectively.

LHD Borrowings

Prior to the Company’s acquisition, LHD secured a federally guaranteed term loan of 0.8 million

uros from Commerzbank AG under the “KfW Quick Loan 2020” program, launched by the German government in 2020 to support small and medium-sized

Prior to the Company’s acquisition, LHD secured a federally guaranteed term loan of 0.8 million EUR from Commerzbank AG under the “KfW Quick Loan 2020” program, launched by the German government in 2020 to support small and medium-sized

enterprises affected by the COVID-19

Repayments of the loan, which matures on June 30, 2030, are made in quarterly installments of 25,000 Euros.

The loan carries an interest rate of

3 % per annum, with interest payments being due in arrears at the end of each quarter.

As of April 30, 2025 and January 31, 2025, the outstanding balance was $ 0.7

Repayments of the loan, which matures on June 30, 2030, are made in quarterly installments of 25,000 EUR.

The loan carries an interest rate of 3 % per annum, with interest payments being due in arrears at the end of each quarter.

As of July 31, 2025 and January 31, 2025, the outstanding balance was $ 0.7 million.

Veridian Borrowings

Prior to the Company’s acquisition, in February 2024, Veridian secured a term loan with USBank for a piece of equipment.

Prior to the Company’s acquisition, in February 2024, Veridian secured a term loan with U.S.

Bank for a piece of equipment.

The loan is for 60 months with monthly payments of approximately $8,000.

The interest rate on the loan is 5.13 %.

As of April 30, 2025 and January 31, 2025, the outstanding balance was

$ 0.3 million and $ 0.4 million, respectively

Approximate maturities on our term loans over the next five years from April 30, 2025, are $1.6 million in FY26, $3.1 million in FY27, $1.2 million in FY28, $0.2 million in FY29, $20.2 million thereafter.

As of July 31, 2025 and January 31, 2025, the outstanding balance was $ 0.3 million and $ 0.4 million, respectively.

Approximate maturities of our term loans over the next five years from July 31, 2025, are $1.2 million in FY26, $1.7 million in FY27, $1.2 million in FY28, $0.4 million in FY29, and $25.2 million thereafter.

Concentration of Risk

Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of cash and cash equivalents, and trade receivables.

The concentration of credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising the Company’s customer base and their dispersion across geographic areas principally within the United States.

The Company routinely addresses the financial strength of its customers and, as a consequence, believes that its receivable credit risk exposure is limited.

19 unchanged sentences

The Company monitors its financial depositories by their credit rating, which varies by country.

, cash balances in banks in the United States are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

As of April 30, 2025,

approximately $

3.0 million was

included in U.S.

bank accounts and approximately $

15.6 million was included

Additionally, cash balances in banks in the U.S.

are insured by the Federal Deposit Insurance Corporation subject to certain limitations.

As of July 31, 2025, approximately $ 2.2 million was h

bank accounts ,

million was uninsured.

As of January 31, 2025,

approximately $ 1.3 million was

included in U.S.

bank accounts and approximately $ 16.2 million was included

in foreign bank accounts ,

of which $ 16.7 million was uninsured.

and approximately $ 15.5 million was h

d in foreign bank accounts, of which $ 17.0 million was uninsured.

As of January 31, 2025, approximately $ 1.3 million was h

bank accounts and approximately $ 16.2 million was h

d in foreign bank accounts, of which $ 16.7 million was uninsured.

Stockholders’ Equity

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If any shares subject to an award are forfeited, expire, lapse or otherwise terminate without issuance of such shares, such shares shall, to the extent of such forfeiture, expiration, lapse or termination, again be available for issuance under the 2017 Plan.

The Company recognized total stock-based compensation costs, which are reflected in operating expenses (in $

Three Months Ended April 30,

The Company recognized total stock-based compensation costs, which are reflected in operating expenses (in $000’s):

Three Months Ended

Six Months Ended

Total restricted stock and stock option programs

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Under the 2017 Plan, as described above, the Company awarded performance-based and service-based shares of restricted stock and restricted stock units to eligible employees and directors.

The following table summarizes the activity under the 2017 Plan for the three months ended April 30, 2025 and 2024.

This table reflects the amount of awards granted and the number of shares that would be vested if the Company were to achieve the maximum performance level under the March 2023, April 2024 and April 2025 grants.

The following table summarizes the activity under the 2017 Plan for the six months ended July 31, 2025 and 2024, respectively.

The tables below reflect the amount of awards granted and the number of shares that would be vested if the Company were to achieve the maximum performance level under the then-outstanding grants.

Changes in performance-based and service-based shares outstanding during the six months ended July 31, 2025 are as follows:

Outstanding at January 31, 2025

Outstanding at April 30, 2025

Outstanding at July 31, 2025

Changes in performance-based and service-based shares outstanding during the six months ended July 31, 2024 are as follows:

Outstanding at January 31, 2024

Outstanding at April 30, 2024

The actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three-year performance measurement period based on measures that include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and return on invested capital for the April 2022 grants.

Performance measures for the March 2023 grants are revenue growth, EBITDA margin and return on invested capital.

The performance measures for the April 2024 grants are aggregate revenue during FY25, FY26, and FY27;

EBITDA margin;

and free cash flow margin.

The performance measures for the April 2025 grants are aggregate revenue during FY26, FY27, and FY28;

Adjusted EBITDA;

and free cash flow margin.

The performance targets have been set for each of the Minimum, Target, and Maximum levels.

The actual performance amount achieved is determined by the Committee and may be adjusted for items determined to be unusual in nature or infrequent in occurrence, at the discretion of the Committee.

Outstanding at July 31, 2024

For performance-based awards granted in FY23, FY24 and FY25, the actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three-year performance measurement period based on measures determined in advance by the Compensation Committee of the Board of Directors of the Company.

For the 2022 grants, the performance measures include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and return on invested capital.

Performance measures for the 2023 grants are revenue growth, EBITDA margin and return on invested capital.

The performance measures for the April 2024 grants are aggregate revenue during FY25, FY26, and FY27, EBITDA margin and free cash flow margin.

With respect to performance-based awards granted in May 2025, the performance measures are the Company’s total revenue, the Company’s fire segment revenue, and its adjusted EBITDA.

Each of these metrics will be independently measured against Minimum, Target, and Maximum performance targets established by the Compensation Committee, against which the Company’s performance will be measured on an annual basis at the end of each fiscal year beginning January 31, 2029 through January 31, 2031.

With respect to performance-based awards granted in July 2025, the performance measures are annual revenue, adjusted EBITDA, free cash flow margin, and individual executive goals.

For all performance-based awards, the performance targets have been set for each of the Minimum, Target, and Maximum levels.

The actual performance amount achieved is determined by the Compensation Committee and may be adjusted for items determined to be unusual in nature or infrequent in occurrence, at the discretion of the Compensation Committee.

The compensation cost is based on the fair value at the grant date, is recognized over the requisite performance/service period using the straight-line method and is periodically adjusted for the probable number of shares to be awarded.

As of April 30, 2025, unrecognized stock-based compensation expense totaled $ 3.5 million pursuant to the 2017 Plan based on outstanding awards under the Plan.

This expense is expected to be recognized over approximately t hree

As of July 31, 2025, unrecognized stock-based compensation expense totaled $ 8.0 million pursuant to the 2017 Plan based on outstanding awards under the Plan.

This expense is expected to be recognized over approximately three years.

Stock Repurchase Program

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On December 1, 2022, the Board of Directors authorized an increase in the Company’s stock repurchase program, under which the Company may repurchase up to an additional $ 5.0 million of its outstanding common stock.

shares were repurchased during Q

26 , leaving $

5.0 million remaining under the share repurchase program at April

The share repurchase program has

no expiration date but may be terminated by the Board of Directors at any time.

The Company’s provision for inc ome

taxes for the three months ended April 30, 2025 and 2024 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company’s effective tax rate for the first quarter of FY26 was 23.4%, which differs from the U.S.

No shares were repurchased during Q2 FY26, leaving $ 5.0 million remaining under the share repurchase program at July 31, 2025.

The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.

The Company’s provision for income taxes for the three months ended July 31, 2025 and 2024 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company’s effective tax rate for the three months ended July 31, 2025 was 117.2 % and 67.08 % for the six months ended July 31, 2025.

Both differ from the U.S.

federal statutory rate of 21 % primarily due to rate differentials in foreign tax jurisdictions.

The Company’s effective tax rate for the first quarter of FY25 was 19.0% which differs from the U.S.

federal statutory rate of 21%, primarily due to rate differentials in foreign tax jurisdictions and the Global Intangible Low-Taxed Income (“GILTI”) provision and impacts from the final earn-out

adjustments related to the Pacific and Eagle acquisitions.

The Company’s effective tax rate for the three months ended July 31, 2024 was 23.4 % and ( 13.1 )% for the six months ended July 31, 2024.

Both differ from the U.S.

federal statutory rate of 21 %, primarily due to the mix of income in various foreign tax jurisdictions, the impacts from Global Intangible Low-Taxed

Income (“GILTI”) and stock compensation vestings, partially offset by foreign withholding taxes accrued during the respective periods.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized.

The valuation allowance was $ 6.8 million and $ 6.6 million as of April 30, 2025 and January 31, 2025, respectively.

The valuation allowance was $ 10.5 million and $ 6.6 million as of July 31, 2025 and January 31, 2025, respectively.

With the exception of our UK and China subsidiaries for which we accrue relevant deferred tax impacts related to non-indefinitely

reinvested cash, we consider the excess of the amount for financial reporting over the tax basis (including undistributed and previously taxed earnings) of investments in our other foreign subsidiaries as of April 30, 2025 to be indefinitely reinvested in the foreign jurisdictions on the basis of our specific plan for reinvestment and estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.

Therefore, we have not provided for deferred taxes related to such excess or the relevant portions thereof and disclosed that the determination of any deferred taxes related to this excess is not practicable in those permanently reinvested jurisdictions.

We have made no changes to our policy on indefinite reinvestment during the quarter ended April 30, 2025.

Net (Loss) Income Per Share

The following table sets forth the computation of basic and diluted net (loss) income per share as follows (in $000s except share and per share amounts):

reinvested cash, we consider the excess of the amount for financial reporting over the tax basis (including undistributed and previously taxed earnings) of investments in our other foreign subsidiaries as of July 31, 2025 to be indefinitely reinvested in the foreign jurisdictions on the basis of our specific plan for reinvestment and estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.

Therefore, we have not provided for deferred taxes related to such excess or the relevant portions thereof and disclosed that the determination of any deferred taxes related to this exces s i

s not practicable in those permanently reinvested jurisdictions.

We have made no changes to our policy on indefinite reinvestment during the six months ended July 31, 2025.

Net Income (Loss) Per Share

The following table sets forth the computation of basic and diluted net income (loss) per share as follows (in $000s except share and per share amounts):

Three Months Ended

Net (loss) income

Denominator for basic net (loss) income per share (weighted-average shares which exclude shares in the treasury, 1,358,208 at April 30,

2025 and 2024)

Six Months Ended

Net income (loss)

Denominator for basic net income (loss) per share (weighted-average shares which exclude 1,358,208

treasury shares for the periods ended July 31, 2025 and 2024)

Effect of dilutive securities from restricted stock plan

Denominator for diluted net (loss) income per share (adjusted weighted average shares)

Basic net (loss) income per share

Diluted net (loss) income per share

For the three months ended April 30, 2025, 0.3 million shares of unvested restricted stock awards were excluded from the calculation of diluted earnings per share due to their anti-dilutive effect.

There were no shares of unvested restricted stock awards excluded from the calculation of diluted earnings per share for the three months ended April 30, 2024.

Denominator for diluted net income (loss) per share (adjusted weighted average shares)

Basic net income (loss) per share

Diluted net income (loss) per share

There were no shares of unvested restricted stock awards excluded from the calculation of diluted earnings per share for the three months ended July 31, 2025.

For the six months ended July 31, 2025, 0.4 million shares of unvested restricted stock awards were excluded from the calculation of diluted earnings per share due to their anti-dilutive effect.

For the three months ended July 31, 2024, 0.3 million shares of unvested restricted stock awards were excluded from the calculation of diluted earnings per share due to their anti-dilutive effect.

There were no shares of unvested restricted stock awards excluded from the calculation of diluted earnings per share for the six months ended July 31, 2024.

Contingencies

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If the assessment indicates that a potential material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

During the third quarter of FY24, the Company sent a letter to the landlord outlining certain structural defects on the newly constructed facility in Monterrey, Mexico that would inhibit the Company from effectively utilizing the facility for its intended purpose.

The Company has initiated discussions with the landlord as to potential remedies that may inform our decision-making process with respect to this property.

Changes in our long-term intended use for the building may impact the carrying value of the currently recorded right of use asset.

In June 2025, the Company initiated legal action against the landlord seeking rescission of the lease due to unremediated structural defects on the newly constructed facility in Monterrey, Mexico that prevented the Company from effectively utilizing the facility for its intended purpose.

The case was dismissed by the Court and the Company is appealing the ruling.

During the three months ended July 31, 2025, the Company assessed the carrying value of the right-of-use asset associated with the lease and concluded the asset was impaired given that (i) the space is not usable for its intended purpose;

(ii) no economic benefits are expected to be derived during the appeal process;

and (iii) the likelihood of recovery of the carrying value of the right-of-use asset is remote.

A lease impairment charge of

$ 3.6 million was recorded during the three months ended July 31, 2025 on the condensed consolidated statement of operations.

The Company is involved in various claims, actions, and legal proceedings arising in the ordinary course of business, including multiple lawsuits pending in the aqueous film forming foam (“AFFF”) multi-district litigation consolidated in the United States District Court of South Carolina, Charleston Division.

These cases involve allegations that plaintiffs were exposed to Per- and polyfluoroalkyl substances (“PFAS”) in the course of their careers as firefighters.

Plaintiffs allege they were exposed to PFAS contained in AFFF and firefighter turnout gear.

The Company is also named alongside several defendants in a class action regarding firefighter turnout gear pending in the United States District Court of Connecticut, styled as Uniformed Professional Fire Fighters Association of Connecticut et al.

3M Company et al., Case No.

3:24-CV-01101.

The case seeks certification of a fire fighter class, a nationwide purchaser class, and a Connecticut purchaser subclass.

The Company’s exposure in these matters to losses, if any, is not reasonably estimable at this time.

General litigation contingencies

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however, there can be no assurance as to the ultimate outcome of these matters.

As of April 30, 2025 and January 31, 2025, to the best of the Company’s knowledge, there were no significant outstanding claims or litigation.

As of July 31, 2025 and January 31, 2025, to the best of the Company’s knowledge, there were no significant outstanding claims or litigation.

Segment Reporting

Domestic and international sales from continuing operations are as follows in millions of dollars:

Ended April 30,

Domestic and international sales are as follows in millions of dollars:

(in millions)

Three Months Ended

Six Months Ended

International

The Company is organized into seven geographical operating segments that are based on management responsibilities:

US Operations (including Corporate), Europe, Mexico, Asia, Canada, Latin America and Other Foreign.

Operations (including the Corporate office), Europe, Mexico, Asia, Canada, Latin America and Other Foreign.

The Company adopted ASU No.

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Improvements to Reportable Segment Disclosures

for the year ended January 31, 2025 and applied it retrospectively for the prior period presented.

Gross profit and Operating profit are the measures used by the chief operating decision maker, identified as our President and Chief Executive Officer, to evaluate segment performance and identify opportunities when allocating resources.

for the year ended January 31, 2025 and applied it retrospectively for the prior periods presented.

Gross profit and Operating income (loss) are the measures used by the chief operating decision maker, identified as our President and Chief Executive Officer, to evaluate segment performance and identify opportunities when allocating resources.

The accounting principles applied at the reportable segment level in determining the segment measure of profit or loss are the same as those applied at the consolidated financial statement level.

Sales and transfers between operating segments are accounted for at market-based transaction prices and are eliminated in consolidation.

Our US operations include a facility in Alabama (primarily the distribution to customers of the bulk of our products and the light manufacturing of our chemical, wovens, reflective, and fire products) and facilities in Iowa and Arkansas (fire services).

The Company also maintains one manufacturing facility in China (primarily disposable and chemical suit production), a manufacturing facility in Mexico (primarily disposable, reflective, fire and chemical suit production), a manufacturing facility in Vietnam (primarily disposable production), a manufacturing facility in Argentina (primarily wovens and production), a manufacturing facility in Romania (boots), a manufacturing facility in New Zealand (helmets) and two small manufacturing facilities in India.

operations include a facility in Alabama (primarily the distribution to customers of the bulk of our products and the light manufacturing of our chemical, wovens, reflective, and fire products) and facilities in Iowa and Arkansas (fire services).

The Company also maintains one manufacturing facility in China (primarily disposable and chemical suit production), a manufacturing facility in Mexico (primarily disposable, reflective, fire and chemical suit production), a manufacturing facility in Vietnam (primarily disposable production), a manufacturing facility in Argentina (primarily wovens production), a manufacturing facility in Romania (boots), a manufacturing facility in New Zealand (helmets) and two small manufacturing facilities in India (primarily disposable and wovens production).

Our China and Vietnam facilities produce a significant portion of the Company’s products.

We evaluate the performance of these entities based on gross profit which is defined as net sales less cost of goods sold, and operating profit, which is defined as income before income taxes, interest expense and other income and expenses.

We have sales forces in the USA, Canada, Mexico, Europe, Latin America, India, Russia, Kazakhstan, Australia, New Zealand and China, which sell and distribute products shipped from the United States, Mexico, China, Vietnam or India.

The table below represents information about reported segments for the three-month periods noted therein:

Three Months Ended April 30,

We evaluate the performance of these entities based on gross profit, which is defined as net sales less cost of goods sold, and operating income (loss), which is defined as income before income taxes, interest expense and other income and expenses.

We have sales forces in the U.S., Canada, Mexico, Europe, Latin America, India, Russia, Kazakhstan, Australia, New Zealand and China, which sell and distribute products shipped from the U.S., Mexico, China, Vietnam or India.

The table below represents information about reportable segments for the three and six month periods noted therein (amounts may not foot due to rounding):

(in millions of dollars)

US Operations (including Corporate)

Latin America

Three Months Ended

Six Months Ended

Other foreign

Latin America

Less intersegment sales

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External Sales:

USA Operations (including Corporate)

Latin America

Other foreign

Latin America

Consolidated external sales

Intersegment Sales:

USA Operations (including Corporate)

Latin America

Other foreign

Latin America

Consolidated intersegment sales

Three Months Ended April 30,

The table below represents information about reportable segments for the three and six month periods noted therein (amounts may not foot due to rounding):

(in millions of dollars)

Three Months Ended

Six Months Ended

Cost of Goods Sold:

USA Operations (including Corporate)

Latin America

Other foreign

Latin America

Less intersegment cost of goods sold

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Gross Profit:

USA Operations (including Corporate)

Latin America

Other foreign

Latin America

Less intersegment loss

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Operating Expenses (1)

USA Operations (including Corporate)

Latin America

Other foreign

Latin America

Less intersegment operating expenses

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Operating (Loss) Income:

USA Operations (including Corporate)

Latin America

Other foreign

Latin America

Less intersegment loss (income)

Operating (loss) income

As of April 30,

Includes lease impairments

The table below represents information about reported segments for the three and six month periods noted therein (amounts may not foot due to rounding):

As of July 31,

As of January 31,

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Total Assets:

USA Operations (including Corporate)

Latin America

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Total Assets Less Intersegment:

USA Operations (including Corporate)

Latin America

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Total Goodwill and Intangible Assets

USA Operations (including Corporate)

Other foreign

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The table below presents external sales by product line:

Three Months Ended

(in millions of dollars)

Three Months Ended

Six Months Ended

External Sales by product lines:

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Subsequent Events

Second Quarter Dividend

On May 1, 2025, the Company’s Board of Directors declared a quarterly cash dividend.

The quarterly dividend of $ 0.03 per share or approximately $ 0.3 million, was paid on May 22, 2025, to stockholders of record as of May 15, 2025.

Letter of Intent – Decatur, Alabama Warehouse Facility

Subsequent to April 30, 2025, the Company developed a plan to sell our warehouse facility in Decatur, Alabama.

On June 6, 2025, the Company entered into a letter of intent to sell the warehouse facility to an unrelated party.

The letter of intent includes a short-term lease on one of the existing warehouses.

The sale is expected to close in the third quarter of FY26.

Third Quarter Dividend

On August 1, 2025, the Company’s Board of Directors declared a quarterly cash dividend.

The quarterly dividend of $ 0.03 per share or approximately $ 0.3 million, was paid on August 22, 2025, to stockholders of record as of August 15, 2025.

Sale of Decatur, Alabama Warehouse Facility

On August 27, 2025

, the Company completed the sale of the Decatur, Alabama warehouse facility to an unrelated party for $ 6.1 million, less commissions and closing expenses.

The sale of the Decatur facility includes a short-term leaseback on one of the three property warehouses while the Company continues to explore alternative sites.

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-Q

Item 1. Financial Statements