What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-04-17 compared with 2024-04-11 · 472 added, 327 removed, 592 unchanged (57% of the section changed)

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Reports of Independent Registered Public Accounting Firm (PCAOB ID No.

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Statements of Operations for the Years Ended January 31, 2025 and 2024

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Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Lakeland Industries, Inc.

To the Stockholders and the Board of Directors of Lakeland Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lakeland Industries, Inc.

and subsidiaries (the "Company") as of January 31, 2024 and 2023, the related statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the two years in the period ended January 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended January 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 10, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

We have audited the accompanying consolidated balance sheet of Lakeland Industries, Inc.

and its subsidiaries (the Company) as of January 31, 2025, the related consolidated statements of operations, comprehensive (loss), stockholders' equity and cash flows for the year then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2025, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Our report dated April 16, 2025 expressed an opinion that the Company had not maintained effective internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

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

The communication of 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 matters or on the accounts or disclosures to which they relate.

Acquisitions — Pacific Helmets NZ Limited —Intangible Assets— Refer to Notes 1 and 6 to the financial statements

Critical Audit Matter Description

The Company completed the acquisition of Pacific Helmets NZ Limited (“Pacific”) on November 30, 2023.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

Accordingly, the Company allocated the purchase price, on a preliminary basis, to the assets acquired and liabilities assumed based on their estimated fair values.

The Company recorded intangible assets related to customer relationships, trade names and trademarks and technological know-how.

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:

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

The communication of 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 separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisitions of Pacific Helmets NZ Limited, Jolly Scarpe S.p.A.

and Jolly Scarpe Romania S.R.L.,– Valuation of Intangible Assets

As described in Note 6 to the consolidated financial statements, the Company completed the acquisitions of Pacific Helmets NZ Limited (Pacific) for $6.3 million on November 30, 2023, and Jolly Scarpe S.p.A.

and Jolly Scarpe Romania S.R.L.

(collectively, Jolly) for $9.0 million on February 5, 2024.

The Company accounted for these transactions under the acquisition method of accounting for business combinations.

The Pacific purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including identifiable intangible assets of $2.2 million, which consisted of customer relationships, tradename, technological know-how and resulting goodwill of $3.0 million.

The Jolly purchase price was allocated to the assets acquired and liabilities assumed based on their respective fair values, including identifiable intangible assets of $1.3 million, which consisted of customer relationships, tradename, technological know-how and resulting goodwill of $1.4 million.

Acquired intangible assets were valued using certain methods including the excess earnings approach and relief from royalty methods specific to the type of intangible asset acquired.

Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasted revenue growth rates, EBITDA margins and resulting forecasted cash flows, as well as royalty and discount rates.

Given the fair value determination of the intangible assets for Pacific requires management to leverage complex valuation methodologies and make significant estimates and assumptions related to the forecasts of revenue, EBITDA margins and resulting future cash flows and the selection of royalty and discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future revenues and EBITDA margins and resulting future cash flows, the selection of valuation methodologies utilized, and the selection of the royalty and discount rates for the intangible assets, included the following, among others:

We evaluated the design and operating effectiveness of controls over the valuation of the intangible assets, including management’s controls over forecasts which estimate future cash flows and selection of the royalty and discount rates.

We assessed the reasonableness of management’s forecasts of future revenues, EBITDA margin and cash flows by comparing the projections to historical results, actual results through year-end, and relevant industry reports and evaluated whether the estimated resulting future cash flows were consistent with evidence obtained in other areas of the audit.

With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodologies and (2) the valuation assumptions used in the fair value analyses by:

Comparing the selected royalty rate to market data for comparable rates.

Testing the mathematical accuracy of the calculations of the royalty and discount rates.

Developing a range of independent estimates for the royalty and discount rates and comparing those to the rates selected by management.

Equity method investment - Refer to Notes 1 and 4 to the financial statements

Critical Audit Matter Description

The Company uses the equity method of accounting to account for its $4.7 million investment in the Class A stock of Inova Design Solutions Ltd, a private limited company incorporated under the laws of England and Wales and headquartered in the United Kingdom, doing business as Bodytrak® (“Bodytrak”).

The Company also holds $2.2 million of notes receivable from Bodytrak which are convertible into shares of the entity.

The Company evaluates its equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired.

If the decline in fair value is deemed to be other than temporary, the investment is written down to fair value.

In situations where the fair value of an investment is not evident due to a lack of a public market price or other factors, the Company uses its best estimates and assumptions to arrive at the estimated fair value of such investment based on accepted valuation methods, which require management to make significant estimates and assumptions related to future cash flows and the selection of the discount rate used in the valuation.

We identified the estimation of future cash flows and discount rate associated with the valuation of Bodytrak as a critical audit matter due to the significant judgments required in the estimation of future revenues and resulting cash flows and the selection of the discount rate.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s forecasts of future cash flows and the selection of the discount rate.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the estimates and assumptions utilized in the determination of fair value used for the impairment analysis included the following, among others:

We evaluated the design and tested the operating effectiveness of controls related to the accounting for potential impairment of the investment.

We evaluated the reasonableness of the forecasts of future revenues and resulting cash flows by comparing those estimates to historical results, internal communications to management and the Board of Directors, existing arrangements with customers, and relevant industry/market data.

With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology and (2) discount rate by:

Testing the source information underlying the determination of the discount rate and testing the mathematical accuracy of the calculation.

Developing a range of independent estimates and comparing those to the discount rate selected by management.

Independently testing the guideline public company market valuation prepared by management’s specialist to further evaluate the estimated fair value.

We considered whether other information obtained during the course of our audit represented contradictory evidence in relation to the estimated future revenues and resulting cash flow projections utilized in the model.

/s/ Deloitte & Touche LLP

Memphis, Tennessee

April 10, 2024

Several significant assumptions and estimates were involved in the application of these valuation methods, including forecasts of revenue growth rates, operating margins, attrition rates, discount rates and royalty rates.

Given the fair value determination of the intangible assets for Pacific and Jolly requires management to leverage complex valuation methodologies and make significant estimates and assumptions related to the forecasts of revenue growth rates, operating margins and resulting future cash flows and the selection of royalty and discount rates, performing audit procedures to evaluate the reasonableness of these estimates and assumptions required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

Our audit procedures related to the Company’s valuation of acquired intangible assets as part of the Pacific and Jolly acquisition included the following, among others:

We obtained an understanding of the relevant controls related to the valuation of acquired intangible assets and tested such controls for design and operating effectiveness, including management controls related to significant assumptions.

We evaluated the reasonableness of management’s revenue growth rate and operating margin forecasts, and attrition rates by comparing the projections to historical results as well as industry benchmarks and tested the underlying data for accuracy and completeness.

With the assistance of our fair value specialists, we evaluated the reasonableness of the Company’s valuation methodology and significant assumptions by:

Assessing the appropriateness of management’s valuation methodology based on the nature of the fair value estimate

Testing the source information underlying the determination of the discount rates and verifying the mathematical accuracy of the calculation.

Developing an analysis of the discount rates and compared that analysis to the discount rates selected by management.

Goodwill Impairment Assessment – Pacific Helmets NZ Limited and Eagle Technical Products Limited

As described in Note 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was $16.2 million as of January 31, 2025, after a goodwill impairment charge of $10.5 million relating to the Pacific Helmets NZ Limited (Pacific) and Eagle Technical Products Limited (Eagle) reporting units.

Goodwill, at the reporting unit level, is tested by the Company for impairment at least annually.

The fair values of the reporting units for the goodwill impairment assessment are determined using an income approach, through a discounted cash flow model and the guideline public company approach, through selected multiples.

The determination of the fair values of each reporting unit requires management to make significant estimates and assumptions related to the specific circumstances of each reporting unit such as revenue projections, projected operating cash flow margins, discount rates and the selection of guideline public company multiples.

We identified the Pacific and Eagle goodwill impairment assessment as a critical audit matter because of the significant assumptions management used in the impairment assessments.

Auditing management’s judgments used in the impairment assessments regarding revenue projections, projected operating cash flow margins, discount rates and guideline public company multiples involved a high degree of auditor judgment and increased audit effort.

Our audit procedures related to the Company’s goodwill impairment assessments for the Pacific and Eagle reporting units included the following, among others:

We obtained an understanding of the relevant controls related to the Company’s goodwill impairment assessments and tested such controls for design and operating effectiveness, including management controls related to significant assumptions.

We evaluated the reasonableness of management’s revenue and operating cash flow projections by comparing them to actual results and historical trends and tested the underlying data for accuracy and completeness.

With the assistance of our fair value specialists with specialized knowledge and experience with impairment of goodwill we evaluated management’s assessment and significant assumptions by:

Evaluating the appropriateness of the valuation methodologies used by management and testing the accuracy of the calculations

Testing the source information underlying the determination of the discount rates and verifying the mathematical accuracy of the calculation.

Developing an analysis of the discount rates and compared that analysis to the discount rates selected by management.

Testing the selection of guideline public company multiples.

/s/ RSM US LLP

We have served as the Company's auditor since 2024.

Fort Lauderdale, Florida

April 16, 2025

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Lakeland Industries, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Lakeland Industries, Inc.

and subsidiaries (the “Company”) as of January 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2024, of the Company and our report dated April 10, 2024, expressed an unqualified opinion on those financial statements.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Pacific Helmets NZ Limited, which was acquired on November 30, 2023, and whose financial statements constitute 6% and 6% of net and total assets, respectively, less than 1% of revenues, and 4% of net income of the consolidated financial statement amounts as of and for the year ended January 31, 2024.

Accordingly, our audit did not include the internal control over financial reporting at Pacific Helmets NZ Limited.

Opinion on the Internal Control Over Financial Reporting

We have audited Lakeland Industries, Inc.

and subsidiaries’ (the Company) internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended January 31, 2025, of the Company and our report dated April 16, 2025 expressed an unqualified opinion.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Jolly Scarpe S.p.A.

and Jolly Scarpe Romania S.R.L.

(collectively, "Jolly"), LHD Group Deutschland GmbH, LHD Group Australia Pty Ltd and LHD Group Hong Kong Ltd., (collectively, the “LHD Group”), and Veridian, Ltd., from its assessment of internal control over financial reporting as of January 31, 2025, because they were acquired by the Company through business combinations on February 5, 2024, July 1, 2024, December 16, 2024, respectively.

We have also excluded Jolly, LHD Group and Veridian, Ltd.

from our audit of internal control over financial reporting.

Jolly, LHD Group and Veridian, Ltd.

are a wholly owned subsidiaries whose total assets and net loss represent approximately 37% and 5%, respectively, of the related consolidated financial statement amounts as of and for the year ended January 31, 2025.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management's assessment.

For those locations where the financially relevant systems were not in-scope and not subject to the Company’s testing of information technology general controls, the financial reporting controls, as designed, do not adequately address the completeness and accuracy of the foreign reporting packages.

The foreign reporting packages form the basis of multiple controls including a key management review control designed to detect a material misstatement in the Company’s consolidated financial statements as well as other controls.

Additionally, the Company did not update the control activities documentation for numerous locations and, in some cases, did not change control processes to reflect changes in operating structure.

This contributed to the material weakness described herein in the Company’s internal controls.

This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2025 financial statements, and this report does not affect our report dated April 16, 2025 on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ RSM US LLP

Fort Lauderdale, Florida

April 16, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Lakeland Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Lakeland Industries, Inc.

and subsidiaries (the "Company") as of January 31, 2024, the related statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for the period ended January 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2024, and the results of its operations and its cash flows for the period ended January 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Memphis, Tennessee

April 10, 2024

April 10, 2024, except for Note 14, as to which the date is April 16, 2025

We began serving as the Company’s auditor in 2020.

In 2024, we became the predecessor auditor.

Lakeland Industries, Inc.

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Operating expenses

Operating profit

Other income (expense), net

Goodwill impairment

Operating (loss) income

Impairment of equity method investment

Other income, net

Interest expense

Income before taxes

Income tax expense

Net income per common share:

(Loss) income before taxes

Income tax (benefit) expense

Net (loss) income

Net (loss) income per common share:

Weighted average common shares outstanding:

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and Subsidiaries

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

For the Years Ended January 31, 2025 and 2024

Other comprehensive income:

Net (loss) income

Other comprehensive loss:

Foreign currency translation adjustments

Comprehensive income (loss)

Comprehensive (loss) income

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

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Intangible assets, net

Equity investments

Equity method investments

Convertible debt investments

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Accrued earnout agreement

Current portion of operating lease liability

Current portion of operating lease liabilities

Total current liabilities

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Loans payable – long term

Long-term portion of operating lease liability

Long-term portion of operating lease liabilities

Total liabilities

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Treasury stock, at cost;

1,358,208 and 1,330,694 shares at January 31, 2024 and 2023, respectively

1,358,208 shares at January 31, 2025 and 2024

Additional paid-in capital

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For the Years Ended January 31, 2025 and 2024

($000’s, except share information)

Treasury Stock

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Balance, January 31, 2023

( 1,330,694 )

Dividends paid

Other comprehensive loss

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Dividends paid

Other comprehensive income

Other comprehensive loss

Underwritten stock offering, net of expenses

Stock-based compensation:

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Return of shares in lieu of payroll tax withholding

Treasury stock purchased

Balance, January 31, 2025

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Cash flows from operating activities:

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

Provision for (recovery of) doubtful accounts

Net (loss) income

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

Provision for doubtful accounts

Deferred income taxes

Depreciation and amortization

Stock based and restricted stock compensation

(Gain) loss on disposal of property and equipment

Equity in (earnings) loss of equity investment

Revaluation of earnout consideration

(Increase) decrease in operating assets:

Amortization of step-up in inventory basis

Stock based compensation

Loss (gain) on disposal of property and equipment

Equity in loss of equity method investment

Change in fair value of earnout consideration

Impairment of equity method investment

Impairment of goodwill

(Increase) decrease in operating assets, net of effects of business acquisitions:

Accounts receivable

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Operating lease liabilities

Net cash provided by (used in) operating activities

Net cash (used in) provided by operating activities

Cash flows from investing activities:

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Cash flows from financing activities

Short term borrowings

Short term borrowings – repayments

Secondary stock offering proceeds

Term loan borrowings

Term loan repayments

Credit line borrowings

Credit line borrowings – repayments

UK borrowings (repayments) under line of credit facility

Dividends paid

Purchase of Treasury Stock under stock repurchase program

Repurchase of common stock

Shares returned to pay employee taxes under restricted stock program

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Cash paid for taxes

Noncash investing and financing activities

Leased assets obtained in exchange for operating lease liabilities

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

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Lakeland Industries, Inc.

and Subsidiaries (“Lakeland,” the “Company,” “we,” “our” or “us”), a Delaware corporation organized in April 1986, manufacture and sell a comprehensive line of industrial protective clothing and accessories for the industrial and public protective clothing market.

Our products are sold globally by our in-house sales teams, our customer service group, and authorized independent sales representatives to a network of over 2,000 global safety and industrial supply distributors.

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

and Subsidiaries, doing business as “Lakeland Fire + Safety” (“Lakeland,” the “Company,” “we,” “our” or “us”), manufacture and sell a comprehensive line of fire services and industrial protective clothing and accessories for the industrial and first responder markets.

Our products are sold globally by our in-house 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, such as 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 mixture of end users directly and to industrial distributors, depending on the particular country and market.

Sales are made to more than 50 countries, the majority of which were into China, countries within the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Middle East and countries within Southeast Asia.

For purposes of this Form 10-K, FY refers to a fiscal year ended January 31;

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.

As referred to herein, FY refers to a fiscal year ended January 31;

for example, FY25 refers to the fiscal year ended January 31, 2025.

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Inventories include freight-in, materials, labor and overhead costs and are stated at the lower of cost (on a first-in, first-out or moving average basis) or net realizable value.

Adjustments are recorded for slow-moving, obsolete or unusable inventory.

Allowances are recorded for slow-moving, obsolete or unusable inventory.

We assess our inventory for estimated obsolescence or unmarketable inventory and write down the difference between the cost of inventory and the estimated net realizable value based upon assumptions about future sales and supply on hand, if necessary.

If actual market conditions are less favorable than those projected by management, additional inventory adjustments may be required.

If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Property and Equipment

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Equity Method Investments

Investments in which the Company can exercise significant influence, but do not control, are accounted for using the equity method and are presented on the consolidated balance sheets.

Investments in which the Company can exercise significant influence but do not control, are accounted for using the equity method.

The Company’s share of the net earnings or losses of the investee is presented within the consolidated statements of operations as other income (expense).

The Company evaluates its equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired.

The primary factors the Company considers in its determination are the length of time that the fair value of the investment is below the Company's carrying value;

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and the financial condition, operating performance and near-term prospects of the investee.

If the decline in fair value is deemed to be other than temporary, the security is written down to fair value.

In situations where the fair value of an investment is not evident due to a lack of a public market price or other factors, the Company estimates fair value based on a discounted cash flow model and a market-based approach using inputs which include expected cash flows and a discount rate representative of the risks within the underlying business and forecasts to arrive at the estimated fair value of such investment.

If the decline in fair value is deemed to be other than temporary, the cost basis of the security is written down to fair value.

In situations where the fair value of an investment is not evident due to a lack of a public market price or other factors, the Company estimates fair value based on a discounted cash flow model and a market-based approach using inputs that include expected cash flows and a discount rate representative of the risks within the underlying business and forecasts to arrive at the estimated fair value of such investment.

Business combinations

In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate costs of acquired businesses to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition.

In accordance with the accounting guidance for business combinations, the Company uses the acquisition method of accounting to allocate the purchase price of an acquired business to the assets acquired and liabilities assumed based on their estimated fair values at the dates of acquisition.

The excess of the purchase price over the estimated fair value of assets and liabilities is recorded as goodwill.

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Probabilities are applied to each potential scenario, and the resulting values are discounted using a rate that considers the weighted average cost of capital as well as a specific risk premium associated with the riskiness of the contingent consideration itself, the related projections, and the overall business.

Should actual results increase or decrease as compared to the assumption used in our analysis, the fair value of the contingent consideration obligations will increase or decrease, up to the contracted limit, as applicable.

Changes in the fair value of the contingent earn-out consideration could cause a material impact and volatility in our operating results.

Goodwill and Other Intangible Assets

Intangible assets with a finite useful life are amortized on a straight-line basis over their useful lives.

Indefinite lived intangible assets are assessed for possible impairment annually on November 1st or whenever circumstances change such that the recorded value of the asset may not be recoverable.

Indefinite lived intangible assets are assessed for possible impairment annually on November 1st or whenever circumstances change such that the carrying value of the asset may not be recoverable.

All goodwill is assigned to and evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.

Goodwill is not amortized, but evaluated for impairment at least annually or whenever events or changes in circumstance indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Goodwill is not amortized but evaluated for impairment at least annually (on November 1) or whenever events or changes in circumstance indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company may perform either a qualitative assessment of potential impairment or proceed directly to a quantitative assessment of potential impairment.

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If the estimated fair value of a reporting unit is less than its carrying value, an impairment charge is recognized for the excess of the reporting unit's carrying value over its fair value.

Fair value is measured using on the discounted cash flow method and relative market-based approaches.

There has been no impairment of our goodwill during the years ended January 31, 2024 and 2023.

Fair value is measured using the discounted cash flow method and relative market-based approaches.

Revenue Recognition

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The Company recognizes revenue for the transfer of promised goods to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods.

Approximately 3% of the Company’s revenue is derived from maintenance, repair and laundry services for protective wear products.

Revenue from these service s represents a single-performance obligation.

The Company recognizes revenue at a point in time when the performance obligation under the terms of the contract with a customer is satisfied .

The Company typically satisfies its performance obligations in contracts with customers upon shipment of the goods.

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These advances are included in Other Accrued Expenses on the Company’s consolidated balance sheet.

The following is a roll-forward of the advances from the date of the Eagle acquisition, December 2, 2022 through January 31, 2024 (in $000s):

Contract liability – December 2, 2022

Increases to contract liability

Decreases to contract liability

Contract liability – January 31, 2023

Increases to contract liability

Decreases to contract liability

Contract liability – January 31, 2024

The Company has seven revenue generating reportable geographic segments under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its limited use/disposable protective clothing and secondarily from its sales of reflective clothing, high-end chemical protective suits, firefighting and heat protective apparel, reusable woven garments and gloves and arm guards.

The Company has seven revenue generating reportable geographic segments under ASC Topic 280 “Segment Reporting” and derives its sales primarily from its limited use/disposable protective clothing and firefighting and heat protective apparel and secondarily from its sales of reflective clothing, high-end chemical protective suits, reusable woven garments and gloves and arm guards.

The Company believes disaggregation of revenue by geographic region and product line best depicts the nature, amount, timing, and uncertainty of its revenue and cash flows (see table below).

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External Sales by Region:

Other foreign

USA Operations (including Corporate)

Latin America

Other foreign

Consolidated external sales

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Foreign Operations and Foreign Currency Translation

The Company maintains manufacturing operations in Mexico, India, Argentina, New Zealand, Vietnam and the People’s Republic of China and can access independent contractors in China, Vietnam, Argentina and Mexico.

It also maintains sales and distribution entities in India, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan, Uruguay, Australia and Mexico.

The Company maintains manufacturing operations in Mexico, India, Argentina, New Zealand, Romania, Vietnam and the People’s Republic of China and can access independent contractors in China, Vietnam, Argentina and Mexico.

It also maintains sales and distribution entities in India, Canada, the U.K., Chile, China, Argentina, Russia, Kazakhstan, Uruguay, Australia, New Zealand, Italy, Germany and Mexico.

The Company is vulnerable to currency risks in these countries.

The functional currency for the United Kingdom subsidiaries is the Pound;

The functional currency for the U.

K., the Pound;

the trading company in China, the RMB;

the Russian operation, the Russian Ruble;

the New Zealand Dollar in New Zealand, and the Kazakhstan operation, the Kazakhstan Tenge.

in Russia, the Ruble;

in New Zealand the New Zealand Dollar, in Germany and Italy the Euro, in Romania the Leu, in Australia the Australian Dollar, in Hong Kong the Hong Kong Dollar and in Kazakhstan the Kazakhstan Tenge.

All other operations have the U.S.

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Fair Value of Financial Instruments

The Company measures certain assets and liabilities at fair value.

US GAAP defines fair value, provides guidance for measuring fair value and requires certain disclosures utilizing a fair value hierarchy which is categorized into three levels based on the inputs to the valuation techniques used to measure fair value.

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There were no foreign currency forward or hedge contracts at January 31, 2025 or January 31, 2024.

The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, short-term borrowings, borrowings under revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fair value based on the short-term nature of these instruments.

The financial instruments of the Company classified as current assets or liabilities, including cash and cash equivalents, accounts receivable, borrowings under the revolving credit facility, accounts payable and accrued expenses, are recorded at carrying value, which approximates fair value based on the short-term nature of these instruments.

Borrowings under the company’s loan agreement approximate fair value as such borrowings bear interest at variable rates.

Certain assets, in specific circumstances, are measured at fair value on a non-recurring basis utilizing Level 3 inputs such as goodwill, intangibles and the equity method investment.

For these assets, measurement at fair value in periods subsequent to their initial recognition would be applicable if one or more of these assets were determined to be impaired.

Net Income Per Share

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The diluted net income per share calculation takes into account unvested restricted shares and the shares that may be issued upon the exercise of stock options, reduced by shares that may be repurchased with the funds received from the exercise, based on the average price during the fiscal year.

Recent Accounting Pronouncements

Recently Adopted and Issued Accounting Standards and Disclosure Rules

The Company considers the applicability and impact of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting standards that are issued.

Segment Reporting

The Company adopted ASU No.

2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures for the year ended January 31, 2025 and applied it retrospectively for the prior period presented.

See “Note 14.

Segment Reporting.”

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

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The Company plans to adopt the provisions of this guidance in conjunction with our Form 10-K for our fiscal year ending January 31, 2026.

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” This guidance requires a public entity to disclose for each reportable segment, on an interim and annual basis, the significant expense categories and amounts that are regularly provided to the chief operating decision-maker (“CODM”) and included in each reported measure of a segment’s profit or loss.

Additionally, it requires a public entity to disclose the title and position of the individual or the name of the group or committee identified as the CODM.

This guidance is effective for fiscal years beginning after December 31, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted and the guidance should be applied retrospectively to all periods presented in the financial statements, unless it is impracticable.

The Company plans to adopt the provisions of this guidance in conjunction with our Form 10-K for the fiscal year ending January 31, 2025.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU No.

2024-03 (“ASU 2024-03”), Disaggregation of Income Statement Expenses (“DISE”) .

ASU 2024-03 requires disaggregated disclosure of income statement expenses for public business entities.

ASU 2024-03 does not change the expense captions an entity presents on the face of the income statement;

rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

As revised by ASU No.

2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, the provisions of ASU 2024-03 are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

With the exception of expanding disclosures to include more granular income statement expense categories, we do not expect the adoption of ASU 2024-03 to have a material effect on our consolidated financial statements taken as a whole.

INVENTORIES, NET

Inventories consist of the following (in $000s):

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Property and equipment consist of the following (in $000s):

Useful Life in

Machinery and equipment

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Leasehold improvements

Shorter of lease term or useful life

Computer hardware and software

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On October 26, 2022, the Company acquired an additional 254,452 Series A Shares of Bodytrak for £1,000,000 ($ 1.2 million).

After completion of these additional investments, the Company owned 22.5 % of Bodytrak’s total share capital.

After the completion of these additional investments, the Company owned 22.5 % of Bodytrak’s total share capital.

The investment in Bodytrak is accounted for under the equity method, given our board representation and the resulting ability to exercise significant influence.

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An initial investment funding of £500,000 ($ 0.6 million on the date of investment) was made on May 19, 2023.

Additional investment fundings of £700,000 ($ 0.9 million on the date of investment) and £500,000 ($ 0.6 million on the date of investment) were made on September 8, 2023 and December 15, 2023, respectively.

Additional investment fundings of £700,000 ($ 0.9 million on the date of investment), £500,000 ($ 0.6 million on the date of investment), £500,000 ($ 0.6 million on the date of investment) and £200,000 ($ 0.3 million on the date of investment) were made on September 8, 2023, December 15, 2023, February 13, 2024 and August 28, 2024, respectively.

The loaned amounts are due twenty-four months from the issue date, which can be extended upon mutual agreement.

The convertible note bears interest at either an annual rate of 12% for cash interest or 15% for payment in kind interest on the outstanding amount under the note, such rate being selected by Bodytrak.

The notes can be converted into equity shares of Bodytrak under a number of conditions, including a qualified equity financing as defined in the agreement, a change of control, an IPO, default or conversion at the discretion of the Company and upon the occurrence of the specified event.

The convertible note is secured by Bodytrak’s intellectual property.

The convertible notes bear interest at either an annual rate of 12% for cash interest or 15% for payment in kind interest on the outstanding amount under the note, such rate being selected by Bodytrak.

There have been no payments received on the convertible notes during the years ended January 31, 2025 and 2024.

The notes were convertible into equity shares of Bodytrak under a number of conditions, including a qualified equity financing as defined in the agreement, a change of control, an IPO, default or conversion at the discretion of the Company and upon the occurrence of the specified event.

The convertible notes are secured by Bodytrak’s intellectual property.

Bodytrak provides wearable monitoring solutions for customers in industrial health, safety, defense and first responder markets wanting to achieve better employee health and performance.

Bodytrak’s solution is provided as a platform as a service (PaaS), delivering real-time data, cloud-based analytics, and hardware that includes a patented earpiece for physiological monitoring and audio communications.

For FY24 and FY23, the Company recognized losses of $ 0.6 and $ 0.4 million, respectively.

The loss is reflected in other income (expense), net in the consolidated statements of operations.

The Company’s investment in Bodytrak has generated losses since its initial acquisition and has required repeated rounds of financing to maintain operations.

In February 2025, Bodytrak entered insolvency proceedings in the United Kingdom.

Since the initial date of acquisition through January 31, 2025, the Company has recognized a total of $ 1.5 million in losses from its investment in Bodytrak.

As of January 31, 2025, the Company recorded an impairment loss of $ 7.6 million for the remaining recorded value of the equity method and convertible debt investments.

GOODWILL AND INTANGIBLE ASSETS

Changes in goodwill during the fiscal years ended January 31, 2024 and 2023, were as follows (in $000s):

Balance at February 1

Goodwill as of January 31, 2025 and 2024, and changes in goodwill during the fiscal years then ended, were as follows (in $000s):

USA Operations

Other Foreign

Balance at January 31, 2023

Measurement period adjustment

Currency translation

Balance at January 31, 2024

During FY24 , a measurement period adjustment was recorded to recognize deferred tax liabilities of $ 1.4 million associated with the finite-lived intangibles acquired in the Eagle acquisition, with a corresponding increase to goodwill.

Changes in intangible assets during the fiscal years ended January 31, 2024 and 2023, were as follows (in $000s):

Balance at February 1

Measurement period adjustment

Currency translation

Balance at January 31, 2025

The Company performed valuations of the Pacific and Eagle reporting units using market value and discounted cash flow methodologies.

Pacific’s forecast was impac ted b y planned investments to improve future profitability, but the profitability has not improved as much as expected.

Eagle has variability in their revenue as they primarily sell through tenders which impacte d their financial outlook.

Given the results of the quantitative assessment, the Company determined that the goodwill of the Pacific reporting unit was impaired and the goodwill of the Eagle reporting unit was partially impaired.

As a result, the Company recognized a goodwill impairment charge of $ 3.0 million representing the entire amount of goodwill related to the Pacific reporting unit in the Other Foreign geographic segment and recognized a goodwill impairment charge of $ 7.5 million representing 83% of goodwill related to the Eagle reporting unit in the Europe geographic segment for the year ended January 31, 2025.

During FY24 , a measurement period adjustment was recorded to recognize deferred tax liabilities of $ 1.4 million associated with the finite-lived intangibles acquired in the FY23 Eagle acquisition, with a corresponding increase to goodwill.

Intangible assets as of January 31, 2025 and 2024, and changes in intangible assets during the fiscal years then ended, were as follows (in $000s):

Balance at beginning of year

Measurement period adjustments

Currency translation

Balance at end of year

January 31, 2025

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Technological know-how

Amortization expense was $ 1.0 million and $ 0.4 million for the fiscal years ended January 31, 2025 and 2024, respectively.

Intangible asset amortization expense over the next five years is expected to be approximately $ 1.9 million per year.

Acquisition of Pacific

On November 30, 2023 the Company acquired New Zealand-based Pacific Helmets NZ Limited (“Pacific”) in an all-cash transaction valued at approximately NZ$14.000,000 ($ 8.5 million at the closing date exchange rate) including assumption of debt, subject to post-closing adjustments and customary holdback provisions.

The acquisition enhances Lakeland’s product portfolio, particularly within fire service protective helmets.

Headquartered in Whanganui, New Zealand, Pacific is a leading designer and provider of structural firefighting, wildland firefighting, and technical rescue helmets.

The transaction was funded through the revolving credit facility and cash balances.

Pacific’s operating results are included in our consolidated financial statements from the acquisition date.

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.

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

Veridian’s operating results are included in our consolidated financial statements from the acquisition date.

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

As part of the acquisition agreement, Pacific will pay from the holdback an amount equal to the amount by which Pacific’s revenue falls below NZ$ 11.1 million for Pacific’s fiscal year ending March 31, 2024 subject to certain conditions.

The estimated amount of the reduction to the holdback to be paid by the Company is less than $0.1 million.

The estimate was developed using a Monte Carlo simulation.

If Pacific exceeds the revenue target of NZ$11.1 million, Pacific will not receive any additional consideration .

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

Veridian’s operating results and assets, including acquired intangibles and goodwill, are reported as part of United States 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:

Net working capital acquired, including cash of $0.5 million

Property, plant and equipment

Right of use assets

Customer relationships

Lease liabilities

Other liabilities assumed

Total net assets acquired

Assets acquired and liabilities assumed in connection with the acquisition were recorded at estimated fair values.

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, and the cost method for the assembled workforce which was included in goodwill.

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.

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

Amortization of Veridian’s identifiable intangible assets will be deductible for tax purposes.

Goodwill is calculated as the excess of the purchase price over the estimated fair value of net assets acquired and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Among the factors that contributed to a purchase price in excess of the estimated fair value of the net tangible and intangible assets acquired were the acquisition of an assembled workforce, the expected synergies and other benefits that we believe will result from combining the operations of Veridian with our operations.

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.

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 LHD

On July 1, 2024, the Company acquired 100 % of the shares of the fire and rescue business of LHD Group Deutschland GmbH 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 cleaning, repair, and maintenance.

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

LHD’s operating results are included in our consolidated financial statements from the acquisition date.

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

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 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

Property, plant and equipment

Right of use assets

Customer relationships

Trade names and trademarks

Technological know-how

Total assets acquired

Less liabilities assumed

Net assets acquired

Lease liabilities

Other liabilities assumed

Total net assets acquired

Assets acquired and liabilities assumed in connection with the acquisition were recorded at estimated fair values.

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;

and the cost method for the assembled workforce was included in goodwill.

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

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

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

The customer relationships, trade names and trademarks and technological know-how acquired in the Pacific transaction are being amortized over periods of 14 years, 15 years and 10 years, respectively.

The customer relationships, trade names and trademarks and technological know-how acquired in the LHD transaction are being amortized over periods of 20 years, 10 years and 15 years, respectively, and are 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 and valuations related to contingent consideration, inventory, contractual relationships, tangible assets and intangible assets.

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 Eagle

On December 2, 2022, we acquired 100% of Eagle's common stock in an all-cash transaction valued at $ 10.5 million, net of net working capital acquired.

Headquartered in Manchester, UK, Eagle is a leading designer and provider of protective apparel to the fire and industrial sectors.

Eagle provides differentiated product offerings through its innovative and technical solutions.

Eagle’s operating results are included in our consolidated financial statements from the acquisition date.

Acquisition of Jolly

On February 5, 2024, the Company acquired 100 % of the shares of Italy and Romania-based Jolly Scarpe S.p.A.

and Jolly Scarpe Romania S.R.L.

(collectively, “Jolly”) in an all-cash transaction.

Total consideration was $ 9.0 million, of which $ 7.5 million was paid to the seller at closing, and $ 1.5 million remained unpaid subject to post-closing adjustments and customary holdback provisions.

Jolly is a leading designer and manufacturer of professional footwear for the firefighting, military, police, and rescue markets.

The company is headquartered in Montebelluna, Italy, with manufacturing operations in Bucharest, Romania, and has 150 employees.

Jolly’s primary customers are based in Europe.

Jolly’s operating results are included in our consolidated financial statements from the acquisition date.

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

As part of the Eagle acquisition agreement, the Company agreed to pay an earnout payment equal to the amount by which Eagle’s revenue exceeds 6 million GBP for the period May 1, 2022 through April 30, 2023.

The Company also agreed to pay an earnout payment equal to the amount by which Eagle’s revenue exceeds 6.3 million GBP for the period May 1, 2023 through April 30, 2024.

The estimated amount of the earnout payment developed using a Monte Carlo simulation included in the preliminary valuation was $ 3.2 million.

Eagle did not reach the revenue threshold for the period May 1, 2022 through April 30, 2023 and received no payment for that period.

Based on the revised forecast for the period May 1, 2023 through April 30, 2024, the estimated amount of the earnout payment developed using a Monte Carlo simulation is $0.6 million.

The adjustment to the accrued earnout payment of $2.5 million was recorded in FY24, and reflected as a reduction in operating expenses .

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

Current assets acquired (including cash of $2.2 million)

Jolly’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 fair values of the Jolly assets acquired and liabilities assumed at the date of the acquisition and reflective of measurement period adjustments:

Net working capital acquired, including cash of $3.0 million and inventory of $6.0 million

Property, plant and equipment

Right of use assets

Customer relationships

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Technological know-how

Lease liabilities

Other liabilities assumed, including debt of $3.7 million

Total net assets acquired

Assets acquired and liabilities assumed in connection with the acquisition were recorded at estimated fair values.

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 forecasts.

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

The customer relationships, trade names and trademarks and technological know-how acquired in the Jolly transaction are being amortized over periods of 14 years, 10 years and 10 years, respectively, and are not deductible for tax purposes .

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

Acquisition of Pacific

On November 30, 2023 the Company acquired 100 % of the shares of New Zealand-based Pacific Helmets NZ Limited (“Pacific”) in an all-cash transaction valued at approximately $ 6.3 million including the assumption of debt, subject to post-closing adjustments and customary holdback provisions.

The acquisition enhances Lakeland’s product portfolio, particularly within fire service protective helmets.

Headquartered in Whanganui, New Zealand, Pacific is a leading designer and provider of structural firefighting, wildland firefighting, and technical rescue helmets.

The transaction was funded through the revolving credit facility and cash balances.

Pacific’s operating results are included in our consolidated financial statements from the acquisition date.

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

As part of the acquisition agreement, Pacific paid from the holdback an amount equal to the amount by which Pacific’s revenue fell below NZ$ 11.1 million for Pacific’s fiscal year ended March 31, 2024 subject to certain conditions.

The amount of the reduction to the holdback was $ 0.3 million.

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

Net working capital acquired including cash of $0.1 million

Property, plant and equipment

Right of use assets

Customer relationships

Trade names and trademarks

Technological know-how

Total assets acquired

Lease liabilities

Less liabilities assumed

Net assets acquired

Total net assets acquired

Assets acquired and liabilities assumed in connection with the acquisition were recorded at estimated fair values.

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;

and the cost method for the assembled workforce was included in goodwill.

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

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

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

The customer relationships, trade names and trademarks and technological know-how acquired in the Eagle transaction are being amortized over periods of 15 years, 15 years and 17 years, respectively.

Liabilities assumed primarily relate to customer deposits included within Other Accrued Expenses.

During FY24 , a measurement period adjustment was recorded to recognize deferred tax liabilities of $ 1.4 million associated with the finite-lived intangibles acquired, with a corresponding increase to goodwill.

The following unaudited pro forma information presents our combined results as if the Pacific and Eagle acquisitions had occurred at the beginning of FY23.

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

Total acquisition-related costs were $ 2.0 million and $ 0.5 million for the years ended January 31, 2025 and 2024, respectively.

Transactional costs and acquisition-related amortization is included in operating expenses in the Consolidated Statements of Operations.

The following unaudited pro forma information presents our combined results of operations as if the Veridian, LHD, Jolly and Pacific acquisitions had occurred at the beginning of FY24.

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting under existing U.S.

The Company has been treated as the acquirer.

The unaudited pro forma financial information was prepared to give effect to events that are (1) directly attributable to the acquisition;

(2) factually supportable;

and (3) expected to have a continuing impact on the combined company's results.

(2) factually supportable, and (3) expected to have a continuing impact on the combined company's results.

There were no material transactions between the Company and the acquired entities during the periods presented that are required to be eliminated.

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Pro forma combined financial information (Unaudited)

(in millions, except per share amount)

(in millions, except per share amounts)

Year Ended January 31

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Diluted 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 periods presented, and should not be taken as representative of our consolidated results of operations or financial condition following the acquisition.

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 that we would have reported had the acquisition been completed as of the beginning of FY24 and should not be taken as representative of our consolidated results of operations following the acquisition.

In addition, the unaudited pro forma combined financial information is not intended to project the future results of the combined company.

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting under existing U.S.

The Company has been treated as the acquirer.

Total acquisition-related costs were $ 0.5 million and $ 0.6 million for the years ended January 31, 2024 and 2023, respectively.

Transactional costs and acquisition-related amortization is included in operating expenses in the Consolidated Statements of Operations.

LONG-TERM DEBT

Revolving Credit Facility

On June 25, 2020, the Company entered into a Loan Agreement (the “Loan Agreement”) with Bank of America (“Lender”).

The Loan Agreement provides the Company with a secured (i) $ 12.5 million revolving credit facility, which includes a $ 5 .0 million letter of credit sub-facility.

The Company may request from time to time an increase in the revolving credit loan commitment of up to $5.0 million (for a total commitment of up to $17.5 million).

Borrowing pursuant to the revolving credit facility is subject to a borrowing base amount calculated as (a) 80% of eligible accounts receivable, as defined, plus (b) 50% of the value of acceptable inventory, as defined, minus (c) certain reserves as the Lender may establish for the amount of estimated exposure, as reasonably determined by the Lender from time to time, under certain interest rate swap contracts.

The borrowing base limitation only applies during periods when the Company’s quarterly funded debt to EBITDA ratio, as defined, exceeds 2.00 to 1.00 .

The credit facility was to mature on June 25, 2025 .

Borrowings under the revolving credit facility bear interest at a rate per annum equal to the sum of the LIBOR Daily Floating Rate (“LIBOR”), plus 125 basis points.

LIBOR is subject to a floor of 100 basis points.

On June 25, 2020, the Company entered into a Loan Agreement (the “Original Loan Agreement”) with Bank of America, N.A.

(“Lender”), as amended by Amendment No.

1 to the Loan Agreement, dated June 18, 2021 (“Amendment No.

1”), Amendment No.

2 to the Loan Agreement, dated March 3, 2023 (“Amendment No.

2”), Amendment No.

3 to the Loan Agreement, dated November 30, 2023 (“Amendment No.

3”), Amendment No.

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

4”), and Amendment No.

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

5” and, collectively with Amendment No.

1, Amendment No.

2, Amendment No.

3, and Amendment No.

4, the “Loan Agreement Amendments”;

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).

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

On January 24, 2025, as required by the Amended Loan Agreement, the Company used certain net proceeds of its equity issuance to reduce the principal amount outstanding under the Amended Loan Agreement.

As a result thereof, the maximum principal amount under the revolving credit facility was reduced to $ 40 million.

The credit facility matures on December 12, 2029.

Borrowings under the revolving credit facility bear interest at a rate per annum equal to the sum of (i) the greater of the daily Secured Overnight Financing Rate (“SOFR”) or an index floor of 1% plus (ii) the Applicable Rate (as defined in the Amended Loan Agreement).

The Applicable Rate is based upon a funded debt to EBITDA ratio (discussed below) and includes four different levels constituting a SOFR margin range from 1.25 % to 2.00 %.

All outstanding principal and unpaid accrued interest under the revolving credit facility is due and payable on the maturity date.

On a one-time basis, and subject to there not existing an event of default, the Company may elect to convert up to $ 5.0 million of the then outstanding principal of the revolving credit facility to a term loan facility with an assumed amortization of 15 years and the same interest rate and maturity date as the revolving credit facility.

The Loan Agreement provides for an annual unused line of credit commitment fee, payable quarterly, of 0.25%, based on the difference between the total credit line commitment and the average daily amount of credit outstanding under the facility during the preceding quarter .

On June 18, 2021, the Company entered into Amendment No.

1 to the Loan Agreement (the “Amendment”) with the Lender, which modified certain terms of the Company’s existing Loan Agreement with the Lender.

The Amendment increased the credit limit under the Loan Agreement’s senior secured revolving credit facility from $ 12.5 million to $ 25.0 million.

The Amendment also amended the covenant in the Loan Agreement that restricts acquisitions by the Company or its subsidiaries in order to allow, without the prior consent of the Lender, acquisitions of a business or its assets if there is no default under the Loan Agreement and the aggregate consideration does not exceed $ 7.5 million for any individual acquisition or $15.0 million on a cumulative basis for all such acquisitions.

The Loan Agreement requires the Company to maintain a Funded Debt to EBITDA (as each such term is defined in the Loan Agreement) ratio of 3.0 to 1.0 or less and a Basic Fixed Charge Coverage Ratio (as defined in the Loan Agreement) of at least 1.15 to 1.0.

The Loan Agreement also contains customary covenants, including covenants that, among other things, limit or restrict the Company’s and/or the Company’s subsidiaries’ ability, subject to certain exceptions and qualifications, to incur liens or indebtedness, pay dividends or merge, consolidate or sell or otherwise transfer assets.

The Amended Loan Agreement provides for a fee on any difference between the line of credit commitment and the amount of credit it actually uses, determined by the daily amount of credit outstanding during the specified period.

Such fee is calculated at the Applicable Rate and is payable quarterly.

The Company made certain representations and warranties to the Lender in the Amended Loan Agreement that are customary for credit arrangements of this type.

The Company also agreed to maintain, as of the end of each fiscal quarter a minimum “basic fixed charge coverage ratio” (as defined in the Amended Loan Agreement) of at least 1.20x and a “funded debt to EBITDA ratio” (as defined in the Amended Loan Agreement) not to exceed 3.5x (with step-downs to 3.25x and 3.0x on February 1, 2026 and February 1, 2027, respectively), in each case for the trailing 12-month period ending with the applicable quarterly reporting period.

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 January 31, 2025.

The Company made certain representations and warranties to the Lender in the Loan Agreement that are customary for credit arrangements of this type.

The Company also agreed to maintain, as of the end of each fiscal quarter, a minimum “basic fixed charge coverage ratio” (as defined in the Loan Agreement) of at least 1.15 to 1.00 and a “funded debt to EBITDA ratio” (as defined in the Loan Agreement) not to exceed 3.00 to 1.00, in each case for the trailing 12-month period ending with the applicable quarterly reporting period.

The Company also agreed to certain negative covenants that are customary for credit arrangements of this type, including restrictions on the Company’s ability to enter into mergers, acquisitions or other business combination transactions, conduct its business, grant liens, make certain investments, make substantial change in the present executive or management personnel and incur additional indebtedness, which negative covenants are subject to certain exceptions.

The Loan Agreement contains customary events of default that include, among other things (subject to any applicable cure periods and materiality qualifier), non-payment of principal, interest or fees, defaults under related agreements with the Lender, cross-defaults under agreements for other indebtedness, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments and material adverse change.

Upon the occurrence of an event of default, the Lender may terminate all loan commitments, declare all outstanding indebtedness owing under the Loan Agreement and related documents to be immediately due and payable, and may exercise its other rights and remedies provided for under the Loan Agreement.

In connection with the 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 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

On November 30, 2023, the Company entered into Amendment No.

3 to the Loan Agreement by and between Bank of America, N.A.

(the “Lender”) and the Company (the “Third Amendment”).

Pursuant to the Third Amendment, the Lender consented to the Company’s acquisition of one hundred percent (100%) of the equity interests of Pacific.

The Third Amendment further provided for certain amendments to the Loan Agreement to permit additional indebtedness to be made available to Pacific, to exempt Pacific from certain requirements of the Loan Agreement pertaining to subsidiary guaranty and asset pledges that would otherwise be required under the Loan Agreement and to waive the Company’s borrowing base limitations through January 31, 2024.

The Third Amendment also provided for the reaffirmation of representations, warranties and covenants under the Loan Agreement as are customary in connection with similar amendments of credit documents.

As of January 31, 2024, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility.

On March 28, 2024, the Company entered into Amendment No.

4 to the Loan Agreement by and between Bank of America, N.A.

(the “Lender”) and the Company (the “Fourth Amendment”).

Pursuant to the Fourth Amendment, the Lender and the Company agreed to, among other things, (i) extend the expiration date of the credit facility to March 28, 2029, (ii) increase the availability under the revolving credit facility to $40.0 million with an accordion feature providing for the potential funding of an additional $10.0 million, (iii) remove the borrowing base component of the credit facility;

and (iv) modify the interest rate based on Daily SOFR plus the Applicable Rate .

The Applicable Rate is based upon a Funded Debt to EBITDA Ratio and includes four (4) different levels constituting a SOFR margin range from 1.25 % to 2.00 %.

In addition, the Fourth Amendment (i) modified the Funded Debt to EBITDA Ratio covenant so as not to exceed 3.5x (with step-downs to 3.25 and 3.0 in 2025 and 2026), (ii) modified the Basic Fixed Charge Coverage Ratio covenant to a minimum of 1.20x, (iii) includes a springing Asset Coverage Ratio covenant of at least 1.10x, but only to the extent that the maximum Total Leverage Ratio exceeds 3.00x at any reporting period, (iv) increases the sublimit for letters of credit to $10.0 million, and (v) imposes a floor to Daily SOFR of one percent (1.00%).

The Fourth Amendment provides for additional indebtedness or the assumption of existing indebtedness for acquisitions of foreign subsidiaries (not to exceed $10.0 million in USD) and increased the size of Permitted Acquisitions, without prior approval from the Lender, to $17.5 million per occurrence and $35.0 million in the aggregate .

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 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).

The Amended Loan Agreement contains customary events of default that include, among other things (subject to any applicable cure periods and materiality qualifier), non-payment of principal, interest or fees, defaults under related agreements with the Lender, cross-defaults under agreements for other indebtedness, violation of covenants, inaccuracy of representations and warranties, bankruptcy and insolvency events, material judgments and material adverse change.

Upon the occurrence of an event of default, the Lender may terminate all loan commitments, declare all outstanding indebtedness owing under the Amended Loan Agreement and related documents to be immediately due and payable, and may exercise its other rights and remedies provided for under the Amended Loan Agreement.

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 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 January 31, 2025.

Borrowings in UK

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Pacific has a trade finance facility where the lender finances vendor purchases.

The trade finance facility has a limit of 500,000 New Zealand dollars and caries an interest rate at the prevailing base rate for the relevant currency of the vendor plus a margin of 3.00% per annum.

The trade finance facility has a limit of 500,000 New Zealand dollars and carries an interest rate at the prevailing base rate for the relevant currency of the vendor plus a margin of 3.00% per annum.

The facility includes two term loans.

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The facilities expire in August 2026 and are secured by a security interest in Pacific’s real property.

Borrowings under the trade finance facility and amounts due in FY25 under the term loans are reported as short-term borrowings and were $ 0.3 million at January 31, 2024.

Borrowings under the term loans due after FY25 are reported as long-term borrowings and were $ 0.7 million at January 31, 2024.

Borrowings under the trade finance facility and total amounts due under the term loans were $ 0.5 million at January 31, 2025.

Jolly Borrowings

On May 9, 2024, Jolly entered into a term loan agreement for 1,500,000 Euros to support working capital requirements with Banca Intesa Spa.

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

The term loan will be repaid in 11 installments of 136,364 Euros, paid quarterly and beginning September 30, 2024.

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 1,200,000 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 January 31, 2025, the outstanding balance under the term loans was $ 2.5 million.

LHD Borrowings

Prior to the Company’s acquisition, LHD secured a federally guaranteed term loan of 800,000 Euros 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 crisis.

Repayments of the loan, which matures on June 30, 2030 , began on September 30, 2022, with quarterly installments of 25,000 Euros.

As of January 31, 2025, the outstanding balance was 555,000 Euros ($576,000).

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

Veridian Borrowings

Prior to the Company’s acquisition, in February 2024, Veridian secured a term loan with USBank 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 January 31, 2025, the outstanding balance was $ 0.4 million.

Approximate maturities on our term loans over the next five years are $0.9 million in FY26, $2.3 million in FY27, $0.4 million in FY28, $0.2 million in FY29, $13.6 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.

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 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.

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Punjab National Bank;

HSBC in India, Argentina and UK;

HSBC in India, Argentina, Australia and UK;

Raymond James in Argentina;

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Banco Mercantil Del Norte SA in Mexico;

ZAO KB Citibank Moscow in Russia, JSC Bank Centercredit in Kazakhstan and Bank of New Zealand in New Zealand.

ALFA Bank and Bank Uralsib in Russia, JSC Bank Centercredit in Kazakhstan;

Bank of New Zealand in New Zealand;

BNL Gruppo Paribas, Banca Monti Dei ‘Paschi and Banca Intesa Spa in Italy;

BCR in Romania;

NAB in Australia:

and Commerzbank AG in Germany.

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

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bank accounts and approximately $ 16.2 million total in foreign bank accounts as of January 31, 2025, of which $ 16.7 million was uninsured.

Major Customer

No customer accounted for more than 10 % of net sales during FY24 and FY23.

Major Supplier

No vendor accounted for more than 10 % of purchases during FY24 and FY23.

STOCKHOLDERS’ EQUITY

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The 2017 Plan provides for the grant of equity-based compensation in the form of stock options, restricted stock, restricted stock units, performance shares, performance units, or stock appreciation rights (“SARs”).

On June 16, 2021, the stockholders of the Company approved Amendment No.

1 (the “Amendment”) to the 2017 Plan.

The Amendment increases the number of shares of common stock, par value $ 0.01 per share (the “Common Stock”), of the Company reserved for issuance under the Plan by 480,000 shares.

An aggregate of 840,000 shares of the Company’s common stock are authorized for issuance under the 2017 Plan, subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events.

An aggregate of 1,240,000 shares of the Company’s common stock are currently authorized for issuance under the 2017 Plan, as amended, subject to adjustment as provided in the 2017 Plan for stock splits, dividends, distributions, recapitalizations and other similar transactions or events.

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 000’s):

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

Total restricted stock and stock option programs

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The following table summarizes the activity under the 2017 Plan for the years ended January 31, 2025 and 2024.

This table reflects the amount of awards granted at the number of shares that would be vested if the Company were to achieve the maximum performance level under the June 2021, June 2022 and March 2023 grants.

This table reflects the amount of awards granted at the number of shares that would be vested if the Company were to achieve the target performance level under the June 2021, June 2022, March 2023 and April 2024 grants.

Service-Based

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

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Stock Repurchase Program

On February 17, 2021, the Company’s Board of Directors approved a stock repurchase program under which the Company may repurchase up to $ 5 million of its outstanding common stock.

On July 6, 2021, the Board of Directors authorized an increase in the Company’s stock repurchase program of up to an additional $ 5 million of its outstanding common stock.

On April 7, 2022, the Board of Directors authorized a new stock repurchase program under which the Company may repurchase up to $ 5 million of its outstanding common stock, which became effective upon the completion of the prior share repurchase program.

On April 7, 2022, the Board of Directors authorized a stock repurchase program under which the Company may repurchase up to $ 5 million of its outstanding common stock, which became effective upon the completion of a prior share repurchase program.

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 million of its outstanding common stock.

Shares repurchased in FY24 totaled 27,514 shares at a cost of $ 0.3 million, leaving $ 5.0 million remaining under the share repurchase program at January 31, 2024.

No shares were repurchased during FY25, leaving $ 5.0 million remaining under the share repurchase program at January 31, 2025.

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

The provision for income taxes is based on the following pretax income (loss):

Domestic and Foreign Pretax Income (Loss)

The domestic and foreign pretax income in the schedule above reflects intercompany dividends paid to the U.S.

Sale of Common Stock

On January 24, 2025, the Company sold 2,093,000 shares of its common stock at a price of $ 20.68 after underwriting discount.

After offering expenses, the Company received approximately $ 46.2 , million which was used to pay down the credit facility.

Income tax expense (benefit) is based on the following pretax income (loss):

The domestic and foreign pretax income (loss) in the schedule above reflects intercompany dividends paid to the U.S.

from international subsidiaries of $ 4.8 million and $ 11.4 million for fiscal years ended January 31, 2025 and 2024, respectively.

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Total Income Taxes

The following is a reconciliation of the effective income tax rate to the Federal statutory rate:

The following is a reconciliation of the Federal statutory rate to the Company’s effective income tax rate::

Statutory rate

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Foreign Tax Credit – GILTI

Goodwill Impairment

Section 250 Deduction

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Effective Rate

The tax effects of temporary cumulative differences which give rise to deferred tax assets are summarized as follows:

The tax effects of temporary cumulative differences which give rise to deferred tax assets and liabilities are summarized as follows:

Deferred tax assets:

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Foreign carry-forwards

Section 163(j) Interest Expense

Withholding taxes

Deferred tax asset

Deferred tax assets

Less valuation allowance

Net deferred tax asset

Net deferred tax assets

Balance sheet classification

Long-term deferred tax asset

Long-term deferred tax assets

Long-term deferred tax liability

The benefit relating to capital loss, operating loss, and credit carryforwards included in the above table at January 31, 2024, consisted of:

The benefit relating to operating loss, and credit carryforwards included in the above table at January 31, 2025, consisted of:

Gross Carryforward

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Chile operating loss carryforwards

Germany operating loss carryforwards

UK operating loss carryforwards

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The Company generally considers all earnings generated outside of the U.S.

to be permanently reinvested offshore, with the exception to countries where cash can be repatriated without withholding taxes, and in China in which the Company previously determined excess cash over what was required to fund operations and growth existed.

During FY24, the Company repatriated $4.5 million and $7.0 million from Canada and China, respectively.

The Company also identified an additional $3.8 million in excess cash in its Chinese operations for which it plans to repatriate in the future .

A withholding tax liability has been established for the expected withholding taxes in the amount of $ 0.4 million as of the period ended January 31, 2024.

The distribution from Canada received during FY24 was a result of the sale of real estate during the year.

The sale resulted in after tax excess cash that the Company determined was not needed to fund local operations and repatriated back to the US in a one-time action.

The Company still currently maintains a permanently reinvestment assertion on its future Canada operations.

to be permanently reinvested offshore, with the exception of countries where cash can be repatriated without withholding taxes, and in China in which the Company previously determined excess cash over what was required to fund operations and growth existed.

During FY25, the Company repatriated $4.8 million from two of its subsidiaries in China.

The Company also identified an additional $0.4 million in excess cash in its Chinese operations, which it plans to repatriate in the future .

A withholding tax liability of $ 0.1 million has been established for the expected withholding taxes as of the year ended January 31, 2025.

Income Tax Audits

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We record net deferred tax assets to the extent we believe these assets will more likely than not be realized.

The valuation allowance for the years ended January 31, 2024 and January 31, 2023 was $ 6.7 million and $ 3.6 million, respectively.

OECD and Pillar Two

In 2021 the Organization for Economic Cooperation and Development (OECD) announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large multinational corporations at a minimum rate of 15%.

Subsequently multiple sets of administrative guidance have been issued.

Many non-U.S.

tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption of additional components in later years or announced their plans to enact legislation in future years.

Although we expect increased tax compliance efforts as a result of new legislation, we do not expect Pillar Two to have a significant impact on our effective tax rate or our consolidated results of operations, financial position and cash flows.

NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share as follows:

The valuation allowance as of January 31, 2025 and January 31, 2024 was $ 6.6 million and $ 6.7 million, respectively.

NET INCOME (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted net income (loss) per share as follows:

Years Ended January 31,

(000’s except share information)

Numerator – Net Income

Denominator for basic net income per share (weighted-average shares which reflect 1,358,208 and 1,330,694 treasury shares at January 31, 2024 and 2023, respectively)

Numerator – Net (Loss) Income

Denominator for basic net (loss) income per share (weighted-average shares which reflect 1,358,208 treasury shares at January 31, 2025 and 2024, respectively)

Effect of dilutive securities from restricted stock plan and from dilutive effect of stock options

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

Basic net income per share

Diluted net income per share

Basic net (loss) income per share

Diluted net (loss) income per share

Derivative Instruments and Foreign Currency Exposure

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If the assessment of a contingency indicates that it is probable that a material loss has been or is probable of being incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s consolidated financial statements.

If the assessment indicates that a potentially 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.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

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.

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The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option would result in an economic penalty.

The Company uses its incremental borrowing rate ("IBR") at the recognition date in determining the present value of future payments for leases that do not have a readily determinable implicit rate.

The Company’s IBR reflects a fully secured rate based on our revolving credit agreement, taking into consideration the repayment timing of the lease and any impacts due to the economic environment in which the lease operates.

All of the Company’s real estate leases are classified as operating leases.

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Short-term lease cost

Operating expenses

Weighted-average lease terms and discount rates are as follows:

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International

We manage our operations by evaluating each of our geographic locations.

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).

The Company also maintains one manufacturing company 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 New Zealand (helmets) and a small manufacturing facility in India.

Our China facilities produce the majority of the Company’s products, and China generates a significant portion of the Company’s international revenues.

We evaluate the performance of these entities based on 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, India or China.

The table below represents information about reported segments for the years noted therein:

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.

The Company adopted ASU No.

2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280):

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.

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.

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 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.

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.

The table below represents information about reportable segments for the years noted therein:

Year Ended January 31,

(in millions of dollars)

USA Operations (including Corporate)

Other foreign

US Operations (including Corporate)

Latin America

Other foreign

Less intersegment sales

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USA Operations (including Corporate)

Other foreign

Latin America

Other foreign

Consolidated external sales

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USA Operations (including Corporate)

Other foreign

Latin America

Other foreign

Consolidated intersegment sales

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(in millions of dollars)

Operating Profit (Loss):

Cost of Goods Sold:

USA Operations (including Corporate)

Latin America

Other foreign

Less intersegment cost of goods sold

Consolidated cost of goods sold

Gross Profit (Loss);

USA Operations (including Corporate)

Latin America

Other foreign

Less intersegment (profit) loss

Consolidated operating profit

Depreciation and Amortization Expense:

Consolidated gross profit

Operating Expenses:

USA Operations (including Corporate)

Latin America

Other foreign

Less intersegment (profit) loss

Consolidated operating expenses

Goodwill Impairment:

Other foreign

Goodwill impairment

Operating (Loss) Profit:

USA Operations (including Corporate)

Latin America

Less intersegment

Consolidated depreciation and amortization expense

Year Ended January 31,

Other foreign

Less intersegment (profit) loss

Operating (loss) profit

As of January 31,

(in millions of dollars)

1 unchanged sentence

USA Operations (including Corporate)

Other foreign

Latin America

Other foreign

Less intersegment

2 unchanged sentences

USA Operations (including Corporate)

Other foreign

Latin America

Consolidated assets

Property and Equipment:

USA Operations (including Corporate)

Other foreign

Latin America

Less intersegment

Consolidated long-lived assets

Capital Expenditures:

Consolidated assets

Total Goodwill and Intangible Assets

USA Operations (including Corporate)

Other foreign

Latin America

Consolidated capital expenditure

Consolidated goodwill and intangible assets

SUBSEQUENT EVENTS

1 unchanged sentence

All appropriate subsequent event disclosures have been made in the consolidated financial statements.

On February 5, 2024, the Company acquired Italy and Romania-based Jolly Scarpe S.p.A.

and Jolly Scarpe Romania S.R.L.

(collectively, "Jolly") in an all-cash transaction valued at approximately $ 9.3 million subject to post-closing adjustments and customary holdback provisions.

Jolly is a leading designer and manufacturer of professional footwear for the firefighting, military, police, and rescue markets.

The company is headquartered in Montebelluna, Italy, with manufacturing operations in Bucharest, Romania, and has 150 employees.

Jolly provides a differentiated product portfolio through its continued investment in research and development and use of modern materials and cutting-edge technologies in the production of its footwear.

On March 28, 2024, the Company entered into Amendment No.

4 to Loan Agreement by and between Bank of America, N.A.

(the “Lender”) and the Company (the “Fourth Amendment”).

See Note 7, “Long-Term Debt” for additional information.

On April 2, 2024, Lakeland Global Safety, Ltd.

(“Lakeland Global”), a wholly-owned subsidiary the Company, entered into a Share Sale and Purchase Agreement (the “Purchase Agreement”), by and between Kantaras Investments Pte.

Ltd., Lakeland Global, and the Company, pursuant to which Lakeland Global acquired all of the shares of the fire and rescue business of LHD Group Deutschland GmbH, LHD Group Australia Pty Ltd and LHD Group Hong Kong Ltd., wholly-owned entities of Kantaras Investments Pte.

(collectively, the “LHD Group”) for a purchase price of EUR 15.4 million (approximately USD $ 16.7 million), subject to post-closing adjustments and customary holdback provisions.

The LHD Group is a leader in firefighter turnout gear, accessories, and Total Care services, including laundry, repair, and maintenance.

The transaction will be funded through the Company’s credit facility.

The acquisition is expected to close in May subject to the satisfaction of customary closing conditions, including receipt of regulatory approvals.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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