Company: APT
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001437749-25-007218
Chunk: 33

Company: ALPHA PRO TECH LTD
Filing Date: 2025-03-12
Form: 10-K
Item: Item 7A
Chunk 33
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 sewing proprietary disposable protective apparel; (3) a23,000square foot facility for sewing proprietary disposable protective apparel; and (4) a159,000square foot facility (rented) for manufacturing Building Supply segment products. All additions have been financed by Harmony with no guarantees from the Company.

In accordance with ASC 810, Consolidation, the Company assesses whether or not related entities are variable interest entities (“ VIEs”). For those related entities that qualify as VIEs, ASC 810 requires the Company to determine whether the Company is the primary beneficiary of the VIE, and, if so, to consolidate the VIE. The Company has determined that Harmony is not a VIE and is, therefore, considered to be an unconsolidated affiliate.

The Company records its investment in Harmony as “equity investment in unconsolidated affiliate” in the accompanying consolidated balance sheets. The Company records its equity interest in Harmony’s results of operations as “equity in income of unconsolidated affiliate” in the accompanying consolidated statements of income. The Company periodically reviews its investment in Harmony for impairment. Management has determined thatnoimpairment was required as of December 31, 2024, or December 31, 2023. Under the equity method, since the Company’s reporting currency is different from that of Harmony’s reporting currency, the Company is required to translate our proportionate share of equity for effects of translations in foreign currency and adjust the investment accordingly, and accrue the adjustment as a component of AOCL.

For the years ended December 31, 2024 and 2023, the Company purchased $22,080,000and $18,822,000of inventories, respectively, from Harmony. For the years ended December 31, 2024 and 2023, the Company recorded equity in income of unconsolidated affiliate of $629,000and $477,000, respectively. For the years ended December 31, 2024 and 2023, the Company sold $839,000and $266,000of inventories, respectively, to Harmony.

As of December 31, 2024, the Company’s investment in Harmony was $5,814,000, which consisted of its original $1,450,000investment and cumulative equity in income of unconsolidated affiliate of $6,882,000, less $942,000in repayments of an advance, payments of $77,000in dividends and AOCL on foreign currency