Company: APT
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001437749-25-025400
Chunk: 6

Company: ALPHA PRO TECH LTD
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 6
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 extrusion coated fabrics. In addition, the joint venture now supplies products for the Company’s Disposable Protective Apparel segment.

The capital from the initial funding and a bank loan, which is guaranteed exclusively by the individual shareholders of Maple Industries and associates and collateralized by the assets of Harmony, were utilized to purchase the original manufacturing facility in India. Harmony currently has fourfacilities in India ( threeowned and onerented), consisting of: (1) a139,000square foot building for manufacturing building products; (2) a121,000square foot building for manufacturing coated material and 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 June 30, 2025, or December 31, 2024. Under the equity method, since the Company’s reporting currency is different from 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 Accumulated other comprehensive loss (“ AOCL”).

For the three months ended June 30, 2025 and 2024, the Company purchased $5,159,000and $5,849,000of inventories, respectively, from Harmony. For the six months ended June 30, 2025 and 2024, the Company purchased $9,914,000and $11,179,000of inventories,