**SECURITIES AND EXCHANGE COMMISSION**

 

**WASHINGTON, D.C. 20549**

 

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**FORM 10-Q**

 

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**QuarterlyReport pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934**

 

**For the Quarter Ended September 30, 2003**

 

**Commission File No. 0-19893**

 

| **Alpha Pro  Tech, Ltd.**                                                               |
|-----------------------------------------------------------------------------------------|
| (exact name of registrant as specified in its charter)                                  |
|                                                                                    |   |   |
| **Delaware, U.S.A.**                                                                    |   | **63-1009183** |
| (State or other jurisdiction of incorporation)                                          |   | (I.R.S. Employer Identification No.) |
|                                                                                    |   |   |
| **Suite 112, 60 Centurian Drive  Markham, Ontario, Canada**                             |   | **L3R 9R2** |
| (Address of principal executive offices)                                                |   | (Zip Code) |
|                                                                                    |   |   |
| Registrant’s  telephone number, including area code:  **(905) 479-0654** |

 

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports)and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ý  Noo

 

Indicate the number of sharesoutstanding of each of the issuer’s classes of common stock, as of November 5,2003.

 

22,696,907 Shares of Common stock, $.01 par value

 

 

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**Alpha Pro Tech, Ltd.**

 

Table of Contents

 

 
| PART I.                                                      | FINANCIAL INFORMATION                                                                       |
|--------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                         |                                                                                        |
| ITEM 1                                                       | Consolidated Financial Statements (Unaudited)                                               |
|                                                         |                                                                                        |
|                                                         | a)                                                                                          | Consolidated Balance Sheets  -  September 30, 2003 (unaudited) and December 31, 2002 |
|                                                         |                                                                                        |   |
|                                                         | b)                                                                                          | Consolidated  Statements of Operations  for the three and nine months ended September 30, 2003 (unaudited)  and September 30, 2002 (unaudited) |
|                                                         |                                                                                        |   |
|                                                         | c)                                                                                          | Consolidated  Statement of Shareholder’s Equity  for the nine months ended September 30, 2003 (unaudited) |
|                                                         |                                                                                        |   |
|                                                         | d)                                                                                          | Consolidated Statements  of Cash Flows  for the nine months ended September 30, 2003 (unaudited)  and September 30, 2002 (unaudited) |
|                                                         |                                                                                        |   |
|                                                         | e)                                                                                          | Notes  to Consolidated Financial Statements (unaudited) |
|                                                         |                                                                                        |   |
| Cautionary  Statements Regarding Forward-Looking Information |
|                                                         |
| Additional  Information                                      |
|                                                         |
| ITEM  2                                                      | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |
|                                                         |
| ITEM 3                                                       | Quantitative  and Qualitative Disclosures About Market Risk                                 |
|                                                         |
| ITEM  4                                                      | Controls  and Procedures                                                                    |
|                                                         |
| PART  II.                                                    | OTHER  INFORMATION                                                                          |
|                                                         |
| ITEM 6                                                       | Exhibits and Reports  on Form 8-K                                                           |
|                                                         |
| SIGNATURES                                                   |
|                                                         |
| EXHIBITS                                                     |
|                                                         |
|                                                         | Exhibit 31.1:                                                                               | Certification by CEO  pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Exchange Act (filed  herewith) |
|                                                         |                                                                                        |
|                                                         | Exhibit 31.2:                                                                               | Certification by CFO  pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Exchange Act (filed  herewith) |
|                                                         |                                                                                        |
|                                                         | Exhibit 32.1:                                                                               | Certification by CEO  pursuant to Section 906 of the Sarbanes-Oxley Act (filed herewith) |
|                                                         |                                                                                        |
|                                                         | Exhibit 32.2:                                                                               | Certification by CFO  pursuant to Section 906 of the Sarbanes-Oxley Act (filed herewith) |
|                                                              |                                                                                             |  |  |  |  |

 

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**AlphaPro Tech, Ltd.**

 

**ITEM 1****           CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**

 

**ConsolidatedBalance Sheets**

 
|                                                                                                                                                       |   | **September  30,  2003** |       | **December  31,  2002** |       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|-------------------------|------------|
|                                                                                                                                                       |   | **(Unaudited)**          | ** ** |                    | ** ** |
|                                                                                                                                                       |   |                     |       |                    |       |
| **Assets**                                                                                                                                                 |   |                     |       |                    |       |
| Current assets:                                                                                                                                            |   |                     |       |                    |       |
| Cash and cash equivalents                                                                                                                                  |   | $                        | 3,180,000  |                    | $          | 2,879,000 |   |
| Accounts receivable, net of allowance for  doubtful accounts of $55,000 and $37,000 at September 30, 2003 and  December 31, 2002                 |   | 2,954,000                |       | 2,286,000               |       |
| Inventories, net                                                                                                                                           |   | 5,611,000                |       | 3,358,000               |       |
| Prepaid expenses and other current assets                                                                                                                  |   | 334,000                  |       | 334,000                 |       |
| Deferred income taxes                                                                                                                                      |   | 365,000                  |       | 365,000                 |       |
| Total current assets                                                                                                                                       |   | 12,444,000               |       | 9,222,000               |       |
|                                                                                                                                                       |   |                     |       |                    |       |
| Property and equipment, net                                                                                                                                |   | 3,254,000                |       | 3,283,000               |       |
| Intangible assets, net                                                                                                                                     |   | 180,000                  |       | 179,000                 |       |
| Notes receivable and other assets                                                                                                                          |   | 0                        |       | 91,000                  |       |
| Total assets                                                                                                                                               |   | $                        | 15,878,000 |                    | $          | 12,775,000 |   |
|                                                                                                                                                       |   |                     |       |                    |       |
| **Liabilities and Shareholders’ Equity**                                                                                                              |   |                     |       |                    |       |
| Current liabilities:                                                                                                                                       |   |                     |       |                    |       |
| Accounts payable                                                                                                                                           |   | $                        | 918,000    |                    | $          | 453,000 |   |
| Accrued liabilities                                                                                                                                        |   | 2,150,000                |       | 1,592,000               |       |
| Notes payable, current portion                                                                                                                             |   | 0                        |       | 127,000                 |       |
| Total current liabilities                                                                                                                                  |   | 3,068,000                |       | 2,172,000               |       |
|                                                                                                                                                       |   |                     |       |                    |       |
| Notes payable, less current portion                                                                                                                        |   | 0                        |       | 288,000                 |       |
| Deferred income taxes                                                                                                                                      |   | 541,000                  |       | 541,000                 |       |
| Total liabilities                                                                                                                                          |   | 3,609,000                |       | 3,001,000               |       |
|                                                                                                                                                       |   |                     |       |                    |       |
| Shareholders’ Equity                                                                                                                                  |   |                     |       |                    |       |
| Common stock, $.01 par value, 50,000,000  shares authorized, 22,696,907 and 22,625,907 issued and outstanding at  September 30, 2003 and December 31, 2002 |   | 227,000                  |       | 226,000                 |       |
| Additional paid-in capital                                                                                                                                 |   | 23,099,000               |       | 23,134,000              |       |
| Accumulated deficit                                                                                                                                        |   | (11,057,000              | )          | (13,586,000             | )          |
| Total shareholders’ equity                                                                                                                            |   | 12,269,000               |       | 9,774,000               |       |
| Total liabilities and shareholder’s equity                                                                                                            |   | $                        | 15,878,000 |                    | $          | 12,775,000 |   |

 

The accompanying notes are anintegral part of these consolidated financial statements.

 

1

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**Alpha Pro Tech, Ltd.**

 

**ConsolidatedStatements of Operations****(Unaudited)**

 
|                                                        |   | **For the  Three Months Ended  September 30,** |      | **For the  Nine Months Ended  September 30,** |   |
|-------------------------------------------------------------|--------|------------------------------------------------|-----------|-----------------------------------------------|--------|
|                                                        |   | **2003**                                       |      | **2002**                                      |   | **2003** |   | **2002** |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Sales                                                       |   | $                                              | 6,517,000 |                                          | $      | 5,013,000 |   | $ | 20,467,000 |   | $ | 16,021,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Cost of goods sold, excluding depreciation and amortization |   | 3,299,000                                      |      | 2,480,000                                     |   | 9,748,000 |   | 7,992,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Gross margin                                                |   | 3,218,000                                      |      | 2,533,000                                     |   | 10,719,000 |   | 8,029,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Expenses:                                                   |   |                                           |      |                                          |   |   |   |   |   |
| Selling, general and administrative                         |   | 2,141,000                                      |      | 1,869,000                                     |   | 6,427,000 |   | 5,478,000 |   |
| Depreciation and amortization                               |   | 131,000                                        |      | 112,000                                       |   | 373,000 |   | 330,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Income from operations                                      |   | 946,000                                        |      | 552,000                                       |   | 3,919,000 |   | 2,221,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Interest, net                                               |   | 2,000                                          |      | 10,000                                        |   | 18,000 |   | 29,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Income before provision for income taxes                    |   | 944,000                                        |      | 542,000                                       |   | 3,901,000 |   | 2,192,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Provision for income taxes                                  |   | 243,000                                        |      | 180,000                                       |   | 1,372,000 |   | 741,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Net income                                                  |   | $                                              | 701,000   |                                          | $      | 362,000 |   | $ | 2,529,000 |   | $ | 1,451,000 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Basic net income per share                                  |   | $                                              | 0.03      |                                          | $      | 0.02 |   | $ | 0.11 |   | $ | 0.06 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Diluted net income per share                                |   | $                                              | 0.03      |                                          | $      | 0.02 |   | $ | 0.11 |   | $ | 0.06 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Basic weighted average shares outstanding                   |   | 22,478,537                                     |      | 23,147,571                                    |   | 22,438,723 |   | 23,411,935 |   |
|                                                        |   |                                           |      |                                          |   |   |   |   |   |
| Diluted weighted average shares outstanding                 |   | 24,065,723                                     |      | 23,512,912                                    |   | 23,865,847 |   | 24,210,311 |   |

 

The accompanying notes are anintegral part of these consolidated financial statements.

 

2

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**Alpha Pro Tech, Ltd.**

 

**Consolidated Statement of Shareholder’s****Equity (Unaudited)**

 
|                                               |   | **Shares** |   | **Common  Stock** |    | **Additional  Paid-in  Capital** |   | **Accumulated  Deficit** |   | **Total** |        |
|----------------------------------------------------|--------|------------|--------|-------------------|---------|----------------------------------|--------|--------------------------|--------|-----------|-------------|
|                                               |   |       |   |              |    |                             |   |                     |   |      |        |
| Balance at December 31, 2002             |   | 22,625,907 |   | $                 | 226,000 |                             | $      | 23,134,000               |   | $         | (13,586,000 | ) | $ | 9,774,000 |   |
|                                               |   |       |   |              |    |                             |   |                     |   |      |        |
| Issuance of common stock upon exercise of  options |   | 371,000    |   | 4,000             |    | 249,000                          |   |                     |   | 253,000   |        |
|                                               |   |       |   |              |    |                             |   |                     |   |      |        |
| Repurchase and retirement of common stock          |   | (300,000   | )      | (3,000            | )       | (284,000                         | )      |                     |   | (287,000  | )           |
|                                               |   |       |   |              |    |                             |   |                     |   |      |        |
| Net income                                         |   |       |   |              |    |                             |   | 2,529,000                |   | 2,529,000 |        |
|                                               |   |       |   |              |    |                             |   |                     |   |      |        |
| Balance at September 30, 2003                 |   | 22,696,907 |   | $                 | 227,000 |                             | $      | 23,099,000               |   | $         | (11,057,000 | ) | $ | 12,269,000 |   |

 

The accompanying notes are anintegral part of these consolidated financial statements

 

3

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**AlphaPro Tech, Ltd.**

 

**ConsolidatedStatements of Cash Flows****(Unaudited)**

 
|                                                                               |   | **For the  Nine Months Ended  September 30,** |      |
|------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|
|                                                                               |   | **2003**                                      |      | **2002** | ** ** |
| **Cash Flows From Operating Activities:**                                          |   |                                          |      |   |   |
| Net income                                                                         |   | $                                             | 2,529,000 |   | $ | 1,451,000 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |   |                                          |      |   |   |
| Depreciation and amortization                                                      |   | $                                             | 373,000   |   | 330,000 |   |
|                                                                               |   |                                          |      |   |   |
| Changes in assets and liabilities:                                                 |   |                                          |      |   |   |
| Accounts receivable, net                                                           |   | (668,000                                      | )         | 210,000 |   |
| Inventories, net                                                                   |   | (2,253,000                                    | )         | (490,000 | ) |
| Prepaid expenses and other assets                                                  |   | 21,000                                        |      | (251,000 | ) |
| Accounts payable and accrued liabilities                                           |   | 1,023,000                                     |      | 711,000 |   |
|                                                                               |   |                                          |      |   |   |
| Net cash provided by operating activities:                                         |   | 1,025,000                                     |      | 1,961,000 |   |
|                                                                               |   |                                          |      |   |   |
| **Cash Flows From Investing Activities:**                                          |   |                                          |      |   |   |
| Purchase of property and equipment                                                 |   | (327,000                                      | )         | (140,000 | ) |
| Purchase of intangible assets                                                      |   | (18,000                                       | )         | (10,000 | ) |
| Proceeds from notes receivable                                                     |   | 70,000                                        |      | — |   |
|                                                                               |   |                                          |      |   |   |
| Net cash used in investing activities                                              |   | (275,000                                      | )         | (150,000 | ) |
|                                                                               |   |                                          |      |   |   |
| **Cash Flows From Financing Activities:**                                          |   |                                          |      |   |   |
| Proceeds from notes payable                                                        |   | —                                        |      | 241,000 |   |
| Payments on notes payable                                                          |   | (415,000                                      | )         | (737,000 | ) |
| Principal payments on capital leases                                               |   | —                                        |      | (8,000 | ) |
| Proceeds from issuance of common stock                                             |   | 253,000                                       |      | 7,000 |   |
| Repurchase of common stock                                                         |   | (287,000                                      | )         | (443,000 | ) |
| Net cash used in financing activities                                              |   | (449,000                                      | )         | (940,000 | ) |
|                                                                               |   |                                          |      |   |   |
| Increase in cash during the period                                                 |   | 301,000                                       |      | 871,000 |   |
|                                                                               |   |                                          |      |   |   |
| Cash, beginning of period                                                          |   | 2,879,000                                     |      | 1,372,000 |   |
| Cash, end of period                                                                |   | $                                             | 3,180,000 |   | $ | 2,243,000 |   |

 

The accompanying notes are an integral part of these consolidatedfinancial statements.

 

4

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**AlphaPro Tech, Ltd.**

 

**Notes to Consolidated Financial Statemen****ts (Unaudited)**

 

**1.****                                      TheCompany**

 

Alpha Pro Tech, Ltd. (the “Company”) manufactures and distributes avariety of disposable mask, shield, shoe cover, apparel and wound careproducts.  Most of the Company’sdisposable apparel, mask and shield products, and wound care products aredistributed to medical, dental, industrial safety and clean room markets,predominantly in the United States of America.

 

**2.****                                      Basisof Presentation**

 

Theaccompanying consolidated financial statements are unaudited but, in theopinion of management, contain all the adjustments (consisting of those of anormal recurring nature) considered necessary to present fairly the financialposition, results of operations and cash flows for the periods presented inconformity with accounting principles generally accepted in the United Statesof America.  The accompanyingconsolidated financial statements should be read in conjunction with theCompany’s Form 10-K for the year ended December 31, 2002 and Form 10-Qs for theperiods ended June 30, 2003 and March 31, 2003.

 

There havebeen no changes since December 31, 2002 in the accounting principles andpractices utilized in the preparation of these consolidated financialstatements.

 

Certain 2002balances have been reclassified to conform to the current periodpresentation.  These reclassificationshad no effect on net income, total assets or liabilities.

 

**3.****                                      StockBased Compensation**

 

Accounting for Stock-based Compensation.  The Company maintains a stock option planunder which the Company may grant incentive stock options and non-qualifiedstock options to employees and non-employee directors.  Stock options have been granted withexercise prices at or above the fair market value on the date of grant.  Options vest and expire according to termsestablished at the grant date.

 

SFAS No. 123,Accounting for Stock-Based Compensation, encourages, but does not require,companies to record compensation cost for stock-based employee compensationplans based on the fair market value of options granted.  The Company has chosen to account forstock-based compensation using the intrinsic value method prescribed inAccounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issuedto Employees, and related interpretations. Accordingly, because the grant price equals or is less than the marketprice on the date of grant,  nocompensation expense is recognized for stock options issued to employees.

 

On December31, 2002, the Financial Accounting Standards Board (“FASB”) issued SFASNo. 148, Accounting for Stock-Based Compensation Transition andDisclosure, which amends SFAS No. 123. SFAS No. 148 requires more prominent and frequent disclosures about theeffects of stock-based compensation. The Company will continue to account for its stock-based compensationaccording to the provisions of APB Opinion No. 25.

 

5

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Hadcompensation cost for the Company’s stock options been recognized based uponthe estimated fair value on the grant date under the fair value methodologyprescribed by SFAS No. 123, the Company’s net earnings and earnings pershare would have been as follows:

 
|                                                                                                                                         |   | **For the  Three Months  Ended  September 30,** |    | **For the  Nine Months  Ended  September 30,** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|---------|------------------------------------------------|--------|
|                                                                                                                                         |   | **2003**                                        |    | **2002**                                       |   | **2003** |   | **2002** |   |
| Net income, as reported                                                                                                                      |   | $                                               | 701,000 |                                           | $      | 362,000 |   | $ | 2,529,000 |   | $ | 1,451,000 |   |
| Add:   Stock based employee compensation expense included in reported net  income, net of related tax effects                           |   | —                                          |    | —                                         |   | — |   | — |   |
|                                                                                                                                         |   |                                            |    |                                           |   |   |   |   |   |
| Deduct:   Stock-based employee compensation expense determined using the fair  value method for all rewards, net of related tax effects |   | —                                          |    | (1,000                                         | )      | — |   | (96,000 | ) |
|                                                                                                                                         |   |                                            |    |                                           |   |   |   |   |   |
| Pro forma net income                                                                                                                         |   | $                                               | 701,000 |                                           | $      | 361,000 |   | $ | 2,529,000 |   | $ | 1,355,000 |   |
|                                                                                                                                         |   |                                            |    |                                           |   |   |   |   |   |
| Net income per share:                                                                                                                        |   |                                            |    |                                           |   |   |   |   |   |
| Basic - as reported                                                                                                                          |   | $                                               | 0.03    |                                           | $      | 0.02 |   | $ | 0.11 |   | $ | 0.06 |   |
| Basic - pro forma                                                                                                                            |   | 0.03                                            |    | 0.02                                           |   | 0.11 |   | 0.06 |   |
| Diluted - as reported                                                                                                                        |   | 0.03                                            |    | 0.02                                           |   | 0.11 |   | 0.06 |   |
| Diluted - pro forma                                                                                                                          |   | 0.03                                            |    | 0.02                                           |   | 0.11 |   | 0.06 |   |

 

**4.****                                     ****New Accounting Standards**

 

Based on the Company’s review of new accountingstandards released during the three months ended September 30, 2003, theCompany did not identify any standards requiring adoption that would have asignificant impact on its consolidated financial statements.

 

**5.****                                      Inventories**

 
|                          |   | **September  30,  2003** |      | **December  31,  2002** |   |
|-------------------------------|--------|--------------------------|-----------|-------------------------|--------|
|                          |   |                     |      |                    |   |
| Raw materials                 |   | $                        | 3,116,000 |                    | $      | 1,751,000 |   |
| Work in process               |   | 105,000                  |      | 85,000                  |   |
| Finished goods                |   | 2,765,000                |      | 1,854,000               |   |
|                          |   | 5,986,000                |      | 3,690,000               |   |
| Less reserve for obsolescence |   | (375,000                 | )         | (332,000                | )      |
|                          |   | $                        | 5,611,000 |                    | $      | 3,358,000 |   |

 

6

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**6.****                                      AccruedLiabilities**

 

The****following table represents the components of accruedliabilities.

 
|                      |   | **September  30,  2003** |      | **December  31,  2002** |   |
|---------------------------|--------|--------------------------|-----------|-------------------------|--------|
|                      |   |                     |      |                    |   |
| Income taxes payable      |   | $                        | 854,000   |                    | $      | 745,000 |   |
| Commissions payable       |   | 574,000                  |      | 444,000                 |   |
| Payroll and payroll taxes |   | 246,000                  |      | 135,000                 |   |
| Accrued rebates and other |   | 476,000                  |      | 268,000                 |   |
|                      |   | $                        | 2,150,000 |                    | $      | 1,592,000 |   |

 

**7.****                                      Basicand Diluted Net Income Per Share**

 

The followingtable provides a reconciliation of both the net income and the number of sharesused in the computation of “basic” EPS, which utilizes the weighted averagenumber of shares outstanding without regard to potential shares, and “diluted”EPS, which includes all such shares.

 
|                                                |   | **For the  Three Months  Ended September 30,** |    | **For the  Nine Months Ended  September 30,** |   |
|-----------------------------------------------------|--------|------------------------------------------------|---------|-----------------------------------------------|--------|
|                                                |   | **2003**                                       |    | **2002**                                      |   | **2003** |   | **2002** |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Net income (Numerator)                              |   | $                                              | 701,000 |                                          | $      | 362,000 |   | $ | 2,529,000 |   | $ | 1,451,000 |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Shares (Denominator):                               |   |                                           |    |                                          |   |   |   |   |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Basic weighted average shares outstanding           |   | 22,478,537                                     |    | 23,147,571                                    |   | 22,438,723 |   | 23,411,935 |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Add: Dilutive effect of stock options and  warrants |   | 1,587,186                                      |    | 365,341                                       |   | 1,427,124 |   | 798,377 |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Diluted weighted average shares outstanding         |   | 24,065,723                                     |    | 23,512,912                                    |   | 23,865,847 |   | 24,210,311 |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Net income per share:                               |   |                                           |    |                                          |   |   |   |   |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Basic                                               |   | $                                              | 0.03    |                                          | $      | 0.02 |   | $ | 0.11 |   | $ | 0.06 |   |
|                                                |   |                                           |    |                                          |   |   |   |   |   |
| Diluted                                             |   | $                                              | 0.03    |                                          | $      | 0.02 |   | $ | 0.11 |   | $ | 0.06 |   |

 

7

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**8.****                                      Activityof Business Segments**

 

The Companyclassifies its businesses into three fundamental segments:  Apparel, consisting of a complete line ofdisposable clothing such as coveralls, frocks, lab coats, hoods, bouffant capsand shoe covers; Mask and eye shields, consisting principally of medical,dental and industrial masks and eye shields; and Extended Care UnrealLambskin®, consisting principally of fleece and other related products whichincludes a line of pet beds.

 

The accountingpolicies of the segments are the same as those described in the “Summary ofSignificant Accounting Policies in the Company’s Form 10-K for the year endedDecember 31, 2002.”  Segment dataexcludes charges allocated to head office and corporate sales/marketingdepartments.  The Company evaluates theperformance of its segments and allocates resources to them based primarily onnet sales.

 

The followingtable shows net sales for each segment for the three and nine months endedSeptember 30, 2003 and 2002:

 
|                         |   | **For the  Three Months Ended  September 30,** |       | **For the  Nine Months  Ended  September 30,** |       |
|------------------------------|--------|------------------------------------------------|------------|------------------------------------------------|------------|
|                         |   | **2003**                                       |       | **2002**                                       |       | **2003** |   | **2002** |   |
|                         |   |                                           | ** ** |                                           | ** ** |   | ** ** |   | ** ** |
| Apparel                      |   | $                                              | 4,161,000  |                                           | $          | 3,425,000 |   | $ | 11,506,000 |   | $ | 10,990,000 |   |
| Mask and eye shield          |   | 1,960,000                                      |       | 1,160,000                                      |       | 7,728,000 |   | 3,641,000 |   |
| Extended care                |   | 396,000                                        |       | 428,000                                        |       | 1,233,000 |   | 1,390,000 |   |
|                         |   |                                           |       |                                           |       |   |   |   |   |
| Consolidated total net sales |   | $                                              | 6,517,000  |                                           | $          | 5,013,000 |   | $ | 20,467,000 |   | $ | 16,021,000 |   |

 

Areconciliation of total segment income to total consolidated net income for thethree and nine months ended September 30, 2003 and 2002 is presented below:

 
|                                    |   | **For the  Three Months Ended  September 30,** |       | **For the  Nine Months  Ended September 30,** |       |
|-----------------------------------------|--------|------------------------------------------------|------------|-----------------------------------------------|------------|
|                                    |   | **2003**                                       |       | **2002**                                      |       | **2003** |   | **2002** |   |
|                                    |   |                                           | ** ** |                                          | ** ** |   | ** ** |   | ** ** |
| Apparel                                 |   | $                                              | 1,293,000  |                                          | $          | 1,054,000 |   | $ | 3,553,000 |   | $ | 3,506,000 |   |
| Mask and Shield                         |   | 889,000                                        |       | 427,000                                       |       | 3,916,000 |   | 1,261,000 |   |
| Fleece                                  |   | 72,000                                         |       | 60,000                                        |       | 207,000 |   | 267,000 |   |
|                                    |   |                                           |       |                                          |       |   |   |   |   |
| Total segment income                    |   | 2,254,000                                      |       | 1,541,000                                     |       | 7,676,000 |   | 5,034,000 |   |
| Unallocated corporate overhead expenses |   | (1,310,000                                     | )          | (999,000                                      | )          | (3,775,000 | ) | (2,842,000 | ) |
| Provision for income taxes              |   | (243,000                                       | )          | (180,000                                      | )          | (1,372,000 | ) | (741,000 | ) |
|                                    |   |                                           |       |                                          |       |   |   |   |   |
| Consolidated net income                 |   | $                                              | 701,000    |                                          | $          | 362,000 |   | $ | 2,529,000 |   | $ | 1,451,000 |   |

 

8

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**CAUTIONARY STATEMENTS REGARDING FORWARD-****LOOKING INFORMATION**

 

This Quarterly Report on Form10-Q contains forward-looking statements that are made pursuant to the SafeHarbor provisions of the Private Securities Litigation Reform Act of 1995.Forward-looking statements involve risks, uncertainties and assumptions asdescribed from time to time in registration statements, annual reports andother periodic reports and filings of the Company filed with the Securities andExchange Commission. All statements, other than statements of  historical facts, which address theCompany’s expectations of sources of capital or which express the Company’sexpectations for the future with respect to financial performance or operatingstrategies, can be identified as forward-looking statements. As a result, therecan be no assurance that the Company’s future results will not be materiallydifferent from those described herein as “believed,” “anticipated,” “estimated”or “expected,” which reflect the current views of the Company with respect tofuture events. We caution readers that these forward-looking statements speakonly as of the date hereof. The Company hereby expressly disclaims anyobligation or undertaking to release publicly any updates or revisions to anysuch statements to reflect any change in the Company’s expectations or anychange in events, conditions or circumstances on which such statement is based.

 

 

**ADDITIONAL INFORMATION**

 

We make available free ofcharge on or through our Internet website our annual reports on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K and amendments to thosereports filed or furnished pursuant to Section 13(a) or 15(d) of the ExchangeAct as soon as reasonably practicable after we electronically file suchmaterial with, or furnish it to, the Securities and Exchange Commission

 

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| **ITEM 2** | **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  RESULTS OF OPERATIONS** |
|------------|-------------------------------------------------------------------------------------------------|

 

 

You should read the followingdiscussion and analysis together with our consolidated financial statements andthe notes to our consolidated financial statements, which appear elsewhere inthis report.

 

**OVERVIEW**

 

Alpha Pro Tech is in thebusiness of protecting people, products and environments. We accomplish this bydeveloping, manufacturing and marketing a line of disposable protective appareland consumer products for the cleanroom, industrial, medical, dental andconsumer markets.  Our products areprimarily sold under the “Alpha Pro Tech” brand name, but are also sold for useunder private label.

 

Our products are classifiedinto four groups:  Disposable protectiveapparel, consisting of a complete line of shoecovers, headcovers, gowns,coveralls and lab coats; infection control products consisting of a line of facemasks and face shields; extended care products consisting of a line of mattressoverlays, wheelchair covers, geriatric chair surfaces, operating room tablesurfaces and pediatric surfaces; and consumer products consisting of a line ofpet bedding and pet toys.  Our productsare sold through three segments.  TheApparel segment, consisting of disposable protective apparel; the Mask and/Shield segment, consisting of infection control products; and the ExtendedCare segment, consisting of extended care products and consumer products.

 

Our target markets arepharmaceutical manufacturing, bio-pharmaceutical manufacturing and medicaldevice manufacturing, lab animal research, high technology electronicsmanufacturing which includes the semi-conductor market, as well as medical anddental distributors. Our products are used primarily in cleanrooms, industrialsafety manufacturing environments, health care facilities such as hospitals,laboratories and dental offices. Our products are distributed principally inthe United States through a network consisting of purchasing groups, nationaldistributors, local distributors, independent sales representatives and our ownsales and marketing force.

 

We have recently implemented anew strategy in conjunction with our distributors to communicate directly withthe end users.  This enables us tobetter understand the end users true needs and ties into our innovativestrategy which is to sell products that best satisfy the end users requirements.

 

We have hired four additionalsales personnel, increasing the sales team from nine to thirteen, and althoughit has taken time to find, educate and train the new staff, third quarterresults are indicating that this approach is working. As we gain market share,we will invest in additional sales personnel.

 

As a result of the additionalpersonnel and the new end user focus, the Company experienced 30% growth in thethird quarter of 2003.  Net of SARSrelated sales, our core business grew approximately 20% in the third quarterand our expectation is to see continued growth.

 

During the third quarter 2003,we had approximately $0.5 million of non-core SARS related N-95 Mask and eyeshield sales.  In the second quarter of2003, we had approximately $3 million of SARS related  N-95 and eye shield sales for a total of $3.5 million since April2003. The Center for Disease Control (CDC) has recommended an N-95 respiratormask be used together with an eye shield to protect healthcare workers in thefight against the spread of the SARS virus. Although there is no way of knowingwhether SARS will resurface later this year or in early 2004, the Company haspositioned itself with more inventory on hand and increased production capacityand capabilities, in the event of a future outbreak.

 

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**RESULTS OF OPERATIONS**

 

**Three months and ninemonths ended September 30, 2003, compared to the three months and nine monthsended September 30, 2002**

 

Alpha Pro Tech, Ltd. (“Alpha”or the “Company”) reported net income for the quarter ended September 30, 2003of $701,000 as compared to $362,000 for the quarter ended September 30, 2002,representing an increase of $339,000 or 93.7%. The increase is attributable to an increase in income before provisionfor income taxes of $402,000, partially offset by an increase in income taxesof $63,000.

 

**Sales.**  Consolidated sales for the quarter endedSeptember 30, 2003 increased to $6,517,000 from $5,013,000 for the quarterended September 30, 2002, representing an increase of $1,504,000 or 30.0%.  The Company attributes approximately$1,000,000 or two thirds of the increase in sales primarily to thepharmaceutical industry.  SARS relatedN-95 mask and eye shield sales account for the balance of the increase ofapproximately $500,000.  Excluding theincrease in non-core sales related to SARS, the Company’s business grew 20% forthe quarter ended September 30, 2003 as compared to the same period in 2002.

 

Whether SARS will resurface isunknown, however even if it does not return, sales of the N-95 mask and othermedical masks as well as, to a lesser extent, other protective products, areexpected to grow due to heightened awareness of infection control procedures inhealth care institutions.

 

 

Sales for the Apparel Divisionfor the quarter ended September 30, 2003 were $4,161,000 as compared to$3,425,000 for the same period of 2002. The Apparel Division sales increase of $736,000 or 21.5% was primarilydue to increased sales to the pharmaceutical industry, partially offset by decreasedsales to the electronics industry which includes semiconductor and memorydevice.  The Company began servicing thepharmaceutical industry in 2002, and management expects continued growth inthis market segment.  Apparel sales arestill being negatively impacted by the continued weakness in the electronicsindustry.

 

Mask and eye shield sales forthe quarter ended September 30, 2003 increased by $800,000 or 69.0% to$1,960,000 from $1,160,000 in the same period of 2002.  The increase is primarily the result of anincrease of approximately $500,000 in N-95 mask and eye shield sales related toSARS as well as an increase in medical and industrial mask sales.  While SARS related sales have decreasedsignificantly since the end of the second quarter, the Company anticipatesstronger than normal demand for the N-95 Particulate Respirator mask as well asother medical masks in the future due to an increased awareness of infectioncontrol precautions.

 

Sales from the Company’sExtended Care Unreal Lambskin and other related products, which includes a lineof pet beds, decreased by $32,000 or 7.5% to $396,000 for the quarter endedSeptember 30, 2003 from $428,000 for the quarter ended September 30, 2002.  The decrease of $32,000 in sales isprimarily the result of a decrease in pet bed pad sales, partially offset by anincrease in medical bed pad sales.

 

Consolidated sales were$20,467,000 and $16,021,000 for the nine months ended September 30, 2003 and2002 respectively, representing an increase of $4,446,000 or 27.8%.  Approximately $3.5 million of the salesincrease is due to non-core SARS related N-95 mask and eye shield sales.

 

Apparel sales for the ninemonths ended September 30, 2003 were $11,506,000 as compared to $10,990,000 forthe same period of 2002, an increase of $516,000 or 4.7%. The increase is dueto higher sales to the pharmaceutical industry and to a lesser extent sales tothe industrial safety industry, partially offset by decreased sales to theelectronics industry.

 

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Mask and eye shield salesincreased by $4,087,000 or 112.3% to $7,728,000 for the nine months endedSeptember 30, 2003 from $3,641,000 in the same period of 2002.  The increase is primarily the result of anincrease in N-95 mask and eye shield sales related to SARS, as well as anincrease in medical, dental and industrial mask sales.

 

Sales from the Company’sExtended Care Unreal Lambskinâand other related products decreased by $157,000 or 11.3% to $1,233,000 for thenine months ended September 30, 2003 compared to $1,390,000 in the same periodin 2002.  The decrease is primarily theresult of a decrease in sales of pet bed products.

 

 

**Cost of Goods Sold.**  Cost of goods sold, excluding depreciationand amortization, increased to $3,299,000 for the quarter ended September 30,2003 from $2,480,000 for the same period in 2002.  Gross profit margin decreased to 49.4% for the quarter endedSeptember 30, 2003 from 50.5% for the same period in 2002.  For the nine months ended September 30, 2003as compared to the same period in 2002, cost of goods sold increased to$9,748,000 from $7,992,000.  Grossprofit margin increased to 52.4% from 50.1% for the nine months ended September30, 2003 compared to 2002.

 

The decrease in gross profitmargin to 49.4% for the three months ended September 30, 2003 as compared to50.5% for the same period in 2002 is due to slightly reduced margins on salesto pharmaceutical companies.

 

The increase in gross profitmargin for the nine months ended September 30, 2003 as compared to the sameperiod in 2002 is due to an increase in the amount of products beingmanufactured in China and a greater percentage of mask and eye shield saleswhich yield higher gross profit margins.

 

Management expects that grossprofit margins should continue to be strong for the balance of 2003.

 

 

**Selling,General and Administrative Expenses.**  Selling,general and administrative expenses increased by $272,000 or 14.6% to$2,141,000 for the quarter ended September 30, 2003 from $1,869,000 for thequarter ended September 30, 2002.  As apercentage of net sales, selling, general and administrative expenses decreasedto 32.9% in the quarter ended September 30, 2003 from 37.3% for the same periodin 2002.  The increase in selling,general and administrative expenses primarily consists of increased payrollrelated costs of $235,000, increased travel, marketing and commission expensesof $1,000, increased rent and utilities expense of $13,000, increased officesupplies of $13,000, increased warehouse supplies of $6,000, increasedtelecommunication and insurance expense of $12,000 and increased miscellaneousexpenses of $12,000, partially offset by decreased professional fees and publiccompany expenses of $20,000.

 

Selling, general andadministrative expenses increased by $949,000 or 17.3%, to $6,427,000 for thenine months ended September 30, 2003 from $5,478,000 for the nine months endedSeptember 30, 2002. As a percentage of net sales, selling, general andadministrative expenses decreased to 31.4% for the nine months ended September30, 2003 from 34.2% in the same period of 2002.  The increase in selling, general and administrative expensesprimarily consists of increased payroll related costs of $715,000, increasedtravel, marketing and commission expenses of $129,000, increased professionalfees and public company expenses of $11,000, increased foreign exchange expenseof $45,000, increased credit card processing expense of $17,000, increasedgeneral office expenses of $15,000, increased financing expense of $12,000,increased telecommunication and insurance expense of $28,000 and increasedmiscellaneous expenses of $1,000, partially offset by decreased rent andutilities of $24,000.

 

 

The increases in both payrolland travel related costs are largely due to the addition of sales and marketingpersonnel.  The Company has increasedthe sales and marketing and customer service team

 

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by 5 people to 22 people atSeptember 30, 2003 as compared to 17 people at September 30, 2002.  Management anticipates that the addition ofthese personnel will continue to yield improved sales results in the comingquarters.  The increase in payrollrelated costs is also due to an increase in the accrual for the executive bonusprogram which is equal to 10% of the pre-tax profits of the Company.

 

**Depreciation and Amortization.**  Depreciation and amortization expenseincreased by $19,000 to $131,000 for the quarter ended September 30, 2003 from$112,000 for the same period in 2002 and increased by $43,000 to $373,000 forthe nine months ended September 30, 2003 compared to the same period in2002.  The increase is primarilyattributable to mask machine and shoecover machine additions and the purchaseof computer equipment.

 

 

**Income from Operations.**  Income from operations increased by $394,000or 71.4%, to $946,000 for the quarter ended September 30, 2003 as compared toincome from operations of $552,000 for the quarter ended September 30, 2002.  The increase in income from operations isdue to an increase in gross profit of $685,000, partially offset by an increasein selling, general and administrative expenses of $272,000, and an increase indepreciation and amortization of $19,000.

 

Income from operations increased by $1,698,000 or 76.5% to $3,919,000for the nine months ended September 30, 2003 as compared to income fromoperations of $2,221,000 for the nine months ended September 30, 2002.  The increase in income from operations isdue to an increase in gross profit of $2,690,000, partially offset by anincrease in selling, general and administrative expenses of $949,000, and anincrease in depreciation and amortization of $43,000.

 

**Net Interest.**  Net interest expense decreased by $8,000 to$2,000 for the quarter ended September 30, 2003 from net interest expense of$10,000 for the quarter ended September 30, 2002.  The decrease in net interest expense is primarily due to lowerinterest charges due to the Company being debt free during the third quarter of2003.  Interest income decreased by$3,000, to $1,000 for the quarter ended September 30, 2003 from $4,000 in thesame period of 2002.

 

Net interest expense decreased by $11,000 to $18,000 for the ninemonths ended September 30, 2003 from $29,000 for the nine months ended Sept 30,2002.  The decrease in net interestexpense is primarily due to lower interest charges due to the Company beingdebt free since the second quarter of 2003. Interest income increased by $1,000 to $13,000 for the nine months endedSeptember 30, 2003 from $12,000 in the same period of 2002.

 

 

**Income Before Provision for Income Taxes.**  Income before provision for income taxes forthe quarter ended September 30, 2003 was $944,000 as compared to $542,000 forthe quarter ended September 30, 2002, representing an increase of $402,000 or74.2%.  This increase is attributableprimarily to an increase in gross profit of $685,000 and a decrease in netinterest expense of $8,000; partially offset by an increase in selling, generaland administrative expenses of $272,000 and an increase in depreciation andamortization of $19,000.

 

Income before provision for income taxes for the nine months endedSeptember 30, 2003 was $3,901,000 as compared to $2,192,000 for the nine monthsended September 30, 2002, representing an increase of $1,709,000 or 78.0%.  This increase is attributable primarily toan increase in gross profit of $2,690,000 and a decrease in net interestexpense of $11,000, partially offset by an increase in selling, general andadministrative expenses of $949,000 and an increase in depreciation andamortization of $43,000.

 

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**Provision for Income Taxes **The provision forincome taxes for the three and nine months September 30, 2003 was $243,000 and$1,372,000, as compared to $180,000 and $741,000 for the three and nine monthsended September 30, 2002.  The increasein income taxes is due to higher income before provision for income taxes in2003.  The effective tax rate isapproximately 35% in 2003 compared to 34% in 2002.

 

 

**Net Income.**  Net income for the quarter ended September30, 2003 was $701,000 compared to net income of $362,000 for the quarter endedSeptember 30, 2002, an increase of $339,000 or 93.7%.  The net income increase of $339,000 is comprised of an increasein income from operations of $394,000 and a decrease in net interest expense of$8,000, partially offset by an increase in the provision for income taxes of$63,000.

 

Net income for the nine months ended September 30, 2003 was $2,529,000compared to net income of $1,451,000 for the nine months ended September 30,2002, an increase of $1,078,000 or 74.3%. The net income increase of $1,078,000 is comprised of an increase inincome from operations of $1,698,000 and a decrease in net interest expense of$11,000, partially offset by an increase in the provision for income taxes of$631,000.

 

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**LIQUIDITY AND CAPITALRESOURCES**

 

As of September 30, 2003, theCompany had cash and cash equivalents of $3,180,000 and working capital of$9,376,000, an increase in working capital of $2,326,000 since December 31,2002.  Cash increased $301,000 for thenine months ended September 30, 2003. The increase in the Company’s cash isprimarily due to cash provided by operating activities, and cash proceeds fromthe exercise of stock options, partially offset by the purchase of property andequipment, payments on notes payable and the repurchase of common stock.

 

The Company has a $3,500,000credit facility with a bank, consisting of a line of credit with interest atprime plus 0.5%.  At September 30, 2003,the prime interest rate was 4.00%.  Theline of credit expires in May 2004.  AtSeptember 30, 2003, the Company’s borrowing capacity on the line of credit was $3,122,000,which is based on a formula of accounts receivable and inventory.  At September 30, 2003, the Company had notborrowed on its line of credit.  As ofSeptember 30, 2003, the Company does not have any debt.

 

 

As shown below, at September30, 2003, the Company’s contractual cash obligations totaled approximately$784,000.

 

**ContractualObligations**

 
|                               |   | **Payments  Due by Period** |    |
|------------------------------------|--------|-----------------------------|---------|
|                               |   | **Total**                   |    | **Less than  1  Year** |   | **1-3 Years** |   | **4-5 Years** |   | **After 5  years** |   |
|                               |   |                        |    |   |   |   |   |   |   |   |   |
| Operating leases                   |   | $                           | 784,000 |   | $ | 116,000 |   | $ | 663,000 |   | $ | 5,000 |   | $ | — |   |
|                               |   |                        |    |   |   |   |   |   |   |   |   |
| Line of credit                     |   | —                      |    | — |   | — |   | — |   | — |   |
|                               |   |                        |    |   |   |   |   |   |   |   |   |
| Total contractual cash obligations |   | $                           | 784,000 |   | $ | 116,000 |   | $ | 663,000 |   | $ | 5,000 |   | $ | — |   |

 

Net cash provided by operatingactivities was $1,025,000 for the nine months ended September 30, 2003.  Net cash provided by operating activitiesdecreased by $936,000 to $1,025,000 for the nine months ended September 30,2003 as compared to the nine months ended September 30, 2002.  The net decrease of $936,000 is primarilydue to a net change in accounts receivable of $878,000, and a net increase ininventories of $1,763,000, partially offset by increased net income of$1,078,000, a net increase in accounts payable and accrued liabilities of$312,000, an increase in depreciation and amortization of $43,000 and a netdecrease in prepaid expenses and other assets of $272,000.

 

 

The Company’s investingactivities consisted primarily of expenditures for property and equipment of$327,000 partially offset by proceeds from notes receivable of $70,000 for thenine months ended September 30, 2003 compared to expenditures for property andequipment $140,000 for the nine months ended September 30, 2002.

 

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The Company expects to purchase$50,000 of additional equipment in 2003.

 

In March 2003, the Companyannounced that its Board of Directors had approved the buy-back of up to anadditional $500,000 of the Company’s outstanding common stock.  This new share repurchase program is the fifth$500,000 buyback authorized by the Board of Directors.  In all instances,the Company is retiring the shares.  Forthe nine months ended September 30, 2003, the Company bought back a total of300,000 common shares at a cost of $287,000. As of September 30, 2003, the Company has bought back a total of2,108,800 common shares at a cost of $2,125,000 since the end of 1999.

 

During the nine months endedSeptember 30, 2003, the Company’s cash used in financing activities resultedprimarily from payments on the Company’s notes payable of $415,000 and frompayments of $287,000 for the repurchase of common stock, partially offset bycash proceeds of $253,000 from the exercise of stock options.

 

The Company believes that cashgenerated from operations, its current cash balance and the funds availableunder its credit facility, will be sufficient to satisfy the Company’sprojected working capital and planned capital expenditures for the foreseeablefuture.

 

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**NEW ACCOUNTINGSTANDARDS**

 

Based on the Company’s reviewof new accounting standards released during the three months ended September30, 2003, the Company did not identify any standards requiring adoption thatwould have a significant impact on its financial statements.

 
| **ITEM 3** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES****ABOUT MARKET RISK** |
|------------|-------------------------------------------------------------------|

 

We manufacture some products inMexico and subcontract the manufacture of some products in China.  The Company’s results of operations could benegatively affected by factors such as changes in foreign currency exchangerates due to stronger economic conditions in those countries.

 

The Company doesn’t expect anysignificant effect on its results of operations from inflationary or interestand currency rate fluctuations.  TheCompany does not hedge its interest rate or foreign exchange risks.

 
| **ITEM 4** | **CONTROLS AND PROCEDURES** |
|------------|-----------------------------|

 

Evaluation of Disclosure Controls andProcedures.

 

As of the end of the period covered by thisreport,(the “Evaluation Date”), the Company’s management, with theparticipation of its Chief Executive and its Chief Financial officers,  evaluated the effectiveness of the designand operation of the Company’s disclosure controls and procedures as defined inExchange Act Rules 13a-15 and 15d-15, which are designed to ensure that theCompany appropriately records, processes, summarizes and reports in a timelyand effective manner the information required to be disclosed in reports filedwith or submitted to the Securities and Exchange Commission.  Based upon the evaluation, they concludedthat, as of the Evaluation Date, the Company’s disclosure controls wereeffective.  In designing and evaluatingthe disclosure controls and procedures, management recognized that any controlsand procedures no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives.  The Company’s Chief Executive Officer andits Chief Financial Officer have concluded that the controls and proceduresare, in fact, effective at the “reasonable assurance” level.

 

Changes in Internal Controls.

 

There have been no significant changes in theCompany’s internal controls or in other factors that could significantly affectthe Company’s internal controls subsequent to the Evaluation Date.

 

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**PART II - OTHERINFORMATION**

 

**ITEM 6 EXHIBITSAND REPORTS ON FORM 8-K**

 

(a)Exhibits

 

31.1Certification Pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the ExchangeAct, Signed by Chief Executive Officer (filed herewith)

 

31.2Certification Pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the ExchangeAct, Signed by Chief Financial Officer (filed herewith)

 

32.1Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section906 of the Sarbanes-Oxley Act of 2002, Signed by Chief Executive Officer (filedherewith)

 

32.2Certification Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section906 of the Sarbanes-Oxley Act of 2002, Signed by Chief Financial Officer (filedherewith)

 

(b)Reports on Form 8-K

 

Noreports were filed on Form 8-K during the third quarter of 2003

 

 

**SIGNATURES**

 

Pursuant to the requirements ofSection 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 
|   | Alpha Pro  Tech, Ltd. |
|--------|-----------------------|
|   |                  |
|   |                  |
| DATE:  | November 10, 2003     |   | BY: | /s/Sheldon  Hoffman |
|   |                  | SHELDON  HOFFMAN |
|   |                  | CHIEF  EXECUTIVE OFFICER |
|   |                  |
|   |                  |
|   | Alpha Pro  Tech, Ltd. |
|   |                  |
|   |                  |
| DATE:  | November 10, 2003     |   | BY: | /s/Lloyd  Hoffman |
|   |                  | LLOYD  HOFFMAN |
|   |                  | CHIEF  FINANCIAL OFFICER |

 

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