Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

	(Mark one)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended October 31, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________ to _______________

Commission File Number: 0-15535

LAKELAND INDUSTRIES, INC.

(Exact name of Registrant as specified in its charter)

Delaware		13-3115216
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

1525 Perimeter Parkway, Suite 325 Huntsville, AL		35806
(Address of Principal Executive Offices)		(Zip Code)

(Registrant's telephone number, including area code) (256) 350-3873

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	LAKE	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	Accelerated filer	☒
Nonaccelerated filer	Smaller reporting company	☒
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class		Outstanding at November 30, 2023
Common Stock, $0.01 par value per share		7,364,757 Shares

LAKELAND INDUSTRIES, INC.

AND SUBSIDIARIES

FORM 10-Q

The following information of the Registrant and its subsidiaries is submitted herewith:

PART I - FINANCIAL INFORMATION:

		Page

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Statements of Operations Three and Nine Months Ended October 31, 2023 and 2022	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) Three and Nine Months Ended October 31, 2023 and 2022	4

	Condensed Consolidated Balance Sheets October 31, 2023 and January 31, 2023	5

	Condensed Consolidated Statements of Stockholders’ Equity Three and Nine Months Ended October 31, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows Nine Months Ended October 31, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	26

	PART II - OTHER INFORMATION:

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 6.	Exhibits	28

	Signature Pages	29

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LAKELAND INDUSTRIES, INC.

AND SUBSIDIARIES

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

($000’s except for share and per share information)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2023			2022			2023			2022
Net sales	$	31,678		$	28,387		$	93,449		$	83,849
Cost of goods sold		18,317			16,083			53,461			48,862
Gross profit		13,361			12,304			39,988			34,987
Operating expenses		9,740			10,082			30,699			29,522
Operating profit		3,621			2,222			9,289			5,465
Other income (expense), net		(53	)		(72	)		(187	)		(140	)
Interest expense		(13	)		(4	)		(22	)		(25	)
Income before taxes		3,555			2,146			9,080			5,300
Income tax expense		937			715			2,677			3,610
Net income (loss)	$	2,618		$	1,431		$	6,402		$	1,690
Net income (loss) per common share:
Basic	$	0.35		$	0.19		$	0.87		$	0.22
Diluted	$	0.34		$	0.19		$	0.85		$	0.22
Weighted average common shares outstanding:
Basic		7,428,557			7,514,725			7,344,559			7,600,272
Diluted		7,614,404			7,704,695			7,528,723			7,787,662

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

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LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

($000’s)

	Three Months Ended October 31,						Nine Months Ended October 31,
	2023			2022			2023			2022

Net income (loss)	$	2,618		$	1,431		$	6,402		$	1,690
Other comprehensive income (loss):
Foreign currency translation adjustments		(483	)		(1,744	)		(2,110	)		(2,916	)
Comprehensive income (loss)	$	2,135		$	(313	)	$	4,292		$	(1,226	)

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

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LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(000’s except for share information)

ASSETS	October 31,			January 31,
	2023			2023
Current assets
Cash and cash equivalents	$	26,425		$	24,639
Accounts receivable, net of allowance for doubtful accounts of $769 and $800 at October 31, 2023 and January 31, 2023, respectively		18,227			17,296
Inventories		54,350			58,176
Prepaid VAT and other taxes		2,633			1,963
Income tax receivable and other current assets		2,385			2,908
Total current assets		104,020			104,982
Property and equipment, net		9,158			9,140
Operating leases right-of-use assets		10,495			5,472
Deferred tax assets		3,790			2,764
Other assets		134			100
Goodwill		8,473			8,473
Intangible assets, net		5,736			6,042
Investments		6,509			5,354
Total assets	$	148,315		$	142,327
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	6,803		$	6,558
Accrued compensation and benefits		3,670			2,522
Other accrued expenses		1,951			4,068
Income tax payable		1,057			-
Short-term borrowings		-			405
Accrued earnout agreement		492			3,182
Current portion of operating lease liabilities		1,538			1,253
Total current liabilities		15,511			17,988
Deferred income taxes		12			769
Long-term portion of operating lease liabilities		9,203			3,580
Total liabilities		24,726			22,337
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.01 par; authorized 1,500,000 shares (none issued)					-
Common stock, $0.01 par; authorized 20,000,000 shares Issued 8,722,965 and 8,655,699; outstanding 7,364,757 and 7,325,005 at October 31, 2023 and January 31, 2023, respectively		87			87
Treasury stock, at cost; 1,358,208 and 1,330,694 shares at October 31, 2023 and January 31, 2023, respectively		(19,979	)		(19,646	)
Additional paid-in capital		78,802			78,475
Retained earnings		70,480			64,765
Accumulated other comprehensive loss		(5,801	)		(3,691	)
Total stockholders' equity		123,589			119,990
Total liabilities and stockholders' equity	$	148,315		$	142,327

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

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LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)

(000’s except for share information)

																	Accumulated
											Additional						Other
	Common Stock				Treasury Stock						Paid-in			Retained			Comprehensive
	Shares		Amount		Shares			Amount			Capital			Earnings			Loss			Total
			($000’s)					($000’s)			($000’s)			($000’s)			($000’s)			($000’s)

Balance, January 31, 2022		8,555,672	$	86		(939,705	)	$	(14,206	)	$	77,826		$	62,892		$	(1,498	)	$	125,100
Net income		—		—		—			—			—			1,690			—			1,690
Other comprehensive loss		—		—		—			—			—			—			(2,916	)		(2,916	)
Stock-based compensation:
Restricted stock issued		94,908		1		—			—			—			—			—			1
Restricted Stock Plan		—		—		—			—			1,141			—			—			1,141
Return of shares in lieu of payroll withholding		—		—		—			—			(805	)		—			—			(805	)
Treasury stock purchased		—		—		(390,989	)		(5,440	)		-			—			—			(5,440	)
Balance, October 31, 2022		8,650,580	$	87		(1,330,694	)	$	(19,646	)	$	78,162		$	64,582		$	(4,414	)	$	118,771
Balance, July 31, 2022		8,650,580	$	87		(1,135,855	)	$	(17,332	)	$	77,811		$	63,151		$	(2,670	)	$	121,047
Net income		—		—		—			—			—			1,431			—			1,431
Other comprehensive loss		—		—		—			—			—			—			(1,744	)		(1,744	)
Stock-based compensation:
Restricted stock issued		—		—		—			—						—			—			—
Restricted stock plan		—		—		—			—			351			—			—			351
Return of shares in lieu of payroll withholding		—		—		—			—			-			—			—			—
Treasury stock purchased		—		—		(194,839	)		(2,314	)		-			—			—			(2,314	)
Balance, October 31, 2022		8,650,580	$	87		(1,330,694	)	$	(19,646	)	$	78,162		$	64,582		$	(4,414	)	$	118,771
Balance, January 31, 2023		8,655,699	$	87		(1,330,694	)	$	(19,646	)	$	78,475		$	64,765		$	(3,691	)	$	119,990
Net income		—		—		—			—			—			6,402			—			6,402
Other comprehensive loss		—		—		—			—			—			—			(2,110	)		(2,110	)
Dividends		—		—		—			—			—			(687	)					(687	)
Stock-based compensation:
Restricted stock issued		67,266		—		—			—			—			—			—			—
Restricted stock plan		—		—		—			—			747			—			—			747
Return of shares in lieu of payroll withholding		—		—		—			—			(420	)		—			—			(420	)
Treasury stock purchased		—		—		(27,514	)		(333	)		—			-			—			(333	)
Balance, October 31, 2023		8,722,965	$	87		(1,358,208	)	$	(19,979	)	$	78,802		$	70,480		$	(5,801	)	$	123,589
Balance, July 31, 2023		8,721,232	$	87		(1,358,208	)	$	(19,979	)	$	78,511		$	68,084		$	(5,318	)	$	121,385
Net income		—		—		—			—			—			2,618			—			2,618
Other comprehensive loss		—		—		—			—			—			—			(483	)		(483	)
Dividends		—		—		—			—			—			(222	)		—			(222	)
Stock-based compensation:
Restricted stock issued		1,733		—		—			—						—			—			—
Restricted stock plan		—		—		—			—			302			—			—			302
Return of shares in lieu of payroll withholding		—		—		—			—			(11	)		—			—			(11	)
Treasury stock purchased		—		—								—			—			—
Balance, October 31, 2023		8,722,965	$	87		(1,358,208	)	$	(19,979	)	$	78,802		$	70,480		$	(5,801	)	$	123,589

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

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LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

($000’s)

	Nine Months Ended October 31,
	2023			2022
Cash flows from operating activities:
Net income	$	6,402		$	1,690
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Provision for (recovery of) doubtful accounts		(31	)		92
Deferred income taxes		(1,783	)		1,788
Depreciation and amortization		1,609			1,370
Stock based and restricted stock compensation		747			1,141
(Gain) loss on disposal of property and equipment		(1	)		(4	)
Loss on equity investment		354			252
Revaluation of earnout consideration		(2,689	)		-
(Increase) decrease in operating assets
Accounts receivable		(963	)		(2,197	)
Inventories		3,211			(10,257	)
Prepaid VAT and other taxes		(670	)		(106	)
Other assets		285			(22	)
Increase (decrease) in operating liabilities
Accounts payable		141			613
Accrued expenses and other liabilities		235			499
Operating lease liabilities		886			(89	)
Net cash provided by (used in) operating activities		7,733			(5,230	)
Cash flows from investing activities:
Purchases of property and equipment		(1,505	)		(1,273	)
Investments		(1,510	)		(3,061	)
Net cash (used in) investing activities:		(3,015	)		(4,334	)
Cash flows from financing activities:
Short-term borrowings (repayments)		(405	)		-
Purchase of treasury stock under stock repurchase program		(333	)		(5,440	)
Dividends paid		(687	)		-
Shares returned to pay employee taxes under restricted stock program		(420	)		(805	)
Net cash (used in) financing activities		(1,845	)		(6,245	)
Effect of exchange rate changes on cash and cash equivalents		(1,087	)		(1,961	)
Net increase (decrease) in cash and cash equivalents		1,786			(17,770	)
Cash and cash equivalents at beginning of period		24,639			52,719
Cash and cash equivalents at end of period	$	26,425		$	34,949

Supplemental disclosure of cash flow information:
Cash paid for interest	$	22		$	25
Cash paid for taxes	$	1,745		$	2,614

Noncash investing and financing activities
Leased assets obtained in exchange for operating lease liabilities	$	4,099		$	34

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

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LAKELAND INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS

(UNAUDITED)

1. Business

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. 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 directly to a mixture of end users and 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.

2. Basis of Presentation

The condensed consolidated financial statements of the Company are unaudited. These condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, considered necessary by management to fairly state the Company's results. Intercompany accounts and transactions have been eliminated. The results reported in these condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the entire fiscal year ending January 31, 2024, or for any future period. The January 31, 2023, Condensed Consolidated Balance Sheet data was derived from the audited Consolidated Balance Sheet, but does not include all disclosures required by accounting principles generally accepted in the United States of America (U.S. GAAP). The accompanying condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto as of January 31, 2023 and 2022, and for each of the two years in the period ended January 31, 2023, included in our most recent annual report on Form 10-K filed on April 18, 2023.

In this Form 10-Q, (a) “FY” means fiscal year; thus for example, FY24 refers to the fiscal year ending January 31, 2024, (b) “Q” refers to quarter; thus, for example, Q3 FY24 refers to the third quarter of the fiscal year ending January 31, 2024, (c) “Balance Sheet” refers to the unaudited condensed consolidated balance sheet, and (d) “Statement of Operations” refers to the unaudited condensed consolidated statement of operations.

3. Investments and Acquisitions

Bodytrak

On October 18, 2021, the Company entered into an Investment Agreement (the “Investment Agreement”) with 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”), and the other parties thereto, pursuant to which Bodytrak agreed to issue and sell to the Company 508,905 cumulative convertible series A shares of Bodytrak (“Series A Shares”) in exchange for a payment by the Company of £2,000,000 ($2.8 million). The closing of this minority investment transaction occurred on October 18, 2021. The Series A Shares issued to the Company at the closing represented approximately 11.43% of Bodytrak’s total share capital.

On April 28, 2022, the Company, under the terms of the Investment Agreement, acquired an additional 381,679 Series A1 Shares of Bodytrak for £1,500,000 ($1.9 million). 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. The investment in Bodytrak is accounted for under the equity method, given our board representation and the resulting ability to exercise significant influence. A substantial portion of our investment represents differences in our investment and our share of the underlying recognized net assets of Bodytrak. These differences are predominately attributable to non-amortizing intangible assets of Bodytrak, including internally developed intellectual property.

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On May 19, 2023, the Company entered into an agreement with Bodytrak to provide an additional investment up to an aggregate of £1,500,000 ($1.9 million on the date of initial investment) in the form of a secured convertible loan. An initial investment funding of £500,000 ($0.6 million on the date of investment) was made on May 19, 2023. An additional investment funding of £700,000 ($0.9 million on the date of investment) was made on September 8, 2023. 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.

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.

The Company recognized losses of $0.1 and $0.1 million for the three months ended October 31, 2023 and 2022, respectively, and recognized losses of $0.4 million and $0.3 million for the nine months ended October 31, 2023 and 2022, respectively, as the Company’s share of Bodytrak’s net loss. The loss is reflected in other income (expense), net in the consolidated statements of operations.

Acquisition of Eagle

On December 2, 2022, the Company acquired 100% of Eagle Technical Products Limited’s (Eagle) 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. 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 $0.5 million. The adjustment to the accrued earnout payment of $1.5 million was recorded in the quarter ended October 31, 2023 and an adjustment of $2.7 million was recorded in the nine months ended October 31, 2023, and reflected as a reduction in operating expenses.

The following unaudited pro forma information presents our combined results as if the Eagle acquisition had occurred at the beginning of FY22. 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. There were no material transactions between the Company and Eagle during the periods presented that are required to be eliminated. The unaudited pro forma combined financial information does not reflect cost savings, operating synergies or revenue enhancements that the combined companies may achieve or the costs to integrate the operations or the costs necessary to achieve cost savings, operating synergies or revenue enhancements.

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Pro forma combined financial information (Unaudited)

(in millions, except per share amounts)	Three Months Ended October 31, 2022		Nine Months Ended October 31, 2022
Net sales	$	29.8	$	86.4
Net income (loss)	$	1.6	$	1.8
Basic earnings per share	$	0.21	$	0.24
Diluted earnings per share	$	0.21	$	0.24

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. 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. GAAP. The Company has been treated as the acquirer.

4. Inventories

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

	October 31, 2023			January 31, 2023
Raw materials	$	26,798		$	29,036
Work-in-process		760			952
Finished goods		31,088			32,855
Excess and obsolete adjustments		(4,296	)		(4,668	)
	$	54,350		$	58,176

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5. Goodwill and Intangible Assets, Net

Changes in intangible assets, net, during the three and nine months ended October 31, 2023, were as follows (in $000s):

Balance at February 1, 2023	$	6,042
Amortization expense		(102	)
Balance at April 30, 2023	$	5,940
Amortization expense		(102	)
Balance at July 31, 2023	$	5,838
Amortization expense		(102	)
Balance at October 31, 2023	$	5,736

There were no material changes to goodwill during the three and nine month periods ended October 31, 2023.

6. Contract Advances

The Company receives advances under certain of its contracts for products sold by Eagle. Those advances are considered contract liabilities with revenues recorded upon delivery of promised goods to customers. 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 January 31, 2023 through October 31, 2023 (in $000s):

Contract liability – January 31, 2023	$	1,627
Increases to contract liability		326
Decreases to contract liability		(1,752	)
Contract liability – October 31, 2023	$	201

7. Long-Term Debt

Revolving Credit Facility

On June 25, 2020, the Company entered into a Loan Agreement with Bank of America (“Lender”). The Loan Agreement, as amended to date (the “Loan Agreement”), provides the Company with a secured $25.0 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 $30.0 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 Loan Agreement permits, without the prior consent of the Lender, acquisitions of a business or its assets by the Company or its subsidiaries 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. On March 3, 2023, the Company changed the benchmark interest rate in the credit facility from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The credit facility will mature on June 25, 2025.

As of October 31, 2023, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility.

On November 30, 2023, the Company entered into Amendment No. 3 to the Loan Agreement. See Note 14, Subsequent Events, for additional information.

Borrowings in UK

There were $0 and $0.4 million in borrowings outstanding under the Company’s credit facility with HSBC Bank at October 31, 2023 and January 31, 2023.

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8. Concentration of Risk

Credit 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 Company routinely addresses the financial strength of its customers and, as a consequence, believes that its receivable credit risk exposure is limited. The Company does not require customers to post collateral.

The Company’s foreign financial depositories are Bank of America; China Construction Bank; Bank of China; China Industrial and Commercial Bank; HSBC (UK); Rural Credit Cooperative of Shandong; Postal Savings Bank of China; Punjab National Bank; HSBC in India, Argentina and UK; Raymond James in Argentina; TD Canada Trust; Banco Itaú S.A., Banco Credito Inversione in Chile; Banco Mercantil Del Norte SA in Mexico; ZAO KB Citibank Moscow in Russia, and JSC Bank Centercredit in Kazakhstan. The Company monitors its financial depositories by their credit rating, which varies by country. In addition, cash balances in banks in the United States of America are insured by the Federal Deposit Insurance Corporation, subject to certain limitations. There was approximately $6.3 million total included in the U.S. bank accounts and approximately $20.1 million total in foreign bank accounts as of October 31, 2023, of which $25.6 million was uninsured.

Major Customer

No customer accounted for more than 10% of net sales during the three and nine-month periods ended October 31, 2023 and 2022.

Major Supplier

No vendor accounted for more than 10% of purchases during the three and nine-month periods ended October 31, 2023 and 2022.

9. Stockholders’ Equity

On June 21, 2017, the stockholders of the Company approved the Lakeland Industries, Inc. 2017 Equity Incentive Plan (the “2017 Plan”). The executive officers and all other employees and directors of the Company, including its subsidiaries, are eligible to participate in the 2017 Plan. The 2017 Plan is administered by the Compensation Committee of the Board of Directors (the “Committee”), except that with respect to all non-employee directors, the Committee shall be deemed to include the full Board. 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, of the Company reserved for issuance under the 2017 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, 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.

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2023		2022		2023		2022
2017 Plan:
Total restricted stock and stock option programs	$	302	$	351	$	747	$	1,141
Total income tax expense recognized for stock-based compensation arrangements	$	63	$	74	$	157	$	240

Restricted Stock and Restricted Stock Units

Under the 2017 Plan, as described above, the Company awarded performance-based and service-based shares of restricted stock and restricted stock units to eligible employees and directors. The following table summarizes the activity under the 2017 Plan for the nine months ended October 31, 2023 and 2022. This table reflects the amount of awards granted and the number of shares that would be vested if the Company were to achieve the maximum performance level under the June 2021, April 2022, June 2022 and March 2023 grants.

	Performance- Based			Service-Based			Total			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2023		127,480			40,665			168,145		$	22.95
Awarded		64,953			124,384			189,337		$	14.02
Vested		(71,202	)		(26,336	)		(97,538	)
Forfeited		(38,901	)		(31,829	)		(70,730	)
Outstanding at October 31, 2023		82,330			106,884			189,214		$	14.68

	Performance- Based			Service-Based			Total			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2022		232,838			14,970			247,808		$	20.89
Awarded		33,492			53,082			86,574		$	18.17
Vested		(119,164	)		(22,669	)		(141,833	)
Forfeited	-			-			-
Outstanding at October 31, 2022		147,166			45,383			192,549		$	19.66

The actual number of shares of common stock of the Company, if any, to be earned by the award recipients is determined over a three-year performance measurement period based in part on measures that include Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”) margin, revenue growth, and free cash flow for the June 2021 grants and revenue growth and EBITDA margin for the April 2022 and June 2022 grants and revenue growth, EBITDA margin and return on invested capital for the March 2023 grants. The performance targets have been set for each of the Minimum, Target, and Maximum levels. The actual performance amount achieved is determined by the Committee and may be adjusted for items determined to be unusual in nature or infrequent in occurrence at the discretion of the Committee.

The compensation cost is based on the fair value at the grant date, recognized over the requisite performance/service period using the straight-line method, and periodically adjusted for the probable number of shares to be awarded. As of October 31, 2023, unrecognized stock-based compensation expense totaled $1.9 million pursuant to the 2017 Plan based on outstanding awards under the 2017 Plan. This expense is expected to be recognized over approximately two years.

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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 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.

As of October 31, 2023, there was $5.0 million remaining under the share repurchase program. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.

10. Income Taxes

The Company’s provision for income taxes for the three and nine months ended October 31, 2023 and 2022 is based on the estimated annual effective tax rate, in addition to discrete items.

The Company’s effective tax rate for the third quarter of FY24 was 26.4%, which differs from the U.S. federal statutory rate of 21% primarily due to rate differentials in foreign tax jurisdictions and Global Intangible Low-Taxed Income (“GILTI”). The Company's effective tax rate for the third quarter of FY23 was 33.3% which differs from the U.S. federal statutory rate of 21%, primarily due to rate differentials in foreign tax jurisdictions and state income taxes.

The Company's effective tax rate for the nine months ended October 31, 2023 was 29.5%, which differs from the U.S. federal statutory rate of 21%, primarily due to rate differentials in foreign tax jurisdictions and GILTI. The Company’s effective tax rate for the nine months ended October 31, 2022 was 68.1%. The Company recorded $2 million in withholding taxes for a planned repatriation of cash from our China operations. In addition to the $2 million discrete item, in Q1 FY23, the Company recorded deferred tax benefits of $0.2 million related to accruals for China social taxes based on our evaluation of the deductibility of these items. Excluding these discrete items, the effective rate was 33.8%, which differs from the U.S. federal statutory rate of 21%, primarily due to rate differentials in foreign tax jurisdictions and GILTI.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. The valuation allowance was $4.0 million and $3.6 million at October 31, 2023 and January 31, 2023, respectively.

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11. Net Income (Loss) Per Share

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	2,618	$	1,431	$	6,402	$	1,690
Denominator:
Denominator for basic net income (loss) per share (weighted-average shares which exclude shares in the treasury, 1,358,208 and 1,330,694 at October 31, 2023 and 2022, respectively		7,428,557		7,514,725		7,344,559		7,600,272
Effect of dilutive securities from restricted stock plan		185,847		189,970		184,164		187,390
Denominator for diluted net income (loss) per share (adjusted weighted average shares)		7,614,404		7,704,695		7,528,723		7,787,662
Basic net income (loss) per share	$	0.35	$	0.19	$	0.87	$	0.22
Diluted net income (loss) per share	$	0.34	$	0.19	$	0.85	$	0.22

For the current and prior year periods presented, there were no securities excluded from the calculation of diluted earnigs per share because they were anti-dilutive.

12. Contingencies

Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s management and legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein.

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 condensed 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.

During the third quarter, the Company sent a letter to the landlord outlining certain structural defects on the newly constructed facility in Monterrey, Mexico that would inhibit the Company from effectively utilizing the facility for its intended purpose. The Company has initiated discussions with the landlord as to potential remedies which may inform our decision-making process with respect to this property. Changes in our long-term intended use for the building may impact the carrying value of the currently recorded right of use asset.

General litigation contingencies

The Company is involved in various litigation proceedings arising during the normal course of business which, in the opinion of the management of the Company, will not have a material effect on the Company’s financial position, results of operations or cash flows; however, there can be no assurance as to the ultimate outcome of these matters. As of October 31, 2023, to the best of the Company’s knowledge, there were no significant outstanding claims or litigation.

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13. Segment Reporting

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). The Company also maintains one manufacturing company in China (primarily disposable and chemical suit production), a manufacturing facility in Mexico (primarily disposable, reflective, fire service and chemical suit production), a manufacturing facility in Vietnam (primarily disposable production) 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 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 three and nine month periods noted therein:

	Three Months Ended October 31,						Nine Months Ended October 31,
	(in millions of dollars)						(in millions of dollars)
	2023			2022			2023			2022
Net Sales:
USA Operations (including Corporate)	$	16.2		$	15.3		$	46.3		$	41.0
Other foreign		3.9			2.3			10.2			7.0
Europe (UK)		3.2			1.5			12.7			5.3
Mexico		1.6			1.4			5.2			4.1
Asia		12.1			16.8			34.1			50.8
Canada		2.7			2.4			7.2			6.9
Latin America		4.2			2.6			12.0			7.0
Less intersegment sales		(12.2	)		(13.9	)		(34.3	)		(38.3	)
Consolidated sales	$	31.7		$	28.4		$	93.4		$	83.8
External Sales:
USA Operations (including Corporate)	$	15.1		$	14.0		$	42.6		$	37.1
Other foreign		2.4			1.7			6.6			5.4
Europe (UK)		3.2			1.5			12.6			5.3
Mexico		1.0			1.0			2.9			2.9
Asia		3.1			5.2			9.7			19.2
Canada		2.7			2.4			7.2			6.9
Latin America		4.2			2.6			11.8			7.0
Consolidated external sales	$	31.7		$	28.4		$	93.4		$	83.8

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Intersegment Sales:
USA Operations (including Corporate)	$	1.1	$	1.3	$	3.7	$	3.9
Other foreign		1.5		0.6		3.6		1.6
Europe (UK)		-		-		0.1		-
Mexico		0.6		0.4		2.3		1.2
Asia		9.0		11.6		24.4		31.6
Canada		-		-		-		-
Latin America		-		-		0.2		0.0
Consolidated intersegment sales	$	12.2	$	13.9	$	34.3	$	38.3

	Three Months Ended October 31,						Nine Months Ended October 31,
	(in millions of dollars)						(in millions of dollars)
	2023			2022			2023			2022
Operating Profit (Loss):
USA Operations (including Corporate)	$	1.9		$	(0.1	)	$	1.6		$	(3.4	)
Other foreign		0.6			0.3			1.8			0.4
Europe (UK)		(0.4	)		(0.5	)		-			(1.1	)
Mexico		(0.4	)		(0.3	)		(1.3	)		(0.9	)
Asia		1.3			2.4			3.1			8.4
Canada		0.5			0.3			1.1			1.3
Latin America		0.8			0.4			2.9			1.2
Intersegment profit (loss)		(0.7	)		(0.3	)		0.1			(0.4	)
Consolidated operating profit	$	3.6		$	2.2		$	9.3		$	5.5

	October 31, 2023		January 31, 2023
	(in millions of dollars)
Total Assets Less Intersegment:
USA Operations (including Corporate)	$	57.2	$	64.5
Other foreign		10.4		9.2
Europe (UK)		24.3		12.5
Mexico		10.5		5.3
Asia		27.4		35.6
Canada		7.1		5.8
Latin America		11.4		9.3
Consolidated assets	$	148.3	$	142.2

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The table below presents external sales by product line:

	Three Months Ended October 31, (in millions of dollars)				Nine Months Ended October 31, (in millions of dollars)
	2023		2022		2023		2022
External Sales by product lines:
Disposables	$	11.9	$	14.1	$	36.7	$	41.3
Chemical		4.7		5.2		15.4		17.5
Fire service		5.6		3.6		20.0		9.2
Gloves		0.5		0.6		1.7		1.7
High Visibility		2.6		1.7		5.4		4.6
High Performance Wear		2.4		1.3		5.2		3.8
Wovens		4.0		1.9		9.0		5.7
Consolidated external sales	$	31.7	$	28.4	$	93.4	$	83.8

14. Subsequent Events

On November 1, 2023, the Company’s Board of Directors declared a quarterly cash dividend. The quarterly dividend of $0.03 per share or approximately $0.2 million, was paid on November 22, 2023, to stockholders of record as of November 15, 2023.

On November 27, 2023, the Company sold its office and warehouse facility in Brantford, Ontario to an unrelated party for $4.9 million. The sale will result in a pre-tax gain, after selling expenses, of approximately $3.8 million. Going forward, the Company will utilize third party logistics providers for customer fulfillment in Canada.

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 ($8.6 million), 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.

On November 30, 2023, the Company entered into Amendment No. 3 to 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

The following discussion and analysis should be read in conjunction with the historical financial statements and other financial information included elsewhere in this quarterly report on Form 10-Q. This Form 10-Q may contain certain forward-looking statements. When used in this Form 10-Q or in any other presentation, statements which are not historical in nature, including the words “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” “project,” “plan,” “seek,” “will,” “may,” “might,” “would,” “could” and similar expressions, are intended to identify forward-looking statements. They also include statements containing a projection of sales, earnings or losses, capital expenditures, dividends, capital structure or other financial terms and expectations with respect to the timing and intended use for our planned manufacturing expansion.

The forward-looking statements in this Form 10-Q are based upon our management’s beliefs, assumptions and expectations of our future operations and economic performance, taking into account the information currently available to us. These statements are not statements of fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. Some of the important factors that could cause our actual results, performance or financial condition to differ materially from expectations are:

	·	we are subject to risk as a result of our international manufacturing operations and are subject to the risk of doing business in foreign countries, particularly in China and Vietnam, which could affect our ability to manufacture or sell our products, obtain products from foreign suppliers or control the costs of our products;
	·	we identified a material weakness in our internal control over accounting for foreign currency exchange and foreign currency translation and remeasurement related to our international subsidiaries that could adversely affect our results of operations, our stock price and investor confidence in our Company;
	·	a terrorist attack, other geopolitical crisis, or widespread outbreak of an illness or other health issue, such as the COVID-19 pandemic, could negatively impact our domestic and/or international operations;
	·	our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates;
	·	the implementation of our Enterprise Resource Planning ("ERP") system had, and may in the future as we implement ERP into foreign operations have, an adverse effect on operating results;
	·	global supply chain constraints have led to inflation in prices of some fabrics we acquire, as well as labor and operating costs, and further pricing increases may result in a decline in our future profitability;
	·	we have manufacturing and other operations in China which may be adversely affected by tariff wars and other trade maneuvers;
	·	the failure to optimize the Company’s manufacturing capacity may have an adverse impact on our business and operations;
	·	our results of operations may vary widely from quarter to quarter;
	·	disruption in our supply chain, manufacturing or distribution operations could adversely affect our business;
	·	climate change and other sustainability matters may adversely affect our business and operations;
	·	some of our sales are to foreign buyers, which exposes us to additional risks;
	·	we deal in countries where corruption is an obstacle;
	·	we are exposed to U.S. and foreign tax risks;
	·	because we do not have long-term commitments from many of our customers, we must estimate customer demand, and errors in our estimates could negatively impact our inventory levels and net sales;
	·	we face competition from other companies, a number of which have substantially greater resources than we do;
	·	our operations are substantially dependent upon key personnel;
	·	cybersecurity incidents could disrupt business operations, result in the loss of critical and confidential information and adversely impact our reputation and results of operations;
	·	we may be subject to product liability claims, and insurance coverage could be inadequate or unavailable to cover these claims;
	·	environmental laws and regulations may subject us to significant liabilities;
	·	provisions in our restated certificate of incorporation and by-laws and Delaware law could make a merger, tender offer or proxy contest difficult;

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	·	we may not achieve the expected benefits from strategic acquisitions, investments, joint ventures, capital investments and other corporate transactions that we have pursued or may pursue;
	·	we may need additional funds, and if we are unable to obtain these funds, we may not be able to expand or operate our business as planned;
	·	adverse developments affecting the financial services industry, including events or concerns involving liquidity, defaults or non-performance by financial institutions or transactional counterparties, could adversely affect our business, financial condition or results of operations;
	·	rapid technological change could negatively affect sales of our products, inventory levels and our performance; and
	·	the other factors referenced in this Form 10-Q, including, without limitation, in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the factors described under “Risk Factors” disclosed in our fiscal 2023 Form 10-K.

We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements which are based on current expectations. Furthermore, forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements after the date of this Form 10-Q, whether as a result of new information, future events or otherwise, except as may be required by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this Form 10-Q might not occur. We qualify any and all of our forward-looking statements entirely by these cautionary factors.

Business Overview

We 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 1,600 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. 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. In addition to the United States, sales are made to more than 50 foreign countries, the majority of which were in China, the European Economic Community (“EEC”), Canada, Chile, Argentina, Russia, Kazakhstan, Colombia, Mexico, Ecuador, India, Middle East and Southeast Asia.

We have operated facilities in Mexico since 1995 and in China since 1996. Beginning in 1995, we moved the labor-intensive sewing operation for our limited use/disposable protective clothing lines to these facilities. Our facilities and capabilities in China and Mexico allow access to a less expensive labor pool than is available in the United States and permit us to purchase certain raw materials at a lower cost than they are available domestically. The Company has been able to pass along a portion of these costs to its customers. We added manufacturing operations in Vietnam and India to offset increasing manufacturing costs in China and further diversify our manufacturing capabilities. Our China operations will continue primarily manufacturing for the Chinese market and other markets where duty advantages exist. Due to damage recently experienced at our newly leased Monterrey site we are currently evaluating our leasehold improvement buildout schedule which may impact our go-live production timing. The Company believes it has global capacity to support its operations for the foreseeable future.

On December 2, 2022, the Company acquired UK-based Eagle Technical Products Limited (“Eagle”) in an all-cash transaction valued at approximately $10.5 million, subject to post-closing adjustments and potential future earnout payments. The acquisition enhances Lakeland’s product portfolio, particularly within fire service protective clothing and expands its sales presence in the Middle East and Europe.

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Our net sales attributable to customers outside the United States were $16.6 million and $14.4 million for the three months ended October 31, 2023 and 2022, respectively, and $50.8 million and $46.7 million for the nine months ended October 31, 2023 and 2022, respectively.

We are continually monitoring the potential financial impact of the Russian invasion of Ukraine on our operations. For the nine months ended October 31, 2023, sales in Russia were approximately 3.2% of our consolidated sales and sales into Ukraine were not significant. We do not have any capital assets in Russia.

We are monitoring the potential financial impact of the Middle East conflict. The Company does not have physical assets in the Middle East but does have sales in the region. The continued conflict could have an impact on the level and timing of sales in the region.

Results of Operations

Three Months ended October 31, 2023, Compared to the Three Months Ended October 31, 2022

The economy has been impacted by certain macroeconomic challenges which have contributed to a rising inflationary trend that has impacted both our revenues and costs globally, and which we expect will continue into the foreseeable future. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. There can be no assurance that our results of operations and financial condition will not be materially impacted by inflation in the future.

Net Sales. Net sales were $31.7 million for the three months ended October 31, 2023, an increase of $3.3 million or 11.6% compared to $28.4 million for the three months ended October 31, 2022. Sales of our fire service and industrial product lines increased by $6.1 million, reflecting continued market share expansion in the first responder markets and ongoing strength in oil and gas turnarounds and utilities markets. Eagle contributed $1.3 million in fire service sales during the quarter. Our sales were negatively impacted by declines in our disposable products, particularly in Asia, and chemical product lines by $2.8 million.

Gross Profit. Gross profit for the three months ended October 31, 2023 was $13.4 million, an increase of $1.1 million, or 8.9%, compared to $12.3 million for the three months ended October 31, 2022. Gross profit as a percentage of net sales declined to 42.2% for the three-month period ended October 31, 2023, from 43.3% for the three months ended October 31, 2022. Gross profit performance in the current period was positively impacted by increased revenue during the quarter, including sales of previously reserved excess inventory, partially offset by an adjustment for deferred profit in ending inventory. Major factors driving the change in gross margins in the three months ended October 31, 2023, were:

	·	Adjustments for deferred profit in inventory and inventory revaluation amortizations.
	·	Partially offset by reduction of total inventory including previously reserved excess inventory.

Operating Expense. Operating expenses decreased 4.0% from $10.1 million for the three months ended October 31, 2022 to $9.7 million for the three months ended October 31, 2023. The Company evaluated the earnout consideration accrual related to the Eagle acquisition and reduced the accrual by $1.5 million, which was recorded during the third quarter as a reduction in operating expenses. This decrease was partially offset by .increases in currency fluctuations of $0.7 million, primarily as a result of declines in the Argentine peso. The remaining difference resulted from increases in selling expenses, travel and trade show expenses. Operating expenses as a percentage of net sales was 30.7% for the three months ended October 31, 2023, an improvement from 35.5% for the three months ended October 31, 2022 primarily due to increased revenue.

Operating Profit. Operating profit increased to $3.6 million for the three months ended October 31, 2023 from $2.2 million for the three months ended October 31, 2022, due to the impacts detailed above. Operating margins were 11.4% for the three months ended October 31, 2023, as compared to 7.6% for the three months ended October 31, 2022.

Income Tax Expense. Income tax expense consists of federal, state and foreign income taxes. Income tax expense was $0.9 million for the three months ended October 31, 2023, compared to $0.7 million for the three months ended October 31, 2022. The effective rate for the three months ended October 31 2023, was 26.4%. The effective rate for the three months ended October 31, 2022 was 33.3%.

Net Income (Loss). Net income for the three months ended October 31, 2023 was $2.6 million an increase of $1.2 million from net income of $1.4 million for the three months ended October 31, 2022. The increase was due to the factors discussed above.

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Nine Months ended October 31, 2023, Compared to the Nine Months Ended October 31, 2022

Net Sales. Net sales were $93.4 million for the nine months ended October 31, 2023 as compared to $83.8 million for the nine months ended October 31, 2022, an increase of 11.5%. Our fire service and wovens product lines increased by $14.1 million in the period due to strengthening in the first responder and utilities markets and the impact of Eagle which contributed $6.8 million in sales. Sales of our disposable and chemical product lines declined by $6.7 million due to diminishing COVID-19 demand and weakness in China.

Gross Profit. Gross profit was $40.0 million for the nine months ended October 31, 2023, an increase of $5.0 million, or 14.3%, from $35.0 million for the nine months ended October 31, 2022. Gross profit as a percentage of net sales increased to 42.8% for the nine months ended October 31, 2023, from 41.7% for the nine months ended October 31, 2022. Major factors driving gross margins were:

	·	Increased sales in our strategic product lines.
	·	Reduced manufacturing costs due to increased throughput.
	·	Reduction in freight costs. ·
	·	Reduction of total inventory including previously reserved excess inventory.
	·	Partially offset by adjustments to deferred profit in ending inventory.

Operating Expense. Operating expenses increased $1.2 million, or 4.1%, to $30.7 million for the nine months ended October 31, 2023 from $29.5 million for the nine months ended October 31, 2022. Operating expenses as a percentage of net sales was 32.9% for the nine months ended October 31, 2023, down from 35.2% for the nine months ended October 31, 2022. The decreased percentage is primarily due to increased revenue. Selling expenses were higher by $0.7 million due to increases in sales commissions, freight out and higher travel, advertising and trade show expenses as COVID-19 restrictions have lifted. General and administrative expenses increased by $0.5 million, with currency fluctuations accounting for $1.1 million of the increase due to the strengthening of the U.S. dollar primarily against the Chinese yuan and Argentine peso. The remaining increase was due to increases in compensation, professional fees and intangibles amortization. The Company evaluated the earnout consideration accrual related to the Eagle acquisition and reduced the accrual by $2.7 million, which was recorded during the third quarter as a reduction in operating expenses. Severance costs of $0.8 million were partially offset by $0.4 million of forfeitures of equity awards on equity compensation expense recorded in the nine months ended October 31, 2023.

Operating Profit. Operating profit increased to $9.3 million for the nine months ended October 31, 2023 from $5.5 million for the nine months ended October 31, 2022, due to the impacts detailed above. Operating margins were 9.9% for the nine months ended October 31, 2023, as compared to 6.5% for the nine months ended October 31, 2022.

Income Tax Expense. Income tax expense consists of federal, state and foreign income taxes. Income tax expense was $2.7 million for the nine months ended October 31, 2023, compared to $3.6 million for the nine months ended October 31, 2022.

In Q2 FY23, the Company recorded $2 million in withholding taxes for a planned repatriation of cash from our China operations during FY23. In Q1 FY23, the Company recorded deferred tax benefits of $0.2 million related to accruals for China social taxes. Excluding these discrete items, the Company’s effective rate was 29.5% and 33.8% for the nine months ended October 31, 2023 and 2022, respectively.

Net Income (Loss). Net income increased by $4.7 million to $6.4 million for the nine months ended October 31, 2023 from $1.7 million for the nine months ended October 31, 2022.

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Significant Balance Sheet Fluctuation October 31, 2023, Compared to January 31, 2023

Cash increased by $1.8 million due to $7.7 million in cash provided by operations primarily due to a $3.2 million reduction in inventory coupled with profitable operations. Offsetting the operating cash flow were $3.0 million in investing activities split between capital equipment and additional investment in Bodytrak. Financing activities, primarily quarterly dividends, UK borrowing repayments and treasury stock purchases totaled $1.8 million. Finally, cash balances were impacted by $1.1 million due to currency fluctuations, primarily the Chinese yuan and Argentine peso.

The Company invested $1.5 million for the nine months ended October 31, 2023 in manufacturing equipment purchases and made an additional investment in Bodytrak of $1.5 million.

Net cash used in financing activities was $1.8 million for the nine months ended October 31, 2023, due to $0.7 million in dividends paid, $0.3 million in shares repurchased, $0.4 million repayments of short term borrowings and $0.4 million in shares returned to pay income taxes on shares vested under our equity compensation program.

Capital expenditures for the three and nine months ended October 31, 2023 were $0.4 million and $1.5 million, respectively.

Liquidity and Capital Resources

At October 31, 2023, cash and cash equivalents were approximately $26.4 million and working capital was approximately $88.5 million. Cash and cash equivalents increased $1.8 million and working capital increased $1.5 million from January 31, 2023.

Of the Company’s total cash and cash equivalents of $26.4 million as of October 31, 2023, cash held in Latin America of $5.2 million, cash held in Russia and Kazakhstan of $0.9 million, cash held in the UK of $1.4 million, cash held in India of $1.2 million, cash held in Hong Kong of $0.4 million and cash held in Vietnam of $1.6 million would not be subject to additional US tax in the event such cash was repatriated due to the change in the US tax law as a result of the December 22, 2017 enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”). If the Company repatriates any of the $5.9 million balance at October 31, 2023 of cash from China, there could be an additional 10% withholding tax incurred in that country.

Net cash provided by operating activities of $7.7 million for the nine months ended October 31, 2023 was primarily due to net income of $6.4 million offset by non-cash items of $1.8 million for deferred taxes, depreciation and amortization, stock compensation and reduction in the accrued Eagle earnout, offset by net increase in working capital of $3.1 million. Net cash used in investing activities of $3.0 million for the nine months ended October 31, 2023 reflects manufacturing equipment purchases and the additional investment in Bodytrak of $1.5 million. Net cash used in financing activities was $1.8 million for the nine months ended October 31, 2023, due to $0.7 million in dividends, $0.3 million in shares repurchased under our share repurchase program, $0.4 million of repayment of short-term borrowings, and shares returned to pay income taxes on shares vested under our equity compensation program.

We believe our current cash balance and cash flow from operations will be sufficient to satisfy our projected working capital and planned capital expenditures for the foreseeable future. However, our liquidity assumptions may prove to be incorrect, and we could utilize our available financial resources sooner than we currently expect.

On June 25, 2020, we entered into a Loan Agreement with Bank of America (“Lender”). The Loan Agreement, as amended through November 30, 2023 (the “Loan Agreement”), provides the Company with a secured $25.0 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 $30.0 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, however, the borrowing base limitation has been waived through January 31, 2024 as a result of the Third Amendment to the Loan Agreement. The Loan Agreement permits, without the prior consent of the Lender, acquisitions of a business or its assets by the Company or its subsidiaries 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 credit facility will mature on June 25, 2025.

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Per the terms of the Loan Agreement, borrowings under the revolving credit facility bear interest at a rate per annum equal to the sum of the one-month LIBOR Daily Floating Rate (“LIBOR”) plus 125 basis points. LIBOR is subject to a floor of 100 basis points. On March 3, 2023, the Company changed the benchmark interest rate in our credit facility from LIBOR to the Secured Overnight Financing Rate (“SOFR”). 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 November 30, 2023, the Company entered into Amendment No. 3 to Loan Agreement by and between 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.

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 Company was in compliance with all of its debt covenants as of October 31, 2023.

On November 30, 2023, the Company acquired Pacific in an all-cash transaction valued at approximately $8.6 million including assumption of debt, subject to post-closing adjustments and customary holdback provisions. The transaction was funded through the revolving credit facility and cash balances.

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, under which the Company may repurchase 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 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.

There is approximately $5.0 million remaining under the share repurchase program at October 31, 2023. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.

On February 1, 2023, the Board of Directors declared a quarterly cash dividend as part of initiating a recurring quarterly dividend program. The initial quarterly dividend of $0.03 per share was paid on February 22, 2023, to stockholders of record as of February 15, 2023.

On May 1, 2023, the Board of Directors declared a quarterly cash dividend. The quarterly dividend of $0.03 per share was paid on May 22, 2023, to stockholders of record as of May 15, 2023.

On August 1, 2023, the Board of Directors declared a quarterly cash dividend. The quarterly dividend of $0.03 per share was paid on August 22, 2023, to stockholders of record as of August 15, 2023.

On November 1, 2023, the Board of Directors declared a quarterly cash dividend. The quarterly dividend of $0.03 per share was paid on November 22, 2023, to stockholders of record as of November 15, 2023.

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Capital Expenditures. Our capital expenditures for the nine months ended October 31, 2023 of $1.5 million principally relate to capital purchases for our manufacturing facilities in Mexico. We anticipate FY24 capital expenditures to be approximately $2.0 million as we invest in strategic capacity expansion and replace existing equipment in the normal course of operations. We expect to fund the capital expenditures from our cash flow from operations. The Company may also expend funds in connection with potential acquisitions.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. A summary of our significant accounting policies is included in Note 1 to our consolidated financial statements in our fiscal year 2023 Form 10-K. Certain of our accounting policies are considered critical, as these policies are the most important to the depiction of our financial statements and require significant, difficult, or complex judgments, often employing the use of estimates about the effects of matters that are inherently uncertain. Such policies are summarized in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section in our 2023 Form 10-K. There have been no significant changes in the application of our critical accounting policies during the nine months ended October 31, 2023.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item and therefore, no disclosure is required under Item 3 for the Company.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act), as of October 31, 2023. The term “disclosure controls and procedures” means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of October 31, 2023, our disclosure controls and procedures were not effective because of the material weakness in internal control over financial reporting described below.

Notwithstanding the ineffective disclosure controls and procedures as a result of the identified material weakness described below, management has concluded that the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows in accordance with U.S. generally accepted accounting principles.

Material Weakness in Internal Control over Financial Reporting

As previously disclosed in our 2023 Form 10-K, management identified certain deficiencies in the Company’s internal control over financial reporting that aggregated to a material weakness related to its foreign subsidiary currency translation or remeasurement to ensure the foreign subsidiary’s account balances were accurately stated in the consolidated financial statements.

Management’s Remediation Plan and Status

In response to the material weakness, management has taken the following actions:

	·	Enhanced the existing monthly financial statement management review by including a reconciliation of key account balances on the general ledger back to the originally reported balances from the foreign subsidiary sub-ledgers (translated to USD);
	·	Reconfigured the trial balance import process for its Argentina subsidiary to import and remeasure account balances in a manner consistent with other foreign subsidiaries; and
	·	Developed enhancements to the foreign subsidiary financial reporting packages by specifically quantifying and reviewing the currency fluctuation impact on the overall financial statements.

While we have taken steps to substantially remediate the identified material weakness and will continue to complete the remediation process as quickly as possible, we cannot at this time estimate how long it will take to remediate this material weakness. The material weakness will not be considered remediated until the controls are designed, implemented, and operate for a sufficient period of time and management has concluded, through independent testing, that these controls are operating effectively. As management continues to evaluate and work to improve our disclosure controls and procedures and internal control over financial reporting, we may take additional measures to address these control deficiencies or modify certain remediation measures described above.

Changes in Internal Control Over Financial Reporting

Other than continuing to make progress on the ongoing remediation efforts described above, there were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended October 31, 2023 that materially affected, or are reasonably likely to affect materially, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

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 then-current stock repurchase program under which the Company may repurchase 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 December 1, 2022, the Board of Directors authorized an increase in the share repurchase program under which the Company may repurchase up to an additional $5 million of its outstanding common stock. The share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.

The common shares available for repurchase under the authorizations currently in effect may be purchased from time to time, with consideration given to the market price of the common shares, the nature of other investment opportunities, cash flows from operations, general economic conditions and other relevant considerations. Repurchases may be made on the open market or through privately negotiated transactions.

The following table sets forth purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, of shares of the Company’s common stock during the third quarter of fiscal 2024:

Period	Total Number of Shares Purchased ⁽¹⁾		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Dollar Amount of Shares that May Yet Be Purchased Under the Programs
August 1 – August 31		---	$	---		---	$	5,030,479
September 1 – September 30		771	$	—		—	$	5,030,479
October 1 – October 31		---	$	---		---	$	5,030,479
Total		771	$	---		---	$	5,030,479

(1)	Includes withholding of 771 restricted shares to cover taxes on vested restricted shares during the third quarter of FY24.

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Item 6. Exhibits:

Exhibits:

* Filed herewith

† Furnished herewith

3.1	Restated Certificate of Incorporation of Lakeland Industries, Inc., as amended (incorporated by reference to Exhibit 4.1 of Lakeland Industries, Inc.’s Registration Statement on Form S-8 filed on September 3, 2021)
3.2	Amended and Restated Bylaws of Lakeland Industries Inc. (incorporated by reference to Exhibit 3.1 of Lakeland Industries, Inc.’s Form 8-K filed April 28, 2017)
10.1*	General Release and Separation Agreement, dated October 19, 2023, by and between Lakeland Industries, Inc. and Charles D. Roberson
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15(d)-14(a) under the Securities Exchange Act of 1934
31.2*	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or 15(d)-14(a) under the Securities Exchange Act of 1934
32.1†	Certification of Chief Executive Officer as adopted pursuant to 18 U.S.C. Section 1350 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2†	Certification of Principal Financial Officer as adopted pursuant to 18 U.S.C. Section 1350 pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following financial statements from the Quarterly Report on Form 10-Q for the quarter ended October 31, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iii) Condensed Consolidated Balance Sheets, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	LAKELAND INDUSTRIES, INC. (Registrant)

Date: December 7, 2023	/s/ Roger D. Shannon
	Roger D. Shannon, Chief Financial Officer (Principal Financial Officer and Authorized Signatory)

nullnullnullnullnull

Cover - shares	9 Months Ended
Cover - shares	Oct. 31, 2023	Nov. 30, 2023
Cover [Abstract]
Entity Registrant Name	LAKELAND INDUSTRIES, INC.
Entity Central Index Key	0000798081
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--01-31
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Oct. 31, 2023
Entity Filer Category	Accelerated Filer
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Entity Common Stock Shares Outstanding		7,364,757
Entity File Number	0-15535
Entity Incorporation State Country Code	DE
Entity Tax Identification Number	13-3115216
Entity Address Address Line 1	1525 Perimeter Parkway
Entity Address Address Line 2	Suite 325
Entity Address City Or Town	Huntsville
Entity Address State Or Province	AL
Entity Address Postal Zip Code	35806
City Area Code	256
Local Phone Number	350-3873
Security 12b Title	Common Stock
Trading Symbol	LAKE
Security Exchange Name	NASDAQ
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Net sales	$ 31,678	$ 28,387	$ 93,449	$ 83,849
Cost of goods sold	18,317	16,083	53,461	48,862
Gross profit	13,361	12,304	39,988	34,987
Operating expenses	9,740	10,082	30,699	29,522
Operating profit	3,621	2,222	9,289	5,465
Other income (expense), net	(53)	(72)	(187)	(140)
Interest expense	(13)	(4)	(22)	(25)
Income before taxes	3,555	2,146	9,080	5,300
Income tax expense	937	715	2,677	3,610
Net income (loss)	$ 2,618	$ 1,431	$ 6,402	$ 1,690
Net income (loss) per common share:
Basic	$ 0.35	$ 0.19	$ 0.87	$ 0.22
Diluted	$ 0.34	$ 0.19	$ 0.85	$ 0.22
Weighted average common shares outstanding:
Basic	7,428,557	7,514,725	7,344,559	7,600,272
Diluted	7,614,404	7,704,695	7,528,723	7,787,662

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
Net income (loss)	$ 2,618	$ 1,431	$ 6,402	$ 1,690
Other comprehensive income (loss):
Foreign currency translation adjustments	(483)	(1,744)	(2,110)	(2,916)
Comprehensive income (loss)	$ 2,135	$ (313)	$ 4,292	$ (1,226)

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Oct. 31, 2023	Jan. 31, 2023
Current assets
Cash and cash equivalents	$ 26,425	$ 24,639
Accounts receivable, net of allowance for doubtful accounts of $913 and $800 at October 31, 2023 and January 31, 2023, respectively	18,227	17,296
Inventories	54,350	58,176
Prepaid VAT and other taxes	2,633	1,963
Income tax receivable and other current assets	2,385	2,908
Total current assets	104,020	104,982
Property and equipment, net	9,158	9,140
Operating leases right-of-use assets	10,495	5,472
Deferred tax assets	3,790	2,764
Other assets	134	100
Goodwill	8,473	8,473
Intangible assets, net	5,736	6,042
Investments	6,509	5,354
Total assets	148,315	142,327
Current liabilities
Accounts payable	6,803	6,558
Accrued compensation and benefits	3,670	2,522
Other accrued expenses	1,951	4,068
Income tax payable	1,057	0
Short-term borrowings	0	405
Accrued earnout agreement	492	3,182
Current portion of operating lease liabilities	1,538	1,253
Total current liabilities	15,511	17,988
Deferred income taxes	12	769
Long-term portion of operating lease liabilities	9,203	3,580
Total liabilities	24,726	22,337
Stockholders' equity
Preferred stock, $0.01 par; authorized 1,500,000 shares (none issued)		0
Common stock, $0.01 par; authorized 20,000,000 shares Issued 8,722,965 and 8,655,699; outstanding 7,364,757 and 7,325,005 at October 31, 2023 and January 31, 2023, respectively	87	87
Treasury stock, at cost; 1,358,208 and 1,330,694 shares at October 31, 2023 and January 31, 2023, respectively	(19,979)	(19,646)
Additional paid-in capital	78,802	78,475
Retained earnings	70,480	64,765
Accumulated other comprehensive loss	(5,801)	(3,691)
Total stockholders' equity	123,589	119,990
Total liabilities and stockholders' equity	$ 148,315	$ 142,327

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Oct. 31, 2023	Jan. 31, 2023
CONDENSED CONSOLIDATED BALANCE SHEETS
Allowance for doubtful accounts	$ 769	$ 800
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,500,000	1,500,000
Preferred stock, shares issued	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	20,000,000	20,000,000
Common stock, shares issued	8,722,965	8,655,699
Common stock, shares outstanding	7,364,757	7,325,005
Treasury stock, shares	1,358,208	1,330,694

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained Earnings (Accumulated Deficit)	Accumulated other comprehensive loss
Balance, shares at Jan. 31, 2022		8,555,672	939,705
Balance, amount at Jan. 31, 2022	$ 125,100	$ 86	$ (14,206)	$ 77,826	$ 62,892	$ (1,498)
Net income	1,690	0	0	0	1,690	0
Other comprehensive loss	(2,916)	$ 0	0	0	0	(2,916)
Restricted stock issued, shares		94,908
Restricted stock issued, amount	1	$ 1	0	0	0	0
Restricted Stock Plan	1,141	0	0	1,141	0	0
Return of shares in lieu of payroll withholding	(805)	0	$ 0	(805)	0	0
Treasury stock purchased, shares			(390,989)
Treasury stock purchased, amount	(5,440)	$ 0	$ (5,440)	0	0	0
Balance, shares at Oct. 31, 2022		8,650,580	1,330,694
Balance, amount at Oct. 31, 2022	118,771	$ 87	$ (19,646)	78,162	64,582	(4,414)
Balance, shares at Jul. 31, 2022		8,650,580	1,135,855
Balance, amount at Jul. 31, 2022	121,047	$ 87	$ (17,332)	77,811	63,151	(2,670)
Net income	1,431	0	0	0	1,431	0
Other comprehensive loss	(1,744)	0	0	0	0	(1,744)
Restricted Stock Plan	351	0	0	351	0	0
Return of shares in lieu of payroll withholding	0	0	$ 0	0	0	0
Treasury stock purchased, shares			(194,839)
Treasury stock purchased, amount	(2,314)	0	$ (2,314)	0	0	0
Restricted stock issued	0	$ 0	$ 0		0	0
Balance, shares at Oct. 31, 2022		8,650,580	1,330,694
Balance, amount at Oct. 31, 2022	118,771	$ 87	$ (19,646)	78,162	64,582	(4,414)
Balance, shares at Jan. 31, 2023		8,655,699	1,330,694
Balance, amount at Jan. 31, 2023	119,990	$ 87	$ (19,646)	78,475	64,765	(3,691)
Net income	6,402	0	0	0	6,402	0
Other comprehensive loss	(2,110)	$ 0	0	0	0	(2,110)
Restricted stock issued, shares		67,266
Restricted stock issued, amount	0	$ 0	0	0	0	0
Restricted Stock Plan	747	0	0	747	0	0
Return of shares in lieu of payroll withholding	(420)	0	$ 0	(420)	0	0
Treasury stock purchased, shares			(27,514)
Treasury stock purchased, amount	(333)	0	$ (333)	0	0	0
Dividends	(687)	$ 0	$ 0	0	(687)
Balance, shares at Oct. 31, 2023		8,722,965	1,358,208
Balance, amount at Oct. 31, 2023	123,589	$ 87	$ (19,979)	78,802	70,480	(5,801)
Balance, shares at Jul. 31, 2023		8,721,232	1,358,208
Balance, amount at Jul. 31, 2023	121,385	$ 87	$ (19,979)	78,511	68,084	(5,318)
Net income	2,618	0	0	0	2,618	0
Other comprehensive loss	(483)	0	0	0	0	(483)
Restricted stock issued, amount	0	0	0		0	0
Restricted Stock Plan	302	0	0	302	0	0
Return of shares in lieu of payroll withholding	(11)	0	0	(11)	0	0
Dividends	(222)	$ 0	$ 0	0	(222)	0
Restricted stock issued, shares		1,733
Treasury stock purchased		$ 0		0	0	0
Balance, shares at Oct. 31, 2023		8,722,965	1,358,208
Balance, amount at Oct. 31, 2023	$ 123,589	$ 87	$ (19,979)	$ 78,802	$ 70,480	$ (5,801)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Oct. 31, 2023	Oct. 31, 2022
Cash flows from operating activities:
Net income	$ 6,402	$ 1,690
Adjustments to reconcile net income to net cash (used in) provided by operating activities
Provision for (recovery of) doubtful accounts	(31)	92
Deferred income taxes	(1,783)	1,788
Depreciation and amortization	1,609	1,370
Stock based and restricted stock compensation	747	1,141
(Gain) loss on disposal of property and equipment	(1)	(4)
Loss on equity investment	354	252
Revaluation of earnout consideration	(2,689)	0
(Increase) decrease in operating assets
Accounts receivable	(963)	(2,197)
Inventories	3,211	(10,257)
Prepaid VAT and other taxes	(670)	(106)
Other assets	285	(22)
Increase (decrease) in operating liabilities
Accounts payable	141	613
Accrued expenses and other liabilities	235	499
Operating lease liabilities	886	(89)
Net cash provided by (used in) operating activities	7,733	(5,230)
Cash flows from investing activities:
Purchases of property and equipment	(1,505)	(1,273)
Investments	(1,510)	(3,061)
Net cash (used in) investing activities:	(3,015)	(4,334)
Cash flows from financing activities:
Short-term borrowings (repayments)	(405)	0
Purchase of treasury stock under stock repurchase program	(333)	(5,440)
Dividends paid	(687)	0
Shares returned to pay employee taxes under restricted stock program	(420)	(805)
Net cash (used in) financing activities	(1,845)	(6,245)
Effect of exchange rate changes on cash and cash equivalents	(1,087)	(1,961)
Net increase (decrease) in cash and cash equivalents	1,786	(17,770)
Cash and cash equivalents at beginning of period	24,639	52,719
Cash and cash equivalents at end of period	26,425	34,949
Supplemental disclosure of cash flow information:
Cash paid for interest	22	25
Cash paid for taxes	1,745	2,614
Noncash investing and financing activities
Leased assets obtained in exchange for operating lease liabilities	$ 4,099	$ 34

Business

9 Months Ended

Oct. 31, 2023

Business

Business

1. Business

Basis of Presentation

9 Months Ended

Oct. 31, 2023

Basis of Presentation

Basis of Presentation

2. Basis of Presentation

Investments and Acquisitions

9 Months Ended

Oct. 31, 2023

Investments and Acquisitions

Investments and Acquisitions

3. Investments and Acquisitions

Bodytrak

Acquisition of Eagle

On December 2, 2022, the Company acquired 100% of Eagle Technical Products Limited’s (Eagle) common stock in an all-cash transaction valued at $10.5 million, net of net working capital acquired.

Pro forma combined financial information (Unaudited)

(in millions, except per share amounts)	Three Months Ended October 31, 2022		Nine Months Ended October 31, 2022
Net sales	$	29.8	$	86.4
Net income (loss)	$	1.6	$	1.8
Basic earnings per share	$	0.21	$	0.24
Diluted earnings per share	$	0.21	$	0.24

The unaudited pro forma combined financial information was prepared using the acquisition method of accounting under existing U.S. GAAP. The Company has been treated as the acquirer.

Inventories

9 Months Ended

Oct. 31, 2023

Inventories

Inventories

4. Inventories

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

	October 31, 2023			January 31, 2023
Raw materials	$	26,798		$	29,036
Work-in-process		760			952
Finished goods		31,088			32,855
Excess and obsolete adjustments		(4,296	)		(4,668	)
	$	54,350		$	58,176

Goodwill and Intangible Assets Net

9 Months Ended

Oct. 31, 2023

Goodwill and Intangible Assets Net

Goodwill and Intangible Assets, Net

5. Goodwill and Intangible Assets, Net

Changes in intangible assets, net, during the three and nine months ended October 31, 2023, were as follows (in $000s):

Balance at February 1, 2023	$	6,042
Amortization expense		(102	)
Balance at April 30, 2023	$	5,940
Amortization expense		(102	)
Balance at July 31, 2023	$	5,838
Amortization expense		(102	)
Balance at October 31, 2023	$	5,736

There were no material changes to goodwill during the three and nine month periods ended October 31, 2023.

Contract Advances

9 Months Ended

Oct. 31, 2023

Contract Advances

Contract Advances

6. Contract Advances

Contract liability – January 31, 2023	$	1,627
Increases to contract liability		326
Decreases to contract liability		(1,752	)
Contract liability – October 31, 2023	$	201

LongTerm Debt

9 Months Ended

Oct. 31, 2023

LongTerm Debt

Long-Term Debt

7. Long-Term Debt

Revolving Credit Facility

As of October 31, 2023, the Company had no borrowings outstanding on the letter of credit sub-facility and no borrowings outstanding under the revolving credit facility.

On November 30, 2023, the Company entered into Amendment No. 3 to the Loan Agreement. See Note 14, Subsequent Events, for additional information.

Borrowings in UK

There were $0 and $0.4 million in borrowings outstanding under the Company’s credit facility with HSBC Bank at October 31, 2023 and January 31, 2023.

Concentration of Risk

9 Months Ended

Oct. 31, 2023

Concentration of Risk

Concentration of Risk

8. Concentration of Risk

Credit Risk

Major Customer

No customer accounted for more than 10% of net sales during the three and nine-month periods ended October 31, 2023 and 2022.

Major Supplier

No vendor accounted for more than 10% of purchases during the three and nine-month periods ended October 31, 2023 and 2022.

Stockholders Equity

9 Months Ended

Oct. 31, 2023

Stockholders Equity

Stockholders' Equity

9. Stockholders’ Equity

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2023		2022		2023		2022
2017 Plan:
Total restricted stock and stock option programs	$	302	$	351	$	747	$	1,141
Total income tax expense recognized for stock-based compensation arrangements	$	63	$	74	$	157	$	240

Restricted Stock and Restricted Stock Units

	Performance- Based			Service-Based			Total			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2023		127,480			40,665			168,145		$	22.95
Awarded		64,953			124,384			189,337		$	14.02
Vested		(71,202	)		(26,336	)		(97,538	)
Forfeited		(38,901	)		(31,829	)		(70,730	)
Outstanding at October 31, 2023		82,330			106,884			189,214		$	14.68

	Performance- Based			Service-Based			Total			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2022		232,838			14,970			247,808		$	20.89
Awarded		33,492			53,082			86,574		$	18.17
Vested		(119,164	)		(22,669	)		(141,833	)
Forfeited	-			-			-
Outstanding at October 31, 2022		147,166			45,383			192,549		$	19.66

Stock Repurchase Program

Income Taxes

9 Months Ended

Oct. 31, 2023

Income Taxes

Income Taxes

10. Income Taxes

The Company’s provision for income taxes for the three and nine months ended October 31, 2023 and 2022 is based on the estimated annual effective tax rate, in addition to discrete items.

Net Income (Loss) Per Share

9 Months Ended

Oct. 31, 2023

Net income (loss) per common share:

Net Income (Loss) Per Share

11. Net Income (Loss) Per Share

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

	Three Months Ended October 31,				Nine Months Ended October 31,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	2,618	$	1,431	$	6,402	$	1,690
Denominator:
Denominator for basic net income (loss) per share (weighted-average shares which exclude shares in the treasury, 1,358,208 and 1,330,694 at October 31, 2023 and 2022, respectively		7,428,557		7,514,725		7,344,559		7,600,272
Effect of dilutive securities from restricted stock plan		185,847		189,970		184,164		187,390
Denominator for diluted net income (loss) per share (adjusted weighted average shares)		7,614,404		7,704,695		7,528,723		7,787,662
Basic net income (loss) per share	$	0.35	$	0.19	$	0.87	$	0.22
Diluted net income (loss) per share	$	0.34	$	0.19	$	0.85	$	0.22

For the current and prior year periods presented, there were no securities excluded from the calculation of diluted earnigs per share because they were anti-dilutive.

Contingencies

9 Months Ended

Oct. 31, 2023

Contingencies

Contingencies

12. Contingencies

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

General litigation contingencies

Segment Reporting

9 Months Ended

Oct. 31, 2023

Segment Reporting

Segment Reporting

13. Segment Reporting

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

	Three Months Ended October 31,						Nine Months Ended October 31,
	(in millions of dollars)						(in millions of dollars)
	2023			2022			2023			2022
Net Sales:
USA Operations (including Corporate)	$	16.2		$	15.3		$	46.3		$	41.0
Other foreign		3.9			2.3			10.2			7.0
Europe (UK)		3.2			1.5			12.7			5.3
Mexico		1.6			1.4			5.2			4.1
Asia		12.1			16.8			34.1			50.8
Canada		2.7			2.4			7.2			6.9
Latin America		4.2			2.6			12.0			7.0
Less intersegment sales		(12.2	)		(13.9	)		(34.3	)		(38.3	)
Consolidated sales	$	31.7		$	28.4		$	93.4		$	83.8
External Sales:
USA Operations (including Corporate)	$	15.1		$	14.0		$	42.6		$	37.1
Other foreign		2.4			1.7			6.6			5.4
Europe (UK)		3.2			1.5			12.6			5.3
Mexico		1.0			1.0			2.9			2.9
Asia		3.1			5.2			9.7			19.2
Canada		2.7			2.4			7.2			6.9
Latin America		4.2			2.6			11.8			7.0
Consolidated external sales	$	31.7		$	28.4		$	93.4		$	83.8

Intersegment Sales:
USA Operations (including Corporate)	$	1.1	$	1.3	$	3.7	$	3.9
Other foreign		1.5		0.6		3.6		1.6
Europe (UK)		-		-		0.1		-
Mexico		0.6		0.4		2.3		1.2
Asia		9.0		11.6		24.4		31.6
Canada		-		-		-		-
Latin America		-		-		0.2		0.0
Consolidated intersegment sales	$	12.2	$	13.9	$	34.3	$	38.3

	Three Months Ended October 31,						Nine Months Ended October 31,
	(in millions of dollars)						(in millions of dollars)
	2023			2022			2023			2022
Operating Profit (Loss):
USA Operations (including Corporate)	$	1.9		$	(0.1	)	$	1.6		$	(3.4	)
Other foreign		0.6			0.3			1.8			0.4
Europe (UK)		(0.4	)		(0.5	)		-			(1.1	)
Mexico		(0.4	)		(0.3	)		(1.3	)		(0.9	)
Asia		1.3			2.4			3.1			8.4
Canada		0.5			0.3			1.1			1.3
Latin America		0.8			0.4			2.9			1.2
Intersegment profit (loss)		(0.7	)		(0.3	)		0.1			(0.4	)
Consolidated operating profit	$	3.6		$	2.2		$	9.3		$	5.5

	October 31, 2023		January 31, 2023
	(in millions of dollars)
Total Assets Less Intersegment:
USA Operations (including Corporate)	$	57.2	$	64.5
Other foreign		10.4		9.2
Europe (UK)		24.3		12.5
Mexico		10.5		5.3
Asia		27.4		35.6
Canada		7.1		5.8
Latin America		11.4		9.3
Consolidated assets	$	148.3	$	142.2

The table below presents external sales by product line:

	Three Months Ended October 31, (in millions of dollars)				Nine Months Ended October 31, (in millions of dollars)
	2023		2022		2023		2022
External Sales by product lines:
Disposables	$	11.9	$	14.1	$	36.7	$	41.3
Chemical		4.7		5.2		15.4		17.5
Fire service		5.6		3.6		20.0		9.2
Gloves		0.5		0.6		1.7		1.7
High Visibility		2.6		1.7		5.4		4.6
High Performance Wear		2.4		1.3		5.2		3.8
Wovens		4.0		1.9		9.0		5.7
Consolidated external sales	$	31.7	$	28.4	$	93.4	$	83.8

Subsequent Events

9 Months Ended

Oct. 31, 2023

Subsequent Events

Subsequent Events

14. Subsequent Events

Investments and Acquisitions (Tables)

9 Months Ended

Oct. 31, 2023

Investments and Acquisitions

Schedule of Pro forma combined financial information

(in millions, except per share amounts)	Three Months Ended October 31, 2022		Nine Months Ended October 31, 2022
Net sales	$	29.8	$	86.4
Net income (loss)	$	1.6	$	1.8
Basic earnings per share	$	0.21	$	0.24
Diluted earnings per share	$	0.21	$	0.24

Inventories (Tables)

9 Months Ended

Oct. 31, 2023

Inventories

Schedule of inventory

	October 31, 2023			January 31, 2023
Raw materials	$	26,798		$	29,036
Work-in-process		760			952
Finished goods		31,088			32,855
Excess and obsolete adjustments		(4,296	)		(4,668	)
	$	54,350		$	58,176

Goodwill and Intangible Assets Net (Tables)

9 Months Ended

Oct. 31, 2023

Goodwill and Intangible Assets Net

Schedule of changes in intangible assets

Balance at February 1, 2023	$	6,042
Amortization expense		(102	)
Balance at April 30, 2023	$	5,940
Amortization expense		(102	)
Balance at July 31, 2023	$	5,838
Amortization expense		(102	)
Balance at October 31, 2023	$	5,736

Contract Advances (Tables)

9 Months Ended

Oct. 31, 2023

Contract Advances

Schedule of contract Advances

Contract liability – January 31, 2023	$	1,627
Increases to contract liability		326
Decreases to contract liability		(1,752	)
Contract liability – October 31, 2023	$	201

Stockholders Equity (Tables)

9 Months Ended

Oct. 31, 2023

Stockholders Equity

Schedule of share-based compensation, restricted stock units award activity

	Three Months Ended October 31,				Nine Months Ended October 31,
	2023		2022		2023		2022
2017 Plan:
Total restricted stock and stock option programs	$	302	$	351	$	747	$	1,141
Total income tax expense recognized for stock-based compensation arrangements	$	63	$	74	$	157	$	240

Schedule of restricted stock units

	Performance- Based			Service-Based			Total			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2023		127,480			40,665			168,145		$	22.95
Awarded		64,953			124,384			189,337		$	14.02
Vested		(71,202	)		(26,336	)		(97,538	)
Forfeited		(38,901	)		(31,829	)		(70,730	)
Outstanding at October 31, 2023		82,330			106,884			189,214		$	14.68

	Performance- Based			Service-Based			Total			Weighted Average Grant Date Fair Value
Outstanding at January 31, 2022		232,838			14,970			247,808		$	20.89
Awarded		33,492			53,082			86,574		$	18.17
Vested		(119,164	)		(22,669	)		(141,833	)
Forfeited	-			-			-
Outstanding at October 31, 2022		147,166			45,383			192,549		$	19.66

Net Income (Loss) Per Share (Tables)

9 Months Ended

Oct. 31, 2023

Net income (loss) per common share:

Schedule of earnings per share, basic and diluted

	Three Months Ended October 31,				Nine Months Ended October 31,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	2,618	$	1,431	$	6,402	$	1,690
Denominator:
Denominator for basic net income (loss) per share (weighted-average shares which exclude shares in the treasury, 1,358,208 and 1,330,694 at October 31, 2023 and 2022, respectively		7,428,557		7,514,725		7,344,559		7,600,272
Effect of dilutive securities from restricted stock plan		185,847		189,970		184,164		187,390
Denominator for diluted net income (loss) per share (adjusted weighted average shares)		7,614,404		7,704,695		7,528,723		7,787,662
Basic net income (loss) per share	$	0.35	$	0.19	$	0.87	$	0.22
Diluted net income (loss) per share	$	0.34	$	0.19	$	0.85	$	0.22

Segment Reporting (Tables)

9 Months Ended

Oct. 31, 2023

Segment Reporting

Schedule of segment information

	Three Months Ended October 31,						Nine Months Ended October 31,
	(in millions of dollars)						(in millions of dollars)
	2023			2022			2023			2022
Net Sales:
USA Operations (including Corporate)	$	16.2		$	15.3		$	46.3		$	41.0
Other foreign		3.9			2.3			10.2			7.0
Europe (UK)		3.2			1.5			12.7			5.3
Mexico		1.6			1.4			5.2			4.1
Asia		12.1			16.8			34.1			50.8
Canada		2.7			2.4			7.2			6.9
Latin America		4.2			2.6			12.0			7.0
Less intersegment sales		(12.2	)		(13.9	)		(34.3	)		(38.3	)
Consolidated sales	$	31.7		$	28.4		$	93.4		$	83.8
External Sales:
USA Operations (including Corporate)	$	15.1		$	14.0		$	42.6		$	37.1
Other foreign		2.4			1.7			6.6			5.4
Europe (UK)		3.2			1.5			12.6			5.3
Mexico		1.0			1.0			2.9			2.9
Asia		3.1			5.2			9.7			19.2
Canada		2.7			2.4			7.2			6.9
Latin America		4.2			2.6			11.8			7.0
Consolidated external sales	$	31.7		$	28.4		$	93.4		$	83.8

Intersegment Sales:
USA Operations (including Corporate)	$	1.1	$	1.3	$	3.7	$	3.9
Other foreign		1.5		0.6		3.6		1.6
Europe (UK)		-		-		0.1		-
Mexico		0.6		0.4		2.3		1.2
Asia		9.0		11.6		24.4		31.6
Canada		-		-		-		-
Latin America		-		-		0.2		0.0
Consolidated intersegment sales	$	12.2	$	13.9	$	34.3	$	38.3

	Three Months Ended October 31,						Nine Months Ended October 31,
	(in millions of dollars)						(in millions of dollars)
	2023			2022			2023			2022
Operating Profit (Loss):
USA Operations (including Corporate)	$	1.9		$	(0.1	)	$	1.6		$	(3.4	)
Other foreign		0.6			0.3			1.8			0.4
Europe (UK)		(0.4	)		(0.5	)		-			(1.1	)
Mexico		(0.4	)		(0.3	)		(1.3	)		(0.9	)
Asia		1.3			2.4			3.1			8.4
Canada		0.5			0.3			1.1			1.3
Latin America		0.8			0.4			2.9			1.2
Intersegment profit (loss)		(0.7	)		(0.3	)		0.1			(0.4	)
Consolidated operating profit	$	3.6		$	2.2		$	9.3		$	5.5

	October 31, 2023		January 31, 2023
	(in millions of dollars)
Total Assets Less Intersegment:
USA Operations (including Corporate)	$	57.2	$	64.5
Other foreign		10.4		9.2
Europe (UK)		24.3		12.5
Mexico		10.5		5.3
Asia		27.4		35.6
Canada		7.1		5.8
Latin America		11.4		9.3
Consolidated assets	$	148.3	$	142.2

Schedule of external sales by product line

	Three Months Ended October 31, (in millions of dollars)				Nine Months Ended October 31, (in millions of dollars)
	2023		2022		2023		2022
External Sales by product lines:
Disposables	$	11.9	$	14.1	$	36.7	$	41.3
Chemical		4.7		5.2		15.4		17.5
Fire service		5.6		3.6		20.0		9.2
Gloves		0.5		0.6		1.7		1.7
High Visibility		2.6		1.7		5.4		4.6
High Performance Wear		2.4		1.3		5.2		3.8
Wovens		4.0		1.9		9.0		5.7
Consolidated external sales	$	31.7	$	28.4	$	93.4	$	83.8

Investments and Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022
Net income	$ 2,618	$ 1,431	$ 6,402	$ 1,690
Basic	$ 0.35	$ 0.19	$ 0.87	$ 0.22
Diluted	$ 0.34	$ 0.19	$ 0.85	$ 0.22
Pro forma combined financial information [Member]
Net sales		$ 29,800		$ 86,400
Net income		$ 1,600		$ 1,800
Basic		$ 0.21		$ 0.24
Diluted		$ 0.21		$ 0.24

Investments and Acquisitions (Details Narrative) - USD ($) $ in Thousands		1 Months Ended		3 Months Ended			9 Months Ended
	Dec. 02, 2022	Oct. 26, 2022	Oct. 18, 2021	Oct. 31, 2023	Oct. 31, 2022	Apr. 28, 2022	Oct. 31, 2023	Oct. 31, 2022	May 19, 2023	Jan. 31, 2023
Recognized losses				$ 100	$ 100		$ 400	$ 300
Investment amount				$ 6,509			$ 6,509			$ 5,354
Convertible series A shares issued				0			0			0
Investment Agreement [Member] \| Bodytrak's [Member]
Payment of related party shares exchanged			$ 2,800
Percentages of total share capital			11.43%
Ownership percentage		22.50%
Additional shares of series A, shares		254,452
Additional shares of series A, amount		$ 1,200
Investment amount									$ 1,900
Investment funding amount									600
Additional investment funding amount									$ 900
Description related to forecast of revenue threshold							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 $0.5 million
Series A shares acquired, shares						381,679
Series A shares acquired, amount						$ 1,900
Convertible series A shares issued			508,905
Investment Agreement [Member] \| Acquisition of Eagle [Member]
Adjustment to the accrued earnout payment				$ 1,500			$ 2,700
Net working capital acquired	$ 10,500
Acquired of eagle technical products limited ownership	100.00%
Eagle acquisition agreement, Description							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

Inventories (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Jan. 31, 2023
Inventories
Raw materials	$ 26,798	$ 29,036
Work-in-process	760	952
Finished goods	31,088	32,855
Excess and obsolete reserves	(4,296)	(4,668)
Inventories, net	$ 54,350	$ 58,176

Goodwill and Intangible Assets Net (Details) - USD ($) $ in Thousands	3 Months Ended
	Oct. 31, 2023	Jul. 31, 2023	Apr. 30, 2023
Goodwill and Intangible Assets Net
Balance at February 1, 2023	$ 5,838	$ 5,940	$ 6,042
Amortization expense	(102)	(102)	(102)
Balance at July 31, 2023	$ 5,736	$ 5,838	$ 5,940

Contract Advances (Details) $ in Thousands	9 Months Ended
Contract Advances (Details) $ in Thousands	Oct. 31, 2023 USD ($)
Contract Advances
Contract liability - January 31, 2023	$ 1,627
Increases to contract liability	326
Decreases to contract liability	(1,752)
Contract liability - July 31, 2023	$ 201

LongTerm Debt (Details Narrative) - USD ($) $ in Millions	9 Months Ended
LongTerm Debt (Details Narrative) - USD ($) $ in Millions	Oct. 31, 2023	Jan. 31, 2023
HSBC Bank [Member]
Outstanding borrowings	$ 0.0	$ 0.4
Loan Agreement \| Bank Of America
Warranties to the Lender in the Loan Agreement	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 $30.0 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
Revolving credit facility	$ 7.5
Individual acquisitions amount	15.0
Credit sub facility	$ 5.0
Credit facility mature date	Jun. 25, 2025
Acquisition description	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

Concentration of Risk (Details Narrative) - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Oct. 31, 2022	Oct. 31, 2023
Cash balances in banks in the United States of America		$ 6.3
Cash balances in foreign bank accounts		20.1
Uninsured amount		$ 25.6
Major Customer [Member]
Concentration risk of net sales	10.00%	10.00%
Major Supplier [Member]
Concentration risk of net sales	10.00%	10.00%

Stockholders Equity (Details) - 2017 Plan [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022
Total restricted stock and stock option programs	$ 302	$ 351	$ 747	$ 1,141
Total income tax benefit recognized for stock-based compensation arrangements	$ 63	$ 74	$ 157	$ 240

Stockholders Equity (Details 1) - $ / shares	9 Months Ended
Stockholders Equity (Details 1) - $ / shares	Oct. 31, 2023	Oct. 31, 2022
Total Segment [Member]
Outstanding at beginning balance	168,145	247,808
Awarded	189,337	86,574
Vested	(97,538)	(141,833)
Forfeited	(70,730)	0
Outstanding at ending balance	189,214	192,549
Performance Based [Member]
Outstanding at beginning balance	127,480	232,838
Awarded	64,953	33,492
Vested	(71,202)	(119,164)
Forfeited	(38,901)	0
Outstanding at ending balance	82,330	147,166
Service Based [Member]
Outstanding at beginning balance	40,665	14,970
Awarded	124,384	53,082
Vested	(26,336)	(22,669)
Forfeited	(31,829)	0
Outstanding at ending balance	106,884	45,383
Weighted Average Grant Date Fair Value [Member]
Weighted Average Grant Date Fair Value, Outstanding at beginning balance	$ 22.95	$ 20.89
Weighted Average Grant Date Fair Value, Awarded	14.02	18.17
Weighted Average Grant Date Fair Value, Vested		0
Weighted Average Grant Date Fair Value, Forfeited		0
Weighted Average Grant Date Fair Value, Outstanding at ending balance	$ 14.68	$ 19.66

Stockholders Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Millions				1 Months Ended
	Apr. 07, 2022	Dec. 01, 2021	Jul. 06, 2021	Jun. 16, 2021	Oct. 31, 2023	Jan. 31, 2023	Feb. 17, 2021
Common stock, shares authorized					20,000,000	20,000,000
2017 Plan [Member]
Common stock, shares authorized					840,000
Price per share				$ 0.01
Repurchase of outstanding common stock				480,000
Unrecognized stock-based compensation expense					$ 1.9
Stock Repurchase Program [Member]
Remaining value of repurchase of outstanding common stock					$ 5.0		$ 5.0
Additional shares of common oitstanding	5,000,000	5,000,000	5,000,000

Income Taxes (Details Narrative) - USD ($)	3 Months Ended	9 Months Ended		12 Months Ended
Income Taxes (Details Narrative) - USD ($)	Apr. 30, 2023	Oct. 31, 2023	Oct. 31, 2022	Jan. 31, 2023
Change in valuation allowance		$ 400,000.0		$ 360,000
Effective tax rates		29.50%	68.10%
Tax rate		29.50%
U.S Federal statutiry Rate		21.00%
China Social Taxes [Member]
Tax rate		21.00%
Deferred tax benefits		$ 2,000,000
Federal tax statutory rate		33.80%
2024 Plan [Member]
Effective tax rates		26.40%
Tax rate		26.40%
U.S Federal statutiry Rate		21.00%
Deferred tax benefits		$ 200,000.0
2023 Plan [Member]
Effective tax rates		33.30%
Tax rate		21.00%
Deferred tax benefits	$ 200,000	$ 2,000,000

Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022
Net income (loss) per common share:
Net income	$ 2,618	$ 1,431	$ 6,402	$ 1,690
Denominator for basic net income per share (weighted-average shares which exclude shares in the treasury, 1,353,508 and 964,722 at April 30, 2023 and 2022, respectively	7,428,557,000	7,514,725,000	7,344,559,000	7,600,272,000
Effect of dilutive securities from restricted stock plan	185,847,000	189,970	184,164,000	187,390,000
Denominator for diluted net income per share (adjusted weighted average shares)	7,614,404,000	7,704,695,000	7,528,723,000	7,787,662,000
Basic net income (loss) per share	$ 0.35	$ 0.19	$ 0.87	$ 0.22
Diluted net income (loss) per share	$ 0.34	$ 0.19	$ 0.85	$ 0.22

Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Segment Reporting (Details) - USD ($) $ in Thousands	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022	Jan. 31, 2023
Operating Profit (Loss)	$ 3,621	$ 2,222	$ 9,289	$ 5,465
Total assets	148,315		148,315		$ 142,327
USA
Net sales	16,200	15,300	46,300	41,000
External sales	15,100	14,000	42,600	37,100
Intersegment sales	1,100	1,300	3,700	3,900
Operating Profit (Loss)	1,900	(100)	1,600	(3,400)
Total assets	57,200		57,200		64,500
Other Foreign [Member]
Net sales	3,900	2,300	10,200	7,000
External sales	2,400	1,700	6,600	5,400
Intersegment sales	1,500	600	3,600	1,600
Operating Profit (Loss)	600	300	1,800	400
Total assets	10,400		10,400		9,200
Europe UK
Net sales	3,200	1,500	12,700	5,300
External sales	3,200	1,500	12,600	5,300
Intersegment sales	0	0	100	0
Operating Profit (Loss)	(400)	(500)	0	(1,100)
Total assets	24,300		24,300		12,500
Mexico
Net sales	1,600	1,400	5,200	4,100
External sales	1,000	1,000	2,900	2,900
Intersegment sales	600	400	2,300	1,200
Operating Profit (Loss)	(400)	(300)	(1,300)	(900)
Total assets	10,500		10,500		5,300
Asia
Net sales	12,100	16,800	34,100	50,800
External sales	3,100	5,200	9,700	19,200
Intersegment sales	9,000	11,600	24,400	31,600
Operating Profit (Loss)	1,300	2,400	3,100	8,400
Total assets	27,400		27,400		35,600
Canada
Net sales	2,700	2,400	7,200	6,900
External sales	2,700	2,400	7,200	6,900
Intersegment sales	0	0	0	0
Operating Profit (Loss)	500	300	1,100	1,300
Total assets	7,100		7,100		5,800
Latin America
Net sales	4,200	2,600	12,000	7,000
External sales	4,200	2,600	11,800	7,000
Intersegment sales	0	0	200	0
Operating Profit (Loss)	800	400	2,900	1,200
Total assets	11,400		11,400		9,300
Intersegment [Member]
Net sales	(12,200)	(13,900)	(34,300)	(38,300)
Operating Profit (Loss)	(700)	(300)	100	(400)
Total Segment [Member]
Net sales	31,700	28,400	93,400	83,800
External sales	31,700	28,400	93,400	83,800
Intersegment sales	12,200	13,900	34,300	38,300
Operating Profit (Loss)	3,600	$ 2,200	9,300	$ 5,500
Total assets	$ 148,300		$ 148,300		$ 142,200

Segment Reporting (Details 1) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
Segment Reporting (Details 1) - USD ($) $ in Millions	Oct. 31, 2023	Oct. 31, 2022	Oct. 31, 2023	Oct. 31, 2022
External sales	$ 31.7	$ 28.4	$ 93.4	$ 83.8
Disposables
External sales	11.9	14.1	36.7	41.3
Chemical
External sales	4.7	5.2	15.4	17.5
Fire Service Member
External sales	5.6	3.6	20.0	9.2
Gloves Member
External sales	0.5	0.6	1.7	1.7
High Visibility Member
External sales	2.6	1.7	5.4	4.6
High Performance Wear
External sales	2.4	1.3	5.2	3.8
Wovens
External sales	$ 4.0	$ 1.9	$ 9.0	$ 5.7

Subsequent Event (Details Narrative) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Nov. 30, 2023	Nov. 27, 2023	Nov. 22, 2023
Sale of office and warehouse facility		$ 4.9
Selling expenses		$ 3.8
Acquisition of company	$ 8.6
Bodytrak [Member]
Dividend per share			$ 0.03
Payment to party			$ 0.2