CHICAGO RIVET & MACHINE CO

Previous wording

Sales for the three months ended March 31, 2026 were $6,851,517 compared to $7,245,635 for the three months ended March 31, 2025, a decrease of $394,118, or 5.4%. The quarter-over-quarter decrease in sales was primarily driven by lower order volumes from our fastener customers, reflecting softer demand across key end markets and broader macroeconomic conditions. Customers exhibited more cautious purchasing behavior during the period amid elevated interest rates, inflationary pressures, a renewed shortage in semiconductor supply, and ongoing economic uncertainty.

Current wording

Sales for the three months ended June 30, 2026 were $7,236,625 compared to $7,298,077 for the three months ended June 30, 2025, a decrease of $61,452, or 0.8%. Sales for the six months ended June 30, 2026 were $14,088,141 compared to $14,543,712 for the six months ended June 30, 2025, a decrease of $455,571, or 3.1%. The year-over-year decrease in sales was primarily driven by lower order volumes from our fastener customers, reflecting softer demand across key end markets and broader macroeconomic conditions. Customers exhibited more cautious purchasing behavior during the period amid elevated interest rates, inflationary pressures, a renewed shortage in semiconductor supply, and ongoing economic uncertainty resulting, in part, from geopolitical events.

Previous wording

Gross margins for the three months ended March 31, 2026 were $958,459 compared to $1,657,741 for the three months ended March 31, 2025, a decrease of $699,282, or 42.2%. The decrease in gross margin was primarily driven by lower sales volumes, which reduced the absorption of fixed manufacturing costs, as well as an unfavorable sales mix.

Current wording

Gross margins for the three months ended June 30, 2026 were $563,312 compared to $975,062 for the three months ended June 30, 2025, a decrease of $411,750, or 42.2%. Gross margins for the six months ended June 30, 2026 were 1,521,770 compared to 2,632,803 for the six months ended June 30, 2025, a decrease of $1,111,033, or 42.2%. The decrease in gross margin was primarily driven by lower sales volumes, which reduced the absorption of fixed manufacturing costs, as well as an unfavorable sales mix. Gross margins were further impacted by increases in raw material and labor costs, together with ongoing inflationary pressures across manufacturing operations, which were not fully offset through pricing actions or operational efficiencies.

Previous wording

Net loss for the three months ended March 31, 2026 was $362,015, or $0.37 per share, compared to net income of $401,022, or $0.42 per share for the three months ended March 31, 2025, a decrease of $763,037, or 190.3%. The decrease was primarily driven by lower sales volumes, reduced absorption of fixed manufacturing costs, and an unfavorable product mix partially offset by reductions in sales and administrative expenses. Operating results were impacted by weakened demand across automotive and general industrial markets, coupled with a more cautious customer ordering environment. Higher borrowing costs, persistent inflation, and general economic and geopolitical uncertainty contributed to delayed purchasing decisions and lower overall activity levels. Results for the current quarter were further affected by the absence of a $339,520 gain on the sale of the Albia facility recognized in the prior-year period.

Current wording

Net loss for the three months ended June 30, 2026 was $989,528, or $1.02 per share, compared to net loss of $394,980, or $0.41 per share for the three months ended June 30, 2025, an increase of $594,548, or 150.5%. Net loss for the six months ended June 30, 2026 was $1,351,543, or $1.40 per share, compared to net income of $6,042, or $0.01 per share for the six months ended June 30, 2025. The increase in net loss was primarily driven by lower sales volumes, reduced absorption of fixed manufacturing costs, and an unfavorable product mix partially offset by slight reductions in sales and administrative expenses. Operating results were impacted by weakened demand across general industrial markets, coupled with a more cautious customer ordering environment. Higher borrowing costs, persistent inflation, and general economic and geopolitical uncertainty contributed to delayed purchasing decisions and lower overall activity levels. Results for the year-to-date period were further affected by the absence of a $339,520 gain on the sale of the Albia facility recognized in the prior-year period.

Previous wording

Fastener segment sales were $5,798,618 for the three months ended March 31, 2026 compared to $6,158,971 for the three months ended March 31, 2025, a decrease of $360,353, or 5.9%. The automotive sector is the primary market for our fastener segment products, and sales to automotive customers were $3,589,765 for the three months ended March 31, 2026 compared to $3,798,658 for the three months ended March 31, 2025, a decrease of $208,893, or 5.5% primarily due to further slowdown in North American vehicle production and continued volatility across the Midwest automotive manufacturing sector. Industry-wide production fell in January 2026, leading to reduced order volumes from key original equipment manufacturers. In addition, elevated interest rates and ongoing economic uncertainty contributed to softer consumer demand, prompting inventory adjustments and cautious procurement behavior among our automotive customers. Fastener segment sales to non-automotive customers, including those in the construction and electronics industries, were $2,208,853 for the three months ended March 31, 2026 compared to $2,360,313 for the three months ended March 31, 2025, a decrease of $151,460, or 6.4%.

Current wording

Fastener segment sales were $6,249,064 for the three months ended June 30, 2026 compared to $6,397,215 for the three months ended June 30, 2025, a decrease of $148,151, or 2.3%. Fastener segment sales were $12,047,681 for the six months ended June 30, 2026 compared to $12,556,186 for the six months ended June 30, 2025, a decrease of $508,505, or 4.0%, reflecting lower sales to non-automotive customers, particularly in the construction and electronics markets, which more than offset modest growth in sales to automotive customers from key original equipment manufacturers. North American vehicle production remains challenged, and uncertainty continues to affect broader automotive industry demand trends. In addition, elevated interest rates and ongoing economic uncertainty continue to contribute to softer consumer demand, prompting inventory adjustments and cautious procurement behavior among our automotive customers. The automotive sector is the primary market for our fastener segment products, and sales to automotive customers were $4,226,830 for the three months ended June 30, 2026 compared to $3,849,079 for the three months ended June 30, 2025, an increase of $377,751, or 9.8%. Sales to automotive customers were $7,816,595 for the six months ended June 30, 2026 compared to $7,647,737 for the six months ended June 30, 2025, an increase of $168,858, or 2.2%. Fastener segment sales to non-automotive customers, including those in the construction and electronics industries, were $2,022,234 for the three months ended June 30, 2026 compared to $2,548,136 for the three months ended June 30, 2025, a decrease of $525,902, or 20.6%. Fastener segment sales to non-automotive customers were $4,231,086 for the six months ended June 30, 2026 compared to $4,908,449 for the six months ended June 30, 2025, a decrease of $677,363 or 13.8%.

Previous wording

Selling and administrative expenses were $1,340,050 for the three months ended March 31, 2026 compared to $1,587,567 for the three months ended March 31, 2025, a decrease of $247,517, or 15.6%, primarily due to reduced salaries, and reduced outside consulting and accounting fees. Selling and administrative expenses were 19.6% and 21.9% of sales in the three months ended March 31, 2026 and 2025, respectively. The Company believes that it has made substantial progress in continuing to implement its plans to reduce costs and improve efficiency and will continue to do so for the remainder of the year.

Current wording

Selling and administrative expenses were $1,597,023 for the three months ended June 30, 2026 compared to $1,392,493 for the three months ended June 30, 2025, an increase of $204,530, or 14.7%. Selling and administrative expenses were $2,937,073 for the six months ended June 30, 2026 compared to $2,980,060 for the six months ended June 30, 2025, a slight decrease of $42,987 or 1.4%. Selling and administrative expenses were 22.1% and 19.1% of sales in the three months ended June 30, 2026 and 2025, respectively. The Company believes that it has made substantial progress in continuing to implement its plans to reduce costs and improve efficiency and will continue to do so for the remainder of the year.

Previous wording

The Company’s effective tax rates were 4.6% and 4.9% for the three months ended March 31, 2026 and 2025, respectively. See Note 5. Income taxes to the Condensed Consolidated Financial Statements included herein for additional information.

Current wording

The Company’s effective tax rates were zero and 4.6% for the six months ended June 30, 2026 and 2025, respectively.

Previous wording

Working capital was $9,480,063 as of March 31, 2026, compared to $9,894,317 at the beginning of the year, a decrease of $414,254, or 4.2%.

Current wording

Working capital was $8,695,836 as of June 30, 2026, compared to $9,894,317 at the beginning of the year, a decrease of $1,198,481, or 12.1%.

Previous wording

On March 6, 2025, the Company entered into a one-year $3,000,000 operating credit agreement (the “March 2025 Credit Agreement”), renewable annually, and consisting of a: (a) $2,500,000 revolving line of credit, and (b) $500,000 non-revolving line of credit. The non-revolving line of credit expired on December 31, 2025 and was not renewed. Borrowings under the March 2025 Credit Agreement bear interest at a fluctuating rate per annum equal to 1% plus the applicable prime rate subject to a 7% floor. The agreement can be early terminated and amounts due repaid, at the Company's discretion, without prepayment penalties. As of March 31, 2026, there was $1,000,000 in borrowings outstanding under the revolving line of credit and no borrowings under the non-revolving line of credit.

Current wording

On March 6, 2025, the Company entered into a one-year $3,000,000 operating credit agreement (the “March 2025 Credit Agreement”), renewable annually, and consisting of a: (a) $2,500,000 revolving line of credit, and (b) $500,000 non-revolving line of credit. The non-revolving line of credit expired on December 31, 2025 and was not renewed. Borrowings under the March 2025 Credit Agreement bear interest at a fluctuating rate per annum equal to 1% plus the applicable prime rate subject to a 7% floor. The agreement can be early terminated and amounts due repaid, at the Company's discretion, without prepayment penalties. As of June 30, 2026, there was $1,500,000 in borrowings outstanding under the revolving line of credit and no borrowings under the non-revolving line of credit. On July 31, 2026, the Company paid off the amounts outstanding under the March 2025 Credit Agreement and terminated this agreement.

Previous wording

The March 2025 Credit Agreement includes certain financial covenants such as minimum profitability for the twelve months ended December 31, 2025, and minimum tangible net worth. As of December 31, 2025 and March 31, 2026, the Company was not in compliance with all such financial covenants. Specifically, the Company was not in compliance with the minimum annual profitability covenant, however, the Company was in compliance with the other financial covenants contained in the credit agreement. On February 27, 2026, the lender waived this covenant violation, and no new covenants were added to the credit agreement. As of March 31, 2026, the Company was not in compliance with the

Current wording

The March 2025 Credit Agreement included certain financial covenants such as minimum profitability for the twelve months ended December 31, 2025, and minimum tangible net worth. As of December 31, 2025, March 31, 2026, and June 30, 2026, the Company was not in compliance with all such financial covenants. On February 27, 2026, the lender waived the covenant violation, and no new covenants were added to the credit agreement. As of March 31, 2026, the Company was not in compliance with the minimum net worth covenant, and the lender waived this covenant violation on May 6, 2026. As of June 30, 2026, the Company has made all required principal and interest payments under the March 2025 Credit Agreement.

Previous wording

The Company also had outstanding total operating lease obligations of $404,395 of which $104,333 were classified as current within Other current liabilities in the Condensed Consolidated Balance Sheets at March 31, 2026.

Current wording

The Company also had outstanding total operating lease obligations of $386,858 of which $105,246 were classified as current within Other current liabilities in the Condensed Consolidated Balance Sheets at June 30, 2026.

Previous wording

The Company has incurred significant recurring operating losses over the last two years, primarily driven by a continuous decline in revenues, recurring negative cash flows from operations and continued reduction in liquidity. The Company reported operating loss of $381,591 and operating income of $409,694 for the three months ended March 31, 2026 and 2025, respectively. The Company’s liquid assets at March 31, 2026 consisted of cash and cash equivalents totaling $1,446,794. The Company’s declining revenues, recurring operating losses and negative cash flows, and continued reduction in liquidity, raise substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of these financial statements. In response, the Company has taken various strategic actions including (a) taking action to sell in the first half of 2026 certain H&L assets and in connection with such anticipated sale, the Company classified these assets in the amount of $179,254 as Assets held for sale in the Consolidated Balance Sheets at December 31, 2025, (b) renewal of the March 2025 Credit Agreement revolving line of credit with a borrowing capacity of $2,500,000 to continue to finance operations, (c) leveraging the Company’s sales team to identify and execute on new sales opportunities and increase revenue; and

Current wording

The Company has incurred significant recurring operating losses over the last two years, primarily driven by a continuous decline in revenues, recurring negative cash flows from operations and continued reduction in liquidity. The Company reported operating losses of $1,033,711 and $417,431 for the three months ended June 30, 2026 and 2025, respectively. The Company reported operating losses of $1,415,303 and $7,737 for the six months ended June 30, 2026 and 2025, respectively. The Company’s liquid assets at June 30, 2026 consisted of cash and cash equivalents totaling $770,752. The Company’s declining revenues, recurring operating losses and negative cash flows, and continued reduction in liquidity, raise substantial doubt about the Company's ability to continue as a going concern within one year after the issuance date of these financial statements. In response, the Company has taken various strategic actions including (a) taking action to sell certain H&L assets in 2026 and in connection with such anticipated sale, the Company classified these assets in the amount of $179,254 as Assets held for sale in the Consolidated Balance Sheets at December 31, 2025 and June 30, 2026, (b) paying off the amounts outstanding under the March 2025 Credit Agreement revolving line of credit and entering into a term loan with a related party to continue financing operations under more favorable terms, (c) leveraging the Company’s sales team to identify and execute on new sales opportunities and increase revenue; and (d) evaluating other financing sources in addition to the March 2025 Credit Agreement, including exploring the potential for a real estate sale leaseback or similar transaction, or seeking to potentially raise additional capital.

Previous wording

Fiscal 2026 guidance remains subject to ongoing macroeconomic uncertainty. We expect production volumes in the segments we serve to increase slightly with the added benefit of new customer awards ramping up in the second half of 2026. Our order volume is showing improvement in the first quarter of 2026 compared to the fourth quarter of 2025 but is not yet back to the levels we experienced in the past. Significant uncertainty remains in the manufacturing sector as companies like ours continue to navigate the potential impacts of tariffs and numerous market factors and geopolitical events that may impact our business in the coming year. The Company believes all of the actions to reduce costs in 2025 continue to better position us to manage this uncertainty, and we will continue to push efficiency improvements in the operations as well as seek appropriate price adjustments from customers and aggressively pursue new sales opportunities to drive volume back to historic levels. In addition, we will actively monitor and analyze potential impacts from tariffs and other external factors, including both challenges and opportunities resulting from tariffs and external factors, so that we are positioned to take actions promptly and as necessary to address such potential impacts. We believe our continued focus on efficiency improvements and driving new sales, as well as our long term operating experience, quality products, and customer service in a very competitive global marketplace will provide the foundation for improved operating results in the future.

Current wording

Fiscal 2026 guidance remains subject to ongoing macroeconomic uncertainty. We expect production volumes in the segments we serve to increase slightly with the added benefit of new customer awards ramping up in the second half of 2026. Overall, results remain consistent with our 2026 outlook, supported by modest improvement in automotive demand, while non-automotive markets continue to lag expectations. Significant uncertainty remains in the manufacturing sector as companies like ours continue to navigate the potential impacts of tariffs and numerous market factors and geopolitical events that may impact our business in the coming year. The Company believes all of the actions to reduce costs in 2025 continue to better position us to manage this uncertainty, and we will continue to push efficiency improvements in operations and seek to reduce operating expenses, as well as seek appropriate price adjustments from customers and aggressively pursue new sales opportunities to drive volume back to historic levels. While sales in the fastener segments remain lower than anticipated, the company's sales team's focus over the last year on new business with existing customers, new customers and new products is progressing and the company expects these efforts to begin showing meaningful progress in the fourth quarter and full year 2027 based on discussions and negotiations that are in progress. We will also seek to achieve a more favorable sales mix, and aggressively manage our cost of goods sold, to improve our operating margin. In addition, we will actively monitor and analyze potential impacts from tariffs and other external factors, including both challenges and opportunities resulting from tariffs and external factors, so that we are positioned to take actions promptly and as necessary to address such potential impacts. We believe our continued focus on efficiency improvements and driving new sales, as well as our long term operating experience, quality products, and customer service in a very competitive global marketplace will provide the foundation for improved operating results in the future.