Financial Analysis

"9. Commitments and Contingencies. The Company is, from time to time involved in litigation, including environmental claims, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company's financial position, liquidity, results of operations or cash flows. The Company recognizes a provision if it is probable that an outflow of cash or other economic resources that can be reliably measured will be required to settle the provision. In determining the likelihood and timing of potential cash outflows, management needs to make estimates, the assessment of which is based in part on internal and external financial and legal guidance and other related factors. For contingencies, the Company is required to exercise significant judgment to determine whether the risk of loss is possible but not probable. Contingencies involve inherent uncertainties including, but not limited to, negotiations between affected parties, among other factors, and the amount of actual loss may be significantly more or less that what was provided for with respect to As previously disclosed in the Companys quarterly report on Form 10-Q for the first quarter of 2024, the Company was notified by one of …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

10. Debt. 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 the Company did not renew it. 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 7 % floor. The agreement can be early terminated and amounts due repaid, at the Company's discretion, without prepayment penalties. As of December 31, 2025 there was $ 500,000 in borrowings outstanding under the revolving line of credit and no borrowings outstanding under the non-revolving line of credit. The March 2025 Credit Agreement maturity date is August 31, 2026 . The Company reclassified the entire outstanding balance of $ 500,000 under the revolving line of credit to Current Liabilities in the Consolidated Balance Sheets to reflect the maturity date. 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 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 othe …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"3. Income Taxes. The provision (benefit) for income tax expense consists of the following : 2025 2024 Current: Federal $ $ 8,390 State 2,430 1,021 Total Current 2,430 9,411 . Deferred: Federal ( 49,427 ) 479,589 State ( 48,099 ) 83,226 Total Deferred ( 97,526 ) 562,815 Total Tax (Benefit) Expense $ ( 95,096 ) $ 572,226 Income from operations before income taxes for the years ended December 31, 2025 and 2024, respectively, consisted of: 2025 2024 Domestic $ ( 1,178,310 ) $ ( 5,043,388 ) Foreign - - Total $ ( 1,178,310 ) $ ( 5,043,388 ) The Company adopted ASU 2023-09 ""Income Taxes (Topic 740): Improvements to Income Tax Disclosures"" on a prospective basis beginning with the year ended December 31, 2025. The following is a reconciliation of the statutory federal income tax rate to the actual effective tax rate: 2025 Amount % Expected tax at U.S. statutory rate $ ( 247,445 ) 21.0 Permanent differences 2,308 ( 0.2 ) Change in valuation allowance - federal 185,769 ( 15.8 ) Change in valuation allowance - state ( 51,904 ) 4.4 State taxes, net of federal benefit 5,036 ( 0.4 ) PTBI return to provision true up 11,140 ( 0.9 ) Income tax (benefit) expense $ ( 95,096 ) 8.1 2024 Amount % Expected tax at U.S. statutory rate $ ( 1,059,111 ) 21.0 Permanent differences 2,315 ( 0.1 ) State taxes, net of federal benefit ( 62,695 ) 1.2 Change in valuation allowance - federal 1,517,557 ( 30.0 ) Change in valuation allowance - state 123,421 ( 2.5 ) State NOL adjustment 18,107 ( 0.4 ) Other adju …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

7. Leases . On November 30, 2024, the Company entered into a lease agreement with Juneau-Bell, LLC for new office space located at 27755 Diehl Road, Suite 200, Warrenville, IL 60555, which constitutes the Company's new headquarters. The lease commencement date was March 1, 2025 . A security deposit of $ 43,970 and the first months base rent of $ 8,365 were paid at signing. These amounts were recorded as Deposits with Vendors and Other Current Assets, respectively, in the Consolidated Balance Sheets. The lease term is for 66 months with one option to renew for additional 60 months . The Company classified the agreement as an operating lease under ASC 842. On the commencement date of March 1, 2025 , the Company recognized an ROU asset of $ 424,188 and a corresponding long-term lease liability of $ 415,824 . In addition to base rent, the Company is responsible for its proportionate share of common area maintenance (CAM) charges and other operating costs associated with the leased premises. These amounts are considered variable lease payments, based on actual costs incurred by the landlord and are not included in the measurement of the lease liability. The Company recorded variable lease expense of $ 12,435 in 2025 in the Consolidated Statements of Operations. As of December 31, 2025, the expected annual minimum lease payments of the Companys operating lease liability were as follows: Operating Lease 2026 $ 103,420 2027 107,071 2028 110,721 2029 114,371 2030 78,478 Thereafter Tot …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

"Recent Accounting Pronouncements. Recently adopted . In December 2023, the Financial Accounting Standards Board (""FASB"") issued Accounting Standards Update (""ASU"") No. 2023-09 , Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision usefulness of income tax disclosures providing investors with information to better assess how an entitys operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. The new guidance is effective for annual periods beginning after December 31, 2024. The Company adopted this ASU in 2025 prospectively. The impact of the adoption on our consolidated financial statements was not material and primarily resulted in new or enhanced disclosures only. Not yet adopted. In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

8. Exit and Disposal. On July 1, 2024, the Company announced the closure of its manufacturing facility in Albia, Iowa. This facility has supplied tooling for the Companys full line of mechanical, hydraulic and pneumatic riveting machines serving both existing customers who own machines and customers purchasing new machines manufactured in the Companys Tyrone, Pennsylvania manufacturing facility. The Albia facility results of operations were consolidated within the Assembly Equipment segment. The closure impacted all 19 full-time and part-time employees. The Company recorded, in the third quarter of 2024, in the Consolidated Statements of Operations, the following exit and disposal costs: selling and administrative expenses for one-time termination benefits of $ 64,856 , employee travel of $ 40,277 , moving expenses of $ 27,563 and employee wages of $ 8,060 , as well as cost of goods expenses for direct and indirect labor of $ 30,517 . After careful consideration, the Companys Board of Directors determined that it was in the Companys best interest to consolidate the operations of the Albia facility into the Tyrone facility. The strategic consolidation is seen as a step to streamline processes, improve delivery, reduce costs and add value for the Companys customers, shareholders and stakeholders. The Company completed the sale of certain Albia facility equipment during the fourth quarter of 2024, and recorded a gain of $ 38,530 in the Consolidated Statements of Operations. At D …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

6. Segment Information. The Company operates in the U.S, in two business segments as determined by its products. The Fastener segment, comprises of H & L Tool and the parent companys fastener operations, which includes rivets, cold-formed fasteners and parts and screw machine products. The Assembly Equipment segment includes automatic rivet setting machines and parts and tools for such machines. The Company determined that its business segments also represent its reportable segments. The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by the Company's CODM to assess operating performance and allocate resources. The CODM is the Companys Chief Executive Officer , Mr. Gregory D. Rizzo. The Company's CODM evaluates segment performance based on gross profit, segment operating income (loss) less depreciation, and capital expenditures. The information provided to the Company's CODM excludes for purposes of making decisions and assessing segment performance other assets or other income information . Information by segment is as follows: Fastener Assembly Equipment Other Consolidated Year Ended December 31, 2025: Net Sales $ 24,102,285 $ 3,804,561 $ 27,906,846 Less: Intercompany Sales ( 16,586 ) - ( 16,586 ) Total Sales to External Customers 24,085,699 3,804,561 27,890,260 Cost of Goods Sold 21,411,908 2,352,469 23,764,377 Segment Gross Profi …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

12. Subsequent Events. On February 23, 2026 , the Board of Directors declared a regular quarterly dividend of $ 0.03 per share, or $ 28,984 , payable March 20, 2026 to shareholders of record on March 5, 2026 .

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Note 3. Commitments and contingencies The Company is, from time to time, involved in litigation, including environmental claims, in the normal course of business. While it is not possible at this time to establish the ultimate amount of liability with respect to contingent liabilities, including those related to legal proceedings, management is of the opinion that the aggregate amount of any such liabilities, for which provision has not been made, will not have a material adverse effect on the Company's financial position, liquidity, results of operations or cash flows. The Company recognizes a provision if it is probable that an outflow of cash or other economic resources that can be reliably measured will be required to settle the provision. In determining the likelihood and timing of potential cash outflows, management needs to make estimates, the assessment of which is based in part on internal and external financial and legal guidance and other related factors. For contingencies, the Company is required to exercise significant judgment to determine whether the risk of loss is possible but not probable. Contingencies involve inherent uncertainties including, but not limited to, negotiations between affected parties, among other factors, and the amount of actual loss may be significantly more or less than what was provided for. As previously disclosed, the Company was notified by one of its customers that certain fasteners manufactured by the Companys wholly-owned subsidia …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Note 10. Debt 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. Borrowings under the credit agreement bear interest at a fluctuating rate per annum equal to 1 % plus the applicable prime rate . At no time shall the interest rate be less than 7 %. The agreement can be early terminated and amounts due repaid, at the Company's discretion, without prepayment penalties. The March 2025 Credit Agreement current maturity date is April 1, 2026 . As of September 30, 2025 there were $ 500,000 in borrowings outstanding under the March 2025 Credit Agreement. 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 September 30, 2025 the Company was in compliance with all such financial covenants. The carrying amounts reported in the Condensed Consolidated Balance Sheets for borrowings outstanding under the March 2025 Credit Agreement approximate their fair value due to their short-term nature and being subject to variable interest rates. …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

"Note 5. Income taxes The Companys effective tax rates were zero and ( 32.0 )% for the nine months ended September 30, 2025 and 2024, respectively. The Companys federal income tax returns for the 2021 through 2024 tax years are subject to examination by the Internal Revenue Service (IRS). Management does not anticipate any adjustments that would result in a material change to the results of operations or financial condition of the Company as a result of any unrecognized tax benefits. No statutes of limitation have been extended on any of the Companys federal income tax filings. The statute of limitations on the Companys 2021 through 2024 federal income tax returns were set to expire on October 15, 2025 through 2028, respectively. The Companys state income tax returns for the 2021 through 2024 tax years remain subject to examination by various state authorities with the latest closing period on October 31, 2028. The Company is not currently under examination by any state authority for income tax purposes and no statutes of limitation for state income tax filings have been extended. Our income tax expense, deferred tax assets and liabilities, and liabilities for unrecognized tax benefits reflect managements best estimate of current and future taxes to be paid. Significant judgments and estimates are required in the determination of the consolidated income tax expense. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and thei …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Note 7. Leases On November 30, 2024, the Company entered into a lease agreement with Juneau-Bell, LLC for new office space located at 27755 Diehl Road, Suite 200, Warrenville, IL 60555, which constitutes the Company's current headquarters. The lease commencement date was March 1, 2025 . A security deposit of $ 43,970 and the first months base rent of $ 8,365 were paid at signing. These amounts were recorded in Deposits with Vendors and Other Current Assets, respectively, in the Condensed Consolidated Balance Sheets at December 31, 2024. The lease term is 66 months with one option to renew for an additional 60 months period. The Company classified the agreement as an operating lease under ASC 842 Leases. On the commencement date of March 1, 2025 , the Company recognized an ROU asset of $ 435,149 and a corresponding long-term lease liability of $ 426,787 . The Company's lease costs were $ 28,330 and $ 99,619 for the three and nine months ended September 30, 2025 , respectively. The Company's lease costs were $ 28,200 and $ 84,600 for the three and nine months ended September 30, 2024, respectively. The Company's lease costs, which include base rent and certain variable costs, were recognized within Selling and administrative expenses in the Condensed Consolidated Statements of Operations. In addition to base rent, the Company is required to pay certain variable costs such as taxes, insurance and common area maintenance costs. These variable costs are excluded from the calculati …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

New accounting pronouncements. Not yet adopted. In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure in the notes to the financial statements of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), which amends the effective date of ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU 2024-03 is permitted. ASU 2024-03 should be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the new guidance to determine the impact it may have on the consolidated financial statements and related disclosures, but expects only additional disclosures upon adoption. In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the transparency and decision …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Note 9. Exit and disposal On July 1, 2024, the Company announced the closure of its manufacturing facility in Albia, Iowa. This facility has supplied tooling for the Companys full line of mechanical, hydraulic and pneumatic riveting machines serving both existing customers who own machines and customers purchasing new machines manufactured in the Companys Tyrone, Pennsylvania manufacturing facility. The Albia facility results of operations were consolidated within the assembly equipment segment. At December 31, 2024, the Company had $ 348,400 classified as Assets held for sale in the Condensed Consolidated Balance Sheets related to the Albia facility's remaining assets and real estate. O n February 25, 2025, the Company completed the sale of the Albia manufacturing facility's remaining assets and real estate for total net cash proceeds of approximately $ 678,000 , and recorded a gain of $ 339,520 within Other income in the Condensed Consolidated Statements of Operations. …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

Note 4. Revenue The Company operates in the fastener industry and is in the business of producing and selling rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines and parts and tools for such machines. Revenue is recognized when control of the promised goods or services is transferred to our customers, generally upon shipment of goods or completion of services, in an amount that reflects the consideration we expect to receive in exchange for those goods or services. For certain assembly equipment segment transactions, revenue is recognized based on progress toward completion of the performance obligation using a labor-based measure. Labor incurred and specific material costs are compared to milestone payments per sales contract. Based on our experience, this method most accurately reflects the transfer of goods under such contracts. During the third quarter of 2025 , the Company realized $ 327,626 related to such contracts and has a remaining performance obligation of $ 149,892 which is expected to be recognized during the fourth quarter of 2025. At September 30, 2025, there were $ 10,460 contract assets relating to these contracts. Sales taxes we may collect concurrent with revenue producing activities are excluded from revenue. Revenue is recognized net of certain sales adjustments to arrive at net sales as reported on the statement of operations. These adjustments primarily relate to customer returns and allowances, which vary o …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Note 8. Segment information The Company operates in the United States in two business segments as determined by its products. The fastener segment is comprised of H & L Tool and the parent companys fastener operations, which includes rivets, cold-formed fasteners, and parts and screw machine products. The assembly equipment segment includes automatic rivet setting machines and parts and tools for such machines. The Company determined that its business segments also represent its reportable segments. The reportable segments identified above are the business activities of the Company for which discrete financial information is available and for which operating results are regularly reviewed by the Company's chief operating decision maker (CODM) to assess operating performance and allocate resources. The CODM is the Companys Chief Executive Officer , Mr. Gregory D. Rizzo. The Company's CODM evaluates segment performance based on gross profit, segment operating income (loss) less depreciation, and capital expenditures. The information provided to the Company's CODM excludes for purposes of making decisions and assessing segment performance other assets or other income information. Information by segment is as follows: Fastener Assembly Equipment Other Consolidated Three Months Ended September 30, 2025 Net sales $ 6,398,873 $ 926,335 $ $ 7,325,208 Add: intercompany sales adjustment 35,076 - - 35,076 Total sales to external customers 6,433,949 926,335 - 7,360,284 Cost of goods …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

"Note 1. Significant accounting policies Basis of presentation. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements for the interim periods presented contain all adjustments necessary to present fairly the financial position of Chicago Rivet & Machine Co. (the Company) as of September 30, 2025 (unaudited) and December 31, 2024, and the results of operations and changes in cash flows for the indicated periods. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (""GAAP"") have been condensed or omitted from these unaudited financial statements in accordance with applicable rules. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited financial statements and the notes thereto included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2024 . Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, H & L Tool Company, Inc. (H & L Tool). All significant intercompany accounts and transactions have been eliminated. Certain amounts in the Condensed Consolidated Financial Statements and accompanying notes may not sum due to rounding. Certain prior period data has been reclassified to conform to the current period presentation. Use of …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing