Aspire-Lakewood closes roughly $30M DCS acquisition
DCS reported a $727,000 net loss for the six months ended June 30, 2026, compared with $12.196 million in net income in the prior-year period.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Aspire-Lakewood Holdings, Inc. (ASBP) completed its acquisition of Dura Driver Control Systems (DCS) on August 6, 2026, for approximately $30 million. A five-year management services agreement with Lakewood Capital, LLC became effective at closing.
Aspire-Lakewood will pay Lakewood a $500,000 closing fee and reimburse closing expenses up to $200,000. Annual management fees equal 5% of Adjusted EBITDA, capped at $1 million. Lakewood is to receive 15% of DCSC equity within 10 days of closing, vesting monthly over two years and estimated at approximately $4.5 million based on the purchase price. The put option cannot be exercised during the first two years after closing; afterward, Lakewood may sell up to 5% of DCSC equity in any 12-month period with 90 days' notice, at a valuation applying a 15% discount to implied equity value after debt.
DCS reported 2025 revenue of $208.852 million and net income of $9.782 million, compared with $205.397 million revenue and $22.816 million net income in 2024. For the six months ended June 30, 2026, DCS reported revenue of $103.788 million and a net loss of $727,000, compared with $103.291 million revenue and $12.196 million net income in the 2025 period.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- None.
Negative
- Major pointDCS net income: $9.782 million in 2025 vs. $22.816 million in 2024.
- Major pointDCS reported a $727,000 first-half loss in 2026 vs. $12.196 million income in 2025.
Filing Explained
DCS's pre-acquisition accounts show reliance on seller funding, so they do not represent a standalone financing history.
This amendment adds DCS historical financial statements and unaudited pro forma information to the report on the acquisition, which closed on
At
For the six months ended
8-K Event Classification
Key Figures
Key Terms
Adjusted EBITDA financial
put option financial
carve-out basis financial
pro forma condensed combined financial information financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was the purchase price for ASBP's DCS acquisition?
How are ASBP's annual management fees to Lakewood paid?
How can Lakewood receive payment for its DCSC put option?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(
(Registrant’s telephone number)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 provided pursuant to Section 13(a) of the Exchange Act.
Explanatory Note
The Company filed a Current Report on Form 8-K on August 10, 2026, (the “Initial Report”) in which the Company disclosed it had entered into an Escrow and Closing Agreement acknowledging that the closing conditions of the Purchase Agreement had been satisfied. This Current Report on Form 8-K/A amends the Initial Report to include certain financial statements of DCS and certain pro forma financial information as required by Item 9.01, which are filed as exhibits hereto, and are incorporated herein by reference. This amendment also includes a Management Service Agreement by and among the Company and Lakewood Capital, LLC as required by Item 1.01 as previously disclosed in the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 13, 2026. No other changes have been made to the Initial Report except as set forth in this amendment
Item 1.01 Entry into a Material Definitive Agreement
Management Services Agreement
A Management Services Agreement (the “Agreement”) was entered into on May 10, 2026, between the Company and Lakewood Capital, LLC (“Lakewood”) becoming effective on the closing date of the acquisition of the Dura Control Systems Corp. (“DCSC”) August 6, 2026, (the “Effective Date”) The term of the Agreement is for a period of five years from the Effective Date.
The Management Services to be provided during the term of the Agreement include consultation in connection to the DCSC operations with respect to the development and implementation of strategies for improving operating, engineering, manufacturing, marketing, and/or financial performance of the Company, its subsidiaries or affiliates. In consideration of the Management Services, the Company will pay Lakewood a closing fee of $500,000 and reimbursement of out-of-pocket expenses not to exceed $200,000 in connection with closing the Dura Transaction. Additionally, the Company will pay Lakewood an aggregate annual management fee equal to 5% of Adjusted EBITDA which means for any period, consolidated earnings before interest, taxes, depreciation, and amortization adjusted to exclude extraordinary items, non-recurring items and other agreed upon items, with an annual cap of $1,000,000 ( the “Annual Management Fee”) with quarterly payments of $250,000 paid (January 1, April 1 and July 1) with final payment on October 1 to be approved by the audit committee of the Board of Directors equal to the difference between 5% Adjusted EBITDA and the $750,000 already paid.
In addition, Lakewood will receive 15% of the equity of DCSC within 10 days upon the closing of the DCSC Transaction, that vests monthly over a two-year period which is currently estimated at approximately $4,500,000 based on the purchase price of $30,000,000. Lakewood also has the opportunity to receive additional liquidity for DCSC by receiving a staggered (tranche-based) put option on its 15% of the DCSC equity. No exercise of the put may be effected during the first two years after the closing of the Dura Transaction. After the end of year two, Lakewood has the option to sell up to 5% of the DCSC equity in any twelve month period subject to a ninety day notice. The put would be payable in cash or Company stock or a combination thereof that would be mutually acceptable to both Lakewood and the Board. The same terms would be applicable to each subsequent year as long as no put exceeds 5% of DCSC equity. Valuation of DCSC in connection with exercising a put option will be calculated by using a pro-rata share of EBITDA generated by DCSC adjusted for certain market adjustments. After adjusting for debt, Lakewood would be able to exercise their put option at a 15% discount to the implied equity value of the DCSC subsidiary.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
The audited combined financial statements of DCSC as of and for the years ended December 31, 2025 and 2024, are filed as Exhibit 99.1 to this Current Report on Form 8-K/A and incorporated herein by reference.
The unaudited condensed combined financial statements of DCSC as of June 30, 2026, and December 31, 2025, and for the six months ended June 30, 2026 and 2025, are filed as Exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein by reference.
(b) Pro forma financial information.
The unaudited pro forma condensed combined financial information of Aspire-Lakewood Holdings, Inc. giving effect to the Acquisition, which includes the unaudited pro forma condensed combined balance sheet as of June 30, 2026, and the unaudited pro forma condensed combined statements of operation for the year ended December 31, 2025, and for the six months ended June 30, 2026, is filed as Exhibit 99.3 to this Current Report on Form 8-K/A and incorporated herein by reference.
The unaudited pro forma financial information included in this Current Report on Form 8-K/A has been presented for informational purposes only, as required by the disclosure requirements of Form 8-K, and is not necessarily indicative of the actual financial position or results of operations that the Company would have realized had the companies been combined as of the dates or during the periods presented, nor is it intended to be indicative of any anticipated combined financial position or future results of operations that the Company may achieve after the Acquisition.
(d) Exhibits.
The following exhibits are included as part of this Current Report on Form 8-K:
| Exhibit Number | Exhibits | |
| 10.1* | Management Service Contract dated August 6, 2026, by and among Aspire-Lakewood, Holding Inc. and Lakewood Capital, LLC | |
| 99.1* | DCSC audited combined financial statements as of and for the years ended December 31, 2025 and 2024, and related notes | |
| 99.2* | DCSC unaudited condensed combined financial statements as of June 30, 2026 and December 31, 2025 and for the six months ended June 30, 2026 and 2025 and related notes | |
| 99.3* | The unaudited pro forma condensed combined financial information of Aspire-Lakewood Holdings, Inc. given the effect to the acquisition of which includes the unaudited pro forma condensed combined balance sheet as of June 30, 2026, and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2025, and the six months ended June 30, 2026. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
* Filed herewith.
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 hereunto duly authorized.
| Date: October 20, 2026 | Aspire-Lakewood Holdings, Inc. | |
| By: | /s/ Ernest Scheidemann | |
| Name: | Ernest Scheidemann | |
Exhibit 99.1
DURA Driver Control Systems
Combined Financial Statements
As of and for the Years Ended
December 31, 2025 and 2024
INDEX TO COMBINED FINANCIAL STATEMENTS
| Page | |
| Report of Independent Registered Public Accounting Firm | 1 |
| Combined Balance Sheets as of December 31, 2025 and 2024 | 2 |
| Combined Statements of Operations and Comprehensive Income for the years ended December 31, 2025 and 2024 | 3 |
| Combined Statements of Changes In Members’ Equity for the years ended December 31, 2025 and 2024 | 4 |
| Combined Statements of Cash Flows for the years ended December 31, 2025 and 2024 | 5 |
| Notes to Combined Financial Statements | 6 |
| 1 |
DURA DRIVER CONTROL SYSTEMS
COMBINED BALANCE SHEETS
(Amounts in Thousands)
| December 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 16,567 | $ | 9,833 | ||||
| Accounts receivable, net of allowance for credit losses of $2,464 and $612, respectively | 26,818 | 34,125 | ||||||
| Related party accounts receivable | 27,979 | 27,076 | ||||||
| Inventories | 21,050 | 21,870 | ||||||
| Prepaids and other current assets | 12,606 | 13,429 | ||||||
| Total Current Assets | 105,020 | 106,333 | ||||||
| Long-term Assets: | ||||||||
| Restricted cash | 294 | 1,052 | ||||||
| Property, plant and equipment, net | 19,657 | 20,454 | ||||||
| Right of use operating lease assets, net | 9,116 | 11,345 | ||||||
| Deferred income tax asset, net | 2,990 | 11,968 | ||||||
| Other noncurrent assets | 3,440 | 1,873 | ||||||
| Total Long-Term Assets | 35,497 | 46,692 | ||||||
| Total Assets | $ | 140,517 | $ | 153,025 | ||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Current maturities of long-term debt | $ | 236 | $ | 2,262 | ||||
| Current operating lease liability | 2,498 | 2,354 | ||||||
| Accounts payable | 20,621 | 25,760 | ||||||
| Accrued liabilities | 19,049 | 48,133 | ||||||
| Total Current Liabilities | 42,404 | 78,509 | ||||||
| Long-term Liabilities: | ||||||||
| Long-term debt, net of current maturities | 12,131 | 10,927 | ||||||
| Noncurrent operating lease liability | 7,308 | 9,461 | ||||||
| Other noncurrent liabilities | 3,129 | 3,328 | ||||||
| Total Long-Term Liabilities | 22,568 | 23,716 | ||||||
| Total Liabilities | 64,972 | 102,225 | ||||||
| Members’ Equity | 75,545 | 50,800 | ||||||
| Total Liabilities and Members’ Equity | $ | 140,517 | $ | 153,025 | ||||
The accompanying notes are an integral part of the combined financial statements.
| 2 |
DURA DRIVER CONTROL SYSTEMS
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands)
| For the Year Ended | For the Year Ended | |||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Revenues | $ | 208,852 | $ | 205,397 | ||||
| Cost of sales | (175,737 | ) | (186,839 | ) | ||||
| Gross profit | 33,115 | 18,558 | ||||||
| Selling, general and administrative expenses | (12,137 | ) | (15,732 | ) | ||||
| Facility consolidation, asset impairment, and other charges | (4,910 | ) | (5,109 | ) | ||||
| Restructuring costs | (2,177 | ) | 40 | |||||
| Income (loss) from operations | 13,891 | (2,243 | ) | |||||
| Other income (expense) | ||||||||
| Interest expense, net | (3,255 | ) | (3,000 | ) | ||||
| Foreign currency transaction (losses) gains | (4,521 | ) | 4,886 | |||||
| Other income | 17,702 | 31,123 | ||||||
| Total other income | 9,926 | 33,009 | ||||||
| Income from operations before income taxes | 23,817 | 30,766 | ||||||
| Income tax expense | (14,035 | ) | (7,950 | ) | ||||
| Net income | $ | 9,782 | $ | 22,816 | ||||
| Foreign currency translation adjustment | 1,207 | (12,907 | ) | |||||
| Comprehensive income | $ | 10,989 | $ | 9,909 | ||||
The accompanying notes are an integral part of the combined financial statements.
| 3 |
DURA DRIVER CONTROL SYSTEMS
COMBINED STATEMENT OF CHANGES IN MEMBERS’ EQUITY
(Amounts in thousands)
| Other | ||||||||||||
| Members’ | Comprehensive | Total | ||||||||||
| Equity | Loss | Equity | ||||||||||
| Beginning Balance, January 1, 2024 | $ | 83,148 | $ | (15,551 | ) | $ | 67,597 | |||||
| Net income | 22,816 | - | 22,816 | |||||||||
| Contribution from Parent | 16,990 | - | 16,990 | |||||||||
| Foreign exchange translation changes in equity | (43,696 | ) | - | (43,696 | ) | |||||||
| Other comprehensive loss | - | (12,907 | ) | (12,907 | ) | |||||||
| Balance, December 31, 2024 | 79,258 | (28,458 | ) | 50,800 | ||||||||
| Net income | 9,782 | - | 9,782 | |||||||||
| Contribution from Parent | 14,710 | - | 14,710 | |||||||||
| Foreign exchange translation changes in equity | (954 | ) | - | (954 | ) | |||||||
| Other comprehensive income | — | 1,207 | 1,207 | |||||||||
| Balance, December 31, 2025 | $ | 102,796 | $ | (27,251 | ) | $ | 75,545 | |||||
The accompanying notes are an integral part of the combined financial statements
| 4 |
DURA DRIVER CONTROL SYSTEMS
COMBINED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| For the Year Ended | For the Year Ended | |||||||
| December 31, 2025 | December 31, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 9,782 | $ | 22,816 | ||||
| Adjustments required to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 4,223 | 4,474 | ||||||
| Provision for allowance for credit losses | 574 | 208 | ||||||
| Non-cash restructuring | 2,177 | (40 | ) | |||||
| Non-cash interest expense | 508 | 454 | ||||||
| Amortization of right of use assets | 2,229 | 2,476 | ||||||
| Deferred income tax expense | 8,978 | (788 | ) | |||||
| Change in other operating items: | ||||||||
| Accounts receivable | 6,733 | (2,912 | ) | |||||
| Related party accounts receivable | (903 | ) | (13,664 | ) | ||||
| Inventories | 820 | 1,836 | ||||||
| Prepaids and other current assets | 823 | 3,904 | ||||||
| Accounts payable | (5,139 | ) | (13,412 | ) | ||||
| Accrued liabilities | (31,261 | ) | 17,507 | |||||
| Operating lease liability | (2,009 | ) | (2,391 | ) | ||||
| Other assets and liabilities, net | 55 | (37,658 | ) | |||||
| Net cash used in operating activities | (2,410 | ) | (17,190 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | (3,426 | ) | (2,054 | ) | ||||
| Net cash used in investing activities | (3,426 | ) | (2,054 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Contribution from Parent | 14,710 | 16,990 | ||||||
| Payments on financing arrangements | (1,330 | ) | (2,825 | ) | ||||
| Net cash provided by financing activities | 13,380 | 14,165 | ||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | (1,568 | ) | 7,827 | |||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | 5,976 | 2,748 | ||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | ||||||||
| Beginning | 10,885 | 8,137 | ||||||
| Ending cash and cash equivalents | 16,567 | 9,833 | ||||||
| Ending restricted cash | 294 | 1,052 | ||||||
| Ending | $ | 16,861 | $ | 10,885 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | 3,255 | $ | 3,000 | ||||
| Cash paid for income taxes | 4,529 | 5,909 | ||||||
The accompanying notes are an integral part of the combined financial statements.
| 5 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 1. | Organization and Description of Business |
DURA Driver Control Systems (“DCS” or “the Company”), and its subsidiaries are a global mobility systems supplier specializing in the design, engineering, and manufacturing of solutions that drive the evolution of mobility. Aspire Biopharma Holdings, Inc. (Aspire) announced on April 16, 2026, that it has entered a letter of intent to acquire 100% of the Dura Driver Control Systems (DCS) business unit of Firefish Topco, LLC, which is a wholly owned subsidiary of Megalodon TopCo, LLC. Prior to the transaction, DCS was included in the combined financial statements of Megalodon TopCo, LLC (“Megalodon”).
| 2. | Significant Accounting Policies |
Basis of Presentation
The accompanying combined financial statements and disclosures of DCS have been prepared in connection with the expected transaction and have been derived from the combined financial statements and accounting records of Megalodon TopCo, LLC (the “Parent”), as if DCS operated on a standalone basis during the periods presented, and were prepared in accordance with the accounting principles generally accepted in the United States of America (GAAP). The following entities are included in the purchase agreement and the accompanying combined financial statements:
| ● | Dura de Mexico SA de CV | |
| ● | Dura Automotive Systems GmbH | |
| ● | Dura Automotive Portuguesa Industria De Componentes | |
| ● | Dura Automotive Romania Srl | |
| ● | Dura Automotive Systems SAS and its wholly owned subsidiary Duratronics GmbH | |
| ● | Dura Automotive Components Trading (Shanghai) Co., Ltd. | |
| ● | Dura Ganziang Automotive Systems (Shanghai) Co., Ltd. | |
| ● | Dura Auto Systems India Private Limited | |
| ● | Dura Automotive Services India Private Limited | |
| ● | DUS Operating, Inc. | |
| ● | Dura Automotive Systems CZ, s.r.o. |
The Company eliminates all intercompany balances and transactions.
The Company has historically operated and reported as a part of Megalodon and not as a stand-alone Company. Financial statements representing the historical operations of the Company’s business have been derived from Megalodon’s historical accounting records and are presented on a carve-out basis. All revenue and costs, as well as assets and liabilities, directly associated with the business activity of the Company are included in the financial statements. The combined financial statements also include allocations of certain expenses such as shared services expenses, accounting and finance and information technology from Megalodon. However, amounts recognized by the Company are not necessarily representative of the amounts that would have been reflected in the combined financial statements had the Company operated independently of Megalodon.
The Company is dependent upon Megalodon for all of its working capital and financing requirements, as Megalodon uses a centralized approach to cash management and financing of its operations. Financial transactions relating to the Company are accounted for through the related party payable. All significant transactions between the Company and Megalodon have been included in the accompanying combined financial statements.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents consist of highly liquid investments which include money market instruments with original maturities of three months or less and are stated at cost, which approximates fair value. Cash balances may be more than the amounts insured by the Federal Deposit Insurance Corporation, or the foreign equivalent. The Company also had restricted cash of $0.3 million and $1 million as of December 31, 2025 and 2024, respectively related to certain future employee benefit related liabilities.
| 6 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
Revenue Recognition and Sales Commitments
The Company recognizes revenue, utilizing the five-step framework of ASC 606, when performance obligations to manufacture and supply these products at the point in time that the customer obtains control of the products. Contract terms do not unilaterally include cancellation provisions that would result in an enforceable right to payment for performance completed to date and as a result, revenue is recognized at a point in time. The customer typically obtains control of the products upon shipment in accordance with purchase orders and delivery releases issued by the customer.
The Company utilizes several factors when determining whether control has transferred, including whether the Company has a present right to payment for the product, the customer has legal title to the product, the Company has transferred physical possession of the product, the customer has the significant risks and rewards of owning the product, and the customer has accepted the product.
Contracts with customers generally state the terms of the sale, including the quantity and price of each product purchased. Trade accounts receivable from the Company’s customers are generally due approximately 60 days from the date the Company’s customers receive the product. Contracts typically do not contain variable consideration as the contracts include stated prices. The Company provides warranties that the product will conform to stated specifications, which are not separate performance obligations. Total warranty accrual as of December 31, 2025 and 2024 is $899 and $926, respectively, which is included in accrued liabilities on the combined financial statements. The Company excludes sales and other taxes from the transaction price of the contracts with customers. The Company has adopted the practical expedient to treat shipping and handling costs as a cost to fulfill the contract. Because contracts with customers usually only contain one performance obligation that is satisfied at a point in time, there are no satisfied performance obligations that would result in contract assets other than trade accounts receivable.
Revenues recognized from contracts with customers, disaggregated by geographical location, are presented in the following table for the years ended December 31, 2025 and 2024 (in thousands). Revenues are attributed to regions based on the location of the customer.
| For the year ended | For the year ended | ||||||
| December 31, 2025 | December 31, 2024 | ||||||
| North America | $ | 79,010 | $ | 79,889 | |||
| Europe | 107,750 | 103,144 | |||||
| Asia | 22,092 | 22,364 | |||||
| Total | $ | 208,852 | $ | 205,397 | |||
Trade Accounts Receivable and Allowance for Credit Losses
In June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments”, which replaces current methods for evaluating impairment of financial instruments not measured at fair value, including trade accounts receivable and certain debt securities, with a current expected credit loss model. The Company adopted this guidance on January 1, 2024. The adoption of this standard was not material to our consolidated financial statements.
The Company generally does not require collateral related to its trade accounts receivable. An allowance for credit losses is established for amounts expected to be uncollectible over the contractual life of the receivables. The Company collectively evaluates trade receivables to determine the allowance for credit losses based on creditworthiness of customers. Credit losses from customers have not been significant, nor has the Company experienced a significant increase in credit losses in connection with the current inflationary market conditions. The Company calculates the allowance using an expected loss model that considers the Company’s actual historical loss rates adjusted for current economic conditions and reasonable and supportable forecasts. The Company considers macroeconomic trends and customer-specific knowledge when making adjustments for reasonable and supportable forecasts. Uncollectible amounts are written off against the allowance for doubtful credit losses in the period they are determined to be uncollectible. Recoveries of amounts previously written off are recognized when received. On a monthly basis, a reserve is established for specific customers at the appropriate risk level supported by external documents. The remaining reserve is calculated by aging accounts receivable balances and reserving a larger percentage of older balances.
| 7 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
While routinely executing collection procedures, some receivables will be determined to be uncollectible by management when all collection actions have been completed. When accounts are deemed to be uncollectible, they are written off and no longer reflected in the accounts receivable balance in the financial statements and are no longer used in calculating the allowance for credit losses. The activity in the allowance for credit losses is as follows:
| 2025 | 2024 | |||||||
| Balance - January 1 | $ | 612 | $ | 2,984 | ||||
| Additions charged to expense | 574 | 208 | ||||||
| Effect of exchange rate | 1,278 | (2,580 | ) | |||||
| Balance - December 31 | $ | 2,464 | $ | 612 | ||||
The Company enters into agreements to sell certain of its accounts receivable, primarily in Europe. Sales of receivables are accounted for in accordance with ASC Topic 860, Transfers and Servicing. Agreements which result in true sales of the transferred receivables, which occur when receivables are transferred without recourse to the Company, are excluded from amounts reported in the combined balance sheets. Cash proceeds received from such sales are included in operating cash flows.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant estimates include the provision for income taxes, allowance for credit losses and allowance for excess and obsolete inventory.
Inventories
Inventories are valued at the lower of cost and net realizable value, using the first-in first-out (“FIFO”) method. The Company assesses inventory valuation based on estimates of future demand. The estimates of future demand are based upon projections of future related automobile platform sales. The future projected demand of service parts is based upon current service usage. The Company evaluates inventory for items that are slow moving or obsolete and records an appropriate reserve for obsolescence if needed.
Foreign Currency Translation
The functional currency is the U.S. dollar as a substantial part of operations are based in the U.S. The financial statements of all subsidiaries with a functional currency other than the U.S. Dollar have been translated into U.S. Dollars. The translation from the applicable foreign currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date. Revenue and expense accounts are translated from the applicable foreign currency using a weighted average exchange rate for the period. The resulting translation adjustments are recorded as a component of Members’ Equity. The Company engages in foreign currency denominated transactions with customers and suppliers, as well as between subsidiaries with different functional currencies. Gains and losses resulting from foreign currency transactions are recognized in net loss in the combined statements of operations. Non-functional currency denominated intercompany balances which are long-term in nature are recognized in accumulated other comprehensive income.
Income Taxes
The Company records income tax expense using the asset and liability method which specifies that deferred tax assets and liabilities be measured each year based on the difference between the financial statement and tax base of assets and liabilities at the applicable enacted tax rates. A valuation allowance is provided for deferred tax assets when management considers it more likely than not that the asset will not be realized. At December 31, 2025, and December 31, 2024, a valuation allowance has been provided for certain deferred tax assets which the Company has concluded are more likely than not to not be realized. If future annual taxable income were to be significantly less than projected levels, there is a risk that part of deferred tax assets not already provided for by the valuation allowance would expire prior to utilization.
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
| 8 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
Management’s conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of, or changes in tax laws, regulations and interpretations thereof as well as other factors. The Company’s policy is to record interest and penalties directly related to income taxes as income tax expense in the accompanying combined statements of operations, of which there was none for the years ended December 31, 2025 and 2024.
Pre-Production Costs Related to Long-Term Supply Agreements
The Company incurs pre-production engineering and development (“E&D”) costs related to the products produced for its customers under long-term supply agreements. These costs are expensed as incurred unless the cost reimbursement is contractually guaranteed in a customer contract for which costs are capitalized as an asset as incurred and subsequently reduced upon lump sum or piece price recoveries.
The Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). Periodically, the Company enters into contractually guaranteed reimbursement agreements related to the sale of tooling to customers. Costs are deferred until reimbursed by the customer. Amounts due under such arrangements are either settled in cash, on a lump sum basis, or settled over the part supply arrangement, in accordance with the specific terms of the arrangement.
The Company also may progress bill on certain tooling being constructed. In certain scenarios, the Company reports deferred revenue resulting from advances from customers or if progress billings are in excess of costs incurred. Deferred revenue on tooling projects are recorded in accrued liabilities on the combined balance sheet, and totaled $0.9 million and $1.9 million as of December 31, 2025 and 2024, respectively.
Excess of cost over billings on uncompleted tooling projects are recorded in prepaids and other current assets on the combined balance sheets, and totaled $0.6 million and $1.9 million as of December 31, 2025 and 2024, respectively.
Occasionally, the Company incurs costs in excess of those contractually reimbursed for customer owned tooling. In those cases, the Company records reserves for such probable and estimable losses. Forecasted losses on incomplete projects are recognized currently when identified. There were no forecasted losses as of December 31, 2025 and 2024.
Property, Plant, and Equipment, net
Property, plant, and equipment are stated at cost or at fair market value for property, plant and equipment acquired through acquisitions. Expenditures for maintenance, repairs and renewals are charged to expense as incurred, while major improvements are capitalized. The cost of these improvements is depreciated over their estimated useful lives. Assets dedicated to a specific customer program, are depreciated over the estimated life of that program. Depreciation and amortization are computed using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes over the estimated useful lives of the related assets as follows:
| Furniture and Fixtures | 3 to 10 years |
| Buildings | 20 to 30 years |
| Machinery and equipment | 3 to 10 years |
| Leasehold improvements | Shorter of useful life or lease term |
| Land improvements | 10 years |
When assets are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is included in the earnings for the current period.
Comprehensive Income (Loss)
Comprehensive income (loss) disclosed in the combined statements of comprehensive income (loss) reflects the change in the equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. Comprehensive loss represents net loss plus other comprehensive income (loss) items (e.g., foreign currency translation adjustments) from nonowner sources.
| 9 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
Retirement Plan
The Company sponsors several 401(k) profit-sharing plans covering substantially all of its domestic employees. Matching contributions charged as expense during 2025 and 2024 were $135 and $172, respectively.
Other Income
Other income in 2025 and 2024 relates to the income of Dura Automotive CZ k.a. Additionally, in 2024 a portion of the other income relates to the sale of the Battery Tray division.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of significant segment expenses. Under the new guidance an entity is required to disclose the title and position of the chief operating decision maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The ASU also requires that an entity that has a single reportable segment provide all the disclosures required by this ASU and all existing segment disclosures in Topic 280. The ASU does not change how operating segments are identified or, when applicable, aggregated. The Company adopted this standard for fiscal year 2024 and such adoption did not have a material impact on our combined financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”) which amends the Codification to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires additional disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid to be disaggregated by jurisdiction. The amendments in ASU 2023-09 apply to all entities that are subject to Topic 740, Income Taxes. For public business entities, the amendments in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. For private business entities, the amendment was effective for annual periods beginning after December 31, 2025. The Company is considered an emerging growth company and plans to adopt this standard consistent with the private business guidance. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures (ASU 2024-03”). This update requires entities to disaggregate operating expenses into specific categories, such as purchases of inventory, compensation, depreciation, and amortization, to provide enhanced transparency into the nature and function of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU 2024-03 may be applied retrospectively or prospectively. The Company is currently evaluating the impact of this standard on its financial statement presentation and disclosures.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, including those assets acquired in a business combination. The practical expedient permits all entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset. This ASU is effective for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting this standard on its financial statements and disclosures.
| 10 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 3. | Prepaids and Other Current Assets |
Prepaid and other current assets are detailed as follows:
| 2025 | 2024 | |||||||
| Taxes | $ | 4,488 | $ | 2,358 | ||||
| Prepaid insurance | 2,115 | 2,016 | ||||||
| Deposits | 844 | 2,497 | ||||||
| Tooling | 587 | 1,969 | ||||||
| Supplies | 891 | 1,038 | ||||||
| Other prepaid expenses | 3,681 | 3,551 | ||||||
| $ | 12,606 | $ | 13,429 | |||||
| 4. | Property, Plant, and Equipment, net |
Property, plant, and equipment consisted of the following (in thousands):
| 2025 | 2024 | |||||||
| Land and buildings | $ | 18,261 | $ | 16,191 | ||||
| Machinery and equipment (1) | 23,945 | 20,872 | ||||||
| Construction in progress | 276 | 953 | ||||||
| Less — Accumulated depreciation and amortization | (22,825 | ) | (17,562 | ) | ||||
| $ | 19,657 | $ | 20,454 | |||||
| (1) | Machinery and equipment includes Company-owned tooling of $0.1 million as of December 31, 2025 and 2024, respectively. |
Depreciation expense totaled $4.2 million and $4.5 million for the years ended December 31, 2025 and 2024, respectively.
| 5. | Inventories |
Inventories consisted of the following as of December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Raw Materials | $ | 14,209 | $ | 14,916 | ||||
| Work-in-process | 3,221 | 3,162 | ||||||
| Finished goods | 3,620 | 3,792 | ||||||
| $ | 21,050 | $ | 21,870 | |||||
The above amounts are shown net of cumulative inventory lower of cost or net realizable value adjustments of 6.1 million and $5.5 million as of December 31, 2025 and 2024, respectively.
| 11 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 6. | Accrued liabilities |
Accrued liabilities are detailed as follows:
| 2025 | 2024 | |||||||
| Accrued compensation | $ | 10,179 | $ | 15,680 | ||||
| Battery tray liability | - | 7,558 | ||||||
| Accrued freight premium | - | 13,773 | ||||||
| Accrued taxes | 2,806 | 3,918 | ||||||
| Customer price downs | 2,484 | 1,544 | ||||||
| Accrued professional fees | 915 | 713 | ||||||
| Deferred revenue | 942 | 1,888 | ||||||
| Litigation reserve | 824 | 992 | ||||||
| Warranty reserve | 899 | 926 | ||||||
| Other | - | 1,141 | ||||||
| $ | 19,049 | $ | 48,133 | |||||
| 7. | Debt |
The Company has long-term debt related to failed sale-leaseback transactions recorded as of December 31, 2025 and 2024. The Company sold buildings to a third-party under sale-leaseback arrangements. Since these transactions do not meet the criteria for sale-leaseback accounting treatment, they are presented as debt in the accompanying combined balance sheet. These financing transactions contain monthly and quarterly payment terms ranging from $0.1 to $0.2 million. Payments are recorded as principal and interest based on implicit rates ranging from approximately 10 percent to 12 percent.
The balance of the above debt matures as follows:
| 2026 | $ | 236 | ||
| 2027 | 270 | |||
| 2028 | 309 | |||
| 2029 | 352 | |||
| 2030 | 401 | |||
| Thereafter | 10,799 | |||
| $ | 12,367 |
| 12 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 8. | Income Taxes |
The provision for income taxes consisted of the following for the years ended December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Current- | ||||||||
| United States | $ | - | $ | - | ||||
| Foreign | 5,057 | 8,738 | ||||||
| Total current income tax expense | 5,057 | 8,738 | ||||||
| Deferred- | ||||||||
| United States | 9,464 | (975 | ) | |||||
| Foreign | (486 | ) | 187 | |||||
| Total deferred income tax expense | 8,978 | (788 | ) | |||||
| Total income tax expense | $ | 14,035 | $ | 7,950 | ||||
The Company is organized as a limited liability company and has elected to be taxed under U.S. Corporation rules, whereby income is taxable to the Company. The current and deferred provision for the United States reflects taxes associated with federal and state income taxes and foreign withholding on income.
A reconciliation of the provision for income taxes at the statutory rates to the reported income tax provision is as follows for the years ended December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Difference in income tax on foreign earnings | $ | 5,057 | $ | 8,738 | ||||
| Valuation allowance | 8,978 | (788 | ) | |||||
| $ | 14,035 | $ | 7,950 | |||||
| 13 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
A summary of deferred tax assets (liabilities) is as follows for the Company as of December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Depreciation and property basis differences | $ | 7,874 | $ | 7,882 | ||||
| Goodwill and intangibles | 895 | 974 | ||||||
| Net operating loss carryforwards | 6,109 | 23,044 | ||||||
| Postretirement benefit obligations | 531 | 469 | ||||||
| Accrued interest | 4,742 | 4,698 | ||||||
| Accrued compensation costs | 546 | 528 | ||||||
| Facility closure and consolidation costs | 152 | 94 | ||||||
| Inventory valuation adjustments | 1,064 | 1,096 | ||||||
| Warranty and environmental costs | 825 | 583 | ||||||
| Capital loss carryforward | - | - | ||||||
| Foreign exchange | (356 | ) | (1,975 | ) | ||||
| Bad debt allowance | (28 | ) | 320 | |||||
| Prepaid expenses | - | - | ||||||
| Other | 669 | 199 | ||||||
| Tax credits and WH tax | 277 | 591 | ||||||
| R&D Costs | 2,110 | 2,123 | ||||||
| Valuation allowance | (22,420 | ) | (28,658 | ) | ||||
| Net deferred tax asset | $ | 2,990 | $ | 11,968 | ||||
As of December 31, 2025 and 2024, the consolidated balance sheet includes $3.0 million and $12.0 million, respectively, of noncurrent deferred tax assets and an insignificant amount of noncurrent deferred tax liabilities.
Deferred tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction, based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse. The DCS Carve-Out has deferred income tax assets on net operating loss carryforwards to the extent they believe they will be able to utilize them in future tax filings. As of December 31, 2025 and 2024, the DCS Carve-Out recorded a valuation allowance of $22.4 million and $28.7, for DCS Carve-Out respectively, based on management’s determination that it is more-likely-than-not that the tax benefits related to these assets will not be realized. The valuation allowance includes a full valuation on deferred tax assets in France, Portugal, Romania, and certain entities in Germany, China, as well as a partial valuation allowance on the United States.
As of December 31, 2025, the DCS Carve-Out has $27.8 million of gross U.S. federal, state and foreign net operating loss carryforwards, reflecting a U.S. federal and state net operating loss of $0.0 million and foreign corporate net operating losses of $27.8 million. As of December 31, 2024, the DCS Carve-Out has $92.6 million of gross U.S. federal, state and foreign net operating loss carryforwards, reflecting a U.S. federal and state net operating loss of $0.0 million and foreign corporate net operating losses of $92.6 million. The net operating losses can be carried forward between 3 years and indefinitely. As of December 31, 2025, net operating losses totaling $0.5 million have no expiration date while the remaining losses will begin to expire in 2026.
For the year ended December 31, 2025, the DCS Carve-Out no longer has a recorded deferred tax liability associated with the non-reserved undistributed earnings related to China and India entities that regularly pay dividends. As of December 31, 2024, the DCS Carve-Out has recorded a deferred tax liability of $0.3 million, associated with the non-reserved undistributed earnings related to China and India entities that regularly pay dividends.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2025 and December 31, 2024. The DCS Carve-Out is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation from its positions. The DCS Carve-Out is subject to income tax examinations by major taxing authorities in the countries in which it operates since its inception.
| 14 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
The DCS Carve-Out files tax returns, including tax returns for its subsidiaries, in the U.S. and several foreign jurisdictions. The current U.S. open examination periods are 2022 forward. In addition, open tax years related to various states remain subject to examination. The foreign taxing jurisdictions are subject to examination for open years after 2016 and the period of open years varies by jurisdiction.
| 9. | Commitments and Contingencies |
Leases
The Company has operating lease obligations that include office space, manufacturing space and certain equipment under agreements with contractual periods ranging from less than one year to 20 years. Many of the lease obligations contain one or more options to extend. The Company includes options that are reasonably certain to exercise in the evaluation of the lease term after considering all relevant economic and financial factors. The leases are classified as right of use assets in the non-current assets section of the combined balance sheet.
The Company does not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they relate. Instead, non-lease components are included in the measurement of the lease obligations. The Company calculates the initial lease liability as the present value of fixed payments not yet paid and variable payments that are based on a market or an index rate, measured at commencement. Most of the leases are discounted using the incremental borrowing rate because the rate implicit in the lease obligation is not readily determinable. All other variable payments are expensed as incurred.
The components of lease cost are as follows:
| 2025 | 2024 | ||||||
| Operating lease costs | $ | 4,718 | $ | 5,009 | |||
Lease obligation right-of-use assets and liabilities at December 31, 2025 and 2024, were as follows (in thousands):
| 2025 | 2024 | ||||||
| Right of use assets, non-current | $ | 9,116 | $ | 11,345 | |||
| Operating lease liability, current | $ | 2,498 | $ | 2,354 | |||
| Operating lease liability, non-current | 7,308 | 9,461 | |||||
| Total operating lease liabilities | $ | 9,806 | $ | 11,815 | |||
| 15 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
Future annual commitments under these lease obligations are as follows as of December 31 (in thousands):
| Operating Lease Liabilities | ||||
| 2025 | ||||
| 2026 | $ | 7,665 | ||
| 2027 | 6,986 | |||
| 2028 | 5,208 | |||
| 2029 | 3,007 | |||
| 2030 | 2,915 | |||
| Thereafter | 22,962 | |||
| Total lease liability | $ | 48,743 | ||
| Less: Interest | 38,937 | |||
| Net lease liability | 9,806 | |||
The weighted-average remaining lease term and weighted-average discount rate at December 31, 2025, and 2024 were as follows:
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Operating leases | 9.81 | 9.35 | ||||||
| Weighted-average discount rate | ||||||||
| Operating leases | 8.06 | % | 8.11 | % | ||||
Supplemental cash flow information related to leases for the years ended December 31, 2025 and 2024 was as follows (in thousands);
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease obligations | ||||||||
| Operating cash flows from operating leases | 2,831 | 3,060 | ||||||
| Right-of-use assets obtained in exchange for new operating lease obligations | 182 | 70 | ||||||
Warranty and Environmental
The Company has an inherent business risk of exposure to warranty claims in the event that manufactured products do not perform as expected and results in replacement of product on vehicles in the field. OEMs are increasingly requiring their suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under which the Company supplies products to an OEM, an OEM may hold us responsible for some or all of the repair and replacement costs of warranty claims under new vehicle warranties when the product supplied does not perform as represented.
The Company’s policy is to record reserves for customer warranty costs on a case by case basis at the time they believe such amounts are probable and reasonably estimable and to review these determinations on a quarterly basis, or more frequently as additional information is obtained. The Company has established reserves for issues that are probable and reasonably estimable in amounts management believes are adequate to cover reasonable adverse judgments. The Company determines the warranty reserves based on identified claims and the estimated ultimate projected claim cost. The final amounts determined for these matters could differ significantly from recorded estimates. The warranty accrual balance was $0.9 million and $1.0 million as of December 31, 2025 and 2024, respectively. The warranty accrual is included in accrued liabilities on the combined balance sheet as of December 31, 2025 and 2024.
| 16 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
The Company is subject to the requirements of federal, state, local and foreign environmental and occupational health and safety laws and regulations. Some of the operations involve the use of hazardous substances. Like all manufacturers, if a release of hazardous substances occurs or has occurred at or from any of the current or former properties or at a landfill or another location where the Company has disposed of wastes, and may be held liable for the contamination, which could be material. The Company’s policy regarding the recording of environmental reserves is the same as for warranty. The reserves are reviewed on a quarterly basis or more frequently as additional information is obtained. The environmental reserve balance was $0.8 million and $0.7 million as of December 31, 2025 and 2024, respectively. The environmental reserve is included in accrued liabilities on the combined balance sheet as of December 31, 2025 and 2024.
Litigation
The Company is involved in various legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties, including, but not limited to, court rulings, negotiations between affected parties and governmental intervention. The Company establishes reserves for matters that are probable and reasonably estimable in amounts they believe are adequate to cover reasonable adverse judgments not covered by insurance. Based upon the information available to us and discussions with legal counsel, it is management’s opinion that the ultimate outcome of the various legal actions and claims that are incidental to the business will not have a material adverse impact on the combined balance sheet, statement of operations, or statement of cash flows; however, such matters are subject to many uncertainties, and the outcome of individual matters are not predictable with assurance. The Company has insurance coverage for certain litigation type matters. The litigation reserve balance was $0.8 million and $1.0 million as of December 31, 2025 and 2024, respectively. The litigation reserve is included in accrued liabilities on the combined balance sheet as of December 31, 2025 and 2024.
Concentrations of Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of accounts receivable and cash investments. The Company’s customer base includes significant global automotive manufacturers and many distributors and installers of automotive aftermarket parts. For the year ended December 31, 2025, three customers accounted for approximately 29%, 14%, and 12%, respectively, of the Company’s revenues. For the year ended December 31, 2024, three customers accounted for approximately 24%, 15%, and 12%, respectively, of the Company’s revenues. The Company’s credit evaluation process, reasonably short collection terms and the geographical dispersion of sales transactions help to mitigate credit risk concentration. The Company requires placement of cash in financial institutions evaluated as highly creditworthy.
The Company’s business is labor intensive and utilizes many unionized employees. As of December 31, 2025 and 2024, approximately 65% of the U.S. employees were unionized and a substantial number of non-U.S. employees are covered by Workers’ Councils. In the U.S., the Company has collective bargaining agreements with the UAW (International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America). The majority of non-U.S. employees are members of industrial trade union organizations and confederations within their respective countries. Many of these organizations and confederations operate under national contracts, which are not specific to any one employer. The UAW contracts expire in 2027 for the unionized facilities in the U.S. and expire annually for non-U.S. facilities. Although the Company believes that the relationship with union employees is generally good, there can be no assurance that they will be able to negotiate new agreements on favorable terms. In the event the Company is unsuccessful in negotiating new agreements, these facilities could be subject to work stoppages, which could have a material adverse effect on operations.
The Company has manufacturing and product development facilities located in the U.S., Europe, and Asia. A significant portion of operations are located outside of the U.S.
The total assets of the operations outside of the U.S. are as follows as of December 31, 2025 and 2024 (in thousands):
| December 31, 2025 | December 31, 2024 | |||||||
| Europe | $ | 142,635 | $ | 135,244 | ||||
| Asia | 27,061 | 28,497 | ||||||
| Total foreign operations | 169,696 | $ | 163,741 | |||||
| 17 |
DURA DRIVER CONTROL SYSTEMS NOTES TO COMBINED FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 |
| 10. | Related Party Transactions |
The following is a description of transactions between the Company and related parties:
Related Party Accounts Receivable
At December 31, 2025 and 2024, the Company had accounts receivable from related entities totaling $27,979 and $27,076, respectively. Balances are related to daily operational activity. The balance has been presented as current as the balance is expected to be settled within the next year.
Due to Parent
At December 31, 2025 and 2024, the Company had accounts payable to the parent totaling $126,952 and $116,693, respectively. Balances are related to the Parent’s cash management and financing strategies. The balance has been presented as equity, as the Parent does not expect repayment as the liability will be forgiven.
Parent Allocation of Expenses
For the years ended December 31, 2025 and 2024, the Company recorded allocations of parent company expenses totaling approximately $4,451 related to general and administrative expenses which has been classified as such in the combined statement of operations. The balance has been presented as equity, as a contribution from Parent.
| 11. | Subsequent Events |
The Company has evaluated events and transactions subsequent to December 31, 2025 through the date the combined financial statements were issued. Other than the below, there were no other events to report than what has been disclosed in the financial statements.
On June 10, 2026, FireFish Topco, LLC, a subsidiary of the Parent, entered into a purchase agreement with Aspire Biopharma Holdings, Inc. to purchase the outstanding equity interests of DCS for approximately $30 million. Prior to the closing of the sale, the Company will settle certain intercompany accounts of the DCS entities and complete other closing obligations as further disclosed in the agreement.
The transaction occurred subsequent to the balance sheet date, and therefore, the accompanying combined financial statements do not reflect the impact of the sale. As of the date the combined financial statements were issued, the Company is still evaluating the final financial statement impact, including the determination of any gain or loss on sale.
| 18 |
Exhibit 99.2
DURA
and for the Six Months Ended
June 30, 2026 and 2025
INDEX
TO
| Page | |
| 2 | |
| 3 | |
| 4 | |
| 5 | |
| Notes
to |
6 |
| 1 |
DURA
(Amounts in Thousands)
| June 30, 2026 | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 10,975 | $ | |||||
| Accounts receivable, net of allowance for credit losses of $2,344 and | 27,135 | |||||||
| Related party accounts receivable | 36,387 | |||||||
| Inventories | 20,512 | |||||||
| Prepaid expenses and other current assets | 10,118 | |||||||
| Total Current Assets | 105,127 | |||||||
| Long-term Assets: | ||||||||
| Restricted cash | 284 | |||||||
| Property, plant and equipment, net | 17,188 | |||||||
| Right of use operating lease assets, net | 7,964 | |||||||
| Deferred income tax asset, net | 4,500 | |||||||
| Other noncurrent assets | 2,906 | |||||||
| Total Long-Term Assets | 32,842 | |||||||
| Total Assets | $ | 137,969 | $ | |||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Current maturities of long-term debt | $ | 244 | $ | |||||
| Current operating lease liability | 2,563 | |||||||
| Accounts payable | 21,906 | |||||||
| Accrued liabilities | 21,738 | |||||||
| Total Current Liabilities | 46,451 | |||||||
| Long-term Liabilities: | ||||||||
| Long-term debt, net of current maturities | 11,542 | |||||||
| Noncurrent operating lease liability | 6,203 | |||||||
| Other noncurrent liabilities | 3,120 | |||||||
| Total Long-Term Liabilities | 20,865 | |||||||
| Total Liabilities | 67,316 | |||||||
| Members’ Equity | 70,653 | |||||||
| Total Liabilities and Members’ Equity | $ | 137,969 | $ | |||||
The
accompanying notes are an integral part of the
| 2 |
DURA
(Amounts in thousands)
| Six-months ended | Six-months ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| Revenues | $ | 103,788 | $ | 103,291 | ||||
| Cost of sales | (91,918 | ) | (90,028 | ) | ||||
| Gross profit | 11,870 | 13,263 | ||||||
| Selling, general and administrative expenses | (5,627 | ) | (5,811 | ) | ||||
| Facility consolidation and other charges | (932 | ) | (906 | ) | ||||
| Restructuring costs | (3,660 | ) | (1,333 | ) | ||||
| Income from operations | 1,651 | 5,213 | ||||||
| Other income (expense) | ||||||||
| Interest expense, net | (1,703 | ) | (2,021 | ) | ||||
| Foreign currency transaction gains (losses) | 1,313 | (3,784 | ) | |||||
| Other (expense) income | (2,055 | ) | 14,559 | |||||
| Total other (expense) income | (2,445 | ) | 8,754 | |||||
| (Loss) income from operations before income taxes | (794 | ) | 13,967 | |||||
| Income tax benefit (expense) | 67 | (1,771 | ) | |||||
| Net (loss) income | (727 | ) | 12,196 | |||||
| Foreign currency translation adjustment | (902 | ) | 1,315 | |||||
| Comprehensive (loss) income | $ | (1,629 | ) | $ | 13,511 | |||
The
accompanying notes are an integral part of the
| 3 |
DURA
(Amounts in thousands)
| Other | ||||||||||||
| Members’ | Comprehensive | Total | ||||||||||
| Equity | Loss | Equity | ||||||||||
| Beginning Balance January 1, 2025 | $ | 79,258 | $ | (28,458 | ) | $ | 50,800 | |||||
| Net income | 12,196 | - | 12,196 | |||||||||
| Contribution from parent | 37,631 | - | 37,631 | |||||||||
| Foreign exchange translation changes in equity | (20,001 | ) | - | (20,001 | ) | |||||||
| Other comprehensive income | - | 1,315 | 1,315 | |||||||||
| Balance, June 30, 2025 | $ | 109,084 | $ | (27,143 | ) | $ | 81,941 | |||||
| Beginning Balance January 1, 2026 | $ | 102,796 | $ | (27,251 | ) | $ | 75,545 | |||||
| Net loss | (727 | ) | - | (727 | ) | |||||||
| Contribution from parent | 17,706 | - | 17,706 | |||||||||
| Foreign exchange translation changes in equity | (20,969 | ) | - | (20,969 | ) | |||||||
| Other comprehensive loss | — | (902 | ) | (902 | ) | |||||||
| Balance June 30, 2026 | $ | 98,806 | $ | (28,153 | ) | $ | 70,653 | |||||
The
accompanying notes are an integral part of the
| 4 |
DURA
(Amounts in thousands)
| Six-months ended | Six-months ended | |||||||
| June 30, 2026 | June 30, 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net (loss) income | $ | (727 | ) | $ | 12,196 | |||
| Adjustments required to reconcile net (loss) income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 2,092 | 2,005 | ||||||
| Provision for allowance for credit losses | 52 | 104 | ||||||
| Non-cash restructuring | 3,660 | 3,660 | ||||||
| Non-cash interest expense | 205 | 205 | ||||||
| Amortization of right of use assets | 1,152 | 255 | ||||||
| Deferred income tax (expense) recovery | (1,510 | ) | 420 | |||||
| Change in other operating items: | ||||||||
| Accounts receivable | (369 | ) | (3,777 | ) | ||||
| Related party accounts receivable | (8,408 | ) | (7,585 | ) | ||||
| Inventories | 538 | 568 | ||||||
| Prepaid expenses and other current assets | 2,488 | (1,070 | ) | |||||
| Accounts payable | 1,285 | (1,181 | ) | |||||
| Accrued liabilities | (971 | ) | (23,967 | ) | ||||
| Operating lease liability | (1,040 | ) | 171 | |||||
| Other assets and liabilities, net | (20,737 | ) | (15,711 | ) | ||||
| Net cash used in operating activities | (22,290 | ) | (33,707 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Capital expenditures | - | (2,712 | ) | |||||
| Net cash used in investing activities | - | (2,712 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Contribution from Parent | 17,706 | 37,631 | ||||||
| Payments on financing arrangements | (786 | ) | (1,180 | ) | ||||
| Net cash provided by financing activities | 16,920 | 36,451 | ||||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | (232 | ) | (2,795 | ) | ||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | (5,602 | ) | (2,772 | ) | ||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH: | ||||||||
| Beginning | 16,861 | 10,885 | ||||||
| Ending cash and cash equivalents | 10,975 | 7,747 | ||||||
| Ending restricted cash | 284 | 366 | ||||||
| Ending | $ | 11,259 | $ | 8,113 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | 1,703 | $ | 2,021 | ||||
| Cash paid for income taxes | 978 | 1,916 | ||||||
The
accompanying notes are an integral part of the
| 5 |
DURA
NOTES
TO
| 1. | Organization and Description of Business |
Dura
| 2. | Significant Accounting Policies |
Basis of Presentation
The
accompanying
| ● | Dura de Mexico SA de CV | |
| ● | Dura Automotive Systems GmbH | |
| ● | Dura Automotive Portuguesa Industria De Componentes | |
| ● | Dura Automotive Romania Srl | |
| ● | Dura Automotive Systems SAS and its wholly owned subsidiary Duratronics GmbH | |
| ● | Dura Automotive Components Trading (Shanghai) Co., Ltd. | |
| ● | Dura Ganziang Automotive Systems (Shanghai) Co., Ltd. | |
| ● | Dura Auto Systems India Private Limited | |
| ● | Dura Automotive Services India Private Limited | |
| ● | DUS Operating, Inc. | |
| ● | Dura Automotive Systems CZ, s.r.o. |
The Company eliminates all intercompany balances and transactions.
The
Company has historically operated and reported as a part of Megalodon and not as a stand-alone Company. Financial statements representing
the historical operations of the Company’s business have been derived from Megalodon’s historical accounting records and
are presented on a carve-out basis. All revenue and costs, as well as assets and liabilities, directly associated with the business activity
of the Company are included in the financial statements. The
The
Company is dependent upon Megalodon for all of its working capital and financing requirements, as Megalodon uses a centralized approach
to cash management and financing of its operations. Financial transactions relating to the Company are accounted for through the related
party payable. All significant transactions between the Company and Megalodon have been included in the accompanying
Cash, Cash Equivalents and Restricted Cash
Cash
and cash equivalents consist of highly liquid investments which include money market instruments with original maturities of three months
or less and are stated at cost, which approximates fair value. Cash balances may be more than the amounts insured by the Federal Deposit
Insurance Corporation, or the foreign equivalent. The Company also had restricted cash of $284 and
| 6 |
DURA
NOTES
TO
Revenue Recognition and Sales Commitments
The Company recognizes revenue, utilizing the five-step framework of ASC 606, when performance obligations to manufacture and supply these products at the point in time that the customer obtains control of the products. Contract terms do not unilaterally include cancellation provisions that would result in an enforceable right to payment for performance completed to date and as a result, revenue is recognized at a point in time. The customer typically obtains control of the products upon shipment in accordance with purchase orders and delivery releases issued by the customer.
The Company utilizes several factors when determining whether control has transferred, including whether the Company has a present right to payment for the product, the customer has legal title to the product, the Company has transferred physical possession of the product, the customer has the significant risks and rewards of owning the product, and the customer has accepted the product.
Contracts
with customers generally state the terms of the sale, including the quantity and price of each product purchased. Trade accounts receivable
from the Company’s customers are generally due approximately 60 days from the date the Company’s customers receive the product.
Contracts typically do not contain variable consideration as the contracts include stated prices. The Company provides warranties that
the product will conform to stated specifications, which are not separate performance obligations. Total warranty accrual as of June
30, 2026 and
Revenues recognized from contracts with customers, disaggregated by geographical location, are presented in the following table for the six months ended June 30, 2026 and 2025. Revenues are attributed to regions based on the location of the customer.
| For the Six Months Ended | ||||||||
| June 30, 2026 | June 30, 2025 | |||||||
| North America | $ | 37,028 | $ | 36,652 | ||||
| Europe | 55,101 | 56,929 | ||||||
| Asia | 11,659 | 9,710 | ||||||
| Total | $ | 103,788 | $ | 103,291 | ||||
Trade Accounts Receivable and Allowance for Credit Losses
The Company generally does not require collateral related to its trade accounts receivable. An allowance for credit losses is established for amounts expected to be uncollectible over the contractual life of the receivables. The Company collectively evaluates trade receivables to determine the allowance for credit losses based on creditworthiness of customers. The Company calculates the allowance using an expected loss model that considers the Company’s actual historical loss rates adjusted for current economic conditions and reasonable and supportable forecasts. The Company considers macroeconomic trends and customer-specific knowledge when making adjustments for reasonable and supportable forecasts. Uncollectible amounts are written off against the allowance for credit losses in the period they are determined to be uncollectible. Recoveries of amounts previously written off are recognized when received. On a monthly basis, a reserve is established for specific customers at the appropriate risk level supported by external documents. The remaining reserve is calculated by aging accounts receivable balances and reserving a larger percentage of older balances.
| 7 |
DURA
NOTES
TO
While routinely executing collection procedures, some receivables will be determined to be uncollectible by management when all collection actions have been completed. When accounts are deemed to be uncollectible, they are written off and no longer reflected in the accounts receivable balance in the financial statements and are no longer used in calculating the allowance for credit losses. The activity in the allowance for credit losses is as follows:
| Balance at January 1 | $ | 2,464 | $ | 612 | ||||
| Additions charged to expense | 52 | |||||||
| Effect of exchange rate | (172 | ) | ||||||
| $ | 2,344 | $ | ||||||
The
Company enters into agreements to sell certain of its accounts receivable, primarily in Europe. Sales of receivables are accounted for
in accordance with ASC Topic 860, Transfers and Servicing. Agreements which result in true sales of the transferred receivables, which
occur when receivables are transferred without recourse to the Company, are excluded from amounts reported in the
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The most significant estimates include the provision for income taxes, allowance for credit losses and allowance for excess and obsolete inventory.
Inventories
Inventories are valued at the lower of cost and net realizable value, using the first-in first-out (“FIFO”) method. The Company assesses inventory valuation based on estimates of future demand. The estimates of future demand are based upon projections of future related automobile platform sales. The future projected demand of service parts is based upon current service usage. The Company evaluates inventory for items that are slow moving or obsolete and records an appropriate reserve for obsolescence if needed.
Foreign Currency Translation
The
functional currency is the U.S. dollar as a substantial part of operations are based in the U.S. The financial statements of all subsidiaries
with a functional currency other than the U.S. Dollar have been translated into U.S. Dollars. The translation from the applicable foreign
currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date. Revenue
and expense accounts are translated from the applicable foreign currency using a weighted average exchange rate for the period. The resulting
translation adjustments are recorded as a component of Members’ Equity. The Company engages in foreign currency denominated transactions
with customers and suppliers, as well as between subsidiaries with different functional currencies. Gains and losses resulting from foreign
currency transactions are recognized in net loss in the
Income Taxes
The
Company records income tax expense using the asset and liability method which specifies that deferred tax assets and liabilities be measured
each year based on the difference between the financial statement and tax base of assets and liabilities at the applicable enacted tax
rates. A valuation allowance is provided for deferred tax assets when management considers it more likely than not that the asset will
not be realized. At June 30, 2026, and
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.
| 8 |
DURA
NOTES
TO
Management’s
conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of,
or changes in tax laws, regulations and interpretations thereof as well as other factors. The Company’s policy is to record interest
and penalties directly related to income taxes as income tax expense in the accompanying
Pre-Production Costs Related to Long-Term Supply Agreements
The Company incurs pre-production engineering and development (“E&D”) costs related to the products produced for its customers under long-term supply agreements. These costs are expensed as incurred unless the cost reimbursement is contractually guaranteed in a customer contract for which costs are capitalized as an asset as incurred and subsequently reduced upon lump sum or piece price recoveries.
The Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”). Periodically, the Company enters into contractually guaranteed reimbursement agreements related to the sale of tooling to customers. Costs are deferred until reimbursed by the customer. Amounts due under such arrangements are either settled in cash, on a lump sum basis, or settled over the part supply arrangement, in accordance with the specific terms of the arrangement.
The
Company also may progress bill on certain tooling being constructed. In certain scenarios, the Company reports deferred revenue resulting
from advances from customers or if progress billings are in excess of costs incurred. Deferred revenue on tooling projects are recorded
in accrued liabilities on the
Excess
of cost over billings on uncompleted tooling projects are recorded in prepaid expenses and other current assets on the
Occasionally,
the Company incurs costs in excess of those contractually reimbursed for customer owned tooling. In those cases, the Company records
reserves for such probable and estimable losses. Forecasted losses on incomplete projects are recognized currently when identified. There
were no forecasted losses as of June 30, 2026 and
Property, Plant, and Equipment, net
Property, plant, and equipment are stated at cost or at fair market value for property, plant and equipment acquired through acquisitions. Expenditures for maintenance, repairs and renewals are charged to expense as incurred, while major improvements are capitalized. The cost of these improvements is depreciated over their estimated useful lives. Assets dedicated to a specific customer program, are depreciated over the estimated life of that program. Depreciation and amortization are computed using the straight-line method for financial reporting purposes and accelerated methods for income tax purposes over the estimated useful lives of the related assets as follows:
| Furniture and Fixtures | 3 to 10 years | |
| Buildings | 20 to 30 years | |
| Machinery and equipment | 3 to 10 years | |
| Leasehold improvements | Shorter of useful life or lease term | |
| Land improvements | 10 years |
When assets are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is included in the earnings for the current period.
Comprehensive Income (Loss)
Comprehensive
income (loss) disclosed in the
| 9 |
DURA
NOTES TO
Retirement Plan
The Company sponsors several 401(k) profit-sharing plans covering substantially all of its domestic employees. Matching contributions charged to expense for the six months ended June 30, 2026 and June 30, 2025 were $8 and $68, respectively.
Other Income
Other income in 2026 and 2025 relates to the income of Dura Automotive CZ k.a.
Recent Accounting Pronouncements Adopted
In
July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for
Accounts Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses
for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, including those
assets acquired in a business combination. The practical expedient permits all entities to assume that current conditions as of the
balance sheet date do not change for the remaining life of the asset. This ASU is effective for fiscal years beginning after
December 15, 2025, and interim reporting periods within those annual reporting periods.
| 3. | Prepaid Expenses and Other Current Assets |
Prepaid expenses and other current assets consisted of the following:
| June 30, 2026 | ||||||||
| Taxes | $ | 3,233 | $ | |||||
| Other prepaid expenses | 3,159 | |||||||
| Prepaid insurance | 1,174 | |||||||
| Supplies | 1,008 | |||||||
| Deposits | 819 | |||||||
| Tooling | 725 | |||||||
| Prepaid expenses and other current assets | $ | 10,118 | $ | |||||
| 4. | Property, Plant, and Equipment, net |
Property, plant, and equipment consisted of the following:
| June 30, 2026 | ||||||||
| Land and buildings | $ | 17,857 | $ | |||||
| Machinery and equipment (1) | 23,015 | |||||||
| Less — Accumulated depreciation and amortization | (23,634 | ) | ) | |||||
| Property, plant and equipment, net | $ | 17,188 | $ | |||||
| (1) | Machinery
and equipment includes Company-owned tooling of $100 as of June 30, 2026 and |
Depreciation expense totaled $2,100 and $2,000 for the six months ended June 30, 2026 and June 30, 2025, respectively.
| 10 |
DURA
NOTES TO
| 5. | Inventories |
Inventories consisted of the following:
| June 30, 2026 | ||||||||
| Raw Materials | $ | 14,198 | $ | |||||
| Work-in-process | 3,106 | |||||||
| Finished goods | 3,208 | |||||||
| Inventories | $ | 20,512 | $ | |||||
The
above amounts are shown net of cumulative inventory lower of cost or net realizable value adjustments of $5,700 and
| 6. | Accrued liabilities |
Accrued liabilities consisted of the following:
| June 30, 2026 | ||||||||
| Accrued compensation | $ | 11,208 | $ | |||||
| Accrued taxes | 3,537 | |||||||
| Other | 2,051 | |||||||
| Customer price downs | 1,417 | |||||||
| Warranty reserve | 1,090 | |||||||
| Litigation reserve | 1,087 | |||||||
| Accrued professional fees | 681 | |||||||
| Deferred revenue | 667 | |||||||
| Accrued liabilities | $ | 21,738 | $ | |||||
| 7. | Debt |
The
Company
The balance of the above debt matures as follows:
| 2026 (excluding the six months ended June 30, 2026) | $ | 244 | ||
| 2027 | 281 | |||
| 2028 | 322 | |||
| 2029 | 366 | |||
| 2030 | 416 | |||
| Thereafter | 10,157 | |||
| Debt | $ | 11,786 |
| 8. | Income Taxes |
The income tax provision effective tax rates was 4.2% and 12.88% for the six months ended June 30, 2026 and 2025, respectively. The Company has recorded a valuation allowance for the periods based on management’s determination that it is more-likely-than-not that the tax benefits related to these assets will not be realized. The valuation allowance includes a full valuation on deferred tax assets in France, Portugal, Romania, and certain entities in Germany, China, as well as a partial valuation allowance on the United States.
| 11 |
DURA
NOTES TO
| 9. | Commitments and Contingencies |
Leases
The
Company has operating lease obligations that include office space, manufacturing space and certain equipment under agreements with contractual
periods ranging from less than one year to 20 years. Many of the lease obligations contain one or more options to extend the term. The
Company includes options that are reasonably certain to exercise in the evaluation of the lease term after considering all relevant economic
and financial factors. The leases are classified as right of use assets in the non-current assets section of the
The Company does not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they relate. Instead, non-lease components are included in the measurement of the lease obligations. The Company calculates the initial lease liability as the present value of fixed payments not yet paid and variable payments that are based on a market or an index rate, measured at commencement. Most of the leases are discounted using the incremental borrowing rate because the rate implicit in the lease obligation is not readily determinable. All other variable payments are expensed as incurred.
The components of lease costs consisted of the following:
| June 30, 2026 | June 30, 2025 | |||||||
| Operating lease costs | $ | 1,353 | $ | 1,493 | ||||
Lease obligation right-of-use assets and liabilities consisted of the following:
| June 30, 2026 | ||||||||
| Operating leases | ||||||||
| Right-of- use operating assets | $ | 7,964 | $ | |||||
| Operating lease liability, current | $ | 2,563 | $ | |||||
| Operating lease liability, non-current | 6,203 | |||||||
| Total operating leases | $ | 8,766 | $ | |||||
The weighted-average remaining lease term and weighted-average discount rate were as follows:
| June 30, 2026 | ||||||||
| Weighted-average operating lease term | 10.26 years | |||||||
| Weighted-average discount rate –operating leases | 8.06 | % | 8.06 | % | ||||
| 12 |
DURA
NOTES TO
Future minimum lease payment under these leases as of June 30, 2026 were as follows:
| 2026 (excluding the six months ended June 30, 2026) | $ | 2,808 | ||
| 2027 | 4,251 | |||
| 2028 | 3,637 | |||
| 2029 | 3,694 | |||
| 2030 | 3,747 | |||
| Thereafter | 45,725 | |||
| Total | 63,862 | |||
| Less: Imputed interest | 55,096 | |||
| Total lease obligations | 8,766 | |||
| Less: Current maturities of long-term lease obligations | (2,563 | ) | ||
| Long-term lease obligation | $ | 6,203 |
Supplemental cash flow information related to leases were as follows;
| June 30, 2026 | June 30, 2025 | |||||||
| Cash paid for amounts included in the measurement of lease obligations | ||||||||
| Operating cash flows from operating leases | $ | 1,326 | $ | 1,460 | ||||
| Right-of-use assets obtained in exchange for new operating lease obligations | $ | 110 | $ | 159 | ||||
Warranty and Environmental
The Company has an inherent business risk of exposure to warranty claims in the event that manufactured products do not perform as expected and results in replacement of product on vehicles in the field. OEMs are increasingly requiring their suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under which the Company supplies products to an OEM, an OEM may hold us responsible for some or all of the repair and replacement costs of warranty claims under new vehicle warranties when the product supplied does not perform as represented.
The
Company’s policy is to record reserves for customer warranty costs on a case by case basis at the time they believe such amounts
are probable and reasonably estimable and to review these determinations on a quarterly basis, or more frequently as additional information
is obtained. The Company has established reserves for issues that are probable and reasonably estimable in amounts management believes
are adequate to cover reasonable adverse judgments. The Company determines the warranty reserves based on identified claims and the estimated
ultimate projected claim cost. The final amounts determined for these matters could differ significantly from recorded estimates. The
warranty accrual balance was
The
Company is subject to the requirements of federal, state, local and foreign environmental and occupational health and safety laws and
regulations. Some of the operations involve the use of hazardous substances. Like all manufacturers, if a release of hazardous substances
occurs or has occurred at or from any of the current or former properties or at a landfill or another location where the Company has
disposed of wastes, and may be held liable for the contamination, which could be material. The Company’s policy regarding the recording
of environmental reserves is the same as for warranty. The reserves are reviewed on a quarterly basis or more frequently as additional
information is obtained. The environmental reserve balance was insignificant as of June 30, 2026 and
| 13 |
DURA
NOTES TO
Litigation
The
Company is involved in various legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties, including,
but not limited to, court rulings, negotiations between affected parties and governmental intervention. The Company establishes reserves
for matters that are probable and reasonably estimable in amounts they believe are adequate to cover reasonable adverse judgments not
covered by insurance. Based upon the information available to us and discussions with legal counsel, it is management’s opinion
that the ultimate outcome of the various legal actions and claims that are incidental to the business will not have a material adverse
impact on the
Concentrations of Risk
Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of accounts receivable and cash investments. The Company’s customer base includes significant global automotive manufacturers and many distributors and installers of automotive aftermarket parts. For the six month ended June 30, 2026, three customers accounted for approximately 30%, 16%, and 12%, respectively, of the Company’s revenues. For the six months ended June 30, 2025, three customers accounted for approximately 29%, 13%, and 12%, respectively, of the Company’s revenues. The Company’s credit evaluation process, reasonably short collection terms and the geographical dispersion of sales transactions help to mitigate credit risk concentration. The Company requires placement of cash in financial institutions evaluated as highly creditworthy.
The Company’s business is labor intensive and utilizes many unionized employees. As of June 30, 2026 and 2025, approximately 38% of the U.S. employees were unionized and a substantial number of non-U.S. employees are covered by Workers’ Councils. In the U.S., the Company has collective bargaining agreements with the UAW (International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America). The majority of non-U.S. employees are members of industrial trade union organizations and confederations within their respective countries. Many of these organizations and confederations operate under national contracts, which are not specific to any one employer. The UAW contracts expire in 2027 for the unionized facilities in the U.S. and expire annually for non-U.S. facilities. Although the Company believes that the relationship with union employees is generally good, there can be no assurance that they will be able to negotiate new agreements on favorable terms. In the event the Company is unsuccessful in negotiating new agreements, these facilities could be subject to work stoppages, which could have a material adverse effect on operations.
The Company has manufacturing and product development facilities located in the U.S., Europe, and Asia. A significant portion of operations are located outside of the U.S.
The total assets of the operations outside of the U.S. are as follows:
| June 30, 2026 | ||||||||
| Europe | $ | 47,970 | $ | |||||
| Asia | 16,836 | |||||||
| Total foreign operations | $ | 64,806 | $ | |||||
| 10. | Related Party Transactions |
The following is a description of transactions between the Company and related parties:
Related Party Accounts Receivable
At
June 30, 2026 and
Contribution to Parent
At
June 30, 2026 and
Parent Allocation of Expenses
For
the six months ended June 30, 2026 and 2025, the Company recorded allocations of parent company expenses totaling approximately $7,241
and $2,226, respectively, related to general and administrative expenses which has been classified as such in the
| 11. | Subsequent Events |
The
Company has evaluated events and transactions subsequent to October
The
transaction occurred subsequent to the balance sheet date, and therefore, the accompanying
| 14 |
Exhibit 99.3
UNAUDITED
PRO FORMA CONDENSED COMBINED
Introduction
On
August 6, 2026, Aspire-Lakewood Holdings, Inc. (“Aspire” or the “Company”) acquired 100% of Dura
The unaudited pro forma condensed combined financial information set forth below gives effect to the acquisition and certain other transactions (collectively, the “Transactions”).
The unaudited pro forma condensed combined balance sheet gives effect to the Transactions as if they occurred on June 30, 2026 and the unaudited pro forma condensed combined statements of operations give effect to the Transactions as if they occurred January 1, 2025.
The unaudited pro forma condensed combined financial information has been prepared by management in accordance with Article 11 of Regulation S-X and is not necessarily indicative of what the combined financial position or results of operations actually would have been had the Transactions been completed as of the dates indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or results of operations of the combined entity.
The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting in accordance with the business combination accounting guidance as provided in Accounting Standards Codification 805, Business Combinations, (“ASC 805”) with Aspire identified as the accounting acquirer. The pro forma adjustments are preliminary and based on currently available information and are subject to change. Differences between these preliminary estimates and the final acquisition accounting may occur and could have a material impact on the accompanying unaudited pro forma combined financial information.
All
financial data included in the unaudited condensed combined financial information is presented in thousands of U.S. dollars, except per
share information, and has been prepared on the basis of accounting principles generally accepted in the U.S. (“U.S. GAAP”)
and
The unaudited pro forma condensed combined financial information presented is for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Transactions had been completed on the dates set forth above, nor is it indicative of future results or financial position of the combined company. The unaudited pro forma condensed combined statements of operations do not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the Acquisition or any integration costs that may be incurred. The pro forma adjustments, which the Company believes are reasonable under the circumstances, are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial information. The final amounts may be materially different from the unaudited pro forma condensed combined financial information presented in this document.
The unaudited pro forma condensed combined financial statements should be read together with the following documents:
| ● | Aspire’s audited consolidated financial statements as of and for the year ended December 31, 2025, and the related notes which are included in its Annual Report on Form 10-K further amended by Form 10-K/A for the year ended December 31, 2025 filed with the SEC on March 30, 2026 and April 8, 2026, respectively: |
| ● | Aspire’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2026, and the related notes which are included in its Quarterly Report on Form 10-Q for the six months ended June 30, 2026 filed with the SEC on August 13, 2026; | |
| ● | DCS’s audited combined financial statements as of and for the year ended December 31, 2025 and the related notes which are included as exhibits to the Company’s Current Report on this Form 8-K/A as Exhibit 99.1. | |
| ● | DCS’s
unaudited |
Description of the Acquisition
On June 10, 2026, Aspire-Lakewood Holdings, Inc. (“Aspire,” the “Company” or the “Purchaser”), a Delaware corporation, entered into a Purchase Agreement (the “Purchase Agreement”) with FireFish TopCo, LLC (the “Seller”), a wholly owned subsidiary of Megalodon TopCo, LLC (the “Parent”), and the Seller’s subsidiaries Dura Automotive Systems CZ, S.R.O and DUS Operating Inc. Pursuant to the Purchase Agreement, Aspire agreed to purchase (i) all of the issued and outstanding equity interests (the “Transferred Equity Interests”) of the ten entities listed as Transferred Entities (see below), (ii) substantially all of the assets and liabilities constituting the driver control systems business unit of DUS Operating Inc. (the “U.S. Enterprise”) pursuant to the U.S. APA, and (iii) substantially all of the assets and liabilities constituting the Kopřivnice, Czech Republic enterprise of DURA Automotive Systems CZ, s.r.o. (the “KOP Enterprise”) pursuant to the KOP AP.
Transferred Equity Interests
On August 6, 2026, the Company and the Seller entered into an Escrow and Closing Agreement (the “Closing Agreement”), pursuant to which the parties acknowledged and agreed that all conditions to the closing of the transactions contemplated by the Purchase Agreement (the “Closing”) had been irrevocably satisfied or irrevocably waived by the party entitled to the benefit thereof, and that all Transaction Documents, certificates and other deliverables required to effect the Closing (collectively, the “Closing Documents”) had been duly executed and irrevocably delivered by the parties and were being held in escrow by the parties (or their respective counsel) pending automatic release as described below.
Pursuant
to the Closing Agreement, the Closing Documents were automatically released from escrow without any further action, and the Closing occurred
automatically and without any further action, immediately upon payment by the Company to the Seller of the Closing Purchase Price in
accordance with the closing statement delivered by the Seller to the Company on July 28, 2026 under the Purchase Agreement. Payment was
made to
Accounting for the Acquisition
The acquisition is being accounted
for as a business combination using the acquisition method in accordance with Accounting Standards Codification (“ASC”) 805,
Business Combinations, “ASC 805”. The Company and DCS each met the definition of a business as defined by ASC 805 by virtue
of having inputs, processes and outputs. The Company was determined to be the acquirer
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2026
(in thousands)
Aspire-Lakewood Holdings, Inc. (Historical) | DURA Control Systems Corp. (Historical) | Transaction Accounting Adjustments | Note | Pro Forma Combined | ||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | $ | 12,167 | $ | 10,975 | $ | (8,826 | ) | 4(a) | $ | 11,202 | ||||||||
| (3,114 | ) | 4(b) | ||||||||||||||||
| Accounts receivable, net of allowance for credit losses | — | 27,135 | — | 27,135 | ||||||||||||||
| Related party accounts receivable | — | 36,387 | (36,387 | ) | 4(c) | — | ||||||||||||
| Inventories | 288 | 20,512 | 531 | 4(d) | ||||||||||||||
| Prepaid expenses and other current assets | 1,010 | 10,118 | — | 11,128 | ||||||||||||||
| Total current assets | 13,466 | 105,127 | (47,796 | ) | ||||||||||||||
| Restricted cash | — | 284 | — | 284 | ||||||||||||||
| Property, plant and equipment, net | — | 17,188 | 28,115 | 4(e) | 45,303 | |||||||||||||
| Right of use operating lease assets, net | — | 7,964 | — | 7,964 | ||||||||||||||
| Intangible assets | — | — | 16,700 | 4(f) | 16,700 | |||||||||||||
| Deferred financing costs | 75 | — | — | 75 | ||||||||||||||
| Other noncurrent assets | — | 2,906 | — | 2,906 | ||||||||||||||
| Total assets | $ | 13,541 | $ | $ | (2,981 | ) | $ | |||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||
| Current liabilities: | ||||||||||||||||||
| Accounts payable | $ | 972 | $ | 21,906 | $ | — | $ | 22,878 | ||||||||||
| Accrued liabilities | 714 | 21,738 | — | 22,452 | ||||||||||||||
| Current maturities of long-term debt | — | 244 | 1,643 | 4(a) | 1,887 | |||||||||||||
| Current operating lease liability | — | 2,563 | — | 2,563 | ||||||||||||||
| Total current liabilities | 1,686 | 46,451 | 1,643 | 49,780 | ||||||||||||||
| Forward purchase agreement liability | 97 | — | — | 97 | ||||||||||||||
| Long-term debt, net of current maturities | — | 11,542 | 20,250 | 4(a) | 31,792 | |||||||||||||
| Deferred tax liability | — | 11,790 | 4(g) | |||||||||||||||
| Noncurrent operating lease liability | — | 6,203 | — | 6,203 | ||||||||||||||
| Put option liability | — | — | 400 | 4(j) | 400 | |||||||||||||
| Other noncurrent liabilities | — | 3,120 | — | 3,120 | ||||||||||||||
| Total liabilities | 1,783 | 34,083 | ||||||||||||||||
| Stockholders’ equity (deficit): | ||||||||||||||||||
| Additional paid-in capital | 43,507 | — | (400 | ) | 4(j) | 43,107 | ||||||||||||
| Accumulated | (31,749 | ) | — | 37,103 | 4(h) | |||||||||||||
| — | — | (3,114 | ) | 4(b) | — | |||||||||||||
| Accumulated other comprehensive income | — | (28,153 | ) | 28,153 | 4(c) | — | ||||||||||||
| Members’ equity | — | 98,806 | (36,387 | ) | — | |||||||||||||
| — | — | 33,556 | 4(i) | — | ||||||||||||||
| — | — | ) | 4(i) | — | ||||||||||||||
| Total | 11,758 | 70,653 | ||||||||||||||||
| Total liabilities and | $ | 13,541 | $ | $ | (2,981 | ) | $ | |||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2025
(in thousands, except share and per share amounts)
Aspire-Lakewood Holdings, Inc. (Historical) | DURA Control Systems Corp. (Historical) | Transaction Accounting Adjustments | Note | Pro Forma Combined | ||||||||||||||
| Revenues | $ | 6 | $ | 208,852 | $ | — | $ | 208,858 | ||||||||||
| Cost of sales | (6 | ) | (175,737 | ) | (425 | ) | 4(k), | (176,168 | ) | |||||||||
| Gross profit | — | 33,115 | (425 | ) | 32,690 | |||||||||||||
| Operating expenses: | ||||||||||||||||||
| General and administrative | 17,637 | 12,137 | 4(1), | |||||||||||||||
| Research and development | 924 | — | — | 924 | ||||||||||||||
| Sales and marketing | 790 | — | — | 790 | ||||||||||||||
| Merger and acquisition expenses | — | — | 3,114 | 4(m) | 3,114 | |||||||||||||
| Facility consolidation, asset impairment and other charges | — | 4,910 | — | 4,910 | ||||||||||||||
| Restructuring costs | — | 2,177 | — | 2,177 | ||||||||||||||
| Total operating expenses | 19,351 | 19,224 | ||||||||||||||||
| (Loss) income from operations | (19,351 | ) | 13,891 | |||||||||||||||
| Other income (expense), net: | ||||||||||||||||||
| Interest expense, net | (8,531 | ) | (3,255 | ) | (1,517 | ) | 4(n) | (13,303 | ) | |||||||||
| Foreign currency transaction (losses) | — | (4,521 | ) | — | (4,521 | ) | ||||||||||||
| Change in fair value of liabilities | 3,861 | — | — | 3,861 | ||||||||||||||
| Initial recognition of forward purchase liability | (95 | ) | — | — | (95 | ) | ||||||||||||
| (Loss) on extinguishment of debt | (364 | ) | — | — | (364 | ) | ||||||||||||
| Bargain purchase gain | — | — | 37,103 | 4(p) | 37,103 | |||||||||||||
| Other income | — | 17,702 | — | 17,702 | ||||||||||||||
| Total other (expense) income, net | (5,129 | ) | 9,926 | 35,586 | 40,383 | |||||||||||||
| (Loss) income before income taxes | (24,480 | ) | 23,817 | |||||||||||||||
| Income tax expense | — | (14,035 | ) | 4(o) | ||||||||||||||
| Net (loss) income | (24,480 | ) | 9,782 | |||||||||||||||
| Less: net income attributable to noncontrolling interest | — | — | ||||||||||||||||
| Net (loss) income attributable to Aspire-Lake | $ | (24,480 | ) | $ | 9,782 | $ | $ | |||||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Net (loss) income | $ | (24,480 | ) | $ | 9,782 | $ | $ | |||||||||||
| Foreign currency translation adjustment | — | 1,207 | — | 1,207 | ||||||||||||||
| Comprehensive (loss) income | (24,480 | ) | 10,989 | |||||||||||||||
| Less: comprehensive income attributable to noncontrolling interest | — | — | ||||||||||||||||
| Comprehensive (loss) income attributable to Aspire-Lakewood Holdings, Inc. | $ | (24,480 | ) | $ | 10,989 | $ | $ | |||||||||||
| Net (loss) income per common share – basic | $ | (16.38 | ) | 4(r) | $ | |||||||||||||
| Net (loss) income per common share – diluted | $ | (16.38 | ) | 4(r) | $ | |||||||||||||
| Weighted average common shares outstanding – basic | 1,494,956 | 1,494,956 | ||||||||||||||||
| Weighted average common shares outstanding – diluted | 1,494,956 | 1,626,092 | ||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2026
(in thousands, except share and per share amounts)
Aspire-Lakewood Holdings, Inc. (Historical) | DURA Control Systems Corp (Historical) | Transaction Accounting Adjustments | Note | Pro Forma Combined | ||||||||||||||
| Revenues | $ | 91 | $ | 103,788 | $ | — | $ | 103,879 | ||||||||||
| Cost of sales | (73 | ) | (91,918 | ) | 33 | 4(q) | (91,958 | ) | ||||||||||
| Inventory write off | (42 | ) | — | — | (42 | ) | ||||||||||||
| Gross (loss) profit | (24 | ) | 11,870 | 33 | 11,879 | |||||||||||||
| Operating expenses: | ||||||||||||||||||
| General and administrative | 1,991 | 5,627 | 4(l), | |||||||||||||||
| Research and development | 530 | — | — | 530 | ||||||||||||||
| Sales and marketing | 1,550 | — | — | 1,550 | ||||||||||||||
| Merger and acquisition expenses | 229 | — | — | 229 | ||||||||||||||
| Facility consolidation, asset impairment and other charges | — | 932 | — | 932 | ||||||||||||||
| Restructuring costs | — | 3,660 | — | 3,660 | ||||||||||||||
| Total operating expenses | 4,300 | 10,219 | ||||||||||||||||
| (Loss) income from operations | (4,324 | ) | 1,651 | |||||||||||||||
| Other income (expense): | ||||||||||||||||||
| Interest income | 62 | — | — | 62 | ||||||||||||||
| Interest expense, net | (1,595 | ) | (1,703 | ) | (759 | ) | 4(n) | (4,057 | ) | |||||||||
| Foreign currency transaction gains | — | 1,313 | — | 1,313 | ||||||||||||||
| Change in fair value of derivative liabilities and convertible notes | 252 | — | — | 252 | ||||||||||||||
| Gain on extinguishment of debt | 1,115 | — | — | 1,115 | ||||||||||||||
| Other expense | — | (2,055 | ) | — | (2,055 | ) | ||||||||||||
| Total other expense, net | (167 | ) | (2,445 | ) | (759 | ) | (3,371 | ) | ||||||||||
| Loss before income taxes | (4,491 | ) | (794 | ) | ||||||||||||||
| Income tax expense | — | 67 | 4(o) | |||||||||||||||
| Net loss | (4,491 | ) | (727 | ) | ||||||||||||||
| Less: net loss attributable to noncontrolling interest | ||||||||||||||||||
| Net loss attributable to Aspire-Lakewood Holding, Inc. | $ | (4,491 | ) | $ | (727 | ) | $ | $ | ||||||||||
| Other Comprehensive income (loss) | ||||||||||||||||||
| Net loss | $ | (4,491 | ) | $ | (727 | ) | $ | $ | ||||||||||
| Foreign currency translation adjustment | — | (902 | ) | — | (902 | ) | ||||||||||||
| Comprehensive loss | (4,491 | ) | (1,629 | ) | ||||||||||||||
| Less: comprehensive loss attributable to noncontrolling interest | — | — | ||||||||||||||||
| Comprehensive loss attributable to Aspire-Lakewood Holdings, Inc. | $ | (4,491 | ) | $ | (1,629 | ) | $ | $ | ||||||||||
| Net loss per common share – basic and diluted | $ | (7.49 | ) | 4(r) | $ | |||||||||||||
| Weighted average common shares outstanding – basic and diluted | 599,714 | 599,714 | ||||||||||||||||
See the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Note 1 – Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial information and related notes are prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information.
The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with ASC 805, with Aspire as the accounting acquirer, using the fair value concepts defined in Accounting Standards Codification 820, Fair Value Measurement, and based on the historical financial statements of the Company and DCS. Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs associated with the business combination are expensed as incurred. The excess or shortfall of the purchase price consideration over the estimated fair value of assets acquired and liabilities assumed, would be recognized as goodwill or gain on bargain purchase, respectively.
The allocation of the aggregate acquisition consideration depends on certain estimates and assumptions, all of which are preliminary. The allocation of the aggregate acquisition consideration has been made for the purpose of developing the unaudited pro forma condensed combined financial information. The final determination of fair values of assets acquired and liabilities assumed relating to the acquisition could differ materially from the preliminary allocation of aggregate acquisition consideration. The final valuation will be based on the actual net tangible and intangible assets of DCS existing at the acquisition date, and such valuation is not yet complete.
The unaudited pro forma condensed combined balance sheet is presented as if the acquisition had occurred on June 30, 2026. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025 and the unaudited pro forma condensed combined statement of operations for six months ended June 30, 2026 gives effect to the acquisition as if it occurred on January 1, 2025.
The unaudited pro forma condensed combined balance sheet as of June 30, 2026 and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2025 and for the six months ended June 30, 2026, presented herein, are based on the historical financial statements of Aspire and DCS.
| ● | The unaudited pro forma condensed combined balance sheet as of June 30, 2026 is presented as if the Transactions had occurred on June 30, 2026 and combines the historical condensed consolidated balance sheet of Aspire as of June 30, 2026 with the historical combined balance sheet of DCS as of June 30, 2026. |
| ● | The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2026 and for the six months ended June 30, 2026 have been prepared as if the Transactions had occurred on January 1, 2025. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2025, combine Aspires’ historical consolidated statement of operations for the year ended December 31, 2025 with DCS’ historical combined statement of operations for the fiscal year ended December 31, 2025. Similarly, the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026 combines Aspires’ historical condensed consolidated statement of operations for the six months ended June 30, 2026, with DCS’ historical combined statement of operations for the six months ended June 30, 2026 |
The pro forma adjustments represent management’s best estimates and are based upon currently available information and certain assumptions that Aspire believes are reasonable under the circumstances.
Note 2 – Accounting Policies and Reclassifications
During the preparation of the unaudited pro forma condensed combined financial statements, the Company performed an analysis to identify differences in DCS’s and the Company’s historical financial statement presentation and significant accounting policies. Based on this initial analysis, the Company did not identify any differences in accounting policies that would have a material impact on the unaudited pro forma condensed combined financial information. No reclassification adjustments have been made to conform DCS’s historical financial statement captions to the Company’s financial statement captions in the unaudited pro forma condensed combined financial statements.
Following the completion of the acquisition, or as more information becomes available, the Company will finalize its review of financial statement presentation and accounting policies. Therefore, the pro forma financial information may not reflect all reclassifications necessary to conform DCS’s presentation to that of the Company’s due to limitations on the availability of information as of the date of this Form 8-K/A. Accounting policy differences and reclassifications may be identified as more information becomes available.
Note 3 –Preliminary Purchase Price Allocation and Consideration Transferred
Estimated Aggregate Acquisition Consideration
The fair value of the consideration transferred as a part of the acquisition includes cash consideration of $8,826 thousand and $21,893 thousand in proceeds from the Axos Bank Credit Facility. This amount is preliminary and subject to additional adjustments.
Preliminary Aggregate Acquisition Consideration Allocation
The assumed accounting for the acquisition, including the preliminary aggregate acquisition consideration, is based on provisional amounts, and the associated purchase accounting is not final. The preliminary allocation of the purchase price to the acquired assets and assumed liabilities was based upon the preliminary estimate of fair values. For the preliminary estimate of fair values of assets acquired and liabilities assumed of DCS, Aspire is expected to use widely accepted income-based, market-based, and cost-based valuation approaches upon finalization of purchase accounting for the acquisition. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information. The unaudited pro forma adjustments are based upon available information and certain assumptions that Aspire believes are reasonable under the circumstances. The purchase price adjustments relating to DCSC’s and Aspire’s combined financial information are preliminary and subject to change, as additional information becomes available and as additional analyses are performed.
The following table summarizes the preliminary aggregate acquisition consideration as if the acquisition had been completed on June 30, 2026:
| ($ in thousands) | Amount | |||
| Assets: | ||||
| Cash and cash equivalents | $ | 10,975 | ||
| Accounts receivable, net of allowance for credit losses | 27,135 | |||
| Inventories (i) | 21,043 | |||
| Prepaid expenses and other current assets | 10,118 | |||
| Property, plant and equipment (ii) | 45,303 | |||
| Restricted cash | 284 | |||
| Right of use operating lease assets | 7,964 | |||
| Deferred income tax asset | 4,500 | |||
| Intangible assets (iii) | 16,700 | |||
| Other noncurrent assets | 2,906 | |||
| Current maturities of long-term debt | (244 | ) | ||
| Current operating lease liability | (2,563 | ) | ||
| Accounts payable | (21,906 | ) | ||
| Accrued liabilities | (21,738 | ) | ||
| Long term debt, net of current maturities | (11,542 | ) | ||
| Deferred tax liability (iv) | (11,790 | ) | ||
| Noncurrent operating lease liability | (6,203 | ) | ||
| Other noncurrent liabilities | (3,120 | ) | ||
| Total estimated fair value of net assets acquired | 67,822 | |||
| Estimated bargain purchase gain (v) | $ | (37,103 | ) | |
| (i) | The unaudited pro forma condensed combined balance sheet has been adjusted to record DCSC’s inventories at a preliminary fair value of approximately $21,043 thousand, an increase of $531 thousand from the carrying value. |
| (ii) | The unaudited pro forma condensed combined balance sheet has been adjusted to record DCS’s property, and equipment, at a preliminary fair value of approximately $45,303 thousand, an increase of $28,115 thousand from the carrying value. This increase to the carrying value of DCSC’s Property, plant and equipment incrementally impacts the depreciation recorded. |
| (iii) | Preliminary identifiable intangible assets in the unaudited pro forma condensed combined financial information consist of the following: |
| ($ in thousands) | Preliminary Fair Value | Estimated Useful Life in Years | ||||||
| Preliminary fair value of intangible assets acquired: | ||||||||
| Leasehold interest | $ | 300 | 9.81 | |||||
| Tradename | $ | 4,100 | 10 | |||||
| Technology | $ | 4,700 | 5 | |||||
| Customer relationships | $ | 7,600 | 10 | |||||
A 10% change in the valuation of intangible assets would cause a corresponding increase or decrease in the amortization expense of approximately $214 thousand for the year ended December 31, 2025 and of approximately $107 thousand for the six months ended June 30, 2026. Pro forma amortization is preliminary and based on the use of straight-line amortization. The amount of amortization following the Acquisition may differ significantly between periods based upon the final value assigned and amortization methodology used for each identifiable intangible asset.
| (iv) | Deferred tax liabilities were derived based on incremental differences in the book and tax basis created from the preliminary purchase allocation. The deferred tax liability was derived using a blended 26% tax rate. |
| (v) | The preliminary bargain purchase gain is calculated as the excess of the estimated consideration over the estimated fair value of the underlying net assets acquired. The final calculation of the of the bargain purchase gain could differ materially from the preliminary amounts presented in these unaudited pro forma condensed combined financial statements due to several factors. Each of these potential adjustments would have a corresponding impact to the preliminary calculation of the bargain purchase gain. . |
Note 4 – Pro Forma Transaction Accounting Adjustments
The following pro forma adjustments are included in the unaudited pro forma condensed combined balance sheet as of June 30, 2026 to reflect the effects of the transaction:
4(a) – Reflects the total estimated acquisition consideration as described in Note 3. The fair value of the consideration transferred as a part of the acquisition includes cash consideration of $8,826 thousand and $21,893 thousand in proceeds from Axos Bank Credit Facility. This amount is preliminary and subject to additional adjustments.
4(b) – Reflects total estimated merger-related transaction costs paid on the closing date of $3,114 thousand, which are reflected as an adjustment to accumulated deficit.
4 (c) – Reflects the elimination of DCSC’s historical parent investment and related party receivables that were settled as a part of the Transaction, as well as accumulated comprehensive income related to foreign currency.
4(d) – Represents the preliminary adjustment of acquired inventories to its preliminary estimated fair value. After the closing, the step up in inventories to fair value will increase cost of goods sold as the inventories are sold, which for purposes of these unaudited pro forma condensed combined financial statements is assumed to occur within the first year after the acquisition.
4(e) – Represents the preliminary purchase accounting adjustment to increase the value of property, plant and equipment to their estimated fair value.
4(f) – Reflects the preliminary purchase accounting adjustment for estimated intangibles based on the acquisition method of accounting. See Note 3- Preliminary purchase price allocation above for additional information on the acquired intangible assets expected to be recognized. Amortization related to the identifiable intangible assets is reflected as a pro forma adjustment in the unaudited pro forma condensed combined statement of operations based on the estimated useful lives in Note 3. The useful life assigned to the intangibles is derived based on the expected timeline of cumulative cash flows from the intangible assets.
4(g) – Represents the adjustment to deferred tax liability of $11,790 thousand associated with the incremental differences in the book and tax basis created from the preliminary purchase price allocation, primarily resulting from the preliminary fair value of assets. These adjustments were based on the applicable blended tax rate of 26% with the respective estimated purchase price allocation. The effective tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, including cash needs, the geographical mix of income and changes in tax law. Because the tax rates used for the unaudited pro forma financial information are estimated, the blended rate will likely vary from the actual effective rate in periods subsequent to completion of the Acquisition. This determination is preliminary and subject to change based upon the final determination of the fair value of the acquired assets and assumed liabilities.
4(h) – Reflects the net adjustment to recognize the preliminary estimated bargain purchase gain. See Note 3 for significant estimates and assumptions used to determine the preliminary estimate of the bargain purchase for the purpose of preparing the pro forma condensed combined financial statements. The bargain purchase arising from the transaction may change materially from the amount presented due to a number of factors.
4(i) – Represents adjustments to equity for the fair value adjustments and the elimination of DCSC’s historical equity.
4(j) – Reflects the adjustment made to record the estimated fair value of the put option for the noncontrolling interest in DCSC and corresponding entry in additional paid in capital.
The following pro forma adjustments are included in the unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2026 and year ended December 31, 2025 to reflect the effects of the transaction:
4(k) – Reflects the pro forma adjustment to cost of products sold of $425 thousand for the estimated fair value of inventories recognized through cost of products sold during the first year after the Acquisition. These costs are non-recurring in nature and are not anticipated to affect the combined statements of operations beyond twelve months after the acquisition date.
4(l) – Reflects the estimated amortization expense related to the acquired intangible assets, which is calculated assuming a straight-line method of amortization based on the preliminary estimated fair values and useful lives presented in Note 3 The amount of amortization is based on the periods in which the associated economic benefits are expected to be recognized. Therefore, the amount following the acquisition may differ significantly between periods based upon the final values assigned and amortization methodology used for each intangible asset.
4(m) – Reflects a non-recurring adjustment to record the total estimated transaction costs of approximately $3,114 thousand incurred by the Company. Direct transaction costs are expensed as incurred and these additional transaction costs are reflected as if incurred on January 1, 2025, the date of the Acquisition is assumed to have been completed for the purposes of the unaudited pro forma condensed combined statement of operations.
4(n) – Reflects the estimated interest expense associated with the Company’s debt incurred to fund the transaction.
4(o) – Reflects the income tax adjustments for the six months ended June 30, 2026 and year ended December 31, 2025.
4(p) – Reflects the net adjustment to recognize the preliminary estimated bargain purchase gain. See Note 3 for significant estimates and assumptions used to determine the preliminary estimate of the bargain purchase for the purpose of preparing the pro forma condensed combined financial statements. The bargain purchase is recognized in earnings and this additional gain is reflected as if incurred on January 1, 2025, the date the Acquisition is assumed to have been completed for the purposes of the unaudited pro forma condensed combined statement of operations. The bargain purchase arising from the transaction may change materially from the amount presented due to a number of factors.