Chicago Rivet & Machine (CVR) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents detailed financial statements, management's analysis, and disclosures on internal controls Financial Statements Q1 2025 financial statements reflect a net income turnaround, driven by improved margins and an asset sale, despite lower sales Condensed Consolidated Balance Sheets Total assets slightly increased to $24.1 million, driven by receivables and inventories, despite a cash decrease Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $766 | $1,923 | | Accounts receivable, net | $4,863 | $3,095 | | Inventories, net | $7,048 | $6,496 | | Total current assets | $13,137 | $12,591 | | Property, plant and equipment, net | $10,461 | $10,735 | | Total assets | $24,071 | $23,370 | | Total current liabilities | $2,406 | $2,220 | | Total liabilities | $3,667 | $3,338 | | Total shareholders' equity | $20,404 | $20,032 | Condensed Consolidated Statements of Operations Q1 2025 reported net income, reversing a prior-year loss, despite a 7.7% sales decrease Q1 2025 vs Q1 2024 Performance ($) | Metric | Q1 2025 ($) | Q1 2024 ($) | Change | | :--- | :--- | :--- | :--- | | Net sales | $7,245,635 | $7,853,181 | -7.7% | | Gross profit | $1,657,741 | $744,562 | +122.7% | | Operating income (loss) | $70,174 | ($903,303) | N/A | | Net income (loss) | $401,022 | ($698,004) | N/A | | Diluted EPS | $0.42 | ($0.72) | N/A | | Cash dividends declared per share | $0.03 | $0.10 | -70.0% | Condensed Consolidated Statements of Shareholders' Equity Shareholders' equity increased to $20.40 million, driven by net income, partially offset by dividends - Total shareholders' equity increased to $20,404,490 as of March 31, 2025, driven by net income of $401,022, less dividends of $28,984[14] Condensed Consolidated Statements of Cash Flows Q1 2025 saw increased cash used in operations, leading to a $1.16 million overall cash decrease Cash Flow Summary (Three Months Ended March 31) ($) | Activity | 2025 ($) | 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($2,010,548) | ($398,759) | | Net cash provided by investing activities | $882,498 | $399,429 | | Net cash used in financing activities | ($28,984) | ($96,613) | | Net decrease in cash | ($1,157,034) | ($95,943) | Notes to Condensed Consolidated Financial Statements Key notes detail a customer settlement, asset sale gain, new credit agreement, and going concern doubt - The company reached a settlement with a customer for $1,100,000, payable in installments over five years, to resolve a product conformity issue[32][33] - On February 25, 2025, the company sold its Albia manufacturing facility's assets and real estate for net cash proceeds of approximately $678,000, recording a gain of $339,520[57] - The company entered into a new one-year, $3 million operating credit agreement in March 2025, with no borrowings outstanding as of March 31, 2025[58] - Due to recurring operating losses, negative cash flows, and reduced liquidity, management concluded there is substantial doubt about the Company's ability to continue as a going concern[60] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2025 net income to improved margins and asset sale, addressing going concern and mitigation - Sales decreased 7.7% year-over-year, with the Fastener segment down 8.4% and Assembly Equipment sales down 3.8%[66] - Gross margins significantly improved in both the fastener segment (by $612,530) and the assembly equipment segment (by $300,649) due to revised pricing, cost reductions, and operational efficiencies[66][67] - The company acknowledges substantial doubt about its ability to continue as a going concern due to recurring losses and declining liquidity, with mitigation plans including boosting sales and utilizing a new $3 million credit line[73][63] - The 2025 outlook remains challenging, with the company focusing on efficiency improvements, price adjustments, and aggressive sales efforts to navigate market uncertainty[78] Controls and Procedures Disclosure controls were ineffective due to a persistent material weakness in inventory valuation; remediation is ongoing - The CEO and CFO concluded that disclosure controls and procedures were not effective as of the end of the reporting period[80] - A material weakness in internal control over financial reporting related to inventory valuation persists, identified as of December 31, 2023 and 2024[82] - Remediation plans are underway, focusing on timely review of accounting standards for inventory valuation and subsequent review and reconciliation of variance accounts[83] PART II. OTHER INFORMATION This section lists 10-Q exhibits, including required certifications and XBRL data files Exhibits This section lists the exhibits filed with the 10-Q report, including required certifications and XBRL data files - The report includes certifications from the CEO and CFO pursuant to Sarbanes-Oxley Act Sections 302 and 906[87] - Interactive Data Files (Inline XBRL) are included as exhibits[87]