Business Context and Reporting Period
Company: Chicago Rivet & Machine Co. (CVR)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended December 31, 2025
Business Overview: The Company operates in the U.S. through two segments: Fastener (rivets, cold-formed fasteners, screw-machine products) and Assembly Equipment (automatic rivet-setting machines). The principal market is the North American automotive industry. The Company is a smaller reporting company with 158 employees as of year-end 2025.
Key Financial Metrics
| Metric | 2025 | 2024 |
|---|---|---|
| Net Sales | $27,890,260 | $26,986,627 |
| Gross Profit | $4,125,883 | $1,060,180 |
| Gross Margin % | 14.8% | 3.9% |
| Operating Loss | $(1,196,717) | $(5,164,054) |
| Net Loss | $(1,083,214) | $(5,615,614) |
| Net Loss Per Share (Basic/Diluted) | $(1.12) | $(5.81) |
| Cash and Cash Equivalents (Year End) | $1,718,237 | $1,922,679 |
| Working Capital | $9,894,317 | $10,371,215 |
| Debt (Line of Credit) | $500,000 | $0 |
| Net Cash Used in Operating Activities | $(1,228,018) | $(153,451) |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 3% year-over-year, driven by a 41% increase in Q4 2025 sales compared to Q4 2024. The Fastener segment saw a 4% revenue increase, while Assembly Equipment remained relatively flat.
- Profitability Improvement: The Net Loss improved significantly from $5.6 million in 2024 to $1.1 million in 2025. This was primarily due to a $3.1 million improvement in gross margin and a $562,000 reduction in selling and administrative expenses.
- Segment Performance: The Fastener segment gross margin improved from $299,740 in 2024 to $2,673,791 in 2025. The Assembly Equipment segment gross margin increased 91% to $1,452,092, aided by the consolidation of the Albia, Iowa facility into the Tyrone, Pennsylvania facility.
- Customer Concentration: Sales to the top three customers (TI Group Automotive Systems, Martinrea International, and Cooper-Standard Holdings) accounted for approximately 34% of consolidated revenues in 2025, up slightly from 35% in 2024.
- Asset Disposal: The Company sold the remaining assets and real estate of the closed Albia facility in February 2025 for net proceeds of approximately $688,000, recording a gain on the sale of property.
Guidance, Outlook, Risks, and Contingencies
Going Concern Warning
The Company has determined there is substantial doubt about its ability to continue as a going concern. This determination is based on significant recurring operating losses, recurring negative cash flows from operations, and a continued reduction in liquidity. The financial statements do not include adjustments that might be necessary if the Company cannot continue as a going concern.
Strategic Actions
To address liquidity and operational challenges, management is implementing:
- Sale of certain H&L assets (classified as "Assets held for sale" at $179,254) in the first half of 2026.
- Renewal of the revolving line of credit ($2.5 million capacity) and evaluation of other financing sources, including potential real estate sale-leaseback transactions.
- Continued focus on pricing adjustments, efficiency improvements, and diversifying the customer base away from the automotive sector.
Debt Covenants
The Company was in default of the minimum profitability covenant under its March 2025 Credit Agreement as of December 31, 2025. The lender waived this default on February 27, 2026, and the agreement was extended to August 1, 2026.
Internal Controls
A material weakness in internal control over financial reporting was identified regarding inventory controls, existing as of December 31, 2024 and 2025. Management is implementing remediation plans.
Contingencies
The Company settled a warranty claim with a customer for $1.1 million in December 2024. As of December 31, 2025, $880,000 remains accrued (split between current and long-term liabilities) for future installments.
Investor Verification Checklist
- Going Concern Status: Verify the success of the planned asset sales and the renewal of credit facilities to ensure the Company can meet its obligations in 2026.
- Inventory Valuation: Review the remediation of the material weakness in inventory controls and the adequacy of inventory reserves given the critical audit matter noted by the auditor.
- Customer Concentration: Monitor the stability of the top three customers, which represent 34% of revenue, particularly given the cyclical nature of the automotive industry.
- Covenant Compliance: Track the Company's ability to meet the minimum profitability and tangible net worth covenants under the extended credit agreement.
- Liquidity Trends: Assess the trend of negative operating cash flows and the sufficiency of current cash balances ($1.7 million) to fund operations until new financing or asset sales are realized.