Aspire-Lakewood Holdings, Inc 8-K/A, filed Oct 20, 2026
Aspire-Lakewood Holdings, Inc. (ASBP)
About this 8-K/A
Aspire-Lakewood Holdings, Inc filed this 8-K/A on October 20, 2026, reporting on events of August 6, 2026.
Aspire-Lakewood Holdings, Inc. closed its acquisition of Dura Driver Control Systems on August 6, 2026. The amendment adds DURA Driver Control Systems audited financial statements for 2025 and 2024 and pro forma financial information. AI summary
Items reported
- Item 1.01: Entered into a material agreement
- Item 9.01: Financial statements and exhibits
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
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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:
* 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 10.1
MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is entered into as of May 10, 2026 but will become effective upon the Effective Date (as hereinafter defined), by and between Aspire Biopharma Holdings, Inc., a Delaware corporation (the “Company”), LAKEWOOD CAPITAL, LLC, a Georgia limited liability company (“Lakewood”).
WHEREAS, subject to the terms and conditions of this Agreement, the Company desires to retain Lakewood and its personnel to provide certain management, consulting, financing and support services to it, and Lakewood desire to provide such services.
WHEREAS, prior to the Effective Date, Lakewood has been actively engaged in assisting the Company with the acquisition of the Driver Controls Systems business of Dura Automotive by the Company or its affiliates on the Effective Date (the “Dura Transaction”).
WHEREAS, this Agreement will become effective on the closing date of the Dura Transaction (the “Effective Date”).
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
1. Management Services.
(a) Lakewood agrees that, during the term of this Agreement (the “Term”), that it will, in collaboration with the Company’s board of directors (the “Board”) or the boards of directors (or similar governing bodies) of the Company and its subsidiaries and the management of the Company and its subsidiaries and affiliates, and as is mutually agreeable to the Company and Lakewood, provide interaction and support to assist in value creation for shareholders by providing the following private-equity equivalent management services (the “Management Services”):
(i) provide the Company and its subsidiaries and affiliates with consultation in connection with its operations, including, without limitation, consultation with respect to the development and implementation of strategies for improving the operating, engineering, manufacturing, marketing, and/or financial performance of the Company and its subsidiaries and affiliates;
(ii) provide the Company and its subsidiaries and affiliates with consultation pre-closing in connection with due diligence associated with and negotiation of agreements, contracts, documents, and instruments necessary to provide the Company and its subsidiaries and affiliates, if any, with financing from banks, leasing companies, or other financial institutions or other entities on terms and conditions satisfactory to the Company and its subsidiaries and affiliates;
(iii) provide the Company and its subsidiaries and affiliates, and any company that, directly or indirectly, possesses all of the outstanding equity interests in the Company with consultation pre-closing and assistance in connection with the strategy, identification, due diligence, and negotiation of the Company’s or its subsidiaries or affiliates, if any, recapitalizations, restructurings, financings, refinancings, mergers, acquisitions, consolidations, and dispositions (including, without limitation, the sale of all or a substantial portion of the assets or equity of the Company and/or any of its subsidiaries or affiliates, however structured); and
(iv) provide other services (which may include financial and strategic planning and analysis, marketing, sales, consulting services, human resources and executive recruitment services, and other services) as Lakewood and the Company or its subsidiaries or affiliates, if any, may agree upon in writing.
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(b) The parties expressly acknowledge that Lakewood is, or may be at a future date be, an investor or an affiliate of an investor directly or indirectly in the Company (the “Affiliated Investors”). Additionally, the parties acknowledge that principals of each Affiliated Investor may serve as members of the board of managers (or similar governing bodies) of the Company and/or its subsidiaries and/or affiliates. It is understood that Lakewood’ rights and obligations hereunder will be independent of the relationship between the Affiliated Investors, the Company, the Board and the respective boards of directors (or similar governing bodies) of the Company’s subsidiaries and affiliates, and that, in performing services hereunder, Lakewood (and its respective representatives) are not acting in the capacity of an equity holder of Company or any of its subsidiaries or as a member of the Board or the respective boards of directors (or managers, as applicable) of the Company’s subsidiaries or affiliates.
2. Payment of Management Fees.
(a) Prior to the Effective Date, Lakewood has been actively engaged in assisting the Company with the Dura Transaction, including assisting with many of the Management Services as more fully described in Section 1 of this Agreement. In consideration for such Management Services, upon the Effective Date, the Company will pay to Lakewood a closing fee of Five Hundred Thousand Dollars ($500,000) (the “Closing Fee”). In addition to the Closing Fee, the Company will reimburse Lakewood for all out-of-pocket expenses incurred for legal, accounting, travel, tax advice, etc. in connection with the Dura Transaction, this Agreement and the transactions contemplated hereby (“Closing Expenses”) not to exceed the aggregate sum of Two Hundred Thousand Dollars ($200,000). Lakewood shall provide the Company with documented evidence of all such Closing Expenses, and the Company will reimburse Lakewood and pay directly any Closing Expenses on the Effective Date; provided, however, that if Lakewood has any Closing Expenses that it receives after the Closing Date, then the Company will promptly pay directly any such additional Closing Expenses upon delivery of documentation of such Closing Expenses by Lakewood. Notwithstanding the foregoing, in the event that the Effective Date does not occur, the Company’s sole liability to Lakewood under Section 2 of this Agreement will be to pay or reimburse Lakewood for any documented Closing Expenses.
(b) In exchange for the Management Services provided hereunder by Lakewood, as more fully described in Section 1 of this Agreement, during the Term the Company will pay to Lakewood an aggregate annual management fee equal to Five Percent (5%) of Adjusted EBITDA with an annual cap of One Million Dollars ($1,000,000) (the “Annual Management Fee”) payable in quarterly payments as follows: (i) payments of $250,000 each quarter (except as set forth below) shall be paid for the first three quarters of each fiscal year (payable January 1, April 1 and July 1) and (ii) the final payment on October 1 shall be approved by the audit committee of the Board of Directors of the Company or a majority of the Board of Directors of the Company if no audit committee (such committee or board approver, the “Board Reviewer”) and shall be equal to the difference between (A) five percent (5%) of the Adjusted EBITDA for the prior 12 months, less (B) the $750,000 amount which has been paid for the first three quarters. For example, if 5% of the Adjusted EBITDA for such trailing 12-month period is $900,000, then the final quarterly installment payment of the Annual Management Fee shall be $150,000 (i.e., $900,000 less $750,000). The Annual Management Fee will be payable in advance on the first day of January, April, July, and October of each year during the term of this Agreement and is subject to the Company’s senior credit agreement with its lender.
(c) “Adjusted EBITDA” means, for any period, the consolidated earnings before interest, taxes, depreciation, and amortization of the Company and its subsidiaries for such period, adjusted to exclude extraordinary items, non-recurring items, and such other items as may be mutually agreed upon by the Company and Lakewood in writing.
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(d) The Closing Fee, Closing Expenses and the Annual Management Fees will be payable by the Company to Lakewood to an account as directed in writing by Lakewood to the Company.
(e) Except as provided below, all fees payable pursuant to this Agreement will be nonrefundable, absolute, irrevocable, and unconditional, will be paid without offset, defense, claim, deduction, or any other claim, and irrespective of the level, quality, or amount of service provided. Notwithstanding anything to the contrary contained in this Agreement, the Company will not be required to make any payment to Lakewood hereunder in excess of the amount permitted by the terms of the senior, subordinated, or mezzanine credit facilities applicable to the Company and its subsidiaries and affiliates, or to the extent the terms of any such facility prohibit the payment by the Company of any amount required to be paid by the Company hereunder at the time such amount is due and payable hereunder. Any payment hereunder not paid to Lakewood due to the preceding sentence will accrue (without interest thereon) and will be due and payable on the first date such payment is permitted to be paid pursuant to the terms of the applicable facility. Without in any way limiting any rights or remedies that Lakewood may have at law or in equity, except as set forth in the previous sentence or as provided in Section 15 below, all payments not made hereunder on the date on which they are due will accrue interest until paid in full at the rate of 12% per annum, compounded as of the last day of each month; provided, however, that if payments are prohibited under this Agreement as a result of covenant default by the Company under its senior credit agreement, then no such 12% per annum interest shall accrue on such unpaid payments during the period of such default prohibition. Notwithstanding the foregoing, in the event of any subsequent adjustment required by an audit restatement of EBITDA, then such adjustment (upward or downward) shall be made against future fee payments in an amount not to exceed $200,000 in any 12-month period. The Company may cause one or more of its subsidiaries or affiliates to make any payments required to be made by the Company hereunder (it being understood that the Company will determine the source for such payments based upon its good faith determination of the relevant benefits received by its subsidiaries and affiliates); provided that the Company will be responsible to ensure all such payments are made and remains liable for all obligations hereunder.
3. Term.
This Agreement will continue in full force and effect from the Effective Date for a period of five (5) years from the Effective Date; provided, however, (a) this Agreement will automatically terminate upon a Sale of the Company (as hereinafter defined), including a Sale of the Company in connection with an exercise of remedies or foreclosure by any secured creditor to the Company having a lien on and security interest in and to substantially all of the assets of the Company or a pledge of the issued and outstanding equity interests of the Company. In the event of any such termination, (x) the obligations of the Company under Section 4 below, (y) any and all accrued and unpaid obligations of the Company owed under Section 2 above (including with respect to any transaction resulting in such termination, and further including an amount equal to the portion of any unpaid Annual Management Fee that would otherwise have been payable in respect of such applicable calendar year in absence of such termination) and (z) the provisions of Sections 8 and 12 below, will survive such termination of this Agreement to the maximum extent permitted under applicable law. For purposes of this Agreement, “Sale of the Company” means a sale of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, or any transfer, whether in a single or series of related transactions, of equity with over 50% of the voting power of the Company (whether by merger, consolidation, recapitalization, transfer of equity securities, or otherwise) after the Effective Date.
4. Out of Pocket Expenses; Indemnification.
(a) Out-of-Pocket Expenses. The Company will pay all reasonable out-of-expenses, e.g., travel, hotel accommodations, entertainment, etc. pre-approved and incurred by Lakewood in respect of the Company and its subsidiaries and affiliates in connection with this Agreement and all operations hereunder. For the avoidance of doubt, all salaries, bonuses or benefits payable to Lakewood personnel shall be the sole responsibility of Lakewood. Such reimbursed expenses are limited to those incurred in connection with travel to meetings of the Board.
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(b) Indemnity and Liability. In consideration of the execution and delivery of this Agreement by Lakewood and in connection with the structuring and consummation of the Dura Transaction, the Company agrees to defend, indemnify, exonerate and hold harmless Lakewood, and each of its partners, stockholders, affiliates, directors, members, managers, officers, fiduciaries, employees and agents and each of the partners, stockholders, affiliates, directors, members, managers, officers, fiduciaries, employees and agents of each of the foregoing (collectively, the “Indemnitees”) from and against any and all actions, causes of action, claims, suits, losses, liabilities and damages, and costs and expenses in connection therewith, including, without limitation, reasonable attorneys’ fees and disbursements (collectively, the “Indemnified Liabilities”), incurred by the Indemnitees or any of them as a result of or arising out of, or in any way relating to, the structuring of the Dura Transaction or the execution, delivery, performance, enforcement, or existence of this Agreement or the transactions contemplated hereby, except for any such Indemnified Liabilities arising on account of such Indemnitee’s willful misconduct, bad faith or gross negligence and if and to the extent that the foregoing undertaking may be unenforceable for any reason, the Company (on behalf of itself and each of its subsidiaries and affiliates) agrees to make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law. None of the Indemnitees will be liable to the Company or any of its subsidiaries or affiliates for any act or omission suffered or taken by such Indemnitee that does not constitute willful misconduct, bad faith, or gross negligence as finally determined by a court of competent jurisdiction. Except as Lakewood may otherwise agree in writing after the date hereof: (i) Lakewood and its affiliates and any of their respective partners, members, employees, or agents (the “Consultant Entities”) will have the right to, and will have no duty (contractual or otherwise) not to, directly or indirectly: (A) engage in the same or similar business activities or lines of business as the Company and its subsidiaries and affiliates and (B) do business with any client or customer of the Company or its subsidiaries or any of their affiliates; (ii) Lakewood will be liable to the Company, its subsidiaries or any of their affiliates for breach of any duty (contractual or otherwise) by reason of any such activities or of such person’s participation therein; and (iii) in the event that Lakewood acquires knowledge of a potential transaction or matter that may be a corporate opportunity for the Company, its subsidiaries or any of their affiliates on the one hand, and Lakewood, on the other hand, or any other person, Lakewood will have any duty (contractual or otherwise) to communicate or present such corporate opportunity to the Company, its subsidiaries or any of their affiliates and, notwithstanding any provision of this Agreement to the contrary, will not be liable to the Company, its subsidiaries or any of their affiliates for breach of any duty (contractual or otherwise) by reason of the fact that Lakewood directly or indirectly pursues or acquires such opportunity for itself, directs such opportunity to another person, or does not present such opportunity to the Company, its subsidiaries or any of their affiliates. The indemnity rights provided to the Indemnitees in this document are cumulative with, and do not supersede, any other indemnification rights such Indemnitees would have under any other arrangement. In no event will the aggregate liability of Lakewood arising out of or relating in any way to this Agreement or the services provided hereunder exceed the aggregate amount of fees (and not expenses) paid to Lakewood or its designees hereunder.
5. Information.
(a) The Company will, and will cause each of its subsidiaries and affiliates to, furnish to Lakewood such information as Lakewood believe to be appropriate for its engagement hereunder (all such information so furnished being referred to hereinafter as the “Information”). The Company recognizes and confirms that Lakewood (i) will use and rely primarily on the Information and information available from generally recognized public sources in performing the services contemplated by this Agreement without having independently verified the same and (ii) does not assume any responsibility or other obligation for the accuracy or completeness of any Information and such other public information.
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(b) Lakewood agree (i) not to use any Information or any information derived therefrom for its own purposes, except as required in connection with its engagement hereunder, (ii) not to disclose any Information or any information derived therefrom to any person or entity, including any parent, subsidiary, or affiliate of such Lakewood, except such officers, directors, key employees or legal or financial advisors of such Lakewood (collectively, “Representatives”) who have a need to know the Information in order for Lakewood to perform its obligations hereunder and have agreed to treat such information as confidential, (iii) that such Lakewood shall be responsible for any breach of this Section 5(b) by its Representatives, and (iv) to take all necessary precautions to avoid the unauthorized disclosure or use of the Information. This Section 5(b) shall not apply to any information (a) which is or becomes known generally within the industry, except as a result of a breach of this Agreement by Lakewood or its Representatives; (b) which Lakewood can establish was in the possession of or known by Lakewood prior to its receipt from the Company; or (c) is subsequently disclosed to Lakewood by a third party that has a bona fide right to make such disclosure.
6. Assignment; Third Party Beneficiaries. Except as provided below, no party hereto will have the right to assign this Agreement. Notwithstanding the foregoing, Lakewood may assign all or part of its rights and obligations hereunder to any affiliate of such Lakewood. Each of the Indemnitees are express third-party beneficiaries of Section 4 of this Agreement, and the provisions of Section 4 for their benefit will be enforceable by them and will inure to their benefit and the benefit of their successors and assigns.
7. Amendments and Waivers. No amendment or waiver of any term, provision or condition of this Agreement will be effective, unless in writing and executed by Lakewood and the Company. No waiver on any one occasion will extend to or effect or be construed as a waiver of any right or remedy on any future occasion. No course of dealing of any person nor any delay or omission in exercising any right or remedy will constitute an amendment of this Agreement or a waiver of any right or remedy of any party hereto. All rights and remedies that any party may have at law, in equity or otherwise upon breach of any term or condition of this Agreement, will be distinct, separate and cumulative rights and remedies and no one of them, whether exercised or not, will be deemed to be in exclusion of any other right or remedy.
8. Lakewood Equity Participation. The Company will create a new subsidiary for the Dura Transaction (such subsidiary, “DCS”). DCS will be structured as a limited liability company in the State of Delaware. Upon closing of the Dura Transaction, DCS will initially be 100% owned by the Company. Lakewood will receive 15% of the equity of DCS within 10 days after the closing of the DCS Transaction that vests monthly over a two year period. If Lakewood continues to assist with and helps complete additional acquisitions/transactions in either DCS or the Company, then Lakewood shall be entitled to additional equity or carried interest participation in an amount mutually agreed upon by Lakewood and the Board.
9. Lakewood Put Option.
(a) Lakewood would have an opportunity to receive optional liquidity from DCS by receiving a staggered (tranche-based) put option (the “Put”) on its 15% of the DCS equity with a delayed start and a vesting exercise schedule as follows:
(i) No exercise of the Put may be effected during the first two years after closing of the DCS Transaction.
(ii) Then beginning after the end of Year 2, Lakewood would have the option to exercise the Put to sell up to 5% of the DCS Equity in any 12 month period thereafter subject to a 90-day notice period. The Put price would be payable in cash or Company stock, or some combination thereof, that is mutually acceptable to both Lakewood and the Board.
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(iii) The Put would also be exercisable for up to an additional 5% per year after the end of Years 3, and 4 and any subsequent years thereafter at Lakewood’s option; provided, that no Put will exceed 5% of the DCS Equity in any 12 month period.
(iv) Lakewood would have the option not to exercise the Put and wait for a change of control transaction of either DCS or the Company at which time its 15%, or applicable ownership at the time, is fully vested and the option to sell all ownership is available.
(v) Valuation of DCS in connection with exercising a Put option will be calculated by using the pro-rata share of EBITDA generated by DCS and applying the market-based EV/EBITDA multiple based on the Company’s average EV/EBITDA multiple over the past 12 months. After adjusting for debt, Lakewood will be able to exercise their Put option at a 15% discount to the implied equity value of the DCS subsidiary. In the event that there are any known or expected material changes to the future EBITDA prospects for DCS as determined by the Board Reviewer in good faith (e.g. major contract losses, etc.) (an “EBITDA Adjustment”), the Board and Lakewood will come to a mutually agreed upon valuation for DCS. In the event an EBITDA Adjustment exists and there is no mutually agreed upon valuation for a period of at least six (6) months, Lakewood would be permitted to explore strategic options for its Put without requiring Board consent.
10. Miscellaneous.
(a) Choice of Law. This Agreement will be governed by and construed in accordance with the domestic substantive laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule that would cause the application of the domestic substantive laws of any other jurisdiction.
(b) Consent to Jurisdiction. Each of the parties hereto agrees that all actions, suits, or proceedings arising out of or based upon this Agreement or the subject matter hereof will be brought and maintained exclusively in the federal and state courts located in Delaware. Each of the parties hereto by execution hereof (i) irrevocably submits to the jurisdiction of the federal and state courts located in the State of Delaware for the purpose of any action, suit, or proceeding arising out of or based upon this Agreement or the subject matter hereof and (ii) waives to the extent not prohibited by applicable law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, suit, or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that it is immune from extraterritorial injunctive relief or other injunctive relief, that its property is exempt or immune from attachment or execution, that any such action, suit, or proceeding may not be brought or maintained in one of the above-named courts, that any such action, suit, or proceeding brought or maintained in one of the above-named courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the above-named courts, should be stayed by virtue of the pendency of any other action, suit, or proceeding in any court other than one of the above-named courts, or that this Agreement or the subject matter hereof may not be enforced in or by any of the above-named courts. Each of the parties hereto hereby consents to service of process in any such suit, action or proceeding in any manner permitted by the laws of the State of Delaware, agrees that service of process by registered or certified mail, return receipt requested, at the address specified in or pursuant to Section 12 is reasonably calculated to give actual notice and waives and agrees not to assert by way of motion, as a defense or otherwise, in any such action, suit, or proceeding any claim that service of process made in accordance with Section 12 does not constitute good and sufficient service of process. The provisions of this Section 10(b) will not restrict the ability of any party to enforce in any court any judgment obtained in a federal or state court located in the State of Delaware.
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(c) Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. Each of the parties hereto acknowledges that it has been informed by the other party that the provisions of this Section 10(c) constitute a material inducement upon which such party is relying and will rely in entering into this Agreement and the transactions contemplated hereby. Either of the parties hereto may file an original counterpart or a copy of this Agreement with any court as written evidence of the consent of each of the parties hereto to the waiver of its right to trial by jury.
11. Entire Agreement. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior communication or agreement with respect thereto, and is superseded by this Agreement.
12. Notice. All notices, demands, and communications required or permitted under this Agreement will be in writing and will be effective if served upon such other party and such other party’s copied persons as specified below to the address set forth for it below (or to such other address as such party will have specified by notice to each other party) if (i) delivered personally, (ii) sent and received by facsimile or email or (iii) sent by certified or registered mail or by Federal Express, DHL, UPS, or any other comparably reputable overnight courier service, postage prepaid, to the appropriate address as follows:
If to the Company, to it at:
23150 Fashion Drive, Suite 232
Estero, Florida 33928
Attn: Kraig T. Higginson, Chief Executive Officer
Email: khigginson@aspire-biopharma.com
If to Lakewood Capital, LLC, to it at:
Lakewood Capital, LLC
2451 Cumberland Pkwy
Suite 3627
Atlanta, Georgia 30339
Attn: Gregory J. Corona
Email: greg@lakewoodcompany.com
Unless otherwise specified herein, such notices or other communications will be deemed effective, (a) on the date received, if personally delivered or sent by facsimile or email during normal business hours, (b) on the business day after being received if sent by facsimile or email other than during normal business hours, (c) one business day after being sent by Federal Express, DHL, or UPS or other comparably reputable delivery service and (d) five business days after being sent by registered or certified mail. Either of the parties hereto will be entitled to specify a different address by giving notice as aforesaid to the other party hereto.
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13. Severability. If in any judicial or arbitral proceedings a court or arbitrator will refuse to enforce any provision of this Agreement, then such unenforceable provision will be deemed eliminated from this Agreement for the purpose of such proceedings to the extent necessary to permit the remaining provisions to be enforced. To the full extent, however, that the provisions of any applicable law may be waived, they are hereby waived to the end that this Agreement be deemed to be a valid and binding agreement enforceable in accordance with its terms, and in the event that any provision hereof will be found to be invalid or unenforceable, such provision will be construed by limiting it so as to be valid and enforceable to the maximum extent consistent with and possible under applicable law.
14. Disclaimer and Limitation of Liability.
(a) Disclaimer. Lakewood makes no representations or warranties, express or implied, in respect of the services to be provided by it hereunder.
(b) Limitation of Liability. In no event will Lakewood, or any of its officers, directors, members, managers, employees, partners, affiliates, or associated entities or individuals be liable to the Company or any of its subsidiaries, or affiliates for any indirect, special, incidental, or consequential damages, including lost profits or savings, whether or not such damages are foreseeable, or for any third party claims (whether based in contract, tort or otherwise), relating to the services to be provided by Lakewood hereunder.
15. Lakewood as Independent Contractors. Lakewood and the Company (on behalf of itself and its subsidiaries) agree that Lakewood and/or its affiliates will perform services hereunder as an independent contractor, retaining control over and responsibility for its own operations and personnel. Lakewood, and Lakewood’ respective managers, members, directors, officers, or employees, will not be considered employees or agents of the Company or any of its subsidiaries as a result of this Agreement nor will any of them have authority to contract in the name of or bind the Company or any of its subsidiaries as a result of this Agreement, except as expressly agreed to in writing by the Company. The duties of Lakewood will be confined to those expressly set forth herein, and no implied duties are assumed or may be asserted against Lakewood hereunder.
16. Shared Services; Other Matters. For the avoidance of doubt, the services and fees described herein do not pertain to any additional services performed by shared executives and/or specialists employed or retained by Lakewood or any of its respective affiliates that may be requested by the Company or any of its subsidiaries or affiliates from time to time. Notwithstanding anything contained herein to the contrary, in no event will the fees and expenses payable pursuant to this Agreement be impacted by or have any impact on any fees or expenses payable to Lakewood or any affiliate thereof as a result of its or their status as a debt holder, providing, or committing to provide, debt financing, or otherwise as an arranger or agent of any debt financing (in each case, whether senior or subordinated) of the Company or any of its subsidiaries or affiliates.
17. Subordination. Notwithstanding any provision herein or in any other agreement or document to the contrary, no amounts payable pursuant to Section 2 shall be made (and no interest shall accrue under Section 2(e) on such unpaid amounts) if and to the extent such payment is prohibited under the terms of the Company’s credit facilities, as amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms by and between the Company.
18. Counterparts; Electronic Transmission. This Agreement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, each of which when so executed will be deemed to be an original and all of which together will constitute one and the same agreement. This Agreement may be executed and delivered by forms of electronic transmission, including by facsimile, PDF, or DocuSign transmission.
[Signature Page Follows]
| 8 |
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf as an instrument under seal as of the date first above written by its officer or representative thereunto duly authorized.
| THE COMPANY: | ||
| Aspire Biopharma Holdings, Inc. | ||
| By: | /s/ Kraig T. Higginson | |
| Name: | Kraig T. Higginson | |
| Title: | Chief Executive Officer | |
| LAKEWOOD: | ||
| Lakewood Capital, LLC | ||
| By: | /s/ Gregory J. Corona | |
| Name: | Gregory J. Corona | |
| Title: | Managing Partner | |
| 9 |
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
Report of Independent Registered Public Accounting Firm
To the Stakeholders and Board of Directors of
DURA Driver Control Systems:
Opinion on the Financial Statements
We have audited the accompanying combined balance sheets of DURA Driver Control Systems (the “Company”) as of December 31, 2025 and 2024, the related combined statements of operations and comprehensive (loss) income, members’ deficit, and cash flows for each of the two years ended December 31, 2025 and 2024, and the related notes (collectively referred to as the “financial statements”). In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2026.
New Haven, Connecticut
July 30, 2026
| 1 |
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 |
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 |
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 |
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 |
|
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 Driver Control Systems
Condensed Combined Financial Statements
As of June 30, 2026 and December 31, 2025
and for the Six Months Ended
June 30, 2026 and 2025
INDEX TO CONDENSED COMBINED FINANCIAL STATEMENTS
| 1 |
CONDENSED COMBINED BALANCE SHEETS
(Amounts in Thousands)
(unaudited)
| June 30, 2026 | December 31,2025 | |||||||
| (audited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 10,975 | $ | 16,567 | ||||
| Accounts receivable, net of allowance for credit losses of $2,344 and $2,464, respectively | 27,135 | 26,818 | ||||||
| Related party accounts receivable | 36,387 | 27,979 | ||||||
| Inventories | 20,512 | 21,050 | ||||||
| Prepaid expenses and other current assets | 10,118 | 12,606 | ||||||
| Total Current Assets | 105,127 | 105,020 | ||||||
| Long-term Assets: | ||||||||
| Restricted cash | 284 | 294 | ||||||
| Property, plant and equipment, net | 17,188 | 19,657 | ||||||
| Right of use operating lease assets, net | 7,964 | 9,116 | ||||||
| Deferred income tax asset, net | 4,500 | 2,990 | ||||||
| Other noncurrent assets | 2,906 | 3,440 | ||||||
| Total Long-Term Assets | 32,842 | 35,497 | ||||||
| Total Assets | $ | 137,969 | $ | 140,517 | ||||
| LIABILITIES AND MEMBERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Current maturities of long-term debt | $ | 244 | $ | 236 | ||||
| Current operating lease liability | 2,563 | 2,498 | ||||||
| Accounts payable | 21,906 | 20,621 | ||||||
| Accrued liabilities | 21,738 | 19,049 | ||||||
| Total Current Liabilities | 46,451 | 42,404 | ||||||
| Long-term Liabilities: | ||||||||
| Long-term debt, net of current maturities | 11,542 | 12,131 | ||||||
| Noncurrent operating lease liability | 6,203 | 7,308 | ||||||
| Other noncurrent liabilities | 3,120 | 3,129 | ||||||
| Total Long-Term Liabilities | 20,865 | 22,568 | ||||||
| Total Liabilities | 67,316 | 64,972 | ||||||
| Members’ Equity | 70,653 | 75,545 | ||||||
| Total Liabilities and Members’ Equity | $ | 137,969 | $ | 140,517 | ||||
The accompanying notes are an integral part of the condensed combined financial statements.
| 2 |
CONDENSED COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts in thousands)
(unaudited)
| 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 condensed combined financial statements.
| 3 |
CONDENSED COMBINED STATEMENT OF CHANGES IN MEMBERS’ EQUITY
(Amounts in thousands)
(unaudited)
| 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 condensed combined financial statements
| 4 |
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
| 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 condensed combined financial statements.
| 5 |
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
| 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. DCS is a business unit of Firefish TopCo, LLC which is a wholly owned subsidiary of Megaladon TopCo, LLC (“Megaladon”).
On June 10, 2026, FireFish TopCo, LLC, entered into a Purchase Agreement with Aspire-Lakewood Holdings, Inc. (“Aspire”) to sell the outstanding equity interests of DCS for approximately $30 million to Aspire. The transaction closed on August 6, 2026 and as a part of the sale, the Company settled certain intercompany accounts of the DCS entities and completed other closing obligations as further disclosed in the Purchase Agreement.
| 2. | Significant Accounting Policies |
Basis of Presentation
The accompanying condensed combined financial statements and disclosures of DCS have been prepared in connection with the transaction and have been derived from the combined financial statements and accounting records of Megalodon, as if DCS operated on a standalone basis during the periods presented. The condensed combined financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The following entities were included in the acquisition and the accompanying condensed 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 condensed 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 condensed 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 condensed combined financial statements. All footnotes are presented in thousands.
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 $294 as of June 30, 2026 and December 31, 2025, respectively related to certain future employee benefit related liabilities.
| 6 |
DURA DRIVER CONTROL SYSTEMS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
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 December 31, 2025, totaled $1,100 and $899, respectively, which is included in accrued liabilities on the condensed 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 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 adopted the guidance in ASC 326, Financial Instruments – Credit Losses, on January 1, 2024. ASC 326 requires entities to measure expected credit losses on financial assets not measured at fair value, including trade accounts receivable and certain debt securities, using a current expected credit loss (CECL) model. The adoption of this guidance did not have a material impact on the Company’s condensed combined 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. 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 DRIVER CONTROL SYSTEMS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
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:
June 30, 2026 | December 31, 2025 | |||||||
| Balance at January 1 | $ | 2,464 | $ | 612 | ||||
| Additions charged to expense | 52 | 574 | ||||||
| Effect of exchange rate | (172 | ) | 1,278 | |||||
| Total | $ | 2,344 | $ | 2,464 | ||||
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 condensed 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 condensed 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 June 30, 2026, and December 31, 2025, 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 CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
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 condensed combined statements of operations, of which there was none for the six months ended June 30, 2026 and 2025.
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 condensed combined balance sheet, and totaled $667 and $942 as of June 30, 2026 and December 31, 2025, respectively.
Excess of cost over billings on uncompleted tooling projects are recorded in prepaid expenses and other current assets on the condensed combined balance sheets, and totaled $725 and $587 as of June 30, 2026 and December 31, 2025, 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 June 30, 2026 and December 31, 2025.
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 condensed 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 CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
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. The adoption of this guidance did not have a material impact on the Company’s condensed combined financial statements.
| 3. | Prepaid Expenses and Other Current Assets |
Prepaid expenses and other current assets consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Taxes | $ | 3,233 | $ | 4,488 | ||||
| Other prepaid expenses | 3,159 | 3,681 | ||||||
| Prepaid insurance | 1,174 | 2,115 | ||||||
| Supplies | 1,008 | 891 | ||||||
| Deposits | 819 | 844 | ||||||
| Tooling | 725 | 587 | ||||||
| Prepaid expenses and other current assets | $ | 10,118 | $ | 12,606 | ||||
| 4. | Property, Plant, and Equipment, net |
Property, plant, and equipment consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Land and buildings | $ | 17,857 | $ | 18,261 | ||||
| Machinery and equipment (1) | 23,015 | 23,945 | ||||||
| Construction in progress | — | 276 | ||||||
| Less — Accumulated depreciation and amortization | (23,634 | ) | (22,825 | ) | ||||
| Property, plant and equipment, net | $ | 17,188 | $ | 19,657 | ||||
| (1) | Machinery and equipment includes Company-owned tooling of $100 as of June 30, 2026 and December 31, 2025, respectively. |
Depreciation expense totaled $2,100 and $2,000 for the six months ended June 30, 2026 and June 30, 2025, respectively.
| 10 |
DURA DRIVER CONTROL SYSTEMS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
| 5. | Inventories |
Inventories consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Raw Materials | $ | 14,198 | $ | 14,209 | ||||
| Work-in-process | 3,106 | 3,221 | ||||||
| Finished goods | 3,208 | 3,620 | ||||||
| Inventories | $ | 20,512 | $ | 21,050 | ||||
The above amounts are shown net of cumulative inventory lower of cost or net realizable value adjustments of $5,700 and $6,100 as of June 30, 2026 and December 31, 2025, respectively.
| 6. | Accrued liabilities |
Accrued liabilities consisted of the following:
| June 30, 2026 | December 31, 2025 | |||||||
| Accrued compensation | $ | 11,208 | $ | 10,179 | ||||
| Accrued taxes | 3,537 | 2,806 | ||||||
| Other | 2,051 | — | ||||||
| Customer price downs | 1,417 | 2,484 | ||||||
| Warranty reserve | 1,090 | 899 | ||||||
| Litigation reserve | 1,087 | 824 | ||||||
| Accrued professional fees | 681 | 915 | ||||||
| Deferred revenue | 667 | 942 | ||||||
| Accrued liabilities | $ | 21,738 | $ | 19,049 | ||||
| 7. | Debt |
The Company has long-term debt related to two failed sale-leaseback transactions as of June 30, 2026 and December 31, 2025. The Company sold buildings to a third-party under sale-leaseback arrangements. Since these transactions did not meet the criteria for sale-leaseback accounting treatment, they are presented as debt in the accompanying condensed combined balance sheets. These financing transactions contain monthly and quarterly payments ranging from $100 to $200. 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 (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 DRIVER CONTROL SYSTEMS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
| 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 condensed 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 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 | December 31, 2025 | |||||||
| Operating leases | ||||||||
| Right-of- use operating assets | $ | 7,964 | $ | 9,116 | ||||
| Operating lease liability, current | $ | 2,563 | $ | 2,498 | ||||
| Operating lease liability, non-current | 6,203 | 7,308 | ||||||
| Total operating leases | $ | 8,766 | $ | 9,806 | ||||
The weighted-average remaining lease term and weighted-average discount rate were as follows:
| June 30, 2026 | December 31, 2025 | |||||||
| Weighted-average operating lease term | 10.26 years | 9.81 years | ||||||
| Weighted-average discount rate –operating leases | 8.06 | % | 8.06 | % | ||||
| 12 |
DURA DRIVER CONTROL SYSTEMS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
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 $1,090 and $899 as of June 30, 2026 and December 31, 2025, respectively. The warranty accrual is included in accrued liabilities on the accompanying condensed combined balance sheets as of June 30, 2026 and December 31, 2025.
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 December 31, 2025.
| 13 |
DURA DRIVER CONTROL SYSTEMS
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(unaudited)
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 condensed 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 $1,087 and $824 as of June 30, 2026 and December 31, 2025, respectively. The litigation reserve is included in accrued liabilities on the condensed combined balance sheets as of June 30, 2026 and December 31, 2025.
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 | December 31, 2025 | |||||||
| Europe | $ | 47,970 | $ | 142,6354 | ||||
| Asia | 16,836 | 27,061 | ||||||
| Total foreign operations | $ | 64,806 | $ | 169,696 | ||||
| 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 December 31, 2025, the Company had accounts receivable from related parties totaling $36,387 and $27,979, respectively. Balances are related to daily operational activity. The balance has been presented as a current asset on the condensed consolidated balance sheets as the balance is expected to be settled within the next year.
Contribution to Parent
At June 30, 2026 and December 31, 2025, the Company had accounts payable to the parent totaling $10,465 and $35,405, respectively. Balances are related to the parent’s cash management and financing strategies. The balance has been included in equity, as the parent does not expect repayment, as this liability will be forgiven.
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 condensed 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 October 20, 2026, the date the condensed 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 August 6, 2026, Aspire acquired 100% of the DCS business unit of Firefish TopCo, LLC, which is a wholly owned subsidiary of Megalodon. Prior to the transaction, DCS was included in the combined financial statements of Megalodon. The transaction will be accounted for as a business combination. The primary reason for the transaction was to expand into new markets. The total purchase price was approximately $30 million which was funded with cash. As of the date the condensed combined financial statements were available to be issued, the fair value of assets acquired and liabilities assumed has not been determined.
The transaction occurred subsequent to the balance sheet date, and therefore, the accompanying condensed combined financial statements do not reflect the impact of the sale. As of the date the condensed combined financial statements were available to be issued, the Company is still evaluating the final financial statement impact, including the determination of any gain or loss on sale.
| 14 |
Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
On August 6, 2026, Aspire-Lakewood Holdings, Inc. (“Aspire” or the “Company”) acquired 100% of Dura Driver Control Systems (“DCS”), a business unit of Firefish TopCo, LLC, which is a wholly owned subsidiary of MegalodonTopCo, LLC. Prior to the transaction, DCS was included in the combined financial statements of MegalodonTopCo, LLC (“Megalodon”).The transaction has been accounted for as a business combination. The total purchase price was approximately $30 million which was funded with cash.
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 Aspire’s accounting policies.
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 condensed combined financial statements as of and for the six months ended June 30, 2026 and the related notes, which are included as exhibits to the Company’s Current Report on this Form 8-K/A as Exhibit 99.2. |
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
| ● | 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. |
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 the Seller on August 6, 2026.
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 as well as the predecessor primarily due to the following: (i) having its board and managers directing the activities of the newly merged entity; (ii) the acquisition was initiated by Aspire an existing registrant and the Company has retained the Aspire name subsequent to the acquisition; and (iii) it paid cash and issued no equity to the Seller and, therefore, is the primary beneficiary of the DCS business. Aspire’s financial statements remain the historical financial statements of the Company and DCS’s results are consolidated only from the acquisition date. DCS’s financial statements are furnished as those of a business acquired under Rule 3-05. DCS assets acquired, and liabilities assumed in connection with the acquisition are recorded at their acquisition date fair values. The preliminary allocation of the estimated purchase price is based on management’s estimates utilizing information currently available and is subject to revision as additional information about the fair value of the assets and liabilities becomes available and final appraisals and detailed analyses are completed. The Company is still evaluating the fair value of intangible assets, property, plant and equipment and other equity related items, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded. Differences between these preliminary estimates and the final purchase price allocation could occur, and these differences may be material. A change in the fair value of the net assets of DCS may change the amount of the purchase price allocable to goodwill, and could have a material impact on the accompanying unaudited pro forma condensed combined financial statements.
Other Transactions
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 Drivers Control Systems (“DCS”) 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.
As part of the closing of the transaction the Company paid $610,000, which has been included in the transaction costs adjustments (4(m)) in the unaudited pro forma condensed combined statements of operations.
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. The annual management fees represent consideration for ongoing consulting and management services and will be recognized as expense over the periods in which those services are provided. Quarterly amounts paid in advance will be recorded as a prepaid expense until the applicable services period occurs, with the fourth quarter true-up recognized based on the contractual 5% of Adjusted EBITDA formula subject to the $1.0 million annual cap. For purposes of the pro forma financial statements the Company has recorded the annual management fees assuming the $1.0 million annual cap is reached.
In addition, Lakewood will receive 15% of the equity of DCS within 10 days upon the closing of the DCS 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 DCS by receiving a staggered (tranche-based) put option on its 15% of the DCS 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 DCS 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 DCS equity. Valuation of DCS in connection with exercising a put option will be calculated by using a pro-rata share of EBITDA generated by DCS 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 DCS subsidiary.
The DCS equity interest granted to Lakewood represents non-employee share-based compensation for services under ASC 718. Compensation cost will be measured at the grant-date fair value of the 15% interest and will be recognized over the two year service period with a corresponding increase to equity attributable to the noncontrolling interest in DSC LLC. As the non-controlling interest has a redemption feature outside the Control of the Company it will be presented as a redeemable noncontrolling interest in temporary equity.
Separately the put option constitutes a freestanding financial instrument that embodies a conditional obligation to repurchase an equity interest in DCS. Further, settlement of the put option may occur through cash, Company stock or a combination thereof, and the Company does not possess an explicit unilateral contractual right to require settlement solely through the issuance of its own equity. Accordingly, because the put option may require settlement through a transfer of assets, the put option will be accounted for as a liability under ASC 480. The liability will be recognized at fair value and subsequently remeasured at each reporting period with changes to the fair value being recorded in the statement of operations.
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) | 2,332 | |||||||||||||
| Prepaid expenses and other current assets | 1,010 | 10,118 | — | 11,128 | ||||||||||||||
| Total current assets | 13,466 | 105,127 | (47,796 | ) | 70,797 | |||||||||||||
| 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 income tax asset, net | — | 4,500 | — | 4,500 | ||||||||||||||
| Deferred financing costs | 75 | — | — | 75 | ||||||||||||||
| Other noncurrent assets | — | 2,906 | — | 2,906 | ||||||||||||||
| Total assets | $ | 13,541 | $ | 137,969 | $ | (2,981 | ) | $ | 148,529 | |||||||||
| 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) | 11,790 | ||||||||||||||
| 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 | 67,316 | 34,083 | 103,182 | ||||||||||||||
| Redeemable non-controlling interest in DCSC | — | — | — | 4(u) | — | |||||||||||||
| Stockholders’ equity (deficit): | ||||||||||||||||||
| Additional paid-in capital | 43,507 | — | (400 | ) | 4(j) | 43,107 | ||||||||||||
| Accumulated (deficit) earnings | (31,749 | ) | — | 37,103 | 4(h) | 2,240 | ||||||||||||
| — | — | (3,114 | ) | 4(b) | — | |||||||||||||
| Accumulated other comprehensive income | — | (28,153 | ) | 28,153 | 4(c) | — | ||||||||||||
| Members’ equity | — | 98,806 | (36,387 | ) | 4(c) | — | ||||||||||||
| — | — | 33,556 | 4(i) | — | ||||||||||||||
| — | — | (95,975 | ) | 4(i) | — | |||||||||||||
| Total stockholders’ equity (deficit) | 11,758 | 70,653 | (37,064 | ) | 45,347 | |||||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 13,541 | $ | 137,969 | $ | (2,981 | ) | $ | 148,529 | |||||||||
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), 4(p) | (176,168 | ) | |||||||||
| Gross profit | — | 33,115 | (425 | ) | 32,690 | |||||||||||||
| Operating expenses: | ||||||||||||||||||
| General and administrative | 17,637 | 12,137 | 7,890 | 4(1), 4(p), | 37,664 | |||||||||||||
| Research and development | 924 | — | — | 4(s), 4(t) | 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 | 11,004 | 49,579 | ||||||||||||||
| (Loss) income from operations | (19,351 | ) | 13,891 | (11,429 | ) | (16,889 | ) | |||||||||||
| 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 | 24,157 | 23,494 | |||||||||||||
| Income tax expense | — | (14,035 | ) | 2,131 | 4(o) | (11,904 | ) | |||||||||||
| Net (loss) income | (24,480 | ) | 9,782 | 26,288 | 11,590 | |||||||||||||
| Less: net income attributable to noncontrolling interest | — | — | 376 | 4(q) | 376 | |||||||||||||
| Net (loss) income attributable to Aspire-Lakewood Holdings, Inc. | $ | (24,480 | ) | $ | 9,782 | $ | 25,912 | $ | 11,214 | |||||||||
| Other comprehensive income (loss) | ||||||||||||||||||
| Net (loss) income | $ | (24,480 | ) | $ | 9,782 | $ | 26,288 | $ | 11,590 | |||||||||
| Foreign currency translation adjustment | — | 1,207 | — | 1,207 | ||||||||||||||
| Comprehensive (loss) income | (24,480 | ) | 10,989 | 26,288 | 12,797 | |||||||||||||
| Less: comprehensive income attributable to noncontrolling interest | — | — | 557 | 4(q) | 557 | |||||||||||||
| Comprehensive (loss) income attributable to Aspire-Lakewood Holdings, Inc. | $ | (24,480 | ) | $ | 10,989 | $ | 25,731 | $ | 12,240 | |||||||||
| Net (loss) income per common share – basic | $ | (16.38 | ) | 4(r) | $ | 7.50 | ||||||||||||
| Net (loss) income per common share – diluted | $ | (16.38 | ) | 4(r) | $ | 6.90 | ||||||||||||
| 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 | 3,945 | 4(l), 4(q), | 11,563 | |||||||||||||
| Research and development | 530 | — | — | (4(s), 4(t) | 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 | 3,945 | 18,464 | ||||||||||||||
| (Loss) income from operations | (4,324 | ) | 1,651 | (3,912 | ) | (6,585 | ) | |||||||||||
| 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 | ) | (4,704 | ) | (9,956 | ) | ||||||||||
| Income tax expense | — | 67 | 597 | 4(o) | 664 | |||||||||||||
| Net loss | (4,491 | ) | (727 | ) | (4,107 | ) | (9,292 | ) | ||||||||||
| Less: net loss attributable to noncontrolling interest | — | — | (627 | ) | 4(q) | (627 | ) | |||||||||||
| Net loss attributable to Aspire-Lakewood Holding, Inc. | $ | (4,491 | ) | $ | (727 | ) | $ | (3,447 | ) | $ | (8,665 | ) | ||||||
| Other Comprehensive income (loss) | ||||||||||||||||||
| Net loss | $ | (4,491 | ) | $ | (727 | ) | $ | (4,074 | ) | $ | (9,292 | ) | ||||||
| Foreign currency translation adjustment | — | (902 | ) | — | (902 | ) | ||||||||||||
| Comprehensive loss | (4,491 | ) | (1,629 | ) | (4,074 | ) | (10,194 | ) | ||||||||||
| Less: comprehensive loss attributable to noncontrolling interest | — | — | (763 | ) | 4(q) | (763 | ) | |||||||||||
| Comprehensive loss attributable to Aspire-Lakewood Holdings, Inc. | $ | (4,491 | ) | $ | (1,629 | ) | $ | (3,311 | ) | $ | (9,431 | ) | ||||||
| Net loss per common share – basic and diluted | $ | (7.49 | ) | 4(r) | $ | (14.45 | ) | |||||||||||
| 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.
4(q) – Reflects the pro forma adjustment for the accounting for the noncontrolling interest related to the 15% Lakewood Capital, LLC equity interest in DCSC (10 days following the close of the acquisition, Lakewood Capital LLC received a 15% equity participation in DCSC per the Management Services Agreement)
4(r) – Reflects the pro forma basic and diluted (loss) earnings per share as calculated on the net income (loss) total of the pro forma total combined column operations which includes the effect of the Transaction adjustments on the pro forma condensed combined statement of operations.
4(s) Reflects the Lakewood estimated annual management fee based on the contractual 5% of Adjusted EBITDA formula subject to the $1.0 million annual cap per the management services agreement.
4(t) Reflects the vesting of the DCS equity interest in accordance with ASC 718 which was measured at the grant-date fair value of the 15% interest and is recognized over the two-year service period. The grant date fair value was estimated based off of a DCS enterprise fair value at acquisition date.
4(u) Reflects the accounting for the noncontrolling interest in DCSC in temporary equity.