Aspire-Lakewood(ASBP)补交8-K/A：仅追加8月已完成收购的DCS历史财报、pro forma与管理服务协议，无新增交易事实

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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K/A
(Amendment
No. 1)
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of Report (Date of earliest event reported):
August 6, 2026
Aspire-Lakewood
Holdings, Inc.
(Exact
name of registrant as specified in its charter)
Delaware
001-41293
33-3467744
(State
or other jurisdiction
of
incorporation)
(Commission
File
Number)
(I.R.S.
Employer
Identification
No.)
23150
Fashion Drive
,
Suite 232
Estero
,
Florida
33928
(Address
of principal executive offices)
(
908
)
987-3002
(
Registrant’s telephone number)
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
Trading
Symbol(s)
Name
of each exchange on which registered
Common
Stock, $0.0001 par value per share
ASBP
The
Nasdaq Stock Market LLC
Warrants,
each exercisable for one share of common stock
ASBPW
The
Nasdaq Stock Market LLC
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company
☒
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Explanatory
Note
On
August 6, 2026, Aspire-Lakewood Holding, Inc. (the “Company”) announced it had closed the acquisition
(the “Acquisition”) of Dura Driver Control Systems (“DCS”) pursuant to the terms
of a Purchase Agreement entered into on June 10, 2026, between the Company and FireFish TopCo, LLC (the “Seller”).
Pursuant to the Purchase Agreement the Company agreed to purchase all of the equity interests in certain of the Sellers subsidiaries
(collectively, “the Transferred Equity Interest” or “DCS”) as previously reported on the Company’s
Current Report on Form 8-K filed on June 12, 2026, with the SEC.
The
Company filed a Current Report on Form 8-K on August 10, 2026, (the “Initial Report”) in which the Company disclosed
it had entered into an Escrow and Closing Agreement acknowledging that the closing conditions of the Purchase Agreement had been satisfied. This Current Report on Form 8-K/A amends the Initial
Report to include certain financial statements of DCS and certain pro forma financial information as required by Item 9.01, which are
filed as exhibits hereto, and are incorporated herein by reference. This amendment also includes a Management Service Agreement by and
among the Company and Lakewood Capital, LLC as required by Item 1.01 as previously disclosed in the Company’s Quarterly
Report on Form 10-Q filed with the SEC on August 13, 2026. No other changes have been made to the Initial Report except as set
forth in this amendment
Item
1.01 Entry into a Material Definitive Agreement
Management
Services Agreement
A
Management Services Agreement (the “Agreement”) was entered into on May 10, 2026, between the Company and Lakewood Capital,
LLC (“Lakewood”) becoming effective on the closing date of the acquisition of the Dura Control Systems Corp.
(“DCSC”) August 6, 2026, (the “Effective Date”) The term of the Agreement is for a period of five years
from the Effective Date.
The
Management Services to be provided during the term of the Agreement include consultation in connection to the DCSC operations
with respect to the development and implementation of strategies for improving operating, engineering, manufacturing, marketing, and/or
financial performance of the Company, its subsidiaries or affiliates. In consideration of the Management Services, the Company will pay
Lakewood a closing fee of $500,000 and reimbursement of out-of-pocket expenses not to exceed $200,000 in connection with closing the
Dura Transaction. Additionally, the Company will pay Lakewood an aggregate annual management fee equal to 5% of Adjusted EBITDA which
means for any period, consolidated earnings before interest, taxes, depreciation, and amortization adjusted to exclude extraordinary
items, non-recurring items and other agreed upon items, with an annual cap of $1,000,000 ( the “Annual Management Fee”) with
quarterly payments of $250,000 paid (January 1, April 1 and July 1) with final payment on October 1 to be approved by the audit committee
of the Board of Directors equal to the difference between 5% Adjusted EBITDA and the $750,000 already paid.
In
addition, Lakewood will receive 15% of the equity of DCSC within 10 days upon the closing of the DCSC Transaction, that
vests monthly over a two-year period which is currently estimated at approximately $4,500,000 based on the purchase price of $30,000,000.
Lakewood also has the opportunity to receive additional liquidity for DCSC by receiving a staggered (tranche-based) put option
on its 15% of the DCSC equity. No exercise of the put may be effected during the first two years after the closing of the Dura
Transaction. After the end of year two, Lakewood has the option to sell up to 5% of the DCSC equity in any twelve month period
subject to a ninety day notice. The put would be payable in cash or Company stock or a combination thereof that would be mutually acceptable
to both Lakewood and the Board. The same terms would be applicable to each subsequent year as long as no put exceeds 5% of DCSC
equity. Valuation of DCSC in connection with exercising a put option will be calculated by using a pro-rata share of EBITDA generated
by DCSC adjusted for certain market adjustments. After adjusting for debt, Lakewood would be able to exercise their put option
at a 15% discount to the implied equity value of the DCSC subsidiary.
Item
9.01 Financial Statements and Exhibits.
(a)
Financial statements of businesses acquired.
The
audited combined financial statements of DCSC as of and for the years ended December 31, 2025 and 2024, are filed as Exhibit 99.1 to
this Current Report on Form 8-K/A and incorporated herein by reference.
The
unaudited condensed combined financial statements of DCSC as of June 30, 2026, and December 31, 2025, and for the
six months ended June 30, 2026 and 2025, are filed as Exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein
by reference.
(b)
Pro forma financial information.
The
unaudited pro forma condensed combined financial information of Aspire-Lakewood Holdings, Inc. giving effect to the Acquisition, which
includes the unaudited pro forma condensed combined balance sheet as of June 30, 2026, and the unaudited pro forma condensed combined
statements of operation for the year ended December 31, 2025, and for the six months ended June 30, 2026, is filed as Exhibit
99.3 to this Current Report on Form 8-K/A and incorporated herein by reference.
The
unaudited pro forma financial information included in this Current Report on Form 8-K/A has been presented for informational
purposes only, as required by the disclosure requirements of Form 8-K, and is not necessarily indicative of the actual financial
position or results of operations that the Company would have realized had the companies been combined as of the dates or during the
periods presented, nor is it intended to be indicative of any anticipated combined financial position or future results of
operations that the Company may achieve after the Acquisition.
(d)
Exhibits.
The
following exhibits are included as part of this Current Report on Form 8-K:
Exhibit
Number
Exhibits
10.1*
Management
Service Contract dated August 6, 2026, by and among Aspire-Lakewood, Holding Inc. and Lakewood Capital, LLC
99.1*
DCSC
audited combined financial statements as of and for the years ended December 31, 2025 and 2024, and related notes
99.2*
DCSC unaudited condensed combined financial statements as of June 30, 2026 and December 31, 2025 and for the six months ended June 30, 2026 and 2025 and related notes
99.3*
The
unaudited pro forma condensed combined financial information of Aspire-Lakewood Holdings, Inc. given the effect to the acquisition
of which includes the unaudited pro forma condensed combined balance sheet as of June 30, 2026, and the unaudited pro forma
condensed combined statements of operations for the year ended December 31, 2025, and the six months ended June 30, 2026.
104
Cover
Page Interactive Data File (embedded within the Inline XBRL document).
*
Filed herewith.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date:
October 20, 2026
Aspire-Lakewood
Holdings, Inc.
By:
/s/
Ernest Scheidemann
Name:
Ernest
Scheidemann

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EX-10.1
2
ex10-1.htm
EX-10.1
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.
1
(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.
2
(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.
3
(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.
4
(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.
5
(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.
6
(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.
7
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

----- ex99-1.htm -----
EX-99.1
3
ex99-1.htm
EX-99.1
Exhibit
99.1
DURA
Driver Control Systems
Combined
Financial Statements
As
of and for the Years Ended
December
31, 2025 and 2024
INDEX
TO COMBINED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
1
Combined Balance Sheets as of December 31, 2025 and 2024
2
Combined Statements of Operations and Comprehensive Income for the years ended December 31, 2025 and 2024
3
Combined Statements of Changes In Members’ Equity for the years ended December 31, 2025 and 2024
4
Combined Statements of Cash Flows for the years ended December 31, 2025 and 2024
5
Notes to Combined Financial Statements
6
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
DURA
DRIVER CONTROL SYSTEMS
COMBINED
BALANCE SHEETS
(Amounts
in Thousands)
December
31, 2025
December
31, 2024
ASSETS
Current Assets:
Cash and cash
equivalents
$
16,567
$
9,833
Accounts receivable, net
of allowance for credit losses of $2,464 and $612, respectively
26,818
34,125
Related party accounts
receivable
27,979
27,076
Inventories
21,050
21,870
Prepaids
and other current assets
12,606
13,429
Total
Current Assets
105,020
106,333
Long-term Assets:
Restricted cash
294
1,052
Property, plant and equipment,
net
19,657
20,454
Right of use operating
lease assets, net
9,116
11,345
Deferred income tax asset,
net
2,990
11,968
Other
noncurrent assets
3,440
1,873
Total
Long-Term Assets
35,497
46,692
Total
Assets
$
140,517
$
153,025
LIABILITIES AND MEMBERS’
EQUITY
Current Liabilities:
Current maturities of long-term
debt
$
236
$
2,262
Current operating lease
liability
2,498
2,354
Accounts payable
20,621
25,760
Accrued
liabilities
19,049
48,133
Total Current Liabilities
42,404
78,509
Long-term Liabilities:
Long-term debt, net of
current maturities
12,131
10,927
Noncurrent operating lease
liability
7,308
9,461
Other
noncurrent liabilities
3,129
3,328
Total Long-Term Liabilities
22,568
23,716
Total
Liabilities
64,972
102,225
Members’
Equity
75,545
50,800
Total
Liabilities and Members’ Equity
$
140,517
$
153,025
The
accompanying notes are an integral part of the combined financial statements.
2
DURA
DRIVER CONTROL SYSTEMS
COMBINED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Amounts
in thousands)
For the Year
Ended
For the Year
Ended
December
31, 2025
December
31, 2024
Revenues
$
208,852
$
205,397
Cost of sales
(175,737
)
(186,839
)
Gross profit
33,115
18,558
Selling, general and administrative expenses
(12,137
)
(15,732
)
Facility consolidation, asset impairment, and
other charges
(4,910
)
(5,109
)
Restructuring costs
(2,177
)
40
Income (loss) from operations
13,891
(2,243
)
Other income (expense)
Interest expense, net
(3,255
)
(3,000
)
Foreign currency transaction (losses) gains
(4,521
)
4,886
Other income
17,702
31,123
Total
other income
9,926
33,009
Income from operations
before income taxes
23,817
30,766
Income tax expense
(14,035
)
(7,950
)
Net income
$
9,782
$
22,816
Foreign currency translation
adjustment
1,207
(12,907
)
Comprehensive income
$
10,989
$
9,909
The
accompanying notes are an integral part of the combined financial statements.
3
DURA
DRIVER CONTROL SYSTEMS
COMBINED
STATEMENT OF CHANGES IN MEMBERS’ EQUITY
(Amounts
in thousands)
Other
Members’
Comprehensive
Total
Equity
Loss
Equity
Beginning Balance, January 1,
2024
$
83,148
$
(15,551
)
$
67,597
Net income
22,816
-
22,816
Contribution from Parent
16,990
-
16,990
Foreign exchange translation changes in equity
(43,696
)
-
(43,696
)
Other comprehensive loss
-
(12,907
)
(12,907
)
Balance, December 31, 2024
79,258
(28,458
)
50,800
Net income
9,782
-
9,782
Contribution from Parent
14,710
-
14,710
Foreign exchange translation changes in equity
(954
)
-
(954
)
Other comprehensive income
—
1,207
1,207
Balance, December 31,
2025
$
102,796
$
(27,251
)
$
75,545
The
accompanying notes are an integral part of the combined financial statements
4
DURA
DRIVER CONTROL SYSTEMS
COMBINED
STATEMENTS OF CASH FLOWS
(Amounts
in thousands)
For the Year
Ended
For the Year
Ended
December
31, 2025
December
31, 2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
9,782
$
22,816
Adjustments required to reconcile net income
to net cash used in operating activities:
Depreciation and amortization
4,223
4,474
Provision for allowance
for credit losses
574
208
Non-cash restructuring
2,177
(40
)
Non-cash interest expense
508
454
Amortization of right of
use assets
2,229
2,476
Deferred income tax expense
8,978
(788
)
Change in other operating
items:
Accounts receivable
6,733
(2,912
)
Related party accounts
receivable
(903
)
(13,664
)
Inventories
820
1,836
Prepaids and other current
assets
823
3,904
Accounts payable
(5,139
)
(13,412
)
Accrued liabilities
(31,261
)
17,507
Operating lease liability
(2,009
)
(2,391
)
Other
assets and liabilities, net
55
(37,658
)
Net
cash used in operating activities
(2,410
)
(17,190
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital
expenditures
(3,426
)
(2,054
)
Net
cash used in investing activities
(3,426
)
(2,054
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution from Parent
14,710
16,990
Payments
on financing arrangements
(1,330
)
(2,825
)
Net
cash provided by financing activities
13,380
14,165
EFFECT OF EXCHANGE RATE
CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
(1,568
)
7,827
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH:
5,976
2,748
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH:
Beginning
10,885
8,137
Ending cash and cash equivalents
16,567
9,833
Ending restricted cash
294
1,052
Ending
$
16,861
$
10,885
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
$
3,255
$
3,000
Cash paid for income taxes
$
4,529
$
5,909
The
accompanying notes are an integral part of the combined financial statements.
5
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
1.
Organization
and Description of Business
DURA
Driver Control Systems (“DCS” or “the Company”), and its subsidiaries are a global mobility systems supplier
specializing in the design, engineering, and manufacturing of solutions that drive the evolution of mobility. Aspire Biopharma Holdings,
Inc. (Aspire) announced on April 16, 2026, that it has entered a letter of intent to acquire 100% of the Dura Driver Control Systems
(DCS) business unit of Firefish Topco, LLC, which is a wholly owned subsidiary of Megalodon TopCo, LLC. Prior to the transaction, DCS
was included in the combined financial statements of Megalodon TopCo, LLC (“Megalodon”).
2.
Significant
Accounting Policies
Basis
of Presentation
The
accompanying combined financial statements and disclosures of DCS have been prepared in connection with the expected transaction and
have been derived from the combined financial statements and accounting records of Megalodon TopCo, LLC (the “Parent”), as
if DCS operated on a standalone basis during the periods presented, and were prepared in accordance with the accounting principles generally
accepted in the United States of America (GAAP). The following entities are included in the purchase agreement and the accompanying combined
financial statements:
●
Dura
de Mexico SA de CV
●
Dura
Automotive Systems GmbH
●
Dura
Automotive Portuguesa Industria De Componentes
●
Dura
Automotive Romania Srl
●
Dura
Automotive Systems SAS and its wholly owned subsidiary Duratronics GmbH
●
Dura
Automotive Components Trading (Shanghai) Co., Ltd.
●
Dura Ganziang Automotive
Systems (Shanghai) Co., Ltd.
●
Dura
Auto Systems India Private Limited
●
Dura
Automotive Services India Private Limited
●
DUS
Operating, Inc.
●
Dura
Automotive Systems CZ, s.r.o.
The
Company eliminates all intercompany balances and transactions.
The
Company has historically operated and reported as a part of Megalodon and not as a stand-alone Company. Financial statements representing
the historical operations of the Company’s business have been derived from Megalodon’s historical accounting records and
are presented on a carve-out basis. All revenue and costs, as well as assets and liabilities, directly associated with the business activity
of the Company are included in the financial statements. The combined financial statements also include allocations of certain expenses
such as shared services expenses, accounting and finance and information technology from Megalodon. However, amounts recognized by the
Company are not necessarily representative of the amounts that would have been reflected in the combined financial statements had the
Company operated independently of Megalodon.
The
Company is dependent upon Megalodon for all of its working capital and financing requirements, as Megalodon uses a centralized approach
to cash management and financing of its operations. Financial transactions relating to the Company are accounted for through the related
party payable. All significant transactions between the Company and Megalodon have been included in the accompanying combined financial
statements.
Cash,
Cash Equivalents and Restricted Cash
Cash
and cash equivalents consist of highly liquid investments which include money market instruments with original maturities of three months
or less and are stated at cost, which approximates fair value. Cash balances may be more than the amounts insured by the Federal Deposit
Insurance Corporation, or the foreign equivalent. The Company also had restricted cash of $0.3 million and $1 million as of December
31, 2025 and 2024, respectively related to certain future employee benefit related liabilities.
6
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Revenue
Recognition and Sales Commitments
The
Company recognizes revenue, utilizing the five-step framework of ASC 606, when performance obligations to manufacture and supply these
products at the point in time that the customer obtains control of the products. Contract terms do not unilaterally include cancellation
provisions that would result in an enforceable right to payment for performance completed to date and as a result, revenue is recognized
at a point in time. The customer typically obtains control of the products upon shipment in accordance with purchase orders and delivery
releases issued by the customer.
The
Company utilizes several factors when determining whether control has transferred, including whether the Company has a present
right
to payment for the product, the customer has legal title to the product, the Company has transferred physical possession of the
product, the customer has the significant risks and rewards of owning the product, and the customer has accepted the product.
Contracts
with customers generally state the terms of the sale, including the quantity and price of each product purchased. Trade accounts receivable
from the Company’s customers are generally due approximately 60 days from the date the Company’s customers receive the product.
Contracts typically do not contain variable consideration as the contracts include stated prices. The Company provides warranties that
the product will conform to stated specifications, which are not separate performance obligations. Total warranty accrual as of December
31, 2025 and 2024 is $899 and $926, respectively, which is included in accrued liabilities on the combined financial statements. The
Company excludes sales and other taxes from the transaction price of the contracts with customers. The Company has adopted the practical
expedient to treat shipping and handling costs as a cost to fulfill the contract. Because contracts with customers usually only contain
one performance obligation that is satisfied at a point in time, there are no satisfied performance obligations that would result in
contract assets other than trade accounts receivable.
Revenues
recognized from contracts with customers, disaggregated by geographical location, are presented in the following table for the years
ended December 31, 2025 and 2024 (in thousands). Revenues are attributed to regions based on the location of the customer.
For the year
ended
For the year
ended
December
31, 2025
December
31, 2024
North America
$
79,010
$
79,889
Europe
107,750
103,144
Asia
22,092
22,364
Total
$
208,852
$
205,397
Trade
Accounts Receivable and Allowance for Credit Losses
In
June 2016, the FASB issued ASU 2016-13 “Measurement of Credit Losses on Financial Instruments”, which replaces current methods
for evaluating impairment of financial instruments not measured at fair value, including trade accounts receivable and certain debt securities,
with a current expected credit loss model. The Company adopted this guidance on January 1, 2024. The adoption of this standard was not
material to our consolidated financial statements.
The
Company generally does not require collateral related to its trade accounts receivable. An allowance for credit losses is established
for amounts expected to be uncollectible over the contractual life of the receivables. The Company collectively evaluates trade receivables
to determine the allowance for credit losses based on creditworthiness of customers. Credit losses from customers have not been significant,
nor has the Company experienced a significant increase in credit losses in connection with the current inflationary market conditions.
The Company calculates the allowance using an expected loss model that considers the Company’s actual historical loss rates adjusted
for current economic conditions and reasonable and supportable forecasts. The Company considers macroeconomic trends and customer-specific
knowledge when making adjustments for reasonable and supportable forecasts. Uncollectible amounts are written off against the allowance
for doubtful credit losses in the period they are determined to be uncollectible. Recoveries of amounts previously written off are recognized
when received. On a monthly basis, a reserve is established for specific customers at the appropriate risk level supported by external
documents. The remaining reserve is calculated by aging accounts receivable balances and reserving a larger percentage of older balances.
7
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
While
routinely executing collection procedures, some receivables will be determined to be uncollectible by management when all collection
actions have been completed. When accounts are deemed to be uncollectible, they are written off and no longer reflected in the accounts
receivable balance in the financial statements and are no longer used in calculating the allowance for credit losses. The activity in
the allowance for credit losses is as follows:
2025
2024
Balance - January 1
$
612
$
2,984
Additions charged to expense
574
208
Effect of exchange rate
1,278
(2,580
)
Balance - December 31
$
2,464
$
612
The
Company enters into agreements to sell certain of its accounts receivable, primarily in Europe. Sales of receivables are accounted for
in accordance with ASC Topic 860, Transfers and Servicing. Agreements which result in true sales of the transferred receivables, which
occur when receivables are transferred without recourse to the Company, are excluded from amounts reported in the combined balance sheets.
Cash proceeds received from such sales are included in operating cash flows.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates. The most significant estimates include the provision for income taxes, allowance for credit losses
and allowance for excess and obsolete inventory.
Inventories
Inventories
are valued at the lower of cost and net realizable value, using the first-in first-out (“FIFO”) method. The Company assesses
inventory valuation based on estimates of future demand. The estimates of future demand are based upon projections of future related
automobile platform sales. The future projected demand of service parts is based upon current service usage. The Company evaluates inventory
for items that are slow moving or obsolete and records an appropriate reserve for obsolescence if needed.
Foreign
Currency Translation
The
functional currency is the U.S. dollar as a substantial part of operations are based in the U.S. The financial statements of all subsidiaries
with a functional currency other than the U.S. Dollar have been translated into U.S. Dollars. The translation from the applicable foreign
currencies to U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date. Revenue
and expense accounts are translated from the applicable foreign currency using a weighted average exchange rate for the period. The resulting
translation adjustments are recorded as a component of Members’ Equity. The Company engages in foreign currency denominated transactions
with customers and suppliers, as well as between subsidiaries with different functional currencies. Gains and losses resulting from foreign
currency transactions are recognized in net loss in the combined statements of operations. Non-functional currency denominated intercompany
balances which are long-term in nature are recognized in accumulated other comprehensive income.
Income
Taxes
The
Company records income tax expense using the asset and liability method which specifies that deferred tax assets and liabilities be measured
each year based on the difference between the financial statement and tax base of assets and liabilities at the applicable enacted tax
rates. A valuation allowance is provided for deferred tax assets when management considers it more likely than not that the asset will
not be realized. At December 31, 2025, and December 31, 2024, a valuation allowance has been provided for certain deferred tax assets
which the Company has concluded are more likely than not to not be realized. If future annual taxable income were to be significantly
less than projected levels, there is a risk that part of deferred tax assets not already provided for by the valuation allowance would
expire prior to utilization.
The
Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized
in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement
with the relevant tax authority.
8
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Management’s
conclusions regarding uncertain tax positions may be subject to review and adjustment at a later date based upon ongoing analysis of,
or changes in tax laws, regulations and interpretations thereof as well as other factors. The Company’s policy is to record interest
and penalties directly related to income taxes as income tax expense in the accompanying combined statements of operations, of which
there was none for the years ended December 31, 2025 and 2024.
Pre-Production
Costs Related to Long-Term Supply Agreements
The
Company incurs pre-production engineering and development (“E&D”) costs related to the products produced for its customers
under long-term supply agreements. These costs are expensed as incurred unless the cost reimbursement is contractually guaranteed in
a customer contract for which costs are capitalized as an asset as incurred and subsequently reduced upon lump sum or piece price recoveries.
The
Company enters into contractual agreements with certain customers to design and develop molds, dies and tools (collectively, “tooling”).
Periodically, the Company enters into contractually guaranteed reimbursement agreements related to the sale of tooling to customers.
Costs are deferred until reimbursed by the customer. Amounts due under such arrangements are either settled in cash, on a lump sum basis,
or settled over the part supply arrangement, in accordance with the specific terms of the arrangement.
The
Company also may progress bill on certain tooling being constructed. In certain scenarios, the Company reports deferred revenue resulting
from advances from customers or if progress billings are in excess of costs incurred. Deferred revenue on tooling projects are recorded
in accrued liabilities on the combined balance sheet, and totaled $0.9 million and $1.9 million as of December 31, 2025 and 2024, respectively.
Excess
of cost over billings on uncompleted tooling projects are recorded in prepaids and other current assets on the combined balance sheets,
and totaled $0.6 million and $1.9 million as of December 31, 2025 and 2024, respectively.
Occasionally,
the Company incurs costs in excess of those contractually reimbursed for customer owned tooling. In those cases, the Company records
reserves for such probable and estimable losses. Forecasted losses on incomplete projects are recognized currently when identified. There
were no forecasted losses as of December 31, 2025 and 2024.
Property,
Plant, and Equipment, net
Property,
plant, and equipment are stated at cost or at fair market value for property, plant and equipment acquired through acquisitions. Expenditures
for maintenance, repairs and renewals are charged to expense as incurred, while major improvements are capitalized. The cost of these
improvements is depreciated over their estimated useful lives. Assets dedicated to a specific customer program, are depreciated over
the estimated life of that program. Depreciation and amortization are computed using the straight-line method for financial reporting
purposes and accelerated methods for income tax purposes over the estimated useful lives of the related assets as follows:
Furniture and
Fixtures
3 to 10 years
Buildings
20 to 30 years
Machinery and equipment
3 to 10 years
Leasehold improvements
Shorter of useful life or
lease term
Land improvements
10 years
When
assets are retired or otherwise disposed, the related cost and accumulated depreciation are removed from the accounts, and any gain or
loss on the disposition is included in the earnings for the current period.
Comprehensive
Income (Loss)
Comprehensive
income (loss) disclosed in the combined statements of comprehensive income (loss) reflects the change in the equity of a business enterprise
during a period from transactions and other events and circumstances from nonowner sources. Comprehensive loss represents net loss plus
other comprehensive income (loss) items (e.g., foreign currency translation adjustments) from nonowner sources.
9
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Retirement
Plan
The
Company sponsors several 401(k) profit-sharing plans covering substantially all of its domestic employees. Matching
contributions
charged as expense during 2025 and 2024 were $135 and $172, respectively.
Other
Income
Other
income in 2025 and 2024 relates to the income of Dura Automotive CZ k.a. Additionally, in 2024 a portion of the other income relates
to the sale of the Battery Tray division.
Recently
Adopted Accounting Pronouncements
In
November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which
requires disclosure of incremental segment information on an annual and interim basis, primarily through enhanced disclosures of
significant segment expenses. Under the new guidance an entity is required to disclose the title and position of the chief operating
decision maker (“CODM”) and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in
assessing segment performance and deciding how to allocate resources. The ASU also requires that an entity that has a single
reportable segment provide all the disclosures required by this ASU and all existing segment disclosures in Topic 280. The ASU does
not change how operating segments are identified or, when applicable, aggregated. The Company adopted this standard for fiscal year
2024 and such adoption did not have a material impact on our combined financial statements.
Recent
Accounting Pronouncements Not Yet Adopted
In
December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740)—Improvements to Income Tax Disclosures (“ASU 2023-09”)
which amends the Codification to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires additional
disaggregation of the reconciliation between the statutory and effective tax rate for an entity and of income taxes paid, both of which
are disclosures required by current GAAP. The amendments improve the transparency of income tax disclosures by requiring (1) consistent
categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid to be disaggregated by jurisdiction.
The amendments in ASU 2023-09 apply to all entities that are subject to Topic 740, Income Taxes. For public business entities, the amendments
in ASU 2023-09 are effective for annual periods beginning after December 15, 2024, with early adoption permitted. For private business
entities, the amendment was effective for annual periods beginning after December 31, 2025. The Company is considered an emerging growth
company and plans to adopt this standard consistent with the private business guidance. The Company is currently evaluating the impact
of this standard on its financial statement presentation and disclosures.
In
November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income (Topic 220): Expense Disaggregation
Disclosures (ASU 2024-03”). This update requires entities to disaggregate operating expenses into specific categories, such as
purchases of inventory, compensation, depreciation, and amortization, to provide enhanced transparency into the nature and function of
expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, with early adoption permitted. ASU 2024-03 may
be applied retrospectively or prospectively. The Company is currently evaluating the impact of this standard on its financial statement
presentation and disclosures.
In
July 2025, the FASB issued ASU 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts
Receivable and Contract Assets, which provides a practical expedient related to the estimation of expected credit losses for current
accounts receivable and current contract assets arising from transactions accounted for under Topic 606, including those assets acquired
in a business combination. The practical expedient permits all entities to assume that current conditions as of the balance sheet date
do not change for the remaining life of the asset. This ASU is effective for fiscal years beginning after December 15, 2025, and interim
reporting periods within those annual reporting periods. The Company is currently evaluating the impact of adopting this standard on
its financial statements and disclosures.
10
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
3.
Prepaids
and Other Current Assets
Prepaid
and other current assets are detailed as follows:
2025
2024
Taxes
$
4,488
$
2,358
Prepaid insurance
2,115
2,016
Deposits
844
2,497
Tooling
587
1,969
Supplies
891
1,038
Other prepaid expenses
3,681
3,551
$
12,606
$
13,429
4.
Property,
Plant, and Equipment, net
Property,
plant, and equipment consisted of the following (in thousands):
2025
2024
Land and buildings
$
18,261
$
16,191
Machinery and equipment (1)
23,945
20,872
Construction in progress
276
953
Less — Accumulated
depreciation and amortization
(22,825
)
(17,562
)
$
19,657
$
20,454
(1)
Machinery
and equipment includes Company-owned tooling of $0.1 million as of December 31, 2025 and
2024, respectively.
Depreciation
expense totaled $4.2 million and $4.5 million for the years ended December 31, 2025 and 2024, respectively.
5.
Inventories
Inventories
consisted of the following as of December 31, 2025 and 2024 (in thousands):
December
31, 2025
December
31, 2024
Raw Materials
$
14,209
$
14,916
Work-in-process
3,221
3,162
Finished goods
3,620
3,792
$
21,050
$
21,870
The
above amounts are shown net of cumulative inventory lower of cost or net realizable value adjustments of 6.1 million and $5.5 million
as of December 31, 2025 and 2024, respectively.
11
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
6.
Accrued
liabilities
Accrued
liabilities are detailed as follows:
2025
2024
Accrued compensation
$
10,179
$
15,680
Battery tray liability
-
7,558
Accrued freight premium
-
13,773
Accrued taxes
2,806
3,918
Customer price downs
2,484
1,544
Accrued professional fees
915
713
Deferred revenue
942
1,888
Litigation reserve
824
992
Warranty reserve
899
926
Other
-
1,141
$
19,049
$
48,133
7.
Debt
The
Company has long-term debt related to failed sale-leaseback transactions recorded as of December 31, 2025 and 2024. The Company sold
buildings to a third-party under sale-leaseback arrangements. Since these transactions do not meet the criteria for sale-leaseback accounting
treatment, they are presented as debt in the accompanying combined balance sheet. These financing transactions contain monthly and quarterly
payment terms ranging from $0.1 to $0.2 million. Payments are recorded as principal and interest based on implicit rates ranging from
approximately 10 percent to 12 percent.
The
balance of the above debt matures as follows:
2026
$
236
2027
270
2028
309
2029
352
2030
401
Thereafter
10,799
$
12,367
12
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
8.
Income
Taxes
The
provision for income taxes consisted of the following for the years ended December 31, 2025 and 2024 (in thousands):
December
31, 2025
December
31, 2024
Current-
United States
$
-
$
-
Foreign
5,057
8,738
Total current income tax
expense
5,057
8,738
Deferred-
United States
9,464
(975
)
Foreign
(486
)
187
Total
deferred income tax expense
8,978
(788
)
Total
income tax expense
$
14,035
$
7,950
The
Company is organized as a limited liability company and has elected to be taxed under U.S. Corporation rules, whereby income is taxable
to the Company. The current and deferred provision for the United States reflects taxes associated with federal and state income taxes
and foreign withholding on income.
A
reconciliation of the provision for income taxes at the statutory rates to the reported income tax provision is as follows for the years
ended December 31, 2025 and 2024 (in thousands):
December
31, 2025
December
31, 2024
Difference in income tax on foreign
earnings
$
5,057
$
8,738
Valuation allowance
8,978
(788
)
$
14,035
$
7,950
13
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
A
summary of deferred tax assets (liabilities) is as follows for the Company as of December 31, 2025 and 2024 (in thousands):
December
31, 2025
December
31, 2024
Depreciation and property basis
differences
$
7,874
$
7,882
Goodwill and intangibles
895
974
Net operating loss carryforwards
6,109
23,044
Postretirement benefit obligations
531
469
Accrued interest
4,742
4,698
Accrued compensation costs
546
528
Facility closure and consolidation costs
152
94
Inventory valuation adjustments
1,064
1,096
Warranty and environmental costs
825
583
Capital loss carryforward
-
-
Foreign exchange
(356
)
(1,975
)
Bad debt allowance
(28
)
320
Prepaid expenses
-
-
Other
669
199
Tax credits and WH tax
277
591
R&D Costs
2,110
2,123
Valuation allowance
(22,420
)
(28,658
)
Net deferred tax asset
$
2,990
$
11,968
As
of December 31, 2025 and 2024, the consolidated balance sheet includes $3.0 million and $12.0 million, respectively, of noncurrent deferred
tax assets and an insignificant amount of noncurrent deferred tax liabilities.
Deferred
tax assets and liabilities are recognized for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differing treatment of items
for financial reporting and income tax reporting purposes. The deferred tax balances are adjusted to reflect tax rates by tax jurisdiction,
based on currently enacted tax laws, which will be in effect in the years in which the temporary differences are expected to reverse.
The DCS Carve-Out has deferred income tax assets on net operating loss carryforwards to the extent they believe they will be able to
utilize them in future tax filings. As of December 31, 2025 and 2024, the DCS Carve-Out recorded a valuation allowance of $22.4 million
and $28.7, for DCS Carve-Out respectively, based on management’s determination that it is more-likely-than-not that the tax benefits
related to these assets will not be realized. The valuation allowance includes a full valuation on deferred tax assets in France, Portugal,
Romania, and certain entities in Germany, China, as well as a partial valuation allowance on the United States.
As
of December 31, 2025, the DCS Carve-Out has $27.8 million of gross U.S. federal, state and foreign net operating loss carryforwards,
reflecting a U.S. federal and state net operating loss of $0.0 million and foreign corporate net operating losses of $27.8 million. As
of December 31, 2024, the DCS Carve-Out has $92.6 million of gross U.S. federal, state and foreign net operating loss carryforwards,
reflecting a U.S. federal and state net operating loss of $0.0 million and foreign corporate net operating losses of $92.6 million. The
net operating losses can be carried forward between 3 years and indefinitely. As of December 31, 2025, net operating losses totaling
$0.5 million have no expiration date while the remaining losses will begin to expire in 2026.
For
the year ended December 31, 2025, the DCS Carve-Out no longer has a recorded deferred tax liability associated with the non-reserved
undistributed earnings related to China and India entities that regularly pay dividends. As of December 31, 2024, the DCS Carve-Out has
recorded a deferred tax liability of $0.3 million, associated with the non-reserved undistributed earnings related to China and India
entities that regularly pay dividends.
There
were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2025 and December 31, 2024. The
DCS Carve-Out is currently not aware of any issues under review that could result in significant payments, accruals, or material deviation
from its positions. The DCS Carve-Out is subject to income tax examinations by major taxing authorities in the countries in which it
operates since its inception.
14
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
The
DCS Carve-Out files tax returns, including tax returns for its subsidiaries, in the U.S. and several foreign jurisdictions. The current
U.S. open examination periods are 2022 forward. In addition, open tax years related to various states remain subject to examination.
The foreign taxing jurisdictions are subject to examination for open years after 2016 and the period of open years varies by jurisdiction.
9.
Commitments
and Contingencies
Leases
The
Company has operating lease obligations that include office space, manufacturing space and certain equipment under agreements with contractual
periods ranging from less than one year to 20 years. Many of the lease obligations contain one or more options to extend. The Company
includes options that are reasonably certain to exercise in the evaluation of the lease term after considering all relevant economic
and financial factors. The leases are classified as right of use assets in the non-current assets section of the combined balance sheet.
The
Company does not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they
relate. Instead, non-lease components are included in the measurement of the lease obligations. The Company calculates the initial lease
liability as the present value of fixed payments not yet paid and variable payments that are based on a market or an index rate, measured
at commencement. Most of the leases are discounted using the incremental borrowing rate because the rate implicit in the lease obligation
is not readily determinable. All other variable payments are expensed as incurred.
The
components of lease cost are as follows:
2025
2024
Operating lease costs
$
4,718
$
5,009
Lease
obligation right-of-use assets and liabilities at December 31, 2025 and 2024, were as follows (in thousands):
2025
2024
Right of
use assets, non-current
$
9,116
$
11,345
Operating lease liability, current
$
2,498
$
2,354
Operating lease liability,
non-current
7,308
9,461
Total
operating lease liabilities
$
9,806
$
11,815
15
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
Future
annual commitments under these lease obligations are as follows as of December 31 (in thousands):
Operating
Lease Liabilities
2025
2026
$
7,665
2027
6,986
2028
5,208
2029
3,007
2030
2,915
Thereafter
22,962
Total lease liability
$
48,743
Less: Interest
38,937
Net lease liability
$
9,806
The
weighted-average remaining lease term and weighted-average discount rate at December 31, 2025, and 2024 were as follows:
2025
2024
Weighted-average remaining
lease term (in years)
Operating leases
9.81
9.35
Weighted-average discount
rate
Operating leases
8.06
%
8.11
%
Supplemental
cash flow information related to leases for the years ended December 31, 2025 and 2024 was as follows (in thousands);
2025
2024
Cash paid for amounts included
in the measurement of lease obligations
Operating cash
flows from operating leases
$
2,831
$
3,060
Right-of-use assets obtained
in exchange for new operating lease obligations
$
182
$
70
Warranty
and Environmental
The
Company has an inherent business risk of exposure to warranty claims in the event that manufactured products do not perform as expected
and results in replacement of product on vehicles in the field. OEMs are increasingly requiring their suppliers to guarantee or warrant
their products and bear the costs of repair and replacement of such products under new vehicle warranties. Depending on the terms under
which the Company supplies products to an OEM, an OEM may hold us responsible for some or all of the repair and replacement costs of
warranty claims under new vehicle warranties when the product supplied does not perform as represented.
The
Company’s policy is to record reserves for customer warranty costs on a case by case basis at the time they believe such amounts
are probable and reasonably estimable and to review these determinations on a quarterly basis, or more frequently as additional information
is obtained. The Company has established reserves for issues that are probable and reasonably estimable in amounts management believes
are adequate to cover reasonable adverse judgments. The Company determines the warranty reserves based on identified claims and the estimated
ultimate projected claim cost. The final amounts determined for these matters could differ significantly from recorded estimates. The
warranty accrual balance was $0.9 million and $1.0 million as of December 31, 2025 and 2024, respectively. The warranty accrual is included
in accrued liabilities on the combined balance sheet as of December 31, 2025 and 2024.
16
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
The
Company is subject to the requirements of federal, state, local and foreign environmental and occupational health and safety laws
and
regulations. Some of the operations involve the use of hazardous substances. Like all manufacturers, if a release of hazardous substances
occurs or has occurred at or from any of the current or former properties or at a landfill or another location where the Company has
disposed of wastes, and may be held liable for the contamination, which could be material. The Company’s policy regarding the recording
of environmental reserves is the same as for warranty. The reserves are reviewed on a quarterly basis or more frequently as additional
information is obtained. The environmental reserve balance was $0.8 million and $0.7 million as of December 31, 2025 and 2024, respectively.
The environmental reserve is included in accrued liabilities on the combined balance sheet as of December 31, 2025 and 2024.
Litigation
The
Company is involved in various legal proceedings. Due to their nature, such legal proceedings involve inherent uncertainties, including,
but not limited to, court rulings, negotiations between affected parties and governmental intervention. The Company establishes reserves
for matters that are probable and reasonably estimable in amounts they believe are adequate to cover reasonable adverse judgments not
covered by insurance. Based upon the information available to us and discussions with legal counsel, it is management’s opinion
that the ultimate outcome of the various legal actions and claims that are incidental to the business will not have a material adverse
impact on the combined balance sheet, statement of operations, or statement of cash flows; however, such matters are subject to many
uncertainties, and the outcome of individual matters are not predictable with assurance. The Company has insurance coverage for certain
litigation type matters. The litigation reserve balance was $0.8 million and $1.0 million as of December 31, 2025 and 2024, respectively.
The litigation reserve is included in accrued liabilities on the combined balance sheet as of December 31, 2025 and 2024.
Concentrations
of Risk
Financial
instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of accounts receivable and cash
investments. The Company’s customer base includes significant global automotive manufacturers and many distributors and installers
of automotive aftermarket parts. For the year ended December 31, 2025, three customers accounted for approximately 29%, 14%, and 12%,
respectively, of the Company’s revenues. For the year ended December 31, 2024, three customers accounted for approximately 24%,
15%, and 12%, respectively, of the Company’s revenues. The Company’s credit evaluation process, reasonably short
collection
terms and the geographical dispersion of sales transactions help to mitigate credit risk concentration. The Company requires placement
of cash in financial institutions evaluated as highly creditworthy.
The
Company’s business is labor intensive and utilizes many unionized employees. As of December 31, 2025 and 2024, approximately 65%
of the U.S. employees were unionized and a substantial number of non-U.S. employees are covered by Workers’ Councils. In the U.S.,
the Company has collective bargaining agreements with the UAW (International Union, United Automobile, Aerospace, and Agricultural Implement
Workers of America). The majority of non-U.S. employees are members of industrial trade union organizations and confederations within
their respective countries. Many of these organizations and confederations operate under national contracts, which are not specific to
any one employer. The UAW contracts expire in 2027 for the unionized facilities in the U.S. and expire annually for non-U.S. facilities.
Although the Company believes that the relationship with union employees is generally good, there can be no assurance that they will
be able to negotiate new agreements on favorable terms. In the event the Company is unsuccessful in negotiating new agreements, these
facilities could be subject to work stoppages, which could have a material adverse effect on operations.
The
Company has manufacturing and product development facilities located in the U.S., Europe, and Asia. A significant portion of operations
are located outside of the U.S.
The
total assets of the operations outside of the U.S. are as follows as of December 31, 2025 and 2024 (in thousands):
December
31, 2025
December
31, 2024
Europe
$
142,635
$
135,244
Asia
27,061
28,497
Total
foreign operations
$
169,696
$
163,741
17
DURA
DRIVER CONTROL SYSTEMS
NOTES
TO COMBINED FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
10.
Related
Party Transactions
The
following is a description of transactions between the Company and related parties:
Related
Party Accounts Receivable
At
December 31, 2025 and 2024, the Company had accounts receivable from related entities totaling $27,979 and $27,076, respectively. Balances
are related to daily operational activity. The balance has been presented as current as the balance is expected to be settled within
the next year.
Due
to Parent
At
December 31, 2025 and 2024, the Company had accounts payable to the parent totaling $126,952 and $116,693, respectively. Balances are
related to the Parent’s cash management and financing strategies. The balance has been presented as equity, as the Parent does
not expect repayment as the liability will be forgiven.
Parent
Allocation of Expenses
For
the years ended December 31, 2025 and 2024, the Company recorded allocations of parent company expenses totaling approximately $4,451
related to general and administrative expenses which has been classified as such in the combined statement of operations. The balance
has been presented as equity, as a contribution from Parent.
11.
Subsequent
Events
The
Company has evaluated events and transactions subsequent to December 31, 2025 through the date the combined financial statements were
issued. Other than the below, there were no other events to report than what has been disclosed in the financial statements.
On
June 10, 2026, FireFish Topco, LLC, a subsidiary of the Parent, entered into a purchase agreement with Aspire Biopharma Holdings, Inc.
to purchase the outstanding equity interests of DCS for approximately $30 million. Prior to the closing of the sale, the Company will
settle certain intercompany accounts of the DCS entities and complete other closing obligations as further disclosed in the agreement.
The
transaction occurred subsequent to the balance sheet date, and therefore, the accompanying combined financial statements do not reflect
the impact of the sale. As of the date the combined financial statements were issued, the Company is still evaluating the final financial
statement impact, including the determination of any gain or loss on sale.
18

----- ex99-2.htm -----
EX-99.2
4
ex99-2.htm
EX-99.2
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
Page
Condensed
Combined Balance Sheets as of June 30, 2026
and December 31,
2025
2
Condensed
Combined Statements of Operations and Comprehensive (Loss) Income for the six months ended June 30, 2026 and 2025
3
Condensed
Combined Statements of Changes In Members’ Equity for the six months ended June 30, 2026 and 2025
4
Condensed
Combined Statements of Cash Flows for the six months ended June 30, 2026 and 2025
5
Notes
to
Condensed
Combined Financial Statements
6
1
DURA
DRIVER
CONTROL SYSTEMS
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
DURA
DRIVER
CONTROL SYSTEMS
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
DURA
DRIVER
CONTROL SYSTEMS
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
DURA
DRIVER
CONTROL SYSTEMS
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
DURA
DRIVER CONTROL
SYSTEMS
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

----- ex99-3.htm -----
EX-99.3
5
ex99-3.htm
EX-99.3
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 statement
s 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-Lake
wood
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)
R
eflects
the accounting for the noncontrolling interest in DCSC in temporary equity.