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Chicago Rivet Posts $916,000 Q3 Loss and Going-Concern Warning
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Chicago Rivet & Machine Co. (CVR ) reported a US$916,000 third-quarter net loss on November 6, 2026, and warned in its third-quarter Form 10-Q that substantial doubt exists about its ability to continue as a going concern within one year after the financial statements’ issuance. The loss amounted to $0.95 per share, reversing net income of $67,572, or $0.07 per share, in the prior-year quarter.
The swing came despite higher quarterly revenue. Net sales rose 2.3% to $7.53 million from $7.36 million, but gross profit fell 49.5% to $671,810 from $1.33 million. Selling and administrative expenses increased 25.6% to $1.59 million from $1.26 million, leaving a much smaller gross-profit base to cover a larger expense burden.
Management attributed the gross-profit deterioration to lower sales volumes that reduced absorption of fixed manufacturing costs, an unfavorable sales mix, and higher raw-material, labor and other inflationary costs. Pricing actions and operating efficiencies did not fully offset those pressures.
Profitability Weakened in Both Operating Segments
Fastener sales rose only 0.9%, while assembly equipment sales increased 12.3%, but operating results deteriorated in both businesses:
| Segment | Q3 2026 external sales | Q3 2025 external sales | Q3 2026 operating income (loss) | Q3 2025 operating income (loss) |
|---|---|---|---|---|
| Fastener | $6,489,430 | $6,433,949 | ($258,992) | $372,937 |
| Assembly equipment | $1,040,737 | $926,335 | $386,826 | $445,447 |
The Other category recorded an operating loss of $1.04 million, compared with $753,814 a year earlier. It includes certain selling and administrative expenses not allocated to the two operating segments, helping explain why profitable assembly equipment operations did not sustain a consolidated profit.
Within fasteners, automotive sales fell 5.2% to $4.01 million from $4.23 million, while non-automotive sales rose 12.5% to $2.48 million from $2.21 million. Growth in non-automotive fasteners and assembly equipment accounts for the modest consolidated sales increase, but did not prevent the sharp profit deterioration.
For the first nine months, net sales declined 1.3% to $21.62 million from $21.90 million. A $2.27 million net loss, or $2.35 per share, replaced net income of $73,615, or $0.08 per share. Management said year-to-date results were further affected by the absence of the prior-year $339,520 gain on the sale of the Albia facility.
Cash Use and Related-Party Financing Frame the Warning
Cash and cash equivalents fell to $633,933 at September 30, 2026, from $1.72 million at December 31, 2025. Operating activities used $1.72 million of cash during the first nine months of 2026, compared with $1.34 million in the corresponding 2025 period, while capital expenditures totaled $361,467. The cash balance therefore reflects both continued operating consumption and new financing.
On July 31, 2026, the company borrowed $1.5 million from CRM Funding LLC, which is wholly owned by John A. Morrissey, a beneficial owner of approximately 10.35% of its common stock. That amount remained outstanding at September 30, and the proceeds were used for working capital and general corporate purposes. The loan bears interest at prime plus 1.25 percentage points, subject to a 7% floor, and matures on July 31, 2027. It is secured by a lien on all company assets and requires the lender’s consent before dividends are paid.
The planned response includes selling certain assets of its H&L Tool subsidiary in 2026, carried at $179,254, pursuing new sales and evaluating other financing, including a possible real-estate sale-leaseback or additional capital. Management believes successful execution could mitigate the conditions behind the warning, but expressly retains the substantial-doubt conclusion because of uncertainty over sales, additional liquidity, loan-covenant compliance and projected cost savings.
Management expects production volumes in its served segments to increase slightly during the remainder of 2026, with new customer awards beginning to ramp in the first quarter of 2027. Results remain consistent with the current 2026 outlook, supported by modest automotive improvement while non-automotive markets lag expectations. Planned operating actions include expense reductions, efficiency improvements, customer price adjustments, a more favorable sales mix and new business.
The central issue for subsequent filings is whether pricing, mix and cost measures can restore gross profit and operating cash generation while management pursues asset sales or additional financing under the going-concern warning.
