SRR Holdings, Inc. and Subsidiaries

December 31, 2024 and 2023

Report of Independent Certified Public Accountants

3

Consolidated financial statements

Consolidated balance sheets

5

Consolidated statements of operations and comprehensive income

6

Consolidated statements of shareholders’ equity

7

Consolidated statements of cash flows

8

Notes to consolidated financial statements

9

Grant Thornton 

Board of Directors
SRR Holdings, Inc.

Opinion

We have audited the consolidated financial statements of SRR Holdings, Inc. (a Delaware corporation) and subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income, shareholders’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for opinion

We conducted our audits of the consolidated financial statements in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of management for the financial statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are available to be issued.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with US GAAS, we:

●

Exercise professional judgment and maintain professional skepticism throughout the audit.

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Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

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Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

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Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Columbia, South Carolina
February 20, 2026

SRR Holdings, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

December 31, 2024 and 2023

SRR Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Years ended December 31, 2024 and 2023

SRR Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Years ended December 31, 2024 and 2023

000's except share and per share data

SRR Holdings, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2024 and 2023

Organization and Nature of Business

SRR Holdings, Inc. and Subsidiaries (collectively, the “Company”) is a Delaware corporation. Through their wholly owned primary operating subsidiaries, the Company’s operations consist of the following:

•

Royston, LLC (“Royston”) -  designing, manufacturing, selling, and installing convenience and grocery store equipment, including check stands, sales and customer service centers, preparation counters, coffee/beverage islands, beverage tower systems, heated food merchandising systems, counters and countertops, shelving and kiosks; and laboratory furniture and fume hoods sold under the Hamilton brand name; and

•

SignResource, LLC (“SignResource”) - designing, manufacturing, selling, installing and servicing outdoor signage, in-store sign solutions and related design elements; and

•

Southern CaseArts (“SCA”) - designing, manufacturing and selling refrigerated and heated display cases, refrigerated island merchandisers, self-service cases, and combination cases.

A summary of the Company’s significant accounting policies follows.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Royston, SignResource and SCA. All intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition

The Company recognizes revenue using the five-step model prescribed by ASC 606, which requires us to: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, an entity satisfies a performance obligation.

A contract with a customer is identified when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable.

The Company accepts returns or claims for goods having quality defects or for other reasons such as disagreements or improper delivery. When revenue is recorded, estimates of returns are made and recorded as a reduction of revenue. 

Recognition of Material Performance Obligations

Product sales - This performance obligation is satisfied at a point in time when the control of the product passes to the customer. This is generally at a point in time upon shipment for product sales.

Project management services - Since the customer simultaneously receives and consumes the benefits throughout the process, this performance obligation is satisfied over the period of time the service is performed for the customer.  There have been no significant contract assets or liabilities recorded as of March 31, 2025 and 2024.

Disaggregation of revenues - Timing of revenue recognition for the years ended December 31, 2024 and 2023 is shown below:

Fair Value of Financial Instruments

Because of their short maturities, the fair value of cash and cash equivalents, accounts receivable, accounts payable and other accrued liabilities are not materially different than their carrying amounts, as reported. The fair value of debt instruments is estimated to approximate carrying amounts since interest rates on these obligations adjust frequently and approximate the rates at which the Company could obtain similar financing at December 31, 2024 and 2023.

Cash and Cash Equivalents

For purposes of reporting the statements of cash flows, the Company considers all cash accounts and all highly liquid financial instruments purchased with an original maturity of three months or less to be cash and cash equivalents. Cash deposits are held in federally insured institutions.  Uninsured domestic held deposits as of December 31, 2024 and 2023 were $1,156 and $1,639, respectively, and China uninsured deposits were $0 and $211, respectively.

Management performs periodic evaluations of the relative credit standing of the financial institution and believes the risk of loss to be remote.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are initially recognized at their sales price. Accounts receivable are considered past due or delinquent when payment is not received within the credit terms extended to the customer. An allowance for estimated credit losses on accounts receivable is provided based on analysis of historical losses and recoveries. Receivables are written off when deemed to be uncollectible. Accounts receivable are net of an allowance for doubtful accounts of $295 and $368 as of December 31, 2024 and 2023, respectively. The Company does not charge interest or late fees on past due accounts and generally does not require collateral.

While the relative significance of any particular customer varies from period to period, the loss of, or significant curtailments of, purchases of goods and services by one or more of the Company’s significant customers at any time would adversely affect revenues and cash flows. The following table summarizes customers generating significant revenues for the Company for the years ended December 31, 2024 and 2023, as well as those representing a significant portion of the accounts receivable balances as of December 31, 2024 and 2023:

* This customer did not have revenues in excess of 10% of the Company's total revenues in 2024.

** This customer did not have accounts receivable in excess of 10% of the Company's total accounts receivable balance.

Inventories

Inventories are valued at the lower of cost or net realizable value. Cost is determined on the basis of weighted average and first-in, first-out (FIFO) methods. The Company assesses inventory on hand periodically for slow moving, obsolete, or damaged product. The carrying value of the slow moving, obsolete, and damaged products are reduced to their estimated net realizable value.

Deferred Debt Issue Costs

Deferred debt issue costs are being amortized over the term of the underlying debt agreements using the effective interest method. Amortization expense of $471 and $419 for the years ended December 31, 2024 and 2023, respectively, is recognized in interest expense. As of December 31, 2024 and 2023, gross deferred debt issue costs were $3,619 and $3,597, respectively, and accumulated amortization was $2,768 and $2,297, respectively.

Estimated amortization expense for deferred debt issue costs for the next three years is as follows:

Goodwill

Goodwill represents the excess of the cost of an acquired entity over the net amount assigned to assets acquired, including other identifiable intangible assets, and liabilities assumed in a business combination. Goodwill is not amortized however it is subject to review for impairment. There was no impairment recognized for the years ended December 31, 2024 and 2023. 

Long-Lived Assets

The Company reviews long-lived assets for impairment when events or changes in business conditions indicate that their full carrying value may not be recoverable. Intangible assets with definite lives, comprised primarily of trademarks, proprietary manufacturing processes, and customer relationships, are amortized over their estimated useful lives and evaluated for impairment consistent with other long-lived assets. Recoverability of long-lived assets is assessed by comparison of the carrying amount of the asset to the estimated future net cash flows expected to be generated by the asset. If estimated future net cash flows are less than the carrying amount of the asset, the asset is impaired, and an expense is recorded in an amount required to reduce the carrying amount of the asset to its fair value. There was no impairment recognized for the years ended December 31, 2024 and 2023.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Major additions and improvements are capitalized, while maintenance and repairs that do not improve the utility or extend the lives of the respective assets are expensed. The carrying amounts of assets that are sold or retired, and the related accumulated depreciation, are removed from the accounts in the year of disposal, and any resulting gain or loss is reflected in the statements of operations and comprehensive loss in other expenses.

Leases 

Under ASC Topic 842, a lease is a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a perioed of time in exchange for consideration.  The Company primarily leases manufacturing plants, typically with office space, and equipment under lease agreements. The Company determines if an arrangement is a lease at inception. The Company elected an accounting policy by class of underlying asset to combine lease and non-lease components. 

For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of lease payments over the term. Leases expire at various dates from 2025 through 2035, with varying renewal and termination options. The length of lease terms include options to extend or terminate the lease when it is reasonably certain such option will be exercised. The Company has certain leases that contain lease and non-lease components and has elected the practical expedient to account for these components as a single lease component.  The Company also made an accounting policy election to forego capitalization of leases with an initial term of 12 months or less.  

Right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term as of the commencement date. Because most of the Company’s leases do not provide an explicit or implicit rate of return, the incremental borrowing rate used is based on the information available at the commencement date in determining the present value of lease payments on an individual lease basis. The incremental borrowing rate for a lease is the rate of interest the Company would have to pay on a collateralized basis to borrow an amount equal to the lease payments for the asset under similar terms.  

The Company monitors events or changes in circumstances that change the timing or amount of future lease payments which results in the remeasurement of a lease liability, with a corresponding adjustment to the ROU asset. ROU assets for operating and financing leases are periodically reviewed for impairment losses under ASC 360-10, Property, Plant, and Equipment, to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize.   There was no impairment recognized for the years ended December 31, 2024 and 2023.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. Deferred income tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and on unutilized tax losses carried forward and measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is recognized to the extent that the recoverability of deferred income tax assets is not considered more likely than not.

Management believes that there is appropriate support for the income tax positions taken and to be taken on income tax returns and that income tax receivables and accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax laws applied to the facts of each matter. Accordingly, a liability has not been recognized as a result of applying the applicable authoritative standards on accounting for uncertainty in income taxes as of December 31, 2024 and 2023.

Tax years 2021 through 2024 remain open to examination by the tax authorities under the statute of limitations.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 those estimates.

Foreign Currency Translation

The Company’s subsidiary in China prepares their financial statements using the Chinese Yuan as the functional currency. Accordingly, the Company’s consolidated foreign currency translation gains and losses are included in accumulated other comprehensive loss. The consolidated translation loss included in equity amounted to $8 and $28 for the years ended  December 31, 2024 and 2023, respectively. Deferred income taxes are not provided on currency translation adjustments as foreign earnings are considered to be permanently reinvested.

Investment in Joint Venture

The Company is part of a joint venture agreement with Tam-Mex, S.A. de C.V., a manufacturer located in Mexico City, Mexico, to market and distribute products in Mexico. The respective partners each own 50% of the corporate capital of the joint venture company, Royston Tammex S DE RL DE CV. This is accounted for under equity method of accounting. The initial capital contribution to the joint venture by the Company was $31, which includes an initial capital contribution of $10, plus an additional $21 for 50% of the cost of start-up tooling. During 2024, the Company made an additional capital contribution of $414. The Company has recognized $355 and $220 in income from the joint venture for the years ended December 31, 2024 and 2023, respectively.

NOTE 2 - INVENTORIES

The components of inventories as of December 31, 2024 and 2023 are as follows:

NOTE 3 - PROPERTY, PLANT AND EQUIPMENT, NET

Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated using the straight-line method over the remaining life of the applicable lease when the life of the lease is less than the related useful life of the asset. 

Property, plant and equipment as of December 31, 2024 and 2023, are as follows:

Depreciation expense was $3,032 and $3,047 for the years ended December 31, 2024 and 2023, respectively.

NOTE 4 - INTANGIBLE ASSETS

The components of intangible assets as of December 31, 2024 and 2023 are as follows:

Amortization expense was $8,084 and $8,180 for the years ended December 31, 2024 and 2023.

Estimated amortization expense, for the next five years and thereafter, as of December 31, 2024, is as follows:

NOTE 5 - GOODWILL

The carrying values of goodwill are reviewed at least annually for possible impairment or whenever events or changes in circumstances indicate that goodwill may be impaired. The Company first assesses qualitative factors in order to determine if goodwill is impaired. If, through qualitative assessment, it is determined that it is more likely than not that the goodwill is not impaired, no further testing is required. If it is determined that it is more likely than not that the goodwill is impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting-unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital, and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions could increase or decrease estimated future discounted operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors, and technological or competitive activities may signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of two reporting units that contain goodwill. The Company relies upon a number of factors, judgments, and estimates when conducting its impairment testing, including, but not limited to, the Company’s operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and the judgments applied in the analysis of goodwill impairment.

The following presents information about the Company's goodwill on the dates or for the periods indicated:

NOTE 6 - LONG-TERM DEBT

Credit Agreement

On March 9, 2018, the Company entered into a credit agreement (the “Credit Agreement”) with a third-party lending institution, which included a Term Loan and a Revolving Credit Facility.  The Credit Agreement was amended on July 28, 2022 and again on July 27, 2023 as discussed in more detail below.   The Credit Agreement is collateralized by a security interest in substantially all of the present and future assets of the Company.

Term Loan

The Company's initial Term Loan of $50,000 with maturity date of March 9, 2023, was revised on July 27, 2018 with an increase to $60,000 and the maturity date extended to July 27, 2023.  On July 27, 2023, the Company refinanced its senior debt, extending the maturity date to July 27, 2026. The revised Term Loan’s principal amount was $60,000, repayable in quarterly installments, with a balloon payment of the remaining principal due at maturity.

The Company’s senior loans mature on July 27, 2026.  Based on the Company’s available cash balances and projected cash flows from operations, the Company does not expect to have sufficient liquidity to make the required balloon payment on the senior debt which comes due in July 2026.  However, based on the Company’s history of successfully refinancing its debt obligations as well as its strong financial position and operating performance, the Company expects to refinance the senior debt in the normal course of business on or before July 2026.  It is expected the subordinated debt which comes due in July 2027 will also be extended consistent with the senior debt refinancing.  The largest lenders of the senior debt syndicate have indicated interest in renewing the credit facility and the Company does not expect significant changes in the terms or interest rates compared to the current debt facilities.  

The loan bears interest at a rate equal to the Base Rate or Adjusted Term Secured Overnight Financing Rate (SOFR) for such interest period, as stipulated in the executed Credit Agreement and selected by the Company, plus the applicable margin. SOFR is a reference rate that is used by parties in commercial contracts that is outside their direct control, established as an alternative to LIBOR.  The applicable margin is based on the Company’s senior leverage ratio as defined by the Credit Agreement. The interest rate for the Term Loan as of December 31, 2024 and 2023 was 8.47% and 9.19%, respectively. Interest on the Term Loan determined using the SOFR Rate is paid monthly or quarterly dependent on the rate periodically selected by the Company.

Revolving Credit Facility

The Credit Agreement includes a revolving credit facility (“Revolver”), initially set at a borrowing limit of $15,000. This limit was raised to $25,000 following an amendment to the agreement on July 27, 2018 and to $30,000 following another amendment to the agreement on July 27, 2023. There were $0 outstanding borrowings as of December 31, 2024 and 2023, respectively. Total available for additional borrowings under the Revolver was $28,730 and $28,855 as of December 31, 2024 and 2023, respectively. The maturity date for the Revolver is July 27, 2026.

All Base Rate Advances of the Revolving Credit and Swing Line shall bear interest at a per annum interest rate equal to the Base Rate plus the Applicable Margin. All Term SOFR Advances of the Revolving Credit bear interest for each Interest Period at a per annum interest rate equal to Adjusted Term SOFR for such Interest Period plus the Applicable Margin and all Quoted Rate Advances of the Swing Line shall bear interest at a per annum interest rate equal to the Quoted Rate plus the Applicable Margin, if any. Interest accruing at the Base Rate shall be computed on the basis of a 360-day year and assessed for the actual number of days elapsed, and in such computation effect shall be given to any change in the interest rate resulting from a change in the Base Rate on the date of such change in the Base Rate. Interest on the Revolver is payable monthly.

Subordinated Note

The Company obtained a Subordinated Note worth $13,000 on March 9, 2018, with an initial maturity date of March 9, 2025. This note was modified on July 27, 2018, increasing the note’s value to $30,000 and extending the maturity date to July 27, 2024. A second amendment to the Subordinated Note was made on July 27, 2023, extending the maturity date further to July 27, 2027, without any other significant alterations to the note. The note accrues interest at an annual rate of 11% on the outstanding principal, payable quarterly in arrears.  The balance of the Subordinated Note, including paid-in-kind interest, was $33,439 on September 30, 2025 and 2024.

The Company was in compliance with the debt covenants (as amended) for all reporting periods.

Derivatives and Hedging Activities

The Company is party to an interest rate swap agreement effective October 2023 to economically hedge the interest rate risk associated with the variable interest rates on a portion of its long-term debt.  The notional amount is $17,500 and $19,500 at December 31, 2024 and 2023, respectively, and is reduced quarterly through July 2026 to $13,500.  The fair value of the swap was not material at December 31, 2024 and 2023.

Letters of credit

As of December 31, 2024 and 2023, respectively, the outstanding letters of credit issued in terms of the credit agreement were $1,270 and $1,145. The beneficiaries are Hartford Fire Insurance Company, increasing from $705 to $830 and Great American Insurance Company $440.

The balances as of December 31, 2024 and 2023 were as follows:

Scheduled maturities of the term loan, subordinated note, and revolving facility as of December 31, 2024, are as follows:

The following summarizes the lease costs included within the consolidated statements of operations and comprehensive income.  Substantially all of the lease expenses are recorded in cost of goods sold, with an insignificant amount recorded in selling, general and administrative expenses, for the years ended December 31, 2024 and 2023, respectively.  

Future minimum payments under noncancelable operating leases, due in each of the next 5 years and thereafter as of December 31, 2024, are as follows:

Future minimum payments under noncancelable finance leases, due in each of the next 5 years and thereafter as of December 31, 2024, are as follows:

NOTE 8 - EMPLOYEE BENEFIT PLANS

The Company has 401(k) retirement savings plans covering substantially all domestic full-time employees.  These Plans were merged into one plan on August 1, 2023. The Company makes contributions to these plans based on employee contributions. Related expenses were $938 and  $1,043 for the years ended December 31, 2024 and 2023, respectively.

NOTE 9 - LITIGATION

The Company is involved in various legal proceedings encountered in the normal course of business. In the opinion of management, the resolution of these matters will not have a material adverse effect on the Company’s financial position.

NOTE 10 - INSURANCE RESERVES

The Company has insurance policies for medical and workers’ compensation benefits that contain significant deductibles. The cost of general medical and workers’ compensation claims, up to the deductibles, is accrued annually based on actual claims reported plus estimated amounts for claims not reported. These estimates are based on historical information, along with certain assumptions about future events, and are subject to change as additional information becomes available. As of December 31, 2024 and 2023, the Company accrued $1,875 and $2,233, respectively, for general medical and workers’ compensation claims within accrued liabilities in the consolidated balance sheets.

NOTE 11 - INCOME TAXES

The major components of income tax (benefit) provision are as follows:

Deferred income tax assets and liabilities result from differences between the carrying amount and the tax bases of the following:

The Company recognizes the amount of taxes payable or refundable for the current year and recognizes deferred tax liabilities and assets for the expected future tax consequences of events and transactions that have been recognized in the Company’s financial statements or tax returns.

The Company's effective tax rate differs from the federal statutory rate primarily due to valuation allowance released that was previously recorded against certain deferred tax assets as well as state taxes. 

The Company files tax returns in each jurisdiction where they are registered to do business. In the United States and many of the state jurisdictions, and in the foreign country where the Company files tax returns, a statute of limitations period exists. After a statute period expires, the tax authorities may no longer assess additional income tax for the expired period. In addition, the Company is no longer eligible to file claims for refund for any tax that it may have overpaid. Pre-tax NOL carryforwards at December 31, 2024 were approximately $2.2 million for state purposes and will begin expiring at various amounts and dates for state purposes beginning in 2029.

Deferred income taxes are provided for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities. In assessing the recoverability of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the period in which the temporary differences become deductible. Management considers the projected future taxable income and tax planning strategies in making this assessment. Based on the cumulative historical income over the past three years and projected future income, management believes it is more likely than not that the Company will be able to realize the benefits of certain deferred income tax assets as of December 31, 2024. Furthermore, management has analyzed the realization of the interest expense carryforward deferred tax asset. According to the Company's projected future income and interest expense, management expects to realize historical interest expense carryforward starting in 2025.  As such, management has determined not to record a valuation allowance on December 31, 2024.

NOTE 12 - STOCK OPTION PLAN

The Company has a stock-based incentive plan for directors and key employees, which is administered by the Company’s Board of Directors. Stock options vest upon a sale of the Company or upon an initial public offering of the Company in which the holders of shares of common stock of the Company achieve a minimum internal rate of return as determined by the Board of Directors and set forth in the stock option agreement of each holder. As of December 31, 2024 and 2023, no options have vested, and no related compensation expense has been recorded.

Stock options terminate 10 years after the effective date of grant. Outstanding stock options as of December 31, 2024 are as follows:

NOTE 13 - RELATED-PARTY TRANSACTIONS

As of December 31, 2024 and 2023, the Company was party to a management agreement with its majority shareholder. Under the agreement, the majority shareholder performs certain services for the Company including, but not limited to, consultation on corporate strategy, budgeting of future corporate investments, acquisition and divestiture strategies, and debt and equity financings. Management fees expensed and paid during the years ended December 31, 2024 and 2023 were $753 and $757, respectively.  Management fees payable were $350 at December 31, 2024 and 2023 respectively.  The Company also receives management fees for similar services provided to a joint venture, Royston Tammex S DE RL DE CV. Management fees received during the years ended December 31, 2024 and 2023 were $641 and $328, respectively.

NOTE 14 - SUBSEQUENT EVENTS

The Company has evaluated subsequent events through February 20, 2026, the date these consolidated financial statements were available to be issued. All subsequent events requiring recognition or disclosure have been incorporated into these consolidated financial statements.