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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-43271

AIAI HOLDINGS CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware	33-4103471
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
17304 Preston Road Suite 410, Dallas, TX	75252
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (214) 396-3330

Securities registered pursuant to Section 12(b) of the Act:

      Title of each class

      Trading
Symbol(s)

      Name of each exchange on which registered

      Class A Common stock, par value $0.001 per share

      AIAI

      The Nasdaq Stock Market LLC  
(Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of the close of business on June 22, 2026, the registrant had 70,313,990 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	2
Item 1.
	AIAI HOLDINGS CORPORATION

	Financial Statements (unaudited)
	Condensed Balance Sheets as of March 31, 2026 and December 31, 2025	2
	Condensed Statements of Operations for the three months ended March 31, 2026 and 2025	3
	Condensed Statements of Stockholders’ Deficit for the three months ended March 31, 2026 and 2025	4
	Condensed Statements of Cash Flows for the three months ended March 31, 2026 and 2025	5
	Notes to Condensed Financial Statements	6

	C.C. CARLTON INDUSTRIES, LTD.

	Financial Statements (unaudited)
	Condensed Balance Sheets as of March 31, 2026 and December 31, 2025	9
	Condensed Statements of Operations for the three months ended March 31, 2026 and 2025	10
	Condensed Statements of Changes in Partners’ Capital for the three months ended March 31, 2026 and 2025	11
	Condensed Statements of Cash Flows for the three months ended March 31, 2026 and 2025	12
	Notes to Condensed Financial Statements	14
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION	38

Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38
Item 3.	Defaults Upon Senior Securities	38
Item 4.	Mine Safety Disclosures	38
Item 5.	Other Information	38
Item 6.	Exhibits	39
Signatures		40

Table of Contents

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of the federal securities laws. Any statements that do not relate to historical or current facts or matters are forward-looking statements. You can identify some of the forward-looking statements by the use of forward-looking words, such as “may,” “will,” “could,” “would,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast,” and the like, or the use of future tense. Statements concerning current conditions may also be forward-looking if they imply a continuation of current conditions. Examples of forward-looking statements include, but are not limited to, statements concerning: the impact of the global macroeconomic environment, including tariffs; expectations regarding demand trends and market conditions for our services; expectations regarding our tax resolutions, effective tax rate and unrecognized tax benefits; expectations regarding the merits of our positions and plans with respect to certain litigation matters; and our beliefs regarding our capital allocation plans and the sufficiency of our available liquidity to meet our working capital, debt and capital expenditure needs.

These forward-looking statements are based on management’s current expectations, represent the most current information available to us as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and other factors that could cause actual results or performance to differ materially from those expressed or implied in the forward-looking statements. These risks and uncertainties include, but are not limited to:

•

the implementation of our business model and strategic plans and the timing, progress and results of our acquisition program;

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our ability to compete effectively with existing and new competitors across markets, products, and pricing environments;

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unanticipated technology needs or developments and our ability to integrate new and enhanced technology into our ecosystem;

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our ability to meet existing performance obligations and maintain the operations of our portfolio companies;

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the rate and degree of market acceptance of our acquisition and operating strategy;

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the increased expenses and operational demands associated with being a public company;

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our ability to meet expectations regarding revenue, cost of revenue, operating expenses, liquidity, and future profitability;

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our ability to establish and maintain collaborations, strategic relationships, and key customer relationships;

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adverse global or regional economic and social conditions, including changes in U.S. trade policy and the impact of tariffs or trade restrictions, and our responsive actions thereto;

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disruptions to our operations or our supply chain, including damage or disruption to our operations or to those of our suppliers;

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our ability to attract and retain key employees;

•

compromise, damage or interruption from cybersecurity incidents or other data or system security risks;

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the competitive environment, including actions by our competitors and the impact of competitive pricing;

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risks associated with cost saving initiatives, restructurings, acquisitions, divestitures, mergers, joint ventures and our strategic relationships;

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changes to our relationships with key customers;

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our level of debt and other financial obligations;

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changes in tax laws or unanticipated tax liabilities;

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risks associated with compliance with changing legal and regulatory requirements and the outcome of legal proceedings;

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any decisions to reduce or discontinue paying cash dividends; and

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the other factors set forth under “Risk Factors” in our Registration Statement on Form S-1/A (File No. 333-292963), as filed with the Securities and Exchange Commission on May 1, 2026.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not rely on our forward-looking statements in making your investment decision. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

AIAI HOLDINGS CORPORATION

CONDENSED BALANCE SHEETS

(Amounts in thousands, except share and per-share amounts)


		March 31,				December 31,
		2026				2025
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$		—		$		—
Noncurrent assets:
Property and equipment, net			5				—
Deferred tax assets			—				—
Total assets	$		5		$		—
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accrued liabilities	$		2,400		$		1,412
Total current liabilities			2,400				1,412
Total non-current liabilities			—				—
Total liabilities	$		2,400		$		1,412
Commitments and contingencies (Note 1)
Stockholders’ deficit:
Common stock, $0.001 par value per share, zero shares authorized, issued and outstanding as of March 31, 2026 and 10,000,000 shares authorized, 1,000 shares issued and outstanding as of December 31, 2025	$		—		$		—
Class A common stock, $0.001 par value per share, 500,000,000 shares authorized, 1,000 shares issued and outstanding as of March 31, 2026 and zero shares authorized, issued and outstanding as of December 31, 2025			—				—
Class B common stock, $0.001 par value per share, 60,000,000 shares authorized, 1,000 shares issued and outstanding as of March 31, 2026 and zero shares authorized, issued and outstanding as of December 31, 2025			—				—
Preferred stock, $0.001 par value per share, 25,000,000 shares authorized, zero shares issued and outstanding as of March 31, 2026 and zero shares authorized, issued and outstanding as of December 31, 2025			—				—
Stock subscription receivable			—				—
Additional paid-in capital			4,222				2,487
Accumulated deficit			(6,617	)			(3,899	)
Total stockholders’ deficit			(2,395	)			(1,412	)
Total liabilities and stockholders’ deficit	$		5		$		—

The accompanying notes are an integral part of these condensed financial statements.

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AIAI HOLDINGS CORPORATION

CONDENSED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per-share amounts)

(Unaudited)


	Three Months Ended March 31,			Three Months Ended March 31,
	2026			2025
Revenue
Products	$	—		$	—
Services		—			—
Total revenue		—			—
Cost of sales		—			—
Gross profit		—			—
General and administrative expenses		18			—
Transaction advisory costs		2,700			—
Operating loss		(2,718	)		—
Other income (expense), net		—			—
Loss before income taxes		(2,718	)		—
Provision for income tax		—			—
Net loss	$	(2,718	)	$	—
Per share data
Net loss per share attributable to common stockholders-basic and diluted	$	(2,717.66	)	$	—
Weighted average common shares outstanding-basic and diluted		1,000			344

The accompanying notes are an integral part of these condensed financial statements.

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AIAI HOLDINGS CORPORATION

CONDENSED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Amounts in thousands, except share and per-share amounts)

(Unaudited)


	Common Stock
	Shares Outstanding		Amount		Stock subscription receivable		Additional Paid‑in Capital		Accumulated deficit		Total stockholders’ deficit
Balance as of December 31, 2024		—	$	-	$	-	$	-	$	-	$	-
Issuance of common stock		1,000		—		—		—		—		—
Stock subscription receivable		—		—		—		—		—		—
Stockholder contribution		—		—		—		—		—		—
Net loss		—		—		—		—		—		—
Balance as of March 31, 2025		1,000	$	-	$	-	$	-	$	-	$	-


	Common Stock
	Shares Outstanding		Amount		Stock subscription receivable		Additional Paid‑in Capital		Accumulated deficit			Total stockholders’ deficit
Balance as of December 31, 2025		1,000	$	-	$	-	$	2,487	$	(3,899	)	$	(1,412	)
Issuance of common stock		—		—		—		—		—			—
Stock subscription receivable		—		—		—		—		—			—
Stockholder contribution		—		—		—		1,735		—			1,735
Net loss		—		—		—		—		(2,718	)		(2,718	)
Balance as of March 31, 2026		1,000	$	-	$	-	$	4,222	$	(6,617	)	$	(2,395	)

The accompanying notes are an integral part of these condensed financial statements.

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AIAI HOLDINGS CORPORATION

CONDENSED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Three Months Ended March 31,			Three Months Ended March 31,
	2026			2025
Cash flows from operating activities
Net loss	$	(2,718	)	$	—
Adjustment to reconcile net loss to net cash used in operating activities:
Deferred income taxes		—			—
Change in accrued liabilities		988			—
Net cash used in operating activities		(1,730	)		—
Cash flows from investing activities
Purchases of property, plant and equipment		(5	)		—
Net cash used in investing activities		(5	)		—
Cash flows from financing activities
Proceeds from stock issuance		—			—
Stockholder contribution		1,735			—
Net cash provided by financing activities		1,735			—
Net increase (decrease) in cash and cash equivalents		—			—
Cash and cash equivalents, beginning of period		—			—
Cash and cash equivalents, end of period	$	—		$	—

The accompanying notes are an integral part of these condensed financial statements.

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AIAI HOLDINGS CORPORATION

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Organization, Basis of Presentation, and Summary of Significant Accounting Policies

Organization, Formation and Description of Business

AIAI Holdings Corporation (the “Company”) was formed as a Delaware corporation on July 19, 2024 under the name MXLII Corporation. On November 3, 2025, MXLII Corporation amended its certificate of incorporation to change its legal name to AIAI Holdings Corporation. The Company was formed for the purpose of completing a direct listing of the Company’s common equity on a U.S. stock exchange (“Direct Listing”) and creating an AI-powered ecosystem through acquiring, integrating, and scaling companies that have high potential for increased operating results through the application of AI.

Financial Statement Preparation

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“U.S. GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the Company's opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented.

Use of Estimates

The preparation of the accompanying financial statements and related disclosures in conformity with U.S. GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in the financial statements and accompanying notes. Estimates and judgments are based on various assumptions that the Company believes are reasonable under the circumstances. Actual results could differ from those estimates.

Commitments and Contingencies

The Company is not a party to any pending claims or legal proceedings and is not aware of any other claims that it believes could, individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations or cash flows.

See Note 3, Transaction Advisory Costs for certain contingent fee arrangements that the Company has entered into with service providers.

Liquidity and Capital Resources

Prior to the completion of the Direct Listing of our common stock and the contemporaneous closing of the acquisition transactions for our Portfolio Companies, our liquidity needs primarily consist of working capital requirements associated with transaction advisory costs incurred in connection with the Direct Listing of our common shares. Our principal sources of liquidity are funded through capital contributions provided by our Founder or affiliated entities under common control of our Founder. As of March 31, 2026 and December 31, 2025, we did not have cash or financial assets of our own, nor did we have any indebtedness. During these periods, we did not conduct any substantive business operations, and all liquidity needs were met exclusively through capital contributions by our Founder and our affiliates who made payments to service providers on our behalf.

Following completion of the Direct Listing and the contemporaneous closing of the acquisition transactions for our Portfolio Companies our liquidity needs will primarily consist of working capital requirements for the operations of our Portfolio Companies as well as incremental general and administrative costs associated with operating as a public company, acquisition funding, capital expenditures, and research and development investments. Our principal sources of liquidity are expected to be cash generated from operations, available cash and cash equivalents, loans from or additional capital contributions provided by our Founder or affiliated entities, borrowings under one or more credit facilities, and access to capital markets.

2. Stockholders’ Equity

On March 1, 2025 the Company issued 1,000 shares of common stock at par value in connection with a $1.00 stock subscription agreement entered into with its sole stockholder. As of December 31, 2025, the Company was authorized to issue 10,000,000 shares of common stock, par value $0.001 per share.

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Effective on January 29, 2026, the Company’s Certification of Incorporation was amended and the 1,000 outstanding shares of common stock were converted to Class A common stock. As of March 31, 2026, the Company was authorized to issue 500,000,000, 60,000,000, and 25,000,000 shares of Class A common stock, Class B common stock, and Preferred stock, par value $0.001 per share, respectively.

3. Transaction Advisory Costs

In connection with the planned Direct Listing, the Company has incurred transaction advisory costs for legal, accounting advisory, valuation, and investor relations services during the three months ended March 31, 2026 and 2025. These costs were funded through capital contributions from the Company’s sole stockholder. Refer to Note 4, Related Party Transactions, for further discussion. To the extent that costs have been incurred but not yet remitted to third party vendors, unpaid amounts have been presented within Accrued liabilities on the balance sheets as of March 31, 2026 and December 31, 2025. Of the total transaction advisory costs incurred through March 31, 2026, $0.4 million is payable in common stock of the Company with the remainder payable in cash.

Additionally, the Company has engaged certain third-party service providers to provide transaction advisory services under contingent fee arrangements for which compensation will become due upon the date of the Direct Listing. Compensation for those services includes contingent fees ranging from $2.85 million to $10.85 million; of this amount $0.85 million is payable in cash with the remainder payable in common stock of the Company. The amount of contingent fees owed will be determined based upon the market capitalization of the Company as of the six-month anniversary of the Direct Listing. Furthermore, the Company has entered into a contingent fee arrangement with a service provider under which the provider will receive a grant of common shares equal to 1% of the fully diluted shares outstanding as of the date of the Direct Listing.

4. Related Party Transactions

In connection with transaction advisory costs paid on its behalf, the Company received capital contributions totaling $1.7 million and $0 during the three months ended March 31, 2026 and 2025, respectively, from an affiliated entity under common control of its sole stockholder as discussed in the Note 3, Transaction Advisory Costs.

5. Employment Agreements

The Company had three employees as of March 31, 2026 and no employees as of December 31, 2025. On January 15, 2026, the Company entered into employment agreements with certain executive officers which commence upon the date of the Direct Listing. These executive officers will be entitled to stock-based compensation in the form of an aggregate of 850,000 restricted common stock awards, granted upon the date of the Direct Listing, with one-third vesting upon each of the first, second, and third anniversary dates of the Direct Listing. In addition to the restricted common stock awards, executive officers are entitled to annual cash compensation totaling $2.75 million and discretionary bonuses pursuant to their respective employment agreements.

In November 2025, the Company’s Board of Directors adopted an Outside Director Compensation Policy, which was subsequently approved by the stockholders. Under this policy, each non-employee director (an “Outside Director”) is eligible to receive compensation in the form of cash and equity awards commencing upon effectiveness of the Direct Listing. Each Outside Director is entitled to receive annual cash compensation of $100,000, with additional compensation in an aggregate amount of $150,000 payable to committee chairs. Each Outside Director is also entitled to receive an initial equity award of $150,000 in restricted stock on the first trading day on or after such individual first becomes an Outside Director. This award vests in equal installments on each of the first, second, and third anniversary dates of the grant date. Furthermore, commencing on the first anniversary of services, each Outside Director is entitled to receive an annual grant of $150,000 restricted stock awards, which will vest on the earlier of (i) the one year anniversary of the annual award’s grant date, or (ii) the day immediately before the date of the next annual meeting following the annual award’s grant date.

6. Income Taxes

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. The Company has net operating loss carryforward deferred tax asset of $1.39 million and $0.82 million as of March 31, 2026 and December 31, 2025, respectively, which may be carried forward indefinitely. A full valuation allowance has been recorded on the net operating loss carryforward deferred tax asset as of March 31, 2026 and December 31, 2025.

7. Subsequent Events

Subsequent events were evaluated through June 22, 2026, the date the financial statements were issued.

On May 6, 2026, the Company completed the acquisition of C.C. Carlton Industries, Ltd. (“CCCI”), Constellation Network, Inc.

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(“Constellation”), gTC MediGuide LP (“MediGuide”), Vanguard Health Solutions, LLC (“Vanguard”), AI Research Corporation (“AIR”), and Bond Street Limited, LLC (“Bond Street”) (each referred to individually as a “Portfolio Company” and collectively as the “Portfolio Companies”). Consideration transferred in exchange for all outstanding equity interests in the Portfolio Companies included 27.47 million shares of AIAI Class A common stock, 3.75 million fully vested options in AIAI Class A common stock, and $20.7 million estimated contingent consideration payable in the form of AIAI Class A common stock. Purchase consideration for certain Portfolio Companies is subject to adjustment for (i) net indebtedness as of the closing date, and (ii) at the Company’s election, up to 1.25 million shares of AIAI Class A common stock upon the occurrence of a specified event, in accordance with the acquisition agreements. In addition, certain transaction-related costs incurred by the Portfolio Companies in an amount of up to $4.05 million will be reimbursed to former equity holders and accounted for as purchase consideration; outstanding unpaid transaction costs as of the closing date will be recognized as acquired liabilities.

Also on May 6, 2026, the Company issued 16.3 million shares of Class A common stock in exchange for an investment in non-voting preferred stock of Messier Blocker Corporation, and issued 25.1 million shares of Class A common stock to Messier 42, LLC (“M42”) as consideration for a perpetual license to M42 AI technology.

On May 14, 2026, the Company’s Class A common stock commenced trading on the Nasdaq Global Market under the ticker symbol "AIAI" pursuant to the Direct Listing. As a result of the Direct Listing, the Company became subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Nasdaq Stock Market LLC.

Following the effectiveness of our Registration Statement on May 6, 2026, and continuing through the date of this filing our Founder or affiliated entities under common control of our Founder funded approximately $7.0 million in payment obligations of the Company. Additionally, our Founder and affiliated entities have committed to providing approximately $45.0 million in cash funding to the Company to satisfy certain capital and/or contractual commitments in connection with our merger agreements for acquisition of the Portfolio Companies and costs associated with completion of our Direct Listing. Repayment is not required prior to June 30, 2027.

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C.C. CARLTON INDUSTRIES, LTD.

CONDENSED BALANCE SHEETS

(Amounts in thousands)


	March 31,		December 31,
	2026		2025
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	13,259	$	15,634
Accounts receivable
Contracts receivable		17,864		25,505
Retainage receivable - closed contracts		3,619		6,765
		21,483		32,270
Contract assets classified as:
Costs and estimated earnings in excess of billings on contracts in progress		13,426		2,738
Retainage receivable - open contracts		15,434		11,884
Other current assets		397		—
TOTAL CURRENT ASSETS		63,999		62,526
PROPERTY AND EQUIPMENT, NET		23,981		23,883
OTHER ASSETS
Due from related party, net		267		568
Other non-current assets		92		100
Finance right-of-use assets, net		4,830		5,873
Operating right-of-use assets, net		1,512		1,761
TOTAL ASSETS	$	94,681	$	94,711
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Accounts payable
Trade	$	35,189	$	34,981
Retainage payable - closed contracts		3,420		6,398
		38,609		41,379
Accrued expenses		2,252		1,058
Notes payable - current portion		2,040		1,849
Lines of credit - current portion		5,533		—
Finance lease obligation - current maturities		1,599		1,878
Operating lease obligation - current maturities		939		1,124
Contract liabilities classified as:
Billings in excess of costs and estimated earnings on contracts in progress		1,809		2,819
Retainage payable - open contracts		8,150		3,547
		9,959		6,366
TOTAL CURRENT LIABILITIES		60,931		53,654
NONCURRENT LIABILITIES
Notes payable		3,234		3,251
Lines of credit		17,683		19,067
Noncurrent finance lease obligation		2,472		3,007
Noncurrent operating lease obligation		654		744
TOTAL LIABILITIES	$	84,974	$	79,723
PARTNERS' CAPITAL
Limited Partners	$	9,370	$	14,468
General Partner		337		520
TOTAL PARTNERS' CAPITAL		9,707		14,988
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$	94,681	$	94,711

The accompanying notes are an integral part of these condensed financial statements.

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C.C. CARLTON INDUSTRIES, LTD.

CONDENSED STATEMENTS OF OPERATIONS

(Amounts in thousands)

(Unaudited)


	Three Months Ended March 31,			Three Months Ended March 31,
	2026			2025
INCOME
Revenue from contracts	$	58,869		$	62,391
Cost of contracts		55,371			53,453
GROSS PROFIT		3,498			8,938

OPERATING EXPENSES
General and administrative expenses		6,964			6,009
(Gain) loss on disposal of property and equipment		(117	)		17
State franchise tax expense		38			68

(LOSS) INCOME FROM OPERATIONS		(3,387	)		2,844

OTHER EXPENSES
Interest expense		(343	)		(336	)

NET INCOME (LOSS)	$	(3,730	)	$	2,508

The accompanying notes are an integral part of these condensed financial statements.

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C.C. CARLTON INDUSTRIES, LTD.

CONDENSED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL

(Amounts in thousands)

(Unaudited)


Partner	Beginning Ownership %			Ending Ownership %			Capital January 1, 2026		Contributions		Net Loss			Distributions and Withdrawals			Capital March 31, 2026
Limited Partners		96.53	%		96.53	%	$	14,468	$	—	$	(3,601	)	$	(1,497	)	$	9,370
General Partner		3.47	%		3.47	%		520		—	$	(129	)		(54	)		337
							$	14,988	$	—	$	(3,730	)	$	(1,551	)	$	9,707


Partner	Beginning Ownership %			Ending Ownership %			Capital January 1, 2025		Contributions		Net Income		Distributions and Withdrawals			Capital March 31, 2025
Limited Partners		96.53	%		96.53	%	$	14,906	$	—	$	2,421	$	(1,444	)	$	15,883
General Partner		3.47	%		3.47	%		600		—		87		(52	)		635
							$	15,506	$	—	$	2,508	$	(1,496	)	$	16,518

The accompanying notes are an integral part of these condensed financial statements.

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C.C. CARLTON INDUSTRIES, LTD.

CONDENSED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Three Months Ended March 31,			Three Months Ended March 31,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income	$	(3,730	)	$	2,508
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation		1,146			810
Amortization on finance right-of-use assets		185			453
Accounts receivable		7,641			(3,412	)
Retainage receivable - closed contracts		3,147			516
(Gain) loss on disposal of property and equipment		(117	)		17
Other		58			20
Contract assets classified as:
Costs and estimated earnings in excess of billings on contracts in progress		(10,688	)		(3,727	)
Retainage receivable - open contracts		(3,550	)		6
Other current assets		(397	)		1,363
Accounts payable		183			7,441
Retainage payable - closed contracts		(2,978	)		690
Due to related party		(83	)		17
Accrued expenses		1,193			36
Contract liabilities classified as:
Billings in excess of costs and estimated earnings on contracts in progress		(1,010	)		(2,063	)
Retainage payable - open contracts		4,603			540
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(4,397	)		5,215
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(311	)		(343	)
Proceeds from disposal of property and equipment		152			39
Issuance of related party note		-			(1,250	)
Proceeds from related party note		500			-
Payments for related party transactions		(120	)		(40	)
Proceeds from related party transactions		4			5
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		225			(1,589	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments on notes payable		(506	)		(158	)
Proceeds on lines of credit		34,116			17,800
Repayments on lines of credit		(29,966	)		(20,800	)
Repayment of finance leases		(296	)		(747	)
Distributions and withdrawals		(1,551	)		(1,496	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		1,797			(5,401	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(2,375	)		(1,775	)
CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD		15,634			2,545
CASH AND CASH EQUIVALENTS, AT END OF PERIOD	$	13,259		$	770

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Supplemental Disclosures of Cash flow information
Cash paid during the period for:

Interest	$	285	$	316

Noncash transactions:

Issuance of notes payable for property and equipment	$	88	$	445

Transfer of right-of-use assets to property and equipment	$	866	$	748

Issuance of notes payable to settle finance lease liabilities	$	518	$	544

The accompanying notes are an integral part of these condensed financial statements.

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C.C. CARLTON INDUSTRIES, LTD.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

C.C. Carlton Industries, Ltd. (the “Partnership”) is a Texas limited partnership, governed by an agreement of limited partnership, as amended (the “Partnership Agreement”). Carlton GP, LLC (“GP”) is a Texas limited liability corporation, and C.C. Carlton Construction of Austin, Inc. (“Construction”) is an S-Corporation.

As of December 31, 2024, GP and Construction owned 1.737% general partner interests in the Partnership. The sole limited partner (the “Limited Partner”) owned a 96.526% interest in the Partnership and 99% interest in GP with an additional investor owning a 1% interest in GP.

During the year ended December 31, 2025, the Limited Partner transferred 12.3% of its interests in the Partnership to the Honeybee Trust (“Honeybee”), 15.1% of its interests in the Partnership to CCC Rainbow Trust (“Rainbow”), and 13.7% of its interests in the Partnership to The Papa Oso Trust (“Papa Oso”).

There were no changes in the Company's ownership structure during the three months ended March 31, 2026.

The Partnership is engaged in the construction of site utilities, roads, bridges, and concrete structures in Texas.

Basis of Presentation and Use of Estimates

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. Actual results could differ from those estimates. In the Company's opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented.

Partnership Interests

Each partner’s ownership interest is represented by an individual capital account as provided for in the Partnership Agreement. Capital contributions, allocations of income, losses, distributions, and any withdrawals are determined in accordance with the Partnership Agreement and based on each partner’s respective ownership percentage. The Partnership’s ownership interests are not unitized, there is no active or public market for such interests, and any transfers are subject to the approval and restrictions outlined in the Partnership Agreement.

Partner capital accounts fluctuate based on project performance, bonding capacity, and working capital needs as determined by management and the partners.

Presentation of Partners’ Equity

Partners’ equity is presented in the financial statements under the caption “Partners’ Capital.” Capital accounts for each partner class are shown individually, reflecting the respective share of capital contributions, allocated earnings, distributions, and any withdrawals in accordance with the Partnership Agreement. Since the Partnership has not issued ownership units or shares, no par value or number of units is assigned to partners’ equity. Changes in partners’ equity are presented in the condensed statements of partners’ capital, consistent with the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 505, Equity.

Revenue Recognition

The Partnership recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers whereby revenue is recognized when control of the promised goods or services is transferred to the customer in an amount that reflects the consideration the Partnership expects to be entitled to in exchange for those goods or services.

The Partnership primarily enters into fixed-price customer contracts, with allowances for change orders, to provide civil construction and related services. The lengths of the Partnership’s contracts vary, typically lasting from six months to two years. Generally, each contract contains a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable

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from other promises in the contract and, therefore, is not distinct, and the entire transaction price is attributed to that single performance obligation.

Subsequent to the inception of a contract, the transaction price could change due to executed or unapproved change orders, and unresolved contract modifications and/or claims. Changes are accounted for as an adjustment to the existing performance obligation. Changes are made to the transaction price to the extent the amount can be reasonably estimated and recovery is probable.

The Partnership’s performance obligations are satisfied over time because performance creates or enhances an asset that the customer controls as the asset is created or enhanced. Revenue is recognized over time as control is transferred to the customers by measuring the progress toward complete satisfaction of the performance obligation using an input (i.e., “cost to cost”) method. Under the cost to cost method, costs incurred to-date are generally the best depiction of transfer of control.

All contract costs are recorded as incurred and revisions to estimated total costs are reflected as soon as the obligation to perform is determined.

Contract Assets and Contract Liabilities

Contract assets include costs and estimated earnings in excess of amounts billed to customers as well as amounts due under contractual retention provisions. Costs and estimated earnings in excess of billings represent amounts earned and reimbursable under contracts and have a conditional right for billing and payment such as achievement of milestones or completion of the project. Generally, such unbilled amounts will become billable according to the contract terms and generally will be billed and collected over the next twelve months.

Contracts include retention provisions to provide assurance to customers that the Partnership will perform in accordance with the contract terms and are not considered a financing benefit under ASC 606. The balances billed but not paid by customers pursuant to these provisions generally become due upon completion and acceptance of the project work by the customer.

Contract liabilities consist of billings in excess of costs and estimated earnings, net of the related contract retention. Billings in excess of costs and estimated earnings are billings to customers on contracts in advance of work performed. Generally, unearned project-related costs will be earned over the next twelve months. Provisions for losses are recognized for the amount of total estimated losses in the period that evidence indicates that the estimated total cost of a performance obligation exceeds its estimated total revenue; there were no material provisions for losses as of March 31, 2026, and December 31, 2025.

Cash and Cash Equivalents

Cash equivalents are securities having maturities of three months or less from the date of purchase. The Partnership had no cash equivalents at March 31, 2026 or December 31, 2025. From time to time, the Partnership’s balances may exceed FDIC insured limits; however, the Partnership believes it is not exposed to any significant credit risk on cash and cash equivalents.

Accounts Receivable

Accounts receivable includes billed and unbilled amounts for services provided to customers for which the Partnership has an unconditional right to payment. The Partnership provides an allowance for credit losses, which is based upon a review of outstanding receivables, historical collection information, and existing economic conditions. The Partnership has elected to use the practical expedient provided in ASC 326-20 that allows entities to assume that current economic conditions as of the balance sheet date do not change for the remaining life of the current accounts receivable and current contract assets. Receivables are due thirty days after the date of the invoice with retentions due thirty days after completion of the project and acceptance by the owner. Credit loss expense and allowance related to doubtful accounts receivable where collectability is not reasonably assured was immaterial as of and for the periods ended March 31, 2026, and December 31, 2025.

Concentration of Credit Risk and Significant Customers

Financial instruments, which potentially subject the Partnership to concentrations of credit risk, consist primarily of cash and cash equivalents, accounts receivable and contract assets. Cash and cash equivalents are held by more than one high credit quality financial institution.

As of March 31, 2026, one customer accounted for approximately 18% of total accounts receivable. As of March 31, 2026, one customer accounted for approximately 18% of total contract assets. For the three months ended March 31, 2026, no customer accounted for 10% or more of total revenue.

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As of December 31, 2025, one customer accounted for approximately 11% of total accounts receivable. As of December 31, 2025, two customers accounted for approximately 37% and 12% of total contract assets, respectively. For the three months ended March 31, 2025, two customers accounted for 11% and 11% of total revenues, respectively.

The customers that represented greater than 10% concentrations for the three months ended March 31, 2026 are different than the customers that represented greater than 10% concentrations for the three months ended March 31, 2025.

Income and Franchise Taxes

The Partnership is not directly subject to income taxes under the provisions of the Internal Revenue Code and applicable state laws. Therefore, taxable income is reported to the individual partners for inclusion in their respective tax returns and no provision for federal and state income taxes has been included in the condensed financial statements.

The State of Texas franchise tax is calculated based on the gross margin times the applicable state tax rate subject to certain provisions and adjustments. Amounts incurred but not yet paid are recorded in accrued expenses on the condensed balance sheets.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is charged to expense on the straight-line method over the estimated useful life of each asset. Leasehold improvements are amortized over the shorter of the lease term or respective estimated useful lives. Expenditures for maintenance and repairs are expensed as incurred. When assets are sold or otherwise disposed of, the related costs and accumulated depreciation are removed from the condensed balance sheets, and any resulting gains or losses are recognized in the condensed statements of operations.

Categories of assets and their useful lives are as follows:


Asset Class		Estimated Useful Life
Buildings and improvements		15 - 40 years
Construction equipment		5 - 10 years
Transportation equipment		5 - 7 years
Furniture & fixtures		5 - 7 years
Office equipment		5 - 7 years
Leasehold improvements		Lesser of useful life or lease term

Summary of Property and Equipment is as follows (in thousands):


March 31, 2026
Category	Cost		Accumulated Depreciation			Net Book Value
Land	$	365	$	—		$	365
Construction equipment		34,093		(12,947	)		21,146
Transportation equipment		2,499		(1,447	)		1,052
Furniture & fixtures		29		(29	)		—
Office equipment		255		(231	)		24
Leasehold improvements		1,535		(141	)		1,394
Total	$	38,776	$	(14,795	)	$	23,981

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December 31, 2025
Category	Cost		Accumulated Depreciation			Net Book Value
Land	$	365	$	—		$	365
Construction equipment		33,144		(12,002	)		21,142
Transportation equipment		2,330		(1,393	)		937
Furniture & fixtures		29		(29	)		—
Office equipment		255		(228	)		27
Leasehold improvements		1,535		(123	)		1,412
Total	$	37,658	$	(13,775	)	$	23,883

Long-Lived Asset Impairment

The Partnership evaluates the recoverability of the carrying value of long-lived assets whenever events or circumstances indicate the carrying amount may not be recoverable. If a long-lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset are less than the carrying amount of the asset, the asset cost is adjusted to fair value, and an impairment loss is recognized as the amount by which the carrying amount of a long-lived asset exceeds its fair value.

No long-lived asset impairment was recognized during the three months ended March 31, 2026 and March 31, 2025.

Imputed Interest

As further described in Note E – Debt, the Partnership entered several equipment purchases in exchange for notes with maturities extending through April 2031. The notes had stated interest rates between 0.00% and 6.89%. The Partnership, in accordance with ASC 835, Interest, adjusted the stated amount of the notes to approximate the then current cash sales price of the equipment by imputing interest using the prime rate published by JPMorgan plus 1.00%. Each equipment purchase was recorded at its present value, with the difference between the face value of the notes and the present value recorded as a note discount. The discount on each note is amortized over the life of the note using the effective interest method. The aggregate notes discount is $0.3 million and $0.4 million as of March 31, 2026, and December 31, 2025, respectively, and is presented on the condensed balance sheets as a direct deduction from the carrying amount of the related notes.

Leases

The Partnership records leases in accordance with ASC 842, Leases. The Partnership determines if an arrangement is a lease, or contains a lease, at inception of the contract and when the terms of an existing contract are changed. The Partnership determines lease classification as operating or finance and recognizes a lease liability and a right of use (ROU) asset at the commencement date of the lease. The lease liability is initially and subsequently recognized based on the present value of its future lease payments, generally discounted using the borrowing rate on the Partnership’s secured line of credit as the implicit rate is not readily determinable on the Partnership’s leases. The ROU asset equals the lease liability at lease commencement as there are not significant indirect direct costs, prepaid or deferred rent, or lease incentives. Generally, the Partnership’s lease contracts do not have the option to extend or renew. The Partnership does not have any material leases with residual value guarantees or restrictive covenants. Lease payments are generally fixed over the lease term. Operating lease expense is recognized on a straight-line basis over the lease term.

The Partnership’s finance lease ROU assets are amortized over the estimated useful life of the asset as ownership of the leased asset transfers to the Partnership by the end of the lease term, or the Partnership is reasonably certain to exercise a purchase option. Amortization expense for finance lease ROU assets is recognized on a straight-line basis and is included in cost of contracts on the condensed statements of operations. Interest expense on finance lease liabilities is recognized separately from the amortization of the ROU asset and is included in interest expense on the condensed statements of operations. The Partnership has elected not to record leases with an initial term of 12 months or less on the condensed balance sheets. Lease cost associated with short-term leases are recognized on a straight-line basis over the lease term.

Advertising Expense

The Partnership expenses advertising costs as incurred in accordance with ASC 720, Other Expenses. Advertising expenses primarily include marketing materials, digital and print media campaigns, promotional activities, and outreach efforts that support project acquisition and brand development. Advertising expense totaled $0.2 million and $0.4 million for the three months ended March 31,

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2026 and March 31, 2025, respectively. The Partnership does not capitalize advertising costs, as such amounts do not meet the criteria for capitalization under U.S. GAAP.

Commitments and Contingencies – Legal Proceedings

The Partnership is subject to various claims and legal proceedings that arise in the ordinary course of business. Management is not aware of any pending or threatened litigation, claims, or assessments that are expected to have a material adverse effect on the Partnership’s financial position, results of operations, or cash flows. The total liabilities for legal proceedings were immaterial as of March 31, 2026, and December 31, 2025.

Fair Value Measurements

ASC 820, Fair Value Measurement, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to observable inputs (Level 1) and the lowest priority to unobservable inputs (Level 3).

•

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

•

Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

•

Level 3 – Unobservable inputs for the asset or liability that rely on the Partnership’s own assumptions.

As of March 31, 2026, and December 31, 2025, the Partnership did not have any assets or liabilities measured at fair value on a recurring or nonrecurring basis. Accordingly, no fair value hierarchy table has been presented. The carrying amounts of financial instruments such as cash, receivables, and payables approximate their fair values due to the short-term nature of these instruments. The fair value of the Partnership’s debt instruments approximate their carrying value due to variable interest rates, relatively short maturities, or how recent the debt was entered. The interest rates on the Partnership’s borrowings are consistent with current market rates available for similar instruments.

Accounting Standards Recently 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 that permits entities to assume that current economic conditions as of the balance sheet date will remain unchanged for the remaining life of current accounts receivable and current contract assets arising from transactions accounted for under ASC 606 when estimating expected credit losses. The Partnership adopted ASU 2025‑05 effective January 1, 2026 on a prospective basis and elected the practical expedient. The adoption of this guidance did not have a material impact on the Partnership's condensed financial statements.

Accounting Standards Issued But Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires that a public business entity disclose detailed information about types of expense. Specifically, a public business entity would disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization included in each relevant expense caption. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed in (a)–(d). In addition, a public business entity should include certain amounts that are already required to be disclosed under current U.S. GAAP in the same disclosure as the other disaggregation requirements. A public business entity would also disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively and disclose the total amounts of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. For public business entities, the new guidance is effective for annual periods beginning after December 15, 2026. Early adoption is permitted. The new guidance should be applied either prospectively to financial statements issued after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Partnership is evaluating the impact of the new guidance.

The Partnership does not expect the adoption of this update, or any other recently issued but not yet effective accounting pronouncements, to have a material effect on the Partnership’s financial statements.

Segment Reporting

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The Partnership operates as a single operating segment engaged in providing construction and related services to public and private sector clients. The Partnership’s reportable segment is determined by Craig Carlton, Manager of GP and Benjamin Lyon, CEO, the executive management team, which is designated as the Chief Operating Decision Maker (“CODM”), based upon information provided about the Partnership’s operations. The segment is also distinguished by the level of information provided to the CODM, which uses net income to review performance and allocate resources. The nature of the Partnership’s operations, the types of customers served, and the methods used to deliver services are substantially similar across all projects. Accordingly, management has determined that the Partnership has one reportable segment under ASC 280, Segment Reporting. Segment accounting policies are the same as those described in Note A – Summary of Significant Accounting Policies.

All of the Partnership's revenues are generated from customers within the United States. All of the Partnership's long-lived assets are located in the United States.

As the Partnership operated in one reportable operating segment, all required financial segment information is included in the Condensed Financial Statements.

NOTE B - REVENUE FROM CONTRACTS WITH CUSTOMERS

Remaining Performance Obligations

As of March 31, 2026, and December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance obligations that are unsatisfied, or partially unsatisfied, was approximately $165.2 million and $158.9 million, respectively. The Partnership expects to recognize unearned revenue at March 31, 2026, as follows (in thousands):


Expected Timing of Revenue Recognition	Amount
Within 12 months	$	158,511
13 to 24 months		6,712
Beyond 24 months		-
Total	$	165,223

Amounts disclosed above represent management’s best estimate based on current contract schedules and anticipated project progress. Actual timing of revenue recognition may vary due to changes in project scope, performance, or customer requirements.

Contract Estimates

Accounting for long-term contracts with customers involves estimating total transaction price, total estimated costs at completion, and progress toward satisfaction of performance obligations which are used to recognize revenue earned. Unforeseen events and circumstances can alter the estimate of the costs associated with a particular contract. Total estimated costs at completion can be impacted by changes in productivity, scheduling, labor costs, subcontracts, materials, and equipment. Additionally, external factors such as weather, customer needs, customer delays in providing permits and approvals, labor availability, governmental regulation and politics may affect the progress of a project’s completion and push the timing and amount of revenue recognition.

To the extent that original cost estimates are modified, estimated costs to complete increase, delivery schedules are delayed, or progress under a contract is otherwise impeded, cash flow, revenue recognition, and profitability from a particular contract may be adversely affected.

The nature of the Partnership’s contracts gives rise to several types of variable consideration that can either increase or decrease the transaction price. Transaction price for contracts is required to include evaluation of variable consideration to which the Partnership has an enforceable right to compensation or obligation for a reduction, which can result in increases or decreases to a contract’s transaction price. The effect of a change in variable consideration on the transaction price of a performance obligation is recognized as an adjustment to revenue on a cumulative catch-up basis.

Contract modifications can result in contract specifications or requirements that either create new or changes existing enforceable rights and obligations of the parties to the contract. The Partnership considers unapproved change orders to be contract modifications for which customers have agreed to changes in the scope of the contract but have not agreed to the price.

The Partnership considers claims to be contract modifications for which the Partnership has sought, or will seek, to collect from customers, or others, for customer-caused changes in contract specifications or design, or other customer-related causes of unanticipated additional contract costs on which there is no contractual agreement with the customer for changes in either the scope or price of the contract. Claims can also be caused by non-customer-caused changes, such as weather delays, work stoppages or other unanticipated events.

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Costs associated with contract modifications are included in the estimated costs to complete the contracts and are treated as project costs when incurred. Contract modifications are generally for goods or services that are not distinct and, therefore, are accounted for as a part of the existing contract. In those instances, the effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue on a cumulative catch-up basis.

Disaggregation of Revenue

The Partnership’s customers are either in the public or private sector. The public sector primarily includes projects for federal, state, and municipal agencies involving infrastructure and public works construction. The private sector primarily includes commercial and industrial development projects with private clients.

The following table presents the Partnership’s revenue disaggregated by customer type (in thousands):


Three months ended March 31,	Public Sector Contracts		Private Sector Contracts		Total Revenue
2026	$	48,301	$	10,568	$	58,869
2025	$	48,372	$	14,019	$	62,391

During the three months ended March 31, 2026 and 2025, the Partnership recognized net reductions to revenue of $4.0 million and net increases to revenue of less than $0.1 million, respectively, related to performance obligations satisfied or partially satisfied in prior periods. The amounts primarily reflect revisions in progress towards completion of certain projects resulting from changes in the estimated total cost, and changes to total contract value, including approved change orders, and updates to variable consideration related to unapproved change orders.

As of March 31, 2026, and December 31, 2025, the status of uncompleted contracts is summarized as follows (in thousands):


	March 31, 2026			December 31, 2025
Contract assets and liabilities classified as:
Costs and estimated earnings in excess of billings on contracts in progress	$	13,426		$	2,738
Billings in excess of costs and estimated earnings on contracts in progress		(1,809	)		(2,819	)
	$	11,617		$	(81	)

As work is performed, revenue is recognized, and the corresponding contract liabilities are reduced. During the three months ended March 31, 2026, and March 31, 2025, the Partnership recognized revenue of $2.0 million and $4.7 million, respectively, that was included in the contract liability balances at December 31, 2025, and December 31, 2024, respectively.

Contract claims and unapproved change orders included in contract assets and liabilities on uncompleted contracts at March 31, 2026, and December 31, 2025 were not material.

NOTE C – RELATED PARTIES

Limited Partner Loans and Transactions

During the three months ended March 31, 2026, the Partnership received cash repayment of $0.5 million related to short term promissory notes made to the Limited Partner in 2025 which were outstanding as of December 31, 2025. No amounts were outstanding under the notes at March 31, 2026. There was no interest income earned on the notes during the three months ended March 31, 2026.

During the three months ended March 31, 2025, the Partnership loaned $1.3 million to the Limited Partner under short-term promissory notes. Amounts outstanding under the notes at December 31, 2025, was $0.5 million. Total interest income earned on the notes during the three months ended March 31, 2025, was not material.

The Partnership also routinely engages in transactions with related parties in an ordinary course of business. These transactions primarily consist of services provided by a single related party, Triple C Outfitters, which includes event services for the Partnership’s employees and customers. The total expense recognized for services provided by the related party was less than $0.1 million and $0.1 million for the three months ended March 31, 2026, and 2025, respectively. Payments for the services are settled in cash and amounts payable to the related party as of March 31, 2026, and December 31, 2025, were $0 and $0.1 million, respectively. The amounts payable are included in due from related party in the condensed balance sheets.

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Related Party Leases

The Partnership leases real estate used for construction equipment storage and operations from five companies, which are all under common control of the Limited Partner. The leases are classified as operating leases. Lease expense recognized under these arrangements was $0.3 million and $0.4 million for the three months ended March 31, 2026, and March 31, 2025, respectively. Required lease information under ASC 842 is presented in Note D – Leases.

NOTE D – LEASES

The Partnership enters into lease arrangements primarily for office facilities, equipment, and vehicles used in construction operations. The Partnership’s lease portfolio consists of both operating and finance leases with varying terms, generally ranging from one to ten years. Lease agreements for office and yard facilities are typically operating leases, while equipment and vehicle leases are generally classified as finance leases. Operating lease costs include $0.1 million and less than $0.1 million of variable lease costs for the three months ended March 31, 2026 and March 31, 2025, respectively.

Lease cost is as follows (in thousands):


	For the three months ended March 31, 2026		For the three months ended March 31, 2025
Operating lease cost	$	323	$	377
Finance lease cost		277		650
	$	600	$	1,027

Cash paid for amounts included in the measurement of lease obligations are as follows (in thousands):


	For the three months ended March 31, 2026		For the three months ended March 31, 2025
Operating leases	$	349	$	416
Finance leases		296		747
	$	645	$	1,163

Additional lease information is as follows:


	As of March 31, 2026			As of December 31, 2025
Weighted-average remaining lease term - operating leases		2.45			2.80
Weighted-average remaining lease term - finance leases		1.12			1.37
Weighted-average discount rate - operating leases		5.15	%		4.95	%
Weighted-average discount rate - finance leases		9.26	%		8.03	%

The aggregate annual lease obligations as of March 31, 2026 are as follows (in thousands):


	Operating Leases			Finance Leases
Remaining nine months of 2026	$	897		$	1,314
2027		322			3,112
2028		479			—
2029		—			—
2030		—			—
Thereafter		—			—
		1,698			4,426
Less imputed interest		(105	)		(355	)
Net lease obligation	$	1,593		$	4,071

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NOTE E – DEBT

As of March 31, 2026 and December 31, 2025, the Partnership had the following notes payable (in thousands):


		March 31, 2026			December 31, 2025


Note payable due in monthly instalments of $13,195, at 0.00% stated interest, 8.75% imputed interest, maturing October 2028, secured by certain equipment of the Partnership.	$		365	$		396

Note payable due in monthly instalments of $8,676, at 0.00% stated interest, 8.75% imputed interest, maturing October 2027, secured by certain equipment of the Partnership.			154			176

Note payable due in monthly instalments of $14,043, at 6.89% stated interest, 8.50% imputed interest, maturing January 2028, secured by certain equipment of the Partnership.			285			321

Note payable due in monthly instalments of $18,176, at 5.99% stated interest, 8.50% imputed interest, maturing February 2028, secured by certain equipment of the Partnership.			385			430

Note payable due in monthly instalments of $9,567, at 5.99% stated interest, 8.50% imputed interest, maturing April 2028, secured by certain equipment of the Partnership.			219			242

Note payable due in monthly instalments of $8,865, at 3.99% stated interest, 8.50% imputed interest, maturing May 2028, secured by certain equipment of the Partnership.			210			231

Note payable due in monthly instalments of $2,923, at 0.00% stated interest, 8.50% imputed interest, maturing June 2029, secured by certain equipment of the Partnership.			99			106

Note payable due in monthly instalments of $1,594, at 0.00% stated interest, 8.50% imputed interest, maturing July 2029, secured by certain equipment of the Partnership.			55			59

Note payable due in monthly instalments of $73,514, at 5.20% stated interest, 8.50% imputed interest, maturing September 2028, secured by certain equipment of the Partnership.			1,981			2,156

Note payable due in monthly instalments of $4,422, at 0.00% stated interest, 8.00% imputed interest, maturing October 2029, secured by certain equipment of the Partnership.			163			173

Note payable due in monthly instalments of $7,899, at 0.00% stated interest, 8.00% imputed interest, maturing November 2029, secured by certain equipment of the Partnership.			298			315

Note payable due in monthly instalments of $1,438, at 0.00% stated interest, 8.00% imputed interest, maturing December 2030, secured by certain equipment of the Partnership.			67			70

Note payable due in monthly instalments of $19,987 at 0.00% stated interest, 8.00% imputed interest, maturing November 2027, secured by certain equipment of the Partnership.			373			425

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Note payable due in monthly instalments of $1,473, at 0.00% stated interest, 7.75% imputed interest, maturing April 2031, secured by certain equipment of the Partnership.	73	—

Note payable due in monthly instalments of $17,084, at 5.20% stated interest, 7.75% imputed interest, maturing May 2029,secured by certain equipment of the Partnership.	547	—

AIAI Holdings Corp 10-Q