Full Press Release Details
For the three and nine months ended February
28, 2026 and 2025 (Unaudited)
| As of: | Note | Feb 28, 2026 | May 31, 2025 | ||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 681,509 | $ | 558,081 | |||||||
| Accounts receivable, net | 5 | 388,048 | 327,788 | ||||||||
| Other receivables | 4,000 | 2,982 | |||||||||
| Investments, at fair value | 9 | 344,336 | 178,657 | ||||||||
| Inventories, net | 6 | 502,717 | 469,220 | ||||||||
| Prepaid expenses and other current assets | 24,231 | 7,187 | |||||||||
| Total Current Assets | $ | 1,944,841 | $ | 1,543,915 | |||||||
| Non-current Assets | |||||||||||
| Property and equipment, net | 7 | $ | 463,772 | $ | 543,627 | ||||||
| TOTAL ASSETS | $ | 2,408,613 | $ | 2,087,542 | |||||||
| LIABILITIES | |||||||||||
| Current Liabilities | |||||||||||
| Accounts payable | $ | 158,645 | $ | 127,201 | |||||||
| Credit card payable | 5,818 | 301 | |||||||||
| Notes payable | 8 | 108,034 | 161,692 | ||||||||
| Customer deposits | - | 6,135 | |||||||||
| Accrued settlement liability | 225,000 | 225,000 | |||||||||
| Total Current Liabilities | $ | 497,497 | $ | 520,329 | |||||||
| TOTAL LIABILITIES | $ | 497,497 | $ | 520,329 | |||||||
| COMMITMENT AND CONTINGENCIES | 11 | ||||||||||
| STOCKHOLDERS' EQUITY | |||||||||||
| Capital stock (no par value, 100,000 shares authorized; 10,000 shares issued and outstanding at February 28, 2026 and May 31, 2025) | 10 | $ | - | $ | - | ||||||
| Paid-in Capital | 10 | 10,000 | 10,000 | ||||||||
| Retained Earnings | 10 | 1,901,116 | 1,557,213 | ||||||||
| TOTAL STOCKHOLDERS' EQUITY | $ | 1,911,116 | $ | 1,567,213 | |||||||
| TOTAL LIABILITIES AND EQUITY | $ | 2,408,613 | $ | 2,087,542 |
The accompanying notes are an integral
part of these statements.
Statement of Operations (unaudited)
| Three Months Ended February 28, | Nine Months Ended February 28, | |||||||||||||||||||
| Note | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||
| Revenue | 3 | $ | 1,274,503 | $ | 1,015,933 | $ | 3,607,404 | $ | 3,197,393 | |||||||||||
| Cost of goods sold | (1,003,914 | ) | (945,867 | ) | (2,139,952 | ) | (2,568,491 | ) | ||||||||||||
| Inventory impairments and write-offs | 6 | - | - | (695,763 | ) | - | ||||||||||||||
| Total cost of goods sold | (1,003,914 | ) | (945,867 | ) | (2,835,715 | ) | (2,568,491 | ) | ||||||||||||
| Gross profit | $ | 270,589 | $ | 70,066 | $ | 771,689 | $ | 628,902 | ||||||||||||
| Other income, net | 2,694 | 2,082 | 16,167 | 3,922 | ||||||||||||||||
| Litigation settlement expense | 11 | - | (225,000 | ) | - | (225,000 | ) | |||||||||||||
| Other operating expenses | (146,129 | ) | (157,068 | ) | (432,968 | ) | (504,900 | ) | ||||||||||||
| Income (loss) before income taxes | $ | 127,154 | $ | (309,920 | ) | $ | 354,888 | $ | (97,076 | ) | ||||||||||
| Income tax expense | 13 | (3,662 | ) | (3,662 | ) | (10,985 | ) | (10,985 | ) | |||||||||||
| Net income (loss) | $ | 123,492 | $ | (313,582 | ) | $ | 343,903 | $ | (108,061 | ) | ||||||||||
| Earnings (loss) per share - basic and diluted | $ | 12.35 | $ | (31.36 | ) | $ | 34.39 | $ | (10.81 | ) | ||||||||||
| Weighted-average shares outstanding - basic and diluted | 10,000 | 10,000 | 10,000 | 10,000 |
The accompanying notes are an integral
part of these statements.
Statement of Changes in Stockholders'
| Three Months Ended February 28, | Nine Months Ended February 28, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Paid-in Capital | $ | 10,000 | $ | 10,000 | $ | 10,000 | $ | 10,000 | ||||||||
| Retained Earnings | ||||||||||||||||
| Beginning Balance | $ | 1,777,624 | $ | 1,874,512 | $ | 1,557,213 | $ | 1,668,991 | ||||||||
| Net Income (loss) | 123,492 | (313,582 | ) | 343,903 | (108,061 | ) | ||||||||||
| Ending Balance | $ | 1,901,116 | $ | 1,560,930 | $ | 1,901,116 | $ | 1,560,930 | ||||||||
| Total Equity | $ | 1,911,116 | $ | 1,570,930 | $ | 1,911,116 | $ | 1,570,930 |
The accompanying notes are an integral
part of these statements.
Statement of Cash Flows (unaudited)
| Nine Months Ended February 28, | ||||||||
| 2026 | 2025 | |||||||
| Operating activities | ||||||||
| Net Income (Loss) | $ | 343,903 | $ | (108,061 | ) | |||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 86,342 | 76,540 | ||||||
| Provision for doubtful accounts | - | (198,042 | ) | |||||
| Inventory reserves and write-downs | - | 80,182 | ||||||
| Non-cash adjustments to PP&E and inventory, net | - | (130,722 | ) | |||||
| Reversal of non-cash accrual | - | 225,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (increase) in accounts receivable | (60,260 | ) | 172,533 | |||||
| Decrease (increase) in Inventories | (33,497 | ) | - | |||||
| Increase in prepaid expenses and taxes | (17,044 | ) | (7,500 | ) | ||||
| Decrease (Increase) in other receivables | (1,018 | ) | 4,549 | |||||
| Increase in accounts payable and credit cards | 36,961 | 42,001 | ||||||
| Decrease in accrued expenses | - | (2,747 | ) | |||||
| Decrease in customer deposits | (6,135 | ) | (19,498 | ) | ||||
| Net cash (used in) provided by operating activities | $ | 349,252 | $ | 134,235 | ||||
| Investing activities | ||||||||
| Purchases of office equipment | (6,487 | ) | (7,891 | ) | ||||
| Purchases of investments | (165,679 | ) | - | |||||
| Net cash provided by (used in) investing activities | $ | (172,166 | ) | $ | (7,891 | ) | ||
| Financing activities | ||||||||
| (Repayments) of Newlane Finance note payable | - | (16,013 | ) | |||||
| (Repayments) of INTECH note payable | (25,893 | ) | (25,003 | ) | ||||
| (Repayments) of US Bank Equipment loan | (15,179 | ) | (14,262 | ) | ||||
| (Repayments) of SBA PPP loan | (12,586 | ) | (12,490 | ) | ||||
| Net cash provided by (used in) financing activities | $ | (53,658 | ) | $ | (67,768 | ) | ||
| Net increase in cash | $ | 123,428 | $ | 58,576 | ||||
| Cash, beginning of period | $ | 558,081 | $ | 595,813 | ||||
| Cash, end of period | $ | 681,509 | $ | 654,389 |
The accompanying notes are an integral part of
Notes to the Financial Statements (unaudited)
Notes to the Financial Statements
As of February 28, 2026 and
May 31, 2025, and for the three and nine months ended February 28, 2026 and 2025 (Unaudited)
NOTE 1: Nature of Operations
A&B Aerospace, Inc. (the "Company")
is a California corporation incorporated in 1992, operating as a precision CNC machining contractor serving the aerospace, defense, and
industrial end-markets. The Company manufactures close-tolerance machined components from customer-supplied and Company-procured raw materials,
principally aluminum, stainless steel, titanium, and high-temperature alloys, using CNC turning centers, Swiss-type automatic lathes,
and vertical machining centers at its facility in Southern California. The Company operates under an AS9100D-certified quality management
system and supplies both production and aftermarket components. The Company's fiscal year ends on May 31. These interim financial statements
cover the three and nine months ended February 28, 2026 and the comparable prior-period three and nine months ended February 28, 2025.
The nine-month stub period extends from June 1, 2025 through February 28, 2026. The stub period financial statements have been prepared
in connection with a potential sale transaction.
NOTE 2: Summary of Significant Accounting Policies
Basis of presentation
The accompanying financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP") and
are presented in U.S. dollars.
In accordance with Accounting Standards
Codification (ASC) 205-40, Presentation of Financial Statements, Going Concern, management has evaluated 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 within
one year after the date these financial statements are available to be issued. The Company generated net income of $123,492 for the three
months ended February 28, 2026, compared to a net loss of $313,582 for the three months ended February 28, 2025. For the nine months ended
February 28, 2026, the Company generated net income of $343,903, compared to a net loss of $108,061 for the nine months ended February
28, 2025. The Company generated positive cash flow from operations of $349,252 for the nine months ended February 28, 2026, compared to
$134,235 for the nine months ended February 28, 2025, demonstrating an ability to fund its day-to-day operations from recurring revenue.
At February 28, 2026, the Company had
net working capital (current assets less current liabilities) of approximately $1,447,000, comprising total current assets of approximately
$1,945,000 and total current liabilities of approximately $497,000, resulting in a current ratio of approximately 3.9 to 1. Cash and cash
equivalents totaled $681,509 and the Company held an additional $344,000 in marketable equity securities, providing aggregate liquid resources
of approximately $1,026,000 against total current obligations of approximately $497,000.
Management has assessed the Company's
available cash and cash equivalents, its investment portfolio, and projected operating cash requirements for the twelve months following
the date the financial statements are available to be issued. Based on this assessment (including the Company's positive operating cash-flow
trend and its net working capital position) management believes the Company has sufficient liquidity to meet its obligations as they become
due, and accordingly the financial statements have been prepared on a going-concern basis.
financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the
reported amounts of revenue and expenses during the reporting period. Areas requiring significant management judgment include the
allowance for credit losses on accounts receivable, the net realizable value of inventories (including the capitalized
manufacturing-overhead component), the useful lives and recoverability of property and equipment, the valuation of investments, and
the assessment of revenue recognition for consignment arrangements under ASC 606. Actual results could differ from those
Notes to the Financial Statements (unaudited)
Cash and cash equivalents
Cash and cash equivalents include cash
on hand, cash held in demand deposit accounts at federally-insured financial institutions, and highly-liquid investments with original
maturities of three months or less at the date of acquisition. Money market funds held at Morgan Stanley are classified as cash equivalents
as they are redeemable on demand at net asset value and are invested in short-term, high-credit-quality
Concentrations of credit risk
The Company is exposed to concentrations
of credit risk on cash deposits and trade accounts receivable. The Company's accounting policy and the quantitative disclosures regarding
these concentrations are presented in Note 4.
Investments consist of marketable equity
securities and money market instruments held in a brokerage account at Morgan Stanley. Equity securities are measured at fair value with
changes in fair value recognized in the Statement of Operations as a component of Other Income, Net, in accordance with ASC 321, Investments
- Equity Securities. Fair values are determined based on quoted market prices in active markets (Level 1 inputs, see Note 9). Dividend
income is recognized when the Company's right to receive payment is established.
Accounts receivable and allowance for credit losses
Accounts receivable are recorded at
the invoiced amount, net of an allowance for credit losses. The Company applies the current expected credit loss ("CECL") model
under ASC 326, Financial Instruments - Credit Losses. Under CECL, the Company estimates lifetime expected credit losses at the reporting
date based on a combination of (i) a specific-reserve analysis for invoices aged greater than 90 days or where other indicators of collectability
risk exist, and (ii) a pooled historical-loss assessment for the remainder of the portfolio. Forward-looking economic indicators (including
aerospace end-market demand, customer-specific
financial condition, and general macroeconomic conditions) are incorporated where they would materially affect the expected loss estimate.
Invoices are charged off against the allowance when management determines, after exhausting commercially reasonable collection efforts,
that recovery is not probable.
Inventories are stated at the lower
of cost or net realizable value, with cost determined using a first-in, first-out
(FIFO) method. Inventory cost includes direct materials, direct labor, and an allocation of manufacturing overhead under a full-absorption
costing model consistent with ASC 330, Inventory. Manufacturing overhead allocated to inventory includes, among other items, indirect
production labor, manufacturing utilities, plant rent, plant insurance, tooling, plant supplies, and depreciation on manufacturing equipment.
The Company periodically reviews inventory for excess and obsolete items and records an inventory reserve when necessary.
Notes to the Financial Statements (unaudited)
The Company evaluates
its inventories for excess, slow-moving, and obsolete quantities at each reporting date. A reserve is recorded against inventories
where the estimated net realizable value is less than carrying cost based on management's analysis of (i) ageing of finished goods,
(ii) historical and forecast usage by part number, (iii) customer-specific demand visibility (including consumption against open
vendor-managed inventory ("VMI") replenishment commitments), and (iv) the salvage or scrap value of components for which
no further demand is anticipated. Write-downs are recognized in the period in which the reduction in net realizable value is
identified and are presented within Inventory impairments and write-offs in the Statements of Operations.
Raw material, work-in-process and finished
goods are held on the Company's premises and measured using year-end physical counts. The Company applies a standard-cost system for routine