Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2026

Summary Of Significant Accounting Policies [Line Items]

Commitments and Contingencies - Legal Proceedings

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.

C.C. Carlton Industries, Ltd.

Summary Of Significant Accounting Policies [Line Items]

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

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

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.

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


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,

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

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).

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

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

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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 Issued But Not Yet Adopted

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

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.