NOTE 4. REVENUE

Revenue recognition

Nature of Revenue Source - The Company manufactures and sells a range of branded and private label evaporated salt products to nationwide retailers, pharmaceutical companies, foodservice operators, and independent distributors. When the Company enters into a sale arrangement with a customer, it believes it is probable that it will collect substantially all the consideration to which it will be entitled in exchange for the goods that will be transferred to the customer. The Company’s customer contracts identify the product, quantity, price, payment terms, and final delivery terms. Payment terms sometimes include early-pay discounts. Although some payment terms may be extended, no terms beyond one year are granted at contract inception.

The Company determines revenue recognition through the following steps:

Performance Obligations - A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in FASB ASC 606, Revenue from Contracts with Customers. The contract's transaction price is allocated to the performance obligations and recognized as revenue when the performance obligations are satisfied. Substantially all our contracts are of a short-term nature and contain a single performance obligation. Because the Company’s agreements have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations.

Shipping and handling costs associated with outbound freight, including shipping and handling costs after control over a product is transferred to a customer are accounted for as a fulfillment cost as incurred and are not considered to be a separate performance obligation. Shipping and handling costs recorded as a component of cost of sales were approximately $2.6 million and $2.5 million for the three months ended June 30, 2026 (Successor) and June 30, 2025 (Predecessor), respectively. Shipping and handling costs recorded as a component of cost of sales were approximately $3.5 million, $1.3 million, and $4.8 million for the period from February 27, 2026 to June 30, 2026 (Successor), the period from January 1, 2026 to February 26, 2026 (Predecessor), and the six months ended June 30, 2025 (Predecessor), respectively.

Contract Estimates - Most contracts include some form of variable consideration. The most common forms of variable consideration include discounts, rebates, and sales returns and allowances. Variable consideration is treated as a reduction in revenue when product revenue is recognized. The Company uses the most likely amount method to determine the variable consideration. The Company believes there will not be significant changes to estimates of variable consideration when any related uncertainties are resolved with customers. The Company reviews and updates its estimates and related accruals of variable consideration each reporting period based on the terms of the agreements, historical experience, and any recent changes in the market. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration.

Approximately 99.8% of the Company’s net sales are generated from North America, and 92.5% and 92.4% of which is from domestic sales for the three months ended June 30, 2026 (Successor) and June 30, 2025 (Predecessor), respectively. Approximately 99.7%, 99.8%, and 99.7% of the Company’s net sales are generated from North America, and 92.6%, 94.1%, and 92.3% of which is from domestic sales for the period from February 27, 2026 to June 30, 2026 (Successor), the period from January 1, 2026 to February 26, 2026 (Predecessor), and the six months ended June 30, 2025 (Predecessor), respectively. The Company offers customers limited right of return for its non-conforming products in the event of defects. Customer remedies may include either a cash refund or product exchange. Accordingly, the estimated right of return and related refund liability is recorded as a reduction in net sales. Return estimates are reviewed and updated in each reporting period based on historical sales and return experiences. Contract asset and liability balances as of June 30, 2026 (Successor) and December 31, 2025 (Predecessor) are immaterial.

Revenue disaggregation

The Company has vertically integrated operations under which the Company solution mines, manufactures, processes, packages, markets, distributes and sells salt either as packaged products prepared on-site at the Watkins Glen, New York facility or as non-packaged products which are shipped in bulk or packaged at a third party facility. The following table disaggregates revenue between these two product categories: