EVI INDUSTRIES, INC.

Previous wording

Certain statements in this Quarterly Report on Form 10-Q are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “could,” “seek,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “strategy” and similar expressions are intended to identify forward looking statements. Forward looking statements may relate to, among other things, events, conditions and trends that may affect the future plans, operations, business, strategies, operating results, financial position and prospects of the Company. Forward looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward looking statements. These risks and uncertainties include, among others, those associated with: general economic and business conditions in the United States and other countries where the Company operates or where the Company’s customers and suppliers are located; economic uncertainty, including as it relates to governmental measures such as the imposition of tariffs and their effect on global trading markets, the availability and pricing of products, credit markets, industry conditions, economic conditions generally or otherwise on the Company and its business, costs and results; the potential of a recession; industry conditions and trends; credit market volatility; risks related to supply chain delays and disruptions and their impact on the Company’s business and results, including the Company’s ability to deliver products and services to its customers on a timely basis; risks relating to inflation, including the current inflationary trend, and other price increases (including due to the imposition of tariffs), and their impact on the Company’s business, costs and results (including that, if desired, the Company may not be able to successfully increase the price of its products and services to offset such costs, in whole or in part, and that price increases may result in reduced demand for the Company’s products and services); risks related to labor shortages and increases in the costs of labor, and the impact thereof on the Company, including its ability to deliver products, provide services or otherwise meet customers’ expectations; risks related to interest rate increases, including the impact thereof on the cost of the Company’s indebtedness and the Company’s ability to raise capital if deemed necessary or advisable; risks associated with international relations and international hostilities, and the impact thereof on economic conditions, including supply chain constraints and inflationary trends; the Company’s ability to implement its business and growth strategies and plans, inclu…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Certain statements in this Quarterly Report on Form 10-Q are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “could,” “seek,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “strategy” and similar expressions are intended to identify forward looking statements. Forward looking statements may relate to, among other things, events, conditions and trends that may affect the future plans, operations, business, strategies, operating results, financial position and prospects of the Company. Forward looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward looking statements. These risks and uncertainties include, among others, those associated with: general economic and business conditions in the United States and other countries where the Company operates or where the Company’s customers and suppliers are located; economic uncertainty, including as it relates to governmental measures such as the imposition of tariffs and their effect on global trading markets, the availability and pricing of products, credit markets, industry conditions, economic conditions generally or otherwise on the Company and its business, costs and results; industry conditions and trends; credit market volatility; risks related to supply chain delays and disruptions and their impact on the Company’s business and results, including the Company’s ability to deliver products and services to its customers on a timely basis; risks relating to inflation, and other price increases (including due to the imposition of tariffs), and their impact on the Company’s business, costs and results (including that, if desired, the Company may not be able to successfully increase the price of its products and services to offset such costs, in whole or in part, and that price increases may result in reduced demand for the Company’s products and services); risks related to labor shortages and increases in the costs of labor, and the impact thereof on the Company, including its ability to deliver products, provide services or otherwise meet customers’ expectations; risks related to interest rate increases, including the impact thereof on the cost of the Company’s indebtedness and the Company’s ability to raise capital if deemed necessary or advisable; risks associated with international relations and international hostilities, and the impact thereof on economic conditions; the Company’s ability to implement its business and growth strategies and plans, including changes thereto; risks and uncertainties associated with the Company’s “buy-and-build” growth strategy, including, without limi…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

In addition to its pursuit of organic growth initiatives, the Company’s growth strategy includes a “buy-and-build” growth strategy. The “buy” component of the strategy includes the consideration and pursuit of acquisitions and other strategic transactions which management believes would complement the Company’s existing business or otherwise offer growth opportunities for, or benefit, the Company. The “build” component of the strategy involves implementing a growth culture at acquired businesses based on the exchange of ideas and business concepts among the management teams of the Company and the acquired businesses as well as through certain initiatives, which may include investments in additional sales and service personnel, new product lines, enhanced service operations and capabilities, new and improved facilities, and advanced technologies. As described in greater detail in Note 4 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, on August 1, 2025, the Company acquired New York-based ASN Laundry Group. The financial position, including assets and liabilities, of ASN Laundry Group, is included in the Company’s consolidated balance sheet as of September 30, 2025 and the results of operations of ASN Laundry Group, subsequent to the August 1, 2025 closing date are included in the Company’s consolidated financial statements for the quarter ended September 30, 2025.

Current wording

In addition to its pursuit of organic growth initiatives, the Company’s growth strategy includes a “buy-and-build” growth strategy. The “buy” component of the strategy includes the consideration and pursuit of acquisitions and other strategic transactions which management believes would complement the Company’s existing business or otherwise offer growth opportunities for, or benefit, the Company. The “build” component of the strategy involves implementing a growth culture at acquired businesses based on the exchange of ideas and business concepts among the management teams of the Company and the acquired businesses as well as through certain initiatives, which may include investments in additional sales and service personnel, new product lines, enhanced service operations and capabilities, new and improved facilities, and advanced technologies. As described in greater detail in Note 4 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, on August 1, 2025, the Company acquired New York-based ASN Laundry Group. The financial position, including assets and liabilities, of ASN Laundry Group, is included in the Company’s consolidated balance sheet as of December 31, 2025 and the results of operations of ASN Laundry Group, subsequent to the August 1, 2025 closing date are included in the Company’s consolidated financial statements for the three and six months ended December 31, 2025.

Previous wording

The Company pursues market share growth using a variety of strategies aimed at increasing the installed base of the wide range of commercial laundry equipment the Company represents. Certain market share growth tactics may, from time to time, result in lower gross margins. However, the Company believes that a greater installed base of equipment strengthens the Company’s existing customer relationships and may lead to increases in the total number of customers, consequently creating a larger and stronger customer base to which the Company may sell products and services. These may include the sale or provision of certain higher margin products and services and any additional products and services which the Company may offer or sell from time to time as a result of any business acquisitions, the sale or lease of complementary products, and any expansion of its service operations. From time to time, the Company also enters into longer-term contracts, including to fulfill large complex laundry projects for divisions of the federal government, where the nature of, and competition for, such contracts may result in a lower gross margin as compared to other equipment sales. Despite the potential for a lower gross margin from such longer-term contracts, the Company believes that the long-term benefit from the increase in its installed equipment will outweigh the possible short-term impact to gross margin.

Current wording

The Company pursues market share growth using a variety of strategies aimed at increasing the installed base of the wide range of commercial laundry equipment the Company represents. Certain market share growth tactics may, from time to time, result in lower gross margins. However, the Company believes that a greater installed base of equipment strengthens the Company’s existing customer relationships and may lead to increases in the total number of customers, consequently creating a larger and stronger customer base to which the Company may sell products and services. These may include the sale or provision of certain higher margin products and services and any additional products and services which the Company may offer or sell from time to time, including as a result of any business acquisitions, the sale or lease of complementary products, and any expansion of its service operations. From time to time, the Company also enters into longer-term contracts, including to fulfill large complex laundry projects for divisions of the federal government, where the nature of, and competition for, such contracts may result in a lower gross margin as compared to other equipment sales. While the Company generally realizes a lower gross margin from such longer-term contracts, the Company believes that the long-term benefit from the increase in its installed equipment will outweigh the possible short-term impact to gross margin.

Previous wording

Revenues for the three-month period ended September 30, 2025 increased $14.6 million, or 16%, compared to the same period of the prior fiscal year. The increase in revenue is primarily attributable to revenues generated by businesses acquired during the fiscal year ended June 30, 2025.

Current wording

Revenues for the six and three-month periods ended December 31, 2025 increased $37.2 million, or 20%, and $22.6 million, or 24%, respectively, compared to the same periods of the prior fiscal year. The increases in revenue were primarily attributable to revenues generated by businesses acquired during the fiscal year ended June 30, 2025, as well as price increases established throughout the Company's product lines and service offerings aimed at maintaining or increasing margins to cover incremental product and operating costs.

Previous wording

Gross profit for the three-month period ended September 30, 2025 increased $5.0 million, or 17%, compared to the same period of the prior fiscal year. The increase was primarily the result of the increased revenues described above. Gross margins increased from 30.8% for the three-month period ended September 30, 2024 to 31.3% for the three-month period ended September 30, 2025.

Current wording

Gross profit for the six and three-month periods ended December 31, 2025 increased $13.0 million, or 23%, and $8.0 million, or 29%, respectively, compared to the same period of the prior fiscal year. The increases were primarily the result of the increased revenues described above. Gross margins increased from 30.3% for the six-month period ended December 31, 2024 to 31.1% for the six-month period ended December 31, 2025 and from 29.7% for the three-month period ended December 31, 2024 to 30.8% for the three-month period ended December 31, 2025, in each case primarily due to changes in product and customer mix.

Previous wording

Operating expenses increased $6.5 million, or 27%, for the three-month period ended September 30, 2025 compared to the same period of the prior fiscal year. The increase is primarily attributable to (a) operating expenses of acquired businesses, including additional operating expenses at the acquired businesses in pursuit of future growth and in connection with the Company’s optimization initiatives, (b) increases in selling costs, including commissions, from increases in revenues during the period, (c) increases in salary, professional, stock compensation, insurance, and technology costs, and (d) approximately $550,000 in expenses related to the Company’s participation at the industry’s largest North American exposition.

Current wording

Operating expenses increased $12.6 million, or 26%, and $6.1 million, or 24%, for the six and three-month periods ended December 31, 2025 compared to the same period of the prior fiscal year. The increases are primarily attributable to (a) operating expenses of acquired businesses, including additional operating expenses at the acquired businesses in pursuit of future growth and in connection with the Company’s optimization initiatives, (b) increases in selling costs, including commissions, from increases in revenues during the periods, (c) increases in salary, professional, stock compensation, insurance, depreciation, amortization, and technology costs, and (d) with respect to the six months ended December 31, 2025, approximately $550,000 in expenses related to the Company’s participation at the industry’s largest North American exposition during such period.

Previous wording

Interest expense for the three-month period ended September 30, 2025 was $916,000 compared to $482,000 for the same period of the prior fiscal year. The increase in interest expense was attributable primarily to an increase in the average outstanding borrowings, partially offset by a decrease in the effective interest rate incurred on outstanding borrowings.

Current wording

Interest expense for the six and three-month periods ended December 31, 2025 was $2.0 million and $1.1 million, respectively, compared to $1.2 million and $0.7 million for the six and three-month periods ended December 31, 2024, respectively. The increases in interest expense were attributable primarily to increases in the average outstanding borrowings, partially offset by decreases in the effective interest rate incurred on outstanding borrowings.

Previous wording

Net income for the three-month period ended September 30, 2025 was $1.8 million compared to $3.2 million for the same period of the prior fiscal year. The decrease in net income was attributable primarily to the increase in operating expenses, partially offset by increases in revenue and gross profit, in each case as described in further detail above.

Current wording

Net income for the six and three-month periods ended December 31, 2025 was $4.2 million and $2.4 million, respectively, compared to net income of $4.4 million and $1.1 million for the six and three-month periods ended December 31, 2024, respectively. The increase in net income for the three-month period was attributable primarily to the increase in revenues and gross margin, partially offset by the increase in operating expenses, in each case as described in further detail above.

Previous wording

The Company’s total assets increased from $307.0 million at June 30, 2025 to $321.8 million at September 30, 2025. The increase in total assets was primarily attributable to an increase in current assets, including accounts receivable, inventory and other current assets, as well as an increase in operating lease assets related to the addition and extension of facility leases. The Company’s total liabilities increased from $163.6 million at June 30, 2025 to $181.0 million at September 30, 2025. This increase was primarily the result of an increase in accounts payable, including dividends payable attributable to the special cash dividend on the Company’s common stock of $0.33 per share (an aggregate of $5.0 million) which was declared by the Company’s Board of Directors on September 11, 2025 and paid on October 6, 2025 to stockholders of record at the close of business on September 25, 2025, an increase in customer deposits, and an increase in operating lease liabilities related to the addition and extension of facility leases.

Current wording

The Company’s total assets increased from $307.0 million at June 30, 2025 to $315.6 million at December 31, 2025. The increase in total assets was primarily attributable to an increase in current assets, including inventory and other current assets, partially offset by a decrease in accounts receivable and cash. The Company’s total liabilities increased from $163.6 million at June 30, 2025 to $171.7 million at December 31, 2025. This increase was primarily the result of an increase in accounts payable, accrued expenses, contract liabilities, and long-term debt, partially offset by a decrease in customer deposits.

Previous wording

For the three-month period ended September 30, 2025, cash decreased by approximately $4.2 million compared to a decrease of approximately $0.2 million during the three-month period ended September 30, 2024. The Company’s primary sources of cash are product and service sales and borrowings under the Company’s credit facility. The Company’s primary uses of cash are purchases of the products sold by the Company, employee related costs, and the cash consideration paid in connection with business acquisitions.

Current wording

For the six-month period ended December 31, 2025, cash decreased by approximately $4.6 million compared to a decrease of approximately $0.7 million during the six-month period ended December 31, 2024. The Company’s primary sources of cash are product and service sales and borrowings under the Company’s credit facility. The Company’s primary uses of cash are purchases of the products sold by the Company, employee related costs, and the cash consideration paid in connection with business acquisitions.

Previous wording

Working capital decreased from $50.6 million at June 30, 2025 to $45.8 million at September 30, 2025, primarily reflecting increases in accounts receivable, inventory, and other current assets, partially offset by an increase in accounts payable and customer deposits and a decrease in cash.

Current wording

Working capital increased from $50.6 million at June 30, 2025 to $56.1 million at December 31, 2025, primarily reflecting increases in inventory and other current assets, and decreases in customer deposits. The increase in working capital was partially offset by increases in accounts payable and contract liabilities, and decreases in accounts receivable and cash.

Previous wording

The following table summarizes the Company’s cash flow activity for the three months ended September 30, 2025 and 2024 (in thousands):

Current wording

The following table summarizes the Company’s cash flow activity for the six months ended December 31, 2025 and 2024 (in thousands):

Previous wording

For the three months ended September 30, 2025, operating activities provided cash of $1.0 million compared to $0.2 million of cash provided by operating activities during the three months ended September 30, 2024. This $0.8 million increase in cash provided by operating activities was primarily attributable to changes in working capital, partially offset by a decrease in net income. The changes in working capital include increases in cash provided by operating activities from changes in operating liabilities such as customer deposits and accounts payable, partially offset by increases to the cash used by operating activities from changes in accounts receivable, inventories, other current and noncurrent assets.

Current wording

For the six months ended December 31, 2025, operating activities provided cash of $5.1 million compared to $2.2 million of cash provided by operating activities during the six months ended December 31, 2024. This $2.9 million increase in cash provided by operating activities was primarily attributable to changes in working capital and an increase in non-cash expenses such as depreciation and amortization, and stock compensation. The changes in working capital include increases in cash provided by operating activities from changes in accounts receivable, accounts payable, and contract liabilities, partially offset by decreases from changes in inventory and customer deposits.

Previous wording

For the three months ended September 30, 2025, investing activities used cash of $2.4 million compared to $7.1 million of cash used by investing activities during the three months ended September 30, 2024. This $4.7 million decrease was primarily attributable to a decrease in cash paid in connection with business acquisitions.

Current wording

For the six months ended December 31, 2025, investing activities used cash of $8.3 million compared to $12.6 million of cash used by investing activities during the six months ended December 31, 2024. This $4.3 million decrease in cash used by investing activities was primarily attributable to a decrease in cash paid in connection with business acquisitions.

Previous wording

For the three months ended September 30, 2025, financing activities used cash of $2.8 million compared to $6.7 million of cash provided by financing activities during the three months ended September 30, 2024. This $9.5 million increase in cash used by financing activities was primarily attributable to a decrease in net borrowings to fund acquisitions and investments.

Current wording

For the six months ended December 31, 2025, financing activities used cash of $1.4 million compared to $9.8 million of cash provided by financing activities during the six months ended December 31, 2024. This $11.2 million increase in cash used by financing activities was primarily attributable to a decrease in net borrowings to fund acquisitions and investments.

Previous wording

Borrowings (other than swingline loans) under the Credit Agreement bear interest, at a rate, at the Company’s election at the time of borrowing, equal to (a) the Secured Overnight Financing Rate (“SOFR”) plus 0.11% to 0.43%, plus an additional adjustment margin that ranges between 1.25% and 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) SOFR plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. Swingline loans generally bear interest at the Base Rate plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. As of September 30, 2025, the Company had approximately $51.0 million of outstanding borrowings under the Credit Agreement, which accrued interest at a weighted average rate of 5.54%.

Current wording

Borrowings (other than swingline loans) under the Credit Agreement bear interest, at a rate, at the Company’s election at the time of borrowing, equal to (a) the Secured Overnight Financing Rate (“SOFR”) plus 0.11% to 0.43%, plus an additional adjustment margin that ranges between 1.25% and 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) SOFR plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. Swingline loans generally bear interest at the Base Rate plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. As of December 31, 2025, the Company had approximately $58.0 million of outstanding borrowings under the Credit Agreement, which accrued interest at a weighted average rate of 5.14%.

Previous wording

The Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. At September 30, 2025, the Company was in compliance with its covenants under the Credit Agreement and $48.0 million was available to borrow under the revolving credit facility.

Current wording

The Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. At December 31, 2025, the Company was in compliance with its covenants under the Credit Agreement and $43.0 million was available to borrow under the revolving credit facility.

Previous wording

The Company believes that its existing cash, anticipated cash from operations and funds available under the Company’s Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months and thereafter. The Company may also seek to raise funds through the issuance of equity and/or debt securities or the incurrence of additional secured or unsecured indebtedness, including in connection with acquisitions or other transactions pursued by the Company as part of its “buy-and-build” growth strategy.

Current wording

The Company believes that its existing cash, anticipated cash from operations and funds available under the Company’s Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months and thereafter. The Company may also seek to raise funds through the issuance of equity and/or debt securities or the incurrence of additional secured or unsecured indebtedness, including in connection with acquisitions or other transactions which may be pursued by the Company as part of its “buy-and-build” growth strategy.

Previous wording

Inflation did not have a significant effect on the Company’s results during any of the reported periods. However, the Company faces risks relating to inflation, including the current inflationary trend, and other price increases (including due to the imposition of tariffs), including that there is no assurance that the Company will be able to effectively increase the price of its products and services to offset increased costs and any such increase may have an adverse impact on the market for the Company’s products and services.

Current wording

Inflation did not have a significant effect on the Company’s results during any of the reported periods. However, the Company faces risks relating to inflation and other price increases (including due to the imposition of tariffs), including that there is no assurance that the Company will be able to effectively increase the price of its products and services to offset increased costs and any such increase may have an adverse impact on the market for the Company’s products and services.

Previous wording

On October 10, 2016, the Company’s wholly-owned subsidiary, Western State Design, entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and employee of the Company, and Tom Marks, Executive Vice President, Business Development and President of the West Region of the Company. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021, and the second three-year renewal term, which commenced in October 2024. Base rent for the first renewal term was $19,000 per month. Base rent for the second renewal term is $21,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $63,000 and $57,000 during the three months ended September 30, 2025 and 2024, respectively.

Current wording

On October 10, 2016, the Company’s wholly-owned subsidiary, Western State Design, entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and employee of the Company, and Tom Marks, Executive Vice President, Business Development and President of the West Region of the Company. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021, and the second three-year renewal term, which commenced in October 2024. Base rent for the first renewal term was $19,000 per month. Base rent for the second renewal term is $21,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $126,000 and $118,000 during the six months ended December 31, 2025 and 2024, respectively, and $63,000 and $61,000 during the three months ended December 31, 2025 and 2024, respectively.

Previous wording

On November 1, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in November 2023. Base rent for the initial term was $36,000 per month. Base rent for the first renewal term is $40,000 per month. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $120,000 during each of the three months ended September 30, 2025 and 2024.

Current wording

On November 1, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in November 2023. Base rent for the initial term was $36,000 per month. Base rent for the first renewal term is $40,000 per month. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $240,000 during each of the six months ended December 31, 2025 and 2024, and approximately $120,000 during each of the three months ended December 31, 2025 and 2024, respectively.

Previous wording

On November 3, 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. The lease had an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. The Company exercised its option to renew this lease for the first three-year renewal term, which commenced in November 2023. Base rent for the initial term was $11,000 per month. Base rent for the first year of the renewal term was $12,500 per month. Base rent for the second year of the renewal term is $12,750 per month. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $38,000 during each of the three months ended September 30, 2025 and 2024.

Current wording

On November 3, 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. The lease had an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. The Company exercised its option to renew this lease for the first three-year renewal term, which commenced in November 2023. Base rent for the first year of the renewal term was $12,500 per month. Base rent for the second year of the renewal term was $12,750 per month. Base rent for the third year of the renewal term is $13,000 per month. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $77,000 and $76,000 during the six months ended December 31, 2025 and 2024, respectively, and approximately $39,000 and $38,000 during the three months ended December 31, 2025 and 2024.