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; 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.

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 or suppliers are located; economic uncertainty, including as it relates to governmental measures such as tariffs, legislation and judicial decisions with respect thereto, 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, including any escalation or worsening thereof, and their impact on economic conditions; the Company’s ability to implement its business and growth strategies and plans, including changes thereto; risks and uncertainties associ…

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 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.

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 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, as of the date of this filing, the Company has completed two acquisitions during the fiscal year ending June 30, 2026: New York-based ASN Laundry Group was acquired on August 1, 2025 and Ohio-based Belenky was acquired on February 28, 2026. The financial position, including assets and liabilities, of ASN Laundry Group and Belenky are included in the Company’s consolidated balance sheet as of March 31, 2026, and the results of operations of ASN Laundry Group and Belenky subsequent to the respective closing dates of the acquisitions are included in the Company’s consolidated financial statements for the three and nine months ended March 31, 2026.

Previous wording

Six and Three-Month Period Ended December 31, 2025 Compared to the Six and Three-Month Period Ended December 31, 2024

Current wording

Nine and Three-Month Periods Ended March 31, 2026 Compared to the Nine and Three-Month Periods Ended March 31, 2025

Previous 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.

Current wording

Revenues for the nine and three-month periods ended March 31, 2026 increased $44.8 million, or 16%, and $7.6 million, or 8%, 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 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.

Current wording

Gross profit for the nine and three-month periods ended March 31, 2026 increased $17.8 million, or 21%, and $4.8 million, or 17%, respectively, compared to the same periods of the prior fiscal year. The increases were primarily the result of the increased revenues described above. Gross margins increased from 30.2% for the nine-month period ended March 31, 2025 to 31.5% for the nine-month period ended March 31, 2026 and from 30.0% for the three-month period ended March 31, 2025 to 32.5% for the three-month period ended March 31, 2026, in each case primarily due to changes in product and customer mix.

Previous 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.

Current wording

Operating expenses increased $17.4 million, or 23%, and $4.8 million, or 19%, for the nine and three-month periods ended March 31, 2026, respectively, compared to the same periods 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 nine months ended March 31, 2026, 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 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.

Current wording

Interest expense for the nine and three-month periods ended March 31, 2026 was $3.0 million and $1.0 million, respectively, compared to $1.7 million and $0.6 million for the nine and three-month periods ended March 31, 2025, 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

The Company’s effective tax rate was 27.4% and 25.1% for the six and three-month periods ended December 31, 2025, respectively, compared to 30.0% and 34.4% for the six and three-month periods ended December 31, 2024, respectively. The decreases in the effective tax rate are attributable to decreases in the Company's taxable presence in the jurisdictions where the Company operates.

Current wording

The Company’s effective tax rate was 30.1% and 42.1% for the nine and three-month periods ended March 31, 2026, respectively, compared to 32.0% and 39.1% for the nine and three-month periods ended March 31, 2025, respectively. The decrease in the effective tax rate for the nine-month comparable period is attributable to decreases in the Company's taxable presence in the jurisdictions where the Company operates partially offset by an increase in the net impact of permanent book-tax differences resulting primarily from nondeductible compensation. The increase in the effective tax rate for the three-month comparable period is attributable to an increase in the net impact of the permanent book-tax differences resulting primarily from nondeductible compensation partially offset by decreases in the Company's taxable presence in the jurisdictions where the Company operates.

Previous 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.

Current wording

Net income for the nine and three-month periods ended March 31, 2026 was $5.0 million and $0.8 million, respectively, compared to net income of $5.4 million and $1.0 million for the nine and three-month periods ended March 31, 2025, respectively. The decreases in net income for the nine-month and three-month periods were attributable primarily to the increases in operating expenses and interest expenses, partially offset by the increases in revenues and gross margin, 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 $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.

Current wording

The Company’s total assets increased from $307.0 million at June 30, 2025 to $318.2 million at March 31, 2026. 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 $172.2 million at March 31, 2026. This increase was primarily the result of an increase in long-term debt and contract liabilities, partially offset by a decrease in customer deposits.

Previous 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.

Current wording

For the nine-month period ended March 31, 2026, cash decreased by approximately $4.5 million compared to an increase of approximately $1.4 million during the nine-month period ended March 31, 2025. 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 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.

Current wording

Working capital increased from $50.6 million at June 30, 2025 to $57.7 million at March 31, 2026, 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 six months ended December 31, 2025 and 2024 (in thousands):

Current wording

The following table summarizes the Company’s cash flow activity for the nine months ended March 31, 2026 and 2025 (in thousands):

Previous 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.

Current wording

For the nine months ended March 31, 2026, operating activities provided cash of $7.2 million compared to $11.3 million of cash provided by operating activities during the nine months ended March 31, 2025. This $4.1 million decrease 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, vendor deposits, and contract liabilities, partially offset by decreases from changes in inventory, accounts payable, and customer deposits.

Previous 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.

Current wording

For the nine months ended March 31, 2026, investing activities used cash of $12.4 million compared to $15.7 million of cash used by investing activities during the nine months ended March 31, 2025. This $3.3 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 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.

Current wording

For the nine months ended March 31, 2026, financing activities provided cash of $0.6 million compared to $5.8 million of cash provided by financing activities during the nine months ended March 31, 2025. This $5.2 million decrease in cash provided 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 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%.

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 March 31, 2026, the Company had approximately $60.0 million of outstanding borrowings under the Credit Agreement, which accrued interest at a weighted average rate of 5.04%.

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 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.

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 March 31, 2026, the Company was in compliance with its covenants under the Credit Agreement and $36.3 million was available to borrow under the revolving credit facility.

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 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 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 $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.

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 $189,000 and $181,000 during the nine months ended March 31, 2026 and 2025, respectively, and $63,000 during each of the three months ended March 31, 2026 and 2025.

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 $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.

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 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 $360,000 during each of the nine months ended March 31, 2026 and 2025, and approximately $120,000 during each of the three months ended March 31, 2026 and 2025.

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 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.

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 $116,000 and $114,000 during the nine months ended March 31, 2026 and 2025, respectively, and approximately $39,000 and $38,000 during the three months ended March 31, 2026 and 2025, respectively.