LSI INDUSTRIES INC

NOTE1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation:

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of LSI Industries Inc. (an Ohio corporation) and its subsidiaries (collectively, the “Company”), all of which are wholly owned. All intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition:

The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at the time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within30 to90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that donot represent separate performance obligations.

Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation isnot a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company isnot always responsible for installation of products it sells and hasno post-installation responsibilities other than standard warranties.

A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products donot have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally doesnot accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there isno alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore recognizes revenue over time. The customized product types are as follows:

The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process.

For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation.

On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (1) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company doesnot have the ability to use the products or direct them to another customer.

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Disaggregation of Revenue

The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments:

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Practical Expedients and Exemptions

Credit and Collections:

The Company maintains allowances for credit losses for probable estimated losses resulting from either customer disputes or the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company* maybe required to record additional allowances or charges against income. The Company determines its allowance for credit losses byfirst* considering all known collectability problems of customers’ accounts and then applying certain percentages against the various aging categories based on the due date of the remaining receivables. The resulting allowance for credit losses is an estimate based upon the Company’s knowledge of its business and customer base, the current economic climate, and historical trends. Receivables deemed uncollectable are written off against the allowance for credit losses after all reasonable collection efforts have been exhausted. The Company also establishes allowances, at the time revenue is recognized, for returns, discounts, pricing, and other possible customer deductions. These allowances are based upon historical trends. The following table presents the Company’s net accounts receivable at the dates indicated.

The net accounts receivable balance as of* June 30, 2024,*was $78.6 million.

Cash and Cash Equivalents:

The cash balance includes cash and cash equivalents which have original maturities of less thanthree months. Cash and cash equivalents consist primarily of bank deposits and a bank money market account that is stated at cost, which approximates fair value. The Company maintains balances at financial institutions in the United States, Canada, and Mexico. In the United States, the FDIC limit for insurance coverage on non-interest-bearing accounts is*$250,000* per institution. As of* June 30, 2026,and2025,* the Company had bank balances of $11.6 million and $3.5 million, respectively, without insurance coverage.

Inventories, Net:

Inventories are stated at the lower of cost or net realizable value. Cost of inventories includes the cost of purchased raw materials and purchased components, direct labor, as well as manufacturing overhead which is generally applied to inventory based on direct labor and on material content, is determined on thefirst-in,first-out basis.

The Company maintains an inventory reserve for obsolete and excess inventory. The Companyfirst determines its excess and obsolete inventory reserve by considering specific known obsolete items, and then by applying certain percentages to specific inventory categories based upon inventory turns. The Company uses various tools, in addition to inventory turns, to identify which inventory items have the potential to become obsolete. Judgment is used to establish excess and obsolete inventory reserves and management adjusts these reserves as more information becomes available about the ultimate disposition of the inventory item.

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Property, Plant and Equipment and Related Depreciation:

Property, plant, and equipment are stated at cost. Major additions and betterments are capitalized while maintenance and repairs are expensed. For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful lives of the assets as follows:

Costs related to the purchase, internal development, and implementation of the Company’s fully integrated enterprise resource planning/business operating software system are either capitalized or expensed. Leasehold improvements are depreciated over the shorter offifteen years or the remaining term of the lease.

The Company recorded $7.9 million, $6.7 million and $5.0 million of depreciation expense in the years ended* June 30, 2026,*2025, and2024, respectively.

Goodwill and Intangible Assets:

Intangible assets consisting of customer relationships, trade names and trademarks, patents, technology and software are recorded on the Company's balance sheet. The definite-lived intangible assets are being amortized to expense over periods ranging between five andtwenty years. The Company evaluates definite-lived intangible assets for possible impairment when triggering events are identified. Neither indefinite-lived intangible assets nor the excess of cost over fair value of assets acquired ("goodwill") are amortized, however, they are subject to review for impairment. See additional information about goodwill and intangible assets in Note9.

Fair Value:

The Company has financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, accounts receivable, accounts payable, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates. The Company hasno financial instruments with off-balance sheet risk.

Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill and other intangible asset impairment analyses, long-lived asset impairment analyses and valuation of acquired assets and assumed liabilities. The accounting guidance on fair value measurement was used to measure the fair value of these nonfinancial assets and nonfinancial liabilities.

Product Warranties:

The Company offers a limited warranty that its products are free from defects in workmanship and materials. The specific terms and conditions vary somewhat by product line, but generally cover defective products returned withinone tofive years, with some exceptions where the terms extend to 10 years, from the date of shipment. The Company records warranty liabilities to cover the estimated future costs for repair or replacement of defective returned products as well as products that need to be repaired or replaced in the field after installation. The Company calculates its liability for warranty claims by applying estimates based upon historical claims as a percentage of sales to cover unknown claims, as well as estimating the total amount to be incurred for known warranty issues. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amount as necessary.

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Changes in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, during the periods indicated below were as follows:

Employee Benefit Plans:

The Company has a401(k)-retirement plan whereby employee’s contributions to the401(k) are matched by the Company. The401(k)-match program covers substantially all of its employees. The Company also has a non-qualified deferred compensation plan covering certain employees. The costs of employee benefit plans are charged to expense and funded annually. Total costs were $2.5 million, $2.4 million and $2.3 million in* June 30, 2026,*2025 and2024, respectively.

Research and Development Costs:

Research and development costs are directly attributable to new product development, including the development of new technology for both existing and new products, and consist of salaries, payroll taxes, employee benefits, materials, outside legal costs and filing fees related to obtaining patents, supplies, depreciation, and other administrative costs. The Company expenses as research and development all costs associated with development of software used in solid-state LED products. All costs are expensed as incurred and are included in selling and administrative expenses. Research and development costs related to both product and software development totaled $3.1 million, $3.3 million and $3.5 million for the fiscal years ended* June 30, 2026,*2025 and2024, respectively.

Cost of Products and Services Sold:

Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of products, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, warehousing costs and other shipping and handling activity. Cost of services sold is primarily comprised of the internal and external labor costs required to support the Company’s project management and installation costs to support its service revenue along with the management of media content.

Stock-Based Compensation:

The Company accounts for stock-based compensation to certain employees in accordance with accounting guidance for stock-based compensation. The accounting guidance requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, restricted stock units, and performance stock units, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Equity award forfeitures are recognized at the date of employee termination.

Earnings Per Common Share:

The computation of basic earnings per common share is based on the weighted average common shares outstanding for the period net of treasury shares held in the Company’s non-qualified deferred compensation plan. The computation of diluted earnings per share is based on the weighted average common shares outstanding for the period and includes common share equivalents. Common share equivalents include the dilutive effect of stock options, restricted stock units, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled 1,982,000 shares,2,024,000 shares and 2,087,000 shares for the fiscal years ending* June 30, 2026,*2025 and2024, respectively. See further discussion in Note6.

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Income Taxes:

The Company accounts for income taxes in accordance with the accounting guidance for income taxes. Accordingly, deferred income taxes are provided on items that are reported as either income or expense in different time periods for financial reporting purposes than they are for income tax purposes. Deferred income tax assets are reported on the Company’s balance sheet. Significant management judgment is required in developing the Company’s income tax provision, including the estimation of taxable income and the effective income tax rates in the multiple taxing jurisdictions in which the Company operates, the estimation of the liability for uncertain income tax positions, the determination of deferred tax assets and liabilities, and any valuation allowances that might be required against deferred tax assets.

Foreign Exchange:

The functional currency of the Company’s Mexican subsidiary is the Mexican Peso and the functional currency of the Company’s Canadian subsidiary is the Canadian Dollar. Assets and liabilities of foreign operations are translated using period end exchange rates. Revenue and expenses are translated using average exchange rates during each period reported. Translation losses (gains) are reported in accumulated other comprehensive loss (gain) as a component of shareholders equity and was $0.3 million as of* June 30, 2026, ($0.6) million as of June 30, 2025,and $0.1 million as of June 30, 2024.The Company recognizes foreign currency transaction (gains) and losses on certain assets and liabilities that are denominated in the Mexican Peso and Canadian Dollar. These transaction (gains) and losses are reported in other expense in the consolidated statements of operations and was $1.0 million, ($0.4) million and $0.3 million for the fiscal year ended June 30, 2026,*2025 and2024, respectively.

New Accounting Pronouncements:

In* December 2023,the FASB issued ASU2023**-09,* Income Taxes (Topic740**): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after* December 15, 2024**,* and interim periods within fiscal years beginning after* December 15, 2025**,* with early adoption permitted. The Company has adopted this new guidance on its consolidated financial statements and related disclosures by providing greater visibility into the rate reconciliation by jurisdiction, and disaggregation of taxes paid by jurisdiction. The Company adopted the ASU on a retrospective basis, with applicable disclosures included in Note14 – Income Taxes. The adoption of ASU2023-09 didnot have a significant impact on the Company’s consolidated financial statements, other than requiring expanded income tax disclosures.

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

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Reclassifications:

Restructuring and severance costs reported in the prior year consolidated statements of operations have been reclassified within cost of products and services sold and selling and administrative expenses to conform to the current year’s presentation. These reclassifications hadno impact to gross profit or operating income amounts reported in prior years.

Subsequent Events:

The Company has evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements were filed.No items were identified during this evaluation that required adjustment to or disclosure in the accompanying consolidated financial statements.

NOTE2 — ACQUISITION OF EMI INDUSTRIES, LLC

On* April 18, 2024,the Company acquired EMI Industries, LLC (EMI), a Florida-based metal and millwork manufacturer of standard and customized fixtures, displays and equipment for the convenience store, supermarket and restaurant industries, for $50.0 million, of which $0.1 million of the purchase price was retained pending a review of the acquired working capital. In thefirst* quarter of fiscal2025, the company funded an additional $59,000 related to the final settlement of the acquired working capital. The Company incurred acquisition-related costs totaling $1.0 million which are included in the selling and administrative expense line of the consolidated statements of operations during fiscal year2024. The acquisition of EMI will further expand LSI’s vertical market presence within Grocery, C-Store, and QSR/Restaurant, while providing a compelling entry point into other diverse markets. The Company funded the acquisition totaling $49.9 million with a combination of cash on hand and from the $75 million revolving line of credit.

The Company accounted for this transaction as a business combination. The Company has allocated the purchase price of approximately $49.9 million which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This allocation of the final determination of the purchase price was finalized in fiscal2025, as well as the potential revision resulting from the finalization of pre-acquisition tax filings. The preliminary allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of* April 18, 2024,*is as follows:

The gross amount of accounts receivable acquired was $11.9 million.

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Goodwill recorded from the acquisition of EMI is attributable to the impact of the positive cash flow from EMI in addition to expected synergies from the business combination. The goodwill resulting from the acquisition is deductible for tax purposes. The trade name and technology used an income (relief from royalty) approach, the non-compete used an income (with or without) approach, and the customer relationships used an income (excess earnings) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

EMI’s post-acquisition results of operations for the period from* April 18, 2024,through June 30, 2024,are included in the Company’s Consolidated Statements of Operations. Since the acquisition date, net sales of EMI for the period from April 18, 2024,through June 30, 2024,*were $18.1 million and operating income was $0.7 million. The operating results of EMI are included in the Display Solutions Segment.

Pro Forma Impact of the Acquisition of EMI*(Unaudited)*

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of EMI as if the transaction had occurred on* July 1, 2023.The unaudited pro forma results of operations have been prepared for comparative purposes only and arenot* necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that* mayoccur in the future. Furthermore, the unaudited pro forma financial information doesnot* reflect the impact of any synergies or operating efficiencies resulting from the acquisition of EMI*.*

The unaudited pro forma financial information for thetwelve months ended* June 30, 2024is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The fiscal2024* unaudited pro forma operating income of $36.3 million excludes acquisition-related expenses of $1.0 million.

NOTE3—** ACQUISITION OF CANADA**’S BEST HOLDINGS

On* March 11, 2025,the Company acquired Canada’s Best Holdings (CBH), an Ontario Canada-based leading provider of retail fixtures and custom store design solutions for grocery, quick service restaurant, c-store, banking, and specialty retail environments, for $25.9 million, subject to a working capital adjustment and future potential earnout payments up to $7.0 million. As of the acquisition date, total purchase consideration of $29.1 million includes the current fair value of the contingent consideration related to future earnout payments of $3.3 million. The future earnout payments include revenue and EBITDA goals for the fiscal years ending June 30, 2026and June 30, 2027.*The Company incurred acquisition-related costs totaling $1.0 million which are included in the selling and administrative expense line of the consolidated statements of operations. The Company funded the initial purchase consideration totaling $25.9 million with a combination of cash on hand and from the $75 million revolving line of credit.

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The Company accounted for this transaction as a business combination. The Company has preliminarily allocated the purchase price of $29.1 million, which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This preliminary allocation is subject to the final determination of the purchase price which was finalized in fiscal2026, as well as potential revision resulting from the finalization of pre-acquisition tax filings and earnout payment calculations. The Company has finalized thethird-party valuations of certain assets including fixed assets and intangible assets. The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of* March 11, 2025,*is as follows:

The gross amount of accounts receivable is $4.3 million.

Goodwill recorded from the acquisition of CBH is attributable to the impact of the positive cash flow from CBH in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

CBH’s post-acquisition results of operations for the period from* March 11, 2025,through June 30, 2025,are included in the Company’s Consolidated Statements of Operations. Since the acquisition date, net sales of CBH for the period from March 11, 2025,through June 30, 2025,*were $8.5 million and operating income was $1.2 million. The operating results of CBH are included in the Display Solutions Segment.

Pro Forma Impact of the Acquisition of CBH*(Unaudited)*

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of CBH as if the transaction had occurred on* July 1, 2023.The unaudited pro forma results of operations have been prepared for comparative purposes only and arenot* necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that* mayoccur in the future. Furthermore, the unaudited pro forma financial information doesnot* reflect the impact of any synergies or operating efficiencies resulting from the acquisition of CBH*.*

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The unaudited pro forma financial information for thetwelve months ended* June 30, 2025,and June 30, 2024,*is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro-form operating income of $37.8 million excludes acquisition-related expenses of $1.0 million.

NOTE4 — ACQUISITION OF ROYSTON GROUP

On* February 20, 2026the Company entered into an agreement and a plan of merger to acquire SRR Holdings, Inc. (Royston) which was completed on March 24, 2026.Royston is a leading U.S.-based designer and manufacturer of cabinetry and store fixtures, refrigerated and heated cases, and signage for multiple end markets. Royston’s customer base spans across large, attractive end-markets of convenience, grocery and gas stations and other retail. Royston was acquired for $325.0 million; $320.0 million in cash and $5.0 million in the Company’s common stock, subject to a working capital adjustment. The Company prefunded $13.2 million as an estimate of the cash and working capital acquired which brings the total purchase consideration to $338.2 million. The amount prefunded for cash and working capital will be adjusted in thefirst* quarter of2027 fiscal year to reflect the actual amounts acquired. The Company incurred acquisition-related costs totaling $9.9 million which are included in the selling and administrative expense line of the consolidated statements of operations. The Company funded the initial purchase consideration totaling $338.2 million with a combination of cash on hand, the $150.0 million revolving line of credit, the $200.0 million five-year term loan, and the $98.1 million of net proceeds from the Company’s* February 26, 2026*public common stock offering.

The Company accounted for this transaction as a business combination. The Company has preliminarily allocated the purchase price of $338.2 million, which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This preliminary allocation is subject to the final determination of the purchase price which will be finalized in fiscal2027, as well as potential revision resulting from the finalization of pre-acquisition tax filings and net working capital adjustments. The Company has finalized thethird-party valuations of certain assets including fixed assets and intangible assets. The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of* March 24, 2026,*is as follows:

The gross amount of accounts receivable is $37.2 million.

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Goodwill recorded from the acquisition of Royston is attributable to the impact of the positive cash flow from Royston in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, technology assets, and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition:

Royston’s post-acquisition results of operations for the period from* March 24, 2026,through June 30, 2026,are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of Royston for the period from March 24, 2026,through June 30, 2026,*were $73.5 million and operating income was $2.4 million. The operating results of Royston are included in the Display Solutions Segment.

Pro Forma Impact of the Acquisition of Royston (Unaudited)

The following table represents unaudited pro forma results of operations and gives effect to the acquisition of Royston as if the transaction had occurred on* July 1, 2023.The unaudited pro forma results of operations have been prepared for comparative purposes only and arenot* necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that* mayoccur in the future. Furthermore, the unaudited pro forma financial information doesnot* reflect the impact of any synergies or operating efficiencies resulting from the acquisition of Royston.

The unaudited pro forma financial information for thetwelve months ended* June 30, 2026,2025 and2024, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income for thetwelve months ended June 30, 2026*of $48.4 million includes acquisition-related expenses of $21.8 million.

Note: The pro forma results presented above exclude the pro forma results related to the acquisition of Canada's Best Holding and EMI Industries, LLC. Including the pro forma results of these acquisitions would allow for a meaningful year-over-year comparison.

NOTE5 — BUSINESS SEGMENT INFORMATION

The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’stwo operating segments are Lighting and Display Solutions, withone executive leadership team reporting directly to the CODM with responsibilities for managing the performance across the segments.

The Company’s methods for measuring profitability under GAAP on a reportable segment basis and used by the CODM to assess performance is adjusted net income. These measurements are used to monitor performance compared to prior periods and forecasted results. The CODM doesnot look at disaggregated expenses at the segment level. The CODM does review expenses on a consolidated basis which is consistent with the categories of expense reported on the consolidated statements of operations.

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The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers.

The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, non-digital signage, menu board systems, millwork and metal display fixtures, refrigerated displays, heated displays, food equipment, countertops, and other custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, quick-service and casual restaurant market, retail and grocery store, and other retail markets. The Company accesses its customers primarily through a direct sale model utilizing its own sales force. Sales through distribution represent a small portion of Display Solutions sales. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage.

The Company’s corporate administration activities are reported in the Unallocated corporate expenses net of tax line item. These activities primarily include expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes.

There wereno customers or customer programs representing a concentration of10% or more of the Company’s net sales in the fiscal year ended* June 30, 2026,2025, or2024. There wasno concentration of accounts receivable at June 30, 2026,*2025, or2024.

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Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of* June 30, 2026,** June 30, 2025and June 30, 2024:*

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• Costs of products and services sold, selling and administrative expenses, other income and expense and income tax expense.

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The segment net sales reported above represent sales to external customers. Identifiable assets are those assets used by each segment in its operations.

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NOTE6 — EARNINGS PER SHARE

The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding:

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NOTE7 — INVENTORIES, NET

The following information is provided as of the dates indicated:

The Company has open purchase orders primarily related to inventory totaling $61.6 million as of* June 30, 2026*.

NOTE8 —** ACCRUED EXPENSES**

The following information is provided as of the dates indicated:

NOTE9 —GOODWILL AND OTHER INTANGIBLE ASSETS

The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company* may**first* assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely thannot that goodwill and indefinite-lived assets arenot impaired,no further testing is required. If it is determined more likely thannot that goodwill and indefinite-lived assets are impaired, or if the Company electsnot tofirst assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets* mayhave become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may*signal that an asset has become impaired.

The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total ofeight reporting units that contain goodwill. One reporting unit is within the Lighting Segment andseven reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, butnot limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment.

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Fiscal2026;

As of* March 1, 2026**,* the Company performed its annual goodwill impairment test on thefive reporting units that contain goodwill, acknowledging that the Company acquiredthree reporting units as part of the Royston acquisition after the designated measurement date. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $34.7 million or 15% above the carrying value of the reporting unit including goodwill. The goodwill impairment test ofone reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $26.5 million which is substantially above the carrying value of the reporting unit including goodwill. The goodwill impairment test of thesecond reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $114.9 million or 41% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of thethird reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $63.4 million or 42% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of thefourth reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $26.6 million or 132% above the carrying value of the reporting unit including goodwill.

The Company hasthree indefinite-lived intangible assets as of our* March 1, 2025measurement date, acknowledging the Company acquiredthree* additional indefinite-lived intangible assets as part of the Royston acquisition after the designated measurement date. The Company engaged athird-party valuation specialist to perform a quantitative annual impairment assessment review of indefinite-lived intangible assets as of* March 1, 2026,and determined there wasno impairment. The impairment test of thefirst* indefinite-lived intangible asset passed with a fair market value of $5.1 million or 5% above its carrying value. The impairment test of thesecond indefinite-lived intangible asset passed with a fair market value of and $10.9 million or 25% above its carrying value. The impairment test of thethird indefinite-lived intangible asset passed with a fair market value of and $15.4 million which is substantially above the carrying value.

Fiscal2025;

As of* March 1, 2025**,* the Company performed its annual goodwill impairment test on thefour reporting units that contain goodwill. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $30.1 million or 6% above the carrying value of the reporting unit including goodwill. The goodwill impairment test ofone reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $22.3 million which is substantially above the carrying value of the reporting unit including goodwill. The goodwill impairment test of thesecond reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $106.6 million or 29% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of thethird reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $63.1 million or 39% above the carrying value of the reporting unit including goodwill.

The Company hasthree indefinite-lived intangible assets. The Company performed its annual review oftwo of our indefinite-lived intangible assets utilizing qualitative factors associated with the stepzero methodology, as of* March 1, 2025,and determined there wasno* impairment. The Company engaged athird-party valuation specialist to perform a quantitative annual impairment assessment ofone of our indefinite-lived intangible assets as of* March 1, 2025,*and determined there wasno impairment.

The following table presents information about the Company's goodwill on the dates or for the periods indicated:

In fiscal2026, the Company acquired Royston, which impacted the amount of goodwill reported, and in fiscal2025, the Company acquired Canada’s Best Holdings (CBH), which impacted the amount of goodwill reported.

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The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:

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The Company expects to record annual amortization expense as follows:

NOTE10 — REVOLVING LINE OF CREDIT AND LONG-TERM DEBT

The Company’s long-term debt as of* June 30, 2026and June 30, 2025*, consisted of the following:

In* Marchof2026**,* the Company entered into a $350 million senior secured credit facility consisting of a $200 million five-year term loan and a $150 million revolving credit facility. The Company is required to make quarterly principal payments of $2.5 million against the term loan, starting in the quarter ending* June 30, 2026,with an increase to $3.75 million of such quarterly payments scheduled in June 2028and with an increase to $5.0 million of such quarterly payments scheduled in June 2030,and the balance of the term loan due at maturity on March 24, 2031**.The revolving credit facility is also scheduled to expire on March 24, 2031**.Interest on the term loan and any loans made under the revolving credit facility is based on the Secured Overnight Financing Rate (“SOFR”) or a customary base rate (which mayinclude Daily Simple SOFR or the Prime Rate), to be determined by reference to customary market benchmarks, in each case plus an applicable margin that is anticipated to vary based on the Company’s consolidated total net leverage ratio, which is calculated to be consolidated funded debt minus unrestricted cash and cash equivalents against earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. As of June 30, 2026,the interest rate applicable to the term loan was 5.5% and the Company’s borrowing rate against its revolving line of credit was 6.2%. The increment over the SOFR borrowing rate is 250 basis points for thefourth* quarter of fiscal year2026. In addition to interest on outstanding amounts, the Company also pays a commitment fee on the unused balance of the revolving credit facility, fluctuates between 17.5 and 27.5 basis points based on the Company’s consolidated total net leverage ratio. Under the terms of the credit agreement, the Company is required to comply with a financial covenant that limits the ratio of indebtedness and unrestricted cash to EBITDA measured on a quarterly basis, with a maximum net leverage ratio of 4.00 to1.00 at closing, which is reduced to 3.75 to1.00 in the fiscal quarter ending* December 31, 2026,and further to 3.50 to1.00* in the fiscal quarter ending* September 30, 2027.The Company is also required to maintain an interest coverage ratio, measured on a quarterly basis, equal to or above the minimum set forth in the agreement, which as of closing was to1.00.* As of* June 30, 2026*, there was $90.0 million available for borrowing under the combined $150 million line of credit.

The Company is in compliance with all of its loan covenants as of* June 30, 2026*.

NOTE11 — CASH DIVIDENDS

The Company paid cash dividends of $6.5 million, $6.0 million and $5.7 million in fiscal years2026, 2025 and2024, respectively. Dividends on restricted stock units in the amount of $0.1 million were accrued for the fiscal years ending* June 30, 2026,2025 &2024. These dividends are paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In August 2026,the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable September 8, 2026,to shareholders of record August 31, 2026.*

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NOTE12 — EQUITY COMPENSATION

In* November 2019,the Company’s shareholders approved the2019* Omnibus Award Plan (as amended on* November 1, 2022,the“2019* Omnibus Plan”). The purpose of the2019 Omnibus Plan is to provide a means through which the Company* mayattract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The2019* Omnibus Plan replaced the2012 Stock Incentive Plan (“2012 Stock Plan”). The number of shares of common stock authorized for issuance under the2019 Omnibus Plan is 5,000,000 which are combined with the remaining shares available under the2012 Stock Plan. The number of shares reserved for issuance under the2019 Omnibus Plan is 994,651 shares all of which are available for future grant or award as of* June 30, 2026*. The2019 Omnibus Plan allows for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units and other stock-based awards.

Inducement awards are granted by the Company to attract and retain key executives. Inducement awards are separately registered securities and arenot part of the2019 Omnibus Plan. In fiscal2026 85,958 RSUs and 203,614 PSUs were granted, and in fiscal2025, 107,217 RSUs and 279,359 PSUs were granted.

Employee Stock Purchase Plan

In* Novemberof2021,* our board of directors and shareholders approved the LSI Employee Stock Purchase Plan (“ESPP”). A total of 270,000 shares of common stock were provided for issuance under the ESPP. Employees* mayparticipate at their discretion and are able to purchase, through payroll deduction, common stock at a 10% discount on a quarterly basis. Employees mayend their participation at any time during the offering period, and participation ends automatically upon termination of employment with the company. During fiscal year2026* and2025 employees purchased 19,000 and 17,000 shares, respectively. At* June 30, 2026*,206,000 shares remained available for purchase under the ESPP.

Stock Options

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. The following table summarizes the weighted-average assumptions used in the Black-Scholes option pricing model to value the stock options granted in the periods indicated. There wereno options granted in fiscal2026 and2025.

Stock option expense is recorded on a straight-line basis, or sooner if the grantee is retirement eligible as defined in the2019 Omnibus Plan, net of forfeitures. The forfeiture rate is based on historical rates and reduces the compensation expense recognized. The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants. The risk-free interest rate is the rate of afive-year Treasury security at constant, fixed maturity on the approximate date of the stock option grant. The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised. It is the Company’s policy that when stock options are exercised, new common shares shall be issued.

Service-based options have athree-year ratable vesting period beginningone year after the date of grant. Inducement stock options have a term often years only if the employee is employed forthree years from the date of grant. The maximum exercise period of service-based and performance-based stock options granted under the2019 Omnibus Plan isten years.

The Company recorded $0.4 million, $0.5 million and $0.1 million of expense related to stock options in fiscal years2026, 2025 and2024, respectively.

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A summary of stock option activity as of* June 30, 2026*, and changes during the period from* July 1,2025, through June 30, 2026*, are as follows:

The aggregate intrinsic value of options exercised during the years ended* June 30, 2026,was $16.3 million, $1.3 million as of June 30, 2025,and $1.7 million as of June 30, 2024.The Company received $4.4 million, $1.1 million and $1.8 million of proceeds from stock options exercises in fiscal2026*,2025, and2024 respectively.

As of* June 30, 2026*, there was $0.6 million of unrecognized compensation cost, net of forfeitures, related to stock options, which is expected to be recognized over a weighted-average remaining period of 0.4 years.

For fiscal year2026, the Company recognized a current income tax benefit of $1.2 million for tax deductions related to equity compensation.

For fiscal year2025, the Company recognized a current income tax benefit of $1.8 million for tax deductions related to equity compensation.

For fiscal year2024, the Company recognized a current income tax benefit of $1.4 million for tax deductions related to equity compensation.

Restricted Stock Units

A total of 85,958 RSUs with a weighted average fair value of$19.54 per share were awarded to employees during fiscal2026. The RSUs awarded during fiscal2026 have athree-year vesting period, withone-third vesting on each of the anniversary dates. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the RSUs were awarded. The unvested RSUs are non-voting but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. Dividends on RSUs in the amount of $103,679, and $88,148 were accrued as of* June 30, 2026,and2025,* respectively. Accrued dividends are paid to the holder upon vesting of the RSUs and issuance of shares.

The Company recorded $1.3 million, $1.3 million and $1.5 million of expense related to RSUs during fiscal year2026,2025, and2024, respectively.

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A summary of outstanding and unvested RSU activity as of* June 30, 2026,and changes during the period from July 1,2025, through June 30, 2026*, are as follows:

As of* June 30, 2026*, there was $1.5 million of unrecognized compensation cost, net of forfeitures, related to RSUs, which is expected to be recognized over a weighted-average remaining period of 1.5 years. The total fair value of RSUs that became fully vested during fiscal2026 was $2.6 million.

Performance Stock Units

A total of 203,615 PSUs with a weighted average fair value of $14.30 per share were awarded to employees during fiscal2026. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the PSUs were awarded. PSUs vest if the Company meets certain financial metrics over athree-year period. The PSUs are non-voting but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock.

The Company recorded $2.3 million, $2.3 million and $2.2 million of expense related to PSUs during fiscal years2026,2025, and2024 respectively.

A summary of outstanding and unvested PSU activity as of* June 30, 2026,and changes during the period from July 1,2025, through June 30, 2026*, are as follows:

As of* June 30, 2026*, there was $2.7 million of unrecognized compensation cost, net of forfeitures, related to PSUs, which is expected to be recognized over a weighted-average remaining period of 2.0 years.

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Director and Employee Stock Compensation Awards

The Company awarded a total of 18,354,27,264 and 31,608 common shares as stock compensation awards in fiscal years2026,2025, and2024, respectively. These common shares were valued at their approximate $0.4 million fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of Company stock. Stock compensation awards are made in the form of newly issued common shares of the Company.

The Company awarded a total of 9,720 common promissory shares as stock compensation awards in fiscal year2026. These common shares were valued at their approximate $0.2 million fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of Company stock. Stock compensation awards are made in the form of promissory common shares of the Company to be transferred to the non-employee director at the end of the board service.

Deferred Compensation Plan

The Company has a non-qualified deferred compensation plan providing for both Company matching contributions and participant funded deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of* June 30, 2026*, there were29 participants, all with fully vested account balances. A total of 1,082,850 common shares with a cost of $11.2 million,1,052,692 common shares with a cost of $10.1 million, and 1,036,714 common shares with a cost of $8.9 million, both of which included the Company contributions and the participant deferrals, were held in the plan as of* June 30, 2026,*2025 and2024, respectively, and accordingly, have been recorded as treasury shares.

The change in the number of shares held by this plan is the net result of newly issued shares as compensation deferred into the plan offset by distributions to terminated employees. The Company issued 89,416,113,176 and 131,226 new common shares for purposes of the non-qualified deferred compensation plan during fiscal2026,2025, and2024 respectively.

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NOTE13 — LEASES

The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. All of the Company’s leases are operating leases. Leases have a remaining term ofone toseven years some of which have an option to renew. The Company doesnot assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements donot contain any material residual guarantees or material variable lease payments. The number of operating leases increased in fiscal2025 as a result of the acquisition of CBH; most of CBH’s operating leases are building leases, and the number of operating leases increased in fiscal2026 as a result of the acquisition of Royston; most of Royston’s operating leases are building leases.

The Company has periodically entered into short-term operating leases with an initial term oftwelve months or less. The Company electednot to record these leases on the balance sheet. The rent expense for these leases was immaterial for* June 30, 2026,*2025 and2024.

The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component.

Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments.

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NOTE14 — INCOME TAXES

The following information is provided for the years ended* June 30, 2026,*2025 and2024:

(a) In2026, 2025, and2024 state and local income taxes in California, Florida, Illinois, Massachusetts, New Jersey, Rhode Island, Texas, Blue Ash (OH) comprise the majority of the state and local income taxes, net of federal effect category.

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The components of deferred income tax assets and (liabilities) at* June 30, 2026and2025* are as follows:

The Company has US net operating loss carry forward deferred tax assets of $4.8 million and$0 million at* June 30, 2026and June 30, 2025respectively. The increase of $4.8 million for the year is from the acquisition of SRR Holdings Inc. and has an unlimited carryforward period. Utilization of the federal net operating loss is limited by Internal Revenue Code Section382.*

The company has Interest expense limitation carry forward deferred tax asset of $1.8 million at* June 30, 2026.The increase of $1.8 million for the year is from the acquisition of SRR Holdings Inc. and has an unlimited carryforward period. Utilization of the interest expense is limited by Internal Revenue Code Section382.*

The Company has state net operating loss carryovers and tax credit deferred tax assets of $0.9 million and $0 million at* June 30, 2026and June 30, 2025respectively. The increase of $0.9 million for the year is from the acquisition of SRR Holdings Inc. A valuation allowance of $0.1 million exists at June 30, 2026,against Oregon tax creditsnot* expected to be used. The Oregon credits are otherwise expected to expire over a4-year period beginning* June 30, 2027.*

At* June 30, 2026,*tax, interest, and penalties, net of potential federal tax benefits, were $1.7 million, $0.4 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $2.3 million. The entire uncertain tax position of $2.3 million, net of federal tax benefit, would impact the effective tax rate if recognized. An uncertain tax position and tax indemnification receivable of $0.9 million was recognized as a result of the CBH acquisition. The liability for uncertain tax position is included in Other Long-Term Liabilities.

At* June 30, 2025,*tax, interest, and penalties, net of potential federal tax benefits, were $1.8 million, $0.3 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $2.3 million. The entire uncertain tax position of $2.3 million net of federal tax benefit, would impact the effective tax rate if recognized. An uncertain tax position and tax indemnification receivable of $1.1 million was recognized as a result of the CBH acquisition. The liability for uncertain tax position is included in Other Long-Term Liabilities.

At* June 30, 2024,*tax, interest, and penalties, net of potential federal tax benefits, were $0.6 million, $0.3 million, and $0.2 million, respectively, of the total reserve for uncertain tax positions of $1.1 million. The entire uncertain tax position of $0.6 million, net of federal tax benefit, would impact the effective tax rate if recognized.

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The amounts of cash taxes paid by LSI are as follows:

The Company is recording estimated interest and penalties related to potential underpayment of income taxes as a component of tax expense in the Consolidated Statements of Operations. The Company recognized a $(0.1) million net tax (benefit) in fiscal2026 and a net tax expense of $0.1 million in both fiscal years2025 and2024, related to the change in reserves for uncertain tax positions. The Company recognized interest net of federal benefit and penalties of $72,000 and $25,000, respectively, in fiscal2026, $12,000 and $21,000, respectively, in fiscal2025, and $17,000 and $37,000, respectively, in fiscal2024.

The tax activity in the liability for uncertain tax positions was as follows:

The Company files a consolidated federal income tax return in the United States, and files various combined and separate tax returns in numerous state and local jurisdictions, and also in Canada, Mexico, Jamaica, Barbados, and Puerto Rico. In general, the Company isno longer subject to U.S. Federal, state, and local tax examinations by tax authorities for fiscal years ending prior to* June**30,* 2023.

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NOTE15 — SUPPLEMENTAL CASH FLOW INFORMATION

NOTE16 — COMMITMENTS AND CONTINGENCIES

The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company doesnot disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters willnot have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity.

The Company has recorded a $7.0 million contingent liability related to the future earnout payments as part of the acquisition of Canada’s Best Holding (CBH), or which $2.1 million is classified as short term, while $4.9 million is classified as long term. The $7.0 million represents the value of the earnout converted from its functional currency to USD as of* June 30, 2026.As of June 30, 2025,the company recorded a $3.4 million contingent liability related to the future earnout payments, and $3.4 million represents the value of the earnout converted from its functional currency to USD as of June 30, 2025.*

NOTE17 — FAIR VALUE MEASUREMENTS

Fair value measurements are categorized intoone ofthree levels based on the lowest level of significant input used: Level1 (unadjusted quoted prices in active markets); Level2 (observable market inputs available at the measurement date, other than quoted prices included in Level1); and Level3 (unobservable inputs that cannot be corroborated by observable market data).

Assets and Liabilities Measured at Fair Value on a Recurring Basis

As of* June 30, 2026and2025*, the estimated fair value of the Company's cash, cash equivalents, receivables, inventory, debt, and accounts payable approximated their carrying values.

The Company recorded the estimated fair value of the contingent consideration liability assumed with the acquisition of CBH. The estimated fair value of the contingent consideration liability is included in the Consolidated Balance Sheets within other noncurrent liabilities, totaling $7.0 million at* June 30, 2026*. The earnout liability is adjusted at fair value quarterly until settled, and changes in fair value will be reported in our Consolidated Statements of Operations.

Changes in the earn-out liability measured at fair value using Level3 inputs were as follows:

The following provides information regarding fair value measurements for our remaining contingent earnout liability as of* June 30, 2026*, according to thethree-level fair value hierarchy:

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NOTE18 - RELATED PARTY

A limited liability company owned (the “LLC”) and controlled by LSI's Chief Executive Officer, James A. Clark, owns an aircraft that is dry leased to an unrelatedthird party. Pursuant to a separate arrangement, thethird-party dry leases the aircraft to LSI for qualifying business travel by certain of the Company’s executive officers. Payments made by LSI depend on actual usage. For the period from* July 1, 2025through June 30, 2026,*the LLC received aggregate payments of $236,000 in connection with this arrangement.

NOTE19 ** — SUMMARY OF QUARTERLY RESULTS (UNAUDITED)**

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