EVI INDUSTRIES, INC.

Note (1)– General:** The accompanying unaudited condensed consolidated financial statements include the accounts of EVI Industries, Inc. and its subsidiaries (the “Company”). All material intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form10-Q and Article10 of Regulation S-X related to interim period financial statements. Accordingly, the accompanying unaudited condensed consolidated financial statements donot include certain information and footnotes required by GAAP for complete financial statements. However, in management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals and adjustments) which are necessary in order to state fairly the Company’s results of operations, financial position, shareholders’ equity and cash flows as of and for the periods presented. The results of operations for interim periods arenot necessarily indicative of the results to be expected for the full year or any other future period. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes, including the Summary of Significant Accounting Policies, included in the Company’s Annual Report on Form10-K for the fiscal year ended* June 30, 2026*. The* June 30, 2026* balance sheet information contained herein was derived from the Company’s audited consolidated financial statements as of that date included in the Company’s Annual Report on Form10-K for the fiscal year ended* June 30, 2026*.

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The estimates and assumptions made* may**not* prove to be correct, and actual results could differ from the estimates.

The Company, through its wholly-owned subsidiaries, operates in the commercial and industrial laundry distribution and service business and, since its acquisition of Sudsies Inc. (“Sudsies”) on* September 1, 2026,*the consumer garment care services industry.

In the commercial and industrial laundry distribution and service business, the Company, through its wholly-owned subsidiaries, is a value-added distributor, and provides advisory and technical services. Through its sales organization, the Company provides its customers with planning, designing, and consulting services related to their commercial laundry operations. The Company sells and/or leases its customers commercial laundry equipment, specializing in washing, drying, finishing, material handling, water heating, power generation, and water reuse applications. In support of the suite of products it offers, the Company sells related parts and accessories. Additionally, through the Company’s network of commercial laundry technicians, the Company provides its customers with installation, maintenance, and repair services.

The Company’s customers include government, institutional, industrial, commercial and retail customers. Product purchases made by customers range from parts and accessories, to single or multiple units of equipment, to large complex systems. The Company also provides its customers with the services described above.

On* September 1, 2026,the Company acquired Sudsies, a well-established operator in the garment care sector andone* of South Florida's premier garment care businesses. The Company’s acquisition of Sudsies marked the Company's entry into the consumer garment care services industry. See Note4 below for additional information regarding the Sudsies acquisition.

The Company’s growth strategy includes organic growth initiatives and business acquisitions pursuant to the Company’s “buy-and-build” growth strategy.

Note (2)–** Summary of Significant Accounting Policies:There have beenno material changes to the Company’s significant accounting policies from those described in Note2 to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form10-K for the fiscal year ended June 30, 2026.

Note (3)–** Recently Issued Accounting Guidance**: In* November 2024,the Financial Accounting Standards Board ("FASB") issued ASU2024*-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40) (“ASU2024-03”), to enhance the transparency and clarity of the components of specific expense categories in the income statement. ASU2024-03 requires disclosure of additional information about specific expense categories underlying certain income statement expense line items. In* January 2025,the FASB issued ASU2025*-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Clarifying the Effective Date, which clarified the effective date of ASU2024-03. ASU2024-03 will be effective for the Company’s annual financial statements beginning in the fiscal year ending* June 30, 2028.*The Company is currently evaluating the impact of this accounting standard on its financial statement presentation and its related disclosures.

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In* July 2025,the FASB issued ASU2025*-05, Financial Instruments—Credit Losses (Topic326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient allowing entities to assume that current conditions remain unchanged over the remaining life of current accounts receivable and contract assets. The Company adopted this guidance on* July 1, 2026and elected the practical expedient. The adoption didnot* have a material impact on the Company's unaudited condensed consolidated financial statements.

Management doesnot believe that accounting standards and updates which have been issued but arenot yet effective will have a material impact on the Company’s condensed consolidated financial statements upon adoption, other than as described above.

Note (4)–** Acquisitions:**

Fiscal2027* Acquisitions*

Sudsies Acquisition

On* September 1, 2026,the Company acquired Sudsies, a well-established operator in the garment care sector andone* of South Florida's premier garment care businesses, which marked the Company's entry into the consumer garment care services industry. The total purchase price paid in the transaction was $37.4 million in cash, which is subject to post-closing adjustments. The Company funded the acquisition with borrowings under its credit facility. Fees and expenses related to the acquisition of Sudsies, consisting primarily of legal and other professional fees, were approximately $300,000 and recorded within selling, general and administrative expenses. In connection with the acquisition of Sudsies, the Company established a new division, which is a separate operating and reportable segment, for its consumer garment care services operations and investments. This new segment primarily consists of premium garment care services, including dry cleaning, laundry, garment finishing and related services to residential and commercial customers.

The acquisition of Sudsies was treated for accounting purposes as a purchase of Sudsies using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC")805, Business Combinations ("ASC805"), pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The computation of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the following table (in thousands):

As of the date of this Quarterly Report on Form10-Q, the Company is continuing its valuation of intangible assets, equipment and improvements, and certain working capital items, which are subject to adjustment in accordance with the terms of the acquisition agreements. Accordingly, the purchase price allocation set forth above reflects preliminary fair value estimates based on preliminary work and analyses performed by management and is subject to change as additional information to assist in determining the fair value of those assets as of the closing date is obtained during the post-closing measurement period of up toone year.

Intangible assets consist of $4.5 million allocated to the Sudsies trade name and $10.7 million allocated to customer-related intangible assets. The Sudsies trade name is indefinite-lived and thereforenot subject to amortization. The Sudsies trade name will be evaluated for impairment annually, or more frequently if an event occurs or circumstances change that indicate that it* may*be impaired, by comparing its fair value to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets will be amortized over 10 years.

Goodwill is attributable primarily to the assembled workforce acquired. The goodwill from the acquisition is deductible for income tax purposes.

Fiscal2026* Acquisitions*

ASN Acquisition

On* August 1, 2025,the Company acquired ASN Laundry Group (“ASN”), a New York-based distributor of commercial laundry products and a provider of related technical installation and maintenance services. The consideration paid by the Company in connection with the acquisition consisted of $0.5 million in cash. In addition, the Company assumed $0.1 million of accrued liabilities of ASN in connection with the transaction. Fees and expenses related to the acquisition, consisting primarily of legal and other professional fees, werenot* material and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for thethree months ended* September 30, 2025.*

The acquisition was treated for accounting purposes as a purchase of ASN using the acquisition method of accounting in accordance with ASC805, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The Company allocated $0.6 million to goodwill, which is expected to be amortized and deductible for tax purposes over 15 years.

Goodwill is attributable primarily to the assembled workforce, as well as the expected benefits from the increased scale of the Company as a result of the acquisition.

BEL Acquisition

On* February 28, 2026,the Company acquired substantially all of the assets of Belenky, Inc. (“BEL”), an Ohio-based distributor of commercial laundry products and a provider of related technical installation and maintenance services to the on-premise and vended laundry segments of the commercial laundry industry. The consideration paid by the Company in connection with the acquisition consisted of $2.4 million in cash and $0.8 million in amounts payable to the seller. The Company funded the acquisition with borrowings under its credit facility. Fees and expenses related to the acquisition of BEL, consisting primarily of legal and other professional fees, werenot* material.

The acquisition of BEL was treated for accounting purposes as a purchase of BEL using the acquisition method of accounting in accordance with ASC805, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to goodwill. The computation of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the following table (in thousands):

As of the date of this Quarterly Report on Form10-Q, the Company is continuing its valuation of intangible assets and certain working capital items, which are subject to adjustment in accordance with the terms of the asset purchase agreement. Accordingly, the purchase price allocation set forth above reflects preliminary fair value estimates based on preliminary work and analyses performed by management and is subject to change as additional information to assist in determining the fair value of those assets as of the closing date is obtained during the post-closing measurement period of up toone year.

Intangible assets consist of $280,000 allocated to the Belenky trade name and $850,000 allocated to customer-related intangible assets. The Belenky trade name is indefinite-lived and thereforenot subject to amortization. The Belenky trade name will be evaluated for impairment annually, or more frequently if an event occurs or circumstances change that indicate that it* may*be impaired, by comparing its fair value to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets will be amortized over 10 years.

Goodwill is attributable primarily to the assembled workforce acquired, as well as benefits from the increased scale of the Company as a result of the acquisition. The goodwill from the acquisition is deductible for income tax purposes.

Supplemental Pro Forma Results of Operations

The following supplemental pro forma information presents the results of operations of the Company for thethree months ended* September 30, 2026and September 30, 2025,after giving effect to the BEL and Sudsies acquisitions, as if such acquisitions were consummated on July 1, 2025.*

The supplemental pro forma information set forth below reflects adjustments based on currently available information and assumptions made by management. While management believes the assumptions made are reasonable under the circumstances, they* may**not* prove to be accurate. The pro forma information set forth below is presented for informational purposes only and isnot necessarily indicative of what the actual results of operations of the Company would have been if the acquisitions of BEL and Sudsies had occurred on the date assumed, nor is it indicative of future results of operations.

The Company’s consolidated results of operations for thethree months ended* September 30, 2026include total revenue of approximately $3.3 million and net income of approximately $0.1 million attributable to businesses acquired during fiscal2026* and thefirst quarter of fiscal2027, based on the consolidated effective tax rate. These results of acquired businesses donot include the effects of acquisition costs in connection with the acquisitions.

Subsequent Acquisition

On* November 6, 2026,*the Company acquired Florida-based Commercial Laundry Equipment Company for total consideration of $8.5 million in cash. The Company is in the process of determining the respective fair values of the assets acquired and liabilities assumed.

Note (5)–** Earnings Per Share:** The Company computes earnings per share using thetwo-class method. Thetwo-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for common stock and any participating securities according to dividends declared (whether paid or unpaid) and participation rights in undistributed earnings. Shares of the Company’s common stock subject to unvested restricted stock awards and restricted stock units are considered participating securities because they contain a non-forfeitable right to cash dividends (in the case of restricted stock awards) or dividend equivalents (in the case of restricted stock units) paid prior to vesting or forfeiture, if any, irrespective of whether the awards or units ultimately vest. Basic and diluted earnings per share for thethree months ended* September 30, 2026and2025* are computed as follows (in thousands, except per share data):

During thethree months ended* September 30, 2026* and2025, other than 882,558 and 136,610 shares of common stock subject to unvested restricted stock awards or restricted stock units, respectively, there wereno potentially dilutive securities outstanding.

Note (6)–** Debt:** Long-term debt as of* September 30, 2026* and* June 30, 2026* are as follows (in thousands):

The Company is party, as borrower, to a syndicated credit agreement (the “Credit Agreement”). The Credit Agreement allows for borrowings in the maximum aggregate principal amount of up to $150 million, with an accordion feature to increase the revolving credit facility by up to $50 million for a total of $200 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $7.5 million and for the issuance of standby letters of credit of up to a sublimit of $15 million. The maturity date of the Credit Agreement is* March 26, 2030.*

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Borrowings (other than swingline loans) under the Credit Agreement bear interest, at a rate, at the Company’s election at the time of borrowing, equal to (a) the Secured Overnight Financing Rate (“SOFR”) plus 0.11% to 0.43%, plus an additional adjustment margin that ranges between 1.25% and 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) SOFR plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. Swingline loans generally bear interest at the Base Rate plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. As of* September 30, 2026*, the Company had approximately $85.0 million of outstanding borrowings under the Credit Agreement, which accrued interest at a weighted average rate of 5.15%.

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* mayrestrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. At September 30, 2026*, the Company was in compliance with its covenants under the Credit Agreement and $47.7 million was available to borrow under the revolving credit facility.

The obligations of the Company under the Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.

The carrying value of the Company’s long-term debt reported in the condensed consolidated balance sheets herein approximates its fair value since it bears interest at variable rates approximating market rates.

Note (7)–** Leases:**

Company as Lessee

As of* September 30, 2026*, the Company had 38 facilities, consisting of warehouse facilities, garment care facilities, retail locations, and administrative offices, financed under operating leases with lease term expirations between2026 and2031. Operating lease cost consists of monthly rental payments under the terms of the lease agreements recognized on a straight-line basis. Short-term lease costs werenot material during thethree months ended* September 30, 2026* or2025.

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The following table provides details of the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of* September 30, 2026*. The table below doesnot include commitments that are contingent on events or other factors that are currently uncertain or unknown.

The table below presents additional information related to the Company’s operating leases (in thousands):

The table below presents lease-related terms and discount rates as of* September 30, 2026*:

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for thethree months ended* September 30, 2026and2025* (in thousands):

Company as Lessor

The Company derives a portion of its revenue from equipment leasing arrangements. Such arrangements provide for monthly payments covering the equipment provided, maintenance and interest. These arrangements meet the criteria to be accounted for as sales type leases. Accordingly, revenue from the provision of the equipment is recognized upon delivery of the equipment and its acceptance by the customer. Upon the recognition of such revenue, an asset is established for the investment in sales type leases. Maintenance revenue and interest are recognized monthly over the lease term.

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The future minimum lease payments receivable for sales type leases are as follows (in thousands):

• Excludes residual values of $2.5 million.

The total net investments in sales type leases, including stated residual values, as of* September 30, 2026* and* June 30, 2026* was $9.3 million and $9.4 million, respectively. The current portion of $1.9 million is included in other current assets in the condensed consolidated balance sheets as of* September 30, 2026* and* June 30, 2026*, and the long term portion of $7.4 million and $7.5 million is included in other assets in the condensed consolidated balance sheets as of* September 30, 2026* and* June 30, 2026*, respectively.

Note (8)–** Income Taxes:**Income taxes are recorded in the Company’s quarterly financial statements based on the Company’s estimated annual effective income tax rate, subject to adjustment for discrete events, should they occur.

The Company’s effective tax rate was 26.2% and 30.2% for thethree-month periods ended* September 30, 2026and2025,* respectively. The decrease in the effective tax rate is attributable to a decrease in the net impact of permanent book-tax differences resulting from nondeductible compensation.

As of* September 30, 2026* and* June 30, 2026*, the Company had net deferred tax liabilities of approximately $9.0 million and $9.1 million, respectively. Consistent with the guidance of the FASB regarding accounting for income taxes, the Company regularly estimates its ability to recover deferred tax assets and establishes a valuation allowance against deferred tax assets to reduce the balance to amounts expected to be recoverable. This evaluation includes the consideration of several factors, including an estimate of the likelihood of generating sufficient taxable income in future periods over which temporary differences reverse, the expected reversal of deferred tax liabilities, past and projected taxable income, and available tax planning strategies. As of* September 30, 2026,*management believed that it was more-likely-than-not that the results of future operations will generate sufficient taxable income to realize the amount of the Company’s deferred tax assets over the periods during which temporary differences reverse.

The Company follows ASC Topic740-10-25, “Accounting for Uncertainty in Income Taxes” (“ASC740”). ASC740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company’s accounting for income taxes in accordance with this standard didnot result in a material adjustment to the Company’s provision for income taxes during thethree months ended* September 30, 2026* or2025.

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As of* September 30, 2026*, the Company was subject to potential federal and state tax examinations for the tax years including and subsequent to 2022.

Note (9)–** Equity Plans and Dividends:**

Equity Incentive Plans

In* November 2015,the Company’s stockholders approved the Company’s2015* Equity Incentive Plan (the*“2015* Plan”). During* December 2020,the Company’s stockholders approved an amendment to the2015* Plan to increase the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the2015 Plan to 3,000,000 shares. During* December 2024,the Company’s stockholders approved an amendment to the2015* Plan to, among other things, further increase the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the2015 Plan to 3,500,000 shares. Pursuant to the terms of the2015 Plan, the Company couldnot issue any additional awards under the2015 Plan following* November 13, 2025,thetenth* anniversary of the effective date of the2015 Plan.

In* December 2025,the Company’s stockholders approved the Company’s2025* Equity Incentive Plan (the*“2025* Plan” and, together with the2015 Plan, the "Plans"). The terms of the2025 Plan are substantially similar to the terms of the2015 Plan, and permit the Company to issue a broad array of awards, including stock awards, restricted stock awards, restricted stock units, stock options, stock appreciation rights, performance awards, and other awards, including cash awards. A total of 3,000,000 shares of the Company's common stock are authorized for issuance pursuant to awards granted under the2025 Plan.

The fair value of awards granted under the Plans is expensed on a straight-line basis over the vesting period of the awards. Stock compensation expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

During thethree months ended* September 30, 2026*, there were 261,023 restricted stock awards and 20,273 restricted stock units granted under the2025 Plan. During thethree months ended* September 30, 2025,there were 182,493 restricted stock awards and 68,790 restricted stock units granted under the2015* Plan. There wereno restricted stock awards forfeited during either of thethree months ended* September 30, 2026* or2025. There were 6,133 and 2,419 restricted stock units forfeited during thethree months ended* September 30, 2026and2025,* respectively.

For thethree months ended* September 30, 2026and2025,* non-cash stock compensation expense related to awards granted under the Plans totaled $1.3 million and $1.2 million, respectively.

As of* September 30, 2026*, the Company had $28.6 million and $11.5 million of total unrecognized compensation expense related to previously granted restricted stock awards and restricted stock units, respectively, which is expected to be recognized over the weighted average period of 10.67 years and 8.80 years, respectively.

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The following is a summary of non-vested restricted stock activity as of, and for thethree months ended,* September 30, 2026*:

Employee Stock Purchase Plan

During2017, the Company’s stockholders approved the Company’s2017 Employee Stock Purchase Plan (the “ESPP”). Subject to the terms and conditions thereof, the ESPP allows eligible employees the opportunity to purchase shares of the Company’s common stock at a 5% discount. The ESPP provides forsix-month offering periods ending on* December 31and June 30of each year. No shares of common stock were issued under the ESPP during thethree* months ended* September 30, 2026or2025.*

Dividends

The declaration and payment of cash dividends on the Company’s common stock is determined by the Company’s Board of Directors based on the Company’s financial condition and results, including, butnot limited to, cash flow generated by operations and profitability, the Company’s prospects and liquidity needs, and other factors deemed relevant by the Company’s Board of Directors.

The Company hasnot historically paid regular dividends on its common stock. However, the Company has from time to time paid special cash dividends on its common stock.

On* September 11, 2025,the Company’s Board of Directors declared a special cash dividend on the Company’s common stock of $0.33 per share (an aggregate of $5.0 million), which was paid on October 6, 2025to stockholders of record at the close of business on September 25, 2025.*

The payment of dividends, if any, in the future will be at the discretion of the Company’s Board of Directors, as described above. The payment of dividends* mayalso be subject to restrictions contained in the Company’s debt instruments. As described elsewhere in this Report, including under “Liquidity and Capital Resources” in Item2* of this Report, the Company’s Credit Agreement contains certain covenants which* may,among other things, restrict the Company’s ability to pay dividends, and any future facilities maycontain similar or more stringent requirements. The Company’s management doesnot* believe that the covenants contained in the Company’s Credit Agreement currently materially limit the Company’s ability to pay dividends or are reasonably likely to materially limit the Company’s ability to pay dividends in the future.

Share Repurchase Program

On* July 28, 2026,the Company's Board of Directors approved a share repurchase program which authorizes the repurchase of up to $10.0 million of the Company's outstanding common stock. Under the share repurchase program, the Company mayrepurchase shares of its common stock from time to time in management’s discretion through solicited or unsolicited open market transactions, in privately negotiated transactions, or by other means in accordance with applicable federal securities laws, including through the use of trading plans intended to qualify under Rule10b5*-1 under the Securities Exchange Act of1934, as amended. The timing, manner, price, and amount of shares which* maybe repurchased under the program will be at management’s discretion based on market conditions, the trading price of the Company’s common stock, the Company’s financial condition, results of operations and capital requirements, general business conditions, alternative investment opportunities, and other factors deemed relevant by management. The share repurchase program doesnot* obligate the Company to repurchase any specific amount of shares, hasno expiration date, and* maybe modified, suspended or terminated at any time without prior notice at the discretion of the Company’s Board of Directors. There wereno* repurchases under the program during thethree months ended* September 30, 2026.*

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Note (10)–** Transactions with Related Parties:** Certain of the Company’s subsidiaries lease warehouse and office space fromone or more of the principals or former principals of those subsidiaries. These leases include the following:

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 offive years and provides fortwo successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for thefirst* three-year renewal term, which commenced in* October 2021,and thesecond* three-year renewal term, which commenced in* October 2024.Base rent for thefirst* renewal term was $19,000 per month. Base rent for thesecond renewal term is $21,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $63,000 during each of thethree months ended* September 30, 2026and2025*.

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 offive years and provides fortwo successive three-year renewal terms at the option of the Company. The Company exercised its option to renew the lease for thefirst* three-year renewal term, which commenced in* November 2023.Base rent for thefirst* renewal term is $40,000 per month. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately $120,000 during each of thethree months ended* September 30, 2026and2025*. On* September 30, 2026,*Mr. Zuffinetti's affiliate sold the building that is leased by AAdvantage Laundry Systems.

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 ofthree years and provides forthree successive three-year renewal terms at the option of the Company. The Company exercised its option to renew this lease for thefirst* three-year renewal term, which commenced in* November 2023.Base rent for thefirst* year of the renewal term was $12,500 per month. Base rent for thesecond year of the renewal term was $12,750 per month. Base rent for thethird 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 $39,000 and $38,000 during thethree months ended* September 30, 2026and2025*, respectively.

On* September 1, 2026,the Company’s wholly-owned subsidiaries through which the Sudsies' business is operated, Garment Care Services FL, LLC, GCS112*-114 Plant FL, LLC and GCS12711 Plant FL, LLC, entered into lease agreements under which they lease a total of approximately 15,431 square feet of retail and plant space, atfour locations in South Florida from affiliates of Jason Loeb, President of the Company's garment care services division. Each lease has an initial term expiring on* December 31, 2031and provides fortwo automatic successive three-year renewal terms, unless the Company electsnot* to renew. Initial base rent under the leases totals approximately $88,800 per month and increases 4% each* January 1.Beginning in2032,* the base rent resets everythree years to the greater of a 4% increase or fair market rent. In addition to base rent, Sudsies is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under these leases totaled approximately $89,000 during thethree months ended* September 30, 2026.*

Note (11)–** Commitments and Contingencies**: In the ordinary course of business, certain of the Company’s contracts require the Company to provide performance and payment bonds related to projects in process. These bonds are intended to provide a guarantee to the customer that the Company will perform under the terms of the contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under the contract or pay subcontractors and vendors, the customer* maydemand that the surety make payments or provide services under the bond. The Company is required to reimburse the surety for expenses or outlays it incurs. No such performance bonds were outstanding at September 30, 2026or June 30, 2026.*

The Company* mayfrom time to time become subject to litigation and other legal proceedings. Litigation and other legal proceedings may*require the Company to incur significant expenses, including those relating to legal and other professional fees, as well as damages or other payments. Litigation and other legal proceedings are inherently uncertain, and adverse outcomes in litigation or other legal proceedings could adversely affect the Company’s financial condition, cash flows and operating results.

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Note (12)–** Goodwill**: The changes in the carrying amount of goodwill are as follows (in thousands):

(1) Relates to the acquisition of Sudsies, which was consummated during thethree months ended* September 30, 2026*, as described in Note4, “Acquisitions.”

Note (13)–** Segment Reporting**:

Prior to* September 1, 2026,the Company hadone operating and reporting segment: commercial laundry. As previously described, on September 1, 2026,the Company acquired Sudsies, a well-established operator in the garment care sector andone* of South Florida's premier garment care businesses, which marked the Company's entry into the consumer garment care services industry. In connection with the acquisition of Sudsies, the Company established a new division, which is a separate operating and reportable segment, for its consumer garment care services operations and investments. All of the goodwill recognized in connection with the acquisition of Sudsies will be assigned to the new garment care services segment, with the remaining goodwill assigned to the commercial laundry segment.

As a result, the Company now operates throughtwo reportable segments: (i) commercial laundry, which primarily consists of the distribution of commercial and industrial laundry equipment, parts, supplies and related products, as well as equipment installation, maintenance, repair and other related services; and (ii) garment care services, which primarily consists of premium garment care services, including dry cleaning, laundry, garment finishing and related services to residential and commercial customers.

The Company’s Chief Executive Officer is the chief operating decision maker (the “CODM”). The CODM uses segment operating income to assess performance and allocate resources, primarily by comparing each segment’s operating income, including its gross margin, to the Company’s margin targets. Segment operating income represents revenue less cost of sales and selling, general and administrative expenses attributable to each segment, including depreciation and amortization included within those expenses. Segment operating income excludes stock compensation, unallocated corporate expenses, interest expense and income taxes.

The following tables present segment results for thethree months ended* September 30, 2026and2025.* Results of the garment care services segment are included beginning on* September 1, 2026and, accordingly, there areno* corresponding segment results for thethree months ended* September 30, 2025.The significant segment expenses presented are those regularly provided to the CODM. Segment revenues less the significant segment expenses presented equal segment operating income. All segment revenues are from external customers; there wereno* intersegment revenues during the periods presented. Depreciation and amortization are separately disclosed in a supplemental section and are included within cost of sales and selling, general and administrative expenses in the determination of segment operating income; they arenot additional deductions. The total segment revenues equal the Company's consolidated revenues for each period presented.

The following table reconciles total reportable segment operating income to consolidated income before income taxes. Unallocated corporate expenses consist primarily of executive, finance, legal, information technology and other corporate support costs that arenot allocated to the segments.

The CODM doesnot regularly review or evaluate assets by reportable segment. Accordingly, segment asset information isnot presented.

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