Electromed, Inc.
For the period ended Sep 30, 2026. Filed Nov 10, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 10, 2026
Extracted filing text, with the paragraph anchors used by the comparison.
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Item 1. Financial Statements
Condensed Balance Sheets
| September 30, 2026 | June 30, 2026 | |
|---|---|---|
| (Unaudited) | ||
| Assets | ||
| Current Assets | ||
| Cash and cash equivalents | $15,875,000 | $20,450,000 |
| Accounts receivable (net of allowance for credit losses of $75,000 and $45,000 as of September 30, 2026, and June 30, 2026, respectively) | 30,267,000 | 29,805,000 |
| Contract assets | 1,026,000 | 1,094,000 |
| Inventories | 3,811,000 | 3,681,000 |
| Income tax receivable | 405,000 | 1,168,000 |
| Prepaid expenses and other current assets | 810,000 | 1,170,000 |
| Total current assets | 52,194,000 | 57,368,000 |
| Property and equipment, net | 5,168,000 | 5,214,000 |
| Finite-life intangible assets, net | 379,000 | 379,000 |
| Other assets | 1,317,000 | 1,270,000 |
| Deferred income taxes | 2,036,000 | 2,036,000 |
| Total assets | $61,094,000 | $66,267,000 |
| Liabilities and Shareholders’ Equity | ||
| Current Liabilities | ||
| Accounts payable | $2,347,000 | $2,643,000 |
| Accrued compensation | 2,830,000 | 6,071,000 |
| Warranty reserve, current portion | 534,000 | 1,899,000 |
| Other accrued liabilities | 1,550,000 | 1,609,000 |
| Total current liabilities | 7,261,000 | 12,222,000 |
| Long-term warranty reserve | 1,310,000 | - |
| Other long-term liabilities | 50,000 | 66,000 |
| Total liabilities | 8,621,000 | 12,288,000 |
| Shareholders’ Equity | ||
| Common stock, $0.01 par value per share, 13,000,000 shares authorized; 8,236,585 and 8,366,163 shares issued and outstanding, as of September 30, 2026, and June 30, 2026, respectively | 82,000 | 84,000 |
| Additional paid-in capital | 25,421,000 | 25,331,000 |
| Retained earnings | 26,970,000 | 28,564,000 |
| Total shareholders’ equity | 52,473,000 | 53,979,000 |
| Total liabilities and shareholders’ equity | $61,094,000 | $66,267,000 |
See Notes to Condensed Financial Statements (Unaudited).
Condensed Statements of Operations (Unaudited)
| Three Months Ended | ||
|---|---|---|
| September 30, | ||
| 2026 | 2025 | |
| Net revenues | $18,682,000 | $16,887,000 |
| Cost of revenues | 3,745,000 | 3,690,000 |
| Gross profit | 14,937,000 | 13,197,000 |
| Operating expenses | ||
| Selling, general and administrative | 11,171,000 | 10,286,000 |
| Research and development | 277,000 | 241,000 |
| Total operating expenses | 11,448,000 | 10,527,000 |
| Operating income | 3,489,000 | 2,670,000 |
| Interest income, net | 148,000 | 134,000 |
| Income before income taxes | 3,637,000 | 2,804,000 |
| Income tax expense | 876,000 | 668,000 |
| Net income | $2,761,000 | $2,136,000 |
| Earnings per share: | ||
| Basic | $0.33 | $0.26 |
| Diluted | $0.32 | $0.25 |
| Weighted-average common shares outstanding: | ||
| Basic | 8,307,125 | 8,322,782 |
| Diluted | 8,761,404 | 8,681,703 |
See Notes to Condensed Financial Statements (Unaudited).
Condensed Statements of Cash Flows (Unaudited)
| Three Months Ended September 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Cash Flows From Operating Activities | ||
| Net income | $2,761,000 | $2,136,000 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 217,000 | 214,000 |
| Amortization | 49,000 | 45,000 |
| Share-based compensation expense | 435,000 | 458,000 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (462,000) | (96,000) |
| Contract assets | 68,000 | (134,000) |
| Inventories | (154,000) | (515,000) |
| Prepaid expenses and other assets | 284,000 | (241,000) |
| Income tax receivable, net | 763,000 | 202,000 |
| Accounts payable and accrued liabilities | (347,000) | 448,000 |
| Accrued compensation | (3,241,000) | (2,348,000) |
| Net cash provided by operating activities | 373,000 | 169,000 |
| Cash Flows From Investing Activities | ||
| Expenditures for property and equipment | (165,000) | (252,000) |
| Expenditures for finite-life intangible assets | (37,000) | (15,000) |
| Net cash used for investing activities | (202,000) | (267,000) |
| Cash Flows From Financing Activities | ||
| Issuance of common stock upon exercise of options | 48,000 | 156,000 |
| Taxes paid on net share settlement of stock awards | (466,000) | (229,000) |
| Repurchase of common stock | (4,328,000) | (1,003,000) |
| Net cash used for financing activities | (4,746,000) | (1,076,000) |
| Net decrease in cash and cash equivalents | (4,575,000) | (1,174,000) |
| Cash and cash equivalents | ||
| Beginning of period | 20,450,000 | 15,287,000 |
| End of period | $15,875,000 | $14,113,000 |
| Supplemental Disclosures of Cash Flow Information | ||
| Cash paid for income taxes | $113,000 | $466,000 |
| Supplemental Disclosures of Noncash Investing and Financing Activities | ||
| Property and equipment and intangible asset acquisitions in accounts payable | $71,000 | $300,000 |
| Demonstration equipment transferred between inventory and property and equipment | $24,000 | $43,000 |
See Notes to Condensed Financial Statements (Unaudited).
Condensed Statements of Shareholders’** Equity (Unaudited)**
| Additional · Total | |||||
|---|---|---|---|---|---|
| Common Stock · Paid-in · Retained · Shareholders’ | |||||
| Shares | Amount | Capital | Earnings | Equity | |
| Balance at June 30, 2025 | 8,349,176 | $83,000 | $21,941,000 | $21,185,000 | $43,209,000 |
| Net income | - | - | - | 2,136,000 | 2,136,000 |
| Exercise of common stock options, vesting of restricted stock units, and issuance of restricted stock awards, net of cancellations and tax withholdings | 48,519 | 1,000 | (46,000) | - | (45,000) |
| Share-based compensation expense | - | - | 458,000 | - | 458,000 |
| Repurchase of common stock | (40,848) | - | - | (1,013,000) | (1,013,000) |
| Balance at September 30, 2025 | 8,356,847 | $84,000 | $22,353,000 | $22,308,000 | $44,745,000 |
| Additional · Total | |||||
|---|---|---|---|---|---|
| Common Stock · Paid-in · Retained · Shareholders’ | |||||
| Shares | Amount | Capital | Earnings | Equity | |
| Balance at June 30, 2026 | 8,366,163 | $84,000 | $25,331,000 | $28,564,000 | $53,979,000 |
| Net income | - | - | - | 2,761,000 | 2,761,000 |
| Exercise of common stock options, vesting of restricted stock units, and issuance of restricted stock awards, net of cancellations and tax withholdings | 27,763 | - | (345,000) | - | (345,000) |
| Share-based compensation expense | - | - | 435,000 | - | 435,000 |
| Repurchase of common stock | (157,341) | (2,000) | - | (4,355,000) | (4,357,000) |
| Balance at September 30, 2026 | 8,236,585 | $82,000 | $25,421,000 | $26,970,000 | $52,473,000 |
Notes to Condensed Financial Statements
(Unaudited)
Note1. Interim Financial Reporting
**Nature of business:**Electromed, Inc. (the “Company”) develops, manufactures and markets innovative airway clearance products that apply High Frequency Chest Wall Oscillation (“HFCWO”) therapy in pulmonary care for patients of all ages. The Company markets its products in the U.S. to the homecare and hospital markets. The Company also sells internationally through distributors.
Since its inception, the Company has operated in a single industry segment: developing, manufacturing, and marketing medical equipment.
Basis of presentation:The accompanying unaudited Condensed Financial Statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. In the opinion of management, the accompanying unaudited Condensed Financial Statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations as required by Regulation S-X. Interim results of operations arenot necessarily indicative of the results that maybe achieved for the full year. The financial statements and related notes donot include all information and footnotes required by U.S. GAAP for annual reports. This interim report should be read in conjunction with the financial statements included in the Company’s Annual Report on Form10-K for the fiscal year ended June 30, 2026 (“fiscal2026”).
A summary of the Company’s significant accounting policies and estimates:
Our significant accounting policies are detailed in Note1. Nature of Business and Summary of Significant Accounting Policies of the Annual Report on Form10-K for the year ended* June 30, 2026.There have beenno* significant changes to these policies that have had a material impact on the Unaudited Condensed Financial Statements and the accompanying disclosure notes for thethree months ended* September 30, 2026*.
Recently Issued Accounting Standards
ASU 2024-03 - Income Statement-Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic220*-40)*
The standard introduces increased disclosure requirements for certain costs and expenses. It is effective for annual reporting periods beginning after* December 15, 2026,and interim reporting periods within fiscal years beginning after December 15, 2027,with early adoption permitted. The Company currently expects to adopt this standard for its fiscal year ending June 30, 2028,*and is evaluating the impact of adoption and additional disclosure requirements.
ASU 2025-06 - Intangibles - Goodwill and Other - Internal-Use Software (Subtopic350*-40)*
The standard modernizes the accounting for software costs that are accounted for under Subtopic350-40. It is effective for annual reporting periods beginning after* December 15, 2027,and for interim periods within those annual reporting periods, with early adoption permitted. The Company expects to adopt this standard for its fiscal year ending June 30, 2029,*and is evaluating the impact of adoption and additional disclosure requirements.
Management has evaluated other recently issued accounting pronouncements and doesnot believe that any of these pronouncements will have a significant impact on the Company’s financial statements and related disclosures.
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Note2. Revenues
Revenue is measured based on consideration specified in the contract with a customer, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price.** *Estimates of variable consideration primarily relate to capped installment payment arrangements with third‑party payers and patient responsibility amounts, including deductibles, coinsurance, copayments, and similar amounts. Estimating variable consideration requires significant judgment, including selecting estimation methodologies, evaluating historical payment experience, and assessing factors that may*affect future collections. Electromed estimates variable consideration using the expected value method, as it best predicts the amount of consideration to which Electromed expects to be entitled, given the large number of contracts with similar characteristics and a wide range of possible outcomes. In applying this method, management considers quantitative inputs such as historical claims approval rates, payment timing and recovery patterns, historical termination experience, and patient demographic data, as well as qualitative factors including changes in insurance coverage, mortality, patient utilization patterns, and other relevant circumstances.
Capped installment payment arrangements represent the majority of Electromed’s variable consideration. For thethree months ended* September 30, 2026and2025*, amounts subject to capped installment payment arrangements represented a significant portion of net revenues, accounting for approximately 96% and 95%, respectively, of net revenues in the homecare market. Electromed’s estimates of consideration related to these arrangements are based on historical payment and termination patterns and are subject to contractual caps that limit the total consideration to which Electromed* may*be entitled.
When a contract with a customer has been established, revenue is recognized when a performance obligation is satisfied by transferring control of a distinct good or service to a customer, typically upon shipment or delivery.
**Disaggregation of revenues.**In the following table, net revenues are disaggregated by market:
| Three Months Ended September 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Homecare | $17,506,000 | $14,889,000 |
| Hospital | 716,000 | 1,047,000 |
| Homecare distributor | 366,000 | 829,000 |
| Other | 94,000 | 122,000 |
| Total | $18,682,000 | $16,887,000 |
In the following table, net homecare revenue is disaggregated by payer type:
| Three Months Ended September 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Commercial | $8,534,000 | $7,171,000 |
| Medicare | 6,631,000 | 5,664,000 |
| Medicare Supplemental | 1,671,000 | 1,399,000 |
| Medicaid | 276,000 | 355,000 |
| Other | 394,000 | 300,000 |
| Total | $17,506,000 | $14,889,000 |
**Contract balances.**The following tables provide information about accounts receivable and contract assets from contracts with customers:
| As of September 30, 2026 | As of June 30, 2026 | |
|---|---|---|
| Receivables, included in “Accounts receivable, net of allowance for credit losses” | $30,267,000 | $29,805,000 |
| Contract Assets | $1,026,000 | $1,094,000 |
Total Accounts receivable, net of allowance for credit losses, as of* June 30, 2025*, were $24,660,000. Accounts receivable outstanding for greater thanone year totaled $602,000 and $514,000 as of* September 30, 2026*, and* June 30, 2026*, respectively. Our accounts receivable balance contains amounts due from governmental and otherthird-party payers, including Medicare. Under certain payer programs, cash collection occurs through interim payments and final settlement over a period greater thanone year, generally approximatingthirteen months. The Company has determined that this collection period represents its normal operating cycle. In accordance with Accounting Standards Codification ("ASC")210‑10‑45, the Company classifies these receivables as current assets.
Changes in the Company's allowance for credit losses are as follows:
| Three Months Ended | Fiscal Year Ended | |
|---|---|---|
| September 30, 2026 | June 30, 2026 | |
| Increase (decrease) | Increase (decrease) | |
| Allowance for credit losses, beginning | $45,000 | $45,000 |
| Provision for credit losses | 30,000 | - |
| Write Offs | - | - |
| Recoveries | - | - |
| Allowance for credit losses, ending | $75,000 | $45,000 |
Significant changes in contract assets during the period are as follows:
| Three Months Ended | Fiscal Year Ended | |
|---|---|---|
| September 30, 2026 | June 30, 2026 | |
| Contract assets, beginning | $1,094,000 | $1,036,000 |
| Reclassification of contract assets to accounts receivable | (275,000) | (1,896,000) |
| Contract assets recognized | 246,000 | 1,968,000 |
| Decrease as a result of changes in the estimate of amounts to be realized from payers, excluding amounts transferred to receivables during the period | (39,000) | (14,000) |
| Contract assets, ending | $1,026,000 | $1,094,000 |
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Note3. Selected Balance Sheet Information
Inventory consists of the following:
| As of September 30, 2026 | As of June 30, 2026 | |
|---|---|---|
| Raw materials | $2,375,000 | $2,595,000 |
| Work in process | 428,000 | 211,000 |
| Finished goods | 672,000 | 772,000 |
| Estimated inventory to be returned | 502,000 | 469,000 |
| Less: Reserve for obsolescence | (166,000) | (366,000) |
| Total | $3,811,000 | $3,681,000 |
Other assets consist of the following:
| As of September 30, 2026 | As of June 30, 2026 | |
|---|---|---|
| Capitalized software costs | $1,191,000 | $1,124,000 |
| Right of use assets | 115,000 | 131,000 |
| Other assets | 11,000 | 15,000 |
| Total | $1,317,000 | $1,270,000 |
Other accrued liabilities consist of the following:
| As of September 30, 2026 | As of June 30, 2026 | |
|---|---|---|
| Accrued insurance recoupments | $1,014,000 | $970,000 |
| Other accrued expenses | 536,000 | 639,000 |
| Total | $1,550,000 | $1,609,000 |
Note4. Warranty Reserve
The Company provides a lifetime warranty on its products to the prescribed patient for sales within the U.S. and aone- tofive-year warranty for all homecare distributor, hospital and other sales. The Company estimates the costs that* may*be incurred under its warranty and records a liability in the amount of such costs at the time the product is shipped. Factors that affect the Company’s warranty reserve include the number of units shipped, historical and anticipated rates of warranty claims, the product’s useful life and cost per claim. The Company periodically assesses the adequacy of its recorded warranty reserve and adjusts the amounts as necessary.
The Company's estimated warranty reserve is classified between current and long-term liabilities based on management's estimate of the timing of expected warranty expenditures. Amounts expected to settle withintwelve months of $534,000 are classified as current, and the remaining obligation of $1,310,000 is classified as long-term. The current portion is included in Warranty reserve, current portion and the long-term portion is included in Long-term warranty reserve in the Condensed Balance Sheets.
Changes in the Company’s warranty reserve were as follows:
| Three Months Ended | Fiscal Year Ended | |
|---|---|---|
| September 30, 2026 | June 30, 2026 | |
| Warranty reserve, beginning | $1,899,000 | $1,645,000 |
| Accrual for products sold | 42,000 | 668,000 |
| Expenditures and costs incurred for warranty claims | (97,000) | (414,000) |
| Warranty reserve, ending | $1,844,000 | $1,899,000 |
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Note5. Income Taxes
Income tax expense was estimated at $876,000, and the effective tax rate was 24.1% for thethree months ended* September 30, 2026*. Estimated income tax expense for thethree months ended* September 30, 2026*, includes a discrete current tax benefit of $75,000, primarily related to the windfall tax benefit of vested stock awards and vested restricted stock units.
Income tax expense was estimated at $668,000, and the effective tax rate was 23.8% for thethree months ended* September 30, 2025*. Estimated income tax expense for thethree months ended* September 30, 2025*, includes a discrete current tax benefit of $81,000, primarily related to the windfall tax benefit of vested stock awards and the exercise of stock options.
The Company is subject to U.S. federal and state income tax in multiple jurisdictions. With limited exceptions, years prior to the Company’s fiscal year ended* June 30, 2023,areno longer open to U.S. federal, state or local examinations by taxing authorities. The Company isnot* under any current income tax examinations by any federal, state or local taxing authority. If any issues addressed in the Company’s tax audits are resolved in a mannernot consistent with management’s expectations, the Company could be required to adjust its provision for income taxes in the period such resolution occurs.
Note6. Financing Arrangements
On* December 16, 2025,the Company entered into a credit agreement with BMO Bank N.A. The credit agreement provides the Company with a senior secured credit facility with a $10,000,000 revolving line of credit. The credit agreement provides that the credit facility will mature on December 16, 2026,ifnot* renewed or replaced before such date. Any borrowings under the credit facility will bear interest at the applicableone-month Term Secured Overnight Financing Rate ("Term SOFR") (3.68% on* September 30, 2026),plus 1.75%, payable monthly. There wasno outstanding principal balance on the line of credit as of September 30, 2026.The Company provided afirst* priority security interest in substantially all of its existing and future assets to secure the payment obligations under the credit agreement.
The documents governing the credit facility contain certain customary financial and non-financial covenants that include a maximum total funded debt ratio ofnot more than 2.50x and a minimum fixed charge coverage ratio of at least 1.20x (as each such term is defined in the credit agreement), as well as restrictions on the Company's ability to incur certain additional indebtedness.
Note7. Common Stock
Authorized shares: The Company’s Articles of Incorporation, as amended, have established 15,000,000 authorized shares of capital stock consisting of 13,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of undesignated stock.
On* September 9, 2025,the Company announced the approval of a stock repurchase authorization. Under the authorization, the Company mayrepurchase up to $10,000,000 of its outstanding shares of common stock. This repurchase authorization hasno* expiration date. As of* September 30, 2026*, a total of 309,252 shares have been repurchased and retired under this authorization for a total cost of $8,245,000, or an average of $26.66 per share.
Repurchased shares are automatically retired and constitute authorized but unissued shares.
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Note8. Share-Based Compensation
The Company’s share-based compensation plans are described in Note8 to the financial statements included in the Company’s Annual Report on Form10-K for fiscal2026. Share-based compensation expense was $435,000 and $458,000 for thethree months ended* September 30, 2026*, and2025, respectively. This expense is included in selling, general and administrative, research and development, and cost of revenues in the Condensed Statements of Operations.
Stock Options
Stock option transactions during thethree months ended* September 30, 2026*, are summarized as follows:
| Weighted-Average | |||
|---|---|---|---|
| Exercise Price | |||
| Number of Shares · per Share | |||
| Outstanding at June 30, 2026 | 544,315 | $11.44 | |
| Granted | 23,100 | $27.10 | |
| Exercised | (3,199) | $14.85 | |
| Cancelled or Forfeited | - | $ | - |
| Outstanding at September 30, 2026 | 564,216 | $12.06 | |
The following assumptions were used to estimate the fair value of stock options granted:
| Three Months Ended | Fiscal Year Ended | |
|---|---|---|
| September 30, 2026 | June 30, 2026 | |
| Risk-free interest rate | 4.6% | 3.8% |
| Expected term (years) | 6 | 6 |
| Expected volatility | 47% | 54% |
The intrinsic value of an option is the amount by which the fair value of the underlying stock exceeds its exercise price. On* September 30, 2026*, the weighted-average remaining contractual term for all outstanding stock options was 5.7 years, and the aggregate intrinsic value of the options was $9,123,000. Outstanding on* September 30, 2026*, there were 564,216 stock options issued to employees, of which 439,972 were vested and exercisable and had an aggregate intrinsic value of $7,946,000. As of* September 30, 2026*, $653,000 of total unrecognized compensation expense related to stock options is expected to be recognized over a weighted-average period of approximately 2.3 years.
Restricted Stock
During thethree months ended* September 30, 2026*, the Company issued restricted stock awards to employees totaling 4,900 shares of common stock, with a weighted average vesting term of 3 years and a weighted average fair value of $27.10 per share. There were 27,749 shares of unvested restricted stock with a weighted average fair value of $22.38 per share outstanding as of* September 30, 2026*. As of* September 30, 2026*, $361,000 of total unrecognized compensation expense related to restricted stock awards is expected to be recognized over a weighted-average period of approximately 2.2 years.
During thethree months ended* September 30, 2026*, the Company issued restricted stock units to employees totaling 46,700 shares of common stock underlying restricted stock units, with a weighted average vesting term of 3 years and a weighted average fair value of $27.10 per share. During thethree months ended* September 30, 2026*, there were 10,032 restricted stock units canceled or forfeited. There were 96,646 shares of unvested restricted stock units with a weighted average fair value of $24.33 per share outstanding as of* September 30, 2026*. As of* September 30, 2026*, $1,697,000 of total unrecognized compensation expense related to restricted stock units is expected to be recognized over a weighted-average period of approximately 2.6 years.
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Note9. Commitments and Contingencies
The Company is occasionally involved in claims and disputes arising in the ordinary course of business. The Company insures certain business risks where possible to mitigate the financial impact of individual claims and establishes reserves for an estimate of any probable cost of settlement or other disposition.
Note10. Segment Reporting
We have determined that we have asingle reportable and operating segment structure. Our President and Chief Executive Officer is our chief operating decision maker (“CODM”). The CODM reviews financial information, including long-lived assets, presented on a consolidated basis, accompanied by information about revenue by market, for purposes of allocating resources and evaluating financial performance. Furthermore, the CODM uses consolidated net income (loss) as the measure of our sole segment’s profit or loss. Significant segment expenses are those expenses reported in the Condensed Statements of Operations. We have a single active product and engage in the single business activity of selling and supporting that single product. There areno managers who are held accountable for operations, operating results or plans for levels or components below the consolidated level. We and our CODM evaluate our performance based on revenue from our single product in the markets in which the Company operates and consolidated net income (loss), which is reflected in the Condensed Statements of Operations. Revenue by market is described above in Note2.
Note11. Earnings Per Common Share (“EPS”)
The computations of the basic and diluted EPS amounts were as follows:
| Three Months Ended September 30, | ||
|---|---|---|
| 2026 | 2025 | |
| Net Income | $2,761,000 | $2,136,000 |
| Weighted-average common shares outstanding: | ||
| Basic | 8,307,125 | 8,322,782 |
| Effect of dilutive common stock equivalents | 454,279 | 358,921 |
| Diluted | 8,761,404 | 8,681,703 |
| Earnings per common share: | ||
| Basic | $0.33 | $0.26 |
| Diluted | $0.32 | $0.25 |
Common stock equivalents excluded from the calculation of diluted earnings per share because their impact was anti-dilutive were 7,533 and 104,290 for thethree months ended* September 30, 2026*, and2025, respectively.
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The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.