Forgent Power Solutions, Inc.

1. Nature of Business

Forgent Intermediate LLC (the “Company”) designs, manufactures and sells electrical distribution equipment used in data centers, the power grid and industrial facilities. The Company specializes in producing custom products that are “engineered-to-order” for technically demanding applications. Major product categories of electrical distribution equipment that the Company sells include automatic transfer switches, dry type transformers, electrical houses, generator connection cabinets, liquid filled transformers, panelboards, power distribution units, power skids, remote power panels, switchboards, switchgear and tap boxes. The Company also provides on-site commissioning and maintenance services for its products.

2. Summary of Significant Accounting Policies

Basis of Accounting and Presentation

The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

The Company uses the U.S. dollar as its functional currency. Gains and losses from foreign currency transactions are included in other income (expense) and are not material to the condensed consolidated financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Forgent Intermediate LLC and its subsidiaries. The Company consolidates Forgent Power Solutions LLC (“Opco”) as a variable interest entity in accordance with Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”). A parent of Forgent Parent I LP has the contractual right to appoint a majority of the board of managers of Opco, which has power over Opco, including making all significant economic decisions of Opco, and Forgent Intermediate II LLC owns a majority of the economic interests in Opco. The assets and liabilities of Opco represent substantially all of the Company’s assets and liabilities with the exception of certain tax balances.

All intercompany balances and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The accompanying condensed consolidated balance sheets as of December 31, 2025 and June 30, 2025, the condensed consolidated statements of operations, changes in member’s equity and cash flows for the three and six months ended December 31, 2025 and 2024 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of December 31, 2025 and the results of its operations and its cash flows for the three and six months ended December 31, 2025 and 2024. The financial data and other information disclosed in these notes related to the three and six months ended December 31, 2025 and 2024 are also unaudited. The results for the three and six months ended December 31, 2025 are not necessarily indicative of results to be expected for the year ending June 30, 2026, any other interim periods, or any future year or period. The consolidated balance sheet as of June 30, 2025 included herein was derived from the audited financial statements as of that date. Certain disclosures have been condensed or omitted from the interim condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Final Prospectus dated February 4, 2026 and filed with the Securities and Exchange Commission (the "SEC") on February 6, 2026 (the "Prospectus").

There have been no changes to the Company’s significant accounting policies described in the Company’s Prospectus that have had a material impact on its condensed consolidated financial statements and related notes.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimated profit on contracts recognized over time measured using the input method, variable consideration on revenues, allowance for credit losses, reserve for excess and obsolete inventory, warranty liability, incremental borrowing rates on operating leases, income taxes, uncertain tax positions, fair value of net assets acquired, liabilities assumed and equity-based consideration issued in a business combination, equity-based compensation, useful lives of property and equipment, and useful lives of intangible assets.

Concentrations of Credit Risk

The Company has cash and cash equivalents deposited at certain financial institutions which, at times, may exceed the limits provided by the Federal Deposit Insurance Corporation. The Company has not experienced any losses on such amounts and believes it is not subject to significant credit risk related to cash balances.

During the three months ended December 31, 2025, the Company hadone customer whose revenues were greater than 10% of revenues. This customer represented approximately 12% of revenues and 6% of accounts receivable. During the six months ended December 31, 2025, the Company had no customers whose revenues were greater than 10% of revenues. During the three and six months ended December 31, 2024, the Company had no customers whose revenues were greater than 10% of revenues.

Fair Value

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company follows a fair value hierarchy which requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Three levels of inputs may be used to measure fair value, as follows:

Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Unobservable inputs that are supported by little or no market activity that are significant to the fair value of the assets or liabilities.

The fair values of the Company’s cash and cash equivalents, accounts receivable, accounts payable, and payables pursuant to acquisitions approximate their carrying values due to their short maturities. The long-term debt is Level 2 in the fair value hierarchy, and the carrying value of the Senior Secured Debt approximates its fair value, as it is based on current market rates at which the Company could borrow funds with similar terms.

3. Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The Company will be required to adopt the update as of June 30, 2026. The Company is currently evaluating the impact that this guidance will have on the presentation of its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03 on its consolidated financial statements and related disclosures.

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.

4. Accounts Receivable, net

Accounts receivable, net consisted of the following (in thousands):

5. Inventory, net

Inventory, net consisted of the following (in thousands):

6. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):

Construction in progress is primarily related to the expansion of both new and currently leased manufacturing campuses. The projects are expected to be substantially complete by the end of fiscal year 2026, at which time the assets will be placed in service and reclassified to machinery and equipment and leasehold improvements.

Depreciation expense for the three months ended December 31, 2025 and 2024 was $3.9 million and $1.4 million, respectively. During the three months ended December 31, 2025, $2.8 million and $1.1 million were allocated to cost of revenues and operating expenses, respectively. During the three months ended December 31, 2024, $1.1 million and $0.3 million were allocated to cost of revenues and operating expenses, respectively.

Depreciation expense for the six months ended December 31, 2025 and 2024 was $7.0 million and $2.5 million, respectively. During the six months ended December 31, 2025, $5.6 million and $1.4 million were allocated to cost of revenues and operating expenses, respectively. During the six months ended December 31, 2024, $2.0 million and $0.5 million were allocated to cost of revenues and operating expenses, respectively.

7. Goodwill and Other Intangible Assets, net

Goodwill

Goodwill totaled $516.6 million as of both December 31, 2025 and June 30, 2025 and relates to prior acquisitions.

Other Intangible Assets

Other intangible assets, net consisted of the following (in thousands):

Amortization expense for the three and six months ended December 31, 2025 was $12.5 million and $25.3 million, respectively. Amortization expense for the three and six months ended December 31, 2024 was $14.9 million and $32.4 million, respectively.

8. Supplemental Balance Sheet Information

Prepaid and other current assets consisted of the following (in thousands):

Accrued expenses consisted of the following (in thousands):

9. Long Term Debt

Long-term debt consisted of the following (in thousands):

Senior Debt

On October 31, 2023, our wholly owned subsidiaries US MetalCo Holdings LLC (the “Initial Borrower”), Forgent Holdings I LLC and certain of its subsidiaries (collectively, the “Initial Credit Parties”) entered into a Credit and Guaranty Agreement (the “2023 Credit Agreement”) with the lenders party thereto and Churchill Agency Services LLC, as administrative agent and as collateral agent, pursuant to which the lenders made available to the Initial Borrower (1) initial term loans in an aggregate principal amount of $203.3 million and delayed draw term loan commitments in an aggregate amount of $55.0 million (collectively, the “2023 Term Loan Facility”) and (2) revolving credit commitments in an aggregate amount of $35.0 million (the “2023 Revolving Facility” and, together with the 2023 Term Loan Facility, collectively, the “2023 Debt Facilities”). On June 14, 2024, the Initial Credit Parties entered into an Amendment No. 1 (“Amendment No. 1”) to the 2023 Credit Agreement, pursuant to which the lenders party thereto (1) made available additional term loans under the 2023 Term Loan Facility in an aggregate principal amount of $259.0 million and (2) increased the revolving credit commitments under the 2023 Revolving Facility by an aggregate amount of $25.0 million. On September 8, 2025, the Initial Credit Parties entered into an Amendment No. 2 (“Amendment No. 2”) to the 2023 Credit Agreement, pursuant to which, among other things, (1) the interest rates applicable to the loans under the 2023 Debt Facilities were decreased, (2) our wholly owned subsidiary Forgent Power LLC (f/k/a Forgent Intermediate IV LLC), a Delaware limited liability company (the “Parent Borrower”), and certain other of our wholly owned subsidiaries (together with the Parent Borrower and the Initial Borrower, collectively, the “Borrowers”) were added as borrowers under the 2023 Credit Agreement and (3) our wholly owned subsidiary, Forgent Intermediate III LLC (“Holdings”), and certain of wholly owned subsidiaries of the Parent Borrower were added as guarantors under the 2023 Credit Agreement. On December 19, 2025, in connection with entry into the Senior Credit Agreement (as defined below), the 2023 Debt Facilities were paid off and all commitments thereunder, and guaranties and security interests in respect thereof, were terminated.

Senior Credit Agreement

On December 19, 2025, the Borrowers entered into a senior credit agreement (the “Senior Credit Agreement”) with Holdings and certain wholly-owned U.S. subsidiaries of the Parent Borrower (collectively, with Holdings, the “Guarantors”, and the Guarantors collectively with the Borrowers, the “Loan Parties”), the lenders and issuing banks party thereto and Jefferies Finance LLC, as administrative agent and as collateral agent, consisting of (a) an initial term loan credit facility in an original principal amount equal to $600 million (the “2025 Term Loan Facility” and the loans thereunder, the “2025 Term Loans”) and (b) a revolving credit facility with commitments in an original principal amount equal to $250 million, including a $50 million sublimit for letters of credit and a $25 million sublimit for swingline loans (the “Revolving Facility” and, together with the 2025 Term Loan Facility, the “Senior Credit Facilities”). The 2025 Term Loan Facility was issued at a 1% discount, resulting in net proceeds of approximately $594 million. The 2025 Term Loan Facility matures on December 19, 2032, and the Revolving Facility matures on December 19, 2030. As of December 31, 2025, no amounts were outstanding under the Revolving Facility, and $600 million was outstanding under the 2025 Term Loan Facility.

The obligations of the Borrowers under the Senior Credit Agreement are guaranteed by the Guarantors and are secured by first priority security interests on all or substantially all of the Loan Parties’ assets (subject to certain customary exceptions).

Interest Rate

As of December 19, 2025, the Senior Credit Facilities bore interest based on, at the option of the Parent Borrower, (1) a “base rate” (defined as the highest rate of: a) the Federal Funds Rate plus 0.5%, b) the one-month Term SOFR, a forward-looking interest rate benchmark derived from the secured overnight financing rate as administered by the Federal Reserve Bank of New York (after giving effect to a 0.00% per annum floor), plus 1% per annum, and c) the prime rate) plus a margin of 2.25% per annum or (2) Term SOFR, subject to a 0.00% per annum floor for the applicable interest period, plus a margin of 3.25% per annum. Upon the consummation of the Public Company Transaction (as defined in the Senior Credit Agreement, and which includes the IPO), the Term SOFR margin was reduced to 3.00% per annum. The effective interest rate as of December 31, 2025 was 7.39% per annum.

Voluntary Prepayments; Repayments of Principal

Subject to certain notice requirements, the Borrowers may voluntarily prepay outstanding loans under the Senior Credit Agreement, in whole or in part, subject to (a) customary “breakage” costs with respect to Term SOFR loans prepaid on any date other than the last day of the applicable interest period and (b) in the case of any voluntary prepayment of 2025 Term Loans on or prior to June 19, 2026 in connection with a Repricing Transaction (as defined in the Senior Credit Agreement), a premium of 1.00% of the aggregate principal amount of the 2025 Term Loans prepaid, subject to certain exclusions.

The 2025 Term Loans amortize at an annual rate of 1.00% of the original principal amount thereof, payable in quarterly installments, commencing with the installment due June 30, 2026. The 2025 Term Loans are subject to mandatory prepayments with the proceeds of certain asset sales, insurance proceeds and debt issuances, subject in the case of asset sale and insurance mandatory prepayments, to a customary reinvestment right. In addition, an annual mandatory prepayment of the 2025 Term Loans is required with a portion of the Parent Borrower’s excess cash flow, subject to a de minimis threshold and certain deductions.

Certain Covenants; Representations and Warranties

The Senior Credit Agreement contains customary affirmative covenants (including reporting obligations and transactions with affiliates) and negative covenants and requires the Parent Borrower and certain of its subsidiaries to make customary representations and warranties in connection with credit extensions under the Revolving Facility. With respect to the negative covenants, these restrictions include, among other things and subject to certain exceptions, thresholds and qualifications (certain of which are based on the Parent Borrower’s Consolidated Adjusted EBITDA (as defined in the Senior Credit Agreement)), limitations on the ability of the Parent Borrower and certain of its subsidiaries to:

•incur or guarantee additional indebtedness;

•create liens;

•pay dividends or make other distributions in respect of equity of the Parent Borrower;

•make certain prepayments in respect of certain material payment-subordinated debt;

•enter into burdensome agreements with negative pledge clauses or restrictions on subsidiary distributions;

•make investments, including acquisitions, loans and advances;

•consolidate, merge, liquidate or dissolve; and

•sell, transfer, or otherwise dispose of assets.

In addition, the Senior Credit Agreement includes a springing financial covenant for the benefit of the Revolving Facility that will be tested on the last day of any fiscal quarter only if the aggregate outstanding amount of revolving credit borrowings under the Senior Credit Agreement (excluding, for the avoidance of doubt, all undrawn letters of credit) exceeds 40% of the aggregate amount of revolving credit commitments as of the last day of any fiscal quarter, commencing (if applicable) with June 30, 2026. If such condition is met, the financial covenant requires the Parent Borrower to maintain a ratio of consolidated first lien debt to consolidated Adjusted EBITDA (as defined in the Senior Credit Agreement) no greater than 7.50 to 1.00 on the last day of such fiscal quarter.

Events of Default

The Senior Credit Agreement contains customary events of default, subject in certain circumstances to specified grace periods, thresholds and exceptions, including, among others, payment defaults, cross-defaults to certain material indebtedness, covenant defaults, material inaccuracy of representations and warranties, bankruptcy events, material judgments, material events related to the Employee Retirement Income Security Act of 1974, as amended, and change of control. If an event of default occurs, the lenders will be entitled to take various actions, including acceleration of the loans and termination of the commitments under the Senior Credit Agreement, foreclosure on collateral and all other remedial actions available to a secured creditor. Failure to pay certain amounts owing under the Senior Credit Agreement when due may result in an increased interest rate equal to 2.00% per annum plus the interest rate otherwise applicable to the relevant overdue loan or letter of credit disbursement (or, in the case of any overdue premium or fee, the interest rate otherwise applicable to revolving loans that are ABR loans).

Interest expense for the three and six months ended December 31, 2025 was $21.0 million and $34.9 million, respectively, which included amortization / write-off of discounts and deferred financing costs of $10.0 million and $11.0 million, respectively. Interest expense for the three and six months ended December 31, 2024 was $13.7 million and $28.6 million, respectively, which included amortization / write-off of discounts and deferred financing costs of $0.6 million and $1.3 million, respectively.

10. Income Taxes

The Company is taxed as a subchapter C corporation and is subject to federal, state and local income taxes. The Company’s sole material asset is its investment in Opco, which is a limited liability company that is taxed as a partnership for U.S. federal and certain state and local income tax purposes. Opco includes disregarded entities whose net taxable income and related tax credits, if any, are passed through to its members and included in the member’s tax returns, along with a subchapter C corporation and foreign entities whose net taxable income are subject to federal, state and foreign taxes. Opco’s disregarded entities are subject to and report an entity-level tax in various states.

A significant portion of the earnings allocated to the non-controlling interest holders is not subject to federal and state income taxes by the Company. As a result, the Company’s effective tax rate can differ materially from the statutory rate, depending on the ownership percentage of the non-controlling interests.

Income tax benefit (expense) was $0.4 million and $(0.8) million for the three months ended December 31, 2025 and 2024, respectively, and $(2.5) million and $(2.1) million for the six months ended December 31, 2025 and 2024, respectively. Our effective income tax rate for the three months ended December 31, 2025 and 2024 was 81.5% and 11.6%, respectively. Our effective income tax rate for the six months ended December 31, 2025 and 2024 was 14.1% and 13.0%, respectively. For the three and six months ended December 31, 2025 our effective income tax rate differed from the federal statutory rate of 21% primarily due to our non-controlling interest not being subject to income taxes and favorable discrete adjustments related to the filing of our 2024 federal return. For the three and six months ended December 31, 2024, the effective income tax rate differed from the federal statutory rate primarily due to a large portion of our non-controlling interest not being subject to income taxes and the use of R&D credits.

In calculating the provision for interim income taxes, in accordance with ASC Topic 740, an estimated annual effective tax rate is applied to year-to-date ordinary income. At the end of each interim period, the Company estimates the effective tax rate expected to be applicable for the full fiscal year.

For annual periods, the Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that the deferred tax assets will be realized. Deferred tax assets and liabilities are calculated by applying existing tax laws and the rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change.

The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return, which are subject to examination by federal and state taxing authorities. The tax benefit from an uncertain tax position is recognized when it is more likely than not that the position will be sustained upon examination by taxing authorities based on the technical merits of the position. The amount of the tax benefit recognized is the largest amount of the benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. The Company recognizes penalties and interest related to uncertain tax positions within the provision (benefit) for income taxes line in the accompanying condensed consolidated statements of operations. The Company recognizes penalties and interest related to uncertain tax positions within the income tax expense line in the accompanying condensed consolidated statements of operations.

The Company files U.S. federal, certain state, and foreign income tax returns. The income tax returns of the Company are subject to examination by U.S. federal, state, and foreign taxing authorities for various time periods, depending on those jurisdictions’ rules, generally after the income tax returns are filed.

On July 4, 2025, the “One Big Beautiful Bill Act” (“Act”) was enacted into law. The Act includes changes to U.S. tax law that will be applicable to the Company beginning in calendar year 2025. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures, accelerated bonus depreciation for property and equipment, changes in calculating interest expense limitations, and other provisions.

11. Operating Leases

The following table summarizes the right of use assets and lease liabilities (in thousands):

The details of the Company’s lease expense were as follows (in thousands):

Supplemental cash flow and other information related to operating leases were as follows (in thousands):

12. Revenues

The Company has four principal offerings:

Custom Products

Custom products include products designed for a specific project or application, involving significant consultation between our in-house engineering team and the customer. Each custom product identified and deliverable in a contract represents a distinct performance obligation within a sales contract. The Company recognizes revenue from custom products either over time, primarily using the output method, or at the point in time when control is transferred to the customer. Revenue is recognized over time using the output method when the manufactured products do not have alternative use and the Company has an enforceable right to payment. The output method is measured based on the units manufactured, which management believes best depicts the extent of transfer of control to the customer. For customer products sold that do not meet the criteria to be recognized over time, revenue is recognized at a point in time when control transfers to the customer, which generally occurs when the custom products have been shipped or delivered to the customer, depending on shipping terms.

Powertrain Solutions

Powertrain solutions include combinations of custom products that are integrated together, skidded together, or designed to work together as a system. Each powertrain solution identified and deliverable in a contract represents a distinct performance obligation within a sales contract. The Company recognizes revenue for the sale of powertrain solutions at a point in time when control has transferred to the customer, which generally occurs when the products have been shipped or delivered to the customer, depending on shipping terms.

Standard Products

Standard products include common designs that are suitable for basic applications and are typically stocked by distributors. Each standard product identified and deliverable in a contract represents a distinct performance obligation within a sales contract. The Company recognizes revenue for the sale of standard products at a point in time when control has been transferred to the customer which generally occurs when the products have been shipped or delivered to the customer, depending on shipping terms.

Services

Services include installation, repair, maintenance, and commissioning. Services revenue is generally recognized over time as the services are provided, using the input method of costs incurred in relation to the estimated contract costs to complete, or straight-line for stand-ready contracts, because the customer simultaneously receives and consumes the benefit as we perform the services.

Disaggregation of Revenues

The following table disaggregates revenues by principal offering and timing of transfer of control (in thousands):

13. Segment Reporting

The Company is organized and operates asone reportable segment, which carries out business activities related to the design, development, manufacturing, and marketing of products and services. The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, reviews operating results and profitability metrics at a consolidated entity level for purposes of making resource allocation decisions and for evaluating financial performance.

The CODM assesses performance of the Company and decides how to allocate resources based on net income (loss) that is also reported on the consolidated income statement. Significant segment expenses are consistent with those presented on the consolidated statements of operations. The measure of segment assets is reported on the consolidated balance sheets as total assets, and total capital expenditures, depreciation, and amortization are reported on the consolidated statements of cash flows. The CODM is involved in determining and reviewing projected net income and income from operations as part of the annual operating plan process. Throughout the year, the CODM considers forecast to actual results and variances on a monthly and quarterly basis to allocate resources for the Company.

The following table presents selected financial information with respect to the Company’s single reportable segment as follows (in thousands):

14. Payables Pursuant to the Acquisitions

The Company has payables that provide the sellers from certain prior acquisitions 100% of the cash tax savings, if any, that the Company actually realizes or is deemed to realize as a result of the Company’s share of tax basis created from certain transaction expenses as defined in the purchase agreements and for an amount equal to the difference that certain sellers owe related to taxes from the sale of a portion of the businesses as a stock sale versus an asset sale. These contractual obligations are due as the Company realizes or is deemed to realize a reduction in the Company’s tax liability or upon filing tax returns. As of December 31, 2025 and June 30, 2025, the Company had related payables totaling $1.1 million and $17.2 million, respectively. During the six months ended December 31, 2025, the Company paid $16.1 million of these outstanding payables.

15. Equity-Based Compensation

The Company accounts for equity grants to employees as equity-based compensation under ASC 718. The incentive units granted to employees are incentive units of Forgent Parent I LP, Forgent Parent II LP, and Forgent Parent III LP. Incentive units contain various vesting provisions, as defined in the unit agreements. Incentive units also vest upon certain performance criteria as defined in the unit agreement. Vested units do not forfeit upon termination and represent a residual interest in a partnership. Holders of the incentive units are entitled to distributions on vested awards in accordance with their respective distribution waterfall. Equity-based compensation cost is measured at the grant date fair value and is recognized on a straight-line basis over the requisite service period, including those units with graded vesting with a corresponding credit to member’s equity as a capital contribution. Vesting related to the portion of incentive units with performance vesting and those which vest upon a sale are not considered probable at the reporting date. As such, no compensation expense is recognized until vesting is probable. However, the amount of equity-based compensation at any date is equal to the portion of the grant date value of the award that is vested.

The incentive units issued to employees are measured at fair value on the grant date using an option pricing model. The Company utilizes the estimated weighted average of the expected fund life dependent on various exit scenarios to estimate the expected term of the awards. Expected volatility is based on the average of historical and implied volatility of a set of comparable companies, adjusted for size and leverage. The risk-free rates are based on the yields of U.S. Treasury instruments with comparable terms. Actual results may vary depending on the assumptions applied within the model.

During the three and six months ended December 31, 2025, the Company recognized $1.6 million and $2.2 million, respectively, in equity-based compensation. During the three and six months ended December 31, 2024, the Company recorded $0.4 million and $0.9 million, respectively, in equity-based compensation. As of December 31, 2025, the Company had $12.4 million of unrecognized compensation costs which are expected to be recognized over a weighted average period of 3.6 years. For the three and six months ended December 31, 2025 and 2024, forfeitures were immaterial.

16. Related Party Transactions

Operating Leases

The Company incurred rent expenses totaling $0.7 million and $1.5 million for the three and six months ended December 31, 2025, respectively, related to related party operating leases for properties owned by the former owners, and $0.8 million and $1.5 million for the three and six months ended December 31, 2024, respectively. As of June 30, 2025 and December 31, 2025, the Company had related party operating lease right of use assets totaling $4.7 million and $4.3 million and operating lease liabilities totaling $4.7 million and $4.4 million, respectively. See Note 11, "Operating Leases" for further information.

Sponsor Fees and Expenses

During the three and six months ended December 31, 2025, the Company incurred sponsor fees and expenses from Neos Partners, LP totaling $10.5 million and $17.1 million, respectively, and $2.7 million and $4.4 million during the three and six months ended December 31, 2024, respectively. As of December 31, 2025 and June 30, 2025, the Company owed the private equity sponsor $13.0 million and $11.0 million, respectively, which is included in accrued expenses in the condensed consolidated balance sheets.

Revenue from Related Parties

The Company earned revenue from other portfolio companies controlled by Neos Partners, LP totaling $0.5 million for the six months ended December 31, 2025, and $0.5 million and $0.6 million for the three and six months ended December 31, 2024, respectively. Revenue earned from other portfolio companies controlled by our private equity sponsor was immaterial for the three months ended December 31, 2025. As of December 31, 2025 and June 30, 2025, the Company had receivables totaling $0.1 million and $0.3 million, respectively, due from other portfolio companies.

Expenses from Related Parties

The Company incurred expenses from other portfolio companies controlled by Neos Partners, LP totaling $1.1 million and $1.3 million for the three and six months ended December 31, 2025, respectively, and $0.1 million and $0.1 million for the three and six months ended December 31, 2024, respectively. As of December 31, 2025, the Company had $0.3 million outstanding payables to the other portfolio companies controlled by Neos Partners, LP. As of June 30, 2025, the Company hadno outstanding payables to the other portfolio companies controlled by our private equity sponsor.

17. Commitments and Contingencies

The Company is from time to time subject to legal proceedings and claims, which arise in the normal course of its business. In the opinion of management and legal counsel, the amount of losses that may be sustained, if any, would not have a material effect on the financial position, results of operations or cash flows of the Company.

18. Subsequent Events

Initial Public Offering of Forgent Power Solutions, Inc.

On February 6, 2026, Forgent Power Solutions, Inc. (the "Corporation" or "Forgent Power Solutions") and the Selling Stockholders sold 16,586,427 and 39,413,573 shares of Class A common stock of Forgent Power Solutions, respectively, at a public offering price of $27.00 per share. On February 9, 2026, Forgent Power Solutions and the Selling Stockholders completed the sale of 2,487,964 and 5,912,036 shares of Class A common stock, respectively, pursuant to the exercise in full of the underwriters' overallotment option. From the IPO and exercise of the underwriters’ overallotment option, Forgent Power Solutions received $491.8 million in proceeds, net of underwriting discounts and commissions, which was used to indirectly purchase 19,074,391 Opco LLC Interests from Opco and, and Opco utilized the net proceeds it received from the sale of Opco LLC Interests to us to redeem Opco LLC Interests from the Existing Opco LLC Owners. The Corporation did not receive any of the proceeds from the sale of Class A common stock by the Selling Stockholders.

Reorganization Transactions

In connection with the IPO, Forgent Power Solutions and Opco completed a series of transactions (the “Reorganization Transactions”) including the following:

•the limited liability company agreement of Opco was amended and restated to, among other things, (i) provide for a new single class of capital ownership interests of Opco LLC Interests in Opco, (ii) exchange all of the then existing membership interests of the holders of Opco capital ownership interests for Opco LLC Interests and (iii) appoint Forgent Intermediate II LLC, a wholly-owned, indirect subsidiary of Forgent Power Solutions, as the sole managing member of Opco;

•Forgent Power Solutions’ certificate of incorporation was amended and restated to, among other things, (i) provide for Class A common stock with voting and economic rights (ii) provide for Class B common stock of Forgent Power Solutions with voting rights but no economic rights and (iii) issue 90,167,635 shares of Class B common stock to the former Existing Opco LLC Owners on aone-to-one basis with the number of Opco LLC Interests they owned prior to the IPO;

•Forgent Parent I LP contributed 100% of the equity interests of Forgent Intermediate LLC to the Company in exchange for 210,055,933 shares of Class A common stock of the Company, and Forgent Intermediate LLC merged with and into Forgent Intermediate Merger Sub LLC, with Forgent Intermediate Sub LLC surviving and renamed Forgent Intermediate LLC;

•the acquisition by the Company, by merger, of Opco LLC Interests held by Forgent Blocker I LLC and Forgent Blocker II LLC, for which the Company issued 4,205,321 shares Class A common stock as merger consideration.

Immediately following the completion of the Reorganization Transactions and the IPO (and the use of proceeds therefrom), Forgent Power Solutions (through the Company) indirectly owned 76.65% of the Opco LLC Interests, and the Existing Opco LLC Owners owned the remaining 23.35% of the Opco LLC Interests.

Opco Recapitalization

As a result of the Reorganization Transactions, the Company became the managing member and owner of all of the limited liability company units of Forgent Intermediate II LLC. In turn, Forgent Intermediate II LLC became the managing member of Opco. The Company and Forgent Intermediate II LLC collectively own a majority of the Opco LLC Interests, and the remaining Opco LLC Interests are owned by the Existing Opco LLC Owners. Accordingly, Forgent Power Solutions will consolidate the financial results of Opco and report non-controlling interest in the Company's consolidated financial statements related to the interest held by the Existing Opco LLC Owners.