Evi Industries, Inc 10-K/A for FY2024

Evi Industries, Inc. (EVI)

10-K/A 2024-09-13 For: 2024-06-30

Added on April 06, 2026

About this 10-K/A

Evi Industries, Inc filed this 10-K/A on September 13, 2024, covering the fiscal year ended June 30, 2024 (FY2024).

Headline figures

Fiscal year ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $353.56M; down 0.2% from $354.17M a year earlier
Net income: $5.65M; down 41.9% from net income of $9.72M a year earlier
Diluted EPS: $0.37; down 44.8% from $0.67 a year earlier

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EVI Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware		11-2014231
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4500 Biscayne Blvd., Suite 340, Miami, Florida		33137
(Address of principal executive offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.025 par value	EVI	NYSE American

	Large accelerated filer ☐	Accelerated filer ☒

	Non-accelerated filer ☐	Smaller reporting company ☒

		Emerging growth company ☐

		Page
PART I

Item 1	Business	4

Item 1A	Risk Factors	12

Item 1B	Unresolved Staff Comments	23

Item 1C	Cybersecurity	23

Item 2	Properties	24

Item 3	Legal Proceedings	24

Item 4	Mine Safety Disclosures	25

PART II

Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	25

Item 6	[Reserved]	25

Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 7A	Quantitative and Qualitative Disclosures About Market Risk	35

Item 8	Financial Statements and Supplementary Data	36

Item 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	69

Item 9A	Controls and Procedures	69

Item 9B	Other Information	73

Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	73

PART III

Item 10	Directors, Executive Officers and Corporate Governance	74

Item 11	Executive Compensation	74

Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	74

Item 13	Certain Relationships and Related Transactions, and Director Independence	75

		Page

Item 14	Principal Accountant Fees and Services	75

PART IV

Item 15	Exhibits and Financial Statement Schedules	75

Item 16	Form 10-K Summary	78

SIGNATURES		79

	●	the ability to identify and consummate transactions with acquisition targets;
	●	the successful operation and integration of acquired companies;
	●	diversion of management’s attention from other business functions and operations;
	●	strain on managerial and operational resources as management tries to oversee larger operations;
	●	difficulty implementing and maintaining effective internal control over financial reporting at the acquired businesses;
	●	possible loss of key employees and/or customer or supplier relationships of the acquired business (See “The Company’s business and results may be adversely impacted if the Company does not maintain its relationships with its significant suppliers or customers” below); and
	●	exposure to liabilities of the acquired businesses.

	Fiscal Year Ended June 30,
Net cash provided (used) by:	2024			2023
Operating activities	$	32,652		$	940
Investing activities	$	(6,816	)	$	(5,986	)
Financing activities	$	(27,199	)	$	6,993

	Fiscal Year Ended June 30,
	2024			2023
As a percentage of revenues:
Cost of sales, net		70.2	%		70.7	%
As a percentage of revenues:
Selling, general and administrative expenses		26.5	%		24.6	%

	Page

Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Miami, Florida; PCAOB ID #243)	37

Consolidated Balance Sheets at June 30, 2024 and 2023	40

Consolidated Statements of Operations for the years ended June 30, 2024 and 2023	42

Consolidated Statements of Shareholders’ Equity for the years ended June 30, 2024 and 2023	43

Consolidated Statements of Cash Flows for the years ended June 30, 2024 and 2023	44

Notes to Consolidated Financial Statements	45

	ii)	Confirming total cost incurred and estimated cost to complete with subcontractors; and

ASSETS
	June 30, 2024		June 30, 2023
Current assets
Cash	$	4,558	$	5,921
Accounts receivable, net of allowance for expected credit losses		40,932		48,391
Inventories, net		47,901		59,167
Vendor deposits		1,657		2,291
Contract assets		1,222		1,181
Other current assets		5,671		8,547
Total current assets		101,941		125,498

Equipment and improvements, net		13,950		12,953
Operating lease assets		8,078		8,714
Intangible assets, net		22,022		24,128
Goodwill		75,102		73,388
Other assets		9,566		9,166

Total assets	$	230,659	$	253,847

LIABILITIES AND SHAREHOLDERS’ EQUITY
	June 30, 2024			June 30, 2023
Current liabilities
Accounts payable and accrued expenses	$	30,904		$	38,730
Accrued employee expenses		11,370			10,724
Customer deposits		24,419			23,296
Contract liabilities		-			668
Current portion of operating lease liabilities		3,110			3,027
Total current liabilities		69,803			76,445

Deferred income taxes, net		5,498			5,023
Long-term operating lease liabilities		5,849			6,554
Long-term debt, net		12,903			34,869

Total liabilities		94,053			122,891

Commitments and contingencies (Note 14)

Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; none issued and outstanding		-			-
Common stock, $.025 par value; authorized shares – 20,000,000; 12,868,709 shares issued at June 30, 2024 and 12,711,558 shares issued at June 30, 2023, including shares held in treasury		322			318
Additional paid-in capital		106,540			101,225
Retained earnings		34,183			32,608
Treasury stock, 184,672 shares, at cost, at June 30, 2024 and 134,001 shares, at cost, at June 30, 2023		(4,439	)		(3,195	)
Total shareholders’ equity		136,606			130,956
Total liabilities and shareholders’ equity	$	230,659		$	253,847

	For the year ended June 30,
	2024		2023
Revenues	$	353,563	$	354,173
Cost of sales		248,310		250,490
Gross profit		105,253		103,683
Selling, general and administrative expenses		93,625		87,177
Operating income		11,628		16,506
Interest expense, net		2,744		2,507
Income before provision for income taxes		8,884		13,999
Provision for income taxes		3,238		4,280

Net income	$	5,646	$	9,719

Net earnings per share – basic	$	0.39	$	0.68

Net earnings per share – diluted	$	0.37	$	0.67

					Additional
	Common Stock				Paid-in			Treasury Stock					Retained
	Shares		Amount		Capital			Shares		Cost			Earnings			Total
Balance at June 30, 2022		12,650,126	$	316	$	97,544			127,801	$	(3,070	)	$	22,889		$	117,679

Share repurchases		-		-		-			6,200		(125	)		-			(125	)

Vesting of restricted shares		31,757		1		(1	)		-		-			-			-

Issuances of shares under employee stock purchase plan		5,432		-		118			-		-			-			118

Issuances of shares in connection with acquisitions		24,243		1		502			-		-			-			503

Stock compensation		-		-		3,062			-		-			-			3,062

Net income		-		-		-			-		-			9,719			9,719
Balance at June 30, 2023		12,711,558		318		101,225			134,001		(3,195	)		32,608			130,956

Share repurchases		-		-		-			50,671		(1,244	)		-			(1,244	)

Vesting of restricted shares		142,814		4		(4	)		-		-			-			-

Issuances of shares under employee stock purchase plan		5,716		-		116			-		-			-			116

Issuances of shares in connection with acquisitions		8,621		-		229			-		-			-			229

Amount of dividends paid ($0.28 per share)		-		-		-			-		-			(4,071	)		(4,071	)

Stock compensation		-		-		4,974			-		-			-			4,974

Net income		-		-		-			-		-			5,646			5,646
Balance at June 30, 2024		12,868,709	$	322	$	106,540			184,672	$	(4,439	)	$	34,183		$	136,606

Years ended June 30,	2024			2023

Operating activities:
Net income	$	5,646		$	9,719
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,983			6,024
Amortization of debt discount		34			29
Provision for bad debt expense		688			710
Non-cash lease expense		14			93
Stock compensation		4,974			3,062
Inventory reserve		54			(178	)
Provision for deferred income taxes		475			357
Other		25			(103	)
(Increase) decrease in operating assets:
Accounts receivable		7,028			(5,664	)
Inventories		11,901			(8,302	)
Vendor deposits		634			(527	)
Contract assets		(41	)		338
Other assets		2,476			(4,296	)
(Decrease) increase in operating liabilities:
Accounts payable and accrued expenses		(8,234	)		(4,164	)
Accrued employee expenses		646			2,114
Customer deposits		1,017			1,567
Contract liabilities		(668	)		161

Net cash provided by operating activities		32,652			940

Investing activities:
Capital expenditures		(4,867	)		(3,708	)
Cash paid for acquisitions, net of cash acquired		(1,949	)		(2,278	)

Net cash used by investing activities		(6,816	)		(5,986	)
Financing activities:
Dividends paid		(4,071	)		-
Proceeds from borrowings		62,500			77,000
Debt repayments		(84,500	)		(70,000	)
Repurchases of common stock in satisfaction of employee tax withholding obligations		(1,244	)		(125	)
Issuances of common stock under employee stock purchase plan		116			118

Net cash (used) provided by financing activities		(27,199	)		6,993
Net (decrease) increase in cash		(1,363	)		1,947
Cash at beginning of year		5,921			3,974

Cash at end of year	$	4,558		$	5,921
Supplemental information:
Cash paid for interest	$	2,783		$	2,469
Cash paid for income taxes	$	4,575		$	3,099
Supplemental disclosure of non-cash financing activities
Common stock issued for acquisitions	$	229		$	503

Principles of Consolidation		The accompanying consolidated financial statements include the accounts of EVI Industries, Inc. and its subsidiaries, all of which are wholly-owned. All significant intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition		The Company recognizes revenue, net of sales taxes, when a sales arrangement with a customer exists (sales contract, purchase or sales order, or other indication of an arrangement), the transaction price is fixed and determinable, and the Company has satisfied the performance obligation(s) per the sales arrangement. Performance Obligations and Revenue Over Time Revenue primarily consists of revenues from the sale or leasing of commercial and industrial laundry and dry cleaning equipment and steam and hot water boilers manufactured by others; the sale of related replacement parts and accessories; and the provision of installation and maintenance services. The Company generates revenue primarily from the sale of equipment and parts to customers. Therefore, the majority of the Company’s contracts are short-term in nature and have a single performance obligation (to deliver products), which is satisfied when control of the product is transferred to the customer. Other contracts contain a combination of equipment sales with a service such as connection of the equipment, which is expected to be performed in the near-term. Such services are distinct and accounted for as separate performance obligations. The Company allocates the transaction price to each performance obligation based on its relative standalone selling price out of the total consideration of the contract. Judgment may be required by management to identify the distinct performance obligations within each contract. Revenue is recognized on these contracts when control transfers to the Company’s customers via shipment of products or provision of services and the Company has the right to receive consideration for these products and services. Additionally, from time to time, the Company enters into longer-termed contracts which provide for the sale of equipment by the Company and the provision by the Company of related installation and construction services. The installation on these types of contracts is usually completed within six to twelve months. The Company recognizes a portion of its revenue over time using the cost-to-cost measure of progress, which measures a contract’s progress toward completion based on the ratio of actual contract costs incurred to date to the Company’s estimated costs at completion adjusted for uninstalled materials, as necessary. Significant judgment may be required by management in the cost estimation process for these contracts, which is based on the knowledge and experience of the Company’s project managers, subcontractors and financial professionals. Changes in job performance and job conditions are factors that influence estimates of the total contract transaction price, total costs to complete those contracts and the Company’s revenue recognition. The determination of the total estimated cost and progress toward completion requires management to make significant estimates and assumptions. Total estimated costs to complete projects include various costs such as direct labor, material and subcontract costs. Changes in these estimates can have a significant impact on the revenue recognized each period. From time to time, the Company also enters into maintenance contracts and ad hoc maintenance and installation service contracts. These longer-term contracts, and maintenance and service contracts have a single performance obligation where revenue is recognized over time using the cost-to-cost measure of progress, which best depicts the continuous transfer of control of goods or services to the customer.

June 30,	2024			2023

Costs incurred on uncompleted contracts	$	1,795		$	13,378
Estimated earnings		379			2,268
Less: billings to date		(1,190	)		(16,148	)
Retainage		238			1,015
Ending balance	$	1,222		$	513

June 30,	2024		2023
Contract assets	$	1,222	$	1,181
Contract liabilities		-		(668	)
Ending balance	$	1,222	$	513

		Contract liabilities are generally associated with contracts with durations of less than one year. Accordingly, such amounts are expected to be realized during the subsequent year. During fiscal 2024, all of the contract liabilities outstanding as of June 30, 2023 were realized.

		The Company does not account for significant financing components if the period between the time when the transfer of the product or service to the customer occurs and when the customer pays for that service or product will be one year or less. The Company does not disclose the value of remaining performance obligations for contracts with an original expected period of one year or less or performance obligations for which the Company recognizes revenue at the amount that it has the right to invoice for services performed.

Goodwill		Goodwill is recorded when the purchase price paid for an acquisition exceeds the fair value of net assets acquired in a business combination. The Company evaluates goodwill for impairment annually or more frequently when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. Goodwill is tested for impairment at the reporting unit level by first performing a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If the reporting unit does not pass the qualitative assessment, then the reporting unit's carrying value is compared to its fair value. If the fair value is determined to be less than the carrying value, a second step is performed to measure the amount of impairment loss. This step compares the current implied goodwill in the reporting unit to its carrying amount. If the carrying amount of the goodwill exceeds the implied goodwill, an impairment is recorded for the excess. The identification and measurement of goodwill impairment involves the estimation of the fair value of the reporting unit and involves uncertainty because management must use judgment in determining appropriate assumptions to be used in the measurement of fair value. The Company performed its annual impairment test on April 1, 2024 using the qualitative assessment to evaluate relevant events and circumstances such as macroeconomic conditions, cost factors, financial performance, and others. Based on the assessment, the Company determined there was no impairment.

Accounts Receivable		Accounts receivable are customer obligations due under what management believes to be customary trade terms. Invoices are typically due upon receipt, however, the Company may grant extended payment terms, typically 30 days, for certain customers. The Company sells its products primarily to hospitals, nursing homes, government institutions, laundry plants, hotels, motels, vended laundry facilities and distributors and dry cleaning stores and chains. The Company performs continuing credit evaluations of its customers’ financial condition and depending on the terms of credit, the amount of the credit granted and management’s history with a customer,

		the Company may require the customer to grant a security interest in the purchased equipment as collateral for the receivable. Management reviews accounts receivable on a regular basis to determine whether it is probable that any amounts are impaired. The Company includes any balances that are deemed probable to be impaired in its overall allowance for doubtful accounts. The provision for doubtful accounts is recorded in selling, general and administrative expenses in the consolidated statements of operations. If customary attempts to collect a receivable are not successful, the receivable is then written off against the allowance for doubtful accounts. The Company’s allowance for doubtful accounts was $2.1 million at both June 30, 2024 and June 30, 2023. Actual write-offs may vary from the recorded allowance.

Cash		The Company’s cash is maintained in bank accounts which bear interest at prevailing interest rates and are covered by Federal Deposit Insurance Corporation (“FDIC“) insurance. The Company has not historically experienced any losses in its cash accounts and does not currently believe that it is exposed to significant credit risk due to the financial position of the banks in which the Company’s cash is held. The Company monitors the strength and credit worthiness of financial institutions in which it holds its cash. However, there recently have been adverse events related to the soundness of financial institutions, including a number of smaller bank failures, and the Company has exposure to the extent its cash balances exceed the current $250,000 in maximum FDIC coverage.
Inventories		Inventories consist principally of equipment inventories and spare part inventories. Equipment inventories are valued at the lower of cost, determined on the specific identification method or average cost, or net realizable value. Spare part inventories are valued at the lower of cost, determined on average cost or first-in first-out method, or net realizable value. Lower of cost or net realizable value adjustments are recorded in cost of goods sold in the consolidated statement of operations. The Company records a reserve for aging or slow-moving inventory. The Company established reserves of approximately $1.1 million and $994,000 as of June 30, 2024 and 2023, respectively, against slow moving inventory.
Vendor Deposits		Vendor deposits represent advances made to the Company’s vendors for specialized inventory on order.

Equipment, Improvements and Depreciation		Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated on straight-line methods over useful lives of five to seven years for furniture and equipment, five years for vehicles, and the shorter of ten years or the remaining lease term (including renewal periods that are deemed reasonably assured) for leasehold improvements. Depreciation and amortization of property and equipment is included in selling, general and administrative expenses in the consolidated statements of operations. Repairs and maintenance costs are expensed as incurred.

Software Capitalization		The Company capitalizes certain costs related to the acquisition and development of internal use software, including implementation costs incurred in a cloud computing arrangement, during the application development stages of projects. The Company amortizes these costs using the straight-line method over the estimated useful life of the software, typically seven years. Costs incurred during the preliminary project or

		the post-implementation/operation stages of the project are expensed as incurred. Capitalized computer software, included as a component of equipment and improvements, net and other assets, in the accompanying consolidated balance sheets, net of accumulated amortization, was $848,000 and $576,000 at June 30, 2024 and 2023, respectively. Computer software amortization expense was $189,000 and $112,000 in fiscal 2024 and fiscal 2023, respectively. Amortization of capitalized software is included in selling, general and administrative expenses in the consolidated statements of operations.

Customer-Related Intangibles, Tradenames and Other Intangible Assets		Finite-lived intangibles are amortized over their estimated useful life while indefinite-lived intangibles and goodwill are not amortized. Customer-related intangibles, non-compete, and other finite-lived intangible assets are stated at cost less accumulated amortization, and are amortized on a straight-line basis over the estimated future periods to be benefited (5-10 years). The estimates of fair value of the Company’s indefinite-lived intangibles and long-lived assets are based on information available as of the date of the assessment and takes into account management’s assumptions about expected future cash flows and other valuation techniques. Amortization of finite-lived intangibles is included in selling, general and administrative expenses in the consolidated statements of operations. The Company also evaluates indefinite-lived intangible assets each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The Company performed its annual impairment test on April 1, 2024 using the qualitative assessment to evaluate relevant events and circumstances such as macroeconomic conditions, cost factors, financial performance, and others. Based on the assessment, the Company determined there was no impairment.

Asset Impairments		The Company periodically reviews the carrying amounts of its long-lived assets, including property, plant and equipment and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If an asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of their carrying amount or fair value less estimated costs to sell. The Company has concluded that there was no impairment of long-lived assets in fiscal 2024 or fiscal 2023.

Estimates		The preparation of consolidated financial statements in conformity with GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management evaluates these estimates on an ongoing basis. Estimates which may be particularly significant to the Company’s consolidated financial statements include those relating to the determination of impairment of assets (including goodwill and intangible assets), the useful life of property and equipment, the recoverability of deferred income tax assets, allowances for expected credit losses, intangible assets, estimates to complete on contracts where revenue is recognized over time, the carrying value of inventories and long-lived assets, and the timing of revenue recognition. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the recognition of revenues and expenses and the carrying value of assets and liabilities that are not readily apparent from other sources. Assumptions

		and estimates may, however, prove to have been incorrect, and actual results may differ from these estimates.

Earnings Per Share		The Company computes earnings per share using the two-class method. The two-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. During fiscal 2024 and fiscal 2023, the Company granted restricted stock awards of 175,801 and 222,672 shares, respectively, and 85,672 and 128,985 restricted stock units, respectively, under the EVI Industries, Inc. 2015 Equity Incentive Plan, as amended (see Note 17). Shares of restricted stock are deemed to constitute a second class of stock for accounting purposes. Basic and diluted earnings per share for fiscal 2024 and fiscal 2023 are computed as follows (in thousands, except per share data):

	For the years ended June 30,
	2024		2023

Net income	$	5,646	$	9,719
Less: distributed and undistributed income allocated to non-vested restricted common stock		717		1,193
Net income allocated to EVI Industries, Inc. shareholders	$	4,929	$	8,526
Weighted average shares outstanding used in basic earnings per share		12,650		12,553

Dilutive common share equivalents		568		251
Weighted average shares outstanding used in diluted earnings per share		13,218		12,804
Basic earnings per share	$	0.39	$	0.68
Diluted earnings per share	$	0.37	$	0.67

		awards or restricted stock units, there were no potentially dilutive securities outstanding. The remaining 732,119 shares of restricted common stock were not included in the calculation of diluted earnings per share because their impact was anti-dilutive.

Supplier Concentration		The Company purchases laundry, dry cleaning equipment, boilers and other products from a number of manufacturers and suppliers. Purchases from four manufacturers accounted for a total of approximately 73% of the Company’s purchases for fiscal 2024 and 70% of the Company’s purchases for fiscal 2023.

Advertising Costs		The Company expenses the cost of advertising as of the first date an advertisement is run. The Company incurred approximately $852,000 and $778,000 of advertising costs in fiscal 2024 and fiscal 2023, respectively, which are included in selling, general and administrative expenses in the consolidated statements of operations.

Shipping and Handling		Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through cost of sales as inventories are sold. Shipping and handling costs associated with the delivery of products are included in selling, general and administrative expenses.

Fair Value of Certain Current Assets and Current Liabilities	Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The inputs used to measure fair value are prioritized based on a three-level hierarchy. The three levels of inputs used to measure fair value are as follows:
		●	Level 1 - Quoted prices in active markets for identical assets and liabilities.

		●	Level 2 - Observable inputs other than quoted prices included in Level 1. This includes dealer and broker quotations, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.

		●	Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

	The Company has no assets or liabilities that are adjusted to fair value on a recurring basis. The Company did not have any assets or liabilities measured at fair value on a nonrecurring basis, other than assets and liabilities from acquisitions, during fiscal 2024 or fiscal 2023.

	The Company’s cash, accounts receivable and accounts payable are reflected in the accompanying consolidated financial statements at cost, which approximated estimated fair value, using Level 1 inputs. Cash is maintained with various high-quality financial institutions and have original maturities of three months or less. Accounts receivable and accounts payable approximate their fair value due to the short term nature of such accounts. The fair value of the Company’s indebtedness was estimated using Level 2 inputs based on quoted prices for those or similar debt instruments using applicable interest rates as of June 30, 2024 and approximated the carrying value of such debt because it accrues interest at variable rates that are repriced frequently. This approximates fair value based on the variable interest rate.

Customer Deposits		Customer deposits represent advances paid by or amounts billed to customers when placing orders for equipment with the Company, in advance of delivery.

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

Income Taxes		The Company recognizes income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the

		enactment date. If it is determined that it is more likely than not that some portion of a deferred tax asset will not be realized, a valuation allowance is recognized. Judgment is required in developing the Company’s provision for income taxes, deferred tax assets and liabilities, and any valuation allowances that might be required against the deferred tax assets. Management evaluates the Company’s ability to realize its deferred tax assets on a quarterly basis and adjusts the valuation allowance when it believes that it is more likely than not that the asset will not be realized. There were no valuation allowance adjustments during fiscal 2024 or fiscal 2023. The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments and which may not accurately reflect actual outcomes. The Company does not believe that there are any material unrecognized tax benefits as of June 30, 2024 or 2023 related to tax positions taken on its income tax returns. The Company’s policy is to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of interest expense and general and administrative expense, respectively, in the consolidated statements of operations.

Leases		Company as Lessee The Company leases warehouse and distribution facilities and administrative office space, generally for terms of three to ten years. The Company recognizes the lease payments under its short-term leases (which are defined as leases with a term of twelve months or less) in profit or loss on a straight-line basis over the lease term. The Company follows this accounting policy for all classes of underlying assets. In addition, variable lease payments in the period in which the obligation for those payments is incurred are not included in the recognition of a lease liability or right-of-use asset. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. However, certain of the Company’s leases do not provide a readily determinable implicit rate. For such leases, the Company estimates the incremental borrowing rate to discount lease payments based on information available at lease commencement. The Company uses instruments with similar characteristics when calculating its incremental borrowing rates. The Company has options to extend certain of its operating leases for additional periods of time and the right to terminate several of its operating leases prior to their contractual expirations, in each case, subject to the terms and conditions of the lease. The lease term consists of the non-cancellable period of the lease and the periods covered by Company options to extend the lease when management considers it reasonably certain that the Company will exercise such options. The Company's lease

		agreements do not contain residual value guarantees. The Company has elected to not separate non-lease components from the associated lease component for all underlying classes of assets with lease and non-lease components.

Recently Issued Accounting Guidance		In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” which changes the way companies evaluate credit losses for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other specified instruments, entities are required to use a new forward-looking “expected loss” model to evaluate impairment, potentially resulting in earlier recognition of allowances for losses. The new standard also requires enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance was required to be applied using a cumulative-effect transition method. The Company adopted this ASU effective July 1, 2023, the first day of its fiscal year ended June 30, 2024. As a result, the consolidated financial statements for fiscal 2024 are presented under the new standard, while the comparative prior year periods are not adjusted and continue to be reported in accordance with the historical accounting policy. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements. Trade receivables as of June 30, 2024 were $40.9 million, net of an allowance for expected credit losses of $2.1 million. The Company measures its allowance for credit losses on trade receivables on a collective (pool) basis when similar risk characteristics exist. Trade receivables are generally pooled based on the type of transaction generating the trade receivable. The Company establishes an estimate for its allowance for credit losses resulting from the failure of customers to make required payments by applying an aging schedule to pools of assets. The Company generally monitors macroeconomic indicators to assess whether adjustments are necessary to reflect current conditions. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”) to enhance segment reporting disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, as well as disclosure of the total amount and description of other segment items by reportable segment. This ASU also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. All disclosures about a reportable segment’s profit or loss and assets that are currently required on an annual basis under Segment Reporting (Topic 280) will also be required for interim periods under ASU 2023-07. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with retrospective application. Early adoption is permitted. The Company is currently evaluating the effect of this ASU on its segment disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”) to enhance transparency and decision usefulness of income tax disclosures. ASU 2023-09 requires greater standardization and disaggregation of categories within an entity’s tax rate reconciliation disclosure, as well as disclosure of income taxes paid by jurisdiction, among other requirements. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. ASU 2023-09 is effective on a prospective basis, with retrospective application permitted. The Company is currently evaluating the effects of this ASU on its income tax disclosures. Management does not believe that accounting standards and updates which have been issued but are not yet effective will have a material impact on the Company’s consolidated financial position, results of operations or cash flows upon adoption.

		industry. The consideration paid by the Company in connection with the acquisition consisted of $987,000 in cash and 8,621 shares of the Company’s common stock, with an acquisition date fair value of approximately $229,000. Fees and expenses related to the acquisition, consisting primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2024. The acquisition was treated for accounting purposes as a purchase of ALCO using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), 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 $793,000 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. The financial position, including assets and liabilities, of ALCO is included in the Company’s consolidated balance sheet as of June 30, 2024 and the results of operations of ALCO since the September 1, 2023 closing date are included in the Company’s consolidated financial statements for fiscal 2024.

		On June 1, 2024, the Company completed the acquisition of Signature Services Corporation (d/b/a Ed Brown Distributors) (“EBD”), a Texas 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 $963,000 in cash. Fees and expenses related to the acquisition, consisting primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2024. The acquisition was treated for accounting purposes as a purchase of EBD using the acquisition method of accounting in accordance with ASC 805, 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 $946,000 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. The financial position, including assets and liabilities, of EBD is included in the Company’s consolidated balance sheet as of June 30, 2024 and the results of operations of EBD since the June 1, 2024 closing date are included in the Company’s consolidated financial statements for fiscal 2024.

		Fiscal 2023 Acquisitions

		On September 1, 2022, the Company completed the acquisitions of Aldrich Clean-Tech Equipment Corp. (“ACT”), a Massachusetts-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry, and K&B Laundry Service, LLC (“K&B”), a North Carolina-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. The total consideration for these

		two acquisitions consisted of approximately $1.2 million in cash, net of cash acquired, which the Company funded through borrowings under its credit facility. Fees and expenses related to these acquisitions, consisting primarily of legal and other professional fees, totaled approximately $102,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statements of operations for fiscal 2023. Each acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition method of accounting in accordance with ASC 805, 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 intangible assets and goodwill. The Company allocated a total of $793,000 to goodwill, which is expected to be amortized and deductible for tax purposes over 15 years. Goodwill is attributable primarily to the assembled workforces, as well as the expected benefits from the increased scale of the Company as a result of these acquisitions. The financial position, including assets and liabilities, of ACT and K&B is included in the Company’s consolidated balance sheets as of June 30, 2023 and 2024, and the results of operations of the businesses since the September 1, 2022 closing date are included in the Company’s consolidated financial statements for fiscal 2023 and fiscal 2024.

		On November 1, 2022, the Company acquired substantially all of the assets of Wholesale Commercial Laundry Equipment Company SE, LLC (“WCL”), an Alabama-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. The consideration paid by the Company in connection with the acquisition consisted of $650,000 in cash and 24,243 shares of the Company’s common stock, with an acquisition date fair value of approximately $503,000. Fees and expenses related to the acquisition, consisting primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2023. The acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition method of accounting in accordance with ASC 805, 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 $1,062,000 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. The financial position, including assets and liabilities, of WCL is included in the Company’s consolidated balance sheets as of June 30, 2023 and 2024, and the results of operations of WCL since the November 1, 2022 closing date are included in the Company’s consolidated financial statements for fiscal 2023 and fiscal 2024.

		On June 5, 2023, the Company acquired substantially all of the assets of Gluno, Inc. (d/b/a Express Parts and Services) (“EXP”), a Maryland-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 $550,000 in cash. Fees and expenses related to the acquisition, consisting primarily of legal and other professional fees, were not material and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2023. The acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition

		method of accounting in accordance with ASC 805, 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 $391,000 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. The financial position, including assets and liabilities, of EXP is included in the Company’s consolidated balance sheets as of June 30, 2023 and 2024, and the results of operations of EXP since the June 5, 2023 closing date are included in the Company’s consolidated financial statements for fiscal 2023 and fiscal 2024.

		Supplemental Pro Forma Results of Operations

		The following unaudited supplemental pro forma information presents the results of operations of the Company, after giving effect to the acquisitions completed by the Company during fiscal 2024 and 2023 as described above, as if the Company had completed each such transaction on July 1, 2022, using the estimated fair values of the assets acquired and liabilities assumed. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the Company would have been if the transactions had occurred on the date assumed, nor are they indicative of future results of operations.

	For the year ended June 30,
(in thousands)	2024 (Unaudited)		2023 (Unaudited)
Revenues	$	356,260	$	362,287
Net income		5,816		10,533

		The Company’s consolidated results of operations for fiscal 2024 include total revenue of approximately $9.7 million and total net income of approximately $599,000 attributable to businesses acquired during fiscal 2024 and fiscal 2023, based on the consolidated effective tax rate. The Company’s consolidated results of operations for fiscal 2023 include total revenue of approximately $6.3 million and total net income of approximately $435,000 attributable to businesses acquired during fiscal 2023, based on the consolidated effective tax rate. These results of acquired businesses do not include the effects of acquisition costs or interest expense associated with consideration paid for the acquisitions.

		Subsequent Acquisition

		On July 1, 2024, the Company acquired Florida-based Laundry Pro of Florida, Inc. for total consideration of $5.9 million in cash. The Company is in the process of determining the respective fair values of the assets acquired and liabilities assumed. The amounts for these items are subject to change as additional information to assist in determining their respective fair values as of the closing date is obtained during the post-closing measurement period of up to one year.


4. Accounts Receivable		Accounts receivable as of June 30, 2024 and 2023 consisted of the following (in thousands):


5. Other Current Assets		Other current assets as of June 30, 2024 and 2023 were comprised of the following (in thousands):


6. Leases		*Company as Lessee*

		As of June 30, 2024, the Company had 32 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between 2024 and 2030. Rent expense consists of monthly rental payments under the terms of the Company’s lease agreements recognized on a straight-line basis.

		The following table sets forth the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of June 30, 2024. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.