UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, ~~2021~~2022

	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to

	Commission file number 001-14757

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, FL 33137
(Address of principal executive offices)

(305) 402-9300
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.025 par value	EVI	NYSE American

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒ Non-accelerated filer ☐ Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: Common Stock, $.025 par value per share – ~~12,258,173~~12,515,944 shares outstanding as of May ~~3, 2021.~~4, 2022.



PART I – FINANCIAL INFORMATION
Item 1.Financial Statements		3
Condensed Consolidated Statements of Operations (Unaudited) for the nine and three months ended March 31, ~~2021~~2022 and ~~2020~~2021	3
Condensed Consolidated Balance Sheets at March 31, ~~2021~~2022 (Unaudited) and June 30, ~~2020~~2021	4
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the nine and three months ended March 31, ~~2021~~2022 and ~~2020~~2021	6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended March 31, ~~2021~~2022 and ~~2020~~2021	8
Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations	2522
Item 3.Quantitative and Qualitative Disclosures About Market Risk	3431
Item 4.Controls and Procedures	3532
PART II – OTHER INFORMATION
Item 1.Legal Proceedings	3633
Item 1A.Risk Factors	3633
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds	3633
Item 5.Other Information	33
Item 6.Exhibits	3735
Signatures	3836

Index

PART I—FINANCIAL INFORMATION

Item 1.Financial Statements.

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands, except per share data) (Unaudited)

	For the nine months ended March 31,						For the three months ended March 31,					For the nine months ended March 31,						For the three months ended March 31,
	2021			2020			2021		2020			2022			2021			2022			2021

Revenues	$	177,456		$	181,379		$	62,413	$	59,041		$	184,485		$	177,456		$	60,042		$	62,413
Cost of sales		133,989			139,640			46,659		45,211			132,977			133,989			42,980			46,659
Gross profit		43,467			41,739			15,754		13,830			51,508			43,467			17,062			15,754
Selling, general and administrative expenses		41,330			39,302			15,025		13,479			47,680			41,330			16,874			15,025
Operating income		2,137			2,437			729		351			3,828			2,137			188			729
Interest and other (expense) income, net (Note 6)		(122	)		(1,198	)		197		(343	)
Interest and other (expense) income, net													(390	)		(122	)		(125	)		197
Income before income taxes		2,015			1,239			926		8			3,438			2,015			63			926
Provision for income taxes		411			408			301		20			851			411			23			301

Net income (loss)	$	1,604		$	831		$	625	$	(12	)
Net income												$	2,587		$	1,604		$	40		$	625

Net earnings (loss) per share – basic	$	0.12		$	0.06		$	0.05	$	(0.00	)
Net earnings per share – basic												$	0.19		$	0.12		$	0.00		$	0.05

Net earnings (loss) per share – diluted	$	0.12		$	0.06		$	0.04	$	(0.00	)
Net earnings per share – diluted												$	0.18		$	0.12		$	0.00		$	0.04

ASSETS
	March 31, 2021 (Unaudited)		June 30, 2020		March 31, 2022 (Unaudited)		June 30, 2021
Current assets
Cash	$	2,919	$	9,789	$	5,604	$	6,057
Accounts receivable, net of allowance for doubtful accounts of $984 and $820, respectively		21,797		23,042
Accounts receivable, net of allowance for doubtful accounts of $1.1 million and $1.0 million, respectively						33,124		28,904
Inventories, net		26,725		24,063		40,781		25,129
Vendor deposits		2,735		1,276		2,022		367
Contract assets		12,316		3,443		357		347
Other current assets		4,865		3,041		6,953		4,419
Total current assets		71,357		64,654		88,841		65,223

Equipment and improvements, net		10,430		7,992		12,140		10,594
Operating lease assets		7,432		5,311		7,466		7,060
Intangible assets, net		24,165		21,754		23,943		23,677
Goodwill		63,772		56,678		65,861		63,881
Other assets		6,978		4,329		6,930		7,415

Total assets	$	184,134	$	160,718	$	205,181	$	177,850

LIABILITIES AND SHAREHOLDERS' EQUITY
	March 31, 2021 (Unaudited)			June 30, 2020			March 31, 2022 (Unaudited)			June 30, 2021
Current liabilities
Accounts payable and accrued expenses	$	30,385		$	24,292		$	26,346		$	26,227
Accrued employee expenses		6,012			4,764			6,420			7,528
Customer deposits		11,115			8,511			21,114			10,344
Contract liabilities		2,675			558			20			3,232
Current portion of long-term debt		2,680			2,680
Current portion of operating lease liabilities		2,091			1,672			2,458			2,131
Total current liabilities		54,958			42,477			56,358			49,462


Deferred tax liabilities, net		3,601			1,728			4,157			4,208
Long-term operating lease liabilities		5,971			3,657			5,784			5,567
Long-term debt, net		20,071			25,030			23,914			11,873

Total liabilities		84,601			72,892			90,213			71,110

Commitments and contingencies (Note 12)

Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; NaN issued and outstanding		0-			0-
Common stock, $.025 par value; authorized shares – 20,000,000; 12,371,415 shares issued at March 31, 2021 and 12,029,910 shares issued at June 30, 2020, including shares held in treasury		309			301
Preferred stock, $1.00 par value; authorized shares – 200,000; 0000none issued and outstanding								0-			0-
Common stock, $.025 par value; authorized shares – 20,000,000; 12,609,354 shares issued at March 31, 2022 and 12,399,137 shares issued at June 30, 2021, including shares held in treasury								315			310
Additional paid-in capital		89,851			79,127			96,342			90,501
Treasury stock, 127,801 shares at March 31, 2022 and 120,706 shares at June 30, 2021, at cost								(3,070	)		(2,865	)
Retained earnings		12,014			10,410			21,381			18,794
Treasury stock, 113,242 shares at March 31, 2021 and 95,396 shares at June 30, 2020, at cost		(2,641	)		(2,012	)
Total shareholders’ equity		99,533			87,826			114,968			106,740
Total liabilities and shareholders’ equity	$	184,134		$	160,718		$	205,181		$	177,850

	Nine months ended March 31, 2021																	Nine months ended March 31, 2022
																						Additional
																		Common Stock				Paid-in			Treasury Stock					Retained
						Additional												Shares		Amount		Capital			Shares		Cost			Earnings		Total
		Common Stock				Paid-in		Treasury Stock					Retained
		Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at June 30, 2020			12,029,910	$	301	$	79,127		95,396	$	(2,012	)	$	10,410	$	87,826
Balance at June 30, 2021																			12,399,137	$	310	$	90,501			120,706	$	(2,865	)	$	18,794	$	106,740

Share repurchases			-		-		-		17,846		(629	)		-		(629	)		0-		0-		0-			7,095		(205	)		0-		(205	)

Vesting of restricted shares			51,701		1		(1)		-		-			-		-			20,835		1		(1	)		0-		0-			0-		-

Issuances of shares under employee stock purchase plan			693		-		21		-		-			-		21
Issuances of shares under employee stock plan																			2,008		0-		59			0-		0-			0-		59

Issuances of shares in connection with acquisitions			289,111		7		8,870		-		-			-		8,877			179,087		4		3,836			-		0-			0-		3,840

Stock compensation			-		-		1,834		-		-			-		1,834			8,287		0-		1,947			-		0-			0-		1,947

Net income			-		-		-		-		-			1,604		1,604			-		-		-			-		-			2,587		2,587
Balance at March 31, 2021			12,371,415	$	309	$	89,851		113,242	$	(2,641	)	$	12,014	$	99,533
Balance at March 31, 2022																			12,609,354	$	315	$	96,342			127,801	$	(3,070	)	$	21,381	$	114,968

	Three months ended March 31, 2021																	Three months ended March 31, 2022
																						Additional
																		Common Stock				Paid-in			Treasury Stock					Retained
						Additional												Shares		Amount		Capital			Shares		Cost			Earnings		Total
		Common Stock				Paid-in		Treasury Stock					Retained
		Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at December 31, 2020			12,340,591	$	309	$	88,855		105,635	$	(2,358	)	$	11,389	$	98,195
Balance at December 31, 2021																			12,418,075	$	310	$	91,880			124,706	$	(3,007	)	$	21,341	$	110,524

Share repurchases			-		-		-		7,607		(283	)		-		(283	)		0-		0-		0-			3,095		(63	)		0-		(63	)

Vesting of restricted shares			20,098		-		-		-		-			-		-			12,192		1		(1	)		-		0-			0-		-

Issuances of shares in connection with acquisitions			10,726		-		356		-		-			-		356			179,087		4		3,836			0-		0-			0-		3,840

Stock compensation			-		-		640		-		-			-		640			0-		0-		627			0-		0-			0-		627

Net income			-		-		-		-		-			625		625			-		-		-			-		-			40		40
Balance at March 31, 2021			12,371,415	$	309	$	89,851		113,242	$	(2,641	)	$	12,014	$	99,533
Balance at March 31, 2022																			12,609,354	$	315	$	96,342			127,801	$	(3,070	)	$	21,381	$	114,968

	Nine months ended March 31, 2020																			Nine months ended March 31, 2021
					Additional									Common Stock Related to											Additional
	Common Stock				Paid-in		Treasury Stock					Retained		Acquiree’s							Common Stock				Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings		ESOP			Total				Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at June 30, 2019		11,825,615	$	296	$	73,010		72,934	$	(1,439	)	$	9,635	$	(4,240	)	$	77,262
Balance at June 30, 2020																						12,029,910	$	301	$	79,127		95,396	$	(2,012	)	$	10,410	$	87,826

Share repurchases		-		-		-		15,372		(425	)		-		-			(425	)			-		-		-		17,846		(629	)		-		(629	)

Vesting of restricted shares		29,880		-		-		-		-			-		-			0-				51,701		1		(1)		-		-			-		-

Issuances of shares under employee stock purchase plan		1,022		-		26		-		-			-		-			26
Issuances of shares under employee stock plan																						693		-		21		-		-			-		21

Issuances of shares in connection with acquisitions		132,726		4		3,766		-		-			-		4,240			8,010				289,111		7		8,870		-		-			-		8,877

Stock compensation		13,550		-		1,724		-		-			-		-			1,724				-		-		1,834		-		-			-		1,834

Net income		-		-		-		-		-			831		-			831				-		-		-		-		-			1,604		1,604
Balance at March 31, 2020		12,002,793	$	300	$	78,526		88,306	$	(1,864	)	$	10,466	$	0-		$	87,428
Balance at March 31, 2021																						12,371,415	$	309	$	89,851		113,242	$	(2,641	)	$	12,014	$	99,533

	Three months ended March 31, 2020																			Three months ended March 31, 2021
					Additional										Common Stock Related to										Additional
	Common Stock				Paid-in		Treasury Stock					Retained			Acquiree’s						Common Stock				Paid-in		Treasury Stock					Retained
	Shares		Amount		Capital		Shares		Cost			Earnings			ESOP		Total				Shares		Amount		Capital		Shares		Cost			Earnings		Total
Balance at December 31, 2019		11,893,567	$	297	$	75,244		83,044	$	(1,748	)	$	10,478		$	-	$	84,271
Balance at December 31, 2020																						12,340,591	$	309	$	88,855		105,635	$	(2,358	)	$	11,389	$	98,195

Share repurchases		-		-		-		5,262		(116	)		-			-		(116	)			-		-		-		7,607		(283	)		-		(283	)

Vesting of restricted shares																						20,098		-		-		-		-			-		-

Issuances of shares in connection with acquisitions		95,676		3		2,473		-		-			-			0-		2,476				10,726		-		356		-		-			-		356

Stock compensation		13,550		0-		809		-		-			-			-		809				-		-		640		-		-			-		640

Net loss		-		-		-		-		-			(12	)		-		(12	)
Balance at March 31, 2020		12,002,793	$	300	$	78,526		88,306	$	(1,864	)	$	10,466		$	-	$	87,428
Net income																						-		-		-		-		-			625		625
Balance at March 31, 2021																						12,371,415	$	309	$	89,851		113,242	$	(2,641	)	$	12,014	$	99,533

	For the nine months ended						For the nine months ended
	March 31, 2021			March 31, 2020			March 31, 2022			March 31, 2021
Operating activities:
Net income	$	1,604		$	831		$	2,587		$	1,604
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Depreciation and amortization		3,388			2,692			3,795			3,388
Amortization of debt discount		41			41			41			41
Provision for bad debt expense		252			136			231			252
Non-cash lease expense		47			24			138			47
Share-based compensation		1,834			1,724
Stock compensation								1,947			1,834
Inventory reserve		(178	)		133			(274	)		(178	)
Provision for deferred income taxes		953			416
(Benefit) provision for deferred income taxes								(51	)		953
Other		(277	)		(85	)		(24	)		(277	)
(Increase) decrease in operating assets:
Accounts receivable		2,799			4,961			(3,129	)		2,799
Inventories		(674	)		902			(13,476	)		(674	)
Vendor deposits		(1,459	)		(210	)		(1,485	)		(1,459	)
Contract assets		(8,873	)		2,371			(10	)		(8,873	)
Other assets		(2,153	)		(602	)		(1,214	)		(2,153	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		3,323			(1,076	)		(829	)		3,323
Accrued employee expenses		684			(1,168	)		(1,170	)		684
Customer deposits		2,062			3,257			10,081			2,062
Contract liabilities		2,117			(20	)		(3,212	)		2,117
Net cash provided by operating activities		5,490			14,327
Net cash (used) provided by operating activities								(6,054	)		5,490
Investing activities:
Capital expenditures		(1,934	)		(2,785	)		(3,066	)		(1,934	)
Cash paid for acquisitions, net of cash acquired		(4,818	)		(1,334	)		(3,187	)		(4,818	)
Net cash used by investing activities		(6,752	)		(4,119	)		(6,253	)		(6,752	)
Financing activities:
Proceeds from borrowings		37,500			8,000
Proceeds from long-term debt								46,000			37,500
Debt repayments		(42,500	)		(18,930	)		(34,000	)		(42,500	)
Repurchases of common stock in satisfaction of employee tax withholding obligations		(629	)		(425	)		(205	)		(629	)
Issuances of common stock under employee stock purchase plan		21			26			59			21
Net cash used by financing activities		(5,608	)		(11,329	)
Net cash provided (used) by financing activities								11,854			(5,608	)
Net decrease in cash		(6,870	)		(1,121	)		(453	)		(6,870	)
Cash at beginning of period		9,789			5,038			6,057			9,789
Cash at end of period	$	2,919		$	3,917		$	5,604		$	2,919

	For the nine months ended				For the nine months ended
	March 31, 2021		March 31, 2020		March 31, 2022		March 31, 2021
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	388	$	1,215	$	320	$	388
Cash paid during the period for income taxes	$	526	$	224	$	261	$	526

Supplemental disclosure of non-cash financing activities:
Common stock issued for acquisitions	$	8,877	$	3,770	$	3,840	$	8,877
Forgiveness of PPP Loan	$	916	$	0-	$	0-	$	916

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

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and the instructions to Form 10-Q and Article 10 of Regulation S-X related to interim period financial statements. Accordingly, the accompanying unaudited condensed consolidated financial statements do not include certain information and footnotes required by GAAP for complete financial statements. However, in management’s opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring accruals and adjustments) which are necessary in order to state fairly the Company’s results of operations, financial position, shareholders’ equity and cash flows as of and for the periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year or any other future period, particularly in light of the COVID-19 pandemic and its effects and potential future effects (which are highly uncertain) on economic and market conditions and on the Company and its business, results and financial condition, as described below and elsewhere herein.period. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes, including the Summary of Significant Accounting Policies, included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021. The June 30, ~~2020~~2021 balance sheet information contained herein was derived from the Company’s audited consolidated financial statements as of that date included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021.

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

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

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

The Company’s growth strategy includes organic growth initiatives and business acquisitions pursuant to the Company’s “buy-and-build” growth strategy, which was implemented in 2015.

The COVID-19 pandemic has ~~been, and continues to be, an unprecedented disruption in the economy and has~~ negatively impacted, and may continue to negatively impact, the Company’s business and results. Specifically, beginning at the end of the quarter ended March 31, 2020, the COVID-19 pandemic and accompanying economic disruption caused delays and declines in the placement of customer orders, the completion of equipment and parts installations, and the fulfillment of parts orders. The adverse impact of the COVID-19 pandemic is expected to continue in the near-term and possibly longer, including, without limitation, if the pandemic increases in size and scope, its duration is prolonged, or, among other matters related thereto, additional governmental actions, including, without limitation, business restrictions, are imposed. In response to the economic and business disruption during 2020, the Company ~~has taken~~took actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating payment terms with suppliers, and reducing hiring activities. ~~The Company continues to actively monitor~~During the fiscal year ended June 30, 2021, the COVID-19 pandemic had a resurgence with the increased presence and ~~may take further actions, including those that may alter business operations, if required by federal, state or local authorities or otherwise determined to be advisable by management.~~

~~As a precautionary measure in order to increase its cash position and preserve financial flexibility in light~~spread of the ~~uncertainties resulting from~~Delta variant. In addition, the ~~COVID-19 pandemic, during May 2020,~~Omicron variant emerged as a variant of concern towards the ~~Company and certain~~end of its subsidiaries received loans (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in the aggregate principal amount of approximately $6.9 million. As described in further detail in Note 14 below, during April 2021, the Company and its applicable subsidiaries applied for forgiveness of the PPP Loans. There is no assurance that the PPP Loans will be forgiven in whole or at all. Additionally, in connection with its acquisition of Yankee Equipment Systems during November 2020, the Company, indirectly through its wholly-owned subsidiary, assumed the approximately $916,000 loan previously received by Yankee Equipment Systems under the PPP. During the quarter ended ~~March~~December 31, 2021 ~~the loan to Yankee Equipment Systems under the PPP was forgiven by the lender. The Company did not recognize any gain on extinguishment of this debt, as the seller of Yankee Equipment Systems~~and had agreed to indemnify the Company with respect to any portion of this loan which was not forgiven. See Note 7 below for additional information regarding these loans as well as information regarding the Company’s credit facility.

~~As of the date of this Quarterly Report on Form 10-Q, significant uncertainty exists concerning the magnitude of the impact and duration of the COVID-19 pandemic.~~adverse effects. Factors arising from the COVID-19 pandemic that have impacted, or may in the future negatively impact, the Company’s business and results, including sales and gross margin, ~~in the future~~ include, but are not limited to: ~~potential limitations on the ability of suppliers~~supply chain disruptions, which resulted in, and may continue to ~~manufacture,~~result in, delays in delivering products or services to the Company’s ~~ability to procure from manufacturers, the products the Company sells, or to meet delivery requirements and commitments;~~customers; labor shortages; limitations on the ability of the Company’s employees to perform their work due to sickness or other impacts caused by the pandemic or local, state, federal or ~~federal~~foreign orders that may restrict the Company’s operations or the operations of its customers, or require that employees be quarantined; limitations on the ability of carriers to deliver products to the Company’s facilities and customers; risks associated with vaccine mandates, including the potential loss of employees, fines for noncompliance and loss of, or future inability to secure, certain contracts, including with the federal government; adverse impacts of the pandemic on certain industries and customers of the Company which operate in those industries, including the hospitality industry; and potential decreased demand for products and services, including potential limitations on the ability of, or adverse changes in the desire of, the Company’s customers to conduct their business, purchase products and services, and pay for purchases on a timely basis or at all.

The situation surrounding the COVID-19 pandemic remains fluid and highly uncertain. The Company is unable to determine or predict the nature, duration, or scope of the overall impact that the COVID-19 pandemic will have on the Company’s business, results of operations, liquidity, or financial condition, as such impact will depend in large part on future developments, including the severity and duration of the pandemic and government and other actions taken in response thereto, all of which are highly uncertain. Further, ~~even after the COVID-19 pandemic subsides,~~ the Company may continue to experience adverse impacts to its business as a result of, among other things, any adverse impact that has occurred or may occur in the future in the economy or markets generally, and changes in customer or supplier ~~behavior.~~behavior, in each case, in connection with the pandemic.

Note (2) – Summary of Significant Accounting Policies: There have been no material changes to the Company’s significant accounting policies from those described in Note 1 to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~

Note (3) – Recently Issued Accounting Guidance: In June 2016, the Financial Accounting Standards Board ~~(the “FASB”~~(“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which will change 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 will be 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 will also require enhanced disclosures, including the requirement to disclose the information used to track credit quality by year of origination for most financing receivables. The guidance must be applied using a cumulative-effect transition method. ASU 2016-13 is effective for fiscal years beginning after December 15, ~~2020,~~2022, and for interim periods within those fiscal years (the fiscal year ending June 30, ~~2022~~2024 for the Company), with early adoption permitted. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The new guidance provides ~~(i)~~ temporary optional guidance to ease the potential burden in accounting for reference rate ~~reform and (ii)~~reform. The new guidance provides optional expedients and exceptions for applying ~~generally accepted accounting principles~~GAAP to transactions affected by reference rate reform if certain criteria are met. These transactions include contract modifications, hedging relationships, and the sale or transfer of debt securities classified as held-to-maturity. Entities may apply the provisions of the new standard as of the beginning of the reporting period when the election is made. The provisions of this update are only available until ~~March~~December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the ~~potential adoption of~~impact that adopting this guidance ~~and the impact, if any, that it~~ may have on ~~the Company’s~~its consolidated financial statements.

Other than as described above, 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 statements upon adoption.

On ~~November 3, 2020,~~February 7, 2022, the Company acquired ~~Yankee~~Consolidated Laundry Equipment, ~~Systems,~~ Inc. ~~(“YES”~~and Central Equipment Company, LLC (collectively “CLK”), pursuant to a merger whereby ~~YES~~CLK merged with and into, and became, a wholly-owned subsidiary of the Company (the ~~“YES~~“CLK Acquisition”). ~~YES~~CLK is a ~~New Hampshire-based~~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. This acquisition expanded the Company’s footprint in the ~~Northeast~~Southeast region of the United States. The consideration paid by the Company in connection with the merger consisted of ~~$5.3~~$4.4 million in cash and ~~278,385~~179,087 shares of the Company’s common stock. The Company funded the cash consideration with borrowings under its credit facility. The Company, indirectly through its wholly-owned subsidiary, also assumed YES’s obligations under the approximately $916,000 loan obtained by it under the PPP, as described in further detail under Note 7 below. Fees and expenses related to the ~~YES~~CLK Acquisition, consisting primarily of legal and other professional fees, totaled approximately ~~$144,000~~$45,000 and are classified as selling, general and administrative expenses in the Company’s consolidated ~~statement~~statements of operations for the three and nine months ended March 31, ~~2021.~~2022. The total purchase price for accounting purposes was ~~$13.8~~$7.0 million, ~~which included~~net of cash acquired of ~~$792,000.~~

The ~~YES~~CLK Acquisition was treated for accounting purposes as a purchase of ~~YES~~CLK using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Under the acquisition method of accounting, the aggregate consideration in the ~~YES~~CLK Acquisition 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 computation of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the following tables (in thousands):

Purchase price consideration:
Cash consideration, net of cash acquired^(a)	$	4,475	$	3,187
Stock consideration^(b)		8,521		3,840
Total purchase price consideration, net of cash acquired	$	12,996	$	7,027

Allocation of purchase price consideration:
Accounts receivable	$	1,581	$	1,322
Inventory		1,554
Inventories				1,902
Vendor Deposits				170
Other assets		1,812		835
Property, plant and equipment		1,850
Equipment and improvements				841
Intangible assets		3,800		1,700
Accounts payable and accrued expenses		(1,867)		(948	)
Accrued employee expenses		(534)		(62	)
Customer deposits		(485)		(689	)
Deferred tax liabilities		(920)
Assumption of debt		(916)
Total identifiable net assets		5,875		5,071
Goodwill		7,121		1,956
Total	$	12,996	$	7,027

The Company is continuing its valuation of the net assets acquired, which is subject to adjustment in accordance with the merger agreement. Accordingly, the purchase price allocation set forth above reflects preliminary fair value estimates based on preliminary work and analyses performed by management and is subject to change as additional information to assist in determining the fair value of the net assets acquired as of the closing date is obtained during the post-closing measurement period of up to one year. The Company ~~is also still assessing~~has finalized its assessment of the assets acquired and liabilities assumed, except for certain working capital ~~items.~~items, including accounts receivable, inventories, other assets and accounts payable and accrued expenses.

Intangible assets consist of ~~$1.6 million~~$800,000 allocated to the ~~Yankee~~Consolidated Laundry Equipment ~~Systems~~ trade name and ~~$2.2 million~~$900,000 allocated to customer-related intangible assets. The ~~Yankee~~Consolidated Laundry Equipment ~~Systems~~ trade name is indefinite-lived and therefore not subject to amortization. The ~~Yankee~~Consolidated Laundry Equipment ~~Systems~~ trade name will be evaluated for impairment annually or more frequently if an event occurs or circumstances change that indicate it may be impaired, by comparing its fair value to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets ~~will be~~are being amortized over 10 years.

Goodwill is attributable primarily to the assembled workforce acquired, as well as benefits from the increased scale of the Company as a result of the ~~YES~~CLK Acquisition. The goodwill from the ~~YES~~CLK Acquisition is not ~~amortizable~~deductible for income tax purposes.

On January 15, 2021, the Company completed the acquisition (the “ELS Acquisition”) of Baystate Business Ventures d/b/a Eastern Laundry Systems (“ELS”), 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. The acquisition was completed by the Company, indirectly through a wholly-owned subsidiary, which purchased substantially all of the assets and assumed certain of the liabilities of ELS. The total consideration for the transaction consisted of $400,000 in cash, net of $57,000 of cash acquired, and the issuance of 10,726 shares of the Company’s common stock. The Company funded the cash consideration for the acquisition with credit facility borrowings. 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, Business Combinations, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, based on their respective fair values as of the closing date, and the excess of the fair value of the acquired net assets over the purchase price has been recognized as a bargain purchase gain in the condensed consolidated statements of operations for the three and nine months ended March 31, 2021. Based on the Company’s preliminary analysis of working capital and valuation-related items, the Company recognized a bargain purchase gain of $361,000 in connection with the ELS Acquisition during the quarter ended March 31, 2021. The purchase price allocations are considered preliminary, as the Company is still assessing certain working capital and valuation-related items. Any change to the preliminary estimate of working capital and valuation-related items and the related deferred tax liability will be recognized as an adjustment to the bargain purchase gain.

The following ~~unaudited~~ supplemental pro forma information presents the results of operations of the Company, after giving effect to the ~~YES Acquisition and ELS~~CLK Acquisition as described above, as if the Company had completed ~~each~~ such transaction on July 1, ~~2019,~~2020, using the estimated fair values of the assets acquired and liabilities assumed. The ~~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~~transaction had occurred on the date assumed, nor are they indicative of future results of operations.

	For the nine months ended March 31,				For the nine months ended March 31,
(in thousands)	2021 (Unaudited)		2020 (Unaudited)		2022 (Unaudited)		2021 (Unaudited)
Revenues	$	189,810	$	208,001	$	192,731	$	188,058
Net income		2,016		1,888		3,350		2,585

The Company’s consolidated results of operations for the nine months ended March 31, ~~2021~~2022 include total revenue of approximately ~~$9.5~~$2.4 million and total net income of approximately ~~$204,000~~$186,000 attributable to ~~YES and ELS,~~CLK, based on the consolidated effective tax rate. These results of the acquired ~~businesses~~business do not include the effects of acquisition costs or interest expense associated with the consideration paid in connection with the acquisitions.

Note (5) - 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. Basic and diluted earnings per share for the nine and three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are computed as follows (in thousands, except per share data):

For the nine months ended
March 31,
For the three months ended
March 31,
2021 (Unaudited)
2020 (Unaudited)
2021 (Unaudited)
2020 (Unaudited)

Net income (loss)
$
1,604
$
831
$
625
$
(12
)

Less: distributed and undistributed income allocated to unvested restricted common stock
143
68
56
0-
Net income (loss) allocated to EVI Industries, Inc. shareholders
$
1,461
$
763
$
569
$
(12
)
Weighted average shares outstanding used in basic earnings per share
12,101
11,815
12,252
11,872
Dilutive common share equivalents
444
373
533
0-
Weighted average shares outstanding used in diluted earnings per share
12,545
12,188
12,785
11,872
Basic earnings per share
$
0.12
$
0.06
$
0.05
$
0.00
Diluted earnings per share (1)
$
0.12
$
0.06
$
0.04
$
0.00


~~(1)~~	~~For the three-month period ended March 31, 2020, potential common shares under the treasury stock method were anti-dilutive because the Company reported a net loss in the period.~~

	For the nine months ended March 31,				For the three months ended March 31,
	2022 (Unaudited)		2021 (Unaudited)		2022 (Unaudited)		2021 (Unaudited)

Net income	$	2,587	$	1,604	$	40	$	625

Less: distributed and undistributed income allocated to unvested restricted common stock		261		143		4		56
Net income allocated to EVI Industries, Inc. shareholders	$	2,326	$	1,461	$	36	$	569
Weighted average shares outstanding used in basic earnings per share		12,321		12,101		12,402		12,252
Dilutive common share equivalents		375		444		261		533
Weighted average shares outstanding used in diluted earnings per share		12,696		12,545		12,663		12,785
Basic earnings per share	$	0.19	$	0.12	$	0.00	$	0.05
Diluted earnings per share	$	0.18	$	0.12	$	0.00	$	0.04

At March 31, ~~2021~~2022 and ~~2020,~~2021, other than ~~1,202,275~~1,400,105 shares and ~~1,068,753~~1,202,275 shares, respectively, of common stock subject to unvested restricted stock awards or restricted stock units, there were no potentially dilutive securities outstanding.

Note (6) – Interest and other (expense) income, ~~(expense),~~ net: Interest and other (expense) income, ~~(expense),~~ net for the nine and three months ended March 31, ~~2021~~2022 and ~~2020~~2021 are as follows (in thousands):

	For the nine months ended March 31,						For the three months ended March 31,						For the nine months ended March 31,						For the three months ended March 31,
	2021 (Unaudited)			2020 (Unaudited)			2021 (Unaudited)			2020 (Unaudited)			2022 (Unaudited)			2021 (Unaudited)			2022 (Unaudited)			2021 (Unaudited)

Bargain purchase gain	$	361		$	0-		$	361		$	0-		$	0-		$	361		$	0-		$	361
Interest (expense), net		(483	)		(1,198	)		(164	)		(343	)		(390	)		(483	)		(125	)		(164	)
Interest and other income (expense), net	$	(122	)	$	(1,198	)	$	197		$	(343	)
Interest and other (expense) income, net													$	(390	)	$	(122	)	$	(125	)	$	197

Note (7) - Debt: Long-term debt as of March 31, ~~2021~~2022 and June 30, ~~2020~~2021 are as follows (in thousands):

	March 31, 2022
Revolving credit facility	$	24,000		$	12,000
Less: unamortized discount and deferred financing costs		(86	)		(127	)
Total long-term debt, net	$	23,914		$	11,873

On November 2, 2018, the Company entered into a syndicated credit agreement (the ~~“2018 Credit~~“Credit Agreement”) for a five-year revolving credit facility in the maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $5 million and for the issuance of standby letters of credit of up to a sublimit of $10 million.

~~Borrowings~~Prior to the amendment described below, borrowings (other than swingline loans) under the ~~2018~~ Credit Agreement ~~bear~~accrued interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ~~ranges~~ranged from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points, ~~(such highest rate, the “Base Rate”),~~ plus a margin that ~~ranges~~ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans ~~bear~~accrued interest calculated at the ~~Base Rate~~base rate determined in accordance with clause (b) of the preceding sentence plus a margin that ~~ranges~~ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The ~~2018~~ Credit Agreement ~~has a~~had an initial term of five years ~~and matures on~~with a scheduled maturity date of November 2, 2023. As of March 31, 2022, $27.5 million was available to borrow under the revolving credit facility.

On May 6, 2022, the Company entered into an amendment to the Credit Agreement which, among other things, (i) in connection with the phasing out of LIBOR, replaced LIBOR with the Bloomberg Short-Term Bank Yield Index (“BSBY”), and (ii) extended the maturity date of the Credit Agreement from November 2, 2023 to May 6, 2027. See Part II, Item 5 of this Quarterly Report on Form 10-Q for additional information relating to the amendment to the Credit Agreement.

The ~~2018~~ Credit Agreement contains certain covenants, including financial covenants requiring the Company to comply with maximum leverage ratios and minimum interest coverage ratios. The ~~2018~~ Credit Agreement also contains other provisions which may restrict the Company’s ability to, among other things, dispose of or acquire assets or businesses, incur additional indebtedness, make certain investments and capital expenditures, pay dividends, repurchase shares and enter into transactions with affiliates. As of March 31, ~~2021,~~2022 and the date of the amendment, the Company was in compliance with its covenants under the ~~2018~~ Credit ~~Agreement and $25.0 million was available to borrow under the revolving credit facility.~~Agreement.

The obligations of the Company under the ~~2018~~ Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.

On May 21, 2020, the Company and certain of its subsidiaries received PPP Loans totaling approximately $6.9 million in principal amount from Fifth Third Bank, N.A. (the “Lender”) under the PPP established under the CARES Act. Each PPP Loan is evidenced by a promissory note dated May 21, 2020 (each, a “Promissory Note”) issued by the applicable borrower to the Lender. The term of each PPP Loan is two years. The interest rate on each PPP Loan is 1.00%, which was deferred for the first six months of the term of the PPP Loan. The Promissory Note evidencing each PPP Loan is in the Lender’s standard form for loans made by it under the PPP and contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the Promissory Note. The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under the applicable PPP Loan, collection of all other amounts owing from the borrower, and filing suit and obtaining judgment against the borrower. Each PPP Loan may be prepaid in whole or in part at any time without penalty.

The proceeds of the PPP Loans have been used primarily for payroll costs and, to a limited extent, other permitted purposes under the CARES Act, including rent and utility costs. Under the terms of the CARES Act, each borrower can apply for forgiveness for all or a portion of the PPP Loan and, as described below, the Company has agreed to apply, and for each of its subsidiaries that received PPP Loans to apply, for forgiveness. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds in accordance with the terms of the CARES Act, as described above, during the 24-week period after loan origination and the maintenance or achievement of certain employee levels. As described in further detail in Note 14 below, during April 2021, the Company and its applicable subsidiaries applied for forgiveness of the PPP Loans. While the Company believes that the proceeds of the PPP Loans have been used only for qualifying expenses in accordance with the terms of the CARES Act, any forgiveness of a PPP Loan will be subject to approval by the Lender and the U.S. Small Business Administration (“SBA”), which is administering the PPP under the CARES Act, and there can be no assurance that any or all of the PPP Loans will be forgiven in whole or in part.

The Company received the consent (the “Consent”) of Bank of America, N.A., U.S. Bank National Association, and Fifth Third Bank under the Company’s 2018 Credit Agreement in connection with its and its subsidiaries’ receipt of the PPP Loans. The Consent, among other things, contains certain representations, warranties and agreements of the Company, including, without limitation, agreements to use the proceeds of the PPP Loan only for permitted expenses under the CARES Act, to timely apply for forgiveness of the PPP Loans, and to maintain all records required to be submitted inIn connection with the ~~forgiveness~~Company’s acquisition of ~~the PPP Loans. The breach of any such representations, warranties or agreements will constitute a default under the 2018 Credit Agreement, subject to any applicable cure periods or provisions thereof.~~

~~As previously described, in addition to the PPP Loans obtained by the Company and certain of its subsidiaries during May 2020, in connection with the YES Acquisition~~Yankee Equipment Systems, Inc. (“YES”) during November 2020, the Company, indirectly through its wholly-owned subsidiary, ~~also~~ assumed the approximately $916,000 loan previously obtained by YES under the ~~PPP. The terms~~Paycheck Protection Program (“PPP”) established under the Coronavirus Aid, Relief, and ~~conditions of such PPP loan were substantially similar to those of the PPP Loans obtained by the Company and its other subsidiaries, as described above.~~Economic Security Act (the “CARES Act”). Under the merger agreement related to the ~~YES Acquisition,~~acquisition, the Company was entitled to indemnification for any required repayment of the loan to YES under the PPP. During the quarter ended March 31, 2021, the loan to YES under the PPP was forgiven by the ~~SBA.~~U.S. Small Business Administration (“SBA”). The Company determined that the fair value of its right to indemnification was equal to the amount forgiven by the SBA. Accordingly, the Company did not recognize any gain on the extinguishment of this debt.

The Company leases warehouse and distribution facilities, administrative office space and service and other fleet vehicles, generally for terms of three to ten years.

~~Effective July 1, 2019, the~~The Company ~~adopted~~applies ASC Topic 842, Leases (“ASC 842” or “Topic 842”), which, among other things, requires lessees to recognize substantially all leases on their balance sheets and disclose certain additional key information about leasing arrangements. The ~~new~~ standard established a right-of-use model that requires a lessee to recognize a right-of-use asset and liability on the balance sheet for all leases with a term longer than 12 months. Leases are required to be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. The Company adopted this standard effective July 1, 2019 using the modified retrospective transition approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption without restatement of prior periods.

The Company made the election to not apply the recognition requirements in Topic 842 to short-term leases (i.e., leases of 12 months or less). Instead, the Company, as permitted by Topic 842, recognizes the lease payments under its short-term leases in profit or loss on a straight-line basis over the lease term. The Company elected this accounting policy for all classes of underlying assets. In addition, in accordance with Topic 842, 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 right-of-use ~~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 its contractual expiration, 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 it is 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.

As of March 31, ~~2021,~~2022, the Company had 2729 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between ~~2021~~2022 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 provides details of the Company’s future minimum lease payments under operating lease liabilities recorded on the Company’s condensed consolidated balance sheet as of March 31, ~~2021.~~2022. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)		Total Operating Lease Obligations (in thousands)
2021 (remainder of)	$	586
2022		2,258
2022 (remainder of)			$	688
2023		1,864		2,579
2024		986		1,727
2025		700		1,169
2026				803
Thereafter		2,347		1,921
Total minimum lease payments	$	8,741	$	8,887
Less: amounts representing interest		679		645
Present value of minimum lease payments	$	8,062	$	8,242
Less: current portion		2,091		2,458
Long-term portion	$	5,971	$	5,784

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

	Nine months ended March 31,				Three months ended March 31,				Nine months ended March 31,				Three months ended March 31,
	2021		2020		2021		2020		2022		2021		2022		2021
Operating lease cost
Operating lease cost (1)	$	1,475	$	1,412	$	482	$	507		1,781		1,475	$	671	$	482
Short-term lease cost (1)		12		153		0-		39		0-		12		0-		0-
Variable lease cost (1)		287		113		122		64		320		287		44		122
Total lease cost	$	1,774	$	1,678	$	604	$	610		2,101		1,774	$	715	$	604

The table below presents lease-related terms and discount rates as of March 31, ~~2021:~~2022:

		March 31, ~~2021~~2022
Operating leases		~~5.6~~4.9 years
Weighted average discount rate
Operating leases		~~3.0%~~3.1%

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities for the nine months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):

	Nine months ended March 31,				Nine months ended March 31,
	2021		2020		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	$	1,475	$	1,412	$	1,919	$	1,475
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:	$	3,793	$	1,366	$	2,010	$	3,793

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

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

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases				Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2021 (remainder of)	$	792	$	440	$	352
2022		2,753		1,516		1,237
2022 (remainder of)									$	1,004	$	595	$	409
2023		2,133		1,134		999				3,356		1,995		1,361
2024		1,545		777		768				2,577		1,476		1,101
2025		960		454		506				1,825		973		852
2026										1,211		551		660
Thereafter		914		406		508				935		419		516
					$	4,370	*						$	4,899	*
* Excludes residual values of $2.3 million.
* Excludes residual values of $2.5 million.								* Excludes residual values of $2.5 million.

The total net investments in sales type leases, including stated residual values, as of March 31, ~~2021~~2022 and June 30, ~~2020~~2021 was ~~$6.6~~$7.4 million and ~~$3.9~~$6.7 million, respectively. The current portion of ~~$1.2~~$1.8 million and ~~$0.7~~$0.9 million is included in other current assets in the consolidated balance sheets as of March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, respectively, and the long term portion of ~~$5.4~~$5.6 million and ~~$3.2~~$5.8 million is included in other assets in the consolidated balance sheets as of March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, respectively.

Note (9) - Income Taxes: Income taxes are recorded in the Company’s quarterly financial statements based on the Company’s estimated annual effective income tax rate, subject to adjustment for discrete events, should they occur.

As of both March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, the Company had net deferred tax liabilities of approximately $~~3.6~~ ~~million and $1.7~~ ~~million, respectively.~~$4.2 million. Consistent with the guidance of the FASB regarding accounting for income taxes, the Company regularly estimates its ability to recover deferred tax assets and establishes a valuation allowance against deferred tax assets to reduce the balance to amounts expected to be recoverable. This evaluation includes the consideration of several factors, including an estimate of the likelihood of generating sufficient taxable income in future periods over which temporary differences reverse, the expected reversal of deferred tax liabilities, past and projected taxable income, and available tax planning strategies. As of March 31, ~~2021,~~2022, management believed that it was more-likely-than-not that the results of future operations will generate sufficient taxable income to realize the net amount of the Company’s deferred tax assets over the periods during which temporary differences reverse.

The Company follows ASC Topic 740-10-25, “Accounting for Uncertainty in Income Taxes” (“ASC 740”). ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. During the nine and three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company’s accounting for income taxes in accordance with this standard did not result in ~~any~~a material adjustment to the Company’s provision for income taxes.

As of March 31, ~~2021,~~2022, the Company was subject to potential federal and state tax examinations for the tax years ~~2017~~2018 through ~~2020.~~

The CARES Act, among its other provisions, includes tax provisions relating to refundable payroll tax credits, deferral of employer’s social security payments, net operating loss (“NOL”) utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP), and financing options. During the nine months ended March 31, 2021, the Company recognized an income tax benefit of $379,000 from a NOL carryback under the CARES Act. Other than with respect to the NOL carryback, the Company’s income tax provision for fiscal 2020 and the first, second and third quarter of fiscal 2021 was not materially impacted by the provisions of the CARES Act.2021.

In November 2015, the Company’s stockholders approved the Company’s 2015 Equity Incentive Plan (the “Plan”). During December 2020, the Company’s stockholders approved an amendment to the Plan to increase the number of shares of the Company’s common stock authorized for issuance pursuant to awards granted under the Plan to 3,000,000 shares. The fair value of awards granted under the Plan is expensed on a straight-line basis over the vesting period of the awards. Share-based compensation expense is included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

During the nine months ended March 31, 2022, restricted stock awards of a total of 134,612 shares, 135,816 restricted stock units, and 8,287 stock awards were granted under the Plan. Stock awards represent shares of the Company’s common stock issued under the Plan which are held by the recipient upon grant without any future risk of forfeiture. During the three months ended March 31, 2022, restricted stock units of a total of 79,393 shares were granted under the Plan. No restricted stock awards or stock awards were granted under the Plan during the three months ended March 31, 2022. During the nine months ended March 31, 2022, restricted stock awards of a total of 13,203 shares were forfeited and returned to the Plan. There were no restricted stock awards forfeited during the three months ended March 31, 2022. There were 9,457 and 1,130 restricted stock units forfeited during the nine and three months ended March 31, 2022, respectively.

During the nine months ended March 31, 2021, restricted stock awards of a total of 8,624 shares and 204,014 restricted stock units were granted under the Plan. During the three months ended March 31, 2021, 2,400 restricted stock units were granted under the Plan. During the nine months ended March 31, 2021, restricted stock awards of a total of 1,492 shares were forfeited and returned to the Plan. There were no shares forfeited during the three months ended March 31, 2021. ~~During~~

For the nine ~~months ended March 31, 2020, restricted stock awards of a total of 187,169 shares, 28,110 restricted stock units,~~ and ~~13,550 stock awards were granted under the Plan. During~~ three months ended March 31, 2020, restricted stock awards of a total of 180,669 shares, 16,000 restricted stock units, and 13,550 stock awards were granted under the Plan. Stock awards represent shares of the Company’s common stock issued under the Plan which are held by the recipient upon grant without any future risk of forfeiture. There were no shares forfeited during the nine or three months ended March 31, 2020.

~~For the nine months ended March 31, 2021 and 2020,~~2022, non-cash share-based compensation expense related to awards granted under the Plan (which, in each case, included restricted stock units and, for the nine-month period, also included restricted stock awards and stock awards, as described above) totaled $~~1.8~~$1.9 million and $~~1.7~~ ~~million,~~$627,000, respectively. For the nine and three months ended March 31, 2021, ~~and 2020,~~ non-cash share-based compensation expense related to awards granted under the Plan (which, in each case, included restricted stock units and, for the nine-month period, also included restricted stock awards, as described above) totaled ~~$640,000~~$1.8 million and ~~$809,000,~~$640,000, respectively.

As of March 31, ~~2021,~~2022, the Company had ~~$15.3~~$18.5 million and ~~$7.4~~$9.5 million of total unrecognized compensation expense related to restricted stock awards and restricted stock units, respectively, granted under the Plan, which is expected to be recognized over the weighted-average period of ~~17.3~~17.1 years and ~~11.4~~10.8 years, respectively.

The following is a summary of non-vested restricted stock activity as of and for the nine months ended March 31, ~~2021:~~2022:

	Restricted Stock Awards				Restricted Stock Units				Restricted Stock Awards				Restricted Stock Units
	Shares		Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value
Non-vested awards or units outstanding at June 30, 2020		987,220	$	19.40		55,610	$	30.31
Non-vested awards or units outstanding at June 30, 2021										919,259	$	19.59		253,913	$	30.92
Granted		8,624		30.61		204,014		31.03		134,612		35.32		135,816		24.54
Vested		(49,170)		17.20		(2,531)		26.40		(14,485)		25.11		(6,350)		0-
Forfeited		(1,492)		33.53		0-		0-		(13,203)		14.20		(9,457)		33.68
Non-vested awards or units outstanding at March 31, 2021		945,182	$	19.59		257,093	$	30.92
Non-vested awards or units outstanding at March 31, 2022										1,026,183	$	21.65		373,922	$	28.56

During 2017, the Company’s stockholders approved the Company’s 2017 Employee Stock Purchase Plan, which, subject to the terms of the plan, allows eligible employees the opportunity to purchase shares of the Company’s common stock at a 5% discount. The Company’s employee stock purchase plan provides for six-month offering periods ending on December 31 and June 30 of each year. During the nine months ended March 31, 2022, 2,008 shares of common stock were issued under the Company’s employee stock purchase plan for which the Company received net proceeds of $59,000. During the nine months ended March 31, 2021, 693 shares of common stock were issued under the Company’s employee stock purchase plan for which the Company received net proceeds of $21,000. ~~During the nine months ended March 31, 2020, 1,022 shares of common stock were issued under the Company’s employee stock purchase plan for which the Company received net proceeds of $26,000.~~ No shares were issued under the Company’s employee stock purchase plan during the three months ended March 31, ~~2021or 2020.~~2022 or 2021.

Note (11) – Transactions with Related Parties: Certain of the Company’s subsidiaries lease warehouse and office space from one or more of the principals or former principals of those subsidiaries. These leases include the following:

The Company’s wholly-owned subsidiary, Steiner-Atlantic Corp. (“Steiner-Atlantic”), leased 28,000 square feet of warehouse and office space from an affiliate of Michael S. Steiner, former President of Steiner-Atlantic and a former director and officer of the Company, pursuant to a lease agreement dated November 1, 2014, as amended. The lease term was extended during January 2020 to run through October 31, 2020. Monthly base rental payments under the lease were $12,000; provided, however, that the monthly base rent for September and October 2020 was $1. In addition to base rent, Steiner-Atlantic was responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease expired in accordance with its terms on October 31, 2020, and was not renewed. Payments under this lease totaled approximately $25,000 and $111,000 during the nine months ended March 31, 2021 and 2020, respectively, and $37,000 during the three months ended March 31, 2020.

During October 2016, the Company’s wholly-owned subsidiary, Western State Design, Inc. (“Western State Design”), entered into a lease agreement pursuant to which it leases 17,600 square feet of warehouse and office space from an affiliate of Dennis Mack, a director and Executive Vice President, Corporate Strategy of the Company, and Tom Marks, Executive Vice President, Business Development and President of the West Region of the Company. The lease had an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Monthly base rental payments ~~are~~were $12,000 during the initial term of the lease. The Company exercised its option to renew the lease for the first three-year renewal term, which commenced in October 2021. Base rent for the first renewal term is $19,000 per month. In addition to base rent, Western State Design is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. ~~The lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company.~~ Payments under this lease totaled approximately $150,000 and $108,000 during ~~each of~~ the nine months ended March 31, 2022 and 2021, respectively, and ~~2020~~$57,000 and $36,000 during ~~each of~~ the three months ended March 31, 2022 and 2021, ~~and 2020.~~respectively.

During October 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, LLC (“Tri-State”), entered into lease agreements pursuant to which it leases a total of 81,000 square feet of warehouse and office space from an affiliate of Matt Stephenson, President of Tri-State. Monthly base rental payments total $21,000 during the initial terms of the leases. In addition to base rent, Tri-State is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $189,000 during each of the nine months ended March 31, ~~2021~~2022 and ~~2020~~2021 and $63,000 during each of the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

During February 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, LLC (“AAdvantage”), entered into a lease agreement pursuant to which it leases a total of 5,000 square feet of warehouse and office space from an affiliate of Mike Zuffinetti, former Chief Executive Officer of AAdvantage. Monthly base rental payments are $4,000 during the initial term of ~~the~~this lease. In addition to base rent, AAdvantage is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. In addition, during November 2018, AAdvantage entered into aan additional lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments under this lease were $26,000 initially. Pursuant to the lease agreement, on January 1, 2019, the lease expanded to cover additional warehouse space and, in connection therewith, monthly base rental payments under this lease increased to $36,000. In addition to base rent, AAdvantage is responsible under ~~the lease~~each of these leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. ~~The~~Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under the leases described in this paragraph totaled approximately $360,000 during each of the nine months ended March 31, ~~2021~~2022 and ~~2020~~2021 and $120,000 during each of the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

During September 2018, the Company’s wholly-owned subsidiary, Scott Equipment, LLC (“Scott Equipment”), entered into lease agreements pursuant to which it leases a total of 18,000 square feet of warehouse and office space from an affiliate of Scott Martin, former President of Scott Equipment. Monthly base rental payments total $11,000 during the initial terms of the leases. In addition to base rent, Scott Equipment is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of five years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $103,000 during each of the nine months ended March 31, ~~2021~~2022 and ~~2020~~2021 and $35,000 during each of the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

During February 2019, the Company’s wholly-owned subsidiary, PAC Industries, LLC (“PAC Industries”), entered into two lease agreements pursuant to which it leases a total of 29,500 square feet of warehouse and office space from an affiliate of Frank Costabile, former President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $15,000 during the initial terms of the leases. In addition to base rent, PAC Industries is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of four years and provides for two successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately ~~$135,000~~$137,000 and ~~$132,000~~$135,000 during the nine months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$45,000~~$46,000 and ~~$44,000~~$45,000 during the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively.

During November 2020, the Company’s wholly-owned subsidiary, Yankee Equipment Systems, LLC (“Yankee Equipment Systems”), entered into a lease agreement pursuant to which it leases a total of 12,500 square feet of warehouse and office space from an affiliate of Peter Limoncelli, President of Yankee Equipment Systems. Monthly base rental payments ~~total~~are $11,000 during the initial term of the lease. In addition to base rent, Yankee Equipment Systems is responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. The lease has an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. Payments under this lease totaled approximately $106,000 and $57,000 during the nine months ended March 31, 2022 and 2021, respectively, and $36,000 and $35,000 during the three months ended March 31, 2022 and 2021, respectively.

During February 2022, the Company’s wholly-owned subsidiary, Consolidated Laundry Equipment, LLC (“Consolidated Laundry Equipment”), entered into two lease agreements pursuant to which it leases a total of 20,300 square feet of warehouse and office space from an affiliate of William Kincaid, President of Consolidated Laundry Equipment. Monthly base rental payments total $20,000 during the initial terms of the leases. In addition to base rent, Consolidated Laundry Equipment is responsible under the leases for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Each lease has an initial term of three years and provides for three successive three-year renewal terms at the option of the Company. Payments under these leases totaled approximately $20,000 during the nine and three months ended March 31, ~~2021, respectively.~~2022.

Note (12) – Commitments and Contingencies: In the ordinary course of business, certain of the Company’s contracts require the Company to provide performance and payment bonds related to projects in process. These bonds are intended to provide a guarantee to the customer that the Company will perform under the terms of the contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under the contract or pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company is required to reimburse the surety for expenses or outlays it incurs. At March 31, ~~2021~~2022 and June 30, ~~2020,~~2021, no such performance or payment bonds were outstanding.

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

Note (13) – Goodwill: The changes in the carrying amount of goodwill are as follows (in thousands):

Balance at June 30, 2020	$	56,678
Balance at June 30, 2021				$	63,881
Goodwill from acquisition (1)		7,121			1,956
Working capital adjustments (2)		(27	)		24
Balance at March 31, 2021	$	63,772
Balance at March 31, 2022				$	65,861

InOn April ~~2021,~~25, 2022, the Company ~~and its applicable subsidiaries applied~~entered into a definitive purchase agreement to ~~the SBA for forgiveness of~~acquire substantially all of the ~~PPP Loans previously obtained~~assets of Clean Designs, Inc. and Clean Route, LLC (collectively “Clean Designs”). Clean Designs is a Colorado-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. In connection with the acquisition, the Company will also assume certain liabilities of Clean Designs. The anticipated consideration to be paid by ~~them, as previously described, including~~the Company in connection with the acquisition is not expected to be material to the Company on a consolidated basis. Closing of the acquisition is subject to certain conditions precedent. There is no assurance that the acquisition will be consummated on the contemplated terms, when expected, or at all.

On April 29, 2022, the Company, indirectly through a wholly-owned subsidiary, acquired substantially all of the assets of LS Acquisition, LLC (d/b/a Laundry South Systems and Repair) (“Laundry South Systems and Repair”), a Mississippi-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. In connection with the transaction, the Company, indirectly through its wholly-owned subsidiary, also assumed certain of the liabilities of Laundry South Systems and Repair. The consideration paid by the Company in connection with the transaction was not material to the Company on a consolidated basis. The financial condition and results of operations of Laundry South Systems and Repair subsequent to the April 29, 2022 closing date of the transaction will be included within the Company’s consolidated financial statements commencing with the quarter ending June 30, 2022.

On May 5, 2022, the Company, indirectly through a wholly-owned subsidiary, acquired substantially all of the assets of Spynr, Inc. (“Spynr”), a Delaware-based digital marketing and technology company which provides digital marketing services to customers and vendors within the commercial, industrial and vended laundry industries. In connection with the transaction, the Company, indirectly through its wholly-owned subsidiary, also assumed certain of the liabilities of Spynr. The consideration paid by the Company in connection with the transaction was not material to the Company on a consolidated basis. The financial condition and results of operations of Spynr subsequent to the May 5, 2022 closing date of the transaction will be included within the Company’s consolidated financial statements commencing with the quarter ending June 30, 2022.

See also Note 7, ~~“Debt.” While the Company believes that the use~~“Debt” and Part II, Item 5 of this Quarterly Report on Form 10-Q for a description of the ~~loan proceeds will meet~~amendment to the ~~conditions for forgiveness of the loan, forgiveness of each PPP Loan will be in the discretion of the Lender and the SBA. The Company cannot assure~~Company’s Credit Agreement that ~~the PPP Loans will be forgiven, in whole or in part. To the extent any PPP Loan is not forgiven in full, the portion of the PPP Loan which is not forgiven will be required to be fully repaid~~was entered into on ~~or before maturity in~~ May 6, 2022.

Item 2.Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

Certain statements in this Quarterly Report on Form 10-Q are “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report on Form 10-Q, words such as “may,” “should,” “seek,” “believe,” “expect,” “anticipate,” “estimate,” “project,” “intend,” “strategy” and similar expressions are intended to identify forward looking statements. Forward looking statements may relate to, among other things, events, conditions and trends that may affect the future plans, operations, business, strategies, operating results, financial position and prospects of the Company. Forward looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward looking statements. These risks and uncertainties include, among others, those associated with: general economic and business conditions in the United States and other countries where the Company operates or where the Company’s customers and suppliers are located; industry conditions and trends; risks relating to the COVID-19 pandemic and the ~~rapidly changing effects~~impact thereof ~~and developments with respect thereto, including the impact of the COVID-19 pandemic~~ on the Company and its business, financial condition, liquidity and results ~~which in large part will depend~~and on ~~future developments and are highly uncertain and beyond~~ the Company’s ~~control, the length~~suppliers and ~~severity of the COVID-19 pandemic and the pace of recovery following the COVID-19 pandemic, the success of actions taken or which may be taken by the Company in response to the COVID-19 pandemic,~~customers, volatility in the economy, including in the credit markets, supply chain disruptions and resulting inflationary trends, labor shortages, reduced demand for products and services, delays in the fulfillment of orders, business restrictions, worker absenteeism, quarantines and other health-related restrictions, governmental and agency orders, mandates and guidance in response to the COVID-19 pandemic, the impact of the COVID-19 pandemic on the Company’s suppliers and customers, including those operating in certain industries (including the hospitality industry), the impact of the provisions of the CARES Act on the Company’s income taxes, the potential impairment of goodwill or other intangible assets, and risks related to potential audits of the ~~PPP Loans obtained~~loans received by the Company and certain of its subsidiaries ~~including that there is no assurance that any or all~~under the Payroll Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)notwithstanding the previous forgiveness of the ~~PPP Loans will be forgiven~~loans; risks associated with vaccine mandates, including the potential loss of employees, fines for noncompliance and ~~that, while the Company believes that the certifications made by it in connection~~loss of, or future inability to secure, certain contracts, including with the ~~loan applications are accurate,~~federal government; risks associated with international relations and international hostilities, including actions of foreign governments and the ~~applications will be reviewed~~impact thereof on economic conditions, including supply chain constraints and ~~may subject the Company to potential liability if determined to be inaccurate;~~inflationary trends; the Company’s ability to implement its business and growth strategies and plans, including changes thereto; risks and uncertainties associated with the Company’s ”buy-and-build” growth strategy, including, without limitation, that the Company may not be successful in identifying or consummating acquisitions or other strategic opportunities, acquisitions which have been agreed to but not completed may not be consummated on the contemplated terms, when expected, or at all, integration risks, risks related to indebtedness incurred by the Company in connection with the financing of acquisitions, dilution experienced by the Company’s existing stockholders as a result of the issuance of shares of the Company’s common stock in connection with acquisitions, risks related to the business, operations and prospects of acquired businesses, risks that suppliers of the acquired business may not consent to the transaction or otherwise continue its relationship with the acquired business following the transaction and the impact that the loss of any such supplier may have on the results of the Company and the acquired business, risks that the Company’s goals or expectations with respect to acquisitions and other strategic transactions may not be met, ~~and~~ risks related to the accounting for ~~acquisitions, including that preliminary valuations are subject~~acquisitions; risks related to ~~change~~supply chain delays and ~~any such change~~disruptions and the impact they may ~~impact~~have on the Company’s ~~results (including~~business, including the Company’s ability to deliver products and services to its customers on a timely basis; risks relating to inflation, including the current inflationary trend in light of supply chain constraints, and the ~~event~~impact of ~~any change which results in an adjustment~~inflation on the Company’s costs and its ability to increase the ~~bargain purchase gain recognized by~~price of its products and services to offset such costs, and on the market for the Company’s products and services; risks related to labor shortages and the impact thereof on the Company, ~~in connection with~~including its acquisition of ELS during January 2021); the risk that market share growth tactics and investments and expenses in pursuit of growth, including those incurred in connection with the Company’s “buy-and-build” growth strategy,ability to deliver or service products or otherwise ~~may not result in the benefits anticipated;~~meet customers’ expectations; risks relating to the impact of pricing concessions and other measures which the Company may take from time to time in connection with its expansion and pursuit of market share growth, including that they may not be successful and may adversely impact the Company’s gross margin and other financial results; technology changes; competition, including the Company’s ability to compete effectively and the impact that competition may have on the Company and its results, including the prices which the Company may charge for its products and services and on the Company’s profit margins, and competition for qualified employees; to the extent applicable, risks relating to the Company’s ability to enter into and compete effectively in new industries, as well as risks and trends related to those ~~industries and the costs and timing of the Company’s efforts with respect thereto;~~industries; risks relating to the Company’s relationships with its principal suppliers and customers, including the impact of the loss of any such relationship; risks that equipment sales may not result in the ancillary benefits anticipated, including that they may not lead to increases in customers (or a stronger relationship with customers) or higher gross margin ~~sale~~sales of parts, accessories, supplies, and technical services related to the equipment, and the risk that the benefit of lower gross margin equipment sales under longer-term contracts will not outweigh the possible short-term impact to gross margin; the risk that the Company’s service operations may not expand to the extent anticipated, or at all; risks related to the Company’s indebtedness; the availability, terms and deployment of debt and equity capital if needed for expansion or otherwise; changes in, or the failure to comply with, government regulation, including environmental regulations; litigation risks, including the costs of defending litigation and the impact of any adverse ruling; the availability and cost of inventory purchased by the Company; the relative value of the United States dollar to currencies in the countries in which the Company’s customers, suppliers and competitors are located; risks relating to the recognition of revenue, including the amount and timing ~~of revenue expected to be recognized~~thereof (including potential delays resulting from delays in ~~future periods~~installation or in receiving required supplies) and that orders in the Company’s backlog may not be fulfilled as or when expected; risks related to the adoption of new accounting standards and the impact it may have on the Company’s financial statements and results; risks that the Company’s decentralized operating model, and that product, end-user and geographic diversity, may not result in the benefits anticipated and may change over time; risks related to organic growth initiatives and market share and other growth strategies, including that they may not result in the benefits anticipated; risks that investments, initiatives and expenses, including, without limitation, investments in acquired businesses and modernization initiatives, expenses associated with the Company’s implementation of its ERP system, and other investments, initiatives and expenses, may not result in the benefits anticipated; and other economic, competitive, governmental, technological and other risks and factors discussed in the Company’s filings with the SEC, including, without limitation, those described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021. Many of these risks and factors are beyond the Company’s control. Further, past performance and perceived trends may not be indicative of future results. The Company cautions that the foregoing factors are not exclusive. The reader should not place undue reliance on any forward looking statement, which speaks only as of the date made. The Company does not undertake to, and specifically disclaims any obligation to, update or supplement any forward looking statement, whether as a result of changes in circumstances, new information, subsequent events or otherwise, except as may be required by law.

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

The Company’s operating expenses consist primarily of (a) selling, general and administrative expenses, ~~at the Company’s operating subsidiaries,~~which are comprised primarily of salaries, and commissions and marketing expenses that are variable and correlate to changes in sales, (b) expenses related to the operation of warehouse facilities, including a fleet of installation and service vehicles, and facility rent, which isare payable mostly under non-cancelable operating leases, ~~and the Company’s fleet of installation and service vehicles,~~ and (c) operating expenses at the parent company, including compensation expenses, fees for professional services, other expenses associated with being a public company, ~~including increased expenses attributable to the Company’s growth,~~ and expenses in furtherance of the Company’s “buy-and-build” growth strategy.

During 2015, the Company implemented a “buy-and-build” growth strategy. The “buy” component of the strategy includes the consideration and pursuit of acquisitions and other strategic transactions which management believes would complement the Company’s existing business or otherwise offer growth opportunities for, or benefit, the Company. The Company generally seeks to structure acquisitions to include both cash and stock consideration.

Since the implementation of its “buy-and-build” growth strategy in 2015, the Company has consummated 16 business acquisitions, which includes the Company’s acquisitions of Yankee Equipment Systems, Inc. (“YES”) during November 2020 and Baystate Business Ventures d/b/a Eastern Laundry Systems (“ELS”) during January 2021, as described in Note 4 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q. The Company has Acquisitions are effected ~~each business acquisition~~ through a wholly-owned subsidiary which acquires the business or assets ~~thereof,~~of the acquired company, whether by an asset purchase or merger, and operates the acquired business following the transaction. In connection with each transaction, the Company, indirectly through its applicable wholly-owned subsidiary, also assumed certain of the liabilities of the acquired business. The financial position, including assets and liabilities, and results of operations of the acquired businesses following the respective closing dates of the acquisitions are included in the Company’s consolidated financial statements. As described in greater detail in Note 4 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q, on February 7, 2022, the Company acquired Consolidated Laundry Equipment, Inc. and Central Equipment Company, LLC (collectively “CLK”), a 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 financial condition and results of operations of Consolidated Laundry Equipment subsequent to the February 7, 2022 closing date of the acquisition are included within the Company’s consolidated financial statements for the quarter ending March 31, 2022. See also Note 14 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for information regarding acquisitions consummated and a definitive purchase agreement entered into subsequent to March 31, 2022.

The “build” component of the Company’s “buy-and-build” growth strategy involves implementing a growth culture at acquired businesses based on the exchange of ideas and business concepts among the management teams of the Company and the acquired businesses as well as through certain initiatives, which may include investments in additional sales and service personnel, new product lines, enhanced service operations and capabilities, new and improved facilities, and advanced technologies.

The Company pursues market share growth using a variety of strategies aimed at increasing the installed base of the wide range of commercial laundry equipment the Company represents. Certain market share growth tactics may, from time to time, result in lower gross margins. However, the Company believes that a greater installed base of equipment strengthens the Company’s existing customer relationships and may lead to increases in the total number of customers, consequently creating a larger and stronger customer base to which the Company may sell products and services. These may include certain higher margin products and services and any additional products and services which the Company may offer or sell from time to time as a result of any business acquisitions, the sale or lease of complementary products, and expansion of its service operations. From time to time, the Company also enters into longer-term contracts, including to fulfill large complex laundry projects for divisions of the federal government, where the nature of, and competition for, such contracts may result in a lower gross margin as compared to other equipment sales. Despite the potential for a lower gross margin from such longer-term contracts, the Company believes that the long-term benefit from the increase in its installed equipment will outweigh the possible short-term impact to gross margin.

Further, as a value-added distributor and a provider of technical services in the commercial laundry industry, the Company partners with its customers to plan, design, install, and maintain their commercial laundry operations. The nature of the Company’s business not only requires an experienced and well-trained sales organization to procure customer orders, but also requires proper, timely, and cost-effective installation ranging from single units of equipment to complex multimillion dollar laundry systems. Such installations also require coordination and collaboration with the Company’s customers and any third parties they may retain. Consequently, the recognition of revenue and profit may from time to time be impacted by delays in construction and/or the preparation of customer facilities for the installation of purchased commercial laundry equipment and systems. This may result in decreased revenue and profit in a current period but a source of future revenue and profit through the ultimate fulfillment of the orders.

The COVID-19 pandemic ~~has been, and continues to be, an unprecedented disruption in the economy and~~ has negatively impacted, and may continue to negatively impact, the Company’s business and results. Specifically, beginning at the end of the quarter ended March 31, 2020, the COVID-19 pandemic and accompanying economic disruption caused delays and declines in the placement of customer orders, the completion of equipment and parts installations, and the fulfillment of parts orders. The adverse impact of the COVID-19 pandemic is expected to continue in the near-term and possibly longer, including, without limitation, if the pandemic increases in size and scope, its duration is prolonged, or, among other matters related thereto, additional governmental actions, including, without limitation, business restrictions, are imposed. In response to the economic and business disruption during 2020, the Company ~~has taken~~took actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating payment terms with suppliers, and reducing hiring activities. ~~The Company continues to actively monitor~~During the fiscal year ended June 30, 2021, the COVID-19 pandemic had a resurgence with the increased presence and ~~may take further actions, including those that may alter business operations, if required by federal, state or local authorities or otherwise determined to be advisable by management.~~

~~As a precautionary measure in order to increase its cash position and preserve financial flexibility in light~~spread of the ~~uncertainties resulting from~~Delta variant. In addition, the ~~COVID-19 pandemic, during May 2020,~~Omicron variant emerged as a variant of concern towards the ~~Company and certain~~end of its subsidiaries received loans (the “PPP Loans”) under the Paycheck Protection Program (the “PPP”) established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) in the aggregate principal amount of approximately $6.9 million. During April 2021, the Company and its applicable subsidiaries applied for forgiveness of the PPP Loans. There is no assurance that the PPP Loans will be forgiven in whole or at all. Additionally, in connection with its acquisition of YES during November 2020, the Company, indirectly through its wholly-owned subsidiary, assumed the approximately $916,000 loan previously received by YES under the PPP. During the quarter ended ~~March~~December 31, 2021 ~~the loan to YES under the PPP was forgiven by the U.S. Small Business Administration (the “SBA”). The Company did not recognize any gain on extinguishment of this debt, as the seller of YES~~and had agreed to indemnify the Company with respect to any portion of this loan which was not forgiven. See “Liquidity and Capital Resources” below for additional information regarding these loans as well as information regarding the Company’s credit facility.

Refer to Note 23 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a ~~discussion~~description of ~~recently adopted significant accounting policies.~~Recently Issued Accounting Guidance.

Nine and Three-Month Periods Ended March 31, ~~2021~~2022 Compared to the Nine and Three-Month Periods Ended March 31, ~~2020~~2021

Revenues for the nine and three-month periods ended March 31, ~~2021 decreased $3.9~~2022 increased $7.0 million, or 2%4%, and ~~increased $3.4~~decreased $2.4 million, or 6%4%, respectively, compared to the same periods of the prior fiscal year. The ~~decrease~~increase in revenue for the nine-month period ~~was~~is due to improved conditions in connection with the ~~continuance of local, state, and/or federal orders related to~~recovery from the COVID-19 pandemic ~~certain~~during the nine-month period ended March 31, 2022 and the completion during such period of ~~which adversely impacted~~projects previously delayed by the ~~normal course of business of~~COVID-19 pandemic. Additionally, the ~~Company, including limiting the ability of~~increase in revenue was partially attributable to price increases established throughout the Company’s ~~employees~~product lines and service offerings aimed at maintaining or increasing margins to ~~timely complete sales, installations,~~cover incremental product and services. Additionally, there were delays in the Company’s receipt of products purchased from certain of its vendors as a result of third-party carriers experiencing limitations related to the COVID-19. Accordingly, these circumstances limited in certain instances the Company’s ability to deliver products and complete installations consistent with pre-COVID-19 schedules.operating costs. The ~~increase~~decrease in revenue for the three-month period ~~was~~is due primarily to supply chain constraints, which impacted both the Company’s timing of receipt and delivery of products to the Company’s customers, as well as other delays, including due to construction or other delays which inhibited a ~~reduced adverse impact of the COVID-19 pandemic and the completion of projects initially delayed by the COVID-19 pandemic.~~customer’s ability to receive products. In addition, ~~while revenue at certain of the Company’s operating subsidiaries decreased,~~ the Company’s revenues for the ~~three~~nine and ~~nine months~~three-month periods ended March 31, ~~2021~~2022 benefited from the results of businesses acquired during ~~or following~~ the ~~nine-month~~nine month period ended March 31, ~~2020,~~2021, including primarily ~~Laundry Systems of Tennessee, Commercial Laundry Equipment and~~ Yankee Equipment ~~Systems.~~Systems, LLC (“Yankee Equipment Systems”) which was acquired during November 2020, and from the results of CLK, which was acquired during February 2022.

Gross profit for the nine and three-month periods ended March 31, ~~2021~~2022 increased ~~$1.7~~$8.0 million, or 4%18%, and ~~$1.9~~$1.3 million, or ~~14%~~8%, ~~respectively,~~ compared to the same periods of the prior fiscal ~~year,~~year. The increase in the nine-month period was primarily ~~as a~~the result of increased revenues and more favorable product and customer mix. The increase in gross profit for the three-month period was primarily the result of a more favorable product and customer mix ~~which~~as well as reduced discounting and promotional pricing due to increased demand and supply constraints. This resulted in ~~an increase~~increases in gross ~~margin~~margins from ~~23.0% to~~ 24.5% and ~~from 23.4% to~~ 25.2% ~~for the nine and three-month periods, respectively.~~

As previously described, longer-term contracts with divisions of the federal government, including those to fulfill large complex laundry projects, generally have a lower gross margin compared to other equipment sales and, as a result, may adversely impact the Company’s gross margin. The Company believes that these longer-term contracts will result in higher gross margin opportunities over the long-term. In the absence of such longer-term federal government contracts, gross margins for the nine and three-month periods ended March 31, 2021, ~~as compared~~respectively, to 27.9% and 28.4% for the ~~same~~nine and three-month periods ~~of the prior fiscal year increased 2.0% to 25.9% and 1.8% to 25.5%,~~ended March 31, 2022, respectively.

Operating expenses increased ~~$2.0~~by approximately $6.4 million, or 5%15%, and ~~$1.5~~$1.8 million, or ~~11%~~12%, for the nine and three-month periods ended March 31, ~~2021,~~2022, respectively, compared to the same periods of the prior fiscal year. ~~The~~These increases ~~in operating expenses resulted~~are primarily ~~from~~attributable to (a) operating expenses of acquired businesses, ~~partially offset by a decrease~~including additional operating expenses at the acquired businesses in ~~sales commissions as well other cost saving initiatives, including those described above~~pursuit of future growth and in connection with the Company’s ~~response~~optimization initiatives, (b) increases in selling costs, including commissions, from increases in revenues during the nine-month period, (c) increases in operating expenses and investments at the parent company level in connection with the Company’s optimization initiatives, including expenses related to the ~~COVID-19 pandemic.~~

~~As a result~~consolidation of the ~~foregoing,~~Company’s operations and the modernization of the Company’s operations through the implementation of advanced technologies, including a new ERP software system, a new customer relations management system, and a completely digital sales and service operating platform, and (d) increased operating expenses ~~as a percentage~~in support of ~~revenues for~~ the ~~nine and three-month periods ended March 31, 2021 were 23.3% and 24.1%, respectively, compared to 21.7% and 22.8% for the nine and three-month periods ended March 31, 2020, respectively.~~Company’s “buy-and-build” growth strategy.

~~Interest~~Net interest and other expense ~~net~~ for the ~~nine-month~~nine month period ended March 31, ~~2021~~2022 was ~~$122,000~~$390,000 compared to $122,000 for the same period of the prior fiscal year. Net interest and other expense ~~net of $1.2 million~~ for the ~~nine-month~~three month period ended March 31, ~~2020. Interest~~2022 was $125,000 compared to net interest and other income ~~net~~of $197,000 for the ~~three-month~~same period ~~ended March 31, 2021 was $197,000, compared to~~of the prior fiscal year. The increase in net interest and other expense ~~net of $343,000~~ for the nine and three-month ~~period ended March 31, 2020. The increases in interest and other income, net were~~periods was attributable primarily to the $361,000 bargain purchase gain recognized in connection with an acquisition completed by the ~~Company’s acquisition of ELS~~Company during ~~January 2021 and~~ the prior fiscal year, partially offset by a decrease in net interest expense primarily due to a decrease in average outstanding borrowings and a decrease in the average effective interest rate.

The Company’s effective tax rate was ~~20.4%~~24.8% and ~~32.5%~~36.5% for the nine and three-month periods ended March 31, ~~2021,~~2022, respectively, compared to ~~32.9%~~20.4% and ~~250.0%~~32.5% for the same periods of the prior fiscal ~~year, respectively.~~year. The ~~decrease~~increase in the effective tax rate for the nine ~~and three-month periods~~month period ended March 31, ~~2021~~2022 is mostly attributable ~~primarily~~ to the recognition in during the nine-month period ended March 31, 2021 of an income tax benefit of $379,000 ~~during the nine and three months ended March 31, 2021~~ relating to an NOL carryback under the CARES Act, ~~as well as to~~partially offset by a decrease in the net impact of permanent book-tax differences resulting primarily from nondeductible compensation. The increase in the ~~bargain purchase gain recognized~~effective tax rate for the three month period ended March 31, 2022 is attributable to an increase in ~~connection with~~ the ~~Company’s acquisition~~net impact of ~~ELS and~~permanent book-tax differences resulting primarily from nondeductible compensation.

Net income for the nine and three months ended March 31, ~~2021~~2022 was ~~$1.6~~$2.6 million and ~~$625,000,~~$40,000, respectively, compared to net income of ~~$831,000~~$1.6 million and ~~net loss of $12,000~~$625,000 for the same periods of the prior fiscal year, respectively. The ~~increase~~change in net income for the ~~nine-month period~~nine and three-month periods ended March 31, ~~2021~~2022 was attributable primarily to the ~~$361,000 bargain purchase gain recognized~~changes in ~~connection with the Company’s acquisition of ELS during January 2021~~revenue and ~~the above-described income tax benefit realized under the CARES Act as described above and decreases in interest expense,~~increases gross profit, partially offset by a decline in revenues and increases in operating expenses, as described above. The adverse impact of the COVID-19 pandemic on net income as a result of the decline in revenues was partially offset by certain of the Company’s cost saving initiatives, as described above. Thean increase in net income for the three-month period ended March 31, 2021 was attributable primarily to the bargain purchase gain recognized in connection with the Company’s acquisition of ELS, the increase in revenues, the decrease in interest expenseselling, general and ~~the success of certain of the Company’s cost saving initiatives,~~administrative expenses, all as described in further detail above.

The Company’s total assets increased from ~~$160.7~~$177.9 million at June 30, ~~2020~~2021 to ~~$184.1~~$205.2 million at March 31, ~~2021.~~2022. The increase in total assets was primarily attributable to ~~the~~an increase in current assets, ~~the Company acquired~~as described below under “Liquidity and Capital Resources - Working Capital.” The Company’s total liabilities increased from $71.1 million at June 30, 2021 to $90.2 million at March 31, 2022, which was primarily attributable to an increase in ~~connection with its acquisition of YES in November 2020 as well as increases in contract assets, operating lease assets~~customer deposits and ~~other assets,~~long-term debt, partially offset by a decrease in ~~cash~~contract liabilities and ~~accounts receivable.~~accrued employee expenses. The increase in ~~contract assets is due~~long-term debt was attributable to borrowings under the Company’s existing credit facility in ~~large part to~~excess of optional repayments. The changes in current liabilities, including the increase in large complex laundry projects for divisions of the federal government. The Company’s total liabilities increased from $72.9 million at June 30, 2020 to $84.6 million at March 31, 2021, which was primarily attributable to the liabilities assumed by the Company in connection with its acquisition of YES in November 2020 and increases in accounts payable and accrued expenses, customer deposits ~~operating lease liabilities, deferred income taxes~~ and decrease in contract liabilities, ~~partially offset by a decrease in total debt.~~are described under “Liquidity and Capital Resources - Working Capital” below.

For the nine-month period ended March 31, ~~2021,~~2022, cash decreased by approximately ~~$6.9 million~~$453,000 compared to a decrease of approximately ~~$1.1~~$6.9 million during the nine-month period ended March 31, ~~2020.~~2021.

Working capital ~~decreased~~increased from ~~$22.2~~$15.8 million at June 30, ~~2020~~2021 to ~~$16.4~~$32.5 million at March 31, ~~2021,~~2022, primarily reflecting ~~lower levels of cash on hand, which was used to pay off long-term debt,~~increases in inventory, accounts receivable and ~~higher levels of accounts payable~~other current assets, and ~~accrued expenses, customer deposits and~~decreases in contract liabilities, partially offset by ~~higher levels of contract assets and other current assets and inventory. The~~ increases in ~~contract assets~~customer deposits. The increase in inventory was primarily due to an increase in inventory stock levels and adjustments to timing of inventory procurement in light of extended inventory lead times due to supply chain constraints. The decrease in contract liabilities ~~were~~was due in large part to the ~~increase in~~completion of certain large complex laundry projects for divisions of the federal ~~government, as described above.~~government. The increase in customer deposits was ~~attributable~~due primarily to ~~the application~~increased orders and delays in fulfilling certain orders in light of ~~more stringent standards regarding the extension of credit on new sales amid the circumstances caused by the COVID-19 pandemic. The increase in~~extended inventory ~~was attributable~~lead times and supply chain constraints, as well as other delays, including construction or other delays which inhibited a customer’s ability to ~~the assets acquired by the Company in connection with its acquisition of YES in November 2020.~~receive products, as described above.

The following table summarizes the Company’s cash flow activity for the nine months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):

	Nine Months Ended March 31,						Nine Months Ended March 31,
	2021			2020			2022			2021
Net cash provided (used) by:
Operating activities	$	5,490		$	14,327		$	(6,054	)	$	5,490
Investing activities	$	(6,752	)	$	(4,119	)	$	(6,253	)	$	(6,752	)
Financing activities	$	(5,608	)	$	(11,329	)	$	11,854		$	(5,608	)

The individual items contributing to cash flow changes for the periods presented are detailed in the unaudited condensed consolidated statements of cash flows included in Item 1 of this Quarterly Report on Form 10-Q.

For the nine months ended March 31, ~~2021,~~2022, operating activities ~~provided~~used cash of ~~$5.5~~$6.1 million compared to ~~$14.3~~$5.5 million of cash provided by operating activities during the nine months ended March 31, ~~2020.~~2021. This ~~$8.8~~$11.5 million ~~decrease~~increase in cash ~~provided~~used by operating activities was primarily attributable to changes in working capital, including increases in cash used from operating activities from changes in operating assets such as accounts receivable and inventory and from changes in operating liabilities such as contract liabilities and accounts payable and accrued expenses, partially offset by decreases to the cash used by operating activities from changes in operating assets such as contract assets and ~~vendor deposits, partially offset by increases~~ from changes in operating liabilities such as customer ~~deposits, accounts payable and accrued expenses and contract liabilities.~~deposits.

Net cash used in investing activities ~~increased $2.6~~decreased $499,000 to $6.3 million during the nine months ended March 31, 2022 compared to $6.8 million during the nine months ended March 31, ~~2021 compared to $4.1 million during the nine months ended March 31, 2020.~~2021. This ~~$2.6 million increase~~$499,000 decrease was attributable primarily to a decrease in cash used in connection with ~~the Company’s acquisition of YES during November 2020 and, to a lesser extent, the acquisition of ELS during January 2021,~~acquisitions, partially offset by ~~a decrease~~an increase in capital expenditures.

For the nine months ended March 31, ~~2021,~~2022, financing activities ~~used~~provided cash of ~~$5.6~~$11.9 million compared to ~~$11.3~~$5.6 million of cash used by financing activities during the nine months ended March 31, ~~2020.~~2021. This ~~$5.7~~$17.5 million ~~decrease~~increase in cash ~~used~~provided by financing activities was attributable primarily to ~~lower optional debt repayments~~an increase in proceeds from borrowings during the nine months ended March 31, ~~2021~~2022 in excess of ~~proceeds from borrowings.~~optional debt payments to fund changes in working capital.

On November 2, 2018, the Company entered into a syndicated credit agreement (the ~~“2018 Credit~~“Credit Agreement”) for a five-year revolving credit facility ~~with a five-year term and a~~in the maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. ~~The Company uses borrowings under~~A portion of the revolving credit facility is available for swingline loans of up to ~~fund in part its working capital needs, acquisitions, dividends (if~~a sublimit of $5 million and tofor the ~~extent declared by the Company’s Board~~issuance of ~~Directors), capital expenditures, amounts paid to satisfy tax withholding obligations upon the vesting of certain restricted stock awards, issuances of~~standby letters of credit ~~and for other general corporate purposes. The obligations~~ of up to a sublimit of $10 million.

Prior to the Company under the 2018 Credit Agreement are secured by substantially all of the assets of the Company and certain of its subsidiaries, and are guaranteed, jointly and severally, by certain of the Company’s subsidiaries.

~~Borrowings~~amendment described below, borrowings (other than swingline loans) under the ~~2018~~ Credit Agreement ~~bear~~accrued interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ~~ranges~~ranged from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points, ~~(such highest rate, the “Base Rate”),~~ plus a margin that ~~ranges~~ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans ~~bear~~accrued interest calculated at the ~~Base Rate~~base rate determined in accordance with clause (b) of the preceding sentence plus a margin that ~~ranges~~ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The Credit Agreement had an initial term of five years with a scheduled maturity date of November 2, 2023. As of March 31, 2022, $27.5 million was available to borrow under the revolving credit facility.

On May 6, 2022, the Company entered into an amendment to the Credit Agreement which, among other things, (i) in connection with the phasing out of LIBOR, replaced LIBOR with the Bloomberg Short-Term Bank Yield Index (“BSBY”), and (ii) extended the maturity date from November 2, 2023 to May 6, 2027. See Part II, Item 5 of this Quarterly Report on Form 10-Q for additional information relating to the amendment to the Credit Agreement.

The obligations of the Company under the Credit Agreement ~~and $25.0 million was available to borrow under~~are secured by substantially all of the ~~revolving credit facility.~~

~~On May 21, 2020,~~assets of the Company and certain of its subsidiaries, ~~received PPP Loans totaling approximately $6.9 million in principal amount from Fifth Third Bank, N.A. (the “Lender”) under the PPP established under the CARES Act. Each PPP Loan is evidenced~~and are guaranteed, jointly and severally, by a promissory note dated May 21, 2020 (each, a “Promissory Note”) issued by the applicable borrower to the Lender. The term of each PPP Loan is two years. The interest rate on each PPP Loan is 1.00%, which was deferred for the first six monthscertain of the term of the PPP Loan. The Promissory Note evidencing each PPP Loan is in the Lender’s standard form for loans made by it under the PPP and contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties or other provisions of the Promissory Note. The occurrence of an event of default may result in a claim for the immediate repayment of all amounts outstanding under the applicable PPP Loan, collection of all other amounts owing from the borrower, and filing suit and obtaining judgment against the borrower. Each PPP Loan may be prepaid in whole or in part at any time without penalty.

The proceeds of the PPP Loans have been used primarily for payroll costs and, to a limited extent, other permitted purposes under the CARES Act, including rent and utility costs. Under the terms of the CARES Act, each borrower can apply for forgiveness for all or a portion of the PPP Loan and, as described below, the Company has agreed to apply, and for each of its subsidiaries that received PPP Loans to apply, for forgiveness. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds in accordance with the terms of the CARES Act, as described above, during the 24-week period after loan origination and the maintenance or achievement of certain employee levels. During April 2021, the Company and its applicable subsidiaries applied for forgiveness of the PPP Loans. While the Company believes that the proceeds of the PPP Loans have been used only for qualifying expenses in accordance with the terms of the CARES Act, any forgiveness of a PPP Loan will be subject to approval by the Lender and the SBA, which is administering the PPP under the CARES Act. There can be no assurance that any or all of the PPP Loans will be forgiven in whole or in part. To the extent any PPP Loan is not forgiven in full, the portion of the PPP Loan which is not forgiven will be required to be fully repaid on or before maturity in May 2022.

~~The Company received the consent (the “Consent”) of Bank of America, N.A., U.S. Bank National Association, and Fifth Third Bank under the~~ Company’s 2018 Credit Agreement in connection with its and its subsidiaries’ receipt of the PPP Loans. The Consent, among other things, contains certain representations, warranties and agreements of the Company, including, without limitation, agreements to use the proceeds of the PPP Loan only for permitted expenses under the CARES Act, to timely apply for forgiveness of the PPP Loans, and to maintain all records required to be submitted in connection with the forgiveness of the PPP Loans. The breach of any such representations, warranties or agreements will constitute a default under the 2018 Credit Agreement, subject to any applicable cure periods or provisions thereof.

As previously described, in addition to the PPP Loans obtained by the Company and certain of its subsidiaries during May 2020, in connection with Company’s acquisition of YES during November 2020, the Company, indirectly through its wholly-owned subsidiary, also assumed the approximately $916,000 loan previously obtained by YES under the PPP. Under the merger agreement related to the YES Acquisition, the Company was entitled to indemnification for any required repayment of the loan to YES under the PPP. During the quarter ended March 31, 2021, the loan to YES under the PPP was forgiven by the SBA. The Company determined that the fair value of its right to indemnification was equal to the amount forgiven by the SBA. Accordingly, the Company did not recognize any gain on the extinguishment of this debt.subsidiaries.

The Company believes that its existing cash, anticipated cash from operations and funds available under the Company’s ~~2018~~ Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve ~~months.~~months from the filing of this Report, and thereafter. The Company may also seek to raise funds through the issuance of equity and/or debt securities or the incurrence of additional secured or unsecured indebtedness, including in connection with acquisitions or other transactions ~~consummated~~pursued by the Company as part of its “buy-and-build” growth strategy.

The Company had no off-balance sheet financing arrangements within the meaning of Item 303(a)(4) of Regulation S-K at March 31, ~~2021.~~2022.

Inflation did not have a significant effect on the Company’s results during any of the reported periods. However, the Company faces risks relating to inflation, including the current inflationary trend in light of supply chain constraints, which may have an adverse impact on the market for the Company’s products and services, including that there is no assurance that the Company will be able to effectively increase the price of its products and services to offset increased costs.

Certain of the Company’s subsidiaries lease warehouse and office space from one or more of the principals of those subsidiaries. These leases include the following:

In connection with the preparation of its financial statements, the Company makes estimates and assumptions, including those that affect the reported amounts of assets and liabilities, contingent assets and liabilities, and revenues and expenses during the reported periods. Estimates and assumptions made may not prove to be correct, and actual results may differ from the estimates. The accounting policies that the Company has identified as critical to its business operations and to an understanding of the Company’s financial statements remain unchanged from those described in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021.

See Note 3 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a description of recently issued accounting guidance.

The Company’s indebtedness subjects the Company to interest rate risk. Interest rates are subject to the influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal policies of the United States and its agencies, particularly the Federal Reserve. The nature and timing of any changes in such policies or general economic conditions and the effect they may have on the Company are unpredictable. The Company’s indebtedness may also have other important impacts on the Company, including that the Company will be required to utilize cash flow to service the debt, indebtedness may make the Company more vulnerable to economic downturns, and the Company’s indebtedness subjects the Company to covenants and may place restrictions on its operations and activities, including its ability to pay dividends and take certain other actions. ~~Interest~~As of March 31, 2022, interest on borrowings under the Company’s ~~2018~~ Credit Agreement ~~accrues~~accrued at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ~~ranges~~ranged from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one-month LIBOR rate plus 100 basis points, ~~(such highest rate, the “Base Rate”),~~ plus a margin that ~~ranges~~ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. As of March 31, ~~2021,~~2022, the Company had approximately ~~$16.0~~$24.0 million of outstanding borrowings under the ~~2018~~ Credit Agreement with a weighted average interest rate of ~~1.36%~~1.63%. Based on the amounts outstanding at March 31, ~~2021,~~2022, a hypothetical 1% increase in daily interest rates would increase the Company’s annual interest expense by approximately ~~$160,000.~~$240,000.

As previously described, on May 6, 2022, the Company entered into an amendment to the Credit Agreement which, among other things, replaced LIBOR with the Bloomberg Short-Term Bank Yield Index (“BSBY”) in connection with the phasing out of LIBOR. See Part II, Item 5 of this Quarterly Report on Form 10-Q for additional information regarding the amendment to the Credit Agreement.

All of the Company’s export sales require the customer to make payment in United States dollars. Accordingly, foreign sales may be affected by the strength of the United States dollar relative to the currencies of the countries in which the Company’s customers are located, as well as the strength of the economies of the countries in which the Company’s customers are located. The Company has, at times in the past, paid certain suppliers in Euros. The Company had no foreign exchange contracts outstanding at March 31, ~~2021~~2022 or June 30, ~~2020.~~2021.

The Company’s cash is maintained in bank accounts which bear interest at prevailing interest rates. At March 31, ~~2021,~~2022, bank deposits exceeded Federal Deposit Insurance Corporation limits.

As of the end of the period covered by this Quarterly Report on Form 10-Q, management of the Company, with the participation of the Company’s principal executive officer and principal financial officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded that, as of March 31, ~~2021,~~2022, the Company’s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. It should be noted that a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

During the quarter ended March 31, ~~2021,~~2022, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

From time to time, the Company is involved in, or subject to, legal and regulatory claims, proceedings, demands or actions arising in the ordinary course of business. There have been no material changes with respect to such matters from the disclosure included in the “Legal Proceedings” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021.

There have been no material changes in the risks and uncertainties that the Company faces from those disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020.~~2021.

The Company does not currently have in place any formal share repurchase plans or programs. Upon request by a recipient of awards granted under the Company’s equity incentive plan, the Company may issue shares upon the vesting of restricted stock awards or restricted stock units or the grant of stock awards net of the statutory tax withholding requirements that the Company pays on behalf of its employees. For financial statement purposes, the shares withheld are treated as being repurchased by the Company and are reflected as repurchases in the Company’s condensed consolidated statements of cash flows and shareholders’ equity as they reduce the number of shares that would have been ~~issued upon vesting.~~issued. The following table provides information concerning shares of the Company’s common stock treated as repurchased during the quarter ended March 31, ~~2021~~2022 in connection with the issuance of shares upon the vesting of restricted stock awards or restricted stock units net of statutory tax withholding requirements:

Period	Total Number of Shares Purchased	Average Price Per Share
January 1 – January 31, 2021	3,099	$	33.00	-	-
February 1 – February 28, 2021	4,508		40.15	-	-
March 1 – March 31, 2021	-		-	-	-
Total	7,607	$	37.24	-	-

Period
Total Number
of Shares
Purchased
Average
Price Per
Share
Total Number of
Shares Purchased as
a Part of Publicly
Announced Programs
Maximum Number
of Shares That May
Yet Be Purchased
Under the Program
January 1 – January 31, 2021
3,099
$
33.00
-
-
February 1 – February 28, 2021
4,508
40.15
-
-
March 1 – March 31, 2021
-
-
-
-
Total
7,607
$
37.24
-
-

Period	Total Number of Shares Purchased	Average Price Per Share		Total Number of Shares Purchased as a Part of Publicly Announced Programs	Maximum Number of Shares That May Yet Be Purchased Under the Program
January 1 – January 31, 2022	-	$	-	-	-
February 1 – February 28, 2022	2,828		20.71	-	-
March 1 – March 31, 2022	267		17.60	-	-
Total	3,095	$	20.44	-	-

During the quarter ended March 31, ~~2021,~~2022, the Company did not repurchase any shares other than shares treated as repurchased upon the vesting of restricted stock awards or restricted stock units net of statutory tax withholding requirements as described and set forth above.

As previously described, during November 2018, the Company entered into a syndicated credit agreement (the “Credit Agreement”) for a five-year revolving credit facility in the maximum aggregate principal amount of up to $100 million, with an accordion feature to increase the revolving credit facility by up to $40 million for a total of $140 million. A portion of the revolving credit facility is available for swingline loans of up to a sublimit of $5 million and for the issuance of standby letters of credit of up to a sublimit of $10 million.

Prior to the amendment described below, borrowings (other than swingline loans) under the Credit Agreement accrued interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranged from 1.25% to 1.75% depending on the Company’s consolidated leverage ratio, which is a ratio of consolidated funded indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (EBITDA) (the “Consolidated Leverage Ratio”) or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the one month LIBOR rate plus 100 basis points, plus a margin that ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans accrued interest calculated at the base rate determined in accordance with clause (b) of the preceding sentence, plus a margin that ranged from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The Credit Agreement had an initial term of five years with a scheduled maturity date of November 2, 2023.

On May 6, 2022, the Company entered into an amendment to the Credit Agreement. The amendment amended the Credit Agreement to, among other things, replace LIBOR with the Bloomberg Short-Term Bank Yield Index (“BSBY”) rate in connection with the phasing out of LIBOR. As a result, borrowings (other than swingline loans) under the Credit Agreement will now bear interest, at a rate based on (a) the BSBY rate plus a margin that ranges between 1.25% and 1.75% depending on the Company’s Consolidated Leverage Ratio or (b) the highest of (i) prime, (ii) the federal funds rate plus 50 basis points, and (iii) the BSBY rate plus 100 basis points (such highest rate, the “Base Rate”), plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio. Swingline loans generally bear interest calculated at the Base Rate plus a margin that ranges between 0.25% and 0.75% depending on the Consolidated Leverage Ratio.

In addition, the amendment also extended the maturity date of the Credit Agreement from November 2, 2023 to May 6, 2027 and reduced the maximum commitment fee rate to up to 0.125% of the unused amount of the revolving loan commitment (based on the Consolidated Leverage Ratio).

The foregoing description is a summary only, does not purport to be complete, and is qualified in its entirety by reference to the full text of the amendment and Annex A thereto, which is the Amended Credit Agreement. The amendment and Amended Credit Agreement are attached as Exhibits 10.01 and 10.02, respectively, to this Quarterly Report on Form 10-Q and are incorporated herein by reference.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	March 31, 2021			June 30, 2020
Revolving Line of Credit	$	16,000		$	21,000
PPP Loans		6,892			6,892
Less: unamortized discount and deferred financing costs		(141	)		(182	)
Total debt, net		22,751			27,710
Less: current maturities of long-term debt		(2,680	)		(2,680	)
Total long-term debt	$	20,071		$	25,030


⁽¹⁾	Relates to the ~~YES~~CLK Acquisition which was consummated during ~~November 2020,~~February 2022, as described in Note 4, “Acquisitions.”
⁽²⁾	~~Relates to~~Represents working capital adjustments ~~from~~related to business acquisitions consummated by the Company during the fiscal year ended June 30, ~~2020.~~2021.

Exhibit
Number	Description

*10.01	First Amendment to Credit Agreement dated as of May 6, 2022 by and among EVI Industries, Inc., certain subsidiaries of EVI Industries, Inc. identified on the signature pages thereto, as guarantors, the lenders identified on the signature pages thereto and Bank of America, N.A., as Administrative Agent.

*10.02	Annex A to First Amendment to Credit Agreement dated as of May 6, 2022 by and among EVI Industries, Inc., certain subsidiaries of EVI Industries, Inc. identified on the signature pages thereto, as guarantors, the lenders identified on the signature pages thereto and Bank of America, N.A., as Administrative Agent.

*31.01	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

*31.02	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

+32.01	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

+32.02	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Date: May 10, ~~2021~~2022		EVI Industries, Inc.


	By:	/s/ Robert H. Lazar
		Robert H. Lazar
		Chief Financial Officer

(a) Includes ~~$5.3~~$4.4 million paid net of ~~$792,000~~$1.2 million of cash acquired.
(b) Calculated as ~~278,385~~179,087 shares of the Company’s common stock, multiplied by ~~$30.61,~~$21.44, the closing price of the Company’s common stock on the closing date.


(1)	Expenses are classified within selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

		March 31, ~~2021~~2022
Weighted average remaining lease terms
Operating leases		~~5.6~~4.9 years
Weighted average discount rate
Operating leases		~~3.0%~~3.1%