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,~~September 30, 2020

☐

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~~

Delaware

11-2014231

(State or other jurisdiction of

~~(I.R.S. Employer~~

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)~~

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 – ~~11,914,487~~11,934,514 shares outstanding as of ~~May 4,~~November 2, 2020.



PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3

	Condensed Consolidated Statements of Operations (Unaudited) for the ~~nine and~~ three months ended ~~March 31,~~ September 30, 2020 and 2019	3

	Condensed Consolidated Balance Sheets at ~~March 31,~~September 30, 2020 (Unaudited) and June 30, ~~2019~~2020	4

	Condensed Consolidated Statements of Shareholders’ Equity (Unaudited) for the ~~nine and~~ three months ended ~~March 31,~~September 30, 2020 and 2019	6

	Condensed Consolidated Statements of Cash Flows (Unaudited) for the ~~nine~~three months ended ~~March 31,~~ September 30, 2020 and 2019	8 7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	10 9

Item 2.	~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	23 20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34 29

Item 4.	Controls and Procedures	35 30


PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	36 31

Item 1A.	Risk Factors	36 31
Item 6.Exhibits		32
~~Item 6.~~ Signatures	~~Exhibits~~	38 33

~~Signatures~~		39

Index

PART I—FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements.~~

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,
2020 2019 2020 2019

Revenues $ 181,379 $ 163,436 $ 59,041 $ 59,290
Cost of sales 139,640 126,615 45,211 45,867
Gross profit 41,739 36,821 13,830 13,423
Selling, general and administrative expenses 39,302 32,180 13,479 12,316
Operating income 2,437 4,641 351 1,107
Interest expense, net 1,198 942 343 403
Income before provision for income taxes 1,239 3,699 8 704
Provision for income taxes 408 1,172 20 238

Net income (loss) $ 831 $ 2,527 $ (12 ) $ 466

Net earnings (loss) per share – basic $ 0.06 $ 0.20 $ (0.00 ) $ 0.04

Net earnings (loss) per share - diluted $ 0.06 $ 0.20 $ (0.00 ) $ 0.04

	For the three months ended September 30,
	2020		2019
Revenues	$	57,878	$	55,681
Cost of sales		44,545		41,847
Gross profit		13,333		13,834
Selling, general and administrative expenses		12,437		12,553
Operating income		896		1,281
Interest expense, net		169		422
Income before provision for income taxes		727		859
Provision for income taxes		209		279

Net income	$	518	$	580

Net earnings per share – basic	$	0.04	$	0.05

Net earnings per share – diluted	$	0.04	$	0.04

See Notes to Condensed Consolidated Financial Statements

Index

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands)

ASSETS
March 31,
2020
(Unaudited)
June 30,
2019
Current assets
Cash and cash equivalents $ 3,917 $ 5,038
Accounts receivable, net of allowance for doubtful accounts of $382 and $323, respectively 26,560 30,557
Inventories, net 27,108 26,445
Vendor deposits 613 403
Contract assets 116 2,487
Other current assets 3,430 2,938
Total current assets 61,744 67,868

Equipment and improvements, net 7,971 5,865
Operating lease assets 5,780 —
Intangible assets, net 22,189 22,351
Goodwill 56,574 54,501
Other assets 4,186 3,900

Total assets $ 158,444 $ 154,485

ASSETS
	September 30, 2020 (Unaudited)		June 30, 2020
Current assets
Cash	$	5,111	$	9,789
Accounts receivable, net of allowance for doubtful accounts		22,433		23,042
Inventories, net		24,694		24,063
Vendor deposits		227		1,276
Contract assets		8,654		3,443
Other current assets		4,386		3,041
Total current assets		65,505		64,654

Equipment and improvements, net		8,952		7,992
Operating lease assets		6,977		5,311
Intangible assets, net		21,321		21,754
Goodwill		56,641		56,678
Other assets		4,641		4,329

Total assets	$	164,037	$	160,718

See Notes to Condensed Consolidated Financial Statements

Index

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share data)

LIABILITIES AND
SHAREHOLDERS’ EQUITY
March 31,
2020
(Unaudited) June 30,
2019
Current liabilities
    Accounts payable and accrued expenses $ 17,647 $ 17,508
    Accrued employee expenses 4,070 5,187
    Customer deposits 10,510 7,163
    Contract liabilities 834 854
    Current portion of operating lease liabilities 1,744 —
Total current liabilities 34,805 30,712

Deferred tax liabilities, net 2,347 1,708
Long-term operating lease liabilities 4,060 —
Long-term debt, net 29,804 40,563

Total liabilities 71,016 72,983

Commitments and contingencies (Note 11)

Common stock related to acquiree’s Employee Stock Ownership Plan (“ESOP”) — 4,240

Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; none issued and outstanding — —
Common stock, $.025 par value; authorized shares - 20,000,000; 12,002,793 shares issued at March 31, 2020 and 11,825,615 shares issued at June 30, 2019, including shares held in treasury 300 296
Additional paid-in capital 78,526 73,010
Retained earnings 10,466 9,635
Treasury stock, 88,306 shares at March 31, 2020 and 72,934 shares at June 30, 2019, at cost (1,864 ) (1,439 )
Common stock related to acquiree’s ESOP — (4,240 )
Total shareholders’ equity 87,428 77,262
Total liabilities and shareholders’ equity $ 158,444 $ 154,485

LIABILITIES AND SHAREHOLDERS' EQUITY
	September 30, 2020 (Unaudited)			June 30, 2020
Current liabilities
Accounts payable and accrued expenses	$	27,521		$	24,292
Accrued employee expenses		4,556			4,764
Customer deposits		11,358			8,511
Contract liabilities		3,399			558
Current portion of long-term debt		383			2,680
Current portion of operating lease liabilities		1,882			1,672
Total current liabilities		49,099			42,477

Deferred tax liabilities, net		968			1,728
Long-term operating lease liabilities		5,707			3,657
Long-term debt, net		19,341			25,030

Total liabilities		75,115			72,892

Commitments and contingencies (Note 10)

Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; NaN issued and outstanding		—			—
Common stock, $.025 par value; authorized shares – 20,000,000; 12,029,910 shares issued at September 30, 2020 and June 30, 2020, including shares held in treasury		301			301
Additional paid-in capital		79,705			79,127
Retained earnings		10,928			10,410
Treasury stock, 95,396 shares at September 30, 2020 and June 30, 2020, at cost		(2,012	)		(2,012	)
Total shareholders’ equity		88,922			87,826
Total liabilities and shareholders’ equity	$	164,037		$	160,718

See Notes to Condensed Consolidated Financial Statements

Index

~~EVI Industries, Inc. and Subsidiaries~~

~~Condensed Consolidated Statements of Shareholders’ Equity~~

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

Nine months ended March 31, 2020
Common
Stock
Additional Related to
Common Stock Paid-in Treasury Stock Retained Acquiree’s
Shares Amount Capital Shares Cost Earnings ESOP Total
Balance at June 30, 2019 11,825,615 $ 296 $ 73,010 72,934 $ (1,439 ) $ 9,635 $ (4,240 ) $ 77,262

Share repurchases — — — 15,372 (425 ) — — (425 )

Vesting of restricted shares 29,880 — — — — — — —

Issuance of shares under employee stock purchase plan 1,022 — 26 — — — — 26

Issuance of shares in connection with acquisitions 132,726 4 3,766 — — — 4,240 8,010

Stock compensation 13,550 — 1,724 — — — — 1,724

Net income — — — — — 831 — 831
Balance at March 31, 2020 12,002,793 $ 300 $ 78,526 88,306 $ (1,864 ) $ 10,466 $ — $ 87,428

Three months ended March 31, 2020
Common
Stock
Additional Related to
Common Stock Paid-in Treasury Stock Retained Acquiree’s
Shares Amount Capital Shares Cost Earnings ESOP Total
Balance at December 31, 2019 11,893,567 $ 297 $ 75,244 83,044 $ (1,748 ) $ 10,478 $ — $ 84,271

Share repurchases — — — 5,262 (116 ) — — (116 )

Issuance of shares in connection with acquisitions 95,676 3 2,473 — — — — 2,476

Stock compensation 13,550 — 809 — — — — 809

Net loss — — — — — (12 ) — (12 )
Balance at March 31, 2020 12,002,793 $ 300 $ 78,526 88,306 $ (1,864 ) $ 10,466 $ — $ 87,428

~~See Notes to Condensed Consolidated Financial Statements~~

~~Index~~

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands, except share data) (Unaudited)

Nine months ended March 31, 2019
Common
Stock
Additional Related to
Common Stock Paid-in Treasury Stock Retained Acquiree’s
Shares Amount Capital Shares Cost Earnings ESOP Total
Balance at June 30, 2018 11,239,656 $ 281 $ 49,950 52,686 $ (711 ) $ 7,511 $ — $ 57,031

Dividends paid ($.13 per share) — — — — — (1,619 ) — (1,619 )

Share repurchases — — — 10,123 (359 ) — — (359 )

Vesting of restricted shares 28,170 — — — — — — —

Issuance of shares under employee stock purchase plan 726 — 23 — — — — 23

Issuance of shares in connection with acquisitions 530,525 13 21,277 — — — (4,240 ) 17,050

Stock compensation — — 1,287 — — — — 1,287

Net income — — — — — 2,257 — 2,527
Balance at March 31, 2019 11,799,077 $ 294 $ 72,537 62,809 $ (1,070 ) $ 8,419 $ (4,240 ) $ 75,940

	Three months ended September 30, 2020
	Common Stock				Additional 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

Stock compensation		—		—		578		—		—			—		578

Net income		—		—		—		—		—			518		518
Balance at September 30, 2020		12,029,910	$	301	$	79,705		95,396	$	(2,012	)	$	10,928	$	88,922

Three months ended March 31, 2019
Common
Stock
Additional Related to
Common Stock Paid-in Treasury Stock Retained Acquiree’s
Shares Amount Capital Shares Cost Earnings ESOP Total
Balance at December 31, 2018 11,619,230 $ 290 $ 65,440 62,809 $ (1,070 ) $ 7,953 $ — $ 72,613

Issuance of shares in connection with acquisitions 179,847 4 6,648 — — — (4,240 ) 2,412

Stock compensation — — 449 — — — — 449

Net income — — — — — 466 — 466
Balance at March 31, 2019 11,799,077 $ 294 $ 72,537 62,809 $ (1,070 ) $ 8,419 $ (4,240 ) $ 75,940

	Three months ended September 30, 2019
	Common Stock				Additional Paid-in		Treasury Stock					Retained		Common Stock Related to Acquiree’s
	Shares		Amount		Capital		Shares		Cost			Earnings		ESOP			Total
Balance at June 30, 2019		11,825,615	$	296	$	73,010		72,934	$	(1,439	)	$	9,635	$	(4,240	)	$	77,262

Issuance of shares in connection with acquisitions		37,050		1		1,293		—		—			—		4,240			5,534

Stock compensation		—		—		453		—		—			—		—			453

Net income		—		—		—		—		—			580		—			580
Balance at September 30, 2019		11,862,665	$	297	$	74,756		72,934	$	(1,439	)	$	10,215	$	—		$	83,829

See Notes to Condensed Consolidated Financial Statements

7 6

Index

EVI Industries, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

For the nine months ended
March 31, 2020 March 31, 2019
Operating activities:
Net income $ 831 $ 2,527
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization 2,692 1,894
Amortization of debt discount 41 82
Provision for bad debt expense 136 181
Non-cash lease expense 24 —
Share-based compensation 1,724 1,287
Inventory reserve 133 125
Provision for deferred income taxes 416 234
Other (85 ) —
(Increase) decrease in operating assets:
Accounts receivable 4,961 (4,847 )
Inventories 902 (5,759 )
Vendor deposits (210 ) (438 )
Contract assets 2,371 (2,445 )
Other assets (602 ) (1,384 )
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (1,076 ) 2,899
Accrued employee expenses (1,168 ) (1,600 )
Customer deposits 3,257 (2,629 )
Contract liabilities (20 ) 255

Net cash provided (used) by operating activities 14,327 (9,618 )
Investing activities:
Capital expenditures (2,785 ) (1,741 )
Cash paid for acquisitions, net of cash acquired (1,334 ) (12,542 )

Net cash used by investing activities (4,119 ) (14,283 )
Financing activities:
Dividends paid — (1,619 )
Proceeds from borrowings 8,000 110,963
Debt repayments (18,930 ) (79,435 )
Payment of debt issuance costs — (272 )
Repurchases of common stock in satisfaction of employee tax withholding obligations (425 ) (359 )
Issuances of common stock under employee stock purchase plan 26 23

Net cash (used) provided by financing activities (11,329 ) 29,301
Net (decrease) increase in cash and cash equivalents (1,121 ) 5,400
Cash and cash equivalents at beginning of period 5,038 1,330

Cash and cash equivalents at end of period $ 3,917 $ 6,730

	For the three months ended
	September 30, 2020			September 30, 2019
Operating activities:
Net income	$	518		$	580
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		985			811
Amortization of debt discount		14			14
Provision for bad debt expense		96			52
Non-cash lease expense		29			19
Share-based compensation		578			453
Inventory reserve		(26	)		53
Provision for deferred income taxes		(760	)		17
Other		60			—
(Increase) decrease in operating assets:
Accounts receivable		530			4,804
Inventories		(585	)		(1,892	)
Vendor deposits		1,049			(283	)
Contract assets		(5,211	)		2,156
Other assets		(1,667	)		(538	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		3,229			(4,301	)
Accrued employee expenses		(208	)		(1,069	)
Customer deposits		2,847			1,415
Contract liabilities		2,841			(458	)
Net cash provided by operating activities		4,319			1,833
Investing activities:
Capital expenditures		(997	)		(1,286	)
Cash paid for acquisitions, net of cash acquired		—			(324	)
Net cash used by investing activities		(997	)		(1,610	)
Financing activities:
Proceeds from borrowings		12,000			2,000
Debt repayments		(20,000	)		(2,000	)
Net cash used by financing activities		(8,000	)		—
Net (decrease) increase in cash		(4,678	)		223
Cash at beginning of period		9,789			5,038
Cash at end of period	$	5,111		$	5,261

See Notes to Condensed Consolidated Financial Statements

8 7

Index

EVI Industries, Inc. and Subsidiaries

EVI Industries, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
For the nine months ended
March 31, 2020 March 31, 2019
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 1,215 $ 799
Cash paid during the period for income taxes $ 224 $ 1,354

Supplemental disclosure of non-cash financing activities:
Common stock issued for acquisitions $ 3,770 $ 21,290

Condensed Consolidated Statements of Cash Flows

(In thousands) (Unaudited)

	For the three months ended
	September 30, 2020		September 30, 2019
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	137	$	457
Cash paid during the period for income taxes	$	453	$	179

Supplemental disclosure of non-cash financing activities:
Common stock issued for acquisitions	$	—	$	1,294

See Notes to Condensed Consolidated Financial Statements

9 8

Index

EVI Industries, Inc. and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~March 31,~~September 30, 2020

(Unaudited)

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. This is particularly true 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, ~~and its~~ results and financial condition, as described below and elsewhere herein. 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, ~~2019.~~2020. The June 30, ~~2019~~2020 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, ~~2019.~~2020.

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 ~~retail,~~government, institutional, industrial, commercial ~~industrial, institutional,~~ and ~~government~~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. See Note 3, “Acquisitions,” for information regarding acquisitions consummated during the nine months ended March 31, 2020. The financial position, including assets and liabilities, and results of operations of the acquired businesses following the respective closing dates are included in the Company’s consolidated financial statements.

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and ~~is likely to~~may continue to negatively impact, the Company’s business and ~~results of operations, cash flows and financial position.~~results. Specifically, ~~the COVID-19 pandemic and accompanying economic disruption have negatively impacted sales and sales contracts, with such decline~~ beginning at the end of the quarter ended March 31, ~~2020. Accordingly,~~2020, the ~~Company experienced a decline~~COVID-19 pandemic and accompanying economic disruption caused delays and declines in ~~revenue for~~ the ~~quarter ended March 31, 2020 compared to~~placement of customer orders, the ~~same period~~completion of equipment and parts installations, and the fulfillment of parts orders. The adverse impact of the ~~prior fiscal year. The Company expects this trend~~COVID-19 pandemic is expected to continue in the near-term and possibly longer, ~~given the state of~~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.~~restrictions, are imposed. In response to the ~~negative sales trend,~~economic and business disruption, the Company has taken actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating ~~credit~~payment terms with suppliers, and reducing hiring activities. The Company continues to actively monitor the COVID-19 pandemic 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 ~~meet business needs as~~increase its cash position and preserve financial flexibility in light of the ~~impact of~~uncertainties resulting from the COVID-19 ~~evolves. To that end,~~pandemic, during ~~April~~May 2020, the Company ~~borrowed approximately $9.0 million under its credit facility~~ and certain of its subsidiaries ~~of the Company applied for~~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 ~~$7.3~~$6.9 million. The Company has not yet received any of the PPP Loans and is evaluating its potential acceptance of the PPP Loans, including in light of current guidance and the anticipation of future guidance with respect to PPP Loans. There can be no assurance that the Company will accept or otherwise receive the PPP Loans in whole or in part. See Note 5 ~~“Debt,” and Note 13, “Subsequent Events,”~~below for additional information regarding the PPP Loans as well as information regarding the Company’s credit ~~facility and~~facility. See also Note 12 below for information regarding the ~~potential~~additional approximately $915,000 loan under the PPP ~~Loans.~~assumed by the Company, indirectly through its wholly-owned subsidiary, in connection with its acquisition of Yankee Equipment Systems during November 2020.

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. Factors arising from the COVID-19 pandemic that have impacted, or may 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 to manufacture, or the Company’s ability to procure from manufacturers, the products the Company sells, or to meet delivery requirements and commitments; potential limitations on the ability of the Company’s employees to perform their work due to impacts caused by the ~~COVID-19~~ pandemic or local, state, or federal orders that may restrict the Company’s operations or the operations of its customers, or require that the employees be quarantined; potential limitations on the ability of carriers to deliver products to the Company’s facilities and customers; 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; and decreased demand for products and services.~~all.

The situation surrounding the COVID-19 pandemic remains ~~fluid.~~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 ~~economic~~adverse impact that has occurred or may occur in the ~~future. However,~~future in the ~~Company believes that its existing cash~~economy or markets generally, and cash equivalents, anticipated cash from operations, and funds available under the 2018 Credit Agreement will be sufficient to fund its operations and anticipated capital expenditures for at least the next twelve months. As described above, certain subsidiaries of the Company have applied for approximately $7.3 million of PPP Loans, although there is no assurance that anychanges in customer or ~~all of such funds will be accepted or otherwise received.~~supplier behavior.

On July 1, 2019, the Company adopted Accounting Standards Codification (“ASC”) 842, Leases (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 establishes a right of use (“ROU”) model that requires a lessee to recognize a ROU 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 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. Therefore, the accompanying unaudited condensed consolidated financial statements for the nine and three-month periods ended March 31, 2020 are presented under the new standard, while the comparative period financial statements presented herein were not adjusted for this standard and continue to be reported in accordance with the Company's previous lease accounting policy. There ~~was no cumulative-effect adjustment recorded on July 1, 2019.~~

The Company elected the package of transition practical expedients for expired or existing contracts, which does not require reassessment of: (1) whether any of the Company's contracts are or contain leases, (2) lease classification and (3) initial direct costs.

The primary impact for the Company was the balance sheet recognition of ROU assets and lease liabilities for operating leases as a lessee. The adoption of ASC 842 did not have a material impact on the results of operations or cash flows of the Company. See Note 6, “Leases,” for further discussion regarding the Company’s adoption of the new standard.

~~Except for the new lease standard adopted on July 1, 2019 described above, there~~ have been no 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, ~~2019.~~2020.

During the nine months ended March 31, 2020, the Company completed the acquisition of three businesses (Professional Laundry Systems, LLC on August 1, 2019; Large Equipment, Inc. (d/b/a Laundry Systems of Tennessee) and TN Ozone, Inc. (d/b/a Premier Laundry Solutions and Premier Equipment Rental) on January 31, 2020; and Commercial Laundry Equipment Company, Inc. on February 29, 2020), each of which distributes commercial, industrial, and vended laundry products and provides installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. Two of these acquisitions were completed by the Company, indirectly through a newly-formed wholly-owned subsidiary, which purchased substantially all of the assets and assumed certain of the liabilities of the acquired entity. The other acquisition was effected by a merger of the acquired entity with and into a newly-formed wholly-owned subsidiary of the Company. The total consideration for these three transactions consisted of $1.5 million in cash, net of $192,000 of cash acquired, the assumption of $129,000 of long-term debt, and the issuance of 132,726 shares of the Company’s common stock. The Company funded the cash consideration for each acquisition with credit facility borrowings. Each acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition method of accounting in accordance with ASC 805, Business Combinations, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to intangible assets and goodwill. In the aggregate, the Company preliminarily allocated a total of $2.0 million to goodwill, $680,000 to customer-related intangibles and $410,000 to the respective trade names. The purchase price allocations are considered preliminary, as the Company is still assessing certain working capital and valuation-related items.

Note (3) – Recently Issued Accounting Guidance: In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“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, and for interim periods within those fiscal years (the fiscal year ending June 30, 2022 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) optional expedients and exceptions for applying generally accepted accounting principles 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 December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the potential adoption of this guidance and the impact, if any, that it may have on the Company’s 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 February 5, 2019, the Company completed its acquisition (the “PAC Acquisition”) of PAC~~EVI Industries, Inc. (“PAC”). As a portion of the consideration paid in connection with the PAC Acquisition, the Company issued 114,634 shares of its common stock to PAC’s employee stock ownership plan (“ESOP”). These shares were not permitted to be traded during the nine-month period commencing on the closing date. Further, if a distribution event occurred during such nine-month period, then each participant in the ESOP would have had the option to require the Company to purchase such participant’s shares at fair market value. Due to the Company’s obligation under this put option, which was in effect at Juneand Subsidiaries

September 30, 2019 but has subsequently expired, the distributed shares subject to the put option which were held by the ESOP were classified as temporary equity in the mezzanine section of the consolidated balance sheet as of June 30, 2019. No distribution events occurred during the nine-month restriction period. Accordingly, on August 5, 2019, each participant’s option to require the Company to purchase such participant’s shares at fair market value if a distribution event occurred expired. As a result, such shares are classified as permanent equity in the consolidated balance sheet as of March 31, 2020.2020

Note (4) - 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,~~September 30, 2020 and 2019 are computed as follows (in thousands, except per share data):

	For the three months ended September 30,
Net income	$	518	$	580
Less: distributed and undistributed income allocated to unvested restricted common stock		42		40
Net income allocated to EVI Industries, Inc. shareholders	$	476	$	540
Weighted average shares outstanding used in basic earnings per share		11,935		11,777
Dilutive common share equivalents		344		439
Weighted average shares outstanding used in diluted earnings per share		12,279		12,216
Basic earnings per share	$	0.04	$	0.05
Diluted earnings per share	$	0.04	$	0.04

At ~~March 31,~~September 30, 2020 and 2019, other than ~~1,068,753~~1,042,830 shares and ~~909,277~~883,354 shares, respectively, of common stock subject to unvested restricted stock awards or restricted stock units, there were no potentially dilutive securities outstanding.

Note (5) - Debt: Long-term debt as of ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 are as follows (in thousands):

On November 2, 2018, the Company entered into a syndicated credit agreement (the “2018 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 (other than swingline loans) under the 2018 Credit Agreement bear interest at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges 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 from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. Swingline loans bear interest calculated at the Base Rate plus a margin that ranges from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. The 2018 Credit Agreement has a term of five years and matures on November 2, 2023.

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. ~~The~~As of September 30, 2020, the Company ~~believes that it is~~was in compliance with its covenants under the 2018 Credit Agreement and ~~$10.0~~$19.5 million was available to borrow under the revolving credit ~~facility at March 31, 2020.~~

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 is 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 and are expected to be used for payroll costs but may also be used for other permitted purposes under the CARES Act, including rent or 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. While the Company believes that the proceeds of the PPP Loans have been used, and expects that any remaining proceeds will be 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, 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 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 described in further detail under Note 12 below, in ~~Note 13, “Subsequent Events,” in an effort~~addition to ~~ensure ample liquidity to meet business needs as~~ the ~~impact~~PPP Loans obtained by the Company and certain of ~~COVID-19 evolves,~~its subsidiaries during ~~April~~May 2020, the Company, ~~borrowed~~indirectly through its wholly-owned subsidiary, also assumed an approximately ~~$9.0 million~~$915,000 loan under the ~~2018 Credit Agreement and applied for approximately $7.3 million~~PPP in connection with the Company’s acquisition of loans under the Paycheck Protection Program established under the CARES Act. The Company has not yet received any of the PPP Loans and is evaluating its potential acceptance of the PPP Loans, including in light of current guidance and the anticipation of future guidance with respect to PPP Loans. There can be no assurance that the Company will accept or otherwise receive the PPP Loans in whole or in part.Yankee Equipment Systems, Inc. during November 2020.

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

~~As described in Note 2, “Summary of Significant Accounting Policies” above,~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Effective July 1, 2019, the Company adopted ~~ASC~~Accounting Standards Codification (“ASC”) Topic 842, Leases (“ASC 842” or “Topic 842”)~~, utilizing~~. 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 using the modified retrospective ~~adoption method with an effective~~transition approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of ~~July 1, 2019.~~ 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,~~September 30, 2020, the Company had 2623 facilities, consisting of warehouse facilities and administrative offices, financed under operating leases with lease term expirations between ~~2020~~2021 and ~~2028.~~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,~~September 30, 2020. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

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

The table below presents lease-related terms and discount rates as of ~~March 31,~~September 30, 2020:

The table below presents supplemental cash flow information related to the Company’s long-term operating lease liabilities as of ~~March 31,~~September 30, 2020 (in thousands):

		Three months ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:		$	474
Operating lease right-of-use assets obtained in exchange for operating lease liabilities:		$	1,928

Minimum future rental commitments for all of the Company’s real property leases, including those with related parties, as of June 30, 2019, which continues to be presented in accordance with ASC Topic 840, Leases (“ASC 840” or “Topic 840”) approximate the following (in thousands):

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 ~~for~~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):

The total net investments in sales type leases, including stated residual values, as of ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 was ~~$3.7~~$4.1 million and ~~$3.0~~$3.9 million, respectively. The current portion of ~~$0.7~~$0.6 million and ~~$0.5~~$0.7 million is included in other current assets in the consolidated balance sheets as of ~~March 31,~~September 30, 2020 and June 30, ~~2019,~~2020, respectively, and the long term portion of ~~$3.0~~$3.5 million and ~~$2.5~~$3.2 million is included in other assets in the consolidated balance sheets as of ~~March 31,~~September 30, 2020 and June 30, ~~2019,~~2020, respectively.

Note (7) - 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 ~~March 31,~~September 30, 2020 and June 30, ~~3019,~~2020, the Company had net deferred tax liabilities of approximately ~~$2.3 million~~$968,000 and ~~$1.7~~$1.7 million, respectively. Consistent with the guidance of the FASB regarding accounting for income taxes, the Company regularly estimates its ability to recover deferred tax assets and establishes a valuation allowance against deferred tax assets to reduce the balance to amounts expected to be recoverable. This evaluation includes the consideration of several factors, including an estimate of the likelihood of generating sufficient taxable income in future periods over which temporary differences reverse, the expected reversal of deferred tax liabilities, past and projected taxable income, and available tax planning strategies. As of ~~March 31,~~September 30, 2020, 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,~~September 30, 2020 and 2019, the Company’s accounting for income taxes in accordance with this standard did not result in any adjustment to the Company’s provision for income taxes.

As of ~~March 31,~~September 30, 2020, the Company was subject to potential federal and state tax examinations for the tax years ~~2016~~2017 through ~~2019.~~2020.

~~Among~~The CARES Act, among its other provisions, ~~the CARES Act~~ includes tax provisions relating to refundable payroll tax credits, ~~deferment~~deferral of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP)~~. At this time, management does not believe that~~, and financing options. These provisions of the CARES Act ~~will~~did not have a material impact on the Company’s income tax provision for ~~2020. The Company will continue to evaluate~~fiscal 2020 or the ~~impact~~first quarter of ~~the CARES Act on its financial position, results of operations and cash flows.~~fiscal 2021.

In November 2015, the Company’s stockholders approved the Company’s 2015 Equity Incentive Plan (the “Plan”). The Plan currently authorizes the issuance of up to 1,500,000 shares of the Company’s common stock pursuant to awards granted under the Plan. The fair value of awards granted under the Plan is expensed on 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, 2020, restricted stock~~There were no awards restricted stock units and stock awards of a total of 187,169 shares, 28,110 shares and 13,550 shares, respectively, were granted under the Plan. During the three months ended March 31, 2020, restricted stock awards, restricted stock units and stock awards of a total of 180,669 shares, 16,000 shares and 13,550 shares, respectively, were granted under the Plan. During the nine months ended March 31, 2019, restricted stock awards and restricted stock units of a total of 6,845 shares and 27,500 shares, respectively, were granted under the Plan. During the three months ended March 31, 2019, restricted stock units of 12,500 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, 2019, and no stock awards were granted under~~September 30, 2020 or 2019.

For the ~~Plan during the nine~~three months ended ~~March 31, 2019. 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. Non-cash~~September 30, 2020 and 2019, non-cash share-based compensation expense under the Plan totaled ~~$1.7 million~~$578,000 and ~~$1.3 million for the nine months ended March 31, 2020 and 2019, respectively, and $809,000 and $449,000 for the three months ended March 31, 2020 and 2019,~~$453,000, respectively.

As of ~~March 31,~~September 30, 2020, the Company had ~~$17.0~~$15.9 million and $1.5 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 ~~17.1~~17.3 years and 16.7 years, respectively.

The following is a summary of non-vested restricted stock activity as of and for the ~~nine~~three months ended ~~March 31,~~September 30, 2020:

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, 2020, 1,022~~There were no shares ~~of common stock were~~ issued under the Company’s employee stock purchase plan ~~for which the Company received net proceeds of $26,000. During~~during the three months ended ~~March 31,~~September 30, 2020 no shares were issued under the Company’s employee stock purchase plan. During the nine months ended March 31, 2019, 726 shares of common stock were issued under the Company’s employee stock purchase plan for which the Company received net proceeds of $23,000. During the three months ended March 31, 2019, no shares were issued under the Company’s employee stock purchase plan.or 2019.

Note (9) – Transactions with Related Parties: 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:

The Company’s wholly-owned subsidiary, Steiner-Atlantic Corp. (“Steiner-Atlantic”), ~~leases~~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 ~~are $12,000.~~were $12,000; provided, however, that the monthly base rent for September and October 2020 was $1. In addition to base rent, Steiner-Atlantic iswas responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately ~~$111,000~~$25,000 and ~~$108,000~~$37,000 during the ~~nine~~three months ended ~~March~~September 30, 2020 and 2019, respectively. The lease expired in accordance with its terms on October 31, 2020, and ~~2019, respectively.~~was not renewed.

On During October ~~10,~~ 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 of the Company. Monthly base rental payments are $12,000 during the initial term of the lease. 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 ~~$108,000~~$36,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019.

On During October ~~31,~~ 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, ~~Inc.~~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~~$63,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019.

On During February 9, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, ~~Inc.~~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 $3,950 during the initial term of the 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. During February 2018, AAdvantage entered into a month-to-month lease agreement with an affiliate of Mike Zuffinetti for a total of 17,000 square feet of warehouse and office space. Monthly base rental payments under this lease were $13,500. This month-to-month lease was terminated on October 31, 2018. In addition, onduring November 1, 2018, AAdvantage entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments 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 increased to $36,000. 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. Payments under the leases described in this paragraph totaled approximately ~~$360,000 and $220,000~~$120,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and ~~2019, respectively.~~2019.

On During September ~~12,~~ 2018, the Company’s wholly-owned subsidiary, Scott Equipment, ~~Inc.~~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, 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 and $77,000~~$34,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and ~~2019, respectively.~~2019.

On During February 5, 2019, the Company’s wholly-owned subsidiary, PAC Industries, ~~Inc.~~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, President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $14,600 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 ~~$132,000~~$45,000 and ~~$29,000~~$44,000 during the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019, respectively.

Note (10) ~~– Recently Issued Accounting Guidance~~: In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” The new guidance will eliminate the second step from the goodwill impairment test required in computing the implied fair value of goodwill. Instead, under the new guidance, an entity will be required to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and, if applicable, the entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the charge recognized should not exceed the total amount of goodwill allocated to that reporting unit. If applicable, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when performing the goodwill impairment test. The amendments in this guidance are effective for public business entities for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2019 (the fiscal year ending June 30, 2021 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 temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include: contract modifications, hedging relationships, and 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 December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the impact that adopting this guidance may have on its consolidated financial statements.

~~Note (11)~~ – Commitments and Contingencies: In the ordinary course of business, certain of the Company’s contracts require the Company to provide performance and payment bonds related to projects in process. These bonds are intended to provide a guarantee to the customer that the Company will perform under the terms of the contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under the contract or pay subcontractors and vendors, the customer 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 ~~each of March 31,~~September 30, 2020 and June 30, ~~2019, outstanding~~2020, no such performance ~~and~~or payment bonds ~~totaled $8.0 million, and there~~ were ~~no estimated costs to complete projects secured by these bonds.~~

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 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 ~~(12)~~(11) – Goodwill: The changes in the carrying amount of goodwill are as follows (in thousands):

On November 3, 2020, the Company acquired Yankee Equipment Systems, Inc. (“Yankee Equipment Systems”), pursuant to a merger whereby Yankee Equipment Systems merged with and into, and became, a wholly-owned subsidiary of the Company. Yankee Equipment Systems is a New Hampshire-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the ~~acquisitions consummated during the nine months ended March 31, 2020, as described in Note 3, “Acquisitions.”~~

~~The Company performed an impairment assessment of its goodwill~~new and ~~other intangible assets due to its conclusion that the impact~~replacement segments of the ~~current COVID-19 pandemic on the Company’s operations~~commercial, industrial and ~~financial results is an indicator that impairment may exist. Based on these impairment assessments,~~vended laundry industry. The consideration paid by the Company ~~determined that there was no impairment~~in connection with the merger totaled approximately $13.5 million, consisting of $6.5 million in cash and 278,385 shares of the Company’s ~~goodwill or other intangible assets as of March 31, 2020.~~

common stock. The Company, indirectly through its wholly-owned subsidiary, also assumed Yankee Equipment Systems’ obligations under the approximately $915,000 loan obtained by it under the PPP.

On April 1, 2020, the Company borrowed approximately $9.0 million under the 2018 Credit Agreement, resulting in approximately $39 million outstanding under the 2018 Credit Agreement. The Company determined to borrow such amount as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic. The Company currently does not have plans to deploy these new funds other than for regular investments and working capital. Borrowings under the 2018 Credit Agreement are scheduled to mature on November 2, 2023. See Note 5, “Debt,” for additional information regarding the 2018 Credit Agreement.

On April 15, 2020, certain subsidiaries of the Company applied for loans totaling approximately $7.3 million in principal amount (the “PPP Loans”) from Fifth Third Bank, N.A., under the Paycheck Protection Program (“PPP”) which was established under the CARES Act. The Company has not yet received any of the PPP Loans and is evaluating its potential acceptance of the PPP Loans, including in light of current guidance and the anticipation of future guidance with respect to PPP Loans. There can be no assurance that the Company will accept or otherwise receive the PPP Loans in whole or in part.

Loans under the PPP have a term of two years and provide for an interest rate of 1.00%, which is deferred for the first six months of the term of the loan, and can be prepaid in whole or in part at any time without penalty. Pursuant to the terms of the CARES Act, the proceeds of loans made under the PPP may be used for payroll costs, rent or utility costs, and each borrower can apply for and be granted forgiveness for all or a portion of the loan. Any such forgiveness is not assured and 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 8-week period after loan origination and the maintenance or achievement of certain employee levels, as well as approval by the lender and the U.S. Small Business Administration, which is administering the PPP under the CARES Act.

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 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 on future developments and are highly uncertain and beyond the Company’s control, the length 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, volatility in the economy, including in the credit markets, supply chain disruptions, reduced demand for products and services, 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, 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 ~~uncertainties regarding~~risks related to the loans under the PPP ~~Loans applied for~~obtained or assumed by the Company’s subsidiaries, that the PPP Loans may not be accepted or otherwise received, in whole or in part, and that, if accepted and received, that forgiveness of the PPP Loans may not be obtained, in whole or in part; technology changes; competition, including the Company’s ability to compete effectively and the impact that competition may have on the Company and certain of its ~~results,~~subsidiaries, including that there is no assurance that any or all of the ~~prices which~~loans will be forgiven and that, while the Company believes that the certifications made by it in connection with the loan applications are accurate, the applications will be reviewed and may ~~charge for its products and services and on~~subject the ~~Company’s profit margins, and competition for qualified employees;~~Company to potential liability if determined to be inaccurate; the Company’s ability to implement its business and growth strategies and plans, including changes thereto; risks and uncertainties associated with the Company’s ~~pursuit of acquisitions and other strategic opportunities,~~”buy-and-build” growth strategy, including, without limitation, that the Company may not be successful in identifying or consummating acquisitions or other strategic opportunities, integration risks, risks related to indebtedness incurred by the Company in connection with financing 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, and risks that the Company’s goals or expectations with respect to acquisitions and other strategic transactions may not be met; 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, or otherwise may not result in the benefits anticipated; 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 growth, including the impact they may have on gross margin and the Company’s 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; 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; 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 higher gross margin sale 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; 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 in future periods 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; 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 ~~this Quarterly Report on Form 10-Q and~~ the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020. Many of these risks and factors are beyond the Company’s control. In addition, dividends are subject to declaration by the Company’s Board of Directors based on factors deemed relevant by it from time to time, may be restricted by the terms of the Company’s indebtedness, and may not be paid in the future, whether with the frequency or in the amounts previously paid or at all, including, without limitation, in light of the impact of the COVID-19 pandemic. 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 of (a) selling, general and administrative expenses at the Company’s operating subsidiaries, primarily 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 facility rent, which is 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, 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.

Prior to the completion of the Company’s first acquisition, the WSD Acquisition (as defined below), pursuant to its “buy-and-build” growth strategy, the Company’s operations consisted primarily of the business and operations of Steiner-Atlantic Corp. (“Steiner-Atlantic”), a wholly-owned subsidiary of the Company. Beginning inDuring 2015, the Company implemented a “buy-and-build” growth. 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 ~~and~~in 2015, the Company has ~~since acquired~~consummated 15 business acquisitions, which includes the ~~following businesses under such growth strategy:~~

~~Acquisitions Completed During the Nine Months Ended March 31,~~Company’s acquisition of Yankee Equipment Systems, Inc. (“Yankee Equipment Systems”) during November 2020,

~~See~~ as described in Note 312 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form ~~10-Q for additional information regarding these acquisitions.~~

~~Each~~10-Q. The Company has effected each business acquisition ~~described above was effected by the Company, indirectly~~ through a separate wholly-owned subsidiary formed by the Company for the purpose of effecting the transaction, whether by an asset purchase or merger, and operating the ~~related~~acquired business following the ~~acquisition, and included both cash consideration and stock consideration in the form of shares of the Company’s common stock.~~transaction. In connection with each ~~asset acquisition,~~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.

The financial position and results of Yankee Equipment Systems following the November 3, 2020 closing date of the acquisition will be included in the Company’s consolidated financial statements beginning with the quarter ending December 31, 2020.

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 increases the Company’s total number of customer relationships, 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.

Finally, it is important to note that, 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 a competent and well-trained sales organization to win 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~~third parties they may retain. Consequently, the recognition of revenue and profit may from time to time ~~may~~ 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.

With the global outbreak of the novel coronavirus, COVID-19, and the declaration of a pandemic by the World Health Organization on March 11, 2020, the Company is keeping the safety of its associates, customers, and suppliers as a top priority while striving to continue to deliver quality products and exceptional service. The Company is monitoring developments and following appropriate recommendations from health and government authorities while proactively seeking to implement safe behaviors, minimize potential exposures, and facilitate safe and healthy environments in the Company’s facilities and at customer locations.

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and ~~is likely to~~may continue to negatively impact, the Company’s business and results. Specifically, ~~the COVID-19 pandemic and accompanying economic disruption have negatively impacted sales and sales contracts, with such decline~~ beginning at the end of the quarter ended March 31, ~~2020. Accordingly,~~2020, the ~~Company experienced a decline~~COVID-19 pandemic and accompanying economic disruption caused delays and declines in ~~revenue for~~ the ~~quarter ended March 31, 2020 compared to~~placement of customer orders, the ~~same period~~completion of equipment and parts installations, and the fulfillment of parts orders. The adverse impact of the ~~prior fiscal year. The Company expects this trend~~COVID-19 pandemic is expected to continue in the near-term and possibly longer, ~~given that state of~~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.~~restrictions, are imposed. In response to the ~~negative sales trend,~~economic and business disruption, the Company has taken actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating ~~credit~~payment terms with suppliers, and reducing hiring activities. The Company continues to actively monitor the COVID-19 pandemic 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.

~~The Company is focused on ensuring ample liquidity~~As a precautionary measure in order to ~~meet business needs as~~increase its cash position and preserve financial flexibility in light of the ~~impact of~~uncertainties resulting from the COVID-19 ~~evolves. To that end,~~pandemic, during ~~April~~May 2020, the Company ~~borrowed approximately $9.0 million under its credit facility~~ and certain of its subsidiaries ~~of the Company applied for~~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 ~~$7.3~~$6.9 million. The Company has not yet received any of the PPP Loans and is evaluating its potential acceptance of the PPP Loans, including in light of current guidance and the anticipation of future guidance with respect to PPP Loans. There can be no assurance that the Company will accept or otherwise receive the PPP Loans in whole or in part. See ~~“Liquidity~~”Liquidity and Capital Resources” below for additional information regarding the PPP Loans as well as information regarding the Company’s credit facility and the additional approximately $915,000 loan under the PPP ~~Loans.~~assumed by the Company, indirectly through its wholly-owned subsidiary, in connection with its acquisition of Yankee Equipment Systems during November 2020.

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. Factors arising from the COVID-19 pandemic that have impacted, or may 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 to manufacture, or the Company’s ability to procure from manufacturers, the products the Company sells, or to meet delivery requirements and commitments; potential limitations on the ability of the Company’s employees to perform their work due to impacts caused by the pandemic or local, state, or federal orders that may restrict the Company’s operations or the operations of its customers, or require that the employees be quarantined; potential limitations on the ability of carriers to deliver products to the Company’s facilities and customers; 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; and decreased demand for products and services.~~all.

See also Part II, Item 1A. - “Risk Factors” of this Quarterly Report on Form 10-Q for further discussion regarding risks related to the COVID-19 pandemic and its impact on, and risks and uncertainties the pandemic poses with respect to, the Company and its business, results, liquidity and financial condition.

Refer to Note 2 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a discussion of recently adopted significant accounting policies.

~~Nine and~~ Three-Month ~~Periods~~Period Ended ~~March 31,~~September 30, 2020 Compared to the ~~Nine and~~ Three-Month ~~Periods~~Period Ended ~~March 31,~~September 30, 2019

Revenues for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020 increased ~~$17.9~~$2.2 million, or ~~11%~~4%, ~~and decreased $249,000, or less than 1%, respectively,~~ compared to the same ~~periods~~period of the prior fiscal year. The increase in ~~revenue for the nine-month period~~revenues was due in part to an increase in revenues from large complex laundry projects for divisions of the federal government, the results of operations of businesses acquired ~~businesses whose results for all~~during or ~~part~~following the three-month period ended September 30, 2019, including primarily Laundry Systems of ~~the nine months ended March 31, 2019 were not included in the Company’s consolidated financial statements for such periods, including Scott~~Tennessee and Commercial Laundry Equipment, ~~Washington Automated, and PAC Industries,~~ and the success of certain sales tactics executed by the Company to increase market share. ~~Revenue for the three-month period was flat due primarily to the adverse impact of COVID-19 on~~These increases in revenues ~~beginning~~were largely offset by a decline in revenues at ~~the end~~certain of the ~~three-month period, including due to~~Company’s operating subsidiaries resulting from the delay in completion of a number of open sales contracts as a result of shelter-in-place orders and other restrictions, and a decrease in revenues from longer-term contracts due to delays in construction and installation as discussed above, partially offset by the results of operations of acquired businesses.COVID-19 pandemic.

Gross profit for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020 ~~increased $4.9 million,~~decreased $501,000, or ~~13%~~4%, ~~and $407,000, or 3%, respectively,~~ compared to the same ~~periods~~period of the prior fiscal year, primarily as a result of ~~increased~~product and customer mix. Specifically, while overall revenues ~~for~~were higher in the ~~nine-month~~current period and increased gross margin during the three-month period. Gross margins increased from 22.5% to 23.0% and from 22.6% to 23.4% for the nine and three-month periods ended March 31, 2020, respectively, eachwhen compared to the same period of the prior fiscal ~~year. The increases were primarily~~year, a larger proportion of the revenue was attributed to ~~product and customer mix.~~

~~Further, as described above, from time to time the Company enters into longer-term contracts, including to fulfill~~ large complex laundry projects for divisions of the federal ~~government. These~~government, which in general have lower gross margins than other equipment sales. Gross margins decreased from 24.8% for the three-month period ended September 30, 2019 to 23% for the three-month period ended September 30, 2020, primarily as a result of product and customer mix as described above.

As previously described, while the 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, adversely impact the Company’s gross margin, ~~for periods in which a significant number of these contracts are entered into. However,~~ the Company believes that these contracts will result in higher margin opportunities over the long-term. During the nine and three month periods ended March 31, 2020 and March 31, 2019, the Company entered into a number of longer-term federal government contracts, which adversely impacted the Company’s gross margin for each such period. In the absence of such longer-term federal government contracts, gross margins for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020 as compared to the same ~~periods~~period of the prior fiscal year ~~decreased 1.5%~~increased 1.4% to ~~23.9% and 1.3% to 23.7%, respectively.~~26.7%.

Operating expenses ~~increased $7.1 million,~~decreased $116,000, or ~~22%, and $1.2 million, or 9%~~1%, for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020, compared to the same ~~periods~~period of the prior fiscal year. The ~~increase~~decrease in operating expenses resulted primarily from ~~the Company’s continued execution of its “buy-and-build” growth strategy and~~a decrease in sales commissions as well other ~~expenses~~cost saving initiatives, including those described above in connection with the Company’s ~~growth and growth initiatives.~~

~~The increase in operating expenses is primarily attributable~~response to ~~(a) additional post-acquisition operating expenses associated with acquired businesses not reflected in operating expenses for~~ the ~~prior fiscal year period, (b)~~COVID-19 pandemic. These decreases were largely offset by additional operating expenses ~~at the~~of businesses acquired businesses in pursuit of future growth and in support of the Company’s growing operations, (c) increases in operating expenses at the parent company level in connection with the Company’s growth, including greater accounting fees and expenses, legal fees, and insurance costs, (d) the addition of sales, service, and operations support professionals and related costs, as total personnel at March 31, 2020 increased by 11% compared to total personnel at March 31, 2019, with 80% of such increase attributable to sales and service related personnel, (e) increased investments in sales, service, and operations related technologies in support of the Company’s “buy-and-build” growth strategy, and (f) an increase in non-cash amortization expense relatedduring or subsequent to the ~~intangible assets the Company acquired in connection with its acquisitions, an increase in depreciation expense and an increase in non-cash share-based compensation.~~

As a result of the foregoing, operating expenses as a percentage of revenues for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020 were ~~21.7% and 22.8%, respectively,~~21.5% compared to ~~19.7% and 20.8%~~22.5% for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31, 2019, respectively.~~September 30, 2019.

Net interest expense for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020 ~~were $1.2 million and $343,000, respectively,~~was $169,000 compared to ~~$942,000 and $403,000, respectively,~~$422,000 for the same ~~periods~~period of the prior fiscal year. The ~~increase in net interest expense for the nine-month period is primarily due an increase in average outstanding borrowings, partially offset by a decrease in the average effective interest rate. The~~ decrease in net interest expense ~~for the three-month period~~ is primarily due to a decrease in average outstanding borrowings and a decrease in the average effective interest rate.

The Company’s effective tax ~~rates were 32.9% and 250.0%~~rate was 28.7% for the ~~nine and~~ three-month ~~periods~~period ended ~~March 31,~~September 30, 2020 ~~respectively,~~ compared to ~~31.7% and 33.8%~~32.5% for the same ~~periods~~period of the prior fiscal ~~year, respectively.~~year. The ~~increase~~decrease in the effective tax rate ~~for the nine and three-month periods ended March 31, 2020~~ is attributable to ~~an increase in the net impact of permanent book-tax differences resulting primarily from nondeductible compensation, partially offset by~~ lower effective state tax rates from increased income apportionment to states with lower tax rates.

Net income ~~(loss)~~ for the ~~nine and~~ three months ended ~~March 31,~~September 30, 2020 was ~~$831,000 and $(12,000), respectively,~~$518,000 compared to net income of ~~$2.5 million and $466,000~~$580,000 for the same ~~periods~~period of the prior fiscal ~~year, respectively. As described above,~~year. While the ~~increases~~Company experienced an increase in revenue and a decrease in operating expenses, the decrease in gross profit as described above resulted in a decrease in net income for the nine-month period were offset by operating expense increases, including increases in (a) operating expenses related to acquired businesses, (b) operating expenses in support of the Company’s buy-and-build efforts and initiatives, and (c) the increase in non-cash charges related to the amortization of intangible assets, depreciation expense and share-based compensation.period. The adverse impact of the COVID-19 pandemic ~~also contributed to the decrease in~~on net income ~~particularly with respect to~~was partially offset by certain of the ~~three-month period ended March 31, 2020.~~Company’s cost saving initiatives and an increase in overall revenues, which were driven largely by sales of lower margin large complex laundry projects for divisions of the federal government.

The Company’s total assets increased from ~~$154.5~~$160.7 million at June 30, ~~2019~~2020 to ~~$158.4~~$164.0 million at ~~March 31,~~September 30, 2020. The increase in total assets was primarily ~~attributable~~due to ~~the adoption of the new lease accounting standard effective July 1, 2019, resulting~~an increase in ~~the establishment of an~~contract assets, operating lease ~~asset,~~assets and ~~the~~other assets ~~the Company acquired in connection with the acquisitions consummated by the Company during the nine months ended March 31, 2020,~~ partially offset by a decrease in ~~accounts receivable~~cash and vendor deposits. The increase in contract ~~assets.~~assets is due in large part to the increase in large complex laundry projects for divisions of the federal government. The Company’s total liabilities ~~decreased~~increased from ~~$73.0~~$72.9 million at June 30, ~~2019~~2020 to ~~$71.0~~$75.1 million at ~~March 31,~~September 30, 2020, which was primarily attributable to increases in accounts payable and accrued expenses, customer deposits, operating lease liabilities and contract liabilities, partially offset by a decrease in ~~long-term debt offset by the adoption of the new lease accounting standard effective July 1, 2019, resulting in the establishment of an operating lease liability, and an increase in customer deposits.~~total debt.

For the ~~nine-month~~three-month period ended ~~March 31,~~September 30, 2020, cash decreased by approximately ~~$1.1~~$4.7 million compared to an increase of approximately ~~$5.4 million~~$223,000 during the ~~nine-month~~three-month period ended ~~March 31,~~September 30, 2019.

Working capital decreased from ~~$37.2~~$22.2 million at June 30, ~~2019~~2020 to ~~$26.9~~$16.4 million at ~~March 31,~~September 30, 2020, primarily reflecting lower levels of ~~accounts receivable and contract assets, an increase in customer deposits and the utilization of~~ cash on hand, which was used to pay off long-term debt, ~~as well as the adoption~~and vendor deposits and higher levels of ~~the new lease accounting standard effective July 1, 2019, resulting in the establishment of a current operating lease liability,~~accounts payable and accrued expenses, customer deposits and contract liabilities, partially offset by ~~lower~~higher levels of ~~accrued employee expenses. The~~contact assets and other current assets and a decrease in ~~accounts receivable~~the current portion of long-term debt. The increases in contract assets and contract liabilities were due in large part to the increase in large complex laundry projects for divisions of the federal government, as described above. The increase in customer deposits was primarily attributable to ~~the timing of collection of payments and~~ more stringent standards regarding the extension of credit on new sales amid the COVID-19 pandemic. ~~The decrease in contract assets is due to decreased amounts that were owed related to progress billing on longer-term contracts.~~

The following table summarizes the Company’s cash flow activity for the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019 (in thousands):

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~~three months ended ~~March 31,~~September 30, 2020, operating activities provided cash of ~~$14.3~~$4.3 million compared to ~~cash used by operating activities of $9.6~~$1.8 million during the ~~nine~~three months ended ~~March 31,~~September 30, 2019. This ~~$23.9~~$2.5 million increase in cash provided by operating activities was primarily attributable to changes in working capital, including ~~a decrease~~increases from changes in ~~accounts receivable, inventory and contract assets and an increase in customer deposits, partially offset by a decrease in~~operating liabilities such as accounts payable and accrued ~~expenses.~~expenses and contract liabilities, partially offset by decreases from changes in operating assets such as contract assets and accounts receivable.

Net cash used in investing activities decreased ~~$10.2 million~~$613,000 to ~~$4.1~~$997,000 during the three months ended September 30, 2020 compared to $1.6 million during the ~~nine~~three months ended ~~March 31, 2020 compared to $14.3 million during the nine months ended March 31,~~September 30, 2019. This ~~$10.2 million~~$613,000 decrease was ~~primarily~~ attributable to ~~a decrease~~decreases in cash used for acquisitions ~~partially offset by an increase in cash used for~~and capital expenditures. The increase in capital expenditures is due in part to expenses in furtherance of certain growth initiatives, including primarily expenditures related to the laundry route and rental business in which certain of the Company’s subsidiaries are engaged.

For the ~~nine~~three months ended ~~March 31,~~September 30, 2020, financing activities used cash of ~~$11.3~~$8.0 million compared to no net cash ~~provided~~used by financing activities ~~of $29.3 million~~ during the ~~nine~~three months ended ~~March 31,~~September 30, 2019. This ~~$40.6~~$8.0 million increase in cash used by financing activities was ~~primarily~~ attributable to the use of cash on hand and cash provided by operating activities during the ~~nine~~three months ended ~~March 31,~~September 30, 2020 ~~which were used~~ to make optional debt repayments in excess of proceeds from borrowings compared to proceeds from borrowings in excess of debt repayments during the nine months ended March 31, 2019. Borrowings during the nine months ended March 31, 2019 were used primarily to fund the changes in working capital during such period and the cash consideration paid in connection with the acquisitions consummated by the Company during such period.borrowings.

On November 2, 2018, the Company entered into a syndicated credit agreement (the “2018 Credit Agreement”) for a revolving credit facility with a five-year term and a 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 the revolving credit facility to fund in part its working capital needs, acquisitions, dividends (if and to the extent declared by the Company’s Board of Directors), capital expenditures, amounts paid to satisfy tax withholding obligations upon the vesting of certain restricted stock awards, issuances of letters of credit, and for other general corporate purposes. 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. ~~The 2018 Credit Agreement replaced the Company’s previous credit facility, which was repaid in full with borrowings of $20.8 million under the 2018 Credit Agreement.~~

~~The Company is focused on ensuring ample liquidity to meet business needs as the impact of COVID-19 evolves. To that end, on April 1,~~On May 21, 2020, the Company ~~borrowed approximately $9.0 million under the Company’s existing 2018 Credit Agreement. In addition, on April 15, 2020,~~and certain of its subsidiaries ~~of the Company applied for loans~~received PPP Loans totaling approximately ~~$7.3~~$6.9 million in principal amount ~~(the “PPP Loans”)~~ from Fifth Third Bank, N.A., (the “Lender”) under the ~~Paycheck Protection Program (“PPP”) which was~~PPP established under the CARES Act. ~~The Company has not yet received any of~~Each PPP Loan is evidenced by a promissory note dated May 21, 2020 (each, a “Promissory Note”) issued by the ~~PPP Loans and is evaluating its potential acceptance of~~applicable borrower to the PPP Loans, including in light of current guidance and the anticipation of future guidance with respect to PPP Loans. There can be no assurance that the Company will accept or otherwise receive the PPP Loans in whole or in part.

~~Loans under the PPP have a~~Lender. The term of each PPP Loan is two ~~years and provide for an~~years. The interest rate ofon each PPP Loan is 1.00%, which is deferred for the first six months of the term of the ~~loan,~~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 ~~can~~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. ~~Pursuant~~

The proceeds of the PPP Loans have been and are expected to be used for payroll costs but may also be used for other permitted purposes under the CARES Act, including rent or utility costs. Under the terms of the CARES Act, ~~the proceeds of loans made under the PPP may be used for payroll costs, rent or utility costs, and~~ each borrower can apply for ~~and be granted~~ forgiveness for all or a portion of the ~~loan. Any such~~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 ~~is not assured and~~ 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 ~~8-week~~24-week period after loan origination and the maintenance or achievement of certain employee ~~levels, as well as~~levels. While the Company believes that the proceeds of the PPP Loans have been used, and expects that any remaining proceeds will be 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~~Lender and the U.S. Small Business Administration, which is administering the PPP under the CARES ~~Act.~~ Act, and there can be no assurance that any or all of the PPP Loans will be forgiven in whole or in part.

In addition to the PPP Loans obtained by the Company and certain of its subsidiaries during May 2020, the Company, indirectly through its wholly-owned subsidiary, also assumed an approximately $915,000 loan under the PPP in connection with the Company’s acquisition of Yankee Equipment Systems during November 2020. See Note 12 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information.

The Company believes that its existing cash, ~~and cash equivalents,~~ 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. ~~While market conditions are not currently favorable in light of the current economic environment and the~~The Company ~~has no plans to do so, the Company~~ may ~~in the future~~ 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 ~~pursued or~~ consummated by the Company as part of its “buy-and-build” growth strategy. As described above, certain subsidiaries of the Company have applied for approximately $7.3 million of PPP Loans, although there is no assurance that any or all of such funds will be accepted or otherwise received.

As previously described, the Company has in place an equity incentive plan, the EVI Industries, Inc. 2015 Equity Incentive Plan (the “Plan”), pursuant to which restricted stock and other equity-based awards and cash awards may be granted to participants in the Plan. Upon request by a holder of restricted stock granted under the Plan, the Company may issue shares upon vesting net of the statutory 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 reduce additional paid-in capital within shareholders’ equity 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. During the nine months ended March 31, 2020 and 2019, share repurchases related to shares withheld upon the vesting of previously granted restricted stock awards were approximately $425,000 and $359,000, respectively.

The Company had no off-balance sheet financing arrangements within the meaning of Item 303(a)(4) of Regulation S-K at ~~March 31,~~September 30, 2020.

Inflation did not have a significant effect on the Company’s results during any of the reported periods.

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:

The Company’s wholly-owned subsidiary, Steiner-Atlantic ~~leases~~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 ~~are $12,000.~~were $12,000; provided, however, that the monthly base rent for September and October 2020 was $1. In addition to base rent, Steiner-Atlantic iswas responsible under the lease for costs related to real estate taxes, utilities, maintenance, repairs and insurance. Payments under this lease totaled approximately ~~$111,000~~$25,000 and ~~$108,000~~$37,000 during the ~~nine~~three months ended ~~March~~September 30, 2020 and 2019, respectively. The lease expired in accordance with its terms on October 31, 2020, and ~~2019, respectively.~~was not renewed.

OnDuring October ~~10,~~ 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 of the Company. Monthly base rental payments are $12,000 during the initial term of the lease. 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 ~~$108,000~~$36,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019.

During October ~~31,~~ 2017, the Company’s wholly-owned subsidiary, Tri-State Technical Services, ~~Inc.~~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~~$63,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019.

OnDuring February 9, 2018, the Company’s wholly-owned subsidiary, AAdvantage Laundry Systems, ~~Inc.~~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 $3,950 during the initial term of the 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. During February 2018, AAdvantage entered into a month-to-month lease agreement with an affiliate of Mike Zuffinetti for a total of 17,000 square feet of warehouse and office space. Monthly base rental payments under this lease were $13,500. This month-to-month lease was terminated on October 31, 2018. In addition, onduring November 1, 2018, AAdvantage entered into a lease agreement pursuant to which it leases warehouse and office space from an affiliate of Mike Zuffinetti. Monthly base rental payments 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 increased to $36,000. 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. Payments under the leases described in this paragraph totaled approximately ~~$360,000 and $220,000~~$120,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and ~~2019, respectively.~~2019.

During September ~~12,~~ 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, 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 and $77,000~~$34,000 during each of the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and ~~2019, respectively.~~

OnDuring February 5, 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, President of PAC Industries, and Rocco Costabile, former Director of Finance of PAC Industries. Monthly base rental payments total $14,600 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 ~~$132,000~~$45,000 and ~~$29,000~~$44,000 during the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019, respectively.

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~~“Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations~~Operations” section of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, except with respect to the adoption of the new lease accounting standard as described in Note 2 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.2020.

See Note 103 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~~. 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 on borrowings under the Company’s 2018 Credit Agreement accrue at a rate, at the Company’s election at the time of borrowing, equal to (a) LIBOR plus a margin that ranges 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 from 0.25% to 0.75% depending on the Consolidated Leverage Ratio. As of ~~March 31,~~September 30, 2020, the Company had approximately ~~$30.0~~$13.0 million of outstanding borrowings under the 2018 Credit Agreement with a weighted average interest rate of ~~2.41%~~1.65%. Based on the amounts outstanding at ~~March 31,~~September 30, 2020, a hypothetical 1% increase in daily interest rates would increase the Company’s annual interest expense by approximately ~~$300,000.~~$130,000.

See Notes 5 and 13 to the unaudited condensed consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q for a discussion of borrowings incurred under the Company’s 2018 Credit Agreement and the PPP Loans applied for by the Company’s subsidiaries subsequent to March 31, 2020.

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,~~September 30, 2020 or June 30, ~~2019.~~2020.

The Company’s cash ~~and cash equivalents are~~is maintained in bank accounts which bear interest at prevailing interest rates. At ~~March 31,~~September 30, 2020, 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,~~September 30, 2020, 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,~~September 30, 2020, 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, ~~2019.~~2020.

There have been no material changes in the ~~other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider~~risks and uncertainties that the ~~risk factors discussed~~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, 2019, as well as the risk factor below, which supplements and should be read in conjunction with the risk factors disclosed in ” in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, any and all of which could materially affect the Company and its business, financial condition, or results. Except as described below, there have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019. The risks described in this Quarterly Report on Form 10-Q and in in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019 are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company and its business, financial condition, or results.2020.

~~The COVID-19 pandemic has had, and are expected to continue to have, negative impacts on the Company’s business, results and financial condition.~~

The COVID-19 pandemic has been, and continues to be, an unprecedented disruption in the economy and has negatively impacted, and is likely to continue to negatively impact, the Company’s business and results. Specifically, the COVID-19 pandemic and accompanying economic disruption have negatively impacted sales and sales contracts, with such decline beginning at the end of the quarter ended March 31, 2020. Accordingly, the Company experienced a decline in revenue for the quarter ended March 31, 2020 compared to the same period of the prior fiscal year. The Company expects this trend to continue in the near-term and possibly longer given that state of the pandemic and, among other matters related thereto, governmental actions, including, without limitation, business restrictions. In response to the negative sales trend, the Company has taken actions to reduce costs and spending across the organization, including changes to inventory stock levels, renegotiating credit terms with suppliers, and reducing hiring activities. While these steps were implemented to mitigate the effects of the pandemic on the Company’s business, the measures themselves may have negative consequences with respect to the Company’s business and operations. In addition, the cost savings sought to be achieved from these measures may not be recognized immediately and will not completely offset the decrease in revenues and other adverse impacts of the pandemic. The Company continues to actively monitor the COVID-19 pandemic 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 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. Factors arising from the COVID-19 pandemic that have impacted, or may negatively impact, the Company’s business and results, including sales and gross margin, in the future include, but are not limited to: limitations on the ability of suppliers to manufacture, or the Company’s ability to procure from manufacturers, the products the Company sells, or to meet delivery requirements and commitments; limitations on the ability of the Company’s employees to perform their work due to impacts caused by the pandemic or local, state, or federal orders that restrict the Company’s operations or the operations of its customers; limitations on the ability of carriers to deliver products to the Company’s facilities and customers; limitations on the ability of the Company’s customers to conduct their business, purchase products and services and pay for purchases on a timely basis or at all; and decreased demand for products and services. In addition, the impact of the COVID-19 pandemic may require the Company to record impairments with respect to its goodwill or other intangible assets in the future. The Company’s business, results and operations could also be negatively affected further if its employees are quarantined or sickened as a result of exposure to COVID-19, or if they are subject to governmental COVID-19 curfews or “shelter in place” health orders.

As a precautionary measure in order to increase its cash position and preserve financial flexibility in light of uncertainty in the global markets resulting from the COVID-19 pandemic, the Company borrowed approximately $9.0 million under its 2018 Credit Agreement on April 1, 2020. In addition, on April 15, 2020, certain subsidiaries of the Company applied for loans totaling approximately $7.3 million in principal amount (the “PPP Loans”) from Fifth Third Bank, N.A., under the Paycheck Protection Program (“PPP”) which was established under the CARES Act. The Company has not yet received any of the PPP Loans and is evaluating its potential acceptance of the PPP Loans, including in light of current guidance and the anticipation of future guidance with respect to PPP Loans. There can be no assurance that the Company will accept or otherwise receive the PPP Loans in whole or in part. Loans under the PPP have a term of two years and provide for an interest rate of 1.00%, which is deferred for the first six months of the term of the loan, and can be prepaid in whole or in part at any time without penalty. Pursuant to the terms of the CARES Act, the proceeds of loans made under the PPP may be used for payroll costs, rent or utility costs, and each borrower can apply for and be granted forgiveness for all or a portion of the loan. Any 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 8-week period after loan origination and the maintenance or achievement of certain employee levels, as well as approval by the lender and the U.S. Small Business Administration, which is administering the PPP under the CARES Act. Accordingly, to the extent the Company’s subsidiaries receive PPP Loans, no assurance could be provided that any or all of the PPP Loans would be forgiven and, while the Company believes that the certifications made by it in connection with their PPP Loan applications are accurate, guidance on the matter is uncertain and changing and the applications will be reviewed and may subject the Company to potential liability if determined to be inaccurate. In addition, the increase in the Company’s debt position will, among other things, increase the Company’s vulnerability to adverse economic conditions and require the Company to meet significant debt service obligations.

The situation surrounding COVID-19 remains fluid. 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 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 has subsided, the Company may continue to experience adverse impacts to its business as a result of, among other things, any economic impact that has occurred or may occur in the future.

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, 2020			June 30, 2019
Revolving Line of Credit	$	30,000		$	40,800
Less: unamortized discount and deferred financing costs		(196	)		(237	)
Total long-term debt	$	29,804		$	40,563

	September 30, 2020			June 30, 2020
Revolving Line of Credit	$	13,000		$	21,000
PPP Loans		6,892			6,892
Less: unamortized discount and deferred financing costs		(168	)		(182	)
Total debt, net		19,724			27,710
Less: current maturities of long-term debt		(383	)		(2,680	)
Total long-term debt	$	19,341		$	25,030

Fiscal years ending June 30,	Fiscal years ending June 30,	Total Operating Lease Obligations (in thousands)		Total Operating Lease Obligations (in thousands)
2020 (remainder of)		$	533
2021			1,823
2021 (remainder of)				$	1,578
2022			1,609		1,909
2023			1,199		1,507
2024			392		708
2025					491
Thereafter			692		2,107
Total minimum lease payments		$	6,248	$	8,300
Less: amounts representing interest			444		711
Present value of minimum lease payments		$	5,804	$	7,589
Less: current portion			1,744		1,882
Long-term portion		$	4,060	$	5,707

	Nine months ended March 31, 2020		Three months ended September 30, 2020
Operating lease cost
Operating lease cost (1)	$	1,412	$	474
Short-term lease cost (1)		153		12
Variable lease cost (1)		113		116
Total lease cost	$	1,678	$	602

	~~March 31,~~ September 30, 2020
Weighted average remaining lease terms
Operating leases	5.9 years
~~Operating leases~~		~~4.1 years~~
Weighted average discount rate
Operating leases	3.2%	~~3.5%~~

	For the nine months ended March 31,				For the three months ended March 31,
	2020		2019		2020			2019

Revenues	$	181,379	$	163,436	$	59,041		$	59,290
Cost of sales		139,640		126,615		45,211			45,867
Gross profit		41,739		36,821		13,830			13,423
Selling, general and administrative expenses		39,302		32,180		13,479			12,316
Operating income		2,437		4,641		351			1,107
Interest expense, net		1,198		942		343			403
Income before provision for income taxes		1,239		3,699		8			704
Provision for income taxes		408		1,172		20			238
Net income (loss)	$	831	$	2,527	$	(12	)	$	466
Net earnings (loss) per share – basic	$	0.06	$	0.20	$	(0.00	)	$	0.04
Net earnings (loss) per share - diluted	$	0.06	$	0.20	$	(0.00	)	$	0.04

ASSETS
	March 31, 2020 (Unaudited)		June 30, 2019
Current assets
Cash and cash equivalents	$	3,917	$	5,038
Accounts receivable, net of allowance for doubtful accounts of $382 and $323, respectively		26,560		30,557
Inventories, net		27,108		26,445
Vendor deposits		613		403
Contract assets		116		2,487
Other current assets		3,430		2,938
Total current assets		61,744		67,868

Equipment and improvements, net		7,971		5,865
Operating lease assets		5,780		—
Intangible assets, net		22,189		22,351
Goodwill		56,574		54,501
Other assets		4,186		3,900
Total assets	$	158,444	$	154,485

LIABILITIES AND SHAREHOLDERS’ EQUITY
	March 31, 2020 (Unaudited)			June 30, 2019
Current liabilities
Accounts payable and accrued expenses	$	17,647		$	17,508
Accrued employee expenses		4,070			5,187
Customer deposits		10,510			7,163
Contract liabilities		834			854
Current portion of operating lease liabilities		1,744			—
Total current liabilities		34,805			30,712


Deferred tax liabilities, net		2,347			1,708
Long-term operating lease liabilities		4,060			—
Long-term debt, net		29,804			40,563

Total liabilities		71,016			72,983

Commitments and contingencies (Note 11)

Common stock related to acquiree’s Employee Stock Ownership Plan (“ESOP”)		—			4,240

Shareholders’ equity
Preferred stock, $1.00 par value; authorized shares – 200,000; none issued and outstanding		—			—
Common stock, $.025 par value; authorized shares - 20,000,000; 12,002,793 shares issued at March 31, 2020 and 11,825,615 shares issued at June 30, 2019, including shares held in treasury		300			296
Additional paid-in capital		78,526			73,010
Retained earnings		10,466			9,635
Treasury stock, 88,306 shares at March 31, 2020 and 72,934 shares at June 30, 2019, at cost		(1,864	)		(1,439	)
Common stock related to acquiree’s ESOP		—			(4,240	)
Total shareholders’ equity		87,428			77,262
Total liabilities and shareholders’ equity	$	158,444		$	154,485

	Nine months ended March 31, 2020
														Common
														Stock
					Additional									Related to
	Common Stock				Paid-in		Treasury Stock					Retained		Acquiree’s
	Shares		Amount		Capital		Shares		Cost			Earnings		ESOP			Total
Balance at June 30, 2019		11,825,615	$	296	$	73,010		72,934	$	(1,439	)	$	9,635	$	(4,240	)	$	77,262

Share repurchases		—		—		—		15,372		(425	)		—		—			(425	)

Vesting of restricted shares		29,880		—		—		—		—			—		—			—

Issuance of shares under employee stock purchase plan		1,022		—		26		—		—			—		—			26

Issuance of shares in connection with acquisitions		132,726		4		3,766		—		—			—		4,240			8,010

Stock compensation		13,550		—		1,724		—		—			—		—			1,724

Net income		—		—		—		—		—			831		—			831
Balance at March 31, 2020		12,002,793	$	300	$	78,526		88,306	$	(1,864	)	$	10,466	$	—		$	87,428

	Three months ended March 31, 2020
															Common
															Stock
					Additional										Related to
	Common Stock				Paid-in		Treasury Stock					Retained			Acquiree’s
	Shares		Amount		Capital		Shares		Cost			Earnings			ESOP		Total
Balance at December 31, 2019		11,893,567	$	297	$	75,244		83,044	$	(1,748	)	$	10,478		$	—	$	84,271

Share repurchases		—		—		—		5,262		(116	)		—			—		(116	)

Issuance of shares in connection with acquisitions		95,676		3		2,473		—		—			—			—		2,476

Stock compensation		13,550		—		809		—		—			—			—		809

Net loss		—		—		—		—		—			(12	)		—		(12	)
Balance at March 31, 2020		12,002,793	$	300	$	78,526		88,306	$	(1,864	)	$	10,466		$	—	$	87,428

	Nine months ended March 31, 2019
															Common
															Stock
					Additional										Related to
	Common Stock				Paid-in		Treasury Stock					Retained			Acquiree’s
	Shares		Amount		Capital		Shares		Cost			Earnings			ESOP			Total
Balance at June 30, 2018		11,239,656	$	281	$	49,950		52,686	$	(711	)	$	7,511		$	—		$	57,031

Dividends paid ($.13 per share)		—		—		—		—		—			(1,619	)		—			(1,619	)

Share repurchases		—		—		—		10,123		(359	)		—			—			(359	)

Vesting of restricted shares		28,170		—		—		—		—			—			—			—

Issuance of shares under employee stock purchase plan		726		—		23		—		—			—			—			23

Issuance of shares in connection with acquisitions		530,525		13		21,277		—		—			—			(4,240	)		17,050

Stock compensation		—		—		1,287		—		—			—			—			1,287

Net income		—		—		—		—		—			2,257			—			2,527
Balance at March 31, 2019		11,799,077	$	294	$	72,537		62,809	$	(1,070	)	$	8,419		$	(4,240	)	$	75,940

	Three months ended March 31, 2019
														Common
														Stock
					Additional									Related to
	Common Stock				Paid-in		Treasury Stock					Retained		Acquiree’s
	Shares		Amount		Capital		Shares		Cost			Earnings		ESOP			Total
Balance at December 31, 2018		11,619,230	$	290	$	65,440		62,809	$	(1,070	)	$	7,953	$	—		$	72,613

Issuance of shares in connection with acquisitions		179,847		4		6,648		—		—			—		(4,240	)		2,412

Stock compensation		—		—		449		—		—			—		—			449

Net income		—		—		—		—		—			466		—			466
Balance at March 31, 2019		11,799,077	$	294	$	72,537		62,809	$	(1,070	)	$	8,419	$	(4,240	)	$	75,940

	For the nine months ended
	March 31, 2020			March 31, 2019
Operating activities:
Net income	$	831		$	2,527
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization		2,692			1,894
Amortization of debt discount		41			82
Provision for bad debt expense		136			181
Non-cash lease expense		24			—
Share-based compensation		1,724			1,287
Inventory reserve		133			125
Provision for deferred income taxes		416			234
Other		(85	)		—
(Increase) decrease in operating assets:
Accounts receivable		4,961			(4,847	)
Inventories		902			(5,759	)
Vendor deposits		(210	)		(438	)
Contract assets		2,371			(2,445	)
Other assets		(602	)		(1,384	)
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses		(1,076	)		2,899
Accrued employee expenses		(1,168	)		(1,600	)
Customer deposits		3,257			(2,629	)
Contract liabilities		(20	)		255
Net cash provided (used) by operating activities		14,327			(9,618	)
Investing activities:
Capital expenditures		(2,785	)		(1,741	)
Cash paid for acquisitions, net of cash acquired		(1,334	)		(12,542	)
Net cash used by investing activities		(4,119	)		(14,283	)
Financing activities:
Dividends paid		—			(1,619	)
Proceeds from borrowings		8,000			110,963
Debt repayments		(18,930	)		(79,435	)
Payment of debt issuance costs		—			(272	)
Repurchases of common stock in satisfaction of employee tax withholding obligations		(425	)		(359	)
Issuances of common stock under employee stock purchase plan		26			23
Net cash (used) provided by financing activities		(11,329	)		29,301
Net (decrease) increase in cash and cash equivalents		(1,121	)		5,400
Cash and cash equivalents at beginning of period		5,038			1,330
Cash and cash equivalents at end of period	$	3,917		$	6,730

	For the nine months ended March 31,				For the three months ended March 31,
	2020 (Unaudited)		2019 (Unaudited)		2020 (Unaudited)			2019 (Unaudited)

Net income (loss)	$	831	$	2,527	$	(12	)	$	466
Less: distributed and undistributed income (loss) allocated to unvested restricted common stock		68		181		—			33
Net income (loss) allocated to EVI Industries, Inc. shareholders	$	763	$	2,346	$	(12	)	$	433
Weighted average shares outstanding used in basic earnings per share		11,815		11,463		11,872			11,666
Dilutive common share equivalents		373		497		—			479
Weighted average shares outstanding used in diluted earnings per share		12,188		11,960		11,872			12,145
Basic earnings per share	$	0.06	$	0.20	$	(0.00	)	$	0.04
Diluted earnings per share (1)	$	0.06	$	0.20	$	(0.00	)	$	0.04

Fiscal years ending June 30,
2020	$	1,922
2021		1,554
2022		1,332
2023		1,031
2024		179
Total minimum lease payments	$	6,018

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2020 (remainder of)	$	599	$	267	$	332
2021		1,356		856		500
2022		1,002		584		418
2023		734		371		363
2024		476		196		280
Thereafter		286		127		159
					$	2,052	*

Fiscal years ending June 30,	Total Minimum Lease Payments Receivable		Amortization of Unearned Income		Net Investment in Sales Type Leases
2021 (remainder of)	$	1,341	$	702	$	639
2022		1,313		682		631
2023		913		457		456
2024		589		261		328
2025		230		109		121
Thereafter		299		135		164
					$	2,339*
* Excludes residual values of $1.7 million.

	Restricted Stock Awards					Restricted Stock Units
	Shares			Weighted- Average Grant Date Fair Value		Shares		Weighted- Average Grant Date Fair Value
Non-vested awards or units outstanding at June 30, 2019		855,854		$	18.62		27,500	$	36.24
Granted		187,169			22.57		28,110		24.51
Vested		(29,880	)		16.59		—		—
Forfeited		—			—		—		—
Non-vested awards or units outstanding at March 31, 2020		1,013,143		$	19.41		55,610	$	30.31

	Restricted Stock Awards				Restricted Stock Units
	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
Granted		—		—		—		—
Vested		—		—		—		—
Forfeited		—		—		—		—
Non-vested awards or units outstanding at September 30, 2020		987,220	$	19.40		55,610	$	30.31

Balance at June 30, 2019	$	54,501
Goodwill from acquisitions¹		1,990
Other		83
Balance at March 31, 2020	$	56,574

Balance at June 30, 2020	$	56,678
Working capital adjustments (1)		(37	)
Balance at September 30, 2020	$	56,641

	Nine Months Ended March 31,
	2020			2019
Net cash provided (used) by:
Operating activities	$	14,327		$	(9,618	)
Investing activities	$	(4,119	)	$	(14,283	)
Financing activities	$	(11,329	)	$	29,301

	Three Months Ended September 30,
	2020			2019
Net cash provided (used) by:
Operating activities	$	4,319		$	1,833
Investing activities	$	(997	)	$	(1,610	)
Financing activities	$	(8,000	)	$	—

~~Exhibit~~
Number	Description

*2.1	Agreement and Plan of Merger, dated October 9, 2020, by and among EVI Industries, Inc. and Yankee Equipment Systems, LLC, on the one hand, and Yankee Equipment Systems, Inc., Limoncelli Family 2020 Revocable Trust U/I/D June 29, 2020, and Peter Limoncelli, on the other hand (The schedules and exhibits to this agreement are omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally to the SEC, upon request, a copy of any omitted schedule or exhibit).

*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~~
101.INS	XBRL Instance Document
~~101.SCH~~
101.SCH	XBRL Taxonomy Extension Schema Document
~~101.CAL~~
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Date: ~~May 11,~~November 9, 2020		EVI Industries, Inc.


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