On February 7, 2022, the Company acquired Consolidated Laundry Equipment, Inc. and Central Equipment Company, LLC (collectively “CLK”), pursuant to a merger whereby CLK merged with and into, and became, a wholly-owned subsidiary of the Company (the “CLK Acquisition”). CLK is a North Carolina-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. This acquisition expanded the Company’s footprint in the Southeast region of the United States. The consideration paid by the Company in connection with the merger consisted of $4.5 million in cash and 179,087 shares of the Company’s common stock. The Company funded the cash consideration with borrowings under its credit facility. Fees and expenses related to the CLK Acquisition, consisting primarily of legal and other professional fees, totaled approximately $45,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2022. The total purchase price for accounting purposes was $7.2 million, net of cash acquired of $1.2 million.

EVI Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The CLK Acquisition was treated for accounting purposes as a purchase of CLK using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations. Under the acquisition method of accounting, the aggregate consideration paid in the CLK Acquisition was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the net assets acquired being allocated to intangible assets and goodwill. The computation of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the following tables (in thousands):

Purchase price consideration:
Cash consideration, net of cash acquired(a)	$	3,346
Stock consideration(b)		3,840
Total purchase price consideration, net of cash acquired	$	7,186

(a) Includes $4.5 million paid net of $1.2 million of cash acquired.

(b) Calculated as 179,087 shares of the Company’s common stock, multiplied by $21.44, the closing price of the Company’s common stock on the closing date.

Allocation of purchase price consideration:
Accounts receivable	$	1,322
Inventories		2,074
Vendor Deposits		170
Other assets		835
Equipment and improvements		841
Intangible assets		1,700
Accounts payable and accrued expenses		(948	)
Accrued employee expenses		(62	)
Customer deposits		(689	)
Deferred tax liabilities		(622	)
Total identifiable net assets		4,621
Goodwill		2,565
Total	$	7,186

The Company has finalized its fair value assessment of the assets acquired and liabilities assumed, except for certain working capital items, including accounts receivable, inventories, other assets and accounts payable and accrued expenses. The amounts for those items are preliminary and subject to change as additional information to assist in determining their respective fair values as of the closing date is obtained during the post-closing measurement period of up to one year.

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

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

CDL Acquisition

On June 1, 2022, the Company acquired Clean Designs, Inc. and Clean Route, LLC (collectively “CDL”). The acquisition (the “CDL Acquisition”) was effected by the Company, indirectly through a wholly-owned subsidiary, which purchased substantially all of the assets and assumed certain of the liabilities of CDL. CDL is a Colorado -based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. This acquisition expanded the Company’s footprint in the West region of the United States. The consideration paid by the Company in connection with the acquisition consisted of $5.4 million in cash. The Company funded the cash consideration with borrowings under its credit facility. Fees and expenses related to the CDL Acquisition, consisting primarily of legal and other professional fees, totaled approximately $65,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2022. The total purchase price for accounting purposes was $5.4 million.

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EVI Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The CDL Acquisition was treated for accounting purposes as a purchase of CDL using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, the aggregate consideration paid in the CDL Acquisition was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the identifiable net assets acquired being allocated to goodwill. The computation of the purchase price consideration and the preliminary allocation of the consideration to the net assets acquired are presented in the following tables (in thousands):

Purchase price consideration:
Cash consideration	$	5,366
Total purchase price consideration	$	5,366

Allocation of purchase price consideration:
Accounts receivable	$	920
Inventories		1,286
Other assets		161
Equipment and improvements		770
Intangible assets		1,580
Accounts payable and accrued expenses		(1,357	)
Accrued employee expenses		(72	)
Customer deposits		(336	)
Total identifiable net assets		2,952
Goodwill		2,414
Total	$	5,366

Intangible assets consist of $590,000 allocated to the Clean Designs trade name and $990,000 allocated to customer-related intangible assets. The Clean Designs trade name is indefinite-lived and therefore not subject to amortization. The Clean Designs trade name will be evaluated for impairment annually or more frequently if an event occurs or circumstances change that indicate it may be impaired, by comparing its fair value to its carrying amount to determine if a write-down to fair value is required. Customer-related intangible assets are being amortized over 10 years.

Goodwill is expected to be amortized and deductible for tax purposes over 15 years. Goodwill is attributable primarily to the assembled workforce acquired, as well as benefits from the increased scale of the Company as a result of the CDL Acquisition.

Other fiscal 2022 acquisitions

In addition to the CLK Acquisition and the CDL Acquisition, during fiscal 2022, the Company completed the acquisition of the following two companies: (i) LS Acquisition, LLC d/b/a Laundry South Systems and Repair (“LSS”), which was acquired on April 29, 2022; and (ii) Spynr, Inc. (“SPR”), which was acquired on May 5, 2022. The total consideration for these two transactions consisted of $3.2 million in cash and 34,391 shares of the Company’s common stock. The Company funded the cash consideration for each acquisition with credit facility borrowings. Fees and expenses related to these acquisitions, consisting primarily of legal and other professional fees, totaled approximately $46,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for fiscal 2022. 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. The Company allocated a total of $2.2 million to goodwill, $760,000 to customer-related intangibles, and $460,000 to the respective trade names. Goodwill totaling $2.2 million from these acquisitions is expected to be amortized and deductible for tax purposes over 15 years. Goodwill is attributable primarily to the assembled workforces, as well as benefits from the increased scale of the Company as a result of these acquisitions.

YES Acquisition

On November 3, 2020, the Company acquired Yankee Equipment Systems, Inc. (“YES”), pursuant to a merger whereby YES merged with and into, and became, a wholly-owned subsidiary of the Company (the “YES Acquisition”). YES is a New Hampshire-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. This acquisition expanded the Company’s footprint in the Northeast region of the United States. The consideration paid by the Company in connection with the merger consisted of $4.5 million in cash, net of $792,000 cash acquired, and 278,385 shares of the Company’s common stock. The Company funded the cash consideration with borrowings under its credit facility. Fees and expenses related to the YES Acquisition, consisting primarily of legal and other professional fees, totaled approximately $144,000 and are classified as selling, general and administrative expenses in the Company’s consolidated statement of operations for the year ended June 30, 2021. The total purchase price for accounting purposes was $13.8 million, which included cash acquired of $792,000.

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EVI Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The YES Acquisition was treated for accounting purposes as a purchase of YES using the acquisition method of accounting in accordance with ASC 805, Business Combinations. Under the acquisition method of accounting, the aggregate consideration in the YES Acquisition was allocated to the acquired assets and assumed liabilities, in each case, based on their respective fair values as of the closing date, with the excess of the consideration transferred over the fair value of the identifiable assets acquired being allocated to goodwill. The computation of the purchase price consideration and the allocation of the consideration to the net assets acquired are presented in the following tables (in thousands):

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

(a) Includes $5.3 million paid net of $792,000 of cash acquired.

(b) Calculated as 278,385 shares of the Company’s common stock, multiplied by $30.61, the closing price of the Company’s common stock on the closing date.

Allocation of purchase price consideration:
Accounts receivable	$	1,482
Inventory		1,591
Other assets		1,812
Equipment and improvements		1,844
Intangible assets		3,800
Accounts payable and accrued expenses		(1,901	)
Accrued employee expenses		(534	)
Customer deposits		(525	)
Deferred tax liabilities		(887	)
Assumption of debt		(916	)
Total identifiable net assets		5,766
Goodwill		7,230
Total	$	12,996

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

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

ELS Acquisition

On January 15, 2021, the Company acquired Baystate Business Ventures d/b/a Eastern Laundry Systems (“ELS”), a Massachusetts-based distributor of commercial, industrial, and vended laundry products and provider of installation and maintenance services to the new and replacement segments of the commercial, industrial and vended laundry industry. The acquisition was effected by the Company, indirectly through a wholly-owned subsidiary, which purchased substantially all of the assets and assumed certain of the liabilities of ELS. The total consideration for the transaction consisted of $400,000 in cash, net of $57,000 of cash acquired, and the issuance of 10,726 shares of the Company’s common stock. The Company funded the cash consideration for the acquisition with credit facility borrowings. The acquisition was treated for accounting purposes as a purchase of the acquired business using the acquisition method of accounting in accordance with ASC 805, Business Combinations, pursuant to which the consideration paid by the Company was allocated to the acquired assets and assumed liabilities, based on their respective fair values as of the closing date. Under ASC 805, if the fair value of the acquired net assets exceeds the purchase price, then a bargain purchase gain in the amount of such excess is recognized in the applicable condensed consolidated statement of operations. Based on the Company’s analysis of working capital and valuation-related items, the Company recognized a bargain purchase gain of $314,000 in connection with the acquisition of ELS, which is included as interest and other (expense), net in the consolidated statement of operations for the year ended June 30, 2021.

Supplemental Pro Forma Results of Operations

The following unaudited supplemental pro forma information presents the results of operations of the Company, after giving effect to the acquisitions completed by the Company during fiscal 2022 and 2021 as described above, as if the Company had completed each such transaction on July 1, 2020, using the estimated fair values of the assets acquired and liabilities assumed. These unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the Company would have been if the transactions had occurred on the date assumed, nor are they indicative of future results of operations.

	For the year ended June 30,
(in thousands)	2022 (Unaudited)		2021 (Unaudited)
Revenues	$	284,392	$	278,323
Net income		6,018		11,496

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EVI Industries, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

The Company’s consolidated results of operations for fiscal 2022 include total revenue of approximately $35.6 million and total net income of approximately $1.2 million attributable to businesses acquired during fiscal 2022 and 2021, based on the consolidated effective tax rate. The Company’s consolidated results of operations for fiscal 2021 include total revenue of approximately $16.8 million and total net income of approximately $201,000 attributable to businesses acquired during fiscal 2021, based on the consolidated effective tax rate. These results of acquired businesses do not include the effects of acquisition costs or interest expense associated with consideration paid for the related acquisitions.