EVI INDUSTRIES, INC. (EVI) Business

Item 1. Business.

General

The Company was incorporated under
the laws of the State of Delaware on June 13, 1963.

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

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

The Company’s growth strategy
includes the pursuit of organic growth initiatives and a “buy-and-build” growth strategy. The Company’s “buy-and-build”
growth strategy includes (i) the consideration and pursuit of acquisitions and other strategic transactions which management believes
may complement the Company’s existing business or otherwise offer growth opportunities for, or benefit, the Company and (ii) the
implementation of 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 additional 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. See “Buy-and-Build Growth Strategy” below for additional information regarding the Company’s “buy-and-build”
growth strategy.

The Company seeks to maintain
a culture designed to reward performance through a variety of performance-based pay, commission programs, cash incentives, and stock-based
equity programs. Stock-based plans include a voluntary employee stock purchase plan and an equity compensation plan under which restricted
stock and other equity awards may be granted. The Company’s equity compensation plan is designed to promote long-term performance,
as well as to create long-term employee retention and continuity of leadership, and align the interests of management and employees with
the long-term success of the Company. The Company believes that its restricted stock program promotes this culture and long-term performance
because restricted stock grants generally provide for long-term vesting, including in certain cases entirely at the end of the recipient’s
career (age 62 or later).

The Company reports its results
of operations through a single operating and reportable segment.

Available Information

The Company files Annual Reports
on Form 10-K and Quarterly Reports on Form 10-Q, files or furnishes Current Reports on Form 8-K, files or furnishes amendments to those
reports, and files proxy and information statements with the SEC. These reports and statements, as well as beneficial ownership reports

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filed by the Company’s officers
and directors and beneficial owners of 10% or more of the Company’s common stock, may be accessed free of charge on the SEC’s
website at http://www.sec.gov and, as soon as reasonably practicable after such materials are electronically filed with, or furnished
to, the SEC, on the Company’s website at http://www.evi-ind.com. The information contained on or connected to the Company’s
website is not incorporated by reference into, or otherwise a part of, this Report. Further, references to the website URL of the Company
in this Report are intended to be inactive textual references only.

Products and Services

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 commercial and industrial
laundry equipment distributed by the Company includes washroom, finishing, material handling, and mechanical equipment such as washers
and dryers, tunnel systems and vended machines, many of which are designed to reduce utility and water consumption. Finishing equipment
distributed by the Company includes sheet feeders, flatwork ironers, automatic sheet folders, and stackers. Material handling equipment
distributed by the Company includes conveyor and rail systems. Mechanical equipment distributed by the Company includes boilers, hot water/steam
systems, power generation products, water purification, reuse and recycling systems and air compressors. Boiler products distributed by
the Company include high efficiency, low emission steam boilers, steam systems and hot water systems that are used in the laundry and
dry cleaning industry for temperature control, heating, pressing and de-wrinkling, and in the healthcare industry, food and beverage industry,
and other industrial markets, for sterilization, product sealing and other purposes. The Company also sells replacement parts and accessories
for the products it distributes.

The Company seeks to position
and price its products to appeal to customers in each of the high-end, mid-range and value-priced markets, as the products are generally
offered in a wide range of price points to address the needs of a diverse customer base. The Company believes that its portfolio of products
affords the Company’s customers a “one-stop shop” for commercial, industrial and vended laundry and dry cleaning machines,
boilers and accessories and that, as a result, the Company is able to attract and support potential customers who can choose from the
Company’s broad product line.

In addition to its distribution
of products, the Company also provides installation, maintenance and repair services to its customers. The Company believes its services
are competitively priced.

Buy-and-Build Growth Strategy

As
described above, in addition to its pursuit of organic growth initiatives, the Company’s growth strategy includes a “buy-and-build”
growth strategy. The “buy” component of the strategy includes the consideration and pursuit of acquisitions and other strategic
transactions which management believes would complement the Company’s existing business or otherwise offer growth opportunities
for, or benefit, the Company. The Company is disciplined and conservative in its consideration of acquisitions and generally seeks to
identify opportunities that fit certain financial and strategic criteria. The “build” component of the

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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. Depending on
the size of the acquisition and other factors, including market conditions at the time, the Company purchases the acquired businesses
using cash and/or stock consideration consisting of shares of the Company’s common stock. The Company believes the issuance of stock
consideration in transactions aligns the interests of the sellers of the acquired businesses with the interests of the Company’s
other stockholders. The sellers as well as other key individuals at the acquired businesses may also be provided with the opportunity
to own shares of the Company’s common stock through equity-based plans of the Company.

Acquisitions are generally effected
by the Company through an existing or newly-formed subsidiary which acquires (whether by an asset purchase, stock purchase or merger)
and operates the acquired business following the transaction. The Company, indirectly through its subsidiary, also assumes 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.

See “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” included as Part II, Item 7 of this Report and Note 3
to the Consolidated Financial Statements included in Item 8 of this Report for additional information about the acquisitions consummated
by the Company during fiscal 2024 and fiscal 2025, as well as an acquisition consummated by the Company subsequent to the fiscal 2025
year-end.

Customers and Markets

The Company’s customer
base consists of approximately 55,000 customers located primarily in the United States, Canada, the Caribbean, and Latin America. No
single customer accounted for more than 10% of the Company’s revenues for fiscal 2025 or fiscal 2024.

The Company’s commercial
and industrial laundry equipment and related products are sold or leased to a wide range of customers, including, but not limited to,
vended laundry facilities, industrial laundry facilities, government institutions, correctional facilities, hospitals, hospital combines,
nursing homes, veterinary clinics, professional sports franchises, educational institutions, hotels, motels, food and beverage establishments,
cruise lines, and specialized users.

Historically, the Company
has not noted any significant seasonality.

Sales, Marketing and Customer Support

The Company employs sales personnel
to market its products in the United States, Canada, the Caribbean, and Latin America. The Company has exclusive and nonexclusive distribution
rights to market its products. Orders for equipment and replacement parts and accessories are generally obtained by telephone, and e-mail
inquiries originated by the customer or by the Company, from existing customer relationships and from newly formed customer relationships.
The Company supports its sales and leasing

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activities through its websites and by advertising online and in trade publications, participating
in trade shows and engaging in regional promotions and incentive programs.

The Company seeks to establish
customer satisfaction by offering:

The Company trains its employees
to provide service and customer support. The Company uses in-person classroom training, instructional videos and vendor sponsored seminars
to educate employees about product information. In addition, the Company’s technical staff has prepared training manuals, written
in English and Spanish, relating to specific training procedures. The Company’s technical personnel are retrained as the Company
believes to be necessary, including in connection with the development of new technology.

Foreign Sales

Foreign sales do not
represent a significant portion of the Company’s business. The Company’s revenues from foreign sales relate principally
to sales of commercial and industrial laundry and dry cleaning equipment and boilers to Canada, the Caribbean, and Latin America.
All of the Company’s foreign sales require the customer to make payment in United States dollars. The Company’s sales to
foreign buyers may be affected by the strength of the United States economy relative to the countries where its customers are
located. The Company had no foreign exchange contracts outstanding at June 30, 2025 or 2024. As discussed elsewhere in this Report,
including in “Item 1A. Risk Factors,” foreign sales may also be impacted by governmental measures, including trade
policies, barriers and tariffs.

Sources of Supply

The Company purchases commercial and industrial laundry products, dry cleaning
machines, boilers and other products for distribution from a number of domestic and foreign manufacturers and suppliers. The major manufacturers
of the products sold by the Company are American Dryer Corporation, Chicago Dryer Company, Cleaver Brooks Inc., Girbau S.A., Dexter Laundry,
Inc., Fulton Thermal Corp., Kannegiesser ETECH, Maytag Corporation, Pellerin Milnor Corporation, Unipress Corporation, Softrol Systems,
Inc., Fagor Commercial, Inc., and Whirlpool Corporation. Purchases from four manufacturers accounted for a total of approximately 72%
and 73% of the Company’s product purchases for fiscal 2025 and 2024, respectively. No other manufacturers accounted for more than
10% of product purchases during fiscal 2025 or fiscal 2024. The Company believes that it has good working relationships with its current
manufacturers and suppliers. The Company has contracts with several of the manufacturers and suppliers of the products which the Company
sells and has established, long-standing relationships with most of its

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manufacturers
and suppliers. The Company believes that such relationships provide the Company with certain competitive advantages, including
exclusivity for certain products in certain areas and, in certain cases, favorable pricing and other terms. While the Company has
generally not experienced difficulty in purchasing products it distributes, the effects of, and uncertainties surrounding,
international tariffs could result in disruption in fulfilling orders and increases in product costs.

The Company purchases products
from a number of foreign suppliers. The Company’s purchases from foreign suppliers may be affected by the strength of the United
States dollar relative to the currencies of the countries where its suppliers are located. Particularly, a weaker U.S. dollar would result
in increased costs, which in turn would negatively affect the Company’s operating results. The Company has, at times in the past,
paid certain suppliers in Euros. The Company had no foreign exchange contracts outstanding at June 30, 2025 or 2024. As discussed elsewhere
in this Report, including in “Item 1A. Risk Factors,” foreign purchases may also be impacted by governmental measures, including
trade policies, barriers and tariffs.

In connection with certain business
acquisitions, the business relationship between the acquired business and its principal supplier ceased. As a result, the businesses distributed
other brands from one or more of the Company’s other suppliers. The Company does not believe that any such brand switches have had
a material adverse impact on the Company as a whole. However, there is no assurance that the Company or any of its acquired businesses
will maintain its relationships with any of its suppliers, and the loss of certain of these relationships, including the loss of a relationship
with a principal supplier and any inability to successfully mitigate the effect of the loss of such supplier, could adversely affect the
Company’s business and results. See also “The Company’s business and results may be adversely affected if the Company
does not maintain its relationships with its significant suppliers or customers” under “Item 1A. Risk Factors” below.

Due to special options and features
on most of the larger and more expensive equipment ordered by customers, in most instances, the Company purchases the equipment distributed
by it after its receipt of orders from its customers. However, from time to time, including in fiscal 2025 and fiscal 2024, the Company
purchased inventory in advance to take advantage of favorable pricing at the time or for other purposes, including to support the Company’s
sales growth initiatives in new distribution territories and in support of growth initiatives related to the establishment of new manufacturer
and supplier distribution relationships. The Company also maintains an inventory of more standardized and smaller-sized equipment that
often requires more rapid delivery to meet customer needs.

Competition

The commercial and industrial
laundry and boiler distribution business is highly competitive and fragmented, with over 500 full-line or partial-line equipment distributors
in the United States. The Company’s management believes that no one competitor has a major share of the market, substantially all
competitors are independently owned, and, with the exception of several regional distributors, distributors operate primarily in local
markets. In the United States, the Company’s primary competition is from a number of independently owned distributors and certain
foreign manufacturers which own distribution businesses operating in North America. In foreign markets, the Company also competes with
several independently owned distributors and manufacturer-owned distribution businesses. Competition is based primarily on a distributor’s
ability to effectively plan and design optimal commercial and industrial laundry facilities, competitive pricing, representation of reliable
and high-quality products, in-house installation, maintenance, and repair services, available and on-time delivery of equipment, parts,
and accessories, and the ability to provide continuous support services to the customer. The Company seeks to compete in these areas by
employing experienced and successful professionals, by offering a comprehensive product line,

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by employing a robust network of qualified
installation and service technicians, by maintaining optimized inventories of equipment, parts, and accessories at well-located facilities
and on service vehicles, by investing in advanced technologies designed to improve the customer experience, and by expansion of its suite
of value-added services.

Research and Development

The Company’s research and
development efforts and expenses are generally immaterial as most of the Company’s products are distributed for manufacturers that
perform their own research and development.

Service Marks and Tradenames

The Company is the owner of certain
service marks in the United States. The Company intends to use and protect its service marks, tradenames and other intellectual property,
as necessary.

Compliance with Environmental and Other Government Laws and Regulations

Over the past several decades,
federal, state, local and foreign governments have enacted environmental protection laws in response to public concerns about the environment.
A number of industries, including the commercial and industrial dry cleaning and laundry equipment industries, are subject to these evolving
laws and implementing regulations. As a supplier to the industry, the Company serves customers who are primarily responsible for compliance
with environmental regulations. Among the United States federal laws that the Company believes are applicable to the industry are the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, which provides for the investigation and remediation of
hazardous waste sites, the Resource Conservation and Recovery Act of 1976, as amended, which regulates the generation and transportation
of hazardous waste as well as its treatment, storage and disposal, and the Occupational Safety and Health Act of 1970, which regulates
exposure to toxic substances and other health and safety hazards in the workplace. In addition, most states and a number of local jurisdictions
have environmental protections which are at least as stringent as the federal laws. The Company is also subject to rules and regulations
with respect to its contracts and dealings with government facilities.

Human Capital Resources

As of August 1, 2025, the Company
had 850 full and part-time employees. All of the Company’s employees are based in the United States. None of the Company’s
employees are subject to a collective bargaining agreement. The Company believes that its relations with its employees are satisfactory.

The Company believes that, in
order to compete and succeed in the highly competitive and fragmented commercial and industrial laundry industry, it is crucial to continue
to attract and retain experienced employees. The Company strives to create a workplace that is diverse, innovative, and safe for its
employees. The Company seeks to attract highly qualified and diverse talent and to provide its employees with growth opportunities, competitive
compensation and benefits, and a variety of training and development programs.

As described above, the Company
seeks to maintain a culture designed to reward performance through a variety of performance-based pay, commission programs, cash incentives,
and stock-based equity

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programs. Stock-based plans include
a voluntary employee stock purchase plan and an equity compensation plan under which restricted stock and other equity awards may be
granted. The Company’s equity compensation plan is designed to promote long-term performance, as well as to create long-term employee
retention and continuity of leadership, and align the interests of management and employees with the long-term success of the Company.
The Company believes that its restricted stock program promotes this culture and long-term performance because restricted stock grants
generally provide for long-term vesting, including in certain cases entirely at the end of the recipient’s career (age 62 or later).

In addition, as previously described,
the Company uses in-person classroom training, instructional videos and vendor sponsored seminars to educate and train its sales personnel
about product information. In addition, the Company’s technical staff has prepared training manuals, written in English and Spanish,
relating to specific training procedures. The Company’s technical personnel are retrained as the Company believes to be necessary,
including in connection with the development of new technology.