LSI INDUSTRIES INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data) Three Months Ended Nine Months Ended March 31, March 31, 2026 2025 2026 2025 Net sales $ 150,525 $ 132,481 $ 454,776 $ 418,310 Cost of products and services sold 112,286 99,638 338,826 316,959 Gross profit 38,239 32,843 115,950 101,351 Selling and administrative expenses 34,163 26,608 92,037 77,526 Operating income 4,076 6,235 23,913 23,825 Interest expense 474 661 1,794 2,264 Other (income)/expense 244 (22 ) 671 300 Income before income taxes 3,358 5,596 21,448 21,261 Income tax expense 1,267 1,713 5,745 5,049 Net income $ 2,091 $ 3,883 $ 15,703 $ 16,212 Earnings per common share (see Note 6) Basic $ 0.06 $ 0.13 $ 0.50 $ 0.54 Diluted $ 0.06 $ 0.13 $ 0.48 $ 0.53 Weighted average common shares outstanding Basic 33,018 30,003 31,531 29,841 Diluted 33,855 30,966 32,387 30,790 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 3 Table of Contents LSI INDUSTRIES INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (In thousands) Three Months Ended Nine Months Ended March 31, March 31, 2026 2025 2026 2025 Net income $ 2,091 $ 3,883 $ 15,703 $ 16,212 Foreign currency translation adjustment (238 ) 262 (192 ) 105 Comprehensive income $ 1,853 $ 4,145 $ 15,511 $ 16,317 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 4 Table of Contents LSI INDUSTRIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except shares) March 31, June 30, 2026 2025 ASSETS Current assets Cash and cash equivalents $ 10,333 $ 3,457 Accounts receivable, less allowance for credit losses of $1,192 and $1,152, respectively 135,794 104,347 Inventories 116,589 79,818 Refundable income tax 2,579 - Other current assets 13,876 6,544 Total current assets 279,171 194,166 Property, plant and equipment, at cost Land 4,010 4,029 Buildings 24,934 24,575 Machinery and equipment 107,612 77,858 Construction in progress 1,690 989 138,246 107,451 Less accumulated depreciation (80,441 ) (76,297 ) Net property, plant and equipment 57,805 31,154 Goodwill 208,444 64,548 Intangible assets, net 200,215 78,258 Operating lease right-of-use assets 51,633 17,187 Deferred tax assets - 7,302 Other long-term assets, net 3,281 3,747 Total assets $ 800,549 $ 396,362 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 5 Table of Contents LSI INDUSTRIES INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands, except shares) March 31, June 30, 2026 2025 LIABILITIES & SHAREHOLDERS' EQUITY Current liabilities Current maturities of long-term debt $ 58,000 $ 3,571 Accounts payable 68,813 48,526 Accrued expenses 61,465 45,252 Total current liabilities 188,278 97,349 Long-term debt, less current maturities 203,006 44,986 Operating lease liabilities 40,995 12,047 Other long-term liabilities 3,323 4,695 Deferred tax liabilities 8,850 3,209 Commitments and contingencies (Note 14) 3,286 3,354 Shareholders' Equity Preferred shares, without par value; Authorized 1,000,000 shares, none issued - - Common shares, without par value; Authorized 50,000,000 shares; Outstanding 36,697,563 and 30,054,532 shares, respectively 274,900 163,692 Treasury shares, without par value (11,283 ) (10,011 ) Key Executive Compensation 11,283 10,011 Retained earnings 77,274 66,201 Accumulated other comprehensive income 637 829 Total shareholders' equity 352,811 230,722 Total liabilities & shareholders' equity $ 800,549 $ 396,362 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 6 Table of Contents LSI INDUSTRIES INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) Accumulated Common Shares Treasury Shares Key Executive Other Total (In thousands, except per share data) Number Of Number Of Compensation Retained Comprehensive Shareholders' Shares Amount Shares Amount Amount Earnings Income (Loss) Equity Balance at June 30, 2024 29,222 $ 156,365 (1,036 ) $ (8,895 ) $ 8,895 $ 47,788 $ 202 $ 204,355 Net Income - - - - - 6,682 - 6,682 Other comprehensive (loss) - - - - - - (109 ) (109 ) Board stock compensation 8 113 - - - - - 113 ESPP stock awards 3 45 - - - - - 45 Restricted stock units issued, net of shares withheld for tax withholdings 492 (204 ) - - - - - (204 ) Shares issued for deferred compensation 32 487 - - - - - 487 Activity of treasury shares, net - - 42 140 - - - 140 Deferred stock compensation - - - - (140 ) - - (140 ) Stock-based compensation expense - 1,047 - - - - - 1,047 Stock options exercised, net 39 248 - - - - - 248 Dividends — $0.20 per share - - - - - (1,481 ) - (1,481 ) Balance at September 30, 2024 29,796 $ 158,101 (994 ) $ (8,755 ) $ 8,755 $ 52,989 $ 93 $ 211,183 Net Income - - - - - 5,647 - 5,647 Other comprehensive (loss) - - - - - - (48 ) (48 ) Board stock compensation 7 112 - - - - - 112 ESPP stock awards 5 65 - - - - - 65 Restricted stock units issued, net of shares withheld for tax withholdings 26 (374 ) - - - - - (374 ) Shares issued for deferred compensation 27 507 - - - - - 507 Activity of treasury shares, net - - (28 ) (506 ) - - - (506 ) Deferred stock compensation - - - - 506 - - 506 Stock-based compensation expense - 1,141 - - - - - 1,141 Stock options exercised, net 30 374 - - - - - 374 Dividends — $0.20 per share - - - - - (1,492 ) - (1,492 ) Balance at December 31, 2024 29,891 $ 159,926 (1,022 ) $ (9,261 ) $ 9,261 $ 57,144 $ 45 $ 217,115 Net Income - - - - - 3,883 - 3,883 Other comprehensive gain - - - - - - 262 262 Board stock compensation 6 112 - - - - - 112 ESPP stock awards 4 49 - - - - - 49 Restricted stock units issued, net of shares withheld for tax withholdings 16 114 - - - - - 114 Shares issued for deferred compensation 24 447 - - - - - 447 Activity of treasury shares, net - - (15 ) (404 ) - - - (404 ) Deferred stock compensation - - - - 404 - - 404 Stock-based compensation expense - 1,007 - - - - - 1,007 Stock options exercised, net 47 220 - - - - - 220 Dividends — $0.20 per share - - - - - (1,496 ) - (1,496 ) Balance at March 31, 2025 29,988 $ 161,875 (1,037 ) $ (9,665 ) $ 9,665 $ 59,531 $ 307 $ 221,713 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 7 Table of Contents LSI INDUSTRIES INC. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) Accumulated Common Shares Treasury Shares Key Executive Other Total (In thousands, except per share data) Number Of Number Of Compensation Retained Comprehensive Shareholders' Shares Amount Shares Amount Amount Earnings Income (Loss) Equity Balance at June 30, 2025 30,054 $ 163,692 (1,052 ) $ (10,011 ) $ 10,011 $ 66,201 $ 829 $ 230,722 Net Income - - - - - 7,264 - 7,264 Other comprehensive (loss) - - - - - - (197 ) (197 ) Board stock compensation 8 135 - - - - - 135 ESPP stock awards 4 55 - - - - - 55 Restricted stock units issued, net of shares withheld for tax withholdings 377 297 - - - - - 297 Shares issued for deferred compensation 22 443 - - - - - 443 Activity of treasury shares, net - - (13 ) (341 ) - - - (341 ) Deferred stock compensation - - - - 341 - - 341 Stock-based compensation expense 1,109 - - - - - 1,109 Stock options exercised, net 613 3,023 - - - - - 3,023 Dividends — $0.20 per share - - - - - (1,525 ) - (1,525 ) Balance at September 30, 2025 31,078 $ 168,754 (1,065 ) $ (10,352 ) $ 10,352 $ 71,940 $ 632 $ 241,326 Net Income - - - - - 6,348 - 6,348 Other comprehensive gain - - - - - - 243 243 Board stock compensation 6 135 - - - - - 135 ESPP stock awards 6 94 - - - - - 94 Restricted stock units issued, net of shares withheld for tax withholdings - 13 - - - - - 13 Shares issued for deferred compensation 24 492 - - - - - 492 Activity of treasury shares, net - - (24 ) (493 ) - - - (493 ) Deferred stock compensation - - - - 493 - - 493 Stock-based compensation expense 1,001 - - - - - 1,001 Stock options exercised, net - - - - - - - - Dividends — $0.20 per share - - - - - (1,555 ) - (1,555 ) Balance at December 31, 2025 31,114 $ 170,489 (1,089 ) $ (10,845 ) $ 10,845 $ 76,733 $ 875 $ 248,097 Net Income - - - - - 2,091 - 2,091 Other comprehensive (loss) - - - - - - (238 ) (238 ) Board stock compensation 2 45 - - - - - 45 ESPP stock awards 5 58 - - - - - 58 Restricted stock units issued, net of shares withheld for tax withholdings 5 (96 ) - - - - - (96 ) Shares issued for deferred compensation 21 438 - - - - - 438 Activity of treasury shares, net - - (21 ) (438 ) - - - (438 ) Deferred stock compensation - - - - 438 - - 438 Equity raise 5,290 98,109 - - - - - 98,109 Shares used in the acquisition of a business 227 5,000 - - - - - 5,000 Stock-based compensation expense 716 - - - - - 716 Stock options exercised, net 34 141 - - - - - 141 Dividends — $0.20 per share - - - - - (1,550 ) - (1,550 ) Balance at March 31, 2026 36,698 $ 274,900 (1,110 ) $ (11,283 ) $ 11,283 $ 77,274 $ 637 $ 352,811 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 8 Table of Contents LSI INDUSTRIES INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended (In thousands) March 31, 2026 2025 Cash Flows from Operating Activities Net income $ 15,703 $ 16,212 Non-cash items included in net income Depreciation and amortization 9,820 9,020 Deferred income taxes 2,024 270 Deferred compensation plan 1,373 1,441 Stock compensation expense 2,826 3,195 ESPP discount 207 159 Issuance of common shares as compensation 315 337 (Gain) loss on disposition of fixed assets 52 (21 ) Allowance for credit losses (178 ) 93 Inventory obsolescence reserve (687 ) 607 Changes in certain assets and liabilities: Accounts receivable 5,721 (15,606 ) Inventories (3,684 ) 131 Refundable income taxes (787 ) 304 Accounts payable 3,426 11,532 Accrued expenses and other (6,890 ) 2,781 Customer prepayments 3,348 (1,836 ) Net cash flows provided by operating activities 32,589 28,619 Cash Flows from Investing Activities Proceeds from the sale of fixed assets 116 50 Acquisition of Royston (net of cash acquired and shares used in purchase) (331,846 ) - Acquisition of CBH (net of cash acquired) 262 (22,797 ) Acquisition of EMI - (59 ) Purchases of property, plant, and equipment (3,358 ) (2,515 ) Net cash flows (used in) investing activities (334,826 ) (25,321 ) Cash Flows from Financing Activities Payments on long-term debt (1,222,825 ) (145,537 ) Borrowings on long-term debt 1,435,273 146,668 Equity raise 98,109 - Cash dividends paid (4,630 ) (4,469 ) Shares withheld on employees' taxes 214 (463 ) Payments on financing lease obligations - (253 ) Proceeds from stock option exercises 3,164 842 Net cash flows provided by (used in) financing activities 309,305 (3,212 ) Change related to foreign currency (192 ) 105 Increase in cash and cash equivalents 6,876 191 Cash and cash equivalents at beginning of period 3,457 4,110 Cash and cash equivalents at end of period $ 10,333 $ 4,301 The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these financial statements. Page 9 Table of Contents LSI INDUSTRIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The interim condensed consolidated financial statements are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, and rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the interim financial statements include all normal adjustments and disclosures necessary to present fairly the Company’s financial position as of March 31, 2026, the results of its operations for the three and nine-month periods ended March 31, 2026, and 2025, and its cash flows for the nine-month periods ended March 31, 2026, and 2025. These statements should be read in conjunction with the financial statements and footnotes included in the fiscal 2025 Annual Report on Form 10-K. Financial information as of June 30, 2025, has been derived from the Company’s audited consolidated financial statements. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation: A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of the Company’s fiscal 2025 Annual Report on Form 10-K. Revenue Recognition: The Company recognizes revenue when it satisfies the performance obligation in its customer contracts or purchase orders. Most of the Company’s products have a single performance obligation which is satisfied at a point in time when control is transferred to the customer. Control is generally transferred at the time of shipment when title and risk of ownership passes to the customer. For customer contracts with multiple performance obligations, the Company allocates the transaction price and any discounts to each performance obligation based on relative standalone selling prices. Payment terms are typically within 30 to 90 days from the shipping date, depending on the terms with the customer. The Company offers standard warranties that do not represent separate performance obligations. Installation is a separate performance obligation, except for the Company’s digital signage products. For digital signage products, installation is not a separate performance obligation as the product and installation is the combined item promised in digital signage contracts. The Company is not always responsible for installation of products it sells and has no post-installation responsibilities other than standard warranties. A number of the Company's display solutions and select lighting products are customized for specific customers. As a result, these customized products do not have an alternative use. For these products, the Company has a legal right to payment for performance to date and generally does not accept returns on these items. The measurement of performance is based upon cost plus a reasonable profit margin for work completed. Because there is no alternative use and there is a legal right to payment, the Company transfers control of the item as the item is being produced and therefore recognizes revenue over time. The customized product types are as follows: ● Customer Main Identification (MID) signage, print / digital graphics, and customer specific metal and millwork products ● Electrical components based on customer specifications The Company also offers installation services for its display solutions elements and select lighting products. Installation revenue is recognized over time as the customer simultaneously receives and consumes the benefits provided through the installation process. For these customized products and installation services, revenue is recognized using a cost-based input method: recognizing revenue and gross profit as work is performed based on the relationship between the actual cost incurred and the total estimated cost for the performance obligation. Page 10 Table of Contents On occasion, the Company enters into bill-and-hold arrangements on a limited basis. Each bill-and-hold arrangement is reviewed and revenue is recognized only when certain criteria have been met: (1) the customer has requested delayed delivery and storage of the products by the Company because the customer wants to secure a supply of the products but lacks storage space; (ii) the risk of ownership has passed to the customer; (iii) the products are segregated from the Company’s other inventory items held for sale; (iv) the products are ready for shipment to the customer; and (v) the Company does not have the ability to use the products or direct them to another customer. Disaggregation of Revenue The Company disaggregates the revenue from contracts with customers by the timing of revenue recognition because the Company believes it best depicts the nature, amount, and timing of its revenue and cash flows. The table below presents a reconciliation of the disaggregation by reportable segments: Three Months Ended (In thousands) March 31, 2026 March 31, 2025 Display Display Lighting Solutions Lighting Solutions Segment Segment Segment Segment Timing of revenue recognition Products and services transferred at a point in time $ 48,843 $ 79,350 $ 49,258 $ 60,215 Products and services transferred over time 11,195 11,137 9,709 13,299 $ 60,038 $ 90,487 $ 58,967 $ 73,514 Type of Product and Services Lighting, poles, electronic components $ 59,450 $ - $ 58,363 $ - Signage and display Products - 76,134 - 58,459 Project management, installation services, shipping and handling 588 14,353 604 15,055 $ 60,038 $ 90,487 $ 58,967 $ 73,514 Nine Months Ended (In thousands) March 31, 2026 March 31, 2025 Display Display Lighting Solutions Lighting Solutions Segment Segment Segment Segment Timing of revenue recognition Products and services transferred at a point in time $ 161,877 $ 224,557 $ 145,835 $ 190,355 Products and services transferred over time 33,887 34,455 29,779 52,341 $ 195,764 $ 259,012 $ 175,614 $ 242,696 Type of Product and Services Lighting, poles, electronic components $ 193,995 $ - $ 173,710 $ - Signage and display Products - 216,302 - 192,634 Project management, installation services, shipping and handling 1,769 42,710 1,904 50,062 $ 195,764 $ 259,012 $ 175,614 $ 242,696 Practical Expedients and Exemptions ● The Company’s contracts with customers have an expected duration of one year or less, as such, the Company applies the practical expedient to expense sales commissions as incurred and has omitted disclosures on the amount of remaining performance obligations. ● Shipping costs that are not material in context of the delivery of products are expensed as incurred. ● The Company’s accounts receivable balance represents the Company’s unconditional right to receive payment from its customers with contracts. Payments are generally due within 30 to 90 days of completion of the performance obligation and invoicing; therefore, payments do not contain significant financing components. ● The Company collects sales tax and other taxes concurrent with revenue-producing activities which are excluded from revenue. Shipping and handling costs are treated as fulfillment activities and included in cost of products and services sold on the Consolidated Statements of Operations. Page 11 Table of Contents New Accounting Pronouncements: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU requires additional disclosures of various income tax components that affect the rate reconciliation based on the applicable taxing jurisdictions, as well as the qualitative and quantitative aspects of those components. The standard also requires information pertaining to taxes paid to be disaggregated for federal, state and foreign taxes, and contains other disclosure requirements. This ASU is effective for fiscal years beginning after December 15, 2024, and interim periods within fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements and related disclosures. NOTE 3 — ACQUISITION OF CANADA’S BEST HOLDINGS On March 11, 2025, the Company acquired Canada’s Best Holdings (CBH), an Ontario Canada-based leading provider of retail fixtures and custom store design solutions for grocery, quick service restaurant, c-store, banking, and specialty retail environments, for $25.9 million, subject to a working capital adjustment and future potential earnout payments up to $7.0 million. As of the acquisition date, total purchase consideration of $28.8 million includes the current fair value of the contingent consideration related to future earnout payments of $3.4 million. The future earnout payments include revenue and EBITDA goals for the fiscal years ending June 30, 2026 and June 30, 2027. The Company incurred acquisition-related costs totaling $1.0 million which are included in the selling and administrative expense line of the consolidated statements of operations. The Company funded the initial purchase consideration totaling $25.9 million with a combination of cash on hand and from the $75 million revolving line of credit. The Company accounted for this transaction as a business combination. The Company has allocated the purchase price of $28.8 million, which includes customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This allocation was subject to the final determination of the purchase price, which was finalized in fiscal 2026, which includes revisions resulting from the finalization of pre-acquisition tax filing. The Company has finalized the third-party valuations of certain assets including fixed assets and intangible assets. The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of March 11, 2025, is as follows: March 11, 2025 Measurement March 11, 2025 (In thousands) as initially reported period adjustments as adjusted Cash and cash equivalents $ 4,592 $ - $ 4,592 Accounts receivable 3,907 (55 ) 3,852 Inventory 4,287 (104 ) 4,183 Property, plant and equipment 640 1,422 2,062 Operating lease right-of-use assets 5,211 (386 ) 4,825 Other assets 204 1,790 1,994 Intangible assets 9,955 (353 ) 9,602 Accounts payable (29 ) 2 (27 ) Accrued expenses (472 ) (639 ) (1,111 ) Operating lease liabilities (2,954 ) - (2,954 ) Other long-term liabilities - (1,515 ) (1,515 ) Deferred tax liability (3,700 ) 573 (3,127 ) Identifiable Assets 21,641 735 22,376 Goodwill 5,748 709 6,457 Net Purchase Consideration $ 27,389 $ 1,444 $ 28,833 The gross amount of accounts receivable is $4.3 million. Page 12 Table of Contents Goodwill recorded from the acquisition of CBH is attributable to the impact of the positive cash flow from CBH in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition: Estimated Fair Estimated Useful (in thousands) Value Life (Years) Tradename $ 991 10 Non-compete agreements 180 3 - 5 Customer relationships 8,431 20 $ 9,602 CBH’s post-acquisition results of operations for the period from July 1, 2025, through March 31, 2026, are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of CBH for the period from July 1, 2025, through March 31, 2026, were $22.8 million and operating income was $2.8 million, and net sales of CBH for the period from January 1, 2026, through March 31, 2026, were $7.5 million and operating income was $1.1 million. The operating results of CBH are included in the Display Solutions Segment. Pro Forma Impact of the Acquisition of CBH (Unaudited) The following table represents unaudited pro forma results of operations and gives effect to the acquisition of CBH as if the transaction had occurred on July 1, 2023. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of CBH. The unaudited pro forma financial information for the three and nine months ended March 31, 2025, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income for the three months ended March 31, 2025 of $6.2 million excludes acquisition-related expenses of $0.1 million. The unaudited pro forma operating income for the nine months ended March 31, 2025 of $23.9 million excludes acquisition-related expenses of $0.3 million. Three Months Ended Nine Months Ended (in thousands; unaudited) March 31, March 31, 2025 2025 Sales $ 137,313 $ 432,807 Gross Profit $ 34,579 $ 106,559 Operating Income $ 6,245 $ 23,853 NOTE 4 — ACQUISITION OF ROYSTON GROUP On February 20, 2026 the Company entered into an agreement and a plan of merger to acquire SRR Holdings, Inc. (Royston) which was completed on March 24, 2026. Royston is a leading U.S.-based designer and manufacturer of cabinetry and store fixtures, refrigerated and heated cases, and signage for multiple end markets. Royston’s customer base spans across large, attractive end-markets of convenience, grocery and gas stations and other retail. Royston was acquired for $325.0 million; 320.0 million in cash and $5.0 million in the Company’s common stock, subject to a working capital adjustment. The Company prefunded $13.2 million as an estimate of the cash and working capital acquired which brings the total purchase consideration to $338.2 million. The amount prefunded for cash and working capital will be adjusted in the fourth quarter of 2026 fiscal year to reflect the actual amounts acquired. The Company incurred acquisition-related costs totaling $6.5 million which are included in the selling and administrative expense line of the consolidated statements of operations. The Company funded the initial purchase consideration totaling $338.2 million with a combination of cash on hand, the $150 million revolving line of credit, the $200 million five-year term loan, and the $98.1 million of net proceeds from the Company’s February 26, 2026 public common stock offering. Page 13 Table of Contents The Company accounted for this transaction as a business combination. The Company has preliminarily allocated the purchase price of $338.2 million, which includes an estimate of customary post-closing purchase price adjustments to the assets acquired and liabilities assumed at estimated fair values, and the excess of the purchase price over the aggregate fair values is recorded as goodwill. This preliminary allocation is subject to the final determination of the purchase price which will be finalized in fiscal 2027, as well as potential revision resulting from the finalization of pre-acquisition tax filings and net working capital adjustments. The Company has finalized the third-party valuations of certain assets including fixed assets and intangible assets. The allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed as of March 24, 2026, is as follows: March 24, 2026 Measurement March 24, 2026 (In thousands) as initially reported period adjustments as adjusted Cash and cash equivalents $ 1,353 $ - $ 1,353 Accounts receivable 36,990 - 36,990 Inventory 32,400 - 32,400 Property, plant and equipment 28,500 - 28,500 Prepaids expenses and other current assets 8,135 - 8,135 Income tax provision refund 1,792 - 1,792 Operating lease right-of-use assets 22,538 - 22,538 Other assets 1,291 - 1,291 Intangible assets 127,000 - 127,000 Accounts payable (16,861 ) - (16,861 ) Accrued expenses (18,558 ) - (18,558 ) Operating lease liabilities (19,638 ) - (19,638 ) Deferred tax liability (10,919 ) - (10,919 ) Identifiable Assets 194,023 - 194,023 Goodwill 144,176 - 144,176 Net Purchase Consideration $ 338,199 $ - $ 338,199 The gross amount of accounts receivable is $37.2 million. Goodwill recorded from the acquisition of Royston is attributable to the impact of the positive cash flow from Royston in addition to expected synergies from the business combination. The intangible assets include amounts recognized for the fair value of the trade name, technology assets, non-compete agreements and customer relationships. The fair value of the intangible assets was determined based upon the income (discounted cash flow) approach. The following table presents the details of the intangible assets acquired at the date of acquisition: Estimated Fair Estimated Useful (in thousands) Value Life (Years) Tradename $ 23,600 Indefinite Technology assets 17,800 7 Non-compete agreements 1,300 5 Customer relationships 84,300 15 $ 127,000 Royston’s post-acquisition results of operations for the period from March 24, 2026, through March 31, 2026, are included in the Company’s Condensed Consolidated Statements of Operations. Since the acquisition date, net sales of Royston for the period from March 24, 2025, through March 31, 2026, were $6.6 million and operating income was $0.8 million. The operating results of Royston are included in the Display Solutions Segment. Page 14 Table of Contents Pro Forma Impact of the Acquisition of Royston (Unaudited) The following table represents unaudited pro forma results of operations and gives effect to the acquisition of Royston as if the transaction had occurred on July 1, 2024. The unaudited pro forma results of operations have been prepared for comparative purposes only and are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the period or the results that may occur in the future. Furthermore, the unaudited pro forma financial information does not reflect the impact of any synergies or operating efficiencies resulting from the acquisition of Royston. The unaudited pro forma financial information for the three and nine months ended March 31, 2026, is prepared using the acquisition method of accounting and has been adjusted to reflect the pro forma events that are: (1) directly attributable to the acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the combined results. The unaudited pro forma operating income for the three months ended March 31, 2026 of ($9.4) million excludes acquisition-related expenses of $21.4 million. The unaudited pro forma operating income for the nine months ended March 31, 2026 of $8.0 million excludes acquisition-related expenses of $21.8 million. Three Months Ended Nine Months Ended (in thousands; unaudited) March 31, March 31, 2026 2026 Sales $ 205,929 $ 637,547 Gross Profit $ 48,003 $ 156,022 Operating Income $ (9,414 ) $ 8,051 NOTE 5 - SEGMENT REPORTING INFORMATION The accounting guidance on Segment Reporting establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information of those segments to be presented in financial statements. Operating segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the chief operating decision maker (the Company’s Chief Executive Officer or “CODM”) in making decisions on how to allocate resources and assess performance. The Company’s two operating segments are Lighting and Display Solutions, with one executive leadership team reporting directly to the CODM with responsibilities for managing the performance across the segments. The Company’s methods for measuring profitability under GAAP on a reportable segment basis and used by the CODM to assess performance is adjusted net income. These measurements are used to monitor performance compared to prior periods and forecasted results. The CODM does not look at disaggregated expenses at the segment level. The CODM does review expenses on a consolidated basis which is consistent with the categories of expense reported on the consolidated statements of operations. The Lighting Segment includes non-residential outdoor and indoor lighting fixtures utilizing LED light sources that have been fabricated and assembled for the Company’s markets, primarily the refueling and convenience store markets, parking lot and garage markets, quick-service restaurant market, retail and grocery store markets, the automotive market, the warehouse market, and the sports court and field market. The Company also services lighting product customers through the commercial and industrial project, stock and flow, and renovation channels. In addition to the manufacture and sale of lighting fixtures, the Company offers a variety of lighting controls to complement its lighting fixtures which include sensors, photocontrols, dimmers, motion detection and Bluetooth systems. The Lighting Segment also includes the design, engineering and manufacturing of electronic circuit boards, assemblies and sub-assemblies which are sold directly to customers. The Display Solutions Segment manufactures, sells and installs exterior and interior visual image and display elements, including printed graphics, structural graphics, digital signage, non-digital signage, menu board systems, millwork and metal display fixtures, refrigerated displays, heated displays, food equipment, countertops, and other custom display elements. These products are used in visual image programs in several markets including the refueling and convenience store markets, quick-service and casual restaurant market, retail and grocery store, and other retail markets. The Company accesses its customers primarily through a direct sale model utilizing its own sales force. Sales through distribution represent a small portion of Display Solutions sales. The Display Solutions Segment also provides a variety of project management services to complement our display elements, such as installation management, site surveys, permitting, and content management which are offered to our customers to support our digital signage. Page 15 Table of Contents The Company’s corporate administration activities are reported in the Unallocated corporate expenses net of tax line item. These activities primarily include expense related to certain corporate officers and support staff, the Company’s internal audit staff, expense related to the Company’s Board of Directors, equity compensation expense for various equity awards granted to corporate administration employees, certain consulting expenses, investor relations activities, and a portion of the Company’s legal, auditing, and professional fee expenses. Corporate identifiable assets primarily consist of cash, invested cash (if any), refundable income taxes (if any), and deferred income taxes. There were no customers or customer programs representing a concentration of 10% or more of the Company’s consolidated net sales in the three and nine months ended March 31, 2026, or 2025. There was no concentration of accounts receivable at March 31, 2026, or 2025. There is no concentration of revenues or assets outside of United States. Summarized financial information for the Company’s operating segments is provided for the indicated periods and as of March 31, 2026, and March 31, 2025: (In thousands) Three Months Ended Nine Months Ended March 31, 2026 March 31, 2026 Segment Segment Lighting Display Total Lighting Display Total Total sales $ 62,860 $ 90,630 $ 153,490 $ 205,080 $ 259,698 $ 464,778 Inter-segment sales (2,822 ) (143 ) (2,965 ) (9,316 ) (686 ) (10,002 ) Net sales 60,038 90,487 150,525 195,764 259,012 454,776 Other segment items * (53,637 ) (82,922 ) (136,559 ) (175,802 ) (238,388 ) (414,190 ) Adjusted net income 6,401 7,565 13,966 19,962 20,624 40,586 Unallocated corporate expenses (3,893 ) (11,025 ) Interest expense (474 ) (1,794 ) Long-term performance based compensation (597 ) (2,264 ) Amortization expense on acquired intangible assets (1,377 ) (3,653 ) Restructuring / severance costs (19 ) 35 Acquisition costs (4,898 ) (5,205 ) Lease expense on the step-up basis of acquired leases (241 ) (340 ) Foreign currency transaction loss on intercompany loan 147 (207 ) Tax rate difference between reported and adjusted net income (523 ) (430 ) Net income $ 2,091 $ 15,703 * Costs of products and services sold, selling and administrative expenses, other income and expense, and income tax expense (In thousands) Three Months Ended Nine Months Ended March 31, 2025 March 31, 2025 Segment Segment Lighting Display Total Lighting Display Total Total sales $ 62,302 $ 73,796 $ 136,098 $ 190,984 $ 243,284 $ 434,268 Inter-segment sales (3,334 ) (283 ) (3,617 ) (15,371 ) (587 ) (15,958 ) Net sales 58,968 73,513 132,481 175,613 242,697 418,310 Other segment items * (53,196 ) (67,466 ) (120,662 ) (159,677 ) (224,475 ) (384,152 ) Adjusted net income 5,772 6,047 11,819 15,936 18,222 34,158 Unallocated corporate expenses (4,827 ) (9,587 ) Interest expense (661 ) (2,264 ) Long-term performance based compensation (879 ) (3,039 ) Amortization expense on acquired intangible assets (1,128 ) (3,260 ) Restructuring / severance costs - (45 ) Acquisition costs (577 ) (627 ) Lease expense on the step-up basis of acquired leases (52 ) (155 ) Consulting expense: commercial growth initiatives - (62 ) Tax rate difference between reported and adjusted net income 188 1,093 Net income $ 3,883 $ 16,212 * Costs of products and services sold, selling and administrative expenses, other income and expense, and income tax expense Page 16 Table of Contents (In thousands) Three Months Ended Nine Months Ended March 31, March 31, 2026 2025 2026 2025 Capital Expenditures: Lighting Segment $ 490 $ 246 $ 1,228 $ 1,467 Display Solutions Segment 251 358 2,062 934 $ 741 $ 604 $ 3,290 $ 2,401 Total segment capital expenditures $ 741 $ 604 $ 3,290 $ 2,401 Other unallocated capital expenditures (34 ) 86 68 114 Consolidated capital expenditures $ 707 $ 690 $ 3,358 $ 2,515 Income Tax Expense: Lighting Segment $ 1,201 $ 2,063 $ 5,147 $ 5,103 Display Solutions Segment 2,245 992 5,700 5,298 $ 3,446 $ 3,055 $ 10,847 $ 10,401 Total segment income tax expense $ 3,446 $ 3,055 $ 10,847 $ 10,401 Other unallocated income tax (credit) (2,179 ) (1,342 ) (5,102 ) (5,352 ) Consolidated income tax expense $ 1,267 $ 1,713 $ 5,745 $ 5,049 Depreciation and Amortization: Lighting Segment $ 1,279 $ 1,284 $ 3,816 $ 3,778 Display Solutions Segment 2,012 1,693 5,703 4,984 $ 3,291 $ 2,977 $ 9,519 $ 8,762 Total segment depreciation and amortization $ 3,291 $ 2,977 $ 9,519 $ 8,762 Other unallocated depreciation and amortization 101 84 301 258 Consolidated depreciation and amortization $ 3,392 $ 3,061 $ 9,820 $ 9,020 March 31, 2026 June 30, 2025 Identifiable Assets: Lighting Segment $ 130,617 $ 132,960 Display Solutions Segment 664,562 253,299 $ 795,179 $ 386,259 Total Segment assets $ 795,179 $ 386,259 Deferred tax assets - 5,495 Other unallocated assets 5,370 4,608 Consolidated assets $ 800,549 $ 396,362 The segment net sales reported above represent sales to external customers. Identifiable assets are those assets used by each segment in its operations. Page 17 Table of Contents NOTE 6 - EARNINGS PER COMMON SHARE The following table presents the amounts used to compute basic and diluted earnings per common share, as well as the effect of dilutive potential common shares on weighted average shares outstanding: (in thousands, except per share data) Three Months Ended Nine Months Ended March 31, March 31, 2026 2025 2026 2025 BASIC EARNINGS PER SHARE Net Income $ 2,091 $ 3,883 $ 15,703 $ 16,212 Weighted average shares outstanding during the period, net of treasury shares 31,836 28,904 30,390 28,754 Weighted average vested restricted stock units outstanding 82 71 62 78 Weighted average shares outstanding in the Deferred Compensation Plan during the period 1,100 1,028 1,079 1,009 Weighted average shares outstanding 33,018 30,003 31,531 29,841 Basic income per share $ 0.06 $ 0.13 $ 0.50 $ 0.54 DILUTED EARNINGS PER SHARE Net Income $ 2,091 $ 3,883 $ 15,703 $ 16,212 Weighted average shares outstanding Basic 33,018 30,003 31,531 29,841 Effect of dilutive securities (a): Impact of common shares to be issued under stock option plans, and contingently issuable shares, if any 837 963 856 949 Weighted average shares outstanding 33,855 30,966 32,387 30,790 Diluted income per share $ 0.06 $ 0.13 $ 0.48 $ 0.53 Anti-dilutive securities (b) 3 35 2 265 (a) Calculated using the “Treasury Stock” method as if dilutive securities were exercised and the funds were used to purchase common shares at the average market price during the period. (b) Anti-dilutive securities were excluded from the computation of diluted net income per share for the three and nine months ended March 31, 2026, and March 31, 2025, because the exercise price was greater than the average fair market price of the common shares or because the assumed proceeds from the award’s exercise or vesting was greater than the average fair market price of the common shares. Page 18 Table of Contents NOTE 7 – INVENTORIES, NET The following information is provided as of the dates indicated: (In thousands) March 31, 2026 June 30, 2025 Inventories: Raw materials $ 82,815 $ 60,726 Work-in-progress 11,625 7,942 Finished goods 22,149 11,150 Total Inventories $ 116,589 $ 79,818 NOTE 8 - ACCRUED EXPENSES The following information is provided as of the dates indicated: (In thousands) March 31, 2026 June 30, 2025 Accrued Expenses: Customer prepayments $ 7,419 $ 4,070 Compensation and benefits 14,394 12,471 Accrued warranty 7,427 7,505 Accrued sales commissions 2,714 3,956 Accrued freight 2,086 1,978 Operating lease liabilities 12,157 6,037 Income taxes 1,792 1,848 Accrued rebate 2,403 - Accrued sales and use tax 651 - Other accrued expenses 10,422 7,387 Total Accrued Expenses $ 61,465 $ 45,252 NOTE 9 - GOODWILL AND OTHER INTANGIBLE ASSETS The carrying values of goodwill and other intangible assets with indefinite lives are reviewed at least annually for possible impairment. The Company may first assess qualitative factors in order to determine if goodwill and indefinite-lived intangible assets are impaired. If through the qualitative assessment it is determined that it is more likely than not that goodwill and indefinite-lived assets are not impaired, no further testing is required. If it is determined more likely than not that goodwill and indefinite-lived assets are impaired, or if the Company elects not to first assess qualitative factors, the Company’s impairment testing continues with the estimation of the fair value of the reporting unit using a combination of a market approach and an income (discounted cash flow) approach, at the reporting unit level. The estimation of the fair value of the reporting unit requires significant management judgment with respect to revenue and expense growth rates, changes in working capital and the selection and use of an appropriate discount rate. The estimates of the fair value of reporting units are based on the best information available as of the date of the assessment. The use of different assumptions would increase or decrease estimated discounted future operating cash flows and could increase or decrease an impairment charge. Company management uses its judgment in assessing whether assets may have become impaired between annual impairment tests. Indicators such as adverse business conditions, economic factors and technological change or competitive activities may signal that an asset has become impaired. The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of six reporting units that contain goodwill. One reporting unit is within the Lighting Segment and five reporting units are within the Display Solutions Segment. The tradename intangible assets have an indefinite life and are also tested separately on an annual basis. The Company relies upon a number of factors, judgments and estimates when conducting its impairment testing including, but not limited to, the Company’s stock price, operating results, forecasts, anticipated future cash flows, and marketplace data. There are inherent uncertainties related to these factors and judgments in applying them to the analysis of goodwill impairment. Page 19 Table of Contents As of March 1, 2026, the Company performed its annual goodwill impairment test on the five reporting units that contain goodwill as of that date. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $34.0 million or 13% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of one reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $27.3 million or significantly above the carrying value of the reporting unit including goodwill. The goodwill impairment test of the second reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $114.9 million or 41% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of the third reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $65.7 million or 47% above the carrying value of the reporting unit including goodwill. The goodwill impairment test of the fourth reporting unit with goodwill in the Display Solutions Segment passed with an estimated business enterprise value of $26.6 million or 132% above the carrying value of the reporting unit including goodwill. The fifth reporting unit with goodwill in the Display Solutions Segment was acquired on March 24, 2026 which will be included in the annual goodwill impairment analysis as of March 1, 2027. The following table presents information about the Company's goodwill on the dates or for the periods indicated: Display Lighting Solutions (In thousands) Segment Segment Total Balance as of March 31, 2026 Goodwill $ 70,971 $ 82,865 $ 153,836 Goodwill acquired, net of adjustments - 143,914 143,914 Foreign currency translation - (18 ) (18 ) Accumulated impairment losses (61,763 ) (27,525 ) (89,288 ) Goodwill, net as of March 31, 2026 $ 9,208 $ 199,236 $ 208,444 Balance as of June 30, 2025 Goodwill $ 70,971 $ 75,714 $ 146,685 Goodwill acquired, net of adjustments - 6,769 6,769 Foreign currency translation - 382 382 Accumulated impairment losses (61,763 ) (27,525 ) (89,288 ) Goodwill, net as of June 30, 2025 $ 9,208 $ 55,340 $ 64,548 The gross carrying amount and accumulated amortization by each major intangible asset class is as follows: (In thousands) March 31, 2026 Gross Carrying Accumulated Net Amount Amortization Amount Amortized Intangible Assets Customer relationships $ 162,609 $ 28,541 $ 134,068 Patents 268 268 - LED technology, software 41,926 19,973 21,953 Trade name 3,685 1,563 2,122 Non-compete 1,886 396 1,490 Total Amortized Intangible Assets $ 210,374 $ 50,741 $ 159,633 Indefinite-lived Intangible Assets Trademarks and trade names 40,582 - 40,582 Total indefinite-lived Intangible Assets 40,582 - 40,582 Total Other Intangible Assets $ 250,956 $ 50,741 $ 200,215 Page 20 Table of Contents (In thousands) June 30, 2025 Gross Carrying Accumulated Net Amount Amortization Amount Amortized Intangible Assets Customer relationships $ 78,485 $ 25,251 $ 53,234 Patents 268 268 - LED technology, software 24,126 18,694 5,432 Trade name 3,704 1,404 2,300 Non-compete 590 280 310 Total Amortized Intangible Assets $ 107,173 $ 45,897 $ 61,276 Indefinite-lived Intangible Assets Trademarks and trade names 16,982 - 16,982 Total indefinite-lived Intangible Assets 16,982 - 16,982 Total Other Intangible Assets $ 124,155 $ 45,897 $ 78,258 Three Months Ended Nine Months Ended March 31, March 31, (In thousands) 2026 2025 2026 2025 Amortization expense of other intangible assets $ 1,732 $ 1,448 $ 4,844 $ 4,264 The Company expects to record annual amortization expense as follows: (In thousands) 2026 $ 8,507 2027 $ 14,430 2028 $ 13,990 2029 $ 13,350 2030 $ 13,343 After 2030 $ 101,046 Page 21 Table of Contents NOTE 10 - DEBT The Company’s long-term debt as of March 31, 2026, and June 30, 2025, consisted of the following: March 31, June 30, (In thousands) 2026 2025 Secured line of credit $ 200,000 $ 36,956 Term loan, net of debt issuance costs of $8 and $14, respectively 61,006 11,601 Total debt $ 261,006 $ 48,557 Less: amounts due within one year 58,000 3,571 Total amounts due after one year, net $ 203,006 $ 44,986 In March of 2026, the Company entered into a $350 million senior secured credit facility consisting of a $200 million five-year term loan and a $150 million revolving credit facility. The Company is required to make quarterly amortization payments of $2.5 million against the term loan, with the balance of the term loan due at maturity on March 24, 2031. The revolving credit facility is also scheduled to expire on March 24, 2031. Interest on the term loan and any loans made under the revolving credit facility is based on the Secured Overnight Financing Rate (“SOFR”) or a customary base rate (which may include Daily Simple SOFR or the Prime Rate), to be determined by reference to customary market benchmarks, in each case plus an applicable margin that is anticipated to vary based on the Company’s consolidated total net leverage ratio, which is calculated to be consolidated funded debt minus unrestricted cash and cash equivalents against earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. As of March 31, 2026, the interest rate applicable to the term loan was 5.5% and the Company’s borrowing rate against its revolving line of credit was 6.2%. The increment over the SOFR borrowing rate is 250 basis points for the third quarter of fiscal year 2026. In addition to interest on outstanding amounts, the Company also pays a commitment fee on the unused balance of the revolving credit facility, fluctuates between 17.5 and 27.5 basis points based on the Company’s consolidated total net leverage ratio. Under the terms of the credit agreement, the Company is required to comply with a financial covenant that limits the ratio of indebtedness and unrestricted cash to EBITDA measured on a quarterly basis, with a maximum net leverage ratio of 4.00 to 1.00 at closing, which then steps down to 3.75 to 1.00 in the fiscal quarter ending December 31, 2026 and further to 3.50 to 1.00 in the fiscal quarter ending September 30, 2027. The Company is also required to maintain an interest coverage ratio, measured on a quarterly basis, equal to or above the minimum set forth in the agreement, which as of closing was 1.15 to 1.00. As of March 31, 2026, there was $88.9 million available for borrowing under the revolving credit facility for general business purposes. The Company is in compliance with all of its loan covenants as of March 31, 2026. NOTE 11 - CASH DIVIDENDS The Company paid cash dividends of $4.6 million and $4.5 million for the nine months ended March 31, 2026, and March 31, 2025, respectively. Dividends on restricted stock units in the amount of $0.2 million and $0.2 million were accrued as of both March 31, 2026, and 2025, respectively. These dividends will be paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In April 2026, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable May 12, 2026, to shareholders of record as May 4, 2026. The indicated annual cash dividend rate is $0.20 per share. Page 22 Table of Contents NOTE 12 – EQUITY COMPENSATION In November 2022, the Company's shareholders approved the amendment and restatement of the 2019 Omnibus Award Plan ("2019 Omnibus Plan") which increased the number of shares authorized for issuance under the plan by 2,350,000 and removed the Plan's fungible share counting feature. The purpose of the 2019 Omnibus Plan is to provide a means to attract and retain key personnel and to align the interests of the directors, officers, and employees with the Company's shareholders. The plan also provides a vehicle whereby directors and officers may acquire shares in order to meet the ownership requirements under the Company's Stock Ownership Policy. The 2019 Omnibus Plan allows for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), performance stock units ("PSUs") and other awards. Except for RSU grants which are time-based, participants in the Company's Long-Term Equity Compensation Plans are awarded the opportunity to acquire shares over a three-year performance measurement period tied to specific company performance metrics. The number of shares that remain reserved for issuance under the 2019 Omnibus Plan is 1,016,256 as of March 31, 2026. In the nine months ended March 31, 2026, the Company granted 121,440 PSUs and 85,958 RSUs, both with a weighted average market value of $19.54. Stock compensation expense was $0.9 million and $1.0 million for the three months ended March 31, 2026, and 2025, respectively, and $3.0 million and $3.2 million in the nine months ended March 31, 2026, and 2025, respectively. In November of 2021, our board of directors approved the LSI Employee Stock Purchase Plan (“ESPP”). A total of 270,000 shares of common stock were provided for issuance under the ESPP. Employees may participate at their discretion and are able to purchase, through payroll deduction, common stock at a 10% discount on a quarterly basis. Employees may end their participation at any time during the offering period, and participation ends automatically upon termination of employment with the Company. During fiscal year 2026, employees purchased 14,000 shares. At March 31, 2026, 211,000 shares remained available for purchase under the ESPP. NOTE 13 - SUPPLEMENTAL CASH FLOW INFORMATION (in thousands) Nine Months Ended March 31, 2026 2025 Cash Payments: Interest $ 1,581 $ 2,036 Income taxes $ 6,291 $ 4,201 Non-cash investing and financing activities Issuance of common shares as compensation $ 315 $ 337 Issuance of common shares in the acquisition of a business $ 5,000 $ - Issuance of common shares to fund deferred compensation plan $ 1,373 $ 1,441 Issuance of common shares to fund ESPP plan $ 207 $ 159 NOTE 14 - COMMITMENTS AND CONTINGENCIES The Company is party to various negotiations, customer bankruptcies, and legal proceedings arising in the normal course of business. The Company provides reserves for these matters when a loss is probable and reasonably estimable. The Company does not disclose a range of potential loss because the likelihood of such a loss is remote. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s financial position, results of operations, cash flows or liquidity. The Company recorded a $3.4 million contingent liability related to the future earnout payments as part of the acquisition of Canada’s Best Holding (CBH). (Refer to Note 3.) The decrease to $3.3 million from $3.4 million represents the value of the earnout converted from its functional currency to USD as of March 31, 2026, and June 30, 2025, respectively. Page 23 Table of Contents NOTE 15 - LEASES The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. The Company’s leases are operating leases and have a remaining term of one to nine years, some of which have an option to renew. The Company does not assume renewals in determining the lease term unless the renewals are deemed reasonably certain. The lease agreements do not contain any material residual guarantees or material variable lease payments. The number of operating leases increased in fiscal 2026 as a result of the acquisition of Royston; most of Royston’s operating leases are building leases. The Company has periodically entered into short-term operating leases with an initial term of twelve months or less. The Company elected not to record these leases on the balance sheet. The rent expense for these leases was immaterial for March 31, 2026, and 2025. The Company has certain leases that contain lease and non-lease components and has elected to utilize the practical expedient to account for these components together as a single lease component. Lease expense is recognized on a straight-line basis over the lease term. The Company used its incremental borrowing rate when determining the present value of lease payments. Three Months Ended Nine Months Ended March 31, March 31, (In thousands) 2026 2025 2026 2025 Operating lease cost $ 3,623 $ 1,679 $ 10,475 $ 4,910 Financing lease cost: Amortization of right-of-use assets - 73 - 218 Interest on lease liabilities - 9 - 30 Variable lease cost - - - 7 Sublease income - - - (39 ) Total lease cost $ 3,623 $ 1,761 $ 10,475 $ 5,126 Nine Months Ended Supplemental Cash Flow Information: March 31, (in thousands) 2026 2025 Cash flows from operating leases Fixed payments - operating lease cash flows $ 10,195 $ 5,055 Liability reduction - operating cash flows $ 8,320 $ 4,328 Assets obtained in exchange for operating lease obligations $ 19,733 $ 6,577 Cash flows from finance leases Interest - operating cash flows $ - $ 30 Repayments of principal portion - financing cash flows $ - $ 253 Operating Leases: March 31, 2026 June 30, 2025 Total operating right-of-use assets $ 51,633 $ 17,187 Accrued Expenses 12,157 6,037 Long-term operating lease liability 40,995 12,047 Total operating lease liabilities $ 53,152 $ 18,084 Weighted Average remaining Lease Term (in years) 6.40 3.49 Weighted Average Discount Rate 5.30 % 5.70 % Page 24 Table of Contents Operating Finance Net Lease Lease Lease Maturities of Lease Liability: Liabilities Liabilities Commitments 2027 $ 12,157 $ - $ 12,157 2028 11,853 - 11,853 2029 8,805 - 8,805 2030 6,501 - 6,501 2031 5,091 - 5,091 Thereafter 19,083 - 19,083 Total lease payments $ 63,490 $ - $ 63,490 Less: Interest (10,338 ) - (10,338 ) Present Value of Lease Liabilities $ 53,152 $ - $ 53,152 NOTE 16 – INCOME TAXES The Company's effective income tax rate is based on expected income, statutory rates, and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions. For the three months ended March 31, 2026 the anticipated rate is significantly greater than the statutory tax rate because of certain non-deductible transaction costs related to the Royston acquisition included in the projected effective tax rate. Three Months Ended Nine Months Ended March 31, March 31, 2026 2025 2026 2025 Reconciliation of effective tax rate: Provision for income taxes at the anticipated annual tax rate 38.8 % 32.7 % 27.0 % 27.9 % Uncertain tax positions 2.8 1.3 0.8 0.2 Deferred income tax adjustment - - - 0.8 Share-based compensation (3.9 ) (3.4 ) (1.0 ) (5.1 ) Effective tax rate 37.7 % 30.6 % 26.8 % 23.8 % NOTE 17 – RELATED PARTY A limited liability company owned (the “LLC”) and controlled by LSI's Chief Executive Officer, James A. Clark, owns an aircraft that is dry leased to an unrelated third party. Pursuant to a separate arrangement, the third-party dry leases the aircraft to LSI for qualifying business travel by certain of the Company’s executive officers. Payments made by LSI depend on actual usage. For the period from July 2025 through March 2026, the LLC received aggregate payments of $177,000 in connection with this arrangement. Page 25 Table of Contents