LSI INDUSTRIES INC 10-K

ITEM 9A. CONTROLS AND PROCEDURES   Disclosure Controls and Procedures   The Company maintains disclosure controls and procedures (as such term is defined Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within required time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.   We conducted, under the supervision of our management, including the Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2023, our disclosure controls and procedures were effective. Management believes that the consolidated financial statements included in this Annual Report on Form 10-K are fairly presented in all material respects in accordance with U.S GAAP, and the Company’s Chief Executive Officer and Chief Financial Officer have certified that, based on their knowledge, the consolidated financial statements included in this report fairly present in all material respects the Company’s financial condition, results of operations, statement of shareholders’ equity, and cash flows for each of the periods presented in this report.   Management's Report on Internal Control over Financial Reporting appearing on page 30 of this report is incorporated by reference in this Item 9A.   Changes in Internal Control   There have been no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. See Management’s Report On Internal Control Over Financial Reporting on page 30.   ITEM 9B. OTHER INFORMATION   During the three months ended June 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K.   ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS   Not applicable. PART III   ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE   Information about our directors and officers may be found under the captions “Nominees for Board of Directors” and “Executive Officers” in our Proxy Statement for the Annual Meeting of Shareholders to be held November 1, 2023 (the “Proxy Statement”). Information about our Audit Committee may be found under the caption “Committees of the Board” in the Proxy Statement. That information is incorporated herein by reference.   We have adopted a code of ethics that applies to all of our employees, including our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, and other finance organization employees. The code of ethics is publicly available on our website at lsicorp.com. If we make any substantive amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the code to our Chief Executive Officer, Chief Financial Officer, or Chief Accounting Officer, we will disclose the nature of the amendment or waiver on that website or in a report on Form 8-K.   - 18 -     ITEM 11. EXECUTIVE COMPENSATION   The information in the Proxy Statement set forth under the captions “Director Compensation,” “Compensation Discussion and Analysis” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” is incorporated herein by reference.   ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS   The information in the Proxy Statement set forth under the captions “Security Ownership,” and “Equity Compensation Plan Information” is incorporated herein by reference.   ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE   The information set forth in the Proxy Statement under the captions “Corporate Governance” and “Related Person Transactions” is incorporated herein by reference.     ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES   Information concerning fees and services provided by our principal accountant, Grant Thornton LLP (PCAOB ID No. [ 248 ]), appears in the Proxy Statement under the headings “Ratification of Appointment of Independent Registered Public Accounting Firm” and “Committees of the Board” and is incorporated herein by reference.   PART IV   ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES   (a)         The following documents are filed as part of this report:     (1) Consolidated Financial Statements appear as part of Item 8 of this Form 10-K.     (2) Exhibits – Exhibits set forth below are either on file with the Securities and Exchange Commission and are incorporated by reference as exhibits hereto, or are filed with this Form 10-K.   Exhibit No.   Exhibit Description       2.1    Stock Purchase Agreement dated as of May 21, 2021, among LSI Fresh Subsidiary Inc., JSI Holding Corp., Fresh Seller Rep, LLC and the Sellers identified therein ++ (incorporated by reference to Exhibit 2.1 to LSI’s Form 8-K filed on May 24, 2021)       3.1   Amended and Restated (Consolidated) Articles of Incorporation of LSI (incorporated by reference to Exhibit 3.1 to LSI’s Form 8-K filed on November 7, 2022).       3.2   Amended and Restated Code of Regulations of LSI (incorporated by reference to Exhibit 3.2 to LSI’s Form 10-K filed on September 11, 2020).       4.1   Description of Securities (incorporated by reference to Exhibit 4.1 to LSI’s Annual Report on Form 10-K filed on September 6, 2019).       10.1   Third Amendment to Loan Documents dated February 21, 2017 between LSI and PNC Bank, National Association (incorporated by reference to Exhibit 4.2 to LSI’s Form 8-K filed on February 21, 2017).       10.2   Fourth Amendment to Loan Documents dated February 28, 2019 between LSI and PNC Bank, National Association (incorporated by reference to Exhibit 10.2 to LSI’s Form 10-Q filed on May 8, 2019).       10.3   Amended and Restated Loan Agreement dated as of June 19, 2014 between LSI and PNC Bank, National Association (incorporated by reference to Exhibit 10.1 of LSI’s Form 10-K filed on September 10, 2014)   - 19 -     10.4*   Amended and Restated 2012 Stock Incentive Plan amended as of November 17, 2016 (incorporated by reference to Exhibit 10.1 to LSI’s Form 10-Q filed on February 3, 2017).       10.5*   Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to LSI’s Form 8-K filed on June 23, 2016)       10.6*   LSI Industries Inc. Nonqualified Deferred Compensation Plan (Amended and Restated as of August 17, 2022) (incorporated by reference to Exhibit 10.3 of LSI’s Form 10-Q filed on November 4, 2022).       10.7*   Employment Agreement between LSI and James A. Clark (incorporated by reference to Exhibit 10.1 to LSI’s 8-K filed on October 17, 2018).       10.8*   Employment Offer Letter between LSI and James E. Galeese (incorporated by reference to Exhibit 10.1 to LSI’s Form 8-K filed on June 13, 2017).       10.9*   Employment Offer Letter between LSI and Thomas A. Caneris (incorporated by reference to Exhibit 10.1 to LSI’s Form 8-K filed on August 5, 2019).       10.10*   Form of Change in Control Agreement (incorporated by reference to Exhibit 10.1 to LSI’s Form 10-Q filed on January 29, 2021).       10.11*   2019 Omnibus Award Plan (incorporated by reference to Exhibit 10.1 to LSI’s Form S-8 Registration Statement File No. 333-234556 filed on November 7, 2019).       10.12   Fifth Amendment to Loan Documents dated as of March 30, 2021, between LSI and PNC Bank, National Association (incorporated by reference to Exhibit 10.1 to LSI’s Form 8-K filed on April 1, 2021).       10.13*   Form of Supplemental Benefits Agreement (incorporated by reference to Exhibit 10.2 to LSI’s Form 10-Q filed on January 29, 2021).       10.14*   Fiscal Year 2021 Long-Term Incentive Plan (LTIP)++ (incorporated by reference to Exhibit 10.1 to LSI’s Form 10-Q filed on November 5, 2020).       10.15*   Form of 2019 Omnibus Award Plan Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.3 to LSI’s Form 10-Q filed on November 5, 2020).       10.16*   Form of 2019 Omnibus Award Plan Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.3 to LSI’s Form 10-Q filed on February 4, 2022).       10.17*   Form of 2019 Omnibus Award Plan Performance Stock Unit Award Agreement++ (incorporated by reference to Exhibit 10.4 to LSI’s Form 10-Q filed on February 4, 2022).       10.18*   LSI Industries Inc. 2021 Employee Stock Purchase Plan (incorporated by reference to LSI’s Proxy Statement on Schedule 14A filed on September 15, 2021).       10.19   Sixth Amendment to Loan Documents dated as of September 30, 2021, between LSI and PNC Bank National Association (incorporated by reference to Exhibit 10.1 to LSI’s Form 10-Q filed on February 4, 2022).       10.20*   Fiscal Year 2022 Long-Term Incentive Plan (LTIP)++ (incorporated by reference to Exhibit 10.1 to LSI’s Form 10-Q filed on February 4, 2022).       10.21*   Fiscal Year 2023 Long-Term Incentive Plan (LTIP) ++ (Incorporated by reference to Exhibit 10.1 of LSI’s Form 10-Q filed on November 4, 2022)   - 20 -     10.22*   Fiscal Year 2023 Short-Term Incentive Plan (STIP) ++ (Incorporated by reference to Exhibit 10.2 of LSI’s Form 10-Q filed on November 4, 2022)       14   Code of Conduct (incorporated by reference to Exhibit 14 to LSI’s Form 10-K filed on September 10, 2021)       19   Insider Trading Policy and Anti-Hedging and Pledging Policy       21   Subsidiaries of the Registrant       23.1   Consent of Independent Registered Public Accounting Firm (Grant Thornton LLP)       24   Power of Attorney (included as part of signature page)       31.1   Certification of Principal Executive Officer required by Rule 13a-14(a)       31.2   Certification of Principal Financial Officer required by Rule 13a-14(a)       32.1   18 U.S.C. Section 1350 Certification of Principal Executive Officer       32.2   18 U.S.C. Section 1350 Certification of Principal Financial Officer   101.INS Inline XBRL Instance Document     101.SCH Inline XBRL Taxonomy Extension Schema     101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase     101.LAB Inline XBRL Taxonomy Extension Label Linkbase     101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase     101.DEF Inline XBRL Taxonomy Extension Definition Document     104 Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)   *Management compensatory agreement.   ++ Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby agrees to furnish a copy of any omitted portion to the SEC upon request.   LSI will provide shareholders with any exhibit upon the payment of a specified reasonable fee, which fee shall be limited to LSI’s reasonable expenses in furnishing such exhibit. The exhibits identified herein as being filed with the SEC have been so filed with the SEC but may not be included in this version of the Annual Report to Shareholders.   ITEM 16. FORM 10-K SUMMARY   Not included.   - 21 -     SIGNATURES   Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.                     LSI INDUSTRIES INC.                   September 8, 2023   BY:   /s/ James A. Clark     Date       James A. Clark             Chief Executive Officer and President       We, the undersigned directors, and officers of LSI Industries Inc. hereby severally constitute James A. Clark and James E. Galeese, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission.   Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.     Signature   Title             /s/ James A. Clark   Chief Executive Officer and President James A. Clark   (Principal Executive Officer) Date: September 8, 2023           /s/ James E. Galeese   Executive Vice President, and Chief Financial Officer James E. Galeese   (Principal Financial Officer) Date: September 8, 2023           /s/ Jeffery S. Bastian   Vice President and Chief Accounting Officer Jeffery S. Bastian   (Principal Accounting Officer) Date: September 8, 2023           /s/ Robert P. Beech   Director  Robert P. Beech     Date: September 8, 2029           /s/ Ronald D. Brown   Director   Ronald D. Brown     Date: September 8, 2023           /s/ Amy L. Hanson   Director   Amy L. Hanson     Date: September 8, 2023           /s/ Ernest W. Marshall, Jr.   Director Ernest W. Marshall, Jr.     Date: September 8, 2023           /s/ Chantel E. Lenard   Director Chantel E. Lenard     Date: September 8, 2023       /s/ Wilfred T. O’Gara   Director Wilfred T. O’Gara   Date: September 8, 2023     - 22 -     MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of the Company’s operations and financial condition. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended June 30, 2023, compared to the year ended June 30, 2022. For a discussion of the year ended June 30, 2022, compared to the year ended June 30, 2021, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2022.    Overview   LSI is a leading producer of non-residential lighting and retail display solutions. Non-residential lighting consists of high-performance, American-made lighting products. The Company’s strength in outdoor and indoor lighting applications creates opportunities for it to introduce additional solutions to its customers. Retail display solutions consist of graphics solutions, digital signage, and technically advanced food display equipment for strategic vertical markets. LSI’s team of internal specialists also provide comprehensive project management services in support of large-scale rollouts.   Summary of Consolidated Results   Net Sales by Business Segment                                   (In thousands)   2023     2022                     Lighting Segment   $ 272,451     $ 233,449   Display Solutions Segment     224,528       221,671   Total Net Sales   $ 496,979     $ 455,120     Operating Income (Loss) by Business Segment                                   (In thousands)   2023     2022                     Lighting Segment   $ 31,633     $ 20,942   Display Solutions Segment     24,920       17,589   Corporate and Eliminations     (19,525 )     (17,330 ) Total Operating Income   $ 37,028     $ 21,201     Fiscal 2023 net sales of $497.0 million increased $41.9 million or 9.2% as compared to fiscal 2022 net sales of $455.1 million. Net sales were favorably influenced by increased net sales in the Lighting Segment (an increase of $39.0 million or 16.7%) and primarily driven by increased net sales in the Display Solutions Segment (an increase of $2.9 million or 1.3%). The increase in sales is attributed to continued strength and focus in the key market verticals the Company serves.   Fiscal 2023 operating income of $37.0 million represents a $15.8 million increase from fiscal 2022 operating income of $21.2 million. Non-GAAP adjusted operating income in fiscal 2023 of $42.0 million increased $17.0 million or 68% from adjusted fiscal 2022 operating income of $25.0 million. Refer to “Non-GAAP Financial Measures” below for a reconciliation of Non-GAAP financial measures to U.S. GAAP measures. The increase in adjusted operating income was the net result of an increase in net sales, sustained price disciplines, a higher-value sales mix, and strong operational execution.   - 23 -     Non-GAAP Financial Measures   We believe it is appropriate to evaluate our performance after making adjustments to the as-reported U.S. GAAP operating income, net income, and earnings per share. Adjusted operating income, net income, and earnings per share, which exclude the impact of acquisition costs, long-term performance based compensation expense, severance costs, and commercial growth opportunity expense, are Non-GAAP financial measures. Also included below are Non-GAAP financial measures including Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA and Adjusted EBITDA), Free Cash Flow, and Net Debt to adjusted EBITDA. We believe that these adjusted supplemental measures are useful in assessing the operating performance of our business. These supplemental measures are used by our management, including our chief operating decision maker, to evaluate business results. We exclude these items because they are not representative of the ongoing results of operations of our business. These Non-GAAP measures may be different from Non-GAAP measures used by other companies. In addition, the Non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations, in that they do not reflect all amounts associated with our results as determined in accordance with U.S. GAAP. Therefore, these measures should only be used to evaluate our results in conjunction with corresponding GAAP measures. Below is a reconciliation of these non-GAAP measures to operating income, net income, and earnings per share for the periods indicated along with the calculation of EBITDA and Adjusted EBITDA, Free Cash Flow, and Net Debt to adjusted EBITDA.    Reconciliation of net income to adjusted net income   (In thousands, except per share data)   2023     2022                       Diluted EPS                     Diluted EPS                                                     Net Income as reported   $ 25,762             $ 0.88     $ 15,032             $ 0.54                                                     Acquisition costs     -               -       373       (4 )     0.01                                                     Long-Term Performance Based Compensation     2,879       (1 )     0.10       2,594       (5 )     0.09                                                     Severance costs     51       (2 )     -       4       (6 )     -                                                     Consulting Expense: Commercial Growth Opportunities     707       (3 )     0.02       -               -                                                     Net Tax impact due to the Distribution of Shares from the Company's Long-Term Performance Based Compensation Plan     (402 )             (0.01 )     -               -                                                     Net Income adjusted   $ 28,997             $ 0.99     $ 18,003             $ 0.64     The following represents the income tax effects of the adjustments in the tables above, which were calculated using the estimated combined U.S., Canada and Mexico effective income tax rates for the periods indicated:   (1) $1,119 (2) $15 (3) $157 (4) $100 (5) $694 (6) $7   The reconciliation of reported earnings per share to adjusted earnings per share may not produce identical amounts due to rounding differences.   - 24 -     Reconciliation of operating income to adjusted operating income: (In thousands)   2023     2022                     Operating Income as reported   $ 37,028     $ 21,201                     Acquisition costs     -       473                     Long-Term Performance Based Compensation     3,998       3,288                     Severance costs     66       11                     Consulting Expense: Commercial Growth Opportunities     864       -                     Adjusted Operating Income   $ 41,956     $ 24,973     Reconciliation of net income to EBITDA and Adjusted EBITDA (In thousands)   2023     2022                     Net Income - Reported   $ 25,762     $ 15,032   Income Tax     7,564       4,053   Interest Expense, net     3,687       1,968   Other expense (income)     15       148   Operating Income as reported   $ 37,028     $ 21,201                     Depreciation and Amortization     9,664       10,118                     EBITDA   $ 46,692     $ 31,319                     Acquisition costs     -       473                     Long-Term Performance Based Compensation     3,998       3,288                     Severance costs     66       11                     Consulting Expense: Commercial Growth Initiatives     864       -                     Adjusted EBITDA   $ 51,620     $ 35,091     Reconciliation of cash flow from operations to free cash flow (In thousands)   2023     2022                     Cash Flow from Operations   $ 49,588     $ (3,863 )                   Capital expenditures     (3,208 )     (2,122 )                   Free Cash Flow   $ 46,380     $ (5,985 )   - 25 -     Net Debt to Adjusted EBITDA                 (In thousands)   June 30,     June 30,       2023     2022                     Debt as reported   $ 35,200     $ 79,596                     Less:                 Cash and cash equivalents as reported     1,828       2,462                     Net Debt   $ 33,372     $ 77,134                     Adjusted EBITDA   $ 51,620     $ 35,091                     Net Debt to Adjusted EBITDA     0.65       2.20     Results of Operations   2023 Compared to 2022             Lighting Segment                 (In thousands)   2023     2022                     Net Sales   $ 272,451     $ 233,449   Gross Profit   $ 86,761     $ 70,120   Operating Income   $ 31,633     $ 20,942     Lighting Segment net sales of $272.5 million in fiscal 2023 increased 16.7% from fiscal 2022 net sales of $233.4 million. The sales growth was across all key vertical markets, with significant contributions from new and enhanced products.   Gross profit of $86.8 million in fiscal 2023 increased $16.6 million or 23.7% from fiscal 2022. Gross profit as a percentage of net sales was 31.8% in fiscal 2023 compared to 30.0% in fiscal 2022. Contributors to the improvement of gross profit as a percentage of sales include an accelerated adoption of recently introduced products, sustained price disciplines, a higher value sales mix, and improved operational execution.   Operating expenses of $55.1 million in fiscal 2023 increased $5.9 million or 12.1% from fiscal 2022 operating expenses of $49.2 million, primarily driven by higher commission expense as a result of higher sales.   Fiscal 2023 Lighting Segment operating income of $31.6 million increased $10.7 million or 51.1% from operating income of $20.9 million in fiscal 2022 and operating income as a percentage of sales also increased from 9.1% to 11.6%. Both increases were primarily driven by sales volume and an improvement in gross profit as a percentage of sales.   Display Solutions Segment                 (In thousands)   2023     2022                     Net Sales   $ 224,528     $ 221,671   Gross Profit   $ 50,179     $ 39,076   Operating Income   $ 24,920     $ 17,589     Display Solutions Segment net sales of $224.5 million in fiscal 2023 increased $2.9 million or 1.3% from fiscal 2022 net sales of $221.7 million. The net increase in sales in the grocery and refueling/c-store market verticals was partially offset by the near completion of a $100 million QSR digital menu board program.   Gross profit of $50.2 million in fiscal 2023 increased $11.1 million or 28.4% from fiscal 2022. Gross profit as a percentage of net sales increased to 22.3% in fiscal 2023 compared from 17.6% in fiscal 2022. The increase in gross profit as a percentage of net sales was driven by improved program pricing and favorable customer mix.   - 26 -     Operating expenses of $25.3 million in fiscal 2023 increased $3.8 million or 17.6% from fiscal 2022. The increase of $3.8 million was driven by several factors including compensation, benefits, and commercial sales and marketing program costs to support sales growth, along with an increase in short-term performance based incentive plan expenses driven by improved business performance.   Fiscal 2023 Display Solutions Segment operating income of $24.9 million increased $7.3 million or 41.7% million from operating income of $17.6 million in fiscal 2022. The increase of $7.3 million was primarily driven by an increase in sales and an improvement in gross profit as a percentage of sales.   Corporate and Eliminations                 (In thousands)   2023     2022                     Gross Profit   $ 5     $ 12   Operating (Loss)   $ (19,525 )   $ (17,330 )   The gross profit relates to the intercompany profit in inventory elimination.   Operating expenses of $19.5 million in fiscal 2023 increased $2.2 million or 12.7% from fiscal 2022. The increase was primarily the result of an increase in short-term and long-term performance-based incentive plan expense driven by improved business performance and by commercial growth initiative consulting expense of $0.9 million for which there was no comparable expense in fiscal 2022.   Consolidated Results   Net interest expense of $3.7 million in fiscal 2023 compared to $2.0 million net interest expense in fiscal 2022. The increase in interest expense is primarily the results of increased borrowing costs. The Company also recorded a negligible amount of other expense in fiscal 2023 and $0.1 million of other expense in fiscal 2022, respectively, related to net foreign exchange currency transaction net losses through our Mexican and Canadian subsidiaries.   The $7.6 million of tax expense in fiscal 2023 reflects a consolidated effective tax rate of 22.7%. The $4.1 million of income tax expense in fiscal 2022 represents a consolidated effective tax rate of 21.2%. The increase in the effective tax rate is primarily driven by an increase in pre-tax profits in the higher taxing jurisdiction of Puerto Rico.   Reported net income of $25.8 million in fiscal 2023 compared to net income of $15.0 million in fiscal 2022. Non-GAAP adjusted net income was $29.0 million in fiscal 2023 compared to adjusted net income of $18.0 million in fiscal 2022 (Refer to the Non-GAAP tables above). The increase in Non-GAAP adjusted net income is primarily the result of an increase in net sales and an improvement of gross profit as a percentage of sales. Diluted earnings per share of $0.88 was reported in fiscal 2023 compared to $0.54 diluted earnings per share in fiscal 2022. The weighted average common shares outstanding for purposes of computing diluted earnings per share in fiscal 2023 were 29,316,000 shares compared to 27,993,000 shares in fiscal 2022.   Liquidity and Capital Resources   The Company considers our level of cash on hand, borrowing capacity, current ratio and working capital levels to be our most important measures of short-term liquidity. For long-term liquidity indicators, we believe our ratio of long-term debt to equity and our historical levels of net cash flows from operating activities to be the most important measures.   Working capital was $73.3 million at June 30, 2023, compared to $81.8 million at June 30, 2022. The ratio of current assets to current liabilities was 1.96 to 1 as of June 30, 2023, compared to a ratio of 2.06 to 1 as of June 30, 2022. The $8.5 million decrease in working capital from June 30, 2022, to June 30, 2023, is primarily driven by a $10.7 million decrease in inventory, partially offset by a $2.1 million increase in refundable income taxes.   Net accounts receivable were $77.7 million and $77.8 million at June 30, 2023, and June 30, 2022, respectively. Net accounts receivable remained relatively flat from prior year. Days Sales Outstanding (DSO) was 57 days and 54 days as of June 30, 2023, and June 30, 2022, respectively. We believe that our receivables are ultimately collectible or recoverable, net of certain reserves, and that aggregate allowances for credit losses are adequate.   - 27 -     Net inventories of $63.7 million at June 30, 2023, decreased $10.7 million from $74.4 million at June 30, 2022. The decrease of $10.7 million is the primarily the result of a combination of decrease in gross inventory of $9.9 million and an increase of $0.8 million in obsolescence reserves. Lighting Segment net inventory decreased $7.8 million, and net inventory in the Display Solutions Segment decreased $2.9 million.   Cash generated from operations and borrowing capacity under our credit facility is our primary source of liquidity. In September 2021, we amended our previous $100 million secured line of credit, to a $25 million term loan and the remaining $75 million as a secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2026. As of June 30, 2023, $58.5 million of the line of credit was available. As of June 30, 2023, we are in compliance with all of our loan covenants. We believe that our $100 million credit facility plus cash flows from operating activities are adequate for operational and capital expenditure needs for the next 12 months.   The Company generated $49.6 million of cash from operating activities in fiscal 2023 compared to a use of cash of $3.8 million in fiscal 2022. The $53.4 million increase in net cash flows from operating activity is primarily the result of strong improvement of cash flow generated from effective working capital management and from cash flow from earnings.   The Company used $3.2 million of cash from investing activities in fiscal 2023 compared to a use of cash of $1.6 million in fiscal 2022. Capital expenditures were $3.2 million in fiscal 2023 compared to $2.1 million in fiscal 2022. The Company received $0.5 million of cash related to the settlement of working capital adjustments from the acquisition of JSI in fiscal 2022 with no comparable event in fiscal 2023.   The Company had a use of cash of $47.1 million related to financing activities in fiscal 2023 compared to a source of cash of $5.6 million in fiscal 2022. The $52.7 million change in cash flow was primarily the result of cash generated from improved working capital management and from improved earnings, which was used to pay down the Company’s line of credit in fiscal 2023. Also contributing to the reduction of debt was $3.9 million of cash received from the exercise of stock options in the second and third quarters of fiscal 2023   The Company has on its balance sheet financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates.   Off-Balance Sheet Arrangements   We have no financial instruments with off-balance sheet risk.   Cash Dividends   In August 2023, the Board of Directors declared a regular quarterly cash dividend of $0.05 per share payable September 5, 2023, to shareholders of record as of August 28, 2023. The indicated annual cash dividend rate for fiscal 2023 was $0.20 per share. The Board of Directors has adopted a policy regarding dividends which indicates that dividends will be determined by the Board of Directors at its discretion based upon its evaluation of earnings, cash flow requirements, financial conditions, debt levels, stock repurchases, future business developments and opportunities, and other factors deemed relevant.   Critical Accounting Policies and Use of Estimates   We have adopted various accounting policies to prepare the consolidated financial statements in accordance with U.S. GAAP. Our significant accounting policies are described in Note 1. "Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements. Some of those significant accounting policies require us to make difficult, subjective, or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria: (i) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made, and (ii) different estimates reasonably could have been used, or changes in the estimate that are reasonably likely to occur may have a material impact on our financial condition or results of operations. The significant accounting policy that management believes is critical to the understanding and evaluating our reported financial results is the warranty reserve. For further information see Note 1. “Summary of Significant Accounting Policies " of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K   - 28 -     Warranty Reserves:   The Company offers a limited warranty that its products are free from defects in workmanship and materials.  The specific terms and conditions vary somewhat by product line, but generally cover defective products returned within one to five years, with some exceptions where the terms extend to 10 years, from the date of shipment. The Company records warranty liabilities to cover the estimated future costs for repair or replacement of defective returned products as well as products that need to be repaired or replaced in the field after installation. The Company calculates its liability for warranty claims by applying estimates based upon historical claims as a percentage of sales to cover unknown claims, as well as estimating the total amount to be incurred for known warranty issues. Warranty reserves are subject to large reserve adjustments when actual warranty costs differ significantly from cost estimates. The Company also periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amount as necessary which can also cause large reserve adjustments. These adjustments may be required in the future, which could adversely affect our gross profit and results of operations. The same methodology was used for calculating warranty reserves in fiscal 2022 and fiscal 2023.   - 29 -     MANAGEMENT ’ S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING   The Management of LSI Industries Inc. and subsidiaries (the “Company” or “LSI”) is responsible for the preparation and accuracy of the financial statements and other information included in this report. LSI’s Management is also responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act Rules 13a-15(f). Under the supervision and with the participation of Management, including LSI’s principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of internal control over financial reporting as of June 30, 2023, based on the criteria set forth in “the 2013 Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission.   A control system, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the reality that judgments in decision making can be faulty, the possibility of human error, and the circumvention or overriding of the controls and procedures.   In meeting its responsibility for the reliability of the financial statements, the Company depends upon its system of internal accounting controls. The system is designed to provide reasonable assurance that assets are safeguarded and that transactions are properly authorized and recorded. The system is supported by policies and guidelines, and by careful selection and training of financial management personnel. The Company also has a Disclosure Controls Committee, whose responsibility is to help ensure appropriate disclosures and presentation of the financial statements and notes thereto. Additionally, the Company has an Internal Audit Department to assist in monitoring compliance with financial policies and procedures.   The Board of Directors meets its responsibility for overview of the Company’s financial statements through its Audit Committee which is composed entirely of independent Directors who are not employees of the Company. The Audit Committee meets periodically with Management and Internal Audit to review and assess the activities of each in meeting their respective responsibilities. Grant Thornton LLP has full access to the Audit Committee to discuss the results of their audit work, the adequacy of internal accounting controls, and the quality of financial reporting.   Based upon LSI’s evaluation, the Company’s principal executive officer and principal financial officer concluded that internal control over financial reporting was effective as of June 30, 2023. We reviewed the results of Management’s assessment with the Audit Committee of our Board of Directors. Additionally, our independent registered public accounting firm audited and independently assessed the effectiveness of the Company’s internal control over financial reporting. Grant Thornton LLP, an independent registered public accounting firm, has issued an opinion on the effectiveness of the Company’s internal control over financial reporting, which is presented in the financial statements.   James A. Clark President and Chief Executive Officer (Principal Executive Officer)   James E. Galeese Executive Vice President and Chief Financial Officer (Principal Financial Officer)   - 30 -     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   Board of Directors and Shareholders LSI Industries Inc.   Opinion on the financial statements   We have audited the accompanying consolidated balance sheets of LSI Industries Inc. (an Ohio corporation) and subsidiaries (the “Company”) as of June 30, 2023 and 2022, the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended June 30, 2023, and the related notes and financial statement schedule included under Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.   We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of June 30, 2023, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated September 8, 2023 expressed unqualified opinion.   Basis for opinion   These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.   We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.   Critical audit matters   The critical audit matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.   /s/ GRANT THORNTON LLP   We have served as the Company’s auditor since 2009.   Chicago, Illinois September 8, 2023   - 31 -     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM   Board of Directors and Shareholders LSI Industries Inc. Opinion on internal control over financial reporting We have audited the internal control over financial reporting of LSI Industries Inc. (an Ohio corporation) and subsidiaries (the “Company”) as of June 30, 2023, based on criteria established in the 2013 Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2023, based on criteria established in the 2013 Internal Control — Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended June 30, 2023, and our report dated September 8, 2023 expressed an unqualified opinion on those financial statements. Basis for opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.   /s/ GRANT THORNTON LLP   Chicago, Illinois September 8, 2023   - 32 -       LSI INDUSTRIES INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the years ended June   30, 2023, and 2022 (In thousands, except per share data)       Twelve Months Ended                         2023     2022                     Net Sales   $ 496,979     $ 455,120                     Cost of products and services sold     360,003       345,912                     Severance costs     31       -                     Gross profit     136,945       109,208                     Selling and administrative expenses     99,882       87,995                     Severance costs     35       12                     Operating income     37,028       21,201                     Interest expense     3,687       1,968                     Other expense     15       148                     Income before income taxes     33,326       19,085                     Income tax expense     7,564       4,053                     Net income   $ 25,762     $ 15,032                                                         Basic   $ 0.92     $ 0.55   Diluted   $ 0.88     $ 0.54                                       Weighted average common shares outstanding                 Basic     28,127       27,286   Diluted     29,316       27,993     The accompanying notes are an integral part of these financial statements.   - 33 -       LSI INDUSTRIES INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the years ended June   30, 2023, and 2022 (In thousands)   (In thousands)                     2023     2022                     Net Income   $ 25,762     $ 15,032                     Foreign currency translation adjustment     294       ( 4 )                   Comprehensive Income   $ 26,056     $ 15,028     The accompanying notes are an integral part of these financial statements.   - 34 -       LSI INDUSTRIES INC.   CONSOLIDATED BALANCE SHEETS June   30, 2023, and 2022 (In thousands, except shares)       June 30,     June 30,       2023     2022                     ASSETS                                   Current assets                                   Cash and cash equivalents   $ 1,828     $ 2,462                     Accounts receivable, less allowance for credit losses of $ 435 and $ 499 , respectively     77,681       77,750                     Inventories     63,718       74,421                     Refundable income tax     3,120       1,041                     Other current assets     3,529       3,243                     Total current assets     149,876       158,917                     Property, Plant and Equipment, at cost                 Land     4,010       4,010   Buildings     24,561       24,495   Machinery and equipment     67,457       66,762   Buildings under finance leases     2,033       2,033   Construction in progress     1,231       618         99,292       97,918   Less accumulated depreciation     ( 73,861 )     ( 70,760 ) Net property, plant and equipment     25,431       27,158                     Goodwill     45,030       45,030                     Other Intangible Assets, net     63,203       67,964                     Operating Lease Right-Of-Use Assets     8,921       8,664                     Other Long-Term Assets, net     3,688       3,347                     Total assets   $ 296,149     $ 311,080     The accompanying notes are an integral part of these financial statements.   - 35 -     LSI INDUSTRIES INC. CONSOLIDATED BALANCE SHEETS (continued) June   30, 2023, and 2022 (In thousands, except shares)       June 30,     June 30,       2023     2022                     LIABILITIES & SHAREHOLDERS' EQUITY                                   Current liabilities                 Current maturities of long-term debt   $ 3,571     $ 3,571   Accounts payable     29,206       34,783   Accrued expenses     43,785       38,728                     Total current liabilities     76,562       77,082                     Long-Term Debt     31,629       76,025                     Finance Lease Liabilities     960       1,246                     Operating Lease Liabilities     5,954       5,776                     Other Long-Term Liabilities     3,466       3,182                     Commitments and Contingencies (Note 13)                               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 28,448,570 and 27,484,514 shares, respectively     148,691       139,500   Treasury shares, without par value     ( 7,166 )     ( 5,927 ) Deferred compensation plan     7,166       5,927   Retained Earnings     28,548       8,224   Accumulated other comprehensive income     339       45                     Total shareholders' equity     177,578       147,769                     Total liabilities & shareholders' equity   $ 296,149     $ 311,080     The accompanying notes are an integral part of these financial statements.   - 36 -       LSI INDUSTRIES INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY For the years ended June   30, 2023, and 2022 (amounts in thousands)       Common Shares     Treasury Shares     Key Executive     Accumulated Other             Total       Number Of             Number Of             Compensation     Comprehensive     Retained     Shareholders'       Shares     Amount     Shares     Amount     Amount     Income (Loss)     Earnings     Equity                                                                     Balance at June 30, 2021     26,863     $ 132,526       ( 346 )   $ ( 2,450 )   $ 2,450       49     $ ( 1,405 )   $ 131,170                                                                     Net Income     -       -       -       -       -       -       15,032       15,032   Other comprehensive loss     -       -       -       -       -       ( 4 )     -       (4 ) Board stock compensation     42       300       -       -       -       -       -       300   Restricted stock units issued, net of shares withheld for tax withholdings     80       ( 250 )     -       -       -       -       -       ( 250 ) Shares issued for deferred compensation     494       3,610       -       -       -       -       -       3,610   Activity of treasury shares, net     -       -       ( 476 )     ( 3,477 )     -       -       -       ( 3,477 ) Deferred stock compensation     -       -       -       -       3,477       -       -       3,477   Stock-based compensation expense     -       3,288       -       -       -       -       -       3,288   Stock options exercised, net     5       26       -       -       -       -       -       26   Dividends — $ 0.20 per share     -       -       -       -       -       -       ( 5,403 )     ( 5,403 )                                                                   Balance at June 30, 2022     27,484     $ 139,500       ( 822 )   $ ( 5,927 )   $ 5,927     $ 45     $ 8,224     $ 147,769                                                                                                                                       Net Income     -       -       -       -       -       -       25,762       25,762   Other comprehensive income     -       -       -       -       -       294       -       294   Board stock compensation     44       368       -       -       -       -       -       368   ESPP stock awards     14       142       -       -       -       -       -       142   Restricted stock units issued, net of shares withheld for tax withholdings     301       ( 896 )     -       -       -       -       -       ( 896 ) Shares issued for deferred compensation     207       2,017       -       -       -       -       -       2,017   Activity of treasury shares, net     -       -       ( 100 )     ( 1,239 )     -       -       -       ( 1,239 ) Deferred stock compensation     -       -       -       -       1,239       -       -       1,239   Stock-based compensation expense     -       3,698       -       -       -       -       -       3,698   Stock options exercised, net     438       3,862       -       -       -       -       -       3,862   Dividends — $ 0.20 per share     -       -       -       -       -       -       ( 5,438 )     ( 5,438 )                                                                   Balance at June 30, 2023     28,488     $ 148,691       ( 922 )   $ ( 7,166 )   $ 7,166     $ 339     $ 28,548     $ 177,578     The accompanying notes are an integral part of these financial statements.   - 37 -       LSI INDUSTRIES INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended June   30, 2023, and 2022 (In thousands)       2023     2022   Cash Flows from Operating Activities                 Net income   $ 25,762     $ 15,032   Non-cash items included in net income                 Depreciation and amortization     9,664       10,118   Deferred income taxes     ( 418 )     ( 342 ) Deferred compensation plan     2,017       3,610   Stock compensation expense     3,698       3,288   ESPP discount     142       -   Issuance of common shares as compensation     368       300   Loss on disposition of fixed assets     59       65   Allowance for doubtful accounts     ( 19 )     246   Inventory obsolescence reserve     2,496       2,111                     Changes in certain assets and liabilities:                 Accounts receivable     88       ( 20,311 ) Inventories     8,207       ( 17,586 ) Refundable income taxes     ( 2,079 )     235   Accounts payable     ( 5,577 )     1,784   Accrued expenses and other     5,180       ( 2,413 ) Net cash flows provided by (used in) operating activities     49,588       ( 3,863 )                   Cash Flows from Investing Activities                 Acquisition of JSI     -       500   Purchases of property, plant, and equipment     ( 3,208 )     ( 2,122 ) Proceeds from the sale of fixed assets     5       49   Net cash flows (used in) investing activities     ( 3,203 )     ( 1,573 )                   Cash Flows from Financing Activities                 Payments on long-term debt     ( 198,306 )     ( 161,627 ) Borrowings on long-term debt     153,910       173,074   Cash dividends paid     ( 5,438 )     ( 5,322 ) Shares withheld on employees' taxes     ( 896 )     ( 250 ) Payments on financing lease obligations     ( 281 )     ( 268 ) Proceeds from stock option exercises     3,862       26   Net cash flows (used in) provided by financing activities     ( 47,149 )     5,633                     Change related to Foreign Currency     130       ( 17 ) (Decrease) increase in cash and cash equivalents     ( 634 )     180   Cash and cash equivalents at beginning of period     2,462       2,282                     Cash and cash equivalents at end of period   $ 1,828     $ 2,462     The accompanying notes are an integral part of these financial statements.   - 38 -     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS       NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   Consolidation:   The consolidated financial statements include the accounts of LSI Industries Inc. (an Ohio corporation) and its subsidiaries (collectively, the “Company”), all of which are wholly owned. All intercompany transactions and balances have been eliminated in consolidation.   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 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 specific branded print graphics   ● Electrical components based on customer specifications   ● Digital signage and related media content   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.   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.   - 39 -     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:       Twelve Months Ended   (In thousands)   June 30, 2023       Lighting Segment Segment     Display SolutionsSegment Solutions Segment   Timing of revenue recognition                 Products and services transferred at a point in time   $ 234,736     $ 177,564   Products and services transferred over time     37,715       46,964       $ 272,451     $ 224,528                     Type of Product and Services                 LED lighting, digital signage solutions, electronic circuit boards   $ 224,529     $ 25,011   Poles and other display solutions elements     44,473       156,057   Project management, installation services, shipping and handling     3,449       43,460       $ 272,451     $ 224,528         Twelve Months Ended   (In thousands)   June 30, 2022       Lighting Segment Segment     Display SolutionsSegment Solutions Segment   Timing of revenue recognition                 Products and services transferred at a point in time   $ 204,241     $ 156,241   Products and services transferred over time     29,208       65,430       $ 233,449     $ 221,671                     Type of Product and Services                 LED lighting, digital signage solutions, electronic circuit boards   $ 191,791     $ 44,771   Poles and other display solutions elements     39,339       136,573   Project management, installation services, shipping and handling     2,319       40,327       $ 233,449     $ 221,671     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.   Credit and Collections:   The Company maintains allowances for credit losses for probable estimated losses resulting from either customer disputes or the inability of its customers to make required payments. If the financial condition of the Company’s customers were to deteriorate, resulting in their inability to make the required payments, the Company may be required to record additional allowances or charges against income. The Company determines its allowance for credit losses by first considering all known collectability problems of customers’ accounts, and then applying certain percentages against the various aging categories based on the due date of the remaining receivables. The resulting allowance for credit losses is an estimate based upon the Company’s knowledge of its business and customer base, the current economic climate, and historical trends. Receivables deemed uncollectable are written-off against the allowance for credit losses after all reasonable collection efforts have been exhausted. The Company also establishes allowances, at the time revenue is recognized, for returns, discounts, pricing, and other possible customer deductions. These allowances are based upon historical trends. The following table presents the Company’s net accounts receivable at the dates indicated.   (In thousands)   June 30, 2023     June 30, 2022                     Accounts receivable   $ 78,116     $ 78,249   Less: Allowance for credit losses     ( 435 )     ( 499 ) Accounts receivable, net   $ 77,681     $ 77,750     - 40 -     Cash and Cash Equivalents:   The cash balance includes cash and cash equivalents which have original maturities of less than three months. Cash and cash equivalents consist primarily of bank deposits and a bank money market account that is stated at cost, which approximates fair value. The Company maintains balances at financial institutions in the United States, Canada, and Mexico. In the United States, the FDIC limit for insurance coverage on non-interest-bearing accounts is $250,000 per institution. As of June 30, 2023, and June 30, 2022, the Company had bank balances of $ 2.3 million and $ 2.7 million, respectively, without insurance coverage.   Inventories, Net:   Inventories are stated at the lower of cost or net realizable value. Cost of inventories includes the cost of purchased raw materials and purchased components, direct labor, as well as manufacturing overhead which is generally applied to inventory based on direct labor and on material content, is determined on the first-in, first-out basis.   The Company maintains an inventory reserve for obsolete and excess inventory. The Company first determines its excess and obsolete inventory reserve by considering specific known obsolete items, and then by applying certain percentages to specific inventory categories based upon inventory turns. The Company uses various tools, in addition to inventory turns, to identify which inventory items have the potential to become obsolete. Judgment is used to establish excess and obsolete inventory reserves and management adjusts these reserves as more information becomes available about the ultimate disposition of the inventory item.   Property, Plant and Equipment and Related Depreciation:   Property, plant, and equipment are stated at cost. Major additions and betterments are capitalized while maintenance and repairs are expensed. For financial reporting purposes, depreciation is computed on the straight-line method over the estimated useful lives of the assets as follows:   Buildings (in years) 28 - 40 Machinery and equipment (in years) 3 - 10 Computer software (in years) 3 - 8   Costs related to the purchase, internal development, and implementation of the Company’s fully integrated enterprise resource planning/business operating software system are either capitalized or expensed. Leasehold improvements are depreciated over the shorter of fifteen years or the remaining term of the lease.   The Company recorded $ 4.9 million and $ 5.3 million of depreciation expense in the years ended June 30, 2023, and 2022 respectively.   Goodwill and Intangible Assets:   Intangible assets consisting of customer relationships, trade names and trademarks, patents, technology and software are recorded on the Company's balance sheet. The definite-lived intangible assets are being amortized to expense over periods ranging between five and twenty years. The Company evaluates definite-lived intangible assets for possible impairment when triggering events are identified. Neither indefinite-lived intangible assets nor the excess of cost over fair value of assets acquired ("goodwill") are amortized, however, they are subject to review for impairment. See additional information about goodwill and intangible assets in Note 6.   - 41 -     Fair Value:   The Company has financial instruments consisting primarily of cash and cash equivalents, revolving lines of credit, accounts receivable, accounts payable, and long-term debt. The fair value of these financial instruments approximates carrying value because of their short-term maturity and/or variable, market-driven interest rates. The Company has no financial instruments with off-balance sheet risk.   Fair value measurements of nonfinancial assets and nonfinancial liabilities are primarily used in goodwill and other intangible asset impairment analyses, long-lived asset impairment analyses and valuation of acquired assets and assumed liabilities. The accounting guidance on fair value measurement was used to measure the fair value of these nonfinancial assets and nonfinancial liabilities.   Product Warranties:   The Company offers a limited warranty that its products are free from defects in workmanship and materials. The specific terms and conditions vary somewhat by product line, but generally cover defective products returned within one to five years, with some exceptions where the terms extend to 10 years, from the date of shipment. The Company records warranty liabilities to cover the estimated future costs for repair or replacement of defective returned products as well as products that need to be repaired or replaced in the field after installation. The Company calculates its liability for warranty claims by applying estimates based upon historical claims as a percentage of sales to cover unknown claims, as well as estimating the total amount to be incurred for known warranty issues. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amount as necessary.   Changes in the Company’s warranty liabilities, which are included in accrued expenses in the accompanying consolidated balance sheets, during the periods indicated below were as follows:   Product Warranties   (In thousands)   June 30, 2023     June 30, 2022                     Balance at beginning of the period   $ 4,491     $ 5,295   Additions charged to expense     6,626       2,960   Deductions for repairs and replacements     ( 4,616 )     ( 3,764 ) Balance at end of the period   $ 6,501     $ 4,491     Employee Benefit Plans:   The Company has a 401(k) retirement plan whereby employee’s contributions to the 401(k) are matched by the Company. The 401(k) match program covers substantially all of its employees. The Company also has a nonqualified deferred compensation plan covering certain employees. The costs of employee benefit plans are charged to expense and funded annually. Total costs were $ 2.5 million and $ 2.9 million in June 30, 2023, and 2022, respectively.   Research and Development Costs:   Research and development costs are directly attributable to new product development, including the development of new technology for both existing and new products, and consist of salaries, payroll taxes, employee benefits, materials, outside legal costs and filing fees related to obtaining patents, supplies, depreciation, and other administrative costs. The Company expenses as research and development all costs associated with development of software used in solid-state LED products. All costs are expensed as incurred and are included in selling and administrative expenses. Research and development costs related to both product and software development totaled $ 3.4 million and $ 3.6 million for the fiscal years ended June 30, 2023, and 2022, respectively.   Cost of Products and Services Sold:   Cost of products sold is primarily comprised of direct materials and supplies consumed in the manufacture of products, as well as manufacturing labor, depreciation expense and direct overhead expense necessary to acquire and convert the purchased materials and supplies into finished product. Cost of products sold also includes the cost to distribute products to customers, inbound freight costs, warehousing costs and other shipping and handling activity. Cost of services sold is primarily comprised of the internal and external labor costs required to support the Company’s project management and installation costs to support its service revenue along with the management of media content.   - 42 -     Stock-Based Compensation:   The Company accounts for stock-based compensation to certain employees in accordance with accounting guidance for stock-based compensation. The accounting guidance requires companies to measure the cost of employee services received in exchange for an award of equity instruments, including stock options, restricted stock units, and performance stock unites, based on the grant date fair value of the award and to recognize it as compensation expense over the period the employee is required to provide service in exchange for the award, usually the vesting period. Equity award forfeitures are recognized at the date of employee termination.   Earnings Per Common Share:   The computation of basic earnings per common share is based on the weighted average common shares outstanding for the period net of treasury shares held in the Company’s nonqualified deferred compensation plan. The computation of diluted earnings per share is based on the weighted average common shares outstanding for the period and includes common share equivalents. Common share equivalents include the dilutive effect of stock options, restricted stock units, contingently issuable shares and common shares to be issued under a deferred compensation plan, all of which totaled 2,156,000 shares and 1,375,000 shares in fiscal 2023 and 2022, respectively. See further discussion in Note 3.   Income Taxes:   The Company accounts for income taxes in accordance with the accounting guidance for income taxes.  Accordingly, deferred income taxes are provided on items that are reported as either income or expense in different time periods for financial reporting purposes than they are for income tax purposes. Deferred income tax assets are reported on the Company’s balance sheet. Significant management judgment is required in developing the Company’s income tax provision, including the estimation of taxable income and the effective income tax rates in the multiple taxing jurisdictions in which the Company operates, the estimation of the liability for uncertain income tax positions, the determination of deferred tax assets and liabilities, and any valuation allowances that might be required against deferred tax assets.   Foreign Exchange:   The functional currency of the Company’s Mexican subsidiary is the Mexican Peso and the functional currency of the Company’s Canadian subsidiary is the Canadian Dollar. Assets and liabilities of foreign operations are translated using period end exchange rates. Revenue and expenses are translated using average exchange rates during each period reported. Translation losses (gains) are reported in accumulated other comprehensive loss (gain) as a component of shareholders equity and was ($ 0.3 ) million as of June 30, 2023, and a nominal amount as of June 30, 2022. The Company recognizes foreign currency transaction (gains) and losses on certain assets and liabilities that are denominated in the Mexican Peso and Canadian Dollar. These transaction (gains) and losses are reported in other expense in the consolidated statements of operations and was a nominal amount for the fiscal year ended June30, 2023 and $ 0.1 million for the fiscal year ended June 30, 2022.   New Accounting Pronouncements:   In October 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,” creating an exception to the recognition and measurement principles in ASC 805. The amendment requires that entities apply ASC 606, “Revenue from Contracts with Customers,” rather than using fair value, to recognize and measure contracts assets and contract liabilities from contracts with customers acquired in a business combination. The ASU is effective for fiscal years beginning after December 15, 2022, and interim periods therein. Early adoption is permitted, including adoption in an interim period, regardless of whether a business combination occurs in that period. The guidance should be applied prospectively; however, an entity that elects to early adopt in an interim period should apply the amendments to all business combinations that occurred during the fiscal year that includes that interim period. The Company is evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.   - 43 -     Use of Estimates:   The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.   Subsequent Events:   The Company has evaluated subsequent events for potential recognition and disclosure through the date the consolidated financial statements were filed. No items were identified during this evaluation that required adjustment to or disclosure in the accompanying consolidated financial statements.     NOTE 2 — BUSINESS SEGMENT 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 (formerly known as the Graphics Segment), with one executive team under the organizational structure reporting directly to the CODM with responsibilities for managing each segment. Corporate and Eliminations, which captures the Company’s corporate administrative activities, is also reported in the segment information.   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, menu board systems, display fixtures, refrigerated displays, and custom display elements. These products are used in visual image programs in several markets including 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 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.   The Company’s corporate administration activities are reported in the Corporate and Eliminations line item. These activities primarily include intercompany profit in inventory eliminations, 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.   - 44 -     There were no customers or customer programs representing a concentration of 10% or more of the Company’s net sales in the fiscal year ended June 30, 2023, or 2022. There was no concentration of accounts receivable at June 30, 2023, or 2022. Summarized financial information for the Company’s reportable business segments is provided for the indicated periods and as of June 30, 2023, and June 30, 2022:   (In thousands)   Twelve Months Ended       June 30       2023     2022   Net Sales:                 Lighting Segment   $ 272,451     $ 233,449   Display Solutions Segment     224,528       221,671       $ 496,979     $ 455,120                     Operating Income (Loss):                 Lighting Segment   $ 31,633     $ 20,942   Display Solutions Segment     24,920       17,589   Corporate and Eliminations     ( 19,525 )     ( 17,330 )     $ 37,028     $ 21,201                     Capital Expenditures:                 Lighting Segment   $ 1,829     $ 1,017   Display Solutions Segment     1,373       1,162   Corporate and Eliminations     6       ( 57 )     $ 3,208     $ 2,122                     Depreciation and Amortization:                 Lighting Segment   $ 5,423     $ 5,782   Display Solutions Segment     3,977       4,073   Corporate and Eliminations     265       263       $ 9,664     $ 10,118         June 30, 2023     June 30, 2022   Identifiable Assets:                 Lighting Segment   $ 142,941     $ 152,431   Display Solutions Segment     145,307       152,302   Corporate and Eliminations     7,901       6,347       $ 296,149     $ 311,080     The segment net sales reported above represent sales to external customers. Segment operating income, which is used in management’s evaluation of segment performance, represents net sales less all operating expenses. Identifiable assets are those assets used by each segment in its operations.   The Company records a 10 % mark-up on most intersegment revenues. Any intersegment profit in inventory is eliminated in consolidation. Intersegment revenues were eliminated in consolidation as follows:   Inter-segment sales                     Twelve Months Ended   (In thousands)   June 30       2023     2022   Lighting Segment inter-segment net sales   $ 22,283     $ 38,310   Display Solutions Segment inter-segment net sales   $ 274     $ 352     - 45 -       NOTE 3 — EARNINGS PER 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)                                   BASIC EARNINGS PER SHARE   2023     2022                     Net Income   $ 25,762     $ 15,032                     Weighted average shares outstanding during the period, net of treasury shares     27,159       26,618                     Weighted average vested restricted stock units outstanding     73       30                     Weighted average shares outstanding in the Deferred Compensation Plan during the period     895       638   Weighted average shares outstanding     28,127       27,286                     Basic income per share   $ 0.92     $ 0.55                     DILUTED EARNINGS PER SHARE                                   Net Income   $ 25,762     $ 15,032                     Weighted average shares outstanding                                   Basic     28,127       27,286                     Effect of dilutive securities (a):                 Impact of common shares to be issued under stock option plans, and Contingently issuable shares, if any     1,189       707   Weighted average shares outstanding     29,316       27,993                     Diluted income per share   $ 0.88     $ 0.54                     Anti-dilutive securities (b)     154       1,100       (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 in the computation of diluted earnings per share for the year ended June 30, 2023, and June 30, 2022, because the exercise price was greater than the 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.   - 46 -       NOTE 4 — INVENTORIES, NET   The following information is provided as of the dates indicated:   The following information is provided as of the dates indicated:                 (In thousands)   June 30, 2023     June 30, 2022                     Inventories:                 Raw materials   $ 47,689     $ 51,637   Work-in-progress     3,373       3,029   Finished goods     12,656       19,755   Total Inventories   $ 63,718     $ 74,421       NOTE 5 — ACCRUED EXPENSES   The following information is provided as of the dates indicated:   (In thousands)   June 30, 2023     June 30, 2022   Accrued Expenses:                 Customer prepayments   $ 5,425     $ 6,416   Compensation and benefits     13,116       9,611   Accrued warranty     6,501       4,491   Accrued sales commissions     5,082       4,783   Accrued freight     3,821       3,680   Accrued FICA     546       1,122   Operating lease liabilities     3,566       3,738   Accrued income tax     -       109   Finance lease liabilities     284       275   Other accrued expenses     5,444       4,503   Total Accrued Expenses   $ 43,785     $ 38,728       NOTE 6 — 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 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.   - 47 -     The Company identified its reporting units in conjunction with its annual goodwill impairment testing. The Company has a total of three reporting units that contain goodwill. One reporting unit is within the Lighting Segment and two 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.   Fiscal 2023:   As of March 1, 2023 , the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $ 34.4 million or 21 % 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 $ 13.6 million or 5,426 % 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 $ 99.4 million or 15 % above the carrying value of the reporting unit including goodwill.   The Company has two indefinite-lived intangible assets. The Company performed its annual review of indefinite-lived intangible assets as of March 1, 2023, and determined there was no impairment. The impairment test of the first indefinite-lived intangible asset passed with a fair market value of $ 17.0 million or 399 % above its carrying value. The impairment test of the second indefinite-lived intangible asset passed with a fair market value of and $ 10.5 million or 21 % above its carrying value.   Fiscal 2022:   As of March 1, 2022 the Company performed its annual goodwill impairment test on the three reporting units that contain goodwill. The goodwill impairment test of the reporting unit in the Lighting Segment passed with a business enterprise value of $ 31.6 million or 18 % 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 $ 12.2 million or 1,316 % 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 $ 100.4 million or 12 % above the carrying value of the reporting unit including goodwill.   The Company has two indefinite-lived intangible assets. The Company also performed its annual review of indefinite-lived intangible assets as of March 1, 2022,and determined there was no impairment. The impairment test of the first indefinite-lived intangible asset passed with a fair market value of $ 17.0 million or 396 % above its carrying value. The impairment test of the second indefinite-lived intangible asset passed with a fair market value of and $ 10.6 million or 22 % above its carrying value.   The following table presents information about the Company's goodwill on the dates or for the periods indicated:   (In thousands)   Lighting Segment Segment     Display SolutionsSegment Solutions Segment     Total   Balance as of June 30, 2022                         Goodwill   $ 70,971     $ 62,105     $ 133,076   Measurement period adjustment     -       1,242       1,242   Accumulated impairment losses     ( 61,763 )     ( 27,525 )     ( 89,288 ) Goodwill, net as of June 30, 2022   $ 9,208     $ 35,822     $ 45,030                             Balance as of June 30, 2023                         Goodwill   $ 70,971     $ 63,347     $ 134,318   Accumulated impairment losses     ( 61,763 )     ( 27,525 )     ( 89,288 ) Goodwill, net as of June 30, 2023   $ 9,208     $ 35,822     $ 45,030     - 48 -     In fiscal 2022, the Company recorded measurement period adjustments to the original purchase price of JSI Store Fixtures which impacted the amount of goodwill originally reported.   The gross carrying amount and accumulated amortization by major other intangible asset class is as follows:   (In thousands)   June 30, 2023       Gross Carrying Amount     Accumulated Amortization     Net Amount                             Amortized Intangible Assets                         Customer relationships   $ 62,083     $ 17,817     $ 44,266   Patents     268       268       -   LED technology, software     20,966       15,783       5,183   Trade name     2,658       1,156       1,502   Non-compete     260       110       150   Total Amortized Intangible Assets   $ 86,235     $ 35,134     $ 51,101                             Indefinite-lived Intangible Assets                         Trademarks and trade names     12,102       -       12,102   Total indefinite-lived Intangible Assets     12,102       -       12,102                             Total Other Intangible Assets   $ 98,337     $ 35,134     $ 63,203     (In thousands)   June 30, 2022       Gross Carrying Amount     Accumulated Amortization     Net Amount                             Amortized Intangible Assets                         Customer relationships   $ 62,083     $ 14,400     $ 47,683   Patents     268       268       -   LED technology, software     20,966       14,598       6,368   Trade name     2,658       1,049       1,609   Non-compete     260       58       202   Total Amortized Intangible Assets   $ 86,235     $ 30,373     $ 55,862                             Indefinite-lived Intangible Assets                         Trademarks and trade names     12,102       -       12,102   Total indefinite-lived Intangible Assets     12,102       -       12,102                             Total Other Intangible Assets   $ 98,337     $ 30,373     $ 67,964     (In thousands)   2023     2022                     Amortization expense of other intangible assets   $ 4,761     $ 4,809     - 49 -     The Company expects to record annual amortization expense as follows:   (In thousands)                   2024   $ 4,760   2025   $ 4,760   2026   $ 4,760   2027   $ 4,754   2028   $ 4,708   After 2028   $ 27,359       NOTE 7 — REVOLVING LINE OF CREDIT AND LONG-TERM DEBT   The Company’s long-term debt as of June 30, 2023, and June 30, 2022, consisted of the following:       June 30,     June 30,   (In thousands)   2023     2022                     Secured line of credit   $ 18,729     $ 57,275   Term loan, net of debt issuance costs of $ 21 and $ 30 , respectively     16,471       22,321   Total debt     35,200       79,596   Less: amounts due within one year     3,571       3,571   Total amounts due after one year, net   $ 31,629     $ 76,025     In September 2021, the Company amended its existing $ 100 million secured line of credit, to a $ 25 million term loan and $ 75 million remaining as a secured revolving line of credit. Both facilities expire in the third quarter of fiscal 2026. The principal of the term loan is repaid annually in the amount of $ 3.6 million over a five-year period with a balloon payment of the remaining balance due on the last month. Interest on both the revolving line of credit and the term loan is charged based upon an increment over the LIBOR rate or a base rate, at the Company’s option. The base rate is calculated as the highest of (a) the Prime rate, (b) the sum of the Overnight Funding Rate plus 50 basis points and (c) the sum of the Daily LIBOR Rate plus 100 basis points as long as a Daily LIBOR rate is offered, ascertainable and not unlawful. The increment over the LIBOR borrowing rate fluctuates between 100 and 225 basis points, and the increment over the Base Rate fluctuates between 0 and 125 basis points, both of which depend upon the ratio of indebtedness to earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the line of credit agreement. As of June 30, 2023, the Company’s borrowing rate against its revolving line of credit was 6.5 %. The increment over LIBOR borrowing rate will be 100 basis points for the second quarter of fiscal 2024. The fee on the unused balance of the $ 75 million committed line of credit fluctuates between 15 and 25 basis points. Under the terms of this line of credit, the Company has agreed to a negative pledge of real estate assets and is required to comply with financial covenants that limit the ratio of indebtedness to EBITDA and require a minimum fixed charge ratio. As of June 30, 2023, there was $ 58.5 million available for borrowing under the $ 75 million line of credit.   The Company is in compliance with all of its loan covenants as of June 30, 2023.     NOTE 8 — CASH DIVIDENDS   The Company paid cash dividends of $ 5.4 million in fiscal years 2023 and 2022, respectively. Dividends on restricted stock units in the amount of $ 0.1 million and $ 0.2 million were accrued as of June 30, 2023, and 2022, respectively. These dividends are paid upon the vesting of the restricted stock units when shares are issued to the award recipients. In August 2023, the Board of Directors declared a regular quarterly cash dividend of $ 0.05 per share payable September 5, 2023, to shareholders of record August 28, 2023.   - 50 -       NOTE 9 — EQUITY COMPENSATION   In November 2019, the Company’s shareholders approved the 2019 Omnibus Award Plan (“2019 Omnibus Plan”). The purpose of the 2019 Omnibus Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means by which directors, officers, and employees can acquire and maintain an equity interest in the Company. The 2019 Omnibus Plan replaced the 2012 Stock Incentive Plan (“2012 Stock Plan”). The number of shares of common stock authorized for issuance under the 2019 Omnibus Plan is 2,650,000 which were combined with the remaining shares available under the 2012 Stock Plan. The number of shares reserved for issuance under the 2019 Omnibus Plan is 2,417,793 shares, all of which are available for future grant or award as of June 30, 2023. The 2019 Omnibus Plan allows for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units (RSU’s), performance stock units (PSU’s), and other stock-based awards. The Company also awards Inducement awards that are granted by the Company to attract and retain key executives. Inducement awards are separately registered securities and are not part of the 2019 Omnibus Plan.   In fiscal 2023, 197,915 RSUs and 190,510 PSUs were granted. In fiscal 2022, 146,821 RSUs and 190,980 PSUs were granted.   Employee Stock Purchase Plan   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 2023, employees purchased 14,000 shares. At June 30, 2023, 256,000 shares remained available for purchase under the ESPP.   Stock Options   The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model. There were no options granted in fiscal 2023 and fiscal 2022.   Stock option expense is recorded on a straight-line basis, or sooner if the grantee is retirement eligible as defined in the 2019 Omnibus Plan, net of forfeitures. The forfeiture rate is based on historical rates and reduces the compensation expense recognized. The expected volatility of the Company’s stock was calculated based upon the historic monthly fluctuation in stock price for a period approximating the expected life of option grants. The risk-free interest rate is the rate of a five-year Treasury security at constant, fixed maturity on the approximate date of the stock option grant. The expected life of outstanding options is determined to be less than the contractual term for a period equal to the aggregate group of option holders’ estimated weighted average time within which options will be exercised. It is the Company’s policy that when stock options are exercised, new common shares shall be issued.   Service-based options have a three-year ratable vesting period beginning one year after the date of grant. Inducement stock options have a term of ten years only if the employee is employed for three years from the date of grant. The maximum exercise period of service-based and performance-based stock options granted under the 2019 Omnibus Plan is ten years. There were no service - based or inducement stock options awarded in fiscal 2023 and fiscal 2022.   The Company recorded $ 0.3 million and $ 0.7 million of expense related to stock options in fiscal years 2023 and 2022, respectively.   - 51 -     A summary of stock option activity as of June 30, 2023, and changes during the period from July 1, 2022, through June 30, 2023, are as follows:       Shares     Weighted Average Exercise Price Average Exercise Price     Weighted Average Remaining Contractual Term (in years)     Aggregate Intrinsic Intrinsic Value   Outstanding at June 30, 2022     2,300,791     $ 6.05       5.7     $ 2,287,764   Granted     -     $ -                   Exercised     ( 520,566 )   $ 7.12                   Forfeited     -     $ -                   Expired     ( 73,262 )   $ 6.58                   Outstanding at June 30, 2023     1,706,963     $ 5.70       5.4     $ 11,705,731   Exercisable at June 30, 2023     1,616,265     $ 5.64       5.3     $ 11,189,810   Vested and expected to vest at June 30, 2023     1,711,976     $ 5.71       5.4     $ 11,734,827     The aggregate intrinsic value of options exercised during the years ended June 30, 2023, and June 30, 2022, was $ 2.0 million as of June 30, 2023, and was nominal as of June 30, 2022. The Company received $ 3.9 million of cash proceeds from the exercise of stock options in fiscal 2023 and a nominal amount of proceeds from the exercise of stock options in fiscal 2022.   As of June 30, 2023, there was $ 0.1 million of unrecognized compensation cost, net of forfeitures, related to stock options, which is expected to be recognized over a weighted-average remaining period of 0.2 years.   For fiscal year 2023, the Company recognized a current income tax benefit of $ 0.8 million for tax deductions related to equity compensation. A discrete tax expense of $ 0.1 million was recognized to reduce deferred tax assets for cancelled awards and detriments in excess of the tax deductions.   For fiscal year 2022, the Company recognized a current income tax benefit of $ 0.2 million for tax deductions related to equity compensation. A discrete tax expense of $ 0.1 million was recognized to reduce deferred tax assets for cancelled awards and detriments in excess of the tax deductions.   Restricted Stock Units   A total of 197,915 RSUs with a weighted average fair value of $ 6.9 per share were awarded to employees during fiscal 2023. The RSUs awarded during fiscal 2023 have a three-year vesting period, with one-third vesting on each of the anniversary dates. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the RSUs were awarded. The unvested RSUs are non-voting but accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock. Dividends on RSUs in the amount of $ 101,931 and $ 65,743 were accrued as of June 30, 2023, and 2022 ,respectively. Accrued dividends are paid to the holder upon vesting of the RSUs and issuance of shares.   The Company recorded $ 1.3 million and $ 0.9 million of expense related to RSUs during fiscal years 2023, and 2022, respectively.   A summary of outstanding and unvested RSU activity as of June 30, 2023, and changes during the period from July 1, 2022, through June 30, 2023, are as follows:       Shares     Weighted- Average Grant Date Fair Value   Unvested at June 30, 2022     249,331     $ 7.49   Granted     197,915     $ 6.90   Vested     ( 96,478 )   $ 3.82   Forfeited     -     $ -   Unvested at June 30, 2023     350,768     $ 7.34     - 52 -     As of June 30, 2023, there was $ 1.1 million of unrecognized compensation cost, net of forfeitures, related to RSUs, which is expected to be recognized over a weighted-average remaining period of 1.6 years. The total fair value of RSUs that became fully vested during fiscal 2023 was $ 0.8 million.   Performance Stock Units   A total of 190,510 PSUs with a weighted average fair value of $ 6.9 per share were awarded to employees during fiscal 2023. The Company determined the fair value of the awards based on the closing price of the Company stock on the date the PSUs were awarded. PSUs vest if the Company meets certain financial metrics over a three-year period. The PSUs are non-voting and do not accrue cash dividends at the same per share rate as those cash dividends declared and paid on LSI’s common stock.   The Company recorded $ 2.0 million and $ 1.6 million of expense related to PSUs during fiscal years 2023, and 2022, respectively.   A summary of outstanding and unvested PSU activity as of June 30, 2023, and changes during the period from July 1, 2022 through June 30, 2023 are as follows:       Shares     Weighted- Average Grant Date Fair Value   Unvested at June 30, 2022     596,567     $ 6.63   Granted     190,510     $ 6.90   Vested     ( 200,626 )   $ 3.83   Forfeited     -     $ -   Unvested at June 30, 2023     586,451     $ 5.60     As of June 30, 2023, there was $ 1.2 million of unrecognized compensation cost, net of forfeitures, related to PSUs, which is expected to be recognized over a weighted-average remaining period of 2.0 years.   Director Stock Compensation Awards   The Company awarded a total of 43,722 and 42,420 common shares as stock compensation awards in fiscal years 2023, and 2022, respectively. These common shares were valued at their approximate $ 0.4 million fair market values based on their stock price at dates of issuance multiplied by the number of common shares awarded, pursuant to the compensation programs for non-employee directors who receive a portion of their compensation as an award of Company stock and for employees who received a nominal recognition award in the form of Company stock. Stock compensation awards are made in the form of newly issued common shares of the Company.   Deferred Compensation Plan   The Company has a non-qualified deferred compensation plan providing for both Company matching contributions and participant funded deferrals of compensation. This plan is fully funded in a Rabbi Trust. All plan investments are in common shares of the Company. As of June 30, 2023, there were 30 participants, all with fully vested account balances. A total of 922,426 common shares with a cost of $ 7.2 million, and 821,876 common shares with a cost of $ 5.9 million, both of which included the Company contributions and the participant deferrals, were held in the plan as of June 30, 2023, and 2022, respectively, and, accordingly, have been recorded as treasury shares.   The change in the number of shares held by this plan is the net result of newly issued shares as compensation deferred into the plan offset by distributions to terminated employees. The Company issued 207,090 and 494,047 new common shares for purposes of the non-qualified deferred compensation plan during fiscal 2023, and during fiscal 2022, respectively.     NOTE 10 — LEASES AND PURCHASE COMMITMENTS   Purchase commitments of the Company totaled $ 50.0 million as of June 30, 2023.   - 53 -     The Company leases certain manufacturing facilities along with a small office space, several forklifts, several small tooling items, and various items of office equipment. All but two of the Company’s leases are operating leases. Leases have a remaining term of one to seven 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 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 fiscal years 2023 and 2022.   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.   - 54 -     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.   (In thousands)   2023     2022   Operating lease cost   $ 3,551     $ 3,483   Financing lease cost:                 Amortization of right of use assets     295       295   Interest on lease liabilities     67       80   Variable lease cost     87       87   Total lease cost   $ 4,000     $ 3,945     Supplemental Cash Flow Information                 (in thousands)   2023     2022   Cash flows from operating leases                 Fixed payments - operating lease cash flows   $ 3,704     $ 3,576   Liability reduction - operating cash flows   $ 3,319     $ 3,064                     Cash flows from finance leases                 Interest - operating cash flows   $ 67     $ 80   Repayments of principal portion - financing cash flows   $ 281     $ 268     Operating Leases:   June 30, 2023     June 30, 2022   Total operating right-of-use assets   $ 8,921     $ 8,664                     Accrued expenses (Current liabilities)   $ 3,566     $ 3,738   Long-term operating lease liability     5,954       5,776   Total operating lease liabilities   $ 9,520     $ 9,514                     Weighted Average remaining Lease Term (in years)     3.31       3.05                     Weighted Average Discount Rate     5.44 %     4.81 %   - 55 -     Finance Leases:   June 30, 2023     June 30, 2022   Buldings under finance leases   $ 2,033     $ 2,033   Equipment under finance leases     34       11   Accumulated depreciation     ( 929 )     ( 634 ) Total finance lease assets, net   $ 1,138     $ 1,410                     Accured expenses (Current liabilities)   $ 284       275   Long-term finance lease liability     960       1,246   Total finance lease liabilities   $ 1,244     $ 1,521                     Weighted Average remaining Lease Term (in years)     3.83       4.80                     Weighted Average Discount Rate     4.86 %     4.86 %   Maturities of Lease Liability:                                     Operating Lease Liabilities Liabilities     Finance Lease Liabilities Liabilities     Operating Subleases     Net Lease Commitments Commitments                                     2024     3,566       337       ( 377 )     3,526   2025     3,145       362       ( 31 )     3,476   2026     1,860       362       -       2,222   2027     1,249       302       -       1,551   2028     632       -       -       632   Thereafter     2       -       -       2   Total lease payments   $ 10,454     $ 1,363     $ ( 408 )   $ 11,409   Less: Interest     ( 934 )     ( 119 )             ( 1,053 ) Present Value of Lease Liabilities   $ 9,520     $ 1,244             $ 10,356       NOTE 11 — INCOME TAXES   The following information is provided for the years ended June 30:   (In thousands)   2023     2022                     Components of income (loss) before income taxes:                 United States   $ 31,701     $ 20,124   Foreign     1,625       ( 1,039 ) Income before income taxes   $ 33,326     $ 19,085                     Provision for income taxes                 U.S. Federal   $ 6,327     $ 3,586   Foreign     325       165   State and local     1,330       644   Total current   $ 7,982     $ 4,395                     Deferred     ( 418 )     ( 342 ) Total provision for income taxes   $ 7,564     $ 4,053     - 56 -     (In thousands)   2023     2022   Reconciliation to federal statutory rate:                 Federal statutory rate     21.0 %     21.0   State and local taxes, net of federal benefit     2.9       3.0   Foreign operations     0.6       -   Federal tax credits     ( 1.0 )     ( 1.0 ) Uncertain tax position activity     -       ( 0.3 ) Stock-based compensation     ( 1.2 )     ( 0.3 ) Tax rate changes     ( 0.2 )     ( 1.4 ) Other     0.6       0.2   Effective tax rate     22.7 %     21.2     The components of deferred income tax assets and (liabilities) at June 30, 2023, and 2022 are as follows:   Components of deferred income tax assets and liabilities                                   (In thousands)   2023     2022                     Uncertain tax positions   $ 185     $ 169   Reserves against current assets     1,255       1,110   Accrued expenses     3,381       2,596   Deferred compensation     1,459       1,195   Stock-based compensation     1,680       1,421   State net operating loss carryover and credits     140       310   Lease Liability     2,397       2,667   Canadian NOL     319       538   U.S. Federal net operating loss carryover and credits     258       1,235   Deferred income tax asset before valuation allowance     11,074       11,241                     Valuation allowance     ( 108 )     ( 108 ) Deferred income tax asset     10,966       11,133                     Goodwill, acquisition costs and intangible assets     ( 3,749 )     ( 3,519 ) Depreciation     ( 1,634 )     ( 2,205 ) Right of Use Asset     ( 2,269 )     ( 2,513 ) Deferred income tax liability     ( 7,652 )     ( 8,237 )                   Net deferred income tax asset   $ 3,314     $ 2,896     The Company has U.S. federal net operating loss carry forward deferred tax assets of $ 0.2 million and $ 1.1 million at June 30, 2023, and June 30, 2022, respectively. The federal net operating loss carry forward was from the acquisition of JSI in May 2021. The decrease of $ 0.9 million in fiscal 2023 was from utilization of the net operating loss. The Company has deferred tax assets for research and development credits of $ 0.1 million at both June 30, 2023, and June 30, 2022. Utilization of the federal net operating losses and research and development credits are limited by Internal Revenue Code Section 382 but are expected to be realized before expiration.   The Company has Canadian net operating loss carry forward deferred tax assets of $ 0.3 million and $ 0.5 million at June 30, 2023, and June 30, 2022, respectively. The decrease of $ 0.2 million was from utilization of the net operating loss. The $ 0.3 million deferred tax asset was from the acquisition of JSI and has a 20 year carryforward period.   The Company has state net operating loss carryovers and tax credit deferred tax assets of $ 0.1 million and $ 0.3 million at June 30, 2023, and June 30, 2022, respectively. A portion of the sate net operating loss carry forward was from the acquisition of JSI in May 2021. A valuation allowance of $ 0.1 million exists at June 30, 2023, against Oregon tax credits not expected to be used. The Oregon credits are otherwise expected to expire over a 4-year period beginning June 30, 2027.   - 57 -     At June 30, 2023, tax, interest, and penalties, net of potential federal tax benefits, were $ 0.6 million, $ 0.3 million, and $ 0.1 million, respectively, of the total reserve for uncertain tax positions of $ 1.0 million. The entire uncertain tax position of $ 0.6 million, net of federal tax benefit, would impact the effective tax rate if recognized.   At June 30, 2022, tax, interest, and penalties, net of potential federal tax benefits, were $ 0.6 million, $ 0.3 million, and $ 0.2 million, respectively, of the total reserve for uncertain tax positions of $ 1.1 million. The entire uncertain tax position of $ 0.6 million net of federal tax benefit, would impact the effective tax rate if recognized. The liability for uncertain tax position is included in Other Long-Term Liabilities.   The Company is recording estimated interest and penalties related to potential underpayment of income taxes as a component of tax expense in the Consolidated Statements of Operations. The Company recognized a $ 0.1 million net tax (benefit)/expense in both fiscal 2023 and fiscal 2022, related to the change in reserves for uncertain tax positions. The Company recognized interest net of federal benefit and penalties of $ 500 and ($ 3,000 ), respectively, in fiscal 2023 and $( 8,000 ) and $( 10,000 ), respectively, in fiscal 2022. The reserve for uncertain tax positions is not expected to change significantly in the next twelve months.   The tax activity in the liability for uncertain tax positions was as follows:   Uncertain tax positions                                   (In thousands)   2023     2022                     Balance at the beginning of the fiscal year   $ 647     $ 682   Decreases - tax positions in prior period     ( 134 )     ( 117 ) Increase - tax positions in current period     143       82   Balance at end of the fiscal year   $ 656     $ 647     The Company files a consolidated federal income tax return in the United States, and files various combined and separate tax returns in several state and local jurisdictions, and also in Canada, Mexico, and Puerto Rico. In general, the Company is no longer subject to U.S. Federal, state, and local tax examinations by tax authorities for fiscal years ending prior to June 30, 2020. Except that US tax years prior to June 30, 2020, are subject to exam to the extent of the US tax refunds generated from the carry back of the June 30, 2020, federal net operating loss. The IRS completed their examination of the US tax year ended June 30, 2020, and issued a no change report.     NOTE 12 — SUPPLEMENTAL CASH FLOW INFORMATION   (in thousands)                                   Cash Payments:   2023     2022   Interest   $ 3,104     $ 1,668   Income taxes   $ 9,559     $ 4,965                                       Non-cash investing and financing activities                 Issuance of common shares as compensation   $ 368     $ 300   Issuance of common shares to fund deferred compensation plan   $ 2,017     $ 3,610   Issuance of common shares to fund ESPP plan   $ 142     $ -     - 58 -       NOTE 13 — 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 may occasionally issue a standby letter of credit in favor of third parties. As of June 30, 2023, there were no such standby letters of credit issued.     NOTE 14 – SEVERANCE COSTS   The Company recorded severance charges of less than $ 0.1 million in fiscal 2023 and 2022, respectively. This severance expense was related to reductions in staffing not related to plant restructuring.   The activity in the Company’s accrued severance liability was as follows for the twelve months ended June 30, 2023, and 2022:       June 30,     June 30,   (In thousands)   2023     2022                     Balance at beginning of period   $ -     $ 13   Accrual of expense     83       13   Payments     ( 78 )     ( 26 ) Balance at end of period   $ 5     $ -     - 59 -       NOTE 15 — SUMMARY OF QUARTERLY RESULTS (UNAUDITED)       Quarter Ended           (In thousands except per share data)   Sep. 30     Dec. 31     Mar. 31     Jun. 30     Fiscal Year                                                                                       2023                                         Net Sales   $ 127,069     $ 128,804     $ 117,470     $ 123,636     $ 496,979   Gross Profit     34,738       34,140       32,204       35,863       136,945   Net Income     6,262       6,417       4,669       8,414       25,762                                             Earnings per share                                         Basic   $ 0.23     $ 0.23     $ 0.16     $ 0.30     $ 0.92   Diluted   $ 0.22     $ 0.22     $ 0.16     $ 0.28     $ 0.88                                             Range of share prices                                         High   $ 8.81     $ 12.39     $ 15.88     $ 14.12     $ 15.88   Low   $ 5.70     $ 7.10     $ 12.17     $ 11.59     $ 5.70                                             2022                                         Net Sales   $ 106,397     $ 111,143     $ 110,111     $ 127,469     $ 455,120   Gross Profit     24,510       25,448       26,793       32,457       109,208   Net Income     3,133       3,105       3,618       5,176       15,032                                             Earnings per share                                         Basic   $ 0.12     $ 0.11     $ 0.13     $ 0.19     $ 0.55   Diluted   $ 0.11     $ 0.11     $ 0.13     $ 0.18     $ 0.54  (a)                                           Range of share prices                                         High   $ 8.43     $ 8.42     $ 7.49     $ 7.66     $ 8.43   Low   $ 7.12     $ 6.41     $ 6.00     $ 5.53     $ 5.53     (a) The total of the earnings per share for each of the four quarters does not equal the total earnings per share for the full year because the calculations are based on the average shares outstanding during each of the individual periods. There is no difference between basic and diluted shares due to losses.   - 60 -       LSI INDUSTRIES INC. AND SUBSIDIARIES SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS FOR THE YEARS ENDED JUNE 30, 2023, and 2022 (In thousands)      Description   Balance Beginning of Period     Additions Charged to Costs and Expenses     Additions from Company Acquired     Deductions (a)     Balance End of Period                                             Allowance for Credit Losses:                                         Year Ended June 30, 2023   $ 499     $ ( 19 )   $ -     $ ( 45 )   $ 435   Year Ended June 30, 2022   $ 256     $ 249     $ -     $ ( 6 )   $ 499                                             Inventory Obsolescence Reserve:                                         Year Ended June 30, 2023   $ 5,447     $ 2,496     $ -     $ ( 1,654 )   $ 6,289   Year Ended June 30, 2022   $ 5,050     $ 2,111     $ -     $ ( 1,714 )   $ 5,447                                             Deferred Tax Asset Valuation Reserve:                                   Year Ended June 30, 2023   $ 108     $ -     $ -     $ -     $ 108   Year Ended June 30, 2022   $ 108     $ -     $ -     $ -     $ 108     (a) For Allowance for credit losses, deductions are uncollectible accounts charged off, less recoveries.   - 61 -