UNITED
      STATES
                    SECURITIES
      AND EXCHANGE COMMISSION
                    
                    WASHINGTON,
      D.C.  20549
                    
                    
                    FORM
      10-Q
 
 x
                  QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended December 31, 2009ORo
                  TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934
                    For the transition period
      from                    
      toCommission
      file number 001-14757
 
 EnviroStar,
      Inc.(Exact
      name of Registrant as Specified in Its
charter)
 
 Delaware
                  11-2014231(State
      of Other Jurisdiction of
                  (I.R.S.
      EmployerIncorporation
      or Organization)
                  Identification
      No.)
 
 290 N.E.
68 Street, Miami, Florida  33138
 (Address
of Principal Executive Offices)
  (305)
754-4551
 (Registrant’s
telephone Number, Including Area Code)
  DRYCLEAN
USA, Inc.
 (Former
name, former address and former fiscal year, if changed since last
report)
 
 Indicate
      by check mark whether the registrant: (1) has filed all reports required
      to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the
      registrant was required to file such reports), and (2) has been subject to
      such filing requirements for the past 90 days.
                    Yes
      xNo oIndicate
      by check mark whether the registrant has submitted electronically and
      posted on its corporate Web site, if any, every Interactive Data File
      required to be submitted and posted pursuant to Rule 405 of Regulation S-T
      (§232.405 of this chapter) during the preceding 12 months (or for such
      shorter period that the registrant was required to submit and post such
      files).    Yes o No oIndicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting
      company.  See the definitions of “large accelerated filer,”
      “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
      Exchange Act.  (Check one):
                    
                    Large
      accelerated filer oAccelerated
      filer oNon-accelerated filer oSmaller reporting
      company xIndicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Act).
                    Yes o No xState
      the number of shares outstanding of each of the issuer’s classes of common
      stock, as of the latest practicable date:  Common Stock, $.025
      par value per share – 7,033,732 shares outstanding as of February 12,
      2010.

















PART I – FINANCIAL INFORMATIONItem 1.
            Financial StatementsCondensed
      Consolidated Statements of Income (Unaudited)for
      the six and three months ended December 31, 2009 and
    2008
            3Condensed
      Consolidated Balance Sheets at December 31, 2009
      (Unaudited)and
      June 30, 2009
            4Condensed
      Consolidated Statements of Cash Flows (Unaudited)for
      the six months ended December 31, 2009 and 2008
            6Notes to the Condensed Consolidated Financial Statements
      (Unaudited)
            7Item 2.
            Management’s Discussion and Analysis of Financial Condition
      and Results of Operations
            11Item 3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            16Item 4T.
            Controls and Procedures
            16PART II – OTHER INFORMATIONItem 4.
            Submission of Matters to a Vote of
      Securityholders
            17Item 6.
            Exhibits
            17Signatures
            18Exhibit Index
            19














2





PART 1.  FINANCIAL INFORMATION





Item
      1.
              Financial
      Statements


EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.)


CONDENSED CONSOLIDATED STATEMENTS OF INCOME








For
      the six monthsended
              December
      31,
            
            For
      the three months ended
              December
      31,2009
            
            
            2008
            
            
            2009
            
            
            2008(Unaudited)
            
            (Unaudited)Net
      sales
            
            
            $
            9,656,509
            
            
            $
            12,778,550
            
            
            $
            6,072,252
            
            
            $
            6,134,405Development
      fees, franchise and license fees, commissions and other
            
            
            93,422
            
            
            185,915
            
            
            49,409
            
            
            79,243Total
      revenues
            
            
            9,749,931
            
            
            12,964,465
            
            
            6,121,661
            
            
            6,213,648Cost
      of goods sold
            
            
            7,387,904
            
            
            9,901,476
            
            
            4,610,239
            
            
            4,635,856Selling,
      general and administrative expenses
            
            
            2,125,466
            
            
            2,420,013
            
            
            1,157,924
            
            
            1,238,524Total
      operating expenses
            
            
            9,513,370
            
            
            12,321,489
            
            
            5,768,163
            
            
            5,874,380Operating
      income
            
            
            236,561
            
            
            642,976
            
            
            353,498
            
            
            339,268Interest
      income
            
            
            6,620
            
            
            58,063
            
            
            3,116
            
            
            31,785Earnings
      before taxes
            
            
            243,181
            
            
            701,039
            
            
            356,614
            
            
            371,053Provision
      for income taxes
            
            
            92,908
            
            
            266,348
            
            
            135,443
            
            
            145,363Net
      earnings
            
            
            $
            150,273
            
            
            $
            434,691
            
            
            $
            221,171
            
            
            $
            225,690Basic
      and diluted earnings per share
            
            
            $
            .02
            
            
            $
            .06
            
            
            $
            .03
            
            
            $
            .03Weighted
      average number of sharesBasic
            
            
            7,033,732
            
            
            7,033,875
            
            
            7,033,732
            
            
            7,033,875Diluted
            
            
            7,033,732
            
            
            7,033,875
            
            
            7,033,732
            
            
            7,033,875





See Notes
to Condensed Consolidated Financial Statements





3





EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.)


CONDENSED CONSOLIDATED BALANCE SHEETS








ASSETSDecember
      31,
              2009
              (Unaudited)
            
            
            June
      30,
              2009Current
      AssetsCash
      and cash equivalents
            
            
            $
            5,847,571
            
            
            $
            5,460,954Accounts
      and trade notes receivable, net
            
            
            697,849
            
            
            936,214Inventories
            
            
            2,363,460
            
            
            3,002,428Deferred
      income taxes
            
            
            161,985
            
            
            173,354Refundable
      income taxes
            
            
            -
            
            
            51,220Other
      assets
            
            
            98,322
            
            
            175,661Total
      current assets
            
            
            9,169,187
            
            
            9,799,831Equipment
      and improvements, net
            
            
            189,484
            
            
            213,153Franchise,
      trademarks and other intangible assets, net
            
            
            101,965
            
            
            112,918Deferred
      tax asset
            
            
            72,506
            
            
            61,115$
            9,533,142
            
            
            $
            10,187,017





See Notes
to Condensed Consolidated Financial Statements








4





EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.)


CONDENSED CONSOLIDATED BALANCE SHEETS








LIABILITIES
      AND
              SHAREHOLDERS’
      EQUITYDecember
      31,
              2009
              (Unaudited)
            
            
            June
      30,
              2009Current
      LiabilitiesAccounts
      payable and accrued expenses
            
            
            $
            661,326
            
            
            $
            713,661Accrued
      employee expenses
            
            
            331,642
            
            
            506,710Income
      taxes payable
            
            
            21,709
            
            
            -Customer
      deposits
            
            
            1,249,367
            
            
            1,847,822Total
      current liabilities
            
            
            2,264,044
            
            
            3,068,193Total
      liabilities
            
            
            2,264,044
            
            
            3,068,193Shareholders’
      EquityPreferred
      stock, $1.00 par value; Authorized shares - 200,000; none issued and
      outstanding
            
            
            -
            
            
            -Common
      stock, $.025 par value; Authorized shares - 15,000,000; 7,065,500, shares
      issued and outstanding, including shares held in treasury
            
            
            176,638
            
            
            176,638Additional
      paid-in capital
            
            
            2,095,069
            
            
            2,095,069Retained
      earnings
            
            
            5,001,329
            
            
            4,851,055Treasury
      stock, 31,625 shares, at cost
            
            
            (3,938
            )
            
            (3,938
            )Total
      shareholders’ equity
            
            
            7,269,098
            
            
            7,118,824$
            9,533,142
            
            
            $
            10,187,017





See Notes
to Condensed Consolidated Financial Statements








5





EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.)


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS





Six
      months endedDecember
      31, 2009
              (Unaudited)
            
            December
      31, 2008
              (Unaudited)Operating
      activities:Net
      earnings
            
            
            $
            150,273
            
            $
            434,691Adjustments
      to reconcile net earnings to net cash provided by operating
      activities:Bad
      debt expense
            
            
            (28,650
            )
            42,175Depreciation
      and amortization
            
            
            45,954
            
            65,011Provision
      for deferred income taxes
            
            
            (22
            )
            20,910(Increase)
      decrease in operating assets:Accounts
      and trade notes receivables
            
            
            267,015
            
            1,488,155Inventories
            
            
            638,968
            
            163,777Other
      current assets
            
            
            77,339
            
            15,039Refundable
      income taxes
            
            
            51,220
            
            (42,379
            )Increase
      (decrease) in operating liabilities:Accounts
      payable and accrued expenses
            
            
            (52,335
            )
            (471,158
            )Accrued
      employee expenses
            
            
            (175,068
            )
            (187,001
            )Unearned
      income
            
            
            -
            
            (41,387
            )Customer
      deposits
            
            
            (598,455
            )
            (150,964
            )Income
      taxes payable
            
            
            21,709
            
            (16,682
            )Net
      cash provided by operating activities
            
            
            397,948
            
            1,320,187Investing
      activities:Capital
      expenditures
            
            
            (11,331
            )
            -Net
      cash used by investing activities
            
            
            (11,331
            )
            -Net
      increase in cash and cash equivalents
            
            
            386,617
            
            1,320,187Cash
      and cash equivalents at beginning of period
            
            
            5,460,954
            
            3,889,736Cash
      and cash equivalents at end of period
            
            
            $
            5,847,571
            
            $
            5,209,923Supplemental
      information:Cash
      paid for income taxes
            
            
            $
            10,000
            
            $
            304,500





See Notes
to Condensed Consolidated Financial Statements











6
 EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.) and Subsidiaries
  NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009
 (Unaudited)





Note (1) -
General:The accompanying unaudited condensed consolidated
financial statements include the accounts of EnviroStar Inc. and its
subsidiaries (the “Company”).  All material intercompany balances and
transactions have been eliminated in consolidation.





Effective
December 1, 2009, the Company changed its name from “DRYCLEAN USA, Inc.” to
“EnviroStar, Inc.”





The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial statements and the
instructions to Form 10-Q related to interim period financial statements.
Accordingly, these condensed consolidated financial statements do not include
certain information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements. However, the
accompanying unaudited condensed consolidated financial statements contain all
adjustments (consisting only of normal recurring accruals) which, in the opinion
of management, are necessary in order to make the financial statements not
misleading. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the Company’s financial statements and footnotes thereto
included in the Company’s Annual Report on Form 10-K for the year ended June 30,
2009. The June 30, 2009 balance sheet information contained herein was derived
from the audited consolidated financial statements included in the Company’s
Annual Report on Form 10-K as of that date.





The
preparation of the financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the financial statements and accompanying notes.  Actual results could
differ from those estimates.





Note (2) - Earnings Per
Share:  Basic and diluted earnings per share for the six and
three months ended December 31, 2009 and 2008 are computed as
follows:





For the six months endedDecember 31,
            
            For the three months ended
              December 31,2009
              (Unaudited)
            
            
            2008
              (Unaudited)
            
            
            2009
              (Unaudited)
            
            
            2008
              (Unaudited)Net
      earnings
            
            
            $
            150,273
            
            
            $
            434,691
            
            
            $
            221,171
            
            
            $
            225,690Weighted
      average shares outstanding
            
            
            7,033,732
            
            
            7,033,875
            
            
            7,033,732
            
            
            7,033,875Basic
      and fully diluted earnings per share
            
            
            $
            .02
            
            
            $
            .06
            
            
            $
            .03
            
            
            $
            .03





At
December 31, 2009, the Company had no outstanding options to purchase shares of
the Company’s common or other dilutive securities.  At December 31,
2008, there were outstanding options to purchase 10,000 shares of the Company’s
common stock which were excluded in the computation of earnings per share
because the exercise price of the options was at least the average market price
of the Company’s common stock for the period.





7
 EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.) and Subsidiaries
  NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009
 (Unaudited)





Note  (3) – Revolving
Credit Line:  Effective November 3, 2009, the Company’s
existing $2,250,000 revolving line of credit facility was extended until October
30, 2010. The Company’s obligations under the facility are guaranteed by the
Company’s subsidiaries and collateralized by substantially all of the Company’s
and its subsidiaries’ assets. No amounts were outstanding under this facility at
December 31, 2009 or June 30, 2009.





Note (4) - Stock-Based Compensation
Plans:The Company’s 2000 Stock Option Plan and 1994
Non-Employee Director Stock Option Plan are the Company’s only stock-based
compensation plans. The 2000 Stock Option Plan authorizes the grant until May 2,
2010 of options to purchase up to 500,000 shares of the Company’s common stock
to employees, directors and consultants. No options were outstanding under the
2000 Stock Option Plan on December 31, 2009. The 1994 Non-Employee Director
Stock Option Plan terminated on May 6, 2009, when the last remaining option
under the plan expired unexercised.





Effective
January 1, 2006, the Company adopted the modified prospective approach contained
in guidance of the Financial Accounting Standards Board (the “FASB”) for
accounting for stock compensation.  This approach applies to stock
compensation grants after December 15, 2005 and to grants that were outstanding
on December 31, 2005 to the extent not yet vested.  Since no new
options were granted during the six and three months ended December 31, 2009 and
2008 and all outstanding options were fully vested at December 31, 2005, no
compensation cost for share-based payments was recognized during the six and
three months ended December 31, 2009 and 2008.





Note (5) – Income
Taxes:Income tax expense varies from the federal corporate
income tax rate of 34%, primarily due to state income taxes, net of federal
income tax effect, and permanent differences.





As of
December 31, 2009 and June 30, 2009, the Company had deferred tax assets of
$234,491 and $234,469, respectively.  Consistent with the guidance of
the FASB regarding accounting for income taxes, the Company regularly estimates
its ability to recover deferred tax assets and establishes a valuation allowance
against deferred tax assets to reduce the balance to amounts expected to be
recoverable.  This evaluation considers several factors, including an
estimate of the likelihood of generating sufficient taxable income in future
periods over which temporary differences reverse, the expected reversal of
deferred tax liabilities, past and projected taxable income and available tax
planning strategies.  As of December 31, 2009, management believes
that it is more-likely-than not that the results of future operations will
generate sufficient taxable income to realize the net amount of our deferred tax
assets over the periods during which temporary differences reverse.





The
Company follows ASC Topic 740-10-25 in Accounting for Uncertainty in Income
Taxes.  Topic 740 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return.  As of
December 31, 2009, this did not result in any adjustment to the Company’s
provision for income taxes.





As of
December 31, 2009, the Company was subject to U.S. Federal and State income tax
examinations for the tax years 2007 through 2009.





8
 EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.) and Subsidiaries
  NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009
 (Unaudited)





Note (6) - Segment
Information: The Company’s reportable segments are strategic businesses
that offer different products and services. They are managed separately because
each business requires different marketing strategies. The Company primarily
evaluates the operating performance of its segments based on the categories
noted in the table below. The Company has no sales between segments. Financial
information for the Company’s business segments is as follows:





For
      the six months ended
              December
      31,
            
            For
      the three months ended
              December
      31,2009
            
            
            2008
            
            
            2009
            
            
            
            2008(Unaudited)
            
            (Unaudited)Revenues:Commercial
      and industrial laundry and dry cleaning equipment
            
            
            $
            9,690,535
            
            
            $
            12,874,586
            
            
            $
            6,091,494
            
            
            $
            6,168,146License
      and franchise operations
            
            
            59,396
            
            
            89,879
            
            
            30,167
            
            
            45,502Total
      revenues
            
            
            $
            9,749,931
            
            
            $
            12,964,465
            
            
            $
            6,121,661
            
            
            $
            6,213,648Operating
      income (loss):Commercial
      and industrial laundry and dry cleaning equipment
            
            
            $
            342,250
            
            
            $
            791,841
            
            
            $
            413,486
            
            
            $
            424,409License
      and franchise operations
            
            
            81,574
            
            
            25,233
            
            
            26,051
            
            
            694Corporate
            
            
            (187,263
            )
            
            (174,098
            )
            
            (86,039
            )
            
            (85,835
            )Total
      operating income
            
            
            $
            236,561
            
            
            $
            642,976
            
            
            $
            353,498
            
            
            $
            339,268





December 31, 2009(Unaudited)
            
            June
      30, 2009Identifiable
      assets:Commercial
      and industrial laundry and dry cleaning equipment
            
            
            $
            9,135,567
            
            
            $
            9,497,789License
      and franchise operations
            
            
            158,047
            
            
            401,473Corporate
            
            
            239,528
            
            
            287,755Total
      assets
            
            
            $
            9,533,142
            
            
            $
            10,187,017





Note (7) – Recently Adopted
Accounting Guidance:In June 2009, the FASB issued the Codification and
the Hierarchy of Generally Accepted Accounting Principles (“GAAP”)
(“Codification”).  The purpose of theCodification is to
provide a single source of authoritative U.S. GAAP.  The Codification
was effective for the Company in the first quarter of fiscal 2010.  As
the Codification was notintended to change or
alter existing GAAP, the adoption of the Codification did not have a material
effect on the Company’s financial statements.





In May
2009, the FASB issued a new standard related to subsequent events which
establishes the accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  The new standard was adopted in the first quarter of
fiscal 2010.  The adoption of the new standard did not have a material
effect on the Company’s financial statements.








9
 EnviroStar,
Inc. (formerly named DRYCLEAN USA, Inc.) and Subsidiaries
  NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2009
 (Unaudited)





In April
2009, the FASB issued three accounting standards, each of which were effective
for the Company on June 30, 2009.  The first requires disclosure about
the method and significant assumptions used to establish the fair value of
financial instruments for interim reporting periods as well as annual
statements.  The second provides guidance for other-than-temporary
impairments to improve the consistency in the timing of impairment recognition,
as well as provide greater clarity to investors about credit and non-credit
components of impaired debt securities that are not expected to be
sold.  The third provides guidance which primarily addressed the
measurement of fair value of financial assets and liabilities when there is no
active market or where the price inputs being used could be indicative of
distressed sales.  The adoption of these standards did not have a
material impact on the Company’s financial statements.





Note
(8) – Recently Issued Accounting Guidance Not Yet Adopted: In
October 2009, the FASB issued new accounting guidance that amends the revenue
recognition for multiple-element arrangements and expands the disclosure
requirements related to such arrangements.  The new guidance amends
the criteria for separating consideration in multiple-deliverable arrangements,
establishes a selling price hierarchy for determining the selling price of a
deliverable, eliminates the residual method of allocation, and requires the
application of relative selling price method in allocating the arrangement
consideration to all deliverables.  The Company does not expect this
accounting guidance, which is effective for the Company beginning July 1, 2010,
to have a material impact on the Company’s consolidated financial condition or
results of operations.





In
October 2009, the FASB issued accounting guidance that changes the accounting
model for revenue arrangements that include both tangible products and software
elements that function together to deliver the product’s essential
functionality.  The accounting guidance is designed to more closely
reflect the underlying economics of these transactions.  The Company
does not expect this accounting guidance, which is effective for the Company
beginning July 1, 2010, to have a material impact on the Company’s consolidated
financial condition or results of operations.





Note (9) – Subsequent
Events:In
May 2009, the FASB issued a new standard related to subsequent events which
establishes the accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  The new standard was adopted in the first quarter of
fiscal 2010.  The Company evaluated all events or transactions that
occurred after December 31, 2009 up through February 12, 2010, the date the
company issued these financial statements. During this period there were no
subsequent reportable events.








10







Item 2:
            Management’s
      Discussion and Analysis or Plan of
Operations





Overview





Revenues
and profits for the second quarter of fiscal 2010 rebounded from the
disappointing first quarter.  However, revenues for the first half of
fiscal 2010 were still 22.8% below the same period of fiscal 2009 which had
record six month revenues, and for the second quarter revenues decreased 1.5%
compared to the second quarter of fiscal 2009.  Earnings followed the
same pattern, decreasing by 65.4% for the first half of the year from the
comparable period a year ago, but only decreased by 2.0% for the second quarter
from the second quarter of fiscal 2009.  While the economic crisis is
still affecting the Company’s performance, it appears that the economy is
moderating; however, incoming sales are still below the level of
shipments.





The
Company’s cash position increased by $386,617 to $5,847,571, largely due to a
decrease in inventories.  At present inventories are at a reduced
level but should increase in future periods as business responds to an improved
economy.





Liquidity and Capital
Resources





Cash
increased by $386,617 during the first six months of fiscal 2009 compared to an
increase of $1,320,187 during the same period of fiscal 2009. The following
summarizes the Company’s Condensed Consolidated Statements of Cash
Flows:





Six
      Months Ended December 31,2009
              (Unaudited)
            
            
            2008
              (Unaudited)Net
      cash provided (used) by:Operating
      activities
            
            
            $
            397,948
            
            
            $
            1,320,187Investing
      activities
            
            
            (11,331
            )
            
            -





For the
six month period ended December 31, 2009, operating activities provided cash of
$397,948 compared to $1,320,187 of cash provided during the same period of
fiscal 2009.  The cash provided by operating activities in the first
half of fiscal 2010 was primarily due to a reduction of $638,968 in inventories,
due to heavy shipments during the second quarter.  These inventories
were not immediately replaced in order to be in line with incoming
orders.  This lower level of inventories should increase as orders
improve with an improving economy.  Cash was also provided by the
Company’s net earnings of $150,273 and non-cash expenses for depreciation and
amortization of $45,954.  Additional cash was provided by a decrease
in accounts receivable of $267,015, other assets of $77,339, and refundable
income taxes and income taxes payable aggregating $72,929.  These
increases in cash were partially offset by a $598,455 reduction in customer
deposits as new orders lagged behind shipments during the
period.  Cash was also used by a reduction in accrued employee
expenses of $175,068 and accrued expenses of $52,335.  These changes
were the result of normal business activities.  The collection of a
$35,000 account receivable resulted in a reversal of a previously recognized bad
debt expense.





Most of
the cash provided by operating activities for the first six months of fiscal
2009 resulted from a $1,488,155 reduction in accounts and trade notes receivable
as large shipments made during the quarter were either paid prior to shipment
(in the case of foreign shipments) or paid for by customers’ deposits. Other
cash generated by operating activities during the first six months of fiscal
2009 was provided by the Company’s net earnings of $434,691 and non-cash
expenses for depreciation and amortization of $65,011 and bad debts of
$42,175.  Included in bad debt expense was an increase in the
provision for bad debts of





11





$20,000
due to the credit crisis. Record shipments also reduced inventories and provided
cash of $163,777. This cash was offset by a decrease in accounts payable and
accrued expenses of $471,158 and accrued employee expenses of $187,001. A
reduction in customers’ deposits also used cash of $150,964. Additional uses of
cash were a reduction in earned income of $41,387 associated with the
amortization of the initial fee received by the Company from Whirlpool
Corporation in January 2005 (which fee was fully amortized at December 31, 2008)
and refundable income taxes and income taxes payable aggregating
$59,061.





Investing
activities used cash of $11,331 for capital expenditures during the first half
of fiscal 2010.  There were no investing activities during the first
half of fiscal 2009.





There
were no expenditures for financing activities during either the first six months
of fiscal 2010 or the first six months of fiscal 2009.





Effective
November 3, 2009, the Company’s existing $2,250,000 revolving line of credit
facility was extended until October 30, 2010. The Company’s obligations under
the facility are guaranteed by the Company’s subsidiaries and collateralized by
substantially all of the Company’s and its subsidiaries’ assets. No amounts were
outstanding under this facility at December 31, 2009 or June 30,
2009.





The
Company believes that its present cash position and cash it expects to generate
from operations and, should it need cash, which is not presently anticipated,
cash borrowings available under its $2,250,000 revolving line of credit
facility, will be sufficient to meet its operational needs.





Off-Balance Sheet
Financing





The
Company has no off-balance sheet financing arrangements within the meaning of
item 303(a)(4) of Regulation S-K.





Results of
Operations





Revenues.





The
following table sets forth certain information with respect to changes in the
Company’s revenues for the periods presented:





Six
      months ended
            
            
            
            Three
      months endedDecember
      31,
            
            
            
            December
      31,2009
              (Unaudited)
            
            
            2008
              (Unaudited)
            
            %
              Change
            
            2009
              (Unaudited)
            
            
            2008
              (Unaudited)
            
            %
              ChangeNet
      sales
            
            
            $
            9,656,509
            
            
            $
            12,778,550
            
            -24.4
            %
            
            $
            6,072,252
            
            
            $
            6,134,405
            
            -1.0
            %Development
      fees, franchise and license fees, commissions and other
            
            
            93,422
            
            
            185,915
            
            -49.8
            %
            
            49,409
            
            
            79,243
            
            -37.6
            %Total
      revenues
            
            
            $
            9,749,931
            
            
            $
            12,964,465
            
            -24.8
            %
            
            $
            6,121,661
            
            
            $
            6,213,648
            
            -1.5
            %











12





Revenues
for the six and three month periods ended December 31, 2009 decreased by
$3,214,534 (24.8%) and $91,987 (1.5%), respectively, from the same periods of
fiscal 2009. The decreases in revenues were largely attributable to the current
financial crisis and the weak economy.  However, the second quarter of
fiscal 2010 rebounded when compared to the first quarter of fiscal 2010, as the
Company was able to ship more of its backlog.  For the six month
period of fiscal 2010, compared to the same period of fiscal 2009, sales of
laundry equipment decreased by 39.3%, which was partially offset by boiler sales
which increased by 8.7% and spare parts which increased by
7.7%.  Drycleaning equipment were only down .3%.  Shipments
improved for the three months ended December 31, 2009, compared to the same
period of fiscal 2009, as sales of drycleaning equipment increased by 31.3%,
along with boiler sales which increased 96.4% and spare parts which increased by
11.7%; however, sales of laundry equipment, although improved, still decreased
by 10.9%.  The increase in boiler sales for both periods was
attributed to the new line of boilers that the Company began to distribute at
the beginning of the fiscal year.  As a result of weak foreign sales
in the first quarter of fiscal 2010, foreign sales for the first half of fiscal
2010 were 17.8% lower than in the same period of fiscal
2009.  However, foreign sales rebounded in the second quarter of
fiscal 2010, increasing by 23.4% over the second quarter of fiscal
2009.





Development
fees, franchise and license fees, commissions and other, decreased by $92,493
(49.8%) and $29,834 (37.6%), respectively, for the six and three month periods
ended December 31, 2009 from the same periods of fiscal 2009.  The
decrease in both periods is attributable to the economic downturn which resulted
in less royalty and license fee revenue.





Operating Expenses.





Six
      months ended
            
            Three
      months endedDecember
      31,
            
            December
      31,2009
              (Unaudited)
            
            2008
              (Unaudited)
            
            2009
              (Unaudited)
            
            2008
              (Unaudited)As
      a percentage of sales:Cost
      of goods sold
            
            76.5%
            
            77.5%
            
            75.9%
            
            75.6%As
      a percentage of revenue:Selling,
      general and administrative expenses
            
            21.8%
            
            18.7%
            
            18.9%
            
            19.9%Total
      expenses
            
            97.6%
            
            95.0%
            
            94.2%
            
            94.5%





Costs of
goods sold, expressed as a percentage of sales, improved to 76.5% from 77.5% for
the first six months of fiscal 2010, but increased to 75.9% from 75.6% for the
three month period ended December 31, 2010, compared to the same periods of
fiscal 2009. These slight variations are attributable to product mix as some
products carry better margins than others.





Selling,
general and administrative expenses decreased by $294,547 (12.2%) and $80,600
(6.5%) for the six and three month periods, respectively, of fiscal 2010 from
the same periods in fiscal 2009.  The decrease in dollar amounts is
mainly attributable to a reduction in payroll costs and commissions due to
reduced sales.  The variation as a percentage of revenues in both
periods was due to the level of sales for the period which affects how fixed and
semi-variable expenses are absorbed.





Interest
income decreased by $51,443 (88.6%) and $28,669 (90.2%) for the six and three
month periods of fiscal 2010, respectively, from the same periods of fiscal 2009
as a result of lower prevailing interest rates which, offset higher average
outstanding bank balances.





The
Company’s effective tax rate increased to 38.2% from 38.0% for the six month
period of fiscal 2010, compared to the same period of fiscal 2009, but decreased
to 38.0% from 39.2% for the three month period.  The slight variation
in percentage for the periods reflects changes in permanent and temporary
adjustments to taxable income.








13





Inflation





Inflation
has not had a significant effect on the Company’s operations during any of the
reported periods.





Transactions with Related
Parties





The
Company leases 27,000 square feet of warehouse and office space from Sheila
Steiner, who, together with her husband, William K. Steiner, Chairman of the
Board of Directors and a director of the Company, are the trustees of a trust
which is a principal shareholder of the Company.  The lease provides
for a three-year term that commenced on November 1, 2005, with annual rent
increases commencing November 1, 2006 of 3% over the rent in the prior
year.  The lease contains two three-year renewal options in favor of
the Company.  The Company exercised its first renewal option to extend
this lease until October 31, 2011.  The rent for the period November
1, 2008 through October 31, 2009 was $103,263 and increased on November 1, 2009
to $106,360 for next twelve months.  The Company bears the costs of
real estate taxes, utilities, maintenance, non-structural repairs and
insurance.  The Company believes that the terms of the lease are
comparable to terms that would be obtained from an unaffiliated third party for
similar property in a similar locale.





Critical Accounting
Policies





The
accounting policies that the Company has identified as critical to its business
operations and to an understanding of the Company’s results of operations remain
unchanged from those described in detail in the Management’s Discussion and
Analysis or Plan of Operation section of the Company’s Annual Report on Form
10-K for the fiscal year ended June 30, 2009. The Company makes estimates and
assumptions that affect the reported amount of assets and liabilities,
contingent assets and liabilities, and the reported amounts of revenues and
expenses during the reported period. Therefore, there can be no assurance that
the actual results will not differ from those estimates.





Recently Adopted Accounting
Guidance





In June
2009, the Financial AccountingStandards Board (“FASB”)
issued the Codification and the Hierarchy of Generally Accepted Accounting
Principles (“GAAP”) (“Codification”).  The purpose of theCodification is to
provide a single source of authoritative U.S. GAAP.  The Codification
was effective for the Company in the first quarter of fiscal 2010.  As
the Codification was notintended to change or
alter existing GAAP, the adoption of the Codification did not have a material
effect on the Company’s financial statements.





In May
2009, the FASB issued a new standard related to subsequent events which
establishes the accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or are available
to be issued.  The new standard was adopted in the first quarter of
fiscal 2010.  The adoption of the new standard did not have a material
effect on the Company’s financial statements.





In April
2009, the FASB issued three accounting standards, each of which were effective
for the Company on June 30, 2009.  The first requires disclosure about
the method and significant assumptions used to establish the fair value of
financial instruments for interim reporting periods as well as annual
statements.  The second provides guidance for other-than-temporary
impairments to improve the consistency in the timing of impairment recognition,
as well as provide greater clarity to investors about credit and non-credit
components of impaired debt securities that are not expected to be
sold.  The third provides guidance which primarily addressed the
measurement of fair value of financial assets and liabilities when there is no
active market or where the price inputs being used could be indicative of
distressed sales.  The adoption of these standards did not have a
material impact on the Company’s financial statements.








14





Recently Issued Accounting
Guidance Not Yet Adopted





In
October 2009, the FASB issued new accounting guidance that amends the revenue
recognition for multiple-element arrangements and expands the disclosure
requirements related to such arrangements.  The new guidance amends
the criteria for separating consideration in multiple-deliverable arrangements,
establishes a selling price hierarchy for determining the selling price of a
deliverable, eliminates the residual method of allocation, and requires the
application of relative selling price method in allocating the arrangement
consideration to all deliverables.  The Company does not expect this
accounting guidance, which is effective for the Company beginning July 1, 2010,
to have a material impact on the Company’s consolidated financial condition or
results of operations.





In
October 2009, the FASB issued accounting guidance that changes the accounting
model for revenue arrangements that include both tangible products and software
elements that function together to deliver the product’s essential
functionality.  The accounting guidance is designed to more closely
reflect the underlying economics of these transactions.  The Company
does not expect this accounting guidance, which is effective for the Company
beginning July 1, 2010, to have a material impact on the Company’s consolidated
financial condition or results of operations.





Forward Looking
Statements





Certain
statements in this Report are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995. When used in this Report,
words such as “may,” “should,” “seek,” “believe,” “expect,” anticipate,”
“estimate,” “project,” “intend,” “strategy” and similar expressions are intended
to identify forward-looking statements regarding events, conditions and
financial trends that may affect the Company’s future plans, operations,
business strategies, operating results and financial position. Forward-looking
statements are subject to a number of known and unknown risks and uncertainties
that may cause actual results, trends, performance or achievements of the
Company, or industry trends and results, to differ materially from the future
results, trends, performance or achievements expressed or implied by such
forward-looking statements. Such risks and uncertainties include, among others:
general economic and business conditions in the United States and other
countries in which the Company’s customers are located; industry conditions and
trends, including supply and demand; changes in business strategies or
development plans; the availability, terms and deployment of debt and equity
capital; technology changes; competition and other factors which may affect
prices which the Company may charge for its products and its profit margins; the
availability and cost of the equipment purchased by the Company; relative values
of the United States currency to currencies in the countries in which the
Company’s customers, suppliers and competitors are located; and changes in, or
the failure to comply with, government regulation, principally environmental
regulations. These and certain other factors are discussed in this Report and
from time to time in other Company reports filed with the Securities and
Exchange Commission. The Company does not assume an obligation to update the
factors discussed in this Report or such other reports.





15








Item 3.
            Quantitative
      and Qualitative Disclosures About Market
Risks





All of
the Company’s export sales require the customer to make payment in United States
dollars.  Accordingly, foreign sales may be affected by the strength
of the United States dollar relative to the currencies of the countries in which
their customers and competitors are located, as well as the strength of the
economies of the countries in which the Company’s customers are
located.  The Company has, at times in the past, paid certain
suppliers in Euros.  The Company’s bank revolving credit facility
contains a $250,000 foreign exchange subfacility for this
purpose.  The Company had no foreign exchange contracts outstanding at
December 31, 2009 and 2008.





The
Company’s cash and cash equivalents are maintained in interest-bearing bank
accounts, including a money market account, and a tax-free municipal fund, each
of which bear interest at prevailing interest rates.  Interest income
decreased by $51,443 (88.6%) in the first half of fiscal 2010 from the same
period in fiscal 2009 as a result of lower prevailing interest rates despite
higher average outstanding bank balances.





Item 4T.
            Controls
      and Procedures





Evaluation
of Disclosure Controls and Procedures





As of the
end of the period covered by this report, management of the Company, with the
participation of the Company’s principal executive officer and the Company’s
principal financial officer, evaluated the effectiveness of the Company’s
“disclosure controls and procedures.”  As defined in Rule 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”),
“disclosure controls and procedures” means controls and other procedures of a
company that are designed to ensure that information required to be disclosed by
the company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms.  Based on that evaluation, the Company’s
principal executive officer and principal financial officer concluded that, as
of the date of their evaluation, the Company’s disclosure controls and
procedures were effective to provide reasonable assurance that information
required to be disclosed in the Company’s periodic filings under the Exchange
Act is accumulated and communicated to the Company’s management, including those
officers, to allow timely decisions regarding required disclosure.  It
should be noted that a control system, no matter how well designed and operated,
can provide only reasonable, not absolute, assurance that it will detect or
uncover failures within the Company to disclose material information otherwise
required to be set forth in the Company’s periodic reports.





During
the period covered by this Report, there were no changes in the Company’s
internal control over financial reporting that have materially affected, or are
reasonably likely to materially affect, the Company’s internal control over
financial reporting.








16





PART II. OTHER INFORMATION





Item 4.
            Submission
      of Matters to a Vote of
Securityholders.





At the
Company’s 2009 Annual Meeting of Stockholders held on November 13, 2009, the
Company’s stockholders:





(a)           Reelected
the Company’s then existing Board of Directors by the following
votes:





VotesFor
            
            
            WithheldMichael
      S. Steiner
            6,434,426
            153,543William
      K. Steiner
            6,334,113
            253,856Venerando
      J. Indelicato
            6,433,726
            154,243David
      Blyer
            6,438,149
            149,820Lloyd
      Frank
            6,336,839
            251,130Alan
      Grunspan
            6,435,666
            152,303Stuart
      Wagner
            6,340,466
            247,503





(b)           Adopted
a proposed Amendment to the Company’s Certificate of Incorporation to change the
Corporation’s name from DRYCLEAN USA, Inc. to EnviroStar, Inc. by the following
vote:





For
            Against
            Abstain6,478,700
            80,058
            29,211





Item 6.
            Exhibits





(a)
            Exhibits:31.01
            Certification of Principal Executive Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002 promulgated under the
      Securities Exchange Act of 1934.31.02
            Certification of Principal Financial Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002 promulgated under the
      Securities Exchange Act of 1934.32.01
            Certification of Principal Executive Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.32.02
            Certification of Principal Financial Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002.








17





SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Date:  February
      12, 2010
            ENVIROSTAR,
      Inc.By:
            /s/
      Venerando J. IndelicatoVenerando
      J. Indelicato,
              Treasurer
      and Chief Financial Officer








18





Exhibit Index





31.01
            Certification of Principal Executive Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002 promulgated under the
      Securities Exchange Act of 1934.31.02
            Certification of Principal Financial Officer pursuant
      to Section 302 of the Sarbanes-Oxley Act of 2002 promulgated under the
      Securities Exchange Act of 1934.32.01
            Certification of Principal Executive Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.32.02
            Certification of Principal Financial Officer pursuant
      to Section 906 of the Sarbanes-Oxley Act of
  2002.