Note 11: Income Taxes

The Company accounts for income taxes under the asset and liability method in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to reverse.

Effective July 1, 2025, the Company adopted Accounting Standards Update (ASU) 2023-09, Improvements to Income Tax Disclosures. This standard requires enhanced disaggregation of the statutory rate reconciliation and cash income taxes paid. The Company has adopted this standard on a prospective basis. Accordingly, the enhanced disclosures required by ASU 2023-09 are presented for fiscal year 2026 only, and prior-period disclosures have not been revised.

Income Before Income Taxes

The components of income before income taxes from continuing operations were as follows (in thousands):

 Schedule Of Components of Income Before Income Tax From Continuing Operations

Provision for Income Taxes

The provision for income taxes consisted of the following (in thousands):

Schedule of Income Tax Provision

Effective Tax Rate Reconciliation

The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate for fiscal 2026. The fiscal 2026 reconciliation reflects the disclosure requirements of ASU 2023-09.

Fiscal 2026 Effective Tax Rate Reconciliation

 Schedule of Effective Income Tax Rate Reconciliation

Nontaxable or nondeductible items were primarily attributable to tax effects associated with acquisition-related items from the Adara merger and other permanent differences.

The effect of cross-border tax laws primarily relates to the Company’s deduction for foreign-derived intangible income ( “FDII”), which reduced the Company’s effective tax rate for fiscal 2026.

Deferred Taxes

The net deferred tax asset primarily relates to interest expense carryforwards under Section 163(j), operating lease liabilities, inventory-related temporary differences, and state net operating loss carryforwards, partially offset by deferred tax liabilities associated with goodwill and intangible assets, operating lease assets, property and equipment, and prepaid expenses.

The significant components of the Company’s deferred tax liabilities (assets) at June 30, 2026 are as follows:

Schedule of Components of Deferred Taxes

Valuation Allowance

The Company evaluates deferred tax assets for recoverability each reporting period. Based upon the weight of available positive and negative evidence, management concluded that it is more likely than not that the Company’s deferred tax assets will be realized. Accordingly, no valuation allowance was recorded as of June 30, 2026 or 2025.

Uncertain Tax Positions

As of June 30, 2026, 2025 and 2024, the Company had no unrecognized tax benefits and, accordingly, no accrued interest or penalties related to uncertain tax positions. Federal income tax returns remain subject to examination for years subsequent to 2022. State income tax returns remain subject to examination based upon the respective statutes of limitation. The Company is currently under examination by the Florida taxing authorities. Management believes its tax positions are more likely than not to be sustained and has not recorded a liability for uncertain tax positions.

Net Operating Loss Carryforwards

As of June 30, 2026, the Company had no federal net operating loss carryforwards and state net operating loss carryforwards of approximately $6.49 million. Approximately $5.6 million of these carryforwards will expire, if unused, through 2043. The remaining carryforwards may be carried forward indefinitely. The Company had approximately $15.6 million of federal business interest expense carryforwards under IRC Section 163(j), which may be carried forward indefinitely.

The utilization of net operating losses and certain tax attributes may be limited under Section 382 of the Internal Revenue Code and similar state provisions following an ownership change.

Income Taxes Paid

Income taxes paid, net of refunds, consisted of the following (in thousands):

 Schedule Of Income Tax Paid Net Of Refunds

Individual taxing jurisdictions representing more than 5% of total income taxes paid, net of refunds, during fiscal 2026 were as follows (in thousands):

 Schedule Of Income Tax Paid By Individual Jurisdiction