v3.26.3
Provision for Income Taxes
 12 Months Ended
Jun. 30, 2026
Provision for Income Taxes [Abstract]  
Provision for Income Taxes

Note 8. Provision for Income Taxes

 

A summary of the components of the provision for income taxes for the years ended June 30, 2026 and 2025 is as follows:

 

    2026     2025  
Current tax expense - federal   $ 2,270,703     $ 1,882,969  
Current tax expense - state     1,713       9,606  
Current tax expense     2,272,416       1,892,575  
Deferred tax benefit - federal     (136,839 )     (306,865 )
Provision for income taxes   $ 2,135,577     $ 1,585,710  

 

Deferred income taxes reflect the impact of "temporary differences" between the amount of assets and liabilities for financial reporting purposes and such amounts measured by tax laws and regulations. These "temporary differences" are determined in accordance with FASB ASC 740-10.

 

Cash payments, net of refunds by jurisdiction for years ending June 30, 2026 and 2025 is as follows:

 

    2026     2025  
U.S. Federal   $ 2,990,264     $ 1,815,000  
U.S. State and Local                
Florida     25,313       2,000  
Other States     —       (1,268 )
Total cash paid for Income taxes, net   $ 3,015,577     $ 1,815,732  

 

The combined U.S. federal and state effective income tax rates of 16.0% and 16.3%, for 2026 and 2025 respectively, differed from the statutory U.S. federal income tax rate for the following reasons:

  

    2026 Amount   2026 Percent
U.S. federal statutory income tax rate     2,796,196       21.00 %
State and local income tax     1,713       0.05  
Effects of cross-border tax laws     (78,298 )     (0.60 )
Non-deductible, Non-taxable items                
ESOP dividend payment     (135,398 )     (1.00 )
ESOP cost versus fair market value     146,297       1.10  
Stock based compensation (including windfalls and shortfalls on stock option exercises)     (565,745 )     (4.30 )
Other non-deductible, non-taxable items     4,110       0.05  
Other Items     (33,297 )     (0.30 )
Effective tax rate     2,135,577     16.00 %

 

    2025 Amount   2025 Percent
U.S. federal statutory income tax rate     2,043,019       21.00 %
State and local income tax     7,588       0.10  
Effects of cross-border tax laws     (53,292 )     (0.50 )
Non-deductible, non-taxable items                
ESOP dividend payment     (62,533 )     (0.70 )
ESOP cost versus fair market value     47,487       0.50  
Stock based compensation (including windfalls and shortfalls on stock option exercises)     (368,631 )     (3.80 )
Other non-deductible, non-taxable items     2,939       0.03  
Other items     (30,868 )     (0.30 )
Effective tax rate     (1,585,710 )     16.30 %

 

For the fiscal year ended June 30, 2026 and 2025, our state and local tax expense is fully attributable to the state of Florida which is the sole jurisdiction contributing to our aggregate state income tax expense. Additionally, all income from continuing operations before income taxes was generated exclusively from domestic operations for the same years ended.

 

For the years ended June 30, 2026 and 2025 deferred income tax benefit of $136,839 and $306,865, respectively, results from the changes in temporary differences for each year. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of June 30, 2026 and 2025 are presented as follows:

 

    2026     2025  
Deferred tax assets:                
Accrued expenses   $ 240,610     $ 171,491  
ESOP     43,650       39,113  
Property, plant and equipment - principally due to differences in depreciation methods     1,030,491       1,023,074  
                 
Inventory - effect of uniform capitalization     57,452       —  
Stock-based compensation     29,387       38,568  
Total deferred tax assets   $ 1,401,590     $ 1,272,246  
                 
Deferred tax liability:                
Inventory - effect of uniform capitalization     —       25,477  
Prepaid expenses     62,732       44,750  
Total deferred tax liability   $ 62,732     $ 70,227  
                 
Net deferred tax asset (liability)   $ 1,338,858     $ 1,202,019  

 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projection for future taxable income over the period in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these temporary differences without consideration of a valuation allowance.

 

As the result of the implementation of ASC 740, “Accounting for Income Taxes”, the Company recognized no material adjustments to unrecognized tax benefits. As of June 30, 2026 and 2025, the Company has no unrecognized tax benefits.

 

The Company recognizes interest and penalties in general and administrative expense. As of June 30, 2026 and 2025, the Company has not recorded any provision for accrued interest and penalties.

 

The Company is subject to taxation in the United States and various state jurisdictions. The federal tax returns are subject to audit for three years from date of filing unless the return was audited within that period. In general, the majority of state statutes follow similar guidelines. As such, the Company’s tax returns for tax years ending June 30, 2025, 2024, and 2023 remain open to examination by the respective taxing authorities.