Note 12 - Income Taxes

12 Months Ended

Jun. 30, 2026

Notes to Financial Statements

Income Tax Disclosure [Text Block]

NOTE 12. INCOME TAXES

Effective July 1, 2025, the Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard expands certain annual income tax disclosure requirements, including disclosures related to the rate reconciliation and income taxes paid. The Company applied the amendments retrospectively to all periods presented. Adoption affected disclosures only and did not impact the Company's consolidated financial position, results of operations, or net cash flows. Certain prior-period disclosures, including supplemental cash flow information related to income taxes paid, were revised to conform to the new presentation requirements.

The Company and its non-Canadian subsidiaries file a consolidated U.S. federal income tax return. USCAN files a separate tax return in Canada. The Company's components of income (loss) before tax by jurisdiction are as follows:

	Year ended June 30,
(dollars in thousands)	2026		2025
United States	$	3,766	$	(322	)
Canada		118		60
Total	$	3,884	$	(262	)

The reconciliation of income tax computed at U.S. federal statutory rates to income tax expense is as follows:

	Year ended June 30,
				% of						% of
(dollars in thousands)	2026			Pretax			2025			Pretax
Tax expense (benefit) at statutory rate	$	816			21.0	%	$	(55	)		21.0	%
Changes in uncertain tax positions		(36	)		(0.9	)%		106			(40.5	)%
Foreign tax effects, Canada
Rate difference on foreign income (loss)		(31	)		(0.8	)%		3			(1.2	)%
Changes in valuation allowance		28			0.7	%		-			0.0	%
Canadian withholding tax		25			0.7	%		23			(8.8	)%
Nontaxable dividend income		(2	)		(0.1	)%		(9	)		3.4	%
Changes in valuation allowance		24			0.6	%		-			0.0	%
Nontaxable or nondeductible items
Dividend Income		(19	)		(0.5	)%		(19	)		7.2	%
Insurance		16			0.4	%		16			(6.1	)%
Meals and entertainment		15			0.4	%		11			(4.2	)%
Dues		4			0.1	%		9			(3.4	)%
Other		-			0.0	%		2			(0.8	)%
Net effect of cross-border tax laws		(19	)		(0.5	)%		(23	)		8.8	%
State and local income taxes, net of federal tax benefit 1		4			0.1	%		8			(3.1	)%
Other		4			0.1	%		-			0.0	%
Total tax expense	$	829			21.3	%	$	72			(27.7	)%

1. State taxes in Texas made up the majority (greater than 50%) of the tax effect in this category.

Components of total tax expense (benefit) are as follows:

	Year ended June 30,
(dollars in thousands)	2026			2025
Current tax expense (benefit) - U.S.	$	1,008		$	(745	)
Current tax expense (benefit) - State U.S.		(31	)		116
Current tax expense (benefit) - non-U.S.		22			(3	)
Deferred tax expense (benefit) - U.S.		(166	)		687
Deferred tax expense (benefit) - non-U.S.		(4	)		17
Total tax expense (benefit)	$	829		$	72

Components of the Company’s deferred assets and liabilities are as follows:

	June 30,
(dollars in thousands)	2026			2025
Deferred Income Tax Assets:
Accumulated depreciation	$	109		$	122
Investments in securities at fair value		-			648
Impairment on securities		365			358
Accrued expenses		64			31
Product start-up costs		111			110
Share-based compensation expense		189			188
Other		101			92
Net operating loss carryover		848			-
Capital loss carryover		401			-
Subtotal Deferred Tax Assets		2,188			1,549
Valuation allowance		(52	)		-
Total Deferred Tax Assets		2,136			1,549
Deferred Income Tax Liabilities:
Investments in securities at fair value	$	(390	)	$	-
Prepaid expenses		(93	)		(89	)
Foreign tax on undistributed earnings		(205	)		(209	)
Total Deferred Tax Liabilities		(688	)		(298	)
Net Deferred Tax Asset	$	1,448		$	1,251
Amounts recognized in the Consolidated Balance Sheets:
Deferred tax asset	$	1,461		$	1,268
Deferred tax liability		13			17
Net Deferred Tax Asset	$	1,448		$	1,251

Components of the Company's income taxes paid, net of refunds received, are as follows:

	Year ended June 30,
(dollars in thousands)	2026		2025
U.S. Federal	$	-	$	(9	)
State and Local (Texas)		6		7
Foreign (Canada)		39		66
Total income tax paid, net of refunds received	$	45	$	64

Carryovers

At June 30, 2026, the Company had U.S. federal capital loss carryforwards of $1.9 million expiring in fiscal year 2029 and net operating loss carryforwards of $3.9 million. USCAN had Canadian net operating loss carryforwards of $106,000 expiring in fiscal year 2046 and no capital loss carryforwards.

At June 30, 2025, the Company had no U.S. federal net operating loss or capital loss carryforwards. USCAN had no Canadian net operating loss or capital loss carryforwards.

Additional Disclosures

A valuation allowance is established when it is more likely than not that some portion of the deferred tax amount will not be realized. At June 30, 2026, the Company had a valuation allowance of $52,000; no valuation allowance was recorded at June 30, 2025.

Uncertain income tax positions

The Company is subject to U.S. federal income tax, state tax jurisdictions within the U.S., and taxes in Canada. The Company maintains a reserve for uncertain tax positions. As of June 30, 2026, and 2025, the total reserve for uncertain tax positions, including interest and penalties, and net of federal benefits, was $855,000 and $891,000, respectively, which is included within long-term liabilities on the Consolidated Balance Sheets.

The reserve as of June 30, 2026, relates to the Company’s uncertain tax positions for income tax matters. The Company believes the reserve for uncertain tax positions, including interest and penalties, and net of federal benefits, of $855,000 as of June 30, 2026, adequately covers open tax years and uncertain tax positions up to and including fiscal 2026 for major taxing jurisdictions. As of June 30, 2026, the entire $855,000 of unrecognized tax benefits, including interest and penalties and net of federal benefit, if recognized, would impact the Company’s effective income tax rate.

The Company's activity was as follows:

	Year ended June 30,
(dollars in thousands)	2026			2025
Beginning Balance	$	891		$	785
Decrease related to prior year tax positions		(36	)		-
Increases related to prior year tax positions		-			106
Ending Balance	$	855		$	891

The Company continues to follow its policy of recognizing interest and penalties accrued on tax positions as a component of income taxes on the Consolidated Statements of Operations. The amount of accrued interest and penalties associated with the Company’s tax positions was $397,000 and $421,000 as of June 30, 2026, and 2025, respectively. The tax years from 2022 through 2025 remain open to examination by the U.S. Federal and State tax jurisdictions. The tax years from 2020 through 2025 remain open to examination by the non-U.S. Federal tax jurisdictions to which the Company is subject. For jurisdictions with unfiled tax returns, the statutes of limitations remain open indefinitely.

On July 4, 2025, President Trump signed into law Public Law 119-21, commonly known as the One Big Beautiful Bill Act (the “Act”), which contained several tax reform proposals. A Company is required to adjust current and deferred tax liabilities and assets for the effects of changes in tax laws or rates in income from continuing operations in the interim period that includes the enactment date. The impact of the Act is reflected in the Company’s results for fiscal 2026 and is immaterial.