Flexsteel Industries reports fiscal Q1 2025 results

Cover page 23 changes

2 unchanged paragraphs

For the fiscal year ended June 30 , 2026

Annual Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2026

5 unchanged paragraphs

Incorporated in the State of Minnesota

3 unchanged paragraphs

DUBUQUE , IA 52001-0877 52001-7004

4 unchanged paragraphs

Common Stock, $1.00 Par Value

1 unchanged paragraph

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

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 a 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 No

Indicate by check mark whether the registrant has submitted electronically if any, every Interactive Data File required to be submitted 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 No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act (check one).

2 unchanged paragraphs

Indicate by check mark whether the registrant has filed a report on and attestation to its management s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to 240.10D-1(b).

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

1 unchanged paragraph

The aggregate market value of the voting stock held by non-affiliates, computed by reference to the last sales price on December 31, 2025 (which was the last business day of the registrant s most recently completed second quarter) w as $ 193,381,286 .

DOCUMENTS INCORPORATED BY REFERENCE

In Part III, portions of the registrant s 2026 Proxy Statement to be filed with the Securities and Exchange Commission within 120 days of the Registrant s fiscal year end.

Shares Outstanding as of August 19, October 28, 2026

FLEXSTEEL I NDUSTRIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED September 30, 2026

Part I Financial Information

Financial statements 7 changes

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm PCAOB ID 34

Report of Independent Registered Public Accounting Firm Internal Control Over Financial Reporting

Consolidated Balance Sheets at June as of September 30, 2026, and 2025 June 30, 2026 (Unaudited)

Consolidated Statements of Income and Comprehensive Income for the Years three months ended June September 30, 2026, 2025, and 2024 September 30, 2025 (Unaudited)

Consolidated Statements of Changes in Shareholders Equity for the Years three months ended June September 30, 2026, 2025, and 2024 September 30, 2025 (Unaudited)

Consolidated Statements of Cash Flows for the Years three months ended June September 30, 2026, 2025, and 2024 September 30, 2025 (Unaudited)

Exhibits 149 changes

Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K, as filed with the Securities and Exchange Commission on December 7, 2016).

Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K, as filed with the Securities and Exchange Commission on March 8, 2024).

Description of the Company s common stock (incorporated by reference to Exhibit No. 4.1 to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2019).

Amended Cash Incentive Compensation Plan, dated August 19, 2025.*

Form of Notification of Award for the Cash Incentive Compensation Plan.*

Form of Notification of Award for the Long-Term Incentive Compensation Plan (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K filed with the Securities and Exchange Commission on September 8, 2021). *

Form of Notification of Award for incentive stock options issued under the Omnibus Stock Plan (incorporated by reference to Exhibit 10.4 of the Company's Form 10-K filed with the Securities and Exchange Commission on September 8, 2021). *

Form of Notification of Award for director non-qualified stock options issued under the Omnibus Stock Plan (incorporated by reference to Exhibit 10.5 to the Company's Form 8-K filed with the Securities and Exchange Commission on December 13, 2013). *

Form of Notification of Award for restricted stock units under the Omnibus Stock Plan (incorporated by reference to Exhibit 10.6 to the Company's Form 10-K filed with the Securities and Exchange Commission on September 8, 2021). *

Long-Term Incentive Compensation Plan, dated July 1, 2013 (incorporated by reference to Appendix B to the Company's Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on October 28, 2013). *

Form of Notification of Non-Statutory Stock Option Award (incorporated by reference to Exhibit 10.8 to the Company's Form 10-K filed with the Securities and Exchange Commission on September 8, 2021). *

Amended and Restated Omnibus Stock Plan (incorporated by Reference to the Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on December 15, 2020). *

Form of Notification of Restricted Stock Award under the Omnibus Stock Plan (incorporated by reference to Exhibit 10.10 to the Company's Form 10-K filed with the Securities and Exchange Commission on September 8, 2021). *

Amended Severance Plan for Management Employees dated August 19, 2025, including Form of Participation Agreement.*

Letter Agreement dated March 10, 2020, by and between Flexsteel Industries, Inc. and Derek P. Schmidt (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on March 18, 2020). *

Employment Agreement between the Company and Derek P. Schmidt dated April 25, 2024 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 29, 2024).*

Credit Agreement between the Company and Wells Fargo Bank, National Association, dated August 18, 2026.

Security Agreement: Business Assets by the Company in favor of Wells Fargo Bank, National Association, dated August 18, 2026.

Revolving Line of Credit Note by the Company to Wells Fargo Bank, National Association, dated August 18, 2026.

Stock Repurchase Agreement by and among the Company. F. Brooks Bertsch and the other entities on Schedule 1 thereto, dates April 26, 2026 (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on April 28, 2026).

Letter Agreement dated January 10, 2024 by and between Flexsteel Industries, Inc. and Michael Ressler (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on January 11, 2024). *

2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the Securities and Exchange Commission on December 16, 2022). *

Form of Stock Option Agreement under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q filed with the Securities and Exchange Commission on February 8, 2023). *

Form of Performance Share Unit Agreement under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.29 to the Company's Form 10-K filed with the Securities and Exchange Commission on August 25, 2023). *

Form of Restricted Stock Unit Agreement under the 2022 Equity Incentive Plan (incorporated by reference to Exhibit 10.23 to the Company's Form 10-K filed with the Securities and Exchange Commission on August 25, 2023). *

Flexsteel Industries, Inc. Insider Trading Policy.

Subsidiaries of the Company.

Consent of Independent Registered Public Accounting Firm.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

Certification by Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Incentive Compensation Clawback Policy adopted October 6, 2023 (incorporated by reference to Exhibit 97.1 to the Company's Form 10-K filed with the Securities and Exchange Commission on August 30, 2024).

Management contracts, compensatory plans and arrangements required to be filed as an exhibit to this report.

XBRL Instance Document**

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Annual Report on Form 10-K shall be deemed to be furnished and not filed.

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.

/s/ Derek P. Schmidt

Chief Executive Officer and Director

(Principal Executive Officer)

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.

/s/ Derek P. Schmidt

Chief Executive Officer and Director

(Principal Executive Officer)

/s/ Michael J. Ressler

Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

Chair of the Board of Directors

/s/ William S. Creekmuir

William S. Creekmuir

/s/ Kathryn P. Dickson

/s/ M. Scott Culbreth

/s/ Terence P. Calloway

PART I FINANCIAL INFORMATION

Ite m 1. Financial Statements

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Amounts in thousands)

Cash and cash equivalents

Trade receivables - less allowances: September 30, 2026 and June 30, 2026, $ 2,040

Total current assets

Property, plant and equipment, net

Operating lease right-of-use assets

Deferred income taxes

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable - trade

Current portion of operating lease liabilities

Accrued liabilities:

Payroll and related items

Sales and advertising related items

Total current liabilities

LONG-TERM LIABILITIES:

Operating lease liabilities, less current maturities

SHAREHOLDERS' EQUITY:

Common stock - $ 1 par value; authorized 15,000 shares; 8,716 shares issued and

4,166 outstanding as of September 30, 2026; 8,629 shares issued and

4,107 outstanding as of June 30, 2026

Additional paid-in capital

and 69 more changes in the filing

Notes to the financial statements 137 changes

Schedule II Valuation and Qualifying Accounts

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Flexsteel Industries, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Flexsteel Industries, Inc. and subsidiaries (the "Company") as of June 30, 2026 and June 30, 2025, the related consolidated statements of income, comprehensive income, shareholders' equity, and cash flows, for each of the three years in the period ended June 30, 2026, and the related notes and the schedule listed in the Index at Item 15 (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, 2026 and June 30, 2025, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also 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, 2026, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated August 19, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

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 Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventories Refer to Notes 1 and 3 to the financial statements

Critical Audit Matter Description

The Company has inventories of $90.6 million as of June 30, 2026. The Company records inventories at the lower of cost or net realizable value utilizing the first-in, first-out ( FIFO ) method. The Company s inventory valuation reflects markdowns for the excess of the cost over the amount expected to be realized. Markdowns establish a new cost basis for the Company s inventories. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdowns or an increase in that newly established cost basis.

Given the quantitative and qualitative materiality of the balance, coupled with the judgments and subjectivity involved to estimate the markdowns to the net realizable value of inventories, auditing management's estimates of net realizable value required subjective auditor judgment.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to estimated net realizable value of inventories included the following, among others:

We tested the design and operating effectiveness of internal controls over the inventory valuation process, including controls over the inputs that are used in management s inventory markdown for the excess of the cost over the amount expected to be realized.

We tested management's methodology to determine the markdowns to net realizable value of inventory through inquiries of management, and evaluation of accounting policies and process documentation.

We tested the accuracy and completeness of the Company s measurement of inventory markdowns using a sampling approach. We evaluated the appropriateness of methodologies and assumptions used by management to estimate inventory markdowns including inventory quantities on-hand, historical sales activity, and other assumptions used by management.

We evaluated management s measurement of the inventory markdowns and net realizable value by testing the mathematical accuracy of the Company s calculation.

We performed retrospective reviews of actual products sold in the current year against prior year inventory markdowns to net realizable value.

/s/ Deloitte & Touche LLP

We have served as the Company s auditor since 1965.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Flexsteel Industries, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Flexsteel Industries, Inc. and subsidiaries (the "Company") as of June 30, 2026, based on criteria established in Internal Control Integrated Framework (2013) 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, 2026, based on criteria established in Internal Control Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended June 30, 2026, of the Company and our report dated August 19, 2026, expressed an unqualified opinion on those financial statements.

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 Annual 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/ Deloitte & Touche LLP

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands)

Cash and cash equivalents

Trade receivables - less allowances: June 30, 2026, $ 2,040 , June 30, 2025, $ 1,790

Total current assets

Property, plant and equipment, net

Operating lease right-of-use assets

Deferred income taxes

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable - trade

Current portion of operating lease liabilities

Accrued liabilities:

Payroll and related items

Sales and advertising related items

Total current liabilities

LONG-TERM LIABILITIES:

Operating lease liabilities, less current maturities

COMMITMENTS AND CONTINGENCIES (Note 14)

SHAREHOLDERS' EQUITY:

Common stock - $ 1 par value; authorized 15,000 shares; 8,629 shares issued and 4,107 shares outstanding as of June 30, 2026; 8,514 shares issued and

5,307 shares outstanding as of June 30, 2025

Additional paid-in capital

Treasury stock, at cost; 4,522 shares as of June 30, 2026, and 3,207 as of June 30, 2025 ( 135,478 ( 71,731

Total shareholders' equity

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

See accompanying Notes to Consolidated Financial Statements.

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Income AND COMPREHENSIVE INCOME

(Amounts in thousands, except per share data)

For the years ended June 30,

Selling, general and administrative expenses

Restructuring expense

Right-of-use asset impairment

(Gain) on sale of real estate

(Gain) on disposal of assets held for sale

Other income (expense):

Income before income taxes

Income tax provision

Net income and comprehensive income

Weighted average number of common shares outstanding:

Earnings per share of common stock

FLEXSTEEL INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders Equity

(Amounts in thousands)

and 57 more changes in the filing

Note 3: LEASES 9 changes

3 unchanged paragraphs

In July 2022, Flexsteel commenced a 12-year lease for a manufacturing facility in Mexicali, Mexico to support strong demand growth which was elevated due to pandemic-driven buying at that time. Subsequently, U.S. furniture demand reverted to pre-pandemic norms, and the Company s plan for the facility pivoted to subleasing the space short-term while maintaining the option to utilize it longer term to support growth. While the Company secured multiple short-term sublease tenants at the beginning of the lease term, substantial changes in U.S. trade policy in early 2025 created significant uncertainty in US-Mexico trade relations, slowed foreign direct investment in Mexico, and greatly diminished tenant interest in subleasing the Mexicali facility. As a result, management concluded that the right of use asset related to this lease was not fully recoverable and recorded a pre-tax, non-cash asset impairment charge of $ 14.1 million during the quarter ended March 31, 2025. The fair value of the right of use asset on March 31, 2025, was estimated under the income approach using a discounted cash flow technique, including assumptions for future sublease rental income and an appropriate discount rate. This technique involves estimates and uncertainties and actual results could differ. The impairment charge is included within operating income in the Consolidated Statements of Income and Comprehensive Income under right-of-use asset impairment.

For the year ended June 30, 2026, the Company evaluated the triggering events described in ASC 360-10-35-21 and considered current operating, market, legal and economic conditions. Based on this evaluation, management concluded that no new events or changes in circumstances occurred during the year that would indicate the carrying amount of the Mexicali ROU asset may not be recoverable. Accordingly, management determined that an additional recoverability test under ASC 360 was not required. The remaining carrying value of the Mexicali ROU asset, after reflecting normal current-year lease accounting activity, lease was $ 12.4 million as of June 30, 2026. No impairment was recognized during the year.

The components of the Company s leases excluding the impact of sublease income reflected on the Company s Consolidated Statements of Income were as follows:

2 unchanged paragraphs

Other information related to leases and future minimum lease payments under non-cancellable non-cancelable operating leases were as follows:

1 unchanged paragraph

Cash received from subleasing of operating lease:

Operating cash flows received from subleasing of operating lease

Operating cash flows from paid for operating leases

3 unchanged paragraphs

Future minimum lease payments under non-cancelable operating leases were as follows:

Remaining payments in FY2027

2 unchanged paragraphs

Note 4: CREDIT ARRANGEMENTS 8 changes

On September 8, 2021, the Company, as the borrower, entered into a credit agreement (the Credit Agreement ) with Wells Fargo Bank, National Association (the Lender ), and the other lenders party thereto. The Credit Agreement has a five-year term and provides for up to an $ 85 million revolving line of credit. Subject to certain conditions, the Credit Agreement also provides for the issuance of letters of credit in an aggregate amount up to $ 5 million which, upon issuance, would be deemed advances under the revolving line of credit. Proceeds of borrowings were used to refinance all indebtedness owed to a prior lender and for working capital purposes. The Company s obligations under the Credit Agreement are secured by substantially all its assets, excluding real property. The Credit Agreement contains customary representations, warranties, and covenants, including a financial covenant to maintain a fixed coverage ratio of not less than 1.00 to 1.00. In addition, the Credit Agreement places restrictions on the Company s ability to incur additional indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities. As of June 30, 2026, management believes the Company was in compliance with all covenants.

On April 18, 2022, the Company, as the borrower, entered into a first amendment to the Credit Agreement ( First Amendment to the Credit Agreement ), with the Lender and the lenders thereto. The amendment to the Credit Agreement changed the definition of the term Payment Conditions and further defined default or event of default and the calculation of the Fixed Charge Coverage Ratio.

Subject to certain conditions, borrowings under the Credit Agreement initially bore interest at LIBOR plus 1.25 % or 1.50 % per annum. On May 24, 2023, the Company entered into a second amendment to the Credit Agreement ("Second Amendment to the Credit Agreement") with the Lender to transition the applicable interest rate from LIBOR to Secured Overnight Financing Rate ("SOFR"). Effective as of the date of the Second Amendment to the Credit Agreement, borrowings under the amended Credit Agreement bear interest at SOFR plus 1.36 % to 1.61 %, or an effective interest rate of 4.98 % on June 30, 2026.

On June 3, 2025, the Company entered into a third amendment to its Credit Agreement ("Third Amendment to the Credit Agreement") with Wells Fargo Bank, NA. The amendment reduced the maximum revolving line of credit amount to $ 55 million and modified certain definitions in the Credit Agreement which include dollar figures derived from the maximum revolver amount. The Company initiated the amendment to better align with current and projected borrowing availability under the Credit Agreement.

On August 18, 2026, the Company, as borrower, entered into a Credit Agreement (the New Credit Agreement ) with Wells Fargo Bank, National Association (the Lender ), providing for a secured revolving credit facility in an aggregate principal amount of up to $ 30.0 million (the Credit Facility ). Proceeds of borrowings under the Credit Facility are used for working capital and other general corporate purposes. The Credit Facility has a three-year term. The Company may prepay outstanding borrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, subject to the terms of the New Credit Agreement. The New Credit Agreement contains customary affirmative and negative covenants, including covenants that, among other things, limit or restrict the Company s ability to incur indebtedness, grant liens, make investments, loans and advances, provide guarantees, pay dividends, repurchase stock, engage in mergers, consolidations and other fundamental changes, and enter into certain transactions. The obligations of the Company under the Credit Facility are secured pursuant to a Security Agreement (the Security Agreement ) entered into with the Lender, pursuant to which the Company granted the Lender a security interest in substantially all of the Company s personal property assets, whether now owned or hereafter acquired, including accounts receivable, deposit accounts, inventory, equipment, general intangibles, software, licenses, payment rights and related proceeds thereof, but excluding the Company s real property. In addition, the New Credit Agreement requires the Company to maintain (i) an Asset Coverage Ratio of not less than 2.00 to 1.00, measured as of the last day of each fiscal quarter, and (ii) EBITDA of not less than $ 15.0 million, measured on a rolling four-quarter basis as of the end of each fiscal quarter. As of September 30, 2026, management believes the Company was in compliance with all covenants.

Amounts outstanding under the Credit Facility bear interest at a rate per annum equal to Daily Simple SOFR plus a margin of 1.25 %, or an effective interest rate of 5.15 %, on September 30, 2026. Interest is payable monthly in arrears on the first business day of each month. In connection with the New Credit Agreement, the Company is required to pay a commitment fee equal to 0.30 % per annum on the average daily unused portion of the Credit Facility and letter of credit fees at a rate equal to the then-effective applicable margin for advances under the New Credit Agreement multiplied by the aggregate amount of letters of credit outstanding. The New Credit Agreement contains customary events of default, including, among others, the failure to pay principal, interest or other amounts when due, breaches of covenants, certain bankruptcy or insolvency events, material judgment defaults and certain change of control events. Upon the occurrence and continuation of an event of default, the Lender may terminate its commitments under the Credit Facility and declare all outstanding obligations immediately due and payable.

As of June September 30, 2026, , there were no outstanding outs tanding borrowings under the New Credit Agreement, exclusive of fees and letters of credit.

Letters of credit outstanding at with the Lender as of June September 30, 2026, totaled totale d $ 0.9 m illion. million.

Note 5: INCOME TAXES 47 changes

The Company recognizes deferred tax assets to the extent that they believe the assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations.

The One Big Beautiful Bill Act ( OBBBA ), enacted into law on July 4, 2025, introduced significant changes to the U.S. federal income tax laws. The OBBBA made permanent certain expiring provisions of the Tax Cuts and Job Act of 2017 (TCJA) and modified other provisions of the TCJA, as well as the Inflation Reduction Act of 2022 (the IRA ). These changes included the permanent extension of 100% bonus depreciation for certain property, the permanent restoration of the tax-basis EBITDA-based limitation on the deductibility of business interest expense subject to certain modifications to the computation of tax-basis EBITDA, and the immediate expensing of qualified domestic research and development expenses. The OBBBA contained various effective dates with certain provisions becoming effective in 2025 and others in 2026 and beyond. The Company has reflected the impact of the OBBBA on current and deferred income taxes in its Consolidated Balance Sheets and Consolidated Statements of Income and Comprehensive Income.

Income tax expense was calculated based upon the following components of income (loss) before income taxes for the years ended June 30:

Income before income taxes

The income tax provision is as follows for the years ended June 30:

Reconciliation between the U.S. federal statutory tax rate and the effective tax rate in accordance with the guidance in ASU 2023-09 is as follows for the years ended June 30, 2026:

Federal statutory tax rate

State and local income taxes, net of federal income tax effect*

Effect of cross border tax laws

Nontaxable or nondeductible items:

Executive compensation limitation

Changes in uncertain tax positions

*State taxes in Indiana, Pennsylvania, California and Illinois made up the majority of the tax effect in this category.

Reconciliation between the U.S. federal statutory tax rate and the effective tax rate in accordance with the guidance prior to the adoption of ASU 2023-09 for the years ended June 30:

Federal statutory tax rate

State taxes, net of federal effect

Foreign rate differential

Uncertain tax positions

Stock based compensation

Executive compensation limitation

Expired state credits

Research and development credit

Remeasurement of deferred tax assets and valuation

State rate change and other state items

A reconciliation of income taxes paid (net of refunds received) by jurisdiction is as follows:

U.S. state and local:

Total U.S. state and local

Total income taxes paid (net of refunds received)

The components of the gross liabilities related to unrecognized tax benefits and the related deferred tax assets are as follows:

Gross unrecognized tax benefits

Accrued interest and penalties

Gross liabilities related to unrecognized tax benefits

Net deferred tax assets

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Reductions for tax positions of the prior year

Additions based on tax positions related to the current year

Lapse of statute of limitations

Addition for tax positions of the prior year

The Company records interest expense and penalties related to income taxes as income tax expense in the Consolidated Statements of Income and Comprehensive Income. The Company does not expect that there will be any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The amount of unrecognized tax benefits as of June 30, 2026, and 2025 that if recognized, would affect the effective tax rate was $ 0.7 million and $ 0.6 million respectively.

The primary components of deferred tax assets and (liabilities) are as follows:

Property, plant, and equipment

Investment tax credit

Net operating loss carryover

Research and development expenditure

On June 30, 2026, certain state tax attribute carryforwards of $ 0.3 million were available, with $ 0.1 million of credits expiring beginning in fiscal years 2026 through 2028 , and $ 0.1 million of state NOLs carryforward. Some of the state NOL carryforwards will have an indefinite carryforward and some will expire in varying amounts between 2035 and 2041.

The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. Generally, fiscal years 2022 through 2026 remain open to examination by the Internal Revenue Service or other taxing jurisdictions to which the Company is subject.

The provision for income taxes for the interim periods is based on an estimate of the Company's effective tax rate adjusted to reflect the impact of discrete items. Management judgement is required in projecting ordinary income to estimate the Company's annual effective tax rate. The Company s effective tax rate for the three months ended September 30, 2026 and 2025, was 21.8 % and 21.9 % , respectively. For the three months ended September 30, 2026 and 2025 , the effective tax rate differs from the statutory tax rate of 21 % due to state taxes, section 162(m) limitation, stock compensation, and the research and development credit.

Note 6: STOCK-BASED COMPENSATION 21 changes

1 unchanged paragraph

Total stock-based compensation expense was $ 4.6 mil lion, $ 3.9 million and $ 4.6 million for fiscal years 2026, 2025, and 2024, respectively.

The following table is a summary of total stock-based compensation expenses for the three months ended September 30, 2026 and 2025.

Total stock-based compensation expense

The T he Company s shareholders approved the Flexsteel Industries, Inc. 2022 Equity Incentive Plan ( 2022 Plan ) on December 14, 2022 and approved amendments to the 2022 Plan on December 10, 2025.

3 unchanged paragraphs

(2) Long-Term Incentive Compensation Plan ( LTIP )

The LTIP provides provided for PSUs to be awarded to officers and key employees based on performance goals set by the Compensation Committee of the Board of Directors (the Committee ). In conjunction with each grant of PSUs, the Committee granted RSUs under the 2013 Omnibus Stock Plan that vested at the end of three years . No further awards will be issued under this plan.

1 unchanged paragraph

The 2013 Omnibus Stock Plan was for key employees, officers and directors and provides provided for the granting of incentive and nonqualified stock options, restricted stock, restricted stock units, stock appreciation rights, and performance units . No further stock units awards will be granted issued under this plan. .

1 unchanged paragraph

The table below sets forth, as of June September 30, 2026 , the number of unvested PSUs granted at the target performance level for the 2024-2026, 2025-2027, and 2026-2028, and 2027-2029 performance periods under the 2022 Plan and the number of unvested RSUs granted in conjunction with the PSUs. For PSUs awarded for the three year performance periods ending June 30, 2026, 2027, and 2028 and 2029, achievement is based on meeting performance goals set for each year within the three year period. The Committee selected Adjusted Operating Income as the performance metric for the performance periods ending June 30, 2026, 2027, and 2028, and 2029.

Time-Based Vest (RSUs)

Performance Based Performance-Based Vest (PSUs)

1 unchanged paragraph

Unvested as of June 30, 2024

Unvested as of June 30, 2025

1 unchanged paragraph

Unvested as of September 30, 2026

Total unrecognized stock-based compensation related to the unvested PSUs at the target performance level and the related unvested RSUs wa s was $ 2.2 4.4 million as of June September 30, 2026, which is expected to be recognized over a perio d of 1.0 year. weighted-average period o f 1.6 y ears.

1 unchanged paragraph

Unvested as of June 30, 2024

Unvested as of June 30, 2025

A summary of the activity in the Company s unvested restricted shares and unvested RSUs (not granted in conjunction with PSUs) as of June September 30, 2026, is presented below: as follows:

1 unchanged paragraph

Unvested as of September 30, 2026

Total unrecognized stock-based compensation related to unvested restricted shares and unvested RSUs (not granted in conjunction with the PSUs) wa s w as $ 0.2 million millio n as of June September 30, 2026, which is expected to be recognized over a weighted average period weighted-average perio d of 1.5 ye ars. 1.4 years.

At June September 30, 2026, the Company had 59,496 50,485 options outstanding under equity incentive plans with a weighted average exercise price of $ 15.37 12.04 and weighted average remaining life of 3.7 years. No options were granted during the period ended June September 30, 2026 and there is no remaining unrecognized stock-based compensation expense related to outstanding options as of June September 30, 2026.

1 unchanged paragraph

During the quarter ended June 30, 2020, the Company awarded its former Chief Financial Officer/Chief Operating Officer (current Chief Executive Officer) 79,000 options outside of any Company stock plans. All 79,000 options remain outstanding as of June September 30, 2026, , with an exercise price of $ 9.97 and a remaining life of 4.0 ye ars. 3.5 y ears. There is no remaining unrecognized stock-based compensation expense related to these options.

Note 8: SEGMENT INFORMATION 3 changes

As disclosed in Note 1, Summary of Significant Accounting Policies, The Company operates as a single one operating segment and one reportable segment reflecting the integrated nature of its operations across various products, manufacturing platforms and sales channels across the entire United States.

2 unchanged paragraphs

The Company has minimal export sales, primarily to Canada or Mexico. The Company leases and operates three manufacturing facilities in Juarez, Mexico and leases one manufacturing facility in Mexicali, Mexico. Long-lived Lon g-lived assets, including property, plant and & equipment and right-of-use assets related to leases, located in the United States and Mexico totaled $ 40.3 39.2 million and $ 31.4 30.5 million, respectively, at June September 30, 2026 and $ 42.4 40.3 million and $ 35.4 31.4 million, respectively, at June 30, 2025. 2026.

The following table disaggregates the Company's net sales by product brand in which the total net sales presented are the same amounts reported for the Company's single reportable segment for the three months ended September 30, 2026 and 2025.

MD&A 76 changes

Results of Operations

For the years ended June 30,

The following analysis of the results of operations and financial condition of the Company should be read in conjunction with the Consolidated Financial Statements and related notes included elsewhere in this Annual quarterly report on Form 10-K. 10-Q.

CRITICAL ACCOUNTING POLICIES:

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations", included in our 2026 annual report on Form 10-K.

The following table has been prepared as an aid in understanding the Company s results of operations on a comparative basis for the fiscal years three months ended June September 30, 2026 2025, and 2024. 2025. The amounts presented are percentages of the Company s net sales.

1 unchanged paragraph

Restructuring expense

Right-of-use asset impairment

(Gain) on sale of real estate

(Gain) on disposal of assets held for sale

3 unchanged paragraphs

Fiscal 2026 Compared to Fiscal 2025

Net sales were $459.2 million for the year ended June 30, 2026, compared to net sales of $441.1 million in the prior year, an increase of $18.1 million or 4.1%. The increase in sales was primarily driven by $28.0 million of growth in soft seating products, partially offset by a $9.0 million decline in homestyles branded ready-to-assemble product sales and $0.9 million decline in Flexsteel branded casegoods.

Gross margin for the year ended June 30, 2026, was 24.7%, compared to 22.2% for the prior fiscal year, an increase of 250 basis points ( bps ). The 250-bps increase was primarily driven by a 200-bps benefit from the International Emergency Economic Powers Act ("IEEPA") Tariff Refunds received and to a lesser extent favorable mix driven by product and customer portfolio optimization initiatives.

Selling, general, and administrative ( SG&A ) expenses increased by $4.2 million in the year ended June 30, 2026, compared to the prior fiscal year. As a percentage of net sales, SG&A expense was 15.4% in fiscal year 2026 compared to 15.1% of net sales in the prior fiscal year. The increase of 30-bps is primarily due to a 70-bps benefit from fixed cost leverage on higher sales volume offset by 70-bps increase in investments in consumer insights, new products and marketing to execute our growth strategy and a 30-bps increase from higher incentive compensation expense.

Income tax expense was $10.7 million, or an effective rate of 24.4%, for the year ended June 30, 2026, compared to income tax expense of $6.8 million in the prior year, or an effective tax rate of 25.3%. The current year effective tax rate was primarily impacted by lower non-deductible compensation, effect of state and foreign taxes, partially offset by stock-based compensation and a research and development credit benefit. The prior year tax rate was primarily impacted by the effect of state and foreign taxes, offset by a research and development credit benefit. The Company adjusted its provision for income tax and measurement of deferred tax assets in accordance with the One Big Beautiful Act ("OBBBA"). See Note 10, Income Taxes, of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

On July 31, 2025, the President of the United States issued an executive order intended to clarify certain matters related to previously issued executive orders on tariffs. This executive order included, among other things, an increase in the country specific tariff from 10% to 20% on goods imported from Vietnam. Accordingly, both our seating and case goods products sourced from Vietnam were subject to tariffs under IEEPA during this period. In addition, beginning in October 2025, substantially all of the seating products we source from Vietnam and manufacture in Mexico became subject to a 25% tariff under Section 232 of the Trade Expansion Act of 1962 pursuant to the Presidential Proclamation Adjusting Imports of Timber, Lumber, and their Derivative Products into the United States. For these seating products, the Section 232 tariff superseded the previously applicable IEEPA tariffs. Our case goods products sourced from Vietnam continued to be subject to the applicable IEEPA tariffs until February 2026, when the U.S. Supreme Court held that the tariffs imposed under IEEPA exceeded the authority granted under that statute. Following the Supreme Court's decision, a temporary 10% global import surcharge was imposed under Section 122 of the Trade Act of 1974 and became applicable to our case goods products sourced from Vietnam. On July 24, 2026, the U.S. implemented a new tariff framework under Section 301 of the Trade Act of 1974. The new framework imposes tariffs of either 10% or 12.5% on imports from certain trading partners, including Vietnam. This Section 301 tariff applies to bedroom, dining and occasional casegood products we source from Vietnam. The majority of our seating products sourced from Vietnam and manufactured in Mexico remain subject to the 25% Section 232 tariffs which, under the existing proclamation, is scheduled to increase to 30% effective January 1, 2027, unless modified prior to that date, and are generally not subject to the additional Section 301 tariffs. In addition, as a result of the U.S. Supreme Court's February 2026 decision regarding the IEEPA tariff program, the U.S. Court of International Trade ordered the U.S. government to process refunds of tariffs collected under the IEEPA tariff program. These refunds relate only to tariffs imposed under the IEEPA authority and do not affect the Section 232 tariffs that continue to apply to the majority of the Company's upholstered seating products.

Fiscal 2025 Compared to Fiscal 2024

Net sales were $441.1 million for the year ended June 30, 2025, compared to net sales of $412.8 million in the prior year, an increase of $28.3 million or 6.9%. The increase in sales was primarily driven by unit volume in our soft seating products, offset by a decline in our homestyles ready-to-assemble product line.

Gross margin for the year ended June 30, 2025, was 22.2%, compared to 21.1% for the prior fiscal year, an increase of 110 basis points ( bps ). The 110-bps increase was primarily driven by fixed cost leverage on higher sales, supply chain cost savings, and product portfolio management.

Selling, general, and administrative ( SG&A ) expenses decreased by $3.7 million in the year ended June 30, 2025, compared to the prior fiscal year. As a percentage of net sales, SG&A expense was 15.1% in fiscal year 2025 compared to 17.1% of net sales in the prior fiscal year. The decrease of 200-bps is primarily due to fixed cost leverage on higher sales volume and structural cost savings partially offset by investments in growth initiatives. The prior year SG&A expense also included a $1.5 million expense due to CEO transition costs associated with the revaluation of previously awarded equity awards which did not recur in the year ended June 30, 2025.

In July 2022, Flexsteel commenced a 12-year lease for a manufacturing facility in Mexicali, Mexico to support strong demand growth which was elevated due to pandemic-driven buying at that time. Subsequently, U.S. furniture demand reverted to pre-pandemic norms, and the Company s plan for the facility pivoted to subleasing the space short-term while maintaining the option to utilize it longer term to support growth. While the Company secured multiple short-term sublease tenants at the beginning of the lease term, substantial changes in U.S. trade policy in early 2025 created significant uncertainty in US-Mexico trade relations, slowed foreign direct investment in Mexico, and greatly diminished tenant interest in subleasing the Mexicali facility. As a result, management concluded that the right of use asset related to this lease was not fully recoverable and recorded a pre-tax non-cash asset impairment charge of $14.1 million during the quarter ended March 31, 2025. See Note 2, Leases, of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

During the year ended June 30, 2025, the Company completed the sale of its Dublin, Georgia facility which had been previously recorded as held for sale. The Company recorded a pre-tax gain of $5.0 million related to the sale. See Note 6, Assets Held For Sale , of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

During the year ended June 30, 2025, the Company completed the sale of 2 separate ancillary buildings, formerly part of its Huntingburg, Indiana distribution center complex. The Company received proceeds of $0.8 million and recorded a pre-tax gain of $0.7 million related to the first sale. The Company received proceeds of $4.0 million and recorded a pre-tax gain of $3.7 million related to the second sale. The Company has adequate distribution capacity to support our growth as we continue to optimize our distribution and logistics network. See Note 6, Assets Held For Sale , of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

Income tax expense was $6.8 million, or an effective rate of 25.3%, for the year ended June 30, 2025, compared to income tax expense of $5.0 million in the prior year, or an effective tax rate of 32.3%. The current year effective tax rate was primarily impacted by the effect of state and foreign taxes, offset by a research and development credit benefit. The prior year tax rate was impacted by the effect of state taxes, nondeductible stock compensation, and foreign taxes, offset by a research and development credit benefit. See Note 10, Income Taxes , of the Notes to Consolidated Financial Statements, included in this Annual Report on Form 10-K for more information.

Net income was $20.2 million, or $3.55 per diluted share for the year ended June 30, 2025, compared to net income of $5.5 million, or $1.91 per diluted share in the prior year.

Results of Operations for the Quarter Ended September 30, 2026 vs. 2025

Net sales were $114.0 million for the quarter ended September 30, 2026, compared to net sales of $110.4 million in the prior year quarter, an increase of 3.2%. The increase was driven by growth in soft seating products of $5.5 million offset by lower sales of homestyles ready-to-assemble product of $1.9 million. Sales of Flexsteel branded casegood products were relatively flat compared to the prior year period.

Sales order backlog was $77.7 million as of the quarter ended September 30, 2026, an increase of 8.2% compared to $71.8 million in the prior year quarter.

Gross margin as a percent of net sales for the quarter ended September 30, 2026, was 22.0%, compared to 23.5% for the prior year quarter, a decrease of 150 basis points ( bps ). The 150-bps decrease was primarily driven by a 130-bps unfavorable foreign currency translation of our peso denominated assets in Mexico in the current quarter and inflation driven by elevated energy and fuel costs.

Selling, general and administrative ( SG&A ) expenses increased $1.2 million to $18.2 million in the quarter ended September 30, 2026, as compared to $17.0 million in the prior year quarter. As a percentage of net sales, SG&A was 16.0% in the quarter ended September 30, 2026 compared to 15.4% of net sales in the prior year quarter. The 60-bps increase was mainly due to investments in demand generation and consumer insights.

Income tax expense was $1.5 million, or an effective rate of 21.8% for the quarter ended September 30, 2026, compared to income tax expense of $2.1 million, or an effective rate of 21.9% for the quarter ended September 30, 2025. For the quarter ended September 30, 2026, the effective tax rate differs from the statutory tax rate of 21% due to state taxes, section 162(m) limitation, stock compensation, and the R&D credit.

Net income was $33.1 $5.4 million, or $6.07 $1.24 per diluted share for the year quarter ended June September 30, 2026, compared to net income of $20.2 $7.3 million, or $3.55 $1.31 per diluted share in the prior year quarter.

1 unchanged paragraph

Working capital (current assets less current liabilities) on June 30, 2026, was $82.7 million compared to $110.4 million on June 30, 2025. The $27.7 million decrease in working capital is primarily due to an increase in trade receivables of $7.4 million, an increase in inventories of $1.5 million, an increase in other current assets of $0.4 million, a decrease in other current liabilities of $1.4 million, and a decrease of insurance costs of $0.5 million partially offset by a decrease in cash of $23.3 million, an increase in accounts payable of $10.6 million, an increase in sales and advertising of $2.2 million, an increase in payroll and related items of $2.2 million and an increase in operating lease of $0.6 million. Capital expenditures were $3.9 million for the fiscal year ended June 30, 2026.

Working capital (current assets less current liabilities) on September 30, 2026, was $80.5 million compared to $82.7 million on June 30, 2026. The $2.2 million decrease in working capital was primarily due to a decrease in cash of $12.3 million and trade receivables of $1.1 million, partially offset by an increase in inventories of $2.2 million and other current assets of $1.3 million. Changes in current liabilities of $7.8 million related primarily to payroll related expenses of $7.5 million. Refer to discussion of working capital changes below, under Net cash (used in) provided by operating activities . Capital expenditures were $1.0 million during the three months ended September 30, 2026.

1 unchanged paragraph

For the years ended June 30,

Net cash provided by operating activities

Net cash (used in) provided by investing operating activities

Net cash (used in) investing activities

1 unchanged paragraph

Net cash provided by operating activities

For the year ended June 30, 2026, cash provided by operating activities was $51.5 million, which primarily consisted of net income of $33.1 million, adjusted for non-cash items including stock-based compensation of $4.6 million, deferred income taxes of $4.5 million, depreciation of $3.8 million and provision for credit losses of $0.2 million. Net cash provided by operating assets and liabilities was $5.3 million and was primarily due to an increase in accounts payable of $10.9 million due to timing of inventory purchases, a decrease in other assets of $3.5 million primarily driven by collections of VAT receivables, partially offset by an increase in trade receivables of $7.6 million due to timing of shipments and an increase in inventories of $1.5 million.

For the year ended June 30, 2025, cash provided by operating activities was $37.0 million, which primarily consisted of net income of $20.2 million, adjusted for non-cash items including an impairment of our Mexicali facility right-of-use asset of $14.1 million, stock-based compensation expense of $3.9 million, and depreciation expense of $3.7 million, offset by gain on disposition of property, plant and equipment of $9.5 million, $3.8 million in deferred income tax benefit, and accounts receivable allowance benefit of $0.2 million. Net cash provided by operating assets and liabilities was $8.7 million and was primarily due to a decrease in trade receivables of $9.3 million and a decrease in inventory of $7.4 million due to inventory optimization initiatives, offset by an increase in other assets of $7.6 million primarily related to our receivable for recoverable VAT paid in Mexico.

For the year ended June 30, 2025, net cash provided by investing activities was $9.4 million, primarily due to proceeds of $11.6 million from the sales of property, plant and equipment, and corporate owned life insurance proceeds of $1.2 million, offset by capital expenditures of $3.3 million.

(Decrease) increase in cash and cash equivalents

Net cash (used in) provided by investing operating activities

For the three months ended September 30, 2026, net cash used in operating activities was ($1.5) million. Net income of $5.4 million was adjusted for non-cash items including non-cash lease expense of $1.6 million, stock-based compensation of $1.1 million and depreciation expense of $1.1 million. These amounts were more than offset by a $10.6 million net use of cash from changes in operating assets and liabilities, partially due to a decrease of $7.8 million in accrued liabilities, mainly related to payroll and related expenses, and a $2.2 million increase in inventories due to timing of new product introductions. These uses of cash were partially offset by a $1.1 million decrease in trade receivables due to timing of shipments.

For the three months ended September 30, 2025, net cash provided by operating activities was $4.1 million, primarily due to net income of $7.3 million, adjustments for non-cash items including deferred income tax expense of $3.4 million, non-cash lease expense of $1.2 million, stock-based compensation of $1.1 million and depreciation of $0.8 million, as well as changes in operating assets and liabilities including an increase in accounts payable of $3.3 million, and a decrease in inventory of $2.2 million, offset by a decrease in accrued liabilities of $8.2 million, and a decrease in other current assets of $6.6 million.

Net cash (used in) investing activities

For the year three months ended June September 30, 2026, net cash used in investing activities was $3.9 $1.0 million primarily due to capital expenditures.

For the three months ended September 30, 2025, net cash used in investing activities was $1.4 million due to capital expenditures.

1 unchanged paragraph

For the year ended June 30, 2026, net cash used in financing activities was $70.9 million, primarily due to common stock repurchases of $63.7 million, dividends paid of $4.4 million and $2.8 million for tax payments on employee vested restricted shares netted with proceeds from the issuance of common stock.

For the year ended June 30, 2025, net cash used in financing activities was $11.2 million, primarily due to proceeds from lines of credit of $202.3 million, offset by payments on lines of credit of $207.3 million, dividends paid of $3.6 million, and $2.8 million for tax payments on employee vested restricted shares netted with proceeds from the issuance of common stock.

Financing Arrangements

On September 8, 2021, the Company, as the borrower, entered into a credit agreement (the Credit Agreement ) with Wells Fargo Bank, National Association (the Lender ), and the other lenders party thereto. The Credit Agreement has a five-year term and provides for up to an $85 million revolving line of credit. Subject to certain conditions, the Credit Agreement also provides for the issuance of letters of credit in an aggregate amount up to $5 million which, upon issuance, would be deemed advances under the revolving line of credit. Proceeds of borrowings were used to refinance all indebtedness owed to a prior lender and for working capital purposes. The Company s obligations under the Credit Agreement are secured by substantially all its assets, excluding real property. The Credit Agreement contains customary representations, warranties, and covenants, including a financial covenant to maintain a fixed coverage ratio of not less than 1.00 to 1.00. In addition, the Credit Agreement places restrictions on the Company s ability to incur additional indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, and to merge or consolidate with other entities.

On April 18, 2022, the Company, as the borrower, entered into a first amendment to the Credit Agreement ( First Amendment to the Credit Agreement ), with the Lender and the lenders thereto. The amendment to the Credit Agreement changed the definition of the term Payment Conditions and further defined default or event of default and the calculation of the Fixed Charge Coverage Ratio.

Subject to certain conditions, borrowings under the Credit Agreement initially bore interest at LIBOR plus 1.25% or 1.50% per annum. On May 24, 2023, the Company entered into a second amendment to the Credit Agreement ("Second Amendment to the Credit Agreement") with the Lender to transition the applicable interest rate from LIBOR to Secured Overnight Financing Rate ("SOFR"). Effective as of the date of the Second Amendment to the Credit Agreement, borrowings under the amended Credit Agreement bear interest at SOFR plus 1.36% to 1.61% or an effective interest rate of 4.98% on June 30, 2026.

On June 3, 2025, the Company, at the borrower, entered into a third amendment to its Credit Agreement ("Third Amendment to the Credit Agreement") with Wells Fargo Bank, NA. The amendment reduced the maximum revolving line of credit amount to $55 million and modified certain definitions in the Credit Agreement which included dollar figures derived from the maximum revolver amount. The Company initiated the amendment to better align with current and projected borrowing availability under the Credit Agreement.

Subsequent to fiscal year end, on August 18, 2026 the Company, as the borrower, entered into a new $30.0 million secured revolving credit facility that replaces the Credit Agreement. The new facility reduces the Company's maximum borrowing capacity from $55.0 million to $30.0 million but extends availability with a new maturity date of August 18, 2029 and is expected to better align with current needs and adequately support the Company s anticipated future requirements for working capital and general corporate purposes.

See Note 9, Credit Arrangements, of Notes to Consolidated Financial Statements of this Annual Report on Form 10-K.

For the three months ended September 30, 2026, net cash used in financing activities was $9.9 million, primarily due to shares withheld for tax payments on vested shares and options exercised of $6.5 million, treasury stock purchases of $2.2 million and dividends paid of $1.1 million.

For the three months ended September 30, 2025, net cash used in financing activities was $4.2 million, primarily due to shares withheld for tax payments on vested shares and options exercised of $1.9 million, dividends paid of $1.1 million and treasury stock purchases of $1.1 million.

On August 18, 2026, the Company, as borrower, entered into a Credit Agreement (the New Credit Agreement ) with Wells Fargo Bank, National Association (the Lender ), providing for a secured revolving credit facility in an aggregate principal amount of up to $30.0 million (the Credit Facility ). Proceeds of borrowings under the Credit Facility are used for working capital and other general corporate purposes. The Credit Facility has a three-year term. The Company may prepay outstanding borrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, subject to the terms of the New Credit Agreement. The New Credit Agreement contains customary affirmative and negative covenants, including covenants that, among other things, limit or restrict the Company s ability to incur indebtedness, grant liens, make investments, loans and advances, provide guarantees, pay dividends, repurchase stock, engage in mergers, consolidations and other fundamental changes, and enter into certain transactions. The obligations of the Company under the Credit Facility are secured pursuant to a Security Agreement (the Security Agreement ) entered into with the Lender, pursuant to which the Company granted the Lender a security interest in substantially all of the Company s personal property assets, whether now owned or hereafter acquired, including accounts receivable, deposit accounts, inventory, equipment, general intangibles, software, licenses, payment rights and related proceeds thereof, but excluding the Company s real property. In addition, the New Credit Agreement requires the Company to maintain (i) an Asset Coverage Ratio of not less than 2.00 to 1.00, measured as of the last day of each fiscal quarter, and (ii) EBITDA of not less than $15.0 million, measured on a rolling four-quarter basis as of the end of each fiscal quarter. As of September 30, 2026, management believes the Company was in compliance with all covenants.

Amounts outstanding under the Credit Facility bear interest at a rate per annum equal to Daily Simple SOFR plus a margin of 1.25%, or an effective interest rate of 5.15%, on September 30, 2026. Interest is payable monthly in arrears on the first business day of each month. In connection with the New Credit Agreement, the Company is required to pay a commitment fee equal to 0.30% per annum on the average daily unused portion of the Credit Facility and letter of credit fees at a rate equal to the then-effective applicable margin for advances under the New Credit Agreement multiplied by the aggregate amount of letters of credit outstanding. The New Credit Agreement contains customary events of default, including, among others, the failure to pay principal, interest or other amounts when due, breaches of covenants, certain bankruptcy or insolvency events, material judgment defaults and certain change of control events. Upon the occurrence and continuation of an event of default, the Lender may terminate its commitments under the Credit Facility and declare all outstanding obligations immediately due and payable.

As of June September 30, 2026, there were no outstanding borrowings under the New Credit Agreement, exclusive of fees and letters of credit.

Letters of credit outstanding at with the Lender as of June September 30, 2026, totaled $0.9 million.

1 unchanged paragraph

The following table summarizes our contractual obligations on June 30, 2026, and the effect these obligations are expected to have on our liquidity and cash flow in the future (in thousands):

Operating lease obligations

Warehouse management obligation

Our focus for fiscal year 2027 will be to continue to operate with agility, maintain disciplined cost control, protect our financial position, and invest in the capabilities that we believe will drive long-term growth and shareholder value creation.

Critical Accounting Policies

The discussion and analysis of our consolidated financial statements and results of operations are based on our consolidated financial statements prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America. Preparation of these consolidated financial statements requires the use of estimates and judgments that affect the reported results. We use estimates based on the best information available in recording transactions and balances resulting from business operations. Estimates are used for such items as the collectability of trade accounts receivable and inventory valuation. Ultimate results may differ from these estimates under different assumptions or conditions.

Allowance for Credit Losses We establish an allowance for expected credit losses to reduce trade accounts receivable to an amount that reasonably approximates their net realizable value. The allowance is established through a review of open accounts, historical collection, and historical write-off amounts. The amount ultimately realized from trade accounts receivable may differ from the amount estimated in the consolidated financial statements.

Inventories We value inventory at the lower of cost or net realizable value. Cost of manufactured inventory includes materials, labor and overhead. In addition, finished goods inventory includes capitalized freight, import duties, and warehousing costs. Our inventory valuation reflects markdowns for the excess of the cost over the amount expected to be realized and considers obsolete and excess inventory. Markdowns establish a new cost basis for the Company s inventory. Subsequent changes in facts or circumstances do not result in the reversal of previously recorded markdowns or an increase in that newly established cost basis.

Valuation of Long-Lived Assets We periodically review the carrying value of long-lived assets and estimated depreciable or amortizable lives for continued appropriateness. This review is based upon projections of anticipated future cash flows and is performed whenever events or changes in circumstances indicate that asset carrying values may not be recoverable or that the estimated depreciable or amortizable lives may have changed. For long-lived assets, including right-of-use lease assets, if the net book value of the asset is greater than its estimated fair value less cost to sell, an impairment is recorded for the excess of net book value over estimated fair value less cost to sell. We recorded $14.1 million of impairments in the fiscal year 2025 related to our Mexicali facility lease right-of-use asset. See Note 2, Leases, for the Company s lease disclosures. No impairments were recorded in fiscal years 2026 and 2024.

Income Taxes - In determining taxable income for financial statement purposes, we must make certain estimates and judgments. These estimates and judgments affect the calculation of certain tax liabilities and the determination of the recoverability of certain deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in the most recent years, and our forecast of future taxable income. In estimating future taxable income, we develop assumptions including the amount of future pre-tax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates we are using to manage the underlying businesses.

At June 30, 2026, the Company determined that based on the weight of available evidence, we will be able to recover our deferred tax assets. The realization of our deferred tax assets is primarily dependent on future taxable income in the appropriate jurisdiction. Any reduction in future taxable income, including but not limited to any future restructuring activities may require that we establish a valuation allowance against our deferred tax assets. Establishing a valuation allowance or an increase in the valuation allowance could result in additional income tax expense in such a period and could have a significant impact on our future earnings. Refer to Note 10, Income Taxes, of Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for more information.

As of September 30, 2026, there have been no material changes to our contractual obligations presented in our Annual Report on Form 10-K for the year ended June 30, 2026.

Market risk 5 changes

Interest Rate Risk The Company s primary market risk exposure regarding financial instruments is changes in interest rates. On June 30, 2026, the Company had no outstanding balance on its line of credit.

Market risk represents the risk of changes in the value of a financial instrument, derivative or non-derivative, caused by fluctuations in interest rates, foreign exchange rates and equity prices. In the normal course of our business we are exposed to various types of market risks, including foreign currency risk, interest rate risk and inflation risk.

Foreign Currency Risk During fiscal years the quarters ended September 30, 2026 2025, and 2024, 2025, the Company did not have sales but had purchases and other expenses denominated in foreign currencies, primarily the Mexican Peso. The wages of our employees and certain other employee benefits and indirect costs related to our operations in Mexico are made in Pesos and subject to foreign currency fluctuation with the U.S. dollar. The Company does not employ any foreign currency hedges against this operating expense exposure. A negative shift in the value of the U.S. dollar against the Peso could increase the cost of our manufactured product. In addition, the Company has certain asset assets and liabilities related to our manufacturing operations which are denominated in pesos, primarily our VAT receivable for recoverable VAT paid in Mexico. A negative shift in the value of the Peso against the U.S. dollar could result in the value of our receivable decreasing which may impact our earnings. During The third quarter of fiscal year 2025, we utilized a derivative instrument to reduce our exposure to foreign currency risk from changes in the peso s exchange rate for this exposure. This instrument expired on March 31, 2025, without being utilized and the Company does not currently hedge this foreign currency risk. See Risk Factors in Item 1A in this the most recent Annual Report on Form 10-K for further discussion.

Interest Rate Risk The Company has exposure to changes in interest rates related to interest which accrues on our cash deposits as well as floating interest rates on our Credit Facility. Increases in interest rates benefit interest accrued on our cash deposits while also increasing our cost of borrowing. Declining interest rates decrease the value earned on our deposits while reducing our cost of borrowing. On September 30, 2026, the Company had no outstanding borrowings on our Credit Facility, exclusive of fees and letters of credit.

General Market risk represents the Inflation Risk of changes in the value of a financial instrument, derivative or non-derivative, caused by fluctuations We are exposed to market risks from price inflation in interest rates, foreign exchange rates raw materials, production costs, importation costs and equity prices. As discussed below, management of the Company does not believe that changes in these factors could cause material fluctuations in the Company s results of operations or cash flows. domestic transportation costs. The ability cost to import furniture products and raw materials can be adversely affected by political issues in the countries where suppliers are located, as well as disruptions associated with shipping distances and negotiations with port employees. Other risks related to the cost of furniture product importation include government imposition of regulations and/or quotas; duties, taxes or tariffs on imports; and significant fluctuation in the value of the U.S. dollar against foreign currencies. Our upholstery manufacturing processes include wood and steel which can be impacted by commodity prices for these materials as well as petroleum based foam which can be impacted by the cost of crude oil prices and availability of starter chemicals to suppliers. Increased energy prices, notably fuel, will also impact the cost associated with transportation of materials and delivery of customer orders. Any of these factors could interrupt supply, increase costs, decrease demand, and decrease earnings.

Controls and procedures 9 changes

Management s Annual Report on Internal Control Over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) or 15d-15(f) of the Securities Exchange Act of 1934, as amended. The Company performed an evaluation under the supervision and with the participation of its management, including the CEO and CFO, to assess the effectiveness of the design and operation of its disclosure controls and procedures under the Exchange Act as of June 30, 2026. In making this assessment, the Company used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control Integrated Framework (2013). Based on those criteria, management concluded that the internal control over financial reporting is effective as of June 30, 2026.

The effectiveness of the Company s internal control over financial reporting as of June 30, 2026, has been audited by Deloitte & Touche LLP, the Company s independent registered public accounting firm, as stated in their report in Part II, Item 8 of this Form 10-K.

Changes in Internal Control over Financial Reporting

(a) Evaluation of disclosure controls and procedures. Based on their evaluation as of the end of the period covered by this Annual Quarterly Report on Form 10-K, the Company s 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective as of June September 30, 2026.

(b) Changes in internal control over financial reporting. During the quarter ended September 30, 2026, there were no change significant changes in our internal control over financial reporting (as defined in Rules Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act occurred during the fiscal quarter ended June 30, 2026, of 1934, as amended) that has have materially affected or is are reasonably likely to materially affect our the Company s internal control over financial reporting.

Cautionary Statement Relevant to Forward-Looking Information for Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

The Company and its representatives may from time to time make written or oral forward-looking statements concerning long-term goals or anticipated results of the Company, including statements contained in the Company s filings with the Securities and Exchange Commission and its reports to stockholders.

Statements, including those in this Quarterly Report on Form 10-Q, which are not historical or current facts, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are certain important factors that could cause the Company s results to differ materially from those anticipated by some of the statements made herein. Investors are cautioned that all forward-looking statements involve risk and uncertainty. Some of the factors that could affect results are the cyclical nature of the furniture industry, supply chain disruptions, litigation, the effectiveness of new product introductions and distribution channels, the product mix of sales, pricing pressures, the cost of raw materials and fuel, changes in foreign currency values, retention and recruitment of key employees, actions by governments including laws, regulations, taxes and tariffs, the amount of sales generated and the profit margins thereon, competition (both U.S. and foreign), credit exposure with customers, participation in multi-employer pension plans, disruptions or security breaches to business information systems, the impact of any future pandemic, and general economic conditions. For further information regarding these risks and uncertainties, see the Risk Factors section in Item 1A of our most recent Annual Report on Form 10-K.

The Company specifically declines to undertake any obligation to publicly revise any forward-looking statements that have been made to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

Risk factors 59 changes

The Company is subject to a variety of risks. You should carefully consider the risk factors detailed below in conjunction with the other information contained in this Annual Report on Form 10-K. Should any of these risks materialize the Company s business, financial condition, and future prospects could be negatively impacted. There may be additional factors that are presently unknown to the Company or that the Company currently believes to be immaterial that could affect its business.

Risks related to our industry:

Changes in U.S. trade policy, including the imposition of tariffs and other trade restrictions, could materially adversely affect our business, financial condition and results of operations.

We source certain finished products from foreign suppliers, primarily in Vietnam, and have significant manufacturing operations in Mexico. As a result, tariffs and other trade restrictions imposed by the United States can materially increase the cost of products we import into the United States. U.S. trade policy has changed significantly in recent years and remains subject to ongoing legal, political, and regulatory developments. Existing tariffs may be increased, extended, modified or replaced, scheduled tariff increases may take effect, and additional tariffs or trade restrictions may be imposed on products or countries that affect our business.

Increases in tariffs or other trade restrictions could increase our cost of goods sold, require price increases, disrupt our sourcing and manufacturing strategies, reduce our competitiveness, and adversely affect our relationships with suppliers and retail partners. Although we may seek to mitigate these impacts through pricing actions, supplier negotiations, sourcing adjustments or other measures, such efforts may not fully offset increased costs.

Tariffs and trade restrictions may also contribute to inflation, economic uncertainty, commodity price volatility and reduced consumer confidence. Because furniture purchases are generally discretionary such conditions may reduce consumer demand for our products.

Accordingly, changes in tariffs or other trade policies could materially adversely affect our net sales, profitability, cash flows and results of operations.

Claims relating to tariff refunds we have received could adversely affect our financial results.

Following the invalidation of certain tariffs previously imposed under the International Emergency Economic Powers Act, we became entitled to refunds of tariffs previously paid on certain imported products. As of June 30, 2026, we had received substantially all of our eligible refund claims.

Retail partners, suppliers, distributors or other parties may assert claims seeking reimbursement, credits or other payments relating to some or all of these tariff refunds. Any amounts we are required to pay, credit or otherwise settle in connection with such claims could reduce the benefit of the refunds received and adversely affect our financial condition, results of operations and cash flows.

Inflation and changes in foreign currency may impact our profitability.

Cost inflation, including significant increases in ocean container rates, tariffs, raw materials prices, labor rates, and domestic transportation costs, has and could continue to impact profitability. Imbalances between supply and demand for these resources may continue to exert upward pressure on costs.

The Company purchases raw materials, component parts, and certain finished goods from foreign external suppliers. Prices for these purchases are primarily negotiated in U.S. dollars on a purchase order basis. A negative shift in the U.S. dollar relative to the local currency of our supplier could result in price increases and negatively impact our cost structure. In addition, our manufactured products are produced in Mexico. The wages of our employees and certain other employee benefit and indirect costs are made in pesos. A negative shift in the value of the U.S. dollar against the peso could increase the cost of manufacturing. In addition, the Company has certain assets and liabilities related to our manufacturing operations which are denominated in pesos, primarily our VAT receivable for recoverable VAT paid in Mexico. A negative shift in the value of the peso against the U.S. dollar could result in the value of our receivable decreasing which may impact our earnings.

Our ability to recover these cost increases through price increases may lag the cost increases, resulting in downward pressure on margins. In addition, price increases to offset rising costs could negatively impact demand for our products.

The Company s products are considered deferrable purchases for consumers during economic downturns. Prolonged negative economic conditions could impact the business.

Economic downturns and prolonged negative economic conditions could affect consumer spending habits by decreasing the overall demand for home furnishing products. These events could impact retailers resulting in an impact on the Company s business. A recovery in the Company s sales could lag significantly behind a general economic recovery due to the deferrable nature and relatively significant cost of purchasing home furnishing products.

Future success depends on the Company s ability to manage its global supply chain.

The Company acquires raw materials, component parts, and certain finished products from external suppliers, both U.S. and foreign. Many of these suppliers are dependent upon other suppliers in countries other than where they are located. This global interdependence within the Company s supply chain is subject to delays in delivery, availability, quality, and pricing. Changes in international trade policies including tariffs, access to ports and border crossings, or railways could disrupt the supply chain, increase cost and reduce competitiveness. The delivery of goods from these suppliers has been and may continue to be delayed by customs, labor issues, availability of third-party transportation and equipment, geopolitical pressures, changes in political, economic, and social conditions, weather, laws, and regulations. Unfavorable fluctuations in price, international trade policies, quality, delivery, and availability of these products could continue to adversely affect the Company s ability to meet demands of customers and cause negative impacts to the Company s cost structure, profitability, and its cash flow.

Enacted tariffs and potential future increases in tariffs on manufactured goods imported from various other countries could adversely affect our business. Inability to reduce acquisition costs or pass-through price increases may have an adverse impact on sales volume, earnings, and liquidity. Similarly, increases in pricing may have an adverse impact on the competitiveness of the Company s products relative to other furniture manufacturers with less exposure to the tariff and could also lead to adverse impacts on volume, earnings, and liquidity.

Additionally, a disruption in supply from foreign countries could adversely affect our ability to timely fill customer orders for those products and decrease our sales, earnings, and liquidity. The main foreign countries we source finished goods from are Vietnam and Mexico. Additionally, China and Italy are key sources of raw materials and components used in the manufacturing of finished goods. If we were unsuccessful in obtaining those products from other sources or at comparable cost, a disruption in our supply chain could adversely affect our sales, earnings, financial condition, and liquidity.

Finally, the Company relies on third parties to deliver customer orders. The capacity of these third parties or cost of this service could be impacted by labor disputes, cost inflation (particularly fuel), and availability of drivers which could increase cost and have negative impacts on our earnings.

Competition from U.S. and foreign finished product manufacturers may adversely affect the business, operating results or financial condition.

The furniture industry is very competitive and fragmented. The Company competes with U.S. and foreign manufacturers and distributors. As a result, the Company may not be able to maintain or raise the prices of its products in response to competitive pressures or increasing costs. Also, due to the large number of competitors and their wide range of product offerings, the Company may not be able to significantly differentiate its products (through function, value, technology integration, styling, finish, and other construction techniques) from those of its competitors.

Additionally, most of our sales are to distribution channels that rely on physical stores to merchandise and sell our products and an involuntary shut down of those or a significant shift in consumer preference toward purchasing products online could have a materially adverse impact on our sales and operating margin.

These and other competitive pressures could cause us to lose market share, revenues, and customers, increase expenditures or reduce prices, any of which could have a material adverse effect on our results of operations or liquidity.

Future costs of complying with various laws and regulations may adversely impact future operating results.

The Company s business is subject to various laws and regulations which could have a significant impact on operations and the cost to comply with such laws and regulations could adversely impact the Company s financial position, results of operations and cash flows. In addition, inadvertently failing to comply with such laws and regulations could produce negative consequences which could adversely impact the Company s operations.

Failure to anticipate or respond to changes in consumer or designer tastes and fashions in a timely manner could adversely affect the Company s business and decrease sales and earnings.

Furniture is a styled product and is subject to rapidly changing consumer and end-user trends and tastes and is highly fashion oriented. If the Company is not able to acquire sufficient cover variety or if the Company is unable to predict or respond to changes in fashion trends, it may lose sales and have to sell excess inventory at reduced prices.

Use of social media to disseminate negative commentary may adversely impact the Company s reputation and business.

There has been a substantial increase in the use of social media platforms, including blogs, social media websites, and other forms of internet-based communications, which allow individuals to access a broad audience of consumers and other interested people. Negative commentary regarding the Company or its products may be posted on social media platforms at any time and may have an adverse impact on its reputation, business, or relationships with third parties, including suppliers, customers, investors, and lenders. Consumers value readily available information and often act on such information without further investigation and without regard to its accuracy or context. The harm may be immediate without affording the Company an opportunity for redress or correction.

Public health events could have a materially adverse effect on our ability to operate, our ability to keep employees safe from a pandemic, our results of operations, and financial condition.

and 27 more changes in the filing

Other information 13 changes

1 unchanged paragraph

and 13 more changes in the filing