Annual report [Section 13 and 15(d), not S-K Item 405]

Income Taxes

v3.25.4
Income Taxes
 12 Months Ended
Dec. 28, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
11. Income Taxes
Income (loss) before income taxes included the following components for the fiscal years ended December 28, 2025, December 29, 2024, and December 31, 2023 (in thousands):
2025 2024 2023
U.S. $ (23,019) $ (77,641) $ (20,894)
Foreign (7) 10  (24)
Income (loss) before income taxes
 $ (23,026) $ (77,631) $ (20,918)
Income tax (benefit) expense included the following components for the fiscal years ended December 28, 2025, December 29, 2024, and December 31, 2023 (in thousands):
2025 2024 2023
Current:
Federal $ (11) $ (37) $ 37 
State 269  (53) 273 
Foreign —  —  — 
Total current income tax (benefit) expense
 $ 258  $ (90) $ 310 
Deferred:    
Federal $ —  $ —  $ — 
State —  —  — 
Foreign —  —  — 
Total deferred income tax (benefit) expense
 $ —  $ —  $ — 
Income tax (benefit) expense, net
 $ 258  $ (90) $ 310 
The reconciliation between the income tax (benefit) expense and the amount of income tax computed by applying the U.S. federal statutory rate to income (loss) before income taxes as shown in the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss) for fiscal years ended December 28, 2025, December 29, 2024, and December 31, 2023 were as follows:
2025 2024 2023
Amount % Amount % Amount %
Tax provision at U.S. federal statutory rate $ (4,835) 21.0  % $ (16,257) 21.0  % $ (4,382) 21.0  %
State and local income tax, net of federal (national) income tax effect(1)
220  (1.0) (512) 0.7  (15) 0.1 
Foreign tax effects
 317  (1.4) (586) 0.8  121  (0.6)
Changes in valuation allowance
 3,512  (15.2) 14,321  (18.6) 2,868  (13.8)
Nontaxable or nondeductible items
 546  (2.4) 621  (0.8) 698  (3.3)
Other 498  (2.1) 2,323  (3.0) 1,020  (4.9)
Effective tax rate $ 258  (1.1) % $ (90) 0.1  % $ 310  (1.5) %
(1) State taxes in California, Colorado, Illinois, Oregon, and Texas made up the majority (greater than 50%) of the tax effect in this category.
The Company's federal and state deferred taxes as of December 28, 2025 and December 29, 2024 were as follows (in thousands):
2025 2024
Deferred tax assets:
Leasing transactions $ 92,318  $ 104,831 
General business and other tax credits 39,718  41,009 
Net operating loss carryover 50,302  50,688 
Accrued compensation and related costs 4,907  4,810 
Goodwill 7,332  7,250 
Stock-based compensation 5,933  6,423 
Advanced payments —  — 
Interest expense 21,670  15,938 
Property & Equipment
 7,463  8,318 
Other non-current deferred tax assets 1,561  1,594 
Subtotal $ 231,204  $ 240,861 
Valuation allowance $ (141,148) $ (136,595)
Total $ 90,056  $ 104,266 
Deferred tax liabilities:
Leasing transactions $ (80,035) $ (89,804)
Property and equipment —  — 
Supplies inventory (4,114) (4,349)
Prepaid expenses (1,282) (1,862)
Advanced Payments (1,056) (364)
Other non-current deferred tax liabilities (3,569) (7,887)
Total $ (90,056) $ (104,266)
Net deferred tax asset $ —  $ — 
The Company had net operating loss carryforwards for tax purposes of $50.3 million as of December 28, 2025. This was comprised of approximately $21.4 million of federal net operating loss carryovers, approximately $19.8 million of state net operating loss carryovers, and approximately $9.1 million of foreign net operating loss carryovers. The federal net operating loss has an indefinite carryforward period, the state net operating loss carryovers expire at various dates between 2026 and 2046, and the foreign net operating loss carryovers expire at various dates between 2036 and 2046.
As of December 28, 2025, the Company had a deferred tax asset of $39.7 million related to federal tax credits, which expire at various dates between 2026 and 2040.
The Company establishes a valuation allowance to reduce the carrying amount of deferred income tax assets when it is more likely than not that it will not realize some portion or all the tax benefit of its deferred income tax assets. The realization of deferred tax assets depends on the generation of future taxable income during the periods in which the temporary differences become deductible. In making this determination, the Company considers all available positive and negative evidence including historical operating losses, the reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies. In 2020, management determined that a full valuation allowance was required and has recorded a full valuation allowance as of December 28, 2025 and at December 29, 2024.
Based on the Company's evaluation of its deferred tax assets, a valuation allowance of approximately $141.1 million had been recorded against the deferred tax asset for federal and state tax credits, federal and state deferred tax assets, all net operating loss carry forwards and the deferred taxes of our foreign subsidiary.
The following table summarizes the Company's unrecognized tax benefits as of December 28, 2025, December 29, 2024, and December 31, 2023 (in thousands):
2025 2024 2023
Beginning of year $ 51  $ 185  $ 185 
Increase due to current year tax positions —  —  — 
Due to decrease to a position taken in a prior year —  —  — 
Settlements —  —  — 
Reductions related to lapses in the statute of limitations (51) (134) — 
End of year $ —  $ 51  $ 185 
The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is approximately $0.0 million. The Company does not anticipate significant changes in the aggregate amount of unrecognized tax benefits within the next 12 months, other than nominal tax settlements.
The following table summarizes the Company's net cash paid (refunds received) for income taxes, which consisted of the following as of December 28, 2025, December 29, 2024, and December 31, 2023 (in thousands):
2025 2024 2023
Federal
 $ 72  $ 21  $ 50 
Aggregated state and local jurisdictions
 53  96  168 
Disaggregated state and local jurisdictions
Maryland
 (293) (191) — 
Oregon
 50  55  43 
Pennsylvania
 31  31  118 
Texas
 57  71  75 
Foreign
 —  —  — 
Net (refunds received) cash paid for income taxes
 $ (30) $ 83  $ 454