v3.25.4
Income Taxes
 12 Months Ended
Jan. 03, 2026
Income Taxes  
Income Taxes

Note 7 – Income Taxes

The components of loss before income taxes consist of the following:

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Fiscal Year Ended

​

  ​ ​ ​

January 3, 2026

  ​ ​ ​

December 28, 2024

Domestic operations

​

$

(50,829)

​

$

(41,208)

Foreign operations

​

 

748

​

 

874

Total loss before income taxes

​

$

(50,081)

​

$

(40,334)

​

The income tax provision consists of the following:

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​

​

​

​

​

​

​

​

 

Fiscal Year Ended

​

  ​ ​ ​

January 3, 2026

  ​ ​ ​

December 28, 2024

Current:

 

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  ​

 

​

​

State tax

​

$

58

​

$

67

Foreign tax

​

 

304

​

​

200

Total current taxes

​

 

362

​

 

267

Deferred:

​

 

  ​

​

​

​

Federal tax

​

 

(8,051)

​

​

(5,730)

State tax

​

 

(1,586)

​

​

(1,054)

Total deferred taxes

​

 

(9,637)

​

 

(6,784)

Valuation allowance

​

 

9,637

​

 

6,784

Income tax provision

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$

362

​

$

267

​

Below is a tabular rate reconciliation pursuant to the disclosure requirements of ASU 2023-09 for the fiscal year ended January 3, 2026:

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Fiscal Year Ended

​

​

​

January 3, 2026

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Amount

  ​ ​ ​

Percentage

  ​ ​ ​

Provision for income taxes at U.S. federal statutory rate

​

$

(10,517)

​

21.0

%

State and local income tax, net of federal tax benefit(1)

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46

​

(0.1)

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Foreign tax effects:

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​

​

​

​

​

Philippines

​

 

145

​

(0.3)

​

Effect of changes in tax laws or rates enacted in the current period

​

​

—

​

—

​

Effect of cross-border tax laws:

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​

​

​

​

​

Global intangible income inclusion

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​

134

​

(0.3)

​

Changes in valuation allowance

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8,384

​

(16.7)

​

Nontaxable or nondeductible items:

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​

​

​

​

​

Share-based compensation

​

 

2,002

​

(4.1)

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Other

​

 

168

​

(0.2)

​

Total tax provision and effective tax rate

​

$

362

​

(0.7)

%

________________

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

Below is a reconciliation of the statutory federal income tax expense and the Company’s total income tax expense for the fiscal year ended December 28, 2024:

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Fiscal Year Ended

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  ​ ​ ​

December 28, 2024

Income tax at U.S. federal statutory rate

​

$

(8,470)

Share-based compensation

​

 

2,598

State income tax, net of federal tax effect

​

 

(780)

Foreign tax

​

 

178

Other

​

 

(43)

Change in valuation allowance

​

 

6,784

Effective income tax benefit

​

$

267

​

For fiscal years 2025 and 2024, the effective tax rate for the Company was (0.7)%, (0.7)%, respectively. The Company’s effective tax rate for fiscal years 2025 and 2024 differs from the U.S. federal rate primarily as a result of non-deductible share-based compensation and the change in the valuation allowance maintained against the Company’s deferred tax assets.

Deferred tax assets and deferred tax liabilities consisted of the following:

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January 3, 2026

  ​ ​ ​

December 28, 2024

Deferred tax assets:

 

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  ​

 

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  ​

Inventory and inventory related allowance

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$

4,208

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$

1,944

Lease liabilities

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​

6,731

​

​

9,564

Share-based compensation

​

 

3,031

​

 

3,782

Book over tax depreciation

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​

4,598

​

​

2,383

Intangibles

​

 

72

​

 

78

Sales and bad debt allowances

​

 

892

​

 

1,092

Accrued compensation

​

 

42

​

 

142

Net operating loss

​

 

41,584

​

 

34,998

Other

​

 

100

​

 

114

Total deferred tax assets

​

 

61,258

​

 

54,097

Valuation allowance

​

 

(55,405)

​

 

(45,463)

Net deferred tax assets

​

 

5,853

​

 

8,634

Deferred tax liabilities:

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  ​

​

 

  ​

Right-of-use assets

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​

5,852

​

​

8,633

Other

​

 

1

​

 

1

Total deferred tax liabilities

​

 

5,853

​

 

8,634

Net deferred tax assets

​

$

—

​

$

—

​

As of January 3, 2026, federal and state net operating loss (“NOL”) carryforwards were $152,613 and $108,281, respectively. Federal NOL carryforwards of $622 were acquired in the acquisition of WAG which are subject to Internal Revenue Code section 382 and limited to an annual usage limitation of $135. Federal NOL carryforwards begin to expire in 2029, while state NOL carryforwards also begin to expire in 2029. The state NOL carryforwards expire in the respective tax years as follows:

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2029

  ​ ​ ​

$

1,814

2030

​

 

9,455

2031

​

 

14,557

2032

​

 

22,739

2033

​

 

24,832

Thereafter

​

 

34,884

​

​

$

108,281

​

Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. Realization of deferred tax assets is dependent upon taxable income in prior carryback years, estimates of future taxable income, tax planning strategies, and reversal of existing taxable temporary differences. ASC 740 provides that forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as

cumulative losses in recent years or losses expected in early future years. As of January 3, 2026, mainly due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $55,405 against deferred tax assets that were not more likely than not of being realized.

We are subject to U.S. federal income tax as well as income tax of foreign and state tax jurisdictions. The tax years 2021-2025 remain open to examination by the major taxing jurisdictions to which the Company is subject, except the Internal Revenue Service for which the tax years 2022-2025 remain open.

Included in accrued expenses are income taxes receivable of $(21) and $(284) as of January 3, 2026 and December 28, 2024, respectively, consisting primarily of current state taxes. Included in other non-current liabilities are income taxes payable of $1,418 and $1,227 as of January 3, 2026 and December 28, 2024, respectively, relating to accrued future foreign withholding taxes.

Disclosed below is a summary of income taxes paid (net refunds received) by jurisdiction pursuant to the disclosure requirements of ASU 2023-09, for the fiscal year ended January 3, 2026:

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Fiscal Year Ended

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​

January 3, 2026

United States federal tax

  ​ ​ ​

$

—

​

​

​

​

United States state and local tax:

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Illinois

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(250)

Texas

​

 

64

Other

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​

3

Foreign:

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​

Philippines

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​

90

Total income taxes received by jurisdiction

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$

(93)

​