Income taxes

12 Months Ended

Dec. 28, 2024

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

For fiscal years ended December 28, 2024, and December 30, 2023, the Company recorded an income tax benefit from continuing operations of approximately $3.0 million and an income tax benefit of $0.4 million, respectively, and an income tax provision from discontinued operations of $0 and approximately $1.0 million, respectively, which consisted of the following (in $000’s):

	Fiscal Years Ended
	December 28, 2024		December 30, 2023
Current tax expense:
State	$	(102)	$	—
Federal	(44)		98
Foreign	334		—
Current tax expense	188		98
Deferred tax (benefit) provision	(3,229)		444
Total (benefit) provision of income taxes	$	(3,041)	$	542

A reconciliation of the Company's income tax benefit (provision) with the federal statutory tax rate for the fiscal years ended December 28, 2024, and December 30, 2023, respectively, is shown below:

	Fiscal Years Ended
	December 28, 2024		December 30, 2023
U.S. statutory rate	21.0	%	21.0	%
State tax rate	0.9	%	1.5	%
Foreign rate differential	4.4	%	0.5	%
Permanent differences	-6.7	%	-0.1	%
Impact of sale of ARCA Recycling and Canada	—	%	-4.4	%
Change in valuation allowance	12.9	%	-25.7	%
Other	0.2	%	-0.1	%
	32.7	%	-7.3	%

Income (loss) before provision of income taxes was derived from the following sources for fiscal years December 28, 2024 and December 30, 2023, respectively, as shown below (in $000’s):

	Fiscal Years Ended
	December 28, 2024		December 30, 2023
United States	$	(12,825)	$	(6,613)
Canada	3,539		(657)
Total	$	(9,286)	$	(7,270)

The components of net deferred tax assets (liabilities) as of December 28, 2024 and December 30, 2023, respectively, are as follows (in $000’s):

	December 28, 2024		December 30, 2023
Deferred tax assets (liabilities):
Accrued expenses	$	152	$	7
Allowance for bad debts	53		—
Accrued compensation	35		3
Section 174 expenses	43		61
Prepaid expenses	(128)		(16)
Net operating loss	7,586		5,360
Lease liability	33		—
Tax credits	—		3
Share-based compensation	114		136
Intangibles	(6,909)		(3,747)
Right-of-use assets	(33)		—
Installment sale	—		—
Unrealized losses	794		327
Section 163(j) interest	138		—
	1,878		2,134
Less: valuation allowance	(2,919)		(2,773)
Net deferred tax liabilities	$	(1,041)	$	(639)

As of December 28, 2024, the Company has net operating loss carryforwards of approximately $19.5 million for federal income tax purposes, and approximately $11.8 million for state income tax purposes, which will be available to offset future taxable income. Due to recent tax legislation, the federal net operating losses are eligible for indefinite carryforward, limited by certain taxable income limitations. State net operating losses begin to expire in 2032. The Company evaluates all available evidence to determine if a valuation allowance is needed to reduce its deferred tax assets. During the fourth quarter of fiscal year 2023, management concluded that a valuation allowance is necessary for the state net operating loss carryforward and a portion of the federal net operating loss carryforward. Due to the 2023 sale of ARCA Canada (as part of the Recycling Subsidiaries transaction), the valuation allowance was released. The Company has recorded a valuation allowance of approximately $2.9 million as of December 28, 2024, and December 30, 2023.

The Company annually conducts an analysis of its uncertain tax positions and has concluded that it has no uncertain tax positions as of December 28, 2024. The Company’s policy is to record uncertain tax positions as a component of income tax expense.

The Company files U.S. and state income tax returns in jurisdictions with differing statutes of limitations. The 2021 through 2024 tax years remain subject to selection for examination as of December 28, 2024. None of the Company’s income tax returns are currently under audit.