AI Financial Corp Income Taxes Disclosure

Note 18: Income taxes

 

For fiscal years ended December 27, 2025, and December 28, 2024, the Company recorded an income tax benefit from continuing operations of approximately $87.6 million and $0.2 million, respectively, and an income tax benefit from discontinued operations of $0.9 million and approximately $2.9 million, respectively, which consisted of the following (in $000’s):

 

Schedule of Income Tax Provision Benefit

		December 27, 2025				December 28, 2024
		Fiscal Years Ended
		December 27, 2025				December 28, 2024
Current tax (benefit) expense:
State		$	—			$	(102	)
Federal			—				(44	)
Foreign			—				334
Current tax (benefit) expense			—				188
Deferred tax benefit			(87,619	)			(3,229	)
Total benefit of income taxes		$	(87,619	)		$	(3,041	)

 

A reconciliation of the Company’s income tax benefit (provision) with the federal statutory tax rate for the fiscal years ended December 27, 2025, and December 28, 2024, respectively, is shown below:

 

Schedule of Reconciliation of Income Tax Benefit Provision with the Federal Statutory Tax Rate 

		December 27, 2025				December 28, 2024
		Fiscal Years Ended
		December 27, 2025				December 28, 2024
U.S. statutory rate			21.0	%			21.0	%
State tax rate			—	%			0.9	%
Foreign rate differential			—	%			4.4	%
Permanent differences			—	%			-6.7	%
Temporary differences			-20.0	%			—	%
Change in valuation allowance			-1.0	%			12.9	%
Other			—	%			0.2	%
Income tax benefit provision			—	%			32.7	%

 

Income (loss) before provision of income taxes was derived from the following sources for fiscal years December 27, 2025 and December 28, 2024, respectively, as shown below (in $000’s):

 

 Schedule of Income (Loss) Before Provision of Income Taxes

		December 27, 2025				December 28, 2024
		Fiscal Years Ended
		December 27, 2025				December 28, 2024
United States		$	(432,126	)		$	(14,148	)
Canada			—				3,539
Total		$	(432,126	)		$	(10,609	)

 

The components of net deferred tax assets (liabilities) as of December 27, 2025 and December 28, 2024, respectively, are as follows (in $000’s):

 

Schedule of Components of Net Deferred Tax Assets Liabilities 

		December 27, 2025				December 28, 2024
Deferred tax assets (liabilities):
Accrued expenses		$	—			$	152
Allowance for bad debts			(53	)			53
Accrued compensation			—				35
Section 174 expenses			26				43
Prepaid expenses			(599	)			(128	)
Net operating loss			7,299				5,819
Lease liability			—				33
Share-based compensation			—				114
Intangibles			—				(6,909	)
Right-of-use assets			—				(33	)
Unrealized losses			86,943				794
Section 163(j) interest			—				138
Deferred Tax Assets Liabilities			93,616				111
Less: valuation allowance			(8,964	)			(2,919	)
Net deferred tax assets (liabilities)		$	84,652			$	(2,808	)

 

 

ALT5 SIGMA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

As of December 27, 2025, the Company has net operating loss carryforwards of approximately $16.5 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 2033. The Company evaluates all available evidence to determine if a valuation allowance is needed to reduce its deferred tax assets. The Company has recorded a valuation allowance of approximately $9.0 million as of December 27, 2025, and December 28, 2024.

 

The Company annually conducts an analysis of its uncertain tax positions and has concluded that it has no uncertain tax positions as of December 27, 2025. 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 2022 through 2025 tax years remain subject to selection for examination as of December 27, 2025. None of the Company’s income tax returns is currently under audit.