Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our accompanying Unaudited Consolidated Financial Statements and related notes thereto and our Annual Report on Form 10-K for the fiscal year ended December 28, 2025. Comparative segment revenues and related financial information are discussed herein and are presented in Note 13 to our Unaudited Consolidated Financial Statements. See "Forward Looking Statements" on page 3 of this report and "Risk Factors" included in our filings with the SEC, including our Quarterly Reports on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 28, 2025, for a description of important factors that could cause actual results to differ from expected results. Our historical financial information may not be indicative of our future performance.
Overview
On May 8, 2024, we announced that our Board of Directors had initiated a process to evaluate potential strategic alternatives and engaged financial advisors in an endeavor to maximize shareholder value ("Strategic alternatives review/restructuring"). On June 14, 2025, we entered into an Equity Purchase Agreement with INSPYR Solutions Intermediate, LLC, pursuant to which we sold substantially all of our outstanding equity interest pertaining to the Professional segment on September 8, 2025. The Professional segment financial results for periods prior to the sale have been reflected as discontinued operations in our Unaudited Consolidated Financial Statements, see "Note 3 - Discontinued Operations."
We currently operate primarily within the United States of America in our Property Management segment. Our Property Management segment currently has the ability to service all states and D.C., and provide office and maintenance field talent to property management companies responsible for the apartment communities' and commercial buildings' day-to-day operations.
Our business normally experiences seasonal fluctuations. Our quarterly operating results are affected by seasonality of our client partners' business, as well as the number of billing days in a quarter. Demand for our Property Management workforce solutions typically increases in the second quarter and is highest during the third quarter of the year due to the increased turns in multifamily units during the summer months when schools are not in session. Overall first quarter demand can be affected by adverse weather conditions in the winter months. In addition, our cost of services typically increases in the first quarter primarily due to the reset of payroll taxes.
Results of Operations
The following tables summarize key components of our results from continuing operations for the periods indicated, both in dollars and as a percentage of revenues, and have been derived from our unaudited consolidated financial statements.
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||
| Revenues | $ | 25,129 | $ | 26,895 | $ | 68,324 | $ | 71,284 | |||||||||||||||||||||
| Cost of services | 16,046 | 17,235 | 43,913 | 45,654 | |||||||||||||||||||||||||
| Gross profit | 9,083 | 9,660 | 24,411 | 25,630 | |||||||||||||||||||||||||
| Selling, general, and administrative expenses | 8,718 | 10,223 | 26,451 | 31,804 | |||||||||||||||||||||||||
| Gain on contingent consideration | - | (450) | - | (450) | |||||||||||||||||||||||||
| Depreciation and amortization | 159 | 824 | 497 | 1,411 | |||||||||||||||||||||||||
| Operating income (loss) | 206 | (937) | (2,537) | (7,135) | |||||||||||||||||||||||||
| Interest income (expense), net | 38 | (1,570) | 272 | (4,595) | |||||||||||||||||||||||||
| Income (loss) before income taxes from continuing operations | 244 | (2,507) | (2,265) | (11,730) | |||||||||||||||||||||||||
| Income tax (expense) benefit from continuing operations | (150) | (571) | 136 | 1,461 | |||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 94 | $ | (3,078) | $ | (2,129) | $ | (10,269) | |||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||
| Revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||||||
| Cost of services | 63.9 | 64.1 | 64.3 | 64.0 | |||||||||||||||||||||||||
| Gross profit | 36.1 | 35.9 | 35.7 | 36.0 | |||||||||||||||||||||||||
| Selling, general, and administrative expenses | 34.7 | 38.0 | 38.7 | 44.6 | |||||||||||||||||||||||||
| Gain on contingent consideration | - | (1.7) | - | (0.6) | |||||||||||||||||||||||||
| Depreciation and amortization | 0.6 | 3.1 | 0.7 | 2.0 | |||||||||||||||||||||||||
| Operating income (loss) | 0.8 | (3.5) | (3.7) | (10.0) | |||||||||||||||||||||||||
| Interest income (expense), net | 0.2 | (5.8) | 0.4 | (6.4) | |||||||||||||||||||||||||
| Income (loss) before income taxes from continuing operations | 1.0 | (9.3) | (3.3) | (16.4) | |||||||||||||||||||||||||
| Income tax (expense) benefit from continuing operations | (0.6) | (2.1) | 0.2 | 2.0 | |||||||||||||||||||||||||
| Income (loss) from continuing operations | 0.4 | % | (11.4) | % | (3.1) | % | (14.4) | % | |||||||||||||||||||||
Thirteen Week Fiscal Period Ended September 27, 2026 ("Fiscal 2026") Compared with Thirteen Week Fiscal Period Ended September 28, 2025 ("Fiscal 2025")
| Thirteen Weeks Ended | |||||||||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Revenues | $ | 25,129 | $ | 26,895 | |||||||||||||
| Gross Profit | $ | 9,083 | $ | 9,660 | |||||||||||||
| Gross Profit Percentage | 36.1 | % | 35.9 | % | |||||||||||||
Revenues: Revenues decreased $1.8 million (6.6%). The decrease was primarily due to a 8.7% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with a partial offset from higher permanent placement revenue.
Gross Profit: Gross profit decreased approximately $0.6 million (6.0%), which is in line with revenues with a partial offset by higher permanent placement revenue that has no cost of service.
Selling, General, and Administrative Expenses: Selling, general, and administrative expenses decreased $1.5 million (14.7%), primarily due to reduced headcount allowing for less compensation and software costs as part of the cost reduction activities which began after the 2025 sale of BGSF Professional and continued into 2026 to align our administrative costs with our lower revenue, and lower shared-based compensation costs related to leadership changes and accelerated amortization from the sale of BGSF Professional.
The components of selling, general, and administrative expense are detailed in the following table:
| Thirteen Weeks Ended | |||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Amount | % of Revenue | Amount | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Selling | $ | 5,442 | 22 | % | $ | 5,672 | 21 | % | $ | (230) | (4) | % | |||||||||||||||||||||||||||||
| General and administrative: | |||||||||||||||||||||||||||||||||||||||||
| Compensation and related | 1,554 | 6 | 2,073 | 8 | (519) | (25) | % | ||||||||||||||||||||||||||||||||||
| Software | 577 | 2 | 750 | 3 | (173) | (23) | % | ||||||||||||||||||||||||||||||||||
| Liability insurance | 239 | 1 | 333 | 1 | (94) | (28) | % | ||||||||||||||||||||||||||||||||||
| Professional fees | 434 | 2 | 131 | - | 303 | 231 | % | ||||||||||||||||||||||||||||||||||
| Share-based compensation | 178 | 1 | 545 | 2 | (367) | (67) | % | ||||||||||||||||||||||||||||||||||
| Strategic alternatives review/restructuring | 175 | - | 482 | 2 | (307) | (64) | % | ||||||||||||||||||||||||||||||||||
| Other | 119 | - | 237 | 1 | (118) | (50) | % | ||||||||||||||||||||||||||||||||||
| Total | $ | 8,718 | 34 | % | $ | 10,223 | 38 | % | $ | (1,505) | (15) | % | |||||||||||||||||||||||||||||
Depreciation and Amortization: Depreciation and amortization charges decreased $0.7 million (80.7%) primarily due to a change in useful life of certain software in 2025 after the sale of BGSF Professional, which created additional amortization in continuing operations on intangible assets for computer software.
Interest Income (Expense), net: Interest income (expense), net increased $1.6 million (102.4%) due to short-term investment income in Fiscal 2026 following the sale of BGSF Professional compared to expense related to our previous credit agreement with BMO Bank, N.A. ("BMO") that was paid off in Fiscal 2025.
Income Tax Expense: Income tax expense increased $0.4 million due to improvement of income before income taxes partially offset by a lower effective tax rate in Fiscal 2026.
Thirty-nine Week Fiscal Period Ended September 27, 2026 ("Fiscal 2026") Compared with Thirty-nine Week Fiscal Period Ended September 28, 2025 ("Fiscal 2025")
| Thirty-nine Weeks Ended | |||||||||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Revenues | $ | 68,324 | $ | 71,284 | |||||||||||||
| Gross Profit | $ | 24,411 | $ | 25,630 | |||||||||||||
| Gross Profit Percentage | 35.7 | % | 36.0 | % | |||||||||||||
Revenues: Revenues decreased approximately $3.0 million (4.2%). The decrease was primarily due to a 5.7% reduction in billed hours, which was driven by a combination of lower demand from cost pressures on property owners and property management companies and increased competition in certain markets with partial offsets by higher permanent placement revenue and average bill rate.
Gross Profit: Gross profit decreased approximately $1.2 million (4.8%) which is in line with revenues with a partial offset by higher permanent placement revenue that has no cost of service.
Selling, General, and Administrative Expenses: Selling, general, and administrative expenses decreased $5.4 million (16.8%) primarily due to reduced headcount allowing for less compensation and software costs as part of the cost reduction activities which began after the 2025 sale of BGSF Professional and continued into 2026 to align our administrative costs with our lower revenue, and lower shared-based compensation costs related to leadership changes and accelerated amortization from the sale of BGSF Professional. Additional decrease is in the provision for credit losses included in "Other," see "Note 2 - Summary Of Significant Accounting Policies" mainly from second quarter in Fiscal 2025.
The components of selling, general, and administrative expense are detailed in the following table:
| Thirty-nine Weeks Ended | |||||||||||||||||||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||||||||||||||||||||||||||||||||
| Amount | % of Revenue | Amount | % of Revenue | $ Change | % Change | ||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||||||||||||||||||||
| Selling | $ | 16,444 | 25 | % | $ | 17,495 | 25 | % | $ | (1,051) | (6) | % | |||||||||||||||||||||||||||||
| General and administrative: | |||||||||||||||||||||||||||||||||||||||||
| Compensation and related | 4,588 | 6 | 6,318 | 10 | (1,730) | (27) | % | ||||||||||||||||||||||||||||||||||
| Software | 1,801 | 3 | 2,197 | 3 | (396) | (18) | % | ||||||||||||||||||||||||||||||||||
| Liability insurance | 763 | 1 | 868 | 1 | (105) | (12) | % | ||||||||||||||||||||||||||||||||||
| Professional fees | 1,405 | 2 | 1,334 | 2 | 71 | 5 | % | ||||||||||||||||||||||||||||||||||
| Share-based compensation | 595 | - | 850 | 1 | (255) | (30) | % | ||||||||||||||||||||||||||||||||||
| Strategic alternatives review/restructuring | 1,043 | 2 | 2,116 | 3 | (1,073) | (51) | % | ||||||||||||||||||||||||||||||||||
Other(1) | (188) | - | 626 | - | (814) | (130) | % | ||||||||||||||||||||||||||||||||||
| Total | $ | 26,451 | 39 | % | $ | 31,804 | 45 | % | $ | (5,353) | (17) | % | |||||||||||||||||||||||||||||
(1)Includes fees charged to cover costs for transitional back-office services provided after the sale of BGSF Professional.
Depreciation and Amortization: Depreciation and amortization charges decreased approximately $0.9 million (64.8%) primarily due to a change in useful life of certain software in 2025 after the sale of BGSF Professional, which created additional amortization in continuing operations on intangible assets for computer software.
Interest Income (Expense), net: Interest income (expense) increased $4.9 million (105.9%) due to short-term investment income in Fiscal 2026 following the sale of BGSF Professional compared to the expense adjustment of amortization of debt issuance costs relating to a waiver and amendment with respect to our previous credit agreement with BMO in Fiscal 2025.
Income Tax Benefit: Income tax benefit decreased $1.3 million primarily due to improvement of loss before income taxes and a higher effective tax rate in Fiscal 2026.
Use of Non-GAAP Financial Measures
We present Adjusted EBITDA (defined below), a measure that is not in accordance with accounting principles generally accepted in the United States of America ("non-GAAP"), in this Quarterly Report to provide investors with a supplemental measure of our operating performance. We believe that Adjusted EBITDA is a useful performance measure and is used by us to facilitate a comparison of our operating performance on a consistent basis from period-to-period and to provide for a more complete understanding of factors and trends affecting our business than measures under accounting principles generally accepted in the United States of America ("GAAP") can provide alone. Our board and management also use Adjusted EBITDA as one of the primary methods for planning and forecasting overall expected performance and for evaluating on a quarterly and annual basis actual results against such expectations, and as a performance evaluation metric in determining achievement of certain compensation programs and plans for our management.
We define "Adjusted EBITDA" as earnings before interest (income) expense, income taxes, depreciation and amortization expense, costs associated with the Strategic alternatives review/restructuring, software as a service costs, and certain non-cash expenses such as share-based compensation expense, as well as certain specific events that management does not consider in assessing our on-going operating performance. Omitting interest, taxes, and the other items provides a financial measure that facilitates comparisons of our results of operations with those of companies having different capital structures. Since the levels of indebtedness and tax structures that other companies have are different from ours, we omit these amounts to facilitate investors' ability to make these comparisons. Similarly, we omit depreciation and amortization because other companies may employ a greater or lesser amount of property and equipment and intangible assets. We also believe that investors, analysts and other interested parties view our ability to generate Adjusted EBITDA as an important measure of our operating performance and that of other companies in our industry. Adjusted EBITDA should not be considered as an alternative to net income (loss) from operations for the periods indicated as a measure of our performance. Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.
The use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider this performance measure in isolation from, or as an alternative to, GAAP measures such as net income (loss). Adjusted EBITDA is not a measure of liquidity under GAAP or otherwise, and is not an alternative to cash flow from operating activities. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by the expenses that are excluded from that term or by unusual or non-recurring items. The limitations of Adjusted EBITDA include: (i) it does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) it does not reflect changes in, or cash requirements for, our working capital needs; (iii) it does not reflect income tax payments we may be required to make; and (iv) it does not reflect the cash requirements necessary to service interest or principal payments associated with indebtedness.
To properly and prudently evaluate our business, we encourage you to review our unaudited consolidated financial statements included elsewhere in this report and the reconciliation to Adjusted EBITDA from net income (loss), the most directly comparable financial measure presented in accordance with GAAP, set forth in the following table. All of the items included in the reconciliation from net income (loss) to Adjusted EBITDA are either (i) non-cash items or (ii) items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess our comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect operating performance. In the case of the other items that management does not consider in assessing our on-going operating performance, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact may not reflect ongoing operating performance.
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||||||||||||
| September 27, 2026 | September 28, 2025 | September 27, 2026 | September 28, 2025 | |||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| Income (loss) from continuing operations | $ | 94 | $ | (3,078) | $ | (2,129) | $ | (10,269) | ||||||||||||||||||
| Income tax expense (benefit) | 150 | 571 | (136) | (1,461) | ||||||||||||||||||||||
| Interest (income) expense, net | (38) | 1,570 | (272) | 4,595 | ||||||||||||||||||||||
| Operating income (loss) | 206 | (937) | (2,537) | (7,135) | ||||||||||||||||||||||
| Depreciation and amortization | 159 | 824 | 497 | 1,411 | ||||||||||||||||||||||
| Gain on contingent consideration | - | (450) | - | (450) | ||||||||||||||||||||||
| Share-based compensation | 178 | 545 | 595 | 850 | ||||||||||||||||||||||
| Strategic alternatives review/restructuring | 175 | 482 | 1,043 | 2,116 | ||||||||||||||||||||||
Software as a service1 | 140 | 516 | 421 | 950 | ||||||||||||||||||||||
| Aged receivable adjustment | - | - | - | 1,070 | ||||||||||||||||||||||
| Adjusted EBITDA from continuing operations | 858 | 980 | 19 | (1,188) | ||||||||||||||||||||||
| Adjusted EBITDA Margin (% of revenue) | 3.4 | % | 3.6 | % | - | % | (1.7) | % | ||||||||||||||||||
| Income (loss) from discontinued operations | 250 | (2,734) | 1,168 | (1) | ||||||||||||||||||||||
Adjustments to discontinued operations2 | - | 1,059 | - | 4,429 | ||||||||||||||||||||||
| Adjusted EBITDA from discontinued operations | 250 | (1,675) | 1,168 | 4,428 | ||||||||||||||||||||||
| Adjusted EBITDA, net | $ | 1,108 | $ | (695) | $ | 1,187 | $ | 3,240 | ||||||||||||||||||
(1)We capitalize direct costs incurred in cloud computing implementation from hosting arrangements, which are reported as a Software as a service and are expensed in selling, general, and administrative expenses.
(2)Adjusted EBITDA from discontinued operations for the thirteen and thirty-nine weeks ended September 28, 2025 includes $0.9 million and $3.6 million of depreciation and amortization, respectively, and $0.1 million and $0.8 million of income tax expense, respectively.
Liquidity and Capital Resources
Our working capital requirements are primarily driven by field talent payments, tax payments, and client partner accounts receivable receipts. Since receipts from client partners lag payments to field talent, working capital requirements may increase substantially in periods of growth.
Our primary sources of liquidity were cash generated from operations, which was used to fund payments to field talent and team members, related payroll liabilities, operating expenses, capital expenditures, cash taxes, and note payments. We believe that cash on hand, short-term investments, and the cash generated from operations, will be sufficient to meet our normal
working capital needs for at least the next twelve months, including investments made, and expenses incurred, in connection with opening new markets throughout the next year. Our ability to continue to fund these items may be affected by general economic, competitive and other factors, many of which are outside of our control. During Fiscal 2025, we received cash proceeds from the sale of BGSF Professional on September 8, 2025, which allowed us to fully payoff and retire the borrowings under an agreement with BMO and pay a $2.00 per share special dividend on September 30, 2025, which means we currently hold approximately $17.9 million in available cash and short-term investments to fund the business. If our future cash flow and other capital resources are insufficient to fund our liquidity needs, we may obtain new debt or equity capital.
While we believe we have sufficient liquidity and capital resources to meet our current operating requirements and expansion plans, we may elect to pursue additional growth opportunities within the next year that could require new debt or equity financing. If we are unable to secure new financing at favorable terms in order to pursue such additional growth opportunities, our ability to pursue such opportunities could be materially and adversely affected.
A summary of our working capital, operating, investing and financing activities are shown in the following table:
| September 27, 2026 | December 28, 2025 | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Working capital from continuing operations | $ | 28,286 | $ | 29,116 | |||||||||||||
| Thirty-nine Weeks Ended | |||||||||||||||||
| September 27, 2026 | September 28, 2025 | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Net cash (used in) provided by continuing operations: | |||||||||||||||||
| Operating activities | $ | (540) | $ | (1,771) | |||||||||||||
| Investing activities | (7,392) | 91,406 | |||||||||||||||
| Financing activities | (1,784) | (48,497) | |||||||||||||||
| Net change in cash and cash equivalents discontinued operations | - | 34 | |||||||||||||||
| Net change in cash and cash equivalents | $ | (9,716) | $ | 41,172 | |||||||||||||
Operating Activities
Cash provided by operating activities from continuing operations consists of net income (loss) adjusted for non-cash items, including depreciation and amortization, share-based compensation expense, provision for credit losses, and the effect of working capital changes. The primary driver of cash inflows and outflows are accounts receivable, transition services payable, and escrow receivable.
During Fiscal 2026, net cash used in operating activities from continuing operations decreased by $1.2 million compared to Fiscal 2025. The decrease is primarily due to increased payments on transition services payable, accrued payroll and expenses, and accounts payable, which were partially offset by the cash receipts of $4.2 million related escrow holdbacks in the sale of BGSF Professional.
Investing Activities
Cash flows from investing activities from continuing operations consisted of capital expenditures, purchases of short-term marketable securities, and proceeds from the sale of BGSF Professional.
For Fiscal 2026, we purchased $20.4 million of short-term investments and minimal capital expenditures, which were partially offset by $3.0 million and $8.9 million of funds received from redemptions and sale, respectively, of short-term investments and $1.2 million of additional funds received for the final settlement of working capital from the sale of BGSF Professional. In Fiscal 2025, cash provided by investing activities from continuing operations consists primarily of net proceeds from the sale of BGSF Professional of approximately for $91.5 million, which was partially offset by minimal capital expenditures.
Financing Activities
Cash flows from financing activities related to continuing operations consisted principally of borrowings and payments under our credit agreement and repurchases of our common stock.
For Fiscal 2026, we repurchased $1.3 million of our common stock under the Company's stock buyback plan. For Fiscal 2025, we paid off our Term Loan, Revolving Facility, and Convertible Note of $32.7, $10.2 million, and $4.4 million, respectively.
Credit Agreements
On September 8, 2025, we paid the balance on the existing term loan commitment and revolving credit facility with BMO using the proceeds from the sale of BGSF Professional and concurrently closed the facility.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amount of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends, and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, estimates, assumptions and judgments to ensure that our consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Our significant accounting policies are discussed in Note 2, Summary of Significant Accounting Policies, of the Notes to Unaudited Consolidated Financial Statements included in "Item 1. Financial Statements." Please also refer to our Annual Report on Form 10-K for the fiscal year ended December 28, 2025 for a more detailed discussion of our critical accounting policies.
Revenue Recognition
We derive our revenues from continuing operations by providing workforce solutions and placement services. Revenues are recognized when promised services are delivered to client partners, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We recognize revenue through the following types of services: workforce solutions and contingent placements.
Short-Term Investments
We invest in U.S. Treasury securities that are classified as trading securities based on the expected holding period and are reported at fair value using observable market data. Realized and unrealized gains and losses as well as interest income are recognized in earnings within interest income (expense), net in the consolidated statements of operations in accordance with Accounting Standards Codification ("ASC") Topic 320, Investments in Debt Securities.
Intangible Assets
We hold intangible assets with finite lives. Intangible assets with finite useful lives are amortized over their respective estimated useful lives, ranging from three to ten years, based on a pattern in which the economic benefit of the respective intangible asset is realized. We develop and implement software modifications to our information technology infrastructure with direct internal payroll costs and external costs capitalized. Minor upgrades and enhancements to software systems are expensed in the period incurred as software maintenance and training costs.
Income Taxes
The current provision for income taxes represents estimated amounts payable or refundable on tax returns filed or to be filed for the year. We recognize any penalties when necessary as part of selling, general, and administrative expenses. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts are classified net as noncurrent in the consolidated balance sheets. Deferred tax assets are also recognized for net operating loss and tax credit carryovers. As of September 27, 2026 and December 28, 2025, the Company carried a valuation allowance of $1.5 million related to capital losses and stock-based compensation deferred tax assets from the sale of BGSF Professional. We follow the guidance of ASC Topic 740, Accounting for Uncertainty in Income Taxes.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements and their potential effect on our results of operations and financial condition, refer to Note 2 in the Notes to the Unaudited Consolidated Financial Statements in this Quarterly Report on Form 10-Q and Note 2 in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025.