Annual report pursuant to Section 13 and 15(d)

Income Taxes

v3.24.0.1
Income Taxes
12 Months Ended
Dec. 30, 2023
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

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December 30, 2023

    

December 31, 2022

    

January 1, 2022

Domestic operations

​

$

(8,888)

​

$

(965)

​

$

(10,460)

Foreign operations

​

 

810

​

 

646

​

 

472

Total loss before income taxes

​

$

(8,078)

​

$

(319)

​

$

(9,988)

​

The income tax provision consists of the following:

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Fiscal Year Ended

​

    

December 30, 2023

    

December 31, 2022

    

January 1, 2022

Current:

 

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​

​

​

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State tax

​

$

(87)

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$

395

​

$

68

Foreign tax

​

 

232

​

​

237

​

 

283

Total current taxes

​

 

145

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632

​

 

351

Deferred:

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​

​

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Federal tax

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(737)

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​

307

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(6,628)

State tax

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(128)

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​

(195)

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(407)

Total deferred taxes

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(865)

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112

​

 

(7,035)

Valuation allowance

​

 

865

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(112)

​

 

7,035

Income tax provision

​

$

145

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$

632

​

$

351

​

Income tax provision differs from the amount that would result from applying the federal statutory rate as follows:

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Fiscal Year Ended

​

​

December 30, 2023

    

December 31, 2022

    

January 1, 2022

Income tax at U.S. federal statutory rate

​

$

(1,643)

​

$

(67)

​

$

(2,098)

Share-based compensation

​

 

817

​

​

397

​

 

(4,602)

State income tax, net of federal tax effect

​

 

(170)

​

​

158

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(269)

Foreign tax

​

 

173

​

​

194

​

 

243

Other

​

 

103

​

​

62

​

 

42

Change in valuation allowance

​

 

865

​

​

(112)

​

 

7,035

Effective tax provision

​

$

145

​

$

632

​

$

351

​

For fiscal years 2023, 2022 and 2021, the effective tax rate for the Company was (1.8)%, (198.0)% and (3.5)%, respectively. The Company’s effective tax rate for fiscal years 2023, 2022 and 2021 differs from the U.S. federal rate primarily as a result of non-deductible share-based compensation, the write-off of expired state net operating loss carryforwards, 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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​

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​

December 30, 2023

    

December 31, 2022

Deferred tax assets:

 

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Inventory and inventory related allowance

​

$

1,605

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$

2,440

Lease liabilities

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​

8,609

​

​

11,226

Share-based compensation

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4,024

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4,337

Book over tax depreciation

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​

1,043

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​

—

Intangibles

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90

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137

Sales and bad debt allowances

​

 

1,130

​

 

1,099

Accrued compensation

​

 

127

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444

Net operating loss

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29,632

​

 

28,728

Other

​

 

47

​

 

151

Total deferred tax assets

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46,307

​

 

48,562

Valuation allowance

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(38,458)

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(37,565)

Net deferred tax assets

​

 

7,849

​

 

10,997

Deferred tax liabilities:

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​

 

  

Right-of-use assets

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​

7,847

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​

10,506

Tax over book depreciation

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—

​

 

489

Other

​

 

2

​

 

2

Total deferred tax liabilities

​

 

7,849

​

 

10,997

Net deferred tax assets

​

$

—

​

$

—

​

As of December 30, 2023, federal and state net operating loss (“NOL”) carryforwards were $105,224 and $84,780, respectively. Federal NOL carryforwards of $891 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

​

 

9,555

2031

​

 

14,611

2032

​

 

24,202

2033

​

 

24,832

Thereafter

​

 

9,766

​

​

$

84,780

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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 December 30, 2023, mainly due to cumulative losses in recent years, the Company maintained a valuation allowance in the amount of $38,458 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 2019-2023 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 2020-2023 remain open. The Company does not anticipate a significant change to the amount of unrecognized tax benefits within the next twelve months.

Included in accrued expenses are income taxes receivable of ($267) and ($67) as of December 30, 2023 and December 31, 2022, respectively, consisting primarily of current state taxes. Included in other non-current liabilities are income taxes payable of $1,124 and $990 as of December 30, 2023 and December 31, 2022, respectively, relating to accrued future foreign withholding taxes.