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Income Taxes | 12 Months Ended
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Dec. 28, 2019
Income Taxes |
Income Taxes | Note 7—Income Taxes United States and foreign loss before provision (benefit) for income taxes was as follows (in thousands):
|  | Year Ended
|  | December 28, |  | December 29,
|  | 2019 |  | 2018
United States |  | $ | (11,916) |  | $ | (16,568)
Foreign |  |  | (523) |  |  | (554)
|  | $ | (12,439) |  | $ | (17,122)
The provision (benefit) for income taxes consisted of the following (in thousands):
|  | Year Ended
|  | December 28, |  | December 29,
|  | 2019 |  | 2018
Current: |  |  |  |  |  |
Federal |  | $ | — |  | $ | —
State |  |  | 13 |  |  | (2)
Total current |  |  | 13 |  |  | (2)
Deferred: |  |  |  |  |  |
Federal |  |  | (2,256) |  |  | (2,133)
State |  |  | (769) |  |  | (1,760)
Foreign |  |  | 166 |  |  | (74)
Change in valuation allowance |  |  | 2,859 |  |  | 3,967
Total deferred |  |  | — |  |  | —
Provision (benefit) for income taxes |  | $ | 13 |  | $ | (2)
Income taxes differ from the amounts computed by applying the statutory federal income tax rate of 21% for 2019 and 2018. The reconciliation of this difference is as follows (in thousands):
|  | Year Ended
|  | December 28, |  | December 29,
|  | 2019 |  | 2018
Statutory federal income tax rate |  |  | 21% |  |  | 21%
Change in valuation allowance |  |  | (18%) |  |  | (19%)
Other |  |  | (3%) |  |  | (2%)
Effective tax rate |  |  | —% |  |  | —%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the deferred tax assets and liabilities are as follows (in thousands):
|  | December 28, |  | December 29,
|  | 2019 |  | 2018
Deferred tax assets: |  |
Operating loss carryforward |  | $ | 32,014 |  | $ | 29,365
Tax credit carryforwards |  |  | 3,664 |  |  | 3,578
Foreign operating loss carryforward |  |  | 759 |  |  | 925
Reserves and allowances |  |  | 643 |  |  | 505
Stock-based compensation |  |  | 368 |  |  | 458
Other |  |  | 672 |  |  | 264
Total deferred tax assets |  |  | 38,120 |  |  | 35,095
Deferred tax liabilities: |  |  |  |  |  |
Operating lease right-of-use assets |  |  | (261) |  |  | —
Prepaid expenses |  |  | (161) |  |  | (171)
Basis difference in warrant and note |  |  | (106) |  |  | (191)
Total deferred tax liabilities |  |  | (528) |  |  | (362)
Net deferred tax assets |  |  | 37,592 |  |  | 34,733
Valuation allowance |  |  | (37,592) |  |  | (34,733)
|  | $ | — |  | $ | —
The Company evaluates 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. In making such judgments, significant weight is given to evidence that can be objectively verified. As of December 28, 2019 and December 29, 2018, a valuation allowance of $37.6 million and $34.7 million, respectively, has been provided based on the Company’s assessment that it is more likely than not that sufficient taxable income will not be generated to realize the tax benefits of the temporary differences. The valuation allowance increased by $2.9 million and $3.9 million during the years ended December 28, 2019 and December 29, 2018, respectively. These increases in the years ended December 28, 2019 and December 29, 2018 primarily relate to the increases in the net operating loss (“NOL”) carryforward. As of December 28, 2019, the Company had (i) $131.8 million of federal NOL carryforwards, of which $104.2 million will expire from 2029 through 2037, and $27.6 million of which will be carried forward indefinitely, (ii) $71.9 million of state NOL carryforwards, which begin to expire in 2029, (iii) federal tax credit carryforwards of $1.8 million, which begin to expire in 2026, and (iv) state tax credit carryforwards of $1.9 million, which will be carried forward indefinitely. In addition, as of December 28, 2019, the Company had $2.5 million of foreign NOL carryforwards from various jurisdictions, which begin to expire in 2020. Utilization of the NOL and tax credit carryforwards is subject to an annual limitation due to the ownership percentage change limitations provided by Section 382 of the Internal Revenue Code (the “Code”) and similar state and foreign law provisions. Under Section 382 of the Code, substantial changes in our ownership may limit the amount of NOL and tax credit carryforwards that are available to offset taxable income. The annual limitation would not automatically result in the loss of NOL and tax credit carryforwards but may limit the amount available in any given future period. Additional limitations on the use of these tax attributes could occur in the event of possible disputes arising in examination from various taxing authorities. The Company files income tax returns with federal, state and foreign jurisdictions. The Company is no longer subject to Internal Revenue Service (“IRS”) or state examinations for periods prior to 2015, although certain carryforward attributes that were generated prior to 2015 may still be adjusted by the IRS. The Company includes interest and penalties related to uncertain tax positions within the provision for income taxes. As of December 28, 2019 and December 29, 2018, the interest or penalties accrued related to unrecognized tax benefits were insignificant, and during the years ended December 28, 2019 and December 29, 2018, the interest and penalties related to uncertain tax position recorded were insignificant. As of December 28, 2019, the Company had no unrecognized tax benefits that would significantly change in the next 12 months.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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