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Income Taxes | 12 Months Ended
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Jan. 01, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | Note 13: Income taxes For fiscal years ended January 1, 2022, and January 2, 2021, the Company recorded an income tax provision of approximately $273,000, and an income tax benefit of approximately $427,000, respectively, which consisted of the following (in $000's):
|  | Fiscal Years Ended |
|  | January 1, 2022 |  |  | January 2, 2021 |
Current tax expense: |  |  |  |  |  |
State |  | $ | (75 | ) |  | $ | (46 | )
Federal |  |  | — |  |  |  | 203 |
Current tax expense |  |  | (75 | ) |  |  | 157 |
Deferred tax benefit - domestic |  |  | (198 | ) |  |  | 270 |
Total benefit (provision) of income taxes |  | $ | (273 | ) |  | $ | 427 |
A reconciliation of the Company's income tax benefit (provision) with the federal statutory tax rate for the fiscal years ended January 1, 2022, and January 2, 2021, respectively, is shown below:
|  | Fiscal Years Ended |
|  | January 1, 2022 |  |  | January 2, 2021 |
U.S statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
State tax rate |  |  | 4.3 | % |  |  | 7.5 | %
Foreign rate differential |  |  | 0.2 | % |  |  | 0.4 | %
Permanent differences |  |  | 2.3 | % |  |  | -0.1 | %
Change in tax rates |  |  | 0.2 | % |  |  | -0.8 | %
Benefit from CARES Act carryback claim |  |  | -1.2 | % |  |  | 0.8 | %
Change in valuation allowance |  |  | -27.5 | % |  |  | -24.5 | %
Other |  |  | -0.9 | % |  |  | 0.6 | %
|  |  | -1.6 | % |  |  | 4.9 | %
Loss before benefit (provision) of income taxes was derived from the following sources for fiscal years January 1, 2022 and January 2, 2021, respectively, as shown below (in $000's):
|  | Fiscal Years Ended |
|  | January 1, 2022 |  |  | January 2, 2021 |
United States |  | $ | (16,074 | ) |  | $ | (8,270 | )
Canada |  |  | (540 | ) |  |  | (655 | )
Total |  | $ | (16,614 | ) |  | $ | (8,925 | )
The components of net deferred tax assets (liabilities) as of January 1, 2022 and January 2, 2021, respectively, are as follows (in $000's):
|  | January 1, 2022 |  |  | January 2, 2021 |
Deferred tax assets (liabilities): |  |  |  |  |  |
Allowance for bad debts |  | $ | 795 |  |  | $ | 823 |
Accrued expenses |  |  | 2,118 |  |  |  | 1,769 |
Accrued compensation |  |  | 91 |  |  |  | 76 |
Prepaid expenses |  |  | (375 | ) |  |  | (304 | )
Net operating loss |  |  | 4,440 |  |  |  | 3,477 |
Lease liability |  |  | 25 |  |  |  | 35 |
Tax credits |  |  | 92 |  |  |  | 290 |
Share-based compensation |  |  | 219 |  |  |  | 176 |
Intangibles |  |  | (5 | ) |  |  | (3,717 | )
Property and equipment |  |  | (407 | ) |  |  | (214 | )
Unrealized losses (gains) |  |  | 148 |  |  |  | 140 |
Section 163(j) interest |  |  | 361 |  |  |  | 387 |
|  |  | 7,502 |  |  |  | 2,938 |
Less: valuation allowance |  |  | (7,502 | ) |  |  | (2,938 | )
Net deferred tax assets (liabilities) |  | $ | — |  |  | $ | — |
As of January 1, 2022, the Company has net operating loss carryforwards of approximately $14.2 million for federal income tax purposes, which will be available to offset future taxable income. Due to recent tax legislation, these net operating losses are eligible for indefinite carryforward, limited by certain taxable income limitations. The Company evaluates all available evidence to determine if a valuation allowance is needed to reduce its deferred tax assets. Management has concluded that it is more likely than not that its existing tax benefits in the U.S. and Canada will not be realized. Consequently, the Company has recorded a valuation allowance of approximately $7.5 million as of January 1, 2022 to reduce its deferred tax assets. The Company annually conducts an analysis of its uncertain tax positions and has concluded that it has no uncertain tax positions as of January 1, 2022. 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 2016 through 2020 tax years remain subject to selection for examination as of January 1, 2022. None of the Company’s income tax returns are currently under audit.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(h)(2)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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