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INCOME TAXES | 12 Months Ended
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Dec. 30, 2018
Income Tax Disclosure [Abstract] |
INCOME TAXES | NOTE 7-INCOME TAXES The following table presents the U.S. and foreign components of consolidated income (loss) before income taxes and the provision for (benefit from) income taxes (in thousands):
|  | Fiscal Years |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (13,982 | ) |  | $ | (14,253 | ) |  | $ | (19,340 | )
Foreign |  |  | 355 |  |  |  | 209 |  |  |  | 257 |
Loss before income taxes |  | $ | (13,627 | ) |  | $ | (14,044 | ) |  | $ | (19,083 | )
Provision for (benefit from) income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (19 | ) |  | $ | — |  |  | $ | — |
State |  |  | 2 |  |  |  | 2 |  |  |  | (3 | )
Foreign |  |  | 169 |  |  |  | 85 |  |  |  | 75 |
Subtotal |  |  | 152 |  |  |  | 87 |  |  |  | 72 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | (7 | )
Subtotal |  |  | — |  |  |  | — |  |  |  | (7 | )
Provision for income taxes |  | $ | 152 |  |  | $ | 87 |  |  | $ | 65 |
The following table presents the rate reconciliation between income tax provisions at the U.S. federal statutory rate and the effective rate reflected in the consolidated statements of operations:
|  | Fiscal Years |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Income tax (benefit) at statutory rate |  | $ | (2,862 | ) |  | $ | (4,775 | ) |  | $ | (6,489 | )
State taxes |  |  | 2 |  |  |  | 2 |  |  |  | (3 | )
Stock compensation and other permanent differences |  |  | 252 |  |  |  | 75 |  |  |  | 211 |
Foreign taxes |  |  | 95 |  |  |  | (30 | ) |  |  | (19 | )
Future benefit of deferred tax assets not recognized |  |  | 2,684 |  |  |  | 4,815 |  |  |  | 6,365 |
Others |  |  | (19 | ) |  |  | — |  |  |  | — |
Provision for income taxes |  | $ | 152 |  |  | $ | 87 |  |  | $ | 65 |
Based on the available objective evidence, management believes it is more likely than not that the U.S. net deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuation allowance against its U.S. federal and state deferred tax assets at December 30, 2018. Any future release of the valuation allowance may be recorded as a tax benefit increasing net income. The Company believes it is more likely than not it will be able to realize its foreign deferred tax assets. Deferred tax balances are comprised of the following (in thousands):
|  | December 30, 2018 |  |  | December 31, 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 37,527 |  |  | $ | 37,631 |
Capital losses |  |  | - |  |  |  | 1,726 |
Accruals and reserves |  |  | 1,370 |  |  |  | 1,487 |
Credits carryforward |  |  | 5,836 |  |  |  | 5,743 |
Depreciation and amortization |  |  | 9,887 |  |  |  | 9,056 |
Stock-based compensation |  |  | 347 |  |  |  | 343 |
|  |  | 54,967 |  |  |  | 55,986 |
Valuation allowances |  |  | (54,913 | ) |  |  | (55,931 | )
Deferred tax asset |  | $ | 54 |  |  | $ | 55 |
Deferred tax liability |  | $ | — |  |  | $ | — |
As of December 30, 2018, the Company had net operating loss carryforwards of approximately $157.4 million for federal and $63.6 million for state income tax purposes. If not utilized, these carryforwards will expire beginning 2019 for federal and state purposes. The Company has research credit carryforwards of approximately $4.1 million for federal and $4.6 million for state income tax purposes as of December 30, 2018. If not utilized, the federal carryforwards will expire in various amounts beginning in 2019. The California credit can be carried forward indefinitely. The Tax Cuts and Jobs Act (the "TCJA") was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the income tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting relating to the TCJA under Accounting Standards Codification Topic 740, “Income Taxes” (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for TCJA-related income tax effects is incomplete, but the company is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company completed the analysis of the TCJA’s income tax effects. In accordance with SAB 118, the TCJA-related income tax effects that we initially reported as provisional estimates were refined as additional analysis was performed. There was no material impact to the balance sheet and income statement recorded when the analysis was completed in the 2018 fourth quarter. The TCJA also includes a provision to tax global intangible low-taxed income ("GILTI") of foreign subsidiaries. In accordance with U.S. GAAP, the Company has made an accounting policy election to treat taxes due under the GILTI provision as a current period expense. Under the Tax Reform Act of 1986, the amount of and the benefit from net operating loss carryforwards and credit carryforwards may be impaired or limited in certain circumstances. Events which may restrict utilization of a company’s net operating loss and credit carryforwards include, but are not limited to, certain ownership change limitations as defined in Internal Revenue Code Section 382 and similar state provisions. In the event the Company has had a change of ownership, utilization of carryforwards could be restricted to an annual limitation. The annual limitation may result in the expiration of net operating loss carryforwards and credit carryforwards before utilization. The Company has not undertaken a study to determine if its net operating losses are limited. In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized. Foreign withholding taxes associated with the repatriation of earnings of foreign subsidiaries were not provided for on the undistributed earnings of certain foreign subsidiaries as of the end of fiscal 2018. The Company intends to reinvest these earnings indefinitely in the Company’s foreign subsidiaries. The Company believes that future domestic cash generation will be sufficient to meet future domestic cash needs. The Company has not recorded a deferred tax liability on the undistributed earnings of non-U.S. subsidiaries. The foreign withholding taxes would not have a material impact on the Company’s financial position and results of operation. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | December 30, 2018 |  |  | December 31, 2017 |  |  | January 1, 2017 |
Beginning balance of unrecognized tax benefits |  | $ | 2,107 |  |  | $ | 2,014 |  |  | $ | 696 |
Additions for tax positions related to the prior year |  |  | (2 | ) |  |  | 16 |  |  |  | 1,204 |
Additions for tax positions related to the current year |  |  | 125 |  |  |  | 77 |  |  |  | 150 |
Lapse of statues of limitations |  |  | (69 | ) |  |  | — |  |  |  | (36 | )
Ending balance of unrecognized tax benefits |  | $ | 2,161 |  |  | $ | 2,107 |  |  | $ | 2,014 |
Out of $2.2 million of unrecognized tax benefits, there are no unrecognized tax benefits that would result in a change in the Company's effective tax rate if recognized in future years. The accrued interest and penalties related to uncertain tax positions was not significant for December 30, 2018, December 31, 2017 and January 1, 2017. The Company is not currently under tax examination and the Company’s historical net operating loss and credit carryforwards may be adjusted by the Internal Revenue Service, and other tax authorities until the statute closes on the year in which such tax attributes are utilized. The Company estimates that its unrecognized tax benefits will not change significantly within the next twelve months. The Company is subject to U.S. federal income tax as well as income taxes in many U.S. states and foreign jurisdictions in which the Company operates. The U.S. tax years from 1999 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits. NOTE 7-INCOME TAXES The following table presents the U.S. and foreign components of consolidated income (loss) before income taxes and the provision for (benefit from) income taxes (in thousands):
|  | Fiscal Years |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Income (loss) before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (13,982 | ) |  | $ | (14,253 | ) |  | $ | (19,340 | )
Foreign |  |  | 355 |  |  |  | 209 |  |  |  | 257 |
Loss before income taxes |  | $ | (13,627 | ) |  | $ | (14,044 | ) |  | $ | (19,083 | )
Provision for (benefit from) income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (19 | ) |  | $ | — |  |  | $ | — |
State |  |  | 2 |  |  |  | 2 |  |  |  | (3 | )
Foreign |  |  | 169 |  |  |  | 85 |  |  |  | 75 |
Subtotal |  |  | 152 |  |  |  | 87 |  |  |  | 72 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | — |
State |  |  | — |  |  |  | — |  |  |  | — |
Foreign |  |  | — |  |  |  | — |  |  |  | (7 | )
Subtotal |  |  | — |  |  |  | — |  |  |  | (7 | )
Provision for income taxes |  | $ | 152 |  |  | $ | 87 |  |  | $ | 65 |
The following table presents the rate reconciliation between income tax provisions at the U.S. federal statutory rate and the effective rate reflected in the consolidated statements of operations:
|  | Fiscal Years |
|  | 2018 |  |  | 2017 |  |  | 2016 |
Income tax (benefit) at statutory rate |  | $ | (2,862 | ) |  | $ | (4,775 | ) |  | $ | (6,489 | )
State taxes |  |  | 2 |  |  |  | 2 |  |  |  | (3 | )
Stock compensation and other permanent differences |  |  | 252 |  |  |  | 75 |  |  |  | 211 |
Foreign taxes |  |  | 95 |  |  |  | (30 | ) |  |  | (19 | )
Future benefit of deferred tax assets not recognized |  |  | 2,684 |  |  |  | 4,815 |  |  |  | 6,365 |
Others |  |  | (19 | ) |  |  | — |  |  |  | — |
Provision for income taxes |  | $ | 152 |  |  | $ | 87 |  |  | $ | 65 |
Based on the available objective evidence, management believes it is more likely than not that the U.S. net deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuation allowance against its U.S. federal and state deferred tax assets at December 30, 2018. Any future release of the valuation allowance may be recorded as a tax benefit increasing net income. The Company believes it is more likely than not it will be able to realize its foreign deferred tax assets. Deferred tax balances are comprised of the following (in thousands):
|  | December 30, 2018 |  |  | December 31, 2017 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 37,527 |  |  | $ | 37,631 |
Capital losses |  |  | - |  |  |  | 1,726 |
Accruals and reserves |  |  | 1,370 |  |  |  | 1,487 |
Credits carryforward |  |  | 5,836 |  |  |  | 5,743 |
Depreciation and amortization |  |  | 9,887 |  |  |  | 9,056 |
Stock-based compensation |  |  | 347 |  |  |  | 343 |
|  |  | 54,967 |  |  |  | 55,986 |
Valuation allowances |  |  | (54,913 | ) |  |  | (55,931 | )
Deferred tax asset |  | $ | 54 |  |  | $ | 55 |
Deferred tax liability |  | $ | — |  |  | $ | — |
As of December 30, 2018, the Company had net operating loss carryforwards of approximately $157.4 million for federal and $63.6 million for state income tax purposes. If not utilized, these carryforwards will expire beginning 2019 for federal and state purposes. The Company has research credit carryforwards of approximately $4.1 million for federal and $4.6 million for state income tax purposes as of December 30, 2018. If not utilized, the federal carryforwards will expire in various amounts beginning in 2019. The California credit can be carried forward indefinitely. The Tax Cuts and Jobs Act (the "TCJA") was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the income tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting relating to the TCJA under Accounting Standards Codification Topic 740, “Income Taxes” (“ASC 740”). In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company’s accounting for TCJA-related income tax effects is incomplete, but the company is able to determine a reasonable estimate, it must record a provisional estimate in its financial statements. If a company cannot determine a provisional estimate to be included in its financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before the enactment of the TCJA. The Company completed the analysis of the TCJA’s income tax effects. In accordance with SAB 118, the TCJA-related income tax effects that we initially reported as provisional estimates were refined as additional analysis was performed. There was no material impact to the balance sheet and income statement recorded when the analysis was completed in the 2018 fourth quarter. The TCJA also includes a provision to tax global intangible low-taxed income ("GILTI") of foreign subsidiaries. In accordance with U.S. GAAP, the Company has made an accounting policy election to treat taxes due under the GILTI provision as a current period expense. Under the Tax Reform Act of 1986, the amount of and the benefit from net operating loss carryforwards and credit carryforwards may be impaired or limited in certain circumstances. Events which may restrict utilization of a company’s net operating loss and credit carryforwards include, but are not limited to, certain ownership change limitations as defined in Internal Revenue Code Section 382 and similar state provisions. In the event the Company has had a change of ownership, utilization of carryforwards could be restricted to an annual limitation. The annual limitation may result in the expiration of net operating loss carryforwards and credit carryforwards before utilization. The Company has not undertaken a study to determine if its net operating losses are limited. In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized. Foreign withholding taxes associated with the repatriation of earnings of foreign subsidiaries were not provided for on the undistributed earnings of certain foreign subsidiaries as of the end of fiscal 2018. The Company intends to reinvest these earnings indefinitely in the Company’s foreign subsidiaries. The Company believes that future domestic cash generation will be sufficient to meet future domestic cash needs. The Company has not recorded a deferred tax liability on the undistributed earnings of non-U.S. subsidiaries. The foreign withholding taxes would not have a material impact on the Company’s financial position and results of operation. Uncertain Tax Positions A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | December 30, 2018 |  |  | December 31, 2017 |  |  | January 1, 2017 |
Beginning balance of unrecognized tax benefits |  | $ | 2,107 |  |  | $ | 2,014 |  |  | $ | 696 |
Additions for tax positions related to the prior year |  |  | (2 | ) |  |  | 16 |  |  |  | 1,204 |
Additions for tax positions related to the current year |  |  | 125 |  |  |  | 77 |  |  |  | 150 |
Lapse of statues of limitations |  |  | (69 | ) |  |  | — |  |  |  | (36 | )
Ending balance of unrecognized tax benefits |  | $ | 2,161 |  |  | $ | 2,107 |  |  | $ | 2,014 |
Out of $2.2 million of unrecognized tax benefits, there are no unrecognized tax benefits that would result in a change in the Company's effective tax rate if recognized in future years. The accrued interest and penalties related to uncertain tax positions was not significant for December 30, 2018, December 31, 2017 and January 1, 2017. The Company is not currently under tax examination and the Company’s historical net operating loss and credit carryforwards may be adjusted by the Internal Revenue Service, and other tax authorities until the statute closes on the year in which such tax attributes are utilized. The Company estimates that its unrecognized tax benefits will not change significantly within the next twelve months. The Company is subject to U.S. federal income tax as well as income taxes in many U.S. states and foreign jurisdictions in which the Company operates. The U.S. tax years from 1999 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits.

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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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