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Note 10 - Income Taxes | 12 Months Ended
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Jan. 02, 2022
Notes to Financial Statements |
Income Tax Disclosure [Text Block] | NOTE 10-INCOME TAXES The following table presents the U.S. and foreign components of consolidated loss before income taxes and the provision for (benefit from) income taxes (in thousands):
|  | Fiscal Years |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Loss before income taxes: |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  | $ | (6,461 | ) |  | $ | (11,170 | ) |  | $ | (15,813 | )
Foreign |  |  | (36 | ) |  |  | 70 |  |  |  | 289 |
Loss before income taxes |  | $ | (6,497 | ) |  | $ | (11,100 | ) |  | $ | (15,524 | )
Provision for (benefit from) income taxes: |  |  |  |  |  |  |  |  |  |  |  |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |  |  | $ | — |
State |  |  | 3 |  |  |  | 3 |  |  |  | 3 |
Foreign |  |  | 22 |  |  |  | 39 |  |  |  | 108 |
Subtotal |  |  | 25 |  |  |  | 42 |  |  |  | 111 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | — |  |  |  | — |  |  |  | (141 | )
State |  |  | — |  |  |  | — |  |  |  | (44 | )
Foreign |  |  | 94 |  |  |  | 9 |  |  |  | (6 | )
Subtotal |  |  | 94 |  |  |  | 9 |  |  |  | (191 | )
Provision for (benefit from) income taxes |  | $ | 119 |  |  | $ | 51 |  |  | $ | (80 | )
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 (in thousands):
|  | Fiscal Years |
|  | 2021 |  |  | 2020 |  |  | 2019 |
Income tax (benefit) at statutory rate |  | $ | (1,364 | ) |  | $ | (2,331 | ) |  | $ | (3,260 | )
State taxes |  |  | 3 |  |  |  | 3 |  |  |  | (42 | )
Foreign taxes |  |  | 124 |  |  |  | 34 |  |  |  | 41 |
Stock compensation and other permanent differences |  |  | (155 | ) |  |  | 171 |  |  |  | 245 |
PPP Loan Forgiveness |  |  | (250 | ) |  |  | — |  |  |  | — |
R&D Tax Credits |  |  | (230 | ) |  |  | (261 | ) |  |  | (286 | )
Expired tax attributes |  |  | 3,304 |  |  |  | 208 |  |  |  | 1,085 |
Future benefit of deferred tax assets not recognized |  |  | (1,312 | ) |  |  | 2,227 |  |  |  | 2,277 |
Other |  |  | — |  |  |  | — |  |  |  | (140 | )
Provision for (benefit from) income taxes |  | $ | 119 |  |  | $ | 51 |  |  | $ | (80 | )
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 January 2, 2022. 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):
|  | January 2, |  |  | January 3, |
|  | 2022 |  |  | 2021 |
Deferred tax assets: |  |  |  |  |  |  |  |
Net operating losses |  | $ | 45,197 |  |  | $ | 43,703 |
Accruals and reserves |  |  | 1,347 |  |  |  | 1,239 |
Credits carryforward |  |  | 5,660 |  |  |  | 5,860 |
Depreciation and amortization |  |  | 7,820 |  |  |  | 9,240 |
Stock-based compensation |  |  | 403 |  |  |  | 485 |
Operating lease liability |  |  | 409 |  |  |  | 469 |
Gross deferred tax assets |  |  | 60,836 |  |  |  | 60,996 |
Deferred tax liabilities: |  |  |  |  |  |  |  |
Right-of-use asset |  |  | (400 | ) |  |  | (458 | )
Withholding tax on future distribution |  |  | (125 | ) |  |  | — |
Gross deferred tax assets |  |  | (525 | ) |  |  | (458 | )
Net deferred tax assets |  |  | 60,311 |  |  |  | 60,538 |
Valuation allowance |  |  | (60,353 | ) |  |  | (60,486 | )
Total deferred tax liability (assets) |  | $ | (42 | ) |  | $ | 52 |
As of January 2, 2022, the Company had net operating loss carryforwards of approximately $183.9million for federal and $94.4 million for state income tax purposes. If not utilized, the federal net operating loss for years beginning before January 1, 2018 of $128.6 million will expire beginning in fiscal year 2022 through 2037, and federal net operating losses beginning after January 1, 2018 of $55.3 million will be carried forward indefinitely (subject to certain limitations). If not utilized, the state net operating losses will expire beginning in fiscal year 2028 through 2041. The Company has research credit carryforwards of approximately $3.7 million for federal and $4.7 million for state income tax purposes as of January 2, 2022. If not utilized, the federal carryforwards will expire in various amounts beginning in fiscal year 2023. The California credit can be carried forward indefinitely. 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 2021. 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):
|  | January 2, |  |  | January 3, |  |  | December 29, |
|  | 2022 |  |  | 2021 |  |  | 2019 |
Beginning balance of unrecognized tax benefits |  | $ | 2,176 |  |  | $ | 2,117 |  |  | $ | 2,161 |
Additions (subtractions) for tax positions related to the prior year |  |  | (7 | ) |  |  | 38 |  |  |  | (46 | )
Additions for tax positions related to the current year |  |  | 128 |  |  |  | 114 |  |  |  | 88 |
Lapse of statutes of limitations |  |  | (178 | ) |  |  | (93 | ) |  |  | (86 | )
Ending balance of unrecognized tax benefits |  | $ | 2,118 |  |  | $ | 2,176 |  |  | $ | 2,117 |
Out of $2.1 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 January 2, 2022, January 3, 2021 and December 29, 2019. On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law. The CARES Act includes provisions relating to loan programs for small businesses ("Paycheck Protection Program" or "PPP"), refundable payroll tax credits, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to the tax depreciation methods for qualified improvement property. The Company applied for and received a PPP loan in Q2 of fiscal year ended 2020 in the amount of $1.2 million which was utilized on qualified business expenses under the guidance of PPP. The Company applied for loan forgiveness and the application was approved by the lender on January 26, 2021. The Company is not currently under tax examination in the U.S. 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 1998 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://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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