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Income Taxes | 12 Months Ended
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Dec. 30, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | 12. Income Taxes Loss (income) from operations before (benefit from) provision for income taxes was comprised of the following:
|  | FY 2017 |  |  | FY 2016 |  |  | FY 2015 |
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 30, 2017 |  |  | December 31, 2016 |  |  | January 2, 2016 |
United States |  | $ | (12,800 | ) |  | $ | (2,656 | ) |  | $ | 291 |
Foreign |  |  | (195 | ) |  |  | — |  |  |  | — |
Total |  | $ | (12,995 | ) |  | $ | (2,656 | ) |  | $ | 291 |
The (benefit from) provision for income taxes includes:
|  | FY 2017 |  |  | FY 2016 |  |  | FY 2015 |
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 30, 2017 |  |  | December 31, 2016 |  |  | January 2, 2016 |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | (90 | ) |  | $ | - |  |  | $ | (4 | )
State |  |  | 16 |  |  |  | 4 |  |  |  | 30 |
|  |  | (74 | ) |  |  | 4 |  |  |  | 26 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | (55 | ) |  |  | 9,271 |  |  |  | (12 | )
State |  |  | 1 |  |  |  | (218 | ) |  |  | (197 | )
|  |  | (54 | ) |  |  | 9,053 |  |  |  | (209 | )
(Benefit from) provision for income taxes |  | $ | (128 | ) |  | $ | 9,057 |  |  | $ | (183 | )
Our effective tax rate differs from the statutory federal income tax rate as shown in the following schedule:
|  | FY 2017 |  |  | FY 2016 |  |  | FY 2015 |
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 30, 2017 |  |  | December 31, 2016 |  |  | January 2, 2016 |
Income tax provision at statutory rate |  |  | 34.0 | % |  |  | 34.0 | % |  |  | 34.0 | %
State income taxes, net of federal benefit |  |  | 2.4 | % |  |  | 9.6 | % |  |  | (70.8 | )%
Permanent differences |  |  | (0.0 | )% |  |  | (1.5 | )% |  |  | 12.0 | %
Research and development credits |  |  | 0.6 | % |  |  | 3.0 | % |  |  | (34.8 | )%
Change in valuation allowance |  |  | (34.9 | )% |  |  | (387.4 | )% |  |  | — |
Foreign rate differential |  |  | (0.5 | )% |  |  | — |  |  |  | — |
Other |  |  | (3.0 | )% |  |  | 1.3 | % |  |  | (3.3 | )%
Effective tax rate |  |  | 1.0 | % |  |  | (341.0 | )% |  |  | (62.9 | )%
The tax effect of temporary differences and carryforwards that give rise to significant portions of the net deferred tax assets are presented below (in thousands):
|  | FY 2017 |  |  | FY 2016 |
|  | Year Ended |  |  | Year Ended |
|  | December 30, 2017 |  |  | December 31, 2016 |
Net operating losses |  | $ | 5,757 |  |  | $ | 4,411 |
Research and development credits |  |  | 2,839 |  |  |  | 2,113 |
Accruals and reserves |  |  | 2,031 |  |  |  | 2,158 |
Deferred revenue |  |  | 341 |  |  |  | 104 |
Property and equipment |  |  | 314 |  |  |  | 396 |
Intangible assets |  |  | 495 |  |  |  | 783 |
Stock compensation |  |  | 528 |  |  |  | 972 |
Other tax credits |  |  | 1 |  |  |  | 90 |
Net deferred tax asset |  |  | 12,306 |  |  |  | 11,027 |
Valuation allowance |  |  | (12,320 | ) |  |  | (11,095 | )
Net deferred tax liabilities |  | $ | (14 | ) |  | $ | (68 | )
Our accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of our deferred tax assets. Assessing the realizability of deferred tax assets is dependent upon several factors, including the likelihood and amount, if any, of future taxable income in relevant jurisdictions during the periods in which those temporary differences become deductible. Our management forecasts taxable income by considering all available positive and negative evidence including our history of operating income or losses and our financial plans and estimates which are used to manage the business. These assumptions require significant judgment about future taxable income. The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income are reduced. As of December 30, 2017, based on the Company's recent history of earnings and its forecasted losses, management believes on the more likely than not basis that a full valuation allowance is required. Accordingly, in the fourth quarter of fiscal year 2017, the Company provided a full valuation allowance on its federal and states deferred tax assets. As of December 30, 2017, the Company had federal and State net operating loss (“NOL”) carry forwards of $21.5 million and $16.7 million respectively. The federal NOL will begin to expire in 2032 and the state NOL will begin to expire in 2020. In December 2015, Congress passed a tax extenders package, Protecting Americans from Tax Hikes (PATH) Act of 2015, and permanently extended the federal R&D credit. The Company has federal and state research credit carry forwards of approximately $1.8 million and $2.6 million, respectively, available to and development credits are subject to IRC sections 382 and 383. In the event of a change in ownership as defined by these code sections, the usage of the above mentioned NOL’s and credits may be limited. On December 22, 2017, the current U.S. presidential administration signed the Tax Cuts and Jobs Act ("Tax Reform") into legislation. Under ASC 740, the effects of changes in tax rates and laws are recognized in the period in which the new legislation is enacted. In the case of US federal income taxes, the enactment date is the date the bill becomes law. With respect to this legislation, we expect a financial statement impact of approximately $90 thousand related to a refundable AMT and an adjustment to the indefinite-lived deferred tax liability. The Company performed a re-measurement of deferred tax assets and liabilities as a result of the decrease in the corporate Federal income tax rate from 35% to 21% which was offset by the valuation allowance. The Act “To provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (the “Tax Reform Act”) was enacted December 22, 2017. The Tax Reform Act reduced certain federal corporate income tax rates effective January 1, 2018 and changed certain other provisions. Various provisions within the new legislation were considered but due to the Company’s valuation allowance on domestic deferred tax assets and liabilities there is no material impact to the financial statements of the federal tax rate reductions for the year ended December 31, 2017. As a result of the Tax Reform Act, the Company has also considered the impact of the transition tax for which it has estimated that the Company would not need to accrue any amounts. The Company accounts for uncertain tax positions in accordance with ASC 740, Income Taxes. ASC 740 seeks to reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax provision that an entity takes or expects to take in a tax return. Additionally, ASC 740 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures, and transition. Under ASC 740, an entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. In accordance with our accounting policy, we recognize accrued interests and penalties related to unrecognized tax benefits as a component of income tax expense. There is no accrued interest and penalty during the year ended December 30, 2017. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | FY 2017 |  |  | FY 2016 |  |  | FY 2015 |
|  | Year Ended |  |  | Year Ended |  |  | Year Ended |
|  | December 30, 2017 |  |  | December 31, 2016 |  |  | January 2, 2016 |
Balance at the beginning of the year |  | $ | 1,029 |  |  | $ | 937 |  |  | $ | 861 |
Additions based upon tax positions related to the current year |  |  | 73 |  |  |  | 75 |  |  |  | 73 |
Additions based upon tax positions related to the prior year |  |  | 3 |  |  |  | 17 |  |  |  | - |
Reductions based upon tax positions related to the prior year |  |  | - |  |  |  | - |  |  |  | 3 |
Balance at the end of the year |  | $ | 1,105 |  |  | $ | 1,029 |  |  | $ | 937 |
If the ending balance of $1.1 million of unrecognized tax benefits at December 30, 2017, were recognized, $0 of the recognition would affect the income tax rate. The Company does not anticipate any material change in our unrecognized tax benefits over the next twelve months. The unrecognized tax benefits may change during the next year for items that arise in the ordinary course of business. The Company files U.S. federal and state returns. The tax years 2010 to 2016 remain open in several jurisdictions, none of which have individual significance.

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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/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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