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Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2022
Income Tax Disclosure [Abstract] |
Income Taxes | 15. Income Taxes Loss from operations before provision for income taxes was comprised of the following:
|  | FY 2022 |  |  | FY 2021 |
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2022 |  |  | January 1, 2022 |
United States |  | $ | (7,544 | ) |  | $ | (5,233 | )
Foreign |  |  | 62 |  |  |  | 48 |
Total |  | $ | (7,482 | ) |  | $ | (5,185 | )
The provision for income taxes includes:
|  | FY 2022 |  |  | FY 2021 |
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2022 |  |  | January 1, 2022 |
Current: |  |  |  |  |  |
Federal |  | $ | — |  |  | $ | — |
State |  |  | 47 |  |  |  | 20 |
Foreign |  |  | 18 |  |  |  | 18 |
|  |  | 65 |  |  |  | 38 |
Deferred: |  |  |  |  |  |
Federal |  |  | 1 |  |  |  | 1 |
State |  |  | (1 | ) |  |  | 1 |
|  |  | - |  |  |  | 2 |
Provision for income taxes |  | $ | 65 |  |  | $ | 40 |
Our effective tax rate differs from the statutory federal income tax rate as shown in the following schedule:
|  | FY 2022 |  |  | FY 2021 |
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2022 |  |  | January 1, 2022 |
Income tax provision at statutory rate |  |  | 21.0 | % |  |  | 21.0 | %
State income taxes, net of federal benefit |  |  | 5.1 | % |  |  | 7.6 | %
Permanent differences |  |  | (2.1 | )% |  |  | 17.1 | %
Federal rate change impact |  |  | (1.1 | )% |  |  | — |
Research and development credits |  |  | 1.5 | % |  |  | 2.3 | %
Change in valuation allowance |  |  | (24.0 | )% |  |  | (47.4 | )%
Foreign rate differential |  |  | (0.1 | )% |  |  | (0.2 | )%
Other |  |  | (1.2 | )% |  |  | (1.2 | )%
Effective tax rate |  |  | (0.9 | )% |  |  | (0.8 | )%
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 2022 |  |  | FY 2021 |
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2022 |  |  | January 1, 2022 |
Deferred tax assets: |  |  |  |  |  |
Net operating losses |  | $ | 11,264 |  |  | $ | 13,751 |
Research and development credits |  |  | 3,904 |  |  |  | 3,582 |
Accruals and reserves |  |  | 2,505 |  |  |  | 2,637 |
Deferred revenue |  |  | 2,640 |  |  |  | 82 |
Property and equipment |  |  | 283 |  |  |  | 361 |
Intangible assets |  |  | 344 |  |  |  | 268 |
Section 174 research and experimental expenditures capitalization |  |  | 1,500 |  |  |  | - |
Stock compensation |  |  | 717 |  |  |  | 574 |
Other tax credits |  |  | 1 |  |  |  | - |
Total deferred tax asset |  |  | 23,158 |  |  |  | 21,255 |
Less: Valuation allowance |  |  | (23,078 | ) |  |  | (21,280 | )
Total deferred tax assets, net |  |  | 80 |  |  |  | (25 | )
Deferred tax liabilities: |  |  |  |  |  |
Goodwill |  |  | (104 | ) |  |  | - |
Total deferred tax liabilities |  |  | (104 | ) |  |  | - |
Net deferred tax liabilities |  | $ | (24 | ) |  | $ | (25 | )
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 31, 2022, based on the Company's recent history of losses 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 2022, the Company provided a full valuation allowance on its federal and state deferred tax assets. As of December 31, 2022, the Company had federal and state net operating loss (“NOL”) carry forwards of $44.6 million and $55.4 million, respectively. The federal NOL will begin to expire in 2033 and the state NOL will begin to expire in 2032. The Company has federal and state research credit carry forwards of approximately $2.4 million and $2.2 million, respectively. The federal research credit will begin to expire in 2023 and the state research credit can be carried forward indefinitely. In the event of a change in ownership as defined by IRC sections 382 and 383, the usage of the above mentioned NOLs and credits may be limited. 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 31, 2022. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
|  | FY 2022 |  |  | FY 2021 |
|  | Year Ended |  |  | Year Ended |
|  | December 31, 2022 |  |  | January 1, 2022 |
Balance at the beginning of the year |  | $ | 1,308 |  |  | $ | 1,220 |
Additions based upon tax positions related to the current year |  |  | 110 |  |  |  | 88 |
Reductions based upon tax positions related to the prior year |  |  | (50 | ) |  |  | - |
Balance at the end of the year |  | $ | 1,368 |  |  | $ | 1,308 |
If the ending balance of $1.4 million of unrecognized tax benefits as of December 31, 2022 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 2012 to 2022 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://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 https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 + Details
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