Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

v3.23.1
Income Taxes (Tables)
 12 Months Ended
Jan. 02, 2023
Income Tax Disclosure [Abstract]  
Schedule of Provision for (Benefit) From Income Taxes
The provision for (benefit) from income taxes is set forth below:

(in thousands) January 2, 2023 December 31, 2021
Current:
U.S. Federal $ —  $ — 
State 35  — 
Total current income tax expense 35  — 
Deferred:
U.S. Federal (10,002) (7,833)
State (1,469) (2,192)
Total deferred income tax benefit (11,471) (10,025)
Valuation allowance 11,341  10,337 
(130) 312 
Income tax (benefit) expense $ (95) $ 312 
Schedule of Reconciliation of Income Tax Rate
The reconciliation of income tax computed at the U.S. federal statutory rate of 21% to the Company’s effective tax rate is set forth below:

(in thousands) January 2, 2023 December 31, 2021
Income tax provision at the U.S. federal statutory rate $ (21,741) $ (25,407)
Permanent differences 870  402 
Share-based compensation (463) 496 
State income taxes, net of federal benefit (1,640) (1,888)
Change in warrant liability (527) (2,900)
Goodwill impairment 11,471  19,820 
True-up 1,983  42 
Change in valuation allowance 11,342  10,337 
Change in rate (249) (406)
Tax credits (1,141) (184)
Total income tax (benefit) expense $ (95) $ 312 
Schedule of Deferred Tax Assets (Liabilities)
The components of the Company's deferred tax liabilities at January 2, 2023 and December 31, 2021 are set forth below:

(in thousands) January 2, 2023 December 31, 2021
Deferred tax assets (liabilities):
Allowance for doubtful accounts $ 40  $ 57 
Goodwill 4,625  2,794 
Fixed Assets 2,164  — 
Deferred franchise fees 277  684 
Deferred rent —  239 
Stock compensation 1,730  1,250 
Net operating losses, Federal 13,649  11,215 
Net operating losses, State 2,691  2,066 
Deferred payroll taxes —  217 
Interest expense 5,351  3,540 
Lease liability 13,104  — 
Tax credits 1,854  713 
Other 1,599  1,075 
     Gross deferred tax assets 47,084  23,850 
Valuation allowance (22,629) (11,383)
     Net deferred tax assets 24,455  12,467 
Intangible assets (13,878) (13,300)
Lease ROU asset (11,800) — 
Fixed assets —  (520)
     Deferred tax liabilities (25,678) (13,820)
Total net deferred tax (liabilities) assets $ (1,223) $ (1,353)
Schedule of Unrecognized Tax Benefits
The following table summarizes the Company's unrecognized tax benefits at January 2, 2023 and December 31, 2021:

(in thousands) January 2, 2023 December 31, 2021
Beginning balance $ 660  $ — 
Additions based on tax positions related to the current year —  — 
Additions for tax positions of prior years —  660 
Reductions for positions of prior years (431) — 
Ending balance $ 229  $ 660