Income Taxes

9 Months Ended

Oct. 29, 2022

Income Tax Disclosure [Abstract]

Income Taxes

Note 3 – Income Taxes

For the 13-week periods ended October 29, 2022 and October 30, 2021, the Company recorded income tax expense of approximately $57,000, or 0.8% of the loss before income taxes, and $1.8 million, or 19.9% of income before income taxes, respectively. The change in income taxes for the 13-week period ended October 29, 2022, compared to the prior year period, was primarily due to the federal net operating loss carry-forward now projected by the Company for fiscal 2022, which is fully offset by a valuation allowance. For the 39-week periods ended October 29, 2022 and October 30, 2021, the Company recorded income tax expense of $355,000, or 0.9% of the loss before income taxes, and $1.7 million, or 15.3% of income before income taxes, respectively. Income taxes for the 39-week period ended October 29, 2022 were minimal due to valuation allowances against deferred tax assets.

Income tax expense differs from the amount computed by applying the statutory federal income tax rate to (loss) income before income taxes. A reconciliation of income tax expense at the statutory federal income tax rate to the amount provided is as follows (in thousands):

	13-Week Period Ended						39-Week Period Ended
	October 29,			October 30,			October 29,			October 30,
	2022			2021			2022			2021
Tax at federal statutory rate	$	(1,530	)	$	1,896		$	(8,515	)	$	2,373
State income taxes, net of federal benefit		(223	)		300			(689	)		366
Tax credits		17			(29	)		(109	)		(35	)
Executive compensation		(15	)		65			101			80
Stock based compensation programs		(43	)		(50	)		(596	)		(567	)
Valuation allowance		1,843			(409	)		10,150			(519	)
Other		8			27			13			28
Income tax expense	$	57		$	1,800		$	355		$	1,726

The Company recognizes deferred tax assets and liabilities using estimated future tax rates for the effect of temporary differences between the book and tax basis of recorded assets and liabilities, including net operating loss carry forwards. Management assesses the realizability of deferred tax assets and records a valuation allowance if it is more likely than not that all or a portion of the deferred tax assets will not be realized. The Company considers the probability of future taxable income and our historical profitability, among other factors, in assessing the amount of the valuation allowance. Adjustments could be required in the future if the Company estimates that the amount of deferred tax assets to be realized is more than the net amount recorded. Any change in the valuation allowance could have the effect of increasing or decreasing the income tax provision in the statement of operations based on the nature of the deferred tax asset deemed realizable in the period in which such determination is made. As of October 29, 2022 and October 30, 2021, the Company recorded a full valuation allowance against deferred tax assets.