Income Taxes

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

Income Taxes

(8) Income Taxes

Components of income tax expense (benefit) for each year are as follows:

		2011	2010	2009
Current
	United States:
	Federal	$95,217	$45,292	$5,766
	State	(37,445)	43,264	21,552
		-----------------	----------------	----------------
Current income tax provision:		57,772	88,556	27,318
		-----------------	----------------	----------------
Deferred:
	United States:
	Federal	(274,962)	247,563	(432,193)
	State	(105,576)	(25,146)	(47,348)
		-----------------	----------------	----------------
Deferred income tax provision (benefit), net		(380,538)	222,417	(479,541)
		-----------------	----------------	----------------
Total		$ (322,766)	$ 310,973	$ (452,223)
		=========	=========	=========

Deferred tax assets (liabilities) as of December 31, 2011 and December 25, 2010 are as follows:

			December 31, 2011	December 25, 2010
Deferred Tax Assets:
	Net operating loss
		carryforwards	$ 465,000	$ 588,000
	Stock compensation		168,000	87,000
	Credit carryforwards		395,000	105,000
	Inventory		256,000	168,000
	Accrued liabilities		27,000	50,000
	Depreciation		165,000	101,000
	Other		5,000	1,279
			-----------------	-----------------
Gross deferred tax assets			1,481,000	1,100,279
Valuation allowance			--	--
			-----------------	-----------------
Net deferred tax assets			$ 1,481,000	$ 1,100,279
			=========	=========

At December 31, 2011 and December 25, 2010, the Company had net operating loss carryforwards of approximately $1,368,000 and $1,731,000 respectively available to offset future income for U.S. Federal income tax purposes. These operating loss carryforwards expire in various amounts from 2012 through 2031 as follows:

2020	$77,000
2021	363,000
2022	887,000
2031	41,000
	---------------
	$ 1,368,000
	=========

During 2010, the Company used approximately $1,142,000 of net operating loss carryforwards. During 2009, the Company used approximately $259,000 of net operating loss carryforwards.

A valuation allowance is required to be established or maintained when it is "more likely than not" that all or a portion of deferred tax assets will not be realized. The Company believes that it will generate sufficient future taxable income to realize the tax benefits related to the remaining deferred tax assets.

A summary of the change in the deferred tax asset is as follows:

	2011	2010	2009
Balance at beginning of year	$ 1,100,279	$ 1,322,696	$ 843,155
Deferred tax (expense) benefit	380,538	(222,417)	479,541
	-------------	-------------	--------------
Balance at end of year	$ 1,480,817	$ 1,100,279	$ 1,322,696
	========	========	========

Income tax (benefit) expense is different from the amounts computed by applying the U.S. federal statutory income tax rate of 34 percent to pretax income as a result of the following:

	2011	2010	2009
Tax at statutory rate	$ (125,000)	$ 347,000	$ 38,000
State tax, net
of federal benefit	(94,000)	46,000	17,000
Net operating
loss and credit carryforwards	(95,000)	(8,000)	665,000
Reduction in the valuation
allowance	--	--	(1,174,000)
Other	(9,000)	(74,000)	3,000
	------------	------------	------------
Total	$ 323,000	$ 311,000	$ (452,000)
	=======	=======	=======

Certain provisions of the Internal Revenue Code limit the annual utilization of net operating loss carryforwards if a change in ownership occurs, as defined. The Company believes that it did not have an ownership change through the period ended December 31, 2011. Therefore, as of year-end 2011 all net operating loss carryforwards should be available to offset future taxable income. The Company`s income tax filings are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations for the years 2008 through 2010.