(

) Income Taxes

The income tax expense (benefit) is different from what would be obtained by applying the statutory federal income tax rate to income (loss) before income taxes due to the following:

	September 29, 2018					September 30, 2017
		Amount		Percent			Amount		Percent
Tax expense (benefit) at U.S. statutory rate	$	(362,946)		(24.5	%)	$	(650,463	)	(34.0	%)
State income tax provision, net of federal benefit		(70,523	)	(4.8	%)		(105,000	)	(5.5	%)
Change in state income tax rate		(41,961	)	(2.8	%)		563		-
Change in federal income tax rate		1,443,180		97.5	%		-		-
Other		(49,462	)	(3.3	%)		(46,120	)	(2.4	%)
Valuation allowance		(918,288	)	(62.1	%)		801,020		41.9	%

Total income tax expense (benefit)	$	-		-		$	-		-

Deferred income taxes consist of the following:

		September 29, 2018			September 30, 2017
Inventory differences	$	1,206,040		$	1,668,529
Net operating losses		1,554,615			2,287,412
Deferred revenue		568,917			187,970
Stock based compensation		116,149			218,846
Tax credits		374,239			247,989
Other		173,128			300,630
Total		3,993,088			4,911,376
Less: valuation allowance		(3,993,088	)		(4,911,376	)

Total	$	-		$	-

December 22, 2017,

the Tax Cuts and Jobs Act (the “TCJA”) was signed into law in the United States. The TCJA reduced the U.S. corporate tax rate from the

34%

21%

for tax years beginning after

December 31, 2017.

As a result of the newly enacted law, the Company was required to revalue all deferred tax assets and liabilities existing as of

December 31, 2017

to reflect the reduction in the federal tax rate. This revaluation resulted in a reduction to the Company’s deferred tax asset of

$1.4

million, with a corresponding reduction to the Company’s valuation allowance. Consequently, there was

impact on the accompanying consolidated financial statements that resulted

Notes to Consolidated Financial Statements (continued)

from the reduction in the federal tax rate. Other relevant provisions of the TCJA did

not

have a material impact on the accompanying consolidated financial statements.

During fiscal year

2014,

the Company established a valuation allowance

against deferred tax assets.

The valuation allowance is related to uncertainty with respect to the Company’s ability to realize its deferred tax assets. Deferred tax assets consist of net operating loss carryforwards, tax credits, inventory differences and other temporary differences. During fiscal year

2018,

the change in the valuation allowance was

$918,288

and related primarily to the TCJA. During fiscal year

2017,

the change in the valuation allowance was

$801,020

and related primarily to the net operating loss and inventory differences.

Due to the nature of the Company’s current operations in foreign countries (selling products into these countries with the assistance of local representatives), the Company has

not

been subject to any foreign taxes in recent years. Also, it is

not

anticipated that the Company will be subject to foreign taxes in the near future.

The Company files income tax returns in the U.S. federal jurisdiction and in the states of Massachusetts and New Hampshire. For U.S. federal purposes, the tax years

2015

through

2017

and for state purposes

2014

through

2017

remain open to examination. In addition, the amount of the Company’s federal and state net operating loss carryforwards utilized in prior periods

may

be subject to examination and adjustment. The Company has federal research credits of

$245,016

available through fiscal year

2038

and net operating loss carryforwards of

$5,889,175

available through fiscal year

2038.

In addition, the Company has Massachusetts research credits of

$163,136

available through fiscal year

2033

and net operating loss carryforwards of

$5,029,887

available through fiscal year

2038.