NOTE 3.

Income Taxes

The Company has not recorded an income tax benefit on its net loss for the six months ended March 28, 2015 due to its uncertain realizability. During the second quarter of fiscal 2014, the Company recorded a valuation allowance for the full amount of its net deferred tax assets since it cannot currently predict the realization of these assets.

During the three months ended March 29, 2014, the Company established a valuation allowance against deferred tax assets and as a result recorded an income tax provision for the six month period ended March 29, 2014 of $894,458. 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.

The below table details the changes in uncertain tax positions, which if recognized would favorably impact our effective tax rate:


Balance at September 27, 2014	$	80,829
Addition related to prior year positions		773

Balance at March 28, 2015	$	81,602

The increase in the Company’s total uncertain tax positions relates to additional accrued interest and penalties for the period.