Income Taxes (Tables)

12 Months Ended

Dec. 29, 2012

Income Taxes Tables

Reconciliation of income tax expense (benefit)

A reconciliation of income tax expense (benefit) computed at the statutory federal income tax rate of 34% for 2012 and 2011 compared to the Company’s income tax expense for the years ended December 29, 2012 and December 31, 2011 is as follows:

	2012			2011
Income tax expense (benefit) at statutory rate	$	(3,965,000	)	$	(2,684,000	)
(Increase) decrease resulting from:
State income taxes, net of federal tax effect		(428,000	)		(382,000	)
Nondeductible expenses		134,000			135,000
Change in effective tax rate		194,000			(26,000	)
Change in valuation allowance		4,136,000			2,953,000
Other		(71,000	)		4,000
	$	-		$	-

Deferred income tax assets and liabilities

The deferred income tax assets and liabilities consisted of the following components as of December 29, 2012 and December 31, 2011:

	2012			2011
Deferred tax assets:
Net operating loss carryforward	$	8,512,000		$	4,757,000
Stock options and restricted stock		1,679,000			1,620,000
Inventory reserve		138,000			88,000
Allowance for doubtful accounts		169,000			4,000
Accrued expenses		134,000			86,000
Intangibles		48,000			63,000
Deferred rent		76,000			42,000
		10,756,000			6,660,000
Less valuation allowance		10,629,000			6,493,000
		127,000			167,000
Deferred tax liabilities:
Leasehold improvements and equipment		(101,000	)		(129,000	)
Prepaid expenses		(26,000	)		(38,000	)
		(127,000	)		(167,000	)
	$	-		$	-