(11)	INCOME TAXES

During the quarter ended January 31, 2014, the Company reached a settlement with the Internal Revenue Service (the “IRS”) with respect to the examination of the Company’s fiscal 2011 and 2012 federal income tax returns. The Company did not have to pay any additional federal taxes as a result of the IRS’s examination of the two years due to the Company’s existing net operating losses, which were reduced by approximately $2,400,000. As a result of the completion of the examinations, the Company reduced its liability for uncertain tax positions by $160,000, including accrued interest. This reduction had the effect of increasing the tax benefit in the accompanying financial statements for the quarter and nine months ended January 31, 2014.

The total tax effect of gross unrecognized tax benefits at January 31, 2014 and April 30, 2013 was $58,000, which, if recognized, would have an impact on the effective tax rate. The Company believes it is reasonably possible that the liability for unrecognized tax benefits will not change in the next twelve months.