Note 9 – Income Taxes

At August 29, 2015, we had Federal net operating loss carry forwards of approximately $213.0 million. These net operating losses will expire in years through fiscal 2034. At August 29, 2015, we also had state net operating loss carry forwards of approximately $125.0 million. These net operating losses expire between 2029 and 2034. We also had the New York State and New York City prior net operation loss conversion (“PNOLC”) subtraction pools of approximately $33.3 million and $34.8 million, respectively. The conversion to the PNOLC under the New York State and New York City corporate tax reforms do not have any material tax impact.

Based on management assessment, it is more likely than not that the entire deferred tax assets will not be realized by future taxable income or tax planning strategy. Accordingly a valuation allowance of $89.5 million is recorded as of February 28, 2015. The valuation allowance was adjusted by approximately $0.4 million during the twenty-six weeks ended August 29, 2015 to $89.9 million.