The benefit for income taxes consists of the following:
| | | September 30, 2017 | | October 1, 2016 | |
| Current: | | | | | | | |
| Federal | | $ | - | | $ | (44,376) | |
| State | | | - | | | 912 | |
| Total current taxes | | | - | | | (43,464) | |
| | | | | | | | |
| Total benefit for income taxes | | $ | - | | $ | (43,464) | |
The benefit for income taxes is different from what would be obtained by applying the statutory federal income tax rate to loss before income taxes due to the following:
| | | September 30, 2017 | | October 1, 2016 | |
| | | Amount | | Percent | | Amount | | Percent | |
| Tax benefit at U.S. statutory rate | | $ | (485,862) | | | (34.0) | % | $ | (855,356) | | | (34.0) | % |
| State income tax provision, net of federal benefit | | | (81,630) | | | (5.7) | % | | (126,318) | | | (5.0) | % |
| Change in state effective rate | | | 563 | | | - | | | (127,485) | | | (5.0) | % |
| Prior year true-up | | | 7,425 | | | 0.5 | % | | (3,737) | | | (0.1) | % |
| Uncertain tax positions | | | - | | | - | | | (44,376) | | | (1.8) | % |
| Other | | | (53,545) | | | (3.7) | % | | 3,539 | | | 0.1 | % |
| Valuation allowance | | | 613,050 | | | 42.9 | % | | 1,110,269 | | | 44.1 | % |
| | | | | | | | | | | | | | |
| Total benefit for income taxes | | $ | - | | | - | | $ | (43,464) | | | (1.7) | % |
Deferred income taxes consist of the following:
| | | September 30, 2017 | | October 1, 2016 | |
| | | | | | | | |
| Inventory differences | | $ | 1,668,529 | | $ | 1,497,123 | |
| Net operating losses | | | 2,287,412 | | | 1,973,189 | |
| Stock based compensation | | | 218,846 | | | 213,506 | |
| Tax credits | | | 247,989 | | | 186,180 | |
| Other | | | 300,630 | | | 240,359 | |
| Total | | | 4,723,406 | | | 4,110,357 | |
| Less: valuation allowance | | | (4,723,406) | | | (4,110,357) | |
| | | | | | | | |
| Total | | $ | - | | $ | - | |
During fiscal year 2017 the change in the valuation allowance was $613,050 and related primarily to the Company’s net operating loss and inventory differences. 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 2016 the change in the valuation allowance was $1,110,269 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 2014 through 2016 and for state purposes 2013 through 2016 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 $175,577 available through fiscal year 2035 and net operating loss carryforwards of $5,991,999 available through fiscal year 2037. In addition, the Company has Massachusetts research credits of $109,717 available through fiscal year 2029 and net operating loss carryforwards of $5,181,801 available through fiscal year 2037.