9. INCOME TAXES:

The components of income tax expense from operations for fiscal 2013 and fiscal 2012 consisted of the following:

	2013			2012

Current: Federal	$	4,099,901		$	3,731,414
Current: State		496,793			620,164

		4,596,694			4,351,578

Deferred: Federal		(203,382	)		625,137
Deferred: State		(18,312	)		56,285

		(221,694	)		681,422

Income tax expense	$	4,375,000		$	5,033,000

The difference between the Company's income tax expense in the accompanying consolidated financial statements and that which would be calculated using the statutory income tax rate of 35% for both fiscal 2013 and fiscal 2012 on income before income taxes is as follows:

	2013			2012

Tax at statutory rate	$	3,581,789		$	4,340,196
Amortization of goodwill and other intangibles		(3,471	)		(5,207	)
Nondeductible business expenses		487,793			339,872
State income taxes, net of federal tax benefit		346,108			418,316
Valuation allowance, net operating losses		(26,889	)		(4,389	)
Other		(10,330	)		(55,788	)

	$	4,375,000		$	5,033,000

Temporary differences between the financial statement carrying balances and tax basis of assets and liabilities giving rise to the net deferred tax asset (liabilities) at fiscal year ends 2013 and 2012 relate to the following:

	2013			2012

Deferred tax assets:
Current:
Allowance for doubtful accounts	$	413,134		$	427,450
Accrued expenses		1,250,868			1,208,999
Inventory		421,397			457,844
Other		58,595			92,384

		2,143,994			2,186,677
Noncurrent:
Property and equipment	$	82,081		$	93,428
Net operating loss carry forwards—federal		379,842			425,884
Net operating loss carry forwards—state		596,545			623,434

		1,058,468			1,142,746

Total deferred tax assets		3,202,462			3,329,423
Valuation allowance		(586,299	)		(613,188	)

Net deferred tax assets	$	2,616,163		$	2,716,235

Deferred tax liabilities:
Current:
Trade discounts	$	312,061		$	270,058

		312,061			270,058
Noncurrent:
Property and equipment		1,512,677			2,165,674
Goodwill		1,060,943			968,024
Intangible assets		1,225,559			1,029,250

		3,799,179			4,162,948

Total deferred tax liabilities	$	4,111,240		$	4,433,006

Net deferred tax assets (liabilities):
Current	$	1,831,933		$	1,916,619
Noncurrent		(3,327,010	)		(3,633,390	)

	$	(1,495,077	)	$	(1,716,771	)

At September 2013, the Company had a $0.4 million noncurrent deferred tax asset related to federal net operating loss carryforwards. These federal net operating loss carryforwards totaled approximately $1.1 million and were primarily attributable to the Company's fiscal 2002 purchase of Hawaiian Natural Water Company, Inc. ("HNWC"), a wholly owned subsidiary of the Company. The utilization of HNWC's net operating losses is limited by Internal Revenue Code Section 382 to approximately $0.1 million per year through 2022.

At September 2013, the Company had a valuation allowance of approximately $0.6 million against certain state net operating losses, which more likely than not will not be utilized. The Company had no material unrecognized tax benefits, interest, or penalties during either fiscal 2013 or fiscal 2012, and the Company does not anticipate any such items during the next twelve months. The Company's policy is to record interest and penalties directly related to income taxes as income tax expense in the Consolidated Statements of Operations. The Company files income tax returns in the U.S. and various states and the tax years 2010 and forward remain open under U.S. and state statutes.