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     The Company will recognize any future accrued interest and penalties related to unrecognized tax benefits in income tax expense. As of October 31, 2008, the Company had approximately $4 in accrued interest and penalties which is included as a component of the $97 unrecognized tax benefit noted above.

     The Company is subject to U.S. federal income tax, and is currently under audit by the Internal Revenue Service for the years ended October 31, 2002 through 2006. The Company's federal income tax returns are open to audit under the statute of limitations for the years ended October 31, 2004 through 2007. The Company's statute of limitations for its years ended October 31, 2002 and 2003 have been extended to October 31, 2009. The Company believes the appropriate provisions for all outstanding issues have been made for all years under audit.

     The Company is subject to income tax in California and various other state taxing jurisdictions. The Company’s state income tax returns are open to audit under the statute of limitations for the years ended October 31, 2003 through 2007. The Company is currently under examination by New York and Texas. No specific issues regarding these examinations have been formally presented by the states conducting these examinations.

     The company does not anticipate a significant change to the total amount of unrecognized tax benefits within the upcoming fiscal year.

NOTE 5- Line of Credit:

     Under the terms of a revolving line of credit with Bank of America, the Company may borrow up to $2,000 through April 30, 2010. The interest rate is at the bank’s reference rate unless the Company elects an optional interest rate. The borrowing agreement contains various covenants, the more significant of which require the Company to maintain certain levels of shareholders’ equity and working capital. The Company was in violation of the shareholders’ equity covenant which was subsequently waived and modified per an amendment to the agreement (dated as of January 9, 2009). The company is currently in compliance with all provisions of the agreement. There were no borrowings under this line of credit during the year.

NOTE 6- Contingencies and Commitments:

     The Company leases certain transportation and computer equipment under operating leases. The terms of the transportation leases provide for annual renewal options and contingent rental payments based upon mileage and adjustments of rental payments based on the Consumer Price Index. Minimum rental payments were $425 in fiscal year 2008 and $415 in fiscal year 2007. Contingent payments were approximately $ 124 in fiscal year 2008 and $120 in fiscal year 2007. Future minimum lease payments are approximately $425 in the each of the years 2009 through 2012 and $405 in 2013 and thereafter.

NOTE 7- Segment Information:

     The Company has two reportable operating segments, Frozen Food Products (the processing and distribution of frozen products), and Refrigerated and Snack Food Products (the processing and distribution of refrigerated meat and other convenience foods).

     The Company evaluates each segment’s performance based on revenues and operating income. Selling and general administrative expenses include corporate accounting, information systems, human resource and marketing management at the corporate level. These activities are allocated to each operating segment based on revenues and/or actual usage.