Note 14 - FTD Loss Contingency

9 Months Ended

Nov. 30, 2020

Notes to Financial Statements

Contingencies Disclosure [Text Block]

NOTE

14

– FTD LOSS CONTINGENCY

In

June 2019,

the Company's largest customer at the time, FTD Companies, Inc. and its domestic subsidiaries (“FTD”), filed for Chapter

11

bankruptcy proceedings. As a part of such bankruptcy proceedings, divisions of FTD's business and certain related assets, including the divisions that the Company has historically sold product to, were sold through an auction to multiple buyers.

The Company historically conducted business with FTD under a Gourmet Foods Supplier Agreement (the “FTD Supplier Agreement”), that among other provisions, provided assurance that custom inventory purchased by the Company and developed specifically for FTD would be purchased by FTD upon termination of the FTD Supplier Agreement. In

September 2019,

the Company received notice that the bankruptcy court had approved FTD to reject and

not

enforce the FTD Supplier Agreement as part of the proceedings.

As a result of FTD's bankruptcy, the sale of certain assets, and the court's approval to reject and

not

enforce the terms of the FTD Supplier Agreement, the Company is uncertain if accounts receivable and inventory balances associated with FTD at

November 30, 2020

will be realized at their full value, or if any revenue will be received from FTD in the future.

As of

November 30, 2020,

the Company had recorded inventory and receivables related to FTD of approximately

$221,000

and

$80,000,

respectively. The Company had also established reserves of approximately

$146,000

for expected losses on FTD inventory and receivables upon the conclusion of the bankruptcy proceedings.