Note 5 - Commitments And Contingencies

12 Months Ended

Feb. 28, 2013

Commitments and Contingencies Disclosure [Text Block]

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Operating leases

The Company conducts its retail operations in facilities leased under five to ten-year non-cancelable operating leases. Certain leases contain renewal options for between five and ten additional years at increased monthly rentals. The majority of the leases provide for contingent rentals based on sales in excess of predetermined base levels.

The following is a schedule by year of future minimum rental payments required under such leases for the years ending February 28 or 29:

2014	$	268,000
2015		194,000
2016		78,000
2017		38,000
2018		40,000
Thereafter		75,000
Total	$	693,000

In some instances the Company has leased space for its Company-owned locations that are now occupied by franchisees, or majority owned subsidiaries. When the Company-owned location was sold or transferred, the store was subleased to the franchisee who is responsible for the monthly rent and other obligations under the lease. The Company's liability as primary lessee on sublet franchise outlets, all of which is offset by sublease rentals, is as follows for the years ending February 28 or 29:

2014	$	686,000
2015		644,000
2016		541,000
2017		293,000
2018		119,000
Thereafter		212,000
Total	$	2,495,000

The following is a schedule of lease expense for all retail operating leases for the three years ended February 28 or 29:

	2013			2012			2011
Minimum rentals	$	862,866		$	834,087		$	590,962
Less sublease rentals		(157,000	)		(125,300	)		(121,600	)
Contingent rentals		20,399			17,692			14,377
	$	726,265		$	726,479		$	483,739

In FY 2013, the Company renewed an operating lease for warehouse space in the immediate vicinity of its manufacturing operation.  The following is a schedule, by year, of future minimum rental payments required under such lease for the years ending February 28 or 29:

2014	$	110,000
2015		113,000
2016		116,000
2017		121,000
2018		30,000
Total		490,000

The Company also leases trucking equipment under operating leases. The following is a schedule by year of future minimum rental payments required under such leases for the years ending February 28 or 29:

2014	$	133,000
2015		38,000
Total	$	171,000

The following is a schedule of lease expense for trucking equipment operating leases for the three years ended February 28 or 29:

2013		2012		2011
	201,081		200,826		206,844

Purchase contracts

The Company frequently enters into purchase contracts of between six to eighteen months for chocolate and certain nuts.  These contracts permit the Company to purchase the specified commodity at a fixed price on an as-needed basis during the term of the contract.  Because prices for these products may fluctuate, the Company may benefit if prices rise during the terms of these contracts, but it may be required to pay above-market prices if prices fall and it is unable to renegotiate the terms of the contract.  Currently the Company has contracted for approximately $2.2 million of raw materials under such agreements.

Contingencies

The Company is party to various legal proceedings arising in the ordinary course of business. Management believes that the resolution of these matters will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows.

Resulting from the purchase of the franchise rights of Yogurtini, the Company may pay up to an additional aggregate amount of $1,400,000, which is contingent on financial performance of the franchise rights over a two-year period.