NOTE 6 - COMMITMENTS, CONTINGENCY AND RELATED PARTIES

Operating Lease Commitments

The Company leases its office, warehouse facilities and retail showrooms under operating lease agreements which expire at various dates through January 2031. Monthly payments related to these leases range from $2,040 to $45,600.

Expected future annual minimum rental payments under these leases follow:

Severance Contingency

The Company has various employment agreements with its senior level executives. A number of these agreements have severance provisions, ranging from 12 to 18 months of salary, in the event those employees are terminated without cause. The total amount of exposure to the Company under these agreements was $3,165,978 at May 3, 2020 if all executives with employment agreements were terminated without cause and the full amount of severance was payable.

Legal Contingency

The Company is involved in various legal proceedings in the ordinary course of business. Management cannot presently predict the outcome of these matters, although management believes, based in part on the advice of counsel, that the ultimate resolution of these matters will not have a materially adverse effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

Related Parties

Mistral performs management services for the Company under a contractual agreement. Management fees totaled approximately $100,000 for both the thirteen weeks ended May 3, 2020 and May 5, 2019, and are included in selling, general and administrative expenses. There were $0 and $2,000 amounts payable to Mistral as of May 3, 2020 and February 2, 2020, respectively and are included in accounts payable in the accompanying condensed consolidated balance sheets. In addition, the Company reimbursed Mistral for expenses incurred in the amount of $0 and $39,000 for out of pocket expenses for the thirteen weeks ended May 3, 2020 and May 5, 2019, respectively.

Satori Capital, LLC (“Satori”), an affiliate of two stockholders of the Company since April 2017, performs management services for the Company under a contractual agreement. Management fees totaled approximately $25,000 for both the thirteen weeks ended May 3, 2020 and May 5, 2019 respectively, and are included in selling, general and administrative expenses. Amounts payable to Satori as of May 3, 2020 were $126,401 consisting of $20,000 in management fees and $106,401 of reimbursable expenses which were included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. Amounts payable to Satori as of February 2, 2020 were $95,000 consisting of $25,000 in management fees and $70,000 of reimbursable expenses which were included in accounts payable and accrued liabilities in the accompanying condensed consolidated balance sheets. In addition, the Company reimbursed Satori for expenses incurred in the amount of $36,401 and $0 for out of pocket expenses for the thirteen weeks ended May 3, 2020 and May 5, 2019, respectively.

The Company engaged Blueport Commerce (“Blueport”), a company owned in part by investment vehicles affiliated with Mistral. Certain directors are members and principals of the Company launched the Blueport platform in February 2018. There were $482,848 and $337,496 of fees incurred with Blueport sales transacted through the Blueport platform during the thirteen weeks ended May 3, 2020 and May 5, 2019, respectively. Amounts payable to Blueport as of May 3, 2020 and February 2, 2020 were $398,138 and $150,508, respectively, and are included in accrued expenses in the accompanying condensed consolidated balance sheets.