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 November 2027. Monthly payments related to these leases range from $2,500 to $24,600.

Expected future annual minimum rental payments under these leases follow:

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 consolidated financial position, results of operations or cash flows.

Related Parties

Mistral, a stockholder of the Company, performs management services for the Company under a contractual agreement. Management fees totaled approximately $100,000 and $300,000 for the thirteen and thirty-nine weeks ended November 4, 2018 respectively, and $100,000 and $300,000 for the thirteen and thirty-nine weeks ended October 29, 2017 respectively, and are included in selling, general and administrative expenses. Transaction fees related to the IPO were $0 and $500,000 for the thirteen and thirty-nine weeks ended November 4, 2018, respectively and are included in selling, general and administrative expenses. No transaction fees were incurred during the thirteen and thirty-nine weeks ended October 29, 2017. Amounts payable to Mistral as of November 4, 2018 and February 4, 2018 were $30,145 and $121,103, respectively, and are included in accounts payable in the accompanying condensed consolidated balance sheets.

During the second half of fiscal 2017, the Company engaged Blueport Commerce (“Blueport”), a company in which investment vehicles affiliated with Mistral own equity, to evaluate a transition plan to convert to the Blueport Commerce platform. The Company launched the Blueport Platform in February 2018. There were $262,349 and $813,892 of fees incurred with Blueport on the conversion of and sales transacted through the Commerce platform during the thirteen and thirty-nine weeks ended November 4, 2018, respectively. Transition plan fees of $0 and $82,500 were incurred with Blueport during the thirteen and thirty-nine weeks ended October 29, 2017. Amounts payable to Blueport as of November 4, 2018 and February 4, 2018 were $84,407 and $15,235, respectively, and are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

Satori Capital, LLC (“Satori”), a stockholder of the Company since April 2017, performs management services for the Company under a contractual agreement. Management fees totaled approximately $25,000 and $75,000 for the thirteen and thirty-nine weeks, respectively, for the period ended November 4, 2018, and $25,000 and $59,000 for the thirteen and thirty-nine weeks ended October 29, 2017, respectively. Transaction fees related to the IPO were $0 and $125,000 for the thirteen and thirty-nine weeks ended November 4, 2018, respectively and there were no structuring fees in the prior year’s periods. A one-time stock bonus of 50,000 shares of common stock at $14.83, or $741,500, is included in equity-based compensation on the accompanying condensed consolidated statement of cashflows and issued on June 22, 2018. The bonus was issued to Satori in three installments; two equal installments of 5,000 shares of common stock in August 2018 and September 2018 and the remainder of the shares were issued in October 2018. All fees and the stock bonus are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. There were no amounts payable to Satori as of November 4, 2018 and February 4, 2018, respectively.