Note 6 – Contingency and Related Parties

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 SAC Holdings, LLC (“Mistral”), an owner of the Company, performs management services for the Company under a contractual agreement. Management fees and expenses totaled approximately $100,000 and $200,000 for the thirteen and twenty-six weeks ended August 5, 2018 and $100,000 and $332,000 for the thirteen and twenty-six weeks ended July 30, 2017 respectively, and are included in selling, general and administrative expenses. Monitoring fees related to the IPO were $500,000 for the thirteen and twenty-six weeks ended August 5, 2018 and are included in selling, general and administrative expenses. No monitoring fees were incurred during the thirteen and twenty-six weeks ended July 30, 2017. Amounts payable to Mistral as of August 5, 2018 and February 4, 2018 were $0 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 Commerce Platform in February 2018. There were $218,270 and $551,543 of fees incurred with Blueport on the conversion of and sales transacted through the Commerce platform during the thirteen and twenty-six weeks ended August 5, 2018, respectively. Transition plan fees of $0 and $82,250 were incurred with Blueport during the thirteen and twenty-six weeks ended July 30, 2017. Amounts payable to Blueport as of August 5, 2018 and February 4, 2018 were $110,502 and $15,235, respectively, and are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets.

Satori Capital, LLC (“Satori”), an owner of the Company since April 2017, performs management services for the Company under a contractual agreement. Management fees totaled approximately $25,000 and $50,000 for the thirteen and twenty-six weeks, respectively, for the period ended August 5, 2018, and $43,000 and $51,000 for the thirteen and twenty-six weeks ended July 30, 2017, respectively. Monitoring fees related to the IPO were $125,000 for the thirteen and twenty-six weeks ended August 5, 2018 and there were no monitoring 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, included in equity-based compensation on the accompanying consolidated statement of cashflows, and issued on June 22, 2018, shall be paid to Satori in ten equal installments of 5,000 shares of common stock, with the first installment due on August 31, 2018 and the remainder of the installments due on the last trading day of the month for the next nine months thereafter. 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 August 5, 2018 and February 4, 2018, respectively.