| COMMITMENTS AND CONTINGENCIES | (6) COMMITMENTS AND CONTINGENCIES: Construction Contracts a. 2505 N. University Drive, Hollywood,
Florida (Store #19) During our fiscal year 2018 and prior to it
being closed in the first quarter of our fiscal year 2019 due to damages caused by a fire, we entered into an agreement with a
third party unaffiliated general contractor for design and development services for the construction of a new building (the “New
Building”) on a parcel of real property which we own and which is adjacent to the real property where our combination package
liquor store and restaurant located at 2505 N. University Drive, Hollywood, Florida, (Store #19) operated until it was closed in
October, 2018 due to damages caused by a fire for a total contract price of $127,000 (the “$127,000
Contract”). We plan to re-locate our package liquor store at the property to the New Building. During the term of the $127,000
Contract, we agreed to change orders which had the effect of increasing the total contract price of the same to $138,000, and during
the second quarter of our fiscal year 2019, we paid the balance of the total contract price of the $127,000 Contract, in the amount
of $25,000. During the first quarter of our fiscal year 2020, we agreed upon changes to the $127,000 Contract for additional design
and development services for the construction of the New Building which had the effect of increasing the total contract price of
the same by $10,000 to $148,000, of which $6,000 has been paid through March 28, 2020. During the third quarter of our fiscal year
2019, we entered into an agreement with a third party unaffiliated architect for design and development services totaling $77,000
for the re-build of our restaurant located at 2505 N. University Drive, Hollywood, Florida (Store #19) which has been closed since
October 2018 due to damages caused by a fire, of which $62,000 has been paid. Additionally, during the third quarter of our fiscal
year 2019, we entered into an agreement with a third party unaffiliated general contractor for site work at this location totaling
$1,618,000, (i) to connect the real property where this restaurant operated (Store #19) to city sewer and (ii) to construct a new
building on the adjacent parcel of real property for the operation of a package liquor store, of which $-0- has been paid through
March 28, 2020. b. 14301 W. Sunrise Boulevard, Sunrise,
Florida (Store #85) During the third quarter of our fiscal year
2019, we also entered into an agreement with a third party unaffiliated design group for design and development services of our
new location at 14301 W. Sunrise Boulevard, Sunrise, Florida 33323 (Store #85) for a total contract price of $122,000. During the
first quarter of our fiscal year 2020, we agreed upon amendments to the $122,000 Contract for additional design and development
services which had the effect of increasing the total contract price by $18,000 to $140,000, of which $97,000 has been paid through
March 28, 2020. Leases To conduct certain of our operations, we lease
restaurant and package liquor store space in South Florida from unrelated third parties. Our leases have remaining lease terms
of up to 10 years and, some of which include options to renew and extend the lease terms for up to an additional 30 years. We presently
intend to renew some of the extension options available to us and for purposes of computing the right-of-use assets and lease liabilities
required by ASC 842, we have incorporated into all lease terms which may be extended, an additional term of the lesser of (i) the
amount of years the lease may be extended; or (ii) 15 years. Following adoption of ASC 842, common area
maintenance and property taxes are not considered to be lease components. The components of lease expense are as follows:
13 Weeks 26 Weeks
Ended Mar. 28, 2020 Ended Mar. 28, 2020
Operating Lease Expense, which is included in occupancy costs $ 1,131,000 $ 2,261,000 Supplemental balance sheet information related to leases as follows:
Classification on the Mar.
28, 2020
Assets
Operating lease assets Other non-current assets $ 26,309,000
Liabilities
Other current liabilities Current liabilities $ 3,109,000
Operating lease liabilities Other non-current liabilities $ 23,902,000
Weighted Average Remaining Lease Term:
Operating leases 8.84 Years
Weighted Average Discount:
Operating leases 5.5 % The following table outlines the minimum future lease payments for
the next five years and thereafter:
For fiscal year
2020 (Six months) $ 1,642,000
2021 4,506,000
2022 3,172,000
2023 3,193,000
2024 3,234,000
Thereafter 19,942,000
Total lease payments (Undiscounted cash flows) 35,689,000
Less imputed interest (8,678,000 )
Total $ 27,011,000 Litigation Our sale of alcoholic beverages subjects
us to “dram shop” statutes, which allow an injured person to recover damages from an establishment that served alcoholic
beverages to an intoxicated person. If we receive a judgment substantially in excess of our insurance coverage or if we fail to
maintain our insurance coverage, our business, financial condition, operating results or cash flows could be materially and adversely
affected. We currently have no “dram shop” claims. We are a party to various other claims,
legal actions and complaints arising in the ordinary course of our business. It is our opinion, after consulting with legal counsel,
that all such matters are without merit or involve such amounts that an unfavorable disposition would not have a material adverse
effect on our financial position or results of operations. |
