| COMMITMENTS AND CONTINGENCIES | (7) COMMITMENTS AND CONTINGENCIES: Construction Contracts a. 2505 N. University Drive, Hollywood,
Florida (Store #19) 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. During our fiscal year 2020 and the
first quarter of our fiscal year 2021, we agreed to change orders to the agreement for additional construction services increasing
the total contract price by $140,000 to $1,757,000, of which $64,000 of the total amount obligated has been paid through January
2, 2021. 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 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 $106,000 has been paid through January 2, 2021.
Additionally, during the fourth quarter of our fiscal year 2020, we entered into an agreement with a third party unaffiliated general
contractor for interior renovations at this location totaling $1,236,000, of which $111,000 has been paid through January 2, 2021. 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, 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 13 Weeks
Ended January 2, 2021 Ended December 28, 2019
Finance Lease Amortization $ 119,000 $ —
Finance Lease Expense, which is included in interest expense 66,000 —
Operating Lease Expense, which is included in occupancy costs 1,049,000 1,130,000
$ 1,234,000 $ 1,130,000 Supplemental balance sheet information related to leases as follows:
Classification on the Condensed Consolidated Balance Sheet January 2, 2021 December 28, 2019
Assets
Finance lease assets $ 4,630,000 $ —
Operating lease assets 21,406,000 27,068,000
$ 26,036,000 $ 27,068,000
Liabilities
Finance current liabilities $ 4,778,000 $ —
Operating current liabilities 1,936,000 1,810,000
Operating lease non-current liabilities $ 19,870,000 $ 25,585,000
Weighted Average Remaining Lease Term:
Finance leases 0.17 Years —
Operating leases 7.46 Years 9.08 Years
Weighted Average Discount:
Finance leases 5.5% —
Operating leases 5.5% 5.5% The following table outlines the minimum future lease payments for
the next five years and thereafter:
For fiscal year 2021 Operating Finance For fiscal year 2020 Operating Finance
2021 (nine (9) months) $ 2,329,000 $ 4,821,000 2020 (nine (9) months) $ 2,437,000 $ —
2022 2,928,000 — 2021 4,466,000 —
2023 2,942,000 — 2022 3,172,000 —
2024 2,975,000 — 2023 3,193,000 —
2025 2,957,000 — 2024 3,234,000 —
Thereafter 14,131,000 — Thereafter 19.942,000 —
Total lease payments Total lease payments
(Undiscounted cash flows) 28,262,000 4,821,000 (Undiscounted cash flows) 36,444,000 —
Less imputed interest (6,456,000 ) (43,000 ) Less imputed interest (9,049,000 ) —
Total $ 21,806,000 $ 4,778,000 Total $ 27,395,000 $ — 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. |
