Note 5 - Commitments and Contingencies

12 Months Ended

Feb. 29, 2012

Commitments and Contingencies Disclosure [Text Block]

NOTE 5 – COMMITMENTS AND CONTINGENCIES

Operating leases

The Company conducts its retail operations in facilities leased under five to ten-year non-cancelable operating leases. Certain leases contain renewal options for between five and ten additional years at increased monthly rentals. The majority of the leases provide for contingent rentals based on sales in excess of predetermined base levels.

The following is a schedule by year of future minimum rental payments required under such leases for the years ending February 28 or 29:

2013	$	822,000
2014		792,000
2015		710,000
2016		534,000
2017		246,000
Thereafter		385,000
Total	$	3,489,000

In some instances, in order to retain the right to site selection or because of requirements imposed by the lessor, the Company has leased space for its proposed franchise outlets. When a franchise was sold, the store was subleased to the franchisee who is responsible for the monthly rent and other obligations under the lease. The Company's liability as primary lessee on sublet franchise outlets, all of which is offset by sublease rentals, is as follows for the years ending February 28 or 29:

2013	$	157,000
2014		162,000
2015		128,000
2016		83,000
2017		86,000
Thereafter		59,000
Total	$	675,000

The following is a schedule of lease expense for all retail operating leases for the three years ended February 28 or 29:

	2012			2011			2010
Minimum rentals	$	834,087		$	590,962		$	404,191
Less sublease rentals		(125,300	)		(121,600	)		(69,700	)
Contingent rentals		17,692			14,377			18,300
	$	726,479		$	483,739		$	352,791

In FY 2008 the Company entered into an operating lease for warehouse space in the immediate vicinity of its manufacturing operation.  The following is a schedule, by year, of future minimum rental payments required under such lease for the years ending February 28 or 29:

2013	$	112,000
2014		29,000
Total	$	141,000

The Company also leases trucking equipment under operating leases. The following is a schedule by year of future minimum rental payments required under such leases for the years ending February 28 or 29:

2013	$	191,000
2014		133,000
2015		38,000
Total	$	362,000

The following is a schedule of lease expense for trucking equipment operating leases for the three years ended February 28 or 29:

2012		2011		2010
	200,826		206,844		209,094

Purchase contracts

The Company frequently enters into purchase contracts of between six to eighteen months for chocolate and certain nuts.  These contracts permit the Company to purchase the specified commodity at a fixed price on an as-needed basis during the term of the contract.  Because prices for these products may fluctuate, the Company may benefit if prices rise during the terms of these contracts, but it may be required to pay above-market prices if prices fall and it is unable to renegotiate the terms of the contract.  Currently the Company has contracted for approximately $2.3 million of raw materials under such agreements.

Contingencies

The Company is party to various legal proceedings arising in the ordinary course of business. Management believes that the resolution of these matters will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows.