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Contingencies and Commitments
 12 Months Ended
Oct. 28, 2022
Commitments and Contingencies Disclosure [Abstract]  
Contingencies and Commitments

NOTE 6- Contingencies and Commitments:

 

The Company leases warehouse and/or office facilities throughout the United States through month-to-month rental agreements. In the case of month-to-month lease or rental agreements with terms of 12 months or less, the Company made an accounting policy election to not recognize lease assets and liabilities and record them on a straight-line basis over the lease term. For further information regarding our lease accounting policy, please refer to Note 1 – Leases.

 

The Company leases three long-haul trucks received during fiscal year 2019. The six-year leases for these trucks expire in 2025. Amortization of equipment under capital lease was $75 in 2022. The Company leased one long-haul truck for $40 received during fiscal year 2022, and that lease term is two years.

 

The Company’s lease with Racine Partners 4333 LLC, was effective June 1, 2022 and was not reflected in the Company’s July 8, 2022 interim financial statements, but was recorded during the fourth quarter ended October 28, 2022. Had it been properly recorded during the quarter ended July 8, 2022, the effect on the Company’s financial statements would have included an additional $4,418 in right-of-use assets and $4,426 in lease liabilities. The Company performed a thorough assessment to determine the significance of the prior period error and concluded that it was neither quantitatively or qualitatively material to the Company’s financial position, results of operations or cash flows for the quarter ended July 8, 2022.

 

The Company performed a detailed analysis and determined that the only indication of a long-term lease in addition to transportation lease for long-haul trucks was Hogshed Ventures, LLC and Racine Partners 4333 LLC. A right-of-use asset and corresponding liability for warehouse storage space was recorded for $248 for Hogshed Ventures, LLC for 40th Street in Chicago, Illinois, and $4,226 for Racine Partners 4333 LLC as of October 28, 2022. We lease this space under a non-cancelable operating lease. This lease does not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses. Further this lease does not contain contingent rent provisions. The lease with Hogshed Ventures LLC terminates on June 30, 2023. The lease with Racine Partners 4333 LLC terminates on May 31, 2027. These leases includes both lease (e.g., fixed rent) and non-lease components (e.g., real estate taxes, insurance, common-area, and other maintenance costs). The non-lease components are deemed to be executory costs and are included in the minimum lease payments used to determine the present value of the operating lease obligation and related right-of-use asset.

 

This Hogshed Ventures LLC lease does not provide an implicit rate and we estimated our incremental interest rate to be approximately 1.6%. We used our estimated incremental borrowing rate and other information available at the lease commencement date in determining the present value of the lease payments.

 

The following is a schedule by years of future minimum lease payments for transportation leases and right-of-use assets:

 

     
Fiscal Year  Financing
Obligations		 
2023  $1,054 
2024   1,101 
2025   1,034 
2026   1,060 
2027   602 
Later Years   - 
Total minimum lease payments(a) $4,851 
Less: Amount representing executory costs   (36)
Less: Amount representing interest(b)  (4)
Present value of future minimum lease payments(c) $4,811 

 

(a) Minimum payments exclude contingent rentals based on actual mileage and adjustments of rental payments based on the Consumer Price Index.
(b) Amount necessary to reduce net minimum lease payments to present value calculated at the Company’s incremental borrowing rate at the inception of the leases.
(c) Reflected in Note 2, as current and noncurrent obligations under capital leases of $202 and $135, respectively, and right-of-use assets of $1,054 and $3,420, respectively.