v3.26.1
Commitments and Contingencies
12 Months Ended
Jan. 31, 2026
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Commitments and Contingencies
Litigation, Claims and Assessments
From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm its business. The Company is currently not aware of any such legal proceedings or claims that they believe will have, individually or in the aggregate, a material adverse effect on its business, financial condition or operating results.
Licensing and Royalty Agreements
The Company has been party to a 50-year Development and License Agreement since 2010. Pursuant to the agreement, we have exclusively licensed certain trade secret recipes, formulas, methods, and ingredients for sauces combined with meatballs and meats in exchange for royalty payments calculated and paid annually based on: 6% of net sales up to $500 thousand; 4% of net sales between $500 thousand and $2.5 million; 2% of net sales between $2.5 million and $20 million; and 1% of net sales in excess of $20 million. The Company must pay a minimum royalty of $125 thousand each year to avoid expiration of its rights under the agreement.
The Company incurred approximately $961 thousand, $679 thousand, and $637 thousand of royalty expenses under the Development and License Agreement for the fiscal years ended January 31, 2026, 2025, and 2024, respectively. Royalty expenses are included in selling, general and administrative expenses on the Consolidated Statements of Operations.
Purchase Commitments
In January 2026 the Company entered into one-year purchase commitments to buy between approximately 14.5 million and approximately 16.6 million pounds of chicken, to be delivered in equal weekly installments at agreed-upon pricing formulas. We recognize liabilities for contingencies and commitments when a loss is probable and estimable.