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Line of Credit and Borrowing Agreement
 12 Months Ended
Nov. 02, 2018
Debt Disclosure [Abstract]  
Line of Credit and Borrowing Agreement

NOTE 5 - Line of Credit and Borrowing Agreement:

 

We maintain a line of credit with Wells Fargo Bank, N.A. that expires on March 1, 2020. The line of credit was expanded from $5,000 to $7,500 during the first quarter of fiscal 2017. Under the terms of this line of credit, we may borrow up to $7,500 at an interest rate equal to the bank’s prime rate or Libor plus 1.5%. The borrowing agreement contains various covenants, the more significant of which require us to maintain a minimum tangible net worth, a minimum quick ratio, a minimum net income after tax and total capital expenditures less than $7,500. The Company was in violation of the capital expenditure covenant which was subsequently waived by letter dated January 3, 2019. The Company was in compliance with all other covenants as of November 2, 2018. There have been no borrowings under this line of credit during fiscal year 2018.

 

On December 26, 2018, we entered into a master collateral loan and security agreement with Wells Fargo Bank, N.A for up to $15,000 in equipment financing. Pursuant to the loan agreement, we borrowed $7,500 to purchase specific equipment for our new Chicago processing facility at a fixed rate of 4.13% per annum. The loan term is seven years and is secured by the equipment purchased. The funds were received on December 28, 2018. Our agreement with Wells Fargo Bank, N.A. contains various affirmative and negative covenants that limit the use of funds and define other provisions of the loan. The main financial covenants are listed below:

 

  ● Total Liabilities divided by Tangible Net Work not greater than 2.5 to 1.0 at each fiscal quarter,
  ● Quick Ratio not less than 1.0 to 1.0 at each fiscal quarter end,
  ● Net income after taxes not less than one dollar on a quarterly basis, determined as of each fiscal quarter end.