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Line of Credit and Borrowing Agreement

12 Months Ended

Oct. 30, 2020

Line Of Credit And Borrowing Agreement

NOTE 5 - Line of Credit and Borrowing Agreement:

The Company maintains a line of credit with Wells Fargo Bank, N.A. that extends through March 1, 2022. 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%. We borrowed $2,000 under this line of credit on November 24, 2019 and $2,500 on January 24, 2020 for a combined total of $4,500. We repaid the balance on this line of credit with Wells Fargo Bank, N.A. on May 13, 2020 of $4,500 with the proceeds from the fifth borrowing of $7,200 under the master collateral loan and security agreement with Wells Fargo Bank, N.A. described below. The line of credit 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 compliance with all covenants as of October 30, 2020. Subsequent to October 30, 2020, we borrowed $2,000 under the line of credit on December 2, 2020.

On December 26, 2018, we entered into a master collateral loan and security agreement with Wells Fargo Bank, N.A. (the “Original Wells Fargo Loan Agreement”) for up to $15,000 in equipment financing. Pursuant to the Wells Fargo Loan Agreement, we borrowed the following amounts.

Type and Number (1)	Date Funds Received		Rate			Amount		Payment Amount and Date
Equipment Loan No. 01		12/26/18		4.13	%	$	7,500	$	103	01/31/19
Equipment Loan No. 02		04/23/19		3.98	%		7,500		102	05/31/19
Equipment Loan No. 03		12/23/19		3.70	%		3,750		54	02/03/20
Equipment Loan No. 04		03/06/20		3.29	%		7,500		100	03/13/20
Equipment Loan No. 05		04/17/20		3.68	%		7,200		97	05/15/20
Total						$	33,450	$	456

(1)

Term: 7 years for 84 installment payments.

	October 30, 2020			November 1, 2019
Secured equipment notes payable to Wells Fargo Bank, N.A. collateralized by equipment for the new Chicago processing facility.	$	29,122		$	13,747
Less current portion of notes payable		(4,430	)		(1,943	)
Total long-term notes payable	$	24,692		$	11,804

The Wells Fargo Loan Agreement as amended, 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 Worth 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, and
	●	Fixed Charge Coverage Ratio not less than 1.25 to 1.0 as of each fiscal quarter end, determined on a trailing 4-quarter basis.

Aggregate contractual maturities of debt in future fiscal years are as follows:

Fiscal Years	Debt Payable
2021	$	4,429
2022	$	4,599
2023	$	4,775
2024	$	4,958
2025	$	5,148
2026-2027	$	5,213

The Company was in compliance with all covenants under the Wells Fargo Loan Agreement as of October 30, 2020.