XML 24 R12.htm IDEA: XBRL DOCUMENT v3.25.1
Equipment Notes Payable and Financial Arrangements
 6 Months Ended
Apr. 18, 2025
Debt Disclosure [Abstract]  
Equipment Notes Payable and Financial Arrangements

Note 6 – Equipment Notes Payable and Financial Arrangements:

 

Revolving Credit Facility

 

On November 30, 2024, we entered into a sixth amendment to the credit agreement with Wells Fargo Bank, N.A. dated March 1, 2018, as amended, and also executed a revolving line of credit note pursuant to the amendment. The revolving line of credit note replaced the then-existing note that expired by its terms on November 30, 2024. Under the terms of this amendment and the revolving line of credit note, we may borrow up to $7,500 from time to time up to November 30, 2025, at an interest rate equal to (a) the daily simple secured overnight financing rate plus 2.0%, or if unavailable, (b) the prime rate, in each case as determined by the bank. The line of credit has an unused commitment fee of 0.35% of the available loan amount, payable on a quarterly basis. Amounts may be repaid and reborrowed during the term of the note. Accrued interest is payable on the first day of each month and the outstanding principal balance and remaining interest are due and payable on November 30, 2025. See Note 1 - Summary of Significant Accounting Policies - Subsequent Events for further details.

 

Equipment Note Payable

 

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 which was amended and expanded as detailed below. We subsequently entered into additional master collateral loan and security agreements with Wells Fargo Bank, N.A. on each of April 18, 2019, December 19, 2019, March 5, 2020, and April 17, 2020 (the Original Wells Fargo Loan Agreement and the subsequent agreements collectively referred to as the “Wells Fargo Loan Agreements”).

 

The following table reflects major components of our revolving credit facility and equipment note payable as of April 18, 2025, and November 1, 2024, respectively.

  

   April 18, 2025   November 1, 2024 
         
Revolving credit facility  $-   $- 
Equipment note payable:          
3.68% note due 04/16/27    2,340    2,786 
Total debt   2,340    2,786 
Less current debt   (2,340)   (1,084)
Total long-term debt  $

-

   $1,702 

 

Loan Covenants

 

The Wells Fargo Loan Agreements and the credit agreement contain various affirmative and negative covenants that limit the use of funds and define other provisions of the loans. Material financial covenants are listed below, and the capitalized terms are defined in the applicable agreements:

 

  ● Total Liabilities divided by Tangible Net Worth not greater than 2.0 to 1.0 at each fiscal quarter end,
     
  ● Quick Ratio not less than 1.25 to 1.0 at each fiscal quarter end, and
     
  ● Fixed Charge Coverage Ratio not less than 1.25 to 1.0 at each fiscal quarter end.

 

As of April 18, 2025, the Company was in violation of the Fixed Charge Coverage Ratio covenant which was waived for the fiscal quarter ended April 18, 2025 (per letter dated June 2, 2025). The Company was in compliance with all loan covenants as of November 1, 2024.

 

We do not anticipate being in compliance with the Fixed Charge Coverage Ratio covenant of the Credit Agreement during the third and fourth fiscal quarters of 2025. Our inability to meet financial covenant requirements of the Credit Agreement may impact our liquidity. We are discussing potential solutions with Wells Fargo Bank, N.A., regarding amendment or renewal of the revolving line of credit. We have reclassified $1,239 of equipment note payable from a long-term notes payable - equipment to a current notes payable – equipment in compliance with ASC 470 Debt. We plan to implement a price increase on our products to help offset some of the higher costs for meat commodities and are focused on reducing selling, general and administrative expenses. Certain factors such as increased commodity costs, tariffs, willingness of customers to accept price increases and inflation of input costs, to name a few, may cause future outcomes to differ materially from those foreseen in forward-looking statements.