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Equipment Notes Payable and Financial Arrangements
 8 Months Ended
Jul. 11, 2025
Debt Disclosure [Abstract]  
Equipment Notes Payable and Financial Arrangements

Note 6 – Equipment Notes Payable and Financial Arrangements:

 

Revolving Credit Facility

 

The Company maintains a revolving line of credit with Wells Fargo pursuant to a credit agreement dated November 30, 2024, as amended and restated on July 23, 2025. Pursuant to the amended and restated agreement and the revolving line of credit note, we may borrow up to $7,500 from time to time up until July 31, 2026, at an interest rate equal to (a) the daily simple secured overnight financing rate plus 2.5% (increased from 2.0% in the July 2025 amended and restatement), or if unavailable, (b) the prime rate, in each case as determined by the bank. The revolving line of credit has an unused commitment fee of 0.35% of the available loan amount, payable on a quarterly basis. We borrowed $2,000 under this line of credit on May 20, 2025, which remained unpaid as of July 11, 2025. 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 July 31, 2026.

 

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, 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 July 11, 2025, and November 1, 2024, respectively.

   

   July 11, 2025   November 1, 2024 
         
Revolving credit facility  $2,000   $- 
Equipment note payable:          
3.68% note due 04/16/27   2,068    2,786 
Total debt   4,068    2,786 
Less current debt   (3,111)   (1,084)
Total long-term debt  $957   $1,702 

 

Loan Covenants

 

The Wells Fargo Loan Agreements and the amended and restated credit agreement contain various 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 of not less than 1.25 to 1.0 at each fiscal quarter end, and
  ● Net income after taxes of not less than $1.00 on a quarterly basis, determined as of each fiscal quarter end, commencing on January 30, 2026.

 

The amended and restated credit agreement eliminated the fixed charge coverage ratio covenant contained in the original credit agreement. Since the amended and restated agreement superseded and replaced the prior agreement, covenant reporting under the original credit agreement was no longer required and all covenant reporting will be pursuant to the amended and restated credit agreement. As of the date of filing, the Company is in compliance with all loan covenants and was in compliance with all loan covenants as of November 1, 2024.

 

We anticipate being in compliance with the covenants of the Credit Agreement during the fourth fiscal quarter of 2025 and fiscal year 2026. Our inability to meet financial covenant requirements in future quarters of the Credit Agreement may impact our liquidity. We have already begun implementing 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.