v3.25.4
Equipment Notes Payable and Financial Arrangements
 3 Months Ended
Jan. 23, 2026
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 credit facility 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 credit 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 credit facility 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 January 23, 2026. 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.

 

On January 27, 2026, $1,000 cash from operations was used to pay down the outstanding balance on the revolving credit facility with Wells Fargo Bank leaving a remaining balance of $1,000. As of March 6, 2026, we have $6,500 available under our revolving credit facility with Wells Fargo Bank. If we are unable to increase liquidity through additional borrowing or mortgaging real estate, or generate positive cash flow necessary to fund operations, we may need to access the line of credit in the future.

 

Equipment Note Payable

 

On December 26, 2018, we entered into a master collateral loan and security agreement with Wells Fargo Bank (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 January 23, 2026, and October 31, 2025, respectively.

 

   January 23, 2026   October 31, 2025 
         
Revolving credit facility  $2,000   $2,000 
Equipment note payable:          
3.68% note due 04/16/27   1,482    1,794 
Total debt   3,482    3,794 
Less current debt   (3,131)   (3,121)
Total long-term debt  $351   $673 

 

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.

 

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 January 23, 2026, the Company was in violation of the net income covenant which was waived by Wells Fargo (per letter dated March 2, 2026). As of January 23, 2026, the Company was in compliance with all other covenants under the Wells Fargo Loan Agreements and the amended and restated credit agreement. As of October 31, 2025, the Company was in violation of the quick ratio covenant which was waived by Wells Fago (per letter dated December 12, 2025). As of October 31, 2025, the Company was in compliance with all other covenants under the Wells Fargo Loan Agreements and the amended and restated credit agreement.

 

Our inability to meet financial covenant requirements in future quarters while subject to the Wells Fargo Loan Agreements and the amended and restated credit agreement may impact our liquidity. We have implemented price increases on our products to help offset some of the higher costs for meat commodities and other expenses, and we 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.