Company: BRID
Filing Date: 2025-06-02
Form Type: 10-Q
Source: 0001641172-25-013252
Chunk: 111

Company: BRIDGFORD FOODS CORP
Filing Date: 2025-06-02
Form: 10-Q
Item: Part I, Item 2
Chunk 111
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. Market data indicates that due
to higher inflation and rising costs for basic needs, consumers are increasingly turning to private-label products to reduce their expenses.
The Company is also seeking bids on its production materials to drive increased competition among its vendors while maintaining quality
inputs at the best possible price. Additionally, we have maintained a revolving line of credit with Wells Fargo Bank, N.A. which has
a borrowing capacity of up to $7,500 through November 30, 2025. 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.
Refer to Note 6 – Equipment Notes Payable and Financial Arrangements to the Condensed Consolidated Financial Statements included
within this Report for further information. As of April 18, 2025, we had $2,340 of current debt on equipment loans, $56,123 of net working
capital and $7,500 available under our revolving line of credit with Wells Fargo Bank, N.A. Additionally as of April 18, 2025, the Company
was in violation of the Fixed Charge Coverage Ratio covenant of the Credit Agreement, which was waived for the fiscal quarter ended April
18, 2025 (per letter dated June 2, 2025).

All
of our operating segments have been impacted by inflation, including higher costs for labor, freight and specific materials related to
product manufacturing and delivery. We expect this trend to continue through the remainder of fiscal year 2025. Additionally, commodity
costs, including meat and flour costs, have and may continue to fluctuate due to both political and economic conditions, including the
ongoing conflicts between Ukraine and Russia and