Company: BRID
Filing Date: 2025-06-02
Form Type: 10-Q
Source: 0001641172-25-013252
Chunk: 37

Company: BRIDGFORD FOODS CORP
Filing Date: 2025-06-02
Form: 10-Q
Item: Part I, Item 1
Chunk 37
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 rate of approximately 26.4%
due to non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies and state income
taxes.

Liquidity
and Capital Resources

The
principal source of operating cash flows is cash receipts from the sale of our products, net of costs to manufacture, store, market and
deliver such products. We evaluate cash and cash equivalents related to borrowing capacity and short-term and long-term investments.
We normally fund our operations from cash balances and cash flow generated from operations. Recent losses may necessitate short-term
or long-term borrowing to fund inventory purchases to meet customer orders. We are most focused on restoring profitability to the Company
by driving top-line revenue growth and reducing costs. In line with this focus, the Company is in discussions with and has begun production
of customer products under private-label arrangements with the goal of increasing product sales volume. 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,