What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-01-26 compared with 2022-01-27 · 188 added, 199 removed, 155 unchanged (71% of the section changed)

19 unchanged sentences

sales in the Frozen Food Products segment in fiscal year 2022 increased $14,744 (35.5%) compared to the prior fiscal year.

The changes in

net sales were comprised as follows:

in net sales were comprised as follows:

Impact on Net Sales-Frozen Food Products

4 unchanged sentences

Increase in net sales

slight increase in net sales for fiscal year 2021 primarily relates to higher selling prices per pound partially offset by lower unit

sales volume.

The increase in net sales was primarily driven by an increase in selling prices due to changes in product mix amid a decrease

in sales volume to retail customers.

Other institutional Frozen Food Products sales, including sheet dough and rolls, increased 16% by

volume while retail sales volume decreased by 7%.

Demand shifted from retail sales to foodservice sales channels as schools and in-dining

restaurants began to slowly reopen across the United States following earlier shutdowns in response to the COVID-19 pandemic.

activity decreased compared to the 2020 fiscal year.

Promotional activity was higher as a percentage of sales during the 2021 fiscal

increase in net sales for fiscal year 2022 primarily relates to higher unit sales volume in pounds coupled with a higher selling price

The increase in net sales was primarily driven by a significant increase in volume to institutional customers and an increase

in selling prices due to price increases implemented during the fourth quarter of fiscal year 2021 and second quarter of fiscal year

Other institutional Frozen Food Products sales, including sheet dough and rolls, increased 44% by volume and retail sales volume

decreased 6%.

Demand has shifted from retail to foodservice sales channels as schools and in-dining restaurants have reopened in response

to the lifting of restrictions caused by the COVID-19 pandemic.

Returns activity decreased compared to the 2021 fiscal year.

activity was higher in fiscal year 2022 as a percentage of sales due to increased sales to high promotion customers.

Sales-Snack Food Products Segment

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Increase in net sales

sales of Snack Food Products increased due to higher sales through our direct store delivery distribution channel during fiscal year

The weighted average selling price per pound increased due to selling price increases and reductions in packaging size.

activity was lower compared to the 2020 fiscal year.

Promotional offers decreased as a percentage of sales due to higher sales to high-volume,

high-promotion customers.

sales of Snack Food Products increased due to higher average selling prices per pound compared to fiscal year 2021.

Price increases were

implemented in the second quarter of fiscal year 2022 in response to record high meat commodity input costs.

Unit sales volume in pounds

through our direct store delivery distribution channel decreased due to lower demand caused by inflationary pressures on consumer spending

Returns activity was higher compared to the 2021 fiscal year.

Promotional offers increased slightly compared to fiscal year 2021.

of Products Sold and Gross Margin-Consolidated

of products sold from continuing operations increased by $4,791 (2.5%) compared to the prior fiscal year.

The gross margin decreased

The gross margin increased

from 21.4% to 27.1% during fiscal year 2022 compared to the prior fiscal year.

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of products sold in the Frozen Food Products segment increased by $11,553 (39.1%) in fiscal year 2022 compared to the prior fiscal year.

Higher direct distribution and production materials were the primary contributing factors to the increase.

Higher flour commodity costs

of approximately $445 contributed to the increase in costs of goods sold.

The gross margin percentage decreased from 32.9% to 28.8% during

fiscal year 2021 compared to the prior fiscal year.

Higher commodity costs, increased volume and changes in product mix were the primary contributing factors to this increase.

of purchased flour increased approximately $1,844, which contributed to the increase in costs of goods sold.

The gross margin percentage

decreased from 28.8% to 26.9% during fiscal year 2022 compared to the prior fiscal year.

of Products Sold and Gross Margin–Snack Food Products Segment

of products sold in the Snack Food Products segment increased by $48,734 (44.0%) compared to the prior fiscal year due primarily to a

substantial increase in sales volume.

Meat commodity costs increased during fiscal year 2021 adding to the increase in cost of products

of products sold in the Snack Food Products segment decreased by $6,762 (4.2%) compared to the prior fiscal year due primarily to lower

unit sales volume.

Meat commodity costs increased during fiscal year 2022 partially offsetting the decrease in cost of products sold.

The cost of meat commodities increased approximately $7,949 during fiscal year 2022 compared to the prior fiscal year.

a net realizable value reserve of $2,353 was recorded during the fiscal year after determining that the market value on some meat products

was less than the costs associated with completion and sale of the product.

As a result, a

net realizable value reserve of $131 was recorded during the fiscal year after determining that the market value on some meat products

was less than the costs associated with production and sale of the product.

Higher depreciation on processing equipment impacted the

cost of products sold.

The gross margin earned in this segment decreased from 29.3% to 19.8% during fiscal year 2021 primarily as a result

of higher commodity costs.

The gross margin earned in this segment increased from 19.8% to 27.1% during fiscal year 2022.

General and Administrative Expenses-Consolidated

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Expense Increase

Product advertising

Wages and bonus

Healthcare costs

Other (income) expense

Pension expense

Postage expense

Outside storage

Pension (income) expense

Product advertising

Healthcare cost

Vehicle repairs and maintenance

Storage unit rent

Travel expense

Insurance expense

for product advertising increased mainly as a result of higher payments under brand licensing agreements in the Snack Food Products segment

during fiscal year 2021.

Higher sales commissions resulted in higher wages and bonus expenses in the 2021 fiscal year compared to the

2020 fiscal year.

Healthcare costs have increased due to claim activity increasing as pandemic restrictions are lifted.

increased due to an estimated gain on life insurance proceeds caused by the passing of a former executive employee during the fourth

quarter of fiscal year 2021.

The decrease in pension expense was due to higher pension discount rates being used to compute the future

liability estimate.

The increase in fuel expense was driven by per gallon fuel price increases compared to the prior year as a result

of higher cost trends in petroleum markets.

Postage expense increased due to higher product shipments to customers.

Outside storage costs

to warehouse products prior to shipment increased due to reaching storage capacity at our new facility as a result of higher sales volume.

Travel expenses increased due to the gradual lifting of travel restrictions and stay-at-home orders which had been imposed in response

to the COVID-19 pandemic.

Insurance expense increased due to unfavorable market conditions, a change in coverage levels and unfavorable

claims experience.

None of the changes individually or as a group of expenses in “Other SG&A” were significant enough

to merit separate disclosure.

The major components comprising the increase of “Other SG&A” expenses were higher customer

fines, equipment rental, sales taxes and employee training expenses.

Outside storage

sales commissions resulted in higher wages and bonus expenses in the 2022 fiscal year compared to the 2021 fiscal year.

in pension expense was a result of an increase in pension plan assets caused by the performance of the underlying markets that support

them as well as higher pension discount rates resulting in lower liability.

The increase in fuel expense was driven by per gallon fuel

price increases compared to the prior year as a result of higher cost trends in petroleum markets.

Costs for product advertising increased

mainly as a result of higher payments under brand licensing agreements in the Snack Food Products segment during fiscal year 2022.

costs have increased due to unfavorable claim trends.

Other income decreased due to a gain on life insurance proceeds caused by the passing

of a former executive employee during the fourth quarter of fiscal year 2021.

Vehicle repairs and maintenance on vehicles have increased

compared to the prior year period mainly due to an aging fleet.

Rent for storage units that house inventory increased due to inflationary

price pressure.

Travel expenses increased due to the lifting of travel restrictions and stay-at-home orders which had been imposed in

response to the COVID-19 pandemic.

Outside storage costs to warehouse products prior to shipment increased due to reaching storage capacity

at our new Chicago facility as a result of higher sales volume.

None of the changes individually or as a group of expenses in “Other

SG&A” were significant enough to merit separate disclosure.

The major components comprising the increase of “Other SG&A”

expenses were higher sales taxes, office supplies and professional fees.

General and Administrative Expenses-Frozen Food Products Segment

expenses in the Frozen Food Products segment decreased by $840 (6.6%) compared to the prior fiscal year.

The overall decrease in SG&A

expenses was due to lower unit sales volume and profit-sharing accruals.

expenses in the Frozen Food Products segment increased by $2,664 (22.3%) compared to the prior fiscal year.

The overall increase in SG&A

expenses was due to higher sales volume and corresponding increased wages and bonus and product advertising partially offset by lower

pension expense.

General and Administrative Expenses-Refrigerated and Snack Food Products Segment

expenses in the Snack Food Products segment increased by $2,444 (5.1%) during fiscal year 2022 compared to the prior fiscal year.

of the increase was due to higher unit sales volume.

of the increase was due to higher licensing fees, travel expense and taxes.

on Sale of Property, Plant and Equipment

gain during fiscal years 2021 and 2020 was due to the ordinary gain on disposal of assets.

gain during fiscal years 2022 and 2021 was due the sale of the Green Street facility and ordinary gain on disposal of assets, respectively.

tax for fiscal years 2022 and 2021, respectively, was as follows:

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October 29, 2021

Benefit on income taxes

Provision for (benefit on) income taxes

Effective tax rate

recorded a tax benefit of $1,779 and $2,193, for fiscal years 2021 and 2020, respectively, related to federal and state taxes, based

on the Company’s expected annual effective tax rate.

The effective tax rate was 24.4% and -42.7% for fiscal years 2021 and 2020,

respectively.

The effective tax rate for fiscal year 2020 was impacted by the rate differential on our net operating loss carryback available

under the CARES Act.

In addition, the effective tax rates for fiscal years 2021 and 2020 were

impacted by such items as non-deductible meals and entertainment, non-taxable gains and losses on life insurance policies and state income

(Refer to Note 4 of Notes to Consolidated Financial Statements for more information).

recorded a tax provision of $16,341 and benefit of $1,779, for fiscal years 2022 and 2021, respectively, related to federal and state

taxes, based on the Company’s expected annual effective tax rate.

The effective tax rate was 26.6% and 24.4% for fiscal years 2022

and 2021, respectively.

In addition, the effective tax rates for fiscal years 2022 and 2021 were impacted by such items as non-deductible

meals and entertainment, non-taxable gains and losses on life insurance policies and state income taxes.

(Refer to Note 4 of Notes to

Consolidated Financial Statements for more information).

and Capital Resources (in thousands except share amounts, percentages, and ratios)

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We normally fund our operations from cash balances and cash flow generated from operations.

We borrowed $18,450

during the first and second quarters of fiscal year 2020 to purchase specific equipment for our new Chicago processing facility.

Additionally,

we borrowed $12,000 under our line of credit with Wells Fargo during fiscal year 2021 to fund operations.

As of October 29, 2021, we

had a book overdraft of $469.

The book overdraft is recorded as a liability in accounts payable on the Consolidated Balance

On December 1, 2021, we expanded the revolving line of credit to $25,000 until June 15, 2022, at which time the credit limit

will return to $15,000.

Commodity price volatility or increases could adversely impact our business, financial condition including liquidity

and results of operations.

Despite higher commodity costs, we may not be able to increase our product prices in a timely manner or sufficiently

to offset increased commodity costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers

to accept the price increase.

We received $60,000

in gross proceeds on June 1, 2022, from the closing of the sale of the Green Street Property pursuant to the terms of the CRG Purchase

We borrowed $2,000 under our line of credit with Wells Fargo Bank, N.A.

on December 2, 2020, $2,000 on April 27, 2021, $2,000

on July 1, 2021, $3,000 on July 19, 2021, $3,000 on October 15, 2021, $2,000 on November 1, 2021, $2,000 on December 16, 2021, and $2,000

on January 24, 2022, for a combined total of $18,000.

The line of credit was paid off on June 7, 2022, using $18,000 in proceeds from

the sale of the Green Street Property.

The revolving line of credit continues in effect per its terms to March 1, 2023.

We entered into

a bridge loan with Wells Fargo on August 30, 2021, for up to $25,000, of which we used $18,653 to pay off a portion of our existing equipment

loans as they came out of the lock out period and could be repaid.

We repaid and terminated the bridge loan on June 2, 2022, using $18,653

in proceeds from the sale of real property at the Green Street Property.

As of October 28, 2022, we had $1,089 of current debt on equipment

loans, $66,076 of net working capital and $15,000 available under our revolving line of credit with Wells Fargo Bank, N.A.

Refer to Note

5 - Line of Credit and Borrowing Agreements of the Notes to the Condensed Consolidated Financial Statements included within this Report

for further information.

higher commodity costs, we may not be able to increase our product prices in a timely manner or sufficiently to offset increased commodity

costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase.

Higher product prices could potentially lower demand for our product and decrease volume.

October 29, 2021, we had $1,065 of current debt on equipment loans.

We entered into a bridge loan on August 30, 2021 for up to $25,000,

which we plan to use to pay off the existing equipment loans as they come out of the lock out period and may be prepaid.

As of October

29, 2021, we paid off $10,328 in equipment loans utilizing proceeds from the new bridge loan.

believes there are various options available to generate additional liquidity to repay debt or fund operations such as mortgaging real

estate, should that be necessary.

Our ability to increase liquidity will depend upon, among other things, our business plans,

the performance of operating divisions and economic conditions of capital markets, or circumstances related to the COVID-19 global pandemic.

If we are unable to increase liquidity through mortgaging real estate, or generate positive cash flow necessary to fund operations, we

may not be able to compete successfully, which could negatively impact our business, operations, and financial condition.

Combined with

the cash expected to be generated from the Company’s operations, income tax refunds of $6,156 and deferral of social security taxes,

we anticipate that we will maintain sufficient liquidity to operate our business for a reasonable period of time.

We will continue to monitor the impact of COVID-19 on our liquidity and, if necessary,

take action to preserve liquidity and ensure that our business can operate during these uncertain times.

flows from operating activities:

Management believes there are various options

available to generate additional liquidity to repay debt or fund operations such as mortgaging real estate, should that be necessary.

Our ability to increase liquidity will depend upon, among other things, our business plans, the performance of operating divisions and

economic conditions of capital markets, or circumstances related to the COVID-19 global pandemic.

If we are unable to increase liquidity

through mortgaging real estate, or generate positive cash flow necessary to fund operations, we may not be able to compete successfully,

which could negatively impact our business, operations, and financial condition.

With the cash expected to be generated from the Company’s

operations, we anticipate that we will maintain sufficient liquidity to operate our business for at least the next twelve months.

will continue to monitor the impact of COVID-19 on our liquidity and, if necessary, take action to preserve liquidity and ensure that

our business can operate during these uncertain times.

flows used in operating activities:

October 28, 2022

October 29, 2021

Net (loss) income

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for (recovery of) losses on accounts receivable

Provision for (reduction in) promotional allowances

Net income (loss)

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization

Provision for losses on accounts receivable

(Reduction in) provision for promotional allowances

Gain on sale of property, plant and equipment

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Operating assets and liabilities

Net cash (used in) provided by operating activities

the fifty-two weeks ended October 29, 2021, net cash used in operating activities was $5,992, a decrease of $15,909 compared to the fifty-two

weeks ended October 30, 2020.

The decrease in net cash provided by operating activities primarily related to an increase in inventory

of $7,475, a net loss of $5,503 and higher accounts receivable of $1,010, partially offset by a decrease in refundable income taxes and

deferred taxes of $1,454.

During fiscal year 2021, we did not contribute towards our defined benefit pension plan.

Plan funding strategies

may be adjusted depending upon economic conditions, investment options, tax deductibility, or legislative changes in funding requirements.

Net cash used in operating activities

the fifty-two weeks ended October 28, 2022, net cash used in operating activities was $7,830, an increase of $1,8380 compared to the

fifty-two weeks ended October 29, 2021.

The increase in net cash used in operating activities primarily relates to a gain on sale of

property, plant and equipment of $57,745, an increase in accounts receivable of $10,116 and an increase in inventory of $3,762, partially

offset by a decrease in refundable income taxes of $4,955 and an increase in deferred taxes of $5,070.

During fiscal year 2022, we did

not contribute towards our defined benefit pension plan.

Plan funding strategies may be adjusted depending upon economic conditions,

investment options, tax deductibility, or legislative changes in funding requirements.

cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 83 days

for the fifty-two weeks ended October 28, 2022, and 74 days for the fifty-two weeks ended October 29, 2021.

the fifty-two weeks ended October 30, 2020, net cash provided by operating activities was $9,917.

The result was primarily related to

higher net income, an increase in accounts payable and deferred income taxes, partially offset by an increase in inventory and accounts

the fifty-two weeks ended October 29, 2021, net cash used in operating activities was $5,992.

The result was primarily related to an

increase in inventory of $7,475 and net loss of $5,503 partially offset by a decrease in refundable income taxes and deferred taxes.

During fiscal year 2021, we did not contribute towards our defined benefit pension plan.

used in investing activities:

flows provided by (used in) investing activities:

October 28, 2022

1 unchanged sentence

Proceeds from sale of property, plant and equipment

Proceeds from deposits in escrow

Changes in escrow balance

Additions to property, plant and equipment

Net cash used in investing activities

Net cash provided by (used in) investing activities

for property, plant and equipment include the acquisition of equipment, upgrading of facilities to maintain operating efficiency and

1 unchanged sentence

In general, we capitalize the cost of additions and improvements and expense

the cost of repairs and maintenance.

We may also capitalize costs related to improvements that extend the life, increase the capacity,

or improve the efficiency of existing machinery and equipment.

Specifically, capitalization of upgrades of facilities to maintain operating

efficiency include acquisitions of machinery and equipment used on packaging lines and refrigeration equipment used to process food products.

Proceeds from deposits in escrow of $1,650 relate to the pending sale of a parcel of land including an approximate 156,000 square foot

four-story industrial food processing building located at 170 N.

Green Street in Chicago, Illinois.

As of October 29, 2021, we have received

a total of $1,650 in deposits in escrow less $1,275 received as non-refundable earnest money.

the cost for repairs and maintenance.

We received $60,000 in gross proceeds on June 1, 2022, from the closing of the real estate transaction

for the Green Street Property, pursuant to the terms of the CRG Purchase Agreement.

We may also capitalize costs related to improvements

that extend the life, increase the capacity, or improve the efficiency of existing machinery and equipment.

Specifically, capitalization

of upgrades of facilities to maintain operating efficiency include acquisitions of machinery and equipment used on packaging lines and

refrigeration equipment used to process food products.

table below highlights the additions to property, plant and equipment for the fifty-two weeks ended:

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related to the new facility in Chicago.

provided by financing activities:

flows (used in) provided by financing activities:

October 28, 2022

3 unchanged sentences

Repayments of bank borrowings

Net cash provided by financing activities

Net cash (used in) provided by financing activities

stock repurchase program was approved by the Board of Directors in November 1999 and was expanded in June 2005.

4 unchanged sentences

Company leases three long-haul trucks pursuant to six-year leases that expire in 2025.

Amortization of equipment under capital

lease was $83 in 2021.

Amortization of equipment under capital lease

was $75 in 2022.

The Company also leased one long-haul truck for $40 during fiscal year 2021, and that lease term is two years.

following table reflects major components of our line of credit and borrowing agreements as of October 28, 2022 and October 29, 2021.

October 28, 2022

October 29, 2021

Revolving credit facility

3 unchanged sentences

3.68% note due 04/16/27, out of lockout 04/17/22

3.29% note due 03/05/27, out of lockout 03/06/22

3.68% note due 04/16/27, out of lockout 04/17/22

SOFR plus 2.00% bridge loan due 03/01/23

2 unchanged sentences

Credit Facility

maintain a line of credit with Wells Fargo Bank, N.A.

that extends through March 1, 2022 (extended to March 1, 2023, per expanded line

of credit signed December 1, 2021).

As of October 29, 2021, under the terms of this line of credit, we may borrow up to $15,000 at an

interest rate equal to the bank’s prime rate or LIBOR plus 2.0%.

The line of credit has an unused commitment fee of 0.25% of the

available loan amount.

We borrowed $2,000 under this line of credit on December 2, 2020, $2,000 on April 27, 2021, $2,000 on July 1,

2021, $3,000 on July 19, 2021 and $3,000 on October 15, 2021, for a combined total of $12,000.

The line of credit is presented under

non-current liabilities in the Consolidated Balance Sheets.

On December 1, 2021, Wells Fargo Bank, N.A.

expanded our line of

credit to $25,000 through June 15, 2022, upon which the credit limit will return to $15,000 for the balance of the term.

Under the terms

of this expanded line of credit, we may borrow up to $25,000 at an interest rate equal to the bank’s prime rate or secured overnight

financing rate (SOFR) plus 2.0%.

Under the amended line of credit, the benchmark interest rate of LIBOR has been transitioned to SOFR

which could impact the cost of credit and alter the value of debt and loans.

We borrowed an additional $2,000 on November 1, 2021, and

$2,000 on December 16, 2021.

Refer to Note 1 – Subsequent Events of the Notes to Consolidated Financial Statements included in

this Report for further information.

maintain a revolving line of credit with Wells Fargo that extends through March 1, 2023.

As of year-end October 29, 2021, under the terms

of this line of credit, we could borrow up to $15,000 at an interest rate equal to the bank’s prime rate or LIBOR plus 2.0%.

line of credit has an unused commitment fee of 0.25% of the available loan amount.

The line of credit is presented under non-current

liabilities in the consolidated balance sheets.

On December 1, 2021, Wells Fargo expanded our line of credit to $25,000 through June

15, 2022, at which time the credit limit returned to $15,000 for the balance of the term.

Under the terms of this line of credit, we

may borrow up to $15,000 at an interest rate equal to the bank’s prime rate or secured overnight financing rate (“SOFR”)

The former benchmark interest rate of LIBOR for our line of credit has been transitioned to SOFR which could impact the cost

of credit and alter the value of debt and loans.

We borrowed $2,000 under this line of credit on December 2, 2020, $2,000 on April 27,

2021, $2,000 on July 1, 2021, $3,000 on July 19, 2021, $3,000 on October 15, 2021, $2,000 on November 1, 2021, and $2,000 on December

26, 2021, and $2,000 on January 24, 2022, for a combined total of $18,000.

The revolving line of credit with Wells Fargo was paid off

on June 7, 2022, using $18,000 in proceeds from the sale of the Green Street Property.

Notes Payable

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 December 19, 2019, March

December 26, 2018, we entered into a master collateral loan and security agreement with Wells Fargo (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

1 unchanged sentence

Pursuant to the Wells Fargo Loan Agreements, we owe the amounts as stated in the table above.

August 30, 2021, we entered into a loan commitment note for a bridge loan of up to $25,000 which we plan to use to pay off the

existing equipment loans as they come out of the lock out (dates detailed in the table above).

The outstanding principal balances of

the bridge loan shall be due and payable in full on the earlier of the following dates (1) August 31, 2023 or (2) one Federal Reserve

business day after the closing of the transactions contemplated under that certain Purchase and Sale Agreement dated March 16, 2020,

as amended, between Bridgford Foods Processing Corporation and CRG Acquisition, LLC (the “March 2020 Purchase and Sale Agreement”).

As of October 29, 2021, we prepaid $10,328 in equipment loans (equipment loans 4.13% and 3.98% above) utilizing proceeds from the new

The Company evaluated the exchange under ASC 470 and determined that the exchange should be treated as a debt modification

prospectively.

August 30, 2021, we entered into a loan commitment note for a bridge loan of up to $25,000 to obtain capital to pay off the existing

equipment loans as they come out of the lock out period and may be repaid (dates detailed in the table above).

The outstanding principal

balances of the bridge loan became due and payable in full on the earlier of the following dates (1) August 31, 2023, or (2) one Federal

Reserve business day after the closing of the real estate transactions contemplated under the CRG Purchase Agreement.

We repaid $18,653

in equipment loans (equipment loans 4.13%, 3.98%, 3.70% and 3.29% in the table above) utilizing proceeds from the new bridge loan.

Company evaluated the exchange under ASC 470 and determined that the exchange should be treated as a debt modification prospectively.

The Company accounted for this transaction as a debt modification and did not incur any gain or loss relating to the modification.

The debt modification did not meet the greater than ten percent test and was deemed not substantial.

On January 12, 2022, we paid off

$2,778 of equipment loans (equipment loan 3.70% above) utilizing proceeds from the new bridge loan.

Refer to Note 1 - Subsequent Events

of Notes to Consolidated Financial Statements included in this Report for further information.

debt modification did not meet the greater than ten percent test and was deemed not substantial.

We repaid and terminated the bridge

loan and related loan commitment note on June 2, 2022, using $18,653 in proceeds from the sale of the Green Street Property pursuant

to the CRG Purchase Agreement.

Wells Fargo Loan Agreements contain various affirmative and negative covenants that limit the use of funds and define other provisions

The main financial covenants are listed below:

Liabilities divided by Tangible Net Worth not greater than 2.5 to 1.0 at each fiscal quarter,

Ratio not less than .85 to 1.0 at each fiscal quarter end,

Charge Coverage Ratio not less than 1.25 to 1.0 as of each fiscal quarter end, determined on a trailing 4-quarter basis, and

Expenditures less than $5,000.

Company was in violation of the capital expenditure covenant and fixed charge coverage ratio which were subsequently waived

(per letter dated January 25, 2022).

The Company was in compliance with all other covenants under the Wells Fargo Loan Agreements

as of October 29, 2021.

Material financial covenants are listed below and the capitalized terms are defined in the Agreements:

Total Liabilities divided

by Tangible Net Worth not greater than 2.5 to 1.0 at each fiscal quarter,

Quick Ratio not less than

0.85 to 1.0 at each fiscal quarter end,

Net Income After Taxes

not less than $500 on a quarterly basis, and

Capital Expenditures less

of October 28, 2022, the Company was in compliance with all covenants under the Wells Fargo Loan Agreements.

contractual maturities of debt in future fiscal years are as follows as of October 28, 2022:

4 unchanged sentences

of commodity markets.

While fluctuations in significant cost structure components, such as ingredient commodities and fuel prices, have

had a significant impact on profitability over the last two fiscal years, the impact of general price inflation on our financial position

and results of operations has not been significant.

However, future volatility of general price inflation or deflation and raw material

cost and availability could adversely affect our financial results.

is of the opinion that our strong financial position and our capital resources are sufficient to provide for our operating needs and

capital expenditures for fiscal year 2022.

All of our operating segments have been impacted by inflation, including higher costs for labor, freight, and specific

We expect this trend to continue through fiscal year 2023.

Management is of the opinion that the Company’s financial

position and its capital resources are sufficient to provide for its operating needs and capital expenditures for fiscal year 2023.

future volatility of general price inflation or deflation and raw material cost and availability could adversely affect our financial

Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis