BRIDGFORD FOODS CORP

Previous wording

Certain statements included within this Report, and the information and documents incorporated by reference with this Report, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report or incorporated by reference into this Report are forward-looking statements. These statements include, among other things, any predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our business strategy; statements concerning industry trends; statements regarding anticipated demand for our products, or the products of our competitors; statements relating to manufacturing forecasts; statements relating to forecasts of our liquidity position or available cash resources; statements regarding operational challenges, including as a result of global supply chain disruptions and labor shortages; statements regarding inflationary pressures, including increased costs for labor and freight, and the resulting impact on our results of operations; statements regarding new regulations related to federal income tax and the impact on our financial statements and cash flow; statements regarding the impact of the adoption of recent accounting pronouncements on our business; and statements relating to the assumptions underlying any of the foregoing. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof (although not all forward-looking statements contain these words).

Current wording

Certain statements included within this Report, and the information and documents incorporated by reference with this Report, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report or incorporated by reference into this Report are forward-looking statements. These statements include, among other things, any predictions of earnings, revenues, expenses or other financial items; plans or expectations with respect to our business strategy; statements concerning industry trends; including the availability of beef, pork and flour; statements regarding anticipated demand for our products, or the products of our competitors; statements relating to manufacturing forecasts; statements relating to forecasts of our liquidity position or available cash resources; statements regarding operational challenges, including as a result of global supply chain disruptions and labor shortages; statements regarding inflationary pressures, including increased costs for labor and freight, and the resulting impact on our results of operations; statements regarding new regulations related to federal income tax and the impact on our financial statements and cash flow; statements regarding the impact of the adoption of recent accounting pronouncements on our business; and statements relating to the assumptions underlying any of the foregoing. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof (although not all forward-looking statements contain these words).

Previous wording

The preparation of our Condensed Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Some of the estimates made by management include the allowance for doubtful accounts, promotional and returns allowances, inventory reserves, the estimated useful lives of property, plant and equipment, and the valuation allowance for the Company’s deferred tax assets. Actual results could materially differ from these estimates. We determine the amounts to record based on historical experience and various other assumptions that we view as reasonable under the circumstances and consider all relevant available information. The results of this analysis form the basis for our conclusion as to the value of assets and liabilities that are not readily available from other independent sources. Amounts estimated related to liabilities for self-insured workers’ compensation, employee healthcare and pension benefits are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts which vary from our current estimates.

Current wording

The preparation of our Condensed Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Some of the estimates made by management include the allowance for doubtful accounts, promotional and returns allowances, inventory reserves, the estimated useful lives of property, plant and equipment, and the valuation allowance for the Company’s deferred tax assets. Actual results could materially differ from these estimates. We determine the amounts to record based on historical experience and various other assumptions that we view as reasonable under the circumstances and we consider all relevant available information. The results of this analysis form the basis for our conclusion as to the value of assets and liabilities that are not readily available from other independent sources. Amounts estimated related to liabilities for self-insured workers’ compensation, employee healthcare and pension benefits are especially subject to inherent uncertainties and these estimated liabilities may ultimately settle at amounts which vary from our current estimates.

Previous wording

Our Snack Food Products segment primarily distributes products manufactured in-house. All items within this segment are considered similar products and have been aggregated at this level. The dry sausage division includes products such as jerky, meat snacks, salami, sausage, and pepperoni products. During the third quarter of fiscal year 2025, our Snack Food Products segment sold approximately 170 different items through customer-owned distribution centers and a direct-store-delivery network serving approximately 21,000 supermarkets, mass merchandise and convenience retail stores located in all 50 states.

Current wording

Our Snack Food Products segment primarily distributes products manufactured in-house. All items within this segment are considered similar products and have been aggregated at this level. The dry sausage division includes products such as jerky, meat snacks, salami, sausage, and pepperoni products. During the first quarter of fiscal year 2026, our Snack Food Products segment sold approximately 180 different items through customer-owned distribution centers and a direct-store-delivery network serving approximately 19,000 supermarkets, mass merchandise and convenience retail stores located in all 50 states.

Previous wording

Net sales increased by $2,691 (5.5%) to $51,954 in the third twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024. The changes in net sales were comprised as follows:

Current wording

Net sales increased by $2,767 (5.3%) to $55,312 in the first twelve-week period of the 2026 fiscal year compared to the same twelve-week period in fiscal year 2025. The changes in net sales were comprised as follows:

Previous wording

The decrease in net sales for the thirty-six-week period ended July 11, 2025, primarily relates to higher promotional activity and related expenses. Higher selling prices per pound partially were offset by lower unit sales volume in pounds. Institutional Frozen Food Products sales, including sheet dough and rolls, decreased 2% by volume while retail sales volume increased by 8%. Returns activity was even as a percentage of sales and in absolute dollars compared to the same thirty-six-week period in the 2024 fiscal year. Promotional activity was both higher in absolute dollars and as a percentage of sales.

Current wording

The decrease in net sales for the twelve-week period ended January 23, 2026, primarily relates to lower unit sales volume in pounds and to a lesser extent lower selling prices per pound due to changes in product mix. Institutional Frozen Food Products sales, including sheet dough and rolls, decreased 3% by volume and retail sales volume decreased by 15%. Returns activity was lower compared to the same twelve-week period in the 2025 fiscal year. Promotional activity was both lower in absolute dollars and as a percentage of sales.

Previous wording

Cost of products sold from continuing operations increased on a consolidated basis by $3,286 (8.6%) to $41,325 in the third twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024. The gross margin decreased to 20.5% in the third twelve-weeks of fiscal year 2025 compared to 22.8% in the same twelve-week period in fiscal year 2024.

Current wording

Cost of products sold from continuing operations increased on a consolidated basis by $2,283 (5.8%) to $41,943 in the first twelve-week period of the 2026 fiscal year compared to the same twelve-week period in fiscal year 2025. The gross margin decreased to 24.2% in the first twelve-weeks of fiscal year 2026 compared to 24.5% in the same twelve-week period in fiscal year 2025.

Previous wording

Cost of products sold in the Frozen Food Products segment decreased by $176 (2.0%) to $8,494 in the third twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024. The cost of purchased flour decreased by approximately $46 based on global economic conditions in the third twelve-week period of fiscal year 2025 compared to the same twelve-week period in fiscal year 2024. The gross margin decreased to 21.3% in the third twelve-weeks of fiscal year 2025 compared to 24.7% in the same twelve-week period in fiscal year 2024 due to higher gross overhead. Gross overhead increased as a result of higher healthcare expenses, temporary labor costs and repairs and maintenance on buildings and processing equipment.

Current wording

Cost of products sold in the Frozen Food Products segment decreased by $81 (0.8%) to $10,665 in the first twelve-week period of the 2026 fiscal year compared to the same twelve-week period in fiscal year 2025. The cost of purchased flour decreased by approximately $87 based on global economic conditions in the first twelve-week period of fiscal year 2026 compared to the same twelve-week period in fiscal year 2025. The gross margin decreased to 25.7% in the first twelve-weeks of fiscal year 2026 compared to 27.2% in the same twelve-week period in fiscal year 2025 due to higher gross overhead. Gross overhead increased as a result of higher healthcare expenses, temporary labor costs and repairs and maintenance on buildings and processing equipment.

Previous wording

Cost of products sold in the Snack Food Products segment increased by $3,462 (11.8%) to $32,831 in the third twelve-week period of the 2025 fiscal year compared to the same twelve-week period in fiscal year 2024 due to higher meat commodity costs. The cost of meat commodities increased by approximately $1,705 due to a limited supply of cattle ready for market and other unfavorable market conditions (including inflation and tariffs) in the third twelve-week period of fiscal year 2025 compared to the same period in fiscal year 2024. The gross margin decreased to 20.2% in the third twelve-weeks of fiscal year 2025 compared to 22.2% in the same twelve-week period in fiscal year 2024. We maintain a net realizable reserve of $1,532 on products as of July 11, 2025, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product. We decreased our net realizable value reserve by $272 during the twelve weeks ended July 11, 2025 in consideration of pending price increases to customers to help mitigate the record increases in meat commodity costs. Freight costs increased by $221 during the third twelve-week period of the 2025 fiscal year compared to the same twelve-week period in the prior year.

Current wording

Cost of products sold in the Snack Food Products segment increased by $2,202 (7.6%) to $31,278 in the first twelve-week period of the 2026 fiscal year compared to the same twelve-week period in fiscal year 2025 due to higher meat commodity costs. The cost of meat commodities increased by approximately $3,099 due to a limited supply of cattle ready for market and other unfavorable market conditions (including inflation and tariffs) in the first twelve-week period of fiscal year 2026 compared to the same period in fiscal year 2025. The gross margin increased slightly to 23.6% in the first twelve-weeks of fiscal year 2026 compared to 23.5% in the same twelve-week period in fiscal year 2025. We maintain a net realizable reserve of $493 on products as of January 23, 2026, after determining that the market value on some meat products could not cover the costs associated with completion and sale of the product. Freight costs increased by $434 during the first twelve-week period of the 2026 fiscal year compared to the same twelve-week period in the prior year.

Previous wording

Selling, general and administrative expenses (“SG&A”) increased by $163 (1.1%) to $14,608 in the third twelve-week period of fiscal year 2025 compared to the same twelve-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:

Current wording

Selling, general and administrative expenses (“SG&A”) decreased by $297 (2.0%) to $14,616 in the first twelve-week period of fiscal year 2026 compared to the same twelve-week period in the prior fiscal year. The table below summarizes the significant expense increases (decreases) included in this category:

Previous wording

The provision for bad debt was lower for the twelve weeks ending July 11, 2025 as the comparative period ending July 12, 2024 had credit losses related to the bankruptcy filing of one of our customers, Big Lots, in the amount of $364, which did not recur. Healthcare costs have increased due to unfavorable claim trends. 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 outside storage unit fees for the direct store delivery route system and higher wages and bonus partially offset by lower outside consulting fees.

Current wording

The provision for credit losses on accounts receivable was lower for the twelve weeks ended January 23, 2026 as the comparative period ended January 24, 2025 had credit losses related to the bankruptcy filing of one of our customers, in the amount of $364, which did not recur. Outside consulting costs have increased due to higher advisory services including cost analysis and reduction assistance. 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 repairs and maintenance and higher insurance partially offset by lower wages and bonuses.

Previous wording

SG&A expenses in the Frozen Food Products segment decreased by $232 (7.6%) to $2,831 in the third twelve-week period of fiscal year 2025 compared to the same twelve-week period in the prior fiscal year. The overall decrease in SG&A expenses was due to a decrease in product advertising, including broker commission, partially offset by higher healthcare costs and hourly wages.

Current wording

SG&A expenses in the Frozen Food Products segment decreased by $363 (10.8%) to $3,007 in the first twelve-week period of fiscal year 2026 compared to the same twelve-week period in the prior fiscal year. The overall decrease in SG&A expenses was due to a decrease in product advertising, including broker commission and recovery of sales taxes.

Previous wording

SG&A expenses in the Snack Food Products segment increased by $395 (3.5%) to $11,777 in the third twelve-week period of fiscal year 2025 compared to the same twelve-week period in the prior fiscal year. Most of the increase was due to higher wages and bonuses on increased sales volume and higher healthcare expenses.

Current wording

SG&A expenses in the Snack Food Products segment increased by $66 (0.6%) to $11,609 in the first twelve-week period of fiscal year 2026 compared to the same twelve-week period in the prior fiscal year. Most of the increase was due to higher labor commission and outside consultants, partially offset by decreased provisions for credit losses on accounts receivable.

Previous wording

Income tax for the twelve weeks ended July 11, 2025, and July 12, 2024, respectively, was as follows:

Current wording

Income tax for the twelve weeks ended January 23, 2026, and January 24, 2025, was as follows:

Previous wording

We recorded a benefit on income taxes of $915 for the twelve-week period ended July 11, 2025, and a benefit on income taxes of $752 for the twelve-week period ended July 12, 2024, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory 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.

Current wording

We recorded a benefit on income taxes of $245 for the twelve-week period ended January 23, 2026, and a benefit on income taxes of $453 for the twelve-week period ended January 24, 2025, related to federal and state taxes, based on the Company’s expected annual effective tax rate. The effective income tax rate differed from the applicable mixed statutory 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.

Previous wording

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 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 for its production materials to drive increased competition among its vendors while maintaining quality inputs at the best possible price.

Current wording

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 against our 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 focused on restoring profitability to the Company by driving top-line revenue growth and reducing costs. In line with this focus, the Company 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. We intend to reorganize our direct-store-delivery route system in response to lower sales volume through that distribution channel, including reducing the number of routes, storage units and vehicles while maintaining superior service to our customers. We are also seeking bids for production materials to drive increased competition among our vendors while maintaining quality inputs at the best possible price.

Previous wording

We anticipate being in compliance with the covenants of the amended and restated credit agreement during the fourth fiscal quarter of 2025. Our inability to meet financial covenant requirements in future quarters of the amended and restated 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.

Current wording

We have implemented multiple 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 including but not limited to increased commodity costs, tariffs, the 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. As of January 23, 2026, we had $1,131 of current debt on equipment loans, $41,195 of net working capital and $5,500 available under our revolving credit facility with Wells Fargo described below.

Previous wording

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 throughout 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 Israel and Palestine, as well as increased tariffs. Despite these higher commodity costs, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity or other costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, general price inflation or deflation, higher raw materials costs, labor shortages or supply chain issues could adversely affect the Company’s financial results and its liquidity. Higher product prices could potentially lower demand for our products and decrease volume. 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 the economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, 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. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.

Current wording

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 throughout the remainder of fiscal year 2026. Additionally, commodity costs, including meat and flour costs, have and may continue to fluctuate due to both political and economic conditions. Despite these higher commodity costs, we may not be able to increase our product prices in a timely manner or sufficiently to offset such increased commodity or other costs due to consumer price sensitivity, pricing in relation to competitors and the reluctance of retailers to accept the price increase. Instances of higher interest rates, general price inflation or deflation, higher raw materials costs, labor shortages or supply chain issues could adversely affect the Company’s financial results and its liquidity. Higher product prices could potentially lower demand for our products and decrease volume. 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 the economic conditions of capital markets. If we are unable to increase liquidity through mortgaging real estate or additional borrowing, 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. We will continue to monitor the impact of inflation and interest rate volatility on our liquidity and, if necessary, take action to preserve liquidity and ensure that our business can operate during these uncertain times.

Previous wording

Cash flows from operating activities for the thirty-six weeks ended:

Current wording

Cash flows from operating activities for the twelve weeks ended:

Previous wording

For the thirty-six weeks ended July 11, 2025, net cash used in operating activities was $5,568, which was $8,770 more cash used than during the same period in fiscal year 2024. The increase in net cash used by operating activities primarily relates to an increase in inventory of $9,576, an increase in other non-current assets of $2,298, and a net loss of $6,906 partially offset by a decrease in accounts receivable of $7,267 and increase in accounts payable of $1,638. During the thirty-six-week period ended July 11, 2025, 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 recent legislative changes in funding requirements.

Current wording

For the twelve weeks ended January 23, 2026, net cash provided by operating activities was $4,269, which was $8,873 more cash provided than during the same period in fiscal year 2025. The increase in net cash provided by operating activities primarily relates to a decrease of inventory of $4,459, and a decrease of accounts receivable of $1,893, partially offset by an increase in prepaid expense and other current assets of $1,578. During the twelve-week period ended January 23, 2026, 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 recent legislative changes in funding requirements.

Previous wording

Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 68 days for the thirty-six-week period ended July 11, 2025. The decrease in the cash conversion cycle from 85 days to 68 days for the thirty-six-week period ended July 12, 2024, was due to lower average days sales outstanding compared to the same period in the prior year caused by acceleration of select trade receivables from customers at a discount.

Current wording

Our cash conversion cycle (defined as days of inventory and trade receivables less days of trade payables outstanding) was equal to 64 days for the twelve-week period ended January 23, 2026. The decrease in the cash conversion cycle from 74 days to 64 days for the twelve-week period ended January 24, 2025, was caused by acceleration of select trade receivables from customers at a discount.

Previous wording

Cash flows from investing activities for the thirty-six weeks ended:

Current wording

Cash flows from investing activities for the twelve weeks ended:

Previous wording

The table below highlights additions to property, plant and equipment for the thirty-six weeks ended:

Current wording

The table below highlights additions to property, plant and equipment for the twelve weeks ended:

Previous wording

Cash flows from financing activities for the thirty-six weeks ended:

Current wording

Cash flows from financing activities for the twelve weeks ended:

Previous wording

On July 23, 2025, we entered into the an amended and restated credit agreement with Wells Fargo. This agreement amends, restates and supersedes our existing credit agreement with Wells Fargo that was set to expire by its terms on November 30, 2025. Under the terms of this amendment 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%, 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. See Note 1 - Summary of Significant Accounting Policies - Subsequent Events for further details.

Current wording

On July 23, 2025, we entered into an amended and restated credit agreement dated November 30, 2024, with Wells Fargo that amends, restates and supersedes our existing credit agreement with Wells Fargo that was set to expire by its terms on November 30, 2025. Under the terms of the amended and restated credit agreement and the associated revolving line of credit note, we may borrow up to $7,500 from time to time until July 31, 2026, at an interest rate equal to (a) the daily simple secured overnight financing rate plus 2.5%, 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 on May 20, 2025, which remained outstanding 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. As of January 23, 2026, the Company was in violation of the net income covenant of the amended and restated credit agreement. Wells Fargo waived this breach by letter dated March 2, 2026. The Company is otherwise in compliance with all other covenants under the amended and restated credit agreement, and we expect to remain in compliance for the remainder of fiscal year 2026. If we are unable to meet the financial covenant requirements of the amended and restated credit agreement, it may impact our liquidity. Refer to Note 6 – Equipment Notes Payable and Financial Arrangements to the Condensed Consolidated Financial Statements included within this Report for further information.

Previous wording

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 Bank, N.A. 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”).

Current wording

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 Bank 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”).