NOTES PAYABLE - BANK

12 Months Ended

Oct. 01, 2016

Notes Payable [Abstract]

Notes Payable [Text Block]

9. NOTES PAYABLE – BANK

On February 25, 2013, the Company issued a promissory note to Bank Hapoalim B.M. (the “BHBM”) for $3,000,000. The note bore interest at LIBOR plus 3.5% per annum, and was payable in 36 equal monthly installments of $83,333, commencing on March 25, 2013. On February 24, 2014, in connection with the acquisition of The Rustic Inn, the Company borrowed an additional $6,000,000 from BHBM under the same terms and conditions as the original loan which was consolidated with the remaining principal balance from the original borrowing at that date. The new loan is payable in 60 equal monthly installments of $134,722, which commenced on March 25, 2014, and matures February 24, 2019. As of October 1, 2016, the outstanding balance of this note payable was approximately $3,907,000.

On October 22, 2015, in connection with the acquisition of Shuckers, the Company issued a promissory note to BHBM for $5,000,000. The note bears interest at LIBOR plus 3.5% per annum, and is payable in 60 equal monthly installments of $83,333, commencing on November 22, 2015, and matures October 21, 2020. As of October 1, 2016, the outstanding balance of this note payable was approximately $4,084,000.

On October 22, 2015, in connection with the Shuckers transaction, the Company also entered into a credit agreement (the “Revolving Facility”) with BHBM which expires on October 21, 2017 and provides for total availability of the lesser of (i) $10,000,000 and (ii) $20,000,000 less the then aggregate amount of all indebtedness and obligations to BHBM. Borrowings under the Revolving Facility will be evidenced by a promissory note (the “Revolving Note”) in favor of BHBM and will be payable over five years with interest at an annual rate equal to LIBOR plus 3.5% per year. As of October 1, 2016, no additional amounts were outstanding under the Revolving Facility.

Deferred financing costs incurred in connection with the Shuckers transaction in the amount of $130,585 are being amortized over the life of the agreements on a straight line basis. Amortization expense of $43,075 for the year ended October 1, 2016 is included in interest expense.

Borrowings under the Revolving Facility and both of the above promissory notes, are secured by all tangible and intangible personal property (including accounts receivable, inventory, equipment, general intangibles, documents, chattel paper, instruments, letter-of-credit rights, investment property, intellectual property and deposit accounts) and fixtures of the Company.

The loan agreements provide, among other things, that the Company meet minimum quarterly tangible net worth amounts, as defined, maintain a fixed charge coverage ratio of not less than 1.1:1 and minimum annual net income amounts, and contain customary representations, warranties and affirmative covenants. The agreements also contain customary negative covenants, subject to negotiated exceptions, on liens, relating to other indebtedness, capital expenditures, liens, affiliate transactions, disposal of assets and certain changes in ownership. The Company was in compliance with all debt covenants as of October 1, 2016.

Long-term debt consists of the following:

	October 1,			October 3,
	2016			2015
	(In thousands)
Promissory Note - Rustic Inn purchase	$	3,907		$	5,524
Promissory Note - Shuckers purchase		4,084			-
		7,991			5,524
Less: Current maturities		(2,617	)		(1,617	)
Less: Unamortized deferred financing costs		(53	)		-
Long-term debt	$	5,321		$	3,907

As of October 1, 2016, the aggregate amounts of notes payable maturities are as follows:

2017	$	2,617
2018		2,617
2019		1,674
2020		1,000
2021		83
	$	7,991