| Summary of Significant Accounting Policies | Note
1 – Summary of Significant Accounting Policies The unaudited condensed consolidated financial
statements of Bridgford Foods Corporation (the “Company”, “we”, “our”, “us”) for the
twelve weeks ended January 21, 2022 and January 22, 2021 have been prepared in accordance with U.S. generally accepted accounting principles
(“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X, and include
all adjustments considered necessary by management for a fair presentation of the interim periods. This Report should be read in conjunction
with the Annual Report on Form 10-K for the fiscal year ended October 29, 2021 (the “Annual Report”). Due to seasonality
and other factors, interim results are not necessarily indicative of the results for the full year. Recent accounting pronouncements
and their effect on the Company are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations
in this Report. We
have considered the impact of federal, state, and local government actions related to the COVID-19 pandemic on our Consolidated Financial
Statements. The business disruptions associated with the pandemic had a significant negative impact on our Consolidated Financial Statements
for the fiscal year ended October 29, 2021 and minimal impact during the twelve-weeks ended January 21, 2022. We expect these
events to have future business impacts, the extent of which is uncertain and largely subject to whether the severity worsens. These impacts
could include but may not be limited to risks and uncertainty related to shifts in demand between sales channels, market volatility,
constraints in our supply chain, our ability to operate production facilities and worker availability. These unknowns may subject the
Company to future risks related to long-lived asset impairments, increased reserves for uncollectible accounts, price and availability
of ingredients and raw materials used in our products and adjustments to reflect the market value of our inventory. The
October 29, 2021 balance sheet amounts within these interim condensed consolidated financial statements were derived from the audited
fiscal year 2021 financial statements included in the Annual Report. The
preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported
revenues and expenses during the reporting periods. Some of the estimates needed to be 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. 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.
Market conditions and the volatility in stock markets may cause significant changes in the measurement of our pension fund liabilities
and the performance of our life insurance policies in future periods. Financial
instruments that subject the Company to credit risk consist primarily of cash and cash equivalents, accounts receivable, accounts payable,
accrued payroll, and notes payable. The carrying amount of these instruments approximate fair market value
due to their short-term maturity or market interest rates. At times, the Company had accounts held with nationally recognized financial
institutions in excess of the Federal Deposit Insurance Corporation insurance coverage limit. As of January 21, 2022, the Company did
not have a book overdraft. When applicable, book overdrafts are recorded as a liability in accounts payable on the condensed consolidated
balance sheet. The Company has not experienced any losses in these accounts and believes it is not exposed to any significant credit
risk with regard to its cash and cash equivalents. The Company grants payment terms to a significant number of customers that are diversified
over a wide geographic area. The Company monitors the payment histories of its customers and maintains an allowance for doubtful accounts
which is reviewed for adequacy on a quarterly basis. The Company does not require collateral from its customers. Comprehensive
income or loss Comprehensive
income or loss consists of net income and additional minimum pension liability adjustments. There were no differences between net income
and comprehensive income during the twelve weeks ended January 21, 2022, or January 22, 2021. Customer
Concentration > 20% of AR or >10% of Sales The
table below shows customers that accounted for more than 20% of consolidated accounts receivable (“AR”) or 10% of consolidated
sales for the twelve weeks ended January 21, 2022, and January 22, 2021, respectively. Schedule of Customer Concentration
Walmart (1) Dollar General
Sales AR Sales AR
January 21, 2022 32.1 % 5.4 % 15.8 % 40.6 %
January 22, 2021 36.5 % 7.3 % 13.7 % 24.1 %
(1) Walmart accounts receivable represented a lower percentage
of sales as of January 21, 2022, due to accelerated payments on outstanding accounts receivable. Revenue
recognition Revenues
are recognized in accordance with Accounting Standards Codification (“ASC”) Topic 606 – Contracts with Customers
The
Company recognizes revenue for the sale of the product at the point in time when our performance obligation has been satisfied and control
of the product has transferred to our customer, which generally occurs upon shipment, pickup or delivery to a customer based on terms
of the sale. Contracts with customers are typically short-term in nature with completion of a single performance obligation. Product
is sold to foodservice, retail, institutional and other distribution channels. Shipping and handling that occurs after the customer has
obtained control of the product is recorded as a fulfillment cost rather than an additional performance obligation. Costs paid to third
party brokers to obtain contracts are recognized as part of selling expenses. Other sundry items in context of the contract are also
recognized as selling expense. Any taxes collected on behalf of the government are excluded from net revenue. We
record revenue at the transaction price which is measured as the amount of consideration we anticipate receiving in exchange for providing
product to our customers. Revenue is recognized as the net amount estimated to be received after deducting estimated or known amounts
including variable consideration for discounts, trade allowances, consumer incentives, coupons, volume-based incentives, cooperative
advertising, product returns and other such programs. Promotional allowances, including customer incentive and trade promotion activities,
are recorded as a reduction to sales based on amounts estimated being due to customers, based primarily on historical utilization and
redemption rates. Estimates are reviewed regularly until incentives or product returns are realized and the result of any such adjustments
are known. Promotional allowances deducted from sales for the twelve weeks ended January 21, 2022 and January 22, 2021 were $ 3,503 3,082 Leases Leases
are recognized in accordance with Accounting Standards Update (“ASU”) 2016-02 Leases (“ASC 842”) which requires
a lessee to recognize assets and liabilities with lease terms of more than 12 Finance
and ROU lease assets are recorded within property, plant and equipment, net of accumulated depreciation and amortization. The
Company’s leases of long-haul trucks used in its Frozen Food Products segment qualify as finance leases. Finance lease liabilities
are recorded under other liabilities, the consolidated balance sheets reflecting both the current and long-term obligation. The classification
as a finance or operating lease determines whether the recognition, measurement and presentation of expenses and cash flows are considered
operating or financing. Financial
statement reclassification Certain
financial statement reclassifications have been recorded in 2021 to conform to the current year presentation of operating income and
income before taxes. Subsequent
events Management
has evaluated events subsequent to January 21, 2022, through the date that the accompanying condensed consolidated financial statements
were filed with the Securities and Exchange Commission for transactions and other events which may require adjustments of and/or disclosure
in such financial statements. As
previously reported, on March 16, 2020, Bridgford Food Processing Corporation (“BFPC”), a wholly-owned subsidiary of the
Company and CRG Acquisition, LLC (“CRG”), entered into a Purchase and Sale Agreement (the “CRG Purchase Agreement),
pursuant to which BFPC agreed to sell to CRG, pursuant to the terms and conditions set forth in the CRG Purchase Agreement, a parcel
of land including an approximately 156,000 60,000 On
July 30, 2021, the Company executed the seventh amendment to the CRG Purchase Agreement. Under the original terms and conditions of the
CRG Purchase Agreement, the closing of the sale of the Property to CRG would occur on the date that is thirty (30) days after CRG’s
receipt of the necessary zoning approvals, but in any event no earlier than October 31, 2020, and no later than March 31, 2021. The first
amendment dated as of April 10, 2020, extended the inspection period to June 1, 2020. The second amendment dated as of June 1, 2020,
extended the inspection period to July 31, 2020, zoning period to February 1, 2021, and closing date to February 5, 2021. The third amendment
dated July 31, 2020, further extended the inspection period to October 31, 2020, zoning period to April 30, 2021, and closing date to
May 6, 2021. The fourth amendment dated November 2, 2020, further extended the inspection period to February 1, 2021, the zoning period
to August 2, 2021, and closing date to August 31, 2021. The fifth amendment dated February 1, 2021, further extended the inspection period
to May 1, 2021, the zoning period to November 1, 2021, and closing date to December 1, 2021. The sixth amendment dated April 28, 2021,
further extended the inspection period to July 30, 2021, the zoning period to February 1, 2022, and closing date to March 1, 2022. The
seventh amendment dated July 30, 2021, further extended the inspection period to September 30, 2021, the zoning period to March 30, 2022,
and closing date to April 29, 2022. The seventh amendment also established that the parties acknowledged and agreed that CRG shall commence
demolition of certain portions of the improvements prior to the expiration of the inspection period and be diligently completed in a
commercially reasonable manner on or prior to the closing date. The escrow account for the transaction has received $ 1,650 1,500 The seventh amendment
also provides the purchaser the right to extend the planning and zoning period beyond February 1, 2022 up to three times by up to thirty
calendar days by providing funds in the amount of $200 for each extension. An additional $ 200 1,700 We
maintain a line of credit with Wells Fargo Bank, N.A. that extends through March 1, 2023 15,000 2.0% 0.25% 25,000 15,000 25,000 2.0% 2,000 2,000 2,000 3,000 3,000 2,000 2,000 16,000 2,000 Based
on Management’s review, no other material events were identified that require adjustment to the financial statements or additional
disclosure. Basic
earnings per share Basic
earnings per share are calculated based on the weighted average number of shares outstanding for all periods presented. No stock options,
warrants, or other potentially dilutive convertible securities were outstanding as of January 21, 2022, or January 22, 2021. |
