NOTE 11. DEBT
Debt consists of the following as of September 27,
2025 and September 28, 2024:
Long-Term Debt
| | | 2025 | | | 2024 | |
Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at 3.86%, amortized over twenty (20) years, payable in monthly installments of principal and interest of approximately $43,400, with a balloon payment of approximately $5,373,000 due on November 27, 2026. As of September 27 2025, the net book value of the collateral securing this mortgage was $5,460,000. | | | 5,750 | | | | 6,016 | |
| | | | | | | | | |
Mortgage payable to institutional lender, secured by first mortgage on real property and improvements, bearing interest at the fixed rate of 3.63% per annum, fully amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $31,100, with a final payment on July 1, 2036. As of September 27, 2025, the net book value of the collateral securing this mortgage was $10,741,000. | | | 3,332 | | | | 3,579 | |
| | | | | | | | | |
Mortgage payable to institutional lender, secured by first mortgage on real property and improvements, bearing interest at the fixed rate of 3.65% per annum, fully amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $16,000, with a final payment on March 2, 2036. As of September 27, 2025, the net book value of the collateral securing this mortgage was $7,667,000. | | | 1,663 | | | | 1,790 | |
| | | | | | | | | |
Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at the lender’s 1 Month CME Term Secured Overnight Financing Rate (“SOFR”), plus 10 basis points (4.42% at September 27, 2025), but with the interest fixed at 4.90% pursuant to a swap agreement, amortized over fifteen (15) years, payable in monthly installments of principal of approximately $38,700, with a final payment on September 28, 2037. As of September 27, 2025, the net book value of the collateral securing this mortgage was $3,419,000. | | | 7,686 | | | | 8,124 | |
| | | | | | | | | |
Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at the fixed rate of 4.65% per annum, fully amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $6,400, with a final payment on December 28, 2031. As of September 27, 2025, the net book value of the collateral securing this mortgage was $1,001,000. | | | 433 | | | | 487 | |
Mortgage payable to a related party, an entity the owners of which include persons who are either our officers, directors or their family members, secured by first mortgage on real property and improvements, bearing interest at 6% per annum, amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $9,300, with a balloon payment of approximately $487,000 on August 1, 2032. As of September 27, 2025, the net book value of the collateral securing this mortgage was $2,157,000. | | | 947 | | | | 1,000 | |
| | | | | | | | | |
Mortgage payable to institutional lender, secured by a first mortgage on real property and improvements, bearing interest at the fixed rate of 4.65% per annum, fully amortized over fifteen (15) years, payable in monthly installments of principal and interest of approximately $6,500, with a final payment on December 28, 2031. As of September 27, 2025, the net book value of the collateral securing this mortgage was $975,000. | | | 442 | | | | 498 | |
| | | | | | | | | |
Mortgage payable to unrelated third party, secured by first mortgage on real property and improvements, bearing interest at 7.5%, amortized over twenty (20) years, payable in monthly installments of principal and interest of approximately $7,300, with a final payment on March 1, 2034. As of September 27, 2025, the net book value of the collateral securing this mortgage was $1,027,000. | | | 557 | | | | 600 | |
| | | | | | | | | |
Mortgage payable to related third party, secured by first mortgage on real property and improvements, bearing interest at 4%, amortized over eight (8) years, payable in monthly installments of principal and interest of approximately $3,000, with a final payment on November 1, 2026. As of September 27, 2025, the net book value of the collateral securing this mortgage was $551,000. | | | 42 | | | | 76 | |
| | | | | | | | | |
| Other | | | 5 | | | | 17 | |
| | | | | | | | | |
| Less unamortized loan costs | | | (239 | ) | | | (275 | ) |
| | | | 20,618 | | | | 21,912 | |
| Less current portion | | | (1,484 | ) | | | (1,400 | ) |
| | | $ | 19,134 | | | $ | 20,512 | |
Long-term debt at September 27, 2025 matures as
follows:
| 2026 | |
| 1,484 | |
| 2027 | |
| 6,555 | |
| 2028 | |
| 1,180 | |
| 2029 | |
| 1,239 | |
| 2030 | |
| 1,301 | |
| Thereafter | |
| 9,098 | |
| | |
| 20,857 | |
| Less unamortized loan costs | |
| (239 | ) |
| | |
$ | 20,618 | |
As of September 27, 2025, we are in compliance
with the financial covenants contained in our loans with our unrelated third-party institutional lender under which we owe in the aggregate,
approximately $19,306,000 of our total loans of approximately $20,618,000. As of September 27, 2025, the year-end fair value of our debt
approximates carrying value.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.