LONG TERM LIABILITIES

6 Months Ended

Nov. 27, 2015

NOTE 8 – LONG TERM LIABILITIES

The Company has two notes payable with a local bank as of November 27, 2015. The first note was established as a construction loan in March 2009 to help fund the construction of a process water treatment facility. In March 2011, the loan was modified by taking the remaining balance of $3,532,700 and adding another $2,900,000 to establish a new note payable of $6,432,700 at 3.52% for 15 years to finance the purchase and implementation of a new Enterprise Resource Planning computer software system. The Company has been making monthly payments on the note and intends to repay it at the earliest practicable date, as there are no prepayment penalties. The balance of the note was $4,754,474 as of November 27, 2015, and $4,944,233 as of May 29, 2015. The second note was established in order to fund the purchase of 440,875 shares of treasury stock. This note in the amount of $2,204,375 is dated January 30, 2015 and is to be repaid over 5 years at 3.3%. The balance of the note was $1,811,527 as of November 27, 2015, and $2,068,484 as of May 29, 2015. In July 2015, a capital lease obligation of $98,586 was incurred when the Company entered into a 36 month lease for new server equipment. The balance of the obligation was $85,461 as of November 27, 2015.