x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Nevada | 11-2238111 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
3475 Victory Boulevard, Staten Island, New York | 10314 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class: | Name of each exchange on which registered: | |
Common Stock, Par Value $0.001 Per Share | NASDAQ Capital Market |
Large accelerated filero | Non-accelerated filero | ||
Accelerated filero | Smaller Reporting Company | x |
Page | ||
PART I | 1 | |
ITEM 1. | BUSINESS | 1 |
ITEM 1A. | RISK FACTORS | |
ITEM 1B. | UNRESOLVED STAFF COMMENTS | |
ITEM 2. | PROPERTIES | |
ITEM 3. | LEGAL PROCEEDINGS | |
ITEM 4. | MINE SAFETY DISCLOSURES | |
PART II | ||
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES | |
ITEM 6. | SELECTED FINANCIAL DATA | |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | |
ITEM 9A. | CONTROLS AND PROCEDURES | |
ITEM 9B. | OTHER INFORMATION | |
PART III | ||
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE | |
ITEM 11. | EXECUTIVE COMPENSATION | |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES | |
PART IV | ||
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | |
SIGNATURES | ||
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS | F-1 |
ITEM 1. | BUSINESS |
· |
· |
· |
· | Retail branded coffee; |
· | Mainstream retail private label coffee; |
· | Specialty retail coffees both private label and branded; |
· | Wholesale specialty green and gourmet whole bean coffees; |
· | Food service; |
· | Instant coffees; and |
· | Tea. |
· | Specialty blends; |
· | Tea line of products; |
· | Private label “value” blends; and |
· | Specialty instant coffees. |
· |
· |
· |
· | specialty instant coffees; |
· | tea; and |
· | trial-sized mini-brick coffee packages. |
· | For over |
· | We are members of Grounds for Health, an organization that educates, screens, and arranges treatment for women who have cancer and live in the rural coffee growing communities of Mexico. |
· | We are a licensed Fair Trade dealer of Fair Trade certified coffee. Fair Trade certified coffee helps small coffee farmers to increase their incomes and improve the prospects of their communities and families. It guarantees farmers a minimum price of $1.25 per pound or ten cents above the current market price. |
· | We are the administrative benefactors to a non-profit organization called Cup for Education. After discovering the lack of schools, teachers, and basic fundamental learning supplies in the poor coffee growing communities of Central and Latin America, “Cup” was established by our employee, Karen Gordon, to help build schools, sponsor teachers, and purchase basic supplies such as books, chalk and other necessities for a proper education. |
ITEM 1A. | RISK FACTORS |
· | the roasting, blending, packaging and distribution of private label coffee; |
· | the roasting, blending, packaging and distribution of proprietary branded coffee; and |
· | the sale of wholesale specialty green coffee. |
· | consumer tastes and preferences; |
· | global economic conditions; |
· | demographic trends; and |
· | the type, number and location of competing products. |
· | market our products on a national scale; |
· | increase our brand recognition on a national scale; |
· | enter into distribution and other strategic arrangements with third party retailers; and |
· | manage growth in administrative overhead and distribution costs likely to result from the planned expansion of our distribution channels. |
such acquisitions, licensing arrangements or other strategic alliances may divert our management’s attention from our existing operations; |
we may not be able to successfully integrate any acquired coffee companies or new coffee brands into our existing business; |
we may not be able to manage the contingent risks associated with the past operations of, and other unanticipated problems arising in, any acquired coffee company; and |
we may not be able to control unanticipated costs associated with such acquisitions, licensing arrangements or strategic alliances. |
potentially dilutive issuances of our equity securities; |
the incurrence of additional debt |
restructuring charges; and |
the recognition of significant charges for depreciation and amortization related to intangible assets. |
· | general domestic and global economic conditions; |
· | a portion of our cash flow from operations will be needed to pay debt service and will not be available to fund future operations; |
· | we have increased vulnerability to adverse general economic and coffee industry conditions; |
· | we may be vulnerable to higher interest rates because interest expense on borrowings under our revolving line of credit is based on variable rates; and |
· | we may be subject to covenants that could restrict our operations. |
· | weather patterns in coffee-producing countries; |
· | economic and political conditions affecting coffee-producing countries, including acts of terrorism in such countries; |
· | foreign currency fluctuations; and |
· | trade regulations and restrictions between coffee-producing countries and the United States. |
· | fluctuations in purchase prices and supply of green coffee; |
· | fluctuations in the selling prices of our products; |
· | the level of marketing and pricing competition from existing or new competitors in the coffee industry; |
· | the success of our hedging strategy; |
· | our ability to retain existing customers and attract new customers; and |
· | our ability to manage inventory and fulfillment operations and maintain gross margins. |
| · | the election of a majority of our directors; |
the amendment of our charter documents; and |
the approval of mergers, sales of assets or other corporate transactions or matters submitted for stockholder approval. |
| · | provide that directors may only be removed upon a vote of at least eighty percent of the shares outstanding; |
· | ||
establish advance notice requirements for nominating directors and proposing matters to be voted on by shareholders at shareholder meetings; |
· | ||
limit the right of our stockholders to call a special meeting of stockholders; |
| · | authorize our board of directors to issue preferred stock and to determine the rights and preferences of those shares, which would be senior to our common stock, without prior stockholder approval; |
· | ||
require amendments to our articles of incorporation to be approved by the holders of at least eighty percent of our outstanding shares of common stock; |
· | ||
a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; and |
| · | provide a prohibition on stockholder action by written consent, thereby only permitting stockholder action to be taken at an annual or special meeting of our stockholders. |
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Period | (a) Total Number of Shares (or Unites) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
August 1, 2014 to August 31, 2014 | ||||||||||||||||
September 1, 2014 to September 30, 2014 | 56,600 | $ | 5.92 | 156,415 | $ | 4,271 | ||||||||||
October 1, 2014 to October 31, 2014 | ||||||||||||||||
Total |
Period | (a) Total Number of Shares (or Unites) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||
September 29, 2015 to September 30, 2015 | ||||||||||||||||
October 1, 2015 to October 31, 2015 | 53,687 | $ | 4.23 | 53,687 | $ | 1,773,150 | ||||||||||
Total |
(1) | On September 29, 2015, we announced that the Board of Directors had approved a share repurchase program (the “Share Repurchase Program”) pursuant to which we may repurchase up to $2 million of our outstanding common stock from time to time on the open market and in privately negotiated transactions subject to market conditions, share price and other factors. The Share Repurchase Program may be discontinued or suspended at any time. |
High | Low | High | Low | |||||||||||||
2014 | 2015 | |||||||||||||||
1st Quarter | $ | 5.57 | $ | 4.50 | $ | 6.20 | $ | 4.50 | ||||||||
2nd Quarter | $ | 8.58 | $ | 4.96 | $ | 5.38 | $ | 4.39 | ||||||||
3rd Quarter | $ | 8.19 | $ | 5.87 | $ | 5.50 | $ | 4.70 | ||||||||
4th Quarter | $ | 7.40 | $ | 5.26 | $ | 5.07 | $ | 3.74 | ||||||||
2013 | 2014 | |||||||||||||||
1st Quarter | $ | 8.84 | $ | 6.04 | $ | 5.57 | $ | 4.50 | ||||||||
2nd Quarter | $ | 7.78 | $ | 6.33 | $ | 8.58 | $ | 4.96 | ||||||||
3rd Quarter | $ | 7.53 | $ | 5.81 | $ | 8.19 | $ | 5.87 | ||||||||
4th Quarter | $ | 6.87 | $ | 5.32 | $ | 7.40 | $ | 5.26 |
ITEM 6. | SELECTED FINANCIAL DATA |
For the Years Ended October 31, | For the Years Ended October 31, | ||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||
(Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||||||||||
Net sales | $ | 108,863 | $ | 133,981 | $ | 173,656 | $ | 146,755 | $ | 83,492 | $ | 118,154 | $ | 108,863 | $ | 133,981 | $ | 173,656 | $ | 146,755 | |||||||||||||||||
Cost of sales | 93,334 | 128,012 | 161,649 | 138,210 | 72,932 | 112,437 | 93,334 | 128,012 | 161,649 | 138,210 | |||||||||||||||||||||||||||
Gross profit | 15,529 | 5,969 | 12,007 | 8,545 | 10,560 | 5,717 | 15,529 | 5,969 | 12,007 | 8,545 | |||||||||||||||||||||||||||
Operating expenses | 7,527 | 7,522 | 7,607 | 7,345 | 6,545 | 7,654 | 7,527 | 7,522 | 7,607 | 7,345 | |||||||||||||||||||||||||||
Income (loss) from operations | 8,002 | (1,553) | 4,400 | 1,200 | 4,015 | ||||||||||||||||||||||||||||||||
(Loss) income from operations | (1,937 | ) | 8,002 | (1,553 | ) | 4,400 | 1,200 | ||||||||||||||||||||||||||||||
Other income (expense) | (37 | ) | (169 | ) | (345 | ) | (124) | (143) | (156 | ) | (37 | ) | (169 | ) | (345 | ) | (124 | ) | |||||||||||||||||||
Income (loss) before income taxes | 7,965 | (1,722) | 4,055 | 1,076 | 3,872 | ||||||||||||||||||||||||||||||||
Provision (benefit) for income taxes | 2,947 | (393) | 1,471 | 230 | 1,479 | ||||||||||||||||||||||||||||||||
(Loss) income before income taxes | (2,093 | ) | 7,965 | (1,722 | ) | 4,055 | 1,076 | ||||||||||||||||||||||||||||||
(Benefit) provision for income taxes | (764 | ) | 2,947 | (393 | ) | 1,471 | 230 | ||||||||||||||||||||||||||||||
Minority interest | (51 | ) | (152 | ) | (98 | ) | (34 | ) | (4 | ) | (84 | ) | (51 | ) | (152 | ) | (98 | ) | (34 | ) | |||||||||||||||||
Net income (loss) | $ | 4,967 | $ | (1,481) | $ | 2,486 | $ | 812 | $ | 2,389 | |||||||||||||||||||||||||||
Net income (loss) per share – Basic | $ | 0.78 | $ | (0.23) | $ | 0.39 | $ | 0.15 | $ | 0.44 | |||||||||||||||||||||||||||
Net income (loss) per share – Diluted | $ | 0.78 | $ | (0.23) | $ | 0.37 | $ | 0.14 | $ | 0.44 | |||||||||||||||||||||||||||
Net (loss) income | $ | (1,413 | ) | $ | 4,967 | $ | (1,481 | ) | $ | 2,486 | $ | 812 | |||||||||||||||||||||||||
Net (loss) income per share – Basic | $ | (0.23 | ) | $ | 0.78 | $ | (0.23 | ) | $ | 0.39 | $ | 0.15 | |||||||||||||||||||||||||
Net (loss) income per share – Diluted | $ | (0.23 | ) | $ | 0.78 | $ | (0.23 | ) | $ | 0.37 | $ | 0.14 |
At October 31, | At October 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||
(Dollars in thousands, except per shares data) | (Dollars in thousands, except per shares data) | |||||||||||||||||||||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||||||||||||||||||||||
Total assets | $ | 38,952 | $ | 32,399 | $ | 38,248 | $ | 38,779 | $ | 23,921 | $ | 35,274 | $ | 38,952 | $ | 32,399 | $ | 38,248 | $ | 38,779 | ||||||||||||||||||||
Short-term debt | 2,498 | 1,229 | 563 | 1,820 | 2,307 | 5,554 | 2,498 | 1,229 | 563 | 1,820 | ||||||||||||||||||||||||||||||
Long-term debt | – | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||
Total liabilities | 12,898 | 10,315 | 14,448 | 16,789 | 9,707 | 10,856 | 12,898 | 10,315 | 14,448 | 16,789 | ||||||||||||||||||||||||||||||
Stockholders’ equity | 26,055 | 22,084 | 23,800 | 21,990 | 13,482 | 24,418 | 26,055 | 22,084 | 23,800 | 21,990 | ||||||||||||||||||||||||||||||
Book value per share | $ | 4.19 | $ | 3.47 | $ | 3.73 | $ | 3.45 | $ | 2.46 | $ | 3.96 | $ | 4.19 | $ | 3.47 | $ | 3.73 | $ | 3.45 |
At October 31, | At October 31, | |||||||||||||||||||||||||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||||||||||||||
Per Common Share Data: | ||||||||||||||||||||||||||||||||||||||||
Basic EPS | $ | .78 | $ | (.23) | $ | .39 | $ | .15 | $ | .44 | $ | (.23) | $ | .78 | $ | (.23) | $ | .39 | $ | .15 | ||||||||||||||||||||
Diluted EPS | $ | .78 | $ | (.23) | $ | .37 | $ | .14 | $ | .44 | $ | (.23) | $ | .78 | $ | (.23) | $ | .37 | $ | .14 | ||||||||||||||||||||
Cash dividends declared | $ | 0 | $ | 387,379 | $ | 774,756 | $ | 694,658 | $ | 333,978 | $ | 0 | $ | 0 | $ | 387,379 | $ | 774,756 | $ | 694,658 |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
· | our dependency on a single commodity could affect our revenues and profitability; |
· | our success in expanding our market presence in new geographic regions; |
· | the effectiveness of our hedging policy may impact our profitability; |
· | the success of our joint ventures; |
· | our success in implementing our business strategy or introducing new products; |
· | our ability to attract and retain customers; |
our ability to obtain additional financing; |
· | our ability to comply with the restrictive covenants we are subject to under our current financing; |
· | the effects of competition from other coffee manufacturers and other beverage alternatives; |
· | the impact to the operations of our Colorado facility; |
· | general economic conditions and conditions which affect the market for coffee; |
· | the macro global economic environment; |
· | our ability to maintain and develop our brand recognition; |
· | the impact of rapid or persistent fluctuations in the price of coffee beans; |
· | fluctuations in the supply of coffee beans; |
· | the volatility of our common stock; and |
· | other risks which we identify in future filings with the Securities and Exchange Commission (the “SEC”). |
· | |
· |
· |
· | |
· |
· | our hedging policy; |
· |
· |
· | We recognize revenue in accordance with the relevant authoritative guidance. Revenue is recognized at the point title and risk of ownership transfers to its customers which is upon the shippers taking possession of the goods because i) title passes in accordance with the terms of the purchase orders and with our agreements with our customers, ii) any risk of loss is covered by the customers’ insurance, iii) there is persuasive evidence of a sales arrangement, iv) the sales price is determinable and v) collection of the resulting receivable is reasonably assured. Thus, revenue is recognized at the point of shipment. |
· | Our allowance for doubtful accounts is maintained to provide for losses arising from customers’ inability to make required payments. If there is deterioration of our customers’ credit worthiness and/or there is an increase in the length of time that the receivables are past due greater than the historical assumptions used, additional allowances may be required. For example, every additional one percent of our accounts receivable that becomes uncollectible, would decrease our operating income by approximately $110,000 for the year ended October 31, 2015. The reserve for sales discounts represents the estimated discount that customers will take upon payment. The reserve for other allowances represents the estimated amount of returns, slotting fees and volume based discounts estimated to be incurred by us from our customers. |
· | Inventories are stated at lower of cost (determined on a first-in, first-out basis) or market. Based on our assumptions about future demand and market conditions, inventories are subject to be written-down to market value. If our assumptions about future demand change and/or actual market conditions are less favorable than those projected, additional write-downs of inventories may be required. Each additional one percent of potential inventory writedown would have decreased operating income by approximately $139,000 for the year ended October 31, 2015. |
· | The commodities held at broker represent the market value of the Company’s trading account, which consists of option and futures contracts for coffee held with a brokerage firm. We use options and futures contracts, which are not designated or qualifying as hedging instruments, to partially hedge the effects of fluctuations in the price of green coffee beans. Options and futures contracts are recognized at fair value in the consolidated financial statements with current recognition of gains and losses on such positions. We classify options and futures contracts as trading securities and accordingly, unrealized holding gains and losses are included in earnings. We record realized and unrealized gains and losses in our cost of sales in the statement of operations/income. |
October 31, 2014 | ||||
Customer list and relationships, net | $ | 116,250 | ||
Trademarks | 180,000 | |||
Goodwill | 440,000 | |||
$ | 736,250 | |||
· | We account for income taxes in accordance with the relevant authoritative guidance. Deferred tax assets and liabilities are computed for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized. Accordingly, our net deferred tax asset as of October 31, 2015 of $905,350 may require a valuation allowance if we do not generate taxable income. |
· | Our goodwill consists of the cost in excess of the fair market value of the acquired net assets of OPTCO, which has been integrated into a structure that does not provide the basis for separate reporting units. Consequently, we are a single reporting unit for goodwill impairment testing purposes. We also have intangible assets consisting of our customer list and relationships and trademarks acquired from OPTCO. At October 31, 2015 our balance sheet reflected goodwill and intangible assets as set forth below: |
October 31, 2015 | ||||
Customer list and relationships, net | $ | 108,750 | ||
Trademarks | 180,000 | |||
Goodwill | 440,000 | |||
$ | 728,750 | |||
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES |
Exhibit No. | Description | |
2.1 | Agreement and Plan of Merger, dated October 31, 1997, by and among Transpacific International Group Corp. and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 2 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form SB-2 filed on November 10, 1997 (File No. 333-00588-NY)). | |
2.2 | Asset Purchase Agreement, dated February 4, 2004, by and between Coffee Holding Co., Inc. and Premier Roasters LLC (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 20, 2004 (File No. 333-00588-NY)). | |
3.1 | Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A the “2005 Registration Statement” filed on May 2, 2005 (File No. 001-32491)). | |
3.2 | ByLaws of the Company (incorporated herein by reference to Exhibit 3.2 to the 2005 Registration Statement (File No. 001-32491)). | |
4.1 | Form of Stock Certificate of the Company (incorporated herein by reference to the Company’s Registration Statement on Form SB-2 filed on June 24, 2004 (Registration No. 333-116838)). | |
10.1 | Loan and Security Agreement, dated February 17, 2009, by and between Sterling National Bank and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K filed on February 23, 2009 (File No. 001-32491)). | |
10.2 | Lease, dated February 4, 2004, by and between Coffee Holding Co., Inc. and the City of La Junta, Colorado (incorporated herein by reference to Exhibit 10.12 to Amendment No. 1 to the Company’s Registration Statement on Form SB-2/A filed on August 12, 2004 (Registration No. 333-116838)). | |
10.3 | Trademark License Agreement, dated February 4, 2004, between Del Monte Corporation and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-QSB/A for the quarter ended April 30, 2004 filed on August 26, 2004 (File No. 333-00588-NY)) as amended by that First Amendment to Trademark License Agreement, dated January 4, 2013. |
10.4 | ||
First Amendment to Trademark License Agreement, dated January 4, 2013, by and between Del Monte Corporation and Coffee Holding Co., Inc. Certain portions of Exhibit 10.4 are omitted based upon approval of the Company’s request for confidential treatment through January 28, 2023. The omitted portions were filed separately with the SEC on a confidential basis (incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended October 31, 2012 filed on January 28, 2013 (File No. 001-32491)). |
10.5 | Amended and Restated Employment Agreement, dated April 11, 2008, by and between Coffee Holding Co., Inc. and Andrew Gordon (incorporated herein by reference to Exhibit 10.14 of the Company’s Current Report on Form 8-K filed on April 16, 2008 (File No. 001-32491)). | |
10.6 | Amended and Restated Employment Agreement, dated April 11, 2008, by and between Coffee Holding Co., Inc. and David Gordon (incorporated herein by reference to Exhibit 10.15 of the Company’s Current Report on Form 8-K filed on April 16, 2008 (File No. 001-32491)). | |
10.7 | Coffee Holding Co., Inc. Non-Qualified Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.19 of the Company’s Quarterly Report on Form 10-QSB filed on June 14, 2005 (File No. 001-32491)). | |
10.8 | Contract of Sale, dated April 14, 2009, by and between Coffee Holding Co., Inc. and 4401 1st Ave LLC (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed on January 28, 2010 (File No. 001-32491)). | |
10.9 | First Amendment to Loan and Security Agreement between Coffee Holding Co., Inc. and Sterling National Bank, dated July 23, 2010 (incorporated herein by reference to Exhibit 103 to the Company’s Annual Report on Form 10-K filed on January 31, 2011 (File No. 001-32491)). | |
10.10 | Placement Agency Agreement, dated as of September 27, 2011, by and among the Company, the selling stockholders named therein, Roth Capital Partners, LLC and Maxim Group, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed on September 27, 2011 (File No. 001-32491)). | |
10.11 | Subscription Agreement, dated as of September 27, 2011, by and between the Company, the selling stockholders named therein and each of the purchasers identified on the signature pages thereto (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 27, 2011 (File No. 001-32491)). | |
10.12 | 2013 Equity Compensation Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed on February 28, 2013 (File No. 13653320)). | |
10.13 | Loan Modification Agreement, dated as of May 10, 2013, by and between Sterling National Bank and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on January 24, 2014 (File No. 001-32491)). | |
10.14 | Loan Modification Agreement, dated March 10, 2015, by and between Sterling National Bank and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 31, 2015). | |
10.15 | Loan Agreement, dated March 10, 2015, by and between Sterling National Bank and Organic Products Trading Company LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 31, 2015). | |
10.16 | Security Agreement, dated March 10, 2015, by and between Sterling National Bank and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 31, 2015). | |
10.17 | Guarantee, dated March 10, 2015, by Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on March 31, 2015). |
List of Significant Subsidiaries.* | ||
23.1 | Consent of Marcum LLP.* | |
Principal Executive Officer and Principal Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
Principal Executive Officer and Principal Financial Officer’s Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
XBRL Taxonomy Extension Presentation Linkbase Document. | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
COFFEE HOLDING CO., INC. | |||
By: | /s/ Andrew Gordon | ||
Andrew Gordon | |||
President, Chief Executive Officer | |||
Signature | Title | Date | ||||
/s/Andrew Gordon | President, Chief Executive Officer, Chief Financial Officer, Treasurer and | January | ||||
Andrew Gordon | Director | |||||
(principal executive officer and principal financial and accounting officer) | ||||||
/s/ David Gordon | Executive Vice President – Operations, Secretary and Director | January | ||||
David Gordon | ||||||
/s/ Gerard DeCapua | Director | January | ||||
Gerard DeCapua |
/s/ Daniel Dwyer | Director | January | ||||
/s/ Barry Knepper | Director | January | ||||
/s/ John Rotelli | Director | January 26, 2016 | ||||
John Rotelli | ||||||
/s/ Robert M. Williams | Director | January | ||||
Robert M. Williams |
Exhibit No. | Description | |
2.1 | Agreement and Plan of Merger, dated October 31, 1997, by and among Transpacific International Group Corp. and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 2 to Post-Effective Amendment No. 1 to the Company’s Registration Statement on Form SB-2 filed on November 10, 1997 (File No. 333-00588-NY)). | |
2.2 | Asset Purchase Agreement, dated February 4, 2004, by and between Coffee Holding Co., Inc. and Premier Roasters LLC (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 20, 2004 (File No. 333-00588-NY)). | |
3.1 | Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A the “2005 Registration Statement” filed on May 2, 2005 (File No. 001-32491)). | |
3.2 | ByLaws of the Company (incorporated herein by reference to Exhibit 3.2 to the 2005 Registration Statement (File No. 001-32491)). | |
4.1 | Form of Stock Certificate of the Company (incorporated herein by reference to the Company’s Registration Statement on Form SB-2 filed on June 24, 2004 (Registration No. 333-116838)). | |
10.1 | Loan and Security Agreement, dated February 17, 2009, by and between Sterling National Bank and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.21 to the Company’s Current Report on Form 8-K filed on February 23, 2009 (File No. 001-32491)). | |
10.2 | Lease, dated February 4, 2004, by and between Coffee Holding Co., Inc. and the City of La Junta, Colorado (incorporated herein by reference to Exhibit 10.12 to Amendment No. 1 to the Company’s Registration Statement on Form SB-2/A filed on August 12, 2004 (Registration No. 333-116838)). | |
10.3 | Trademark License Agreement, dated February 4, 2004, between Del Monte Corporation and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-QSB/A for the quarter ended April 30, 2004 filed on August 26, 2004 (File No. 333-00588-NY)) as amended by that First Amendment to Trademark License Agreement, dated January 4, 2013. | |
10.4 | First Amendment to Trademark License Agreement, dated January 4, 2013, by and between Del Monte Corporation and Coffee Holding Co., Inc. Certain portions of Exhibit 10.4 are omitted based upon a approval of the Company’s request for confidential treatment through January 28, 2023. The omitted portions were filed separately with the SEC on a confidential basis (incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended October 31, 2012 filed on January 28, 2013 (File No. 001-32491)). | |
10.5 | Amended and Restated Employment Agreement, dated April 11, 2008, by and between Coffee Holding Co., Inc. and Andrew Gordon (incorporated herein by reference to Exhibit 10.14 of the Company’s Current Report on Form 8-K filed on April 16, 2008 (File No. 001-32491)). | |
10.6 | Amended and Restated Employment Agreement, dated April 11, 2008, by and between Coffee Holding Co., Inc. and David Gordon (incorporated herein by reference to Exhibit 10.15 of the Company’s Current Report on Form 8-K filed on April 16, 2008 (File No. 001-32491)). |
10.7 | ||
Coffee Holding Co., Inc. Non-Qualified Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.19 of the Company’s Quarterly Report on Form 10-QSB filed on June 14, 2005 (File No. 001-32491)). | ||
10.8 | Contract of Sale, dated April 14, 2009, by and between Coffee Holding Co., Inc. and 4401 1st Ave LLC (incorporated herein by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed on January 28, 2010 (File No. 001-32491)). | |
10.9 | First Amendment to Loan and Security Agreement between Coffee Holding Co., Inc. and Sterling National Bank, dated July 23, 2010 (incorporated herein by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K filed on January 31, 2011 (File No. 001-32491). | |
10.10 | Placement Agency Agreement, dated as of September 27, 2011, by and among the Company, the selling stockholders named therein, Roth Capital Partners, LLC and Maxim Group, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Report on Form 8-K filed on September 27, 2011 (File No. 001-32491)). | |
10.11 | Subscription Agreement, dated as of September 27, 2011, by and between the Company, the selling stockholders named therein and each of the purchasers identified on the signature pages thereto (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 27, 2011 (File No. 001-32491)). | |
10.12 | 2013 Equity Compensation Plan (incorporated by reference to Annex A of the Company’s Definitive Proxy Statement filed on February 28, 2013 (File No. 13653320)). | |
10.13 | Loan Modification Agreement, dated as of May 10, 2013, by and between Sterling National Bank and Coffee Holding Co., Inc. (incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K filed on January 24, 2014 (File No. 001-32491)). | |
List of Significant Subsidiaries.* | ||
23.1 | Consent of Marcum, LLP* | |
Principal Executive Officer and Principal Financial Officer’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | ||
Principal Executive Officer and Principal Financial Officer’s Certification furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* | ||
101.INS | XBRL Instance Document. | |
101.SCH | XBRL Taxonomy Extension Schema Document. | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
PAGE | |||
FINANCIAL STATEMENTS: | |||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | F-2 | ||
CONSOLIDATED BALANCE SHEETS AS OF OCTOBER 31, | F-3 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS - YEARS ENDED OCTOBER 31, | |||
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY - YEARS ENDED OCTOBER 31, | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS - YEARS ENDED OCTOBER 31, 2015 AND 2014 | |||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
2015 | 2014 | |||||||
- ASSETS - | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 3,853,816 | $ | 3,782,639 | ||||
Accounts receivable, net of allowances of $144,000 for 2015 and 2014 | 10,968,237 | 15,419,860 | ||||||
Inventories | 13,862,818 | 15,210,153 | ||||||
Prepaid green coffee | 620,452 | 467,155 | ||||||
Prepaid expenses and other current assets | 256,202 | 260,112 | ||||||
Prepaid and refundable income taxes | 1,434,577 | 759 | ||||||
Deferred income tax asset | 997,720 | 343,657 | ||||||
TOTAL CURRENT ASSETS | 31,993,822 | 35,484,335 | ||||||
Machinery and equipment, at cost, net of accumulated depreciation of $4,241,256 and $3,704,802 for 2015 and 2014, respectively | 1,845,000 | 1,991,094 | ||||||
Customer list and relationships, net of accumulated amortization of $41,250 and $33,750 for 2015 and 2014, respectively | 108,750 | 116,250 | ||||||
Trademarks | 180,000 | 180,000 | ||||||
Goodwill | 440,000 | 440,000 | ||||||
Equity method investments | 96,571 | 97,404 | ||||||
Deposits and other assets | 610,499 | 643,549 | ||||||
TOTAL ASSETS | $ | 35,274,642 | $ | 38,952,632 | ||||
- LIABILITIES AND STOCKHOLDERS’ EQUITY - | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | 4,021,389 | $ | 8,693,100 | ||||
Line of credit | 5,554,121 | 2,498,458 | ||||||
Due to broker | 483,835 | 484,924 | ||||||
Income taxes payable | - | 331,051 | ||||||
TOTAL CURRENT LIABILITIES | 10,059,345 | 12,007,533 | ||||||
Deferred income tax liabilities | 92,370 | 165,157 | ||||||
Deferred rent payable | 222,055 | 209,640 | ||||||
Deferred compensation payable | 482,499 | 515,549 | ||||||
TOTAL LIABILITIES | 10,856,269 | 12,897,879 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Coffee Holding Co., Inc. stockholders’ equity: | ||||||||
Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued | - | - | ||||||
Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,456,316 shares issued; 6,162,207 and 6,215,894 shares outstanding for 2015 and 2014 | 6,456 | 6,456 | ||||||
Additional paid-in capital | 15,904,109 | 15,904,109 | ||||||
Retained earnings | 9,665,940 | 11,079,168 | ||||||
Less: Treasury stock, 294,109 and 240,422 common shares, at cost for 2015 and 2014 | (1,494,712 | ) | (1,267,862 | ) | ||||
Total Coffee Holding Co., Inc. Stockholders’ Equity | 24,081,793 | 25,721,871 | ||||||
Noncontrolling interest | 336,580 | 332,882 | ||||||
TOTAL EQUITY | 24,418,373 | 26,054,753 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 35,274,642 | $ | 38,952,632 |
2014 | 2013 | |||||||
- ASSETS - | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 3,782,639 | $ | 4,035,669 | ||||
Accounts receivable, net of allowances of $144,000 for 2014 and 2013 | 15,419,860 | 12,362,792 | ||||||
Inventories | 15,210,153 | 9,373,018 | ||||||
Prepaid green coffee | 467,155 | 439,290 | ||||||
Prepaid expenses and other current assets | 260,112 | 336,494 | ||||||
Prepaid and refundable income taxes | 759 | 1,000,317 | ||||||
Deferred income tax asset | 343,657 | 1,330,666 | ||||||
TOTAL CURRENT ASSETS | 35,484,335 | 28,878,246 | ||||||
Machinery and equipment, at cost, net of accumulated depreciation of $3,704,802 and $3,130,902 for 2014 and 2013, respectively | 1,991,094 | 2,060,350 | ||||||
Customer list and relationships, net of accumulated amortization of $33,750 and $26,250 for 2014 and 2013, respectively | 116,250 | 123,750 | ||||||
Trademarks | 180,000 | 180,000 | ||||||
Goodwill | 440,000 | 440,000 | ||||||
Equity method investments | 97,404 | 98,178 | ||||||
Deposits and other assets | 643,549 | 618,498 | ||||||
TOTAL ASSETS | $ | 38,952,632 | $ | 32,399,022 | ||||
2015 | 2014 | |||||||
NET SALES | $ | 118,153,541 | $ | 108,863,097 | ||||
COST OF SALES (which include purchases of approximately $22.1 million and $17.5 million in fiscal years 2015 and 2014, respectively, from a related party) | 112,436,831 | 93,334,118 | ||||||
GROSS PROFIT | 5,716,710 | 15,528,979 | ||||||
OPERATING EXPENSES: | ||||||||
Selling and administrative | 7,000,744 | 6,868,052 | ||||||
Officers’ salaries | 653,285 | 659,400 | ||||||
TOTAL | 7,654,029 | 7,527,452 | ||||||
(LOSS) INCOME FROM OPERATIONS | (1,937,319 | ) | 8,001,527 | |||||
OTHER INCOME (EXPENSE): | ||||||||
Interest income | 45,049 | 44,962 | ||||||
Loss from equity method investments | (833 | ) | (774 | ) | ||||
Interest expense | (200,074 | ) | (80,493 | ) | ||||
TOTAL | (155,858 | ) | (36,305 | ) | ||||
(LOSS) INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES AND | ||||||||
NON-CONTROLLING INTEREST IN SUBSIDIARY | (2,093,177 | ) | 7,965,222 | |||||
(Benefit) provision for income taxes | (763,647 | ) | 2,947,102 | |||||
NET (LOSS) INCOME BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | (1,329,530 | ) | 5,018,120 | |||||
Less: Net income attributable to the non-controlling interest in subsidiary | (83,698 | ) | (50,585 | ) | ||||
NET (LOSS) INCOME ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ | (1,413,228 | ) | $ | 4,967,535 | |||
Basic and diluted (loss) earnings per share | $ | (.23 | ) | $ | .78 | |||
Weighted average common shares outstanding: | ||||||||
Basic and diluted | 6,212,929 | 6,333,212 |
- LIABILITIES AND STOCKHOLDERS’ EQUITY - | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued expenses | $ | 8,693,100 | $ | 7,244,822 | ||||
Line of credit | 2,498,458 | 1,229,182 | ||||||
Due to broker | 484,924 | 984,040 | ||||||
Income taxes payable | 331,051 | - | ||||||
TOTAL CURRENT LIABILITIES | 12,007,533 | 9,458,044 | ||||||
Deferred income tax liabilities | 165,157 | 145,666 | ||||||
Deferred rent payable | 209,640 | 195,452 | ||||||
Deferred compensation payable | 515,549 | 515,498 | ||||||
TOTAL LIABILITIES | 12,897,879 | 10,314,660 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||
Coffee Holding Co., Inc. stockholders’ equity: | ||||||||
Preferred stock, par value $.001 per share; 10,000,000 shares authorized; none issued | - | - | ||||||
Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,456,316 shares issued; 6,215,894 and 6,372,309 shares outstanding for 2014 and 2013 | 6,456 | 6,456 | ||||||
Additional paid-in capital | 15,904,109 | 15,904,109 | ||||||
Retained earnings | 11,079,168 | 6,111,633 | ||||||
Less: Treasury stock, 240,422 and 84,007 common shares, at cost for 2014 and 2013 | (1,267,862 | ) | (272,133 | ) | ||||
Total Coffee Holding Co., Inc. Stockholders’ Equity | 25,721,871 | 21,750,065 | ||||||
Noncontrolling interest | 332,882 | 334,297 | ||||||
TOTAL EQUITY | 26,054,753 | 22,084,362 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 38,952,632 | $ | 32,399,022 |
2014 | 2013 | |||||||
NET SALES | $ | 108,863,097 | $ | 133,980,759 | ||||
COST OF SALES (which include purchases of approximately $17.5 million and $31.2 million in fiscal years 2014 and 2013, respectively, from a related party) | 93,334,118 | 128,011,678 | ||||||
GROSS PROFIT | 15,528,979 | 5,969,081 | ||||||
OPERATING EXPENSES: | ||||||||
Selling and administrative | 6,868,052 | 6,939,819 | ||||||
Officers’ salaries | 659,400 | 582,091 | ||||||
TOTAL | 7,527,452 | 7,521,910 | ||||||
INCOME (LOSS) FROM OPERATIONS | 8,001,527 | (1,552,829 | ) | |||||
OTHER INCOME (EXPENSE): | ||||||||
Interest income | 44,962 | 43,144 | ||||||
Loss from equity method investments | (774 | ) | (105,781 | ) | ||||
Interest expense | (80,493 | ) | (106,184 | ) | ||||
TOTAL | (36,305 | ) | (168,821 | ) |
Common Stock | Treasury Stock | Additional Paid - in Capital | Retained Earnings | Non- Controlling Interest | Total | |||||||||||||||||||||||||||
$.001 Par Value | ||||||||||||||||||||||||||||||||
Number of | Number of | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance,10/31/13 | 6,372,309 | $ | 6,456 | 84,007 | $ | (272,133 | ) | $ | 15,904,109 | $ | 6,111,633 | $ | 334,297 | $ | 22,084,362 | |||||||||||||||||
Treasury Stock | (156,415 | ) | 156,415 | (995,729 | ) | (995,729 | ) | |||||||||||||||||||||||||
Dividend | (52,000 | ) | (52,000 | ) | ||||||||||||||||||||||||||||
Net income | 4,967,535 | 4,967,535 | ||||||||||||||||||||||||||||||
Non-Controlling | ||||||||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | 50,585 | 50,585 | ||||||||||||||||||||||||
Balance, 10/31/14 | 6,215,894 | $ | 6,456 | 240,422 | $ | (1,267,862 | ) | $ | 15,904,109 | $ | 11,079,168 | $ | 332,882 | $ | 26,054,753 | |||||||||||||||||
Treasury Stock | (53,687 | ) | 53,687 | (226,850 | ) | (226,850 | ) | |||||||||||||||||||||||||
Dividend | (80,000 | ) | (80,000 | ) | ||||||||||||||||||||||||||||
Net loss | (1,413,228 | ) | (1,413,228 | ) | ||||||||||||||||||||||||||||
Non-Controlling | ||||||||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | 83,698 | 83,698 | ||||||||||||||||||||||||
Balance, 10/31/15 | 6,162,207 | $ | 6,456 | 294,109 | $ | (1,494,712 | ) | $ | 15,904,109 | $ | 9,665,940 | $ | 336,580 | $ | 24,418,373 |
2015 | 2014 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net (loss) income | $ | (1,329,530 | ) | $ | 5,018,120 | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 545,390 | 581,400 | ||||||
Unrealized (gain) on commodities | (1,089 | ) | (499,116 | ) | ||||
Loss on equity method investments | 833 | 774 | ||||||
Deferred rent | 12,415 | 14,188 | ||||||
Deferred income taxes | (726,850 | ) | 1,006,500 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 4,451,623 | (3,057,068 | ) | |||||
Inventories | 1,347,335 | (5,837,135 | ) | |||||
Prepaid expenses and other current assets | 3,910 | 76,382 | ||||||
Prepaid green coffee | (153,297 | ) | (27,865 | ) | ||||
Prepaid and refundable income taxes | (1,433,818 | ) | 999,558 | |||||
Accounts payable and accrued expenses | (4,671,711 | ) | 1,448,278 | |||||
Deposits and other assets | - | (25,001 | ) | |||||
Income taxes payable | (331,051 | ) | 331,051 | |||||
Net cash (used in) provided by operating activities | (2,285,840 | ) | 30,066 | |||||
INVESTING ACTIVITIES: | ||||||||
Purchases of machinery and equipment | (391,796 | ) | (504,644 | ) | ||||
Net cash used in investing activities | (391,796 | ) | (504,644 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Line of credit | 3,055,663 | 1,269,277 | ||||||
Purchase of treasury stock | (226,850 | ) | (995,729 | ) | ||||
Payment of dividend | (80,000 | ) | (52,000 | ) | ||||
Net cash provided by financing activities | 2,748,813 | 221,548 | ||||||
NET INCREASE (DECREASE) IN CASH | 71,177 | (253,030 | ) | |||||
CASH, BEGINNING OF PERIOD | 3,782,639 | 4,035,669 | ||||||
CASH, END OF PERIOD | $ | 3,853,816 | $ | 3,782,639 |
INCOME (LOSS) BEFORE PROVISION (BENEFIT) FOR INCOME TAXES AND | ||||||||
NON-CONTROLLING INTEREST IN SUBSIDIARY | 7,965,222 | (1,721,650 | ) | |||||
Provision (benefit) for income taxes | 2,947,102 | (393,767 | ) | |||||
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | 5,018,120 | (1,327,883 | ) | |||||
Less: Net income attributable to the non-controlling interest in subsidiary | (50,585 | ) | (152,352 | ) | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ | 4,967,535 | $ | (1,480,235 | ) | |||
Basic and diluted earnings (loss) per share | $ | .78 | $ | (.23 | ) | |||
Dividends declared per share | $ | .00 | $ | .06 | ||||
Weighted average common shares outstanding: | ||||||||
Basic and diluted | 6,333,212 | 6,372,309 |
2015 | 2014 | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||||||||
Interest paid | $ | 196,556 | $ | 73,692 | ||||
Income taxes paid | $ | 1,651,156 | $ | 1,432,777 |
Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Non-Controlling Interest | Total | |||||||||||||||||||||||||
$.001 Par Value | ||||||||||||||||||||||||||||||
Number of Shares | Amount | Number of Shares | Amount | |||||||||||||||||||||||||||
Balance,10/31/012 | 6,372,309 | $ | 6,456 | 84,007 | $ | (272,133 | ) | $ | 15,904,109 | $ | 7,979,247 | $ | 181,945 | $ | 23,799,624 | |||||||||||||||
Dividend | (387,379 | ) | (387,379 | ) | ||||||||||||||||||||||||||
Net loss | (1,480,235 | ) | (1,480,235 | ) | ||||||||||||||||||||||||||
Non-Controlling | ||||||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | 152,352 | 152,352 | ||||||||||||||||||||||
Balance, 10/31/13 | 6,372,309 | $ | 6,456 | 84,007 | $ | (272,133 | ) | $ | 15,904,109 | $ | 6,111,633 | $ | 334,297 | $ | 22,084,362 | |||||||||||||||
(995,729 | ) | |||||||||||||||||||||||||||||
Treasury Stock | (156,415 | ) | 156,415 | (995,729 | ) | |||||||||||||||||||||||||
Dividend | (52,000 | ) | (52,000 | ) | ||||||||||||||||||||||||||
Net income | 4,967,535 | 4,967,535 | ||||||||||||||||||||||||||||
Non-Controlling | ||||||||||||||||||||||||||||||
Interest | - | - | - | - | - | - | 50,585 | 50,585 | ||||||||||||||||||||||
Balance, 10/31/14 | 6,215,894 | $ | 6,456 | 240,422 | $ | (1,267,862 | ) | $ | 15,904,109 | $ | 11,079,168 | $ | 332,882 | $ | 26,054,753 |
2014 | 2013 | |||||||
OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 5,018,120 | $ | (1,327,883 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 581,400 | 506,934 | ||||||
Unrealized (gain) on commodities | (499,116 | ) | (383,349 | ) | ||||
Loss on equity method investments | 774 | 105,781 | ||||||
Deferred rent | 14,188 | 28,784 | ||||||
Deferred income taxes | 1,006,500 | (515,000 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (3,057,068 | ) | 270,336 | |||||
Inventories | (5,837,135 | ) | 2,434,063 | |||||
Prepaid expenses and other current assets | 76,382 | 367,519 | ||||||
Prepaid green coffee | (27,865 | ) | (289,290 | ) | ||||
Prepaid and refundable income taxes | 999,558 | (937,554 | ) | |||||
Accounts payable and accrued expenses | 1,448,278 | (3,531,885 | ) | |||||
Deposits and other assets | (25,001 | ) | 16,407 | |||||
Income taxes payable | 331,051 | (21,122 | ) | |||||
Net cash provided by (used in) operating activities | 30,066 | (3,276,259 | ) | |||||
INVESTING ACTIVITIES: | ||||||||
Proceeds from disposition of equity method investment | - | 232,069 | ||||||
Purchases of machinery and equipment | (504,644 | ) | (768,029 | ) | ||||
Net cash used in investing activities | (504,644 | ) | (535,960 | ) | ||||
FINANCING ACTIVITIES: | ||||||||
Advances under bank line of credit | 4,051,522 | 6,821,366 | ||||||
Principal payments under bank line of credit | (2,782,245 | ) | (6,154,684 | ) | ||||
Purchase of treasury stock | (995,729 | ) | - | |||||
Payment of dividend | (52,000 | ) | (387,377 | ) | ||||
Net cash provided by financing activities | 221,548 | 279,305 | ||||||
NET DECREASE IN CASH | (253,030 | ) | (3,532,914 | ) | ||||
CASH, BEGINNING OF PERIOD | 4,035,669 | 7,568,583 | ||||||
CASH, END OF PERIOD | $ | 3,782,639 | $ | 4,035,669 | ||||
2014 | 2013 | |||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||||||||
Interest paid | $ | 73,692 | $ | 108,608 | ||||
Income taxes paid | $ | 1,432,777 | $ | 803,626 |
2014 | 2013 | |||||||
Inventory received | $ | - | $ | 503,500 | ||||
Settlement of accounts payable | - | 992,402 | ||||||
Total noncash proceeds | $ | - | $ | 1,495,902 |
2014 | 2013 | 2015 | 2014 | |||||||||||||
Allowance for doubtful accounts | $ | 65,000 | $ | 65,000 | $ | 65,000 | $ | 65,000 | ||||||||
Reserve for other allowances | 35,000 | 35,000 | 35,000 | 35,000 | ||||||||||||
Reserve for sales discounts | 44,000 | 44,000 | 44,000 | 44,000 | ||||||||||||
Totals | $ | 144,000 | $ | 144,000 | $ | 144,000 | $ | 144,000 |
2015 | 2014 | |||||||||||||||
2014 | 2013 | |||||||||||||||
Option contracts | $ | (217,624 | ) | $ | (188,819 | ) | $ | (134,613 | ) | $ | (217,624 | ) | ||||
Future contracts | (267,300 | ) | (795,221 | ) | (349,222 | ) | (267,300 | ) | ||||||||
Commodities due to broker | $ | (484,924 | ) | $ | (984,040 | ) | $ | (438,835 | ) | $ | (484,924 | ) |
Year Ended October 31, | Year Ended October 31, | |||||||||||||||
2014 | 2013 | 2015 | 2014 | |||||||||||||
Gross realized gains | $ | 5,294,449 | $ | 1,836,103 | $ | 1,292,471 | $ | 5,294,449 | ||||||||
Gross realized (losses) | (2,054,301 | ) | (8,044,751 | ) | (6,778,407 | ) | (2,054,301 | ) | ||||||||
Unrealized gains | 499,116 | 383,349 | 1,089 | 499,116 | ||||||||||||
Total | $ | 3,739,264 | $ | (5,825,299 | ) | $ | (5,484,847 | ) | $ | 3,739,264 |
2014 | 2013 | 2014 | 2014 | |||||||||||||
Packed coffee | $ | 1,578,248 | $ | 1,873,982 | $ | 1,441,451 | $ | 1,578,248 | ||||||||
Green coffee | 12,987,257 | 6,818,261 | 11,730,006 | 12,987,257 | ||||||||||||
Packaging supplies | 644,648 | 680,775 | 691,361 | 644,648 | ||||||||||||
Totals | $ | 15,210,153 | $ | 9,373,018 | $ | 13,862,818 | $ | 15,210,153 |
Estimated Useful Life | 2015 | 2014 | |||||||
Improvements | 15-30 years | $ | 199,035 | $ | 172,506 | ||||
Machinery and equipment | 7 years | 5,274,277 | 4,937,017 | ||||||
Furniture and fixtures | 7 years | 612,944 | 586,373 | ||||||
6,086,256 | 5,695,896 | ||||||||
Less, accumulated depreciation | 4,241,256 | 3,704,802 | |||||||
$ | 1,845,000 | $ | 1,991,094 |
Estimated Useful Life | 2014 | 2013 | |||||||
Improvements | 15-30 years | $ | 172,506 | $ | 172,506 | ||||
Machinery and equipment | 7 years | 4,937,017 | 4,481,050 | ||||||
Furniture and fixtures | 7 years | 586,373 | 537,696 | ||||||
5,695,896 | 5,191,252 | ||||||||
Less, accumulated depreciation | 3,704,802 | 3,130,902 | |||||||
$ | 1,991,094 | $ | 2,060,350 |
2014 | 2013 | 2015 | 2014 | |||||||||||||
Current | ||||||||||||||||
Federal | $ | 1,607,952 | $ | (60,108 | ) | $ | (73,407 | ) | $ | 1,607,952 | ||||||
State and local | 332,199 | 181,341 | 36,610 | 332,199 | ||||||||||||
1,940,151 | 121,233 | (36,797 | ) | 1,940,151 | ||||||||||||
Deferred | ||||||||||||||||
Federal | 886,060 | (516,000 | ) | (657,500 | ) | 886,060 | ||||||||||
State and local | 120,891 | 1,000 | (69,350 | ) | 120,891 | |||||||||||
1,006,951 | (515,000 | ) | (726,850 | ) | 1,006,951 | |||||||||||
Income tax (benefit) expense | $ | 2,947,102 | $ | (393,767 | ) | $ | (763,647 | ) | $ | 2,947,102 |
2015 | 2014 | |||||||
Tax at the federal statutory rate of 34% | $ | (711,680 | ) | $ | 2,708,175 | |||
Other permanent differences | (30,359 | ) | (62,348 | ) | ||||
State and local tax, net of federal | (21,608 | ) | 301,278 | |||||
Provision for income taxes | $ | (763,647 | ) | $ | 2,947,102 | |||
Effective income tax rate | (37 | )% | 37 | % |
2014 | 2013 | |||||||
Tax at the federal statutory rate of 34% | $ | 2,708,175 | $ | (585,362 | ) | |||
Other permanent differences | (62,348 | ) | 71,910 | |||||
State and local tax, net of federal benefit | 301,278 | 119,685 | ||||||
Provision for income taxes | $ | 2,947,102 | $ | (393,767 | ) | |||
Effective income tax rate | 37 | % | (23 | )% |
2014 | 2013 | 2015 | 2014 | |||||||||||||
Current deferred tax assets: | ||||||||||||||||
Accounts receivable | $ | 54,407 | $ | 54,553 | $ | 53,605 | $ | 54,407 | ||||||||
Net operating loss | 27,807 | 866,000 | 714,150 | 27,807 | ||||||||||||
Unrealized loss | 183,216 | 372,791 | 180,112 | 183,216 | ||||||||||||
Inventory | 78,227 | 37,322 | 49,853 | 78,227 | ||||||||||||
Total current deferred tax asset | $ | 343,657 | $ | 1,330,666 | $ | 997,720 | $ | 343,657 | ||||||||
Non-current deferred tax assets: | ||||||||||||||||
Deferred rent | 79,575 | 74,044 | 82,666 | 79,575 | ||||||||||||
Deferred compensation | 194,768 | 195,290 | 179,614 | 194,768 | ||||||||||||
Total non-current deferred tax asset | $ | 274,343 | $ | 269,334 | $ | 262,280 | $ | 274,343 | ||||||||
Total deferred tax asset | $ | 618,000 | $ | 1,600,000 | $ | 1,260,000 | $ | 618,000 | ||||||||
Non-current deferred tax liability: | ||||||||||||||||
Fixed assets | 439,500 | 415,000 | 354,650 | 439,500 | ||||||||||||
Total deferred tax liabilities | $ | 439,500 | $ | 415,000 | $ | 354,650 | $ | 439,500 |
October 31, | ||||
2016 | $ | 279,945 | ||
2017 | 264,123 | |||
2018 | 254,683 | |||
2019 | 262,413 | |||
2020 | 271,051 | |||
Thereafter | 889,467 | |||
$ | 2,221,682 |
October 31, | ||||
2015 | $ | 252,643 | ||
2016 | 243,021 | |||
2017 | 248,738 | |||
2018 | 254,683 | |||
2019 | 262,413 | |||
Thereafter | 1,159,991 | |||
$ | 2,421,489 |
a. | Treasury Stock. The Company utilizes the cost method of accounting for treasury stock. The cost of reissued shares is determined under the last-in, first-out method. The Company purchased 53,687 shares for $226,850 during the year ended October 31, 2015 and 156,415 shares for $995,729 during the year ended October 31, 2014. |
b. |
Share Repurchase Program. On January 24, 2014, the Company announced that the Board of Directors had approved a share repurchase program (the |
Fair Value Measurements as of October 31, 2014 | Fair Value Measurements as of October 31, 2015 | |||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Money market | 515,549 | 515,549 | – | – | 482,499 | 482,499 | – | – | ||||||||||||||||||||||||
Total Assets | $ | 515,549 | $ | 515,549 | – | – | $ | 482,499 | $ | 482,499 | – | – | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Commodities – Options | (217,624 | ) | (217,624 | ) | (134,613 | ) | (134,613 | ) | ||||||||||||||||||||||||
Commodities – Futures | (267,300 | ) | – | (267,300 | ) | – | (349,222 | ) | – | (349,222 | ) | – | ||||||||||||||||||||
Total Liabilities | $ | (484,924 | ) | – | $ | (484,924 | ) | – | $ | (483,835 | ) | – | $ | (483,835 | ) | – | ||||||||||||||||
Fair Value Measurements as of October 31, 2013 | Fair Value Measurements as of October 31, 2014 | |||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Money market | 515,498 | 515,498 | – | – | 515,549 | 515,549 | – | – | ||||||||||||||||||||||||
Total Assets | $ | 515,498 | $ | 515,498 | – | – | $ | 515,549 | $ | 515,549 | – | – |
Liabilities: | ||||||||||||||||
Commodities – Options | (188,819 | ) | (188,819 | ) | ||||||||||||
Commodities – Futures | (795,221 | ) | – | (795,221 | ) | – | ||||||||||
Total Liabilities | $ | (984,040 | ) | – | $ | (984,040 | ) | – |
Liabilities: | ||||||||||||||||
Commodities – Options | (217,624 | ) | (217,624 | ) | ||||||||||||
Commodities – Futures | (267,300 | ) | – | (267,300 | ) | – | ||||||||||
Total Liabilities | $ | (484,924 | ) | – | $ | (484,924 | ) | – |