[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] 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) |
PART I | ||
3 | ||
PART II | ||
25 | ||
26 | ||
26 | ||
26 | ||
April 30, 2016 | October 31, 2015 | July 31, 2016 | October 31, 2015 | |||||||
(Unaudited) | (Unaudited) | |||||||||
- ASSETS - | - ASSETS - | - ASSETS - | ||||||||
CURRENT ASSETS: | ||||||||||
Cash | $ | 3,198,097 | $ | 3,853,816 | $1,830,441 | $3,853,816 | ||||
Accounts receivable, net of allowances of $144,000 for 2015 and 2014 | 11,318,009 | 10,968,237 | 15,819,019 | 10,968,237 | ||||||
Inventories | 12,333,449 | 13,862,818 | 12,737,022 | 13,862,818 | ||||||
Prepaid green coffee | 344,439 | 620,452 | 562,142 | 620,452 | ||||||
Prepaid expenses and other current assets | 273,395 | 256,202 | 518,909 | 256,202 | ||||||
Prepaid income taxes | 931,727 | 1,434,577 | 503,327 | 1,434,577 | ||||||
Due from broker | 205,253 | - | 107,731 | |||||||
Deferred income tax asset | 53,595 | 997,720 | 85,272 | 997,720 | ||||||
TOTAL CURRENT ASSETS | 28,657,964 | 31,993,822 | 32,163,863 | 31,993,822 | ||||||
Machinery and equipment, at cost, net of accumulated depreciation of $4,516,493 and $4,241,256 for 2016 and 2015, respectively | 1,839,981 | 1,845,000 | ||||||||
Customer list and relationships, net of accumulated amortization of $45,000 and $41,250 for 2016 and 2015, respectively | 105,000 | 108,750 | ||||||||
Machinery and equipment, at cost, net of accumulated depreciation of $4,661,610 and $4,241,256 for 2016 and 2015, respectively | 2,126,239 | 1,845,000 | ||||||||
Customer list and relationships, net of accumulated amortization of $46,875 and $41,250 for 2016 and 2015, respectively | 223,125 | 108,750 | ||||||||
Trademarks | 180,000 | 180,000 | 180,000 | 180,000 | ||||||
Goodwill | 440,000 | 440,000 | 1,017,905 | 440,000 | ||||||
Equity method investment | 96,327 | 96,571 | ||||||||
Equity method investments | 95,522 | 96,571 | ||||||||
Deposits and other assets | 601,993 | 610,499 | 593,476 | 610,499 | ||||||
TOTAL ASSETS | $ | 31,921,265 | $ | 35,274,642 | $36,400,130 | $35,274,642 | ||||
- LIABILITIES AND STOCKHOLDERS’ EQUITY - | - LIABILITIES AND STOCKHOLDERS’ EQUITY - | - LIABILITIES AND STOCKHOLDERS’ EQUITY - | ||||||||
CURRENT LIABILITIES: | ||||||||||
Accounts payable and accrued expenses | $ | 3,271,416 | $ | 4,021,389 | $2,539,048 | $4,021,389 | ||||
Line of credit | 2,654,121 | 5,554,121 | 7,258,375 | 5,554,121 | ||||||
Due to broker | - | 483,835 | 483,835 | |||||||
Income taxes payable | 500 | - | 925 | |||||||
TOTAL CURRENT LIABILITIES | 5,926,037 | 10,059,345 | 9,798,348 | 10,059,345 | ||||||
Deferred income tax liabilities | 20,995 | 92,370 | 70,672 | 92,370 | ||||||
Deferred rent payable | 226,636 | 222,055 | 228,927 | 222,055 | ||||||
Deferred compensation payable | 489,826 | 482,499 | 497,034 | 482,499 | ||||||
TOTAL LIABILITIES | 6,663,494 | 10,856,269 | 10,594,981 | 10,856,269 | ||||||
STOCKHOLDERS’ EQUITY: | ||||||||||
Coffee Holding Co., Inc. stockholders’ equity: | ||||||||||
Preferred stock, par value $.001 per share; 10,000,000 shares authorized; no shares issued and outstanding | - | - | - | |||||||
Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,456,316 shares issued; 6,068,119 and 6,162,207 shares outstanding at April 30, 2016 and October 31, 2015, respectively | 6,456 | 6,456 | ||||||||
Common stock, par value $.001 per share; 30,000,000 shares authorized, 6,494,680 and 6,456,316 shares issued; 6,026,283 and 6,162,207 shares outstanding at July 31, 2016 and October 31, 2015, respectively | 6,495 | 6,456 | ||||||||
Additional paid-in capital | 15,904,109 | 15,904,109 | 16,104,074 | 15,904,109 | ||||||
Retained earnings | 10,936,310 | 9,665,940 | 11,691,828 | 9,665,940 | ||||||
Less: Treasury stock, 388,197 and 294,109 common shares, at cost for six months ended April 30, 2016 and 2015, respectively | (1,881,031 | ) | (1,494,712 | ) | ||||||
Total Coffee Holding Co., Inc. Stockholders’ Equity | 24,965,844 | 24,081,793 | ||||||||
Less: Treasury stock, 468,397 and 294,109 common shares, at cost at July 31, 2016 and October 31, 2015, respectively | (2,334,639) | (1,494,712) | ||||||||
Total Coffee Holding Co., Inc. Stockholders' Equity | 25,467,758 | 24,081,793 | ||||||||
Non-controlling interest | 291,927 | 336,580 | 337,391 | 336,580 | ||||||
TOTAL EQUITY | 25,257,771 | 24,418,373 | 25,805,149 | 24,418,373 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 31,921,265 | $ | 35,274,642 | $36,400,130 | $35,274,642 |
Six Months Ended April 30, | Three Months Ended April 30, | Nine Months Ended July 31, | Three Months Ended July 31, | |||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||||||||
NET SALES | $ | 44,212,334 | $ | 68,669,033 | $ | 21,406,939 | $ | 30,263,054 | $61,566,868 | $95,708,890 | $17,354,533 | $27,039,857 | ||||||||
COST OF SALES (including $5.6 and $14.9 million of related party costs for the six months ended April 30, 2016 and 2015, respectively. Including $2.0 and $5.1 million for the three months ended April 30, 2016 and 2015, respectively.) | 38,251,840 | 67,824,859 | 18,097,486 | 31,340,321 | ||||||||||||||||
COST OF SALES (including $7.4 and $17.9 million of related party costs for the nine months ended July 31, 2016 and 2015, respectively. Including $1.9 and $3.0 million for the three months ended July 31, 2016 and 2015, respectively.) | 52,455,081 | 92,816,224 | 14,203,343 | 24,991,366 | ||||||||||||||||
GROSS PROFIT (LOSS) | 5,960,494 | 844,174 | 3,309,453 | (1,077,267 | ) | |||||||||||||||
GROSS PROFIT | 9,111,787 | 2,892,666 | 3,151,190 | 2,048,491 | ||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||
Selling and administrative | 3,466,440 | 3,563,835 | 1,789,489 | 1,897,480 | 5,170,915 | 5,286,993 | 1,704,373 | 1,723,158 | ||||||||||||
Officers’ salaries | 327,700 | 325,585 | 163,850 | 172,850 | 491,550 | 489,435 | 163,850 | 163,850 | ||||||||||||
TOTAL | 3,794,140 | 3,889,420 | 1,953,339 | 2,070,330 | ||||||||||||||||
TOTALS | 5,662,465 | 5,776,428 | 1,868,223 | 1,887,008 | ||||||||||||||||
INCOME (LOSS) FROM OPERATIONS | 2,166,354 | (3,045,246 | ) | 1,356,114 | (3,147,597 | ) | 3,449,322 | (2,883,762) | 1,282,967 | 161,483 | ||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||||||
Interest income | 21,000 | 13,228 | 10,988 | 4,930 | 30,889 | 26,302 | 9,890 | 13,074 | ||||||||||||
(Loss) gain from equity method investment | (244 | ) | 448 | 212 | (267 | ) | ||||||||||||||
Loss from equity method investment | (1,049) | (162) | (805) | (610) | ||||||||||||||||
Interest expense | (73,473 | ) | (118,612 | ) | (33,670 | ) | (64,633 | ) | (116,144) | (153,768) | (42,671) | (35,156) | ||||||||
TOTAL | (52,717 | ) | (104,936 | ) | (22,470 | ) | (59,970 | ) | (86,304) | (127,628) | (33,586) | (22,692) | ||||||||
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARY | 2,113,637 | (3,150,182 | ) | 1,333,644 | (3,207,567 | ) | ||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST IN SUBSIDIARIES | 3,363,018 | (3,011,390) | 1,249,381 | 138,791 | ||||||||||||||||
Provision (benefit) for income taxes | 787,920 | (1,189,825 | ) | 485,356 | (1,158,721 | ) | 1,236,319 | (1,189,785) | 448,399 | 40 | ||||||||||
NET INCOME (LOSS) BEFORE NON-CONTROLLING INTEREST IN SUBSIDIARY | 1,325,717 | (1,960,357 | ) | 848,288 | (2,048,846 | ) | 2,126,699 | (1,821,605) | 800,982 | 138,751 | ||||||||||
Less: Net (income) attributable to the non-controlling interest | (55,347 | ) | (20,402 | ) | (17,487 | ) | (3,714 | ) | ||||||||||||
Less: net income attributable to the non-controlling interest | (100,811) | (19,992) | (45,464) | 411 | ||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COFFEE HOLDING CO., INC. | $ | 1,270,370 | $ | (1,980,759 | ) | $ | 830,801 | $ | (2,052,560 | ) | $2,025,888 | $(1,841,597) | $755,518 | $139,162 | ||||||
Basic and diluted earnings (loss) per share | $ | .21 | $ | (.32 | ) | $ | .14 | $ | (.33 | ) | ||||||||||
Basic earnings (loss) per share | $.33 | $(.30) | $.12 | $.02 | ||||||||||||||||
Diluted earnings (loss) per share | $.33 | $(.30) | $.12 | $.02 | ||||||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic and diluted | 6,148,039 | 6,215,894 | 6,133,557 | 6,215,894 | 6,117,610 | 6,215,894 | 6,056,420 | 6,215,894 |
2016 | 2015 | 2016 | 2015 | |||||||
OPERATING ACTIVITIES: | ||||||||||
Net income (loss) | $ | 1,325,717 | $ | (1,960,357 | ) | $2,126,699 | $(1,821,605) | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||
Depreciation and amortization | 278,987 | 274,022 | 425,977 | 408,436 | ||||||
Unrealized gain on commodities | (689,088 | ) | (489,696 | ) | (591,566) | (8,263) | ||||
Loss (gain) loss on equity method investment | 244 | (448 | ) | |||||||
Loss on equity method investments | 1,049 | 162 | ||||||||
Deferred rent | 4,581 | 6,206 | 6,872 | 9,311 | ||||||
Deferred income taxes | 872,750 | (1,143,650 | ) | 890,750 | (1,149,500) | |||||
Changes in operating assets and liabilities: | ||||||||||
Accounts receivable | (349,772 | ) | 2,263,522 | (4,766,640) | 3,424,104 | |||||
Inventories | 1,529,369 | 2,536,227 | 1,432,701 | 2,765,836 | ||||||
Prepaid expenses and other current assets | (17,193 | ) | 82,747 | (262,707) | (29,039) | |||||
Prepaid green coffee | 276,013 | 346,043 | 58,310 | (547,756) | ||||||
Prepaid and refundable income taxes | 502,850 | (1,387,393 | ) | 931,250 | (1,433,818) | |||||
Deposits and other assets | 15,833 | - | 31,558 | |||||||
Accounts payable and accrued expenses | (749,970 | ) | (3,215,641 | ) | (1,554,385) | (3,093,085) | ||||
Income taxes payable | 500 | (331,051 | ) | 925 | (331,051) | |||||
Net cash provided by (used in) operating activities | 3,000,821 | (3,019,469 | ) | |||||||
Net cash used in operating activities | (1,269,207) | (1,806,268) | ||||||||
INVESTING ACTIVITIES: | ||||||||||
Cash paid for acquisition of business | (856,904) | |||||||||
Purchases of machinery and equipment | (270,221 | ) | (341,337 | ) | (661,591) | (351,194) | ||||
Net cash used in investing activities | (270,221 | ) | (341,337 | ) | (1,518,495) | (351,194) | ||||
FINANCING ACTIVITIES: | ||||||||||
Advances under bank line of credit | 600,000 | 9,272,578 | 5,204,254 | 9,272,578 | ||||||
Principal payments under bank line of credit | (3,500,000 | ) | (6,000,000 | ) | (3,500,000) | (7,502,578) | ||||
Purchase of treasury stock | (386,319 | ) | - | (839,927) | ||||||
Payment of dividend | (100,000 | ) | (80,000 | ) | (100,000) | (80,000) | ||||
Net cash (used in) provided by financing activities | (3,386,319 | ) | 3,192,578 | |||||||
Net cash provided by financing activities | 764,327 | 1,690,000 | ||||||||
NET DECREASE IN CASH | (655,719 | ) | (168,228 | ) | (2,023,375) | (467,462) | ||||
CASH, BEGINNING OF PERIOD | 3,853,816 | 3,782,639 | 3,853,816 | 3,782,639 | ||||||
CASH, END OF PERIOD | $ | 3,198,097 | $ | 3,614,411 | $1,830,441 | $3,315,177 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||||||||||
Interest paid | $ | 81,276 | $ | 112,585 | ||||||
Income taxes paid | $ | 25,008 | $ | 1,641,197 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW DATA: | ||
Interest paid | $111,060 | $152,765 |
Income taxes paid | $26,582 | $1,647,668 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |
On June 29, 2016 Coffee Holding Co., Inc. acquired certain assets of Coffee Kinetics, LLC: | |
Fair value of assets acquired | $1,128,952 |
Less: liabilities assumed | (72,045) |
Net assets acquired: | 1,056,907 |
Common stock, par value $.001 per share, 38,364 shares | 38 |
Additional paid-in capital | 199,965 |
Non-cash payment | 200,003 |
Net cash paid | $856,904 |
The following table summarizes the assets purchased and liabilities assumed: | |
Assets acquired: | |
Accounts receivable | $84,142 |
Inventory | 306,905 |
Equipment | 40,000 |
Customer List | 120,000 |
Goodwill | 577,905 |
Less: liabilities assumed | (72,045) |
Net assets acquired: | $1,056,907 |
Purchase of assets funded by: | |
Cash paid | $856,904 |
Common stock, par value $.001 per share, 38,364 shares | 38 |
Additional paid-in capital | 199,965 |
$1,056,907 |
Nine Months Ended July 31, | Three Months Ended July 31, | |||
2016 | 2015 | 2016 | 2015 | |
Pro forma sales | $62,751,256 | $96,910,164 | $17,689,710 | $27,456,352 |
Pro forma net income (loss) | $2,103,684 | $(1,960,479) | $775,650 | $202,569 |
Pro forma basic and diluted earnings per share | $.34 | $(.32) | $.13 | $.03 |
April 30, | October 31, | |||||||
2016 | 2015 | |||||||
Allowance for doubtful accounts | $ | 65,000 | $ | 65,000 | ||||
Reserve for other allowances | 35,000 | 35,000 | ||||||
Reserve for sales discounts | 44,000 | 44,000 | ||||||
Totals | $ | 144,000 | $ | 144,000 |
July 31, 2016 | October 31, 2015 | |
Allowance for doubtful accounts | $65,000 | $65,000 |
Reserve for other allowances | 35,000 | 35,000 |
Reserve for sales discounts | 44,000 | 44,000 |
Totals | $144,000 | $144,000 |
July 31, 2016 | October 31, 2015 | |
Packed coffee | $1,938,043 | $1,441,451 |
Green coffee | 10,086,200 | 11,730,006 |
Packaging supplies | 712,779 | 691,361 |
Totals | $12,737,022 | $13,862,818 |
April 30, 2016 | October 31, 2015 | |||||||
Packed coffee | $ | 1,815,454 | $ | 1,441,451 | ||||
Green coffee | 9,766,891 | 11,730,006 | ||||||
Packaging supplies | 751,104 | 691,361 | ||||||
Totals | $ | 12,333,449 | $ | 13,862,818 |
April 30, 2016 | October 31, 2015 | July 31, 2016 | October 31, 2015 | |||||||
Option Contracts | 2,647 | (134,613 | ) | 25,744 | (134,613) | |||||
Future Contracts | 202,606 | (349,222 | ) | 81,987 | (349,222) | |||||
Total Commodities | 205,253 | (483,835 | ) | 107,731 | (483,835) |
Three Months Ended July 31, | ||
2016 | 2015 | |
Gross realized gains | $681,200 | $293,439 |
Gross realized losses | (23,379) | (175,280) |
Unrealized gain (losses) | (97,521) | (481,433) |
Total | $560,300 | $(363,274) |
Nine Months Ended July 31, | ||
2016 | 2015 | |
Gross realized gains | $1,247,113 | $991,706 |
Gross realized losses | (924,507) | (6,415,825) |
Unrealized gains | 591,566 | 8,263 |
Total | $914,172 | $(5,415,856) |
Three Months Ended April 30, | ||||||||
2016 | 2015 | |||||||
Gross realized gains | $ | 445,314 | $ | 52,670 | ||||
Gross realized losses | (368,745 | ) | (5,259,865 | ) | ||||
Unrealized gain (losses) | 687,536 | 1,851,504 | ||||||
Total | $ | 764,105 | $ | (3,355,691 | ) |
Six Months Ended April 30, | ||||||||
2016 | 2015 | |||||||
Gross realized gains | $ | 565,912 | $ | 698,267 | ||||
Gross realized losses | (901,128 | ) | (6,240,545 | ) | ||||
Unrealized gains | 689,088 | 489,695 | ||||||
Total | $ | 353,872 | $ | (5,052,583 | ) |
● other risks which we identify in future filings with the Securities and Exchange Commission (the “SEC”). |
● the roasting, blending, packaging and sale of our seven proprietary brands of coffee. |
● the level of marketing and pricing competition from existing or new competitors in the coffee industry; |
● our ability to retain existing customers and attract new customers; |
● our hedging policy; |
● fluctuations in purchase prices and supply of green coffee and in the selling prices of our products; and |
● our ability to manage inventory and fulfillment operations and maintain gross margins. |
Customer list and relationships, net | $223,125 |
Goodwill | 1,017,905 | ||
April 30, 2016 | ||||
Customer list and relationships, net | $ | 105,000 | ||
Trademarks | 180,000 | |||
Goodwill | 440,000 | |||
$ | 725,000 |
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 (2) |
May 1, 2016 to May 31, 2016 | 0 | - | - | - |
June 1, 2016 to June 30, 2016 | 56,863 | $5.59 | 56,863 | $1,068,806 |
July 1, 2016 to July 31, 2016 | 23,337 | $5.81 | 23,337 | $933,224 |
Total | 80,200 | $5.66 | 80,200 | $933,224 |
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 (2) | ||||||||||||
February 1, 2016 to February 29, 2016 | 0 | - | - | - | ||||||||||||
March 1, 2016 to March 31, 2016 | 43,989 | $ | 3.95 | 43,989 | $ | 1,599,529 | ||||||||||
April 1, 2016 to April 30, 2016 | 50,099 | $ | 4.25 | 50,099 | $ | 1,386,831 | ||||||||||
Total | 94,088 | $ | 4.11 | 94,088 | $ | 1,386,831 |
(1) | On September 29, 2015, we announced that the Board of Directors had approved a share repurchase program (the “2015 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 2015 Share Repurchase Program may be discontinued or suspended at any time. | |
(2) | Dollar amount reflects the value of shares purchased previously pursuant to the 2015 Share Repurchase Program during the fiscal |
Principal Executive Officer and Principal Financial Officer's Certification furnished 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. |
Coffee Holding Co., Inc. | |||
Date: | By: | /s/ Andrew Gordon | |
Andrew Gordon President | |||
Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Principal Financial Officer, Chief Accounting Officer) | |||